ASKED & ANSWERED Arts groups line up for pandemic aid PAGE 14
CRAINSNEWYORK.COM
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LOT TO LOOK FORWARD TO Garages could win big if commuters start driving to work PAGE 3
MAY 11, 2020
MORE INSIDE
CORONAVIRUS ALERT NO RELIEF Landlords can’t count on the city delaying property taxes. PAGE 2
FISCAL CRISIS The city could be headed toward a budget takeover.
HUNGRY UPSTART Lunchbox aims to give Grubhub and Uber Eats a run for their money.
THUMBSDOWN Business interests blast the essentialworker bill.
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LIABILITY PROTECTION Businesses fear a flood of Covid19-related lawsuits. PAGE 16
COVID-19 TRACKER Get the latest stats on the pandemic’s impact on the city and the state. PAGE 22
HEALING THE HEALERS
After marathon shifts and ‘wartime’ conditions, doctors and nurses face their own mental health crisis BY JENNIFER HENDERSON
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See HEALERS on page 18 TOWNSEND, a clinical nurse leader, is not used to patients dying at Hospital for Special Surgery.
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HOSPITAL FOR SPECIAL SURGERY
or Dr. Joseph Herrera, the past eight weeks have seemed like a lifetime. Herrera used to spend his days treating sports injuries as chairman of rehabilitation medicine at Mount Sinai Health System. Then the number of Covid-19 cases started to rise. Hospitals reached capacity in a matter of days as an invisible enemy stormed emergency rooms.
5/8/20 5:47 PM
CORONAVIRUS ALERT
WEBCAST CALLOUT
Property tax relief unlikely for landlords; $180M in delinquencies expected MAY 14 JOIN CRAIN’S FOR OUR WEBCAST ON THE FUTURE OF THE CITY’S TRANSPORTATION INFRASTRUCTURE With state and federal funding being swallowed up for Covid-19 relief, what will happen to infrastructure programs such as the MTA’s capital improvement plan and the LaGuardia Airport AirTrain? Transit experts will discuss what lies ahead for New York’s major transportation construction.
Tune in from 4 to 5 p.m. EDT at CrainsNewYork.com/ transportationwebcast2020
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ull-fledged property tax relief is unlikely to come to New York City landlords in July, according to the city’s Office of Management and Budget. A City Council proposal that aims to delay property tax payments for small landlords and cover the loss with prepayments from large ones does not add up financially, Francesco Brindisi, OMB’s deputy director for city revenues, said last week at a budget hearing. “It’s just not clear to what extent we can play that balancing act,” Brindisi said. The office will consider reducing delinquency fees, which can be as high as 18%, on property tax payments, OMB Budget Director Melanie Hartzog said at the same hearing.
the majority of my tenants pay a 10th of the market rate for comparable apartments.” David Legow, who owns multiple buildings across northern New Jersey, said 20% of his office tenants have not paid their rent in the past two
The city is already facing a massive budget crunch: It closed an $8.7 billion gap, largely created by tax revenue shortfalls, in its recent budget. But the likelihood of further losses is high.
Collection shortfall Landlords, of course, are facing their own shortfalls. The Covid-19 pandemic has rendered residential and commercial tenants increasingly unable to cover monthly payments, making it harder for property owners to pay bills they owe, like the July property tax. Right now the OMB has set aside $180 million to cover property tax delinquencies it expects to come in July, Brindisi said. That’s assuming 2% of taxes are delinquent, he said. The true number could be higher. Crain’s spoke to a handful of small landlords across the metropolitan area who said that with
BUCK ENNIS
BY GWEN EVERETT AND BRIAN PASCUS
commercial rent shortfalls and residential rent an open question, they’re not confident they can cover their property tax payment this summer. “My commercial tenants, I’ve received zero for the month of May, and I only received 30% in April,” said Jan Lee, who owns a 28-unit, rent-stabilized building in Chinatown that holds three commercial rents. “The commercial is what we use to subsidize the building, as
months. “We normally get 100%,” Legow said. “I’ve never had a collection problem.” The difference in the drop-off between residential rents and commercial rents has more to do with government mandates and their effect on the broader economy. Although hundreds of thousands of New Yorkers have lost See TAX on page 20
Vol. 36, No. 17, May 11, 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.
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2 | CRAIN’S NEW YORK BUSINESS | MAY 11, 2020
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COURTESY OF ICON PARKING
CORONAVIRUS ALERT
Parking lot to look forward to Covid-19 could be a lifeline for garages if commuters ditch mass transit in favor of driving to work
BY AARON ELSTEIN
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f all the things vanishing from New York, probably none are missed less than parking lots and garages. They charge a small fortune, and finding your car can be nearly impossible, as Jerry, Elaine, Kramer and George discovered in a legendary Seinfeld episode. The number of garages and lots in Midtown and Lower Manhattan has fallen by 25% in the past decade, as owners sold their sites to condo developers. In the age of Uber and Lyft, New Yorkers aren’t leasing parking spaces like they used to. Even before the pandemic, some garage operators were seeking 20% reductions on their rent. But now a green shoot is emerging from the concrete, and like seemingly everything else these days, it stems from Covid-19. Although the pandemic has further flattened a business that has seen cars vanish from the roads, causing See GARAGES on page 17
City budget takeover looms BY BRIAN PASCUS
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s coronavirus shutdown measures ravage the New York economy, the city finds itself in a fiscal crisis reminiscent of the 1970s, one that experts say will require cutting the city workforce and, more drastically, receivership of the city's finances. “We now have a significant revenue shortfall,” said Andrew Rein, president of the Citizens Budget
Commission. “The federal government should support those needs, but that still leaves us with significant gaps in economic growth.” Experts say a budget takeover by the Financial Control Board— which would dilute the mayor's and the City Council's decision-making power, might be necessary. Inaugurated in 1975 to handle the financial crisis then, the measure allows the board to take control of the city’s budget if it fails to
pay its debt service or incurs a $100 million operating deficit during a fiscal year. The board was declawed in 1986 and currently just audits the budget, reviewing its four-year financial plan on a quarterly basis. “The mayor and city council have to start thinking about what options there are for balancing the budget,” said Sal Albanese, a city
BUCK ENNIS
Without aid from the federal government, the fiscal forecast is grim
CITY HALL
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CORONAVIRUS ALERT
Lunchbox wants to help restaurants take on Grubhub Midtown startup finalizes $2 million funding round to expand
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s city lawmakers seek to rein in Grubhub and Uber Eats commissions, Lunchbox, a Midtown startup, says it can offer a better deal. The company last week finalized a $2 million fundraising round to expand its business, which provides restaurants with online ordering and marketing for a $300 flat rate each month. CEO Nabeel Alamgir, 28, said Lunchbox will double its staff in the coming months to meet demand driven by Covid-19. With restaurants forced to close their dining rooms, establishments are thinking more than ever about how to improve their to-go sales. “Grubhub’s and Uber Eats’ fees are just not sustainable, and what Covid has done is force restaurants to really see that,” Alamgir said. “But most restaurants don’t have a ton of money to invest in their own online system.”
Understanding needs Lunchbox’s platform takes orders, dispatches deliveries, manages promotions and collects payment. Since launching in February 2019, the company has landed Chip
NYC, 16 Handles and Fuku among its clients. The company processed about $10 million in sales last year and expects to handle $36 million this year. The system was built at first to help what is now Lunchbox’s biggest client, Bareburger. Alamgir emigrated from Kuwait when he was 15 and learned English by watching Martin Scorsese movies and busing tables at the Astoria Bareburger location. He eventually moved up in the company to chief marketing officer, where he designed the ordering technology that was spun off into Lunchbox. “One of the things we liked about Lunchbox is that it is from people who came up in the restaurant industry and understand what they need,” said Nnamdi Okike, managing partner at 645 Ventures, one of the lead investors in Lunchbox’s latest financing round. “We’re thinking a lot about how restaurants can sustain themselves post-Covid, and the value Lunchbox provides is especially important in that environment.” The pitch for Lunchbox hinges on the difference between first-party sales and third-party sales. Third-party sales, such as through Grubhub, cost restaurants some-
Layoffs, furloughs at Planned Parenthood In-patient visits are down 70% locally BY JENNIFER HENDERSON
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lanned parenthood of Greater New York—which launched in January after the merger of five affiliates—has laid off or furloughed nearly a third of its staff as a result of the Covid-19 crisis. About 135 employees have been laid off, and an additional 150 have been furloughed or had their hours reduced. “It’s very difficult to make that decision,” said Laura McQuade, president and CEO. “We felt that in order to stabilize the organization, we had to make that decision.” Planned Parenthood relies on insurance and patient revenue as well as grants and private philanthropy. All have taken a hit during the pandemic. In-person visits have trended down as much as 70%, McQuade said. And the organization has had to cancel several fundraising events, from which it expected to bring in about $3 million. McQuade said that she hopes the organization will be able to re-
coup some of those contributions later this year. It also expects to grow its virtual offerings. What started as 400 virtual visits a week has increased to about 650. “We actually have the capacity to grow that even further, and we are looking at the possibility of putting even more resources into that space,” McQuade said. The organization is hoping to get its furloughed staff back to work as early as this summer. “People are really starting to understand that they’ve got to get health care,” McQuade said. "During those first two weeks, [many people thought,] This is going to be short—I’ll put everything on hold. There are certain kinds of health care that simply can’t wait. Some people may be putting their health care at risk.” The organization has continued to work with public health officials in the city and at the state level. It’s been taking referrals for abortion care from hospitals that have been unable to provide it during the crisis. ■
times 30% in fees for processing, marketing and delivery. First-party sales come direct, with only the costs to deliver—typically 10% through Relay or DoorDash—and no marketing fee. “The more volume you do on your own site, the more you are rewarded,” Alamgir said. “For them, the more volume, the more you pay.”
BLOOMBERG/LUNCHBOX
BY RYAN DEFFENBAUGH
Direct sales The trick for restaurants is getting customers to come directly to their website. Bareburger in Astoria might have no problem getting regular customers to find its site and place an order. But Grubhub and Uber Eats can offer restaurants access to tens of millions of customers nationally who might arrive in a new neighborhood for work or travel, search for “burger” and order from whichever restaurant shows up at the top of the list. Alamgir said restaurants using his platform don’t forgo sales through other apps. But Lunchbox has tools for restaurants to design their own marketing and rewards programs— which can push more users to purchase food directly.
When restaurants first sign up with Lunchbox, they typically drive about 10% of their takeout sales through their own website, compared with 90% through ordering apps, Alamgir said. Those clients eventually capture an average of 42% of their online sales directly, by his count.
“That’s the number we point out to every restaurant we talk to,” Alamgir said. The company also delivers valuable user data from purchases to the restaurants, another source of conflict with ordering apps. Grubhub only rarely reaches data-sharing deals with clients, such as in its bid to land Shake Shack’s business last year. “Simply building an ordering platform for restaurants is not how we survive,” Alamgir said. “We need to show restaurants that we can bring them new customers and keep them coming back.” ■
Uber Eats adds thousands of couriers to its roster
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he ranks of Uber Eats delivery couriers have swelled in the city during the past two months, the company said, as the pandemic has left New Yorkers with only delivery and pickup options from restaurants. Roughly 30,000 New Yorkers have signed up to deliver food through the platform since March, according to company data shared with Crain’s. Total earnings paid out to couriers has climbed 40%, Uber said. “New Yorkers are turning to Uber Eats to help make ends meet during what is an unprecedented economic crisis,” the company said in a statement. Whatever boost Eats has provided Uber has been outweighed by the slowdown to its core business: providing rides. The firm disclosed recently that it will cut 14% of its global workforce, about 3,700 jobs. Uber is highlighting the local Eats numbers as the City Council nears a vote on a bill widely opposed by tech firms that facilitate food sales. The legislation would cap at 10% the commissions DoorDash, Grubhub, Uber Eats and
other delivery platforms charge restaurants. “Restaurants needed help before the Covid-19 epidemic,” Councilman Francisco Moya said during an April 29 hearing on the bill. “Now they are getting swallowed by the exorbitant commission fees, which exceed 30% and absorb the slim profit margins restaurants already operate in.”
‘Simply can’t survive’ City lawmakers have been at odds with delivery services for more than a year now. Delivery firms say they provide new customers and supplemental income to restaurants. Restaurants say the fees the firms charge—both for handling transactions on their app and for delivery—eat up any value from the services. That dynamic has been inflamed since restaurants were forced to close their dining rooms in March due to the pandemic. Evan Franca, owner of Brooklyn Crepe and Juice, testified to the council that app-based deliveries typically constituted 20% of his sales. Since March they have made
up 80%, he said. “When our restaurant is full of people, it is nice to have these extra sales,” Franca said. “But now that we are not allowed to fill our restaurants in this emergency, we are relying on only these orders. We simply can’t survive on these margins.” He said typical food sales have a 10% profit margin, but that is before the 30% in fees that go toward the apps. In a class-action lawsuit filed last month, New York restaurants accused DoorDash, GrubHub, Postmates and Uber Eats of charging unrealistic fees. Uber charges a 15% fee per order for listing on its page and 30% fees for delivery, company spokesman Joshua Gold told the council. During the pandemic, the company has dropped a fee for orders on its app that are picked up at the restaurant. The council could vote on the commission bill at its next hearing, scheduled for May 20. Moya told the Gotham Gazette that he has the votes to pass the legislation. — R.D.
