Crain's New York Business

BANKING WIN Piermont secured PPP funds for clients while larger banks failed

ASKED & ANSWERED Legalizing marijuana could be post-pandemic financial boon PAGE 7

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MAY 25, 2020

CORONAVIRUS ALERT MORE INSIDE

UP IN THE AIR: A combination of Covid-19 rules and a slowdown in the economy could dampen construction activity in the city.

BLEAK PICTURE Real estate market could take years to recover PAGE 2 THUMBS-DOWN Shareholders reject executive pay package at Investors Bancorp PAGE 4

GETTY IMAGES

FALSE POSITIVE SEC cracks down on bogus Covid-19 home test. PAGE 6

W

QUIET SKYLINES

Construction industry ponders how to keep cranes busy in a post-pandemic city

hile many New York City industries have shuttered completely from the pandemic, the construction industry has held on.

Although construction may not meet its pre-pandemic projections for this year of $65 billion in projects, there are more than 8,000 active construction sites in

BY RYAN DEFFENBAUGH

NEWSPAPER

VOL. 36, NO. 19

© 2020 CRAIN COMMUNICATIONS INC.

See SKYLINES on page 18

OUT OF OFFICE

WHERE TO PLACE YOUR NEXT TAKEOUT ORDER PAGE 23

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INSURANCE REVOLT Restaurant leads class-action suit over pandemic claims PAGE 16

7 13%

31%

22% 27%

TRACKING THE VIRUS Updated numbers in the fight against Covid-19 PAGE 17 LATEST LAYOFF Brooks Brothers closing Sunnyside tie factory, idling 136 PAGE 21

5/22/20 6:00 PM

CORONAVIRUS ALERT

Doubts about city’s ‘long-term attractiveness’ will put a drag on real estate recovery Budget watchdog predicts city employment levels won’t return until 2024

C

ity officials are not counting on a quick recovery for the real estate industry, which could lose a third of its annual output this year because of the pandemic.

Total taxable real estate sales, both commercial and residential, will drop to $65 billion this year, from $100 billion in 2019, according to a report from the city's Independent Budget Office.

“In the wake of this crisis, the long-term attractiveness of New York City as a place to live and do business is very much an open question,” the report said. “At a minimum, prices of both commercial and residential property are likely to remain below the record-breaking levels of recent years for a considerable period.”

The independent report paints a bleak picture for the city’s chance at a so-called V-shaped recovery, in which economic activity quickly resumes and overtakes losses from the start of the pandemic. The IBO does not expect the city to reach its pre-pandemic employment levels until 2024.

BLOOMBERG

BY RYAN DEFFENBAUGH

NOMINATIONS

Even by that time, much of the real estate industry could lag behind the city's general economy.

The report expects 2024 personal income and general sales tax collections to exceed 2019 levels, but revenue will still be negative from pre-pandemic totals for taxes on property transfers, mortgages and hotel room bookings.

Ugly truth One early indicator for the trouble to come is the 1% to 1.5% tax the city collects on real estate transfers—sales of commercial buildings and homes. The tax revenue sunk to $43 million in April, compared with $118 million in March. Transfer tax revenues will fall a projected 22% this year, followed by a 19% loss in 2021, according to the report. The office expects commercial sales will pick back up in 2022, followed

more gradually by the residential market.

The city charges a 4% toll on the base rent of leases for restaurants and retailers south of 96th Street in Manhattan. Turmoil in the leasing market has the IBO projecting a 6% decrease during the next two years for those revenues, known as the commercial rent tax.

Revenue from the city's roughly 6% tax on hotel room bookings will sink 24% this year, according to the IBO, and then 7% from those totals in 2021.

Even with a slow recovery starting in 2022, city prognosticators expect 2024 hotel bookings to be down near 8% from the total five years earlier.

“In the coming years, fewer tourists will favor the city as a vacation destination, even after there is a resolution to the pandemic,” the report said. “Moreover, we do not expect business travel to return to pre-pandemic levels; businesses have gained experience using telecommunications technology, improving their ability to operate remotely and reducing spending on travel.” ■

N DO YOU KNOW A HEALTH CARE HERO IN NEW YORK? Crain’s is continuing to search for outstanding professionals in the health care community in the New York metro area. This year, due to the Covid-19 crisis, we are opening nominations to include men, as well as women and small teams related to the virus response.

Crainsnewyork.com/ notablehealthcare2020

Commercial Rent

Mortgage Recording

Hotel Occupancy

Real Property Transfer

5.84% 5 -3.75%

0 -5

-7.68%

-10 -11.21% -15 -20 -25 -30 -35 -40

2019

2020

2021

2022

2023

2024

SOURCE: New York City Independent Budget Office

Housing Court begins virtual eviction conferences for backlogged cases

BY NATALIE SACHMECHI

JUNE 12

TAX REVENUE

ew York City Housing Court will begin addressing eviction cases virtually, Judge Lawrence K. Marks said last week.

Eviction conferences are being scheduled to help the court cut down on the backlog of cases that will flood the dockets once it resumes normal operations, a press release said. Soon after the announcement, requests for confer-

tween lawyers and a judge to decide whether a case can be settled or if it needs to be litigated. If a tenant doesn’t agree to a conference, it’s no dice for the landlord, and a hearing is scheduled at a later date. Conferences are also off-limits for cases filed during the pandemic, and judges require both sides to have representation.

In a benefit for tenants, right now no one can force them to do anything, whether it’s vacating a home or appearing for a conference, said R o b e r t Rosenblatt, an attorney who represents clients on both sides of such cases. “It’s never in the tenant’s interest to go forward on a regular eviction case,” he said.

“When you’re representing a tenant, time is your friend.”

His landlord clients, who are forbidden from evicting tenants until

“IT’S GOING TO BE A DISASTER FOR LANDLORDS AND IT’S GOING TO BE A PARTY FOR TENANTS” ences with a judge began flooding in from landlords eager to put their issues with tenants—which had been on hold during the city’s lockdown—to rest.

Landlords, however, shouldn’t get too excited. A conference is not a hearing—it’s a discussion be-

Aug. 20 while Gov. Andrew Cuomo’s moratorium is in place, are anxious to be heard. “Each month that goes by, the landlord is further and further behind in rent collection,” he said.

House party Despite the citywide lockdown, housing court has been open for emergency hearings for illegal tenant lockouts and repairs for heating or hot water. In April judges began issuing written decisions on nonessential matters that had been heard before.

Tenant advocates worry that the virtual conferences are a step toward housing court resuming normal operations and enforcing evictions.

“There’s still no legislation right now to help people that can’t pay rent,” said Ava Farkas, director of the tenant advocacy group Met Council on Housing. “It’s going to lead to a lot of confusion for tenants and people not understanding how

things are moving forward.”

Many of the people who appear in housing court are low-income tenants, Farkas said. “The courts should not be doing anything that could potentially increase the ranks of homelessness,” she added.

The group is also pushing for a citywide rent strike and mortgage debt forgiveness. Landlords have retaliated with a strike of their own, threatening to withhold property taxes, though the governor said he is working with banks to provide relief for them too.

Still, it’s going to be a long while before any tenants are actually evicted, Rosenblatt said. When the city does reopen, courts will continue to adhere to social-distancing rules, which Rosenblatt said will cut a day’s 50 usual cases down to five or 10.

“I do not see this straightening itself out or becoming manageable until next year,” he said. “It’s going to be a disaster for the landlords and it’s going to be a party for the tenants.” ■

Vol. 36, No. 19, May 25, 2020—Crain’s New York Business (ISSN 8756-789X) is published weekly, except for bimonthly in January, July and August and the last issue in December, by Crain Communications Inc., 685 Third Ave., New York, NY 10017.

Periodicals postage paid at New York, NY, and additional mailing offices. Postmaster: Send address changes to: Crain’s New York Business, Circulation Department, PO Box 433279, Palm Coast, FL 32143-9681. For subscriber service: call 877-824-9379; fax 313-446-6777. $3.00 a copy; $129.00 per year. (GST No. 13676-0444-RT) ©Entire contents copyright 2020 by Crain Communications Inc. All rights reserved.

2 | CRAIN’S NEW YORK BUSINESS | MAY 25, 2020

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CORONAVIRUS ALERT

The little bank that could comes through for small business When bigger rivals faltered, Piermont Bank secured SBA loans for customers

BY AARON ELSTEIN

O

ne would think that a 10-month-old bank would be at risk of being swallowed by the coronavirus pandemic along with so many other businesses in New York City.

But just the opposite has happened. Piermont Bank, New York’s first new bank in 11 years and one of the only ones in the country with both a female chief executive and a female chairman, has thrived during the past two months.

PIERMONT BANK

CAI-LEE heads Piermont Bank, one of the few in the country to have both a female CEO and a female chairman.

“There is a time and place for everything,” said board member Janie Barrera. “It was time for a bank like this.”

Bank CEO Wendy Cai-Lee said Piermont was able to secure Paycheck Protection Program loans for 99% of applicants (she would not say how many) in the first round, and the bank is now attracting legions of small-business customers. The See BANK on page 19

REAL ESTATE

Why apartment rents are still rising despite a massive drop in leasing

THE DIME

BY RYAN DEFFENBAUGH month, using the time to set up interactive virtual tours for each type of unit among the 177 apartments. Marketing materials were redrawn to promote the building’s acre of private outdoor space, “with plenty of room to

CITYREALTY.COM

F

or The Dime, a 23-story apartment tower in Williamsburg that launched leasing last week, the pandemic forced a new game plan.

Developers Charney Cos. and partner Tavros Holdings pushed back the opening by a

See RENTS on page 4 MAY 25, 2020 | CRAIN’S NEW YORK BUSINESS | 3

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FINANCE

Uprising at Investors Bancorp as CEO’s pay gets thumbs-down from shareholders The New Jersey-based bank saw net income fall by $15 million last year

T

he pay is too darn high for Investors Bancorp executives. At least that’s the view of a majority of Investors’ investors.

Last week 54% of shareholders voted against the pay packages awarded to Chief Executive and Chairman Kevin Cummings and other officials. It was the latest skirmish in a lengthy battle over compensation at the bank, and the vote represents a rare rebuke, considering only 2% of U.S. companies have seen their executive-pay plans shot down by shareholders this year, according to figures from consulting firm Semler Brossy.

Short Hills, N.J.–based Investors has about 150 branches, including around two dozen in New York City. It has $27 billion in assets, and its ads have featured former NFL stars Phil Simms and Boomer Esiason.

The 94-year-old institution was a depositor-owned thrift that converted to a public company and sold more than $2 billion in shares in 2014.

After that deal, Cummings and other insiders awarded themselves more than $50 million worth of restricted shares and stock options. A shareholder sued, arguing the awards were excessive. The shares

RENTS FROM PAGE 3

socially distance.”

There was one thing that didn’t change in that time: rent prices.

The $2,700-per-month studios and roughly $5,500 two-bedrooms fit within the original pricing plan for the project, said Matthew Villetto, an executive vice president at Douglas Elliman who is leading sales at the building.

Even if agents can’t lead a tour of the property, The Dime’s developers are betting that a lack of new

and options were surrendered as part of a settlement last year.

The old awards were replaced with new ones that have proved no less problematic and led to the shareholder vote.

No performance targets Although the new grants were lower in value, pocketing them didn’t require executives to meet performance targets.

“Equity awards of substantial magnitude, even when made in replacement of surrendered awards, should carry rigorous performance

Holding steady Rents have kept steady citywide, despite new leasing falling by nearly 70% last month in both Manhattan and Brooklyn. The average monthly cost for a Manhattan rent-

CUMMINGS

“EQUITY AWARDS SHOULD CARRY RIGOROUS PERFORMANCE CRITERIA” vesting criteria,” said Institutional Shareholder Services, an influential adviser that recommended that Investors’ investors vote against the pay plan.

Egan-Jones Proxy Services added, “The company’s compensation policies and procedures are not effective or strongly aligned with the long-term interest of its shareholders.”

Shareholders also may have been rankled by Investors’ board’s essenal climbed to $4,500 in April, up 4% from March and 7.4% from April 2019, according to a report from Douglas Elliman. Average rents in Brooklyn climbed 10% year over year to reach $3,500 last month.

Jonathan Miller, president and CEO of Miller Samuel and author of the report, said landlords have focused on cutting deals to keep their current tenants.

“The expected discount on rental prices by landlords due to the pause in the economy only appears to be occurring on the renewal side of the rental market, which represents about two-thirds of overall leasing activity,” Miller wrote.

Renewal deals skew toward older and cheaper apartments and are not as easily tracked by appraisers such as Miller. That means average rent prices are more reflective of deals signed at new, high-end apartments, such as The Dime. As restrictions on physical home showings lift, there will be more data available on the rental rates for new lease signings.

“Over the coming months, we continue to expect significant economic weakness, which will likely translate into weaker rental conditions,” Miller said.

Rent increases tend to lag behind other economic indicators.

“OVER THE COMING MONTHS, WE EXPECT WEAKER RENTAL CONDITIONS” supply in a desirable neighborhood will push enough renters to sign virtually.

“If it means leasing for six months instead of four months, the development team is perfectly comfortable with that type of strategy,” Villetto said.

tially moving the goalposts to accommodate management. Although net income fell last year by about $15 million, to $196 million, the bank argued that results were better after adjusting for $8 million in tax-related expenses, $6 million in costs stemming from the shareholder litigation and other items.

“Net income utilized for evaluation of the corporate goal achievement was $214.6 million,” the bank said in a regulatory filing.

The Dodd-Frank reform law requires public companies to regularly hold investor votes on compensation packages, known as “say on pay.” The votes are nonbinding, and firms are free to ignore their shareholders if they wish.

Investors Bancorp didn’t respond to emails seeking comment.

More battles to come Whatever the future holds, it probably includes more court battles between the bank and its stockholders.

After the replacement compensation package was adopted last year, the investor who brought the lawsuit filed another legal complaint, arguing the new package effectively offered bank executives “We saw rents drop 10% in Manhattan during the Great Recession, but that happened over 18 months,” said Nancy Wu, an economist with StreetEasy.

