Candidates for treasurer of the National Association of Realtors expect declining membership counts ahead, but lauded the trade group’s robust finances as they campaigned for votes at an online forum Thursday afternoon.
NAR will be holding its first-ever virtual election this year at its first online midyear conference, the Virtual Realtors Legislative Meetings. While most candidates for NAR leadership are running unopposed, two veteran real estate leaders are vying for the 2021-2022 treasurer position: Nancy Lane of Brandon, Mississippi, and David McKey of Baton Rouge, Louisiana, both of whom have served on multiple state and national Realtor association committees and boards.
Lane and McKey pitched themselves to NAR members at the conference’s Eligible Candidates Forum, which is one of 42 sessions the trade group is streaming. The remaining 82 sessions will not be streamed, including the NAR board of directors meeting on May 15 when the top vote-getter will be announced. NAR Past President Elizabeth Mendenhall asked the candidates questions gathered from board members.
In opening and closing statements, McKey portrayed himself as someone who had the skills to handle a crisis. He pointed to a time when he was president of the Louisiana Realtors and the building burned after being hit by lightning in May 2013.
“I put together a building committee. We found a great location in downtown Baton Rouge and I went before our board of directors and I asked them to fund that new building,” McKey said.
“I’m happy to report that today we have a state of the art building in downtown Baton Rouge. And we kept our promise to our board of directors and we have a paid-off building, no mortgage on it. As a national leader, I think it is my job to deliver that type of service to our nearly 1.4 million Realtors. When we ask our Realtors to trust us, and we make a promise, we must deliver.”
In her statements, Lane emphasized her experience. “Without question I have more exposure to and expertise with the finances of NAR. Five years on Finance Committee, five years on Reserve Investments [Committee], and eight years on Real Property Operations Committee overseeing the assets of NAR. Add all of that up: 18 years. That’s 12 years more experience with NAR finances that I bring to the position dealing with all the nuances of NAR’s portfolio. Experience matters.”
The coronavirus pandemic hung over the discussion as a source of uncertainty, but both McKey and Lane were confident that NAR’s finances would weather the storm as a result of the dues increase approved in 2018 and implemented last year that shored up the association’s reserves. At last year’s midyear conference, NAR’s board voted to raise the trade group’s minimum operating reserves requirement to 50 percent of the association’s gross operating expenditure budget with a target reserve level of 75 percent — a target both candidates said NAR was more than meeting today.
Still, NAR anticipates a drop in membership next year. Even before the pandemic, the trade group projected a decline from 1.36 million in 2019 to 1.32 million in 2021. Mendenhall said membership revenue is expected to fall in the next year or two due to “current economic conditions.” She asked each candidate what he or she would do to make budget adjustments and how member services would be affected.
“This reserve is set up for emergencies. I don’t think we’ve ever seen anything like we’ve seen today as far as the coronavirus is concerned. I don’t think anybody knows where our membership is actually going to go,” McKey said.
“But what we have to remember is our members are looking for services out there and tools. So we really have to be cautious and make sure that we’re not cutting something out of our budget that directly impacts our membership because it would be like a roller coaster ride — you’d be going downhill and probably losing more members because they don’t see the benefit of our association.
“So this is a very unique situation we’re in and we probably will have to use some of our reserves moving forward. But we just have to be careful what we do on the other side of the financial statement and make sure we don’t cut initiatives and programs that have an impact on our membership.”
Lane noted that NAR’s Finance Committee and NAR staff have always been conservative in regards to membership projections.
“We will continue just to be conservative with our reserves. And at this time with the reduced travel, we’re already saving some money. That’s offsetting some of the things that will help us grow those reserves even more. So we just have to continue to watch the numbers. We can’t overly anticipate what might happen. That can get us in trouble every time. So we should continue to be very conservative with our numbers and with the way that we run operations just like we would with our business,” she said.
Both Lane and McKey stressed opportunities to build up NAR’s non-dues revenue, which includes revenue from events, technology and buildings. NAR owns four buildings — two in Chicago, one in Cincinnati and one in Washington D.C. — and they bring in more than $200 million of NAR’s $600 million budget, according to Lane. NAR is spending $45 million to renovate its Chicago headquarters.
“We’re doing a great job in Chicago adding 15,000 square feet of leasable space to our building. We continue to add amenities and attract tenants. We’re changing things with our buildings to make them more attractive to tenants, which gets us more rental income, which equates to non-dues revenue. So every dollar we make with non-dues revenue saves our members dollars,” Lane said.
McKey also emphasized that NAR’s buildings should be “a beacon of light” for members and be kept in “tip top shape.” However, he also pointed for the need to invest in technology.
“Sometimes we seem to be behind the eight ball,” he said. “I think it’s important that we are in the forefront, that we’re the pioneers in technology out there.”
Partnerships with technology firms could also potentially bring non-dues income to the association, he added.
Neither McKey nor Lane thought NAR should veer from its current investment strategy, even in light of the stock market downturn.
“Our investment portfolio at this particular point is paying dividends for us. Obviously, we’ve lost money like everybody else has, but we were much more conservative with our portfolio than I would have been with my portfolio — more in fixed income and less in equities — and I think that’s a smart and prudent thing for an association. It is our members money,” McKey said.
“We do have to be careful and not be too speculative out there,” McKey added. “Obviously, we won’t see the growth once it starts picking back up that we may have being invested in equities. But I’m very happy for where we are. Although we’ve lost money, we’ve lost less than probably most of the corporations out there.”
Asked where NAR has the most exposure financially and what she would do to address it, Lane said exposure comes in many forms.
“It could be in membership. It could be in lawsuits. It could be in many different directions that we don’t expect. Exposures with coronavirus. Things we have to do to prepare our buildings to reoccupy after this is all over. Things we had to do to prepare our staff to work from home,” she said.
“Our preparation is in our savings and our policies. We’ve worked on those policies very closely, very diligently, and we have great people who have so much more knowledge than I have by myself. We have committees that put these plans together. We stick to that plan and we continue to save and to plan and to grow our investments and provide the benefits that our members need.”
The forum lasted about 45 minutes and Mendenhall said it was the largest candidates forum ever with 405 online attendees at around the 40-minute mark, not counting whomever might be streaming the forum without logging on. She said 15,000 people had registered for the conference overall. By contrast, last year’s in-person event saw 9,000 attendees.