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STIRRING THE POT Quest to legalize marijuana raises concerns about taxes, social reform PAGE 3

February 8, 2021

ISTOCK

BUCK ENNIS

ASKED & ANSWERED Senator outlines benefits of online sports betting PAGE 13

REAL ESTATE

Return of city workers to offices hailed, but but details are scarce Manhattan’s office vacancy rate was 14.9% last month

BY EDDIE SMALL

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ROBOTS SPEEDING UP THE OFFICE ROUTINE

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rnst & Young’s robots don’t scurry around the office, delivering mail and performing other ordinary tasks.

But the accounting firm saved 2 million work hours last year, thanks to robotic software that performed mostly paperwork-heavy jobs, such as data processing and

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customer billing, that clerical staff would normally handle.

“You have automation doing the manual tasks that, frankly, humans don’t want to do and shouldn’t be doing, which then allows them to focus on higher-value activities,” said Jeff Aldridge, who leads EY’s Intelligent Automation practice for the Americas.

Called robotic process automation, the soft-

© 2021 CRAIN COMMUNICATIONS INC.

A May comeback

ware speeds up repetitive tasks in data entry and document processing. It is growing so quickly that research firm Gartner expects that 70% of the routine tasks for corporate managers will be automated within three years. New York’s historic strength in document-heavy industries ripe for automation—finance

The mayor said in his State of the City address that employees who are working remotely will start returning in May, a move that should be a boon to New York’s struggling office market. Widespread working-from-home practices have gutted the industry during the pandemic, and the office vacancy rate in Manhattan hit a record high of 14.9% in January, according to a Colliers report.

But the return’s impact will not just be limited to the office market, said Andrew Sachs, Newmark’s executive managing director. It also will have an effect on retail and mass transit, as more people returning to work means more foot

See ROBOTS on page 22

See OFFICE on page 19

Local startups are leading the $2 billion industry creating software to automate repetitive workplace tasks

BY RYAN DEFFENBAUGH

ayor Bill de Blasio’s recent announcement that the city government will start bringing its remote workers back to its offices in May was greeted with a sigh of relief by the real estate industry, even as specifics of the plan remain scarce.

“If the government itself is not bringing its people back, that sends a message in terms of a lack of confidence,” said Scott Rechler, chairman of RXR Realty, “whereas when the government does reopen its offices and bring its people back, it sends a message of confidence.”

RESTAURANT OWNERS TRY NEW IDEA TO SURVIVE PANDEMIC LULL PAGE 23

WHO OWNS THE BLOCK

Covid mutes effort to revive Union Square PAGE 10

2/5/21 4:03 PM

TECHNOLOGY

5G expansion could boost city’s job recovery, GDP by billions: report De Blasio pledged 2021 will be the ‘year of 5G’

Potential benefits The benefits of 5G have been hyped for some time, but so far the network has rolled out in only a limited capacity in major cities in the U.S. That could change, however, as Apple and Google are introducing 5G-capable phones this year, and carriers such as Verizon and AT&T have pledged to expand the network.

At its full potential, carriers say, 5G can reach speeds up to 100 times the current service provided by 4G LTE. The report tries to put into context what those speeds could mean for economic progress, said Enrique Duarte Melo, a managing director with Boston Consulting Group.

Part of the challenge in measuring the potential economic opportunity is that the new network could enable software and technologies

THE NETWORK COULD ENABLE TECHNOLOGIES THAT DON’T EXIST YET ation cellular network.

By Boston Consulting Group’s calculation, every six-month delay in 5G deployment could cost $25 billion in potential economic productivity by 2030. The report projects 5G could add about 4.5 million jobs nationally by the end of the decade.

Mayor Bill de Blasio is pledging to make 2021 the “year of 5G.” The

that don’t exist yet.

“We can’t say, ‘Here are all the uses that will be in place by 2028.’

That’s a fool’s errand,” Duarte Melo said. “If we were talking in 2009 about 4G, it would have been really difficult to imagine things like Uber and Airbnb.”

Instead, the report looked by industry. Health care, it found, stands to benefit from expanded telemedicine options. An oft-cited example is remote surgery.

The reduced lag time from a 5G

connection could allow a spinal-surgery expert in New York to operate on a patient in Ohio. Using 5G, surgeons in China already have completed such operations on a ­trial basis.

Jobs in the information technology sector, meanwhile, would be

CORRECTION ■ The Rooftop at Pier 17 works with external agency Relevent. The name of the agency was misspelled in “Finding New Ways to Get Together,” published Feb. 1.

HEALTH CARE

Data backs state’s decision not to repurpose second doses of vaccine

BY SHUAN SIM

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he state last Thursday turned down Mayor Bill de Blasio’s request to use Covid-19 vaccine doses earmarked to be a second shot as a first dose, and clinical data backs up that decision, health experts say.

The state health commissioner, Dr. Howard Zucker, responded to de Blasio that the Centers for Disease Control and Prevention does not recommend using second doses as first doses.

“The CDC has information that we do not have,” Zucker said. “The CDC has intimate knowledge of the future vaccine production schedule, as it is federally controlled, and their opinion is informed by national and international medical professionals researching the virus.”

When reached for comment, a spokesman for de Blasio pointed to the mayor’s Thursday news conference. “It’s just not right to withhold second doses we could be using right now. What we know is that when you get a first dose, you get

some protection,” de Blasio had said during the briefing.

Unknown availability The level of protection received after a first dose, however, does not necessarily mean second doses should be repurposed, said Dr. Bruce Y. Lee, professor of health policy and management at the City University of New York’s Graduate School of Public Health and Health Policy.

The biggest issue with using the earmarked second doses is not knowing when another supply will replace them, or what the medical impacts are if they are extensively delayed and individuals do not receive a second dose in a timely fashion, Lee said.

Doses of the Pfizer and Moderna vaccines are to be given 21 days and 28 days apart, respectively. But clinical data has suggested—and the CDC also has noted—that protection is comprehensive if a second dose is administered up to 42 days after the first dose, Lee said.

But “what if those who are wait-

ing for the second dose don’t get it within that time?” he asked. “There is limited data on the effectiveness of the vaccine after that window.”

In addition, there are questions about levels of protection. Clinical data on the Pfizer vaccine shows it is 50% effective after one dose and 95% after the second. From a population standpoint, it is not clear if having a larger number of individuals protected at 50% is better than having a smaller group that is 95% protected, said Dr. Jennifer Lighter, hospital epidemiologist at NYU Langone and associate professor of pediatrics at the New York University Grossman School of Medicine.

Moreover, expanding first doses to more people to meet demand does not address the priority issue, which is ensuring people who need it most will get it, Lighter said.

“Vaccine eligibility is expanded to restaurant workers now, but they’re not the ones most likely to get a severe course of the disease if infected,” she said.

A better solution would be to ensure existing supplies end up in the

boosted by the need for web developers, among other technologies.

Overall, Boston Consulting Group estimates 5G could boost the city’s annual GDP by $77 billion in the next decade.

The most immediate jobs, the report said, would be in laying the infrastructure necessary to expand the wireless network.

As part of his “year of 5G” plan, de Blasio will make 7,500 city pole tops newly available for cellular equipment—the start of a long process.

“When you look at what carriers say they need to really bring 5G to life over the next five years, we are talking about tens of thousands of cell sites,” said Ray LaChance, co-founder and CEO of ZenFi Networks, one of the nine companies that hold a franchise with the city to install cellular equipment.

LaChance called 7,500 “a sensible target,” adding: “But we are still very much in the early innings of the 5G rollout.” ■

arms of those with comorbidities and the elderly, she added.

Lee agreed. “Spreading the doses around is putting the cart before the horse,” he said. “The issue is production and moving supplies to the states. It makes more sense to target that first.”

Public education Because the city and the state can’t control production, what might be helpful instead are public education efforts. City and state vaccination numbers have been collected but aren’t widely published in prominent places, Lee noted.

“How many people actually know what percentage of health care workers, elderly and those with underlying conditions have been vaccinated?” he asked.

If the general public and employers can be made more aware that the most needy haven’t received the vaccine yet, perhaps those who need it less—even if they are eligible—will feel compelled to wait, Lee said. ■

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ffectively expanding speedy 5G cell service could add up to 140,000 jobs in the metropolitan area within 10 years and add billions to the city’s gross domestic product, according to a report from the Boston Consulting Group.

