Crain's New York Business by crains-new-york-business

ASKED & ANSWERED How the pandemic is changing the mortgage industry

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THE LIST

Crain’s annual ranking of the city’s top-funded tech startups CRAINSNEWYORK.COM

MAY 4, 2020

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$3.00

CORONAVIRUS ALERT

How business will navigate post-pandemic world Industries across the city face an uncertain future with no road map to follow

etting back to work in the post-Covid-19 world presents a host of challenges as businesses try to balance the needs of commerce with the requirements to keep workers and customers safe. Gov. Andrew Cuomo announced that a 100-person task force of business, community and civic leaders will advise him on guidelines for reopening the state’s economy. Mayor Bill de Blasio plans a four-part strat-

egy using advisory councils, task forces and a charter-revision commission to give him guidance on reopening parts of the city. No hard timetables have been sketched out for when reopening will begin. Last month Cuomo extended the statewide lockdown until May 15, leaving himself the flexibility to extend the shutdown measures for weeks or even an additional month. De Blasio will have no choice but to follow Cuomo’s lead.

But no matter what politicians or business leaders forecast, there is still the on-the-ground reality New Yorkers will experience. That encompasses commercial office space, the construction of buildings, a failing retail sector, a shattered restaurant industry and an uncertain future for Broadway shows, professional sports and other live events. Crain’s spoke with experts in each sector to learn what the future holds.

Office space The city’s commercial office space industry is in a state of limbo. Manhattan office leasing is down 50% since winter and is expected to plunge further. “The short answer is nobody knows, and I’m not embarrassed to say that,” said Jeffrey Peck, vice chairman at Savills. What is certain is the entire structure of commercial office use will

BUCK ENNIS

BY BRIAN PASCUS

See ECONOMY on page 21

CLUTCHING THE PIGGY BANK Even with budget shortfalls, museums avoid tapping into endowments

BY GWEN EVERETT

I NEWSPAPER

VOL. 36, NO. 16

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MORE INSIDE

See MUSEUMS on page 22

GETTING CREATIVE

Landlords working on plan to help tenants pay rent. PAGE 2

A REPORTER’S JOURNEY

LEFT OUT

Crain’s health care reporter recounts his bout with Covid-19.

Outerborough businesses feel snubbed by city relief programs.

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ISTOCK

t’s a moment of reckoning for arts institutions across the city. As revenue from ticket sales and grants has drastically slipped away, the city’s cultural nonprofits are laying off workers to survive. So far 31 institutions in New York have laid off staff, according to Art and Museum Transparency, a group that tracks museum furloughs and layoffs. That includes more than 80 workers at the Metropolitan Museum of Art, 76 at the Whitney Museum of American Art and 41 at the New Museum. MoMA also ended all contracts for museum educators and tour guides.

ANSWERING THE CALL

Utah hospital network sends 100 health care workers to New York. PAGE 5

5/1/20 7:05 PM

CORONAVIRUS ALERT REAL ESTATE

Related, other landlords push credit-card rent payments BY RYAN DEFFENBAUGH

orried about a massive drop in rent payments from out-ofwork residents, city landlords are encouraging tenants to pay with their credit card— which some observers said sends a dangerous message. The Related Cos., one of the city’s largest residential landlords, last week emailed a message to residents at its Hunter’s Point South apartments, announcing that the company would now accept creditcard payments. “These are very scary and challenging times for everybody, and we want to help you in any way that we can,” the message read. The offer for the new payment method—which includes a 2.3% fee—alarmed some residents at the two apartment towers, which make up the largest affordable-housing development built under the Bloomberg administration. “People may think, I’m going to lose this one-in-a-thousand apart-

With New York’s jobless rate approaching 20% and tenant groups calling for a rent strike, Related is not the only landlord pushing for plastic payment. Clinton Management, part of Douglaston Development, has agreed to cover the fees for renters who choose to pay by credit card in its roughly 3,000 city apartments, a mix of market-rate and affordable units. The firm’s president, Ryan O’Connor, said it is working with tenants on payment plans as well, and it decided to waive the fees after hearing from residents who said they preferred to charge the bill. “They say they are cash-strapped now but know that they have more money coming in later,” O’Connor said.

ment if I can’t pay,” said Sam Goldsmith, a carpenter who lives in the building. “That could trick people into paying now to then face a massive debt later.” More than 90,000 New Yorkers applied in 2014 for a place in the development’s first 924 income-restricted apartments. Asked about the email, a Related spokeswoman said credit-card payments are “something we have been offering at many other residential buildings at the request of tenants for years, and it is being rolled out to Hunter’s Point South.” Goldsmith said residents unable to pay should work out a plan with the landlord rather than pay the rent with a credit card. Related CEO Jeff Blau said recently in an interview with CNBC that the company will work with tenants who have lost their job. “The people that can pay need to pay,” Blau said. “Landlords need to help out those that can’t, and then the banks need to help out those landlords that are hurt by people that couldn’t pay the rent.”

Charge! Rent paid through credit cards climbed 31% this month among users of Zego, a national company that processes the payments, the firm said. “Credit-card payments for rent are not necessarily new, but land-

BLOOMBERG

Tenants bristle at pressure from building owners to collect fees and increase debt

lords are much more willing to pick up the transaction fee now,” said Alan Hammer, a lawyer at Brach Eichler who owns apartment buildings in New Jersey and Pennsylvania. “Tenants are our customers, and we want to work with them.” The typical 3% transaction fee for a credit card tacks on $75 to a $2,500 rent payment. “If your landlord is willing to cover the fee, that could be a helpful way to make ends meet while you are missing out on typical in-

Property owners working on plan to help tenants pay up

come,” said Sara Rathner, credit-card expert at NerdWallet. “But you always need to be aware of the interest rate and the cost to you if you carry a large balance month to month.” Cea Weaver of tenant advocacy group Housing Justice for All criticized landlords for encouraging the use of credit cards. “Landlords have been saying a rent strike is risky and irresponsible,” Weaver said. “I think it is far more irresponsible to encourage going into credit-card debt.” ■

WEBCAST CALLOUT

With people out of work in droves, the city’s real estate big shots are getting creative

ajor city landlords are working with real estate and affordable-housing groups on a plan to help tenants pay their rent, Jeffrey Levine, chairman of Douglaston Development, told Crain’s last week. Levine and Gotham’s David Picket, L&M Development Partners’ Ron Moelis and BFC Partners’ Donald Capoccia are discussing the issue with the Real Estate Board of New York, the New York State Association for Affordable Housing, the Rent Stabilization Association and the Community Housing Improvement Program. The group is “trying to help tenants, who are not necessarily our tenants, through some philanthropic giving to help not-for-profits direct tenants who are impacted to social-service groups that can help them access various sources to help them pay their rent through

these troubled times,” Levine said. In an industry known for tracking down rent at all costs, landlords have met their match with Covid-19. The city’s behemoth real estate industry churns on rent payments being paid each month, but with people out of work in droves, residential and commercial tenants are increasingly unable to pay. That means landlords are facing pressure to solve their rent problems before someone else does. Calls have mounted among tenantrights groups and in City Hall for residents to go on a rent strike. “With the rhetoric that’s going on with this potential rent strike, I am very concerned,” Levine said.

Collection day Landlords are scrambling to find ways to keep cash flowing. The Related Cos., a major city landlord, notified tenants recently that they could pay their rent with a credit card (see “Related, other landlords push credit-card rent payments,”

LEVINE

MAY 7 JOIN CRAIN’S FOR THE WEBCAST “HOW COVID-19 WILL CHANGE NYC REAL ESTATE”

BLOOMBERG

BY GWEN EVERETT

above). For Levine, the biggest stress points have been in his affordable-housing units. Payments on them are down 35% to 45%, he said, and the crunch has made it difficult for Douglaston to service its debt. The initiative is not meant for

market-rate tenants, Levine said, adding that they might have a hard time finding a forgiveness program. About 90% of tenants in market-rate apartments paid their April rent, but Levine said he was nervous about May. ■

How will companies rethink their office space needs post-Covid-19? Real estate leaders discuss demands for square footage, industries that need more room to work and reimagining offices to accommodate social distancing.

4 to 5 p.m. EDT CrainsNewYork.com/ realestatewebcast2020

Vol. 36, No. 16, May 4, 2020—Crain’s New York Business (ISSN 8756-789X) is published weekly, except for bimonthly in January, July and August and the last issue in December, by Crain Communications Inc., 685 Third Ave., New York, NY 10017. Periodicals postage paid at New York, NY, and additional mailing offices. Postmaster: Send address changes to: Crain’s New York Business, Circulation Department, PO Box 433279, Palm Coast, FL 32143-9681. For subscriber service: call 877-824-9379; fax 313-446-6777. $3.00 a copy; $129.00 per year. (GST No. 13676-0444-RT) ©Entire contents copyright 2020 by Crain Communications Inc. All rights reserved. 2 | CRAIN’S NEW YORK BUSINESS | MAY 4, 2020

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CORONAVIRUS ALERT

Nathan’s hot dog shortage looms BY AARON ELSTEIN

ALYSSA LAMANTIA, ISTOCK

Crain’s reporter Jonathan LaMantia recounts his experience with Covid-19.

When Covid-19 strikes: A reporter’s journey Navigating the health care system during a pandemic isn’t easy BY JONATHAN LAMANTIA

s a health care reporter for Crain’s, I’ve spent the past eight weeks covering multiple stories every day about the new coronavirus. I followed along as the mayor and governor tried to balance New York’s economy with the threat from Covid-19, finally succumbing to our new reality by dimming the lights on Broadway and then closing schools and busi-

nesses. I reported on how the virus was crippling our health care system, including the ability of the state and city to find much-needed medical supplies including personal protective equipment and ventilators. Then I became the first person in the newsroom to get sick with Covid-19. I have since recovered, but I found navigating the health See COVID-19 on page 16

FOR PEOPLE WITH MILD CASES, WORRYING OVER GETTING OTHERS SICK IS THE WORST PART

f the Coney Island beaches open this summer, something important could be missing: Nathan’s hot dogs. Nathan’s Famous said last week that its primary manufacturer of hot dogs has closed. The company, chaired by Howard Lorber, an adviser to President Donald Trump and chairman of real estate broker Douglas Elliman, said it doesn’t expect the closure of the Smithfield Foods facility in Sioux Falls, S.D., to have a “material” effect on the availability of hot dogs. Maybe so, but with more than 1,000 Covid-19 cases linked to the South Dakota facility and packers across the Midwest closing or working limited shifts, hot dogs could become harder to find. The cattle slaughter for the week that ended April 24 was 25% lower than a year ago and 7% smaller than the previous week, according to the U.S. Department of Agriculture. Pork production was 15% lower than a year ago. Trump signed an executive order last week ordering meat-processing plants to remain open during the coronavirus pandemic. Nathan’s, which started as a single Coney Island restaurant in 1916, has in recent years grown into a global franchise. It’s one reason more hot dogs are eaten in New York City than anywhere except Los Angeles, according to the Hot Dog and Sausage Council. Typically hot dogs are made with trimmings, a combination of leftover meat and fat. But industry officials say quality has taken a leap forward thanks to Covid-19, because hot dogs are now being made with meat that ordinarily would be sold to restaurants. “Some manufacturers are buying briskets and putting them into hot dogs,” one food-industry executive said. “Never seen anything like it.” Still, the diminishing meat supply is having an effect beyond franks. “Supplies are the tightest I’ve seen in my 37 years in this business,” said Richard Romanoff, chief executive of Nebraskaland in the Bronx, which distributes food to the region’s supermarkets. His firm is turning to smaller suppliers and buying items intended for restaurants and schools. Supplies haven’t tightened further, he said, because food exports have fallen as much as 40% since Covid-19 struck. “We are getting all our orders filled, but prices are higher,” Romanoff said. “It’s not business as usual.” ■

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CORONAVIRUS ALERT

Company pivots its householdhelp network to deliver groceries Umbrella taps into an army of volunteers to get food to the elderly BY RYAN DEFFENBAUGH

How businesses are adapting to the coronavirus crisis

A VOLUNTEER shops for the elderly at a local grocery store.

those who don’t use the internet. Umbrella has opened up its contactless delivery platform to anyone who calls or fills out a request form online. Customers are responsible for paying for their groceries, but delivery is free. The company suggests a $10 contribution to cover its costs.

People want to help More than 3,000 people have volunteered to deliver groceries in the metropolitan area, Umbrella said. Among them are firefighters, military veterans and police officers, Ullman said, as well as people who live away from their family and are looking to help others. They are unpaid but for the occasional home-baked cookies, handwritten poems or fresh-cut flowers left on the doorstep as a thank-you. “We hear these stories, and it shows that there’s a connection, even from a distance, that is amazingly powerful,” Ullman said. Umbrella has expanded its delivery system to Cleveland, Detroit and Birmingham, Ala., through a partnership with Venture for America, the nonprofit, tech-focused fel-

ED KASHI/VII

ix months after Umbrella raised $5 million from investors for its AAA-like membership service to help senior citizens with household tasks, Covid-19 disrupted its business model. Sending gig workers to help its paying members, all of whom are 60 or older, was no longer feasible under social-distancing policies. Even if it were possible, “changing a light bulb or fixing a leaky faucet wasn’t as important as keeping people safe,” said Lindsay Ullman, chief executive and co-founder. Instead, Umbrella heard that one thing was particularly vital to the people it serves: buying groceries. “We had thousands of phone calls with members by the end of February, asking them what they need,” Ullman said. “We kept hearing, ‘If I can’t go outside my house, how can I get the things I need?’” The Brooklyn-based company has suspended its annual $199 membership fee and has spent the past two months building up an army of volunteer grocery shoppers. Instacart and FreshDirect have been jammed up since the start of the pandemic. Securing a delivery time takes digital know-how that’s rare among Umbrella’s customers. The services are impossible for

lowship program founded by former presidential candidate Andrew Yang. All 20 of Umbrella’s employees have stayed on the payroll, with the company drawing on the venture investment to pay its bills. Ullman said investors, including Alphabet’s Sidewalk Labs and David Tisch’s Box Group, support the firm’s decision to hold off on collecting fees. There is “no playbook” for how long Umbrella will be able to—or need to—keep its grocery service

up and running. Gov. Andrew Cuomo said last week that the city and its suburbs will be the last parts of the state to be removed from social-distancing guidelines. For as long as the pandemic is a threat, the vulnerable population Umbrella serves will be asked to limit exposure to the public. Although the company’s revenues will be limited to the suggested delivery donations for now, Umbrella is betting that the goodwill it

is building will help grow its membership when the time is right. “This is a defining moment for companies and brands,” Ullman said. “People will look back and ask what you did and what you stood for.” ■ Do you know of other businesses that have pivoted during the coronavirus pandemic to keep their employees working? Contact Robert Hordt, Crain’s editor, at robert.hordt@CrainsNewYork.com.