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Succeeding in development as the city shelters in place
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it. And they’re holding their breath.
eal estate development in New York has become very complicated. Clearly the Covid-19 outbreak and the shelter-in-place orders have dragged down the market and halted development, but the extent of the pandemic’s impact is the great unknown. To shepherd projects through, developers must address funding and timeline problems now—without knowing when normal economic activity will resume and what the market will look like when it does. To understand the challenges facing New York developers and property owners, Crain’s Content Studio spoke to Andy Charles, a partner at Kramer Levin in New York with extensive experience in commercial real estate law. CRAIN’S: How are developers and investors dealing with project delays as Covid-19 and shelter-inplace orders continue to slow economic activity? CHARLES: For the most part developers are relying on the joint-venture agreement. Presumably that agreement includes a negotiated force majeure clause, which would give them the ability to mitigate their exposure for any promises they made with respect to delays to completion and, most important, with respect to costs. The biggest sensitivity among developers and investors when they go into these agreements is who bears the risk for the increased cost. The investor gets sold on the deal based on a budget, and then the budget increases as a result of unforeseen conditions, which translates into force majeure. So the developer is saying, “There’s a force majeure issue here. And assuming my investor is deep-pocketed enough, he’s going to contribute his share of whatever those increased costs might be.” The lender has approved a budget, and it’s very hard for the developer to modify that budget without getting the lender involved. If there’s a disruption in the supply chain, those numbers may all be out of whack. At the moment, lenders, developers and investors are at least talking to one another, trying to work together and being as transparent as possible.
CRAIN’S: Since contracts likely don’t mention a pandemic specifically, how does a force majeure clause need to be written to be useful in this situation? CHARLES: Those clauses generally need to be drafted pretty clearly because courts tend to interpret them very narrowly. Most force majeure clauses include a provision that deals with actions by the government that would, directly or indirectly, increase the cost of the project or delay the project. And certainly a moratorium on construction and the stay-at-home orders would all fall under that rubric. Similarly, force majeure clauses commonly include “Acts of God” as a means to put the force majeure clause into play. If they don’t have a force majeure clause in their contract and they don’t have similar contract terms like excusable delays, then it’s going to be much more difficult for them. They would have to try to rely on common law theories like “impossibility” and “commercial impracticability.” CRAIN’S: Where are developers turning for additional capital to cover cost overruns? CHARLES: Developers in many cases have not yet been able to quantify what the increased costs will be. They just know this epidemic and the response to it are going to create increased costs down the line. But the first place you look to is your agreement with your investors. The increased
Andy Charles, real estate partner at Kramer Levin
capital first comes from the investors. You make a capital call to the various members, and they’re each supposed to contribute their pro rata share. To the extent the investors still believe in the project and have already made a sizable investment they need to maintain, they will make the additional capital contributions. Now, to the extent they don’t make the additional capital contributions, then the developer looks to recapitalize the project and may try to bring in additional investors and recut a deal—and, of course, working with the lender because all of this will eventually require the lender’s consent. I have clients, investors in the hospitality industry, who are going to be receiving capital calls and are questioning whether it really pays to make those calls. It’s interesting to be at this vantage point because you’re right at the cusp of all these issues bubbling up, but they really haven’t come to fruition yet. Even when we take a look at rent, a lot of the rents in April were paid. Certainly they’re down, but it hasn’t been a wholesale drop-off yet.
At the moment, tenants who find themselves struggling are asking landlords to apply their security deposits toward their rent payments to help alleviate cash flow shortages. In addition, tenants are waiting on the various programs that are being set up by both the federal government and the state governments to see if there will be some third-party help to bridge the gap until the current crisis subsides. It seems more likely than not, as the current situation continues, many tenants will eventually go into default, and it remains to be seen whether landlords and tenants will find it in their mutual best interest to renegotiate rents based on current market conditions. CRAIN’S: Are you seeing any new projects generate interest in the midst of all this?
CHARLES: Sure. There are always creative, entrepreneurial real estate people who take a look at the situation and say, “Where is the next move?” We signed a real estate contract last week for an office building. The clients believe it’s the right price at this time. I think there are people looking at bulk sales of newly constructed condominiums. There are always people looking at what the right deals are going to be. There’s still plenty of money on the sidelines. And if you look back in history, anybody who did real estate deals in 2009 and ’10 and ’11, they did pretty well in the long run. So I think people are savvy to that, and people know that New York City recovers. When? It may take one year or two years, but New York City will get beyond this. And if there’s a deal to be made, and it makes sense, people will be looking to make it.
The right partner is the one with real-world solutions. Many of the biggest names in New York trust Kramer Levin for real estate and land use advice. Let us show you how resultsoriented counsel can make your next project a reality.
CRAIN’S: How are property owners and lenders responding to rent delinquencies? Are they anticipating reaching a crisis point? CHARLES: It’s a combination: They’re anticipating %DAY_OF_WEEK_DATE% | CRAIN’S NEW YORK BUSINESS | 5
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IN THE MARKETS
In a post-Covid world, these companies will rock Wall Street is placing bets on products that line up with changing consumer habits
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ust about everyone has an lyn-based etailer reported stronopinion of what life will be like ger-than-expected earnings last after Covid-19, and in Wall Wednesday, thanks to so many Street’s considered opinion it folks buying masks they can’t find will be filled with ecommerce, in pharmacies. Etsy’s stock price chain restaurants, craft beer, has risen 67% this year and its $9 video games and frantic levels of fi- billion market value is larger than nancial-market activity. Also, get- Macy’s, The Gap, and Nordstrom ting stuff delivered to your door put together. But you can’t just shop for stuff at could cost more. If this sounds like an apocalyptic home. There must be food, too. vision appealing mostly to 30-year- While full-service restaurants hibernate, Papa John’s stock old males, know that the price has more than douaverage Wall Street trader bled in the past two is 30 years old, according months and trades near its to a 2015 study by reall-time high reached four search firm Emolument. years ago. The pizza chain U.S. Equal Employment had expanded its menu Opportunity Commiswith something called Pasion data show men outpadias, a toasted sandnumber women in the wich that management securities business by a describes as their “first two-to-one margin. AARON ELSTEIN new holistic platform.” With that in mind, it's Cheap pizza goes best worth examining the collective wisdom of the Wall Street with beer and video games. Sam crowd, which it is putting formida- Adams maker The Boston Beer ble sums of money where its mouth Company hit a new 52-week high, is. Its vision of a post-pandemic while shares of Anheuser-Busch Inworld can be gauged by looking at Bev are trading near their all-time which stocks have been bid up to low, because locked-down drinkers want something stronger and tasti52-week highs. The Wall Street guys think Etsy er than a light, fizzy Budweiser. Covid-19 has also delivered a will be a big winner in the postCovid-19 world, which is interest- new lease on life for Zynga, a video ing considering 87% of the site’s game developer that went public sellers are women. The Brook- back in 2011 on the strength of
FarmVille and had been seldom heard from since. It just turned in a dynamite first quarter. Many Wall Streeters are still working as the market dramatically swings. The big benefactors are order-takers like New York-based Virtu Financial, a trading firm that typically sees big spikes in volume when fears of a recession rise and investors adjust their positions. The firm reported a stunning 177% increase in quarterly revenue to $1
billion, while net income swung to $388 million from a $13 million loss in the year-earlier period. It would be tough for any business to top that performance, but investors think it can be done at Virtu. The stock rallied after the amazing earnings news. But not all is well in paradise as understood by Wall Street. The cost of getting items delivered is poised to go up. With airlines grounded for the
most part, air freight companies are positioned to charge more to haul stuff. Atlas Air Worldwide Holdings reported an increase in first-quarter operating earnings, even though revenue fell by $36 million to $643 million. The Westchester County-based firm said the second half of the year looks even better from an earnings standpoint. Good for Atlas Air, but if cargo prices remain elevated then eventually consumers will pay the price. ■
ON NEW YORK
During pandemic, startups look good Companies across sectors are getting money, pivoting as outbreak rolls on
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ith the Covid-19 pan- “Overnight, user behavior has demic making trips to changed, and suddenly all these the pharmacy risky, physicians are using telemedicine, New York–based on- and people really like it.” The pandemic has thrust digital line pharmacy Capsule knew it had an opportunity. It accelerated its health companies like these into expansion plans, launching two the spotlight and dramatically enhanced their prospects in weeks ago in Minneapowhat has now become lis and last week in Chiknown as the new norcago, months ahead of mal. But while a West schedule. Coast startup like Airbnb Maven Clinic also realis slashing staff and dealized that its fertility and ing with revolts from pregnancy health plans, both hosts and guests based on the largest telealike, many companies in medicine network in the the New York tech sector industry, would be more are forging ahead. New in demand than ever. It GREG DAVID unicorns are reaching $1 fast-tracked a billion valuations, venCovid-19-related program for pregnant women in a ture capital continues to flow into week and made sign-ups for com- the city, and startups are seeing their stocks soar. panies easy. Reveal Health, which creates personalized care programs for Feeling bullish chronic medical conditions, immeHealth care is not the only sector diately pivoted to prepare for what looking up these days. Last month is now being called the collateral AI flash storage company Vast Data damage of people putting off visits raised $100 million at a valuation of to doctors. It is taking care of their $1 billion, making it the city’s 35th conditions with programs designed unicorn. (All of them are in Manto identify the patients most at risk. hattan except Vice, which is based “Telemedicine is in the sweet in Brooklyn.) The TechNY daily spot as a lot of our health plan part- newsletter for last Wednesday listners are talking about how to ed six new venture investments, a change their ecosystem,” said Kate typical number for the report. Ryder, founder and CEO of Maven. Union Square Ventures, the city’s
most important venture firm, reported in early March that it was working on two new term-sheet investments and closing on several existing term sheets. In a mid-April update, partner Fred Wilson said on his blog that the firm had signed three or four term sheets since the original post and closed on a few of them already. Peloton, the at-home stationary bike company, reported last week that revenue for the quarter ending March 31 jumped 66%, to $525 million, and that its membership surged to 2.6 million from 2 million in the past three months. Its loss grew as it increased marketing, but its stock has soared to $38 a share from its post-initial public offering low of $19 in early March. The company’s strategy was widely panned after it revealed its financials before the IPO, and its initial stock decline was heralded as bad news for New York tech companies. “There are plenty of reasons to be bullish on New York’s tech sector,” said Julie Samuels, executive director of the industry group Tech:NYC. “It is highly diversified, touching almost every part of the existing New York economy, which means that we’re going to see plenty of companies weathering and even succeeding in these times.” To be sure, online retailers that
also established brick-and-mortar outlets have suffered a blow. Layoffs and even closings of companies are harder to track and could be happening quietly. A severe and long recession will be a problem for all companies, even those growing quickly. “Across the business, we are doubling down on operational efficiency because we are working from home and because of the recession,” Ryder of Maven said. The company, which is based in Tribeca, was founded six years ago and has raised $90 million in venture capital in four rounds. It has 128 employees and has attracted about 100 companies as clients. “Our clients and prospects see us as essential,” Ryder said. “We offer on-demand visits that are really important during this time.” It has recently signed up MassHealth, the Medicaid plan for Massachusetts, to offer maternity and pediatric benefits during the pandemic. With telemedicine appointments up 50% now and 300% for mental health services, the company’s prospects have never been better. Capsule was founded in 2015 after founder Eric Kinariwala had a horrible experience trying to pick up a prescription for a sinus infection at a New York pharmacy. It has
raised $270 million in three rounds and has added 300 workers to its staff since early March, bringing the total to 800. It reports a surge in new customers since the outbreak began. When the company was founded, a minuscule percentage of prescriptions were ordered online and delivered. “Fast forward to today,” Kinariwala said, “everything has been accelerated, and medication delivery has gone from a convenience to being essential to contain the virus because people should not be congregating in pharmacies.” The interest in telemedicine and the medical consequences of the pandemic have changed the prospects for Reveal Heath, which has raised $90 million with an infusion of capital from its original Series A investors last year. It is telling clients and prospective clients that it can identify patients at high risk post-pandemic and get them the medical care they need with as little in-person contact as possible. “If we don’t make an impact now, when will we ever?” asked Lori Evans Bernstein, founder and chief operating officer. ■ Greg David writes a regular column for CrainsNewYork.com.
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CORONAVIRUS ALERT
Rights bill would burden business and city coffers
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either mom-and-pop businesses nor the city itself would be able to pay for a suite of bills meant to guarantee hazard pay and stronger rights for essential workers, officials said last week in a public hearing. “We recognize that the mom and pops cannot sustain or survive with this legislation as was mandated,” Brooklyn City Councilwoman Laurie Cumbo, majority leader and co-sponsor of a bill that would give daily bonuses of up to $75 to essential workers. "The Amazons of the world, who are making a lot of money, we need to figure out how do we capture them in this legislation.” Dubbed the Essential Workers Bill of Rights, the package discussed in the Committee on Civil Service and Labor hearing, aims to expand protections for essential
them adequately. But the hearing, which lasted seven hours, put on full display the difficulty of funding such proposals amid the massive economic fallout of the Covid-19 pandemic.
Budget strain Council members and a litany of business groups, from the Partnership for New York City, The Brooklyn Chamber of Commerce, the Manhattan Chamber of Commerce, said that businesses would not be able to foot the cost of the package. "We employ 160 hourly workers. If I have to pay those 160 hourly workers an extra $75 per shift, that's an extra $12,000 a day," said David Offerman, president and CEO of manufacturer IEH Corp. He added that company revenue will be down 40% as a result of Covid-19. "If this legislation passes, I have to leave New York City tomorrow." "Without a guaranteed funding source, our financial stability will be in serious jeopardy," said Michelle DeMott, chief of staff to the president at counseling and rehabilitation center Samaritan Daytop Village. “It’s not an exaggeration to say that these bills will result in layoffs.” The city is in no better position. New York is facing a $7.4 billion
“IT’S NOT AN EXAGGERATION TO SAY THAT THESE BILLS WILL RESULT IN LAYOFFS” workers on the front lines of the pandemic, many of whom work in low-wage jobs. Sponsors of the bills say it is unfair to put the city's most vulnerable on the front lines of the pandemic without paying or protecting
CITY FROM PAGE 3
councilman for 25 years and former Democratic candidate for mayor. “Because if not, the Financial Control Board will come in and take over the city’s finances.” An April report by the city's Independent Budget Office estimated a $9.7 billion revenue shortfall in fiscal years 2020 and 2021, plus a $4.4 billion revenue shortfall in 2022. “IBO’s estimates of the extent to which tax revenues will fall short of expectations is also almost certainly greater than in any two-year period since the end of the city’s fiscal crisis,” the report said. Understanding what happened 45 years ago helps explain the parallels of the dire situation the city finds itself in today.