Rents recovered quickly and soared from there as jobs returned to the city following the economic crash in 2008. Of course Covid-19 has caused a crash that’s multiple times steeper than that of even the recent financial crisis. Neither landlords nor economists have any precedent for when public health conditions could allow markets to rebound.

Limited inventory In the early days of the pandemic, New Yorkers canceled their apartment hunts, and landlords avoided listing their properties.

New listings on StreetEasy fell 60% in March from March 2019. But the site has tracked a slight rebound, with listings up 15% in April from March totals—even if still well behind typical April inventory.

Landlords will closely track how fast that limited inventory is absorbed.

“If we are seeing that New Yorkers are still leaving the city come summertime, that interns and new hires aren’t arriving,” Wu said, “that would mean a significant decline in demand at a time there is typically the most. Then we could see rents go down in the next couple of months.” ■

BUCK ENNIS

BY AARON ELSTEIN

more of the same to the detriment of shareholders.

Delaware Judge Joseph Slights III allowed the new case to proceed, even as he noted the fight had a fa-

miliar sound. In a footnote to his ruling, he cited the John Prine song “Often Is a Word I Seldom Use.” “It is appropriate here,” Slights said. ■

REAL ESTATE

Gallery sues RFR to break lease

BY NATALIE SACHMECHI

W

hat’s a space at “the epicenter of the art world” worth?

Not as much as it used to be, high-end art dealer and investor David Lindemann says.

Lindemann, the owner of Upper East Side art gallery Venus Over Manhattan, is suing global real estate mogul Aby Rosen’s RFR to break the third-floor lease in 980 Madison Ave. because he says he can no longer do business there.

Lindemann, who broke art auction records with the $57 million sale of a Jean-Michel Basquiat painting in 2016, wants his $365,000 security deposit back plus legal fees.

The art dealer claimed in papers in Federal Court in Manhattan that because of the order temporarily shuttering nonessential businesses, he is no longer obligated to fulfill his lease, which ends in 2022.

“When you have a gallery opening, you have 500 people,” said Errol Margolis, the gallery’s lawyer. “If you have social distancing, how can you have 500 people in the future?”

Venus filed a lawsuit against RFR on May 13, claiming frustration of purpose—a doctrine that allows tenants to terminate a lease if the purpose of it has been undermined because of an unforeseen circumstance.

One legal expert cast doubt on the gallery’s claim.

“Frustration of purpose is something that some sophisticated tenants are asserting,” said Howard Kingsley, an attorney at Rosenberg Estis. “The purpose of the lease won’t be impossible once we go back to business.”

The terms of Venus’ lease required monthly rent payments of $73,814 in its final year, up from the $54,233 it paid when it first began occupying the space in 2012.

Tenants typically do not have the right to suspend their rent or ask for an abatement, Kingsley said.

The 100,000-square-foot building, which has been called “the epicenter of the art world” by Rosen, is also home to Higher Pictures and the Danziger Gallery. So far Venus is the only one that has filed suit.

RFR declined to comment. ■

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CORONAVIRUS ALERT

Let the major sports leagues play games without fans, Cuomo says

G

ov. Andrew Cuomo has put the ball in the owners’ court.

Cuomo said last week that the state would support sports franchises and professional leagues if they would like to reopen and play games this year, with one caveat: The games would be played without fans in the seats.

“I encourage all major sports teams to reopen without fans,” Cuomo said at a news conference in Buffalo. “We are a ready, willing

pandemic. Major League Baseball has yet to open its 2020 season. The National Football League is not scheduled to begin regular season play until September.

“If they can economically have games without fans, and the economics and numbers work for them, and the TV revenue is enough—if they can make the numbers work—I say great,” Cuomo said. “The state will work with you.”

CUOMO

Economics of sports Sanctioned games without fans could have a major impact on how weak or strong certain leagues—and by extension, their teams—emerge from the crisis. The economics of professional sports in America is not weighted equally.

“Some sports [leagues] like the NFL can recover with relative minimum damage due to their TV contract,” said Mark Conrad, director of the sports business program at the Fordham School of Business.

GOVERNORANDREWCUOMO/FLICKR

BY BRIAN PASCUS

“THIS IS IN THE BEST INTEREST OF ALL THE PEOPLE OF NEW YORK”

“Sports that depend on a gate will have a harder time even if games are broadcast.”

Conrad said gate receipts account for 40% of Major League Baseball revenues, so not having live attendance is going to be prob-

BUCK ENNIS

and able partner. This is in the best interest of all the people of New York.”

The National Basketball Association and National Hockey League suspended their operations in midMarch because of the Covid-19

Homebuilder sentiment up after worst slump ever Low interest rates are bolstering demand, expert says BLOOMBERG U.S. HOMEBUILDER sentiment rose in May by more than forecast following a record slump a month earlier as a pickup in sales and demand expectations pointed to stabilization in the real estate market.

The National Association of Home Builders/Wells Fargo Housing Market Index increased by 7 points, to 37, according to data last week. In April the gauge plummeted 42 points, the most in records since 1985. The median projection in a Bloomberg survey of econo-

mists called for 35 in May. Readings above 50 indicate more builders view conditions as good than poor.

Enticing buyers “Low interest rates are helping to sustain demand,” Robert Dietz, NAHB chief economist, said in a statement. “As many states and localities across the nation lift stayat-home orders and more furloughed workers return to their jobs, we expect this demand will strengthen.”

The average rate on a 30-year

fixed mortgage dropped in April to the lowest in Freddie Mac records back to 1971, enticing buyers.

At the same time, the industry will be challenged by the surge in layoffs that has occurred in the past two months as the pandemic prompted state and local governments to close most nonessential businesses.

All three components of the builder sentiment index—current sales, expectations and potential buyer traffic—advanced this month. Confidence improved in all U.S. regions but the Northeast. ■

lematic. He added that no one— owners, players or teams—will make money if no games are played, so it’s in everyone’s best interest to have games without fans.

“You want to give them something because right now you aren’t

giving them anything,” he said.

Cuomo hopes the nation’s sports leagues accept his olive branch.

“Why wait to fill a stadium before you can bring the entire team back?” the governor asked. “I want to watch the Buffalo Bills.” ■

You’re not alone when you have an experienced Grassi business advisor at your side. grassicpas.com/consulting

MAY 25, 2020 | CRAIN’S NEW YORK BUSINESS | 5

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IN THE MARKETS

Cannabis company charged with touting phony Covid-19 home test Applied BioSciences is the newest member of the penny-stock-scam hall of fame

MORE FRAUDS LIKE THIS ONE ARE SURE TO BUBBLE UP BECAUSE THEY ALWAYS DO

BLOOMBERG NEWS

O

nce upon a time I wrote home-testing kit. Whoever the folks an article about Harold behind this outfit were, they were “Hayseed” Stephens, a no Hayseed Stephens.

Applied BioSciences had trouble New York Jets quarterback before Joe Namath. After foot- deciding which story it wanted to ball, Stephens went back to Texas, tell. The company was formed in got into oil and in 1982 received di- 2014 as First Fixtures to sell kitchen vine revelation that told him to dig and bathroom fixtures online. That didn’t click, so the next for oil in Israel. Scripture, year the company got into he said, foretold that a the cannabis business and gentile would discover recast itself as Stony Hill. the oil and not a Jew, but When that didn’t take off, he named his energy it changed its name to Apcompany Ness—the Heplied BioSciences. brew word for “miraAny dealer stretching cle”—I guess to cover his back to Cheech and Chong bases with the almighty. could tell you managing a His quest for oil came to cannabis biz is tough. Innaught, mainly because AARON ELSTEIN ventory can be unreliable, crude isn’t copiously flowing under the Holy and lazy customers someLand, but not before Ness’s penny times don’t pay for everything right stock soared in value. Stephens told away. Last year accounts receivable a great story and stuck to it, which is accounted for half of Applied BioScience’s working assets, and the company posted a $1.4 million loss in the nine months that ended Dec. 31 on just the most important thing when $163,000 in revenue. Its investment in magazine publisher Hightimes marketing a penny stock.

I mention this because recently Holdings lost half its value last year. the hall of fame of penny-stock Even its accounting firm doubted it scams gained a new member: Man- could survive.

Then opportunity came knocking hattan-based Applied BioSciences, which was touting a Covid-19 with the coronavirus. Applied Bio-

Sciences reinvented itself yet again, as a provider of Covid-19 home-testing kits. According to a March 31 press release, it offered a new test to “be used for homes … or anyone wanting immediate and private results,” all in less than 15 minutes with only a finger prick.

Applied BioSciences’ penny stock soared.

Partnering up The key to Applied BioSciences’ newfound success was its partnership with another company seeking reinvention, Beverly Hills–based Essential Oil Co. That firm was a

seller of “vitamin essential oil aromatherapy diffuser sticks,” and its top honcho’s background was in acting and modeling.

Of course, there’s no Food and Drug Administration–approved home test. Nor did Applied BioSciences actually intend to sell to the general public; it saw nursing homes, schools and the like as its audience. Anyway, Essential Oil started selling a test bought from a Chinese manufacturer, and Applied BioSciences resold the thing.

The comedy started ending April 13, when the Securities and Exchange Commission halted trading

in Applied BioSciences’ stock. Last week the agency sued the company for fraud. A summons sent to its headquarters at 320 Park Ave. hasn’t been answered yet, according to a federal court database, and the company didn’t respond to an email seeking comment.

More frauds much like this one are sure to bubble up because they always do, especially during a crisis. I doubt anyone reading this is gullible enough to swallow the bait.

But if you feel like trying your luck, ask yourself this: Is the pitchman in the same league as Hayseed Stephens? ■

ON NEW YORK

New York’s political leaders aren’t up to the current budget challenge Cuomo and de Blasio’s constant bickering is a major roadblock

B

ill de Blasio, you are no Ed me when leaders are not leaders.”

The two were among five “Sages Koch. Andrew Cuomo, you for the Ages” assembled by the Citiare no Hugh Carey.

The result is that New zens Budget Commission last York’s recovery from Covid-19—a Wednesday to come up with ideas pandemic that has killed more than for how the city and the state can manage through the cri22,000, almost oversis. All professed optiwhelmed the health care mism about the future, system, devastated the but what they said actualeconomy and created unly was that the foundaprecedented holes in city tions of the recovery of and state budgets—is in the 1970s no longer exist. doubt when the current Certainly some nostalcrisis is compared to the gia for the events that fiscal crisis of the 1970s. helped these public serAt least, that is the view of vants make their mark the sages who saved New GREG DAVID colored their views, but York back then. the specifics were com“To call the local leadership mediocre is to be charita- pelling. Here are the key ways today ble,” said the irascible Stephen is different.

The governor and the mayor fail the Berger, who once ran the Financial Control Board overseeing city fi- professionalism test. No one singled out Cuomo and de Blasio by name nances.

Added Koch budget director, for their competence, but they did deputy mayor and former Crain’s make it clear their constant bickerpublisher Alair Townsend: “It sours ing is a major roadblock. Carey and

Koch were far from friends and in many ways were rivals. But when it came to issues involving the city’s future, they and their respective staffs worked together professionally. (The sages clearly believe current council members and legislators are worse than those in the 1970s.)

The business community is so different. In the 1970s the leaders of the

Labor leaders are different too. The other heroes of the 1970s fiscal crisis were teachers union leader Albert Shanker and Victor Gotbaum, head of District 37, which covered most municipal employees. Both agreed to concessions and directed their pension funds to buy the bonds the city needed to stay afloat.

It was clear the sages see no leaders of similar stature today.

In the end, the sages agreed on three essential elements for any recovery.

Federal aid. Without substantial direct aid, there is no way the city and the state can cover the shortterm decline in revenue caused by the economic shutdown. Ravitch in particular opposed borrowing because of how it would increase debt service and cause other spending to have to be reduced or taxes raised substantially in future years.

A thorough scrubbing of city govern-

THE GOVERNOR AND THE MAYOR FAIL THE PROFESSIONALISM TEST major corporations saw themselves as New Yorkers. They had grown up here, and they owned the buildings where their employees worked, said civic leader Richard Ravitch, a key go-between in the many negotiations needed in the 1970s. Today the top CEOs run global firms, and for the most part they are tenants.

ment to make it work better. Good times bring expansions of the city’s government, but no mayor has been less interested in productivity than de Blasio. While mayors going back to Koch consistently forced agencies to seek savings through what is known as a Program to Eliminate the Gap, or PEG, de Blasio only implemented the strategy recently and applied it with a very light hand.

A new attitude toward city spending.

In the Koch era, the sages noted, the default answer to requests for more spending was no. And when Koch was forced to approve new spending, he could count on Berger’s Financial Control Board to say no.

After the board rejected spending, Koch would go on TV to denounce it. “When the interview was over, he turned to people nearby and said, ‘Thank God for the friggin’ control board,’ ” Ravitch recalled. ■ Greg David writes a regular column for CrainsNewYork.com.

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ASKED & ANSWERED

JESSICA RABE DataTrek Research

DOSSIER

INTERVIEW BY AARON ELSTEIN

WHO SHE IS Co-founder, DataTrek Research

J

essica Rabe, 25, is Wall Street’s leading analyst for the cannabis business. As the co-founder of DataTrek Research, her insights into the highs and lows of marijuana legalization are read by institutional investors around the world. Now, because of the vast economic damage done by Covid-19, she argues that it’s time for New York and other states to finally legalize it.

New York has considered legalization before but hasn’t done it. So why do it now?

The state is facing a huge budget shortfall and can’t count on the federal government to rescue us. We’re going to need to fix our fiscal problems on our own—to a larger degree than I think people understand. I fear raising income, property or sales taxes would drive people out, so the state needs to find new revenue sources. Marijuana can be part of that.

How much tax revenue could legalization generate?

Well, the city comptroller forecast two years ago that legalizing recreational sales could generate $1.3 billion in new revenue. Gov. Andrew Cuomo has said the state faces a $13 billion shortfall, so opening marijuana to retail could address 10% of that. Every little bit helps.

How much confidence do you have in that estimate?

GREW UP Chatham, N.J.; she still lives in the state.