Outer-borough businesses snubbed by city virus relief fund Manhattan companies landed about two-thirds of loans

ity Council members blasted the de Blasio administration’s distribution of Covid-19 aid after officials said just 1% of loans for small businesses have gone to the Bronx. Councilman Mark Gjonaj, whose district is in the borough, called New York a “city of two tales” during a hearing last week at which Small

small business with four employees or fewer—are part of the city’s $20 million Small Business Continuity Loan program.

$1 billion needed The city has received about 8,000 applications and distributed roughly $10 million, Bishop said. Based on an average of $60,000 per loan, the city would need more than $1 billion to cover all applicants. “The need far outweighs our ability to help on the local level,” Bishop said. Of the loans the city has distributed, about 5% have gone to Staten Island businesses, 9% to Queens and 18% to Brooklyn. “We know that many of our small businesses are in the outer boroughs yet we are seeing a huge dis-

“THE NEED FAR OUTWEIGHS OUR ABILITY TO HELP ON THE LOCAL LEVEL” Business Services Commissioner Gregg Bishop disclosed that Manhattan businesses landed about two-thirds of loans from the city. The funds—up to $75,000 for a

parity,” Gjonaj said. Bishop countered that the majority of the businesses that qualify for the loans are in Manhattan. The borough is home to 40% of such firms, 25% are in Brooklyn, 23% in Queens, 8% in the Bronx and 4% on Staten Island. “What you are seeing is a ratio that matches the general landscape of small businesses in the city,” Bishop said. A separate grant program that has provided $19 million to roughly 2,600 small businesses during the pandemic has a similar breakdown. Half of the money went to Manhattan firms, 25% to Brooklyn businesses, 3% to the Bronx, 3% to Staten Island and 16% to Queens. The SBS has stopped taking applications on its loans and shifted focus to helping businesses navigate the process for federal loans, such as the Paycheck Protection Program. Those loans are less re-

BISHOP said Manhattan received most of the loan money because it had the most small businesses that qualified.

GETTY IMAGES

BY RYAN DEFFENBAUGH

strictive and can help a wider range of businesses, Bishop said. Councilman Justin Brannan of Bay Ridge questioned why the city couldn’t commit more to help small businesses. Bishop echoed the mayor’s previous comments that the city is facing a budget

crunch and will need federal help. “We are hearing a lot of talk now about donor states, those that send more to D.C. than we get back,” Brannan said. “A lot of small businesses are starting to feel the same way—that they send more money.” ■

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CORONAVIRUS ALERT

How a Utah health system helped relieve New York hospital workers BY JONATHAN LAMANTIA

n early April staff at Intermountain Healthcare in Utah got an email that the 24-hospital system would be sending a delegation to New York to treat Covid-19 patients. Employees would have about two days to volunteer and would need their manager’s approval. Intermountain ended up sending 100 doctors, nurse practitioners, physician assistants, nurses and respiratory therapists to work at Northwell Health and New York–

pital personnel in New York. “As physicians and nurses, we all know what it’s like to be overwhelmed by our jobs at times,” Gray said. “These folks that have been doing it out here had been in that position for weeks on end. I knew just how taxed these guys were, and first and foremost I wanted to help them. Second, [I wanted] to obviously help the patients involved.” The partnership between Intermountain and the metro area’s hospitals has benefits for the Utah system too. Although their state had seen only about 4,500 Covid-19 cases as of April 29, the group of 100 clinicians will bring back experience on how to treat such patients. “It’s one thing to read about any disease in a book and in studies and journals. It’s another thing to experience it,” Gray said. “I thought that experience would be valuable for our community and system.” Gray is primarily working on the

“WE’RE LIKE A PRESSURERELIEF VALVE AND ENABLE DOCTORS TO GET REST” Presbyterian hospitals. Dr. Jarid Gray said his wife knew he’d sign up even before he told her. Gray, a 46-year-old physician working at 48-bed Cedar City Hospital in southern Utah, felt compelled to help take some pressure off the hos-

Northwell honors our nurses who deliver exceptional care with bravery and selflessness

medical floors at Long Island Jewish Medical Center, part of the Northwell system, treating patients with Covid-19 who are too sick to leave the hospital but not in critical care. He spent several days observing in the ICU to learn more about caring for critical patients.

‘A tremendous asset’ Dr. Dixie Harris, a pulmonologist, was deployed to Northwell’s Southside Hospital in Bay Shore, Long Island. She has worked a mix of day and night shifts to relieve some of the intensive-care doctors. “We’re like a pressure-relief valve and enable doctors to get some rest,” said Harris, who is in her 50s. Typically, she would go in for a night shift at 6:15 to start putting on protective equipment, then finish her shift around 7 a.m. After handing off patients to other doctors and getting back into her street clothes, she would arrive back at her hotel around 8:30 a.m. “When I walked in on the 14th and 15th [of April], they had just peaked and were fully running ev-

ery ICU,” Harris said. Southside Hospital, Northwell’s tertiary facility in Suffolk County, went from 36 ICU beds to close to 140 at peak patient volume. Both Gray and Harris were preparing to return to Utah late last week after two weeks in New York. “The key to managing this disease that we don’t have a specific known treatment for yet is intense and expert clinical bedside care,” said Dr. Jay Enden, Southside’s chief medical officer. “It’s among the most intensive critical care demands. For folks to step right in to help with that is a tremendous asset for both our facility and the patients.

HARRIS

When they go back home, their state will be in a better position.” ■

National Nurses Week May 6-12

During these extraordinary times, you’ve inspired us all as you continue to care for your patients with unwavering dedication and skill. Even as your strength is tested. Even as your feet ache and your hearts weigh heavily. For all this, and so much more, we thank every nurse, including the more than 17,000 across our health system. Your devotion and courage will help our nation—and New York—heal and move forward to a brighter future. To our #HealthcareHeroes, we are forever grateful. Michael J. Dowling President & Chief Executive Officer

MAY 4, 2020 | CRAIN’S NEW YORK BUSINESS | 5

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IN THE MARKETS

Paramount Group adjusts to an uncertain future

Landlord unsure what demand will be like in a post-Covid-19 world

“TENANTS WILL THINK DIFFERENTLY. DENSIFICATION IS OVER”

companies that can’t afford to rent more space might direct fewer staffers to come to work at any given time. That change has profound implications for real estate, public health and the economy. “We are entering a new real estate cycle,” Evercore analyst Steve Sakwa said in a recent report. He said he expects rent growth in most major markets to drop by as much as 20%.

31 W. 52ND ST.

Back to the office Sakwa added that some employers without the capacity for remote work likely will try to bring employees back to the office. That could lead to the sort of tension already playing out in the blue-collar world, where meat-packers are demanding scared employees come back to work after a presidential order. At the moment it’s not clear how much emptier offices will have to be as workers return. Based on parameters spelled out by California Gov. Gavin Newsom, Sakwa estimates that employers with 250 workers in a 50,000-square-foot office space could allow in only 167 of them if they must provide at least 300 square feet of space per person.

BUCK ENNIS

ffice landlord Paramount about real estate,” acknowledged Group has avoided the Peter Brindley, Paramount’s execuworst of New York’s lock- tive vice president for leasing. down. Its towers are “Densification is over.” Paramount owns occupied mainly by blueseveral prime office chip banks and law firms, towers in Manhattan, 95% of which continue to pay including 31 W. 52nd rent, and it has little expoSt. and 60 Wall St. sure to the shattered retail Last month the firm sector. agreed to sell a 10% “We’re a trophy portfolio,” stake in its namesake Chief Financial Officer Wilproperty at 1633 bur Paes said on a conferBroadway for $240 ence call last Thursday. But trophies aren’t all that AARON ELSTEIN million to an unidentivaluable when nobody is fied buyer. It also there to admire them. agreed to sell its last Faced with cratering demand for building in Washington, D.C., for prime office space and the loss of a $115 million. The firm said both big Wall Street tenant at year’s end, deals were in the works pre-coroParamount is grappling with a sin- navirus. The firm has also deferred $50 million in maintenance costs. “Preservation of capital will be our foremost goal until we have better visibility,” Chief Executive Albert Behler gularly uncomfortable question: said. After the coronavirus lockdown Just how much office space will be needed by anyone after the pan- ends, employees returning to the office will need more space in order demic? “Tenants will think differently to maintain social distancing. But

The same office could admit only 100 workers if 500 square feet of space is mandated.

New world Paramount officials said they are preparing for the new world by replacing air filters, cleaning common areas more often and even introducing fresh air “as appropriate.” In the meantime, Paramount is

trying to line up a new tenant to replace Barclays Capital, whose lease for 500,000 square feet at 1301 Sixth Ave. expires at the end of this year. With the leasing market at a standstill, Paramount officials said, they don’t expect to find takers for all the space until next year at the earliest. “We think we can lease it all in 2021 at decent levels,” Behler said. ■

ON NEW YORK

Small landlords are hurting too

Without rent, owners say they won’t be able to pay bills and maintain buildings

hen the boiler broke nance and capital upgrades, mortrecently in the small gages, and take a modest developer apartment building fee,” Sewell said. “Soon we will have Lincoln Eccles owns to ask for a forbearance on our in Crown Heights, Brooklyn, the mortgages.” The debate on how to help New second-generation Jamaican immigrant spent $10,000 to repair it. He Yorkers who can no longer pay their had to dip into his reserves and take rent has focused on tenants and out an overdraft at his bank to pay sparked a growing clamor from activists and politicians for a the bill, he said, because freeze on evictions as long six of his 14 tenants either as the pandemic lasts, the aren’t paying rent or have cancellation of rent owed been slow to do so. and a rent strike. Less atWith a moratorium on tention has been given to evictions, if the other tenlandlords and the ecoants don’t pay their May nomic ecosystem that rent, Eccles said, he won’t rental housing provides— be able to pay his properespecially small landty-tax bill in July. His taxlords, who house a signifes and the water bill eat GREG DAVID icant percentage of the up 60% of his cash flow. city’s most vulnerable “No one is saying they won’t pay, but I am worried about and are most at risk themselves. “The system is not prepared to it,” he said. The Settlement Housing Fund handle such massive risk of nonowns 2,000 apartments throughout payment,” said Matt Murphy, execthe city focused on very-low-in- utive director of the Furman Center come people, and it has 1,500 more at NYU. Each month New Yorkers pay units in the pipeline. Already the number of tenants paying rent has $3.2 billion in rent, the Furman dropped by 25%. Alexa Sewell, the Center calculates, or $40 billion anfund president, said she believes nually. An analysis published this the number will grow. The nonprofit week shows that a disproportionate doesn’t have much of a cushion to 26% of economically vulnerable people live in two- to four-unit cover rent losses, she said. “From our rent roll, we pay [for] buildings, those with the weakest the staff in our buildings, mainte- finances.

Last week Signature and Dime Community banks reported an alarming 50% of tenants in buildings where they held the mortgages had not paid April’s rent. (The figure is somewhat overstated, as 10% typically don’t pay on time, and it included retail spaces.) Nationally, about a third of tenants did not pay their April bill, probably similar to what is happening in New York. Many small landlords say they are already working with tenants in financial difficulty but say they simply won’t be able to pay their bills or maintain their buildings if they can’t collect rent.

deposit to cover April’s rent—one of Mayor Bill de Blasio’s proposals to help renters. “We work it out with the tenants when they have a problem,” Athineos said. But if the economy doesn’t rebound in June, or if more of his tenants lose their job, his finances will be imperiled.

Ripple effect Nonprofits, the backbone of the city’s affordable housing, operate on tight budgets. The economics of a building Settlement House is rehabbing under a city program to lock in affordable rents shows how thin their margins are. The first-year operating cash flow is expected to be $900,000, with mortgage payments equaling $370,000 and all but $55,000 eaten up by the cost of running the building. The nonprofit assumes nonpayment of rent and vacancies will run about 5%. If that figure rises to above 10%, the building will lose money. “We don’t have other big buildings with high-income tenants and leftover rental income elsewhere to cross-subsidize,” Sewell said. If landlords cut back on maintenance, that causes a ripple effect. “All of the men I would hire to

“NO ONE IS SAYING THEY WON’T PAY, BUT I AM WORRIED ABOUT IT” Most of the people in the 150 apartments Chris Athineos’ family owns in several Brooklyn neighborhoods are still employed. He is working with the 12 who are having financial difficulties, he said. One woman asked him to wait until her unemployment checks started arriving; he agreed. Another didn’t want to be responsible for unpaid rent, so she asked to break her lease. He told her that would be all right and allowed her to use her security

maintain the buildings will be sitting on the couch because we won’t have the money to pay,” said Jan Lee, the third-generation owner of a building in Chinatown. Landlords and their representatives are calling for a federal program to bail out tenants who can’t pay or to provide direct help to landlords. “Instead of half-baked political schemes, like rent strikes, rent forgiveness and rent freezes, politicians should be driving to D.C. and begging the federal government for rent vouchers that would pay 70% of the rent for all tenants that are paying $3,000 or less a month,” argued Joseph Strasburg, president of the Rent Stabilization Association, a landlord group. “This would cast a wide-enough net to catch all those who are struggling so that they can use the other assistance and benefits for food and other necessities.” The odds of getting assistance would be improved if landlords and tenants worked together, said Murphy of the Furman Center. “It is going to be important to the city’s recovery,” he said, “that we don’t have a spike in evictions overwhelming our court system.” ■ Greg David writes a regular column for CrainsNewYork.com.

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ASKED & ANSWERED as we possibly can. So we are way over capacity and are trying to grow.