Hidden deficits The roots of the 1970s fiscal disaster stemmed from the city running hidden deficits for years on end—which ballooned so much that within a decade the city accumulated a deficit worth half its entire budget, risking default, said Eugene Keilin, who worked on the city's budget negotiations at the time. “The state would give the city power to borrow, but it always
gave the city ability to change its accounting rule. It allowed the city to show a surplus even though it was balancing its budget with borrowed money,” Keilin said. “It was not known to the general public, certainly, and it wasn’t known to the people who bought and sold municipal bonds.” Eventually, it was discovered that the city’s books had been cooked. Banks that had been lending the city money became spooked. Interest rates on the loans were raised to account for
BLOOMBERG
BY GWEN EVERETT
budget shortfall. City Comptroller Scott Stringer said Tuesday that the mayor's budget, proposed in April, did not make enough cuts to city agencies. That means agencies have little room to bankroll new initiatives. Department of Consumer Affairs Commissioner Lorelei Salas hesitated to say whether nonprofits should be included in the hazard pay bill for that reason. “Just for financial resources, I would say that it definitely will place a strain on the city, she said. didn’t work very well. MAC was not able to borrow enough,” Keilin told Crain’s. “In effect, we needed more assurance that the city was going to be disciplined financially. That’s when the Financial Control Board was created.” As a second step, the board gave the lenders and the state more direct authority over the city. It had the power to approve and disapprove budgets and approve and disapprove contracts. The city was required to adopt general accounting standards. Mayor Ed Koch balanced the budget in three years, and the city got back into credit markets. “It was a wartime experience,” Keilin said. “Those of us who went through it have stayed close ever since. The outcome was uncertain over an extended period of time.” Since then, the city’s budget has remained balanced or in a surplus. Today, under the lockdown, the city faces a similar wartime experience, one both Gov. Andrew Cuomo and Mayor Bill de Blasio liken to the shared sacrifices and existential challenges Americans faced during the Great Depression and World War II. City stakeholders say two routes
“It will come back to the city to increase the funding. I’m not sure I have a better answer for that right now.”
Finger pointing Many fingers on the city council's virtual floor pointed to the federal government to foot the bill. New York Senator Chuck Schumer has proposed a "Heroes Fund," which would give a $25,000 pay increase to all essential workers until the end of the year. Federal hope aside, the funding must be taken if New York is to emerge from the new crisis fiscally sound. One is the process of attrition, the gradual means of city workforce employees retiring or leaving and being replaced (or not), as opposed to their being laid off. Rein estimates that more than 15,000 full-time staff employees have been brought on by the city since the peak of the last recession and that up to 7,000 workers leave the city in a given year and typically are replaced. “If you use attrition and redesign your work processes at the same time, it reduces impact on public service and reduces public impact,” he said.
“IF WE’RE NOT THINKING LONG-TERM, WE’RE GOING TO DESTROY THE FUTURE”
Crisis management
the risk. The federal government entered the picture—a moment highlighted by the infamous Daily News headline “Ford to City: Drop Dead.” The state eventually stepped in to create a multiyear balanced-budget process. To that end, the state created a borrowing entity, the Municipal Assistance Corp., an entity that allowed the city to borrow money on the state’s credit to shore up its finances. Keilin was executive director of the MAC between 1976 and 1979. “It worked a little bit, but it
“I certainly think there will be attrition. It’s the easiest way to reduce payroll,” said Keilin, who cautioned that the attrition process is somewhat random and that restaffing considerations should be given to the city’s health care workers. “What we’ve learned in this crisis is that when you need a hospital you better have one. Same for EMS,” he said. “When you make cuts, you should be selective.” “This is the nuts and bolts of good management,” Rein said. “It’s hard but it’s worth it.” Another recommendation from
debate puts the package, and the essential workers who testified at the start of the hearing, in a precarious position. Tarek Kachakech, an employee at a T-Mobile store, was one such essential worker. He spoke of facing a choice between protecting his job, and speaking out for Covid-19 safety measures in his workplace. A bill in the BAD NEWS package that Businesses would require oppose employers to have proposed a “just cause” for legislation. firing an employee would change that, he said. But businesses testified that the just cause rule would make it burdensome to get rid of employees under any circumstances. Brooklyn City Councilman Brad Lander, a sponsor of the just cause bill, said it would allow for furloughs and layoffs as a result of Covid-19, and was meant to prevent firing of workers for speaking out against their employers about health risks. He said that the council still had work to do on the package, but it was committed to the reforms. ■ experts is beefing up the city’s rainy day fund. The fund was approved by New York voters in November with more than 71% support. “California has a $21 billion rainy-day fund. We have none of that here, and that’s negligence on the part of the city,” Albanese said. It’s not just negligence; it’s also the law. According to Rein, gaps in the city’s budget are required to be closed in order to balance the budget for that fiscal year. Money may be allocated only on a year-to-year basis and may not be moved from prior years and stashed far into the future. “The strong fiscal management system that we have has that one flaw,” Rein said. “The challenge is that it does not allow you to have a real rainy-day fund.” If the city is to emerge from this fiscal crisis, it will require difficult choices and learning from the past to chart a new path forward, the experts said. “Everything has to be on the table, given the gravity of the deficit,” said Albanese, who suggested de Blasio will have to think about furloughs, reorganizing some city agencies for efficiency purposes and taking a pay cut as a gesture of solidarity. “If we’re not thinking long-term now, we’re going to destroy the future,” Rein said. ■
MAY 11, 2020 | CRAIN’S NEW YORK BUSINESS | 7
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president K.C. Crain senior executive vice president Chris Crain group publisher Mary Kramer
EDITORIAL
publisher/executive editor
Hospital workers deserve our applause— and ready access to mental health care
editor Robert Hordt assistant managing editors
Christine Haughney (special projects), Janon Fisher, Gabriella Iannetta (digital) senior editor Telisha Bryan
Health System. “It just felt like drinking out of a fire hose—waves and waves of sick patients coming in and a feeling of hopelessness,” said another from New York City Health and Hospitals. Several frontline health care workers have likened the pandemic to war—fighting a never-ending battle to save patients from the grip of Covid-19, sometimes winning but often losing. And like war, those in battle run the risk of anxiety, depression or worse. There already have been reports of at least one frontline worker taking her own life. Health care officials expect to see an increase in post-traumatic stress disorder—a condition usually seen in soldiers returning from combat—among hospital workers because of the prolonged stress they are facing on the job. Symptoms can include a reliving of traumatic events, the numbing of emotions and nightmares. Hospitals have acknowledged the challenges they face to keep their staffs healthy, and several have put programs in place to
HEALTH CARE OFFICIALS EXPECT TO SEE AN INCREASE IN PTSD workers, many of them with years of experience yet still unprepared for what they are being asked to do. “I don’t think anybody can prepare you as a physician for the amount of grief and death that’s happened during the pandemic,” said one doctor from Mount Sinai
EDITORIAL
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, Natalie Sachmechi columnist Greg David contributors Tom Acitelli, Ronald DeCicco,
Cara Eisenpress, Cheryl S. Grant, Steve Krupinski, Danielle McManus Sladek, GETTY IMAGES
T
he frontline health care workers in New York and beyond certainly deserve all the accolades, applause and free meals they are getting. But let us not lose sight of what they are going through and what it might mean for months—or even years—to come, both for them and the health care system. The emotional pain they are enduring while working day after day and seeing scores of patients die in front of them is taking a toll few of us can fully comprehend. We can surely empathize, but we cannot appreciate it entirely without experiencing it firsthand. In this week’s cover story, we hear from some of those frontline
Frederick P. Gabriel Jr.
support workers. In some cases, it is as basic as providing break rooms or outdoor spaces where doctors and nurses can occasionally escape from the daily grind. In other instances, it means making psychiatrists available to offer counseling. For hospitals, taking care of their employees is not only the right thing to do—it is a smart business decision. While the country is gearing up to reopen, hospital officials in New York are girding for a possible resurgence of Covid-19 cases in the fall. To handle this so-called second wave, hospitals will need a healthy workforce, both physically and
mentally. To do that, they must prepare aggressive, proactive plans that account for the fact that some hospital workers may not even realize they need help. Seeking out therapy still holds a stigma for some, and PTSD can sometimes show up months, or even years, after a traumatic event has occurred. It has become a custom in New York and elsewhere to stop what we are doing each evening and publicly applaud our health care workers. But we owe them much more than that. Ensuring their ability to access mental health services is a good place to start. ■
Mark Yawdoszyn to contact the newsroom:
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OP-ED
manager of conferences & events
Ana Jimenez, ajimenez@crainsnewyork
Covid-19 relief bills shift the burden to small landlords BY CHARLES HOPPENSTEIN
T
o help building tenants survive the Covid-19 pandemic, the City Council is considering a series of bills that, while well-intentioned, will wind up threatening the survival of smaller, family-run building owners like me. In a nutshell, this one-sided legislation would shield tenants from any penalty for failing to pay rent for an entire year. I own a 60,000-square-foot, 16-story commercial building in the Garment District. As of April 29, the vast majority of my tenants have not paid any rent. Without rental income, the lights go off. Banks foreclose on owners unable to service debt on their buildings, a pattern of deterioration that is likely to keep growing. Allowing tenants to remain in their units for a year or more without paying rent—and without exposure to eviction or personal liability—
would destroy the livelihoods of many small and midsize building owners. This legislation would essentially oblige me to keep my building functioning for a sustained period of time for mostly nonpaying tenants. Media reports indicate that large office tenants are still paying rent. But judging from the landlords I know, I doubt it. Plus, the Garment District is still home to many tenants involved with the tariff-battered apparel industry. When the pandemic hit in March, all U.S. stores canceled their orders. The goods had been ordered, paid for and manufactured by the garment tenants. But when orders were canceled, there was no place to ship them. Building owners should not be forced to carry the burdens of an industry gravely suffering from the pandemic. Generally, commercial landlords cannot tap the emergency financing the federal Small Business
Administration earmarked to address the pandemic. And most banks prohibit borrowers from layering more debt onto their properties. The City Council’s lopsided reform package might minimally help a few struggling enterprises survive the downturn. But it would destroy the marketplace for small building owners who take chances on startups. Government at all levels is rightfully helping businesses, families and individuals, but small building owners are not banks. We have bills to pay too and cannot be expected to shoulder this crisis alone. There are many other ways the council could assist business owners, namely by finding a way to help them pay their obligations— other than by legislating a free ride on the backs of commercial landlords. As it is, the federal Paycheck Protection Program allows businesses to use only 25% of the funds on operational costs, which in-
REPRINTS director, reprints & licensing Lauren Melesio,
212.210.0707, lmelesio@crain.com PRODUCTION production and pre-press director
clude rent. For many businesses in our city, operational costs are significantly higher than that. The council could help stabilize the commercial real estate sector by providing real estate tax relief. Additionally, it could look to the banking industry to mandate debt relief for struggling owners. Without thoughtful legislation that takes into account the long-reaching and long-lasting ramifications of narrow fixes in the proposed Covid-19 relief package, the small businesses I have nurtured for three decades will vanish. So would the jobs of the unionized employees managing my building and my livelihood as well. Remember, this pandemic isn’t assaulting tenants alone. As small businesses, independent building owners like me should not be expected to foot the bill for everyone else. ■
Simone Pryce media services manager Nicole Spell SUBSCRIPTION CUSTOMER SERVICE
www.crainsnewyork.com/subscribe 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] chairman Mrs. G.D. Crain Jr. [1911-1996]
Charles Hoppenstein is a building owner and landlord in the Garment District.
8 | CRAIN’S NEW YORK BUSINESS | MAY 11, 2020
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OP-ED
BUCK ENNIS
Bankers, insurers must open their wallets to help small businesses BY GREGG BISHOP
City’s tax shortfall stems from lack of homeownership BY ERICA BUCKLEY
L
ast year was the year of the tenant, and 2020 started as the year of the homeowner. Antihomeownership sentiment following the Great Recession finally subsided—and then Covid-19 struck. Now only essential affordablehousing projects may proceed, and government plays a role in prioritizing which ones receive attention. It will be tempting for officials to put homeownership projects on the back burner. In fact, they should be prioritized. A closer look at how homeowners and tenants are faring thus far during the pandemic should guide lawmakers and policymakers as they decide what is important during and after the crisis. Government learned a painful lesson from the Great Recession. Millions of individuals and families lost their homes to foreclosure, contributing to the housing crisis we see today. Perhaps that is why both the federal government and New York were quick to put into place mandatory protections for homeowners during the pandemic. As a result, many struggling homeowners are able to defer payments on their mortgage and are protected against foreclosure. The same thing cannot be said for rental tenants, however.
Thus, the city should think creatively about ways to transform programs to assist tenants in becoming owners while ensuring small landlords receive just compensation. The city relied on similar programs to deal with distressed properties after the 1970s recession by developing homeownership options for tenants under the interim lease and homesteading programs. Many believe these programs made neighborhoods such as the East Village and Harlem the vibrant and diverse communities they are today. Overall, the real estate landscape in the city after the pandemic is going to be different. It is unclear how quickly the luxury market will rebound, and unsold inventory will remain high. Vacant units benefit nobody. The city needs to dust off some old ideas, like the Harp program, and pave the way for the conversion of unsold condo units to affordable housing, giving preference to homeownership.