EDUCATION Bachelor’s in economics, Gordon College YOUNG START Rabe entered college when she was 16, got her first Wall Street job when she was 19, and at 20 wrote her first business book, Alts Democratized: A Practical Guide to Alternative Mutual Funds and ETFs, published by John Wiley & Sons. She was vice president of a financialservices firm at age 22 before co-founding DataTrek three years ago with Nicholas Colas, a veteran Wall Street analyst. She grew up during the financial crisis, which spurred her interest in economics.

THE ELECTION FACTOR Because legalizing cannabis gets a lot of support from younger voters, Rabe thinks the odds of federal legalization are good if Joe Biden is elected president and the Democrats win the Senate and retain the House. Biden has called for further medical research before legalization, but federal regulations bar most research on cannabis. If President Donald Trump is reelected or the Republicans hold the Senate, Rabe reckons, federal legalization won’t happen for a long time.

There are solid numbers to support it. Colorado

generates $300 million in tax revenue from cannabis, but its population is only a quarter of the New York’s.

The city got 65 million visitors last year, and while that number will decline this year, I think tourists will continue to come, and legal marijuana will make this an attractive destination.

I wonder if New Yorkers really want to attract that sort of tourist.

That’s a fair point. California allowed recreational sales, but at the same time three-quarters of cities there banned them. But I’ll say this: There are going to be a lot of vacant storefronts in New York after Covid-19, and making some of them dispensaries could help. Cannabis legalization could create 100,000 jobs in the state.

Wouldn’t those be low-wage jobs?

That’s not the case. Glassdoor did a survey last year showing the median wage in cannabis was $58,000.

Because marijuana is still illegal on the federal level, states that permit recreational use must create jobs for regulators, inspectors to track it from seed to sale. It’s a labor-intensive process. And I would add that Nevada has many cannabis workers as bartenders.

Has the pandemic affected sales?

We saw some jumps when the stay-at-home orders came out, but since then things have calmed. People have their stashes.

How did states react to the surge?

Massachusetts banned recreational sales because it was clear that customers from the epicenter of the pandemic—New York, New Jersey and Connecticut— were coming over to buy cannabis. California, on the other hand, deemed dispensaries to be essential services. There’s now curbside pickup and home delivery. ■

Announcing Crain’s New Podcast: SMALL BUS NESS

LIFELINE CRAIN’S PODCAST TO NAVIGATE THE COVID CRISIS

Hosted by award winning

EVERY THURSDAY, Small Business Lifeline

investigative journalist

highlights a specific topic to assist the small businesses

Christine Haughney Dare-Bryan,

community with timely expert advice and updates. Each

Crain’s new podcast focuses on

episode features in-depth interviews with top policy

helping small businesses

makers and business owners to give listeners concrete

navigate the COVID-19 crisis

answers to the questions that are keeping them up at

and rebuild for the future.

night when it comes to surviving a pandemic.

LISTEN TO THE PODCAST: CrainsNewYork.com/lifeline

MAY 25, 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

associate publisher Lisa Rudy

Small businesses still need a lifeline funds within eight weeks of issuance if they want to be reimbursed, meaning that in most cases they need to use these funds by the end of June. That’s a dire problem for businesses that are not yet allowed to reopen and don’t know yet when they may be able to. These businesses also don’t even know at what reduced capacity they would have to operate when they do reopen and how many people they will need.

It’s especially unlikely that many workers are going to return to work in the next eight weeks if they are offered jobs since they currently receive an extra $600 a week in unemployment benefits and often have children to care for at home. Those additional unemployment funds are scheduled to run out on July 31.

But until then it will be hard to get many of them to return to the workforce.

Many New York businesses also are struggling with the requirement that they must use 75% of their PPP loan toward payroll in order for it to be forgiven. The remaining 25% must be used for rent and utilities.

In New York, rent can be a bigger expense than payroll for some businesses. So New Yorkers need

ALL THAT MONEY HAS NOT STOPPED THE BLEEDING FOR SMALL BUSINESSES loans, they're still not bringing people back to work.

First, small businesses are concerned that they must use the

A

editor Robert Hordt assistant managing editors

Janon Fisher, Gabriella Iannetta (digital) senior editor Telisha Bryan 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, Mark Yawdoszyn to contact the newsroom:

this part of the regulations to be adjusted as well.

Now that the federal government has found a way to give small businesses some financial relief that can get people working again, let’s make sure we give them the ability to actually spend this money in a way that makes sense. Here are some initiatives: The Brooklyn Chamber of Commerce has called on the SBA to extend the date for businesses to rehire or keep employees from June 30 to the year’s end. It also has called on the SBA to eliminate

•

the 25% non-payroll restrictions so that small businesses can spend more of the funds on expenses like rent.

Likewise, a proposed law called Paycheck Protection Flexibility Act extends the time period of when businesses need to use these funds and relaxes the rigid 75/25% spending requirements.

Elected officials should seriously consider these proposals to help reopen New York small businesses sooner rather than later. ■

•

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dstein@crain.com CUSTOM CONTENT director of custom content

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Sophia Juarez, sophia.juarez@crainsnewyork.com EVENTS

www.crainsnewyork.com/events

Real estate industry changed forever s the pandemic continues to significantly alter the way the world lives, moves and works, millions in the city and around the world are relying heavily on the digital age 2.0.

From virtual hangouts and happy hours to buying and selling, online and video platforms have not only transformed how we do business during this challenging time, but it has also helped prevent even more Draconian layoffs by easing the path to working remotely.

Even as the curve continues to flatten in New York and conversations of economic re-entry have just begun, it’s safe to say that the economy of yesterday will not be the economy of tomorrow as individuals and businesses begin to realize the ease and efficiency of facilitating business-as-usual virtually. And that conclusion is crystal clear for both the residential and commercial real estate industry, especially in light of WeWork laying off staff.

Businesses begin to realize one of the most painless ways to cut a budget is simply to cut the amount of

EDITORIAL

Christine Haughney (special projects),

OP-ED

BY CHAO CHENG-SHORLAND

Frederick P. Gabriel Jr.

ISTOCK

I

n recent weeks, the Small Business Administration has made tremendous progress in providing loans to small business owners. As of May 16th, between two rounds of funding, the agency provided more than 4.3 million loans worth $513 billion nationwide. While New York businesses were left out of some of the early funding, by the second round they received 281,058 approved loans worth $37.8 billion.

But all that money has not stopped the bleeding for New York small businesses. A recent survey conducted by the Brooklyn Chamber of Commerce found that even though 92% of its surveyed businesses received Paycheck Protection Program loans, only 46% could afford to pay their rent on May 1st. Businesses have the money in their pockets. But because they’re so worried about the strings that come with these

publisher/executive editor

workspace. But in addition to cutting costs, there are several other ways the real estate industry will transform itself for this new economy, especially since the days of face-to-face negotiations will not be possible for the foreseeable future.

As an entrepreneur and real estate investor myself, I know firsthand how cumbersome the buying and selling process can be with hundreds of pages of documents shuttling back and forth between lawyers, brokers, consultants, inspectors and many others over many months. As we continue adjusting to e-closings, we are starting to see the benefits and trends of taking the process digital and how they are turning into simple, one-stop real estate shops.

One benefit is that virtual negotiations promote a level of trust rarely seen in traditional real estate deal-making and contract executions and can help eliminate those heavy layers of negotiations with other parties by showing specific changes in real time. This, in turn, reduces the amount of time to conduct such transactions from weeks and months to just days.

This also reduces the bureaucracy and administrative costs of facilitating and closing the deal at a time when the phrase “counting every penny” is paramount.

Next, the buying and selling of real estate is quickly moving toward all virtual in this new world of social distancing, which will lead to greater scrutiny on privacy and cybersecurity.

More vulnerability The rise of virtual meeting solutions and related platform users for videoconferencing has also led to an increase in vulnerability, giving hackers countless opportunities to take advantage and steal your confidential data. As business systems become more vulnerable to virtual intruders as we’ve already seen, virtual real estate will see a shift in the use of smart and secure, blockchain-based contract platforms, which in turn promote high levels of security, trust and transparency in the deal-making and transaction process.

One other key transformation may be a surge in secondary home purchases in suburban or rural ar-

eas outside metropolitan areas for individuals looking for additional space in less dense areas should there be another outbreak. Many individuals are currently staying in “secondary homes,” taking refuge in Airbnbs and residences Upstate or out east, and as social distancing regulations are slowly relaxed, businesses will likely alternate days where individuals come into the office and others work remotely.

As the current narrative on Covid-19 centers on preventing a second wave of the virus, regardless of that wave and any social distancing restrictions, real estate won’t return to “business as usual” as many discover the cost savings and convenience of taking the buying and selling process onto the digital wave. Instead, what we will start to see is the evolution of real estate into the second wave of more individuals realizing the safety and economic potential of conducting their transactions virtually. ■ Chao Cheng-Shorland is the CEO and co-founder of ShelterZoom & DocuWalk—blockchain document and contract platforms.

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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]

8 | CRAIN’S NEW YORK BUSINESS | MAY 25, 2020

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OP-ED

Reopen New York restaurants with a European café sensibility The city needs more outdoor dining areas like Stone Street in Lower Manhattan

N

Some intriguing ideas for opening restaurants with adequate social distancing are out there. They are ideas that New York City should emulate.

ew York City’s restaurant scene is famous throughout the world and an enormous Shared spaces source of pride for everyone who lives here. From our smallest neighSeveral cities in Europe have beborhood pizza place to our four-star gun closing public sidewalks, restaurants, this industry, unfortustreets and plazas to create outnately, has been one of the hardest door dining spaces. Many of these hit in the Covid-19 pandemic. spaces are shared by several adjaWe need to start planning now cent restaurants or bars along the about how to help our closed street. restaurants recover from It’s a concept not unfaMORE this crisis. It won’t be easy. miliar to New Yorkers who Architect Many of the things we have been to Stone Street creats model love most about the city’s in Lower Manhattan, and for outdoor restaurant scene—its cozione that should be seriousdining. ness and the camaraderie ly expanded to help restauPAGE 14 among strangers in close rants remain operational quarters—will make any as we begin to reopen from safe reopening a challenge. the pandemic.

To be profitable, restaurants In-person restaurant dining need to feed as many people as won’t be in the city’s first reopenpossible in a given day. But as a ing phase—which could begin in city, we may need to consider limjust a few weeks—but we must beiting the number of people inside gin to think creatively and plan our restaurants to allow for social now. If we don’t, we won’t be ready distancing. when the time does come for re-

AP PHOTO

BY COREY JOHNSON AND ANDREW RIGIE

opening our dining scene.

That’s why the NYC Hospitality Alliance and the City Council have started working together to find open spaces that would allow for restaurants to serve outdoors.

We are beginning to gather feedback from restaurant owners, business improvement districts and

community boards to identify criteria and potential areas where this might work as a pilot.

In a city as diverse as ours, obviously we aren’t expecting one-sizefits-all solutions.

For a scenario such as Stone Street to unfold, ideally several participating restaurants would be

immediately adjacent to the closed street, lane or plaza. Smaller spaces could potentially work for more isolated eateries.

We know this is not a long-term fix, but it's a good first step to help restaurants while we reimagine outdoor space.

It’s clear to all of us that for health and safety reasons, the restaurant industry in New York City must look different for the next few months or even years.

But it’s equally clear that this is an iconic industry that’s worth fighting for. Let’s get creative, and let’s do this.

One day our city will be back up and running better than ever. We have come through every tragedy stronger. And when we get past this one, we will want to celebrate over a nice meal, together, in our favorite restaurant.

That’s the New York way. ■ Corey Johnson is the speaker of the New York City Council. Andrew Rigie is the executive director of the NYC Hospitality Alliance.

OP-ED

Economic reopening plan must involve the formerly incarcerated The key to keeping our communities safe is creating more opportunities

BY DR. JOCELYNNE RAINEY

E

very day at 7 p.m., we go outside to cheer the people caring for us, feeding us and keeping our city running during the Covid-19 crisis.

I know some of these people firsthand. They are the young men I work with daily at Getting Out and Staying Out. GOSO is a citywide nonprofit helping incarcerated and justice-involved boys and young men, ages 16 to 24, connect to jobs, education, vocational training and mental health services.

Those workers are now handling some of society’s most essential duties. They deliver food, load boxes of medical supplies and replace soup kitchen workers who are elderly and at high risk of contracting the virus.

One young client named Unique, who recently was released from prison, is helping get thousands of meals each day to senior citizens and hospital workers. Another, Dave, delivers for FedEx throughout the city. A third, Isaiah, is putting in long hours as a grocery cashier. I’m proud of their work and gratified that our employer partners are connecting them with opportunities to make a living and help our city during this difficult time.

Prior to working at GOSO, I led workforce development at the Brooklyn Navy Yard, where we increased the percentage of formerly incarcerated employees from 10% to 20% in jobs including furniture manufacturing, metalwork and tech. At GOSO we have utilized the city’s Work Progress Program to fund 500 subsidized jobs in six years.

Initiatives like that one help businesses by providing subsidized labor while offering workers valuable experience and a paid job. When availed of such robust programs, only 15% of young men at GOSO have returned to jail, versus more than 65% nationwide.

COVID-19 is making life all the more dangerous for all incarcerated individuals.

Employers to emulate We need more committed, creative employers, like Dos Toros restaurants, Rusk Renovations and Vamoose Bus. And we need nonprofits, like the Horticultural Society and Carnegie Hill Neighbors, which were hiring formerly incarcerated and justice-involved young men even before the Covid-19 crisis began.

I commend Great Performances, which has pivoted from catering at The Plaza hotel and Jazz at Lincoln Center to working with the city to provide meals for senior citizens.

And it is adding young men who

have been incarcerated to its staff to aid in its efforts—with excellent outcomes.

Covid-19 is making life all the more dangerous for all incarcerated individuals, some with health issues, who should already be availed of justice options beyond the cellblock. Those who are released, often to neighborhoods hit hardest by the virus, are facing

higher rates of homelessness, joblessness and hunger. It is in every New Yorker’s interest to ensure that all who are released have the opportunity to achieve stability.