The report, backed by wireless industry group CTIA, serves as a notice for local and federal agencies to invest in expanding the next-gener-

mayor said during his State of the City speech Jan. 28 that his administration would soon open more public property for installing telecom equipment necessary for the next-generation network.

ISTOCK

BY RYAN DEFFENBAUGH

MARCH 3 HOW THE BIG APPLE WILL ­REGAIN ITS SHINE, FEATURING DANIEL L. ­DOCTOROFF, CHAIRMAN AND CEO OF SIDEWALK LABS In the wake of 9/11, Daniel Doctoroff, then deputy mayor of economic development, contemplated the same issue we face today: Are cities still necessary?

With the redevelopment of the World Trade Center, the High Line and Hudson Yards, among other projects, the answer was a resounding yes.

Join Crain’s March 3, when we talk to Doctoroff, now CEO of innovation company Sidewalk Labs, about how New York can come back again.

VIRTUAL EVENT Time: 4 to 5 p.m.

CrainsNewYork.com/ MarchBizForum

Vol. 37, No. 5, February 8, 2021—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.

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2 | CRAIN’S NEW YORK BUSINESS | February 8, 2021

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POLITICS

Quest for pot legalization stirs debate on taxes, social reform A generous proposal would give half of marijuana tax revenue to social equity causes

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ith New York state on the precipice of legalizing recreational marijuana, a fight is already brewing over how to spend what’s expected to be more than $300 million in annual tax revenue.

At issue is how much of the funds will go to the communities hardest hit by the U.S. war on drugs. The state is trying to close a $15 billion deficit worsened by the pandemic, while rent relief, small-business recovery and other economic interests also vie for marijuana tax revenue.

Gov. Andrew Cuomo in January called for

$100 million of the new tax revenue to go into a so-called Cannabis Social Equity Fund over four years, with $50 million annually thereafter. In his budget proposal, he said it would help those harmed by the more than 800,000 arrested over the past decades for marijuana possession—most of whom were people of color. But a more generous proposal that would give half of whatever New York brings in from marijuana taxes to social equity causes has also been circulating for years, setting the state up for a legislative battle later this month.

Black New Yorkers have particularly been affected by the war on drugs, having been arrested for pot crimes at around 14 times the

AT ISSUE IS HOW MUCH OF THE FUNDS WILL GO TO THE COMMUNITIES HARDEST HIT BY THE U.S. WAR ON DRUGS

revenue in what’s become a years-long negotiation over the Marijuana Regulation and Taxation Act, or MRTA—legislation that dates back to 2013. MRTA advocates for more money to be sent to minority communities.

rate of white residents from 2000 to 2018, according to the New York Civil Liberties Union. Hispanics were seven times more likely to be arrested for marijuana crimes than white people during that time period, the group said.

Lawmakers, community groups, companies and special interests will have to hash out how to treat New York’s marijuana tax

Meanwhile, states around the country are watching New York as they face their own budget shortfalls and pressures to address social inequities. New York’s decisions over how much money flows to social equity causes, and exactly how itgets distributed, will have ripple effects nationwide, said

National impact

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TECHNOLOGY

BY RYAN DEFFENBAUGH

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rowing investor interest in green energy technologies and President Joe Biden’s $2 trillion clean infrastructure pledge could be a boon for New York’s climate technology companies.

That includes Verdant Power, a marine energy company based on Roosevelt Island. The startup had a breakthrough during the fall in completing a 20-year mission to draw clean energy from river tides, launching three turbines on the East River for what it said was the first licensed tidal power project in the U.S. The experimental project generates enough power for about 500 homes that it sells to Con Edison—

That could include tests for sen- want to be part of the enorsors to coordinate the power supply mous opportunities in the said Kate with wind and solar, as well as link- transition,” ing tidal power to electric vehicle Frucher, managing direccharging. Verdant, meanwhile, tor of the Clean Fight, a would expand its product to rivers nonprofit accelerator for around the world, with New York as startups focused on clean its research and manufacturing energy. hub.

“That’s the big idea,” Taylor said. The green bubble “But, like all things, it takes monSome investors may still ey—a minor inconvenience.” approach green technoloThe good news on that front is gies cautiously, however, that venture investment into cli- as many clean-tech investmate-focused startups last year hit ments went bust a decade a record $16.4 billion, according to ago in what became known data from Pitchbook reported by as the green bubble.

Axios. As a sign of that interest, Frucher said what is Union Square Ventures, one of the helping clean energy incity’s top technology investors, vestment are advancehas raised $162 million for a new ments in technologies like fund dedicated to solar, which have made upclimate startups. grades more commercially During the sum- viable. In addition to pomer, Amazon tential federal help, both New York launched a $2 bil- state and city have laws requiring lion climate-­ private businesses and landlords to focused invest- cut their emissions.

The Clean Fight, which is backed ment fund.

Meanwhile, one of Biden’s first by state funds, provides guidance acts as president was reentering the and connections to startups such as U.S. into the Paris Climate Agree- Enertiv and Radiator Labs, two New ment, committing the country to York firms focused on reducing enemission reductions. As a candi- ergy usage in buildings.

“New York has been a breeding date, he promised to spend $2 trillion on climate-related infrastruc- ground for companies—like ture projects.

BlocPower and Brightpower—fo“We are at a precipice now where cused on energy-efficiency manpeople are realizing the future is a agement and renewable energy clean energy economy, and they solutions,” said Micah Kotch, man-

VENTURE INVESTMENT INTO CLIMATE-FOCUSED STARTUPS LAST YEAR HIT A RECORD not making much of a dent in the city’s vast power needs, as Trey Taylor, the company’s co-founder and chief marketing officer, concedes.

But the company’s vision is far grander. The strong current of the East River could make the area a proving ground for all kinds of tidal power technology, which is still well behind solar and wind power for commercial viability.

VERDANT

Local startups see opportunity as climate investing heats up

aging director of Urban-X, a clean energy–focused startup accelerator.

“Real estate is a competitive advantage for New York, and we have a number of startups working to transform this sector, which accounts for 79% of city emissions.”

For Lauren Salz, CEO of Midtown-based startup Sealed, the focus at the local and federal levels should include smaller measures that cut emissions, such as shifting existing homes from gas power to electric.

Sealed has raised $17 million from investors and doubled its

headcount in the past six months to 40 employees, thanks to the demand for single-family home energy retrofits on Long Island and in the city’s outer boroughs.

The company covers the cost— typically about $30,000—for shifting a home from gas to electric, then pays itself back by collecting the energy savings.

“I think often the focus is on the new housing or electric cars,” Salz said. “But we should really talk about how to make it possible for people to electrify and weatherize their homes.” ■

Manhattan startup raises $55M, says virtual biz events are here to stay

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he Robin Hood foundation’s 2019 fall investor summit gathered about 700 people to Lower Manhattan for two days of panels with big-name financial types such as Goldman Sachs CEO David Solomon and hedge-fund billionaire and Mets owner Steven Cohen.

The 2020 version was—you guessed it—held virtually. To make the event more than a daily Zoom meeting, the foundation turned to Touchcast, a West Village startup that uses artificial intelligence and

Accenture is a customer and now Touchcast’s lead investor.

Touchcast is betting that virtual events will become standard in the corporate world, even when in-person conferences—a trillion-dollar business—can safely return.

“The future of events will be digital with a physical extension,” said Edo Segal, the company’s founder and CEO. “The current situation has taught companies that there is a tremendous opportunity to innovate and make all events global.”

The Robin Hood event, for instance, had 2,000 viewers, well ahead of the number who traditionally arrived in person, driving $3 million in ticket sales that the foundation put toward its mission of fighting poverty.

Touchcast’s platform features a Netflix-style homepage for all its events, along with AI-generated transcripts that attendees can read and annotate in real time. Live polls, text chats and virtual “meeting suites” attempt to re-create the serendipity of in-person meetings.

The company develops customized re-creations of company conference rooms, meeting halls and

“THE FUTURE OF EVENTS WILL BE DIGITAL WITH A PHYSICAL EXTENSION” 3D mixed reality to produce interactive virtual events. The company recently closed a $55 million Series A funding round, capitalizing on the momentum for online meetings created by the pandemic.

Along with Robin Hood, the firm has hosted virtual events in the past 12 months for a list of global companies that includes Pfizer, JPMorgan and Unilever. Consulting firm

museums to serve as the backdrop for the events. Rather than static images, the backgrounds can be navigated with swoops and pans by an event director. Segal spoke with Crain’s from a Touchcast-customized version of Zoom, flipping between a range of backgrounds that included an airplane hangar and an auditorium.