T
ime and again, New York City has proven to be a resilient place filled with hope and an unmatched network of individuals who fight for their communities. Our 230,000 small businesses are fighting even harder during this pandemic and have turned to government for guidance and leadership. Our city is at its best when we all work together. Small businesses have looked to government before. During the 2008 financial crisis, our small and micro businesses, which make up 70% of the city’s small businesses, asked for help and were met with resounding silence. The federal bailout prioritized larger financial institutions. Back then our community development financial institutions stepped in and fought to keep the economic engine of our city running. CDFIs recently were given additional resources to continue supporting our businesses. To make the banks stronger, however, they need dedicated funding in future rounds of relief. Now is the chance for all of us to get it right. As our city continues to advocate for relief, our private partners must lend the helping hands that we all desperately need. First, banks should create fund-
ing programs to help alleviate the burden many entrepreneurs are facing. Instead of relying on federal relief, lending institutions must now reach within their own pockets and produce loan products for small businesses. This is an opportunity for new thinking, as business owners continue to rely on their banks—the ones in their communities that helped them build and supported them as neighbors and friends. It’s imperative that when small-business owners look for relief, they continue to see the same friend and neighbor who has always been there to assist. Second, the insurance industry has a unique ability to step up in ways they have yet to do. Small businesses have paid business-interruption insurance premiums for years, but when they need it most, coverage is being denied. Insurance companies must cover these events. Rather than finding legal loopholes or wasting precious time waiting for government mandates, insurance companies need to find a way to provide coverage immediately. Taking cover in outdated policies would not only hurt us now but expose us to a more vulnerable future. Finally, we need to explore alternative forms of relief for businesses. Although private partners have stepped up to help New York City,
we need many more. This is the optimal moment for philanthropic foundations that have been building their reserves for many years to step in and help.
Hope and time We know that the needs of our business owners far outweigh the help that any one of us can provide. That is why private lending and insurance coverage should carry reasonable limits so that the pain is shared equitably and a majority of our businesses can access the relief they need right now. We all need hope and time—time to combat the challenges that lie before us and hope that working together will help shape a brighter future. New Yorkers—and our small businesses—are defined by their tenacity and grit. We are grateful to our city congressional delegation for providing our nation with unprecedented support, and we applaud their continued fight for our most vulnerable populations. We cannot continue to operate as things were. We need to work together to keep our small businesses alive. Our economic recovery depends on it. ■ Gregg Bishop is commissioner of the city Department of Small Business Services.
Transient town The other problem the pandemic has exposed is just how transient New York City is. Stories of individuals and families fleeing have become common in recent weeks. As renters, it is possible to pick up and leave. If the homeownership rate in the city weren’t so low, people would feel more connected. If the city can no longer provide the bustling culture that attracts so many, it is reasonable to ask whether people will want to come back. Like it did after the Great Recession, government will learn lessons after the pandemic. The vulnerability that tenants feel right now should guide future policy. If the city and the state prioritize homeownership, we could come up with creative ways to redirect a glut of condo units to working families, we could come up with creative solutions for rent arrears, we could bring much-needed tax revenue to the city and the state, and, most of all, we could give more people a reason to call New York City home. ■
THE VULNERABILITY THAT TENANTS FEEL RIGHT NOW SHOULD GUIDE POLICY Although there is a moratorium on evictions, it would be untenable for government to mandate rent forgiveness without providing direct relief to landlords, many of which are in fact small businesses. City Council members have suggested deferring the ability to collect rent or carry out evictions until April of next year. That might keep tenants in place for the short term, but it would do nothing to address rental arrears or the inability of some landlords to operate buildings without necessary revenue. The suggestions follow the enactment of the Housing Stability and Tenant Protection Act, which has made owning small, rent-regulated buildings less attractive for some landlords.
Erica Buckley, a former assistant state attorney general, is the practice leader for the cooperative and condominium team at the law firm Nixon Peabody. MAY 11, 2020 | CRAIN’S NEW YORK BUSINESS | 9
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THE LIST LARGEST REAL ESTATE FINANCINGS City properties ranked by loan amount in 2019 DATE
BUYER(S)
LENDER(S)
1
$1,600 Refinance
8/9
Bank of America/ Durst Organization
Empire State Bank and a commercial mortgage-backed security1
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 25 27 28 29
1633 Broadway
$1,250 Refinance
10/18
Paramount Group
Commercial mortgage-backed securities2
55 Hudson Yards
$1,245 Refinance
11/21
Related Cos./Mitsui Fudosan
Commercial mortgage-backed securities3
30 Hudson Yards
$1,120 Sale
6/1
Related Cos./Allianz
Commercial mortgage-backed securities4
Time Warner Center
$1,100 Refinance
5/9
Related Cos./GIC
Wells Fargo
28 Liberty St.
$1,025 Refinance
9/18
Fosun International
Deutsche Bank
28-10 Jackson Ave. (Jackson Park)
$1,000 Refinance
9/27
H&R REIT/Tishman Speyer
Commercial mortgage-backed securities1
30 31 32 33 33 35
Midtown West
Midtown West Far West Side Far West Side
Columbus Circle Financial District
Long Island City
4 Times Square
$900 Refinance
4/8
Durst Organization
JPMorgan Chase
730 Fifth Ave. (Crown Building) Midtown West
$807 Refinance
8/26
Brookfield Property REIT/ Wharton Properties
Apollo Commercial Real Estate Finance
650 Madison Ave.
$800 Refinance
11/26
Crown Acquisitions/ Highgate Holdings
JPMorgan Chase and commercial mortgage-backed securities5
1 SoHo Square
$730 Refinance
5/23
Stellar Management/ Imperium Capital
Commercial mortgage-backed security6
424–434 Fifth Ave. (Lord & Taylor)
$700 Sale
2/8
Rhone Group/The We Co.
JPMorgan Chase
420 E. 54th St. (Oriana at River Tower)
$675 Refinance
11/1
BentallGreenOak/ Slate Property Group
Mack Real Estate Group
335 Madison Ave. (The Company Building)
$650 Refinance
10/18
Milstein Properties
Citigroup
100 W. 33rd St. (Manhattan Mall)
$580 Refinance
2/12
Vornado Realty Trust
U.S. Bancorp
441 Ninth Ave. (Hudson Commons) Far West Side
$579 Refinance
11/25
Cove Property Group/ Baupost Group
Blackstone Mortgage Trust
616 First Ave. (American Copper Buildings)
$574 Refinance
2/1
JDS Development/ Baupost Group
AIG
65 E. 55th St. (Park Avenue Tower)
$570 Refinance
3/19
Blackstone/Park Tower Group
Morgan Stanley
252 South St. (1 Manhattan Square) Lower East Side
$554 Refinance
8/28
Extell Development Co.
Blackstone
345 Park Ave. South
$540 Sale
9/5
Deerfield Management
Blackstone
188-02 64th Ave.
$500 Refinance
9/26
Cammeby’s International Group
Fannie Mae
30 Hudson Yards
$490 Refinance
5/20
KKR/City of New York
Deutsche Bank
5100 Kings Plaza
$487 Refinance
12/3
Macerich
Commercial mortgage-backed securities7
606 W. 57th St. (The Max) Midtown West
$484 Refinance
3/12
TF Cornerstone
New York state
1 Dag Hammarskjöld Plaza
$430 Sale
1/8
Rockpoint Group
Wells Fargo
7 Hanover Square
$430 Sale
10/3
GFP Real Estate/ Northwind Group
Square Mile Capital
36 Central Park South (Park Lane Hotel)
$425 Sale
2/6
Mubadala Investment
Deutsche Bank
620 Sixth Ave.
$422 Refinance
10/8
Blackstone/RXR Realty
Goldman Sachs
30 Hudson Yards
$420 Refinance
11/13
Related Cos./New York City Industrial Development Agency
Bank of America
63 Madison Ave.
$410 Refinance
12/20
Jamestown Properties/ George Comfort & Sons
Wells Fargo
32 Old Slip (1 Financial Square) Financial District
$404 Refinance
4/12
RXR Realty
Mesa West Capital
120 Park Ave. (Altria Building)
$400 Refinance
8/16
Global Holdings Management Group
HSBC
420 Kent Ave.
$386 Refinance
5/22
Spitzer Enterprises
KKR Real Estate Finance Trust
70 Pine St.
$386 Refinance
9/23
Rose Associates/ Eastbridge Group
Commercial mortgage-backed security6
25 11th Ave. (Pier 57)
$375 Refinance
4/11
RXR Realty/ Young Woo & Associates
TIAA
Theater District
Lenox Hill SoHo
Midtown West Turtle Bay
Midtown East
Chelsea
Murray Hill
Midtown East
NoMad
Fresh Meadows Far West Side Mill Basin
Midtown East
Financial District Midtown West
Chelsea
Far West Side
NoMad
Murray Hill
Williamsburg Financial District Chelsea
THE TOP FOUR
1 Bryant Park LOAN AMOUNT $1.6 billion
1633 Broadway LOAN AMOUNT $1.3 billion
55 Hudson Yards LOAN AMOUNT $1.2 billion
BUCK ENNIS, WIKI
LOAN AMOUNT TRANSACTION (IN MILLIONS) TYPE
ADDRESS/ NEIGHBORHOOD
1 Bryant Park
RANK
Data are based on publicly reported lending activity from Jan. 1, 2019 through Dec. 31, 2019. Includes single assets and first mortgages only for acquisitions and refinancings on properties of $2.5 million and greater; excludes construction debt and leased-fee/land-only transactions. Additional mezzanine financing may not be counted. In cases of tied figures, deals are listed in alphanumeric order of address. 1-Originated by Bank of America. 2-Originated by Goldman Sachs, JPMorgan Chase and Wells Fargo. 3-Originated by Deutsche Bank, Morgan Stanley and Wells Fargo. 4-Originated by Deutsche Bank, Goldman Sachs and Wells Fargo. 5-Originated by Barclays, BMO Financial Group and Citigroup. 6-Originated by Goldman Sachs. 7-Originated by JPMorgan Chase and Wells Fargo. Source: Real Capital Analytics, with additional research by Gerald Schifman.
WANT MORE OF CRAIN’S EXCLUSIVE DATA? VISIT CRAINSNEWYORK.COM/LISTS.
30 Hudson Yards LOAN AMOUNT $1.1 billion
10 | CRAIN’S NEW YORK BUSINESS | MAY 11, 2020
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CORONAVIRUS ALERT
Vornado halts rent to city over Pier 92 shutdown BY RYAN DEFFENBAUGH
The EDC is responsible for maintaining the piles that support the pier, which is where the damage was found, Vornado said. The company has spent the 14 months since the order negotiating either a rent abatement or concessions for lost revenue from the city.
V
ornado Realty Trust is refusing to pay the city rent for Piers 92 and 94 more than a year after inspectors declared part of the West Side event space structurally unsound and forced the company to shut it down. The realty trust cut off payment in March, Vornado disclosed in its quarterly filing last week. Since 2011 the publicly traded company has paid the city $2 million annually for the ground lease on the piers, where Vornado runs connected event halls totaling more than 200,000 square feet of space. In February 2019 inspectors with the city’s Economic Development Corp. said a routine review uncovered structural damage to Pier 92.
SHIPPING OUT: Pier 92 was found to be structurally unsound.
The 2019 vacate order came weeks before the March 7 opening of the Armory Show, one of city’s largest art fairs. The portion of the show slated for Pier 92 was relocated to Pier 90, which is operated by the city. Volta, a sister art show scheduled at Pier 90 for the same weekend, was canceled. The Armory hosted its 2020 show at the start of March at Piers 90 and 94, but the experience will lose Vornado one of its key events going forward. The show is scheduled to move to a fall date at the Javits Center next year. “Having piers that aren’t next to each other has been challenging,” Nicole Berry, executive director of the Armory Show, told The New
A KEY EVENT HOSTED AT THE PIERS WILL MOVE TO THE JAVITS CENTER NEXT YEAR Vornado was ordered to vacate the property, according to the disclosure.
NEW YORK CITY ECONOMIC DEVELOPMENT CORP
Docking pay
York Times in March. “The Javits Center offers a better long-term solution, to have everybody in one place.” The Bloomberg administration awarded Vornado a contract to expand a city-run events space at Pier 94 over to Pier 92—which is part of the Manhattan Cruise Terminal—
in 2008. The ground lease between Vornado and the city, officially inked three years later, runs through 2060, with fixed increases and a renewal period every 10 years. That would place the next option in 2021. Food festivals, the Architectural Digest Design Show and parts of the
Westminster Kennel Club Dog Show have been held on the two piers. An Economic Development Corp. spokesman said the city is in talks with Vornado for a long-term plan at the piers but declined further comment. A Vornado representative declined to comment. ■
Commercial waste zones law delayed until fall
Commissioner: The industry needs time to recover and stabilize BY BRIAN PASCUS
BUCK ENNIS
A
controversial plan to confine private garbage trucks to specific zones—a measure intended to improve traffic safety—has been suspended by the Department of Sanitation because of the pandemic. In a letter to commercial waste industry stakeholders May 1, Sanitation Commissioner Kathryn Garcia said the new zoning legislation will not begin its planned implementation until fall at the earliest. The mass shuttering of businesses, including restaurants and bars—from which most of the carting work originates—has crippled the industry. “We need to allow for the business community and the carting industry to begin to recover and stabilize before embarking on this transformative effort,” Garcia said in her letter, adding that the initiative will require “bold, forward-looking commitments from our partners in the private sector.” Garcia had delayed the time line of the legislation for one month on March 27. Zoning bid proposals and public-review hearings were to begin in the spring. Other stakeholders in the process have called for further delays in the proposed time line. In a letter addressed to Mayor Bill de Blasio on April 23, the Na-
tional Waste and Recycling Association requested a 12-month extension on the commercial waste zones program, arguing that rushing the legislation forward during the coronavirus pandemic would harm both the industry and the constituents who rely on its collection services. “The CWZ program is a longterm, significant structural change in the management and delivery of commercial waste services,” the association said. “To allow the nearterm impact and short-term uncertainty created by Covid-19 to disrupt the proper administration of such a critical, long-term initiative would represent a true missed opportunity.”
