By Ethan Rothstein, Bisnow
Scott Rechler does not speak with brash hyperbole, engage in heavy self-promotion or even raise his voice much above a low, measured level — somewhere between a bass and a baritone. But the CEO of New York real estate powerhouse RXR Realty, one of the most powerful figures in the city, is deciding to use that voice to tell people to vote.
“I’ve been more vocal than the average citizen in taking [voting] more seriously,” he told Bisnow in a phone interview this week. “We can’t just rely on elected officials to solve our issues, we have to be more empowered to do that.”
Political activity is not a new arena for Rechler, who served as the vice chairman of the board of the Port Authority of New York and New Jersey until 2016. Gov. Andrew Cuomo appointed him to that post, and appointed him to his seat on the board of the Metropolitan Transit Authority in June 2017.
Rechler has also been an active donor, giving more than $600K in personal donations to political candidates and causes in the last two decades, according to Federal Election Commission records. Those contributions have gone overwhelmingly to Democrats, with a notable exception of $28,500 to the McCain Victory Fund in June 2008 (he donated $45K to the Obama Victory Fund in 2012).
Earlier this week, Rechler — whose company has nearly $18B worth of properties in its portfolio — gave remarks at the Real Estate Board of New York’s fall luncheon that showed his passion for encouraging voting.
“[It is] incumbent upon all of us to be responsible, to use our voice and not expect someone to do it for us, because it’s not going to happen,” Rechler said at the event. “And that starts with voting.”
L&L MAG CEO MaryAnne Gilmartin spoke for many in attendance when she asked if Rechler planned to run for office. Rechler told Bisnow he doesn’t currently have interest in political office, but said he is more keen than ever on using his voice in politics. RXR sent out an email to 20,000 of its contacts encouraging them to vote and helping show them how, and did the same to its hundreds of employees.
Below is the interview. Rechler’s responses have been edited and condensed for clarity:
Bisnow: It’s clear you’re ramping up your get-out-the-vote efforts, especially in the last week or so. Why do you feel passionate about pushing those efforts now?
Rechler: More generally, I’ve been more vocal than the average citizen in taking this responsibility more seriously. We can’t just rely on elected officials to solve our issues, we have to be more empowered to do that. We have to vote, and vote for leaders to serve us well and be good fiduciaries and stewards of our country. The best way to be engaged is to vote. If you start by voting and getting involved in issues and taking initiatives, that’s critical. I like to quote Justice Brandeis, who says the most important political office is private citizen, and I take that to heart.
Bisnow: Are you pursuing this now because you see the 2018 election as a critical one for New York and/or the country?
Rechler: Frequently, I hear people complain about someone in elected office whether it’s city, state or federal, and then I ask them if they voted, and they say no. You don’t have a right to complain. It’s incumbent on you to exercise your right to put the right people in office. If you don’t take that step, you don’t have a right to complain afterward.
Look at the last city election. The mayor won with less votes than what [former Mayor David] Dinkins lost by when he lost his election. It speaks to a sense of apathy, but that’s not an excuse, we have to break through that.
Bisnow: In New York City, like in many East Coast cities, it can be hard convincing the average citizen to vote because it feels like one party has a firm grip on the system, and their vote doesn’t matter. How do you break through that?
Rechler: I think in every election, in every location, there are always parts that are more pivotal. We have some critical elections, as to who’s going to control the House of Representatives, in upstate New York. We have the state legislature in the Senate, and it’s very close. If you have a view on either of those, your vote matters pretty clearly as it relates to that.
I think reforms are needed on that front. The whole primary system creates a big part of that environment that you’re talking about. I think more open primaries would be a way to encourage people to vote.
Bisnow: What are some issues you see as critical in this election?
Rechler: I think in New York, one of things that’s critical is election reform and good governance initiatives. We’ve had some challenges on the governance side, where being state legislators isn’t a full-time job. It’s hard to register to vote, we don’t have early voting mechanisms. There’s a lot of things in New York we can improve with good governance measures.
There are issues coming out of Washington, whether it’s the tax treatment with SALT [state and local tax deduction] and other things to legislate the burdens of homeowners in New York. There are a number of environmental issues. Gun safety is another issue I’ve been very focused on and vocal on. New York State has led on good, responsible gun safety measures, but we can do more.
On the local level, when people see good government do good things, it sets trends for other governments to follow. I’ve seen that on the local level and on the state level, where people put forward good measures that create better environments and economic vitality, and other parts of the country follow that model.
Bisnow: Top of the issues list for any New Yorker is the subway. You’re on the board of the MTA, so what do you think needs to happen, and more importantly can happen, to improve the system?
