BY THE NUMBERS
$775K
In 2011, Barbara and Lou Grumet bought a two-bedroom co-op for $775,000 at 100 W. 57th St.
$25M
The new holders have proposed to raise the rent to $25 million a year from $4 million.
25K
There are between 65 and 100 co-ops with a ground lease in and around the city, housing up to 25,000 people
By Amanda D’Ambrosio
IMidtown residents risk losing their apartments as co-ops face a wave of ground lease renewals at eye-popping rates GROUND LEASING 1980s
n 2011, Barbara and Lou Grumet bought a two-bedroom co-op for $775,000 at 100 W. 57th St., leaving behind their house in Riverdale for a fully accessible apartment close to Mount Sinai West, Weill Cornell Medical Center and NYU Langone Health.
“We use all three hospitals,” said Barbara, a retired dean at Long Island University’s Westchester campus who is 80 years old and uses a wheelchair. “We also like going to
Ground leases were rare for apartments until the 1980s but became more popular after a court-ordered policy change.
| By Aaron Elstein
Broadway shows,” said Lou, also 80, who uses a cane.
But the golden years for these grandparents are under threat by something happening in the dirt below them, something that could force them to move out in as little as six months. at something is a ground lease. In a ground lease, the land underneath has a di erent owner than the building above. ese leases are common in commercial real estate. e o ce
“We’re not billionaires, we’re thousand-aires. We are the tip of a spear that’s coming straight for co-ops across the city.”
Richard Hirsch, board president, Carnegie House
tower at 40 Wall St. owned by Donald Trump has one, and last month the ground lease for the Chrysler Building was terminated by Cooper Union after troubled operator RFR Holding defaulted on $21 million in rent payments. Ground leases were rare for apartments until the 1980s but became more popular after a court-ordered policy change. Today, residents are paying the price as ground leaseholders seek to dramatically raise rents to re ect soaring values for New York housing.
At the Grumets’ co-op, called Carnegie House and located across from Billionaires Row on 57th Street, the ground lease resets next March 14. e new holders, which own several Manhattan o ce buildings, have proposed to raise the rent to $25 million a year from $4 million. Residents say such a drastic rent increase will bankrupt their building. ey have o ered to pay $5.6
Gov. Kathy Hochul handed over a home care program that costs the state $9 billion tonancial services rm Public Partnerships LLC last week, along with the colossal task of consolidating one of New York’s most popular Medicaid services from being managed by 700 companies to just one.
Hochul’s decision to award the contract to PPL is the latest development in her plan to rein in the ballooning Consumer Directed Personal Assistance Program. e program, which allows New Yorkers to hire family members and friends to provide home-based services, has grown exponentially in the past decade and driven up the state’s Medicaid costs. PPL will lead the charge on whittling down the hundreds of existing companies that facilitate the program, partnering with 30 current middlemen to enroll and educate patients and workers. e rm is ultimately responsible for overseeing the
By Nick Garber
New York City’s largest hotel industry trade group is dropping its opposition to the bill that would impose a licensing system and new employment restrictions on the city’s hotels — a victory for the labor union that has been pushing it. e compromise, reached Oct. 2 by the Hotel Association of New York City and the Hotel and Gaming Trades Council union, mostly keeps the controversial provision that requires hotels to directly employ public-facing workers like front desk sta and housekeepers, rather than subcontracting out those jobs. In a compromise, the
CEO of the hotel association, said in a statement the new bill “includes modi cations that address some of HANYC’s most serious concerns,” adding that his group would “withdraw our objection to the passage of the legislation if these changes remain in place.”
Bill sponsor Julie Menin also agreed to make other technical changes to resolve concerns that the language could a ect investors and cause them to run afoul of federal rules governing real estate investment trusts, according information shared by the union, HTC. Menin told Crain’s she hopes to hold a hearing this week.
A leading hotel owners’ group is getting behind the bill that will limit subcontracted work at city hotels.
subcontracting ban will no longer apply to technical jobs like engineers.
HANYC said it won other changes to the licensing rules that will prevent them from being applied arbitrarily, although full text of the new bill was not yet available Oct. 2.
Vijay Dandapani, president and
OCT. 22
NETWORKING WITH NOTABLES
Join us for networking, deal-making, and a live interview with real estate legend Larry Silverstein, the founder and chairman of Silverstein Properties. He’s perhaps best known as the developer of the rebuilt World Trade Center complex in Lower Manhattan and the ultra-luxury 82-story residential tower 30 Park Place. His eponymous 400-employee rm owns and operates a portfolio of of ce towers and residential properties that encompass more than 16 million square feet and are valued at over $10 billion.
DETAILS
e compromise did not satisfy some of the other hotel owners who had railed against the bill. While HANYC’s members are largely unionized hotel owners, other trade groups that include non-union hotels, like the American Hotel and Lodging Association, said Oct. 2 that they remain opposed.
In any case, the legislation now appears on a glide path to passage. It has won support from nearly two-thirds of the 51-member City Council, thanks largely to the powerful in uence of HTC. Mayor Eric Adams, historically an ally of HTC, has also hinted at support.
Both sides tried to paint the compromise as a victory — HTC President Rich Maroko called the changes “modest,” while HANYC labeled them “signi cant.” But the bill’s likely passage is an obvious win for the union, which has long aspired to require hotels to get a license to operate and limit their use of subcontracted work. HTC has pushed versions of the same bill in the council since 2019.
Still, this year’s campaign got o to a rocky start, as Menin was forced to postpone an initial hearing and revise the bill in response to fears that a broader subcontracting ban could shutter restaurants and other businesses that lease space within hotels.
Menin said Oct. 2 that she was “very pleased” with the deal, adding that the bill “protects hotel guests, workers and the broader community.”
e bill’s supporters have framed it from the start as a modest attempt to improve safety at hotels, responding to rising consumer complaints and the risk of human tra cking. Other provisions would require hotels to maintain some kind of continuous front desk or security presence, hire a certain number of security
guards, create “panic buttons” for employees to press when they spot danger, and meet certain cleanliness standards for guest rooms.
Menin, who represents the Upper East Side, is also widely expected to run for City Council speaker in 2026, a contest in which labor support can be crucial. Although she has closely allied with HTC in shepherding the licensing bill, she has denied that securing the union’s support was a factor in her decision to sponsor the measure.
Kevin Carey, the interim president and CEO of the American Hotel and Lodging Association, argued in a statement that the new
bill “still contains language that will cause signi cant economic harm — primarily to small, family-owned hotels and the largely immigrant and minority-owned businesses that support them.” “ ere is no question that this bill, if passed, will cause many of New York City’s small businesses to close and thousands of hard-working New Yorkers to lose their jobs,” Carey said. Maroko, HTC’s president, said that the bill “will achieve its intended goals of protecting hotel workers, guests and neighbors, while also promoting a thriving hotel sector in New York City.”
e Metropolitan Transportation Authority and BXP broke ground on a new Grand Central Terminal entrance Oct. 1, part of the real estate rm’s massive planned o ce tower at 343 Madison Ave. that is still awaiting an anchor tenant.
e project dates back to 2013, when the MTA issued a request for proposals to redevelop the site that was once its former headquarters, ultimately ground-leasing it to BXP (known until recently as Boston Properties). A number of transit renovations were part of the deal, including the upcoming entrance to Grand Central Madison, which gives Long Island Rail Road commuters access to the terminal. Work on the entrance should take about 18 months to complete.
e o ce tower itself is still in its nal design stages, and BXP should be ready to start construction as soon as it nds a main tenant, said Hilary Spann, executive vice president at the rm.
“We are having constructive conversations with anchor tenants in the marketplace,” she said, “and I think as soon as we secure one, we’ll be ready to go vertical.”
BXP CEO Owen omas de-
clined to put a timeline on the rm’s tenant negotiations but said the location and quality of the tower will make it an attractive destination.
“ ere’s not a lot of availability close to Grand Central,” he said. “If you’re a tenant over 100,000 feet, new construction is probably what you’re going to be looking at, and this site is ready to go.”
omas sounded a similar note on an August 2023 earnings call, when he said the rm was having “preliminary discussions with potential anchor clients” for 343 Madison. At an investor conference soon after, company President Douglas Linde said rents will need to be “well in excess of $200 a square foot” to make building a new o ce project worthwhile.
e company’s skyscraper at 343 Madison Ave. should span about 950,000 square feet overall. BXP has partnered on the project with Norges Bank Investment Management, Norway’s $1.4 trillion sovereign wealth fund, which bought a 45% stake in it last year.
e development has been seen as BXP’s e ort to compete with projects like SL Green’s 1 Vanderbilt and the new JPMorgan headquarters going up at 270 Park Ave. However, omas downplayed those comparisons Oct. 1, noting that BXP has been at work on 343 Madison for more than a decade.
e rm’s occupancy rate for its New York properties, which include the GM Building and 399 Park Ave., slipped to 87% during the second quarter of the year. omas said o ce buildings re-
main “challenging” as an overall asset class on that quarter’s earnings call.
MTA Chairman Janno Lieber noted at the Oct. 1 event that work on the o ce tower itself was still in progress, saying in his remarks that BXP is “inching closer, we think and hope, to building a building on this site.”
“But we cannot wait any longer for the entrance to the Grand Central Madison facility to be built,” he continued, “and that’s what we’re here to celebrate today.”
When Wissam Akra worked as a resident engineer for the Metropolitan Transportation Authority, one of his biggest challenges was meeting the city’s requirements of hiring women and minority-owned businesses to construct the Second Avenue subway.
“It was a challenge on that job and on every other job that I was involved in,” said Akra. “Contractors mostly come from an engineering background: We know how to build a bridge. We know how to build a tower. We have no idea how to nd diverse businesses and how to convince them to work with us.”
Akra founded Tough Leaf in 2021 as a platform that seeks to help general contractors nd the best subcontractors to solicit bids from while supporting small, minority, and women-owned businesses in bidding for and winning jobs they are quali ed for.
nated during Mayor Eric Adams’s tenure in o ce, despite the mayor singling out support for MWBE rms as a key focus of the administration.
Hunter Butera and Chris Macaluso, both project managers with MJM Construction Associates, have been working with Tough Leaf to nd MWBEs for a project restoring a SoHo commercial space with four o ce oors. e project is part of the city Department of Finance’s Industrial & Commercial Abatement Program, which requires outreach to MWBEs for bids on about 25 di erent trades.
Tough Leaf collects data on small and MWBE subcontractors and compiles it into a marketplace platform that Akra likens to an intersection between LinkedIn and Uber. e platform then connects subtractors to businesses after it recognizes that the rms’ skills and certications meet the project requirements.
General contractors pay between $80,000 and $200,000 annually for an enterprise-level subscription to Tough Leaf, while subcontractors can access the platform for free. Tough Leaf currently has 53 clients — primarily private companies and local governments — in New York, Massachusetts, Florida, Illinois, Ohio, Texas, and California. e company says it has helped procure $600 million in business contracts thus far. e company reported revenue of $1.5 million as of the third quarter of 2023 and has raised about $8 million in total venture funding, including a $4.5 million round it closed in August.
In New York, Tough Leaf’s platform has helped procure $85 million in contracts for the new $3 billion JP Morgan Chase headquarters on Park Avenue, $91 million for roadway improvements on the Verrazano-Narrows Bridge and $50 million for e Bronx Museum of Art, among other projects. e work falls in line with City Hall’s e orts to uplift MWBE businesses. In February, City Comptroller Brad Lander released a report showing contracts to MWBE rms have stag-
Butera said many large construction companies are reluctant to hire smaller subcontractors because it’s often seen as a gamble to work with a newcomer. Tough Leaf, according to Butera, speeds up the process and saves hours spent manually searching for companies online.
at’s helped business owners like Lateef Belfor of Mount Vernon-based Bonanza Contracting win bids he’d once considered impossible. Since joining Tough Leaf in 2023, Bonanza Contracting has done carpentry work, metal and glass work, signage and construction management for construction at John F. Kennedy, LaGuardia, and Newark airports, along with interior carpentry, framing, drywall and painting for the Bronx Museum and a Queens College building.
“It wasn’t just like just reaching out to us, ‘Oh, here’s a project, bid on it,’” Belfor recounted. ey will really help guide us through the application,” Belfor said.
Akra said Tough Leaf provides general contractors with three companies for each trade to give more options and to provide a space to highlight MWBE clients. “We started o as a diversity compliance platform to make sure that contractors meet their compliance requirements,” Akra said. “But it ended up being a business development platform because we’re capable of providing them more bids and more optionality.”
Procore Technologies, founded in 2002 in California, provides construction management software to over two billion users in over 150 countries. e company went public in 2021 and, at the end of 2023, reported $950 million in annual revenue.
General contractors looking to solicit subtractors often browse government directories that include rows of PDFs to nd the right company for the job. e issue with this process, according to Akra, is that much of the information stored in these databases can quickly become outdated. Tough Leaf’s subcontractor dataset is updated regularly: it tracks where businesses are located, their contact information, their certi cations, their previous work and employees. “We’ve spent the past four years collecting data on diverse businesses by tapping into every state and city certication platform, private certi cation platforms, the Department of Labor, the Department of Finance — you name it — in order to build a pro le on these diverse businesses,” he explained.
Youssef Kalad, an investor in AlleyCorp’s Economic Infrastructure team, which led fundraising for Tough Leaf, hopes that automating the process of vetting subcontractors will speed up the process.
“Tough Leaf is in the very unique, special position, of not having to encourage anyone to use its software. It in fact exists because there’s a regulatory impetus to have a bigger, more diversi ed pool of subcontractors,” Kalad said.
With their latest funding round, Akra wants to expand to the West Coast and other regions. He also sees an opportunity to seek out construction projects tied to the In ation Reduction Act, passed by Congress in 2022, which prioritizes spending on clean energy infrastructure projects.
e company is also piloting a new product they will release later this fall called Tough Leaf Clear Spend, which allows clients to monitor their spending with small and minority-owned businesses.
“A lot of the larger companies have to report on these ESG metrics and we are the only platform that provides this with a level of accuracy that’s unmatched because you have the data on every diverse business in the country,” he added. “Without us, they’re trying to do this manually.”
Olivia Bensimon is a freelance journalist in New York City who reports on human-centered stories.
The closure of the mainstay for ribbons and rhinestones leaves its block garment-less
Fans of trimmings — not the anksgiving kind, but the sequins, tassels and ribbons that give a little pizzazz to clothing — suffered a blow in mid-September with the news that M&J Trimmings, a mainstay of the Garment District since 1936, will soon close its Sixth Avenue location.