The City Council passed the commercial waste zones bill in October by a vote of 34–14. The idea had generated much controversy over the years, especially among labor unions, private carting companies, business owners, the Real Estate Board of New York and City Council members whose districts were most likely to be affected by the new zoning. At its core, the bill aimed to create safer streets—and a more streamlined industry—by reworking and creating zones across the five boroughs for commercial waste trucks to travel through under a system run by the Department of Sanitation. The legislation addressed environmental and safety concerns, as private garbage companies were required to implement employee safety standards and transition to zero-emission vehicles by 2040. In her letter, Garcia said the Department of Sanitation remains committed to the program ■.
Redefining what you should expect from your accountant. grassicpas.com
MAY 11, 2020 | CRAIN’S NEW YORK BUSINESS | 11
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WHO OWNS THE BLOCK
Front Street pushes forward
98 FRONT ST.
Dumbo, Brooklyn’s pricey waterfront neighborhood, is well positioned for recovery BY C. J. HUGHES
D
100 JAY ST. J Condominium, Dumbo’s tallest tower, is a 33-story, 267-unit building developed in 2006 alongside the Manhattan Bridge by the Hudson Cos. There is a washer and dryer in each unit. The building also features a kids’ playroom and a roof deck. The cheapest one-bedroom for sale in late April cost $800,000. A one-bedroom rental was $4,350.
60 FRONT ST. The final property in the once-sprawling portfolio of the Jehovah’s Witnesses was this 52,000-square-foot, block-through triangle, a parking lot for years. In 2018 Fortis Property Group shelled out $91 million for the site, where a 26-story, 78-unit condominium and a 5-story school are planned; $92 million in financing is from Madison Realty Capital.
181 FRONT ST. A 12-story, 105-unit rental from Megalith Capital Management, Urban Realty Partners and the Carlyle Group, this luxury building, completed in 2018, has been slow to lease, brokers say, because it faces the noisy Front and York construction site. Last summer it offered one month of free rent; last month it was dangling three free months on 15-month leases. The least-expensive available unit, a two-bedroom, costs $5,786.
65 WASHINGTON ST. This 12-story, 54-unit rental from Two Trees Management, Dumbo’s largest landlord, was developed as the firm’s first ground-up project in 2001, when the neighborhood was heating up. The red-brick building last month offered a studio at $2,929 per month.
99 GOLD ST.
69 ADAMS ST. In 2018 a 3-story former machine shop with a rooftop tennis court was razed to make way for a 26-story, 225unit rental building from the Rabsky Group that’s still under construction. Rabsky bought the site from the Jehovah’s Witnesses for $65 million in 2016. Axos Bank provided a $47 million acquisition loan; Goldman Sachs contributed $50 million last year.
In 2003 the HK Organization paid $4.6 million for a concrete warehouse used to store novelty items and turned it into an 87-unit rental with an indoor basketball court. As of 2018, HK, which owns a stake in Dumbo shopping center Empire Stores, owed $32 million on the site, which is in Vinegar Hill. One-bedroom rents start at $3,850.
BUCK ENNIS, GOOGLE MAPS
umbo, a stylish sweep of converted warehouses along Brooklyn’s waterfront, appears to be having a so-so year. After consistently ranking as the borough’s priciest neighborhood, its fortunes slipped in 2019 as high-end real estate struggled. The median sale price on its cobblestone streets was a little more than $1.6 million last year, down 20% from 2018, according to PropertyShark. That dropped Dumbo behind Cobble Hill and placed it 10th on the city’s overall list. Oversupply is a concern, as new condo projects go head to head. Several are on Front Street, a nine-block span that dips into Vinegar Hill. It is where Dumbo’s past and future mix. Of the big, new for-sale projects battling for dominance, the farthest along is 98 Front St., a 165-unit offering from Hope Street Capital that will “soon” be 50% sold, said Sha Dinour, president of Triumph Property Group, Hope Street’s marketing division. The condominium, which was supposed to start closings this spring until the pandemic hit, was the third-bestselling development in Brooklyn in the first quarter, with 13 signed contracts, Halstead Development Marketing said. (Topping the list, with 47 contracts, was 11 Hoyt, a 481-unit Downtown Brooklyn building.) Units at 98 Front, which has raised prices three times since January 2019, are trading for about $1,800 per square foot. “The velocity has been terrific,” Dinour said, adding that he won’t lower prices for the post-pandemic market. Hope Street bought its site from the Jehovah’s Witnesses church, which for decades controlled much of Dumbo. After a selling spree during the past few years, the church has no foothold left. In 2018 Fortis Property Group grabbed one of the Witnesses’ last sites, 60 Front St., where foundations have been poured for a 26-story condo-and-school spire. The 78-unit tower, which has lined up $92 million, is expected to have tennis courts, swimming pools and expansive Manhattan views, though no offering plan has been filed. Also competing is Front and York, a full-block condo-and-rental complex that is about a dozen stories out of the ground this spring. Sales of its 408 condos began last summer, with prices for a onebedroom starting at $975,000. The amenity-rich building, from a team that includes CIM Group, is marketing $450,000 worth of wine lockers, its offering plan shows. “We’re a small area, so a lot of inventory means downward pressure on prices,” said Charles Homet, a Compass agent and longtime neighborhood resident. “But Dumbo is well positioned, so there’s a lot of upside. ■
12 | CRAIN’S NEW YORK BUSINESS | MAY 11, 2020
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THANK YOU T
o everyone at the frontlines of the pandemic, from health care employees to food services, words cannot begin to express our gratitude.
You selflessly take care of others, putting their needs ahead of your own. In times like these, your strength and resiliency are an inspiration to all.
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ASKED & ANSWERED
KERRY MCCARTHY
Many are looking to donations to offer a lifeline. Can the philanthropic community answer the call?
DOSSIER
New York Community Trust
WHO SHE IS Vice president for philanthropic initiatives, New York Community Trust
INTERVIEW BY GWEN EVERETT
A
SIZE OF THE RESPONSE & IMPACT FUND $105 million to date
s vice president for philanthropic initiatives at the New York Community Trust, Kerry McCarthy is especially committed to saving the arts world from the ravages of Covid-19. To help, the New York Community Trust administers the Response & Impact Fund, which doles out grants to arts and public service organizations in the city in coordination with a host of philanthropies, including Bloomberg Philanthropies and the Ford Foundation. When first announced, the fund totaled $75 million, but it has now grown to $105 million and given out $41.6 million in grants.
Many philanthropies have donated to the trust’s relief fund. How did you mobilize such a strong list?
Donors were enlisted from every Rolodex of every foundation, executive and individual funder. Our colleagues in the philanthropic community were ready and eager to help. We started with 18 partners and raised more than $100 million in a few weeks. We have already gotten $62 million in grants and no-interest loans out the door to frontline service providers.
What does the $105 million fund say about the state of giving to the arts during the pandemic? The fund targeted both the arts and human services,
GREW UP Knoxville, Tenn. RESIDES Washington Heights EDUCATION Bachelor’s in art history, Sewanee; master’s in folk art studies, NYU DECADE OF TRUST McCarthy began working for the trust as a program officer in 2009. She held various roles through the years and was promoted to her current job in 2019. MUPPET CAPER Her first job in the city’s arts and culture community was working for the Muppets and the Jim Henson Foundation.
but the support we received speaks to the special place the arts have in the hearts of New Yorkers and what we value. There was an explicit recognition that the arts are a huge economic engine for the city and that even in good times, arts organizations struggle to stay afloat.
We created the fund to help small and midsize art groups, but the pandemic has hit everyone and every organization. What’s encouraging is that the crisis highlighted the importance of art to the public. During this shutdown, the thing that has kept people going is the arts, whether they are watching movies and plays in the digital public realm or reading books or drawing in their notebooks. As we go through this crisis, we just need to figure out how to keep artists connected to the public, who need them to help process and understand the collective trauma we have all experienced.
Are the grants that are being given generally restricted to certain uses?
Our fund’s grantmaking is being used generally for two purposes: to pay for fixed expenses, including payroll, in the face of lost revenues and for transitioning to online programming. The Nonprofit Finance Fund is making nointerest loans as part of our joint effort.
What advice would you give museums and theaters?
Arts groups need to have a Plan A, a Plan B and maybe even a few others to figure out how to keep connecting with their audiences despite social distancing. They need to be smart, creative and flexible. The reality is that the city’s economy is going to take a long time to fully recover. It will be challenging, but our city’s artists and arts groups will lead us.
What’s next for the trust?
As we move into the next phase of response, our ongoing grantmaking will provide a lifeline to many nonprofits as new challenges emerge. Our emergency fund also will accept donations and help us make grants through the rest of the year. ■
Cultural nonprofits have seen earned revenue plummet to zero, and the city cut funding too.
LAST CHANCE TO NOMINATE! Nominations close Friday, May 15 Do you know a 20something who is someone to watch? Crainʼs 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.
14 | CRAIN’S NEW YORK BUSINESS | MAY 11, 2020
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CORONAVIRUS ALERT
Small firms still in dark about loan forgiveness as clock ticks BLOOMBERG
GETTY IMAGES
S
NY joins with six states to purchase medical gear in bulk ASSOCIATED PRESS
N
ew York is banding together with six nearby states to purchase equipment and supplies that sometimes have been hard to find during the Covid-19 pandemic, Gov. Andrew Cuomo announced May 3. Cuomo said New York will join with states from Massachusetts to Delaware to create a regional supply chain for masks, gowns, ventilators, testing supplies and other equipment vital to fighting the novel coronavirus. The states are joining together after months of dealing separately with what Cuomo said was a “totally inefficient and ineffective” purchasing process that pitted all 50 states against one another, as well as the federal government and other entities, driving up prices as supplies dried up. New York buys about $2 billion worth of medical equipment per year, Cuomo said. The other states joining the consortium together spend about $5 billion per year. Working as one unit, they’ll have stronger purchasing power and improve their clout with global suppliers, Cuomo said. “It will make us more competitive in the international marketplace, and I believe it will save taxpayers money,” the governor said. “I also believe it will actually help us get the equipment, because we have trouble still getting the equipment.” In addition to Delaware and
Massachusetts, the other states in the consortium are Connecticut, Pennsylvania, New Jersey and Rhode Island. One goal, the states’ governors said, is to find suppliers within the region instead of relying on swamped manufacturers in China and other faraway places. On a parallel track, they’ll also continue to work with the federal government to procure medical gear, Cuomo said. “Whatever they can do to help is great,” Cuomo said.
Shoring up supplies In a lesson learned during the crisis, Cuomo said going forward hospitals in New York will be required to keep on hand a 90-day supply of masks, gowns and other personal protective equipment, which ran critically short at times. In building their stockpiles, hospitals should account not for normal usage but for the high usage rates they’ve seen during the pandemic, the governor said. Because of dwindling supplies, hospitals were rationing supplies and asking staff to reuse masks. At one point in the crisis, hospitals in the New York–Presbyterian system were burning through about 40,000 masks each day— about 10 times the normal amount, according to Columbia University Medical Center officials. “We can’t go through this dayto-day moving masks across the state,” the governor said, “this mad scramble that we were in and still are, in many ways.” ■
mall businesses that struggled to get loans from a government pandemic-relief program still don’t know how much they may have to repay after the government missed a deadline to give specific guidance. The Small Business Administration was supposed to clarify by April 26 how loans it approved as part of the Trump administration’s multitrillion-dollar coronavirus stimulus package can be spent and still qualify to become grants. Companies and lenders say they need more guidance on how to calculate the amount eligible for forgiveness and what documentation is required to support the claims. That could leave small firms on the hook to repay loan proceeds they thought would be a grant. As a result, some business owners are holding on to the loans and may even return them, according to interviews with small-business groups, lenders and borrowers. The Paycheck Protection Program was designed as a lifeline for small firms, many of which were shuttered due to stay-at-home orders, have no revenue coming in and may be forced to close for good. Time is short because the funds must be spent within eight weeks after they’re received to qualify for forgiveness. Every day of uncertainty means making decisions is more difficult, the groups and business owners said. “As soon as they got the money, they’re calling and saying, ‘OK, how do I spend this to make sure I get this forgiven, because I don’t want to mess this up,’ ” said Kimberly Rayer, a partner at Starfield & Smith in Pennsylvania, who advises lenders on SBA loan programs. “Borrowers are concerned. They would like to make sure that they don’t have to pay this money back.”
Uncertainty and chaos The uncertainty about how loans will be forgiven is just the latest stumbling block in the SBA’s chaotic effort to funnel about $670 billion to small firms across the country to counter the devastating effects of Covid-19 on their operations. The initiative was intended to keep them afloat and keep employees on the payroll. The initial round of $349 billion in funding ran out April 16 in just 13 days after nearly 1.7 million firms were approved for loans. The program relaunched April 27 with an additional $320 billion, and the SBA and Treasury Department reported May 3 that 2.2 million loans totaling $175.7 billion from more than 5,400 lenders have been processed, with an average loan size of $79,000—much lower than the $206,000 average in the first round. The totals, through May 1, mean less than half the additional funding remains available.