Gov. Andrew Cuomo has said that young, healthy workers are needed to reopen the state. Mayor Bill de Blasio has called for the city’s reopening to be fair and just. A plan for a just reopening must include

pathways for formerly incarcerated and justice-involved people to fully participate.

Workforce programs are just a fraction of what is needed, but for those able to work, they are a lifeline.

The key to keeping our city safer and our communities stronger is not incarcerating more young men. It is creating more innovative opportunities for education and jobs, to allow these willing workers to be the heroes that we desperately need now and will continue to need as we reopen and rebuild. ■ Dr. Jocelynne Rainey is president and CEO of Getting Out and Staying Out, a re-entry, youth and career-development nonprofit that serves justice-involved boys and young men ages 16 to 24.

MAY 25, 2020 | CRAIN’S NEW YORK BUSINESS | 9

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WHO OWNS THE BLOCK

Pandemic could spell disruption for Midtown South’s tech scene Startups might struggle to fulfill their lease agreements 1 MADISON AVE.

BY C. J. HUGHES

E

200 FIFTH AVE. This 15-story office building once housed toy sellers. It now houses Grey Advertising and Tiffany & Co. Gourmet market Eataly is on the ground level. The Chetrit Group purchased the block-long building for $355 million in 2005, then sold it to the partnership of Lehman Bros. and L&L Holding Co. for $480 million in 2007.

JPMorgan Chase bought out Lehman’s share for $719 million in 2011.

11 MADISON AVE. This 30-story, 2.3 million-square-foot tower is owned by SL Green and PGIM Real Estate, an investment arm of Prudential Financial, whose tenants include Yelp and Credit Suisse. The vacant, 100,000-square-foot, 12th-floor berth is being marketed under a 10year lease.

1 MADISON AVE. SL Green Realty bought this full-block site at Madison Square Park that originally served as offices for the Metropolitan Insurance Co. for $918 million in 2005. Green sold a portion of it, anchored by a distinctive 41-story clock tower, for $200 million in 2007; it’s a hotel today. The $2.3 billion redevelopment of the rest of the site, to open in 2024, calls for shaving off 5 stories and installing a glassy, 17-story addition.

184 FIFTH AVE. Bernard Kayden, a major landlord in the neighborhood who died in 2009, owned this 8-story, prewar building for decades. Breather, a coworking provider focused on tech tenants, is active in the building.

175 FIFTH AVE. The Flatiron Building was occupied by publishers for decades. The triangular, terracotta-clad, 21-story tower, which has 10,000-square-foot floors, is in the midst of an $80 million renovation that will improve the lobby and elevators, said Jeffrey R. Gural, chairman of GFP Real Estate, an owner of the landmark. “It’s a cool building,” Gural said, “and we intend to make it cooler.”

120 E. 23RD ST. Owned by Gramercy Five, a limited liability company, this 12-story, 1914 office building that extends to East 22nd Street has an outpost of WeWork, the financially troubled coworking provider. Other tenants include CenturyLink, a telecom provider.

23 E. 22ND ST.

880 BROADWAY This 6-story office building is now home to Netflix after a complicated series of deals.

Normandy Real Estate Partners bought the red-brick, prewar edifice from ABC Carpet and Home, its longtime retail tenant, for $130 million in 2017, then carved out a separate 4-story commercial condo on its upper floors for Netflix. Columbia Property Trust, a real estate investment trust, snapped up Normandy for $100 million in January.

One Madison Park, a slender, 60-story, 53-unit residential condo, began its skyward climb in 2006 but ran into financial trouble during the Great Recession and was delayed for years.

The Related Cos. finally completed the project, which this month listed a four-bedroom apartment with park views for $12.5 million.

SL GREEN, GOOGLE MAPS

arlier this month, as the pandemic raged and business leaders fretted, SL Green Realty showed that the commercial real estate market isn’t dead yet.

In a blockbuster deal, the city’s largest office landlord sold a nearly 50% stake in its $2.3 billion 1 Madison Ave. construction project to the developer Hines and a South Korean pension fund for $492 million.

But in 1 Madison’s Flatiron District neighborhood, the celebration could be short-lived. The area, part of Midtown South, is the heart of New York’s tech scene, which accounts for more than 300,000 jobs and has attracted more than $3 billion in venture capital annually in recent years.

Indeed, many of the tech firms cramming the area are startups, meaning they’re vulnerable to economic shocks—and that could spell trouble for landlords, brokers and analysts say.

“The tech sector has been a cash cow for real estate for a decade,” said Jonathan Bowles, executive director of the Center for an Urban Future, a research group that in April published a study on the topic. “With a lot more companies pulling back, furloughing people and putting off expansion plans, it will affect the real estate market.”

Not all tech companies in Midtown South, which encompasses the Meatpacking District, the East Village and SoHo, are expected to be hurt. Indeed, established giants probably won’t pare down office space, brokers say, citing Google, which took three locations in Hudson Square in 2018 alone.

But landlords might have to renegotiate leases with firms that have only a few dozen employees and work in a beleaguered industry, such as hospitality, if they want those tenants to stay, brokers say.

“We have a few companies that have vowed to never go back to a physical office,” said Brad Svrluga, a co-founder of Primary Venture Partners, which has invested in about 50 startups.

“They feel like they’re being at least as productive remotely, and they just can’t justify the costs.”

Tech firms signed about half the leases in Midtown South in the first quarter, real estate services company Jones Lang LaSalle found, for asking rents of $97 per square foot, the highest in Manhattan’s office districts.

But there are signs of softening: Those rents were flat over a year.

Coworking providers, which essentially serve as landlords for tech tenants—and are tenants themselves— are seeing weak demand too.

“There is no question things have slowed down,” said Aidan Velle, a leasing agent with Breather, a coworking firm focused on the area. “But all the reasons tech firms moved to the city in the first place are still here.” ■

10 | CRAIN’S NEW YORK BUSINESS | MAY 25, 2020

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CORONAVIRUS ALERT

NORTHWELL

H

These NY facilities received the most Covid-19 relief aid

BY JONATHAN LAMANTIA

uninsured patients.

NYC Health and Hospitals reorthwell Health, the ceived the second-most funding in state’s largest private New York for a system overall, $699 hospital system, received million, and New York–Presbyterian about $795 million in qualified for $698 million.

Long Island Jewish Medical Cenfederal hot spot funding.

Its award was the largest among ter received the largest award for a hospital systems out of the $5 bil- single institution in the U.S., at lion the Department of Health and nearly $278 million, followed by Human Services sent to New York, Holy Name Medical Center in Teaccording to a Crain’s analysis of aneck, N.J., at $213 million, and facility-level data. The funding was NYU Langone’s Tisch Hospital, first announced May 1, with data on with $203 million.

NYC Health and Hospitals/Elmspending disclosed later, and aimed to allocate money to the hos- hurst, which was a focal point in the pitals that treated the most early days of the Covid-19 crisis, received the 10th-most funding in Covid-19 patients.

The funding does not completely New York, $111 million.

A previous round of $50 billion in offset Northwell’s losses from responding to the Covid-19 outbreak, federal funding had calculated awards based on providers’ share of a health system spokesman said.

The health system is losing $350 all U.S. Medicare payments. That led million to $400 million a month be- to larger awards for some hospitals cause of higher labor and supply that treated fewer Covid-19 pacosts, and the pandemic has led to tients, such as Memorial Sloan Ketlower revenue for other medical tering Cancer Center,. MSK received the 20th-largest aid services. Northwell has repackage nationwide in ceived $1 billion in corothat earlier round, $64 navirus relief aid, but it million. estimates the crisis will The cancer hospital result in a $1.4 billion to AMOUNT of hot received $18 million in $1.6 billion loss through spot funding the latest hot spot fundthe end of June. the Department ing.

“While greatly appreciof Health and “This list appears to ated, these funds are only Human Services more closely reflect partially offsetting losses gave to Northwell those hospitals that have incurred from treating Health been the hardest hit with Covid patients and revethe burden of caring for nue lost from not being Covid-19 patients,” said able to perform elective surgeries and other routine medi- Lois Uttley, director of the women’s cal care we were unable to provide health program at Community Catbecause we closed many physician alyst and founding director of practices,” Northwell’s spokesman MergerWatch, which tracks hospital consolidation said.

Uttley said it would be easier to Who got what evaluate the appropriateness of Data from the Centers for Dis- where the federal dollars went if the ease Control and Prevention pro- state released a facility-level breakvided a facility-level breakdown of down of hospital admissions related funding, which Crain’s used to cal- to Covid-19. She said Assemblyman Richard Gottfried has requested culate the totals for each system.

The money was split among 395 that information from the Cuomo hospitals in Covid-19 hot spots in- administration on behalf of comcluding Connecticut, Louisiana, munity health organizations.

Uttley said the Covid-19 outbreak Massachusetts, Michigan, New York, New Jersey and Pennsylvania. has shown the need for more It gave hospitals a fixed amount per thoughtful regional health planCovid-19 admission to reflect their ning that spans both public and role in responding to the crisis. Of private hospitals.

“One takeaway has been we need the $12 billion distributed nationally, $2 billion was set aside for hospi- to have a better way of coordinating tals treating disproportionate hospitals, particularly in times of shares of Medicare, Medicaid and public health crisis,” she said. ■

N

ospital stays for patients with Covid-19 cost around $35,000 for about half of cases and up to $600,000 for patients who were seriously ill, according to claims data from MagnaCare, a third-party insurance administrator.

Some insurers and employers— and in some cases patients—likely will be hit with costly medical bills, while others are seeing a drop in costs as patients postpone appointments.

MagnaCare said the number of Covid-19 claims it processed increased 174% in April compared to the previous month. Meanwhile, overall claim volume was down 40% compared to January and February, before the first cases of the respiratory illness were identified in New York. Its clients also increased coverage for telemedicine visits and saw an uptick in use.

The analysis was based on about

hits different individuals and employers,” said Michelle Zettergren, president of MagnaCare.

The administrator, part of Brighton Health Plan Solutions, works with self-insured employers and union benefit funds to manage their health plans and create provider networks. Its clients include unions in New York, New Jersey and Connecticut representing the building trades, grocery and retail workers, and nursing home staff. Many of these union benefit plans shield workers from the bulk of health costs.

The insurance administrator said about half of claims on the lower end of the cost spectrum were from patients typically able to avoid critical care and intubation. They were mostly treated on medical floors for severe pneumonia.

The next tier of care, about 40% of hospitalized patients, were treat-

“COVID-19 CLAIMS HAVE BEEN HAPHAZARD IN HOW THEY HIT EMPLOYERS” 5,300 claims since March and reflects the working-age population its clients cover.

“It’s been haphazard in how it

GETTY IMAGES

40% of coronavirus hospital stays cost up to $100K

ed in ICUs but didn’t need ventilators, and their stays cost $60,000 to $100,000. The sickest 10% of patients, some of whom needed hospital stays of more than 20 days, had bills of $100,000 to $300,000.

One of the highest claims topped out at $600,000.

Zettergren said she has seen claims normalize, with fewer Covid-19–related ones. Heart attacks, gallbladder removals and surgeries are beginning to make up a larger share of hospitalizations.

“The light at the end of the tunnel is that within the last couple of weeks, we started to see hospital claims look more like typical claims,” she said.

—J.L.

$795M

MAY 25, 2020 | CRAIN’S NEW YORK BUSINESS | 11

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THE LIST LARGEST CITY GOVERNMENT AGENCIES Ranked by number of employees

RANK

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

AGENCY NAME/ ADDRESS

LEADERSHIP

Department of Education 52 Chambers St. New York, NY 10007

Richard Carranza Chancellor

Police Department 1 Police Plaza New York, NY 10038

FISCAL 2020 PERSONNEL/ % CHANGE FROM 2019 1

FISCAL 2020 EXPENDITURES (IN MILLIONS)/ % CHANGE FROM 2019 2

FISCAL 2019 OVERTIME (IN MILLIONS)

146,292 +0.4%

$28,362.0 +4.8%

$29.0

Dermot Shea Commissioner

53,841 +0.1%

$5,851.4 -2.1%

$736.3

Health and Hospitals 125 Worth St. New York, NY 10013

Mitchell Katz President, chief executive

38,187 +2.5%

$7,829.7 -4.8%

$178.1

Fire Department 9 MetroTech Center Brooklyn, NY 11201

Daniel Nigro Commissioner

17,386 +1.2%

$2,136.1 +1.0%

$341.6

Human Resources Administration 150 Greenwich St. New York, NY 10007

Steven Banks Commissioner

12,630 -1.8%

$10,291.9 +0.5%

$39.2

Department of Correction 75-20 Astoria Blvd.

East Elmhurst, NY 11370

Cynthia Brann Commissioner

11,678 -6.3%

$1,330.4 -3.2%

$180.1

Housing Authority 250 Broadway New York, NY 10007

Gregory Russ Chair, chief executive

11,056 +3.7%

$3,476.6 -0.5%

$102.5

Department of Sanitation 59 Maiden Lane New York, NY 10038

Kathryn Garcia Commissioner

10,479 +1.6%

$1,802.2 +2.3%

$137.9

City University of New York 205 E. 42nd St. New York, NY 10017

FĂŠlix Matos RodrĂ­guez Chancellor

10,281 -3.6%

$1,346.9 +7.6%

$7.8

Administration for Children's Services 150 William St. New York, NY 10038

David Hansell Commissioner

7,085 +6.3%

$2,729.3 -13.3%

$60.3

Department of Parks and Recreation 830 Fifth Ave. New York, NY 10065

Mitchell Silver Commissioner

6,907 -1.4%

$606.0 +7.5%

$26.5

Department of Health and Mental Hygiene 42-09 28th St. Long Island City, NY 11101

Oxiris Barbot Commissioner

6,773 -0.7%

$1,860.3 +4.4%

$13.3

Department of Environmental Protection 59–17 Junction Blvd.

