Crain's New York Business, February 19, 2024 by crains-new-york-business

CRAINSNEWYORK.COM I FEBRUARY 19, 2024

Are company DEI investments built to last? Diversity and inclusion officers were the most coveted C-suite hires. Now they are leaving their roles. By Jack Grieve

51%

Just two years ago the role of chief diversity and inclusion officer was the single fastest-growing position in the C-suite, as documented by LinkedIn. Now, many of those same officers are leaving their jobs. Appointing a director-level position in charge of diversity, equity and inclusion, or DEI, initiatives had become a go-to

of DEI officers say business leaders fail to take ownership for driving DEI outcomes. Source: CV Viverito

168.9%

symbol of an organization’s commitment to diversity in the workplace after the police killing of George Floyd and the nationwide racial reckoning that followed. However, in the initial race to create DEI-focused roles, organizations often failed to dedicate sufficient support to sustain DEI staff in the long term. Now,

Growth in diversity and inclusion officer positions from 2019 to 2021. Source: analysis from LinkedIn

mounting legal pressure, political backlash and personal burnout are eroding the ranks of corporate DEI officers. “In 2020 there was a reactive investment without necessarily building up the foundation and structure to support that See DEI on Page 19

-4.5%

Diversity and inclusion officer positions declined by 4.5% in 2022. Source: analysis from LinkedIn

New York’s Film Production Credit, newly expanded to $700 million annually, gives the state back just 31 cents for every dollar it spends on the tax break, a new state-commissioned report found. | BUCK ENNIS

New York’s generous film tax credit is a failure The $700 million incentive is a “net negative” that fails at its main goal, according to a new state-commissioned report By Nick Garber

New York’s newly expanded tax credit for film productions is a “net negative” that fails to give taxpayers a return on their investment, even as state leaders have continued pushing to expand it, according to a new study commissioned by the state itself. New York’s Film Production Credit was

grown in last year’s state budget to cover as much as $700 million in costs annually for film and television productions that opt to locate in the state, forgiving 30% of eligible costs for each movie and show. Lawmakers, at the urging of Gov. Kathy Hochul, also extended the program through 2034 — despite longstanding complaints from watchdogs that the incentive may not achieve its stated goal of

spurring economic activity and attracting more well-paying jobs. Those claims are bolstered by the new study by the financial advisory firm PFM Group, which was commissioned by the state’s Department of Taxation and Finance to look into each of New York’s economic development tax credits. The study was required by a 2022 state budget provision and was put together over the course

of 2023. All told, New York gets back just 31 cents for every $1 it invests in film productions through tax breaks, the study concludes after considering the program’s pros and cons. The program has cost the state some $5 billion in the last decade, making it the largest of New York’s many tax incentives. See CREDITS on Page 22

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ELECTION RESULTS Democrat Tom Suozzi beats Republican Mazi Pilip for George Santos’ former seat in the U.S. House.

CHASING GIANTS A startup on the Upper West Side aims to provide a support group for any life challenge.

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GOTHAM GIG The MTA’s chief customer officer looks for fresh ways to keep people informed. PAGE 23

2/16/24 5:57 PM

ON POLITICS

What Tom Suozzi’s win doesn’t mean Beware of reading too much into the results when the general election will bring out many more voters

T Tom Suozzi, a former congressman, won the special election in New York’s third congressional district. | BLOOMBERG

Election results: Suozzi beats Pilip to replace George Santos in House dacy, said in a statement. The third congressional district covers a Democrat Tom Suozzi defeated Republi- swath of Nassau County’s North Shore and a can Mazi Pilip in the Feb. 13 special House few neighborhoods in eastern Queens, election to replace George Santos, stem- where voters headed to the polls on Feb. 13 ming the GOP’s inroads on Long Island and amid a snowstorm that was widely expected further narrowing the party’s slim majority to depress turnout. As of Feb. 14, the special election turnout was about 62% of the disin Congress. Defying polls that had depicted a neck- trict’s 2022 general election in which Santos and-neck race, Suozzi held a comfortable won a surprise victory. For weeks, Suozzi, a moderate Democrat, lead of nearly 8 percentage points, or more than 13,000 votes, with nearly all votes had been seen as a favorite over Pilip given his prominent stature in the district — he previcounted as of Feb. 14. The contest had been loaded with mean- ously held the seat for six years and served being, seen variously as a referendum on New fore that as a local mayor and Nassau County York City’s migrant crisis, a test of the Repub- executive. But polls released recently showed lican Party’s continued gains on Long Island, a close contest between him and Pilip, who is and even a preview of the November general a county legislator and Israeli military veteran. Both candidates sought to make themelection, where the seat will go up for grabs again along with several other swing seats in selves palatable: Suozzi has distanced himNew York. With Suozzi’s special election self from President Joe Biden and progresvictory, the Republican Party’s margin in the sive elected officials, while Pilip has made herself hard to pin down politically, evading House will shrink to just six seats. questions on abortion and only recently conceding that she voted for Donald Trump in 2020. Suozzi has dominated fundraising, although the race has attracted millions of dollars in outside spending. Upwards of $22 million has been spent on advertising, according to the tracking firm AdImpact — making it the 16th costliest House election since 2016. Immigration has been the dominant topic in television ads. — Mike Smith, president of the Democratic House Majority PAC As in many special elections, both campaigns focused much of their ener“Thank God,” Suozzi told his supporters gy on turning out their own core supporters. in a victory speech Feb. 13. Pilip quickly But the contest’s low turnout, compounded by the weather, means it may have limited valconceded the race after it was called. Suozzi’s return to Washington will not be ue as a predictor for November’s midterms. Another wild card is the potential for the restful, given his need to defend the seat again in November. It is unclear whether district’s boundaries to change in the coming Pilip will be the Republican nominee again. months, thanks to a December court ruling “House Republicans have shown how out that may pave the way for state Democrats to of touch they are with Americans across the seize control of the redistricting process. The seat was freed up by the December country, and their deeply unpopular extremist policies will ensure their losses at expulsion of Santos after the revelation of the ballot box,” Mike Smith, president of the the freshman congressman’s largely fictiDemocratic House Majority PAC that spent tious life story and the fraud and moneymillions of dollars to boost Suozzi’s candi- laundering charges filed against him.

By Nick Garber

“House Republicans have shown how out of touch they are with Americans across the country, and their deeply unpopular extremist policies will ensure their losses at the ballot box.”

Correction ◗ The profile of David Travin that ran in the Feb. 12 edition of Notable General Counsels was

updated to clarify his role.

om Suozzi triumphed over Mazi Pilip in the House race to replace the indicted and expelled George Santos, benefiting from greater name recognition, stronger fundraising and turnout that plummeted when a snowstorm arrived on Election Day. Suozzi banked a likely lead in early voting that he didn’t relinquish, and Pilip, a conservative Republican, was left to scramble to Democrat Tom Suozzi and Republican Mazi Pilip contested the NY-3 make up the difference on Elec- congressional seat encompassing northern Nassau County and tion Day. eastern Queens. | BLOOMBERG Suozzi was the congressman who had held the seat until launching a tures and town governments. It will take doomed bid for governor in 2022. Long be- more than Suozzi’s return to D.C. to fix fore then, he had served as Nassau County what ails Democrats on Long Island. But Republicans will need to worry more executive and was a known commodity to the Nassau and eastern Queens-based dis- about Nassau County in the House. Firsttrict. Though Pilip, a local legislator, and term Republican congressman Anthony her allies tried to paint him as an AOC and D’Esposito barely won a South Shore disIlhan Omar-aligned radi- trict that had historically been in Democratcal, Suozzi has always ic control. He may not be able to hold it if been critical of the left Biden carries the district, as he did in 2020. A greater question, still unanswered, is if flank of his party and distanced himself, when Democrats can somehow flip the Suffolk possible, from progres- County House seat they lost a decade ago, when Lee Zeldin unseated Tim Bishop. sives. Democrats won a Nick LaLota is the first-term incumbent race they were sup- and is, in theory, vulnerable. There’s no inposed to win. And with dication, though, that the local Democratic House districts set to Party can drive LaLota out of office. Ross Barkan be Beware of reading too much into one redrawn again, and Albany Democrats de- House special election. November is many ciding what they look like, it’s plausible months away, and the kind of people who Suozzi will have an easier time winning show up to vote for Biden or Trump are very different than the kind who feel enre-election in November. The low turnout helped Suozzi because gaged enough to cast a ballot for one conDemocrats, in the last half-decade, have gressional race in the depths of winter. Ross Barkan is a journalist and author attracted more college-educated voters, the sort that show up for special elections in New York City. and off-year contests. Thanks to Donald Trump’s furious opposition to mail-in ballots and anything that isn’t Election Day EVENTS CALLOUT voting, Democrats in Nassau County and Queens were able to cast votes before the snow hit while more Republicans waited for Feb. 13. The Nassau County GOP machine couldn’t overcome the turnout challenges or the heavy outside spending headed up by Hakeem Jeffries, the Brooklyn congressman and House minority leader who hopes to be elected speaker next year.

Results won’t tell us very much There will be much chatter about this special election being a bellwether for the rest of the nation — an indication of Joe Biden’s rising fortunes in the fall and emboldened Democratic efforts to retake the House. Both outcomes might happen, but Suozzi’s ability to defeat Pilip — an untested neophyte who ducked reporters for most of the race — won’t tell us very much. The November electorate will look very different than last week’s. At the very minimum, it will be far larger. Democrats can hope that Suozzi’s win will start to reverse their terrible fortunes on Long Island. After Santos won in 2022, Republicans held all four House seats in Nassau and Suffolk counties. They still control both county executive and district attorney offices, as well as the local legisla-

Vanessa Gibson

Donovan Richards Jr.

JUNE 5 POWER BREAKFAST Mark your calendar to hear from all five borough presidents on one stage — Vito Fossella, Staten Island; Vanessa Gibson, Bronx; Mark Levine, Manhattan; Antonio Reynoso, Brooklyn; and Donovan Richards Jr., Queens. They’ll discuss big issues facing the city, ranging from housing and development to public safety in a conversation moderated by Crain’s New York Business Editor-inChief Cory Schouten.

DETAILS Location: 180 Central Park South, NYC CrainsNewYork.com/pb_boroughpres

2 | CRAIN’S NEW YORK BUSINESS | FEBRUARY 19, 2024

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CHASING GIANTS

Co-founders Rajiv Kumar (left) and Lee Pichette launched Forum last November with $5.3 million in seed round funding. | COURTESY OF FORUM

An Upper West Side startup aims to provide a support group for any life challenge The upstart: Forum

sliding scale, which is important to me, and consistent with making my service accessible to a diverse group of people.” Krug says she found the platform easy to use, and is hoping to launch additional support groups for other neurodivergent populations. Forum employs a team of ten including the co-founders, and currently hosts about 70 support groups led by a similar number of facilitators. It would not disclose how many members have joined the platform.

f you’ve lost a spouse, you can typically join a grief support group at your church or community center. But what if you’re the only person in town dealing with a more unusual difficulty, like the loss of a twin? That’s the need Rajiv Kumar and Lee Pichette hope to address with Forum, their Upper West Side startup. The online platform, launched last November, offers live, virtual peer support group meetings for everyone from parents of transgender children to people dealing with infidelity or the The reigning Goliath: Reddit death of a beloved pet. Forum partners with independent facilitators to lead the Millions of users rely on free Reddit forums for support support groups — typically experienced mental health pro- with issues ranging from divorce to pet loss. The career fessionals. Facilitators decide their group’s focus and struc- guidance subreddit, for example, has 2.7 million members; ture. Groups can meet as often as several times a week to as the relationships forum has 3.5 million. The San Francislittle as every three months, from one to several co-based company, which is planning an IPO this hours and include two to 12 participants. spring, reportedly earned $800 million last year. “We’re really leaning into the expertise of the facilitators — letting them run groups and facilitate How to slay the giant them the way they know best,” says Kumar. Facilitators also decide how much to charge for Kumar and Pichette met a decade ago at Kumar’s membership in their support group — anywhere first startup, ShapeUp, an online peer-support from $100 to $500 a month per participant is typicompany for weight loss. The two remained friends. cal. Membership in a grief group tends to cost less When they met up at a rooftop bar in Midtown in than membership in a group focusing on, say, prothe summer of 2022 to discuss startup ideas, they fessional development that might be covered by an Anne Kadet realized they’d been considering the same concept employer, says Kumar. from different angles. Kumar had been mulling onFacilitators keep the majority of the subscription line support groups for mental health, Pichette for revenue, he says. He declined to specify the exact split. career development. Why not create a one-stop-shop? Forum puts potential facilitators through intensive They started by chatting with support group professionals screening and training — just 5% of prospective facilitators to learn about their work, what they found challenging and are invited to join the platform. “We’re not looking for folks what they’d like to see in an online platform. who have never done this before,” says Kumar. “And what always happens when you do these research Among them is Allison Krug, an epidemiologist and certi- calls — you end up inadvertently converting and getting fied coach in Virginia Beach who joined at the start of the year some customers, right?” says Kumar. “A few of those facilitaafter hearing about Forum from a fellow coach. Her group, tors said, ‘Hey, if you’re starting this, we want to be the first “Unleashed: Thriving as a Neurodiverse Female Entrepre- ones on your platform.’” neur,” has two members. She is hoping to attract up to five. Relying on freelance help and their own engineering Forum’s online peer support model allows her to work prowess, the co-founders built a makeshift platform (later with small business owners who can’t afford one-on-one replaced with a fully-featured version) and started running counseling, says Krug, “And it’s wonderful we can offer a pilot groups for divorce and grief support in the fall of 2022.