The program provides loans of as confusion and caused banks to much as $10 million to small busi- hold off on processing applications. Large firms and national chains nesses affected by the outbreak. The law says borrowers don’t have swooped in, picking up millions of dollars in loans and leavto repay if the money is ing many mom-and-pop spent on payroll plus businesses shut out. Almortgage interest, rent most 320 public compaand utilities. An initial nies received loans totalrule issued by the SBA AVERAGE size ing about $1.1 billion, and Treasury said 75% of of a loan in the according to data comthe proceeds must be latest round of funding, much piled by FactSquared. spent on payroll and 25% lower than After the Trump adon the approved expensthe $206,000 ministration warned large es. The amount forgiven average in the firms with access to other is reduced if owners cut first round capital about taking loans jobs or wages, and any and Treasury Secretary amount that’s not forgivSteven Mnuchin said all en must be repaid at 1% interest in two years, with the first loans of more than $2 million would be reviewed for criminal liapayment deferred for six months. Business owners don’t have bility, 29 companies had returned enough guidance about how they’re loans worth $183 million as of May spending the money to ensure 1, data show. they’ll avoid having to repay it, said Holly Wade, director of research Changes sought and policy analysis for the National James Cummings, who runs 22 Federation of Independent Busi- Great Clips franchises across North ness. Questions include whether Carolina, said he received a loan for expenses incurred during the eight his hair salons toward the end of weeks but paid later would qualify. April but is holding on to it until he They’d also like more flexibility gets more details on how the forabout how the proceeds can be giveness will work. He’s hoping the used and still qualify for forgive- government will allow more flexiness. Small-business and industry bility in how he spends it. groups are lobbying Congress and Cummings said he needs to “be the Trump administration for able to use this money when we rechanges. open or we’re literally going to have Congress said in the legislation to pay it all back, every dime.” creating the program that the SBA The salon operator is among was to issue guidance and regula- small-business owners who are tions for loan forgiveness “not later finding themselves caught in an adthan 30 days after the date of enact- ditional bind: even with a loan, they ment of this act,” which would have can’t pay their staff as much as the been April 26. The agency still workers could get from unemployhasn’t said when it will issue the ment benefits, but they can’t use more of the money to cover other expenses while waiting to reopen. Many restaurants and other small-business guidance and didn’t comment for owners also say eight weeks of fedthis report. eral relief won’t be enough, espeThe program was designed to cially if they’re not ready to reopen have banks disburse loans to small during that time. Industry groups businesses that the SBA would including the National Restaurant guarantee, to get money into the Association are seeking a number hands of those in need as quickly as of changes, such as an extension of possible. Lenders can apply to have the period when owners can use the agency reimburse them for the the loan and have it forgiven. portions of loans that are forgiven, Advocates also want more flexistarting seven weeks after money is bility to the rule on how the prodisbursed. ceeds can be spent, but Mnuchin Lenders also want more guid- has defended the terms because ance because they make the initial the intent of the law was to keep assessment about loan forgiveness, workers employed. Clara Osterhage, who owns hair said Paul Merski of the Independent Community Bankers of Amer- salons in Ohio and other states, got ica. The SBA and Treasury should her loan funds April 26 but doesn’t produce a calculator to help lend- know when she’ll be able to reopen ers and borrowers determine loan and whether she can rehire workforgiveness and simplify the pro- ers. She said she needs more clarity about the rules and may end up cess, he said. The rollout of the small-business having to return the money rather relief program had numerous prob- than having to repay with interest a lems. The SBA’s lending platform two-year loan she can’t afford. “It’s incredibly concerning,” Oswas quickly overwhelmed, and guidance to borrowers and banks— terhage said. “I don’t know the which has changed dozens of times rules of the game, and I have no since it launched April 3—sowed control.” ■
$79K
“BORROWERS WANT TO MAKE SURE THEY DON’T HAVE TO PAY THIS MONEY BACK”
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CORONAVIRUS ALERT
Business groups push Stringer attacks de Blasio for liability protections budget, suggests tax hike BUSINESS GROUPS on the governor’s reopening advisory board are pushing for Covid-19 liability protections for businesses—an ask that critics say is the newest installment in a decades-long campaign for tort reform. Nineteen business groups—including the Partnership for New York City, the Real Estate Board of New York and the New York City Hospitality Alliance—signed a letter with the Lawsuit Reform Alliance of New York, asking Gov. Andrew Cuomo to enact by executive order liability protections for all matters related to Covid-19. Five of the organizations that signed the letter are on the governor’s New York Forward Advisory Board, which is charged with helping guide reopening policy. “Regardless of any precautions, when customers and employees begin to move in and out of our businesses again, these risks are unavoidable. New York must recognize this and enact meaningful liability protections to ensure our economy is not further devastated
by Covid-related lawsuits during the recovery,” the letter reads. Tom Stebbins, executive director of LRANY, said Cuomo’s executive action in March that provided liability protections for doctors and hospitals gives him hope that the governor will extend such protections to all businesses. The letter is just the latest in the long push for tort reform from business interests, said Tony Sebok, professor at Cardozo Law School. “I really just don’t see what the argument is,” Sebok said. “If they are concerned that the [number of cases] is going to get so big that they’re going to get swept away in litigation, I think they really need to justify that empirically.” “The idea that there’s not a wave of related litigation … it’s just documented and demonstrably inaccurate,” said Ken Pokalsky, vice president of the state Business Council, which is also on the New York Forward board. “Thousands of suits have already been filed for all sorts of issues related to Covid.” There have been 277 Covid-19 related cases in state and federal court in New York since Jan. 30. ■
BY GREG DAVID
M
ayor Bill de Blasio is drawing down the city’s fiscal reserves too quickly and failing to seek enough cost savings from agencies amid the unprecedented fiscal meltdown caused by the economic shutdown, Comptroller Scott Stringer said last Tuesday. The likely mayoral candidate also seemed to support tax increases to bolster state revenues and reduce any aid cuts to the city, though he was not more specific. He noted that the fiscal recoveries after 9/11 and the Great Recession involved new revenues. Meanwhile, Stringer echoed calls from de Blasio and Gov. Andrew Cuomo for federal aid to offset revenue losses from the pandemic. President Donald Trump touched off another round of controversy on the issue when he told the New York Post that New York and other Democratic states did not deserve to be bailed out at the expense of Republican states. “Who cares who runs the states?” the mayor said at his daily briefing.
GETTY IMAGES
BY GWEN EVERETT
1 comes from reserves. The IBO reported that the mayor’s moves will leave only about $2.1 billion in the retiree health trust, just $20 million in the general reserve in the current year and $100 million for next year, while STRINGER DE BLASIO exhausting the 2021 capital stabilization reserve. “The people need help.” Draining reserves so quickly Cuomo said there had been no mismanagement by the states. If could lead to difficulties if the city’s anything, he said, the mismanage- economy fails to rebound quickly. ment had been by the Trump ad- Mayor Michael Bloomberg had a ministration. Cuomo told Demo- reserve of 18% when the Great Recrats in the House that they could cession struck, compared with 12% not pass another economic-relief under de Blasio. Stringer continued to criticize measure that didn’t include state aid without betraying the people the mayor for his failure to pursue aggressive savings programs in the they represent. Both the comptroller and a sepa- past. He announced he would imrate report from the Independent mediately pursue a 4% savings in Budget Office highlighted de Bla- his own office as an example to othsio’s use of reserves in his budget. er city agencies. Requiring a program to cut 4% Stringer noted that 46% of the money to close the budget gap in this from city agency spending would fiscal year and the one starting July save $1 billion. ■
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16 | CRAIN’S NEW YORK BUSINESS | MAY 11, 2020
FROM PAGE 3
garage owners to take down their “no vacancy” signs, some observers say parking garages are on the verge of a comeback. “When people go back to work, we believe many will prefer to travel in cars by themselves instead of taking the subway,” said John Smith, chief executive of Icon Parking, the city’s largest garage operator, with 250 of them across the five boroughs. “Demand for parking is going to increase. Consumer behavior is going to change.” Smith is hopeful because an Icon-commissioned study of 1,200 New York–area drivers showed that 63% plan to travel to work by car after the lockdown is lifted. When the city Economic Development Corp. examined the matter two years ago, 27% of New Yorkers said they commuted by car. Smith’s forecast appalls public-transit supporters. But he’s hardly alone in thinking empty garages and lots will soon have plenty of cars. Andrew Brucker, a lawyer at Armstrong Teasdale who represents condominiums and coop-
“THERE’S NO WAY TO SOCIALLY DISTANCE ON THE SUBWAY” eratives with garages, said his wife has ordered him to avoid the Metro-North when he resumes commuting to the city from his suburban home. “I don’t think my wife’s demand is unique,” Brucker said. “I do think the garage business is going to be bigger than ever.” Scott Heller, founder of the Heller Organization, a real estate broker, said he’ll be driving to work in the future even though his subway ride is just 12 minutes long. “There’s no way to socially distance on the subway,” Heller said.
Traffic congestion For mass-transit and environmental advocates, the potential comeback of the parking garage is a chilling thought. Danny Pearlstein, policy and communications director at the Riders Alliance, said that if parking garages are full, then roads could be too, and that would damage the city’s economic recovery. A 2018 study from the Partnership for New York City said traffic congestion costs businesses $20 billion each year in travel time and excess fuel expense, a 53% increase from 2006. More cars on the road also would cause more pollution. A study by the city Health Department showed that the number of fine particles in the air has fallen by more than half since the pandemic lockdowns began. Midtown pollution levels now are about the same as in low-traffic areas of Queens. “It would be surely nice for Icon if their garages filled up,” Pearlstein said, “but it would literally be killing people.” For most New Yorkers, driving to work and parking in a garage is unaffordable. Depending on the loca-
$20B
tion, it costs about $500 per month for one THE ANNUAL of the 120,000 cost of traffic garage-parking congestion due spots in the city. to travel time Indeed, 85% of and excess the people surfuel expense, veyed by Icon according to a expect employ2018 study. ers to pay for some or all of their parking. The steep cost is NUMBER OF one reason cars entering most car owners Manhattan’s take public central business transit. district daily in Still, New 2016. Yorkers do love their cars. More than 1.9 million were registered in the city in 2018, about 1 million in Nassau County and 625,000 in Westchester County, according to the state Department of Motor Vehicles. It wouldn’t require many of the region’s car owners to start driving to work to fill up parking garages, especially because street parking has become scarcer since the city started adding bike lanes and restricting traffic on 14th Street and elsewhere. In a signal that New York doesn’t intend to become more car-friendly in the near term, Mayor Bill de Blasio recently unveiled a plan to close 100 miles of streets to vehicles so pedestrians could have more room to roam. But persuading frightened commuters to get out of their car and get on trains or buses with scores of others is likely to be a huge challenge, even with subways being shut down overnight for cleaning. Jorge Arias, an architect in Washington Heights, said he looks forward to riding the subway again, but it will take him time to feel comfortable. He rented a Zipcar recently to pick up some items at his office near Penn Station. After a dip in business, Zipcar usage in the city has increased during the past two weeks. “Anyone who drives does so more cautiously after they’ve been in an accident,” Arias said. “That’s how I feel about the subway: It’s had an accident.” Restoring public confidence in public transportation will not be cheap. Kate Slevin, senior vice president at the Regional Plan Association, said the subway alone will need around $4 billion in federal aid to make up revenue shortfalls caused by the collapse in ridership. Without the aid, service will be cut, conditions could deteriorate further, and more people likely will seek alternatives to public transit, she said. “If we don’t get that help, the recovery is going to be bleak,” Slevin said. For parking-garage owners, the pandemic offers a chance to turn around a business that’s been in retreat for many years. For a long time garage operators collected fat profits, dealing mostly in cash while awaiting the day a developer bought their land. “Then people started parking less in the city,” Heller said. A report by the New York Metro-
ing to work. It is automating garages so customers don’t have to touch a ticket upon entering or hand their keys to anyone. While waiting for business to pick up, Icon is offering $15-per-day parking to first responders. “Parking is an old industry that hasn’t evolved,” said Smith, who joined Icon in January with a background in hospitality. “There is an opportunity in improving the customer experience.” Not only does it seem likely more people will get into their car more often, but the implementation of congestion pricing also has been pushed back from its expected January 2021 date to some undetermined time due to Covid-19. In the meantime, Pearlstein said, there are inexpensive things public officials can do to discourage commuters from getting into their car, such as creating more dedicated bus lanes on streets and highways using traffic cones. Comptroller Scott Stringer’s office reports that 30% of essential workers commute via bus, and Pearlstein said getting them to work quickly should be a top priority. “They won’t be honored as heroes forever,” he said. “But they will travel by bus and need cars out of the way.” ■
PARKING-garage owners have been able to renegotiate rents in the past few years due to a dip in traffic and demand for parking.
720K
COURTESY OF ICON PARKING
GARAGES
politan Transportation Council counted 720,000 cars entering the Manhattan central business district daily in 2016, a 5% drop from 2011, even as job growth in the borough was nearly 14% during the same period. In 2017–2018, there was a 10% slide in the number of cars that park by the day or hour at Manhattan garages, according to the Metropolitan Parking Association. Meanwhile, garage owners’ labor costs shot up as the minimum wage doubled, and congestion pricing was another blow.
Winning concessions Last year some struggling garages in condominiums and cooperative buildings began asking to renegotiate their rent and won concessions. Most parking garages in the city
are owned by a handful of companies, such as Icon or Standard Parking. “There aren’t many you can trust,” said Brucker, who represents 400 condo and co-op boards. Brucker said his clients understood parking revenue was down but struggled to figure out by how much. “There certainly was a decrease in business,” he said. “When we asked for figures, no company would show us their books.” Standard Parking’s owner, SP Plus Corp. of Chicago, is expected to post a 28% drop in quarterly earnings when it reports them. Icon, owned by private-equity firm HPS Investment Partners, is preparing for the expected postCovid-19 surge in commuters driv-
The tools you need now to navigate the crisis With small businesses needing to adjust during these uncertain times, Crain’s Business Toolbox offers critical information and resources to help businesses not only survive, but thrive.