‘Overwhelming demand’ A Touchcast event can cost in the six figures, but Segal noted that is still cheaper than a typical in-person investor presentation or industry conference, which requires a venue, catering and travel costs. For now, virtual is the only option, creating “overwhelming demand” for Touchcast, Segal said.

The company hopes to scale up with the new investment to fulfill more of that interest. It has about 100 employees, with a central office on Greenwich Street in the West Village. Much of the company’s staff is spread globally, however, and worked remotely pre-pandemic.

Segal, a former AOL executive and director of tech development company BMuse, started Touchcast in 2012. The company initially focused on developing interactive

VERDANT

BY RYAN DEFFENBAUGH

online videos, such as placing comments and photos directly on the screen. That product set the groundwork for the virtual events features that Segal said set Touchcast apart.

Virtual events are still new, but they are increasingly competitive for companies that host them. Most notably, U.K.-based Hopin has raised about $170 million from investors,

and recently it acquired Streamyard, a live-video company. The leading videoconferencing companies, Zoom and Cisco’s W ­ ebex, offer larger event hosting as well.

“Zoom has been the Model-T moment to democratize videoconferencing and make it part of our lives,” Segal said. “We are focused on the question of ‘What is Tesla?’—that next generation.” ■

4 | CRAIN’S NEW YORK BUSINESS | February 8, 2021

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HEALTHCARE

BY SHUAN SIM

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raining for medical practitioners and students during the pandemic has gone beyond moving classes to Zoom, experts from the city’s medical institutions say. Anatomy classes, clinical assessments and other requirements with physical elements have now been adapted in novel ways to fit the remote-learning setting.

Technologies such as virtual reality, simulations and other videoand voice-based tools have helped bring remote learning to life. The trend of moving medical education toward the virtual setting existed

chased plastinated bodies—preserved using plastic—before the pandemic hit the city. To make anatomy courses available in a remote setting, those were 3D-scanned and used on a teaching platform.

“We thought, How do we teach anatomy if students are not on-site for access to cadavers? And [we] thought to apply new technologies to resources we already had,” said Melvin Rosenfeld, senior associate dean for medical education at NYU Grossman.

Virtual reality tools have allowed for hybrid instruction, unlocking the potential of certain platforms such as simulation centers for a large number of remote learners, said Dr. Marc Triola, director of the Institute for Innovations in Medical Education at NYU Grossman. For example, with a faculty member onsite at the simulation center, students could interact with mannequins and observe their “vitals” all through a virtual space, Triola said.

Virtual learning benefits schools and health systems as well as students, said Dr. Daniel Katz, vice

TECHNOLOGY WON’T COMPLETELY REPLACE IN-PERSON LEARNING even before Covid-19, but the pandemic definitively transitioned things in that direction, said Dr. Curtis Cole, chief information officer at Weill Cornell Medicine.

The NYU Grossman School of Medicine, for example, had pur-

RAISE YOUR VOICE YOUR HAND YOUR SELF YOUR COMMUNITY YOUR EXPECTATIONS YOUR IDEA OF HEALTH

chair of education for the Mount Sinai Department of Anesthesiology, Pain and Perioperative Medicine.

Before the pandemic, a refresher course for advanced cardiac life-support certification required an instructor. In Katz’s department, with about 200 people to be recertified, that process could take up to 10 days for everyone, assuming a ratio of one instructor for every five students.

Katz’s department, however, adopted the use of virtual reality headsets during the pandemic and found that not only was it more time-efficient, but it also resulted in cost savings. There were fewer variable costs involved—no expensive mannequins had to be maintained, and no external instructors were needed—and individuals were able to undertake the training as their schedules permitted.

Katz did a study on the VR tool for the recertification training and found that it achieved savings of 83% per learner, assuming the training was carried out four times a year.

“For some learners who needed more time, they could definitely do so, as opposed to a classroom set-

HEALTH SCHOLARS

Medical education enters virtual setting and finds flexibility, cost savings

ting where they had to absorb all that information at the same pace as everyone else,” Katz said.

Greater efficiency Technology also has improved the logistics of medical education.

Faculty members can now prerecord their lectures when it is convenient for them, freeing up their day for clinical matters, Rosenfeld said.

Not being locked into fixed times provided individuals the flexibility to carry out their own training, and this has allowed providers more time to interact with their patients, Katz said.

Technology won’t completely replace in-person learning, however, Cole said.

“Absolutely nothing replaces the actual experiences of dissection, for example,” he said.

Rosenfeld agreed, saying that even after the pandemic, all the innovations borne from the crisis will need to be preserved and adapted for future education needs.

For example, telehealth, a mainstay, and the technologies involved in enabling it will need to be taught to students, Triola said.

“Medical education won’t ever be the same,” Rosenfeld said. ■

The health of one of us is the health of all of us.

Be a Health Raiser at RaiseHealth.com

February 8, 2021 | CRAIN’S NEW YORK BUSINESS | 5

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IN THE MARKETS

Black-owned bank Carver Federal takes advantage of Reddit ardor to raise cash

CARVER HAS BEEN A BEDROCK OF HARLEM’S BUSINESS COMMUNITY SINCE 1948

main relevant as the business has come to be dominated by a handful of giants, which are required by the Community Reinvestment Act of 1977 to serve everyone in all their geographic areas. The number of Black-owned banks in the country has fallen in half since 2001, to 20, according to Federal Deposit Insurance Corp. data.

But Carver has been rediscovered since the killing of George Floyd raised awareness about the importance of supporting Blackowned businesses. Its stock, which traded for less than $2 a share during the spring, soared briefly to nearly $23 in June. About that time, Netflix and PayPal pledged to put deposits in Black-owned banks.

New deposits Last year Carver beefed up marketing to potential customers stretching from Rhode Island to Virginia, and in December it said it had attracted $5 million in new deposits from 1,000 new accounts.

"Consumers and businesses today are increasingly interested in putting their bank deposit dollars to work at institutions that reinvest in their communities," Chief Executive Michael Pugh said.

In another sign of its rising profile, Carver even attracted the inter-

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arver Federal Savings, one Bancorp took advantage of the atof the nation’s oldest and tention to raise cash. It sold 158,000 largest Black-owned shares at $7.75 each, according to a banks, took advantage of regulatory filing last Tuesday. The unexpected activity in its stock to infusion boosts the bank’s capital raise $4.4 million, a move by about 10% and means that will enable the Harit can provide at least $40 million in additional lem institution to provide loans to its clientele, many more new loans to which is minority-owned underserved borrowers. small businesses and For that, the bank can nonprofits. thank Reddit.

Carver executives The bank’s normally weren’t available to comdormant stock sprang to life last month, when one ment, a spokesman said. participant on the Wall- AARON ELSTEIN Ordinarily a stock loses StreetBets forum predictvalue when sold at a dised it had “4X potential,” count to market price as meaning it could quadruple in Carver’s was. But in afternoon tradprice. More than 4.2 million shares ing last Tuesday the bank’s shares changed hands Jan. 27—10 times were up by 3%, a sign shareholders on Reddit and perhaps elsewhere liked the transaction.

Carver has been a bedrock of Harlem’s business community higher than normal—and a stock since 1948, when it was founded to that started the week around $7.50 serve borrowers who couldn’t get a share momentarily soared as high loans from white-controlled instias $10.74. tutions. It is a small bank, with just Like AMC Entertainment, Ameri- $673 million in assets and $460 milcan Airlines and other objects of lion in loans, and like many BlackReddit’s affection, parent Carver owned banks has struggled to re-

est of a hedge fund after its shares were mostly ignored by the investment community for years.

In August a fund called Quinn Opportunity Partners disclosed that it had acquired a 6.8% stake in Carver. Quinn’s website says the firm has a “core event-driven strategy [and] we constantly look for ex-

ceptional value investments where securities are trading at substantial disconnects to our assessment of intrinsic value.”

Last month the fund disclosed that it had reduced its stake in Carver to 3.9%.

Managing partner Patrick Quinn declined to comment. ■

REAL ESTATE

State must release total nursing-home death count

Neumann invests in mortgage startup

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alon Mortgage, a startup promising to cut mortgage-servicing costs by half, raised $50 million from investors including WeWork co-founder Adam Neumann’s family office and venture firm Andreessen Horowitz, the company’s chief executive officer said.