But some landlords in the neighborhood, which stretches across the West 30s and West 40s, may have had the opposite reaction. Eager to turn empty textile factories into housing to help meet embattled Mayor Eric Adams’ ambitious goal of creating 500,000 new units by 2032, the property owners are backing his push to ease regulations on building conversions. M&J’s disappearance, then, seems to provide more proof of the garment industry’s fading relevance.
One doesn’t have to look far to see that the sector is in retreat. e blocks near M&J, once a vibrant hub of the hat-making trade, will have almost no traces of their industrial history once M&J turns out the lights this fall. To wit: e Bead Center, which sold similar notions at 989 Sixth Ave. across the street and was itself a vestige of an older neighborhood, shuttered in 2021 and was razed to make way for an ongoing 68-story condo development.
To be sure, the M&J space, addressed at 1008 Sixth Ave. near West 37th Street, may not be much of a candidate for a major makeover itself. It sits inside a sleek high-rise developed in 2001 on a site that previously housed textile tenants, so its structure is already more symbolic of a new era than the past.
And if lawmakers do pass Adams’ City of Yes plan, which would make it easier to convert commercial sites into housing, more wrecking balls could start swinging in the neighborhood. Developers will also likely come knocking if o cials green-light a related proposal to rezone the district from a manufacturing enclave to a residential one, a move that already has the support of the Garment District Alliance, a landlord-centric advocacy group. e “Garment District is dead” voices may have a fresh data point with M&J’s closing.
Why exactly the popular M&J is shuttering is unclear. e store has long had a regular roster of blue-chip corporate clients, such as Ralph Lauren, Betsey Johnson and the Jim Henson Co., according to its website, as well as frequent celebrity shoppers, such as actress and fashion entrepreneur Sarah Jessica Parker. If any fashion business could hang on in Manhattan, it would seem to be this one.
For his part, Michael Cohen, the store’s owner, isn’t revealing much. “It is a di cult time, and we are doing the best we can,” he said in a brief phone interview last week, though he declined to say what will come next for his store or its real estate.
The Garment District once had item-speci c subdistricts. Sellers and storers of furs were in the West 20s, while hat-makers, which once numbered in the dozens, clustered near Sixth. In fact, the modest limestone midblock structure at this address, the Millinery Center Synagogue, served as a house of worship for that industry’s workers. Founded in 1934 in borrowed space at 1011 Sixth, the shul, designed by Art Deco architect H. I. Feldman, opened its doors at No. 1025 in 1948. At rst the narrow 19-foot-wide, 130-parishioner space reportedly was not intended for regular services but as a place to say prayers for the dead, though it later evolved into a more traditional synagogue. It continues to operate today, even as the Garment District’s presence on Sixth seems to have become as much of an anachronism as men who wear formal hats.
This humble prewar mixed-use mid-rise is the type of structure that was once ubiquitous in the neighborhood but is now increasingly rare — the buildings that M&J lost in the 1997 blaze looked similar. The Pennsylvania-based Morgenstern family appears to have owned the 6,500-square-foot structure since the mid-1990s and paid off the mortgage on the site about a decade ago, according to the city register. Leasing its ground oor is Bryant Market, a deli, and on its ground oor is Spirit Lab Yoga, an exercise studio. The four-story building, which likely has untapped air rights, is worth $5.6 million according to city of cials, a recent high for the property. When the city rebranded Sixth as the Avenue of the Americas as a unifying gesture in the wake of World War II, a lamppost in front of No. 1017 gained a large medallion adorned with the colorful coat of arms of a nation in the Western Hemisphere (tax photos are blurry as to which exact country it was). But it and others gradually vanished through the years after road projects, and the initial total of 300 medallions on the avenue had dwindled to just 18 by 2023, when Adams began restoring them en route to a 172-medallion goal. The new marker now dangling outside No. 1017 is a tribute to Suriname, even as “Sixth Avenue” endures as the road’s handle.
Reinvention came a decade ago to this 23-story, 250,000-square-foot prewar structure, which housed glove companies and other apparel businesses before its owner, 1001 Sixth Associates, made over the site as a more traditional of ce building in 2012. The owner is a rm linked to the late Alvin Schwartz, an associate of the powerful developer Harry Helmsley who took over much of Helmsley’s portfolio after he died in 1997. Schwartz replaced windows, upgraded elevators and created a new lobby, which seems to have helped the building attract law rms, ad agencies and tech companies. Ten of ce spaces were available late last month, including ve suites on the 11th oor and three fulloor berths on levels 14, 16 and 20, according to ABS Partners Real Estate, which manages the property. Marvelous by Fred, a two-level, three-year-old pastry and sandwich shop that glitters with a tall chandelier, occupies a storefront.
Cohens also own this four-story, 20-foot-wide prewar building, though they are not related to the M&J family of the same name. Stanley & Son Fine Jewelers, founded in 1950, occupied most of No. 1006 from the 1960s to 2006, when the business relocated to the second oor and the sidewalk-level space welcomed a liquor store. In 2023 the jeweler moved again, this time relocating to nearby 1384 Broadway, which allowed the liquor store to take its former berth. In 1979, after years of being a tenant, Stanley Cohen purchased No. 1006, according to the city register. His three children took over the space by way of a limited liability company in 2019, though son Paul Cohen, a jeweler himself, died earlier this year, an obituary shows. The 2,200-squarefoot structure, which also contains two apartments, is worth $1.7 million, according to the city, though of cial appraisals tend to be lower than actual sales values. The building was worth $2.1 million in 2021, records show.
Perhaps no project did more to physically alter this part of the Garment District than the 43-story tower at this address, a 2006 undertaking by the developer G Holdings that stacks 10 oors of condos atop a 360-room Residence Inn by Marriott hotel. The massive 241,000-square-foot structure, which replaced a low-slung parking garage and other modest buildings, takes up the entire block save for two parcels, which it wraps around. One of those plots contains the Millinery Center Synagogue, a longtime house of worship for textile workers at No. 1025. The other site, No. 1027, features a gift shop. The least expensive unit for sale in late September in the building’s condo section, which goes by the name Bryant Park Tower and uses the address 100 W. 39th St., was a one-bedroom that has bounced on and off the market for years asking $880,000, StreetEasy shows. According to the city register, the owners appear to have paid a similar amount, $860,000, when they bought it from the sponsor in 2006.
A neo-Gothic former hat factory in an area known for its headwear, this 13-story terracotta-and-brick edi ce appeared to be in dire straits in January 2009 before the developer Savanna swooped in to acquire its deed in lieu of foreclosure, a deal valued at $44.9 million, according to the register. But the rm didn’t hold onto the 121,000-square-foot site for long. In November 2009 it ipped No. 63 for $29.5 million to a team led by the developer Aini Assets, which then transformed the prewar structure into the 200-room Re nery Hotel, which opened in 2013. In 2021, the ownership group, which also includes costumer jewelry importer Raizada Vaid and Highgate hotels executive Kurien Jacob, sold air rights above the through-block site for $11 million to developer Wei Hong Hu, who is now building the 42-story Xadia Hotel at 58 W. 39th St. It is scheduled to open next year. Over the summer, meanwhile, the Re nery’s landlords closed on a $70 million re nancing package with Morgan Stanley. A rooftop bar offers Empire State Building views.
In the mid-1990s, M&J Trimming owned three sites on the west side of Sixth Avenue between West 37th and West 38th streets. The mothership for ribbons, rhinestones and lace was at No. 1008, where a Five Guys serves burgers today, even though M&J’s owner, the Cohen family, has retained control of the building. Closer to West 38th was a button annex and home-furnishings store, though a major re wiped out both sites in 1997. Afterwards, the Cohens partnered with developer The Gotham Organization to rebuild the block, seemingly aware the site could accommodate a much larger structure than what had been there for decades. After tacking on other parcels and some air rights, the team in 2001 unveiled a 47-story project with apartments, of ces and retail space. Its residential portion, with 373 market-rate and affordable units, is called Atlas New York. M&J, meanwhile, became owner of the wide retail commercial condo along Sixth, which is divided into several stores. Its main store then relocated from the Five Guys building a few feet to the north, into the space where it is today, though somewhat confusingly both Five Guys and M&J use the same numerical address. M&J, which Michael Cohen heads, will close the store this fall. The family’s other retail berths in the building seem to have been hit with high turnover. Tenants that have come and gone after short stays, based on Google Street View photos, include a Wasabi Sushi and Bento branch, a GNC vitamin store and the jewelry supply shop Genuine Ten Ten. Meanwhile, the home-furnishings shop once located on the block, Samuel & Sons, which is also owned by the Cohen clan — other family members in the business include Michael’s father, Samuel Cohen, and his brothers, Hymie and Joseph Cohen — does business today at a new East Side site, 983 Third Ave.
By Amanda D’Ambrosio
It’s not easy being the city’s doctor.
City Health Commissioner Dr. Ashwin Vasan said last month that he’ll resign by the end of the year, citing personal reasons. e announcement, which came just days before Mayor Eric Adams was indicted by federal prosecutors on criminal charges, means that one of the most prestigious jobs in public health will soon be seeking candidates.
e high-pro le job has seen an unusual amount of churn in the years following the pandemic. Vasan’s resignation marks the third city health commissioner in recent history to leave their post after serving for less than three years. While some turnover in the role is expected as administrations change, health commissioners must perform a particularly challenging balancing act: keeping the biggest city in the U.S. healthy while adhering to the mayor’s priorities.
Every mayor comes with a di erent set of policy priorities and budgetary constraints — and it’s up to the commissioner to become adept at guring out where public health ts in, said one former city
Health Department o cial, who requested anonymity to speak candidly about the dynamic.
For example, Adams’ policy agenda of public safety bleeds into a top public health concern: severe mental illness. One of the mayor’s leading initiatives was a directive that relied on police o cers and others to involuntarily transport people with severe mental illnesses to psychiatric facilities — a controversial strategy that has come to de ne his approach to the mental health crisis. Vasan, who has a background in mental health, has not spoken out against the mayor’s tactics, but has promoted boosting housing, community-based care and access to psychiatric beds in hospitals to address severe mental illness.
e challenging relationship between mayors and health commissioners is perhaps best illustrated by the pandemic, when public health o cials were thrust into a new stratosphere of public scrutiny, forcing them to contend with backlash from stay-at-home orders and misinformation about new vaccines.
“Covid-19 certainly raised the pro le of the role of commissioner, as it did for public health ocials all over the world,” Vasan said
in an emailed statement to Crain’s “ is increased notoriety has come with additional demands of the people who have the privilege of serving as commissioner, and it has certainly demanded much of me, and my family.”
Relationships between heads of government and commissioners took a hit as mayors and governors worried more about what would get them re-elected than what empirical evidence was necessary to keep the public safe, said John Kaehny, executive director at the government watchdog group Reinvent Albany.
“ eir world is not empirical,” Kaehny said. “ ey are not evidence-based, they are special-interest based.”
ose competing priorities have led to departures. Dr. Oxiris Barbot, who served as city health commissioner from 2018 to 2020, abruptly left o ce after the rst wave of the pandemic because of escalating tensions with former Mayor Bill de Blasio. e clash reportedly stemmed from the former mayor’s decision to move a vast citywide contact tracing program to detect
infections — a core function of the Health Department — to the city’s public hospital system.
Barbot expressed “deep disappointment” in the de Blasio administration’s handling of the pandemic in a resignation email reported by the New York Times, stating that “the health department’s incomparable disease control expertise was not used to the degree it could have been.”
Barbot was named acting health commissioner after the departure of Dr. Mary T. Bassett, who served under de Blasio from 2014 to 2018.
Bassett left for a faculty position at Harvard, and was appointed by Gov. Kathy Hochul to lead the state Department of Health in 2021 — a position she stayed in for just over a year.
Within a day of Barbot’s resignation, she was swiftly replaced by Dr. Dave Chokshi, who at the time led population health at New York City Health + Hospitals. Chokshi served as commissioner for two years, vacating the post when Adams was elected mayor and brought on Vasan to lead the agency.
Recent health commissioners have had less autonomy to pull o a robust public health agenda compared to those under Mayor
Michael Bloomberg’s administration — often regarded as the “glory days” of public health, the former Health Department o cial said. Bloomberg launched a series of public health initiatives ranging from anti-obesity e orts to a ban on smoking that led in part to reduced rates of tobacco use among city residents.
“Bloomberg was and remains a public health mayor,” they said. “No one else even gets close.”
Despite leadership changes at the top, thousands of city health workers keep the Health Department’s programs — and mission — a oat, said Dr. Isaac Weisfuse, a former deputy health commissioner under Mayors Ed Koch, David Dinkins, Rudy Giuliani and Bloomberg. “ ey o er the continuity that sometimes leadership can’t,” he said.
Ethan Geringer-Sameth contributed reporting to this story.
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Is it Andrew Cuomo’s time to shine?
e former governor, who resigned in disgrace in 2021, is strongly considering a run for mayor, now that Eric Adams has been indicted. If Adams resigns, a special election will be triggered, and many think Cuomo is sure to enter it. is might be his best opportunity for redemption. He should not be underestimated. He enjoys universal name recognition in New York City and lingering goodwill from his Covid-era press conferences. As the governor for more than a decade, he can go to voters and promise he’ll know how to run a municipal government that has apparently sunk deep into the muck of corruption.
Black and Latino voters who supported him throughout his gubernatorial campaigns.
A special election would be a three-month sprint, favoring a candidate like Cuomo. His opposition would have much less time to make themselves known and attack him simultaneously. e electorate would not be limited to Democrats, which could theoretically bene t him with more moderates casting votes.
Does all of this add up to a Cuomo victory? at’s far less clear. He’d be a front-runner, but not a vaunted one who could sprint away from the eld of Democrats. He has real weaknesses that could come into sharp relief very soon.
e real estate and business elites who help to decide the course of elections could warm to Cuomo, along with certain labor unions. If Cuomo’s main opponent is the progressive Jumaane Williams, who in this scenario would be the interim acting mayor, the business class could coalesce behind the ex-governor. So could some of the working class
ere is the nature of the sexual harassment scandal that felled him. Even if voters have moved on from that — if the MeToo era has cooled — there are his Covid scandals. e millions of dollars he accepted for a pandemic memoir as thousands died from the virus. His decision to send Covid patients back into nursing homes, fueling carnage there.
