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

ASKED & ANSWERED Wylde on how an antidevelopment stance hurts the city

FROZEN FOOD Will outdoor dining still be popular this winter?

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CRAINSNEWYORK.COM

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OCTOBER 19, 2020

POLITICS

WHO WILL BE THE NEXT MAYOR? De Blasio’s successor will have to restore a city that’s divided, sickened and broke BY BRIAN PASCUS

hoever succeeds Bill de Blasio as mayor of New York will inherit a collection of challenges that the city has not experienced since the early 1990s. The global pandemic brought on by Covid-19 has killed more than 23,000 New Yorkers since March. The subsequent shutdown of regional commerce to protect citizens from the virus has caused unprecedented

BUCK ENNIS, FLICKR

See MAYOR RUN on page 18

INSIDE CITY HALL: Shaun Donovan, Loree Sutton, Eric Adams, Maya Wiley, Kathryn Garcia, and Scott Stringer

RETAIL

Plastic bag ban in question after new legal challenge Bodega and supermarket owners sue over confusion about reusable plastic totes BY BRIAN PASCUS

plastic bag ban set to begin Oct. 19 is now mired in uncertainty following a lawsuit by bodega and supermarket owners.

NEWSPAPER

VOL. 36, NO. 35

The crux of the confusion is whether or not reusable plastic bags are allowed under the terms of a state law. Since its passage in April 2019, the Bag Waste Reduction Act has been fraught with legal challenges by plastic manufacturers and

supermarket industry groups concerning a statute that bans the use of all plastic bags. The state Department of Environmental Conservation, the agency in charge of enforcement, has only added to the confusion by exempting certain types of reusable plastic

bags—a carve-out that was not in the law. Food industry groups have argued that the law cannot be enforced on its intended start date because it is not clear what type of bags See BAGS on page 6

RENT-RELIEF PROGRAM A ‘MASSIVE FAILURE’

GOTHAM GIG

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Helping health care firms innovate

FROM THE NEWSROOM | ROBERT HORDT | EDITOR

REAL ESTATE

CRAIN’S COMMITTED Diamond District gem TO 2021 MAYORAL RACE hits the market for $113M BY NATALIE SACHMECHI

12-story Diamond District gem, home to some of the city’s famed diamond dealers, is hitting the market for $113 million—jewels not included. The Edwardian building at 576 Fifth Ave. could be changing hands for the first time in more than four decades. It was last purchased for $1.3 million in 1977, and the property is now run by third-generation family office Severn Realty Partners. The property, built in 1907, has been a premier exchange for jewelry in the city, where troves of diamonds pass through its doors daily as family-run businesses cut, set and sell some serious bling. Peter J. Germano Jewelers, J. Birnbach International and Manhattan Buyers are among a number of tenants. Some of them have their retail stores on the ground floor and offices above, and many others use their offices as showrooms, said Paul Massey, chief executive of B6 Real Estate Advisors, which is marketing the property.

The building will likely retain its Class B mixed-use status, Massey said, although it will depend on whether current tenants can stay put or need to set up shop somewhere else.

The perfect buyer The sale comes at a time when retail vacancies are at alarming highs and commercial tenants are having trouble paying their rent. The new

Amazon lands another huge deal on Staten Island

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development is now fully leased. Amazon has already started to move into the space, Matrix CEO Joe Taylor said. “We’re proud of it,” he said of the logistics complex, “and we’re delighted Amazon has enough confidence in us and in the park to lease yet another building.” The company will use the site as a center to sort packages before transferring them to a delivery station or a delivery partner, Amazon spokeswoman Emily Hawkins said. It will officially open in November and has created more than 1,250 full-time and part-time jobs so far, she said. Industrial real estate has been one of the few bright spots for the industry during the pandemic. The

THE NEW FACILITY HAS CREATED MORE THAN of1,250 JOBS SO FAR

CRAIN’S HALL OF FAME CELEBRATION

VIRTUAL EVENT Time: 4 to 5 p.m. CrainsNewYork.com/ VirtualHOF

Bronx warehouse taking up more than 100,000 square feet last year. The logistics park is near the Bayonne Bridge and spans 3.5 million square feet overall. Ikea in 2018 leased a 975,000-square-foot warehouse at the site for a fulfillment center focused on e-commerce, and Amazon’s latest deal means the

office and retail sectors had an extremely rough third quarter, but leasing activity for industrial properties surged by more than 70%, according to a report from CBRE. The report cited the 975,000-squarefoot lease in the logistics park as the largest industrial lease of the quarter but referred to the lessee only as “a prominent e-commerce tenant.” BLOOMBERG

mazon has signed yet another massive lease on Staten Island. The e-commerce giant is leasing an additional 975,000 square feet at Matrix Global Logistics Park, Matrix Development Group told Crain’s last week. The company will occupy the entire fourth building at the complex. Amazon previously had leased a 450,000-square-foot warehouse and opened an 855,000-squarefoot distribution center at the logistics park on Staten Island’s West Shore. The company also leased a

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owner will be someone optimistic about the city’s future, Massey said, with hopes to use it as a headquarters. “I think probably the perfect buyer is going to be someone with a very long-term view of New York City post–the current period,” he said. “To be able to buy a HQ building smack in the middle of 47th and Fifth, close to Grand Central, is a rare opportunity.” Although it has retained the same ownership for the past 43 years, the property was sold as a leasehold several times. Nick Bienstock’s real estate investment firm, Savanna, took over the leasehold in 2012, when Western Management, which held it at the time, went into default in the aftermath of the financial crisis. After making updates to the building’s facade, elevators and windows, Savanna sold its claim to the Michael Miller–led Real Estate Equities Corp. in 2012. A Chetrit family deal to sell its Diamond District building at 15 W. 47th St. fell through in July after the buyer failed to close on the property. ■

REAL ESTATE

BY EDDIE SMALL

WEBCAST CALLOUT

Crain’s Hall of Fame highlights the top city leaders who have shaped one of the most important commercial capitals of the world. The honorees represent a breadth of industries and wield influence across sectors, from real estate to health care to cultural institutions. Crain’s invites you to join us in our annual celebratory event honoring this year’s Hall of Fame inductees.

576 FIFTH AVE.

COURTESY OF B6

THIS WEEK’S ISSUE MARKS the beginning of Crain’s coverage of the 2021 mayoral race. Our political reporter Brian Pascus’ story on page 1 introduces the leading candidates to succeed Mayor Bill de Blasio. Although the race will likely not begin in earnest until after the presidential election next month, we wanted to get a head start. Throughout the next year, we plan to bring readers up-todate developments of the campaign, detailed profiles of the candidates and ongoing surveys of the electorate. These surveys will not only THE NEXT keep track of which candidates are leading the race, but also detail the issues that matter most MAYOR WILL to New Yorkers. Crain’s is also planning to sponsor candidate debates, whether virtual or in perHAVE TO son, to give voters the opportunity to hear from HELP HEAL the candidates directly on their vision for New York. THE CITY’S No one knows what the city will look like SPIRIT AS when the next mayor assumes office in January 2022. For all we know, it may well be on the WELL AS ITS mend from the pandemic. But if experts are right, it will take years for some sectors of the ECONOMY city’s economy to come back. Small businesses have been hit particularly hard by Covid-19, and it may be presumptuous to expect that life as we know it will return to normal in the next 15 months. That is why the race for mayor will be so important for the future of New York. In addition to leading the city’s ongoing economic recovery, the next mayor will have to heal the city spiritually. As the past few months have shown, New Yorkers are demanding racial justice in all institutions, but most of all in the Police Department. They are also unhappy with the economic inequality that persists and divides the city's population into haves and have-nots. The next mayor will surely have his or her hands full, and that is why Crain’s is committing itself to providing readers with the most complete coverage of the election that we can deliver. This also will be the first mayoral election to use ranked-choice voting in the primaries, a change we’ll explain to voters. If you have any ideas on how we can make our content even better and more informative, send me an email at robert.hordt@ CrainsNewYork.com.

Other deals Amazon has had a complicated relationship with the city since at least 2018, when the firm announced its plan to build part of its second headquarters in Long Island City, only to abandon the idea the following year in the face of political and community opposition. It has still made several deals in the city since then, however, including leasing 335,000 square feet of office space from SL Green near Hudson Yards. It also bought the historic Lord & Taylor building on Fifth Avenue for $1 billion. The company said it would hire 2,000 workers by 2023 for its new office there. ■

Vol. 36, No. 35, October 19, 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 | OCTOBER 19, 2020

RESTAURANTS

RESTAURANTS BRACE FOR WINTER’S CHILL

DI PIETRO, owner of Tarallucci e Vino, gets ready for winter.

BUCK ENNIS

Even with propane heaters, eatery owners wonder how popular December dining will be BY GWEN EVERETT

he owner of the NoMad restaurant Scarpetta is thinking about winter outdoor dining as a New York City take on après-ski. “I think that hosting guests outdoors is very viable—I don’t think it’s formal dining, I think it’s snacking and cocktails,” said John Meadow, president of LDV Hospitality, which owns Scarpetta. It would have been un-

conscionable a year ago that guests would be eating in a city bike lane, he said, but it is the difference this particular year has made. Of course none if it is making money for LDV, Meadow said. See DINING on page 20

“YOU CAN’T HAVE PARTIES LIKE YOU USED TO. THE PARTIES ARE WHAT MAKE YOU A LOT OF YOUR MONEY”

REAL ESTATE

Cuomo’s rent-relief program a ‘massive failure’ Only about 6% of applicants have received funds so far

orisela Hernandez has lost all hope of remaining in her Manhattan studio for the duration of her lease. The 40-yearold mother of two applied to the state’s Covid-19 rent-relief program in August, but she has yet to receive word on whether she’s been approved or denied.

“I’m frustrated,” Hernandez said in Spanish regarding the progress of her application, “frustrated because I’m going to lose my apartment.” Hernandez is not alone in her grievance. So far New York’s Covid-19 rent-relief program has distributed only about $12 million of its $100 million in funding in the more than two months since the

application period ended. Although about 37,000 of the more than 90,000 people who applied have been approved for rent relief, money has gone out to only about 6,000 applicants, or roughly 6% of the total, state politicians say. “I’m sure there was a learning curve, but it’s now mid-October,”

BUCK ENNIS

BY EDDIE SMALL

See RENT on page 4 OCTOBER 19, 2020 | CRAIN’S NEW YORK BUSINESS | 3

POLITICS

Union labor negotiations test city’s ability to handle fiscal crisis

labor contract deal struck by Mayor Bill de Blasio and the city’s teachers union captures the murky world of budget negotiations that characterize the administration’s attempts to stave off fiscal collapse. De Blasio announced Oct. 9 that his administration came up with “$450 million in labor savings” by reaching a deal with the United Federation of Teachers in which money owed would become money deferred in exchange for a promise to delay any teacher layoffs until June 2021 and raise educators’ pay 3% that year. Although the deal will result in $450 million in savings in this fiscal fiscal year, its context is a little more nuanced. “De Blasio is calling this deal a

This budget commitment to teachers goes back to the Bloomberg administration. Between 2009 and 2011, UFT failed to secure a raise during labor negotiations following the Great Recession. Once de Blasio took office in 2014, he awarded $3.6 billion in back payments that would be stretched out over six years. With a $7 billion fiscal hole over the next two fiscal years, New York City said that it can’t afford to complete the payments this year. Rather than risk layoffs, the 120,000-member teachers union swallowed its pride and accepted another deferment of a payment owed to it 11 years ago. “The shocking part is this is not a surprise to the city. It’s not like they didn’t know this was coming,” Michael Mulgrew, UFT’s president, said in a YouTube video message. “This is our last payment.”

“IT’S NOT A SAVINGS. IT’S JUST PUSHING THE DEBT INTO THE NEXT FISCAL YEAR” labor savings, but it’s not a savings,” said Nicole Gelinas, senior fellow at the Manhattan Institute. “It’s just pushing the debt into the next fiscal year and making it a problem for the next mayor.”

RENT FROM PAGE 3

Assemblywoman Linda Rosenthal said. “They should be able to process applications much more quickly.” Assemblyman Harvey Epstein described the numbers as “very low” and said they reflect “structural problems with the program and its administration.” The Division of Homes and Community Renewal, which administers the program, disagreed with the Assembly members’ numbers but declined to provide figures of its own. Echoing the Assembly members’ sentiments was Cea Weaver, coordinator for the Housing Justice for All Campaign. “It’s unconscionable. The state has clearly failed to get aid money out the door,” she said, describing the program as “a massive failure.”

Half-hearted attempt? The program was open for applications from July 16 through Aug. 6. Its aim was to help tenants who have lost money because of the pandemic, who earn less than 80% of an area’s median income or who spend more than 30% of their monthly income on rent. The program was flooded with applicants and criticism. Housing advocates claimed that the application process was not open long enough and the state

Health costs

The negotiation with the UFT could be a preview of future labor talks the administration must have with labor committees, transportation unions and representatives for worker health care pensions to avoid the layoffs of up 22,000 city workers, which de Blasio has threatened.

had not publicized the program well, characterizing it as a half-hearted attempt to help tenants when more was needed. HCR spokesman Brian Butry responded to criticism by stressing that the agency was only properly carrying out what the Legislature itself put together. “I think the Legislature seems to have forgotten that they actually wrote the law creating the program,” he said. “Any structural issues, very specific exclusions, limitations are singularly the Legislature’s domain.” Butry also defended the speed at which HCR has been going through the applications, saying that staffers have been “working around the clock to implement the program.” The first round of applications has been approved or reached the final stages of the approval process, HCR said. The second round needs more intense and specialized case management, the agency said, and HCR has reached out to every member in the applicant group. Renters who think they have been rejected for rent relief in error may appeal their case to the state. The law the state enacted creating the rent-relief fund did include some rough parameters, but it left HCR in charge of structuring and implementing the program, Rosenthal said. “There’s no need to be defen-

4 | CRAIN’S NEW YORK BUSINESS | OCTOBER 19, 2020

22,000 people,” Doulis said.