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New York Supreme Court judge ordered the state Health Department to release records showing the full count of coronavirus deaths among nursing-home residents.

The ruling was the latest blow to Gov. Andrew Cuomo, who has tried to deflect a barrage of criticism that state policies under his leadership led to an increase of Covid-19 related deaths among nursing home residents. Recently state Attorney General Letitia James released a report alleging the Cuomo administration undercounted Covid-19 deaths in nursing homes by as much as 50%, and may have obscured data available to assess the risk to patients.

Last month acting Supreme Court Justice Kimberly A. O’Connor said that the Health Department violated state law by not providing data in response to a Freedom of Information Act request from the Empire Center for Public Policy, a fiscally-conservative think tank in Albany. O’Connor gave the department five business days to provide the requested information, which includes the num-

ber of patients who died inside and outside of nursing-home facilities.

“We hope Justice O’Connor’s unequivocal ruling finally pushes the Cuomo administration to do the right thing,” said Bill Hammond, senior fellow for health policy at the Empire Center. “The people of New York—especially those who have lost loved ones in nursing homes—have waited much too long to see this clearly public information about one of the worst disasters in state history.”

The Health Department was already “in the process” of responding to the request, said spokesman Gary Holmes. He said the department will also publish the information on its website.

New release Following the Attorney General’s report last month, state Health Commissioner Howard Zucker released additional figures on nursing-home fatalities. The state data showed 9,786 confirmed and 2,957 presumed deaths.

State officials said they hadn’t released the data initially because

they wanted to be sure it was accurate. Cuomo defended his administration, saying they did the best they could with the information they had at the time.

He said the state was following directions from the federal government when it sent out guidance on March 25 that required coronavirus patients to be admitted into nursing homes, a move the attorney general said may have put healthy residents at risk. Cuomo has said the homes weren’t supposed to take in Covid-positive patients if their facility wasn’t able to properly isolate them.

“Clearly the best disinfectant is sunlight,” said state Senator Jim Tedisco, a Republican who advised the Empire Center on the lawsuit.

“Governor Cuomo’s coronavirus cover-up is crumbling down.” ■

Fannie Mae approved Valon, formerly known as Peach Street Inc., has won approval from mortgage giant Fannie Mae to service its home loans, co-founder and CEO Andrew Wang said, and aims to increase its current book of mortgages from $30 million to $10 billion by year-end. He said it’s the first new loan servicer to gain Fannie approval using its own software and technology.

The Chandler, Arizona-based company is among startups working to disrupt the typically staid world of mortgages by using new software to replace workers and reduce costs. Low interest rates helped the mortgage industry record its best year ever in 2020, prompting numerous lenders to go public. Still, complaints abound

about the quality of customer service.

“Homeowners are faced with clumsy websites, call centers, and often misinformation,” said Angela Strange, a general partner at Andreessen Horowitz and Valon board member. “In Valon, they have a trusted software-driven adviser.”

Wang, who said the U.S. is on the cusp of a foreclosure crisis comparable to 2008, reckoned that his company’s software has the Amount Valon potential to cut has raised mor tgage-sersince 2019. vicing costs by as much as 50%.

The firm has raised $53 million since its 2019 founding and plans to offer mortgages and other financial products in the coming years.

Existing investors who participated in the latest funding round include Jefferies Financial Group Inc., New Residential Investment Corp., an affiliate of Fortress Investment Group LLC, and Neumann’s 166 2nd LLC. Its board includes Timothy Mayopoulos, president of digital-lending startup Blend Labs Inc. and the former CEO of Fannie Mae. ■

$53M

6 | CRAIN’S NEW YORK BUSINESS | February 8, 2021

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REAL ESTATE

Judge cracks down on Icon Parking’s strategy to avoid rent payments

I

con Parking’s campaign to avoid paying rent to its New York City landlords has come to an end—at least at one Times Square garage.

With 200 sites, Icon is known as the city’s largest operator of parking garages. The company has been the subject of dozens of lawsuits since the pandemic began and it started to withhold rent payments.

Now, Icon must pay $1.4 million to its landlord, a limited liability company called RPH Hotels 51st Street Owner, Justice Arlene Bluth

the adjacent Hampton Inn Manhattan Hotel and visitors to Times Square to make money. Demand for parking spaces there has dropped to less than 30%, the company said in court papers.

If it had to continue paying its rent, which amounts to nearly $192,000 per month at this location, Icon would have to choose between shutting down operations and paying its employees, according to the lawsuit.

Highgate didn’t buy it.

Icon is owned by HPS Investment Partners, a private-equity firm with $67 billion in assets under management, the landlord’s Alan attorney, Zuckerbrod, said, and money isn’t an issue.

“Icon, and its ­private-equity investor, HPS, apparently have a plan to keep all of its garage income while paying nothing to its landlords,” Zuckerbrod said.

At least 25 other lawsuits have been filed for the same reason.

Any claims of “frustration of pur-

ICON HAS BEEN THE SUBJECT OF DOZENS OF LAWSUITS SINCE THE PANDEMIC BEGAN ruled. The hotel, at 851 Eighth Ave., is affiliated with Highgate Hotels.

Like many businesses in the city, Icon claimed that it could no longer afford its rent—the multilevel valet garage depends on guests at

pose” are also irrelevant, Bluth ruled. “The defendant’s purpose was to operate a garage, and it certainly is doing just that,” she said, adding that a less profitable business and a decrease in clients don’t mean that Icon is excused from paying rent.

“If a business that was permitted to operate throughout the pandemic (as opposed to others, such as gyms, that were forced to close for months) can assert a frustration of purpose . . . then nearly every struggling commercial tenant could seek relief from their leases,” she said.

BUCK ENNIS

BY NATALIE SACHMECHI

Taking advantage?

Late last year, also in state Supreme Court in Manhattan, Justice David Cohen found that Icon was occupying a garage beneath a ­Midtown co-op building in violation of its lease while it charged residents of the building $700 per month and failed to pay any rent to its landlord.

Icon made similar claims of financial hardship because of the pandemic, but the landlord and the justice saw a company trying to take advantage of the situation. The company was ordered to pay $1.5 million in rent arrears and was booted out of the space.

Other landlords have gone after

the parking company for millions of dollars in unpaid rent. In September ABS Partners sued for more than $7 million. In addition, Kamber Management has sought more than $2 million.

HPS and Icon did not immediately respond to a request for comment. ■

February 8, 2021 | CRAIN’S NEW YORK BUSINESS | 7

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chief executive officer K.C. Crain senior executive vice president Chris Crain group publisher Jim Kirk

EDITORIAL

publisher/executive editor

Council speaker and mayor have failed taxi industry

editor Robert Hordt assistant managing editors Telisha Bryan,

Janon Fisher audience & analytics manager

Midtown. The medallion system was meant to rein in the congestion, capping the number of cabs on the road, to reduce gridlock and punish bad actors. By limiting the number of medallions, the city created an artificial market, which it then exploited to raise revenue.

The system was hardly perfect. It was impossible to get a cab in Midtown during rush hour, in a rainstorm, above 96th Street or anywhere in the outer boroughs. For Black and brown New Yorkers, trying to hail a cab was a reminder of their second-class status.

In 2011 ride-hail app Uber entered the market as a totally new player—not a cab, not a livery car.

Uber and eventually Lyft disrupted an industry badly in need of reform. New Yorkers no longer had to call a dispatch center or stand on a street corner with their hand up. A few taps on a smartphone could beckon a ride that was usually comparably priced to a cab ride. The companies managed to overcome early resistance and regulation with an aggressive public relations campaign. They entered the market with little if any regulation.

When the app-hail vehicles

THERE ISN’T A CLEAR STRATEGY FOR REGULATING FOR-HIRE VEHICLES chronicled in last week’s cover story, the taxi industry stalled when app-hail companies were allowed to enter the market with little regulation. The taxi medallion was implemented in 1937. Before that anyone with a car could pick up passengers and charge whatever rate they wanted. Cabs flooded

EDITORIAL

Gabriella Iannetta associate editor Lizeth Beltran art director Carolyn McClain photographer Buck Ennis senior reporters Aaron Elstein, Eddie Small reporters Ryan Deffenbaugh, Brian Pascus,

Natalie Sachmechi, Shuan Sim executive assistant Devin Cavallo to contact the newsroom:

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

C

ity Council Speaker Corey Johnson and Mayor Bill de Blasio have failed to show leadership regarding the crisis in the taxi cab industry.