Flushing, NY 11373

Vincent Sapienza Commissioner

6,080 +0.8%

$1,489.5 +3.9%

$48.8

Department of Transportation 55 Water St. New York, NY 10041

Polly Trottenberg Commissioner

5,742 +4.6%

$1,155.6 +11.1%

$66.1

Public Libraries Fifth Avenue and 42nd Street New York, NY 10018

Anthony Marx President, chief executive

3,937 -0.5%

$428.0 +6.5%

n/d

Department of Citywide Administrative Services 1 Centre St. New York, NY 10007

Lisette Camilo Commissioner

2,509 +3.1%

$1,327.9 +3.7%

$27.2

Department of Housing Preservation and Development 100 Gold St. New York, NY 10038

Louise Carroll Commissioner

2,409 +3.5%

$1,293.2 +18.6%

$4.0

Department of Homeless Services 33 Beaver St. New York, NY 10004

Steven Banks Commissioner

2,288 -4.0%

$2,150.8 -1.5%

$17.8

Department of Finance 1 Centre St. New York, NY 10007

Jacques Jiha Commissioner

2,099 +8.4%

$333.6 +11.1%

$5.3

Law Department 100 Church St. New York, NY 10007

James Johnson Corporation counsel

1,882 +4.7%

$278.9 +9.8%

$2.4

Department of Buildings 280 Broadway New York, NY 10007

Melanie La Rocca Commissioner

1,660 +3.9%

$210.6 +21.6%

$7.5

Department of Information Technology and

Jessica Tisch Commissioner

1,595 +3.9%

$726.0 +7.5%

$1.9

Lorraine Grillo Commissioner

1,320 +0.3%

$331.8 +15.7%

12 | CRAIN’S NEW Telecommunications YORK BUSINESS | MAY 25, 2020

Department of Design and Contruction 30-30 Thomson Ave. Long Island City, NY 11101

RAN

Â?

2 MetroTech Center Brooklyn, NY 11201

P012_P013_CN_20200525.indd 12

1 1 1 2 2 21 2 23 24 25 26 27 28 39 31 31 31 31 31 31 31 31 31 41 2 2 2 2

$2.5

5/20/20 2:32 PM

NS)

9.0

6.3

8.1

1.6

9.2

0.1

2.5

7.9

7.8

0.3

6.5

3.3

8.8

6.1

n/d

7.2

4.0

7.8

5.3

2.4

7.5

1.9

2.5

17 18 19 20 21 122 223 324 425 526 627 728 829 930 10 31 11 32 12 33 13 34 14 35 15 36 16 37 17 38 18 39 19 40 20 21 22 23 RANK

Department of Housing Preservation and Development 100 Gold St. New York, NY 10038

Louise Carroll Commissioner

2,409 +3.5%

$1,293.2 +18.6%

$4.0

Department of Homeless Services 33 Beaver St. New York, NY 10004

Steven Banks Commissioner

2,288 -4.0%

$2,150.8 -1.5%

$17.8

Department of Finance 1 Centre St. New York, NY 10007

Jacques Jiha Commissioner

2,099 +8.4%

$333.6 +11.1%

$5.3

Law Department 100 Church St. New York, NY 10007

James Johnson Corporation counsel

1,882 +4.7%

$278.9 +9.8%

$2.4

Department of Buildings 280 Broadway AGENCY NAME/ New York, NY 10007 ADDRESS

Melanie La Rocca Commissioner

1,660 +3.9% FISCAL 2020 PERSONNEL/

$210.6 +21.6% FISCAL 2020 EXPENDITURES (IN MILLIONS)/

$7.5

Department of Information Education Technology and Telecommunications 52 Chambers St. 2 MetroTech New York, NYCenter 10007 Brooklyn, NY 11201 Police Department Department 1 Police Plazaof Design and Contruction 30-30 Thomson Ave. New York, NY 10038 Long Island City, NY 11101

Jessica Richard Tisch Carranza Commissioner Chancellor

1,595 146,292 +3.9% +0.4%

$726.0 $28,362.0 +7.5% +4.8%

$1.9 $29.0

Dermot Shea Lorraine Grillo Commissioner Commissioner

53,841 1,320 +0.1% +0.3%

$5,851.4 $331.8 -2.1% +15.7%

$736.3 $2.5

Health and Hospitals Department 125 Worth St.of Probation 33 St.10013 NewBeaver York, NY New York, NY 10004

Mitchell Katz Ana BermĂşdez President, chief executive Commissioner

38,187 1,127 +2.5% -0.3%

$7,829.7 $127.3 -4.8% +11.5%

$178.1 $3.5

Fire Department School Construction 9 MetroTech Center Authority 30-30 Thomson Ave. Brooklyn, NY 11201 Long Island City, NY 11101

Daniel Nigro Lorraine Grillo Commissioner President, chief executive

17,386 855 +1.2% +4.8%

$2,136.1 3 $4,779.4 +1.0% +21.8%

$341.6 n/d

Human Resources Administration Board of Elections 150 Greenwich St. 32-42 Broadway New York, NY 10007 New York, NY 10004

Steven Banks Michael Ryan Commissioner Executive director

12,630 818 -1.8% +7.1%

$10,291.9 $254.5 +0.5% +47.2%

$39.2 $11.5

Department of Correction Office ChiefBlvd.

Medical Examiner 75-20 of Astoria 421 E. 26th St. East Elmhurst, NY 11370 New York, NY 10016

Cynthia Brann Barbara Sampson Commissioner Chief medical examiner

11,678 664 -6.3% +2.5%

$1,330.4 $95.6 -3.2% +12.9%

$180.1 $6.7

Housing Authority Department 250 Broadwayfor the Aging 2 Lafayette New York, NYSt.10007 New York, NY 10007

Gregory Russ Lorraine CortĂŠs-VĂĄzquez Chair, chief executive Commissioner

11,056 629 +3.7% +2.6%

$3,476.6 $434.0 -0.5% +11.8%

$102.5 $0.0

Department of Sanitation Taxi and Limousine 59 Maiden Lane Commission 33 St.10038 NewBeaver York, NY New York, NY 10004

Kathryn Garcia Aloysee Heredia Jarmoszuk Commissioner Commissioner, chair

10,479 605 +1.6% -1.0%

$1,802.2 $54.1 +2.3% +12.9%

$137.9 $1.5

City University of New York Department 205 E. 42nd of St.Youth and Community Development 2 Lafayette New York, NYSt.10017 New York, NY 10007

FĂŠlix Matos RodrĂ­guez Bill Chong Chancellor Commissioner

10,281 540 -3.6% +6.1%

$1,346.9 $988.0 +7.6% +13.3%

$7.8 $0.1

Administration for Children's Services Economic Development Corp.

150 William St. 1 Liberty New York,Plaza NY 10038 New York, NY 10006

David Hansell James Patchett Commissioner President, chief executive

7,085 538 +6.3% +1.5%

$2,729.3 3 $890.6 -13.3% +124.1%

$60.3 n/d

Department of Parks and Recreation Department 830 Fifth Ave.of Consumer Affairs 42 NewBroadway York, NY 10065 New York, NY 10004

Mitchell Silver Lorelai Salas Commissioner Commissioner

6,907 404 -1.4% +1.3%

$606.0 $43.4 +7.5% +2.6%

$26.5 $0.3

Department of Health and Mental Hygiene Office Administrative Trials and Hearings 42-09 of 28th St. 100 St. NY 11101 Long Church Island City, New York, NY 10007

Oxiris Barbot Joni Kletter Commissioner Commissioner, chief administrative law judge

6,773 398 -0.7% +3.9%

$1,860.3 $51.5 +4.4% +9.3%

$13.3 $0.0

Department of Environmental Protection 311 Customer 59–17 JunctionService Blvd. Center 253 Broadway Flushing, NY 11373 New York, NY 10007

Vincent Sapienza Joseph Morrisroe Commissioner Executive director

6,080 388 +0.8% +1.8%

$1,489.5 $44.9 +3.9% -1.8%

$48.8 $0.3

Department of Transportation Department 55 Water St. of Investigation 180 New Maiden York, NY Lane 10041 New York, NY 10038

Polly Trottenberg Margaret Garnett Commissioner Commissioner

5,742 367 +4.6% +3.4%

$1,155.6 $61.6 +11.1% +25.5%

$66.1 $1.0

Public Libraries Department of City Planning Fifth Avenue and 42nd Street 120 New Broadway York, NY 10018 New York, NY 10271

Anthony Marx Marisa Lago President, chief executive Chair

3,937 322 -0.5% +0.9%

$428.0 $52.3 +6.5% +30.4%

n/d $0.0

Department of Citywide Administrative Services Department 1 Centre St. of Small Business Services 1 Liberty New York,Plaza NY 10007 New York, NY 10006

Lisette Camilo Jonnel Doris Commissioner Commissioner

2,509 303 +3.1% +3.8%

$1,327.9 $271.5 +3.7% +11.0%

$27.2 $0.1

Department of Housing Preservation and Development Emergency 100 Gold St.Management 165 Plaza East New Cadman York, NY 10038 Brooklyn, NY 11201

Louise Carroll Deanne Criswell Commissioner Commissioner

2,409 195 +3.5% +5.4%

$1,293.2 $73.5 +18.6% +24.6%

$4.0 $0.6

Department of Homeless Services Civilian Complaint Review Board 33 Beaver St. 100 New Church York, NYSt. 10004 New York, NY 10007

Steven Banks Fred Davie Commissioner Chair

2,288 191 -4.0% +8.5%

$2,150.8 $19.6 -1.5% +6.0%

$17.8 $0.5

Department of Finance City Commission on Human Rights 1 Centre St. 100 New Gold York, St. NY 10007 New York, NY 10038

Jacques Jiha Carmelyn Malalis Commissioner Commissioner, chair

2,099 130 +8.4% -7.8%

$333.6 $14.4 +11.1% +8.3%

$5.3 $0.0

LEADERSHIP

% CHANGE FROM 2019 1

% CHANGE FROM 2019 2

FISCAL 2019 OVERTIME (IN MILLIONS)

Law Department James Johnson 1,882 $278.9 $2.4 100 Church St. Corporation counsel +4.7% +9.8% York, NY 10007 New

  � � � � � � � � � � � �  � 1- ­ � � 2-€ � � 3- � � � � ‚� � �ƒ �ƒ �„ � � � � �… ��

Department of Buildings 280 Broadway New York, NY 10007

Melanie La Rocca Commissioner

1,660 +3.9%

$7.5

$726.0

$1.9

WANT MORE OF CRAIN’S EXCLUSIVE DATA? VISIT CRAINSNEWYORK.COM/LISTS.

Department of Information Technology and Telecommunications 2 MetroTech Center Brooklyn, NY 11201

Jessica Tisch Commissioner

1,595 +3.9%

Department of Design and Contruction 30-30 Thomson Ave. Long Island City, NY 11101

Lorraine Grillo Commissioner

1,320 +0.3%

P012_P013_CN_20200525.indd 13

$210.6 +21.6%

MAY+7.5% 25, 2020 | CRAIN’S NEW YORK BUSINESS | 13

$331.8 +15.7%

$2.5

5/20/20 2:33 PM

CORONAVIRUS ALERT

Famed designer draws up plan to save restaurants through outdoor dining BLOOMBERG

T

he sprawling sidewalk café lifestyle is prevalent in cities around the world, from Rome to Miami. New York? Not so much.

But the Big Apple’s cityscape might be changing in response to the ruinous effects of Covid-19 on the restaurant industry. Polly Trottenberg, commissioner of New York’s Department of Transportation, recently announced that an interagency group was looking at how the city could expedite the permitting process to enable outdoor dining for restaurants, giving them additional space for socially distanced dining.

In response, noted architect David Rockwell has created a template for outdoor dining that he is making public for establishments to use if they receive permits.

Restaurants that would like to use the template can reach out to his team through his firm’s website.

Rockwell—who has designed everything from Broadway shows to Kaos Nightclub in Las Vegas—is especially well known for his work in restaurants such as New York’s Avra Madison and Catch Steak.

Rockwell determined that the pandemic offered a moment to create an outdoor model that could be re-created by many different places, depending on the dictates of their sidewalks and streets. The plans, based on a kit-like module, take into account socialdistancing space between tables as well as all-important sanitation stations. They allow for varying

numbers of seats and include sidewalk fencing and planter benches to create a sense of separation.

“We’ve been exploring adaptable and portable designs that extend the inner dining space to sidewalks and beyond,” Rockwell said.

“We’ve been inspired by work across the country and globe. Mostly, we’ve tried to utilize designs and materials that can be adapted to reflect the diversity of streetscapes in the city.”

Getting around restrictions Among the restaurateurs Rockwell is working with is Melba Wilson, president of the NYC Hospitality Alliance and chef and owner of Melba’s in Harlem.

“Restaurant operators across the city are nervous about how we can get back to business while protecting the health and safety of our guests and staff,” Wilson said. “Our small businesses are anchors in their respective neighborhoods and are key links in the city’s economy.”

Most restaurants expect that they will have to operate at 50% capacity when they reopen, a projection based on restrictions put in place by Gov. Andrew Cuomo before their closures were mandated.

That’s not enough customers for most places to survive, and the potential for outdoor seating could help increase volume.

Rockwell’s designs also serve to make restaurants more visible and enticing to passersby.

“We’re excited about these preliminary designs, because they weave us into the community

during this time of need,” Wilson added.

“How we utilize space is paramount to success.”

Rockwell worked with Wilson’s restaurant to develop a test fit for various outdoor seating options based on the place’s specific site conditions. There are options for restaurants at corners of intersections, adjacent to bike lanes and even alongside parking ROCKWELL lanes.

Rockwell, whose projects generally run big-budget, such as the Equinox Hotel at Manhattan’s $25 billion Hudson Yards, developed these plans to be adapt- projects to maximize outdoor able, inexpensive and easy to im- space. For the Italian hot spot Gaplement while addressing safety briel’s Bar & Restaurant, which is concerns. Components such as the moving to the former Bobby Vans sidewalk decks aren’t hard to space on Central Park South, the find or construct, and the plans are designer is making the restaurant’s scalable for restaurants that are facade accessible to the street with scrambling to open and expand access for takeout while creating a sidewalk café that will spill out to their space.

“There is not one easy solution the street facing the park.