“A couple of those groups are still running today,” says Kumar. Based on early feedback, the co-founders determined that both facilitators and members preferred a simple monthly subscription plan over a complicated pricing structure with multiple options. They also discovered customers didn’t want additional features such as a 24/7 text-based group chat. “People just want to be in a live meeting with others that they connect with. All that other stuff is noise,” says Kumar. While fundraising, they were happy to find many venture capitalists interested in a marketplace for peer-support groups. But some felt the company should launch with deep focus on one category, such as grief. Then they met Lee Hower, co-founder and partner at Flatiron-based NextView Ventures, which led Forum’s $5.3 million seed round in November 2023. “It’s a conundrum many startups face — focusing on one area or going wide,” says Hower. “For a business like Forum, it was important to be a multi-category company in the early innings so you don’t get pulled into one niche for too long.” He also liked Forum’s determination to let facilitators decide the parameters of their own groups. “It should be flexible,” says Hower, “not one-size-fits all.”

The next challenge Having amassed a pool of facilitators, the co-founders say they will now focus largely on growing platform membership. The goal is to serve as a global marketplace — one of the first options people consider when they need help facing any sort of life challenge. Beyond word of mouth, they will be partnering with influencers, buying digital ads and working with advocacy groups who can spread the word to their members. “Marketplaces take a long time to build,” says Kumar. “You have to build up the supply and the demand, and you’ve got to get the network effects going. But we’re committing to doing this for as long as it takes.” Anne Kadet is the creator of Café Anne, a weekly newsletter with a New York City focus. February 19, 2024 | CRAIN’S NEW YORK BUSINESS | 3

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WHO OWNS THE BLOCK

120-125 RIVERSIDE DRIVE

Big loss on prewar buildings on the Upper West Side is latest hit for apartment investors Rent regulations may be to blame for Nos. 120-125 Riverside Drive selling for 64% less than in 2013 By C. J. Hughes

RIVERSIDE PARK

One of park designer Frederick Law Olmsted’s skinnier green spaces — its width in some places is just a couple hundred feet, although it does stretch for four miles — Riverside Park allows neighbors to unwind in nature without trekking all the way to Central Park. In 1844, Edgar Allan Poe stayed at a nearby farmhouse for a year. His wife, Virginia, had been suffering from tuberculosis, so the Poes thought it wise to leave their home in congested Greenwich Village and spend some time in the cleaner country air the rural Upper West Side then provided. (They relocated to the Bronx next.) During his short stay, which included work on his poem The Raven, Poe apparently liked to sit and think on a rocky outcrop called Mt. Tom. Though the park did not exist in Poe’s day as it was completed in stages starting in the late 1800s, Mt. Tom survived the major landscaping project. Find it around West 84th Street, a block that bears Poe’s name today.

126 RIVERSIDE DRIVE At odds with the historic vibe of the street because of its picture-window-lined facade and unadorned look, No. 126 can seem to belong to the postwar era. But underneath that plain exterior is a pair of prewar buildings — one with six stories and the other with seven — built around the turn of the last century, historical records show. Presumably once single-family dwellings, the structures apparently later served as SRO-style hotels between 1940 and 1966 before being reinvented and remodeled by their landlord into a single conventional rental building. It has 27 one- and two-bedroom units today. In 1982, like with much of Riverside Drive, No. 126 became a co-op. But unlike with some similar properties, the building’s board seems flexible about allowing shareholders to rent out their homes. The handful of units that have been leased in recent years includes a one-bedroom last asking $4,200 a month that found a taker in June, according to StreetEasy. But at a time of historically low vacancy rates, there hasn’t been a rental listing there since.

350 W. 85TH ST. This striking red-brick-and-terracotta building, which is called Red House according to the name inscribed over its door, opened in the early 20th century as the neighborhood was turning into an affluent enclave. Riverside Drive (which was originally Riverside Avenue) had opened to traffic a decade earlier. Owned today by Isadora Hecht, whose family appears to have controlled the site for decades, the 6-story, 54-unit National Register site has never gone the co-op route but operated as a rental since cutting its ribbon in 1904. The quippy author Dorothy Parker reportedly lived there briefly as a child. No. 350 seems well run — building records indicate almost no lodged complaints — and appears in solid shape but has still seen its value drop in recent years like with other apartment houses. In fact, the city puts its market value at $6 million, which is up slightly from 2023 but less than its $7.8 million value in 2022, according to tax records. (Buildings usually trade for twice their city-assigned value.) The building does have rent-regulated apartments, according to the state Division of Housing and Community Renewal, but it’s not known how many. As far as its market-rate units, a two-bedroom asking $3,700 a month was leased in January.

120-125 RIVERSIDE DRIVE These two attached and sinuously curved apartment buildings were developed on slightly different schedules. No. 120, which has nine stories, went up first, in 1900, and No. 125, with 12 stories, came in 1907. For decades, both properties were owned by the Wassner family, which apparently funneled some of its fortune from a footwear business — its breakthrough was adding a durable patented plastic material called Arnavon to children’s shoes in the 1960s, according to Time magazine — into real estate. But they stayed rentals, as the co-op craze of the mid-20th century seemed to pass the site by. In 2013, a group led by retail powerhouse Thor Equities, then branching into residential plays, purchased the 95-unit complex for $85 million before renovating the common areas and market-rate apartments; combinations shrunk the unit total to 82. But the high number of rent-stabilized units, about half of the buildings, may have limited the owners’ upside, especially after the 2019 pro-renter law that made deregulation tougher. In January, the development team, which appeared to be led by a different firm, BGO, unloaded Nos. 120-125 for $31 million, a hefty 64% haircut. The buyer, Aya Acquisitions, a company led by Amir Shriki, previously developed co-living sites and was backed by $15.9 million in financing from Tennessee-based First Horizon Bank. In addition, GDS Brightstar, the lending arm of developer GDSNY, and the firm Sabal Investment Holdings kicked in $11.5 million in equity. An email sent to BGO was not returned.

353 W. 84TH ST. This 16-foot-wide, 5,100-square-foot brick-and-limestone building with dramatically bowed bay windows was built in 1897 as a single-family residence. But it was converted, likely in the 1940s, into the B’nai Israel Chaim synagogue at a time when the blocks west of West End Avenue were popular destinations for Jewish immigrants from Germany, Hungary and Poland, according to the Landmarks Preservation Commission. The mid-20th century was a time of major reinvention for the area. A post-World War I housing shortage led to officials encouraging the carving up of large homes into multifamily dwellings, a trend that accelerated during the Great Depression as owners cast about for new income streams. The West Side in particular went through much of this slicing and dicing, the commission said. Some of the subdivided properties, where tenants had their own sleeping chambers but shared baths, evolved into the neighborhood’s once-numerous single-room occupancy hotels, or SROs, some of which survive to this day.

110-118 RIVERSIDE DRIVE While Nos. 120-125 may have hung on as rentals, other large apartment houses took a different route and became co-ops, with residents apparently deciding that the best way to deal with aging structures was to collectively take matters into their own hands. An example is this full-block site, which similarly has two buildings acting as one. Their developer in 1929 was an entity called Driveway Realty Corp., which built the khaki-hued-brick complex courtesy of a $1.6 million construction loan (the equivalent of about $28 million today), according to news reports from the time. The site’s architect, the firm Gronenberg & Leuchtag, appeared to be a go-to for West Side residential projects back then, also completing nearby 250 W. 85th St., 315 W. 86th St. and 345 W. 86th St., according to the official nomination that led to this block becoming a landmark in 2012. The L-shaped, 16-story complex went co-op in 1968 and has about 170 apartments today. Comedy luminaries Jerry Stiller and Anne Meara lived in the building since its days as a rental and raised their children there, actors Ben Stiller and Amy Stiller. After Anne died in 2015 and Jerry died in 2020, Ben and Amy sold the family’s five-bedroom, three-and-a-half bath apartment in 2022 for $6 million. They had been marketing it at $5 million.

341 W. 84TH ST. This 6-story, stoop-fronted limestone home, one of three of identical vintage in a row, is on the market for $6.3 million, down slightly from the $6.5 million it was initially seeking in July. The owner paid $5.2 million for the property in 2010, according to the city register. Although listed in tax records as able to legally house three families, No. 341 has been functioning as a two-family, according to the listing. It offers a four-level apartment awash in antique details like carved fireplace moldings atop a one-bedroom apartment at the garden level and also features a finished roof. But when the 17-foot-wide, 6.500-square-foot structure was constructed in 1900, it was likely a single-family home. Upper West Side townhouses appear to have had a middling 2023, according to data from the townhouse-focused brokerage Leslie Garfield & Co. The average sale price of $6.9 million was up slightly over 2022, but the neighborhood saw just 47 deals in total, down a bit over the same time period, the firm said.

BUCK ENNIS, GOOGLE MAPS

ringed by a park, awash in attractive architecture and relatively quiet, Riverside Drive should be a real estate slam dunk. But a January deal there suggested otherwise. The developer BGO unloaded a pair of renovated prewar rental buildings at Nos. 120 and 125 at a staggering 64% loss about a decade after snapping them up. Why the interconnected buildings sold for $31 million after being purchased in 2013 for $85 million may suggest the limits of an old approach to investing in a new multifamily world. The partnership that bought the complex, which was then led by the firm Thor Equities, planned to immediately renovate the non-rent-regulated units in the building, which made up about half of their 95 units, Thor executives said at the time. The other aspect of the business plan, assuming the standard approach of developers, was presumably to renovate the rent-stabilized units as they became vacant and then pass along the construction costs to new tenants through raised rents. The strategy could take a while to play out but would essentially deregulate the units over time. But then came 2019, when state lawmakers passed the sweeping Housing Stability and Tenant Protection Act, which sharply limited using the capital improvements strategy to deregulate apartments. Housing advocates hailed the stronger protections for tenants amid sky-high living costs as more important than the downsides for developers. But several years later, the law appears to have lowered demand for rental complexes, even if higher borrowing costs are also to blame. Indeed, in 2023 Manhattan saw 163 multifamily deals, a 31% drop from the 237 in 2022, according to the brokerage Ariel Property Advisors. Along the same lines, developers shelled out $2.7 billion for apartment buildings in 2023, a 64% plunge from the $7.5 billion spent in 2022, the firm said. And the rent-stabilized buildings in that group seemed particularly impacted. The ones in Manhattan below 96th Street, like 120-125 Riverside, saw their values plummet 37% in 2023 versus what their worth was about a decade ago, Ariel said. Nos. 120-125 might have suffered more than most based |on the firm’s survey. But other studies suggest buildings with rent-stabilized tenants can now be had for 50% off. The buyer of Nos. 120-125, Aya Acquisitions, has previously invested in co-living properties and may have liked what it saw in terms of the market-rate units. A five-bedroom, for example, was listed a year ago at nearly $20,000 a month. Aya, which did not respond to a request for comment, may also have more room to breathe at such a lower acquisition cost and be able to stick out its purchase for a while. 4 | CRAIN’S NEW YORK BUSINESS | February 19, 2024

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NOTABLE LEADERS IN SUSTAINABILITY Nominate a leader who leads sustainability initiatives at an organization and makes an environmental impact.

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2/15/24 3:22 PM

ON REAL ESTATE

With unveiling of proposal, looks like there’s hope for a serious housing debate in Albany A recent plan from a pair of state lawmakers shows the Legislature is at least taking more ownership over the issue this year

BLOOMBERG

t looks as if we might have a ideologically-driven plan that substantive housing debate in would basically just create another version of the city’s infamously Albany this year after all. Recently state Sen. Cordell troubled public housing authority Cleare, who represents Harlem, on a statewide level. The plan is almost certainly too and Assemblywoman Emily Gallagher of northern Brooklyn un- liberal to get the signature of Gov. Kathy Hochul, who has veiled a housing proposstayed largely aligned al that supporters and with business interests detractors alike (there throughout her tenure so are already plenty of far and spent years advoboth) would have to cating for a replacement agree is ambitious. And of 421-a, the tax abatethough the plan itself is ment program meant to highly unlikely to pass in incentivize developers to its current form, its mere create affordable housexistence is a good sign ing, albeit unsuccessfully. that the Legislature is Eddie Small But it is still a welcome taking more ownership difference from the Legisover New York’s affordable housing crisis rather than lature’s approach to the housing crisis last year, which seemed to leaving it to the governor to solve. The crux of the proposal would consist largely of their saying no to be the creation of a $5 billion, everything Hochul proposed. (Asstate-run Social Housing Devel- sembly Speaker Carl Heastie and opment Authority that could state Senate Majority Leader Anbuild, buy and renovate perma- drea Stewart-Cousins did say they nently affordable housing with reached a fairly comprehensive union labor. Gallagher, Cleare and housing deal at the tail end of the other supporters say it could cre- 2023 legislative session that Hoate 26,000 affordable homes chul wouldn’t support, but they across the state and eliminate the never actually passed anything need to incentivize private devel- that could be sent to her desk, opers to build affordable housing something her administration through tax breaks. Opponents, archly pointed out at the time.) Hochul had already indicated meanwhile, have derided it as an

that she would leave the ball more in the Legislature’s court on housing this year, and her State of the State address largely bore that out. Although it included more of a focus on housing than many expected, the ideas were largely repeats of her proposals from last year without something as farreaching as the statewide housing mandates she pitched then. This seemed to tee up a smaller overall role for housing on Albany’s agen-

da this year, but several members of the Legislature stressed they would continue to work on it, and it’s nice to see that at least some of them meant it. The fact that this proposal exists by no means guarantees a housing package will pass. It is all too easy to envision a scenario in which progressive members of the Senate and the Assembly insist that this is the only strategy for boosting affordable housing production

they will accept, Hochul refuses to sign off on it—assuming it even comes up for a vote—and nothing gets done once again. But with rents still sky-high compared to before the pandemic and the city’s residential vacancy rate the lowest it has been since before the moon landing, the pressure to take action to address New York’s affordable housing crisis will and should only grow. The more ideas to argue over, the better.

