421-a: An interview with John Banks III, REBNY president by Bernie Kennedy

Bernie Kennedy, Bond, Schoeneck & King

The most recent article (May 17) I wrote for the NYREJ provided a summary of the issues surrounding the real estate tax exemption program applicable to New York City known as 421-a. As a real estate attorney with more than a passing interest in several pending real estate development projects in the city, I thought it worthwhile to discuss the issue both from the perspective of the unions, supported to date by governor Cuomo, and the developers, supported at least tacitly by mayor DiBlasio. Having done so, I concluded that I expected the parties to reach a compromise before the end of the then legislative session. But to date the parties have proved by their action, or more accurately, their inaction, that I was at least premature in my conclusion. The legislative session ended with no sign of compromise in sight, and the controversy continues to surround the relationship between building affordable housing in the city and the 421-a tax exemption program. Prompted by this state of affairs, I sought to interview one of the principal players in the continuing controversy. John Banks, III, is the president of the Real Estate Board of New York (REBNY) the organization that lobbies and speaks for New York developers, about his experience leading the organization and the 421-a issue.

How was it that you came to become President of REBNY?

Banks: A headhunter asked if I knew anyone who would be good for the position, I told them, “me.” When the opportunity came, I jumped on it. REBNY is the apex of advocacy in the New York political world and I learned a lot about the industry during my time at Con Edison.

What other jobs had you held previously that prepared you for this one?

Banks: I came from Consolidated Edison Inc., where I spent 13 years as vice president of government relations. Before that, I worked as the chief of staff for the New York City Council, director of government relations at Con Edison, and deputy director of the New York City Council’s Finance Division. I got my start in government working for mayor Edward Koch in the mayor’s office of operations.

What is the principal role of REBNY in the development community?

Banks: REBNY lobbies local, state and federal government to advocate for fair and important legislation to protect and promote the public policy interests and investments of the real estate industry and development community.

Do you think that 421-a should be revived in some form?

Banks: Creating more below-market rental housing is one of the greatest challenges facing New York City and 421-a has accounted for a significant share of the city’s recent affordable housing production, particularly in those areas of the city where it is most difficult to build below-market rental housing. Any meaningful effort to address the city’s affordable housing needs will require reviving the 421-a program.

What in your mind is the biggest hurdle to overcome in making a deal on 421-a?

Banks: One of the biggest hurdles is the tabled construction prevailing wage requirement, which will simply result in much less affordable housing so that certain segments of the construction industry can be paid well above middle class wages.

Policymakers have a clear choice. They can choose to prioritize affordable housing production or they can choose to pay a carpenter nearly $200,000 each year to build affordable housing. If they choose the latter, there will be less affordable housing built or taxpayers will be asked to pay an exponentially larger tab.

What would you say to those people who complain about real estate developers receiving tax breaks like those permitted by 421-a?

Banks: New York is a city of renters and one that continues to grow. There is a critical need to produce more multifamily, rental housing, particularly at below-market, or affordable rents. Without a program like 421-a, one can’t build multi-family rental housing with a significant below-market, or affordable, component on a scale necessary to address the city’s needs.

What do you think REBNY can do to help change New York City for the better?

Banks: Our industry has been called upon to serve New York City at a time when our population is growing quickly and employment and tourism are at record levels. It is through the efforts of our more than 17,000 members, that the real estate industry is able to fulfill its role in fueling the economic engine of New York City.

From City Hall to the halls of Congress, REBNY is advocating for more jobs and fairer wages, and rallying to restate, amend, or eliminate laws based on what’s best for New York City. We also serve as a voice on critical issues surrounding transportation, sustainability, rezoning, landmarking, and hotel legislation, among many others.

Bernie Kennedy is a co-managing member (partner) at Bond, Schoeneck & King, Garden City, N.Y.