A race to replace Adams would
be, by its nature, a change election. Voters will cast about for alternatives to scandal and disgrace. Cuomo’s long tenure in government was tumultuous. His closest aide, at one point, was indicted on corruption charges. ( e Supreme Court, narrowing the de nition of corruption, eventually overturned that conviction.)
New Yorkers might prove wary of Cuomo once his opponents begin to reeducate them on his past. In a ranked-choice voting election, his potential rivals — Williams, City Comptroller Brad Lander, former City Comptroller Scott Stringer, and at least two state legislators — would be incentivized to unite and attack him repeatedly. He would be the focus of the election, especially if he’s a polling leader at the outset.
Early front-runners in mayoral elections tend to be vulnerable. Ask Christine Quinn or Andrew Yang. In a ranked-choice voting election, polarizing candidates can struggle. ere will be voters who simply refuse to put Cuomo on their ballots.
Another unsettling parallel for Cuomo is Eliot Spitzer. Former Gov.
Spitzer, who resigned in a prostitution scandal, attempted a comeback ve years later in a race for city comptroller. He polled far ahead of his rival, Stringer. He looked, for weeks, like a lock to win. And then, as Stringer took aim, he faded. Stringer had the help of a labor and business establishment that might be less likely to turn on Cuomo. Still, the criticism can take its toll. If Cuomo, in his early polling, has high negatives, it will be a challenge to bring them down. e nal challenge is money. As governor, Cuomo was a proli c
fundraiser. He shouldn’t have trouble here, except that the city matching funds system rewards smaller dollar donations that he never had experience chasing. He’s used to a hedge funder or developer sending him tens of thousands of dollars in one shot, as the statewide system allows. He won’t be able to do that now. Cuomo can win. His victory — and even his entrance into the race — cannot be treated as a fait accompli, though. Not now, anyway. Ross Barkan is a journalist and author in New York City.
By Amanda D’Ambrosio
Mayor Eric Adams has said he has no plans to resign after his indictment by federal prosecutors on ve counts last month. But if that changes or Adams is removed from o ce, Public Advocate Jumaane Williams is rst in the mayoral succession line. If Williams assumes the role, the city’s health care system can expect more of the progressive health e orts he has championed thus far.
If Williams becomes mayor, the city may see a greater focus on investments in community mental health programs, alternatives to police interventions and public health initiatives in low-income communities during his tenure, which would last until at least January 2026.
Williams, outspoken about seeking therapy for his own mental health challenges, has emphasized the importance of mitigating the city’s mental health crisis. e public advocate has supported funding mobile crisis teams, which canvass city streets to get New Yorkers into treatment, and
respite centers, which o er shortterm residences as an alternative to hospitalization for people in crisis.
One of the public advocate’s main policy platforms is reducing police intervention in mental health emergencies. at includes expanding the B-Heard program, a pilot program that sends EMTs and social workers to mental health-related 911 calls instead of police. Adams pledged last year to execute a citywide expansion of the program, which operates in only 31 of the city’s 77 police precincts. But that expansion came to halt earlier this year due to funding constraints — a pause that Williams has called out.
“If we want an e ective alternative to police responses to people in mental health crises, we must be meaningfully prioritizing resources for that response,” Williams said during a City Council oversight hearing on the B-Heard program recently. He said the city should be directly funding the
public health system to sta social workers, mental health professionals and peer-support sta to the crisis response teams.
Adams, too, has made the city’s mental health crisis a cornerstone of his agenda, albeit via the opposite approach — one that has relied heavily on policing. e mayor unveiled a controversial plan in November 2022, directing police o cers, emergency medical responders and outreach workers to involuntarily transport people to hospitals if they showed signs of severe mental illness.
Williams criticized the plan, telling the news station NY1 that it had a “lack of clarity” — except where the mayor pledged to increase involuntary removals. He said the plan did not provide information on funding for mobile crisis teams, drop-in crisis centers and other facilities “that will actually provide the care that’s needed.”
Williams has also promoted efforts to safeguard reproductive health and birth equity. e public advocate, a nonvoting member of the City Council, signed on to a package of city bills in 2022 to address stark racial disparities in maternal morbidity and mortality. He sponsored a resolution that
created a maternal bill of rights in an aim to reduce discrimination toward pregnant people, calling birth equity an “under-acknowledged and under-addressed” public health crisis.
The public advocate also sponsored legislation passed by the council earlier this year to increase city-run testing sites for sexually transmitted infections in low-income neighborhoods, where rates of illnesses including chlamydia and gonorrhea have historically been roughly double that of high-income areas. He sponsored the bill alongside Councilwoman Pierina Sanchez, who represents parts of the Bronx.
Adams, meanwhile, is facing growing calls for him to step down, and it’s not clear whether Gov. Kathy Hochul will remove him from o ce. If either of those scenarios play out, Williams will be sworn into the job and required to call a special election within three days of becoming mayor under the City Charter. e election is required to take place before the end of this year.
By Aaron Elstein
e troubled real estate powerhouse RFR may soon lose control of the Chrysler Building, a jewel of the New York skyline.
Cooper Union, which owns the land under the landmarked tower, said RFR hasn’t paid rent for its ground lease since May. e school said it planned to terminate the lease Sept. 27 and take custody of the building.
“Control of the Chrysler Building will transfer to Cooper Union,”
RFR says it plans to ght to keep the New York landmark.
said John Ruth, vice president for nance at Cooper Union, in a statement provided to Crain’s “We are engaging a world-class property management rm, Cushman & Wake eld, to ensure a smooth transition for our tenants.”
RFR led a lawsuit Sept. 26 in an e ort to prevent Cooper Union from terminating its lease, suggesting Cooper Union’s takeover may not be a done deal.
A step to a resolution
“RFR remains committed to Chrysler Building for the long term,” the rm said. e lawsuit “is a procedural step in the successful resolution to the groundlease between RFR and Cooper Union over the coming weeks.”
In a subsequent statment, the rm said: “While RFR prefers to resolve this matter amicably, and privately, if possible, it is also prepared for the alternative, if necessary.”
Losing the Chrysler Building would contribute to what’s already been a terrible, horrible, no-good, very-bad year for RFR chief Aby Rosen. His Austrian partner in the Chrysler Building is insolvent, and tenants complain of broken elevators, mice and dirty drinking water.
Elsewhere in the city, lenders
and city agencies have sued RFR for missed loan and tax payments at 17 State St., 522 Fifth Ave. and 90 Fifth Ave. e jewel in Rosen’s crown, the Seagram Building, carries nearly $1 billion in mortgage and mezzanine debt that must be re nanced next year. RFR controls nearly 3 million square feet of commercial space.
“He’s going to lose stu . He’s de nitely going to lose stu ,” one longtime broker told reporters C. J. Hughes and Eddie Small last
month. “I wouldn’t bet against this guy, but I wouldn’t want to be him right now because he’s got a lot of buildings that are underwater.”
On Sept. 26 Rosen’s rm sued Cooper Union, alleging the nonpro t didn’t negotiate in good faith and was “clearly oblivious to the new nancial realities.” e school-landlord “unreasonably insisted upon draconian terms” such as demanding “millions of additional dollars” before consid-
ering lease modi cations.
On Sept. 27, a lawyer for Cooper Union, Steven Klein, sent a letter to RFR obtained by Crain’s explaining why it would terminate the lease.
“Your withholding of $21 million is not acceptable to us,” the letter reads. “You have repeatedly misrepresented your situation and have been unable to raise the capital necessary…despite your assurances that you had things under control.”
LEARN MORE AT
During a time when many New Yorkers struggle to nd a ordable places to live, as much emphasis must be placed on preserving existing options as thinking of new solutions.
In this week’s cover story, senior reporter Aaron Elstein explores the phenomenon of ground leases — dirt that has a different owner than the building above.
Barbara and Lou Grumet, both 80, purchased a co-op at Carnegie House in 2011 to be closer to Mount Sinai West, Weill Cornell Medical Center and NYU Langone Health. e building’s ground lease will reset in March and the new holders have proposed to raise the rent from $4 million to $25 million a year. e move would potentially bankrupt the building and force many residents, who would shoulder the costs, to nd another place to live.
e story of Carnegie House residents highlights an urgent issue that lawmakers cannot ignore: allowing ground lease owners to exponentially increase rent on land under co-ops threatens one of the last pathways to a ordable homeownership in the city.
Such arrangements have historically
played a signi cant role in the city’s real estate landscape, initially providing a stable revenue source for landlords while allowing developers to build without tying up capital in land purchases. But those dynamics shifted dramatically as property values soared in desirable neighborhoods. Ground-lease co-ops usually cost buyers less but come with higher maintenance
costs. at’s thenancial situation most buyers thought they were getting into, not that their ground rent would skyrocket. Once a reasonable arrangement, ground leases have enabled such increases that can cripple co-op residents.
While plenty of commercial buildings have ground leases, this is not the kind of nancial engineering that should be allowed for co-ops.
Lawmakers must step in to regulate these increases and provide essential protections for approximately 25,000 New Yorkers who have invested their lives and savings into homes with ground leases. Lawmakers should consider regulation that stops the use of ground leases under co-ops and lay out a reasonable phase out
plan for existing ones that keeps residents in their homes without shortchanging the land owners. Some potential ideas include facilitating a fair appreciation or sale back of ground ownership to the co-ops, perhaps incentivized by state-subsidized low-interest loans.
Sen. Liz Krueger’s proposed legislation, which aimed to limit ground lease increases to 3% annually, is a good start. e bill did not advance after gaining approval from the Senate Judiciary Committee due to opposition from the Real Estate Board of New York; the powerful trade group argued that the bill would result in unlawful government interference with privately negotiated contracts.
A housing crisis that leads to increased displacement contributes to a cycle of outmigration and diminished local economic activity. Attainable homeownership like co-ops ensures economic diversity that is vital for the business community and fosters a resilient economy capable of withstanding rough nancial times. To fortify a stable housing market, it’s equally important to preserve current solutions than to build new units.
I READ YOUR REPORT, “New York’s Nonprofit Shadow Government” (published on Sept. 16), which claims that the city’s nonprofits operate without sufficient oversight. While it’s true that there are always some bad actors in any sector, portraying the entire nonprofit field as largely unregulated is both inaccurate and misleading. In reality, most nonprofits maintain high standards of transparency and accountability. As a nonprofit leader with 25 years of experience, I can attest that New York City nonprofits – many of which are the backbone of our community –are held to rigorous standards. As the third largest employer in the U.S., the nonprofit sector is often the first
responder to the city’s most pressing challenges, from food insecurity to affordable housing and child care. Nonprofits have built deep relationships within the communities they serve, fostering trust and expertise that is essential for the delivery of critical services.
Despite these indispensable contributions, nonprofit contracts remain chronically underfunded, and city payments on those contracts are often woefully delayed. This forces nonprofits to extend interest-free loans to the city — sometimes in the millions — while continuing to administer essential services on behalf of the city. No one sector can solve these chal-
lenges alone. Rather than assigning blame, we should be focusing on cross-sector collaboration. It is in the city’s best interest to ensure that nonprofits are successful in their mission to support millions of New
Yorkers every day. That means fully funding contracts, paying them on time, and giving nonprofits a true seat at the decision-making table. By doing so, we can create stronger partnerships that benefit all New Yorkers.
“No one sector can solve these challenges alone. Rather than assigning blame, we should be focusing on cross-sector collaboration.”
PERSONAL VIEW
New York City is still the go-to destination for young professionals. It needs to work to retain its crown.
It’s easy to take New York City’s status as the premier destination for young job seekers for granted. Data from Handshake, the college and recent graduate career platform, shows that New York remains the number one location where new graduates are applying for jobs. But these young workers are entering a job market that is increasingly struggling to accommodate them.
ere are now nearly 140,000 young New Yorkers who are neither in school nor employed— the majority of whom are from historically underserved communities. ose fortunate enough to nd employment often land in roles that hardly allow them to make ends meet in one of the world’s most expensive cities. Data shows that, across the country, nearly half of the millennial and Gen Z workforce are in low-paying frontline roles with little opportunity for growth. In New York, more than one-third of the city’s frontline workers are younger than 34. e mismatch between New York’s job o erings and the aspirations of its young workforce has left the
city’s reputation as the ideal landing spot for budding professionals in a precarious position. About 40 percent of millennials now say they are contemplating leaving New York. As Gen Z rapidly becomes a dominant presence in the workforce, it’s crucial that the city’s businesses work to avoid a similar exodus. ey will need to evolve into employers that actively foster environments that align with the values and aspirations of this new generation.
developing and executing strategies that bene t workers, businesses and communities.
Today’s young workers seek — and deserve — a workplace that prioritizes economic opportunity. ey want to work for companies that o er an equitable way into, and up within, quality career pathways. e most diverse generation in U.S. history, Gen Z prefers organizations that uphold their principles and assist in their professional growth. For these workers, compensation extends beyond salary considerations. ey desire employment that offers balanced work arrangements, fosters meaningful connections, encourages continuous learning, and embraces technology.
Smart companies have already started
to adapt. For example, JPMorgan Chase, which is headquartered in New York, delivers targeted education and training opportunities to its 150,000 U.S. employees— from front-line bank sta to corporate executives. To customize these services for its increasingly younger workforce, the company consulted a broad spectrum of employees to learn more about their daily challenges and preferences in education. ese insights enabled JPMorgan Chase to develop technology-driven bene ts that resonate with the needs of their digitally savvy workers.
Prioritizing — and acting upon — the perspectives of employees and emphasizing inclusion and a belonging are essential. Gen Z highly values workplaces that respect their workers and where employees can actively shape the world of work around them. To this end, JPMorgan has created several business resource groups where employees can engage, share perspectives, and build networks with workers who share similar experiences and backgrounds. More than half of its workforce across 53 countries participates in these groups.
Meanwhile, Salesforce, another corporate giant with a signi cant presence in New York, has developed an advocacy and employee listening program called “ e
Warmline.” is program is designed to assist employees in navigating their careers, foster a sense of belonging, and facilitate meaningful conversations. In one pilot study, Salesforce employees who utilized e Warmline saw a 33 percent greater sales quota attainment rate than those who did not participate. By 2030, Gen Z will constitute one-third of the U.S. workforce. If New York City intends to remain the top choice for new-career professionals, companies will need to intensify their e orts to not only attract but retain this rapidly expanding demographic. New York’s future as a hub for young talent hinges on its ability to meet this challenge.