Meta to shrink footprint at Vornado building by a third By Aaron Elstein

Meta Platforms is ditching a third of its 775,000 square feet of space at 770 Broadway and the landlord, Vornado Realty Trust, said Feb. 13 that occupancy rates at its Manhattan office buildings will continue to erode this year. New York’s second-largest commercial property owner said a key performance metric called funds from operations would decline this year. But company leaders say prospects for next year are better because they continue to believe

million square feet from its 20 million-square-foot Manhattan portfolio, which includes towers at 1290 Sixth Ave. and 280 Park Ave. But the slow leak of tenants continues. Occupancy in the landlord’s New York portfolio edged down last quarter to 89.4%, 50 basis points below the Sept. 30, 2023 figure and 100 basis points below the year-earlier period. The next source of pressure comes from Meta, whose lease for 275,000 square feet at 770 Broadway expires in June, Vornado said. Meta will retain 500,000 square feet at the Greenwich Village office building, which has a total of 1.2 million. The owner of Facebook, Instagram and WhatsApp, Meta is Vornado’s largest tenant; the Silicon Valley giant’s decision to lease 730,000 square feet at the Farley Building in 2020 was a big bet on New York’s future. Facebook first leased space at 770 Broadway in 2018 and took additional space in 2022, but has laid off people here over the past year. Meta, which also leases space at Hudson Yards, didn’t re-

“The office leasing market is on the foothills of recovery.” — Steven Roth, CEO Vornado Realty Trust work from home isn’t viable over the long term. “The office leasing market is on the foothills of recovery,” CEO Steven Roth said on an earnings call Feb. 13. Investors didn’t see it that way, and Vornado’s stock price fell 8% in afternoon trading, to about $25 a share. Vornado secured some large leases last quarter and is in negotiations to lease another 2

spond to a request for comment.

Taking a year longer Vornado owns several office buildings near Penn Station, including the Penn 1 and Penn 2 towers. On Feb. 13, the landlord said it would take a year longer than previously forecast for Penn 2 to “stabilize,” or produce enough rental income to service debt. Evercore ISI analyst Steve Sakwa said the building, still under renovation, hasn’t landed an outside tenant except MSG Entertainment – which could signal demand for Class A office space in the neighborhood is weaker than around Grand Central Terminal or Sixth Avenue. Vornado enlisted commercial broker Cushman & Wakefield to help its internal team with marketing the building and officials said it will take time to lease space. “We’re trying to be realistic,” President Michael Franco said. The landlord had a happier story to tell about retail, thanks to Gucci’s parent and Prada paying huge sums for Fifth Avenue storefronts recently. It also pushed back against a report in Crain’s that Ralph Lauren had negotiated a sharply lower rent

Meta Platforms currently leases 775,000 square feet at 770 Broadway. | BLOOMBERG

for headquarters space at 650 Madison Ave., saying the new rent is similar to the older one on a per square foot basis after taxes and other costs paid by the tenant are accounted for. Annual rent paid by Ralph Lauren will fall by about 45% because it leased less space. Meanwhile, Vornado continues to hang onto cash. The firm didn’t repurchase any shares from last quarter and has bought back $29

million worth since the board authorized $200 million last year. The buyback program was instituted after Vornado suspended its dividend and dropped its shareholder payout by two-thirds last year. Roth assured that at some point Vornado will “rightsize” the dividend but now is not the time for that. “Most of your friends and peers think that what we did was the correct thing,” he told an analyst.

6 | CRAIN’S NEW YORK BUSINESS | February 19, 2024

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Just one-third of New Yorkers with commercial insurance accessed specialty mental health care in 2021, report says By Jacqueline Neber

Just one-third of New Yorkers with commercial health insurance were able to access specialty mental health care in 2021, a new report shows. The report, released Jan. 8 by national mental health advocacy coalition Inseparable, uses data from a study the firm commissioned last year to assign each state an access scorecard. New York, it found, is not faring well compared to the rest of the country. Of the more than three million

aid Services and commercial insurers, shows. Just 21% of Medicaid beneficiaries reached the same care.

Follow-up care

Furthermore, it illustrates, only 24% of New Yorkers got follow-up care within 30 days after visiting an emergency room for mental health or substance use care. About 21 individuals per 100,000 people died because of a drug overdose and eight per 100,000 New Yorkers died by suicide. New York’s commercial insurance access rate puts it at 14th place in the country, said Angela Kimball, Inseparable’s chief advocacy officer. But the state’s 51st place ranking for Medic— Angela Kimball, Inseparable’s chief advocacy officer aid recipient access pushes it to the botNew Yorkers with a diagnosed tom of the pack overall. To that end, the report aims to mental health condition, 34% with commercial coverage re- raise awareness of access dispariceived specialty care, the report, ties and provide intervention based on data from Milliman, the ideas for lawmakers, she said. Centers for Medicare and Medic- While New York has made signifi-

“The bulk of commercial insurance is actually federally regulated, which is not something states have purview over.”

Just 21% of Medicaid patients accessed specialty care for their mental health in 2021. | UNSPLASH

cant progress in some areas, such as extending Medicaid eligibility for adults with lower incomes, there are still steps to be taken such as requiring health plans to cover all medically necessary mental health and substance use treatment. Kimball pointed out encourag-

ing proposals in Gov. Kathy Hochul’s executive budget, including setting network adequacy standards for commercial insurers and Medicaid plans. She also acknowledged the challenges states have in trying to widen access. “The bulk of commercial insur-

ance is actually federally regulated, which is not something states have purview over,” she said. “So it’s an enormous challenge if the federal government isn’t holding plans’ feet to the fire.” Inseparable was established in 2020 and is based in Washington, D.C.

Ralph Lauren’s newly negotiated lease for its Midtown corporate headquarters reduces rent rate by 30% By Aaron Elstein

In a move that could dramatically reset the market for highend Manhattan office space, Ralph Lauren negotiated a 30% reduction in rent to keep its corporate headquarters at 650 Madison Ave. “That is approximately 30% less on a per square foot basis,” said Fitch Ratings director David Ro, whose firm disclosed details of the luxury retailer’s new lease in a report this month. A 30% rent reduction indicates Ralph Lauren would pay only $62

occupy many fewer square feet when its new lease takes effect next year. It is expected to reduce its footprint at 650 Madison to 140,000 square feet from 240,000, Fitch said. The company’s total annual rent bill would fall by nearly 60%, to less than $9 million from more than $21 million.

‘Continued weakness’ Ralph Lauren didn’t respond to requests for comment. Its broker, CBRE, declined to comment. Some information about the lease was reported in December but not the rent. 650 Madison is a Class A building holding 600,000 square feet of office and retail space, with upper floors offering views of Central Park. The 27-story tower was acquired in 2013 for $1.3 billion by Vornado Realty Trust and the Ontario Municipal Employees Retirement System, which manages more than $100 billion in assets. Vornado, which owns 20.1%, wouldn’t comment, and OMERS didn’t respond to a request for comment. 650 Madison’s second-largest tenant, Memorial Sloan Kettering Cancer Center, moved out of 100,000 square feet of space a year before its lease expired in

Fitch downgraded a security linked to 650 Madison’s $800 million mortgage, citing “performance declines.” per square foot for its Plaza District headquarters space at the corner of East 60th Street, based on a 2020 report from bond rating firm KBRA showing the company paid $88 per square foot on its existing lease. Asking rents in the neighborhood average $90 per square foot, according to CoStar. In addition to paying less per square foot, Ralph Lauren will

650 Madison Ave., Plaza District | BUCK ENNIS

2022. Remaining tenants include Sotheby’s International Realty, private equity firm BC Partners and Willett Advisors, a firm that manages the fortune of former Mayor Michael Bloomberg. Ralph Lauren has been a tenant since 1989.

This month, Fitch downgraded a security linked to 650 Madison’s $800 million mortgage, citing “performance declines.” The building’s net cash flow has fallen by 21% in the last four years to $42 million annually, and Fitch expects vacancies to lease at an av-

erage rent of $75 per square foot and for occupancy to stabilize at 89.4%, down from 97.4% in 2019. The credit downgrade reflects “forward-looking performance deterioration expectations due to continued weakness” in the Midtown office market, Fitch said. February 19, 2024 | CRAIN’S NEW YORK BUSINESS | 7

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EDITORIAL

State must shout ‘Cut!’ on film tax credit T

Many productions regularly shot here, like “Law and Order,” portray New York as crime-ridden and dangerous, hardly a favor to the city’s reputation.

he state’s Film Production Credit grew to $700 million in last year’s budget. It’s time to call it a wrap on the giveaway, following a damning report on the credit’s failure to return on the investment. The newly expanded credit is just one of many tax incentives offered by the state, but at about $5 billion over the last ten years, it’s the largest. The goal of the tax credit was to incentivize more in-state filming and production that creates industry jobs and drives economic activity (think catering, equipment and site rentals, and more city scenery in movies and TV, boosting tourism demand). That sounds good in theory, but once investments are made, there’s rarely an analysis to confirm that the return on investment is real, until now.

‘Net negative’ The results aren’t good. The study, commissioned by the state itself, found that the investment is a “net negative.” New York gets back just 31 cents on every dollar invested in film production via tax breaks. The credit’s job-creation claim is “inconclusive at best,” the study found. After its launch in 2004, film industry employment stayed flat until 2010, and its share relative to the na-

Six movies with ties to New York received Oscar nominations, including two that were filmed in part in the city. | ISTOCK

tionwide market has since dropped. Other qualitative benefits touted by the break are murky at best. As Crain’s reporter Nick Garber pointed out, many of the shows that receive the credit every year are long-running television series that have always been filmed in New York,

dampening the claim that the subsidy attracts new investment. And does New York, of all places, really need more “exposure,” another alleged benefit touted by the state? Not to mention that many productions regularly shot here, like “Law and Order,” portray the city as crime-rid-

den and dangerous, hardly a favor to the city’s reputation. The study, which legislators demanded in exchange for expanding the program last year, should put its future in serious doubt. State officials, likely realizing as much, quietly posted the study online, without fanfare, and it only drew widespread attention when flagged by the Empire Center, a watchdog group. The stark report presents an opportunity for Gov. Kathy Hochul to reassess how she allocates a significant chunk of the budget and invest instead in housing and health care. If Hochul and lawmakers continue to grow the credit after such indisputable findings have come to light, voters and businesses will know that their promise to efficiently use tax dollars is just an act.

PERSONAL VIEW

Who needs SALT? Answer: All Americans

n 2025, a tax reform tsunami will flood that SALT would be the locomotive needCongress with the expiration of the Tax ed to propel Congress to action. In esCuts and Jobs Act. These negotiations sence, it was the only way to ensure that will reverberate beyond the Capitol Dome the TCJA could be passed with adequate and across all of America. In fact, conversa- budget-balancing. Historically, Republican members of tions in the halls of Congress have already started, and citizens in every sector and in Congress from high-tax states have been every income bracket — regardless of polit- staunch opponents of restricting SALT deductions, and I continue to share ical party — will be affected. that ideological viewpoint. AtTCJA, landmark tax reform legtacking SALT has extreme impliislation passed in 2017, contains cations for middle-class taxpaystrategically embedded expiraers, and the relief it provides is an tion dates designed to pit various important economic lifeline for interests against each other. From many. Saving SALT is about preindividual rates and standard deventing middle-class America ductions to corporate rates and from paying an outsized share of estate limits, the carefully crafted taxes because of state lines. code has set the stage for a monContrary to prevailing myths, umental clash. The unspoken Tom Reed SALT is not an exclusive benefit linchpin in this looming fiscal was a member for the wealthy — it is a lifeline storm is the State and Local In- of the U.S. for middle-class Americans income Tax deductions — a critical House of bargaining chip that will dictate Representatives cluding police officers, teachers, firefighters and frontline workthe course of the 2025 discussion. serving New ers. It ensures the 1% pays their SALT, capped at $10,000, al- York’s 23rd fair share while providing essenlows taxpayers to reduce their District from tial relief to hard-working Amerifederally taxable income. I wit- 2010 to 2022. cans burdened by the quirks of nessed the birth of TCJA and SALT’s introduction into the negotiation geography. It’s true that the higher the income a process. As a member of Congress serving on the tax-writing House Ways and Means person makes, the more of an impact SALT Committee in 2017, I was in the heart of has on their day-to-day income. However, the action as we overhauled our country’s salaries and cost of living vary tremenoutlandishly antiquated tax code. During dously across the country. Notable salary these talks, it became abundantly clear swings can even be found within a single

state. For example: the median income in Staten Island is $92,000, while in an upstate city like Jamestown, it is closer to $36,000. For added consideration — the median rent of a 2-bedroom apartment in Staten Island is nearly $2,500 a month. In Jamestown, it’s around $850 a month.

Simplistic and unrealistic Further, the common misconception that SALT will automatically revert to full deductibility in 2025 overlooks the complex interplay of revenue projections and political realities. As individual and corporate rates automatically rise, the assumption that SALT can be fully deducted without consequences to federal revenue is simplistic and unrealistic. The forthcoming 2025 tax reform negotiations will undoubtedly hinge on the pivotal question — how much SALT does America truly need? As a member of Congress, my responsibility was always to protect the interests of my constituents. I fought against a full repeal of SALT — which many of my colleagues wanted — and agreed to support the $10,000 SALT cap, which protected nearly all of my district’s taxpayers from an increase in taxes while giving them all the tax benefits that TCJA provided. In my view, this was a deal that moved our country forward with the largest economic growth our nation had seen in decades.