One neighborhood that stands to right now to the challenges faced by restaurants here,” Rockwell said. benefit strongly from the DOT’s “But it’s clear we need to rethink proposed legislation is Manhathow we utilize outdoor public spac- tan’s Meatpacking District. About es. The intersection of streets and 25% of the district’s storefronts are sidewalks—and even the center restaurants or cafés, not including lanes of avenues, in some cases— rooftops and Chelsea Market vencan provide much-needed capacity dors. The district has 62 food and beverage establishments in total. for restaurants.”

On May 13 Mayor Bill de Blasio Rockwell is also adapting future

BLOOMBERG

Potential for sidewalk seating offers a workaround to limited capacity inside for customers

announced 12 additional miles of street closures around the city, including three streets in the Meatpacking District that could conceivably be used to expand outdoor dining: both 13th Street and Little West 12th Street between Ninth Avenue and Washington Street and 17th Street between Eighth and 10th avenues.

“The long-held objection to sidewalk cafés is the conflict it creates by taking away public space,” said Jeffrey LeFrancois, executive director of the Meatpacking District Management Association. “But if you take away that conflict area, then restaurants can set up tables farther apart, and that will work well for us here.” ■

Sports fans awaiting refunds wonder if they’re being played

BY AARON ELSTEIN

E

ddie Sanchez is sports coordinator at a large Bronx wholesaler. That means he’s in charge of buying the Yankees tickets that are handed out to clients.

Last week the Yankees told Sanchez he could get a full refund for April’s unplayed games. But if he accepted a credit, the team would throw in a 10% bonus, so if Sanchez’s company spent $50,000 next year, it would get $55,000 worth of tickets. Sanchez chose the refund.

“I don’t know how many people will want to go to ballgames next year,” he said.

Such conversations are playing out across the wide world of sports.

Although German soccer has kicked off and Nascar is racing

again, sports remain mostly dormant. Last week Gov. Andrew Cuomo called for leagues to reopen without fans.

That puts sports teams in a bind.

With revenues from broadcasts, sponsorships and merchandising all but stopped, at least for now, some are holding on to ticket money for as long as they can, even though it’s clear no one is going to a ballgame soon.

“Ticket sales are still a significant component of a team’s budget, revenue and liquidity,” said Daniel Etna, co-chair of the sports law group at Herrick Feinstein.

Squeezed owners Collectively North American sports teams generated $20 billion in gate receipts last year, according to figures from PwC, for a quarter

of total revenue. In baseball, which plays many more games, tickets and suites account for half of certain teams’ revenue.

Some squeezed owners and arena operators are preparing to ask bankers for waivers to their loan covenants.

“We’re starting to have those conversations,” Fitch Ratings analyst Chad Lewis said.

For some owners, the cost of refunds could be dear indeed.

Madison Square Garden’s sports segment was holding $85 million worth of advance payments for Knicks and Rangers games as of March 31, according to a regulatory filing. Last week the arena’s owner said it is holding $220 million in ticket, suite and sponsorship revenue for concerts and other events that will be returned or credited “to

the extent necessary.”

“To date, the significant majority of impacted events have been postponed and are expected to be rescheduled,” MSG Entertainment Corp. said.

The Yankees also could be on the hook for significant refunds or credits if fans can’t get into Yankee Stadium this year. The team generated $320 million from ticket and suite sales in 2018, according to a disclosure to bondholders. Forbes estimates the team had $668 million in revenue that year. In March S&P Global warned it may downgrade the BBB-rated bonds used to pay for the construction of Yankee Stadium.

The Yankees didn’t respond to a request for comment.

The Mets have offered seasonticket holders a 20% bonus if they

roll over their plans into next year.

The team, which according to Forbes had $336 million in 2018 revenue, didn’t respond to a request for comment.

A fan-free sports world would hit Barclays Center too. With no Brooklyn Nets games or concerts on the calendar, Moody’s lowered the arena’s credit outlook in March to “negative.”

Cuomo recently extended the city’s stay-at-home order until June 13. Major League Baseball hopes to resume in empty ballparks July 4, pending an agreement with the players.

Meanwhile Sanchez would like to know when the Yankees will issue refunds for games that clearly won’t be played.

“They don’t have an answer for May yet,” he said. ■

14 | CRAIN’S NEW YORK BUSINESS | MAY 25, 2020

P014_CN_20200525.indd 14

5/19/20 5:15 PM

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.

CN019706.indd 1

5/20/20 12:57 PM

CORONAVIRUS ALERT

Upper West Side restaurant sues insurer over denied Covid-19 claim

A

popular Upper West Side restaurant has launched a class-action lawsuit to force its insurer to cover losses from the pandemic—the latest effort from a city business to secure claims during the economic shutdown.

Since the start of the pandemic, commercial insurers have insisted that business-interruption policies—which cover costs for busi-

“IT IS AN EXCEPTIONAL RISK BECAUSE IT IS UNIVERSAL, SYSTEMIC” nesses when disasters force a closure—exclude lost income from a virus. Cafe du Soleil, which has operated for 15 years near the corner of West 104th and Broadway, heard the same reasoning on its claim.

Insurer AXA Financial told the restaurant on April 3 that its commercial policy would not cover Covid-19, citing an exclusion in the plan for "any virus, bacterium or

other microorganism" that causes illness. The insurance covers only physical damage to a property that shuts down business, the letter further said.

The restaurant filed a lawsuit against the insurer May 15 in U.S. Southern District Court, seeking class-action status for up to $5 million in damages.

"The current global catastrophe is much different from, for example, an episode of food poisoning affecting several restaurant patrons," wrote Cafe du Soleil attorney Tina Wolfson in the complaint. "The Covid-19 pandemic is much closer to a natural disaster than a 'loss due to virus or bacteria.'"

Owner Alain Chevreux said the restaurant just recently opened up for takeout and delivery. Without an open dining room, the café can make only about 15% of typical revenue.

"I'm losing money every week," Chevreux said.

He added that he just wants his insurer to pay the money he is owed.

While cases similar to Cafe du Soleil's pile up in courts around the country, lawmakers are seeking solutions. A bill sponsored by Brooklyn Assemblyman Robert Carroll would require insurers to cover claims related to a pandemic and void any exclusion for viruses and bacteria.

Insurers say the costs to cover claims for an international disaster such as Covid-19 could bankrupt the entire industry. That's why viruses were specifically excluded from plans starting in 2003, after the SARS epidemic provided a warning of what could come.

The American Property Casualty Insurance Association—an industry lobbying group—projects that paying out claims just to businesses with 100 employees or fewer could cost $383 billion per month, dwarfing the costs of even the worst hurricane seasons.

The U.S. press office for AXA did not respond to a request for comment early last week. The company's leaders have expressed similar concerns about the cost of paying pandemic claims in the U.K. and

CAFE DU SOLEIL has operated for 15 years near the corner of West 104th and Broadway.

CAFE DU SOLEIL

BY RYAN DEFFENBAUGH

the firm's home country of France.

AXA is working with leaders in both countries on a joint effort to fund claims, Reuters reported.

“It is an exceptional risk, because it is universal, systemic. It cannot be diversified, it cannot be pooled between insurers’ portfolios, hence the need for public-private partnership,” Chief Risk Officer Renaud Guidee told the outlet.

A group of big-name chefs including Wolfgang Puck, Thomas Keller, Daniel Boulud and Jean-Georges Vongerichten has taken the fight directly to the White House. An advocacy group led by the chefs, the Business Interruption Group, pressed President Donald

Trump to require insurers to cover pandemic claims in a phone call at the end of March.

"I would like to see the insurance companies pay if they need to pay, if it’s fair," Trump said at an April press briefing. "And they know what’s fair. And I know what’s fair."

The Treasury Department has since cautioned against requiring insurers to pay claims. Responding to a bill from Rep. Mike Thompson, D-Calif., that would negate virus exceptions, Frederick Vaughan, Treasury principal deputy assistant secretary, warned the bill could "fundamentally conflict with the contractual nature of insurance obligations." ■

NEW in 2020

DO YOU KNOW A HEALTH CARE HERO?

Nominations open to men, women and teams

Crain’s New York Business is continuing to search for outstanding individuals in the health care community within the New York metropolitan area.

This year, due to the Covid-19 crisis, Crain’s is opening nominations to include men, as well as women and additionally to small teams related to the Covid-19 response.

Nominate today at crainsnewyork.com/notablehealthcare2020 Nominations due Friday, June 26, 2020.

Questions? Contact notables@crainsnewyork.com

IN HEALTHCARE 16 | CRAIN’S NEW YORK BUSINESS | MAY 25, 2020

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5/21/20 2:05 PM

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 22.

DAILY HOSPITALIZATIONS

POSITIVE CASES

Weeks ago the state reported that a projected 110,000 hospital beds would be needed during the virus’ peak. With roughly 50,000 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.

On March 22, Gov. Andrew Cuomo enacted New York Pause, which closed all non-essential businesses.

With the virus already spreading throughout the downstate region, the Covid-19 caseload skyrocketed in the weeks to come before slowing in late April. The city and suburbs are now adding fewer than 2,000 new coronavirus diagnoses each day.

20,000

200,000

New York City

Long Island

Lower Hudson Valley 196,484

15,000

150,000

10,000

100,000

78,280

4,844

5,000

50,000

326 0

60,768

March 16

May 21

40

+50

March 3

May 21

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

358,154

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. A full economic reopening will require widespread access to tests, including reliable serology exams.

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.

800,000

New York City

Long Island

Lower Hudson Valley

Staten Island

745,390

Queens 7% Manhattan

600,000

13%

31%

400,000

289,445 22% 200,000

253,218 The Bronx

27% Brooklyn

0 March 3

May 21

22

%

PROPORTION of New York’s population that has been tested

23,195

NUMBER of deaths from Covid-19 in the state

90

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 12

%

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

SOURCE: State Department of Health

FOR THE MOST UP-TO-DATE COVID-19 STATISTICS, VISIT CRAINSNEWYORK.COM/TRACKING-CORONAVIRUS-NEW-YORK. MAY 25, 2020 | CRAIN’S NEW YORK BUSINESS | 17

P017_CN_20200525.indd 17

5/22/20 4:44 PM

FROM PAGE 1

the city, despite an order stopping most work. Essential sites—those with a component involving affordable housing, transportation, health care or homeless services— have continued to build.

“The good news is we still have projects that are moving,” said Carlo Scissura, president and chief executive officer of the New York Building Congress. “In September and October we will know if we are stable.”

That’s partly helped by the fact that New York City is coming off of one of the most productive eras of building in history. Jobs in the construction industry grew 30% from 2010 to 2018, reaching a peak nearing 400,000 workers. Those workers reshaped the city, building arenas, bridges, parks and even part of the long-awaited Second Avenue subway. Construction spending grew from $30 billion annually in 2010 to $60 billion last year, according to Building Congress estimates. It was so productive that it has disrupted the entire order of the city’s tallest buildings and nearly knocked the Chrysler Building off the list of the city’s top 10 tallest structures.

But moves in the next several months by the city’s construction industry—to keep worksites safe and answer concerns about demand—will determine whether a historic decade-long building boom can avoid a collapse from the pandemic. Already there are signs of a free fall. New York state construction and utility workers have filed more than 167,000 unemployment claims statewide since the start of the pandemic. As the industry reopens, there is significant risk that a combination of higher costs and weakened demand could significantly shrink the industry, “This is going to put tens of thousands of small contractors, suppliers, vendors and manufacturers out of business,” said Barry LePatner, founder of construction law firm LePatner and Associates “There are many businesses without the extensive capital resources required to come back.”

Back to work

Shopping local For builders, the social distancing standards mean masks and gloves—not steel, glass and iron— are the most in-demand supplies.

“Not just masks, but thermometers and disinfectants,” said Louis

BUCK ENNIS

The new normal for construction sites—those active during the pandemic and projects that will restart

sometime in the summer—already involve mandatory masks, daily health screening and six feet of air between workers.

Gov. Andrew Cuomo’s administration released the new rules May 13 after more than a month of discussions with building unions, contractors and developers.

Even compared with the challenges following 9/11 and Superstorm Sandy, building during the Covid-19 era will be the most complicated challenge the industry has faced, said Gary LaBarbera, president of the Building and Construction Trades Council of Greater New York.

For the time being, that challenge has brokered a peace among industry groups whose interests don’t always align. The Real Estate Board of New York, the Building Trades Employers’ Association and unions have been in discussions since April on social distancing rules for city worksites that would go beyond the state rules.

“We have to demonstrate that New York City is a healthy and safe place to live, work and build,” said James Whelan, president of REBNY. “The primary focus for the next weeks and months has to be showing we can operate these sites safely.”

While Cuomo has halted all nonessential construction in the city since March 27, the number of worksites cleared to keep going has steadily grown. The city Department of Buildings launched an online map of projects deemed essential on April 3, showing about 400 active sites. By May 15 the total shot past 8,000.

The definition for essential construction has expanded to include work on projects that have already broken ground for essential businesses, such as grocery stores, restaurants, banks and hotels.

SL Green has continued the transit-related work at Grand Central Terminal for its 1 Vanderbilt office tower. SJP Properties received emergency work approval for its 52-story luxury condo tower on the Upper West Side.

BUCK ENNIS

SKYLINES

topped out at $50 per square foot last year— have spent the past three months learning how to work remotely.

Barclays CEO Jes Staley said in a recent earnings call that headquarters with thousands of staffers “could be a thing of the past,” one of several warnings from major corporate leaders that office demand could sink.

“There is going to be a reduction in office size for every company that has a lease coming up in the next two or three years,” LePatner said.

Major landlords don’t appear shaken just yet.

Vornado Realty Trust’s CEO Steven Roth surprised some analysts this month when he said a new mega-office tower at the company’s 350 Park Ave. property could break ground in three years, replacing a roughly 500,000-square-foot building with one up to 1.8 million square feet.

The real estate titan swatted away concerns about a widespread work-from-home movement.

“The reaction to 9/11 was nobody wanted to rent space in the upper reaches of buildings because it was dangerous,” Roth said on an investor call. “And now the space that’s the most valuable is the upper reaches of the buildings. So this

EVEN WITH THE PANDEMIC, there are still 8,000 active construction sites Coletti, president and CEO of the Building Trades Employers’ Association, which represents union construction managers and contractors. “We are not waiting until we get the signal to open up to make sure the supplies are there.”