Now is the time to invest in the hotel industry and
Just one year after lawmakers succeeded in adding needed restrictions to New York City’s short-term rental market, the same special interests that sought to eliminate jobs and housing for pro t are back. Now, Airbnb and other similar companies are trying to make the case that higher hotel costs over the last year are caused by the legislation, and that is reason to go backward and repeal the city’s law.
ere’s only one problem with their argument: basic economics.
others from our overloaded shelter system. With supply down that much and tourism back to pre-Covid levels, it is no wonder prices are higher. Reversing the short-term rental law will not a ect that.
e short-term rental companies claim hotel prices have gone up because fewer visitors can rent their rooms in private buildings. In reality, the managing boards of many private buildings have already banned short-term rentals for security concerns, signi cantly limiting the number of rooms Airbnb and others can add to the market. And that small amount would not have enough of an impact on supply to drive down prices by satisfying increasing demand.
Vijay Dandapani is the president and CEO of the Hotel Association of New York City.
Instead, by far the most signi cant reason for the low supply of available rooms in New York is the hotel industry’s commitment to helping alleviate the migrant crisis. Nearly 20 percent of hotel rooms in the city are being used to house asylum seekers and
In fact, a report out last month by AirDNA, a market research rm, stated that recently “shortterm rental prices increased nearly 20%.” Quite evidently the rooms provided by Airbnb are not a cheap option.
At the same time, the average monthly rent on regular apartments has also skyrocketed postCovid. Repealing the new shortterm rental rules would almost certainly exacerbate that problem and lower our already razor-thin 1.4 percent city-wide home vacancy rate by removing units from the general market and e ectively turning them into businesses.
We can’t forget why the city decided to step in and regulate short-term rentals in the rst place — and why a return to the lawless market would be a disaster for New Yorkers.
Local Law 18, which city lawmakers enacted in 2022, was passed explicitly to shut down the regulatory arbitrage exploited by short-term rental platforms. Airbnb and other companies provided little oversight of their users, leading nearly 14,000 New
Yorkers to le complaints about unsafe and illegal conduct happening in shortterm rentals in their buildings.
e companies also provided an opportunity for wealthy New Yorkers and other opportunistic commercial operators to buy up properties and price residents out of their own neighborhoods — shrinking the housing supply even further and turning residential homes into makeshift hotels.
Unlike hotels, Airbnb diverted millions in taxes that visitors would have provided to the city — which then went straight into the companies’ pockets. At the same time, thousands of hotel workers’ jobs were put at risk.
Despite Airbnb’s promises, short-term rentals are a decidedly worse alternative to the hotel industry. New York’s hotels are safe, heavily regulated and contribute to the city’s nancial health. Airbnb is none of the above.
e company made millions o of New Yorkers while it claimed to help the average homeowner. ey were wrong then, and their e ort to repeal legislation banning them would only hurt New Yorkers again.
So how do we lower hotel costs to ensure we maximize our economic potential as a tourist destination? Lower taxes. New York hotels pay double the property tax paid in other major markets, which is reected in room costs. e city also has continually raised the hotel occupancy tax
that visitors pay to 5.875%, which is now also the highest in the country. Additionally, visitors pay state and city sales taxes of 8.5% as well as a $2 “room tax” convention center fee of $1.50 per room per day. If the city lowered these rates, it would lower prices for our guests and make New York much more competitive in the global tourism market. at would also mean more jobs for New Yorkers and a better overall economy for our city. Even tax revenue would likely increase because as many more rooms would be occupied. Supporting our hotel industry is by far the best option for making New York a ordable to visitors and New Yorkers. Let’s invest in that future for our tourism industry and not revert to the past we rightly left behind.
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Global business advisory rm EisnerAmper announces a combination with Los Angelesarea CPA rm KROST CPAs. Servicing the Los Angeles area since 1939, KROST has eight partners and a staff of more than 100 professionals across of ces in Los Angeles, Woodland Hills, and Pasadena. KROST is full-service accounting, tax, and advisory rm to the hospitality, technology, nancial services, manufacturing, real estate, sports and entertainment, nonpro t, and other sectors.
By C. J. Hughes
Jay Brown, who co-founded the entertainment powerhouse Roc Nation alongside billionaire hiphop entrepreneur Jay-Z, has picked up a pad in SoHo.
e home, a full- oor condo unit at 50 Wooster St., traded for $10.3 million, according to a deed that appeared in the city register last month. Laurence Jay Brown, which is Brown’s birth name, signed the deed on behalf of the listed purchaser, e RMP Trust.
Tucked in a prewar complex on a cobblestone block between Broome and Grand streets, the 4,600-square-foot spread features four bedrooms, three baths and direct elevator access, as well as many of the kinds of details associated with the neighborhood’s historic lofts, such as hardwood oors, beamed ceilings and exposed-brick walls. ere’s also a small terrace o the open- oor-plan-style living and dining room combo.
According to StreetEasy, the sellers, Leslie and Timothy Hartzell, rst listed the home in June 2022 for $12.5 million and marketed it on and o for the past two years, a time of sluggish sales owing to high interest rates for home loans. e Federal Reserve’s rate cut last month, however, is expected to improve conditions.
At $10.3 million, the SoHo unit, which went into contract July 15 and closed Sept. 19, according to the deed, traded for 18% less than what the Hartzells sought.
In December 2022, a couple of months after the team of SL Green Realty Corp. and Caesars Entertainment unveiled a plan to build a casino at 1515 Broadway in Times Square, Roc Nation joined the partnership. A casino would
supposedly lead to $166 million in new spending in the neighborhood, the team has said.
Gaming license sought
But the group is competing for the gaming license needed for such a casino with several other powerful and well- nanced groups, including one led by the developer e Related Cos., which
TUESDAY, NOVEMBER 12
8:30-10 a.m.
is seeking to build one in Hudson Yards. A state panel is expected to decide on the license late next year.
Last month Roc Nation pledged $15 million for after-school and other community programs in Times Square-adjacent Hell’s Kitchen if its bid is approved.
In 2008 Brown, Tyran Smith and Jay-Z, whose real name is Shawn Carter, co-founded Roc Nation
with a $50 million investment from the concert giant Live Nation. Today, in addition to being a home for musicians such as Rihanna, Alicia Keys and Megan ee Stallion, the company also has a robust talent agency that represents basketball, baseball and even broadcast news stars. e privately held rm, for which Brown serves as CEO, also has a VC arm, Marcy Venture Partners. In 2019 Roc Nation opened a 60,000-square-foot o ce, its New York headquarters, on West 26th Street in Chelsea. It also has o ces in London and Los Angeles. Mallory Bogard, the Serhant agent who marketed the home, had no comment by press time, and Jana Fleishman, a Roc Nation spokeswoman, did not return an email.
Public Advocate Jumaane Williams is a self-described democratic socialist whose of ce is likely best known for publishing a list of the 100 worst landlords in the city each year. Although Williams, through his policies, has done little to endear himself to the real estate community during his career, not everyone in the industry is concerned about what will happen if he becomes the acting mayor if Mayor Eric Adams resigns or is removed. “ I think the most important thing over the next year is just stability and lack of chaos,” said Eli Weiss, principal
at the New York developer Joy Construction. “I’ d be less concerned about long-term overall real estate policy than I would be about the city continuing to function. T he garbage still has to be picked up."
N ew Yorkers of all stripes have been rapidly trying to familiarize themselves with the mayoral line of succession in light of the stunning indictment of Adams on charges including bribery and wire fraud. Although Adams has so far insisted he will stay on as mayor, he is facing immense pressure to resign, and if that happens, Williams would at
M UCH OF THE IMPACT Williams would have on real estate or any industry depends on how long he ends up serving as mayor. He aggressively denied rumors he would run for the of ce in 2021 and has shown little interest in it since then. But actually having the authority could make him decide he wants to keep it, the former councilman said. He did not see this as a good outcome for New York’s real estate world.
“It’s going to send a message to the business community that New York has fallen into hands that are to the left of Bill de Blasio,” he said. “Yeah, he’s going to make gestures toward development, but not mixed-income development, not market-rate development, so you can’t count on him.”
But others downplayed these fears. The current councilman who spoke with Crain’s said other elected of cials would probably encourage Williams to ensure the city runs smoothly amid such turmoil rather than make aggressive moves at any agency, at least until the special election.
“There will likely be a push for the public advocate to act as a careful steward for the of ce until the voters pick a new mayor,” he said.
W ILLIAMS COULD ALSO have a chance to make an impact on real estate through his appointments. The number of of cials leaving the Adams administration has been a major point of concern, and Adolfo Carrión, Housing Preservation and Development commissioner, is rumored to be eyeing the exit as well, although a City Hall spokesman denied this. Appointing a new HPD commissioner in particular could give Williams a chance to leave a mark on the city's housing policies.
Cea Weaver, a leader at the tenants’ rights group Housing Justice for All, listed three additional things Williams could do easily and quickly even if he stays in the mayor’s seat for only a few months: Implement the
least temporarily ll the role until a special election for the remainder of Adams' term.
W illiams, whose of ce did not respond to a request for comment, has been a frequent advocate for higher taxes on the wealthy and signi cantly stricter rent protections, among other progressive policies. But the actual impact his ideology would have on his stint as mayor, if it comes to that — along with how much of an opportunity he would even have to implement policy — is still up for debate.
T HE FATE OF THE PACKAGE of housing reforms in Adams' City of Yes initiative remains one of the biggest open-ended questions for his administration and for a potential Williams one. There were already worries about whether the mayor's legal issues would sink the proposal before his recent indictment, and now its path through the City Council is even murkier.
The City Planning Commission voted 10-3 in favor of the plan last month, moving the nal hurdle to the 51-member legislative body, which will vote on the initiative by the end of the year. Williams could thus take over as mayor with its passage still uncertain and would then need to determine what role, if any, to play in the remaining negotiations.
But one City Council member who spoke with Crain’s on the condition of anonymity to be more candid is not concerned about getting City of Yes over the nish line no matter who is in of ce. Department of City Planning Director Dan Garodnick is the architect of the ambitious housing initiative, and he has been more than competent, the council member noted.
“The mayor hasn’t himself been deeply involved,” he said. “And most importantly, it’s at the end of the process, so it's hard to pull it now.”
Another prominent city developer, who also spoke on the condition of anonymity, said that if Adams does resign, City of Yes would be Williams' most signi cant and likely only real initiative on the housing front, given that his temporary term would last for only about 80 days, according to the rules of the city charter. Once he’s sworn in as interim mayor, he would have to set the date for a special election within three days.
“He has some friends in the real estate community and has been in and around city government for a long time,” the developer said of Williams. “I don't see it as Armageddon.”
low-income housing voucher expansion law that Adams is feuding with the City Council over, fully lift a hiring
freeze on city agencies to get more workers into HPD speci cally and replace seven of the nine members on the Rent Guidelines Board whose terms have expired.
“I’m really con dent in Jumaane,” she said. “If he became mayor, he would do a great job.”
One former councilman, who also requested anonymity, said a Williams administration could also decide to let “ the dogs of war loose on some of the worst landlords. ” HPD just announced Sept. 26 that notorious landlord Daniel Ohebshalom , a frequent name on the public advocate ’s worst landlords list, was headed back to Rikers Island over his failure to x violations at two of his buildings, a drastic move that could be more common under Williams, the former councilman said.
Jack Grieve
Turns out some U.S. cities’ pandemic exoduses were not as drastic as they seemed. Plenty of people did pack up and move from many of the country’s major metropolitan areas, but with three years hindsight, it appears the eeing — at least for some cities — was overhyped.
e same cannot be said for New York. Here, the pandemic exodus really was intense, at least in a few key ways. Net migration out of the city doubled during the public health emergency, and some of the New Yorkers who jumped ship did so with their pockets full of cash.
at’s according to a recent Brookings Institution analysis of IRS data on where people led their taxes from one year to the next. e report suggests the longterm economic and population impacts of New York’s exodus may
overhyped.
really was bad.
ic and post-pandemic-onset periods,” the report said.
For New Yorkers on the move, Miami was by far the top destination. No two cities saw a bigger increase in the net numbers of people moving between them, according to IRS data.
Florida long popular
“In the two years prior to the pandemic, the New York metro area had a total net loss of 11,700 tax lers to the Miami metro area; in the two years after the pandemic’s onset, that loss more than doubled, to 26,900,” wrote Alan Berube, who conducted the study for Brookings.
Florida has long been a popular change of address for New Yorkers of upper income brackets in large part because it does not levy state income taxes. In 2023, a move from New York to Miami would save a person with a $100,000 sala-
prove relatively insigni cant — but it shows the magnitude of the migration spike out of the city was no exaggeration.
Even before the pandemic, New York long lost more tax lers than it gained. e city was in the red every year for the last decade, though at varying rates. In 2014, for example, the city saw a net outow to the tune of 58,000. e next: a relatively mere 43,000.
But if years prior were New York’s out-migration stuck on an uneven downslide, the pandemic was like it falling o a cli . New York was not the only major metro area to see this trend. Los Angeles and Boston, for example, saw similar spikes. San Francisco also experienced an outsized out ow.
But many other cities, like Chicago and San Diego, for example, saw much tamer responses relative to New York. “Aside from the major metro areas of New York, Los Angeles, and San Francisco, however, there were few truly seismic shifts in metro-to-metro migration between the pre-pandem-
eted after the pandemic.
Still, much of the Brookings report argues the actual impact of these changes will prove relatively insigni cant. at is particularly true for Berube’s argument about the broader economic e ect — or lack thereof — of metro areas losing out on these tax lers. And even with New York’s particularly large pandemic-induced out ow spike, much of his thinking still applies.
People who moved out of New York in the years before the pandemic actually earned about 15% less than non-movers, he found. In the year after the pandemic, the average movers’ income superseded the non-movers by about 5%. “A number of very high-income households seem to have moved from New York to Miami after the pandemic’s onset,” the report said. at’s notable, of course, but Berube wrote there is not much there-there from an economic perspective in the grand scheme of things. While the incomes of people leaving major metro areas tended to be bigger than before the pandemic, so too were those of folks coming in.
“ e New York metro area registered a net aggregate loss of $46 billion in (adjusted gross income) due to migration in 2020-21 and 2021-22,” he added. “Yet in 2022, the metro area’s total AGI among ‘non-movers’ was $125 billion higher than in 2020.”
Plus, the extreme population bleeding was only temporary. e IRS data runs just through 2022, but the city’s net out ow cooled to 114,000 at the end of the year.