A judicious SALT compromise would pave the way for fair and balanced tax reform in 2025, writes former congressman Tom Reed. | BLOOMBERG

The fight to save SALT — and increase its cap — starts now. Conversations are already underway among my former colleagues. This is why we must begin to combat the flawed narratives around SALT and reiterate the truth: Americans need SALT. A judicious SALT compromise will pave the way for fair and balanced tax reform in 2025. It’s about securing a financial lifeline for millions of middle-class Americans who feel the added burden of an additional tax solely based on the community they call home. It’s about ensuring tax fairness exists across the board in this country, independent of location. And it’s about ensuring Americans are not discriminated against for earning higher wages in places where they are needed to offset the price of a higher cost of living.

Write us: Crain’s welcomes submissions to its opinion pages. Send letters and op-eds of 500 words or fewer to opinion@CrainsNewYork.com. Please include the writer’s name, company, title, address and telephone number. Crain’s reserves the right to edit submissions for clarity. 8 | CRAIN’S NEW YORK BUSINESS | FEBRUARY 19, 2024

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PERSONAL VIEW

More business owners should consider ESOPs a viable succession strategy

ergers, buy-outs and liquidations ownership control over time, without any are some of the most common upfront investment on their part. As a business owner who chose this opbusiness exit strategies. But today’s high interest rates, inflation and re- tion for my own firm, I’m not surprised that ESOPs gained momentum in cession fears make it challenging private firms while M&A activity to find a buyer and get the maxislowed. ESOPs address some of mum price. As a result, total the most important obstacles M&A transaction volume fell standing in the way of business 32% last year. success today, from the talent Even if conditions improve, shortage to the economic downselling to a third party is not alturn. ESOPs report voluntary quit ways the best option, particularrates of about one-third of the naly for owners looking to retain tional average. the business model, culture and There are also significant tax team they have built. Succession Louis Grassi planning is often lacking at small is the CEO and savings for ESOP transactions. First and foremost, sellers of the and mid-size businesses, leaving managing stock in the company can defer them in reactive mode with little partner of capital gains tax on eligible stock time to explore all options. professional sold to an ESOP, as long as the Meanwhile, a solution for services firm many businesses is hiding in Grassi Advisors. proceeds from the sale are reinvested into qualified replacement plain sight — their employee base. Too many owners are overlooking property. If the owners decide to sell to anthis prime source of interested, capable other outside party, such as a private equibuyers who eliminate much of the uncer- ty firm, taxes are generally due upon sale. tainty around transitioning a business to a Additionally, all contributions to the ESOP to pay down the debt associated with the competitor or private equity firm. Employee ownership can be effectively transaction are tax-deductible. In turn, employees receive the benefits achieved through an Employee Stock Ownership Plan, which carries more of ownership without financial risk. In widespread benefits than profits from a fact, employee owners at S corporations sale. ESOPs allow team members to gain average more than double the retirement

savings of non-ESOP counterparts. When I advise business owners on ESOPs, I often need to debunk several myths. Many think they need to fully relinquish control of the business once the transaction is complete. In reality, ESOPs are an ideal way to keep leadership Louis Grassi, CEO and managing partner of Grassi Advisors, intact while transitioning owner- argues that Employee Stock Ownership Plans carry more ship to employees over time. benefits than profits from a sale. | GETTY IMAGES/ISTOCK Other misconceptions are that ESOPs are prohibitively expensive or car- new legislation allows professional design ry excessive risk. This is where feasibility corporations to be up to 100% ESOPstudies come in. Just like due diligence is owned by non-licensed professionals. performed at the start of the M&A proThis emphasis on employee ownership cess, this study helps determine the prac- on both the federal and state level speaks ticality of an ESOP based on the compa- to the value it brings not only to firms and ny’s profitability, size, debt, workforce employees, but also to the public. ESOPs and other factors. keep companies intact and retain jobs in our local communities. They also aid in diversity efforts by providing ownership opNew law sweetens advantage portunities to underprivileged populaRecent legislation has sweetened the tions and leveling the playing field for all ESOP advantage. The Consolidated Appro- employees. Not every business will benefit from an priations Act of 2023 contains a number of provisions that positively impact ESOPs. ESOP, but every ESOP — when effectively These include additional funding through implemented — will benefit all parties instate-level grants to encourage the estab- volved. Far more business owners owe it lishment of employee ownership struc- to themselves and their employees to contures, as well as enhanced capital gains sider this effective succession planning deferral for S corporations. In New York, tool.

PERSONAL VIEW

U.S. proposal would create disincentive for public-private collaboration

cross New York, startups, corpora- companies spanning technology, life scitions, universities and research in- ences, agriculture and numerous other institutions mutually benefit from dustries. The White House recently proposed a innovative public-private partnerships. These partnerships translate lab-based re- provision to Bayh-Dole that would allow search into real-life solutions — including the federal government to leverage its “march-in rights” to implement life-saving medical treatments, price controls for any discovery new vaccines and technological created through public-private advancements — but future colpartnership. Originally devised to laboration would be disincentivhold companies accountable for ized under a new framework becommercializing innovation, ing considered by the White march-in rights allow the governHouse. ment to seize patents if an effort is Passed in 1980, the Bayh-Dole not made to bring publicly-fundAct granted federally funded ined discoveries to market. The prostitutions ownership over the posed use of these rights to dicpatent rights for their discover- Jennifer ies, allowing them to license pat- Hawks Bland tate costs is a clear overstep that will stifle innovation. ents to private companies for is the CEO of Expanding march-in rights commercialization. Under the NewYorkBIO, would have a particularly negaBayh-Dole Act, public-private the leading tive impact on the bioscience inpartnership has skyrocketed. advocate for dustry, which has seen over 200 Between 1996 and 2020 alone, the life science treatments and vaccines develtechnology transfers for the industry in oped under Bayh-Dole. Among commercialization of discover- New York. these are common treatments ies contributed $1 trillion to the United States’ gross domestic product such as Allegra and nicotine patches, as and incentivized the creation of more well as life-saving advancements in the than 17,000 startups. Here in New York, treatment of diseases such as cancer, mulwe have reaped the benefits. The law has tiple sclerosis and AIDS. Discoveries of bolstered our economy by fostering col- this magnitude require immense resourclaboration between our state’s robust ac- es and years of research, clinical trials and ademic community and private sector development. It is rare that public institu-

tions can commercialize their discoveries without private investment; in fact, private investment often far exceeds government fund- The White House’s proposed framework for march-in rights ing. could do irreparable damage to the future of public-private Once brought to market, the reve- partnerships, writes Jennifer Hawks Bland of NewYorkBIO. nue earned helps offset the cost of | UNSPLASH/CYTONN PHOTOGRAPHY research, development, and production, making it worthwhile for private technology. This is especially concerning companies to invest. Under the White for New Yorkers as we look to the future of House’s proposed provisions, the federal AI; Gov. Kathy Hochul’s 2025 budget comgovernment could unilaterally dictate mitted $400 million in both public and how much a drug should cost and seize private funds toward the establishment of patents accordingly, ultimately disincen- the Empire AI Consortium to make New tivizing the private investment that makes York a leader in the AI transformation. it possible for publicly funded institutions This initiative’s success will hinge on the to discover treatments. Without these crit- same public-private partnerships that the ical incentives, private investment in pub- White House’s proposal will disincentivlicly funded institutions would decrease ize. Every New Yorker has benefited from substantially, hampering the development and commercialization of future discoveries born out of public-private partnerships. Our state’s economy is fulife-saving cures. The implications of this proposal would eled by our promotion of these partneralso reach beyond the bioscience indus- ships to spur innovation. Collaboration try. Additional discoveries commercial- should continue to be supported, not disized under Bayh-Dole include technology couraged by burdensome regulations that that Americans use every day, such as hamper innovation. The White House’s Google’s search engine, cloud-based soft- proposed framework for march-in rights ware and touch-screen technology. If the within the Bayh-Dole Act could do irrepafederal government can use march-in rable damage to the future of public-prirights to seize patents based on cost, it will vate partnerships and prevent consumers curb the innovation and commercializa- from accessing future life-saving cures tion of the next generation of cutting-edge and groundbreaking discoveries. February 19, 2024 | CRAIN’S NEW YORK BUSINESS | 9

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Advertising Section

PEOPLE ON THE MOVE

To place your listing, visit www.crainsnewyork.com/people-on-the-move or, for more information, contact Debora Stein at 917.226.5470 / dstein@crain.com

LAW

Hodgson Russ LLP Carol A. Fitzsimmons and John J. Zak have been appointed CoChairs of Hodgson Russ LLP. Both Carol and John are active in Fitzsimmons the firm’s U.S.-Canada Practice and will be integral to the firm’s continued growth in this important market. Carol is also a senior partner and the Zak former Practice Group Leader in the firm’s Federal & International Tax Practice. In addition, John is the leader of the firm’s Securities Regulation & Corporate Compliance Practice and its Investment Management & Compliance Practice, as well as co-leader of the Mergers & Acquisitions Practice. Both Carol and John are regularly recognized for their legal work and acumen by “Best Lawyers in America.” John is also ranked by Chambers USA.

ACCOUNTING

ARCHITECTURE

COMMERCIAL REAL ESTATE

CONSTRUCTION

Mazars in the US

MG2

Madison Capital

Sweet Group

Mazars, a leading audit, tax, and advisory firm in the US, recently announced the election of Charles Abraham to its Executive Board, replacing Shahab Moreh, whose term expired at the end of 2023. Charles has 20 years of experience providing auditing and advisory services to the financial services industry. As the Financial Services Practice Leader at Mazars in the US, he is responsible for driving organic growth and increasing brand recognition across the sector.

Victor Malerba, Jr., AIA, NCARB, LEED GA was promoted to principal at the global architecture and design firm MG2. He leads the Community Environments studio in New York City with a focus on complex multifamily residential and mixed-use projects. With more than 20 years in the profession, he is known for his breadth of experience and expertise in every phase of a project. In his new role, Victor will be responsible for leading studio business operations and overseeing growth.

Madison Capital, a leading real estate investment and operating company, is excited to welcome Tim Hennessey as Senior West Coast Acquisitions Advisor. Formerly with Prudential Global Investment Management (PGIM) for 20 years, leading West Coast Acquisitions and closing over $5 billion in transactions, his expertise will propel Madison Capital’s West Coast expansion and fortify its leadership in real estate investment.

Sweet Group appoints Danielle Grillo Pemberton as first female Vice President. Formerly the Director of Public Projects, Ms. Pemberton continues to strengthen Sweet Group’s portfolio in public works projects at all government levels. With 20+ years of experience in local government and communications, she brings a proven track record in implementing large-scale changes and managing multimillion dollar capital programs.

CONSTRUCTION MANAGEMENT

CONSULTING

HEALTH CARE

LEGAL

Rider Levett Bucknall

Luminary Labs

DarrowEverett LLP

David Eivers is now an Associate Principal in our New York Office. David holds a BSc. in Quantity Surveying and with over 13 years of experience in the construction industry, brings a wealth of Cost Management knowledge and experience, encompassing pre-design feasibility studies, milestone estimating, contract management, procurement, and cost control services. David specializes in key account management and large-scale global portfolio management.

Paraic Morrissey has been promoted to Vice President. Heading up RLB’s New York office, Paraic has been instrumental in the continued growth and success in New York in recent years. A member of the Royal Institute of Chartered Surveyors, he brings 15 years of experience in the construction industry and has provided an array of construction consulting services across North America since 2012, focusing on diverse aspects of Project Management, Project Controls and Cost Management.

Janna Gilbert has been named a Partner at Luminary Labs, an independent strategy and innovation consultancy established in 2009. Since joining Luminary Labs in 2013, Janna has been instrumental in evolving the consultancy’s service offering, building and investing in the team, developing deep relationships with clients, and supporting strategic business expansion. The new partnership model will support the company’s commitment to organizational sustainability and longevity.

Westchester Medical Center Health Network (WMCHealth)

FINANCIAL SERVICES

J.P. Morgan Private Bank

John Iannaco joins J.P. Morgan Private Bank in New York as an Executive Director and Banker. As a member of the Law Firm Group, John works with Partners at some of the most prominent law firms in the area, as well as affluent individuals in the legal space and other successful professionals. He is known for the high level of attention he brings to each relationship and for going the extra mile to find the answers that clients desire. Most recently, John joins the firm from City National Bank.

Gretchen van Eyck joins J.P. Morgan Private Bank in New York as an Executive Director and Banker. As a member of the Law Firm Group, Gretchen serves the sophisticated wealth management needs of prominent leaders in the legal space, including law firm partners, their circle of influence and other successful individuals. Gretchen understands that clients seek an advisor and a firm with a deep knowledge of the marketplace and their industry. Gretchen joins the firm from City National Bank.

Chris Kary has joined J.P Morgan Private Bank in New York as a Vice President and Banker. As a member of the Law Firm Group, Chris works with senior leaders and equity partners at some of the most prominent plaintiff firms in the area who seek the brand recognition and fortress balance sheet of an industry leader. He offers strategies for bridging liquidity and cash flow to mitigate the inconsistent nature of income streams. Most recently, Chris joins the firm from Citibank.

Maureen Kerr has joined J.P. Morgan Private Bank in New York as a Vice President and Banker. Maureen advises affluent individuals, successful business owners, entrepreneurs and corporate executives on all aspects of investing and wealth planning. A Wall Street veteran, Maureen leverages her experience in investment banking, capital markets and private equity to deliver the full resources of the firm to clients. Most recently, Maureen joins the firm from Goldman Sachs.