Eyes on the MTA

BLOOMBERG

BY BRIAN PASCUS

Health care is the main place to look for savings, said Maria Doulis, vice president of the Citizens Budget Commission. Excluding municipalities in California, none holds a larger health insurance liability than New York City’s estimated $110 billion. “No other city or state is offering as generous health benefits to retirees and their families,” Doulis said. “The liability for retiree health care benefits is much larger than the liability for pensions.” City workers are enrolled in health care plans that don’t require them to pay a premium. Coverage under the plan extends to workers’ spouses and children. Workers are guaranteed coverage into retiresive,” she said. “What’s needed is a way to fix this quickly.”

Stressing out Hernandez was able to borrow funds from relatives to pay two months in back rent, but she can no longer afford her apartment on her inconsistent income as a house cleaner. Although she knows her landlord must take several steps to force her out if she defaults again on rent, the anxiety from constant phone calls and knocks on the door has been difficult, she said. “Honestly, I don’t feel like [state officials] really want to help us,” Hernandez said. “They rolled out this program so people would calm down and back off from the movement to cancel rent.” Dawn Miller, a Flatbush resident, said she had not received help from the program. She blamed stringent paperwork requirements as the problem. Miller was let go from her job at a kiosk at Brooklyn College in March. She has not been able to get in touch with her former employer to help her get the documents she needs for approval, she said. “I just can’t deal with it. I can't take the stress,” Miller said. “And I know my landlord. He is working on the eviction.” Gov. Andrew Cuomo did not immediately respond to a request for comment. ■ Lizeth Beltran contributed reporting.

ment after only 10 years of service. When they are 65 and enroll in Medicare Part B, the city reimburses retirees for the full cost of that premium. “We’ve never funded it,” Gelinas said. “Every year we make promises to future retirees and we don’t put money away to fund those promises.” The Citizens Budget Commission argues that the city should work with the Municipal Labor Committee on a health insurance premium-sharing agreement in which workers would contribute a portion of the cost of the premium. “That reform would be sufficient to generate hundreds of millions of dollars and prevent the layoffs of

Another place to watch the dysfunctional politics of labor negotiations play out is at the Metropolitan Transportation Authority. Chairman Patrick J. Foye has said all options are on the table in the event that the MTA does not receive $12 billion in federal funding to cover operating expenses this year and next—a position that could induce the MTA to cancel contracts, cut subway lines, raise fares and lay off transportation workers. “We’re not engaging in concessionary bargaining,” said John Samuelsen, president of the Transportation Workers Union International. “After over 100 fatalities to Covid-19, we kept the city moving.” Samuelsen, who has pressed the federal and state governments to step up funding, said borrowing should be thought of as an investment in the future, not as a matter of going into debt. “This crisis is not the fault of workers,” he said. “The New York City Transit Authority has been in cyclical financial crisis since the day I started this job 27 years ago.” Ken Lovett, a senior spokesman at the MTA, said the authority’s focus right now is on the need to secure federal funding. ■

HEALTH CARE

AdvantageCare partners with state on rapid testing BY JENNIFER HENDERSON

dvantageCare Physicians— part of EmblemHealth’s family of companies—has partnered with the state to up Covid-19 testing capacity in city hot spots. Though AdvantageCare has medical offices across the five boroughs and Long Island, the new partnership will focus on expanded testing in parts of Brooklyn and Queens as cases in certain ZIP codes there rise. The effort is part of Gov. Andrew Cuomo’s Cluster Action Initiative to provide additional testing sites in targeted communities, AdvantageCare said. AdvantageCare will prioritize rapid, point-of-care testing at eight of its locations in Brooklyn and Queens, the practice said. To support the effort, the state is supplying the sites with additional Abbott testing machines for rapid tests, test kits and personal protective equipment. The locations are in Bay Ridge, Flatbush and Kings Highway in Brooklyn, and in Elmhurst, Flushing, Forest Hills, Jamaica Estates and Rockaway in Queens.

Dr. Navarra Rodriguez, president and chief medical officer at AdvantageCare, said in a statement that the practice appreciates Cuomo “recognizing the importance of local providers and care teams … to increase testing and outreach in our neighborhoods—especially in lowincome and minority communities that continue to be at higher risk.” AdvantageCare also partnered with the city and the state in the spring to expand Covid testing in some of the hardest-hit communities locally. Providers have increasingly turned to rapid testing, viewed by public health experts as an important tool for fighting infection spread, as of late. Recently ProHealth and Riverside Medical Group—both part of UnitedHealth Group’s OptumCare—as well as PM Pediatrics—a nationwide provider of pediatric urgent care—said they were making pushes in rapid testing. More than 50% of the half a million patients served by AdvantageCare facilities are Black or Latino, and more than 70,000 are insured by Medicaid. ■

HEALTH CARE

Insurance premiums rise 4% in 2020; unaffordability concerns mount

ealth insurance premiums grew by 4% this year from 2019, according to the latest edition of the Kaiser Family Foundation’s employer health benefit survey. Although the bump is modest by historic standards, cumulative premium increases have outstripped wage growth, and there are concerns that health care is becoming increasingly unaffordable, a study author said. The San Francisco–based nonprofit has been tracking premium costs since 1999. Annual premiums for single and family coverage both rose 4%, to $7,470 and $21,342, respectively. Workers contributed 17% of the cost for single coverage and 27% for family coverage. Across all plan types, the Northeast had the highest annual premiums, with $7,826 for single coverage and $23,151 for family coverage. The South had the lowest, with $7,296 and $20,593 for single and family coverage, respectively. Single coverage for small firms— defined as having between three and 199 workers—cost $7,483 for

the year. The amount was $7,466 for large firms—those with 200 or more workers. Family coverage premiums for small firms were $20,438 and $21,691 for large firms.

Increasing costs The rise in premiums was largely led by increased health care costs, said Matthew Rae, associate director for the health care marketplace program at the organization and one of the study’s authors. Premiums have cumulatively gone up 22% since 2015, but wages have increased by only 15%. If the disparity between premiums and wage increases continues, health care will become unaffordable for more U.S. workers in coming years, he said. Drug costs have also gone up significantly, ultimately leading to the higher premiums noted in the study, said Leslie Moran, senior vice president at the New York Health Plan Association. Addressing drug prices as well as hospital and provider costs will be necessary to keep premiums manageable, she said. Cost-sharing by employees has gone up too, Rae said. “We’ve seen a remarkable increase in deduct-

GETTY IMAGES

BY SHUAN SIM

ibles over time,” he said. The average deductible in 2020 was $1,600, and 26% of employees had a deductible more than $2,000. Five years ago, the average deductible was $1,300, and only 19% of employees had a deductible more than $2,000. Shifting the burden of health care costs to employees can be worrisome as many workers don’t have the financial savings to pay out of pocket before a health plan starts paying, Rae said. In 2003 only 13% of workers experienced out-of-pocket spending that exceeded $1,000. In 2018 that percentage was 24%. “There is a concept that higher deductibles and out-of-pocket spending requirements will mean workers would not use unneces-

sary care and be more cost-cautious when accessing health services, but we’re not seeing that play out,” Rae said. Instead, what has happened is workers choose to skip care and medications altogether due to costs. “And these responses are also coming from people with relatively generous health benefits too,” he said, adding that this cost-sharing shift could ultimately lead to poorer health outcomes if sick people keep foregoing care. But higher deductibles might be necessary to keep premiums affordable for a broader range of benefits, Moran said. Under the Affordable Care Act, health plans are working within detailed actuarial values that act as guard rails for the

consumer, she said. In New York, all health plans have to submit their rates to the Department of Financial Services, which gets the last say, Moran said. New York plans work closely with the department to ensure affordability as it is still in their interest for the products to be accessible, she said. In fact, the department had approved a rate increase of only 1.8% for 2021, underscoring the strong protections that exist in the state, she added.

Mental health benefits A new concern from this year’s Kaiser study was that many health plans did not have adequately broad mental health coverage, Rae said. This could result in high surprise bills for firms and workers as the need for such services increases, he said. Although 70% of large employers said their plan’s medical network was broad, only 37% of large employers said theirs had a broad network for mental health services. “As workers navigate anxieties from Covid-19, the last thing they want is to be hit by surprise billing from visiting an out-of-network mental health provider,” Rae said. ■

OCTOBER 19, 2020 | CRAIN’S NEW YORK BUSINESS | 5

IN THE MARKETS

After election, Wall Street fortunes could change It’s a safe bet that if Biden wins, his administration will be less charitable to finance

FROM PAGE 1

are allowed. “ ‘Reusable plastic bag’ is not a term defined or used in the Bag Waste Reduction law,” Environmental Conservation general counsel Cristin Clark said. “Non-woven polypropylene bags that meet the definition of a reusable bag are not banned from distribution.” In August an Albany judge upheld the ban but ruled that the department has no right to exempt any reusable plastic bags. The supermarket and bodega industry is mulling how to respond. “We’re considering ignoring the law, but I’m not sure we’re going to yet,” said Nick D’Agostino III, owner of D’Agostino Supermarkets. “Any

Echoes of the past Of course, things are different than in 2008 or ’09. Back then banks, reckless housing loans and their related securities were at the center of the financial crisis. Now a pandemic is why 898,000 people filed new claims for unemployment

benefits in the latest reporting period, the most in two months. But some things about today rhyme with those of 2008. Goldman recently reported that bonus pools are running 16% higher than last year. That sounds something like the dark days of the Great Recession, when the public was furious over AIG using its bailout money to pay bonuses. Goldman will try to be discreet, but right around Inauguration Day it will disclose how large its pandemic-

comment on pending litigation but it will begin enforcement Oct. 19. “The supermarkets are resisting in terms of cost and convenience,” said Burt Flickinger, managing director at Strategic Resource Group. “Food retailers in the city are losing record amounts of money from the dramatic amount of worker and resident departures.”

Paper problems Transitioning from plastic to an entirely paper bag model was always going to be difficult for the industry. But the issue has been exacerbated during the pandemic by the widespread need for paper for use in packaging to ship consumer goods. “It’s sourcing,” Flickinger said. “Statewide supermarket demand is also up 12% to 20% on the year. With higher sales, there’s higher use of bags, which leads to higher costs.” Avi Kaner, owner of Morton Williams Supermarkets, said the paper bags with handles the state is requiring are not available for purchase in the quantities required because national chains have bought most of them, leaving smaller chains in the cold. “It’s a nonstarter,” he said. “We can’t even get paper bags if we wanted them.”

“IT’S A NONSTARTER. WE CAN’T EVEN GET PAPER BAGS IF WE WANTED THEM” reusable bags have some sort of plastic in them.” A second lawsuit has been launched by industry groups tied to supermarkets, bodegas and a manufacturer of polypropylene plastic. The Department of Environmental Conservation said it does not

ble. Tops on the list would be restoring the Consumer Financial Protection Bureau budget and restocking the IRS so collectors can pursue tax cheats.

6 | CRAIN’S NEW YORK BUSINESS | OCTOBER 19, 2020

BUCK ENNIS

BAGS

ISTOCK

his is certainly a first-world tion. When the economy locked down, problem, but it’s one Wall Street surely has: Business the Federal Reserve took a series of emergency measures to rescue the is so very good. What’s the matter with that? Well, financial system, and they have the Democratic Party may soon worked. The market for initial pubcontrol the White House and Con- lic offerings is robust. Corporations gress. If it does, Wall Street will be are taking advantage of rock-botlucky for the massive profits report- tom interest rates to refinance debt ed by banks recently to remain just and borrow fresh funds to get them through the crisis. Deposits are a public relations problem. flooding into banks, givThe numbers are siming lenders plenty of raw ply astounding. Goldman material to manufacture Sachs’ annualized return loans. on equity, a measure of “Covid was God’s gift how profitably it deploys to the financial industry,” capital, is the highest in said Dick Bove, a bank10 years. JPMorgan ing analyst at Odeon Chase reported higher Capital. third-quarter earnings Wall Street’s amazingthan it did last year, bely good fortune will fore the pandemic sav- AARON ELSTEIN greatly benefit New York. aged the world. Morgan Albany relies on personStanley Chief Executive James Gorman said the al and business taxes from Wall wealth-management business is Street for 17% of tax collections, acthe healthiest he’s seen since join- cording to figures from the state comptroller’s office. In the city, fiing the firm 14 years ago. “We’re overcapitalized, that’s the nancial jobs account for less than bottom line,” Gorman said. That 5% of employment but 20% of primeans the firm is sitting on more vate-sector wages. The state and city budget gaps would be even money than it can use. more unmanageable without the First-world problems indeed. You can’t blame Wall Street for unexpected gusher of revenue from doing what it does. Microsoft makes Wall Street. But good fortune today poses a software. Disney makes entertainment. Goldman Sachs makes mon- risk to Wall Street after the election. The Trump administration has regey. The bank and its brethren are ulated finance with an awfully light coining a ton of it, thanks in no touch. It’s a safe bet that a Biden adsmall part to government interven- ministration would be less charita-

Kaner added that most New Yorkers do not have a car and carry their groceries home, which requires every paper bag to be doubled. “The environmental cost of a double-bagged paper bag is far greater than a single-use plastic bag,” he said. Supermarkets and bodegas will have to make the transition to solely paper without any guarantee it can be sourced or any idea of how expensive it will be to acquire. But if they don’t make the switch, they could face fines. In order to pay for the newly required bags, customers will need to share in the costs.