By Julianne Cuba
Notorious city landlord Daniel Ohebshalom was back behind bars Sept. 25 after failing to x dangerous living conditions at two of his long-dilapidated apartment buildings in Washington Heights, the city announced. e housing division of Manhattan Supreme Court approved the second arrest warrant for Ohebshalom — who has frequently been named on the public advocate’s annual list of worst landlords — and sent him back to Rikers Island for another 60 days, the city’s Housing Preservation and Development Commissioner Adolfo Carrión said Sept. 26.
dered repairs at the two West 170th Street properties, Gothamist reported. He will be held at Rikers for up to 60 days. His projected release date is Nov. 23, unless he corrects the violations earlier, according to Department of Corrections records.
He also faces separate but related criminal charges from Manhattan District Attorney Alvin Bragg for allegedly harassing rent-stabilized tenants across ve of his apartment buildings — 331 E. 14th St., 410 and 412 W. 46th St., along with both of the West 170th Street properties — the top prosecutor revealed in an indictment in May.
The notorious landlord turned himself in after reportedly missing deadlines for court-ordered repairs at two West 170th Street properties.
ry an estimated $37,000 a year, according to SmartAsset data. For those earning $250,000, the savings were $88,000. Jump up to the $650,000 bracket and it’s more like $195,000 saved.
Miami also pitched itself as a safe haven away from pandemic-related restrictions just as hybrid work allowed many so-called supercommuters to spend more time away from the o ce. Snowbirds who previously spent just a few weeks or months outside the city now had a legitimate shot at spending half the year in Florida while keeping their desk job in Manhattan.
New York represented four of the ve largest absolute changes in metro-to-metro migration immediately after the pandemic, Berube’s report found, with the other biggest out ow increases from New York going to Bridgeport, Connecticut; Philadelphia and Orlando, Florida. e city was already losing thousands of residents to these cities, even accounting for the two-way street of folks coming in — but the disproportionate rate of out ow skyrock-
at’s within a rounding error of the 113,000 out ow the city saw in 2017, an otherwise normal year.
e latest U.S. Census Bureau data gives us a more up-to-date read on where things stand. Per their estimates, New York City saw net out-migration of about 78,000 residents between 2022 to 2023.
It should also be noted that domestic migration is just one of many factors that determine overall population trends. Urban centers like New York can see their negative domestic migration oset by other factors, such as having a high birth rate or a strong international appeal. New York is unlikely to see signi cant population decline as a result of domestic out migration, at least not at the rate it’s at now.
“ is analysis of metropolitan migration during the pandemic suggests neither cause for alarm nor reason to shrug o the potential impacts of newer movements,” Berube wrote. “Rather, it points to underlying metropolitan challenges and opportunities these recent trends re-reveal, and imperatives to address them as U.S. cities and regions nd their new normal.”
is is not Ohebshalom’s rst stint at Rikers. e landlord, who in the past has used pseudonyms to avoid accountability, rst turned himself in to authorities in March after Housing Court Judge Jack Stoller signed o on his arrest earlier that month over accusations that he failed to address nearly 700 violations across a pair of uptown properties.
Alleged problems at 705 and 709 W. 170th St., which have been at the core of an ongoing HPD lawsuit from 2021, include infestations of rats and cockroaches, mold and lead paint in common areas and apartments that are not only unsightly but hazardous to tenants’ health. He was sentenced to 60 days at the notorious jail.
Ohebshalom again turned himself on Sept. 25 after missing deadlines for court-or-
“As alleged, Daniel Ohebshalom took advantage of rent-regulated tenants living in ve Manhattan apartment buildings by creating dangerous living conditions in an e ort to push them out. New Yorkers deserve to live in their apartments without fearing for their safety,” Bragg said at the time. “Landlords have the responsibility to ensure tenants’ safety.” It remains rare for landlords to go to jail, but is not unheard of. In 2017, real estate owner Steve Croman was sentenced to a year at Rikers after pleading guilty to charges of grand larceny, tax fraud and falsifying records.
Aaron Elstein
Léman Manhattan Preparatory School, the city’s only boarding school, serves families who want their kids to learn and live with a view of the harbor and the Statue of Liberty.
Tuition, room, board and fees were $93,000 per pupil for the 2021-22 school year, according to a brochure from the Financial District school. A recent lunch menu for students attending the lower school was chili lime sh tacos or bean tacos with jasmine rice, served with shredded cabbage, salsa and avocado crema. e head of communications and enrollment management, Paige Murphy, said: “Léman is experiencing record revenue and the highest retention rate in its history.”
It is also experiencing a erce ght with its landlord.
Léman hasn’t paid rent since June 2023 for about 200,000 square feet of space at 25 Broadway, even though its lease doesn’t expire until 2030, Moody’s said in a report last month. Owner BF&W Realty Co. is part of Wolfson Group, a family enterprise that controls 2 million square feet of space in New York, according to a report
from credit-rating rm KBRA. Principal Morris Wolfson didn’t return a call.
Murphy said Léman and landlord are “proactively collaborating to develop mutually bene cial lease terms” and an agreement is expected “soon.”
“No clear path”
at would be great news for investors in 25 Broadway’s mortgage looking at a nearly 50% loss since the $250 million loan came due in April, Moody’s said. About 30% of space was available as of February, said KBRA, adding the landlord indicated there was “no clear path toward re nancing.”
25 Broadway is a 22-story building that holds 1 million square feet and was developed in 1921. It used to be called the Cunard Building and in its ornate hall passengers booked tickets aboard the Queen Mary. WeWork moved out in 2021 and Teach for America shrank its footprint, KBRA said. Now that Léman is e ectively on rent-strike, Moodys’ said revenue and net operating income are under further pressure. e building housed middle and high-school classrooms, according to a securities ling.
At least for now, Wolfson and lenders have decided to kick the can.
In return for a $7 million payment, lenders recently granted Wolfson a 24-month forbearance agreement with a potential sixmonth extension, Moody’s said. roughout the agreement 25 Broadway’s mortgage will be con-
sidered current, “with the borrower continuing to lease up the property.”
Léman seems positioned to command a substantial drop in rent, considering the vacancy rate in nearby buildings is 27%, according to a Cushman & Wake eld survey of the Financial District. e school was founded in 2005 as
Claremont Preparatory School and acquired in 2011 by Meritas, a group of 10 schools for 12,000 students worldwide owned by Chicago-based private-equity rm Sterling Partners. Meritas sold several schools in 2015, but it’s not clear if it kept the Manhattan location. A call to Sterling wasn’t returned.
Nick Garber
When Alex Spiro, an attorney for Mayor Eric Adams, led a motion on Sept. 30 to dismiss the federal bribery charge against him, it was not the rst time that one of the mayor’s lawyers had made such an argument. A di erent set of attorneys, from the rm WilmerHale, made many of the same claims in a Sept. 12 letter to federal prosecutors as part of an unsuccessful attempt to stave o Adams’ indictment.
e embattled mayor has hired Spiro’s rm Quinn Emanuel to join WilmerHale as the second high-powered law rm representing him in the case related to alleged travel perks and campaign cash from Turkey that led to Adams’ indictment last month. Adams faces another three known federal investigations plus a decades-old sexual assault claim. Meanwhile, the city’s 800-attorney Law Department is representing Adams in the assault case, along with Spiro.
On Sept. 30, lings revealed that two new Quinn Emanuel lawyers had joined Adams’ defense: William Burck, a veteran lawyer known for representing Republican politicians, and Avi Perry, a former federal prosecutor who joined the rm last year.
“Gratuities
are not federal crimes, courtesies to politicians are not federal crimes.”
Alex Spiro, attorney
It’s not unusual for a public ocial under re to bring on multiple rms for their defense. But the addition of a new high-pro le law rm promises more considerable costs for the mayor, who has already paid out $878,000 to WilmerHale for representing him since November the probe by the Southern District of New York.
Mayor Eric Adams hired Alex Spiro (left) of Quinn Emanuel to represent him in connection with his federal indictment. Another top rm, WilmerHale, was already representing the mayor in the same case, and has charged Adams nearly $900,000 in fees. BLOOMBERG
ose payments have come from a legal defense fund that Adams created to defray the costs and avoid passing them onto taxpayers.
Adams had raised a combined $1.7 million for the trust as of July; his next disclosure, due Oct. 15, will show his fundraising and expenses in recent weeks, including, presumably, his spending on Spiro’s rm.
WilmerHale still represents Adams in connection with the Turkey probe, a person familiar with the arrangement said. His attorneys from that rm are Brendan McGuire, his former chief counsel at City Hall, and Boyd Johnson, a former federal prosecutor.
Spiro, in a Sept. 30 press conference to discuss the motion to dismiss, said that “I will be trial counsel on this matter,” adding that “WilmerHale is still involved.”
Speaking at his law rm’s Midtown o ce, Spiro did not answer questions about when Adams
hired him for this case, and what rate he is charging for his services. (In the sexual assault case, Spiro is charging the city a heavily discounted rate of $250 per hour, compared to the $2,000-an-hour fee he has charged other clients.)
Fabien Levy, a City Hall spokesman, said in an email that “the city is not covering the costs of attorneys in this matter.”
Carrie Cohen, a former corruption prosecutor for the SDNY, said in an interview that “it’s always helpful to have more repower when you’re in a high-pro le matter, such as this indictment and ongoing investigation.”
“It is particularly helpful to have someone on board who is used to speaking in public about pending criminal prosecutions,” she added, alluding to Spiro, known for his aggressive defense of celebrity clients such as Elon Musk and Alec Baldwin.
Spiro argued in his motion to dismiss the bribery charge that the indictment failed to prove any connection between the years of discounted ights and hotel stays that Adams received from Turkish o cials and his subsequent 2021 attempt to speed up safety approvals for a Turkish consulate building in Midtown. Spiro also said Adams, who was then the Brooklyn borough president and Democratic nominee for mayor, had no authority to exert pressure on the city’s re commissioner to certify the building — complicating prosecutors’ e orts to paint the intervention as an “o cial act” performed as a quid pro quo.
“Gratuities are not federal crimes, courtesies to politicians are not federal crimes,” Spiro said. “Congressmen get upgrades, they get free appetizers, they have their iced tea lled up. at’s just what happens.”
McGuire and Johnson of WilmerHale had raised similar claims in their Sept. 12 letter to the De-
partment of Justice, which was shared with Crain’s following Adams’ Sept. 25 indictment. McGuire and Johnson argued that the federal courts’ increasingly narrow view of what constitutes corruption would make it impossible for the charges against Adams to hold up in court.
“A close evidentiary case that does not include an express betrayal of the public trust, a logical quid pro quo, or an explicit motive to be in uenced will be questioned by the courts and the public, especially given the consistent media coverage of con dential details of the investigation over the past ten months,” the attorneys wrote in a letter to Lisa Monaco, the deputy U.S. attorney general.
Legal representation has been a significant issue in Adams’ City Hall. His former top aide Timothy Pearson — who resigned on Sept. 30 — was named in four sexual harassment lawsuits by former colleagues and subordinates. Pearson had been receiving taxpayer-funded representation in those cases, a decision that was a factor in the June resignation of corporation counsel Sylvia Hinds-Radix, Politico reported. (City Hall has strongly denied the report.)
Adams’ own chief counsel Lisa Zornberg resigned abruptly 11 days after federal investigators seized phones and searched the homes of several City Hall ocials. She reportedly quit after the mayor refused her advice to re Pearson and other aides whose homes were searched.
Both of those top legal jobs — corporation counsel and chief counsel — are now vacant. Adams nominated the veteran lawyer Randy Mastro to be corporation counsel, which oversees the Law Department, but Mastro withdrew from consideration Sept. 10 after a contentious City Council hearing showed that lawmakers were poised to reject him. The mayor has not said who he now plans to pick for either role.
Ethan Geringer-Sameth
A growing cohort of health-tech rms focused on clandestine medication delivery is attracting investors as policymakers have moved to limit abortion and contraception in states around the country.
One of the latest companies to draw venture capital is Dumbo-based Twentyeight, which raised more than $14 million from eighteen investors in a Later Stage VC round that closed last month, according to the database PitchBook.
e startup o ers remote clinicians’ visits, birth control and oth-
er medications by delivery in 43 states and the District of Columbia. It markets “discreet, a ordable, and convenient” care to underserved communities, including people who are on Medicaid or are uninsured.
A similar company, San Francisco-based Nurx, has raised close to $165 million to date from investors, according to PitchBook. Demand for the services has gone up since the Dobbs decision as a growing number of counties are left without access to traditional brick-and-mortar care. Some communities, like undocumented immigrants, must still fend for themselves even with the
increase in telemedicine options like Twentyeight, which requires proof of citizenship of naturalization.
Investors in the latest round included venture capital rm and early funder ird Prime, as well as the University of Pennsylvania Health System and Great Oaks Venture Capital, an investor whose portfolio includes other women’s health startups including Lower Manhattan-based Maven and Brooklyn Heights-based Oula. e raise brought Twentyeight’s valuation to $52 million, accord-
ing to PitchBook.
More than 19 million women live in contraceptive deserts, according to the national reproductive health advocacy group Power to Decide. Over a million live in counties that lack health clinics o ering the full range of FDA-approved birth control methods.
e company lets customers interact with the same remote provider and promises to maintain patient privacy; all medications come in an unmarked package with no Twentyeight branding, according to its website. Customers in New York and California can also receive abortion pills through the service.
By Julianne Cuba
A San Francisco-based o ce landlord with properties in New York and across the U.S., Canada and Europe has added one more Manhattan building to its portfolio for $52 million, records show.
Spear Street Capital, which was founded in 2001 and has since amassed more than $11 billion in investments, has acquired 446 Broadway in SoHo, according to a deed that appeared in the city register Sept. 25. e rm currently maintains two other Manhattan properties, 641 Sixth Ave. and 2 Crosby St., and it previously bought and sold 315 Park Ave. South, according to its website.
Known as the L’Atelier, the 5-story commercial building between Howard and Grand streets was sold by the investment firm KPG Funds, headquartered just down the block at 433 Broadway. KPG bought the circa-1915 building for $46 million in 2018, according to city records, and redeveloped it into boutique offices. The property was named “Best Office Development” by Commercial Property Execu-
tive’s CPE Influence Awards in 2022.
e roughly 40,000-squarefoot building is currently occupied by household goods store Rumi Life on the ground oor with o ces above it, including one that’s home to Santa Monica-based video editing service Cabin Editing Co. It made its New York debut in 2021, when it signed a 10-year lease for 7,000 square feet of space on the top oor of the Broadway building.
e average asking rent in the neighborhood for ground- oor retail is $281 per square foot, according to a report from commercial real estate rm JLL from the rst quarter of this year; asking rents for SoHo o ce space, meanwhile, can range from $42 to $128 per square foot, according to LoopNet.