William B. Pryor has been named Executive Vice President, Chief Human Resources Officer at The Westchester Medical Center Health Network (WMCHealth). Pryor will oversee recruitment, labor relations and workforce policies for the network’s 13,000 employees. He previously served as Executive Vice President and Chief Administrative Officer for Catholic Health in Buffalo and Chief Human Resource Officer for North Carolina’s Cape Fear Valley Health System. He has 30 years of experience in HR.

David Pentlow is a Partner in the Corporate & Business Transactions Group, and has over two decades of experience in corporate and securities law, private investment funds and investment management. He represents public and private businesses in a wide range of sophisticated transactions including public and private financing transactions, mergers and acquisitions, joint ventures, reorganizations, business divorces, and day-today operations.

PROMOTE. Why not? Celebrate your success with promotional products! • Digital Reprint • Logo Licensing • Social Media Images • Plaques/Frames

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10 | CRAIN’S NEW YORK BUSINESS | February 19, 2024

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Health startup Ezra raises $21 million to boost early detection of cancer using AI

BUCK ENNIS

By Amanda D’Ambrosio

City’s housing vacancy rate plunges to historic low By Eddie Small

The city’s housing vacancy rate has plummeted to 1.4%, the lowest it has been since 1968, according to the Department of Housing Preservation and Development. The statistic comes from the agency’s New York City Housing and Vacancy Survey, which it has partnered with the U.S. Census Bureau to conduct roughly every three years since 1965. The latest survey was conducted from January through mid-June last year and found only about 33,000 apartments available for rent across the city. HPD attributed the extremely low vacancy rate to a massive supply-and-demand imbalance, saying that the number of new homes being built in the city cannot keep

ams said in a statement. “New Yorkers need our help, and they need it now.”

Dire housing situation Hochul referenced the survey at a Feb. 9 event in Gowanus touting the projects that are advancing because of her tax incentive program for the neighborhood, saying it showed just how dire New York’s housing situation has become. “Stark does not begin to describe that scenario for someone looking for a home here in the city of New York,” she said. “We don’t have a housing shortage at all. We have a housing crisis on steroids. There’s no other way to describe this.” The vacancy rate from the city’s previous study, conducted in 2021 after multiple delays because of the pandemic, was about 4.5%, and although the housing supply grew by about 60,000 units since then, the number of new households rose by 275,000, according to HPD. The vacancy rate tended to be lower for lower-priced rentals, although it was still only about 3.4% for high-cost homes. At units renting for less than $2,400, the rate was less than 1%, and at units with rents less than $1,100, the rate was about 0.4%, the report said. The report also found that a vast majority of low-income New Yorkers are rent-burdened, mean-

“The data is clear: The demand to live in our city is far outpacing our ability to build housing. New Yorkers need our help, and they need it now.” — Mayor Eric Adams up with the number of people who want to live in the city. Making it easier to build more homes has been a key policy goal of Mayor Eric Adams and Gov. Kathy Hochul, and both doubled down on their efforts to increase the city’s housing supply in the wake of the survey. “The data is clear: The demand to live in our city is far outpacing our ability to build housing,” Ad-

ing they spend more than 30% of their income on rent. Among homes earning less than $50,000 per year without rental assistance, 86% were rent-burdened, while 86% of homes earning less than $25,000 per year without help were severely rent-burdened, meaning they spend more than half of their money on rent. The number of homes that were vacant but not available to rent, which has been a major and disputed point of controversy amid the housing debate in recent years, fell by 35% to 230,200, the report says. About 41,000 of these were off the market because they were undergoing or awaiting renovations, but the most common reason for an empty apartment was that it was used only seasonally or occasionally.

Zoning changes The Adams administration has proposed a series of zoning changes meant to spur the creation of more housing that will go before the City Council for approval this year. Dan Garodnick, director of the Department of City Planning, took the data as an opportunity to advocate for the proposals. “When New Yorkers wonder why their rent is so damn high, or why they can’t get repairs in their apartment, they should look to this historically low vacancy rate that is exacerbating the imbalance of power between landlords and tenants,” he said. “That’s why we’ve proposed City of Yes for Housing Opportunity, the most pro-housing initiative in the history of New York City zoning.”

A Flatiron-based health tech startup is boosting its efforts to catch cancer quicker. Ezra, which offers artificial intelligence-powered MRI scans that attempt to detect cancer before people develop symptoms, announced on Feb. 8 that it had raised $21 million. As health officials anticipate a drastic increase in cancer diagnoses in the coming years, Ezra is attempting to expand access to early detection — what it sees as the best solution to growing cancer deaths. “I personally think we have a cure for cancer: early detection,” Emi Gal, CEO and founder of Ezra, told Crain’s. The problem is, he said, a bulk of people who get diagnosed with cancer every year find out in the late stages. Gal founded Ezra six years ago after his mother died from latestage cancer, aiming to improve

Food and Drug Administration last year. Full-body MRI scans have attracted attention over their popularity among influencers and celebrities, including Kim Kardashian. The growing interest in the scans, which are offered by a handful of companies and can cost up to $2,500, has sparked debate about the necessity of medical testing and which demographics can access new technologies.

Geographic expansion But Gal said that the speed and accuracy of Ezra’s technology is attempting to make the early detection of cancer more affordable. The company’s recent funding round will support its initiative to develop a 15-minute full-body scan, priced at $500, in the next two to three years, he added. The company will also use its recent funding to expand geographically. Ezra currently offers its services at 18 locations across New York City, New Jersey, Miami, Las Vegas, Los Angeles, San Francisco and Irvine. It plans to expand to 50 sites across 20 states — Gal said the company is aiming to go national by the end of this year. Ezra’s latest funding round brings the company’s total fundraising to $41 million. The recent funding round was co-led by Healthier Capital — the venture capital firm started by former One Medical CEO Amir Dan Rubin — and FirstMark Capital. Other firms participating in the round included Allianz Life Ventures, Gaingels, Republic and Mana Ventures.

The speed and accuracy of Ezra’s technology is attempting to make the early detection of cancer more affordable, says CEO and founder Emi Gal. early screening technologies. His team unveiled its AI-powered MRI technology in 2019 to reduce the “noise” in scans, resulting in clearer images that could be obtained in less time. Now, the company offers a $1,350, full-body scan in 30 minutes to detect cancer. It also offers 60-minute scans, which may include musculoskeletal scans and cardiac imaging. Ezra’s Flash technology, which powers its 30-minute oncology scan, was cleared by the U.S.

Ezra, a health tech company based in Flatiron, raised $21 million in funding to advance its artificial intelligence technology for MRI scans to detect cancer earlier. | EZRA AI February 19, 2024 | CRAIN’S NEW YORK BUSINESS | 11

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Developers still aren’t planning big new rental buildings despite the city’s needs, new data in REBNY report says Housing production ended 2023 with a whimper. In the fourth quarter developers filed permits to build 4,046 units, down slightly from the 4,190 units filed for in the third quarter, according to new data from the trade group the Real Estate Board of New York, and in line with the diminished levels of the past couple of years. In fact the fourth-quarter total came in 16% lower than the historical average dating back to 2008, REBNY said. Last year’s drop-off may be even

Large multifamily buildings of 100 or more units, which would make the biggest impact on inventory levels, were particularly in short supply at the end of last year. Developers filed permits for only nine of them citywide between October and December 2023, according to REBNY, which based its findings on data from the Department of Buildings. It was the fourth straight quarter when there were 10 or fewer buildings in the category. Elevated loan costs are likely crimping some housing production. But a lack of tax incentives is also putting a major damper on development, which is too costly in an expensive city like New York without some kind of subsidy, especially when it has a public benefit, according to REBNY. It has lobbied for a property tax break akin to the former 421-a program, which expired in June 2022 after failing to be renewed by lawmakers. Critics have called the program a taxpayer-funded giveaway to developers. In January Gov. Kathy Hochul

“Without policies in place to spur greater rental housing construction, one cannot expect this problem to fix itself.” — Zachary Steinberg, a senior vice president at REBNY, in a statement more glaring when considering Mayor Eric Adams says the city needs to build about 12,000 units a quarter to hit a goal of 500,000 new units by 2033.

proposed an alternative, 485-x, which would offer breaks of up to 40 years for affordable projects where residents can buy homes. “Without policies in place to spur greater rental housing construction, one cannot expect this problem to fix itself,” said Zachary Steinberg, a senior vice president at REBNY, in a statement. “Elected officials in Albany must take action to create new housing that will support our housing market and broader economy.”

51 projects In terms of multifamily housing, which refers to buildings with four or more apartments, developers sought to build 3,176 units across 51 projects in the fourth quarter of last year based on permits. In contrast, the third quarter saw 4,277 units in the sector, the second quarter had 3,088 units, and the first quarter, 2,195, REBNY said. (REBNY recently changed its methodology for tallying permits, forcing adjustments to some earlier figures.) Though the fourth quarter of 2023 may not represent rock bottom for the last year and or even the past decade—housing production has hit similarly depressed levels

BLOOMBERG

By C. J. Hughes

from time to time even with 421-a-style incentives in place—the decline can recall the sluggish construction environment of the Great Recession. The sleepiest period in that era, a time when the national banking system nearly collapsed, was the fourth quarter of 2009, when only 827 units were proposed in New York in 33 multifamily buildings. Many larger proposals continue to be affordable projects eyed for the Bronx. In fact, the largest from

the fourth-quarter batch is a 26-story, 420-unit, all-electric and all-affordable tower at 1387 University Ave. in the Highbridge section from the nonprofit Samaritan Daytop. Other sites that accounted for many of the proposed units included 895 Erskine St., a 425-unit development in East New York, Brooklyn, from L+M Development Partners, and 401 E. 51st St., an 86unit undertaking in Turtle Bay, Manhattan, from SK Development.

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Proposal to overhaul home care payments would cost the state billions, plans say By Amanda D’Ambrosio

Gov. Kathy Hochul’s executive budget proposal included a 13.4% cut for the Office of Addiction Services and Supports, according to a presentation from the agency. | GETTY IMAGES

Hochul proposes addiction budget cuts as overdose deaths mount stewardship funds. Advocates are calling attention Gov. Kathy Hochul proposed to to the proposed decline in OASAS cut funding for the agency over- funding as state legislators preseeing addiction services in her pare to establish their own budget recent budget proposal, sparking proposals. The legislature was to concerns that New York will be hold a mental hygiene budget even more ill-prepared to address hearing on Feb. 13 to hear testithe overdose crisis as deaths rise, mony from the state’s mental health agencies and advocates advocates say. Hochul’s fiscal year 2025 budget about what’s needed to address proposal reduced funding for the the growing overdose crisis — a Office of Addiction Services and crisis that’s been deemed the Supports by 13.4% from the previ- worst on record. Statewide overdose deaths skyous budget year, according to a presentation from the agency re- rocketed nearly 300% between viewed by Crain’s. The proposed 2010 and 2021, the most recent OASAS budget for the upcoming year that data is available, with roughly 6,000 people dying from an overdose. Deaths in New York City have also reached an alltime high, with Black New Yorkers more rapid increases in overdoses — Lauri Cole, executive director of the New York State Council for Community Behavioral Healthcare compared to white people. Despite the urgency of the epibudget year is $1.2 billion, roughly $179 million less than the previ- demic, advocates say a tight budget year and persisting stigma around ous year’s total. “The overall issue on the addic- substance use disorders has resulttion side is that there was really a ed in less funding for the overdose lack of investment,” Allegra Schorr, crisis. Some are skeptical that the president of the Coalition of Med- decreases in funding are related to ication-Assisted Treatment Pro- the state’s $190 million allocation viders and Advocates, said of the of opioid settlement funds within governor’s proposal. “That was re- the last year, which are one-time payments that come from state litially disappointing.” The proposed cuts represent a gation with opioid manufacturers decline in funding to local govern- and distributors over their role in ments, which Schorr said will af- the epidemic. While the state is slated to get fect services across the board. She also pointed to a drop in funding $2.7 billion from the settlements for the opioid stewardship fund — over the next 20 years, advocates an account that drug companies noted that the money is intended pay a portion of opioid sales into. for the specific purpose of creatThe fund received $200 million in ing innovative approaches to the the fiscal year 2023 budget that overdose epidemic — and is not was reappropriated in the follow- supposed to replace current state ing year, but the governor’s pro- funding for addiction. “I think there’s a feeling of ‘well, posal included $187 million in By Amanda D’Ambrosio

“New York state is not treating the overdose epidemic as one would think it would any public health crisis.”

there’s some money around,’” Schorr said. “That is erroneous.” The governor’s office did not respond to multiple requests for comment about the proposed cut to the OASAS budget.

‘Not nearly enough’ Lauri Cole, executive director of the New York State Council for Community Behavioral Healthcare, said that the funding included in the executive budget is “not nearly enough to arrest this incredible overdose epidemic,” signaling a lack of attention to a public health crisis. “New York state is not treating the overdose epidemic as one would think it would any public health crisis,” Cole said. “There seems to be a certain amount of passivity, or a lack of vigorous, aggressive tactics to arrest this problem.” Advocates have pushed the governor to declare a public health emergency declaration regarding the overdose crisis, which would give her the power to authorize staffing changes and ease other regulations that could increase access to care. A handful of states, including Massachusetts and Maryland, have declared states of emergency, and the federal government declared one in 2017. Schorr said that in addition to pushing for awareness around the overdose crisis, COMPA is calling for increased funding in the final budget. She noted that the 1.2% cost-of-living adjustment for the substance use disorder workforce included in the executive budget falls short of the 3.2% that providers asked for, and is calling for a $500 million increase in workforce funding. Her organization is also calling for a bill that would reform the Medicaid audit process to reduce administrative burdens on providers.