Construction projects that started before the pandemic likely have their physical construction supplies ready to go, Coletti said. But disruption to the global markets could pinch projects once new construction starts. U.S. builders typically source at least 30% of materials from China, with some projects importing as much as 80%, according to figures from the engineering firm Atkins. With those supplies disrupted during the pandemic, construction sites increasingly will attempt to source materials locally.

But shopping local also appears to be extending to construction supplies.

At the Taystee Lab Building, a life sciences center under construction in Harlem, a new glass curtain wall will soon be installed across its 11-stories that was manufactured by Island Exterior on Long Island’s North Fork. Buying local material helped

“There may be experienced construction managers, who have the resources and the contacts, who decide to avoid foreign purchasing in case it messes up the supply chain and development timeline,” Salama said.

will pass.”

Construction industry experts interviewed by Crain’s expressed greater concern for new towers in the luxury condo market. Tax changes and a glut of new supply had already slowed sales of the multimillion-dollar penthouses in super tall buildings before the pandemic. A StreetEasy report at the end of last year estimated that 25% of the 13,000 new condos built in the city since 2013 sat empty.

Coletti said he has already heard from developers rethinking condo plans to build rentals instead. He declined to say which companies.

Where the buyers are

Relief in infrastructure?

The skyline has been reshaped in recent years by two types of buildings: office towers and luxury highrise condos. Serious doubts exist about whether either market can return soon.

More than 45 million square feet of new office space has been built in Manhattan alone since 2010, according to CBRE data. The construction was spurred by the rebuilding of the World Trade Center, an expansion west to Hudson Yards and a 2017 rezoning of Midtown East that paved the way for new skyscrapers in the city’s central business district.

The companies that fill those buildings—paying rents that

The city’s real estate industry has joined the lobbying effort for a new federal rescue package that it hopes will spur more public-sector construction projects. Experts told Crain’s they hoped a federal bill would seize on low-interest rates to fund construction efforts rivaling the New Deal. A moonshot package that includes funding for the Gateway program, a $54 billion MTA capital plan and a $40 billion backlog of city water main and sewer work could keep the industry afloat.

“How long have we been talking about rebuilding our infrastructure?” Coletti said. “Now is the time for the federal government to step up.” ■

avoid the threat of tariffs two years ago, said Jerry Salama, principal of Janus Property Group, the project’s developer.

“WE HAVE TO DEMONSTRATE THAT NEW YORK CITY IS A HEALTHY AND SAFE PLACE TO LIVE, WORK AND BUILD”

18 | CRAIN’S NEW YORK BUSINESS | MAY 25, 2020

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FROM PAGE 3

institution has originated about $30 million in loans, according to regulatory data, and will have done significantly more by summer.

“The pandemic gave Piermont an opportunity to shine,” Cai-Lee said.

A $400,000 PPP loan meant Veronica Rose, CEO of Queens-based contractor Aurora Electric, could rehire all of her 24-person staff except two, who remain at home caring for family members. She also got a line of credit from Piermont to help cover upfront costs for a large construction project.

“They’re responsive. They’re fast.

They understand the business I’m in,” Rose said. “And they don’t discriminate.”

The Covid-19 crisis has played to the strengths of small banks like Piermont in surprising ways.

For years these institutions struggled to keep up with giant banks and their nationwide franchises in writing huge mortgages and auto

less than $10 billion in assets secured 60% of the available funding for clients in the first round of funding, while large banks struggled to get out of the starting gate.

“Community banks stole the show,” analysts at brokerage firm Keefe Bruyette & Woods wrote in a recent report.

Time of need Larger banks have done a better job lately, securing 53% of PPP loans in the second funding round, but a lot of borrowers won’t forget how lenders failed them in their time of need.

Research firm Greenwich Associates said that more than 1 in 5 business owners plans to switch banks because they were unhappy with their PPP experience. That suggests 6 million customers with $290 billion in their business-checking accounts are looking for a new bank, providing a huge opportunity for Piermont and thousands like it.

“We’re in a business where the human touch is appreciated,” said Cai-Lee, a classic New York success story who emigrated from China when she was 11.

In her youth, she hoped to work for her adopted country, perhaps as a diplomat or FBI or CIA agent. At one point she aimed to be a fashion buyer at Lord & Taylor.

“When I learned you could get paid to buy clothes, I thought, I’m game,” she said. “My father said, ‘Not over my dead body.’ ” After attending Rutgers University, she landed a job at Chase in the mid-1990s, launched a tech startup, then did a stint at Deloitte. In 2011 she joined East West Bank, which has served Southern California’s Asian community for years

PIERMONT BANK

BANK

BOARD OF DIRECTORS: (From left) Barrera, Cai-Lee, Chairwoman Julia Gouw and Peggy Ding and had just expanded to the New York area.

“I became knowledgeable about a whole lot of industries and expert in a few,” Cai-Lee said.

In July she opened Piermont, the first state-chartered bank to launch in New York since 2008. After the financial crisis, the creation of new banks stopped because ultra-low interest rates squeezed profits for lenders, and financial entrepreneurs tended to focus on building the next hot app.

Cai-Lee’s bank specializes in lending to small, family-owned businesses, and its staffers have a history of serving overlooked customers in innovative ways. In 2008, when he worked at Citigroup, Steve LaFredo, Piermont’s chief banking officer, took $30 million worth of microloans originated by a nonprofit and packaged them into a bond sold to institutional investors.

It was the first deal of its kind. The nonprofit was headed by Barrera, who is now a Piermont director.

The bank’s expansive sense of

“WE’RE IN A BUSINESS WHERE THE HUMAN TOUCH IS APPRECIATED” loans. But with almost no one buying a house or car these days, small banks’ ties to local businesses have never been more valuable—not just for borrowers, but also for the overall economy, whose recovery depends on their survival.

“The real niche for small banks is small-business lending,” said Paul Merski, chief economist at the Independent Community Bankers Association.

Those ties paid off when the PPP was launched. Small banks with

purpose helped when Covid-19 struck and PPP applications started rolling in. Its newness and small size also helped, because it wasn’t terribly complicated for 24 employees to suddenly work remotely.

Piermont was also one of the first banks in the city to accept PPP applications from borrowers who weren’t existing customers, said Michael Roth, partner at Next Street, a firm that helps small businesses find financing.

High approval rate Cai-Lee and her team handled each PPP application personally and consistently updated borrowers on their status. No application with missing information was submitted to the Small Business Administration, which helps explain why the bank’s approval rate was so high.

Staffers worked around the clock before the first funding round began. LaFredo filed applications at 5 a.m., when traffic on the SBA website was lower. Cai-Lee’s exec-

utive assistant helped prepare applications too.

Word began to spread that a tiny startup bank had cracked the code for getting PPP loans. After only eight of the 500 small businesses at the Brooklyn Navy Yard got funding in the first round, officials asked officials at Piermont and two other small lenders to help. About 130 tenants have since scored PPP loans.

“It was a night-and-day difference,” said David Ehrenberg, CEO of the Brooklyn Navy Yard Development Corp.

One Navy Yard tenant who received help was architect Poonam Khanna, a longtime JPMorgan Chase customer.

“By the time Chase said they were submitting my application to the Small Business Administration, Piermont Bank had already gotten my loan approved,” she said.

A Chase spokeswoman said: “We have helped 239,000 businesses get Paycheck Protection Program loans, and we’re not done yet. We’ll keep processing and submitting applications to help as many small businesses as possible.”

Cai-Lee said that when board members ask why Piermont has performed so well during the crisis, she answers that Covid-19 has amplified what she calls wrong-sizing, which means too many people use a bank that’s too big for their needs.

Piermont is flooded with requests for all kinds of commercial loans and is adding staff, including an innovation manager to make processes even more efficient.

Cai-Lee’s goal is nothing less than making the Piermont brand synonymous with excellence.

“When people try to build a new Google, they don’t say, ‘We want to build a new search engine,’ ” she said. “And when people build a new bank, I hope to hear one day ‘We’re building a Piermont.’ ” ■

REAL ESTATE

Skyline changes colors thanks to global donations 1,776

T

he Manhattan skyline recently got a whole lot more colorful.

Starting at sundown May 20, the Durst Organization, gave control of the iconic building lights of 1 World Trade Center, the Bank of America Tower and 4 Times Square to people around the world who donated money to the Coronavirus Relief Fund. The effort kicked off a monthlong initiative.

Durst, one of the oldest familyrun real estate firms in the city, partnered with Spireworks—an app

munities globally and essential workers.

HEIGHT in The proceeds feet of the 73 were slated to go light fixtures on to the cause via the broadcast GlobalGiving, a antenna atop platform that al1 World Trade lows people to Center, the tallest donate to initiainstallation tives around the world.

“We hope to raise money for those impacted but also to use our skyline to demonstrate our city’s resiliency and unity as we triumph over this scourge together,” Jordan Barowitz, a spokesman for Durst, said before the event.

“WE HOPE TO DEMONSTRATE CITY UNITY AS WE TRIUMPH OVER THIS SCOURGE” company that allowed users to change the colors of the light installations on the city’s skyscrapers—to raise money for impoverished com-

Social benefit

The campaign, “Change at a Distance,” aimed to connect people in quarantine around the world through live video of the color changes. Those who plan to participate can visit Spire-

WTC/DBOX

BY NATALIE SACHMECHI

works’ app nightly and scan the QR code for access, said Mark Domino, the creator of Spireworks and head of digital media at Durst.

After sunset, a donor can use the app to access the program that controls the lights at any of the buildings by making a donation of at

least $10.

“Now we see where something as delightful as playing with light on these iconic buildings can create some social benefit t h r o u g h giving,” said Domino.

The highest of the light installations was on the broadcast antenna atop 1 World Trade Center, with 73 light fixtures at a height of 1,776 feet. It was followed by 4 Times Square, with 220 fixtures at 1,149 feet, and the spire atop the Bank of America Tower, with 148 fixtures at 1,200 feet. ■

MAY 25, 2020 | CRAIN’S NEW YORK BUSINESS | 19

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C

CORONAVIRUS ALERT LAYOFFS

Brooks Brothers, Uber, Vice staff on the chopping block American retailer Brooks Brothers is shuttering its New York City tie factory and in turn will lay off 136 employees.

The New York–based clothing company cited unforeseeable business circumstances prompted by the Covid-19 pandemic in a filing with the state Department of Labor. Employee layoffs at the plant, located in Sunnyside, Queens, will go into effect Aug. 18.

The two-century-old company, known for its American-made ties and apparel for men and women, has seen tough times in recent years. To date it has about $600 million in debt.

In order to help mitigate its financial woes, the company will also shut its two other manufacturing facilities, located in North Carolina and Massachusetts, according to filings in each state. In total, the company will shed about 700 jobs from its manufacturing workforce in the three states combined.

Last year the retailer began its search for a buyer. In April Brooks Brothers extended the sale process, which could involve a transaction that is part of a bankruptcy filing,

Vice

people familiar with the matter told Bloomberg.

—Lizeth Beltran

Uber Uber is shedding workers once again.

The ride-share company is shedding 3,000 jobs in a second round of layoffs and closing 45 offices as it looks to navigate revenue loss stemming from the Covid-19 pandemic, the company disclosed to the Securities and Exchange Commission last week.

The layoffs are part of an effort

by Uber to slash its expenses by $1 billion. The filing did not clarify which offices will close. In the fall Uber signed a lease for a roughly 300,000-square-foot office at 3 World Trade Center.

“Given the dramatic impact of the pandemic and the unpredictable nature of any eventual recovery, we are concentrating our efforts on our core mobility and delivery platforms and resizing our company to match the realities of our business,” CEO Dara Khosrowshahi said.

The move comes weeks after the company announced it would eliminate 3,700 jobs and close 180 driver centers in its first round of

BUCK ENNIS

Brooks Brothers

cost-cutting measures. The job reductions announced earlier this month mostly would affect the company’s support and recruiting teams, Khosrowshahi wrote in an email to employees.

The company has moved hastily in recent weeks to reduce costs and dump investments wherever possible.

Last week Uber laid off 37

employees at Jump Bikes, which the company bought for $200 million two years ago. Jump has been sold off for parts, and Uber instead will invest $170 million in Lime, which will take over as Uber’s scooter and bike partner.

Lime will operate Jump’s bikes and scooters, Uber said.

—Ryan Deffenbaugh and L.B.

Vice Media Group will reduce its workforce in the U.S. and abroad.

The Brooklyn-based news organization is cutting 155 employees—55 in the U.S. and approximately 100 overseas—as a result of struggles in its digital division.

“Currently, our digital organization accounts for around 50% of our headcount costs but only brings in about 21% of our revenue,” said CEO Nancy Dubuc in a memo to employees.

Staffers in the U.S. had their last day May 15, and international employees will be let go in the coming weeks, according to the memo.

Vice Media was able to preserve about 90% of digital roles by eliminating open positions across the company and reassigning some employees to the Vice News division, Dubuc wrote.

Laid-off employees will be able to keep their work-issued laptops and receive severance pay. U.S. employees also will receive health benefits coverage through the end of the year.

Last year Vice Media also laid off about 250 employees as part of a company reorganization.

—L.B.

De Blasio backs at-home care for seniors

BY JONATHAN LAMANTIA

M

NYCMAYOROFFICE/FLICKR

ayor Bill de Blasio said he would prioritize getting more seniors care at home and having fewer treated in nursing homes as part of his Covid-19 recovery plan.

The long-term goal reflects the mayor’s ambition to reform city life rather than restore services to the way they were before the pandemic. The mayor hailed home care as a way to help more seniors live indeDE BLASIO pendently and reduce the spread of infections.

“I think we need to start thinking about a different future,” de Blasio said last week. “I think we need to think about a time where more and more of the care given to

ing goal for de Blasio, who is limited in what he can do to influence home care. The city doesn’t control Medicaid and has limited influence to regulate health care providers or the private Medicaid plans that finance home care. The city’s insurance arm, MetroPlus, does run its own managed longterm care plan that pays for home care in the Bronx, Brooklyn, Manhattan and Queens.