Rechler: I should have said that before — that is obviously one of my top issues. Our transit system, our subway system, our commuter rails are failing. Our subway system has been underinvested in for decades, and we’re taxing the next generation. We’re at a tipping point where the bill is due.
We have recruited one of the best-equipped leaders in this guy Andy Byford, who has done this before in Toronto, to actually fix it. He’s put in a plan. The bad news is the plan costs $40B, and along with ongoing maintenance costs, that’s probably a $60B number over the next 10 years. We need to own up to that and find a way to fund that.
One of the policy initiatives we’ve been pushing is congestion pricing, which works in London and Singapore. It makes our buses a more viable alternative, which right now are going 5 miles an hour, and gives us a way to fund the subway.
There are additional revenue sources that need to be created. No elected official or politician likes to raise taxes or fares, but we also have to face reality and make tough decisions about what we need to do. Coupled with that is there needs to be validation to the public that it’s not going to be business as usual and money is going to be invested well. In the past it’s been a black hole. There needs to be some methodologies and some framework for these funds. We have to reinvest, but we have to reinvent how we invest.
Bisnow: The Tri-State Area is already one of the highest-taxed localities in the country, so raising taxes for anyone is not going to be an easy sell. How do you convince people that it’s worth it?
Rechler: Bloomberg was being prescient in realizing this issue could happen and raising money for the transit authority, but the general public wasn’t feeling the pain. Now, they’re feeling the pain. Everyone’s lives are being impacted by a transit system that’s not functioning, that’s not reliable. People are feeling the pain, so there’s an overwhelming sense of, ‘We need to do something right now.’ The trick is giving people confidence that if they invest this money, it’ll result in a better system.
If you knew that money was going to guarantee you a transit system that worked and less congestion on the roads and a more sustainable economic engine that it has been, you’d be more willing to pay. A bigger issue is the lack of trust.
Bisnow: Another big issue facing New York City is how expensive it is to build here. Whether it’s a new subway line or a new office building, it’s the most expensive city for construction in the world. How do we go about reversing that trend and bringing the city at least closer to its peers?
Rechler: On the public projects part, the agencies like the MTA have for years focused on building contracts and policies that were well-intended to protect the public, but they’ve become so burdensome now and have so many layers, and they are so one-sided against the contractors, so when people do business now, they put in a 25% surcharge to deal with that. That’s one example of the low-hanging fruit that can change, but can the culture change?
As for private projects, it’s a very dense city, it’s hard to build. It makes it more complicated, but working with labor to figure out the best means to execute is key. There are some arcane laws like the scaffolding law; frankly if that were changed there would be savings. We’re looking at the concept of these transit-oriented developments, if you can create density in the suburbs around New York, you can build cheaper. In downtown New Rochelle, we can build product that’s equivalent to Long Island City and Brooklyn but costs half as much.
Bisnow: You’ve given hundreds of thousands of dollars to political campaigns and have been active in city politics, but not as outspoken before. Why the decision to become more vocal now?
Rechler: I’ve been civically engaged and active for a number of years. So that part’s not new. In terms of being more vocal and more of a leadership role in these initiatives, I feel our institutions and even some of our big business institutions, are failing us at a time where we need them the most. We’re going through such a disruptive part of our economic cycle, and our political leadership generally isn’t standing up and supporting the community as effectively as they have in the past, and in some cases, they’re flaming the problems instead of dampening them. We need to fill that void, and civic and business leaders can fill that void and speak out against hate and for issues in the community.
Bisnow: The natural question then goes: Do you see political office in your future?
Rechler: I think that where I’ve been effective is having a foot in and a foot out … my objective is to try to make our communities better places, and to do that you need to think long-term. Elected officials have to live their lives by the daily polls and election cycles, and that’s why a lot of these tough decisions are made. My sense is where I have the greatest impact is being politically active but not an elected official.
Bisnow: Can you see that changing at some point in the future?
Rechler: Not at this point, I don’t see anything changing. Even with this short-termism, you see that with businesses. Big public companies have been forced into thinking quarter to quarter. There’s a gap out there for people to use their voice, and that’s where I think I’ll be most effective.
The RXR platform manages 71 commercial real estate properties and investments with an aggregate gross asset value of approximately $20.5 billion, comprising approximately 31.4 million square feet of commercial properties, inclusive of approximately 6.0 million square feet of buildings securing debt and preferred equity investments, a multi-family residential portfolio of approximately 2,500 units under operation or development, and control of development rights for an additional approximately 3,700 multi-family and for sale units in the New York Metropolitan area as of June 30, 2019. Gross asset value compiled by RXR Realty in accordance with company fair value measurement policy and is comprised of capital invested by RXR and its partners, as well as leverage.