Health plans and providers are pushing back on a legislative proposal that would overhaul how the state pays for home care, stating that it would cost — not save — New York upwards of $3 billion, according to a new analysis. Late last year, legislators introduced the Home Care Savings & Reinvestment Act, a bill that would effectively move home care services from Medicaid managed care to a fee-for-service model. There’s been growing interest around the bill as the state considers cutting costs in the home care program, with backers of the legislation, including labor giant 1199 SEIU, saying that it could save the state $3 billion per year in administrative fees and profits pocketed by managed long-term care plans. But a new fiscal analysis released by the industry Feb. 8 says that those cost savings estimates are flawed. Instead of saving money, the proposal would cost New York between $3.1 and $4.7 billion annually, health plans and providers say. The industry says that proponents of the Home Care Savings & Reinvestment Act have failed to account for the costs of moving home care into a fee-for-service model in their $3 billion savings estimate. The industry’s analysis estimates that additional burdens on local governments and state expenses of managing home care services through Health Homes would cost more than $1 billion a year. Additionally, they say that managed long-term care plans generate $1 billion in federal revenue each year that would not be recouped under a fee-for-service model. Health plans and providers also say that estimates of their profit margins are overstated in advocates’ fiscal analysis. The $3 billion cost savings estimate pushed by advocates is based on an estimate of health plans’ profit margins, which averaged 5.5% in 2021 — twice the national average, according to 1199 SEIU, which commissioned the analysis that the proposal is based on. But health plans say a bulk of those profits were recouped by the state because of caps on how much plans can make from administrative payments. “The advocates’ financial analysis, if you want to call it that, was woefully inadequate,” said Lev Ginsburg, executive director of the New York Conference of Blue Cross and Blue Shield Plans, adding that it did not take into account “about 90% of the issues” that would increase costs if the state moved home care out of managed long-term care plans.

Health plans and health care provider groups say that moving home care from Medicaid managed care to a fee-forservice model would cost the state at least $3 billion annually. | GETTY IMAGES

Helen Schaub, interim political director of 1199 SEIU, said that “the insurance companies’ claims that moving to managed fee-forservice would cost federal dollars or lead to dramatic new utilization are not based on any credible analysis. She added that taxpayers pay $1 billion dollars annually in “unnecessary administrative costs and subsidizing the profits of multibillion-dollar corporations like Elevance.” “Ten years ago, New York required Medicaid home care consumers to enroll in managed care plans with the promise that it would save money and increase coordination between Medicaid and Medicare services,” Schaub said. “That experiment has failed.”

Industry opposition The Medicaid Redesign Team led by former Gov. Andrew Cuomo transitioned home care to Medicaid managed care from a fee-forservice model in 2011 in an effort to make the provision of services more efficient, improve quality and save money — all things that critics of managed care say it has failed to do. The proposal has gained steam as home care worker advocates and lawmakers scrutinize health plan profits. They say the industry pocketed $722 million in 2021. But opposition from the industry has begun to mount. A group of 200 health plan and provider groups sent a letter to bill sponsors Assemblywoman Amy Paulin and Sen. Gustavo Rivera the evening of Feb. 8 stating their opposition to the proposal. Ginsberg said that if this proposal becomes law, it would undo a decade of progress and upend care for the 300,000 New Yorkers who rely on managed long-term care plans. The fiscal analysis was released by the New York Conference of Blue Cross and Blue Shield Plans, the New York Health Plan Association, the Home Care Association of New York State, LeadingAge New York and the New York State Coalition of Managed Long Term Care Plans.

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Musician Joe Jackson sells Hudson Square duplex co-op to Carlos Suarez, owner of Rosemary’s, other restaurants By C. J. Hughes

Joe Jackson, the Grammywinning singer of “Steppin’ Out” and other hits, and an emblem of 1980s downtown cool, has sold his duplex co-op in Hudson Square to Carlos Suarez, the owner of Rosemary’s and other trendy downtown restaurants of the 2010s and beyond. The two-bedroom apartment, on the lower floors of 52 King St., changed hands for $3.3 million Feb. 1 and appeared in city tax records Tuesday. But Jackson appears to have been trying to sell the 2,400-square-foot pad for a while and does not seem to have lived there in some time. Jackson first listed the co-op in August 2021 for $4.5 million, according to StreetEasy, and appears to have marketed it sporadically since then. Spanning two floors, the apartment features three baths, three fireplaces and some 11-foot ceilings, besides a private, 950-square-foot, fern-stuffed garden. There’s also a basement with a laundry room. It’s not clear from the city register what Jackson paid or even when he moved into the building, a 4-story townhouse with two units

Joe Jackson | GETTY IMAGES

near Varick Street. But No. 52 seems to have gone co-op around the time England-born Jackson exploded onto the music scene with his debut album, Look Sharp!, which featured his smash “Is She Really Going Out With Him?” A regular performer early on in local clubs and later a fixture of haunts in the neighborhood when it was known simply as West SoHo, Jackson lifted ideas from life out-

52 King St., Hudson Square | BROWN HARRIS STEVENS

side his door. “You can dress in pink and blue just like a child, and in a yellow taxi turn to me and smile. We'll be there in just a while,” he sang in 1982’s “Steppin Out.’

Suarez has grown roots But Jackson apparently soured on New York in later years before eventually relocating to Berlin. “It's as if the city and I had a hot

love affair, and now we're just friends,” he told The Wall Street Journal in 2018. “The New York I knew in late ‘81 and ‘82 is gone." Suarez, on the other hand, has grown roots since opening Bobo in the West Village in 2007 and its follow-up, Greenwich Avenue’s Rosemary’s, which is known for its rooftop vegetable garden, in 2012. Today his Casa Nela restaurant group also owns the nearby Clau-

Carlos Suarez | CRAIN’S/TWITTER X

dette and Roey’s, as well as a second outpost of Rosemary’s next to the East Side’s Stuyvesant Town apartment complex. Judith Medwin, the agent with Brown Harris Stevens who marketed the property, had no comment. An email sent to Rosemary’s seeking an interview with Suarez was not returned. And a message left with RZO Cos., Jackson’s manager, went unreturned by press time.

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Adams omitted nearly $4B in costs from budget plan By Nick Garber

Mayor Eric Adams omitted $3.6 billion in costs from the $109 billion spending plan he released last month, a fiscal watchdog says, undercutting his claim that he had balanced the city’s budget. Most of that money came from the $2.2 billion in “fiscal cliffs” — costly long-term programs that are funded only one year at a time — that Adams failed to account for in his preliminary budget for Fiscal Year 2025, the Citizens Budget Commission said in its Feb. 8 report. That includes $655 million in expected overtime for uniformed agencies like the NYPD; $704 million for the CityFHEPS rental voucher program; $200 million for homeless shelters; and $675 million for programs that have been propped up by diminishing federal pandemic funds, mostly in the Department of Education. The hawkish commission has

for research. “There’s been more and more of a tendency to fund programs only one year at a time,” Champeny said.

City’s fiscal picture As a result, the commission says Adams should follow through on his plan to impose a third round of spending cuts in April, on top of the 5% reductions announced in November and again in January. The mayor had long warned the April cut may be necessary, but softened his stance in recent weeks as strong tax revenues and slimmed-down spending on migrants improved the city’s fiscal picture. Mayoral spokesman Charles Lutvak said in a statement that Adams had used “responsible, effective fiscal management” to close an estimated $7 billion gap in its fiscal 2025 budget. The budget commission also praised the administration for taking some steps toward transparency, Lutvak noted, by adding funding for some education programs that have often been underbudgeted in past years. “And as the CBC found, we are not out of the woods — as the city continues to shoulder most of the costs of a national humanitarian crisis, we continue to need more support from our state and federal

“There’s been more and more of a tendency to fund programs only one year at a time.” — Ana Champeny, the commission’s vice president for research raised similar concerns about fiscal cliffs and underbudgeting in previous years’ spending plans. But the pattern appears to be worsening, said Ana Champeny, the commission’s vice president

Mayor Eric Adams’ preliminary budget will be revised in April, then subject to months of negotiations with the City Council ahead of a July 1 deadline when the 2025 fiscal year begins. | ED REED/MAYORAL PHOTOGRAPHY OFFICE

partners,” Lutvak said. Adams’ preliminary budget will be revised in April, then subject to months of negotiations with the council ahead of a July 1 deadline when the 2025 fiscal year begins. The commission also called into question City Hall’s rosy revisions of future-year budget gaps, which it said last month now total about $16 billion through Fiscal Year 2028. In fact, the true total is closer to $27 billion, taking into account

similar underbudgeting in future years, the report states. Several of the costs that appear underestimated in Adams’ budget plan have been cited by the commission in past years. Overtime costs for police officers were pegged at $453 million in the executive budget proposal Adams released last April — a little less than half of the actual projected cost and far less than the NYPD has typically ended up spending in recent years.

The looming $704 million cliff for the CityFHEPS voucher program does not include the major expansion of the program passed by the City Council last year over Mayor Adams’ veto. The administration says the laws may cost $17 billion over five years, while the council countered with a still-considerable $11 billion. The council is now moving to sue the Adams administration over its refusal to implement the laws based on cost concerns.

HFZ executives indicted in alleged $86 million fraud scheme By Eddie Small

Four real estate executives were indicted in an alleged multimillion-dollar fraud scheme centered on the now flailing luxury condo developer HFZ, the Manhattan District Attorney’s Office announced Feb. 7. The arraignments came one day after former HFZ Managing Principal Nir Meir was arrested in Florida in connection with the investigation, which alleges a fraud totaling $86 million, according to Manhattan District Attorney Alvin Bragg. In addition to Meir, the de-

known as the XI. The charges encompass HFZ’s construction firm Omnibuild as well, specifically co-CEO John Mingione and project accountant Kevin Stewart. Marrone, Mingione, Stewart and Omnibuild project manager Roy Galifi were arraigned and released Feb. 7. Meir remains in Florida pending extradition to New York. The next court date for the case is May 7, according to Bragg’s office. “These indictments depict allegations of widespread fraud within the real estate industry primarily spearheaded by one man: Nir Meir,” Bragg said in a statement. “In total, we allege these defendants’ conspiracies netted them a total of $86 million stolen from investors, contractors and the city of New York.” The alleged scheme dates back to 2015, when HFZ created a limited liability company to buy the site of the XI for $870 million. According to Bragg’s office, assets that were required to be used on the project instead went to different LLCs that HFZ controlled

HFZ was behind about $10 billion worth of development, but the company has since defaulted on several multimillion-dollar loans and effectively collapsed. fendants include Anthony Marrone, HFZ’s head of construction, along with executives at Omnibuild, the former contractor on HFZ’s troubled luxury condo project near the High Line, formerly

to cover financial shortfalls on other projects and occasionally went to HFZ executives’ personal accounts as well, leading to a $37 million shortfall HFZ owed Omnibuild and its subcontractors. The Omnibuild executives then allegedly conspired with HFZ to fill this funding shortfall by making it seem to the project’s lender that they had finished more work than they really had, causing the lender to release more funds to HFZ.

Forging bank statements

HFZ’s troubled luxury condo project near the High Line finally opened last fall. | CORCORAN GROUP

After a series of lawsuits made HFZ’s financial problems public, Meir told a company accountant to forge bank statements showing funds that were nearly empty actually contained millions of dollars, the DA’s office claims. In one case, Meir told the employee to say an account that had $814 in it actually had more than $24.6 million, according to the allegations. Bragg’s office also accuses Galifi of conspiring to steal $300,000 from the project lender in a separate scheme and claims that HFZ stole $24 million on a NoMad project at West 30th Street between Fifth and Sixth avenues. The firm allegedly stole $4.6 million for a phony project at 620 Folsom St. in

San Francisco that it never acquired the development rights to as well and defrauded that city of $15 million in taxes, according to Bragg’s office. HFZ, run by Meir and Ziel Feldman, was behind about $10 billion worth of development, but the company has since defaulted on several multimillion-dollar loans and effectively collapsed. The firm’s most high-profile project was the XI, a two-towered condo by the High Line that faced a mountain of legal issues before Witkoff Group and Access Industries took control of it in late 2021. They have rebranded the project as 1 High Line, and move-ins began last year.

Feldman is not expected to be charged in the investigation and has blamed virtually all of HFZ’s problems on Meir. Josh Vlasto, a representative for the Omnibuild executives, responded to the charges with the same statement as the day before, saying that the Omnibuild defendants “absolutely maintain” their innocence. Sanford Talkin, Marrone’s attorney, similarly said that his client “denies the charges against him and looks forward to the opportunity to clear his name through the court proceedings.” A representative for the other executives did not respond to a request for comment by press time.

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Beer magnate sells UES townhouse for frothy 40% profit By C. J. Hughes

A beer magnate may be toasting to a sale on the Upper East Side. Luis Felipe Padreira Dutra Leite, the chief financial officer of Anheuser-Busch InBev, has sold a six-bedroom townhouse at 18 E. 73rd St. for $38.3 million, a more than 40% premium over the $27 million he paid in 2019, public records show. The actual legal entity that sold the 10,500-square-foot landmark near Fifth Avenue is Mallow Enterprises, a shell company previously linked to the executive, who uses the shorter name Luis Dutra professionally. Since 2005 Dutra has served as CFO of Anheuser-Busch

pany, which has employed him since 1990. The buyer of the home, which was listed for $43 million in October and went into contract in early December, was an entity called Willow Trust, represented by New York attorney Ira Gilbert and with a Delaware address listed as a contact. The sale of the 5-story, 22-footwide residence closed Jan. 31.

