Deference to REBNY irks smaller landlord group
Industry leaders’ differing agendas and access to power came into view during a tense lobbying season in New York
When the Real Estate Board of New York cheered a new $10 million program for rent-stabilized buildings, Jay Martin took to Twitter — to vent.
“REBNY does not represent rent-stabilized owners,” huffed Martin, whose Community Housing Improvement Program does. “REBNY represents developers and brokers.”
“If you want to know about developing brand new buildings, call REBNY,” he continued. “If you want to know how much it costs to renovate, de-lead, and electrify an apartment that’s 90 years old and been occupied for 40 years … call a rent-stabilized owner.”
In the tweet, Martin noted that he was not being critical, just pointing out the organizations’ different constituencies. But it was nonetheless a rare public surfacing of tension between the real estate groups, their sometimes conflicting interests and their differing levels of access to government.
CHIP and the Rent Stabilization Association primarily represent rent-stabilized landlords, while the Real Estate Board of New York’s members span a broader spectrum of the industry, including development, brokerage and property management.
RSA and CHIP viewed the city’s program — which provides no more than $25,000 per apartment for renovations — as another sign that elected officials do not understand the extent of distress in older rental housing. REBNY praised it as a “creative solution” to ease the city’s housing crisis.
Long the industry’s standard-bearer, REBNY is often invoked by lawmakers and advocacy groups to refer to landlords or real estate at large. As a result, it is both blamed for and consulted on housing policy more than its counterparts.
But the most recent state legislative session was a reminder that the industry is not a monolith, and highlighted how these groups’ agendas sometimes run on parallel tracks — and other times on a collision course.
Developers v. landlords
Historically, the rent stabilization law and developers’ 421a tax break would expire around the same time, meaning that state lawmakers would consider these polarizing issues simultaneously. Groups that represent stabilized apartments felt these negotiations were aimed solely at satisfying developers and tenant advocates.
“I think the rent-stabilized community has felt, for a long time, like a bargaining chip,” Martin said.
“The rent-stabilized community has felt that their interests have been traded for the biggest fish, which is the billionaire developers.”
The issues were decoupled when the tax break was renewed in 2017 and the rent law was made permanent in 2019. Without the leverage of an expiring rent law, the industry lost 421a when it lapsed last year.
Then, another bargaining chip emerged: good cause eviction, which would end landlords’ power to not renew leases of paying tenants. It would also allow tenants to challenge rent increases above a certain percentage. Landlords derided the proposal as universal rent control.
In the early days of this year’s session, RSA President Joseph Strasburg and REBNY President Jim Whelan discussed how the two policies would play off each other. Strasburg said they agreed that preventing good cause was a priority, and that REBNY would not accept good cause as a condition of restoring 421a.
“The rent-stabilized community has felt, for a long time, like a bargaining chip.”
“He made it very clear that 421a was not on the table for tradeoffs,” he said.
RSA, REBNY and CHIP were part of a broader coalition of landlord and building groups, dubbed Homeowners for an Affordable New York, that launched a lobbying campaign against good cause. Gov. Kathy Hochul did not support the bill, but some influential legislators did.
CHIP also focused on a measure that would allow landlords to reset rents on vacant stabilized apartments needing major renovations.
“CHIP was pushing reset. We support reset, but that was not REBNY’s or RSA’s issue,” Strasburg said. “We let CHIP run with it.”
Trading or traitors?
There was, however, distrust and finger-pointing behind the scenes.
CHIP’s Martin said REBNY accused him of trying to swap good cause eviction for the rent reset bill. He said he was not going rogue, but had approached his members about the possibility that good cause could happen.
“I was preparing for the call four days before the budget that the governor is not holding the line anymore on good cause,” he said.
There was reason to worry: Four years before, a drastic rent reform had caught the industry by surprise, and then-Gov. Andrew Cuomo ignored its last-minute plea to stop it.
This year, Hochul’s office solicited advice from REBNY about how to approach tenant protections, as reported by New York Focus. The trade group reportedly pitched a 10 percent cap on annual rent increases, with caveats, as an alternative to good cause. In the end, nothing passed.
Martin cited Hochul’s outreach as an example of lawmakers’ wrongly defaulting to the group on industry issues, though he said he did not intend that as a criticism of REBNY.
“If that’s going to be proposed, we need to be part of the conversion,” he said. “They do not speak for our industry, carte blanche.”
Different playbooks
REBNY is by far the most influential of the three groups, boasting the most spending power and a membership that includes the most powerful players in New York real estate. The most recent public tax filings show annual revenue of $14 million for REBNY, $7 million for RSA and $1.5 million for CHIP. Those numbers do not account for political action committees through which individual REBNY and RSA members spend millions of dollars.
Whelan agreed that REBNY is looked to as the voice of the industry. “I think that is often the case,” he said. “I think that is reflective of the broad membership we have.”
RSA’s members include large rent-stabilized owners, condo and co-op boards, while CHIP represents midsized owners. REBNY’s members also include rent-stabilized landlords.
REBNY tends to back moderate Democrats, including Hochul, who has pushed for industry priorities such as the replacement of 421a and easing office-to-residential conversions. RSA, meanwhile, has aligned with Republican and Democratic lawmakers.
Myriad other groups represent pockets of the industry. Small Property Owners of New York, for example, advocates for landlords who typically own two to five units.
SPONY’s president, Ann Korchak, pointed out that her organization is run by volunteers, not paid staffers. That comes with some advantages: Korchak said it is more difficult for lawmakers to ignore pleas from small property owners who are experiencing the consequences of policies firsthand.
The group does sometimes team up with larger organizations, as it did this session as part of the effort to stop good cause eviction.
“Our interests are sometimes different than the bigger guys’, but the Venn diagram of what we agree on is quite a few things,” she said.
The New York Building Congress, whose members include developers, architects, construction unions, universities and hospitals, tends to stay out of debates where its constituencies do not see eye to eye. It focuses on policies that encourage construction, including 421a and lifting the cap on residential floor area ratio in New York City.
“You don’t have to fight every battle in life,” said its president, Carlo Scissura.
REBNY in recent years has engaged more in coalition-building, aiming to shed a Big Real Estate label that had become a headwind in New York City’s increasingly progressive politics. One industry source said it takes a data-focused approach to lobbying and isn’t “into bomb-throwing, and tactics that are potentially more politically toxic.”
Tactics, as it happens, are yet another differentiator among the groups.
Martin, a prolific Twitter user, thinks the industry should take notes from tenant advocates and adopt some of their strategies, such as door-knocking and flooding social media.
“I think this industry for too long has tried to run their lobbying strategy as a boardroom,” he said.
Strasburg, though, wants nothing to do with social media.
“It does come back to haunt you,” he said. “There’s a positive and negative to being old-school.”