Supermarket owners said there isn’t a hard estimate on how much the transition will cost their industry. But it’s certain that customers will need to pay higher prices to shop at their stores. And higher prices could push customers away. “We have no choice but to transfer the cost onto customers. They’re going to be paying for the bags,” D’Agostino said. “It’s going to affect our overall profitability.”

Green motive As for the state, its motivation to move forward with the law comes from a mandate set last year by Gov.

year bonus pool was. It takes zero imagination to envision Sen. Elizabeth Warren—Treasury Secretary Warren?—holding a hearing in which she declares that the bonuses demonstrate how finance has run amok again and must be tightly regulated. Since Warren helped create the CFPB, she’d probably have more than a few ideas on how to do it. That’s when the Street’s good fortune will become more than a PR problem. ■ Andrew Cuomo for New York to be a net-zero-carbon economy by 2050. The state’s supermarkets have been slow to adapt thus far, Flickinger said, and the plastic bag ban is meant to push them along. “To get to those levels, the supermarket, its warehouses and its stores need to go rooftop solar and find a sustainable solution for the bags,” he said. In response to the state, the Bodega and Small Business Association has proposed a compromise that would tax each plastic bag sold at 5 cents and allow a two-year transition for the industry. The association believes this tax would generate $500 million in bag-charge revenue a year for the state, as the Department of Environmental Conservation estimates upward of 23 billion plastic bags are used each year across New York. “They’re trying to rush this thing through in a pandemic,” D’Agostino said. “As usual, the government wants what it wants, and the rest of us have to live with it.” ■

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CRAIN’S: What advice do you have for estate owners who have already reached the $11.58 million doubled exemption?

CRAIN’S: How might the election affect the trusts and estates landscape, and how can people better plan for this uncertainty?

RISPOLI: IDGTs and GRATs are particularly effective techniques for taxpayers who have already gifted up to their lifetime exemption amount and want to continue to transfer assets to a trust while minimizing tax obligations.

RISPOLI: As more details of Vice President Joe Biden’s tax plan emerge, it becomes increasingly clear that the tax landscape created by President Donald Trump’s Tax Cuts and Jobs Act will be significantly altered if control of the White House changes hands. Biden’s plan calls for returning the estate tax to the “historical norm,” which might include slashing the gift and estate tax exemption from the current $11.58 million down to as low as $3.5 million and returning to an estate tax rate above 40%. The plan also proposes eliminating the step-up in basis for inherited assets. This provision could be replaced with the carryover basis, which imposes a higher income tax liability on the heir when the asset is sold, or a new capital gains tax on the decedent. There is still time during the 2020 tax year to take advantage of TCJA benefits. But time is of the essence. If a new tax regime is introduced in 2021, trust and estate advisers will become inundated with work and have limited availability to take on new clients. CRAIN’S: With the economy in a period of contraction, are there changes people should consider making to their trust and estate strategies? RISPOLI: The decreased values of many investment portfolios, real estate assets and businesses make gifting an even more attractive option right now. Gifting to

trusts is always the preferred way of transferring assets to beneficiaries. Grantor retained annuity trusts (GRATs) perform particularly well in low interest environments. If you have assets that you expect to increase in value, consider transferring them to a GRAT under current low IRS hurdle rates (the October midterm rate was 0.38%). The GRAT will make annuity payments to you for a fixed number of years before the asset is transferred to the beneficiaries. This strategy will be successful if the future appreciation of the assets exceeds the current IRS hurdle rate, which, under the current rates, should be much easier to achieve. CRAIN’S: Are there any gifting strategies that are particularly suited to the current environment? RISPOLI: Intentionally defective grantor trusts (IDGTs) are a smart choice in an economic downturn when asset values are low. IDGTs require the grantor to continue to pay the income tax on the income generated by the assets gifted to the IDGT. Because the IDGT does not “exist” for income tax purposes, transactions between the grantor and the trust are ignored. A grantor can sell an asset to the trust at fair market value and take back a promissory note. Transferring the asset to the IDGT “freezes” the value of the asset in the estate of the grantor. The promissory note does not increase in value, allowing for the future growth of the asset to occur estate tax-free. IDGTs also can give the grantor power to swap assets without the tax treatment of a sale (for example, exchanging cash for real estate at current fair

market value). If the current economy makes you hesitant to give up certain cash flow assets, a particularly effective type of IDGT is a spousal lifetime access trust, known as a SLAT, which is established for the benefit of your spouse. This will allow you to gift the assets tax-free, up to the increased lifetime exemption, but still retain indirect access to the funds while your spouse is alive and married to you. Intrafamily loans also are more cost-effective in down economies. With the federal rate for long-term loans at only 1.12% in October, intrafamily loans are a great way to provide funds to family members, especially if they have suffered financially from the Covid-19 crisis.

Lisa Rispoli, Trust & Estate Services Leader, Grassi Advisors & Accountants

retirement plan in relation to your trust and estate strategies. The last thing you want is to be relying on income from an asset you are planning to give away.

For assets that are difficult to value and could put you over the $11.58 million inadvertently, estate planners often use a defined-value clause, which defines a fixed value of the transferred asset at the time of transfer. Certain techniques could protect you, should the assets be revalued at a higher cost upon an IRS audit. ■

Advisory | Tax | Audit

CRAIN’S: How should people adapt their trust and estate strategies to better prepare themselves and their heirs for the future? RISPOLI: To take full advantage of trust and estate strategies available under the TCJA before year’s end, you need to know first how much you can give away. Your CPA can conduct a cash flow analysis that will help you determine what you can afford to gift and ensure you are maximizing your gifting under current tax law. Your estate planner should balance estate planning with income tax planning. Giving assets away eliminates a step-up in basis at death. This strategy should involve reducing overall tax, income tax and estate tax for your beneficiaries.

Build your estate administration and trust planning strategies on a strong foundation. Grassi’s Trust & Estate professionals are dedicated to helping executors and trustees fulfill their fiduciary roles and guiding trustors and beneficiaries to more confident estate and gift tax decisions.

Lisa Rispoli, CPA, AEP, TEP Trust & Estate Services Leader 516.336.2444 | lrispoli@grassicpas.com grassicpas.com/trust-estate-services

You should review your

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president K.C. Crain senior executive vice president Chris Crain group publisher Mary Kramer

EDITORIAL

publisher/executive editor

It’s time for Cuomo and de Blasio to put their egos aside and lead more, as the temperature drops and people head indoors for longer periods, we may be entering a critical new phase of the pandemic—the so-called second surge. The governor and the mayor have a long history of acrimony. Almost from the moment de Blasio took office, Cuomo has resisted the mayor’s ideas—remember the millionaires tax?—and has gone out of his way to criticize his performance. For his part, de Blasio has made no secret of his displeasure with Cuomo. The spike in positivity rates in the outer boroughs has once again put their feud on full display. They are still trying to outdo each other and assert their control over the city—and each other. As soon as de Blasio declared new Covid-19 guidelines, the governor attacked his plan, only to reveal almost the same strategy, albeit somewhat stricter, a day later. Their only joint success has been sowing seeds of confusion among the public. The governor’s latest salvo came last week, when he threatened to cut off state aid to the city if it did not enforce his Covid-19 safety regulations.

THEIR ONLY JOINT SUCCESS HAS BEEN SOWING SEEDS OF CONFUSION foolish bickering and one-upmanship, and come together for the good of New York? For one thing, as recent events have made clear, we are not out of the woods as far as the pandemic is concerned. Rising positivity rates in Brooklyn and Queens show we can’t let our guard down. What’s

associate publisher Lisa Rudy EDITORIAL editor Robert Hordt assistant managing editors Telisha Bryan,

Janon Fisher audience & analytics manager

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

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www.crainsnewyork.com/staff 212.210.0100

DE BLASIO

Apart from getting Covid-19 under control again, the governor and the mayor will have to work together to restore New York’s economy to what it was before the pandemic struck. It is not going to be easy. It’s going to take time and the cooperation of everyone— business leaders, special-interest groups and our elected officials. But with the two top officials at each other’s throat, moving forward will be impossible. New Yorkers want to pitch in and help. They’re willing and able, but

CUOMO

as in any crisis, they need leadership. They need inspiration. So far Cuomo and de Blasio have failed to provide either. They’ve been too busy sniping at each other. Instead of working together, they work on parallel fronts. Communicating with each other? What’s that? A New York Times article last week revealed that the two had spoken only once in the past month, before the most recent spike in Covid-19 cases. Guys, it’s time to bury the hatchet. ■

BLOOMBERG PHOTOS

ov. Andrew Cuomo and Mayor Bill de Blasio have asked a lot of New Yorkers this year in their effort to tame Covid-19. Residents have stayed home from work, canceled family celebrations, stopped seeing friends and upended their lives in countless other ways. Their cooperation, for the most part, has worked. Despite recent spikes in some parts of the city and in upstate counties, New York has enjoyed low infection rates these past few months, even as other states struggle with theirs. Now it’s time for New Yorkers to ask something of Cuomo and de Blasio: Will you please stop your

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OP-ED

REPRINTS

The city needs a corporate hero

director, reprints & licensing Lauren Melesio,

212.210.0707, lmelesio@crain.com PRODUCTION production and pre-press director

BY ALEXANDRIA SICA

pen Streets/Open Restaurants has been a lifeline for small restaurants across the city. It’s invigorating. It’s delightful. And for many of us, it’s feeling a bit unsustainable. Back in July, when we all hustled to work to launch the first weekend streets were shut down to allow restaurants to serve outside, we cobbled together furniture, searched high and low for barricades and fired up the printers for signage. We relished the feeling of actually doing something useful to help our ailing businesses after months of wait-and-see. In Dumbo, this meant shutting down three blocks every Friday afternoon, opening them back up Friday evening at 10 for traffic, wiping down tables, keeping tabs on social distancing and then starting all over again on Saturday and Sunday. For dozens of business improvement districts around the city, this routine defined the summer of 2020. And guess what? It’s worked

smashingly. The neighborhood feels vibrant with a capital V. Outdoor seating is full, and people are respectful, delighted and, importantly, spending money. Now Mayor Bill de Blasio has thankfully made this program yearround—a crucial effort to save the restaurants that define our neighborhoods. I hope this can be a part of his permanent legacy. And as my colleagues in other business improvement districts have been advocating, I hope it can be expanded to benefit not just restaurants but our endangered boutiques and bookshops as well. But let’s be clear: Although the dozens of business improvement districts that stepped up to organize and execute Open Streets every weekend may have budgeted for a summer 2020 experiment, this is a huge financial and organizational burden that may not be sustainable for the duration of this pandemic, let alone on a permanent basis. What’s more, this program should take flight throughout the five boroughs, bringing life and op-

8 | CRAIN’S NEW YORK BUSINESS | OCTOBER 19, 2020

portunity out into the streets in every neighborhood. We need a hero.

Corporate citizens In an ideal world, that hero would be the city of New York, dedicating millions of dollars to support the operation of Open Streets in an equitable and robust play to transform our public space. But right now, the city is cash-strapped, and there are countless health, humanitarian and systemic issues that command attention and resources. So how about a corporate hero, one with big pockets who is motivated to help our city and our businesses (aka, its customers) in this time of need? We have seen these mutually beneficial relationships work before: Citi Bike brought mobility to millions. American Express’s Shop Small/Small Business Saturday programs have helped to establish a new shopping imperative for small businesses. But it’s not just the banks and credit card companies that have a lot at stake in the survival of the city’s small businesses. Google and other big tech com-

panies need their ad dollars. Insurance companies need to keep collecting on policies. For one of these firms, seeding a fund for operations of Open Streets could have a remarkable return on investment. The city should put this opportunity out to bid tomorrow. The pitch writes itself: “We’ll put your logo on every barricade, your stamp on every bistro table.” Let the Department of Transportation distribute the funds to partners like business improvement districts and other nonprofits and community groups that would gladly come to the table to deliver these services across the city. Put metrics in place to build a program that is managed with equity and sustainability in mind. The business giants of New York City should step up to own a piece of the magical experience we are having these days dining outdoors. It’s a good look and, more important, a good policy, for everyone. ■ Alexandria Sica is executive director of the Dumbo Improvement District.

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OP-ED

BY ERIC ADAMS

ew York is facing so many challenges right now that it is hard to keep count. Unemployment is at 16%. Our education system is a mess. Trash is piling up. Many neighborhoods have seen increases in violent crime. Now winter is coming—and with it a likely resurgence in Covid-19 cases, hospitalizations and deaths. Just recently, we reversed progress in Brooklyn and Queens, where spikes led to shutdowns because of the city’s failure to get communities to help stop the spread. But perhaps the most dangerous threat to our great city is fear of the

clearer about the basic things New Yorkers themselves can do to help the city recover. And we should have a transparent way to track our overall progress.