Top-to-bottom makeover A trust with the same name is linked in recent U.S. Securities and Exchange Commission filings to billionaire Leslie Wexner, the founder and former chairman of L Brands, the owner of the apparel chain Victoria’s Secret. One of several trusts connected with Wexner and his wife, Abigail, that uses a name with a basis in nature, Willow, according to the filings, owned hundreds of thousands of shares in L brands as recently as 2021, the year shareholders forced Wexner out of the company over his close ties to disgraced investor Jeffrey Epstein, who managed Wexner’s fortunes for years. Wexner also once owned Epstein’s notorious former residence,

Previous owner Luca Orlandi undertook a three-year renovation that turned the multi-family dwelling into a single-family home while adding an elevator. InBev, a Belgium-based powerhouse that owns 500 beer brands, including Corona, Beck’s and Budweiser. Dutra also wears the hat of chief technology officer at the com-

18 E. 73rd St., Upper East Side | BROWN HARRIS STEVENS

a townhouse at nearby 9 E. 71st St., before selling the mansion to a company linked to Epstein in the late 1990s. Epstein died by suicide in a Manhattan prison in 2019 while awaiting trial. As part of a 2021 reorganization, L Brands split into two separate companies, Bath & Body Works and Victoria’s Secret. A message sent to a spokeswoman for Bath & Body Works was not returned. Gilbert did not respond to an email. Sami Hassoumi, the Brown Harris Stevens agent who represented the seller in the deal, had no comment by press time. And a separate contact for Willow Trust could not immediately be determined.

In 2019 the person who sold the townhouse to Dutra was Luca Orlandi, an Italian fashion designer behind the Luca Luca women’s line, which was known for its brightly colored dresses but that appears to have folded about a decade ago. Orlandi paid $19.7 million in 2013, when No. 18 was split up into a handful of apartments, and then undertook an extensive three-year renovation that turned the multifamily dwelling into a single-family home while adding an elevator. It’s not the first time the property has had a top-to-bottom makeover. A century ago, Henry Wise, the U.S. district attorney for the Southern District under Presi-

dents William Taft and Teddy Roosevelt, bought what was then a brownstone and removed its stoop, added brick façade walls and installed fireplaces, according to the building-history website Daytonian in Manhattan. Townhouses, whose lack of both doormen and condo-style services can limit their appeal, have lingered on the market in recent years, though prices seem to be improving, according to Douglas Elliman. In 2023 their median sale price in Manhattan was $5.8 million, up about 5% in a year, the firm reported, though townhouses sat for an average of 184 days before finding a seller, up from 161 days in 2022.

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Man indicted over alleged scheme to falsely claim ownership of iconic New Yorker Hotel near Penn Station By Eddie Small

Alleged fraudster Mickey Barreto has been indicted over accusations of a bizarre scheme to claim he owned the famed New Yorker Hotel, near Penn Station, the Manhattan District Attorney's Office announced. Manhattan District Attorney Alvin Bragg has accused Barreto of filing false property records that presented himself as the owner of the iconic hotel between May 2019 and September of last year. He has been charged with criminal contempt as well. The alleged plot dates back to June 2018, when Barreto, 48, booked a room at the property for one night and asked the hotel to lease him the room the next day in

by either continuously living there for six months or requesting a lease after staying there for one night, according to an interview Brooklyn Law School Professor David Reiss had with Curbed about the saga.) The hotel refused, and Barreto left but kept his belongings in the room, court documents say. After the hotel returned the belongings to Barreto and asked him to leave, he sued in housing court for being wrongfully evicted, and a judge granted him possession of one room in the hotel, according to court documents.

2019 lawsuit Barreto then uploaded fake real estate documents into the city’s property records database in May 2019, including a deed supposedly transferring ownership of the entire hotel from the Holy Spirit Association for the Unification of World Christianity, a Korean religious organization, to himself, the district attorney’s office claims. He subsequently presented himself as the true owner of the hotel, demanding rent from one of its tenants and access to its bank accounts, according to Bragg. He also allegedly demanded that the Holy Spirit Association leave the hotel and send him any rent payments it collected and contact-

The Manhattan district attorney has accused Mickey Barreto of filing false property records that presented himself as the owner of the hotel between May 2019 and September 2023. accordance with New York's rent stabilization law, according to Bragg's office. (The law includes an obscure provision allowing guests at certain hotels to become tenants

The New Yorker Hotel | GETTY IMAGES

ed the hotel’s franchise holder, Wyndham, to discuss transferring the franchise to him. The Holy Spirit Association sued Barreto in civil court in June 2019 and won an order that banned him from continuing to present himself as the hotel owner. However, Barreto allegedly continued to claim that he owned the building despite an unsuccessful appeal, and he al-

legedly filed more false real estate documents in April and September 2023, including another phony deed supposedly transferring ownership of the hotel from himself to himself for $400 million, according to Bragg’s office and property records. Barreto’s attorney did not respond to a request for comment by press time.

The 43-story New Yorker Hotel opened in 1930 with about 2,500 rooms starting at $3.50 per night. It hosted celebrities ranging from Nikola Tesla to members of the Brooklyn Dodgers soon after but shuttered in 1972 with an uncertain future. The Holy Spirit Association then bought the property in 1976, and it reopened as a hotel in 1994.

Apartment lease signings in city surge as rents stabilize By Eddie Small

Stabilizing rent prices appear to be sparking a busier market for apartments in the city so far this year after the repeated record highs from last year. Although the median rent in Manhattan did increase in January for the first time in three months, it did so by just 2.5% month over month and 1.3% year over year to reach $4,150, according to the latest report from Douglas Elliman

In Brooklyn, the median rent stayed flat year over year at about $3,500 after 24 months of increases and went up by less than 1% month over month. New lease signings almost doubled year over year for the third month in a row, rising from 1,111 to 2,140, and listing inventory dropped year over year for the first time in five months, falling to 3,388 apartments. And in northwest Queens, the median rent dropped year over year for the second time in three months, falling to $3,200 for a monthover-month decrease as well. As in Brooklyn, new lease signings rose significantly year over year, increasing from 379 to 497, and listing inventory dropped year over year for the first time in five months, falling from 616 to 547 apartments. “The decline in median rent is just going to be very slow and gradual, and we’re not looking at a correction in rental prices,” said Jonathan Miller, CEO of Miller Samuel and author of the report. “You can see that just in the last couple of months, where rents have essentially moved sideways.”

and Miller Samuel. New lease signings increased more sharply month over month and year over year, rising by 8% and 14%, respectively, to reach 3,922, although the vacancy rate remained above 3%, the report says. The borough’s listing inventory was 7,496 apartments, down slightly compared to December but up 18% year over year.

BLOOMBERG

In Brooklyn, new lease signings almost doubled year over year for the third month in a row, rising to 2,140 from 1,111.

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Oscar Health revenues swell by 44% in fourth quarter as the company expands its insurance plan offerings By Jacqueline Neber

Health insurance company Oscar Health’s revenues swelled by 44% in the fourth quarter of 2023 to $1.4 billion, according to financial results released Feb. 14. Higher revenues were largely driven by the premiums the Tribeca-based health technology and insurance firm earned, which totaled nearly $1.4 billion for the quarter, also a 44% jump. The number of people enrolled in Oscar’s individual and small group plans has dropped by about 11% since 2022 to 967,000

offerings with Cigna has climbed by 8% to 67,500 individuals. The company covered just over one million members in total at the end of 2023.

Reaching milestones Chief executive Mark Bertolini said Oscar expanded into 165 new counties in the latest open enrollment period, enrolled and maintained members and expanded its chronic illness plans and diabetes care. Oscar expects to serve more than 1.3 million members after the latest enrollment period, he said. Oscar’s expenses for the quarter grew alongside its revenue. Total operating expenses grew by almost 30% to nearly $1.6 billion, driven by a 36% jump in claims the company incurred. Net claims incurred totaled about $1.2 billion. On the earnings call, Bertolini called the company’s fourth quarter performance strong, pointing out that Oscar achieved milestones in 2023 that leaders had named as targets when the firm went public in 2021. That

Oscar expects to serve more than 1.3 million members after the latest enrollment period. individuals and Medicare Advantage enrollment has plummeted to under 2,000 people from almost 4,500 at the end of 2022, which vice president of investor relations Chris Potochar told Crain's was expected. However, enrollment in its plan

Oscar is based in Tribeca. | BLOOMBERG

includes achieving adjusted earnings before interest, taxes, depreciation and amortization profitability for the Oscar’s insurance company within the year

and being on track to reach the same goal for the total company in 2024. Oscar was unprofitable in 2022. The firm expects total revenues

for 2024 to land between $8.3 and $8.4 billion. Oscar was founded in 2012 and closed Feb. 14 at $13.41 per share.

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DEI

From Page 1

function fully,” said CV Viverito, director analyst for DEI at management consulting firm Gartner. “It [created] disillusioned expectations of the return on investment, like ‘Why didn’t the organization change overnight?’ ”

Inroads ignite backlash Few organizations contacted for this story wanted to discuss DEI, though they appeared very interested in bolstering their efforts not too long ago.

168.9% from 2019 to 2021, according to an analysis by LinkedIn. “Everybody was trying to get that competitive edge,” said Jackye Clayton, vice president of talent acquisition and diversity, equity, inclusion and belonging at Seattle-based Textio, a software company that helps firms hire and retain diverse talent. “No one wants to be the organization that doesn’t care about how to support their employees.” Those efforts paid off. By July 2022 all Fortune 100 companies had made public commitments to DEI. According to Workday, 85% of companies now maintain a dedicated DEI budget, up from 76% in 2022. The inroads have ignited a backlash. After last summer’s Supreme Court decision in the case Students for Fair Admissions v. Harvard, which said that race could not be considered a factor in college admissions, lawmakers in dozens of states across the country have introduced legislation seeking to restrict diversity initiatives in the workplace as well. These challenges have forced many employers to reassess their

“In 2020 there was a reactive investment without necessarily building up the foundation and structure to support that function fully.” — CV Viverito, director analyst, DEI, Gartner Across the U.S., three out of four Fortune 500 firms employed a chief diversity officer by 2022, according to a report from leadership advisory firm Russell Reynolds Associates. In total, diversity and inclusion officer positions grew by

policies. “We’ve got lawyers going back and doing audits just to make sure everything looks good and make sure all of the language is legal,” said Viverito. Some companies are making a tangible shift in how they approach the topic. Whereas in the past organizations might seek symptom-focused solutions — assertively recruiting people from underrepresented groups, for example — now a safer strategy might be to counsel managers. “Your goal is actually to fix a trust problem and foster more healthy manager-employee relationships, which will result in an increase of more equitable representation of talent,” Viverito said.

Heading for the exit Following the Supreme Court’s affirmative action ruling, companies have brought in legal experts to advise on how the decision affects hiring and personnel practices. Hiring in the DEI space is down, according to LinkedIn, and many officers — who say they feel overworked and unsupported — are leaving their jobs at “elevated levels,” said Lisa Simon, chief economist at workforce intelligence company Revelio Labs. At the same time as companies are reassessing their approach, DEI teams are shrinking. “There

has been really high turnover for DEI roles forever, but especially in recent times,” said Simon. “The attrition rates for DEI roles have just gone up a lot and are basically twice as high as that of non-DEI roles.” Revelio Labs’ latest data shows that the rate for DEI roles hovers just above 22%. That’s up from 18% in January 2020 and outpaces the non-DEI role attrition rate of about 12%, which has remained relatively unchanged in the past four years. Those numbers do not distinguish between layoffs and voluntary departures, but as Simon put it, “No matter why people are leaving, whether they are being laid off or leaving because they want to, it’s not good for the DEI efforts at that company; that much is clear.” Some experts partially blame burnout for the high turnover. DEI teams are often given massive mandates from their employers to make structural changes without the necessary resources or support to effectively make that happen, said Viverito. Another burnout contributor, some say, is that such employees must pay prolonged attention to instances of oppression and discrimination, intrinsically difficult issues. “You are confronting crisis intervention, conflict management and bias mitigation everyday,” Viverito said. “That type of

work can cause real fatigue. When you mix it with some organizational resistance, lack of necessary resources or accountability, it becomes really tough.” “Since a lot of it was formed out of tragedy and trauma, it was focused on one piece of it,” said Textio’s Clayton, referring to the corporate initiatives that came out of 2020 and 2021. “Diversity is just a piece of it, the next is, are people being included? Do people feel like they belong? Is everything equitable?” It’s not just legal challenges and burnout at play, though. Broader economic conditions are also inflicting pressure. “Companies aren’t stupid. I don’t think anyone is actually laying off these teams en masse,” Simon said. But “they are taking a little bit more of a backseat these days with higher interest rates and higher uncertainty in the labor market.” But DEI advocates say that despite the current headwinds, companies should not sit idly by and let DEI policies and personnel go without a fight. “We are in this pressure cooker moment,” Viverito said. “Instead of saying, ‘Dissolve DEI,’ it [should be] ‘Evolve DEI.’” In that version of the future, even with mounting backlash, “DEI does not disappear; it becomes the way we work.”