Time and again the city’s top elected officials have knitted their brows and wrung their hands over the loss of value of the city’s taxi medallions, cab driver suicides and ride-hail apps’ disruption of the industry. The council has commissioned study after study, but the mayor left the Taxi & Limousine Commission without a permanent commissioner for months. What the politicians have not done is come up with a clear, effective strategy for regulating for-hire vehicles.

As reporter Brian Pascus

Frederick P. Gabriel Jr.

started to overwhelm city streets, the Taxi and Limousine Commission abdicated its responsibility.

Instead of studying the way the new players operated in the streetscape, they overlaid an existing regulatory framework that was neither effective nor appropriate. The TLC monitors the speed and location of every cab in the city, but app-hail cars roam wherever they please.

After the suicides of several members of the taxi community, the City Council and the mayor proposed several fixes. They floated a bailout program for medallion owners, a cap on app-hail vehicles in Midtown and a tax on empty

vehicles cruising for fares. The cruising cap failed a legal test, but the other solutions have floundered, unable to find political support.

City politicians have aggressively courted the tech industry, including disruptors like Uber and Lyft, with the hope that innovators will come to the Big Apple with big ideas and big money. But their continued failure to hold app-hail cars to the same standards as yellow cabs is decimating the taxi industry. With such a clearly uneven playing field, there’s no wonder the taxi industry remains overmatched. ■

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OP-ED

212.210.0707, lmelesio@crain.com

Building New York out of the pandemic means supporting union labor

BY JOSEPH GEIGER

A

s Covid-19 upended the daily lives of New Yorkers, those who were deemed essential faced tremendous strife when grappling with a new normal amid a public health emergency.

Now that we’ve experienced nearly a year of living with a deadly virus that we have yet to get a handle on, it’s clear that those in unions have fared far better with the virus than nonunion workers.

pertise to handle Covid-19 and, now, our state’s recovery efforts.

During this unprecedented time, unions leveraged their strength to better working conditions for their members.

I strongly believe that New York can build its way out of the pandemic. That can be done, however, only by using a unionized workforce—our history and experience in the city and across the country proves it.

New York City, which was once identified as a union town, has seen job sites quickly shift to an open-shop model.

While large-scale developers claim open shops build up the middle class and provide opportunities, what we’re really seeing is corporate greed building its empire on the backs of innocent workers.

We see banks making hefty construction loans, yet these de-

WE MUST HAVE LEADERSHIP AND GOVERNMENT THAT PRIORITIZE UNION LABOR The very foundation of unionized labor is to protect the interests of workers, expanding into its own social justice movement dedicated to uplifting the working class. Because of this very foundation, unions were equipped with the ex-

velopers on the receiving end are paying less than area standard wages and denying critical health care benefits for workers, all on the taxpayer dime.

Workplace rights Now more than ever, we can’t have developers or contractors who cheat the working class, and the District Council of Carpenters is dedicated to ending this unjust reign within the industry.

As a union, we advocate for workplace rights, fair wages and hope for our future. Despite the difficult times we’re in, we remain true to our values, and we continue to elevate the voices of labor, while nonunion contractors attempt to silence them.

We need safe job sites with adequate personal protective equipment, ensuring that not only workers but their families remain safe and healthy.

We need to create job opportunities that allow New Yorkers to put

food on the table for their families.

We need to prioritize job and career training, reaching out to those in need of a living across the five boroughs.

We need to secure health care benefits for every worker. Covid-19 is real and does not discriminate against any individual.

This is what the labor movement is about. We organize around the idea that there should be economic justice for all. This is what’s unique to unions.

Unions, such as the District Council, firmly believe that no worker should be left behind.

Workers across all trades are the lifeblood of this industry, and we must have leadership and government that prioritize union labor at a time when we’re in need of stability, economic opportunity and justice for every worker. ■

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CRAIN COMMUNICATIONS INC. chairman Keith E. Crain vice chairman Mary Kay Crain chief executive officer K.C. Crain senior executive vice president Chris Crain secretary Lexie Crain Armstrong editor-in-chief emeritus Rance Crain chief financial officer Robert Recchia founder G.D. Crain Jr. [1885-1973] chairman Mrs. G.D. Crain Jr. [1911-1996]

Joseph Geiger is the executive secretary-treasurer of the New York City District Council of Carpenters.

8 | CRAIN’S NEW YORK BUSINESS | FEBRUARY 8, 2021

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OP-ED

BY LORRAINE COLLINS, JAMES WHELAN AND JUDITH GOLDINER

E

xtraordinary times call for unity of purpose. Our voices represent property owners, housing providers and tenants, and together we are calling on state officials to take critical steps that will help prevent evictions, homelessness and additional economic harm.

Nearly a year after the coronavirus hit New York, unleashing its devastating health and economic consequences, more New Yorkers than ever are struggling to stay safely in their homes. Although the federal government finally enacted a stimulus package and New York state adopted its Emergency Eviction and Foreclosure Prevention Act, extending eviction bans statewide until May, these stopgap measures do not provide sustainable, long-term solutions for keeping New Yorkers safely housed and property owners afloat.

More than 200,000 eviction cases are pending in New York City Housing Court. Statewide, many renter households reported they had no confidence to pay rent in January.

More than half a billion dollars in city property taxes went unpaid in 2020, and thousands of property owners have said they will still be unable to pay their property taxes or utility bills for the beginning of this year.

Feeling the impact Communities of color in New York are feeling the impact of this crisis most acutely. With much higher rates of job losses during the pandemic, they are more likely than their white counterparts to fall behind on rent. Many immigrants, including those who are lawfully present in the U.S., are nevertheless ineligible for many government resources, and they face the heightened risk of job losses and illegal evictions. In turn, housing instability and evictions further jeopardize public health, causing trauma and an increased likelihood of emergency room visits—straining a system already pushed past its limits.

Housing instability stands to devastate low-income New York residents for some time unless we enact solutions that help renters stay housed, support the viability of building owners and preserve the

affordable-housing stock statewide.

By enacting vital reforms to increase access to existing resources, New York’s elected officials can help ensure that many more vulnerable tenants can stay in their homes.

That is why we are urging New York lawmakers to enact several key reforms to the state Family Homelessness and Eviction Prevention Supplement, the ­CityFHEPS and One Shot Deals programs to expand eligibility for these rental assistance programs and prevent evictions.

The state can immediately serve more people through its FHEPS and CityFHEPS rental assistance programs by eliminating the requirement of an eviction filing for eligibility. There is no reason to burden tenants and landlords with traumatic and expensive Housing Court proceedings before supplying aid.

One Shot Deals are an emergency form of rental assistance and do not require an eviction notice, but agency staff are not always aware of this.

Clarifying eligibility criteria for tenants, staff and property owners would ensure more people can access this aid. In addition, the program must respond to the current reality by waiving any requirement

BLOOMBERG

State policy reforms will stabilize housing during the pandemic—and after

to repay the One Shot Deals and demonstrate future ability to pay.

These resources must better reflect the reality of New York’s housing market in the amount of subsidy they provide. To achieve this, lawmakers must raise the current rent ceilings governing eligibility for these programs.

Without federal approval, state and city officials can immediately grow the reach of these crucial supports to help people now and after the pandemic is over. By providing assistance to households before they turn to more costly public interventions, such as homeless shelters and emergency room visits,

these reforms are ultimately cost savers.

One day the eviction bans will end—but we can’t wait until that time to take action. Lawmakers must enact these changes now for the city’s public health, economy and long-term recovery. ■ Lorraine Collins is director of public policy and external affairs at New York for Enterprise Community Partners. James Whelan is president of the Real Estate Board of New York. Judith Goldiner is attorney-in-charge of the Civil Law Reform Unit of the Legal Aid Society.

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Join Crain’s on March 3, when we talk to Doctoroff, now CEO of urban innovation company Sidewalk Labs, about how New York City can come back again.

Daniel L. Doctoroff, Chairman & CEO, Sidewalk Labs

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February 8, 2021 | CRAIN’S NEW YORK BUSINESS | 9

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WHO OWNS THE BLOCK

New Union Square office building owners try to grin and bear it

809 BROADWAY

Health crisis mutes efforts to revitalize the neighborhood

A

hefty $100 million plan to upgrade Union Square Park could energize efforts to redevelop the Manhattan enclave as a high-end office district. But as the anniversary of the Covid-19 pandemic in New York approaches, developers are wrestling with an anemic office market.