DOSSIER

INTERVIEW BY GERALD SCHIFMAN

WHO HE IS Founder and chief executive, Better.com

s the Covid-19 pandemic wreaks havoc on the city’s economy, Vishal Garg’s Better.com is flourishing. The digital platform, which streamlines the home-mortgage process and charges low fees, is helping Americans capitalize on historically low interest rates to refinance their homes. In January, when the virus was in its early stages nationwide, Better handled $500 million in home loans. The sum hit $1 billion in March alone, leaving the Financial District–headquartered company unable to fully keep pace with demand. Looking ahead, Garg intends to fill many of the company’s staffing needs with laid-off hospitality workers.

Do you think the pandemic is going to accelerate the digitization of the mortgage industry?

The short answer is yes. There are a lot of physicallyoriented businesses—such as title insurance, notaries, appraisers, Realtors and the like—who have been really holding on to the old way of doing things. The digitization of entire real estate and mortgage transactions will be vastly sped up.

Is Better seeing a benefit?

Our non-commission, online-only model has worked well. We’re able to save people $2,000 to $3,000 a year for the next 30 years, which is meaningful for them right now. One of the challenges is that, with so many of the banks

YEAR FOUNDED 2016 GREW UP Garg was born in India, where he lived until he was 8. His family then emigrated to the United States and settled in Forest Hills, Queens. RESIDES Tribeca EDUCATION Bachelor’s in finance and international business, NYU EARLY START While attending Stuyvesant High School, Garg worked as a runner and order-entry clerk at Salomon Brothers.

Is Better profitable?

The company was not profitable previrus. This year we will grow and lose less money. We still don’t make enough money to pay for all the lights, people and everyone else in corporate. We are also not trying to surge price or price gauge, so we are still offering the same rates that we always have.

Has the virus changed Better’s outlook on an IPO?

The prospect of an IPO has probably accelerated by a year. We’re thinking that we’re going to be a public company by the end of 2021 or the first half of 2022, depending on how the market recovers.

Why have you decided to fill your staffing needs with laidoff hospitality workers?

SIDE HUSTLE Garg operates One Zero Capital, which invests in early-stage startups. “One Zero lets me stay connected to the rest of the startup ecosystem and what’s happening in fintech.”

I always tell my team, “We need to provide the quality of service that you get at a nice restaurant or a nice hotel—where we recommend things that are going to be good for you.” The hospitality industry is very good at making people feel special and making sure their needs are heard. In New York, there’s an amazing “keep the costumer happy” ethos at a lot of places.

and mortgage brokers shut down, people actually aren’t able to take advantage of these once-ina-lifetime low rates and refinance. We’ve been able to stay open for business and serve as many customers

IN HEALTHCARE

What’s your outlook for the home-buyers’ market as Americans’ finances tighten?

For people whose finances have been able to remain intact, it’s probably going to be a great year and a half to buy a home because sales prices are likely to come down by at least 5% to 10%. You’re going to see movement from folks out of the suburbs to traditional retirement destinations and movement from young families from urban areas into suburban areas. You’re going to see a good balance between supply and demand in both markets. ■

BETTER.COM

VISHAL GARG Better.com

NOMINATIONS NOW OPEN!

Celebrate health care heroes with Crain’s Notable in Health Care feature, publishing August 10. Crain’s New York usiness is continuing to search for outstanding indi iduals in the health care community within the New York metropolitan area. This year, due to the Co id 19 crisis, Crain’s is opening nominations to include men, as well as women and additionally to small teams related to the Co id 19 response.

Nominate today at crainsnewyork.com/notablehealthcare2020 Nominations due Friday, June 2 , 2020. uestions Contact notables@crainsnewyork.com

MAY 4, 2020 | CRAIN’S NEW YORK BUSINESS | 7

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president K.C. Crain senior executive vice president Chris Crain

EDITORIAL

group publisher Mary Kramer

Council’s Covid-19 relief package

Frederick P. Gabriel Jr.

publisher/executive editor

EDITORIAL editor Robert Hordt

smacks of pandering

senior editor Telisha Bryan

cashiers are to this crisis what firefighters were to 9/11 and law enforcement and soldiers were to the war against terror. They deserve admiration, protection and, yes, hazard pay for the work they’re doing to keep the city and the country moving while most of us hunker down, waiting for the horror to end. However, the price of the pandemic shutdown should not be borne on the backs of city businesses. The council’s news release on the bills included quotes from many worker-rights and socialjustice advocates championing them, but only one member of the business community—NYC Hospitality Alliance chief Andrew Rigie—came out in support. Rigie later clarified that he backed only one bill in the package: a measure that would eliminate sidewalk café fees. Perhaps there is compromise in the legislation, but the way the council went about the whole thing will undermine its efforts. Springing the bills on the business community all but guaranteed opposition.

THE PRICE OF THE PANDEMIC SHUTDOWN SHOULD NOT BE BORNE BY CITY BUSINESSES businesses was included as well, but it was hard to find. Mostly the legislation was a progressive wish list from a time not long ago when the city economy was booming and money—especially other people’s—was no object. Nurses, cleaning staff, grocery clerks, delivery workers and

Janon Fisher, Gabriella Iannetta (digital) associate editor Lizeth Beltran (digital) art director Carolyn McClain photographer Buck Ennis data editor Gerald Schifman senior reporters Aaron Elstein,

Jonathan LaMantia reporters Ryan Deffenbaugh, Gwen Everett,

Jennifer Henderson, Brian Pascus columnist Greg David contributors Tom Acitelli, Ronald DeCicco,

Cara Eisenpress, Cheryl S. Grant, Steve Krupinski, Danielle McManus Sladek, Mark Yawdoszyn to contact the newsroom: BUCK ENNIS

ast month the City Council unveiled its Covid-19 relief package, a slate of legislation that it championed as a “bill of rights” for essential workers during the shutdown. The business community had another name for it: pandemic politics. Among the bills were measures for paid sick leave, $75-per-shift bonuses, whistleblower protections, a yearlong moratorium on evictions, rent cancellation, commercial tenant harassment protection, limits on third-party delivery service fees and requirements for the city to use hotel rooms to house the homeless. Supposedly, relief for small

assistant managing editors

Christine Haughney (special projects),

Some of the package’s proposals aren’t even specific to the pandemic. A bill that caps charges from third-party delivery services was introduced about a year before hydroxychloroquine became a household word.

Search for a villain Legislation that bars tenant harassment over Covid-19 seems to be looking for a villain that doesn’t exist. Smart landlords are working with their tenants to arrange a way to pay their rent, because there might not be other

www.crainsnewyork.com/staff 212.210.0100 685 Third Ave., New York, NY 10017-4024 ADVERTISING

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tenants moving into their storefronts or apartments for some time. Maybe Council Speaker Corey Johnson didn’t notice, but no one is cashing in on the outbreak. Aside from the daily horrors of death tolls and hospitalizations, the unemployment rate has reached 15%. Obituaries have been written for whole industries that have fallen victim to the virus. Now is not the time to virtue-signal to your Twitter followers. The council should work with business leaders to find a solution that works for everyone. ■

senior account managers Rob Pierce,

Stuart Smilowitz, Tori Weil account executive Devin Cavallo integrated marketing manager Jonathan Yan,

212.210.0290, jyan@crainsnewyork.com people on the move manager Debora Stein,

dstein@crain.com CUSTOM CONTENT director of custom content

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www.crainsnewyork.com/events manager of conferences & events

OP-ED

Ana Jimenez, ajimenez@crainsnewyork

Gig workers need pandemic protections

REPRINTS director, reprints & licensing Lauren Melesio,

212.210.0707, lmelesio@crain.com

Freelancers deserve the same rights as those working from home

n the blink of an eye, and out of dire necessity in order to help stem the spread of the coronavirus, social distancing and working from home have become the new normal for many New Yorkers. But while the abrupt transition to remote-work arrangements has been relatively painless for some, for others it has been devastating to their finances and their health. More than 1.6 million New Yorkers have filed for unemployment, and thousands of others have been furloughed, as nonessential businesses have been forced to close for the foreseeable future. Still others—those who are considered essential workers—have no choice but to report to their job, potentially exposing themselves to the virus in the process. Among the workers who’ve been hardest hit are the state’s gig workers, both freelancers and independent contractors. Many of them either are contracted vendors, work

in health care or are in service jobs that require them to work on-site, such as in delivery, transportation, food production and agriculture. For those gig workers who’ve been let go, their worst nightmare happened overnight. With little notice, they were pushed off a cliff into immediate unemployment, and now they will need to climb a steep mountain in order to get back to full employment. Losing a job is always difficult, but for the average New Yorker who does not earn enough to cover their monthly expenses, it’s devastating. Although the current lack of income is certainly a hardship, fulltime employees who’ve been furloughed stand a good chance of getting their job back once the pandemic subsides and the curve is flattened. And those who are laid off can at least file for unemployment benefits, while those who have health insurance through their employer can keep their coverage, at least for 18 months, under Cobra.

But for gig workers, there are no such safety nets or cushions, no provisions or protections. They are not laid off—they’re simply let go without severance, unemployment benefits or health insurance. That is why now, more than ever, gig workers need the same protections that other full-time workers have. And they might have had them if, as we pleaded for, state legislators had included a bill in this year’s budget that would have reclassified New York’s 1 million independent contractors as regular employees eligible for benefits. Of course, to say there were extenuating circumstances would be an understatement—and so it is that our lawmakers in Albany just passed a bare-bones budget to fund essential services related to Covid-19. Still, gig workers now will have to continue working in an “abusive” economy. Although unprecedented circumstances made it difficult to include gig-worker protections in this year’s fiscal budget, the need

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Simone Pryce media services manager Nicole Spell SUBSCRIPTION CUSTOMER SERVICE

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BY LEO HINDERY JR.

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for the protections should not be forgotten, as the gig economy in New York is likely to continue to grow. If there were any doubt about the desperate need for the protections, look no further than the devastating impact the pandemic has had on the gig-economy workforce. These hardworking New Yorkers—many of whom are on the front lines of the pandemic— deserve the same rights and benefits as those who are staying at home with benefits and protections in hand. ■

customerservice@crainsnewyork.com 877.824.9379 (in the U.S. and Canada). $3.00 a copy for the print edition; or $129.00 one year, for print subscriptions with digital access. Entire contents ©copyright 2020 Crain Communications Inc. All rights reserved. ©CityBusiness is a registered trademark of MCP Inc., used under license agreement. CRAIN COMMUNICATIONS INC. chairman Keith E. Crain vice chairman Mary Kay Crain president K.C. Crain senior executive vice president Chris Crain secretary Lexie Crain Armstrong editor-in-chief emeritus Rance Crain chief financial officer Robert Recchia founder G.D. Crain Jr. [1885-1973]

Leo Hindery Jr. is co-chairman of the Task Force on Job Creation and a member of the Council on Foreign Relations.

chairman Mrs. G.D. Crain Jr. [1911-1996]

8 | CRAIN’S NEW YORK BUSINESS | MAY 4, 2020

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OP-ED

Who’s in charge of the pandemic?

BLOOMBERG

STRINGER

ADAMS

SCOTT STRINGER AND ERIC ADAMS Stringer, the comptroller, was smart to question the Department of Education’s insistence on continuing to pay $700 million in bus contracts

gation distinguish itself yet.

AP PHOTO

BILL DE BLASIO In some ways, predicting how elected officials will handle a crisis isn’t that difficult. Past performance is always the best DE BLASIO indicator of future results. And after six years of a largely disengaged, flat, unsuccessful mayoralty, the fact that de Blasio is struggling through the pandemic shouldn’t surprise anyone. Of course, he only exacerbates the problem by doing senseless things, such as going to the gym or taking a caravan to Brooklyn so he can stroll through cemeteries and parks. But the problem goes far deeper than form. De Blasio can’t make decisions quickly and intelligently, and he doesn’t have the talent around him to compensate for his shortcomings. His demand that the federal government fill his budget deficit is nothing less than absurd; Washington didn’t tell him to increase spending by 30%. The real blame, however, lies with the city’s civic leadership, which knew just how bad de Blasio was before his 2017 re-election but largely sat on their hands and did nothing about it. We’re now paying the price for their cowardice and inaction.

despite the fact that kids are not taking buses anywhere. It’s a tangible issue that people can understand. Adams, Brooklyn’s president, has been as visible and creative as a borough president can be in a time of true crisis, but this is where having fewer statutory responsibilities presents a challenge. LETITIA JAMES Other than questioning Zoom’s privacy practices, it’s hard to point to much the attorney general has done during the JAMES past six weeks. She’s been so overshadowed by Cuomo that it’s possible no one has even noticed the lack of activity from her office. (If there has been activity, we’re not seeing it.) If crisis equals opportunity, her office is squandering it. CONGRESS Sen. Chuck Schumer has been Schumer: working hard, always visible. Other than negotiating with Sen. Mitch McConnell on emergency funding, there’s not much he can really do. Sen. Kirsten Gillibrand and the rest of the delegation—minus Rep. Alexandria Ocasio-Cortez—have not been front and center either. It’s difficult to make an impression when you have no real responsibility other than voting yes or no once in a while. We haven’t seen the dele-

BLOOMBERG

FLICKR

ANDREW CUOMO The governor is the big political winner of the pandemic so far. His daily briefings have become mustCUOMO see TV. His name keeps being floated as a somehow miracle replacement for Joe Biden atop the Democratic Party’s ticket. Cuomo consistently comes off as competent, logical and engaged. He has shown far more empathy than anyone has seen from him in years. The only red flag is his tendency to needlessly fight with other politicians, especially Mayor Bill de

FLICKR

e’re roughly seven weeks into the crisis. New York City is the global epicenter of the coronavirus pandemic. Things are much worse than almost anyone expected. More than 18,000 New Yorkers (as of this writing) have died from Covid-19. More than 500,000 city residents have lost their jobs, with some observers predicting local unemployment will reach 30%. The city is facing a $10 billion budget deficit. Restaurants and bars are boarding up their windows. Subway ridership is down 90%. Most people are sheltering at home—giving them time to become acutely aware of how their elected officials are performing. Here’s what they’re likely thinking about New York’s leaders.