Most valuable players New Yorkers are hardworking, goal-oriented people. Give us a job, and we will get it done. We just need to know what to do and what success looks like. To accomplish both, I propose the city create a Recovery Score. Let us take all the challenges we have— and all the ways we measure how they progress and put them into one easily understandable number that New Yorkers can rally to improve every day. The score should include, of course, metrics on public health and public safety, weighting those most important factors heavier than others. Unemployment also should be a key statistic. It should include students’ access to quality education (including, for instance, how many families have access to high-quality broadband). Neighborhood cleanliness, rate of homelessness and other quality-of-life measures that require city services must be part of the score. Subway volume, office building capacity and retail vacancies should be added. Many of these things already are

PERHAPS THE MOST DANGEROUS THREAT TO OUR GREAT CITY IS FEAR OF THE UNCERTAIN uncertain. New Yorkers feel this intensely. I hear it from them every day. People ask me, “What’s the plan?” Good question. It is not just mismanagement of the city that is keeping New Yorkers up at night; it is lack of shared purpose. In July I put forward my Real Recovery Plan to get us through these crises and have added specific ideas since then. Some have been adopted by the city and the state, and I will keep pushing others. But City Hall must be much

tracked regularly by the city, but reported infrequently on staggered schedules from silo-ed agencies. Only once a year do we get the full picture in the Mayor’s Management Report, which does not provide an accurate snapshot of where we are today. Many of the other statistics are reported by independent advocacy and business groups that we should involve in this important project. Sound too complicated? Boston already does this through its CityScore initiative. We’re not going to get beaten by Boston, are we? Such a score will give us a much clearer view of the problem and force the city into the real-time governing model it should have been following for years—but it also will help everyday New Yorkers work together on solutions in ways small and large. For instance, we now know that subways are safe if riders wear masks and maintain social distancing. If people trust the subway, they will return to the office buildings. If they return to the office buildings, the restaurants and the stores in our commercial centers will reopen. When they reopen, people will get rehired. Each New Yorker who can should commit to doing this now at least twice a week.

Follow the money Another big way to help? Volunteer. The city must do a better job of prioritizing its spending to make sure a lack of services does not result in a negative spiral for New York. But

ASSOCIATED PRESS

New York must create a scorecard to track its recovery

we also are in the middle of a financial crisis, and the need for volunteers has never been greater. I am organizing neighborhood cleanups and other efforts to maintain our quality of life. Contact my office or your local neighborhood group to get involved. That volunteer, “can do” spirit has been shining bright in this pandemic, and we need it more than ever for a real recovery that brings us—all of us— back equitably. The business community also can help boost our recovery score by doing what it does best: marketing New York. It is not just New Yorkers who need to invest in their city for it to thrive—we need the visitors, the employers and the entrepreneurs to know this is still the best place to go. Business leaders

should invest in a massive ad campaign to make the point. Of course, wearing a mask and being respectful of fellow New Yorkers are the main ways we can all contribute and, most important, not letting frustration turn to hopelessness. Because the biggest threat to New York is not crime or the economic crisis or even Covid-19: It is New Yorkers who stop believing in New York. I grew up here. I have lived my entire life here. I will never give up on New York. Our people are too hardworking and too proud. Given a purpose and a plan, they can do anything. They deserve both.■ Eric Adams is the Brooklyn borough president.

OP-ED

BY TOM WRIGHT

ere’s a rare piece of good news during these difficult times: The overcrowded, dangerous, subterranean train station at the heart of the New York region is finally starting to get the overhaul it has needed for decades. The master plan for Penn Station, co-written by Amtrak, the MTA-Long Island Rail Road and NJ Transit, is to be released soon. Penn Station is the most important hub for all three railroads. The plan needs to provide a

piece of a completely reimagined and unified 21st-century transit hub for the region. The next steps in the project would see Penn Station expand on the city block to the south, adding nine new tracks, which will increase capacity 40%. In addition to providing capacity to accommodate the significant growth of New Jersey’s trans-Hudson rail services via the new Gateway-Hudson River Tunnel, the Penn Station Expansion will provide space for Metro-North’s Penn Access Project—running New Haven line trains directly into Penn Station and serving four new stations in the Bronx. Rethinking Penn Station is long overdue and incredibly important to the long-term economic health of the region. As offices begin to reopen, we will need Penn Station to move the region’s growing workforce. Or not. Some critics have argued that Penn Station doesn’t need to be expanded. They say it can handle the increase of some number of addi-

WE WILL NEED PENN STATION TO MOVE THE REGION’S GROWING WORKFORCE clear road map to unifying the station and connecting it to the surrounding neighborhood. This will come just as the first new phase of what has been branded the Empire Station Complex is to open across Eighth Avenue during the winter. The Moynihan Train Hall in the James A. Farley Post Office Building, designed to serve Amtrak and the LIRR, represents the first new

tional daily commuters by redesigning the tracks and the platforms and providing more through-running service. They argue that would increase Penn Station’s capacity without acquiring new property or building new tracks and platforms underneath West 31st Street. They fail to mention, however, important caveats about the proposal, including the time, money and disruption it would take to reconstruct the existing tracks and platforms; how they would build the appropriate number of stairs, elevators and escalators necessary to move passengers up and down onto the concourse level; and how much it would cost, including the rolling stock, electrical systems, labor contracts and other essential systems needed to integrate the unique and distinct operations of the LIRR, NJT and Metro-North.

Massive disruptions Amtrak’s position is that altering the existing tracks at Penn Station for through-running would be not only extremely expensive but also cause massive disruptions for commuters for several years—all for capacity gains of less than half of what the

BLOOMBERG

Rethinking Penn Station is long overdue

Penn Station Expansion project would produce. Altering the tracks would come at an enormous cost without providing the congestion relief that we need, especially as ridership through Penn increases up to 24% from work trips alone by 2040. By contrast, building the Penn Station Expansion would likely cost less than converting the existing Penn Station tracks and platforms. This is a pivotal moment for the future of public transit in our region.

These station and network investments will be built to last far beyond most of our lifetimes. The realization of a project such as the Empire Station Complex could fix a great wrong at the heart of our transit ecosystem. As our region rebounds from Covid-19, we must get it right. ■ Tom Wright is president and chief executive officer of the Regional Plan Association.

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ASKED & ANSWERED Partnership for New York City

WHO SHE IS President and CEO, Partnership for New York City AGE 74

INTERVIEW BY EDDIE SMALL

GREW UP Madison, Wisc.

athryn Wylde has been the president and CEO of the Partnership for New York City since 2001. From 1982 to 2000 she focused on developing and managing affordable housing and economic development programs in the five boroughs for the organization. Now many of the problems the city faced in the 1980s seem to be returning as New York struggles to handle the pandemic and its economic fallout. The partnership has taken an active role in the city’s recovery, but the road ahead could still be difficult.

What has the partnership been doing so far to help the city recover from the pandemic?

We just launched a New York City Small Business Resource Center. Businesses with fewer than 100 employees lost 520,000 jobs during the pandemic, and we’ve been working to provide a one-stop shop for small businesses that are struggling to reopen to figure out how they’re going to survive and pay the rent. We can give them every kind of assistance, from financial to mentoring to marketing.

Why did the partnership decide to publish its letter to the mayor criticizing his administration’s response to the pandemic? There was growing concern about deteriorating

RESIDES Bay Ridge, Brooklyn EDUCATION Bachelor’s in political science, St. Olaf College PREVIOUS WORK One of her jobs before she joined the partnership in 1982 was as an urban affairs officer at Anchor Savings Bank. AVID READER Wylde is reading Without Compromise, about shady dealings among city politicians including Ed Koch and Rudy Giuliani. Her favorite authors are Aldous Huxley, Albert Camus and Herman Melville. WHAT SHE’S INTO Wylde is passionate about animal rescue efforts. She is also an avid baker.

conditions in the city. At the same time, employers were being asked to urge their people to come back to the office, and that was very difficult because the image that was going up was that the city is an unsafe, unhealthy place to be. The letter was simply meant to say we know how many challenges the city and state government are facing, and we want to help. It clearly struck a nerve among New Yorkers looking for a plan.

Obviously. There are organized political forces taking advantage of people’s insecurity to suggest that if we stop development, their lives will be better, which is ridiculous. If we stopped development, there would be no funding for education or workforce skills. We just haven’t worked hard enough to make sure the benefits of developments are felt by members of the communities where they are taking place.

Have there been any pushes to increase diversity in New York’s business community, especially following the George Floyd protests?

Those initiatives started prior to George Floyd, but there is certainly a new focus that this has to be a central priority. That’s a result of the exposure that Covid gave to racial disparities and the violence between the Police Department and the Black community. A number of issues have made clear that the efforts we’ve made over the past decade have not been enough.

Moody’s recently downgraded the credit ratings for the city and the state. Does that concern you?

We only went down one notch, but it is a clear warning that we are on a slippery slope. If the virus hangs on and the economy has to shut down again and the deficit gets deeper, we could be in deep trouble. We’ve got to do everything we can to continue to contain Covid and think in smart ways about how to expand our economy and our tax base. ■

BEN FRACTENBERG/THE CITY

KATHRYN WYLDE

You were critical of the city’s political climate after the Industry City rezoning collapsed. Do you feel like things have become too anti-development?

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RESIDENTIAL REAL ESTATE

Luxury senior-living towers open to Covid-era reality

y the end of the year, New York City will get three posh assisted-living towers offering seniors spa treatments, gourmet meals and chauffeured rides along with their daily care. The projects were built on a bet that a surging population of wealthy elders would pay hefty sums— starting around $13,000 a month in Manhattan—to stay near their grown children, in a vibrant urban center, when they could no longer live alone. Then Covid-19 upended it all. The virus, which disproportionately harms the elderly, spread quickly through senior-care facilities across the country. Indoor social events, such as wine tastings and other highlights of assisted living, have become untenable. The adult offspring of potential tenants haven’t yet returned to their Midtown offices and may even have moved to the suburbs. With Broadway shuttered and cultural attractions at minimal capacity, the city’s vigor, and the top rents it helps command, is indefinitely on hold. “New York really needs to be humming for this to work,” said John Kim, an analyst at BMO Capital Markets who covers Welltower Inc., co-developer of Sunrise at East 56th, set to open in November.

ening, and demographics pointing to a “silver tsunami” of aging boomers, developers sensed a new opportunity. “Seniors deserve to have options and not have senior living be an afterthought,” said Bevin Littlehale, a New York-based managing director at Hines, Welltower’s partner on the East 56th Street project, which will be operated by Sunrise Senior Living.

Human connections Opening such a property during a pandemic has its challenges, but assisted living can reduce the isolation that seniors are feeling as the virus keeps visitors away, according to Jenifer Salamino, chief operating officer at Sunrise. Even socially distanced activities provide some human connection, she said. “We have a full dining staff, housekeeping staff, 24-hour doorman and there will be 24-hour nurses,” Salamino said, adding that some activities, like art projects, can be brought into residents’ rooms. “When you are home alone, some people don’t even have a home health aide—they are literally alone.” The partners wouldn’t disclose how many of the building’s 151 apartments have been leased but said 95% of inquiries have been from New Yorkers already living nearby. Monthly rents start at $13,750 for assisted living and $21,000 for memory-care units. Covid protocols will guide life at the senior towers for the foreseeable future. On Manhattan’s Upper East Side, Omega Healthcare Investors Inc. and Maplewood Senior Living have installed air purifiers and ultraviolet light sanitizers at their tower, called Inspir. Residents will be screened daily for symptoms, wear masks in common areas, and events, like an improv comedy class or guided tour of the boroughs, will happen online. The property—promising a bar with signature cocktails, a theater and a Mercedes chauffeur service—is awaiting final approval by the state health department and could open by early November. Deposits have been placed for 75 of the Inspir’s 215 units, said Greg Smith, chief executive officer of Maplewood Senior Living. The partners are in contract to acquire a site for a second Manhattan project, and are pursuing one in London as well. “We’re still incredibly bullish on the urban markets,” Smith said. In Brooklyn, a nearly century-old tower has been reimagined as senior housing at Watermark at Brooklyn Heights, with an art gallery, a heated lap pool and a wood-paneled library featuring a whiskey bar. A ballroom from the property’s days as a hotel is now a restaurant, the W Room, and tenants will have wine storage on-site.

ASSISTED LIVING CAN REDUCE THE ISOLATION THAT SENIORS ARE FEELING “I think it’s going to be very challenging to lease it up.” Just before the pandemic, assisted-living facilities in Manhattan reached record occupancy of 96%, the result of high demand paired with a 15-year period when not a single new unit was built, according to the National Investment Center for Seniors Housing & Care.