City spending on MWBE contracts stagnates under Adams despite the mayor’s emphasis on boosting it, report says By Nick Garber

New York City’s contract spending on minority- and women-owned businesses is stagnating under Mayor Eric Adams despite his vocal push to increase it, according to a report released Feb. 14 by the city comptroller’s office. Adams’ administration has disputed some of the findings, arguing that the fiscal watchdog ignored progress being made on MWBEs. During the 2023 fiscal year that ended in June, MWBEs were awarded $2.1 billion in new city contracts

MWBE spending to a cumulative $60 billion between fiscal 2023 and 2030. Comptroller Brad Lander called the numbers “disappointing,” saying in a statement that the city remains “woefully short of where we need to be.” But the Adams administration is pushing back — after receiving a preview of Lander’s report, Garner sent the comptroller a letter on Feb. 2, obtained by Crain’s, arguing that the city’s spending on MWBEs had increased for certain subsets of contracts. Garner said the city awarded a record-high $1.42 billion to MWBEs last year within the smaller universe of contracts held by agencies that are required by law to hit certain goals for MWBE participation. The city also awarded a record $175 million in discretionary, no-bid contracts to MWBEs, Garner said. “Perhaps most fundamentally, this administration has undertaken a culture change when it comes to our MWBEs, instituting frequent, City Hall-led meetings to hold agencies accountable for their contracting decisions and drive on-theground success,” Garner wrote. Lander spotlighted other long-running problems that remain unsolved — including late pay-

A“disparity within the disparity” remains — Black-, Hispanic- and women-of-color-owned businesses each scored only about 1% of the value of contracts subject to MWBE participation goals. The rest are going to white women business owners. — 5.3% of the city’s $40 billion in total procurement. That is barely changed from last year’s share of 5.2%, although it remains higher than two years ago. The findings are unwelcome for Adams, who has singled out MWBEs as a key issue and appointed the city’s first-ever chief business diversity officer, Michael Garner, in an effort to boost spending. Adams has set goals to more than double

City Comptroller Brad Lander, who hosted a December roundtable for minority- and women-owned businesses (pictured above), said the Adams administration has lagged in some efforts to boost contracts to MWBEs. | OFFICE OF CITY COMPTROLLER BRAD LANDER

ments. More than 60% of contracts awarded to MWBEs were not registered until after their start date, resulting in delayed payouts — an existential problem for small contractors who are then forced to essentially work for free. (Garner strongly disputed that figure, saying the administration’s own records found less than 21% of contracts were registered after the start date.) And a much-discussed “disparity within the disparity” remains — Black-, Hispanic- and women-ofcolor-owned businesses each scored only about 1% of the value of contracts subject to MWBE participation goals. The rest are going to white women business owners. Also, contracts awarded to MWBEs remain smaller than those given to companies owned by white men — MWBEs won 62% of new

contracts subject to the city’s targets but just 10% of their total dollar value. Lander credited the Adams administration with making progress on several recommendations the comptroller issued in a report last year. The mayor persuaded state lawmakers to raise the cap on nobid contracts to MWBEs from $1 million to $1.5 million. (Just a year earlier, in 2022, the cap was raised from $500,000 to $1 million.) The city also created six new lists of pre-qualified MWBE vendors and raised the share of small purchases registered to MWBEs. But Lander said the administration has not taken other steps, like updating the training given to city agencies on best procurement practices. Garner disagreed, stating in his letter that the city has hosted

monthly procurement training for agency staff. Lander made new recommendations in last week’s report, including that the city conduct a survey to find out why most certified MWBEs do not have contracts with the city, and that it make a special effort to award more MWBE subcontracts in the human services sector, which makes up the biggest chunk of city contracts. As in past years, the comptroller evaluated different city agencies by how effectively they are prioritizing MWBE contracts, this time using a weighted metric to compare similarly sized agencies more fairly. Top-performing departments included the Environmental Protection and Homeless Services, while Transportation and Finance were among the lowest performers.

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Director (Apollo Management Holdings, L.P. – New York, NY); Mult. pos. avail. Design sophisticated sol for sys that result in simple, extensible, maintainable, high-qual code based on 12/15 factor app methodology. Corrob with key stakeholders w/in Middle Office, Controllers, Cred, Fund Fin, and Front Office Tech teams to gather the tech needs of the bus in order to ensure the successful del of software sol on time. F/T. Pos based in New York, NY; telecomm perm up to two times per week. Sal range $215,000 to $250,000/yr. Apply w/ resume to pkotakonda@apollo.com. Ref. Job ID: 7382706

Senior Analytics Engineer positions (Turner Services, Inc.; New York, NY). Lead the applicat’n & dev’t of quantitative frameworks to understand the co’s vast portfolio of content via big data. May work remotely. Salary range is $163,238/yr - $183,500/yr, based on qualifications. Email resume to GMRI@wbd.com. Ref: 7209424SAE2.

Quantitative Researcher (WorldQuant, LLC / New York, NY) – Build mathematicl, algorithmic, computer-driven models (alphas) that seek to predict the movement of financl mrkts; perform analysis of financl datasets via existing tools & data. Reqs Master’s in Comp Sci, Engnrng, Applied Math, Data Sci, or Operations Research or in a closly relatd quant field & 6 mnths of exp in job offerd or in internships incldng as Data Analyst Intern, &/or Quant Researcher Intern, &/or Wealth Mgmt Intern or in similar positn(s); or Bach in same academic field(s) & 2 yrs of exp. Bkgd in educ, training or exp must incld knowldge & undrstndng of linear algebra, stats, Machine Learning, Stochastic calculus, asset pricing, econometrics, time series analysis, & risk management; programng proficiency in C++ & w/ scripting languages incldng Python; exp working w/ Unix systems. Salary $120,000 - $150,000 per yr. Send resumes to Sandra.DiCairano@worldquant.com; ref job title in subjct line.

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CREDITS From Page 1

“Based on an objective weighing of the costs and benefits, the film production credit is at best a break-even proposition and more likely a net cost to NYS,” the authors wrote. As critics have long argued, the study found that much of the filming activity funded by the credit would have happened in New York regardless, given its existing workforce and infrastructure. And although the productions do attract high-paying jobs, the tax credit’s unlimited duration means it functions more as an “ongoing subsidy” rather than a one-time incentive that could wind down after establishing a steady film industry in the state. Indeed, many of the productions that continue receiving annual tax credits are long-running television series filmed in New York for years — undercutting the program’s stated goal of attracting new investments. And even the job-creation claim is “inconclusive at best,” the study found. After New York launched the credit in 2004, film industry employment remained stagnant for years until increasing in 2010, and its share relative to the nationwide market has since dropped.

Other studies’ better results A spokesman for Gov. Kathy Hochul said the office is reviewing the report but pushed back on its conclusions, pointing to other studies that found better results. Among them was a study commissioned by the Empire State Development

like “Law & Order,” hardly portray New York in a fully positive light, the authors note. The state’s expansions to the program last year also expanded the credit to cover “above-theline” salaries for actors, directors, producers and writers, in addition to the “below-the-line” jobs, such as hairdressers and set builders, that had been covered before. Hochul, who pushed for the expansions, argued it would lure more productions to the state and boost an industry that serves as a major union employer. In the end, the study concludes, the strongest argument for the tax credit may be that it works as a “defense mechanism” — deterring productions from choosing rival states like California and Georgia that offer their own incentives. Unlike other states that subsidize film and TV, New York’s credit is split into separate programs for regular production, — New York State Sen. Liz Krueger on the study by PFM Group post-production, and making ple without college degrees. New commercials. The main film proYork has also lost productions to duction credit makes up the vast other states that boosted their in- majority of the new $700 million centives, such as the 2022 film total, with $45 million reserved for “White Noise,” which filmed in post-production. The report found a similarly disCleveland after “extensively scouting New York state,” Hochul’s office mal return of just 30 cents for every dollar spent on the post-producsaid. The PFM study found that other tion credit, but a roughly break“qualitative” factors cited by boost- even return for commercials. ers of the tax break are similarly murky, like the exposure that New Looked at other tax breaks York state and city might enjoy as a result of all the films and shows set The tax-break-skeptical Empire here. Many of those productions, Center think tank publicized the Corp. which found that New York’s state and local governments reaped a combined $1.70 for every dollar spent on the film tax credit in 2021 and 2022 — although the state by itself (omitting local governments like New York City) still lost out overall, the report found. “New York's tax credits and incentive programs are critical to growing the state's economy, boosting innovation, and creating good jobs, which is why the Legislature approved them in the first place, and Governor Hochul will continue working with members to improve the programs to maximize benefits for New Yorkers,” spokesman Justin Henry said. Hochul’s office pointed to the high wages available in film and TV jobs, which often employ peo-

“This groundbreaking audit is just the tip of the iceberg in terms of the information we should have on economic development spending in our state.”

State Sen. James Skoufis, who helped negotiate for the study on New York’s economic development tax breaks, discusses the new report at the state Capitol on Feb. 12. | NYS SENATE MEDIA SERVICES

study’s findings in an article on Feb. 12, weeks after the state quietly published the findings online to little notice. Empire Center senior fellow E.J. McMahon predicted the findings may still have little effect on state lawmakers, given the film industry’s aggressive lobbying. “The taxpayer giveaway to Hollywood East enjoys strong support from a politically powerful, deep-pocketed constellation of producers, actors, labor unions and real estate interests enriched by the subsidy,” McMahon wrote. The 359-page PFM report also looked at other state tax breaks, with mixed conclusions. A $300 million credit intended to kickstart New York City’s theater industry in the wake of the pandemic directly generates just 23 cents for every dollar invested, but Broadway’s bigger impacts on tourism and local retail means the program probably works out to be a net positive, the authors wrote. And the Excelsior Jobs Program,

a set of five incentives that aim to encourage businesses to locate and expand in the state, generates a positive return of $1.76 on every dollar invested thanks to its success in creating jobs, the authors found. It awarded $69 million to 210 projects last year. Democratic state senators who secured the tax-break study as part of the 2022 budget said Feb. 12 that they will push to eliminate the incentives found to be wasteful and establish new rules to improve transparency. “This groundbreaking audit is just the tip of the iceberg in terms of the information we should have on economic development spending in our state,” said Manhattan State Sen. Liz Krueger in a statement. “We simply should not be wasting taxpayer money on programs that do not provide a fiscal or other benefit to New Yorkers, or those that make grand promises of jobs but serve only to line the pockets of a small number of individuals.”

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Shanifah Rieara holds an OMNY card, which allows customers to pay their fare through a simple tap. | BUCK ENNIS

MTA’s chief customer officer seeks fresh ways to keep riders informed Shanifah Rieara also serves as the transit authority’s senior adviser of communications and policy | By Caroline Spivack

o two days are alike for Shanifah Rieara in her roles at the Metropolitan Transportation Authority, but her dual positions as senior adviser of communications and policy and chief customer officer generally involve engaging communities at various events with MTA Chairman and CEO Janno Lieber, and developing fresh ways to connect with straphangers. The fusion of roles is a new approach for the MTA. Rieara picked up the mantle of chief customer officer from Sarah Meyer, who resigned in 2022, and as of Jan. 25, has permanently stepped into the position on top of her advising duties. The combo allows her to slice through the MTA’s bureaucracy and accelerate efforts to improve the rider experience, she said. Growing up in the Bronx, Rieara’s parents taught her and her four siblings the importance of being involved in your community. “You see New Yorkers who don’t know their neighbors’ names and who are not entrenched or embedded in shaping their community,” she said. “I never understood that.” Rieara got her first taste of local government at community board meetings. She liked that the boards allowed residents to debate and strategize on the issues affecting

their neighborhoods. In 1997, when the role of community associate opened up at West Harlem’s Manhattan Community Board 9, she jumped at the opportunity to be part of the civic process. Rieara went on to serve the Upper West Side at Manhattan Community Board 7, then the borough at large in the Manhattan Borough President’s Office before a major expansion of her responsibilities when she joined the New York City Comptroller’s Office in 2014.

Community engagement As the deputy comptroller for public affairs, Rieara had broad oversight of initiatives to engage with communities, help shape programs and influence public policy change, among other things. So it was a fitting choice, but not exactly an obvious one, in 2021 when Rieara joined the MTA, the state-run agency that oversees the city’s great social equalizer: its subway system. Helping to inform her work at the authority is her 90-minute, one-way commute on the 5 line from Morris Park to Lower Manhattan each day. Those experiences helped inform the “Courtesy Counts” campaign, a series of tongue-in-cheek

cartoons encouraging riders to be respectful of one another’s personal space. Another push involves adding decals to subway cars detailing how riders can report a messy car, someone who may need homeless services or other concerns to the MTA so teams can be dispatched. “We’ve all been in that situation where you're getting in a car and something happens and you're like, How do you contact the MTA or report this? And people just don’t know,” said Rieara. Crafting catchy, informative messaging is a perennial goal in the MTA’s communications to riders, she said. In that vein, the MTA Weekender newsletter, which launched in the fall of 2022, packages major weekend service changes in a pithy, all-in-one read. In the last year, the MTA launched 15 new customer service centers in targeted, high-traffic subway stations to connect straphangers with face-to-face help getting around. Rieara’s team is about to launch a campaign against fare evasion on digital screens and other mass transit displays, and is also preparing for the anticipated June rollout of congestion pricing with a campaign on what the tolls will mean for riders. “We're bringing the information

Shanifah Rieara Born St. Thomas, U.S. Virgin Islands Grew up Rieara’s family moved from St. Thomas to the Bronx when she was nine and bounced around neighborhoods in the borough. Resides Morris Park, Bronx Education Bachelor’s in political science, Baruch College Craft queen Rieara taught herself how to knit and crochet during the Covid-19 pandemic and says she has perfected the art of scarf marking. Foodie focus As a selfdescribed foodie, Rieara spends most weekends exploring the city’s culinary scene, from fine dining to food trucks, with her 11-year-old daughter, Zoe, and her 6-year-old daughter, Kennedy. proactively to the customers instead of just being on the defensive,” said Rieara. “We’re trying to make it bright, festive, catchy or entertaining, but people can still walk away with the message of doing the right thing.”

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