“It’s still going to take a while before people feel comfortable coming back to the office,” said Alan Wildes, an executive director at Cushman & Wakefield who is marketing 809 Broadway, a 15-story building that opened last year and is 40% leased. “But I’m bullish long-term.”

Located on the former site of a billiards store, No. 809 has open floor plans, a shared bamboo garden and private outdoor space for nearly every office. Wildes said financial firms have been early takers at the building, whose rents start at $130 per square foot annually, versus an average of $87 for comparable space in Midtown South, according to a Cushman report.

But Midtown South, which includes the Meatpacking District and the East Village, is grappling with a 15% vacancy rate, Cushman says. That’s the highest rate since 1995, when arriving tech startups helped set the area on its current path.

Rising nearby is 799 Broadway, an angular offering from Columbia Property Trust that seems to recognize post-Covid concerns. The private terraces on eight of its 12 floors will make office tenants “feel healthy, safe and confident,” according to marketing materials. No leases have been signed at the building, which has been marketed since 2019 and opens this year.

Columbia had no comment on rents.

The towers are hardly the first to add a glossy stamp to a brick-and-brownstone area once associated with the counterculture. Recent arrivals include 51 Astor Place, a 13-story full-block obsidian-hued building from Edward J. Minskoff Equities. And a ground-up spire from the Real Estate Equities is planned across the street, at St. Mark’s Place. Vornado Realty Trust’s 770 Broadway, a former department store, built in 1907 and renovated in 2000, has Facebook as a major tenant.

Residential buildings are also squeezing into the area, which is surrounded by historic districts but lacks coverage itself.

The Union Square expansion plan, announced last month by the Union Square Partnership, a revitalization group, seeks to boost the park’s acreage by up to 33% by absorbing adjacent streets while also adding trees, benches and sculpture. Broadway between East 13th and 14th streets is being eyed for conversion to a pedestrian-only block, plans show.

Boosters of the neighborhood point out that it’s packed with residences.

The mix could appeal to those who want to work near where they live and not depend on the subway. ■

809 BROADWAY Blatt Billiards, founded in 1923 with a focus on pool and bowling, had its factory in a 5-story building at this address. Blatt sold the building in 2014 for $24 million to developer IDM Capital. (Blatt still has a Manhattan showroom, on West 38th Street.) Natixis, a French lender, provided $14 million in financing. The 15-story building, designed by ODA, has signed four leases since 2019, said Alan Wildes, the Cushman & Wakefield agent marketing it for rents ranging from $130 to $145 per square foot annually. With about 90% of workers still not coming to offices citywide, even a month into this year, prospects of a quick lease-up are slim, whatever the property, Wildes said.

“People are reluctant to make long-term commitments to new office space,” he said. “It’s been challenging.”

67 E. 11TH ST. Built in 1868, the cream-colored cast-iron building, also known as 801 Broadway, initially housed McCreery & Co. Dry Goods, a sprawling store known for its upscale apparel. But by the mid-20th century, with wealthy New Yorkers having migrated uptown, the building had become a relic.

Later, a fire caused heavy damage. Development firm Rockrose nearly razed it before neighbors stepped in, according to the Daytonian in Manhattan blog. The building, a city landmark, went co-op in 1974. It has 144 units, many with sleeping lofts.

799 BROADWAY The pink building that anchored this corner site for years was once the fashionable St. Denis Hotel, completed in 1853. The hotel’s guests included Mark Twain, P.T. Barnum and President Chester Arthur. A 1920s renovation stripped it of its Victorian flourishes, though. In later years, therapist offices and publishing outfits called it home.

Investment firm Cambridge Associates bought the building in 1973 as one of its first purchases, according to city records, before selling it in 2016 to Normandy Real Estate Partners for $101 million. Two years later, Normandy sold a stake to Columbia Property Trust, a frequent development partner, for $146 million. The joint venture then began a $300 million, 12-story office tower, though Normandy was later acquired by Columbia. No. 799, which does not yet have tenants, is due to open this year.

800 BROADWAY Designed by James Renwick Jr. on a former apple orchard owned by Henry Brevoort, the neo-Gothic Grace Church, an Episcopal house of worship, opened at this bend in the road in 1846. Other structures, including a chorister’s house on Fourth Avenue, came later. In 1894 the church opened a school, and in 2015, it expanded to teach prekindergarten through 12th grades. The high school is located around the corner, at 46 Cooper Square in the former Village Voice offices. Total enrollment is 700.

815 BROADWAY Magnum Real Estate Group, a development firm helmed by Ben Shaoul, is planning an 11-story residential building here. It will feature a store on the ground floor and 40 apartments above, according to building permits filed last month. Plans call for amenities, in the basement, to include a gym, a bike storage room and a pet spa.

A zoning approval is needed for the site, which contains a 2-story cast-iron building owned by Shaoul since 2000, around when he started snapping up property in the area. The designer is Issac and Stern Architects, which also was behind Magnum’s 100 Avenue A, an 8-story condominium that replaced a defunct movie theater.

The structure now at No. 815, developed in 1897 by the Roosevelt family, once held a photo studio, an early cafeteria-style restaurant from the Childs chain and, most recently, a place that sold hummus sandwiches. Magnum had no comment.

813 BROADWAY For the Shaouls, real estate is a family business. This 4-story tenement-style building, which has a 7-Eleven convenience store at its base and three apartments upstairs, was purchased in the early 1980s by Ben’s relatives, Kristina and Jack Shaoul, whose Universe Antiques store has been at 833 Broadway since 1974. Over the years, Ben’s parents, Minoa and Abraham, who also has worked as an antiques dealer, controlled the property, based on their names on tax records.

But Ben seems now in charge, as Magnum is listed as the landlord in the 2014 arrangement to install the 7-Eleven. Ben has famously warred with his parents, who sued him in 2013 for refinancing jointly owned properties and pocketing the upside. “The people he is stealing from are his own parents,” the suit said, “the same parents who paid for him to learn the real estate business.” Ben denied the allegations, and the sides settled a year later.

Among Magnum’s high-profile recent developments are Yves Chelsea, a green-glass condominium on West 18th Street; 254 Front St., a 40-unit Seaport rental; and 140 West St., a conversion of the upper floors of a stately former Verizon building. Ben’s sister, Elizabeth, is a Magnum partner.

808 BROADWAY James Renwick Jr., the architect behind St. Patrick’s Cathedral in Midtown, was also busy in this part of the city. His portfolio includes the St. Denis Hotel, Grace Church and this neo-Gothic 1887 edifice, which was once commercial and which went co-op in 1981 and acquired the Renwick name then. Stretching through to Fourth Avenue, and with some views through lancet windows of Grace Church’s grassy yard, the Renwick last sold a unit in May, a one-bedroom for almost $1.12 million that does not appear to have been publicly marketed, online records show. “Broadway between Astor Place and Union Square has been ripe for development for some time,” said Josh Rubin, an Elliman broker active in the building. “Build it and they will come.”

BUCK ENNIS, GOOGLE MAPS

BY C. J. HUGHES

10 | CRAIN’S NEW YORK BUSINESS | February 8, 2021

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SPONSORED CONTENT

Evolving Rules for HHS Provider Relief Fund In response to the unprecedented strain placed on healthcare provider organizations (“providers”) by the Covid-19 pandemic, the federal government created, through multiple pieces of legislation, the Provider Relief Fund (“PRF”) to provide much-needed financial assistance. Providers can use distributions received from the PRF to reimburse expenses and lost revenues attributable to coronavirus. Congress has appropriated $178 billion to this fund to date, which is administered by the Department of Health and Human Services (“HHS”), nearly $140 billion has been obligated or disbursed to providers through several distributions.

ABOUT THE AUTHORS

While this money has provided sorely needed liquidity, the constantly evolving, ambiguous guidance surrounding the many terms and conditions for the use and reporting of funds has created a complex web of concerns for recipients. These concerns are particularly pressing as the PRF distributions will be subject to significant governmental oversight and scrutiny. As providers contemplate how to deploy these funds, they must consider how to reduce risk while maximizing benefit, while at the same time maintaining appropriate controls and documentation to meet reporting and audit requirements.