Major changes The virus abruptly changed the equation. During the second quarter, when New York was locked down, occupancy fell to 88%, the lowest since 2010. A moratorium on move-ins, in the city and nationwide, meant residents who left, passed away or moved into higher levels of care couldn’t be replaced. “Certainly, it could take a little longer for the area to absorb that new product along with the decline in occupancy that the pandemic had wrought,” said Lana Peck, a senior principal at the Maryland-based nonprofit. New York’s luxury senior towers, where residents pay completely out of pocket for perks and modern design rivaling the city’s glitziest condo towers, were a new concept in 2016 when the first two ground-up projects were announced. With sales of high-end apartments slack-

BLOOMBERG

Just over half of the 275 units at the project—developed by Kayne Anderson Real Estate, Tishman Speyer and Watermark Retirement Communities—will be allocated to seniors who can live independently. The rest will be divided between assisted living and memory care, at rents as high as $20,000 monthly, a spokesman said. As of last week, about 20% of the residences were

leased. The property opened this month. While the pandemic presents new challenges for luxury senior properties, their prohibitive costs remain the biggest hurdle to their success, said Jeffrey Langbaum, a Bloomberg Intelligence analyst who covers real estate investment trusts, including Welltower. But that might prove to be a sell-

ing point. As families again get comfortable placing their loved ones in assisted living, they’re likely to seek out pricier facilities, which have the resources to pay for expensive virus-protection measures, he said. “People who can afford this,” he said, “will look to these higher end, well-run, more efficiently managed facilities as a safer place for their parents.” ■

Connect with us on social media @georgearztcomm:

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1 THE LIST

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2020 LAWYER BREAKDOWN, BY PRACTICE AREA 2020 LAWYER BREAKDOWN

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1,036 1,048

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Paul Weiss Rifkind Wharton & Garrison 1285 Sixth Ave.; 212-373-3000 paulweiss.com Brad Karp

828 833

n/d

Davis Polk & Wardwell 450 Lexington Ave.; 212-450-4000 davispolk.com Neil Barr

770 755

114

577

Kirkland & Ellis 601 Lexington Ave.; 212-446-4800 kirkland.com Sandra Goldstein

719 695

256

463

Skadden Arps Slate Meagher & Flom and Affiliates 1 Manhattan West; 212-735-3000 skadden.com Eric Friedman

699 713

131

494

Sullivan & Cromwell 125 Broad St.; 212-558-4000 sullcrom.com Joseph Shenker

661 621

113

473

Weil, Gotshal & Manges 767 Fifth Ave.; 212-310-8000 weil.com Barry Wolf

654 610

132

466

Cravath, Swaine & Moore 825 Eighth Ave.; 212-474-1000 cravath.com Faiza Saeed

573 543

486

Latham & Watkins 885 Third Ave.; 212-906-1200 lw.com MichĂ¨le Penzer

573 508

139

408

Simpson Thacher & Bartlett 2 425 Lexington Ave.; 212-455-2000 stblaw.com William Dougherty

541 585

131

White & Case 1221 Sixth Ave.; 212-819-8200 whitecase.com Eliza McDougall, Hugh Verrier

530 498

135

Cleary Gottlieb Steen & Hamilton 1 Liberty Plaza; 212-225-2000 clearygottlieb.com Michael Gerstenzang

526 554

n/d

1,220 1,319

Debevoise & Plimpton 2 919 Third Ave.; 212-909-6000 debevoise.com Michael Blair

513 464

105

336

n/d 695

Willkie Farr & Gallagher 787 Seventh Ave.; 212-728-8000 willkie.com Thomas Cerabino, Steven Gartner

494 470

134

330

871 780

Sidley Austin 787 Seventh Ave.; 212-839-5300 sidley.com Samir Gandhi

475 455

146

278

2,076 2,080

Ropes & Gray 1211 Sixth Ave.; 212-596-9000 ropesgray.com Eva Carman, Keith Wofford

463 416

362

1,581 1,488

Fried, Frank, Harris, Shriver & Jacobson 1 New York Plaza; 212-859-8000 friedfrank.com David Greenwald

452 429

110

303

641 612

Proskauer 2

439 351

186

216

n/d 718

411 384

287

n/d 678

1 2 3 4 5 6 7 7 9 10 11 12

16 17

12 | CRAINâ&#x20AC;&#x2122;S BUSINESS | OCTOBER 19, 2020 11NEW TimesYORK Square; 212-969-3000

n/d

2,921 2,783

1,752 1,668

977 934

1,236 1,186

599 571

3,107 2,922

337

n/d 987

367

2,420 2,320

proskauer.com Steven Ellis Milbank 2 55 Hudson Yards; 212-530-5000 milbank.com

1 1 12 13

RAN

24 25 26 72 72 9 2 1

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1 1

WIDE ERS 20/ 019

972 009

036 048

921 783

752 668

977 934

236 186

599 571

107 922

n/d 987

420 320

220 319

n/d 695

871 780

076 080

581 488

641 612

n/d 718

n/d 678

Debevoise & Plimpton 2 919 Third Ave.; 212-909-6000 debevoise.com Michael Blair

513 464

105

336

n/d 695

Willkie Farr & Gallagher 787 Seventh Ave.; 212-728-8000 willkie.com Thomas Cerabino, Steven Gartner

494 470

134

330

871 780

Sidley Austin 787 Seventh Ave.; 212-839-5300 sidley.com Samir Gandhi

475 455

146

278

2,076 2,080

Ropes & Gray 1211 Sixth Ave.; 212-596-9000 ropesgray.com Eva Carman, Keith Wofford

463 416

362

1,581 1,488

16 1 17 2 18 3 19 RANK

4 20 5 21 6 22 723 724 9 25 10

2020 LAWYER BREAKDOWN, BY PRACTICE AREA 2020 LAWYER BREAKDOWN

Fried, Frank, Harris, Shriver & Jacobson FIRM/ 1ADDRESS; New YorkPHONE/ Plaza; 212-859-8000 friedfrank.com WEBSITE/ David SENIORGreenwald PARTNER(S) IN NEW YORK 1

452 NY-AREA 429 LAWYERS 2020/ 2019

RT PAP

Paul Weiss2Rifkind Wharton & Garrison Proskauer 1285 SixthSquare; Ave.; 212-373-3000 11 Times 212-969-3000 paulweiss.com proskauer.com Brad Karp Steven Ellis

828 439 833 351

n/d 186

n/d 216

n/d 37

2 & Wardwell Davis Polk Milbank 450Hudson Lexington Ave.; 212-450-4000 55 Yards; 212-530-5000 davispolk.com milbank.com Neil Barr Scott Edelman

770 411 755 384

114 99

577 287

KirklandDunn & Ellis Gibson, & Crutcher 601 Park Lexington 212-446-4800 200 Ave.; Ave.; 212-351-4000 kirkland.com gibsondunn.com Sandra Goldstein Mark Kirsch, Andrew Lance Skadden Arps Slate Meagher & Flom and Shearman Affiliates & Sterling 599 LexingtonWest; Ave.;212-735-3000 212-848-4000 1 Manhattan shearman.com skadden.com David Beveridge Eric Friedman

719 371 695 381

256 104

699 345 713 364

Sullivan Roth & Cromwell Schulte & Zabel 125 Third BroadAve.; St.; 212-558-4000 919 212-756-2000 sullcrom.com srz.com JosephEfron, Shenker David Marc Elovitz Weil, Gotshal & Manges Kramer & Frankel 767 FifthLevin Ave.;Naftalis 212-310-8000 1177 Sixth Ave.; 212-715-9100 weil.com kramerlevin.com Barry Wolf Paul Schoeman, Howard Cravath,Spilko Swaine & Moore 825 Eighth Ave.; 212-474-1000 Cahill Gordon & Reindel cravath.com 32 OldSaeed Slip; 212-701-3000 Faiza cahill.com William Latham Hartnett & Watkins 885 Third Ave.; 212-906-1200 Arnold lw.com & Porter 250 W. 55th St.; 212-836-8000 MichĂ¨le Penzer arnoldporter.com Arthur Brown Simpson Thacher & Bartlett 2 425 Lexington Ave.; 212-455-2000 Greenberg stblaw.com Traurig 200 ParkDougherty Ave.; 212-801-9200 William gtlaw.com Scott WhiteBornstein, & Case Stephen Rabinowitz 1221 Sixth Ave.; 212-819-8200

110

303 R NE

S SO AS A

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79 25

463 248

n/d 19

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494 233

74 30

661 328 320 621

113 69

473 203

654 319 610 322

132 96

573 543 309 312

C TH

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466 178

56 45

486

212

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139

408

541 585 300 294 530 498

IO AT

T ES

641

FIRMWIDE 612 LAWYERS 2020/ 2019

T TAX

O OTHER

972 n/d 1,009 718

1,036 n/d 1,048 678

2,921 1,418 2,783 1,446

1,752 848 1,668 861

977 372 934 361

1,236 393 1,186 397

599 571 326 331

182

131

337

143

127

135

367

R RE

3,107 2,922 1,003 998 n/d 987 2,226 2,177 2,420 2,320

whitecase.com Eliza McDougall, Hugh Verrier Â

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11 12

1 Liberty Plaza; 212-225-2000 clearygottlieb.com Michael Gerstenzang

554

Debevoise & Plimpton 2 919 Third Ave.; 212-909-6000 debevoise.com Michael Blair

513 464

105

336

n/d 695

Willkie Farr & Gallagher 787 Seventh Ave.; 212-728-8000 willkie.com Thomas Cerabino, Steven Gartner

494 470

134

330

871 780

Sidley Austin 787 Seventh Ave.; 212-839-5300 sidley.com Samir Gandhi

475 455

146

278

2,076 2,080

Ropes & Gray 1211 Sixth Ave.; 212-596-9000 ropesgray.com Eva Carman, Keith Wofford

463 416

362

1,581 1,488

Fried, Frank, Harris, Shriver & Jacobson 1 New York Plaza; 212-859-8000 friedfrank.com David Greenwald

452 429

110

303

641 612

Proskauer 2 11 Times Square; 212-969-3000 proskauer.com Steven Ellis

439 351

186

216

n/d

Milbank 2 55 Hudson Yards; 212-530-5000 milbank.com

411 384

287

n/d 678

16 17

1,319

OCTOBER 19, 2020 | CRAINâ&#x20AC;&#x2122;S NEW YORK BUSINESS 718 | 13

17 18

Milbank 2 55 Hudson Yards; 212-530-5000 milbank.com Scott Edelman

proskauer.com Steven Ellis 411 384

287

n/d 678

Gibson, Dunn & Crutcher 200 Park Ave.; 212-351-4000 gibsondunn.com Mark Kirsch, Andrew Lance

371 381

104

248

1,418 1,446

Shearman & Sterling 599 Lexington Ave.; 212-848-4000 shearman.com David Beveridge

345 364

233

848 861

Schulte Roth & Zabel 919 Third Ave.; 212-756-2000 FIRM/ srz.com ADDRESS; PHONE/ David Efron, WEBSITE/ Marc Elovitz SENIOR PARTNER(S) IN NEW YORK 1

328 320

ENT

THE LIST

LARGEST LAW FIRMS

RANK

1 22 2 23 3 24

2020 LAWYER BREAKDOWN, BY PRACTICE AREA 2020 LAWYER

NY-AREA LAWYERS 2020/ 2019

PPA

RCE

BREAKDOWN 203 56

69 N RT

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372 361

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FIRMWIDE LAWYERS 2020/ 2019

Kramer Levin Naftalis & Frankel Paul Weiss Rifkind Wharton & Garrison 1177 1285 Sixth Sixth Ave.; Ave.; 212-715-9100 212-373-3000 kramerlevin.com paulweiss.com Paul Brad Schoeman, Karp Howard Spilko Davis Polk & Wardwell Cahill Gordon & Reindel 450 Lexington Ave.; 212-450-4000 32 Old Slip; 212-701-3000 davispolk.com cahill.com Neil Barr William Hartnett

319 828 322 833

96 n/d

178 n/d

45 n/d

393 972 397 1,009

770 309 755 312

114 62

577 212

79 35

1,036 326 1,048 331

Kirkland & Ellis Arnold & Porter 601 Lexington Ave.; 212-446-4800 250 W. 55th St.; 212-836-8000 kirkland.com arnoldporter.com Sandra Goldstein Arthur Brown

719 306 695 294

256 87

463 182

n/d 39

2,921 1,003 2,783 998

Skadden Arps Slate Meagher & Flom and 699 131 494 74 1,752 Greenberg Traurig 300 143 127 30 2,226 Affiliates 713 1,668 294 200 Park Ave.; 212-801-9200 2,177 1 Manhattan West; 212-735-3000 gtlaw.com skadden.com Scott Bornstein, Eric Friedman Stephen Rabinowitz Sullivan & Cromwell 661 113 473 75 977 125 Broad St.; 212-558-4000 621 934 Â sullcrom.com Â? Â? Â? Â Â? Â? Â? Â Â Â Â Â? ÂÂ&#x20AC; Â&#x201A; Â&#x192; Â&#x201E; Joseph Shenker

4 25 5 6 7 7 9

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Weil, Gotshal & Manges 767 Fifth Ave.; 212-310-8000 weil.com Barry Wolf

654 610

132

Cravath, Swaine & Moore 825 Eighth Ave.; 212-474-1000 cravath.com Faiza Saeed

573 543

Latham & Watkins 885 Third Ave.; 212-906-1200 lw.com MichĂ¨le Penzer

573 508

139

408

Simpson Thacher & Bartlett 2 425 Lexington Ave.; 212-455-2000 stblaw.com William Dougherty

541 585

131

337

White & Case 1221 Sixth Ave.; 212-819-8200 whitecase.com Eliza McDougall, Hugh Verrier

530 498

135

367

Cleary Gottlieb Steen & Hamilton 1 Liberty Plaza; 212-225-2000 clearygottlieb.com Michael Gerstenzang

526 554

n/d

Debevoise & Plimpton 2 919 Third Ave.; 212-909-6000 debevoise.com Michael Blair

513 464

105

336

466

486

Willkie Farr & Gallagher 134 Thursday, December494 3, 2020 |3304 - 530PM 787 Seventh Ave.; 212-728-8000 470 willkie.com In a time where organizations are struggling to stay afloat, these companies are Thomas Cerabino, pressing Stevenforward. Gartner Join us at the virtual event on Dec. 3 as we celebrate the 2020

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15 16 17 18

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Ropes & Gray 1211 Sixth Ave.; 212-596-9000 ropesgray.com Eva Carman, Keith Wofford

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1,236 1,186

599 571

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463 416

362

452 429

110

303

Supporting Sponsor

Fried, Frank, Harris, Shriver & Jacobson 1 New York Plaza; 212-859-8000 friedfrank.com David Greenwald

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Logicworks Lowenstein Sandler MakeSpace ManhattanTechSupport.com MANTL Marx Realty Michelman & Robinson MongoDB mParticle Muck Rack National Financial Network Neverware Noom, Inc. Numerix One Drop Pariveda Solutions Path Interactive Peloton PlaceIQ Pragma PulsePoint Radar Reed Smith RevTrax Rockefeller Group Ryan Salesforce SchrĂśdinger, Inc. SecurityScorecard Sheppard Mullin Shift7 Digital SpotX Star Mountain Capital Tapad Inc. The Bachrach Group The Durst Organization The Pappas Agency The Trade Desk thoughtbot Transwestern Unqork VHB Engineering, Surveying, Landscape Architecture and Geology, P.C. Virginia & Ambinder VirtualHealth VTS West Monroe WithumSmith+Brown, PC Yieldmo, Inc Yotpo

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Proskauer 2 11 Times Square; 212-969-3000 proskauer.com 14 | CRAINâ&#x20AC;&#x2122;S NEW YORK BUSINESS | OCTOBER 19, 2020 Steven Ellis Milbank 2 55 Hudson Yards; 212-530-5000 milbank.com Scott Edelman

351

411 384

287

3,107 2,922

n/d 987

2,420 2,320

1,220 1,319

n/d 695

871 780

2,076 2,080

1,581 1,488

641 612

n/d 718

n/d 678

POLITICS

Attorney General James takes aim at Trump, the Sacklers and the NRA

Invitation to Prequalify and to Bid Rehabilitation and Flood Mitigation of the New York Aquarium, Brooklyn, NY Turner Construction Company, an EEO Employer, is currently soliciting bids for the Rehabilitation and Flood Mitigation of the New York Aquarium from subcontractors and vendors for the following bid packages: BP #36 East Service Yard Asphalt Pavement (Bid, Payment & Performance Bond Required) Only bids responsive to the entire scope of work will be considered and, to be successful, bidders must be pre uali ed by urner. erti ed M/WBE and Small Business (13 CFR part companies are encouraged to submit.