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started to bring back online some surgeries and other services that were put off to add Covid-19 capacity. Such services bring in much-needed revenue for facilities. Returning to this version of normal means transitioning doctors and nurses back to their pre-Covid-19 roles. To do so, they will have to help staff head off mental health concerns before they lead to burnout or have grave outcomes. “The goal is to keep people as safe and supported as they can be,” Brotman said, “so they stay in the battle.” Shawna Townsend, a clinical nurse leader at Hospital for Special Surgery, oversees care for patients with underlying conditions when they have orthopedic surgery. Townsend, 38, is used to complex patients, but the Covid-19 cases she and her team took on to help ease the strain on other hospitals were different. “When you see a patient who is struggling to breathe because their lungs are being invaded by this virus, that’s not an easy thing to see,” Townsend said. “Even having a conversation is a luxury they don’t have. “We’re not used to patients dying at HSS,” she added. It’s been overwhelming at times—“I’ve cried,” she conceded. Talking to her team members and being there for them in return has helped. “We want our health care workers who have had to be redeployed to the front lines to feel good physically and emotionally to go back to their prior responsibilities,” said Dr. Dennis Charney, a psychiatrist and dean of the Icahn School of Medicine at Mount Sinai. “These workers
FROM PAGE 1
Herrera, a 47-year-old father of three, was deployed to the front lines—and he hasn’t been the same since. He tends to patients young and old on a Covid-19 inpatient floor. The past two months have been the most challenging of his career. The work is physically grueling, but that’s not what troubles him. “I don’t think anybody can ever prepare you as a physician for the amount of grief and death that’s happened here during the pandemic,” Herrera said. “The worst day on my watch, we had four deaths. We’re running in there, running to codes, doing chest compressions to save the lives of the people we’re caring for.” Far too often, nothing works. “One of the toughest things,” Herrera said, “is then calling family members who haven’t seen their loved ones in weeks because they haven’t been allowed to come into the hospital and sharing their grief when you tell them their loved one has passed away.” He worries about his own family as well. “My kids are 12, 10 and 6,” he said. “My wife is also on the front lines; she’s an anesthesiologist intubating patients.” Herrera fears he may bring home the virus. He strips down in his garage, then gets straight in the shower. He agonizes over refusing to see his mother, who had a stroke in August, as she recovers with other family. But he wants her to live. His fears are not unique. Some frontline workers have been staying in hotels to protect their families, but the isolation can be difficult to bear. “There’s not a single person I’ve talked to who’s been on an inpatient unit who hasn’t felt a little bit to a great deal overwhelmed by the experience,” said Dr. Andrew Brotman, executive vice president and vice dean for clinical affairs and strategy, and chief clinical officer at NYU Langone Health.
HERRERA fears bringing home the virus to his family.
Although much about the novel coronavirus remains unknown, it’s proved a tactical opponent that compounds stress for frontline health care workers. “The nature of this situation is different than others because there’s no clear end,” Brotman said. “It’s happening every single day, there is a great deal of uncertainty, the amount of death on inpatient units is about tenfold the usual amount, and the number of people who have transferred into roles they didn’t previously have is very, very high. It’s much like the anxiety of an active military battle.” As the number of Covid-19 patients begins trending downward, doctors and nurses have fleeting moments to reflect on the war they’ve waged. The death toll has been hard to handle, and there’s no time to rest. Outsiders may think frontline health care workers will receive extended breaks after marathon shifts, but it’s not that simple. Patients still need care—and workers have to get back to their everyday routine. In recent weeks hospitals have
MOUNT SINAI HEALTH SYSTEM
Active battle
lies, and die so rapidly and in such large numbers, will have the potential to lead to the symptoms of PTSD.” That can include re-experiencing traumatic events, a numbing of emotions, a shortened sense of the future and nightmares, she said. Even behavioral health care workers—particularly those in residential facilities—have experienced stressors and exposure from the crisis. “My concern is that this is going to leave us with a group of staff members who are going to have eventually some form of PTSD,” said Dr. Mark Jarrett, chief quality officer and deputy chief medical officer at Northwell Health. “If we don’t try to rectify that now and there’s a resurgence [of Covid-19], it will only make it worse.” Providers who are stressed, burned out and overtired can unintentionally make mistakes as well. “This is as much a quality and safety issue as it is a human issue,” Jarrett said. Dr. Eric Wei, vice president and chief quality officer at New York City Health and Hospitals, agreed. “When people were saying, ‘What happens when all of your health care workers are out sick, contagious with the virus? Who’s going to be standing ready at the emergency department doors, in the ICUs to treat patients?’ The same thing applies for mental health.” Wei, who has personally cared for Covid-19 patients, says he’ll never be the same from a clinical or leadership perspective. “This is definitely unprecedented in my lifetime,” Wei said. “I know others have compared this to the HIV/AIDS epidemic. Working in the [emergency department] during this surge, there were things I never could even have dreamed of in my worst nightmares. It just felt like drinking out of a fire hose— waves and waves of sick patients coming in and a feeling of hopelessness.” He acknowledged that he’s received extensive medical training to diagnose and provide treatment to all manner of patients. But some kept getting worse and worse no matter what was done. “They would be talking in full sentences and then a few hours later, be intubated,” Wei recalled. He knows his colleagues feel the same. “I think my biggest fear is not just losing our health care heroes to the virus,” he said, “but losing them to the emotional and psychological trauma of that.”
“MY BIGGEST FEAR IS LOSING OUR HEALTH CARE HEROES TO PSYCHOLOGICAL TRAUMA” are critical to providing care to so many millions of people.” Sustaining critical levels of personnel will mean getting ahead of serious mental health conditions, burnout and suicide. “We know that post-traumatic stress disorder comes in many different forms,” said Dr. Jeanie Tse, chief medical officer at the Institute for Community Living, a nonprofit behavioral health provider. “I think a lot of those folks who have seen people die without their fami-
Providing support At Health and Hospitals, a Covid-19 relief fund for frontline health care workers has raised
SUNY DOWNSTATE
HEALERS
more than $20 million. It’s being used to provide clean scrubs, meals and hotels for staffers who don’t feel safe returning home. It’s also being used to bolster the health system’s existing Helping Healers Heal program, which provides inhouse services and referrals for doctors and nurses dealing with traumatic events. Dr. Bonny Baron, an emergency department physician at Kings County Hospital, said just knowing workers from the program have been present at the facility has been comforting. “At one point we were in the middle of a surge, and the liaison for the program just walked in with a box full of water,” she recalled. “That’s all we needed at that point in time.” Baron recently lost several of her longtime colleagues—whom she calls her family—to the virus in a single week. “We just got an email from [Dr. Mitchell Katz, president and CEO of Health and Hospitals] about a program with the Department of Defense that will use combat stress-management techniques for us,” she added. “People are going to suffer from PTSD. It’s prolonged stress; you can’t identify acutely how this is going to affect people later.” At Northwell Health, Jarrett said mental health support will be a priority of the health system’s recently assembled recovery group. Additionally, the health system has brought in volunteer staff from the University of Rochester and Intermountain Healthcare in Utah to provide relief to frontline workers. “Having them come here was emotionally and physically what our frontline staff needed,” said Dr. Nancy Kwon, vice chair of the Department of Emergency Medicine at Long Island Jewish Medical Center, which is part of the Northwell system. “You can’t even explain what [frontline staff ] have carried on their shoulders and seen over
the last two months. This has been analogous to a war that we are fighting, and it does at times feel like that.” Break rooms and outdoor spaces where doctors and nurses can rest free of their personal protective equipment for a few minutes have helped. So have the presence of psychiatrists in the emergency departments and the availability of confidential Zoom sessions. “The support has been amazing,” she said, “but I think it’s going to be [important to be] checking in with people and recognizing at some point what is going to be the longterm impact of all of this.” Mount Sinai has created a new center aimed at addressing the psychological impact of Covid-19 on frontline health care workers. It will focus on screening, treatment and research. Charney said the center is being funded by philanthropy as well as by the health system and medical school. He said it’s a substantial investment but declined to provide the exact dollar amount. New York-Presbyterian, which recently experienced the suicide of an emergency department physician who had taken a leave of absence after treating many Covid-19 patients and contracting the virus herself, has been offering virtual mental health services to all of its employees at no cost. Services include screening for stress, anxiety and depression; referrals to additional resources if needed; and 24/7 access to psychiatrists. The expanded access is expensive, said Dr. Philip Wilner, senior vice president and chief operating officer of New York-Presbyterian Westchester Behavioral Health Center, and a professor of clinical psychiatry at Weill Cornell Medicine. To date the services have been dependent on volunteerism. But there is a commitment from leadership to sustain them. NYU Langone’s efforts have included virtual team meetings and
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scre who “E stag ma sam
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screening for those staff members who may need care. “Everything we’re doing at this stage is intended to minimize stigma and build resilience but at the same time provide a safety net for
the small minority of people who are so overwhelmed that they need some sort of psychiatric care,” said Dr. Charles Marmar, professor and chairman of the Department of Psychiatry at NYU School of Medicine. It’s also important to consider that research has found that influenza-like viruses can trigger depression. So health care workers who have contracted Covid-19 themselves might be at added risk. SUNY At SUNY DownDownstate state Health Scilooks to help ences University, frontline staff Dr. Ayman Fadeal with nous, chairman of making tough psychiatry, said decisions. efforts have focused on engaging frontline doctors and nurses and helping them deal with times when they’ve had to do things that run contrary to what they believe in and that they found hard to deal with. During the current crisis, doctors and nurses have been told not
to allow family members to visit patients in the hospital and in nursing homes, for example. And often their efforts to save patients have proved futile. “Our very best isn’t necessarily reflected in the patient outcomes, and that’s something we’re not used to,” said Dr. Mafuzur Rahman, vice chairman of the Department of Medicine and the director of palliative care at SUNY Downstate. “It’s devastating.” Care during the crisis goes against what nurses have been trained to do, said Jacqueline Witter, SUNY Downstate’s associate administrator and director of nursing education and research. “Patient-centered care. That’s what is embedded in our daily routine—patients and patient families,” Witter said. “That’s what’s been taken away.” Witter, Rahman and other members of leadership have been working hard to engage frontline doctors and nurses in virtual group support meetings. One important aspect, Witter said, is cultural background. Many of SUNY Downstate’s frontline workers are from the Caribbean, like Witter, and many others are African American. Some have been hesitant to partake in psychological support—traditionally not sought in some segments of the black community—relying instead on family members and prayer. However, it’s important to involve all of the institution’s frontline
workers and inform them of the importance of group support meetings, Witter said. SUNY Downstate is offering one-on-one virtual support sessions with therapists and a 24/7 hotline for those feeling emotional concerns or distress. “These are the people who are actually doing the fighting,” Fanous said. “I view us as the medics to help them heal, so they can get back in the fight.”
Far from over Wilner of New York-Presbyterian pointed to a recent study from Wuhan, China—where the virus emerged—as a precautionary tale. The study found that, when conditions started to improve, 25% of the overall workforce didn’t return, Wilner said. Hospitals will need to figure out how to rest their frontline workers, Wilner said. Doctors and nurses will have to be re-energized and ready to go back to normal work. “We don’t know when this is going to end, and that weighs very heavily on everybody,” Wilner said. “This is my new normal? My new life? My new career? That is very hard to bear. That sometimes leads to despair, and we have to try and keep people from despair. That’s the big challenge now: to keep people from despair.” Townsend of Hospital for Special Surgery—who hasn’t seen her mother, sister or nephew since the crisis started—likened her personal experience to being on a roller
coaster. She tries to brace for the downs and hold on to the ups as long as she can. “The beautiful part is when you clap them out,” she said of the send-offs for patients who have recovered, which are marked by applause from the full staff. “The patients love it.” Witter at SUNY Downstate sings “Lean on Me” to her fellow nurses over the speaker system. She also recites a “A Nurse's Prayer,” which begins: “Give me strength and wisdom when others need my touch.” For Herrera at Mount Sinai, the ups include helping his kids with math problems while they do schoolwork from home. That’s despite new elementary math methods being harder to problem-solve than most hospital work, he said. Herrera also lauded the unsung heroes of the pandemic—the volunteers who are making masks and cooking food for doctors and nurses. “I can’t stress how important it is that when you try to find 10 seconds to eat, there’s food there,” he said. While there are glimmers of hope and the occasional laugh, none of the city’s frontline health care workers will be able to erase from their minds what they’ve been through. “This hits everyone across the board,” Herrera said. “Our residents, our nurses are working three or four shifts in a row. “This was truly a war zone.” ■
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CORONAVIRUS ALERT LAYOFFS
Marriott East Side, ViacomCBS making major cuts The East Side Marriott’s general manager, David Salcfas, said that although most employees are furloughed, the ownership of Marriott East Side is in conversation as far as its future goes. Hotel occupancy in the U.S. declined to 21% during the week ending April 11.
BLOOMBERG
Realtor.com
month, announcing layoffs would begin Aug. 3. All Marriott hotels in New York City are temporarily closed during the governor’s “on pause” order.