New Legislation and Important Change in Methodology In December 2020, Congress passed an additional coronavirus relief bill. In the new legislation, Congress revised the methodology for determining eligible use of the PRF distributions. In particular, providers will now be permitted to calculate lost revenue attributable to coronavirus by comparing actual 2020 revenue with budgeted revenue, so long as the applicable budget was “established and approved” by the provider by March 27, 2020.

On January 15, 2021, HHS issued additional guidance regarding the new budgetary comparison for determining lost revenue.

HHS will now allow for three possible methodologies for determining lost revenue: (i) a comparison of 2020 actual patient care revenue to 2019 actual; (ii) a comparison of 2020 actual patient care revenue to 2020 budget; or (iii) “any reasonable method of estimating lost revenue.”

HHS notes that providers who pursue the second option must also complete an attestation confirming that their budget was “established and approved” prior to March 27, 2020. For providers that pursue the third option, they must submit an explanation of their methodology with their reporting. HHS indicated that providers who choose the third option will face a higher risk of audit by HHS. PRF Distributions – Reporting and Use In addition to issuing updated guidance on calculating lost revenue, on January 15, 2021, HHS also issued new guidance

on reporting. While the first reporting deadline for PRF payments was initially set for February 15, 2021, it now appears to be delayed. HHS did not indicate a new deadline, but rather asked providers to register for reporting through a new portal (https://prfreporting. hrsa.gov/s/) and stated that “in the near future,” they would be releasing an updated window for reporting on providers’ 2020 use of PRF payments. This new guidance does not appear to amend HHS’ position that providers may continue to deploy PRF payments until June 30, 2021 and that they must report on the 2021 use of funds

by July 31, 2021.

Despite this delay, as providers close out 2020, they must finalize how they are going to allocate the funds they received.

In the fall of 2020, HHS clarified that PRF reporting will require a two-step process for allocating PRF payments. Providers must first allocate funds to healthcare-related expenses attributable to coronavirus.

Any funds that remain after covering such healthcare-related expenses may be claimed as lost revenue.

For reporting purposes, providers should identify and quantify incremental healthcare-related expenses attributable to coronavirus.

The categories of eligible expenses appear broad, including expenses such as supplies, equipment, workforce trainings, and additional staffing expenses. It is critical to bear in mind when considering these expenses, however, that it must be defensible as “preventing, preparing for, or responding to coronavirus.”

Importantly, HHS clarified that two critical expense categories can generally be covered with PRF payments: capital expenses attributable to coronavirus and taxes imposed on PRF payments.

Capital expenses attributable to coronavirus, such as ICU-related equipment, retrofitting Covid-19 units, or leasing temporary structures to screen/treat patients, are eligible, in full, for PRF payment use, so long as they are directly related to preventing, preparing for, or responding to coronavirus. Likewise, HHS “considers taxes imposed on Provider Relief Fund payments to be ‘healthcare-related expenses attributable to coronavirus’,” with the noted exception of PRF payments made as part of the Nursing Home Infection Control Distribution.

While allocating funds to cover healthcare-related expenses attributable to coronavirus may be helpful, many providers may not have sufficient, eligible expenses to utilize all of their PRF payments. As a result, providers will often lean on the “lost revenue” category to validate the use of PRF payments.

For reporting lost revenue attributable to coronavirus, providers must first determine revenue losses attributable to coronavirus. The definition of “revenue” for purposes of the computation appears to include amounts received under the Paycheck Protection Program (“PPP”), as well as any interest earned on PRF payments.

Factoring PPP funding into the definition of revenue could significantly reduce available revenue losses for some providers, making it more difficult to claim PRF payments.

Providers who are able to claim funds under lost revenue may, per HHS guidance, use their PRF distributions to “cover any cost that the lost revenue otherwise would have covered, so long as that cost prevents, prepares for, or responds to

Aaron D. Cohen, JD

Kate Broderick

Principal & Co-Leader Healthcare Practice

Manager, Healthcare Consulting Practice

CONTACT US:

Aaron Cohen: acohen@citrincooperman.com Kate Broderick: kbroderick@citrincooperman.com

Preparation, planning, and strong leadership are crucial now more than ever to be the difference-maker between success and failure. Tomorrow’s business world will be anything but normal. Every business needs a comprehensive playbook to navigate the types of changes we face today and transition into tomorrow’s reimagined normal.

coronavirus.” and, critically, providers may consider “maintaining healthcare delivery capacity” as a means of responding to coronavirus. HHS has provided examples of eligible costs, including rent, employee payroll, and equipment leases.

Given that claiming funds under lost revenue allows providers to cover normal operating expenses, this pathway seems to offer a lower risk and more flexible route to taking advantage of PRF payments than attributing the PRF payments to healthcare-related expenses.

Preparing Documentation for Reporting and Oversight – Internal Controls Providers must simultaneously stand up appropriate internal controls and documentation to prepare for future HHS reporting and audit requirements. First, providers should document and

implement effective internal controls to demonstrate responsible stewardship and transparency in the management of their distributions.

Additionally, providers should maintain careful documentation of their eligibility for the funds they received, including bank statements identifying PRF funds received, tax returns, and proof of patient care on or after January 31, 2020.

It is critical that providers undertake detailed documentation of PRF payment uses. While HHS has provided guidance on the type of information it will look to gather, it has not identified the specific documentation that will be required of providers. We would suggest being prepared to provide information such as internal financial statements, individual receipts, and line-item budgets. ■

February 8, 2021 | CRAIN’S NEW YORK BUSINESS | 11

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KeyBank Real Estate Capital has promoted Alan Isenstadt to SVP/Team Leader for NYC, New Jersey, Philadelphia, and Mid-Atlantic. He will lead strategic expansion and business development with a team of bankers that provides real estate owners with balance sheet and capital markets financing. He joined Key in 2011 and was a senior banker and top CRE originator. He has a B.A. from DePaul University and MSc from The Henley Business School, Univ. of Reading, UK. He is located in Key’s NYC office.

Nixon Peabody is proud to announce that Adam Gordon has been elected into the firm’s partnership.

Adam’s practice concentrates on infrastructure, economic development and project finance. Adam has worked on a variety of real estate, transportation, nonprofit and public-private partnership (P3) transactions. Outside of the firm, he serves as Nixon Peabody’s liaison to the Harlem Youth Court.

BayBridge Real Estate Capital, a company of Berkowitz Pollack Brant Advisors + CPAs, today announced that 40-year real estate and capital markets veteran Mark Niman has joined the firm as executive managing director. Niman has a wealth of experience executing transactions and representing clients in all asset classes throughout the United States, Canada, South America, Europe and the Middle East.

LAW

Tarter Krinsky & Drogin

ACCOUNTING

UHY LLP Daniel Jones has been promoted to Partner at UHY LLP. He has served the firm for over three years and is responsible for servicing clients for the firm’s Northeast region. His extensive technical knowledge and grace under pressure leads him to completing large-scale and short deadline projects, and his meticulous work ethic and exemplary leadership ensures the quality of work during the engagements he leads.

HUMAN RESOURCES

Alight Solutions Cathinka Wahlstrom has been named president and chief commercial officer of Alight, a leading cloud-based provider of integrated digital human capital and business solutions.

Cathinka will be responsible for accelerating Alight’s growth strategy, leading all aspects of its commercial organization, including North America sales, strategic accounts, channels and partnerships and marketing.

Cathinka joins Alight from Accenture where she served in various leadership roles for more than 26 years.

Tarter Krinsky & Drogin is pleased to welcome Anna Taruschio to its full service International Group. Her arrival enhances the firm’s capabilities in providing comprehensive support to U.S. and global companies. Anna’s practice centers on a broad array of corporate, employment and operational matters. Fluent in English and Italian, Anna is a valued addition to the firm. Her prior experience ranges from Big Law to working in-house at highly regarded private and notfor-profit institutions.

PROMOTE. Why not?

CRAINSNEWYORK.COM I SEPTEMBER 28, 2020 I

Few qualities are more vital to the health of any business than financial

experts in tax regulation, audit, estate administration, forensic accounting,

organizational transformation, advisory services, fundraising and business equilibrium and organizational efficiency.

Rarely has the value of both been more strongly felt than in recent structure. They represent an extraordinary group of professionals from months. From stress-tested balance sheets to fast-changing regulations, firms of varying size and renown.