COREY JOHNSON The City Council speaker has performed well thus far. He has been engaged with the details, saw the scope of the problem beJOHNSON fore most people did, urged extreme caution and has largely been proven right. He now faces the test of his career, however, as the city has to somehow eliminate its $10 billion budget deficit. De Blasio has failed to take responsibility for the budget (other than calling for a federal bailout). That leaves Johnson in charge of actually ensuring that spending matches revenue—which will mean major spending cuts, finding new sources of revenue and being a lot more creative than the city has been in years. It also means relentlessly focusing on the local economy to help businesses get back on their feet and mitigate the budget fallout during the next few years. How the speaker handles that might determine his candidacy for mayor next year.

BOROUGH OFFICE

Blasio and President Donald Trump. Cuomo might be right on the merits in both cases, but he just diminishes himself by sinking to his opponents’ level. As a side note, across the Hudson River, Gov. Phil Murphy has excelled during the crisis.

AP PHOTO

BY BRADLEY TUSK

AP PHOTO

Politicians will have many more weeks of the shutdown to improve their performance DONALD TRUMP N o v e m b e r ’s election is now wholly about Trump’s handling of the crisis. If Biden went on vacation for the next TRUMP six months, it’s not clear the results would be any different. Trump’s response to the pandemic so far is generally seen as confused, chaotic and often just plain incorrect. Politically, all that matters is how Trump’s handling comes off to undecided voters in swing counties in a handful of states. So far they don’t seem impressed. The economy is cratering, and incumbents usually aren’t re-elected when things are bad. Come November, things will be bad. Very bad. Other than Cuomo exceeding expectations, the first six weeks have been largely what everyone might have expected: Trump is floundering, de Blasio is struggling, Cuomo is leading, Johnson is engaged, Schumer is doing his best to get attention, and everyone else is mainly sidelined. There’s a good chance that six weeks from now we’ll all still be working from home, waiting for a vaccine. That gives the politicians six more weeks to distinguish themselves. They’d better. Everyone is watching. ■ Bradley Tusk is the founder of Tusk Strategies, a city-based political consulting firm.

OP-ED

Pandemic relief undermined by Fed policy Powell must open up the lending process to nonbank lenders BY DAVID WEPRIN

lthough the Paycheck Protection Program is certainly well-intentioned, too many of America’s smallest businesses— many of which exist in underserved, unbanked and redlined communities—are being left out. I know, because my office is receiving distressed emails as I write this. On March 29 Congress passed the Cares Act. Its first provision was the creation of the Paycheck Protection Program, aimed at providing loans to American small businesses with 500 or fewer employees. In particular, the program seeks to protect the jobs of the tens of millions of Americans employed by such companies by offering loan forgiveness to business owners in proportion to the number of employees they retain. Moreover, the terms of the loans, which are governed by the act, are favorable to borrowers: 1% interest,

a two-year term, deferred payments for six months, the possibility to apply for total loan forgiveness after eight weeks, and no collateral or personal-guarantee requirement. In order to facilitate the program and the immense amount of loan processing required, the government enlisted banks and nonbanks to help disburse the funds. To enable lending at those terms, the government offered to guarantee 100% of the value of the loans and offer a fee to the lenders on a sliding scale based on the value of the loans.

Down with PPP The program’s initial days were riddled with confusion, with more questions than answers often arising on some of the program’s most fundamental aspects. For example, the government did not produce a promissory note, leaving lenders confused as to whether, if they lent, the government’s guarantee would be honored. The answer, that lenders could produce their own prom-

issory notes, was delivered by Vice President Mike Pence during a White House press briefing. Big banks were the first to lend. They could afford to make PPP loans without fully knowing whether they met the regulatory requirements and therefore would be fully guaranteed, both because they were helping only their biggest and most favored clients, who already had outstanding debt with them, and because of the size of their balance sheets. Moreover, even if the banks wanted to—and every bank officer in America was enlisted to help process these applications— there still would not be enough processing power to make PPP loans in enough time to stave off job losses. Of course, this did not work for most small businesses. Nonbank lenders, which have long been licensed by the U.S. Small Business Administration to make loans to small businesses not creditworthy at traditional banks, have the processing power to help

service the ocean of demand for PPP loans. However, the nonbank lenders, unlike depository banks, are unable to borrow from the Federal Reserve to lend and are limited by their own balance sheets. Therefore, although they are best positioned to help small businesses sustain themselves or grow, they are stuck on the sidelines. Last week the Fed Chairman Jerome Powell announced an addendum to the program. It would allow both banks and nonbanks to borrow from the Federal Reserve at unlimited amounts to make PPP loans. But access to that credit facility has not begun for nonbanks. The effectiveness of the plan, which would create a massive expansion in the availability of credit and allow a new set of loan processors to service demand, is contingent upon it beginning now. If nonbank lenders were given the opportunity collectively, that could drastically reduce the wait times that businesses face to receive their funds.

But the Fed is wasting time the economy and our city does not have. While it has told nonbanks that the promised cash will be available in the “near future,” by the time we get to the near future, another 6 million Americans will have lost their job and thousands of small businesses in New York will have disappeared. This crisis is acute. While small-business owners wait and hope that they might be able to save the jobs of their employees, who in many cases are friends or family, nonbank lenders that could be helping have their hands tied. The Federal Reserve should open up its credit facility to nonbanks before it is too late and the smallest of our small businesses die out forever. ■ State Assemblyman David Weprin represents the 24th Assembly District, located in Queens, and is an advocate for criminal justice reform, immigration and small business.

MAY 4, 2020 | CRAIN’S NEW YORK BUSINESS | 9

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THE LIST TECH 25 City companies ranked by funding raised from April 2019 to March 2020

RANK

1 2 3 4 5 6 7 8 8 10 11 12 13 14 15 16 17 17 19 20 20 20

TOTAL APRIL 2019â&#x20AC;&#x201C; MARCH 2020 FUNDING (IN MILLIONS)

COMPANY/ ADDRESS

PHONE/ WEBSITE

UiPath 90 Park Ave. New York, NY 10016

uipath.com

Daniel Dines Co-founder, chief executive

$568.0

1 Series D

2005 Vendor of robotic process automation services

Knotel 228 Park Ave. South New York, NY 10003

646-979-0898 knotel.com

Edward Shenderovich Co-founder, chairman Amol Sarva Co-founder, chief executive

$400.0

1 Series C

2015 Flexible workspace platform

Compass 90 Fifth Ave. New York, NY 10011

212-913-9058 compass.com

Ori Allon Co-founder, executive chairman Robert Reffkin Co-founder, chief executive

$371.0

2 Series G/ Unknown venture series

2012 Technology-driven real estate platform

Lemonade 5 Crosby St. New York, NY 10013

844-733-8666 lemonade.com

Daniel Schreiber Co-founder, chief executive Shai Wininger Co-founder, president, chief operating officer

$300.0

1 Series D

2015 Technology-driven homeowners and renters insurance

ClassPass 275 Seventh Ave. New York, NY 10001

classpass.com

Payal Kadakia Founder, executive chairman Fritz Lanman Chief executive

$285.0

1 Series E

2011 Subscription marketplace for fitness classes

Nuvation Bio 1500 Broadway New York, NY 10036

nuvationbio.com

David Hung Founder, president, chief executive

$275.0

1 Series A

2018 Oncology biotechnology

Vroom 1375 Broadway New York, NY 10018

855-524-1300 vroom.com

Paul Hennessy Chief executive

$254.0

1 Series H

2013 E-commerce marketplace for car buying, selling and financing

Capsule 20 W. 36th St. New York, NY 10018

212-675-3900 capsule.com

Eric Kinariwala Founder, chief executive

$200.0

1 Series C

2015 Pharmacy delivery technology

Via 160 Varick St. New York, NY 10013

ridewithvia.com

Daniel Ramot Co-founder, chief executive

$200.0

1 Series E

2012 Ridesharing e-hail

Unqork 114 Fifth Ave. New York, NY 10011

unqork.com

Gary Hoberman Founder, chief executive

$153.0

3 Series A/ Series B/ Series B

2017 Platform to build and deploy enterprise software

Foursquare 50 W. 23rd St. New York, NY 10010

foursquare.com

Dennis Crowley Co-founder, executive chairman David Shim Chief executive

$150.0

1 Series G

2009 Location data platform

iCapital Network 60 E. 42nd St. New York, NY 10165

212-994-7400 icapitalnetwork.com

Lawrence Calcano Chief executive

$146.0

1 Unknown venture series

2013 Alternative-asset investment platform

Grasshopper Bank 915 Broadway New York, NY 10010

grasshopper.bank

Judith Erwin Chief executive

$131.2

2 Seed/ Unknown funding round

2016 Digital commercial banking

Wheels Up 220 W. 42nd St. New York, NY 10036

855-359-8670 wheelsup.com

Kenny Dichter Founder, chief executive

$128.0

1 Series D

2013 Membership-based private aviation application

Real Capital Analytics 110 Fifth Ave. New York, NY 10011

212-387-7103 rcanalytics.com

Robert White Founder, president

$115.0

1 Series B

2000 Real estate data and analytics

Kallyope 430 E. 29th St. New York, NY 10016

kallyope.com

Nancy Thornberry Chief executive

$112.0

1 Series C

2015 Biotechnology with a focus on the gut-brain connection

Attentive 156 Fifth Ave. New York, NY 10010

attentivemobile.com

Brian Long Founder, chief executive

$110.0

2 Series B/ Series C

2016 Mobile brand engagement

Dashlane 44 W. 18th St. New York, NY 10011

dashlane.com

Emmanuel Schalit Co-founder, chief executive

$110.0

1 Series D

2009 Password manager and digital wallet application

Policygenius 50 W. 23rd St. New York, NY 10010

895-695-2255 policygenius.com

Jennifer Fitzgerald Founder, chief executive

$110.0 1

2 Series D/ Series D

2014 Online insurance marketplace

Away 503 Broadway New York, NY 10012

awaytravel.com

Stuart Haselden, Steph Korey Co-chief executives Jen Rubio Co-founder, president, chief brand officer

$100.0

1 Series D

2015 Luggage e-commerce

BigID

917-765-5727

Dmitri Sirota Chief executive

$100.0

2 Series C/ Series C

2016 Software for securing customer data and navigating privacy regulations

Brad Birnbaum Co-founder, chairman, chief executive

$100.0

2 Series D/ Series E

2015 Customer service and 4/30/20 relationship management platform

165YORK Mercer St. bigid.com 10 | CRAINâ&#x20AC;&#x2122;S NEW BUSINESS | MAY 4, 2020

TOP EXECUTIVE(S)

NUMBER OF FUNDING ROUNDS

FUNDING TYPE(S)

New York, NY 10012 Kustomer 39th St. New York, NY 10018

P010_CN_20200504.indd 10W. 318

kustomer.com

YEAR FOUNDED

NATURE OF BUSINESS

1:47 PM

SPONSORED CONTENT

Finding opportunity in times of crisis virtual environment?

ew leaders anticipated that a pandemic would upend the economy in 2020, but with the Covid-19 crisis still ongoing, many companies are looking for creative ways to navigate current business conditions so they can stay resilient and emerge stronger.

ENGERT: In this new normal, we must redefine what inclusion means and be creative in cultivating and supporting diverse teams. As the work world becomes more virtual, we must consider everyone’s situations — embracing flexible work hours, supporting parents and caregivers who are now dual-hatting, and acknowledging the challenges of converting homes into offices.

By thinking entrepreneurially and reacting quickly to fast-changing market demands, many companies are finding new opportunities. For ideas on how to do so successfully, Crain’s Content Studio spoke with Herb Engert, EY New York Office Managing Partner. CRAIN’S: Many entrepreneurs are being put to the test during the Covid-19 crisis. What are the top challenges their businesses face right now as they cope with the pandemic? ENGERT: Liquidity is a priority for companies across sectors and industries. Many are trying to conserve cash and are conducting scenarioplanning exercises and reforecasting. Organizations are also looking to policymakers for the latest regulatory guidance, such as the CARES Act and SBA loans, to provide much-needed liquidity. However, entrepreneurs may face unique obstacles. Small businesses, for example, may lack the resources needed to meet operational costs during a revenue decline. They are trying to do right by their employees while keeping the business afloat. Entrepreneurs must be resilient, resourceful and realistic. CRAIN’S: Cash flow is top of mind for many entrepreneurial firms right now. What creative strategies are companies using to stretch their cash and keep workers on the payroll? ENGERT: In a time of crisis, leaders must closely track both inward and outward cash flows to gain a clear understanding of the organization’s long-term fiscal health. Entrepreneurs may be forced to accept new payment terms from customers, balancing business relationships with concessions to increase liquidity. At the same time, they may be

negotiating with vendors on accounts payable, to conserve cash.

Herb Engert, EY New York Office Managing Partner

Leaders are assessing what’s available to them in the CARES Act and similar federal or state programs. They may also encourage employees to take pre-paid vacation days, halt nonessential travel or reduce work schedules. Some entrepreneurs are also delaying product offerings, sunsetting struggling brands, halting marketing and advertising campaigns or postponing IPOs and M&A activity. Future savings come into play, too: There may no longer be a need for physical office space, and work travel may become more of a nicety than a necessity.

signers now creating PPE to liquor companies manufacturing hand sanitizer, brands are rapidly reassessing how to address significant gaps in the market. The best entrepreneurs are accurately anticipating not only what products are needed now but which will be in demand tomorrow, and they are marketing appropriately to the right buying audience.

CRAIN’S: Some firms are finding that out of a crisis like this, new opportunities may emerge. How are entrepreneurs redirecting their teams’ efforts to make the most of current market conditions and demands?

ENGERT: It may seem counter-intuitive, but demonstrating vulnerability in a tough situation fosters understanding, compassion and respect. None of us have lived through a crisis of this scale and magnitude. It’s natural to be afraid or uncertain.

ENGERT: During a crisis, entrepreneurs often nimbly pursue new opportunities. Software-as-a-service providers are approaching municipalities nationwide, offering cities and states the ability to track confirmed Covid-19 cases and make informed decisions. Additionally, data analytics firms and companies equipped to develop antibody tests are positioning themselves to address emerging needs.