Greg Kraut, KPG’s co-founder and chief executive o ce, who signed the sale documents, did not respond to a request for comment.
John Grassi, the chief executive o cer of Spear Street Capital,
signed the deed on behalf of the buyer. e global o ce landlord has more than 19 million square feet of holdings across the country as well as in Ireland and British Columbia. Spear Street did not immediately respond to a request for comment about its plans for the site.
David Malawer, the senior managing director of Midtown-based rm Newmark Knight Frank, is the broker for the building’s o ce tenants; and Richard Skulnik, ex-
ecutive vice president of commercial real estate rm Ripco, also based in Midtown, is the broker for the building’s retail tenants. Neither Malawer nor Skulnik responded to a request for comment.
million a year.
“We’re not billionaires, we’re thousand-aires,” said Richard Hirsch, president of the 324-unit building where, like in all co-ops, residents own shares in a housing corporation and divide the operating costs. “We are the tip of a spear that’s coming straight for co-ops across the city.”
ere are between 65 and 100
ter that, they would be eligible to lease their apartment at a stabilized rent, meaning the cost could rise only by levels prescribed by the city. However, the initial rent could be set at an una ordable price for many residents, said Stuart Saft, a ground-lease expert at law rm Holland & Knight. “ at,” he said, “is the problem.”
e Grumets have no idea where they’d go if they can’t afford to stay in Carnegie House. A ordable housing is scant everywhere, and they’d like to stay close to their doctors.
“The situation at Carnegie House reveals a clear hole in our housing-protection laws. It isn’t about just this building, but bigger issues we have to confront.”
State Sen. Liz Krueger
co-ops with a ground lease in and around the city, housing up to 25,000 people, according to estimates from the Real Estate Board of New York and the Ground Lease Co-op Coalition. Residents in these buildings occupy a special place in the Byzantine world of New York real estate, as they are both homeowners and renters at the same time.
If Carnegie House residents are unable to agree on new lease terms and default, the groundlease owners would seize control of their building, homeowners would lose all their equity and have to pay o the balance on their mortgage immediately. If they have any money left over af-
“We’re not wealthy people,” said Barbara. Lou, a former executive director of the New York State School Boards Association, looked at his wife of 56 years and said: “I assure you we wouldn’t go quietly.”
Carnegie Houses’s ground lease is owned by billionaire real estate investor Rubin Schron and partner David Werner. ey bought it 10 years ago for $315 million from the previous owner who’d held it for at least 60 years. As they see it, the co-op is a housing corporation whose ground rent is priced far below market value, which has soared since the supertall towers of West 57th Street rose across the way from the 21-story co-op developed in 1960. e partners want the new rent determined by an arbitrator and have o ered each tenant a
10% discount if the sum exceeds $25 million a year. ey’ve also o ered to extend the lease’s remaining term to 62 years from 43.
“ ey’re living practically rentfree on Billionaires Row,” said Schron, who co-owns the Woolworth Building. “ ere are multi-millionaires in the building, there are investors. It’s not just middle class.”
Asked if $25 million is a fair price for ground rent, Schron said: “Maybe they’ll appraise it at $20 million. Maybe 25 or $26 million.”
Carnegie House residents are ghting back. ey’ve found powerful allies in the state Legislature and recently led a lawsuit against the ground-lease owners and the New York state Division of Homes and Community Renewal, which oversees rent-stabilized housing. e lawsuit could buy co-op residents some time to negotiate a new lease.
“ e situation at Carnegie House reveals a clear hole in our housing-protection laws,” said state Sen. Liz Krueger. “It isn’t about just this building, but bigger issues we have to confront.”
Ground leases date back to at least 1928, when Columbia University rented its land to Rockefeller Center.
Typically the leases last from 50 to 99 years, and the rent resets about every 25 years. e leases produce a steady stream of cash for holders who collect a monthly check.
“Ground leases are a way for wealthy parties to maintain the
Condos that hold ground leases in the city
real estate they own,” Saft said.
Traditionally landlords didn’t get rich from ground leases, which typically generate investment returns of about 3% a year.
But they are attractive investments because leaseholders didn’t have to pay for a building’s upkeep or property taxes.
“It was like owning a Treasury bond,” Hirsch said. “Until investors decided they wanted Nvidia.”
A marketing presentation from CBRE a decade ago showed ground leases could produce returns akin to a super-hot AI-chip maker. At the time, Carnegie House’s ground lease was being sold by the estate of Evelyn Sharp, mother of Peter Jay Sharp, developer of 450 Park Ave., former owner of the Carlyle Hotel, and ground-lease holder who died in 1992. Symphony Space’s theater on the Upper West Side is named for him.
CBRE’s “base case” was that the ground rent for Carnegie House’s residential and retail space would rise from $6.4 million a year to “nearly $40 million” in 2025. at’s because provisions written when the lease was drafted around 1960 called for the rent in 2025 to equal 8.1667% of the fair market value of the “demised land, considered as vacant, unimproved and free of this lease.”
For Schron and Werner, Carnegie House’s rent-reset comes when some of their other properties are struggling. Schron’s portfolio includes towers at 42 Broadway and 45 Broadway in the Financial District, a neighborhood with a 27% o ce vacancy rate, according to Cushman & Wake eld. He also owns what one attorney described as nursing homes “at an industrial scale.” Schron wouldn’t comment on his holdings.
Werner owns 5 Times Square, a building formerly occupied by Ernst & Young that could be partially converted into apartments. He leads a syndicate of investors that owns 40% of 237 Park Ave., a
tower poised to lose tenant JPMorgan after the bank’s new headquarters across the street is completed next year, according to bond-rating rm KBRA. Werner avoids the press, according to real estate newsletter e Promote, citing “ayin hara,” which is Hebrew for “evil eye.”
Last year billionaire Michael Dell’s merchant bank, MSD Partners, extended a $100 million loan to Schron and Werner, according to the Real Deal. MSD declined to comment.
Ground-lease negotiations are often contentious. Two years ago Vornado Realty Trust renewed its lease for land near Penn Station through 2073 and is still ghting in court with the landlord over the rent. Vornado CEO Steven Roth estimated the lease could jump to $26 million a year from $2.5 million. Vornado says in a regulatory ling that the nal price “may be materially higher or lower” than its estimate.
Schron and Werner are bringing the same kind of ght to Carnegie House, a place where residents get their mail and packages handed to them daily by doorman Bryan Gallardo, who has worked at the co-op for 15 years. “ is is a building where neighbors look out for each other,” Gallardo said.
For a long time ground leases were rare under apartment buildings. at started to change in 1982, after tenants at an Upper East Side building prevailed in a lawsuit against the state attorney general’s o ce, which is responsible for approving co-op nancial plans. Condominiums are governed by a di erent state law and prohibited from leasing their land.
For leaseholders, separating the land from the building above was a useful way to raise cash while keeping a stake in the property. And developers with a 99-
year ground lease in their pocket can use it as collateral to borrow and build a lot taller than they otherwise could.
verting to a rental property are higher, banks are refusing to write mortgages at buildings whose ground lease renews in 30 years or less, said Robert Cecere, a lawyer at Daniels Norelli Cecere & Tavel. At such buildings apartments sell for cash or not at all.
“You’ve got apartments that can’t be sold and can’t be bought,” Cecere said. “How crazy is that?”
Santiago, 69, had planned to retire a few years ago, sell his two-bedroom apartment and live somewhere else. But because of his co-op’s rent problem, no buyer will pay him close to market rate. So he’s still working in elevator construction and still in the apartment he’s ready to part with.
“My wife and I feel like hostages,” he said.
tween, as a general matter, sophisticated parties,” said Anita Laremont, a partner at Fried Frank Harris Shriver & Jacobson who represents REBNY. “We don’t believe there’s a legitimate public purpose here.”
at Pillsbury Winthrop Shaw Pittman and a former New York state judge.
A spokesperson for Schron said: “By ling this complaint, the co-op has tacitly conceded that it believes its proposal is meritless.” Nevertheless, recently the co-op secured a procedural victory when a state judge, Arthur Engoron, granted its request to postpone arbitration proceedings until a preliminary hearing is held in his courtroom on Nov. 13. And on Sept. 27 Gov. Hochul signed into law legislation allowing co-ops to initiate renewals or extensions before their ground leases expire, granting some of the relief sought from Albany by ground-lease coops.
“No one mentioned the ground lease,” he said.
Now, in recognition that the odds of a co-op defaulting and re-
Even though the ground rent would rise over time, the risk of the lease causing problems was understood to be too small to matter. Carnegie House resident Anthony Santiago said his bank didn’t raise any issues when he re nanced his mortgage in 2012.
Carnegie House has joined a group called the Ground Lease Co-op Coalition to lobby Albany for relief. State Sen. Liz Krueger sponsored a bill that would limit rent increases in ground-lease co-ops to 3% a year, the same rate typically charged to o ce buildings. e bill was approved by the Senate Judiciary in a 10-8 vote last session but didn’t go further due to opposition from the Real Estate Board of New York. e powerful trade group argued the bill would violate the U.S. Consitution’s “takings” clause because it’s unlawful government interference with privately negotiated contracts.
“ ese are agreements be-
After years of fruitless backand-forth haggling with Schron and Werner, what Carnegie House described in its lawsuit as formal negotiations began in March. Schron and Werner waited until the last day of the negotiating period, Sept. 13, before proposing to raise the ground rent to $25 million from $4 million, according to the co-op, which accused the landlords of failing to negotiate in good faith and making “a thinly veiled attempt to force Carnegie House into insolvency.”
Schron said Carnegie’s House’s o er to pay $5.6 million in rent is inadequate and amounts to just 60 cents a share per unit on a persquare-foot basis.
“You can’t o er 60 cents for a suit that costs 200 or 300 dollars,” he said.
Attorneys say the co-op’s lawsuit will likely be dismissed because its rent hasn’t been raised yet and no harm has yet taken place.
“ is lawsuit is premature,” said James Catterson, a partner
Carnegie House is represented by Tim Collins, who has sparred on behalf of Stuyvesant Town-Peter Cooper Village, Manhattan’s largest apartment complex, over rent protections and improvement costs with landlords such as Blackstone Group and CW Capital.
In the meantime, Carnegie House residents are left to stress over how much the rent will rise for the dirt below – and whether they’ll be wiped out nancially and lose their homes.
“I fear that sooner or later our health will snap,” said Santiago’s wife, Yolanda, a retired hospital administrator, “and that we will have to go through life without each other.”
Software Engineer (Citadel Securities Americas Services LLC – New York, NY); Mult. Pos. Avail. Offered salary of $200,000 - $250,000/year. Design & build software compon’ts that are foundation’l to research & trad’g activities. Enhance proprietary electronic trad’g systems & tools to support new products & algorithms. F/T. Resumes: citadelrecruitment@citadel.com. Ref: JobID: 8006192.
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Bennett Midland seeks a business strategist with deep experience in financial planning and analysis. We are a professional services firm that deploys teams to support civic sector organizations to solve their complex challenges and our biggest asset is our team. We are most effective—externally and internally—when we have strategies in place that harmonize the skills our team can provide with the opportunities we pursue, and when those opportunities align with the strategic goals we set for our business. The Senior Manager of Business Strategy and Financial Management will conduct research and analysis, develop financial models, and execute on internal operational workstreams to ensure our effectiveness and drive strategic decision-making.
Full Job Description and Requirements available at jobs.crainsnewyork.com
Director - NYS Small Business Development Center (SBDC)
Reporting to the Chief Administrator of Community Partnerships and Government Relations, the Director of the NYS Small Business Development Center will play a key role in driving innovative programs and building strategic partnerships that empower small businesses and fuel economic growth throughout New York State. Full Job Description and Requirements available at jobs.crainsnewyork.com
Cardiovascular Service
Line Administrator
The Administrator for the Heart and Vascular Institute is an important position and represents a unique opportunity to pull together cardiac surgery and cardiology into a single operational entity to support comprehensive Cardiovascular care at SUNY Upstate. This Executive will arrive at a pivotal time in SUNY Upstate’s history and is expected to work with the team to create the strategy and infrastructure for a future Heart and Vascular Institute and to lead the growth and expansion of the program to meet the growing needs of the community in central New York. Full Job Description and Requirements available at jobs.crainsnewyork.com
Notice of Qualification of INFORMA CONNECT USA LLC
Appl. for Auth. filed with Secy. of State of NY (SSNY) on 08/05/24. Office location: NY County. LLC formed in Delaware (DE) on 04/30/24. SSNY designated as agent of LLC upon whom process against it may be served. SSNY shall mail process to Corporation Service Co. (CSC), 80 State St., Albany, NY 12207-2543. DE addr. of LLC: c/o CSC, 251 Little Falls Dr., Wilmington, DE 19808. Cert. of Form. filed with Jeffrey W. Bullock, Secy. of State, Div. of Corps., John G. Townsend Bldg., 401 Federal St., Ste. 4, Dover, DE 19901. Purpose: Any lawful activity.
DREAM VARIATION
ENTERTAINMENT LLC Arts. of Org. filed with Secy. of State of NY (SSNY) on 6/12/24. Office location: NY County. SSNY designated as agent of LLC upon whom process against it may be served. SSNY shall mail process to; 2248 Broadway, #1153, NY, NY 10024 Purpose: Any lawful activity
Notice of Formation of BUCK RIDGE PRINTING LLC
Arts of Org filed with Secy of State of NY (SSNY) on 6/5/24. Office
Location: NY County. SSNY designated as agent upon who process shall be served and shall mail copy of process against LLC, to 21 W 38TH ST, FL 10, New York, NY 10018. Purpose: any lawful act.
Notice of Formation of 34 WEST 95TH STREET LLC
Arts. of Org. filed with Secy. of State of NY (SSNY) on 08/22/24. Office location: NY County. Princ. office of LLC: 34 W. 95th St., NY, NY 10025. SSNY designated as agent of LLC upon whom process against it may be served. SSNY shall mail process to the LLC at the addr. of its princ. office. Purpose: Any lawful activity.
LUCIDITY CAPITAL PARTNERS
LLC Application of AuthorityOrg. filed with the SSNY on 08/16/24. Office: New York County. SSNY designated as agent of the LLC upon whom process against it may be served. SSNY shall mail copy of process to the LLC, 555 West 53rd Street. #1547, NY, NY 10019. Purpose: Any lawful purpose.