BY BRIAN PASCUS

Dissolve and conquer James’ office has been at the forefront of several high-profile cases that have received national attention because of the nature of the defendants. Most notably, she’s gone toe-to-toe with President Donald Trump. In 2019 the Trump Organization paid New York $2 million in court-ordered damages for illegally using charity funds se-

In order to receive the bid packages, potential bidders must submit a complete Subcontractor endor re uali cation tatement. rior pre uali cation submissions that remain current will be considered as pre iously submitted or may be updated at this time. All bidders must prequalify by the bid deadline November 12, 2020 and submission of a pre uali cation statement not later than No ember is strongly encouraged. All bidders must have an acceptable EMR, and will be subject to government regulations such as and ederal ecuti e rder . uccessful bidders will be re uired to use racker compliance eri cation software. Note that while this is a New York ity pre ailing wage pro ect union a liation is not re uired for BP#36. o obtain further information about contracting opportunities and or the pre uali cation package and bid solicitation package/s, please contact Macarena Bermudez (mbermude tcco.com or . he date for the irtual public opening by urner onstruction ompany o ce located at 375 Hudson Street, New York, New York, is November 13, 2019 at 11 am. Link for virtual opening: Please join my meeting from your computer, tablet or smartphoneg https global.gotomeeting.com oin BLOOMBERG

ew York Attorney General Letitia James offered no apologies for her crusading litigation against the National Rifle Association, the Sackler family and the Trump Organization during a wide-ranging conversation last week. “It’s important we have a criminal-justice system that has the trust of the general public,” she said during a Crain’s New York Business forum. “My duty as attorney general is to follow the facts and to follow the evidence wherever they lead.” Since her election as attorney general in 2018, James has had to balance her role as an impartial vanguard of justice with the reputation she gained as a reformer throughout her political career in the state. She is the first Black woman to hold the title of New York attorney general. “As someone who is now the chief law enforcement officer for the state of New York, who continues to engage in investigations related to drug trafficking, arms trafficking and gun trafficking, it’s important that we do our investigations consistent with the law and respectful of the rights of individuals,” she said.

comply with a subpoena James’ office presented him. “We filed that case after the testimony of Michael Cohen,” she said, referring to the president’s former personal attorney, who now is a convicted felon. “The investigation is ongoing.” Another controversial case brought by James involves the NRA. Her office seeks to dissolve the powerful gun lobby for violating the state’s nonprofit laws. James charges that the organization diverted funds from a charitable organization for its own use, failed to protect whistleblowers and engaged in fraud. “Funds were often used to gain the loyalty of employees and to protect those individuals who were engaged in wrongdoing,” she explained, adding that the case is still pending.

“THEY NEED TO BE HELD ACCOUNTABLE FOR THE DAMAGE THEY’VE CAUSED” cured by the Trump Foundation. “We have dissolved the Trump Foundation,” she said. James’ office also is investigating the Trump Organization for improperly inflating the value of its real estate assets. The president’s son sat for a deposition earlier this month after initially refusing to

Bitter pill James touched on her office’s work in holding to account those who profited from the nationwide opioid

epidemic. She pointed out that her office has filed some of the most extensive lawsuits in the nation against manufacturers and distributors of opioids, including the Sackler family, owners of the now-bankrupt pharmaceutical company Purdue Pharma.

U.S. SENATOR NEXT UP FOR CRAIN’S FORUM WANT TO HEAR MORE FROM NEW YORK’S LEADERS? Join Crain’s New York Business on Nov. 18 for a conversation with U.S. Sen. Chuck Schumer about the battles he’s waged during the pandemic and what New York will look like after the presidential election. Register at CrainsNewYork.com/ novbusinessforum.

“They need to be held accountable [for] the damage that they’ve caused,” she said. “They failed to provide any protocols to divert any of these opioids into the marketplace, and as a result countless numbers of Americans and New Yorkers were addicted, and they need to be held accountable for that.” She added that the Sackler family transferred funds into offshore accounts, money that’s alleged to have been derived from profits for opioids, such as OxyContin, that Purdue Pharma manufactured. “We hope to provide some relief,” she said. “We will investigate and continue to pursue them for their wrongdoings.” ■

Make sure you have the right valuation expert on your side of the courtroom. grassicpas.com/valuations

THANK YOU Crain’s acknowledges the presenting sponsors of the business forum, Hornblower Cruises & Events and United Airlines, as well as its corporate members, Brown & Weinraub, BTEA, Cozen O’Connor, GCA, George Arzt Communications, Greenberg Traurig, Kasirer, Nicholas & Lence Communications and Patrick B. Jenkins & Associates. Without their support, this business forum would not have been possible.

OCTOBER 19, 2020 | CRAIN’S NEW YORK BUSINESS | 15

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COMMERCIAL REAL ESTATE

Related cracks down on delinquent tenants at Columbus Circle mall

he Shops at Columbus Circle, Manhattan’s second-largest mall, is dropping the hammer on its luxury tenants, who collectively owe more than $7 million in back rent, taxes and other expenses, according to lawsuits filed Oct. 8 and 9 in state Supreme Court in Manhattan. Jeff Blau, CEO of The Related Cos., has urged retailers to keep paying their rent at its swanky retail space throughout the pandemic.

Solstice and sportswear brand JackRabbit were also the target of lawsuits. More than 50 retailers are at the 2.8 million-square-foot property, which also includes a Whole Foods Market and Masa, a Japanese sushi restaurant reported by Eater New York to be the most expensive eatery in the country. The shopping center got the green light to reopen from Gov. Andrew Cuomo in early September after a six-month hiatus, which Blau told CNBC would help rent collections pick up. A few weeks later, the companies are still holding on to their cash. Hugo Boss filed a countersuit against Related a day later to cancel its lease, get a rent abatement for the time its store was closed and ask for a rent reduction from its nearly $442,000 monthly dues at its 14,776-squarefoot boutique. With other expenses, the clothier cuts Related a nearly $700,000 check every month. Although the “hefty rent” was justified pre-Covid-19, the brand’s complaint said, “there is simply no

MORE THAN 50 RETAILERS ARE AT THE 2.8 MILLIONSQUARE-FOOT PROPERTY The company reported a meager 50% rent-collection rate across its malls, including Hudson Yards, as of late August. High-end brands such as Cole Haan, Tumi and Michael Kors have failed to make any payments to Related since at least March. Hugo Boss owes the most—a whopping $4 million, the retail landlord said. Eyewear company

‘switch to flip’ that will return the parties to their pre-Covid-19 posture and suddenly cause eager shoppers to appear in the corridors of the Columbus Circle mall.” Related has installed digital people counters to make sure that visitors to the mall are only at 50% capacity.

Retail still down The nation’s retail industry continues to struggle because of the pandemic. At Hudson Yards, anchor store Neiman Marcus is set to vacate its location amid a bankruptcy that rocked the city’s retail sector. The developer is in talks to transform the space into offices. For some commercial pockets of the city, businesses are and will continue to suffer because commercial rents are just “too damn high,” Columbia Law professor Tim Wu wrote in an op-ed in the Oct. 11 New York Times. Right now, rents are still up, although demand is low. If rents reflected current market conditions at lower rates, more businesses could survive, more commercial spaces could be repurposed for

BUCK ENNIS

BY NATALIE SACHMECHI

other uses and more new businesses could be started, he wrote. Retail lease deals have dropped nearly 25% between the second quarter of 2019 and this year, with rents falling 11% during that period, according to a July CBRE report. If demand continues to falter, prices will follow suit, said Nicole LaRusso, a head of research at the brokerage. Many retail landlords, however,

are beholden to their lenders when setting asking rents because the investors usually establish a minimum rent. Even in a downturn like this, landlords can bring prices down only so much, Wu said. Representatives for JackRabbit declined to comment. Representatives for Related and the other retail defendants in the lawsuits did not respond to requests for comment. ■

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16 | CRAIN’S NEW YORK BUSINESS | OCTOBER 19, 2020

P016_CN_20201019.indd 16

10/15/20 5:07 PM

WHO OWNS THE BLOCK

Luxury developers bet big on Madison Avenue

1045 MADISON AVE.

Naftali banks on big payoffs in the long run BY C. J. HUGHES

1044 MADISON AVE. This 5-story, Georgian-style building from 1920 contains Emmelle, a two-floor women’s clothing store, and three residential floors with eight units. Madison Avenue, which has its own business improvement district to handle sanitation and marketing, is known for its high-end boutiques. But in the 1960s, the Emmelle space was a home to a Hamburger Heaven, a local chain. It’s still around and serving patties today—as Burger Heaven.

1046 MADISON AVE. Stores, art galleries and four apartments are shoehorned into this 5-story, corner-wrapping 1910 brownstone. A bare-bones studio rented for $1,600 a month in 2018. Retail tenants in the building, which is owned by a limited liability company, include Nicholas Brawer Gallery, which deals in “giant naval observation binoculars of the 1920s through the 1950s.”

1042 MADISON AVE. Citibank is the sole tenant of this 2-story, black-toned retail building, which was built in 1937 and was once owned by Sol Goldman, one of New York’s biggest landlords. New Rock Asset Partners sold the 4,200-squarefoot structure to JSRE Acquisitions, a division of the Safra banking empire, for $36 million in 2012.

40 E. 80TH ST. In an area that abounds with red-brick co-ops, this 25-story, brown-brick tower, completed in 1974 and turned into a co-op in 1979, is unusual. It contains 41 apartments, many with sweeping Central Park views. A five-bedroom duplex was listed for $2.65 million in October. The property was once owned by next-door Manhattan Church of Christ, whose own modernistic building opened in 1968.

31 E. 79TH ST. This 14-story, red-brick building, built in 1925, has 19 co-op apartments. Units don’t seem to sell often; the most recent transaction was in 2017. But two were put up for sale last month; one, a twobedroom unit with herringbone floors and a wood-burning fireplace, had an asking price of $4.35 million. The commercial portion of the building is known as 1040 Madison Ave., and for years it was occupied by a branch of J.Crew, which filed for bankruptcy protection during the spring because of the coronavirus.

1045 MADISON AVE.

39 E. 79TH ST. This 14-story, prewar building contains 20 apartments; its commercial side of the redbrick structure is 1033 Madison Ave. Its architect was Kenneth Murchison, a Beaux-Arts practitioner best known for commercial projects. But he also designed railroad stations, such as the one in Long Beach, N.Y., and Forest Hills Stadium in Queens. Murchison relocated to the building, as would Bessie White, the widow of Stanford White, another celebrated architect. The terrace-lined two-bedroom penthouse is on the market for $10 million.

Rising at this address is the Benson, a 15-unit, 19-story condo from the Naftali Group, which has been prolific in the nine years since its founding. Other residential jobs include the Shephard in Greenwich Village, the Seymour in Chelsea and 221 W. 77th St. The firm snapped up a $102 million parcel in Williamsburg during the pandemic. “I have less competition now,” said Miki Naftali, the founder of the Naftali Group. Naftali named the Benson for his father, Ben. Procuring the site required purchasing four adjacent prewar rowhouses, Nos. 1039, 1041, 1043 and 1045, which had rental units upstairs and stores at their bases, including an outpost of the fashion boutique Eileen Fisher. Three retail berths will anchor the ground floor of the Benson.