We’ve been hosting regular, internal virtual drop-in sessions, where leaders share what’s on their mind and provide candid, transparent updates with teams. We’ve also provided our people with new resources to support their health and well-being, from additional paid time off for sick leave or family caregiving to frequent mindfulness sessions.

Never have so many entrepreneurs radically changed course to meet a surge in demand. From fashion de-

I’m proud to see our diverse mentoring program continuing virtually, connecting senior leaders with our junior staff. We’re empowering our professional networks and affinity groups to stay connected, holding social gatherings and “Lunch with a Leader” via video conference. And our corporate responsibility team is offering ways to volunteer with organizations serving diverse communities such as LGBT+ and veterans.

CRAIN’S: Trusted advisers can play an important role in guiding entrepreneurs in unprecedented business conditions. How can clients make the most of these relationships? ENGERT: I’d encourage clients to be open-minded to best practices you might not otherwise consider. It can be helpful to hear what has worked for other organizations. Keep close to counselors and absorb their perspectives. Collaboration is key. That may mean teaming with competitors to develop solutions that help everyone. I have personally witnessed some of the best of our industry unite to navigate these uncertain times. Entrepreneurs should be willing to work together, especially for the good of society. We need great ideas and leaders now more than ever.

CRAIN’S: How can firms help their managers and executives expand their capabilities to address the challenges of the current environment?

CRAIN’S: Studies show that having a diverse team improves business results. How can companies create a more diverse and inclusive environment in a more

Can distance bring us closer? ey.com/covid19 #betterworkingworld

%DAY_OF_WEEK_DATE% | CRAIN’S NEW YORK BUSINESS | 11

COPY EDITOR ______ COLD READER ______ WRITER ______ SENIOR EDITOR ______ FINAL ______

15 16 THE LIST 17 TECH 17 25 19 20 1 20 2 20 20 3 20 4 25 5 6 7 8 8 10 11 12 13 14 15 16 17 17 19 20 20 20 RANK

Real Capital Analytics 110 Fifth Ave. New York, NY 10011

212-387-7103 rcanalytics.com

Robert White Founder, president

$115.0

1 Series B

2000 Real estate data and analytics

Kallyope 430 E. 29th St. New York, NY 10016

kallyope.com

Nancy Thornberry Chief executive

$112.0

1 Series C

2015 Biotechnology with a focus on the gut-brain connection

Attentive 156 Fifth Ave. New York, NY 10010

attentivemobile.com

Brian Long Founder, chief executive

$110.0

2 Series B/ Series C

2016 Mobile brand engagement

Dashlane 44 W. 18th St. New York, NY 10011

dashlane.com

Emmanuel Schalit Co-founder, chief executive

$110.0

1 Series D

2009 Password manager and digital wallet application

Policygenius 50 W. 23rd St. New York, NY 10010

895-695-2255 policygenius.com

Jennifer Fitzgerald Founder, chief executive

$110.0 1

2 Series D/ Series D

2014 Online insurance marketplace

Away 503 Broadway COMPANY/ New York, NY 10012

awaytravel.com

$100.0

1 Series D

2015 Luggage e-commerce

PHONE/ WEBSITE

Stuart Haselden, Steph Korey Co-chief executives Jen Rubio TOP EXECUTIVE(S) Co-founder, president, chief brand officer

UiPath BigID 90 Park Ave.St. 165 Mercer 10016 New York, NY 10012

uipath.com 917-765-5727 bigid.com

Daniel Sirota Dines Dmitri Co-founder, chief executive Chief executive

$568.0 $100.0

D 21 Series C/ Series C

Knotel 228 Park Ave. South Kustomer New W. York, NY St. 10003 318 39th New York, NY 10018

646-979-0898 knotel.com kustomer.com

Edward Shenderovich Co-founder, chairman Brad Birnbaum Amol Sarva chairman, chief executive Co-founder, Co-founder, chief executive

$400.0 $100.0

1 Series C 2 Series D/ Series E

Compass MoneyLion 90 W. Fifth Ave.St. 30 21st 10011 New York, NY 10010

212-913-9058 888-704-6970 compass.com moneylion.com

Ori Allon Dee Choubey Co-founder, executive chairman Founder, chief executive Robert Reffkin Co-founder, chief executive Amir Orad Danielexecutive Schreiber Chief Co-founder, chief executive Shai Wininger David Greenberg Co-founder, president, chief operating Founder, officer chief executive

$371.0 $100.0

12 Series CG/ Unknown venture series

ADDRESS

TOTAL APRIL 2019â&#x20AC;&#x201C; MARCH 2020 FUNDING (IN MILLIONS)

NUMBER OF FUNDING ROUNDS

FUNDING TYPE(S)

YEAR FOUNDED

NATURE OF BUSINESS

2005 Software Vendor offor robotic 2016 securing process automation customer data and services privacy navigating regulations 2015 Flexible workspace platform service and 2015 Customer relationship management platform 2012 Mobile Technology-driven real 2013 banking platform estate platform

Sisense 646-432-1507 $100.0 1 Series F 2004 Big data analytics Lemonade 844-733-8666 $300.0 1 Series D 2015 software Technology-driven 1359 Broadway sisense.com 5 Crosby lemonade.com homeowners and renters New York,St. NY 10018 New York, NY 10013 insurance Updater updater.com $95.0 1 Unknown venture series 2011 Moving technology 19 Union Square West New York, NY 10003 ClassPass classpass.com Payal Kadakia $285.0 1 Series E 2011 Subscription 275 Seventh Ave. Founder, executive chairman marketplace for fitness NY 10001 Lanman New York, Fritz classes Chief executive Â Â?Â?Â Â? Â? Â Â Â?Â?Â?Â?

Â&#x20AC; Â&#x20AC; 1-Â&#x201A;Â&#x192; Â&#x20AC; Â&#x20AC; Â&#x20AC;Â&#x201E;Â Â?Â? Â?Â?Â? Â?Â&#x2026;Â? Â&#x2020; Â&#x2020; Â&#x2021;Â&#x20AC; Â&#x20AC;Â&#x2C6; Â&#x20AC; Â&#x20AC; Â&#x20AC; Â&#x20AC; Â&#x20AC;Â?Â? Â&#x20AC;Â?Â?Â?Â? Â&#x20AC;

Â&#x20AC; Â&#x20AC; Â&#x20AC;Â&#x2030; Â&#x20AC;Â&#x2020;

Nuvation Bio 1500 Broadway New York, NY 10036

nuvationbio.com

Vroom 1375 Broadway New York, NY 10018

855-524-1300 vroom.com

Paul Hennessy Chief executive

$254.0

1 Series H

2013 E-commerce marketplace for car buying, selling and financing

Capsule 20 W. 36th St. New York, NY 10018

212-675-3900 capsule.com

Eric Kinariwala Founder, chief executive

$200.0

1 Series C

2015 Pharmacy delivery technology

David Hung Founder, president, chief executive

$275.0

1 Series A

WANT MORE OF CRAINâ&#x20AC;&#x2122;S EXCLUSIVE DATA? VISIT CRAINSNEWYORK.COM/LISTS.

WHATâ&#x20AC;&#x2122;S YOUR NEXT MOVE?

2018 Oncology biotechnology

Via 160 Varick St. New York, NY 10013

ridewithvia.com

Daniel Ramot Co-founder, chief executive

$200.0

1 Series E

2012 Ridesharing e-hail

Unqork 114 Fifth Ave. New York, NY 10011

unqork.com

Gary Hoberman Founder, chief executive

$153.0

3 Series A/ Series B/ Series B

2017 Platform to build and deploy enterprise software

Foursquare 50 W. 23rd St. New York, NY 10010

foursquare.com

Dennis Crowley Co-founder, executive chairman David Shim Chief executive

$150.0

1 Series G

2009 Location data platform

iCapital Network 60 E. 42nd St. New York, NY 10165

212-994-7400 icapitalnetwork.com

Lawrence Calcano Chief executive

$146.0

1 Unknown venture series

2013 Alternative-asset investment platform

Grasshopper Bank 915 Broadway New York, NY 10010

grasshopper.bank

Judith Erwin Chief executive

$131.2

Wheels Up 220 W. 42nd St. New York, NY 10036

855-359-8670 wheelsup.com

Kenny Dichter Founder, chief executive

$128.0

Real Capital Analytics 110 Fifth Ave. New York, NY 10011

212-387-7103 rcanalytics.com

Robert White Founder, president

$115.0

Kallyope 430 E. 29th St. New York, NY 10016

kallyope.com

Nancy Thornberry Chief executive

$112.0

Attentive 156 Fifth Ave. New York, NY 10010

attentivemobile.com

Brian Long Founder, chief executive

$110.0

Dashlane 44 W. 18th St. New York, NY 10011

dashlane.com

Emmanuel Schalit Co-founder, chief executive

Policygenius 50 W. 23rd St. New York, NY 10010

895-695-2255 policygenius.com

Away 503 Broadway New York, NY 10012

awaytravel.com

BigID 917-765-5727 165 Mercer St. bigid.com 12 | CRAINâ&#x20AC;&#x2122;S NEW YORK BUSINESS | MAY 4, 2020 New York, NY 10012 Kustomer 39th St. New York, NY 10018

P012_CN_20200504.indd318 12 W.

kustomer.com

Create your own business headlines with Companies on the Move 2 Seed/ Unknown funding round

2016 Digital commercial banking

1 Series D

2013 Membership-based private aviation application

1 Series B

2000 Real estate data and analytics

1 Series C

2015 Biotechnology with a

$110.0

1 Series D

2009 Password manager and digital wallet application

Jennifer Fitzgerald Founder, chief executive

$110.0 1

2 Series D/ Series D

2014 Online insurance marketplace

Stuart Haselden, Steph Korey Co-chief executives Jen Rubio Co-founder, president, chief brand officer

$100.0

1 Series D

2015 Luggage e-commerce

Dmitri Sirota Chief executive

$100.0

2 Series C/ Series C

2016 Software for securing customer data and navigating privacy regulations

Brad Birnbaum Co-founder, chairman, chief executive

$100.0

2 Series D/ Series E

2015 Customer service and 4/30/20 relationship management platform

Showcase your latest milestones, focus on the gut-brain connection awards, community outreach and more 2 Series B/ 2016 Mobile brand in Crainâ&#x20AC;&#x2122;s print and online editions Series C engagement

CrainsNewYork.com/CompanyMoves

1:51 PM

INSTANT EXPERT

What antibody testing will and won’t accomplish BY JONTHAN LAMANTIA

THE ISSUE

ISTOCK

THE PLAYERS

Gov. Andrew Cuomo has raised his national profile with his daily briefings on Covid-19, fueling speculation that he’ll be looking to parlay this into a higher office. State Health Commissioner Dr. Howard Zucker has led the state’s research efforts, including looking at how CUOMO ZUCKER Covid-19 is having a disparate impact on certain groups, such as Latinos. Mayor Bill de Blasio and Dr. Oxiris Barbot, the city health commissioner, have also created an initiative to perform tens of thousands of tests. Dr. Stephen Hahn leads the Food and Drug Administration, which is responsible for approving antibody tests. The country’s largest commercial lab companies stand to benefit from this increase in testing. They include the country’s two largest commercial labs—Quest Laboratories and LabCorp—as well as BioReference Laboratories, which is smaller than the other two but has a significant presence in the Northeast.

FLICKR, GETTY IMAGES

New York state is testing thousands of people to determine whether they have the antibodies to fight off Covid-19. The exams differ from diagnostic tests, which determine who has contracted the virus. By conducting the tests, state health officials hope to get a better picture of the infection rate in the state. The test will also identify who can donate their blood plasma to develop treatments for people with severe cases of the respiratory illness. A statewide survey of 7,500 people showed that 15% had been exposed to the virus and tested positive for antibodies. In the city, 25% of people tested positive for antibodies.

WHAT’S NEXT

YEAH, BUT…

Public health officials have retreated from the position that the antibody tests can be used as evidence of immunity and a passport back to work. The World Health Organization said April 24 that “there is currently no evidence that people who have recovered from Covid-19 and have antibodies are protected from a second infection.” Some participants in studies showed very low levels of antibodies after recovering from Covid-19. The organization also cautioned that lab tests to detect antibodies need further validation to prove they’re accurate and reliable.

ISTOCK

RESULTS OF CLINICAL TRIALS FOR THESE TREATMENTS AND VACCINES COULD TAKE ANYWHERE FROM WEEKS TO MONTHS

SOME BACKGROUND

ISTOCK

The Cuomo administration continues to expand its study of antibody testing. The state has started testing 3,000 health care workers, 1,000 city firefighters, 1,000 city police officers and 1,000 transit workers in its next wave. Because antibody testing is far from a panacea, New York is looking to double the number of tests to diagnose Covid-19, trace the contacts of people who test positive and isolate those infected. There were 72 registered clinical trials as of late April evaluating potential antiviral treatments and vaccines for Covid-19, according to the FDA. They include Gilead’s remdesivir, which is being tested locally at Montefiore Medical Center and NYU Langone Medical Center as part of a national study. The anti-malaria drug hydroxocloroquine is also being tested, but one clinical trial discovered potentially life-threatening side effects. Potential vaccines are being developed by, among others, Moderna Therapeutics and a partnership between Pfizer and the German company BioNTech. Results of clinical trials for these treatments and vaccines could take anywhere from weeks to months. Then, drugmakers will have to churn out enough for widespread treatment or immunization, and governments and insurers will have to find a way to pay it.

Diagnostic companies have rushed new tests to market but not all of them are 100% reliable. Some might have trouble distinguishing immunity to Covid-19 from antibodies created to fight other types of coronaviruses, such as those that cause the common cold. The FDA is permitting at least 120 manufacturers to sell tests but has granted emergency use authorization, which signals a test has been vetted, to just a few. Even that designation doesn’t mean those tests are FDA-approved. Two local organizations—Mount Sinai Laboratory and Chembio Diagnostics on Long Island—have gotten the emergency authorization. Still, the city health department cautioned doctors to be wary of any test promising results at the point of care in the doctor’s office. Those shouldn’t be used to tell patients they have immunity, the city said. A health department spokesman clarified that the city has no problem with the state’s antibody study, which used labs capable of complex testing.