Notice of Qualification of LEVEL STRUCTURED CAPITAL III, L.P. Appl. for Auth. filed with Secy. of State of NY (SSNY) on 09/05/24. Office location: NY County. LP formed in Delaware (DE) on 08/30/24. Princ. office of LP: 140 E. 45th St., NY, NY 10020. Duration of LP is Perpetual. SSNY designated as agent of LP upon whom process against it may be served. SSNY shall mail process to c/o Corporation Service Co. (CSC), 80 State St., Albany, NY 12207-2543. Name and addr. of each general partner are available from SSNY. DE addr. of LP: CSC, 251 Little Falls Dr., Wilmington, DE 19808. Cert. of LP filed with Secy. of State of the State of DE, Div. of Corps., John G. Townsend Bldg., 401 Federal St., Ste. 4, Dover, DE 19901. Purpose: Investments.
CAMILLE GALLO, LLC Arts of Org filed with Secy of State of NY (SSNY) on 2/29/24. Office
Location: New York County. SSNY designated as agent upon whom process may be served against LLC to: Camille Gallo, 66 Madison Ave,Ste 8C, NY, NY, 10016, USA, CamilleGallo@Live.com
Purpose: any lawful act.
Notice of Formation of 200 E 69TH STREET APT. 25B
LLC Arts. of Org. filed with Secy. of State of NY (SSNY) on 09/10/24. Office location: NY County. Princ. office of LLC: c/o Melissa E. Sydney, Esq., Tarlow, Breed, Hart & Rodgers, P.C., 101 Huntington Ave., Ste. 500, Boston, MA 02199. SSNY designated as agent of LLC upon whom process against it may be served. SSNY shall mail process to Corporation Service Co., 80 State St., Albany, NY 12207-2543.
Purpose: Any lawful activity.
Notice of Formation: Nagle Qiu & Shi LLC Art. Of Org. filed with Sec. of State of NY (SSNY) on 08/26/2024. Office Loc.: New York County. SSNY designated as agent of LLC upon whom process against it may be served. SSNY shall mail process to: 82 Nagle AVE, New York, NY 10040, USA Purpose: Any lawful activity.
Notice of Formation of AMY R. ALSON, MD, PLLC Arts of Org filed with Secy of State of NY (SSNY) on 7/24/24. Office
Location: NY County. SSNY designated as agent upon who process shall be served and shall mail copy of process against THE LLC, to 205 E. HIGH ST.. CHARLOTTESVILLE, VA, 22902.. Purpose: any lawful act.
Notice of Formation of AURORA BLISS COMPANY, LLC Arts of Org filed with Secy of State of NY (SSNY) on 7/24/24. Office Location: NY County. SSNY designated as agent upon who process shall be served and shall mail copy of process against LLC to 500 West 18th Street, Unit 20E, New York, ,NY 10011. Purpose: any lawful act.
Notice of Qualification of COMFLUENCE LLC
Appl. for Auth. filed with Secy. of State of NY (SSNY) on 08/22/24. Office location: NY County. LLC formed in Delaware (DE) on 08/19/24. SSNY designated as agent of LLC upon whom process against it may be served. SSNY shall mail process to c/o Corporation Service Co., 80 State St., Albany, NY 12207-2543. DE addr. of LLC: 251 Little Falls Dr., Wilmington, DE 19808. Cert. of Form. filed with Secy. of State, Div. of Corps., 401 Federal St., Ste. 4, Dover, DE 19901. Purpose: Any lawful activity.
Notice of Qualification of 522 FIFTH AVENUE LENDER LLC Appl. for Auth. filed with Secy. of State of NY (SSNY) on 08/14/24. Office location: NY County. LLC formed in Delaware (DE) on 08/13/24. Princ. office of LLC: 1 Vanderbilt Ave., NY, NY 10017. SSNY designated as agent of LLC upon whom process against it may be served. SSNY shall mail process to Corporation Service Co., 80 State St., Albany, NY 12207-2543. DE addr. of LLC: 251 Little Falls Dr., Wilmington, DE 19808. Cert. of Form. filed with Jeffrey W. Bullock, 401 Federal St., Ste. 4, Dover, DE 19901. Purpose: Any lawful activity.
VINEA LLC Arts of Org. filed SSNY 7/29/2024 New York Co. SSNY design agent for process & shall mail to 45 W 76th Street Apt 1B, NEW YORK, NY, 10023 RA: US CORP AGENTS, INC. 7014 13TH AVE, SUITE 202, BROOKLYN, NY, 11228 General Purpose
NOTICE OF FORMATION of SOMETHING ABOUT L.L.C. Arts of Org filed with Secy. of State of NY (SSNY) on 7/3/24. Office location: NY County. SSNY designated as agent upon whom process may be served and shall mail copy of process against LLC to 228 Park Ave S, #584937, NY, NY 10003. R/A: US Corp Agents, Inc. 7014 13th Ave, #202, BK, NY 11228. Purpose: any lawful act.
By Nick Garber
New York City Schools Chancellor David Banks will step down on Oct. 16, months earlier than he had previously planned to, City Hall disclosed Oct. 2.
e unexpected move may deepen questions about the reasons for Banks’ departure, which comes after his phones were seized by federal agents amid a corruption probe that has also touched on his brothers, the deputy mayor Philip Banks and consultant Terence Banks; as well as his wife, First Deputy Mayor Sheena Wright.
In September, before the mayor’s criminal indictment, Banks had said he would take his long-
cided to accelerate the start date of Chancellor Aviles-Ramos to Oct 16th so that she can immediately begin executing on her vision for New York City Public Schools.”
The power to remove Adams
Gov. Kathy Hochul, who has the power to remove Adams from ofce, has held multiple calls with the mayor since his indictment and told him that “We expect changes,” as she told reporters Oct. 2. Since those conversations began, Adams’ embattled aide Tim Pearson resigned from the administration.
“She’s going to use her powers to make sure the mayor cleans house and puts a structure in place that gives comfort to the public and [city agency] commissioners,” said one person familiar with the governor’s private campaign.
David Banks will retire this month, a premature departure that deepens questions about the reason for his retirement.
planned retirement at the end of the year, when he would be succeeded by his deputy, Melissa Aviles-Ramos. City Hall spokeswoman Amaris Cock eld said in a statement on Oct. 2, “We have de-
Neither Banks nor any other o cial besides Adams has been accused of wrongdoing. Following the Sept. 24 announcement that he would retire, reports emerged that Banks, a veteran educator, had grown frustrated with Adams over issues like budget cuts and a slow-moving plan to ban cell phones in schools.
Cock eld, the City Hall spokeswoman, said Banks’ early departure was meant to ensure that the city’s 900,000 public school students have “the same leadership through as much of the school year as possible, rather than changing chancellors halfway through.”
“We thank Chancellor Banks for his service to the city and nearly one million public school children,” she said.
Speculation has abounded in political circles about the fate of Wright: David Banks’ wife and the
mayor’s top deputy. City Hall has said Wright is not leaving, but the administration raised eyebrows by quietly publishing a succession plan recently that lays out what would happen if Wright became unable to perform her duties as rst deputy mayor.
program and paying workers, said Maria Perrin, the company’s chief growth and strategy o cer. It is not clear when the contract will start, the duties of the subcontractors are not de ned, and the cost of the contract is still unknown. But the state’s changes to the program face at least four lawsuits attempting to halt the con-
is up to the task as a leader in a competitive consumer-directed market.
e Georgia-based company was founded in 1999 to assist the Robert Wood Johnson Foundation in launching its consumer-directed care pilot program. Now it operates in 21 states and manages $2 billion in payments for goods and home care services. PPL employs more than 1,800 people, according to data from PitchBook.
“This is a competitive market. There’s several national FIs. We win from each other; we lose from each other. This is a good thing, because it keeps prices down.”
solidation from going into e ect. e deal has sparked outcry within the home care industry, which says that PPL’s shaky track record could jeopardize services in New York. Although the company has operated programs in 20 other states, it’s been under a magnifying glass in prior years for payment delays and disruptions that advocates say don’t bode well for the future of New York’s program. But the company says it
PPL has long been rumored to be a top contender for New York’s home care contract. It made moves to establish its operations locally by elding partnership agreements before the bidding process concluded in order to offer a lifeline to scal intermediaries set to go out of business. It also hired a New York director.
e rm has invested in its political relationships in New York, as well. e home care administrator inked a $6,500 monthly contract with the lobbying rm Cozen O’Connor to provide “strategic advice and business development” earlier this year. Its head of government relations, Patricia By-
rnes, donated $5,000 to Hochul’s re-election campaign last year — the maximum contribution allowed under state law — and an additional $1,000 earlier this year.
One of its most in uential relationships could be with labor union 1199SEIU, a powerful political force in New York’s health care industry that has supported the state’s move to consolidate home care as a path to organize the sector’s workers. In response to a question from Crain’s about whether PPL has a relationship with 1199SEIU, Perrin said that the company would cooperate and allow workers to decide whether they want to organize but did not speak to the speci c ties between the two organizations.
Despite PPL’s national presence, it has a spotty track record in administering similar programs in other states. A Pennsylvania auditor’s report found in 2013 that PPL showed “numerous red ags” when it took over a consumer-directed program in the state, leading to missing records and inaccurate data that delayed payments for workers, in some cases for months.
ose missing payments led 20,000 home care aides in Pennsylvania to le a class-action lawsuit against PPL in 2017. e workers alleged that the company repeatedly failed to pay them for
overtime, despite the fact that some consistently worked 60 or more hours per week. e lawsuit is still ongoing.
Bryan O’Malley, who leads an organization that represents home care agencies, called New York’s decision to strike a deal with PPL a “recipe for chaos” given its prior work in Pennsylvania, adding that it puts consumers at risk of losing access to services.
Perrin said that it is “telling” that critics of the CDPAP consolidation have pointed to contracts that are more than 11 years old to highlight PPL’s missteps.
Some states have chosen to end their contracts with PPL. Pennsylvania terminated its contract with
the rm in 2021, handing over its consumer-directed contract to Massachusetts-based rm Tempus Unlimited.
West Virginia also ended its contract with PPL earlier this year, swapping out the provider for Arkansas-based home care administrator Palco. Perrin said that the change was not related to PPL’s performance; rather, it was a result of a competitive bidding process.
“ is is a competitive market,” Perrin said. “ ere’s several national FIs. We win from each other; we lose from each other. is is a good thing, because it keeps prices down.”
Sen. Gustavo Rivera, a Bronx representative who chairs the state Senate’s health committee, said that he remains “seriously concerned” about the decision to strike a deal with PPL, given that other states have decided not to renew contracts with the company.
Perrin said she is con dent that PPL will lead New York to a successful transition for its home care program.
“ ere’s been a lot of misinformation about anyone connected with this,” Perrin said. “ is transition is going to happen, so let’s make it the best we can for vulnerable populations.”
Kin Gin’s Sarah Cole employs her experience as a counselor and a yoga teacher to alleviate some of the pressure of managing a restaurant
Sarah Cole, the general manager of trendy Manhattan izakaya joint Kin Gin, has worked for some of the hippest Japanese restaurants in New York. e accomplishment can seem like a far cry from her suburban Atlantan childhood, when nights on the town often involved unlimited amounts of breadsticks.
“A nice restaurant for us back then would have been Olive Garden,” Cole said. “My horizons have been really expanded.”
Similarly, the idea that Cole would someday be quarterbacking a team of 20 during 12-hour shifts to help a ve-month-old restaurant stand out in the competitive scene of the Lower East Side would also have likely surprised her younger self.
Favoring psychology courses in college, she instead envisioned a career as a counselor of low-income children and in fact brie y worked with adults battling substance-abuse and anger-management issues upon graduating. “ ings have turned out a lot different from what I had anticipated,” Cole said.
After a stint employed by a rehab clinic in California in her mid20s, Cole on a whim went totally outside her previous experience and applied for a job at the Los Angeles outpost of Nobu; the
country’s best-known sushi brand hired her as a hostess in 2011 when she was 24. A transfer to the Nobu branch in Midtown Manhattan, where Cole was promoted to maitre’d, came in 2013.
Other raw- sh-focused eateries followed, including Murray Hill’s Zuma, which she helped launch, and more recently an executive-level gig at Simple Venue’s Sushi by Bou, which operates speakeasy-style, gra ti-tagged omakase counters tucked inside ower shops and hotel lobbies.
roughout her career in the high-pressure, high-burnout foodservice world, she has been able to employ some of the well-honed empathy skills she learned as a counselor.
“ is industry can wear people down, and emotions run high,” she said. “So I tell my sta , ‘We’re in this together, and at the end of the shift, we can work through whatever it is.’”
e pandemic shutdowns weren’t great for professional growth, naturally. In fact, Williamsburg chicken-and-wa es hotspot Sweet Chick, where Cole snagged her rst general manager job, had to let her go when the novel coronavirus hit. But the forced break
By | C. J. Hughes
might not have been such a bad thing. During a career that often had Cole turning in at 5 a.m., some months o came as a balm. e break also allowed Cole to become certi ed to teach yoga, which helps her stay relaxed today.
“ e pandemic changed worklife balance for the better,” she said.
Kin Gin has earned plaudits for its inventive clam, caviar and crispy pigs ear dishes since it opened in April. ough its skylight-lined, richly-colorful dining room is sumptuous, it sits inside e Hotel on Rivington, a 20-yearold tower now undergoing an apparently long-overdue renovation, which has led to a work-in-progress vibe at the overall site, said Patric Yumul, CEO of the restaurant’s parent, TableOne Hospitality.
“We’ve had a little bit of a challenge,” said Yumul of Kin Gin, the rst from-scratch undertaking of his Las Vegas-based company in New York.
But Yumul, a two-decade-pluslong industry veteran, says Kin Gin, whose Japanese name translates to “gold and silver,” can become a precious metal in Cole’s hands.
“She has a great ability to make people feel instantly at ease and at home,” he said, “and to get a team to rally behind her.”
Age 37
Grew up Douglasville, Georgia
Resides East Williamsburg
Education Bachelor’s in psychology, Georgia Southern University; master’s in counseling psychology, Georgia State University
Eastern plan After years of working at Japanese restaurants, Cole hopes to visit the country in 2025.
“Japan has got it all gured out,” she said.
Southern with-drawl “My accent disappeared when I moved to California, though a little twang comes back when I visit home,” she said.
“And I still say y’all.”