TAX
FROM PAGE 2
their job since the coronavirus shutdown measures were imposed by the state in March, many of those residents have received a Cares Act check or are receiving unemployment insurance. Others were furloughed or paid through Paycheck Protection Program provisions. Millions of other New Yorkers are now working from home and are thus able to make some, if not all, of their rent. But commercial tenants, such as retail stores and other small businesses, not only have been ordered to shut their doors, but many also were already struggling to pay high rents. Many such businesses—including restaurants—simply do not have the foot traffic or consumerspending patterns to justify keeping their doors open. “Commercial’s still a disaster,” said Jay Martin, executive director at the Community Housing Improvement Program. “That is dragging down multifamily owners who have commercial on the bottom floor and residential on the top floors.” “This is a big problem for a lot of owners not collecting that commercial rent,” said Frank Ricci, director of government affairs at the Rent Stabilization Association. “A lot of that commercial space winds up subsidizing the rent-regulated space above.” Aside from the fear that their commercial tenants will go bellyup, building owners are concerned that no extension has been given on the July 1 city property tax payments. “It’s moving along like nothing is
Real estate listing site Realtor.com has been hit with job cuts that will impact every office and business unit across its organization. The Santa Clara, Calif.– based company, which is operated by Move Inc., a subsidiary of News Corp., made staff reductions last week as part of an ongoing organizational realignment. “While the impact of Covid-19 is a factor in these changes, they are also part of a larger realignment process as we focus on creating best-in-class experiences for real estate profeshappening,” said Lee, who added that any existing fines or tickets on buildings made since March 20 are also continuing to be assessed, regardless of the underlying economic emergency or the ability of owners to pay. “It is absolutely unconscionable to do this to small-building owners and small businesses,” he said. Lincoln Eccles, who owns a 14unit, rent-stabilized building in Crown Heights, suggested the city reevaluate its tax penalties or push back the due date to help small landlords. “The city has to give landlords like myself breathing room,” he said. “The money’s not there if we haven’t reduced constraints.” The biggest constraint on building owners is property taxes, which are determined each year by the
sionals and the consumers we serve,” said a Move spokeswoman. Although the number of layoffs could not be confirmed, the job cuts were spread across functions and levels. The company has offices in Santa Clara, New York, Austin and other locations, and has about 1,400 employees across its operations. While it is unclear whether laid-off employees will be able to retain any benefits, the company is “focused on taking the best possible care of our colleagues and supporting them as they move on from Realtor.com to their next opportunities,” the spokeswoman said.
RTW Retailwinds Another retail company bites the dust. RTW Retailwinds, the retail chain formerly known as New York & Company, has laid off 192 employees. The retailer filed a notice with the state Department of Labor announcing layoffs that would affect employees at the company’s corporate office, located at 330 W. tions, especially considering how they have burdened landlords with pro-tenant reform laws, which have made it costlier to repair the city’s 900,000 rent-regulated units. “The laws that passed last year were nonsensical,” Lee said. “The way the laws were changed were made with the idea of keeping people in their home, but the opposite took place. A lot of people in the city are not keeping apartments rentable anymore.” Even more concerning to building owners are the calls by politicians, including Rep. Alexandra Ocasio-Cortez, for rent strikes. Mayor Bill de Blasio has urged the Rent Guidelines Board to issue a rent freeze, which they voted to do for some units last week. Landlords argue that such suggestions are shortsighted and don’t take into account the economic damage such measures would cause, including in municipal funding. Residential rents not only pay for services in a building, the landlords point out, but they also go toward paying the mortgage and real estate taxes for the city and the state, ultimately providing funding for teachers and public safety. “The people who can pay their rent will keep this city going,” said Charles Gedinsky, who owns a 46unit building in Queens. “I’m hearing and reading about the rent-strike business. That would be devastating to the industry,” said Alan Hammer, a real estate lawyer at Brach Eichler and the owner of 80 buildings. “If you tell someone they don’t have to pay their rent, you can rest assured the landlord won’t pay his taxes.” ■
“THEY NEED TO FREEZE THE PROPERTY TAX RATE GOING BACK ONE YEAR” city Department of Finance. The city assesses each Class 2 property—apartment buildings—and determines how much each owner should pay. That assessment figure is then multiplied by the annual rate set by the City Council in order to calculate each building’s property tax. “This is not a business that runs on big margins,” Ricci said. “The mayor dodges this question, but what they really need, at a minimum, is to freeze the property tax rate and the assessments going back one year.” Some owners said they believe it’s unrealistic to expect the city and the state to change their tax regula-
34th St., prompted by the Covid-19 pandemic. Layoffs began May 2 and will run through June 1. The company announced in late March that it would close all New York & Company stores as well as its Fashion to Figure stores in response to the pandemic. The retailer also furloughed all store employees, who received pay for their scheduled shifts, and a portion of its home office associates, giving the retailer an approximately 80% reduction in weekly payroll expenses, according to the company. RTW Retailwinds has struggled to find its footing in the past few years after transforming and rebranding to a multibrand lifestyle company. The company announced at the end of last year that it would shutter 30 stores, on top of the 14 stores it had previously shut down.
The New York–based company laid off employees across the organization as part of its ongoing integration between Viacom and CBS, which merged in December. ViacomCBS Chief Executive Bob Bakish sent a companywide memo to employees last month in which he stressed that even before the pandemic, the company was “already in a period of significant change to integrate our newly combined company,” and “throughout this transformation, we want to be as supportive of our employees as possible, particularly given the circumstances we’re in.” The round of layoffs includes Tom Hayden, president of the Smithsonian Network, and Sarah Babineau, Comedy Central’s head of content and creative enterprises, according to news site The Wrap. ViacomCBS had filed a worker adjustment and retraining notification with the state Department of Labor in late February announcing layoffs across 11 divisions that would affect 117 employees between April 15 and June 30. — Lizeth Beltran
ViacomCBS A wave of layoffs has hit media conglomerate ViacomCBS, where at least 100 employees were cut.
BEEN
GETTY IMAGES
Layoffs continue to hit the hotels and hospitality industry. Marriott International will lay off 316 employees at its East Side location, 525 Lexington Ave. The company filed a notice with the state Department of Labor this
BUCK ENNIS
Marriott International
ANGLIN
Anglin, Been to head up council on real estate and construction BY RYAN DEFFENBAUGH
D
eputy Mayors Vicki Been and Laura Anglin have been picked to lead the de Blasio administration’s real estate and construction advisory council on reopening the city's economy. The mayor’s office has not named other industry insiders tapped to join the group. Other councils, the office said, will focus on small businesses, large businesses, labor, arts and tourism, faith-based organizations, nonprofits, health care, roads, education and vocational training. “We can take all the best information and come up with the right game plan, but we need to run it by the right people in each business, each sector, who understand their workplaces best,” Mayor Bill de Blasio said.
Each group will have 20 to 40 members and be led by a deputy mayor and designated industry leaders, the mayor said, though he has yet to name names for all the councils.
Start it up The mayor said the groups will focus on such matters as addressing the proper protective equipment for each industry and how to use temperature checks to find potential Covid-19 cases among employees. As part of the same reopening initiative, the mayor has named his wife, Chirlane McCray, to oversee a task force aimed at alleviating inequality. He stressed there is no “on/off switch” for the economy. “This is a case where a little moderation would be good for all of us,” he said. ■
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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 8.
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 180,000. 200,000
20,000
New York City
Long Island
Lower Hudson Valley
150,000
181,783
15,000
8,196 100,000
10,000
74,035
50,000
5,000
57,007
326 0
March 16
May 7
26
+50
March 3
May 7
55
%
CONSECUTIVE DAYS in which total intubations have dropped. Earlier in the pandemic, the intubated count rose for 24 straight days.
0
%
MINIMUM AMOUNT by which hospitals needed to increase capacity
PORTION of the state’s positive cases that are in the city
330,407
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 and 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
600,000
New York City
Long Island
Lower Hudson Valley
7%
530,578 Manhattan
500,000
13%
31%
400,000
300,000
221,029 22%
200,000
199,558
100,000
0
The Bronx March 3
27% Brooklyn
May 7
29
%
RATE of New York’s population that has been tested
21,045
NUMBER of deaths from Covid-19 in the state
89
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 17
%
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. 22 | CRAIN’S NEW YORK BUSINESS | MAY 11, 2020
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OUT OF OFFICE
Where to get a good meal while you hunker down BY CARA EISENPRESS
A
s the city settles into its second month of hospitalityindustry closures, many restaurants have rejiggered their operations to find a rhythm in providing takeout to residents still stuck at home and hold on to a portion of their revenue. Some have simplified their menu, while others have expanded into meal kits containing the ingredients to make crowd favorites. Below are 10 restaurants that are still open for your orders. Service times and menu items may vary, so please check the eateries’ websites and social-media pages for the most up-to-date information.
BEYOND SUSHI.
BEYOND SUSHI
DINOSAUR BBQ 4 to 9 p.m. Monday and Tuesday; noon to 9 p.m. Wednesday through Sunday The barbecue mainstay is offering a limited menu of favorites, such as ribs and barbecue chicken, brisket and pork, for takeout. The latter three can come
FISH CHEEKS Noon to 8 p.m. Wednesday through Sunday The NoHo restaurant specializes in Thai seafood dishes, such as coconut crab curry, crab fried rice and steamed fish with Thai herbs. To make up for income lost during the moratorium on fullservice dining, the restaurant is raising money for its 40 employees through GoFundMe. Customers also can purchase T-shirts and buy gift cards to use in the future as well as donate to health care workers’ meals through Venmo. 55 Bond St. JEFFREY’S GROCERY 10:30 a.m. to 6:30 p.m. daily Gabriel Stulman’s mini empire of West Village restaurants, including Joseph Leonard and Simon and the Whale, are now open as a grocery store and prepared-foods shop out of one of the restaurants, Jeffrey’s Grocery. On the menu
are breakfast and side-dish options. For lunch and dinner, shoppers can buy a whole lasagna; a Mediterranean snack kit with hummus, marinated feta cheese, marinated olives, za’atar, labneh, pistachios and pita; and a spatchcocked chicken kit that comes with romesco sauce and sautéed broccolini. Cooking instructions for each kit can be found on the company’s website. 172 Waverly Place JONES WOOD FOUNDRY 3 to 5 p.m. Tuesday, Wednesday and Friday For those with the foresight to order by 6 the night before, Jones Wood will make a variety of savory pies, such as lamb and rosemary, curried pork vindaloo and fisherman’s pie. Each serves four to five people and goes well with beer, which is also available. Delivery covers a small area—East 60th Street to East 86th Street between FDR Drive and Park Avenue—or orders can be picked up. The restaurant also offers some delivery in Larchmont and Rye in Westchester County. 401 E. 76th St.
LEVAIN BAKERY Most locations are open 8 a.m. to 8 p.m. daily The bakery, known for its massive cookies in such flavors as chocolate chip–walnut and chocolate-peanut, is open for pickup and delivery. Nationwide shipping is also available. 351 Amsterdam Ave.; 1484 Third Ave.; 340 Lafayette Street; 2167 Frederick Douglass Blvd.; 354 Montauk Highway, Wainscott, Long LEVAIN BAKERY Island
LIEBMAN’S DELI Noon to 8 p.m. daily The Riverdale restaurant offers classic Jewish delicatessen favorites such as chicken soup with noodles and matzo balls, pastrami sandwiches and thickcut fries. To order, customers can text LIEBMANS to 33733 to download the restaurant’s app or use Grubhub. 552 W. 235th St., Bronx NAMI NORI 4 to 9:30 p.m. daily The hand roll restaurant, which opened in the fall, started doing delivery only in mid-March but had to shutter later that month. Now it’s back at it, delivering hand rolls in varieties such as tuna poke, spicy sea bass, ginger scallion squash and lobster tempura. A custom, eco-friendly wrapper around the nori keeps it separate from the rice’s moisture, ensuring the rolls stay crisp. 33 Carmine St.
NAMI NORI SEBASTIAN LUCRECIO
JONES WOOD FOUNDRY
MELISSA KIRSCHENHEITER
CARACAS AREPA BAR Noon to 8:30 p.m. daily After shuttering initially, Caracas has reopened its East Village location for pickup and delivery through its site and Doordash. The menu features Los Muchachos, which comes with grilled chorizo, spicy white cheese with jalapeños and sautéed peppers, and La Pelua, which is made of shredded beef and cheddar cheese. An at-home kit contains the ingredients to bake arepas, filling them with meat, cheese or beans. 91 E. Seventh St.
as platters or sandwiches. The sides run from coleslaw and whipped sweet potatoes to barbecue fried rice and macaroni and cheese. Offerings also include burgers, barbecue cheese steaks and makeyour-own salads. 700 W. 125th St.; 604 Union St., Brooklyn
JONES WOOD FOUNDRY
BEYOND SUSHI Around 11:30 a.m. to 9 p.m. (hours vary by location) The all-vegan sushi restaurant is still creating its colorful, fruit- and vegetable-filled rolls. There’s the Spicy Mang, which is made with black rice, avocado, mango, cucumber, vegetable slaw and toasted cayenne sauce, and the Sweet Tree, which has black rice, avocado, sweet potato, alfalfa sprouts and toasted cayenne sauce. Hot main dishes include spanakopita and spaghetti with vegan “meatballs.” Vegan ice cream is available by the scoop. The restaurant has partnered with the nonprofit Support and Feed so customers can make a donation to health care workers. 134 W. 37th St.; 1429 Third Ave.; 62 W. 56th St.; 229 E. 14th St.; 75 Ninth Ave.; 215 Mulberry St.; 70 Pine St.
STONE PARK CAFÉ Noon to 9 p.m. Monday through Friday; 11 a.m. to 3 p.m. and 4 to 9 p.m. Saturday The Park Slope go-to, especially for brunch, has kept on cooking its Stone Park burger, wedge salad and Swiss chard raviolini for the neighborhood. 324 Fifth Ave., Brooklyn MAY 11, 2020 | CRAIN’S NEW YORK BUSINESS | 23
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