MAY 4, 2020 | CRAIN’S NEW YORK BUSINESS | 13

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NOMINATIONS CLOSING SOON! Do you know a 20something who is someone to watch? Crainâ&#x20AC;&#x2122;s 20 in Their 20s recognition program seeks young professionals who are making a mark in the New York City area. This awards program recognizes the hard work of local rising stars and further propels their careers.

Nominate today at crainsnewyork.com/20sNominate Deadline to nominate is Friday, May 15, 2020. To qualify, candidates must be 29 years old or younger by July 13, 2020. For questions about this program, please contact 20s@crainsnewyork.com.

CN019683.indd 1

4/29/20 9:34 AM

CORONAVIRUS ALERT

Competitors become partners: Sotheby’s, city galleries team up BY GWEN EVERETT

BUCK ENNIS

he pandemic has made strange bedfellows in the art world. Sotheby’s has partnered with eight blue-chip New York galleries to sell their artwork on its online platform, the auction house said last week. It’s an unusual alliance of two market players that often see one another as competitors. Year after year competition with auction houses ranks among the top concerns of the dealer sector, according to the annual Art Basel report. The partnership, Sotheby’s Gallery Network, operates through direct sales rather than by auction. Galleries set the prices—ranging from a $950,000 piece by Alex Katz to a $22,000 piece by Andy Warhol—and house the works. Sotheby’s has the exclusive right to list the art on its site, and it takes a fixed commission from each sale. “As the art world continues to grapple with and acclimate to the circumstances of our current mo-

ment, we are proud to be able to support our gallery peers with this online sales platform as well as offer Sotheby’s clients new and exclusive works of art through this partnership with many internationally renowned galleries,” said Saara Pritchard, contemporary art spe-

cialist at Sotheby’s. The network might solve problems the age of social distancing has created for the art market. Much of the business auction houses and galleries do is in person: live auctions, art openings and client home visits. But the pandemic has

forced the business to move online. Before the pandemic the art world had been slow to do that. Online arts purchases accounted for 9% of sales by value last year, according to 2019’s Art Basel report. “The gallery is closed, like every other gallery,” said Angela Westwater, head of Sperone Westwater, one of the eight galleries in the network. “Obviously we have other selling platforms, but this is an alternative.” The partnership offers galleries exposure to more buyers, Sotheby’s said. Toby Campbell, who runs the Rafael Valls gallery in London and worked with Sotheby’s for a novel online auction in March, told Crain’s that had been the case for him. “We have already been contacted

by clients new to us as a result of the sale,” Campbell said, “and I believe Sotheby’s has gained a number of clients from us who bid on pictures in the sale. It has been an excellent mutual symbiosis.” The other galleries that partnered with Sotheby’s are Gavin Brown’s Enterprise, Lehmann Maupin, Jack Shainman, Luhring Augustine, Kasmin, Petzel and Van Doren Waxter.

New model For Sotheby’s, the network is a new income stream. Its core auction business suffered last year, when, the Art Basel report found, the company’s public auction sales fell 9%. Although its recent contemporary, curated online auction brought in $6.4 million, a new high for an online Sotheby’s sale, prices still trailed the ones seen at live auctions. “We believe this type of cooperative arrangement can be a model for success, not only during the short term but also as a long-term reciprocal project to support all levels of the market,” Pritchard said. ■

Council eviction ban is not enforceable, sheriff says BY RYAN DEFFENBAUGH

he city sheriff said last week that his office will be unable to enforce a proposed city law blocking evictions through the next 12 months in some cases. “I am not a heartless bill collector but rather an officer of the court with a duty to enforce the law,” Sheriff Joseph Fucito said during a virtual council hearing last Tuesday. He was called to discuss a City Council bill that would effectively outlaw most evictions for the next year by barring marshals and the city’s sheriff from taking property or

sheriff has no ability to look beyond the court’s order.” The sheriff’s office is currently not handling evictions because Gov. Andrew Cuomo has temporarily halted the actions. But when that order expires in two months, Fucito said, he will be required to act as the court dictates. “My personal feeling is that I think these are good concepts to explore, but in my role as sheriff, I have to be neutral,” he said. “I have to rely on the court.” Fucito was not the first to question whether the city had the authority to block evictions mandated by state courts. Housing advocates, who also testified, said the bill wouldn’t interfere with the sheriff’s mandate. “The sheriff would not be placing the judgment aside indefinitely. It will be executed when the moratorium is lifted,” said Caryn Schreiber, an attorney with the Legal Aid Society of New York. “It would not be flying in the face of state law to say the judgment will be paused until such time has passed that it makes sense for the community at large.” Earlier in the hearing, council members said their bill was necessary for when the state’s moratorium on eviction expires. “While this allows tenants to remain in their apartments for now, it

“WHILE WELL-INTENTIONED, THE BILL RAISES SIGNIFICANT LEGAL CONCERNS” executing money judgments. The law would bar the actions through September for the entire city and until April 2021 for New Yorkers affected by Covid-19. “While well-intentioned, [the bill] raises significant legal concerns,” the sheriff said. If a state court mandates an eviction, Fucito said, he could be held in contempt for failing to carry out the order. He could even be jailed for up to 30 days. “The court’s process controls what the sheriff does,” he said. “The

doesn’t guarantee that tenants unable to pay rent will be able to stay in their apartments once evictions resume,” said Robert Cornegy, chair of the Committee on Housing and Buildings.

‘Humanitarian crisis’ One tenant advocate said the city could soon face a “humanitarian crisis” without intervention from the state or federal government to cancel rent. “There is going to come a point where the courts reopen and the moratorium on evictions is lifted, and there will be tens of thousands—maybe hundreds of thousands—of tenants facing eviction,” said Michael McKee, treasurer of the Tenants Political Action Committee. Testimony from the real estate industry, however, warned that the bill could have disastrous implications for the housing market and the tax dollars it contributes. “There should be widespread concern [about] the impression that this legislation gives to tenants, particularly those who have the means to pay rent and will choose not to do so,” a statement from the Real Estate Board of New York read. “The economic consequences of this misimpression could lead to widespread mortgage default, decreased property tax collection and a subsequent decline in necessary city services for quality of life for tenants across the city.” ■

Redefining what you should expect from your accountant. grassicpas.com

MAY 4, 2020 | CRAIN’S NEW YORK BUSINESS | 15

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COVID-19 FROM PAGE 3

care system during a global pandemic isn’t easy—even for someone with more knowledge than the average person as to how that system works. There are still questions for which I don’t have satisfactory answers. How long am I contagious? Should I be looking to get a test to measure my immunity? And how long might that immunity last? I am 28 years old and live in Manhattan with my fiancée but had been staying with my parents in Nassau County. Crain’s had shifted to a work-from-home policy, and we were looking for more work

tact with—relatively few—and whether I had inadvertently gotten my fiancée and her parents sick. For people who develop mild cases of the disease, the worries over getting others sick are the worst part. During the next week, I had an intermittent fever. About five days into the illness, I started to cough. Gov. Andrew Cuomo has repeatedly said that 80% of people with Covid-19 are likely to recover at home. I figured I would be among them if I did get sick, but I took precautions so I wouldn’t get the disease while local hospitals would be too overwhelmed to help me. Unfortunately, I caught it right as the metropolitan area was reaching its plateau. Luckily, though, I never had to go to a hospital. My dad was lucky to get a test quickly through his doctor. He went to a ProHealth urgent-care center and within a few days received his results: positive for SARS-CoV-2, the virus that causes Covid-19. Once he got his result, I didn’t see an urgent need to get a test. I had been in close contact with someone who tested positive and had a fever and cough. Regardless of my test result, I would be asked to isolate myself. Without a proven treatment, I’d be told to rest, take acetaminophen and drink plenty of fluids. The frustrating part about a mild case of Covid-19 is that you can feel OK for stretches of time, but the fever keeps coming back. Frequently I would have a good day, only to find I had a fever that topped 100 degrees at night, when body temperatures tend to rise. After about a week of Netflix and isolation in my bedroom, I decided to call a doctor and see if I could get a test. At the very least, a positive result would help me qualify to donate plasma after two weeks without the illness. I called my primary-care doctor, whose office referred me to the state Health Department and an urgent-care chain operated by Northwell Health and GoHealth.

space than our apartment affords. In early April, my dad, who owns a route delivering chips and pretzels to grocery stores, started to feel feverish. He stopped working and confined himself to his bedroom. With nearly everything else closed, grocery stores have become a sort of ground zero for the spread of the virus. Even with new measures put in place, such as passing out gloves and mandating one-way traffic in store aisles, supermarkets remain high-risk areas. They’re one of the last places where people are able to congregate. Shoppers continue to roam stores relatively free of restrictions. With hundreds of workers, customers and vendors that come in to stock shelves, the stores are a nightmare for anyone trying to trace the spread of Covid-19.

Chills and fever About two days after my dad developed symptoms, I had a strong inkling I was getting sick too. I started to feel chills and could tell I was coming down with a fever. I thought about the people I’d been in con-

JONATHAN LAMANTIA

THE SWAB REACHED FARTHER INT0 MY NOSE THAN I THOUGHT POSSIBLE

DRIVE-THROUGH TESTING: Reporter Jonathan LaMantia was given a Covid-19 test at Jones Beach State Park. I called the state hotline for drivethrough testing, and a friendly representative took down my symptoms and information and said I would be called when a test was available. I made a virtual appointment with GoHealth—checking my insurance first to make sure I wouldn’t be stuck with an out-of-network bill—to be seen about 30 minutes later. It was better than having to go to a physical location and risk getting people sick in a waiting room. The physician assistant who conducted the video visit was friendly but frank. GoHealth was testing only first responders and frontline

health care workers, so I wouldn’t be getting a test, she said. Other than that, there wasn’t much else I could do. She recommended vitamins C and D and zinc as well as plenty of fluids. After 72 hours without a fever and a week of no symptoms, she said, I could end isolation but should wear a mask in public. It wasn’t all that helpful.

Confirming diagnosis Two days later I heard back from the state Health Department. I could be tested at the Jones Beach State Park drive-through center. There didn’t seem to be much upside to going—I already presumed I

was positive. But if I could confirm my diagnosis through a test, it could help me donate plasma, so I took the appointment. I was greeted at the center by several members of the National Guard dressed in military fatigues. They were waiting outside a parking booth near the entrance to the park’s nature center. Through a closed window, a guardsman asked for my name and an ID. I wasn’t on his list. “They like to throw curveballs at us,” he said. I was on the next guardsman’s list, so I proceeded to a few more checkpoints before driving on to the line of patients. The complex was reminiscent of a car wash. Cars slowly inched toward massive white tents, where nurses were stationed at long tables. After about 10 minutes it was my turn. I pulled closer to the nurses, who were decked out in full protective gear, with gowns, gloves, masks and face shields. I cracked my window to receive a tissue and a card that explained how to receive my results. The tissue, I gleaned, was to clear my nose before the nasal swab. The nurse returned to my car and asked me to open the window halfway and lean toward the window with my head tilted back. The swab was uncomfortable, reaching farther into my nose than I thought possible, but the procedure was relatively painless. The nurse apologized. About three days later I found I had tested positive. The Health Department called to follow up and urged me to isolate myself for seven days since my symptoms first appeared and for a period of three days without a fever. My period of isolation might be coming to an end, and my dad has since recovered as well. If you’re lucky like we were, Covid-19 might just knock you out of commission for a week with a fever and a cough. But as you’re weighing whether to reject social-distancing guidelines also think about the possibility of a hospital visit or spreading the virus to your friends and family. It’s not worth the extra trip to the grocery store. ■

$2 million tax break for landlords tucked in Covid-19 rescue bill

lthough landlords were left out of the federal government’s small-business loans, a less-noticed tax provision in the federal Covid-19 relief package could set some property owners up for a $2 million windfall. “Everyone is running around now, fighting to get their money from the federal government,” said Lewis Taub, tax director at accounting firm Berkowitz Pollack Brant. “They should know there is another way: Get your taxes back.” The IRS recently released guidance on how to navigate a provision in the Cares Act that allows owners of nonresidential properties to immediately write off the costs of interior improvements. The Tax Cuts and Jobs Act of 2017 provided a windfall to several in-

dustries by allowing businesses to deduct the full value of certain capital investments immediately. But the bill left out interior improvements to nonresidential properties. The omission, believed to be a glitch, forced owners of office and commercial buildings, as well as the retailers leasing the space, to instead stretch the deductions for their investment over 39 years, limiting the value. A small change in the tax code through the Cares Act, passed in March, reverses that. Businesses can go back and amend their 2018 tax return and change their 2019 return for the new rules. The deduction instead can be spread over 15 years “or you can elect to write the whole darn thing off as bonus depreciation,” Taub said. Under the former rules, an interi-

or improvement with a $2 million deductible value in 2018 would have been deducted over only the 39-year period, worth about $51,000 yearly. With the Cares Act update, the property owner can amend the return and cash in the full $2 million deduction. “That is huge,” Taub said.

‘Act quickly’ For businesses that owed on their taxes last year, the new deduction value could instead bring a refund. Qualified improvements include any interior work, such as replacing drywall and making mechanical and electrical upgrades. Structural changes, including elevators, don’t count. Importantly, the deduction applies to tenants as well as property owners. That means restaurants

BUCK ENNIS

BY RYAN DEFFENBAUGH

and other retailers that typically invest heavily in the interior of a property before opening can use the deduction. Guidance on the new rules from

accounting firm BDO advises that “companies within the retail, restaurant and hospitality industries with significant new assets, in particular, should act quickly.” ■

16 | CRAIN’S NEW YORK BUSINESS | MAY 4, 2020

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CORONAVIRUS ALERT

Tracking Covid-19 in New York BY GERALD SCHIFMAN

New York City is the epicenter of the Covid-19 outbreak in the United States. Crain’s is tracking the growth of the virus in the five boroughs and the surrounding counties. The figures below are as of Friday, May 1.

DAILY HOSPITALIZATIONS

POSITIVE CASES

Weeks ago the state reported that a projected 110,000 hospital beds would be needed during the virus’ peak. With 53,000 beds in operation, New York’s health systems would have been overwhelmed. But as social-distancing measures have driven the apex downward, hospitalization totals are decreasing, albeit at a slower rate than the initial ascent.