Downtime When she’s not running around in dining rooms and kitchens, Cole enjoys slow-walking the great outdoors. “I really like to be outside, like hiking in the Catskills, Adirondacks or upstate Harriman State Park.”
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Industry leaders discuss contributing factors and potential solutions to rising prices
Clinical and business reasons for spiking health care costs
Positive impact of community partnerships in health care
Technological innovations are making a difference
Anthem
By Gary Belsky and Hannah Rubin Crain’s Content Studio
Although 79% of the population is happy with their health insurance, a full 41% report being dissatis ed with the health care system, according to a 2023 survey of national voters. The primary reason: affordability — or rather, the lack thereof.1
And with treatment costs and prescription drug prices rising steadily, leaders in the health care sectors are urgently seeking ways to improve access to quality care while also controlling costs.
With all this in mind, Crain’s New York Business and Anthem Blue Cross and Blue Shield recently convened a roundtable of industry insiders to discuss the persistent issue of health care affordability and the steps being taken to mitigate costs. It wasn’t the rst time the two organizations have collaborated: Introducing the event, Crain’s publisher
and executive editor Fred Gabriel noted the longstanding relationship between the media brand and Anthem.
Anthem has long strived to improve health care, looking for innovative ways to bolster access to care, increase affordability and lessen administrative burdens faced by providers.
“Anthem is deeply intent on modernizing the health care system as a whole to improve health outcomes and lower cost trends,” said Victor DeStefano, president of New York commercial business for Anthem. “We’re constantly thinking about data, technology and community relationships. So while we’re not in the exam room with patients, we’re enabling providers behind the scenes and empowering consumers to navigate the health care system.”
It’s no secret that prescription drug pricing has spiked of late, reportedly rising twice as fast as in ation between
Executives from Anthem Blue Cross and Blue Shield and New York-area community partners gathered at Crain’s New York Business headquarters for a discussion about health care affordability moderated by publisher and executive editor Fred Gabriel.
Victor DeStefano, president, NY Commercial Business, Anthem Blue Cross and Blue Shield
Mark Miller, general manager, NY Commercial Business, Anthem Blue Cross and Blue Shield
AnneBeth Litt, MD, FACP, FAHM, chief medical director, Anthem Blue Cross and Blue Shield
Deborah Ruggiero, MS, RN, MCHES, clinical programs director, Anthem Blue Cross and Blue Shield
Christopher Joseph, LMSW/MPH, executive director, EngageWell IPA
Donna Quinn, vice president/ HR - Bene ts, The Fedcap Group
Zac Hall, senior vice president of programs, Food Bank For New York City
2016 and 2020. Specialty drugs are particularly costly — spending on them has increased 43% since 2016, despite just a 0.5% increase in actual prescriptions.2
“The specialty market has simply exploded,” said Dr. AnneBeth Litt, an internist and chief medical director at Anthem. “Speci cally, biologics and gene and cell therapies, which allow us to provide more personalized treatment.”
Health care innovation, which often leads to more expensive treatments, need not necessarily result in higher overall expenditures. If prevention and management of chronic disease became more commonplace — that is, if basic health care became more accessible — fewer patients would wind up with the kinds of chronic or complex conditions that require expensive therapies. This relationship between higher quality and lower cost trends was a recurring theme during the roundtable.
Litt highlighted another factor: our aging population.
“We’re looking at an older population with multiple chronic conditions: diabetes, hypertension, heart disease,” she said. “These are all health conditions that frequently lead to polypharmacy. That can mean adverse drug interactions, which lead to falls, dehydration and other complications that put people in downward spirals requiring hospitalization.”
Litt also pointed to the prevalence of overtreatment and low-value care, which accounts for $75.7 billion to $101.2 billion in wasteful spending each year, adversely affecting affordability for consumers.3
“As a primary care physician, I highly recommend establishing a relationship with a primary care provider who is familiar with your complete medical history to reduce the chances of polypharmacy, overtreatment and lowvalue care,” Litt said.
The business side has its own amalgam of factors that impact health care affordability.
For starters, many health care systems are still trying to recover from shortfalls incurred during the pandemic. Between 2021 and 2022, 10 large national nonpro t hospital systems reported a 184.6% decrease in revenue from investments. Patients continue to bear some of that compensatory burden.4
Health plans negotiate rates on behalf of members. But there have been troubling trends in this arena of late. Hospitals and health systems — squeezed by both the factors outlined above and labor costs — are asking for large price increases that patients and employers can ill afford.
“The rates we negotiate with hospitals are very important,” said Mark Miller, general manager for New York commercial business at Anthem.
“Ninety-three percent of our book of business is self-insured. We need to be strong nancial stewards of their dollars, and so we have entire teams negotiating with hospitals and providers.”
To overcome these headwinds, Anthem gets creative and collaborative.
“We suggest contractual terms that are not purely transactional,” DeStefano said. “We think of ways we might partner with health systems to improve the health of our populations together. So we might incorporate nancial incentives for lowering A1C levels among diabetic populations, for example, or for increasing colonoscopy compliance.”
Such tactics align with a value-based care framework that incentivizes providers to focus on improved health outcomes. This is distinct from the traditional fee-for-service model, which bases provider pay on treatment quantity without regard for qualitative improvements. The fee-for-service model, of course, is now thought to be a leading contributor to the high cost of health care.
Anthem’s commitment to value-based care is borne out by the data: In New York, the health plan has added valuebased care providers that today support more than 821,000 members; 54.2% of Anthem’s New York spend is tied to this care model.5
For members, a key component of health plans is the providers they can access.
“Our robust provider network is one of our most valuable assets,” DeStefano said. “But that’s only useful if members can afford to see them. So we work with employers to craft thoughtful employee bene ts plans that factor in cost sharing and other variables that affect access.”
Donna Quinn, vice president of HR bene ts at The Fedcap Group — a global network of nonpro ts helping people with barriers to economic wellbeing — echoed DeStefano’s focus on member affordability.
“We’re concerned about expense like any business or organization,” Quinn said in a post-roundtable conversation. “So health care costs greatly impact our health plan selections. But we’re also deeply aware of how the plans we choose impact our employees.”
Community partnerships — generally with nonpro t social service providers — can be a difference maker in health care quality and accessibility, functioning as links to a health care apparatus that some individuals struggle to access. The Food Bank For New York City and EngageWell IPA are among the community organizations that Anthem partners with to engage broad populations around health.
“We see wellness as extending well beyond food,” said Zac Hall, senior vice president of programs at Food Bank For New York City. “Our aim is to connect people with the knowledge, bene ts and services that undergird health.”
Case in point: The organization recently ran a pilot that delivered medically tailored meals to individuals with histories of hospitalization, hoping to prevent future visits.
Behavioral health is a particularly costly domain: Employees in mental health distress cost employers about $3,000 more a year than do their peers.6 On the ip side, employers that support behavioral health see a $4 return for every $1 invested in related treatments.7
Animated by its “Whole Health” approach, Anthem has prioritized access to behavioral health care through the following initiatives:
1 2 3
Launching a virtual solution that puts a focus on behavioral care. Anthem provides access to virtual providers such as Talkspace and Headway along with many other online therapy provider groups. The virtual modality was chosen because three-quarters of the most common virtual diagnosis codes are for behavioral health. Anthem offers virtual mental health visits for our New York members, providing convenience and exibility when scheduling appointments.
Lowering the cost of behavioral health care.
Connecting primary care providers with behavioral health solutions, Anthem plans to roll out more new behavioral health offerings — from personalized content to expanded digital coaching — in 2025. But the health plan already has achievements to celebrate: 72% of members stated that Anthem’s virtual self-guidance support improved their emotional health.8 And employees receiving substance-use-disorder treatment saw an average decrease of $2,493 in total impactable medical costs.9
Christopher Joseph, executive director of EngageWell IPA, a network of communitybased health and human services organizations, shared a similar proactive philosophy.
“We aim to treat the whole person, recognizing the myriad of factors that support well-being,” he said. “That means providing wraparound services, such as help with substance use and housing.”
This aligns with Anthem’s own “Whole Health” approach, which aims to improve access to and quality of care while keeping costs down.
“Health care to us includes behavioral, social and nancial elements; there is rarely just one stressor,” said Deborah Ruggiero, clinical programs director at Anthem. “And our approach is not just holistic, but integrated. So when a course of treatment is prescribed, we’re also asking: Can you access transportation? Do you have a primary care doctor? Do you need help making an appointment?”
As a connection point between many of the health care services that members utilize, health plans are uniquely situated to ensure that patients’ needs are met. For example, they can identify whether a member has failed to re ll a prescription for heart medication or not gotten a preventive screening, alerting the member or their physician.
Through Anthem’s Sydney Health app members have access to a zip code-based community resources section that may help members nd support for a full range of social needs: food, housing, transit, education, work and health.
“There are people who need to choose between buying their diabetes medication or their next meal,” DeStefano said. “Community partnerships allow us to facilitate solutions that help people avoid those impossible decisions.”
Hall, of Food Bank For New York City, shared a revealing triumph for both his organization and one of its clients. A pilot program to increase produce consumption helped a diabetes patient lower her A1C level enough so that she could undergo eye surgery.
“This demonstrates the power of food coupled with coaching that drove the change,” Hall said.
Hall credited Anthem and its “Whole Health” mindset for the success.
“Anthem hosted us at a master class for pantry leaders,” he said. “They provide a
space for the cross-pollination of ideas and help us think about the value of trust.”
Trust is an important currency in the community health world, where outcome discrepancies continue to rankle (and ripple). Smart leaders leverage community partners with the cultural uency that allows them to have an impact.
“To address racial disparities in primary care access, we launched a telemedicine initiative inside a supportive housing program where Haitian Creole is a dominant language,” Joseph said. “We knew there might be some medical mistrust, so we hired someone from within the community to serve as a Program Ambassador.”
Anthem has long believed that streamlined processes bene t not only providers but their patients. Less burdensome administrative loads allow doctors and other professionals to direct more attention and resources to care delivery.
As one example, the health plan is appropriately accelerating authorizations for providers and consumers by increasing electronic medical record (EMR) access
and bi-directional data exchange through the EMRs. It is also working closely with providers on after-hours primary care, as well as virtual care across a sweep of specialties.
Technology — or, more speci cally, technology that facilitates smart data usage — also helps lower costs.
“By partnering with Anthem, we can study previous years’ health care utilization and identify the top drivers of health care costs,” Quinn said. “Then we can target the leading ones.”
The Fedcap Group introduced an Anthem digital- rst diabetes program — a weight loss and exercise challenge in an app — for prediabetic and diabetic members, who earn wellness dollars for participation.
Joseph, of EngageWell IPA, shared how a similar strategy is employed across his network of community-based organizations.
“Smartphone push noti cations remind people to take critical medications, with nancial rewards for successful adherence,” he said.
In both cases, organizations are leaning on preventive care to lower future health care costs.
New York members are increasingly engaging with Anthem’s digital offerings, increasing their participation each year. The health plan is intent on becoming a digital- rst platform — and it’s well on its way: 44% of eligible commercial members are registered on Sydney Health, Anthem’s health platform app, through which they can view claims, learn about bene ts, nd in-network providers, access virtual care and more.10
Critically, Sydney Health can also be used to store comprehensive health histories and
medication information. DeStefano shared how having that data in hand can be gamechanging for members:
“A kid had a successful transplant, but a week later complained of a headache and couldn’t see,” he said. “The mom brought him to an ophthalmologist, who asked what medications the child was on. Crying and overwhelmed, the mother couldn’t recall. But by using the Sydney Health app, the ophthalmologist easily pulled up data on exactly what the kid was taking — and saw that one of the medications can cause blurred vision in high doses.”
An ER visit was rendered unnecessary.
In an era where AI’s adoption is increasing, Anthem is leveraging that technology in multiple ways, one of which is helping to improve members’ experiences. The health plan’s associates are using AI and the insights provided by the technology to help provide optimal care pathways. So, for example, when a newly pregnant member calls to verify her cost share of OB-GYN visits, her words trigger AI to pull up relevant information for the member services associate, allowing the associate to spend more time with the
member instead of searching pages of bene ts. AI-driven insights can also help the member services associate ag and introduce Anthem’s maternity program to the member.
“We’ve invested signi cantly in technology, including AI,” said Miller, the general manager for the health plan’s New York commercial business. “For example, our Find Care tool includes personalized match, which recommends high-performing providers by matching members’ unique clinical pro les to physicians who have the best outcomes managing similar populations.”
In addition, Anthem’s team is using AI to help identify and target gaps in care for the member providing the next best action guidance that most impacts their immediate health status, prevention and overall costs.
“We’re not here only when you’re sick and paying bills,” DeStefano said. “We’re a company that uses digital technologies to transform the way we serve consumers. We’re a company that enables community relationships. And we’re a company that focuses on improving health habits among people, which is our ultimate mission.”
1. Partnership for America’s Health Care Future: https:// americashealthcarefuture.org/resources/voter-vitals-june-2023-edition-ahealth-care-tracking-poll/
2. Health Care Cost Institute: https://healthcostinstitute.org/images/pdfs/ and HCCI_2020_Health_Care_Cost_and_Utilization_Report.pdf
3. AMA Journal of Ethics: https://journalofethics.ama-assn.org/article/ ama-code-medical-ethics-opinions-related-health-care-waste/2022-10
4. Fierce Healthcare: https://www. ercehealthcare.com/providers/ taxpayers-shouldnt-have-subsidize-health-systems-massive-2022investment-losses-health#:~:text=The%20systems%20saw%20a%20 collective,pro les%2C%E2%80%9D%20the%20researchers%20wrote.
5. Anthem membership data based on internal program studies.
6. NSC: https://www.nsc.org/newsroom/new-mental-health-costcalculator-demonstrates-why?srsltid=AfmBOopXgJbuRJpE6CDpDGPqsbk Ik3CJ-uvHrLTIn3SAjjYrMKuD_O01
7. National Safety Council and NORC at the University of Chicago research released May 13, 2021.
8. Anthem internal data, Commercial members, 2022
9. Anthem commercial behavioral health program evaluation 2020.
10. Based on Anthem data from June 2024.
Anthem is deeply committed to bringing choice and value to the 4.8 million New Yorkers we serve every day, investing nearly $10 million to help strengthen our communities. We do this thanks to the hard work of our 5,000+ associates who live and work here too. In partnership with local care providers, we use data and technology to deliver personalized healthcare with equal focus on the physical, behavioral, and social drivers of health.