“It should be our goal to enable everybody who can live at home to do so,” said Dr. Mitchell Katz, NYC Health and Hospitals’ CEO. Home care was one of four elements in a plan de Blasio presented last week to help the city’s 169 nursing homes battle Covid-19 by promising to provide testing capacity, nursing staff and Department of Health disease-control specialists.

The mayor was careful to clarify that the state Department of Health regulates nursing homes,

“I THINK WE NEED TO START THINKING ABOUT A DIFFERENT FUTURE” our seniors is given to them at home.”

Reforming long-term care could prove an expensive and challeng-

in which at least 5,600 people have died or are presumed to have died from Covid-19 statewide.

The city plans to offset the cost of nursing home residents’ tests and

deliver kits so that nursing homes can test an additional 3,000 people per day on top of their current capabilities.

De Blasio said the city would

continue to contribute to the costs of the tests for as along as they're needed and would more than double the number of staffers it provides to facilities to 600. ■

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Volunteers of America Greater New York

David A. Landman joins Ulmer as Partner in the Business Litigation Practice Group and divides his time between the firm’s New York and Cleveland offices. David has significant experience representing clients in complex commercial litigation and class action matters, as well as private equity, real estate, and financial services clients in various transactions and acquisitions.

He received his undergraduate degree from Binghamton University and his law degree from Fordham University School of Law.

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CORONAVIRUS ALERT

Landlord sues to hold restaurateur personally liable for unpaid rent

BY RYAN DEFFENBAUGH

is not surprising, given their long practice of tenant harassment in New York.”

The statement was an apparent reference to a $500,000 settlement Icon paid the state attorney general’s office in 2018 for the alleged harassment of residential tenants.

The company denied any wrongdoing following the settlement.

A spokesman for Icon Realty responded directly to Fig & Olive’s statement to Crain’s, saying the landlord had reached deals with

A

Manhattan landlord has sued the founder of the Fig & Olive restaurant group personally for $90,000 in unpaid rent at the chain’s Upper East Side location—a type of legal action that the City Council recently voted to suspend during the Covid-19 crisis.

The owners of 808 Lexington Ave., a Lenox Hill apartment building, sued Laurent Halasz in Manhattan federal court last Thursday, citing his status as guarantor on a ground-floor retail lease for Fig & Olive at the building.

The restaurant is at least two months behind on its $42,000 monthly rent, plus other charges, according to the lawsuit. With the restaurant “openly refusing to perform (or even respond) to plaintiff, plaintiff has no choice but to pursue this action against (Halasz), as guarantor, to recover amounts due under the lease and guaranty,” it read.

A spokeswoman for Fig & Olive slammed the landlord in an email: “While it is unfortunate that our landlord, a subsidiary of Icon Realty Management, has initiated an action to individually sue our beloved founder, Laurent Halasz ... it

lawsuit. The restaurant signed a 10year lease at the building in 2015, an extension after Fig & Olive opened its first location there in 2005. The landlord alleges that the restaurant had made several efforts before the pandemic to rework the terms of the lease and was unresponsive following the crisis, a charge Fig & Olive denies.

“The evidence will show that we have attempted to work in earnest with Icon since March 27, in light of the closure of our restaurants due to the Covid-19 crisis,” the company’s statement read.

The landlord’s attorney did not immediately respond to a request for comment.

Fig & Olive runs nine Mediterranean restaurants in the city, Westchester County, California, Chicago, Houston and Washington, D.C. The company furloughed 244 New York employees in March after the pandemic forced the closure of its four dining rooms in the state.

Halasz, who lives in California, according to the lawsuit, is not listed on Fig & Olive’s website as an active part of the company’s management.

The lawsuit comes one week af-

“IT’S DISAPPOINTING FOR FIG & OLIVE TO TRY TO TAKE ADVANTAGE” other tenants unable to pay rent.

“It’s disappointing, bordering on despicable, for someone who made their money peddling, ‘Cuisine of the French [Riviera]’ to the ultra-rich to try to take advantage of the pandemic and accuse us of harassment after they blew us off.”

Garnished wages Fig & Olive’s representatives told the landlord in April that the restaurant could no longer make payments and required changes to its lease terms, according to the

ter the City Council voted to suspend enforcement of personal liability provisions in commercial leases and rental agreements. The bill was part of a Covid-19 relief package for small businesses.

Councilwoman Carlina Rivera, its sponsor, said the suspension ensures “business owners, should they be forced to walk away or temporarily shutter their stores through no fault of their own, can do so without facing threats to their life savings and personal assets.”

Check, please!

In opposition to the bill, the Real Estate Board of New York said it would mandate “seemingly impermissible, unilateral amendment of existing, valid contracts. It is not clear that the City Council has the authority to do this.”

Mayor Bill de Blasio is scheduled to sign the bill into law May 26, according to a schedule on the council’s website. The bill would take effect immediately and suspend personal liability provisions through the summer.

Assuming the mayor does sign the bill, “the question will be whether the provisions apply retroactively,” said Joe Taylor, a lawyer with Helbraun Levey who has clients in the hospitality field. ■

State sales tax deadline pushed back to late June

BY GWEN EVERETT NEW YORK STATE has delayed the deadline to file sales taxes to late June, Gov. Andrew Cuomo said last week.

Businesses will have until June 22 to file sales taxes, which were previously due May 19, the governor said. The move staved off a deadline that already had been extended. Sales taxes were initially due March 20, when the Covid-19 pandemic already had begun to take hold in the state.

“Small businesses are struggling.

The numbers of small businesses that they’re projecting may not come back are really staggering,” Cuomo said. “We understand that they have financial issues, obviously, so the state is doing everything they can.”

Reiterating a call he has made previously, Cuomo said more robust aid would need to come from the federal government. ■

Czech billionaire who April is ‘worst month ever’ bought Macy’s stake for hospital revenue: report bets on Foot Locker

Retail therapy Kretinsky, 44, has been scooping up shares of troubled retailers, investing last year in France’s Casino Guichard-Perrachon SA after a $6.5 billion takeover offer for Germany’s Metro AG was rebuffed. A former private-equity lawyer, Kretinsky now owns Energeticky a Prumyslovy Holding AS, one of the largest power companies in central Europe, as well as the Sparta Prague soccer team.

Kretinsky declined to comment on his Foot Locker stake.

Foot Locker, like other retailers,

GETTY IMAGES

D

aniel Kretinsky, the Czech billionaire who invested in Macy’s Inc. earlier this month, disclosed that he’s also bought shares in another beatendown U.S. retailer: Foot Locker Inc. Kretinsky’s Vesa Equity Investment acquired 6% of the company’s common shares, according to a U.S. regulatory filing. His stake in the New York–based sneaker store chain has a current market value of about $169 million.

KRETINSKY

has been hit by the Covid-19 pandemic. The company in March withdrew its forecast for this year and said it would temporarily shutter stores in most parts of the globe, including North America. Foot Locker shares are down 31% this year, even after jumping 6.2% last Monday, to $27.

In disclosing his 5% stake in Macy’s last week, Kretinsky, who tested positive for the coronavirus in March, said he planned to work with management to improve the department store chain’s performance.

Macy’s was dropped from the S&P 500 benchmark in March, and Fitch cut the company’s credit rating to junk levels last month. ■

HOSPITALS ACROSS THE U.S. experienced extreme declines in patient volume and revenue last month, driving most into the red, according to a report from Kaufman Hall.

The median operating margin was 29% among the approximately 800 respondents to the Chicago-based consulting firm’s monthly survey.

Declines were particularly severe in surgery departments and outpatient clinics. The number of minutes operating rooms were in use fell 61% in April compared to the same month in 2019. Outpatient revenue was cut in half, while hospital discharges fell 30% yearover-year, leading to a 25% decrease in inpatient revenue.

Cruelest month “April was the worst month ever for hospital finances,” said Jim Blake, managing director at Kaufman Hall. “Our nation’s hospitals are in a perilous position. They are serving as the front lines of our battle against this virus, but the pandemic is threatening their fundamental financial viability at a

ISTOCK

BY JONATHAN LAMANTIA

BLOOMBERG

time when we need them most.”

The report doesn’t break down local financial performance, but New York hospitals have started to share financial results from the first quarter, with more filings expected in the next few weeks. Memorial Sloan Kettering Cancer Center, which has consistently generated operating income, lost $62 million in operating income in the first quarter. In 2019 it had earned an operating profit of $65.3 million in the first three months of the year.

The Greater New York Hospital

Association has said that local hospitals were losing $350 million to $450 million a month from the crisis.

Kaufman Hall noted that U.S. hospitals’ losses deepened in April even after they received $50 billion in federal coronavirus relief aid.

Not all of that aid was distributed by the end of April. The $5 billion in Covid-19 hot spot money, which the federal government approved to better target the hardest-hit facilities, didn’t reach New York facilities until May. ■

22 | CRAIN’S NEW YORK BUSINESS | MAY 25, 2020

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Global cuisine to spice up your takeout routine

BY CARA EISENPRESS

D

LOLO’S SEAFOOD SHACK

DANNY PRUSSMAN

uring the past two weeks, a growing number of city restaurants have reopened for limited hours, offering takeout and deliveryonly menus. For most, takeout sales are only a stopgap and don’t fully compensate for lost revenue. Of the eateries surveyed by the New York City Hospitality Alliance, nearly 9 in 10 said they paid either none or only a portion of their May rent.

RAS PLANT BASED

JACOB’S PICKLES 11 a.m. to 10 p.m. daily Filling, Southern-inspired food has always been the draw at Jacob’s Pickles. Now the restaurant is offering delivery. The biscuit sandwiches come with sausage, egg and cheese and other fillings at breakfast, then come complete with buttermilk fried chicken and various toppings for lunch.

509 Amsterdam Ave. LE CROCODILE 3 to 8 p.m. daily The sit-down spot at the Wythe Hotel in Brooklyn is selling its entire regular menu for takeout and delivery. That includes a whole herb-roasted chicken dinner, leeks vinaigrette and flourless chocolate cake.

There are also pantry items, including cheese, and ramp butter, as well as alcohol for sale.

80 Wythe Ave., Brooklyn LOLO’S SEAFOOD SHACK Noon to 9 p.m. daily Lolo’s is delivering favorite items such as fried fish and chips through most of the delivery apps or by calling the restaurant.

There’s a soft-shell crab special and a lobster roll served on a homemade

such as rib eye minute steak and roasted cauliflower. Diners can now place an order on most delivery apps. Each location is also selling Israeli pantry goods, such as za’atar, and family-style meals like roasted chicken and hummus if a customer orders by 3 p.m. Wednesday for pickup between 3 and 5 p.m. Friday.

435 W. 15th St. (Chelsea Market); 161 W. 72nd St.

MIZNON AND MIZNON NORTH johnnycake with avocado. Along with World Central Kitchen and Marcus Samuelsson’s Harlem EatUp, Lolo’s has prepared and delivered hundreds of meals each week to NYCHA residents in Harlem.

303 W. 116th St.

MAMA’S TOO Noon to 10 p.m. daily The thick-crust, crispy pies that have driven lines out the door at this pizza place near Columbia University are available for takeout and delivery through its website. Whole pies come with pepperoni or mushrooms and sausage. And each WednesMAMA’S TOO day the restaurant offers a special sandwich.

2750 Broadway MIZNON AND MIZNON NORTH 5 to 9 p.m. Monday through Saturday Both restaurants, Israeli imports, are known for their creative pita fillings,

NORTHERN TIGER Noon to 8 p.m. Monday through Saturday The fast-casual Chinese stall in Brookfield Place’s food court is now offering both delivery and contactless pickup outside of the mall. The menu includes rice bowls with toppings such as barbecue char siu pork, beef soup, five-spice chicken wings and several types of dumplings.

There’s also a kit that includes 25 frozen dumplings plus sauces to go with them.

Northern Tiger sells jars of homemade chili crisp, a spicy oil, as well.

225 Liberty St. (Brookfield Place)

RAS PLANT BASED 2 to 9 p.m. Monday through Saturday The two-month-old Ethiopian restaurant with an all-vegan menu started offering takeout and delivery in Crown Heights on May 4. Menu items include a platter with chickpeas, collards, cabbage and mushroom dishes.

739 Franklin Ave., Brooklyn LOS TACOS NO. 1 AND LOS MARISCOS 11 a.m. to 9:30 p.m. daily The trio of Los Tacos No. 1 locations and Los Mariscos, the chain’s seafood-focused cousin, have reopened for pickup and delivery. The menu always has been limited to a small assortment of tacos and quesadillas with fillings including carne asada (steak), pollo asada (chicken) and adobada (pork) at Los Tacos No. 1. Los Mariscos’ menu specializes in fish and shrimp. Now the four restaurants are also offering a make-your-own taco kit, for which customers can select how many people will be eating and whether they’d like corn or flour tortillas or shells.

Los Tacos No. 1: 75 Ninth Ave.; 229 W. 43rd St.; 136 Church St. Los Mariscos: 409 W. 15th St.

OLMSTED TRADING POST 2 to 7 p.m. Monday through Friday; noon to 7 p.m. Saturday and Sunday The Prospect Heights restaurant has just reopened as a shop filled with organic produce, wine, cocktails and baked goods created by the restaurant’s pastry chef. Olmsted also functions as a community food bank, especially for laid-off restaurant workers, through a partnership with the Lee Initiative and spirits brand Maker’s Mark.

659 Vanderbilt Ave., OLMSTED TRADING POST Brooklyn

OLMSTEAD TRADING POST

BKLYN LARDER Pickup and delivery on Thursdays The Park Slope specialty shop has reopened for pickup with an offering of frozen, refrigerated and pantry items that range from half a dozen meatballs and breakfast sausages to frozen croissants.

228 Flatbush Ave.

MIZNON AND MIZNON NORTH

LOLO’S SEAFOOD SHACK

MAMAS TOO

SOHO DINER

OUT OF OFFICE

MAY 25, 2020 | CRAIN’S NEW YORK BUSINESS | 23

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