Even as the number of hospitalizations in the state has shrunk, the total cases in downstate New York have continued to rise steadily. The city’s number of confirmed positives now tops 160,000. 200,000

20,000

New York City

10,933

15,000

Long Island

Lower Hudson Valley

150,000

169,690

100,000

10,000

70,198

50,000

5,000

326

53,787

March 16

April 30

+50

March 3

April 30

CONSECUTIVE DAYS in which total intubations have dropped. Earlier in the pandemic, the intubated count rose for 24 straight days.

MINIMUM AMOUNT by which hospitals needed to increase capacity

PORTION of the state’s positive cases that are in the city

308,314

NUMBER of positive cases in the state, the most in the country

TESTS CONDUCTED

DISTRIBUTION OF CASES BY BOROUGH

The Food & Drug Administration granted approval to private labs to screen for Covid-19 on March 13. New York is now testing at a higher rate per capita than any other state, but it’s still not enough. A full economic reopening will require drastically expanding the testing capacity, including by introducing reliable serology tests.

Queens has the most confirmed positive cases in the city. When the numbers are restated on a per-capita basis, however, the Bronx emerges as the hardest-hit borough. Staten Island Queens

500,000

New York City

Long Island

Lower Hudson Valley

435,992 Manhattan

400,000

13%

31%

300,000

190,876 200,000

22% 173,266

100,000

The Bronx 0

March 3

27% Brooklyn

April 30

RATE of New York’s population that has been tested

18,610

NUMBER of deaths from Covid-19 in the state

PORTION of state Covid-19 fatalities in which patients had preexisting conditions ISTOCK

PORTION of state tests that have resulted in positive cases

1 in 21

NOTE: Lower Hudson Valley includes Dutchess, Orange, Putnam, Rockland and Westchester counties.

SOURCE: State Department of Health

FOR THE MOST UP-TO-DATE COVID-19 STATISTICS, VISIT CRAINSNEWYORK.COM/TRACKING-CORONAVIRUS-NEW-YORK. MAY 4, 2020 | CRAIN’S NEW YORK BUSINESS | 17

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CORONAVIRUS ALERT

Frequently asked questions: SBA loans Unraveling the Paycheck Protection Program and the Economic Injury Disaster Loan BY BRIAN PASCUS

he following questions were submitted by participants during an April 6 Crain’s webcast. They have been edited for length and clarity.

Q. How do I apply for the Paycheck Protection Program?

A. Applications for the PPP are done online or over the phone with a small-business owner’s bank or a non-bank lender. The U.S. Small Business Administration does not run the PPP loan fund; it has allocated lending and underwriting responsibilities to individual banks across the nation. Up to 5,000 institutions, from largescale banks such as JPMorgan Chase to smaller commercial banks and non-bank lenders, are participating in the program.

A. The repayment process for the plan starts no later than six months after the loan begins. The loan may be repaid over two years at an interest rate of 1%. The payments are for those portions of the loan that were not forgiven after being applied to eligible costs.

Q. How is the loan amount calculated?

A. Any business with fewer than 500 employees that existed before Feb. 15 can access a forgivable PPP loan of up to $10 million, although the loan amount is calculated as being two and a half times the average total monthly payroll cost for each individual business. Borrowers must certify that they will use the PPP loan for the eligible costs, which are: ● payroll (up to $100,000 per employee). ● mortgage payments (pre– Feb. 15). ● rent payments (pre–Feb. 15). ● utility payments, including for gas, water, heat, electricity, telephone and internet access.

Q. May third-party agents be used to apply for the loans?

A. Those owners who want to apply for loans from lenders should do so themselves and not use third-party agents. It’s one thing to have an accountant advise on the application process, but business owners should not risk applying online for the loans by using third parties, as the applications are processed and approved on a first-come, first-served basis. Any delay or confusion in applying could push back approval.

Q. What is EIDL?

A. The Economic Injury Disaster Loan program is part of a preexisting SBA initiative

ISTOCK

Q. When does repayment begin for the PPP?

structured to provide loans of last resort for small businesses hit by an environmental or economic disaster in a defined geographic location—think Superstorm Sandy. The program was set up to handle requests from small businesses suffering economic injury in a single disaster location. It did not anticipate a surge in loan requests nationwide. Unlike the PPP, the EIDL program does not use banks and non-bank lenders to underwrite, verify and distribute the loans. It is managed entirely by the SBA. Following the Covid-19 shutdowns, the EIDL program capped its loans between $25,000 and $35,000 and changed the immediate grant to $1,000 for each small-business employee—not to exceed 10 employees. Demand has been overwhelming, with one report pegging loan requests at more than 3 million. Unlike with the PPP, which can be forgiven for payroll expenses, EIDL loans are not forgiven; they must be paid back.

Q. Quite a few of our clients have applied for EIDL loans and have not received any communication from the SBA. How long can we expect it to take for communication? How long will the advance take to be deposited into their bank account? Can we get clarification on that advance? Is it $10,000 or up to $10,000? A. The $10,000 up-front grant has been revised. As noted, it

18 | CRAIN’S NEW YORK BUSINESS | MAY 4, 2020

is now an immediate grant of $1,000 per employee, for no more than 10 employees. The SBA’s response to EIDL loan requests has been delayed because of tremendous demand and the fact that the program originally was set up to be regional, not national. After applying online, businesses are supposed to be contacted by the SBA within 30 days.

Q. Is there a printable version of the EIDL? It would make it much easier to have all the information in front of me already before starting the online application.

A. The information can be found on the SBA’s website, sba.gov, which also is where the EIDL application is submitted.

Q. Can you carry both PPP and EIDL funds? A. Yes, EIDL and PPP funds may be used together as long as they both don’t go toward the same cost. For instance, a smallbusiness owner could use the PPP to pay rent and employee payroll, while an EIDL could go toward fixed costs and capital investments. Remember, though: EIDLs must be paid back.

Q. What’s the time frame for getting the PPP?

A. It has varied, and there’s no clear pattern. Much comes down to the small-business owner’s banking relationships, plus the competency of individual banks. Some owners already have received money; others are still seeking notice that their

application has been processed. It is a mixed bag.

Q. I am an S corporation, and I am the only employee. I do pay myself a salary. Do I qualify for the PPP? A. Yes. Those who file their tax form as an S corporation are eligible.

Q. What happened to being able to use the PPP to pay rent? Has that changed since the initial announcements?

A. It has not changed. Onequarter of the PPP loan money that goes toward rent or mortgages signed before Feb. 15 can be forgiven.

Q. Where did the 25% for rent come from? Please help me understand how much of the funds can be applied to mortgage or rent.

A. The 25% figure comes from the SBA’s guidance. No more than 25% of the forgivable portion of the loan may be used for non-payroll costs, which include rent and mortgage payments. The PPP loan is mainly geared toward keeping small-business employees on the payroll for eight weeks.

Q. For PPP, does rent mean real estate only? Or does that extend to equipment under rent or lease? A. Rent basically refers to the space that you’re in. Utilities include internet, phone, gas and electricity. If you’re renting your computers or a tractor, it’s not clear if those costs are eligible

to be forgiven. Many lenders are expecting more guidance on qualified expenses going forward.

Q. My business relies on contract employees. Will I be able to use the PPP to pay them? And will this expense be considered a part of payroll and thus forgiven?

A. Yes. Any payments to independent contractors for services are included in the loan amount. Also, business owners who operate as independent contractors or as sole proprietors are eligible; they just need to provide payroll tax filings documenting the data.

Q. Are nonprofits eligible for the PPP? A. Yes, nonprofits are eligible.

Q. What if my bank is not lending for this program? A. Unfortunately, you will need to find another bank that is approved by the SBA to make the loans.

Q. What if we use the money to pay employees, but after eight weeks the business still cannot support our staffers? Do we lay them off again? Do we still get debt relief for the eight weeks we paid the employees? A. In terms of the eight weeks, you apply for the loan, and then you apply for forgiveness once the funds are allocated. You have to go back to your lender and apply to have those funds forgiven. It is not clear what happens after eight weeks. ■

CORONAVIRUS ALERT LAYOFFS

Restaurants, retailers scaling back their workforce across its stores. Bed, Bath & Beyond has seen a shuffle in its leadership during the past year, with the company most recently appointing a new chief financial officer and four new executives. Dismal sales in the past three years have only worsened recently.

Hard Rock Cafe One of the restaurants at the epicenter of the city’s tourism industry has turned off its lights and laid off all of its employees. Hard Rock Cafe, located at 1501 Broadway, just steps away from Times Square, has temporarily laid off 456 employees, the company said in a state filing. The layoffs went into effect in mid-April, according to the filing, and were prompted by the Covid-19 pandemic. The state’s workforce lockdown has battered the city’s restaurant industry. With New York allowing restaurants and bars to accept only takeout and delivery orders, some dine-in restaurants have been left with no other option than to completely shut down.

Hudson’s Bay Co. Hudson’s Bay Co., the parent company of Saks Fifth Avenue, is temporarily laying off its city retail employees. The Toronto-based company filed a notice with the state announcing that it would furlough a total of 507 retail employees in the city due to the economic toll of the Covid-19 pandemic. The filing originally stated that 491 employees would be furloughed but was later updated. Most employees affected by the job cuts were laid off between April 21 and May 4. Hudson’s Bay sold department store Lord & Taylor last year to Le Tote for $100 million, while keeping a minority stake and two controlling seats on the board. The company has struggled financially for years as consumers have moved away from visiting brickand-mortar locations and onto online shopping.

Le Pain Quotidien Belgian bakery chain Le Pain Quotidien has closed up shop and laid off employees across all of its

city locations until further notice. The eatery laid off 678 employees in April, a move that follows an announcement on its website that it would shutter all of its U.S. locations out of concern for its guests, teams and the community at large. Le Pain’s layoffs began March 22 and concluded April 20, according to a filing with the Department of Labor.

Although store closures and layoffs were cited as a result of the Covid-19 pandemic, the chain had been reportedly looking to downsize its footprint throughout the country before the virus affected business, the New York Post first reported. Le Pain flagged 19 locations for permanent closures in an effort to cut costs, the newspaper reported. — Lizeth Beltran

ISTOCK

Struggling home-furnishings company Bed, Bath & Beyond has made more changes to its workforce—this time furloughing 771 employees in the region. The New Jersey–based company, which has been teetering on the edge for several years, began laying off New York employees temporarily in April, citing business circumstances prompted by the Covid-19 pandemic in a filing with the state Department of Labor. The move is part of a larger round of cuts affecting the company’s employees statewide. In total, Bed, Bath, & Beyond temporarily cut 1,893 New York employees from its payroll. Long Island, the mid-Hudson region, the Finger Lakes area, and western and central New York were also affected by the job cuts. The company had announced 500 job cuts in February—weeks before the pandemic shut down the U.S. economy—as part of a plan to reorganize and simplify its field operations. The company employs about 60,000 people

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Advertising Section

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ECONOMY FROM PAGE 1

PHOTOGRAPHY, BUCK ENNIS

be different. According to experts, many landlords are instituting new policies. They will include temperature scans before entering buildings, touchless entry for security and a limit on elevator occupancy, the experts said. Commercial tenants are expected to implement new measures to create a low-risk atmosphere for employees, including removing bench seating and allocating more space per person. There are questions, though, about the legality of some measures, especially secured entry. “It’s a hot topic of conversation whether buildings or employers can mandate temperature-taking before allowing people into the building or the office,” said Dena Cohen, a commercial leasing lawyer at Herrick Feinstein. “Some people say it’s an invasion of privacy.” There is also the matter that a majority of white-collar office workers in the city have been working from home for months, a behavior change that might have far-reaching ramifications in the commercial market down the line. “We can’t hide from the fact that over time there may be pressure on the office-leasing market as people realize they can work from home,” Cohen said. “There was a trend in this direction, and this has just accelerated it.” Even so, Peck in particular is bullish about the opportunities springing from an altered commercial landscape. “It may end up resulting in a higher availability rate in the short term,” he said, “so there will be opportunities for tenants while the availability rate climbs. Any tenant that made a deal after 9/11 and 2008 looked back on that deal 10 years, 15 years later and came out very strong.”

Construction One of the essential businesses that has continued work throughout the pandemic is construction, at least that pertaining to roads, bridges, hospitals and affordable housing. Workers have been able to remain on-site while practicing social distancing. Cuomo has even said that construction will be involved in phase-one of reopening. The financial side of the industry, however, will determine if greater

construction remains viable coming out of the pandemic. “Whether you can successfully engage in a project depends on whether you can finance it,” said Jakub Nowak, a broker at Marcus & Millichap. “This isn’t a question of building physically and workforce. What really matters are the fundamentals of what the banks are willing to do.” Lenders want to finance only strong sponsors, Nowak said, and each lender wants to make sure that the developer has a track record, meaning that he or she can prove projected rents are accurate and the balance sheet is strong enough to cover interest payments for a predetermined amount of time. “There’s a lot of caution,” he said, adding that although hotel construction is expected to crater, medical office development likely will remain strong.

Retail Few industries have been as devastated by the coronavirus shutdown as retail and restaurants. Both depend on consistent levels of foot traffic and consumption to break through razor-thin profit margins. “Retail has nowhere to go except down,” said Barry Fields, a broker at City Connections. “The challenges that existed before Covid will still exist,” Cohen said, while acknowledging that retail will be forced to implement social-distancing measures inside stores as well as practices such as limiting the number of shoppers at one time and requiring customers and staff to wear protective attire. “That’s probably something I would expect to see in the near term,” she said. “But hopefully that’s not the new normal.” More important, experts say, the pandemic is going to increase the rise in vacancies that has plagued New York for years. Fields said there are many landlords who can afford to rent a property for below market value but choose not to. Richmond said many landlords have deliberately let their commercial space go vacant for quite some time. “If employers and businesses can’t renegotiate their leases, then we’re going to be left with a lot of empty storefronts,” she said. One strategy that could be used upon reopening to help struggling retailers is a rent structure whereby the landlord is paid a percentage of revenue the retailer earns. It’s a strategy commonly used in large shopping centers, but it is not as common in New York. “I’m not sure if that’s a sustainable model,” Cohen said, “because of the expenses that landlords have. I realize smaller retailers will not survive, but hopefully with the [Paycheck Protection Program] loans

that are made, they will work out a deal with their landlord or they are deferring their rent so they can stay open.”