BUCK ENNIS, GOOGLE MAPS

espite a downturn in the luxury sector and a number of dire real estate predictions, Miki Naftali is pushing more chips to the center of the table. The developer has begun courting prospective buyers for his latest condominium project, the Benson. The 15-unit limestone-clad offering at 1045 Madison Ave., located in a part of the Upper East Side known for its co-ops, is one of just a handful of condos that have come on the market in Manhattan since the pandemic began. But don’t expect coronavirus-related discounts at the Benson. Most units cost between $12 million and $14 million. “I have no doubt in my mind that values will rise once the pandemic is over. So why should I lower prices?” said Naftali, CEO of the Naftali Group, which he founded in 2011. “It’s not the best time, and I’m not trying to pretend that it is. But in any situation, you always have an outlier.” Naftali, who is known for sinking much of his own equity into projects, said he’s not pushing ahead to please lenders, which include Israel’s Bank Hapoalim. It has provided $120.5 million in construction financing for the project, which is expected to open by 2022. But he concedes the downturn will slow sales. Selling every unit, which filings indicate would bring in a $220 million haul, might take two years instead of a more typical year and a half. Designed by Peter Pennoyer Architects with a prewar aesthetic, the 19-story building may appeal to those seeking social distance from neighbors. It’s small by condo standards, but it offers elevators that open directly into apartments, and every unit has private outdoor space. A fire pit–centered roof deck overlooks Central Park, and a theater features a bar and popcorn machine. So far, there’s been some interest. The Benson saw its first deal this month, as a townhouse resident from the neighborhood signed a contract for a $13 million, six-bedroom unit, the developer said. Research from GS Data Services suggests Naftali may be positioned relatively well. While sales activity dropped across the board in the third quarter versus the previous year, apartments with four or more bedrooms saw the smallest decrease, the analytics firm found. A desire for home offices was likely the reason behind the trend. Yet large apartments that came on the market in the last quarter had some of the steepest price discounts. “Fewer people are willing to purchase in the prime and super-prime markets,” or above $5 million, said Garrett Derderian, GS’s chief executive officer, because “the future of the market remains uncertain.” ■

OCTOBER 19, 2020 | CRAIN’S NEW YORK BUSINESS | 17

FROM PAGE 1

economic damage. Just about every industry has been affected. In August, 87% of all retail businesses and restaurants were unable to pay full rent and uneployment has skyrocketed. The real estate industry—where the city government derives revenue from property taxes and other real estate taxes—is on its knees. With only 14.8 million square feet leased the first three quarters of the year, Manhattan is on pace for its slowest office volume in 20 years. Residential properties fare no better—more than 15,000 apartments were available for rent in August, the highest number of vacant units in 14 years. The fiscal picture of the city has been crippled by coronavirus prevention. New York faces an $8.5 billion budget gap over the next two

fiscal years and this figure could balloon to $12 billion by 2022, according to the Financial Control Board.

MAYA WILEY

s the former top counsel for Bill de Blasio and chairwoman of the Civilian Complaint Review Board, Maya Wiley faces the challenge of distancing herself from an unpopular mayor. The 56-year-old civil rights attorney and activist presents herself as the antidote to the city's current ailments. “New York’s leaders did not bring Covid-19 to our city, but they are responsible for the decisions they made and fail to make,” she said recently. She criticized de Blasio’s latest budget, and argued that he did not cut the NYPD funding enough. If her announcement speech is any indication, social justice and inequality will be at the forefront of her platform. Wiley called systemic racism “our nation’s oldest virus” and said that “communities of color need more than applause: they need a lifeline.” As a civil rights attorney, Wiley’s greatest strength lies in her understanding of social issues that are flashpoints for many Democratic voters, like educational inequality and policing. She is supported by State Senator Michael Gianaris

Racial justice protests Through it all, New York is grappling with the consequences of the May 25 death of George Floyd at the hands of Minneapolis police officers—an incident that sparked the largest and most sustained racial justice protests since the civil rights movement. The City Council subsequently cut $1 billion from the police department’s budget. Here are six Democratic Party candidates who have either declared their intentions to run for mayor or are in the process of raising money in support of a campaign. Unless a strong candidate emerges from the Republican Party —and no one is on the horizon— the June 2021 Democratic primary will likely decide who will serve as the city’s next mayor.

PHOTOGRAPHY BY BUCK ENNIS

DONOVAN

SHAUN DONOVAN

s the former head of President Barack Obama’s Office of Management and Budget, Shaun Donovan knows about fiscal challenges. Donovan managed a $4 trillion budget at OMB, a cabinet position he held following five years as Obama’s Secretary of Housing and Urban Development. Donovan, 54, has more federal government experience than anyone else in the race and is the only candidate who has sat in the Situation Room during a moment of consequence. “I am offering a vision for change but also a depth of experience and record of accomplishment of getting big, progressive things done that nobody else can,” he said. Born and raised on the Upper East Side, Donovan spent much of his career prior to joining the Obama Administration working to improve affordable housing in New York. He worked in Mayor Michael Bloomberg’s administration as the commissioner of the Department of Housing Preservation and Development—though that association may prove unpopular with some outer-borough voters who blame Bloomberg for augmenting gentrification and creating a more unequal playing field. It's hard to say where Donovan will find a constituency. His technocratic Washington background may play well in parts of Manhattan, but it's hard to see the Ivy League-educated candidate connecting with voters in Bedford-Stuyvesant churches or beachside bars in the Rockaways. Donovan believes his affordable housing expertise is the type of results-driven background frustrated New Yorkers from all boroughs are seeking from their next mayor. He also believes that his experience working with Obama to protect the U.S. from the Zika virus and Ebola gives him the skill set to help New York improve its response to Covid-19. “There are so many things we need to do,” he said. “Repair, rebuild, reimagine.”

18 | CRAIN’S NEW YORK BUSINESS | OCTOBER 19, 2020

SUTTON

LOREE SUTTON

oree Sutton may be the breath of fresh air the city needs. Looking to become New York’s first lesbian mayor, Sutton is a Gulf War combat veteran, a former brigadier general and the Army’s highest-ranking psychiatrist from 2007 to 2010. She moved to New York in 2012 following her retirement from the military, and was de Blasio’s choice to be the founding commissioner of the Department of Veterans’ Services. In her five years in that role, she oversaw a dramatic decline in veteran homelessness. “I realized what we were designing would really serve the city in not only directly supporting veterans and their families but would serve as a laboratory for the issues facing the city,” she said. Sutton, 61, said she is a big believer in public-private partnerships and that she will be guided by the recent Covid-19 policy response plan of Kathryne Wylde’s Partnership for New York City. “I love what they have done,” Sutton said. “This recovery has to be based off of partnerships. We have to make the case to the private sector, the philanthropic sector, and demonstrate a good faith effort from the public sector that we have skin in the game.” Folksy and approachable, Sutton believes her lack of political experience is an asset and that her background in psychiatry will help her form relationships across New York’s sprawling government apparatus. Voters, though, may look at the magnitude of the city’s problems—especially the billions of government debt and the fiscal stress put on every city agency—and decide that only five years in city government is not enough firsthand experience to tame the beast of New York bureaucracy. Though she was the first of the three former de Blasio staffers running to break ties with the mayor, the affiliation will likely work against her. But Sutton is nothing if not an optimist. Her cheerful disposition and can-do attitude may be enough to convince even the most jaded New Yorker that she’s the woman for the job. “You have to have a core set of values that are not political in nature,” she said. “You have to be able to lead with competence, calmness, planning and preparedness.”

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ne candidate not lacking in New York government experience is Eric Adams. A 22year career in the NYPD culminated with a captain’s rank; he spent seven years as a state senator; and he is the first person of color to hold his current position of Brooklyn borough president. Even in his role as a cop, he was a reformer and a civil rights leader as the former head of 100 Blacks in Law Enforcement Who Care. “When you look at my life experience ... I’ve been on the field of battle for the people of this city for over 42 years.” Adams, 60, is adamant that the city has not been run efficiently. He believes every city agency can be cut by as much as 10% and that the bureaucracy has become too un-

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wieldy, with too much overlap. He wants to cut multiple regulations that he feels hamper small business owners’ ability to earn a living. “Bureaucracy, lack of communication, and inefficiency are destroying our city,” he said, adding that the financial sector is doing well but New York’s tech-sector is not where it should be. “This needs to become the tech capital of the East. We should attract them here and show them how easy it is to do business here,” he said. It’s unclear whether Adams’ association with the NYPD will hurt or help him with progressiveminded voters. While he may be the candidate best able to speak about policing and public safety, it remains to be seen if a former po-

GARCIA

SCOTT STRINGER

o other candidate for mayor has more experience as an elected official in city government than Scott Stringer. The comptroller of the city since 2014, Stringer also spent seven years as Manhattan borough president and another 12 years as a member of the New York State Assembly, representing the Upper West Side’s 67th District. “I have run some of the most professional and effective government offices in this city and that’s what I will do at City Hall,” he said. “I’ve been a consistent voice for fiscal responsibility and responsible budgeting.” As a lifelong New Yorker, Stringer, 60, has already positioned himself in opposition to de Blasio, who he has often clashed with and has no hesitation criticizing now that he is running. “We have seen what happens when you have no leadership in City Hall, and so the election for the next mayor is critical,” he said. While no one would doubt Stringer’s progressive credentials or record of accomplishment, there is the risk that this becomes a “change election” in which New Yorkers seek a new voice, one not tethered to decades in city government, to provide leadership through the present and ongoing state of crisis. It is the same threat that harmed Hillary Clinton in her presidential race against Donald Trump in 2016. Trump repeatedly questioned Clinton’s decades of experience in federal government by asking voters how she could be the change agent when “nothing” had changed under her watch. This question, however disingenuous, may hang over Stringer’s head during the primary and be used by his opponents seeking to harness their own campaign narratives around a changing of the guard.

lice officer can be elected into Gracie Mansion in this current political environment. In Adams’ mind, the trust between the police and the city was broken by a toxic relationship some officers had with de Blasio; this distrust has since spilled over into neighborhoods across the city. “It was downhill the day police officers turned their backs on the mayor at funerals,” he said. Adams hopes his firsthand experience in law enforcement will serve as the catalyst to create a new relationship between communities and the police. This task, though, may be easier said than done as the city continues to grapple with issues pertaining to race, class and public safety.

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he mayor's utility player, Kathryn Garcia, resigned from her long run as the highly regarded Department of Sanitation commissioner and announced her interest in her old boss' job. During a 14-year career in city government, Garcia earned a reputation as being a driven, analytically minded bureaucrat who ran her departments efficiently. Aside from a six-year tenure at Sanitation, the Brooklyn-born-andraised Garcia also led the Department of Environmental Protection and the New York City Housing Authority. “My focus is on making sure we are keeping the fundamental services of the city intact as we get through what is a dark time,” she said. “I’m very focused on quality of life in the city. We need to be prepared to build and lay the foundation for the next 100 years.” Garcia, 50, believes the city should restructure its debt while interest rates are still low, purchase distressed hotels and convert them into affordable residential properties, create a five-borough protective plan against climate change storm surges, and implement new reforms within the NYPD like raising the age of recruitment. “Officers should be 25 not 21,” she said. “That’s a really young age for someone to be given a gun and that much responsibility.” One thing that will hamper Garcia is her lack of campaign experience— she’s never run for public office before and lacks the fundraising network other candidates have spent decades growing. It’s one thing to be an experienced bureaucrat; it’s quite another thing to be a comfortable candidate. Despite her attempt to distance herself from de Blasio, she's stuck with the association.

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of Queens, who could bring on additional institutional support from the state Democratic Party. There are shoals for her to navigate. Wiley has defended the practice of housing New York’s homeless population in commercial hotels across the city. Earlier this summer, she led a rally to protest homeless men being moved from the Upper West Side's Lucerne Hotel where neighbors had complained of quality of life issues. While this position may be popular with progressives who watched her as a commentator on MSNBC, it certainly won’t endear her to the business community and residents who’ve complained about an increasingly large and aggressive homeless population. Wiley is unabashedly proud of her lack of political experience and the fact that she has never held elected office. New York voters looking for a seasoned hand to steer the city away from disaster will likely pull the lever for a different candidate. “I am not a conventional candidate, but changing it up is not a risk,” she said.

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OTHER CANDIDATES

here are a handful of other Democratic candidates who may emerge as contenders. City Councilman Carlos Menchaca of Brooklyn is seeking to harness his relative youth—40 years old—with progressive credentials. Menchaca has called for City College to be free and believes rent should be canceled. Then there is Dianne Morales, 53, of the South Bronx who runs the non-profit Phipps Neighborhoods. Morales may be the most progressive—or far left—candidate in the entire primary. She has gone further than simply suggesting the police should have funding reallocated. She has advocated moving away from the NYPD entirely and creating an alternative to policing—a position that will likely cost her support from across the five boroughs. Finally, there is Ray McGuire, the vice chairman of Citigroup, who officially threw his hat into the ring last Thursday. While still a mystery to many voters, McGuire, 63, may have the right combination of executive experience, fundraising, and campaign gravitas. Many city voters will recoil from electing a Wall Street executive, but McGuire should be able to harness a formidable campaign war chest with a powerful dueling message: Not only would he be New York’s second Black mayor, but he’d bring to the position a knowledge of budgeting and fiscal leadership. OCTOBER 19, 2020 | CRAIN’S NEW YORK BUSINESS | 19

DINING

‘TIS THE SEASON

FROM PAGE 3

$10.7B

As is the case for many restaurants in the city, the focus right now is survival. Scarpetta fills all of its seats up every night, but with indoor dining limited to a quarter capacity, the restaurant is nowhere near being able to host the kind of bustle that really makes money, Meadow said. There’s no telling when those kinds of gatherings will be safe in the city again.

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BUCK ENNIS

Winter’s coming To ease the pain, the City Council last Thursday approved legislation that would allow for yearlong outdoor dining and roll back a longstanding ban on propane heaters. It was the latest in a number of public policy changes meant to help the beleaguered industry. But the fact remains: A cold winter is on the way. Scarpetta has installed a roof, partial siding and electric gas heaters to contend with that. But many other restaurants say hosting

“NOBODY WANTS TO EAT OUTSIDE IN THIS WEATHER” guests outdoors ultimately will be a losing proposition.

Ryan, who owns Austin’s Ale House in Kew Gardens. In some ways, restaurants are in a better posiWAGES paid by the restaurant tion than they industry in 2019 were just a month ago, when indoor dining was still disallowed. But PERCENTAGE surviving has of city eateries largely been the that got outdoor result of the Paydining permits in check Protection September. Program and other Small Business Administration loans, multiple restaurants said, not the eateries’ ability to drum up business. Challenges remain. Questions, too: How many diners are allowed indoors? How many are willing to come. While Scarpetta has filled up every night, Ryan and di Pietro said their guests, concerned about the spread of the virus, seem nervous to dine indoors. It all means difficult choices ahead. “I feel like I felt for a long time, that my restaurants were my kids … and the attachment was almost irrational,” di Pietro said. Now he’s changed his tune. “I cannot get in debt and hope for the best,” he said. “I need to be able to put the oxygen mask on myself before I throw good money after bad money.” ■

SCARPETTA filled up every night for outdoor dining during the summer months, but questions remain if it will be as popular after the change in season.

Luca di Pietro, owner of Tarralluci e Vino, which has locations across Manhattan, including in NoMad and Union Square, spoke to Crain’s after consecutive days of rain in the city. Wind had dented metal beams in the tent he put up at one of his locations and flipped over his planters, he said,

adding: “Nobody wants to eat outside in this weather.”

Hot air Di Pietro is dubious about how useful gas heaters will be, but he ordered two anyway. In fact, 43% of city eateries got outdoor permits in September, according to the state comptroller. Nine in 10 restaurants could not pay full rent in Au-

gust, the NYC Hospitality Alliance said. So restaurants are hardly in a position to refuse potential revenue streams. Restaurants say they hope indoor dining capacity will increase soon—they make money off volume, which makes the quarter capacity cap challenging. “You can’t have parties like you used to. The parties are what make you a lot of your money,” said John

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POSITION AVAILABLE Brick by Brick Consulting NYC LLC. Art of Org. filed with the SSNY on 09/16/2020 office: New York county. SSNY designated as agent of the LLC upon whom process against it may be served. SSNY shall mail copy of process to the LLC, United States Corporation Agents, INC. 7014 13th Avenue, Suite 202 Brooklyn, NY 112 28.Purpose: Any lawful purpose. Notice of Qualification of UNDERBITE DENTAL BRANDS LLC Appl. for Auth. filed with Secy. of State of NY (SSNY) on 09/25/20. Office location: NY County. LLC formed in Delaware (DE) on 09/22/20. SSNY designated as agent of LLC upon whom process against it may be served. SSNY shall mail process to the LLC, 230 W. 41st St., Second Fl., NY, NY 10036. DE addr. of LLC: 251 Little Falls Dr., Wilmington, DE 19808. Cert. of Form. filed with Secy. of State of DE, 401 Federal St., Ste. 4, Dover, DE 19901. Purpose: Any lawful activity. NOTICE OF FORMATION of limited liability company (LLC). Name: JE Tâ&#x20AC;&#x2122;AIME FORD, LLC. Articles of Organization filed with Secretary of State of New York (SSNY) on 09/09/2020. Office location: New York County. SSNY designated as agent of LLC upon whom process against it may be served. SSNY shall mail copy of process to: JAMIE FORD. 175 W. 87th ST., APT. 19H, NEW YORK, NY 10024. Purpose: shoe company. Notice of Formation of KW Media Partners, LLC. Arts of Org filed with the Secy. of State of NY (SSNY) on 7/16/20. Office location: NY County. SSNY designated as agent upon whom process may be served and shall mail copy of process against LLC to 5 W 37th St., Ste. 501, NY, NY 10018. Princ. Bus. Addr: 248 E. 31st St., Unit 4B, NY, NY 10016. Purpose: Any lawful act. NAIM MATTO 1353 LLC, Arts. of Org. filed with the SSNY on 09/16/2020. Office loc: NY County. SSNY has been designated as agent upon whom process against the LLC may be served. SSNY shall mail process to: The LLC, 666 Old Country Road, Ste 510, Garden City, NY 11530. Purpose: Any Lawful Purpose. Notice of Formation of HC HOLDCO III LLC Arts. of Org. filed with Secy. of State of NY (SSNY) on 09/30/20. Office location: NY County. SSNY designated as agent of LLC upon whom process against it may be served. SSNY shall mail process to c/o Timothy P. Terry, 667 Madison Ave., 24th Fl., NY, NY 10065. Purpose: Any lawful activity.

Notice of formation of The Law Office of Kaitlin Rolston, PLLC. The Articles of Organization field with the Secretary of State of New York (â&#x20AC;&#x153;SSNYâ&#x20AC;?) on September 10, 2020 in New York County. SSNY has been designated as agent upon whom process against it may be served. The Post Office address to which the SSNY shall mail a copy of any process against the PLLC served upon it is 43 West 43rd Street, Suite 275, New York, NY 10036. The principal place of business for the PLLC is 43 West 43rd Street, Suite 275, New York, NY 10036.

Investment Professional (PennantPark Investment Advisers, LLC â&#x20AC;&#x201C; New York, NY) Analyze, strctr & spprt all stages of invstmnt deal exctn SUFVV ) 7 5HTV %DFKÂˇV GHJ RU IUJQ HTY LQ )LQ (FRQ 0DWK RU UHO Ă G \UV H[S LQ MRE RIIUG RU SUIUPÂˇJ Ă&#x20AC;QDQFO rsrch & analysis in an invstmnt bank. $OO VWDWHG H[S PXVW LQFO WKH Ă OZÂˇJ DQDO\]LQJ FRUSUW Ă&#x20AC;QDQFO VWDWPQWV Ă&#x20AC;QDQFO PGOÂˇJ GDWD DQDO\VLV LQ 06 ([FHO FQGFWÂˇJ GXH GOJQFH UVUFK GUIWÂˇJ SUVQWÂˇJ LQYVWPQW UHFPPQGWQV XWO]ÂˇJ Ă&#x20AC;QDQFO VIWZU IRU LQYVWPQW UVUFK SUWĂ LR PQWUÂˇJ 5HVXPHV 7 Clerkin, PennantPark Investment Advisers, LLC, 590 Madison Avenue, WK )ORRU 1HZ <RUN 1< -RE ,'

PUBLIC & LEGAL NOTICES BALTIC CAPITAL MANAGEMENT, LLC. Art. of Org. filed with the SSNY on 10/01/20. Office: New York County. SSNY designated as agent of the LLC upon whom process against it may be served. SSNY shall mail copy of process to C T Corporation System, 28 Liberty St New York, NY 10005. Purpose: Any lawful purpose. Notice of Formation of WVA Service LLC, Arts. of Org. filed with SSNY on September 21, 2020. Office: NY County. SSNY designated agent of LLC upon whom process against it may be served. SSNY shall mail copy of process to LLC: 1015 Morris Park Ave, Bronx, NY 10462. Purpose: any lawful activity. IVHB VENTURES LLC, Arts. of Org. filed with the SSNY on 08/17/2020. Office loc: NY County. SSNY has been designated as agent upon whom process against the LLC may be served. SSNY shall mail process to: Jennifer Baez, 145 Seaman Ave Apt 1A, NY, NY 10034. Purpose: Any Lawful Purpose. Notice of Formation of HC HOLDCO V LLC Arts. of Org. filed with Secy. of State of NY (SSNY) on 09/30/20. Office location: NY County. SSNY designated as agent of LLC upon whom process against it may be served. SSNY shall mail process to c/o Timothy P. Terry, 667 Madison Ave., 24th Fl., NY, NY 10065. Purpose: Any lawful activity. 31 TMH Realty LLC. Appl. for Authority filed with Secy. of State of NY (SSNY) on 10/09/20. Off. loc.: NY Co. Orig. juris.: DE. SSNY des. as agent of LLC upon whom process may be served. SSNY shall mail process to the LLC, c/o Allison Young, 31 West 89th Street, New York, NY 10024. Purpose: General. ARDMORE HILL LLC, Arts of Org. filed SSNY 07/15/20. Office: NY Co. SSNY designated agent of LLC upon whom process may be served & mail to National Registered Agents, Inc., 28 Liberty St., NY, NY 10005, also the registered agent upon whom process may be served. General Purpose.

OCTOBER 19, 2020 | CRAINâ&#x20AC;&#x2122;S NEW YORK BUSINESS | 21

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HOTELS

Manhattan’s Blue Moon Hotel presses business-interruption claim against Travelers

he Lower East Side’s Blue Moon Hotel is hoping that it has something very rare indeed: a winning claim against its insurance company. The Orchard Street inn, like many other pandemic-racked businesses, filed suit against its insurer, Travelers Insurance, to force payments on a business-interruption claim. The Blue Moon, however, may have one thing that the others don’t: a provision that covers losses that result from acts of civil authority. “[Traveler’s] accepted the policy premiums with no intention of providing coverage for business in-

spond to a request for comment. Business-interruption claims have been routinely rejected by insurers, and so far courts tend to side with them. Insurers have successfully argued that the pandemic is not the right kind of interruption because it produced no physical damage.

Favorable position? Courts are currently looking at more than 1,000 business-interruption claims, said Loretta Worters, a spokeswoman at the Insurance Information Institute. The Blue Moon case may have promise because virus exceptions in insurance policies do not always extend to civil authority protections and because businesses can invoke the coverage even if their premises were not specifically contaminated with Covid-19. “The issue of having to deal with loss arising out of a pandemic such as Covid-19 is going to be very complicated,” said Marc Dedman, a partner at Barton LLP, who is not connected with the

“HAVING TO DEAL WITH LOSS ARISING OUT OF COVID-19 IS GOING TO BE COMPLICATED” come losses resulting from orders of a civil authority,” according to the Oct. 9 lawsuit, filed in Manhattan federal court. Traveler’s attorney did not re-

SHOP ARCHITECTS/JDS DEVELOPMENT

BY GWEN EVERETT

case. “I think that New York has taken a fairly insured-favorable position in other cases,” said Stephen Younger, a partner at the law firm of Patterson Belknap. “And so New York is a jurisdiction that can be sympathetic to other insureds.” Barton is not connected to the case. He said the single case that’s been

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22 | CRAIN’S NEW YORK BUSINESS | OCTOBER 19, 2020

decided in New York went in favor of an insured‘s business, though the facts in that claim were different. That said, Younger believes insureds have an unphill climb in these cases. He said the hotel can win only if it can prove it wouldn’t have shut down anyway if not for the governor’s order. “The question is, did the virus shut this hotel down

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or did the governor’s order shut the hotel down?” Hotels as a sector are facing a host of challenges in light of the pandemic. Of the roughly 2,300 hotels in New York, 1,565 are facing closure if another stimulus bill is not passed by Congress, according to the American Hotel & Lodging Association. ■

TIC

KET S AV AIL

ABL

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GOTHAM GIGS

BUCK ENNIS

SEGAL has served as the director of the Division of Long-Term Care.

ANDREW SEGAL AGE 39 GREW UP A suburb of Syracuse RESIDES Hell’s Kitchen EDUCATION Bachelor’s in American studies, Brandeis University; master’s in public health, Columbia University COMEDY SHOW Segal does presidential impersonations and has performed several times at Caroline’s comedy club. COVID NO-GO He had to postpone his May wedding, set for Miami Beach, until next year. GIVING BACK With his brother, Segal raises money for his charity, Bottles for a Cure, which helps to fund grants for breast cancer research with money from cans and bottles. TRAVEL BUG Segal is an avid traveler. He’s recently been to Peru, and last year he went to London for the five-set Wimbledon final between Novak Djokovic and Roger Federer.

A healthy focus on innovation

Now a consultant, health care industry vet guides clients on tech, strategy BY JENNIFER HENDERSON

year before the pandemic began, Andrew Segal started the consulting firm Ansega Health Solutions with the goal of advising health care providers, payers, health-tech startups and privateequity firms on policy and strategy. From 2016 to 2018, he was the state’s director of the Division of Long-Term Care within the Department of Health’s Office of Health Insurance Programs. In that role, he was responsible for 250,000 Medicaid managed-care beneficiaries and the oversight and regulation of 53 health plans. But Segal—who also has held several leadership positions at the Visiting Nurse Service of New York—never could have imagined the environment he’s currently helping companies navigate. “I’ve been really busy during Covid-19 because a lot of my clients

are trying to grapple with, ‘How do we innovate and create change?’ ” Segal said. Ansega has worked with more than 20 clients since it opened, and its roster currently includes VillageCare, a West Village–based managed long-term care plan; Huron Consulting Group, an $800 million global firm; and Audicus, a national hearing aid provider. Much of the work his clients focus on is providing services for the frail and vulnerable, which Segal said he has always been passionate about due to his experiences with loved ones. “The pandemic has exposed a lot of flaws and fragmentation in our system,” he said. “Our elderly are some of the most valued and trusted members of society.” Nursing homes struggled to gain access to Covid testing, and many residents perished alone, he said. From his office just outside Times Square, Segal advises firms on using technology to better share

information between health plans and providers as well as connecting organizations and vendors for partnerships aimed at helping people receive high-quality services in their home and community. As New York faces a multibillion-dollar deficit and looks to cut back on Medicaid spending, Segal—who has worked on two state budgets—is guiding clients on ways to become more efficient and develop solutions in a challenging financial environment. He’s also advising private-equity firms on areas ripe for investment. “I think what’s interesting about some of the private-equity companies now is that they value industry people like myself who know what the needs are,” Segal said. “Everyone wants to be a disruptor now in health care, but I think you really have to understand what are the trigger points, what are the pain points. That’s something I try to provide to my clients.” ■

“THE PANDEMIC HAS EXPOSED A LOT OF FLAWS AND FRAGMENTATION IN OUR SYSTEM”

OCTOBER 19, 2020 | CRAIN’S NEW YORK BUSINESS | 23

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