Restaurants Restaurants are facing an existential crisis. “We anticipate that we’re going to have very small activity, and every restaurant will try to accommodate people within the space,” said Stavros Aktipis, who owns Kellari and four other Manhattan restaurants. “My fear is it’s going to be an extremely low number of people coming in.” Aktipis anticipates every worker using masks and gloves as well as single-use menus and a way to take customers’ credit cards without touching them. Occupancy levels will be enforced—which could pose major problems for restaurants and bars. “If you can only have 25% of your former occupancy, the likelihood you’re going to make a profit is pretty darn low,” Richmond said. No matter what the government decides to do with the rollout, Richmond anticipates problems in the kitchen, where it’s difficult to maintain social distancing. “I don’t think we can really have line cooks and preps working shoulder to shoulder as we open up without any type of vaccine,” she said. “Kitchen safety will impact how many people we can serve.” Geography might determine which restaurants survive. Aktipis said he believes the Lower East Side and other downtown neighborhoods—ones that feature younger, healthier patrons—will get more traffic during reopening phases than those in Midtown and farther north. “I see uptown and downtown as two different markets,” he said.

Live events The last industry likely to experience any type of reopening is the event business. That includes Broadway shows, museums, art galleries and professional sports. “I think they’ll be among the last to open,” said Mark Conrad, director of the sports business program at Fordham University. “There are inherent society safety situations when you’re dealing with public performances, and you can’t easily control crowds.” “Cultural institutions were not built for social distancing,” said Taryn Sacramone, executive

director of the Queens Theater. “There have been incredible financial losses to cultural institutions.” Sacramone said so much of any predicted opening depends on when the public will feel ready to reengage with arts institutions. International travel plays a huge role in the sphere, she noted, as does when schools reopen for field trips. “There are a lot of different angles as to what this is going to look like,” she said. Conrad said he believes it could be months before Broadway shows are able to continue, as even 3,000 people separated by 6 feet in a theater would still be dangerous. He said he doesn’t think concerts will start in New York anytime soon, mainly because of the nature of the venues and the density of the people in them, creating the potential for the virus to spread. The entire business of professional sports could be altered, he added. There have been talks of the National Basketball Association and Major League Baseball starting to play games again, but Conrad said that is unlikely. “Any solution or any idea has risks, and we’re all faced with bad choices,” he told Crain’s. “If no games are played, that is going to be catastrophic. If some games are played with this risk, what happens if this risk occurs? Do you cancel or do you not cancel?” Conrad estimates 40% of MLB revenues come from gate receipts. The possibility of games played in empty stadiums could radically damage the sport’s finances, he said. Other leagues are in better shape. The National Football League’s TV contract is ironclad, and the NBA already played 75% of its regular-season games. Additionally, a clause in NBA contracts says that in the event of a pandemic, if games are not played, players are not paid. A cycle of no games and no revenue is likely to create a downward economic spiral. Municipalities will be affected by the lack of parking receipts and the loss of stadium concessions. “You may see certain owners being forced to sell teams if they get into a liquidity crunch,” Conrad said. The loss of professional sports also would destroy a sector the city

has relied upon for decades as a consistent source of revenue: tourism. “Yankee Stadium is not filled on a Tuesday night because of New Yorkers,” said David King, assistant professor of urban planning at Arizona State University. “It’s filled because people are visiting the city and going to a baseball game.” The decline in tourism would have far-reaching effects not just on the city’s live events but also on retail shopping and nightlife. “It’s underappreciated how many bars and restaurants and theaters are supported by tourism,” King said. “New Yorkers go occasionally, but it’s tourists who go frequently.” The hospitality industry has already been damaged by a drop in tourism. Hotel occupancy levels are down 80%, and some analysts expect it will take years for hospitality groups to recover.

The elephant in the room Underlying the challenges facing various city industries is the elephant in the room: Until the spread of the virus is mitigated, transportation will continue to be hindered. That, in turn, affects the rest of the region’s economy. “The unique challenge for New York is the city depends on its transit system,” King said. “There’s no robust New York economy without a lot of people packed together on buses and trains.” King said mitigating the spread of Covid-19 is the prime factor in improving the economy. Most people will be too nervous to travel through crowded spaces until there are treatment options, he said. That could take three or more months. It could take years. And it’s not just riders who are nervous. At least 50 MTA workers have died from coronavirus complications. Operators themselves need to be convinced that it’s safe to work. “There’s no easy answer to this from a transportation perspective,” King said. Some New Yorkers, though, are optimistic that the city will rebound quickly. “The talent is here in New York, and New York is going to thrive after this,” Peck said. “It thrived after 9/11, when it was written off, and it thrived after the financial crisis and came back stronger.” Others are more pessimistic. Some observers say the reopening is doomed to fail due to the underlying economic factors created by the pandemic. “If we tell movie theaters and bars to open and they open at 25% capacity, that’s nuts,” King said. “That’s just a way to make sure all of these businesses fail, and [then they would] have no case for any type of government intervention to save them.” ■

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MUSEUMS

long-term consequences,” Monger said. “That’s why I think it’s not such an easy answer.” Institutions do not always need to spend their endowment funds directly in order to benefit from them. Monger said the Staten Island Museum is considering taking out a margin loan against its reserves. That would help with cash flow and operating expenses. But first, the museum is making budget cuts.

FROM PAGE 1

Strategizing

GENE SCHIAVONE

No matter how dire the economic outlook, however, many city arts organizations say they do not plan to draw more from their endowment this year than they did last year. In fact, most institutions are doing everything they can not to touch their endowment at all. Case in point: Even though the Guggenheim faces a $10 million revenue shortfall and furloughed 92 workers, it has no plans to draw down more from its $85.5 million endowment than in years past, spokeswoman Lauren Van Natten said. That’s frustrating news for workers who have lost their job. It also raises larger questions about how much the industry favors art over the welfare of its employees. THE AMERICAN BALLET If the Museum of Modern Art THEATRE, which has “broke down and lost its entire colperformed Swan Lake, faces lection, would they really not be about $18 million in losses able to tap their endowment?” after canceling its spring asked Nikki Columbus, who last season. year settled a pregnancy discrimination case with MoMA PS 1 after it rescinded a curator offer at the muWith their endowments, the nonseum. “There’s this idea that the profits typically invest in relatively continuation of their mission into conservative mutual funds to geninfinity is more important than ac- erate annual returns of about 7%. tually taking care of the people who Then they draw down 5% of the toallow that mission to be tal. The law limits fulfilled.” them from dipping Arts nonprofits, howinto their principal to ever, say their endowcover operating exments are not really tappenses. pable resources. Crain’s Ideally, an endowspoke to a half-dozen ment should be at THE SIZE OF THE institutions across the least twice the size of Guggenheim Museum’s city with large and small an organization’s endowment endowments, from the yearly operating budMet, with $3.2 billion in get, but that’s true endowment funds, to only for the city’s bigthe Museum of the Movgest names. Carnegie ing Image, with $50,000. Hall’s endowment is NUMBER OF Citing legal restrictions almost three times its WORKERS the and concerns about lonoperating budget, its Guggenheim Museum gevity, they all said they most recent filings furloughed do not plan to use any show. At the Whitmore of their endowney, which had operment than in a typical year. ating revenue of $69.4 million in its most recent disclosure, the endowEndowment 101 ment is about five times that. The Met funds around half its Even in a city rich with funds for cultural institutions, many non- yearly budget with its endowment spokesman Kenneth profits operate on a tight budget, income, even in good years. Those that have Weine said. Even after allocating an endowment rely on it to supple- more of those proceeds to yearly ment ticket revenue and grants— expenses, the museum still needed which do not necessarily cover the to lay off workers because it faced a full cost of operations—and to plan $150 million shortfall, he said. “We are drawing as much as we for long-term growth.

Taking care of their own

ENDOWMENTS VS. LAYOFFS

$85.5M

BUCK ENNIS

QUEENS BOTANICAL GARDEN laid off 38 workers to save $50,000 in monthly payroll. can,” Weine said. But the Met’s endowment funds were “slowly and assiduously built, one gift at a time, over a century. If an institution spends from its endowment corpus, it is literally taking funds from every subsequent year of its operating budget.”

Feeling the market pinch Many arts groups across the city just don’t have that much money. “There is an assumption that big organizations have big endowments,” said Kara Barnett, executive director of American Ballet Theatre. ABT started building its endowment in 2005, and it has grown to about $20 million. But that’s less than half of the company’s most recently reported annual budget. After canceling its spring season at the Metropolitan Opera House as well as a five-week international tour, the company is facing losses of around $18 million. But drawing down more from the endowment to cover that shortfall is not an option, Barnett said, in part because the gap is nearly as large as the endowment. “We simply can’t,” she said. Actually, there’s a chance ABT might not be able to tap into its endowment at all this year. Regulations do not allow permanently restricted investments to dip below their principal value, said Shawn Davidson, ABT’s chief financial officer. After the S&P 500’s longest

bull market on record, the index is down about 11% so far this year. ABT is invested 60% in equities.

Borrowing and cutting The Staten Island Museum draws out $60,000 in a good year from its $1 million investment reserves, which includes its endowment. This, however, has not been a good year, and the museum’s investment portfolio has lost about $100,000 thus far. The museum does not plan to draw any more from its endowment, said Janice Monger, its president and chief executive. “This idea of pilfering, that has

Workers at arts institutions know better than anyone that the nonprofits operate on small budgets. But they question how the city’s richest arts organizations could hoard their reserves while cutting their workforce. “These fancy, well-endowed institutions should not be contributing to a severe crisis of unemployment and working security,” said Camilo Godoy, an educator at the Whitney. “Why is it being guarded and not considered to be potential funds to use to support people in the most horrible global crisis that we have ever had?” Despite the Whitney’s cuts, Godoy still has his job. His friends at MoMA and Guggenheim have not been so lucky. “We understand the restrictions on gift giving and endowments,” said Andres Puerta, director of special projects at IUOE Local 30, the union that Guggenheim workers voted to join last year. “But if this crisis isn’t a reason for administrative leaders of these institutions to push as hard as they can to use the money that’s just sitting there to try to lessen the crisis for the most vulnerable, then I can’t imagine when they would do it.” ■

STATEN ISLAND MUSEUM.ORG

BUCK ENNIS

THE MET LAID OFF staff to manage its $150 million shortfall.

The Queens Botanical Garden, which operates on about $4.8 million in annual revenue, has a $470,000 board of directors endowment. That kind of reserve is different from a typical endowment because dipping into it is up to the board, not the state. But even with fewer legal restrictions, taking funds from the endowment is not viable, officials said, because payroll costs the garden $200,000 per month. The garden recently laid off 38 employees—which saves $50,000 per month. “It really makes more sense to be right-sized,” said Susan Lacerte, executive director. “The reality is that $470,000 will go really fast, and then we’d have nothing.”

THE STATEN ISLAND MUSEUM’S investment balance lost $100,000 in value.

22 | CRAIN’S NEW YORK BUSINESS | MAY 4, 2020

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GOTHAM GIGS

BUCK ENNIS

GUPTA came up with Tembo Health after his grandfather moved into a nursing home.

ANURAG GUPTA AGE 36 GREW UP Monroe, Mich. RESIDES Long Island EDUCATION Bachelor’s in biology, University of Michigan; M.D., University of Michigan Medical School; M.B.A., Steven M. Ross School of Business, University of Michigan HITTING THE ACCELERATOR Tembo Health was selected to the Entrepreneurs Roundtable Accelerator in Midtown, which takes equity in exchange for investment and resources. EASING ISOLATION Tembo has partnered with AARP to keep the startup’s virtual exam rooms available during off-hours so nursing home residents can socialize via video chat with family and friends. NAME GAME Tembo is Swahili for elephants. “Elephants are one of the few species on the planet that care for their elders,” Gupta explained.

Keeping the elderly healthy An ER doc’s startup provides virtual nursing-home visits BY RYAN DEFFENBAUGH

s an emergency room doctor, Anurag Gupta has seen the toll of Covid-19 firsthand. “The situation is dire,” he said. “Health care resources are strained on a normal day, and now you have something that is completely taxing the system.” His time moonlighting at city hospitals has brought a sense of urgency to his day job. Two years ago Gupta, 36, founded Tembo Health, which connects nursing home residents with specialty care doctors through virtual visits—which don’t require transportation from strained nursing home staff. He got the idea four years ago, when his grandfather moved to a nursing home in Michigan. Now Gupta thinks his business can help fight the pandemic. A striking number of the patients arriving in hospitals with Covid-19

symptoms originated from nursing homes, which Gov. Andrew Cuomo has called a “feeding frenzy” for the virus. Nursing home residents represented nearly 3,000 of the state’s roughly 17,000 Covid-19 deaths through April. The elderly often have complex health needs, such as heart disease and diabetes. However, the state has mandated that nursing homes limit contact with outside visitors, which can include non-emergency health care personnel. That’s where Gupta says Tembo can help. The platform requires only the staff already on hand to administer appointments. Through video, the residents can connect with specialists, such as psychiatrists and cardiologists. Tembo provides virtual stethoscopes and EKG machines. “Our doctors can do a complex physical exam to drive real diagnostics, treatment plans and recommendations,” Gupta said. Gupta started his career in emer-

gency medicine after graduating from the University of Michigan Medical School in 2009. He became an emergency room physician at Mount Sinai Beth Israel and moonlights in ERs around the city a couple of days each month. He moved into the business world in 2012, eventually leading the tech team at Brigham and Women’s Hospital in Boston and working at Boston Consulting Group and medical firm Imagen Technologies. While there, he thought up Tembo. The startup’s platform is available to 600 residents across seven nursing homes in Texas and New York. The firm has six employees and 30 clinicians. Tembo expects to soon reach 25 new nursing homes in New York and is negotiating with an operator of 100 in Texas. Gupta wants to scale the business quickly to help the elderly when they need it most. “This is the perfect time for telemedicine to make a difference,” Gupta said. ■

“HEALTH CARE RESOURCES ARE STRAINED ON A NORMAL DAY, AND NOW YOU HAVE SOMETHING COMPLETELY TAXING THE SYSTEM”

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