CRAINSNEWYORK.COM I SEPTEMBER 28, 2020 I To find these honorees, Crain’s consulted with trusted sources in the and reconfigured supply chains to “new normal” working arrangements, the Covid-19 pandemic has challenged even the strongest of businesses. business world in general and in the accounting and consulting realms in Standing tall within this chaotic breach are the foot soldiers of profes- particular. The nominations submitted by individuals and firms in the New Few qualities are more vital to the health of any business than financial experts in tax regulation, audit, estate administration, forensic accounting, York metropolitan area were rigorously vetted. Ultimately, each of the acsional service firms, led by accountants and management consultants. organizational transformation, advisory services, fundraising and business equilibrium and organizational efficiency.

In selecting the 86 honorees for this year’s list of Notable Women in counting and consulting notables was chosen for her career achievements Rarely has the value of both been more strongly felt than in recent structure. They represent an extraordinary group of professionals from Accounting and Consulting, Crain’s sought to spotlight the accomplished and involvement in industry and community organizations—and at times and renown. months. From stress-tested balance sheets to fast-changing regulations, firms of varyingI size 28, 2020 I to help New York rebound SEPTEMBER from the coronavirus. metropolitan area professionals and problem-solvers who keep business- her effortsCRAINSNEWYORK.COM To find these honorees, Crain’s consulted with trusted sources in the and reconfigured supply chains to “new normal” working arrangements, Read their biographies and learn how the members of this remarkable es churning. The talented individuals presented here are a diverse group, the Covid-19 pandemic has challenged even the strongest of businesses. business world in general and in the accounting and consulting realms in skilled at resourceful innovation and disruptive thinking. These women are cohort keep the gears of business whirling.

The nominations by individuals andadministration, firms in the New Standing tall withinFew thisqualities chaoticare breach soldiersofofanyprofesexperts insubmitted tax regulation, audit, estate forensic accounting, moreare vitalthetofoot the health businessparticular. than financial York metropolitan organizational area were rigorously vetted. Ultimately, each of the acsional service firms, led by accountants and management transformation, advisory services, fundraising and business equilibrium and organizational efficiency.consultants. counting and consulting notables chosenan forextraordinary her career achievements In selecting the 86 honorees for this list been of Notable structure.

They was represent group of professionals from Rarely has the valueyear’s of both more Women stronglyinfelt than in recent andregulations, involvement infirms industry and community organizations—and at times Accounting and Consulting, Crain’s sought to spotlight the accomplished of varying size and renown. months. From stress-tested balance sheets to fast-changing efforts to help New from theCrain’s coronavirus. metropolitan area and professionals andsupply problem-solvers businessTo York find rebound these honorees, consulted with trusted sources in the reconfigured chains to who “newkeep normal” working her arrangements, Read their biographies learn how theand members this remarkable es churning. The talented individuals presented here are aeven diverse group, of businesses. businessand world in general in the of accounting and consulting realms in the Covid-19 pandemic has challenged the strongest cohort the gears of business whirling. submitted by individuals and firms in the New skilled at resourcefulStanding innovationtalland disruptive thinking.

Theseare women aresoldiers particular.

The nominations within this chaotic breach the foot of keep professional service firms, led by accountants and management consultants.

In selecting the 86 honorees for this year’s list of Notable Women in Accounting and Consulting, Crain’s sought to spotlight the accomplished metropolitan area professionals and problem-solvers who keep businesses churning. The talented individuals presented here are a diverse group,

LAURA PETERSONskilled at resourceful innovation and disruptive thinking. These women are

York metropolitan area were rigorously vetted. Ultimately, each of the accounting and consulting notables was chosen for her career achievements and involvement in industry and community organizations—and at times her efforts to help New York rebound from the coronavirus.

Read their biographies and learn how the members of this remarkable cohort keep the gears of business whirling.

Managing Director and Communications, Media and Technology Northeast Business Leader Accenture

LAURA PETERSON

Laura Peterson’s résumé lists a whopping 10 positions she’s held at the multinational professional services company Managing Director and Communications, Media and Technology Northeast Business Leader Accenture since joining the firm in 2000. In her current role as Accenture the Northeast business lead for communications, media and technology, the enterprising ladder climber presides over a team Laura Peterson’s résumé lists a whopping 10 positions she’s of 3,000 professionals. Peterson is charged with managing a $750 held at the multinational professional services company andinCommunications, Media and Technology Northeast Business Leader million profit-and-lossManaging statementDirector for clients the Accenture since joining the firm in 2000. In her current role as aforementioned sectors as well as the high tech sector. Peterson Accenture the Northeast business lead for communications, media and works with key business leaders among more than 40 clients and technology, the enterprising ladder climber presides over a team Laura Peterson’sstructure. résumé lists a whopping within Accenture’s global management Since 2017, she 10 positions she’s of 3,000 professionals. Peterson is charged with managing a $750 held the multinational professional company has been a board adviser to at Fairygodboss, an online platformservices that million profit-and-loss statement for clients in the since joining the firm in 2000. In her current role as seeks to elevate womenAccenture in the workplace. aforementioned sectors as well as the high tech sector. Peterson the Northeast business lead for communications, media and works with key business leaders among more than 40 clients and technology, the enterprising ladder climber over a team Reprinted with permission from Crain’s New York Business. © 2020 Crain Communications Inc. All rightspresides reserved.

Further duplication without permission is prohibited. #NB20073 Since 2017, she within Accenture’s global management structure. of 3,000 professionals. Peterson is charged with managing a $750 has been a board adviser to Fairygodboss, an online platform that million profit-and-loss statement nt fo nt ffor or cclients cl client liients ts iin ts n the tth h hee seeks to elevate women in the workplace. aforementioned entioned sectors as well as as the th he high gh tech sector. Peterson Peterson aam m mo on o ng m more ree tth tha than haan ha han n 4400 cl clients cli li t aand nd nd works with key business leaderss amo among Reprinted with permission from Crain’s New York Business. © 2020 Crain Communications Inc. All rights reserved. global gem empermission ent struct cttu ure. rreee. Since Siince ince ce 2017, ce 220 2017 201 01777,, she she sh h within Accenture’s management structure.

Further manag duplication without is prohibited. #NB20073 n a board adviser to Fairygodboss, Fairr yg yggod go o od dboss, an online on onl nlline inee platform platf pla latfo that tth hat has been seeks to elevate women in the workplace. work orkp place.

LAURA PETERSON

Reprinted with permission permissi ssion from f m Crain’s rain’s New York Business.

Busi Bu in ness ess.. © 2020 Crain Communications Communicati Co ons Inc. All rights hts reserved. reserved.

Furth her duplication without without permission with permission is prohibited. prohibited. ##NB20073 Further

CRAINSNEWYORK.COM I OCTOBER 26, 2020 I

ASKED & ANSWERED

PAT WANG Healthfirst

P

INTERVIEW BY JENNIFER HENDERSON

at Wang, president and CEO of Healthfirst, a nonprofit insurer formed by a group of health care systems, had been working to advance value-based care long before the pandemic. The concept involves paying hospitals and physicians based on their patients’ outcomes rather than on the volume of services they provide. Now, as health care providers face unprecedented financial strain due to the Covid-19 crisis, Wang says such payment arrangements are more critical than ever. Not only do they improve the quality of care for patients—including the 1.5 million plan members Healthfirst serves throughout the city, Long Island and surrounding areas—but they also generate fiscal benefit for the facilities, practices and health centers that serve them.

How does Healthfirst contribute to value-based care?

What you understand as profit in another health insurance company’s balance sheet at Healthfirst is contractually-driven surplus that goes back to the delivery system. Eighty percent of the premiums we get for medical services flows through value-based payment arrangements, which means that providers benefit when there is a surplus in the premium. If less money is spent on fee-for-service claims, the surplus is part of the contractually-obligated payment stream.

What has that meant during the pandemic?

For April through June, we are distributing $250 million in those surpluses [about double that of the same period last year], and we’ve expedited the calculation and reconciliation of those amounts to get them out the door faster because the delivery system really needs it.

Why are value-based payments vital now and in normal times?

In the best of times, we have always been trying to push for this model because it aligns the incentives around trying to keep people healthy and avoiding unnecessary care. The providers are aligned with that goal because they benefit from it if they can reduce avoidable care. Consider Covid-19 to be like a war.

In war times, the model has been a lifesaver because there is this artificial depression of utilization, and that’s why the providers have lost so much money—their revenue has dried up. But because we have these risk contracts, the surplus that is there, that’s what has gone out the door to them.

DOSSIER WHO SHE IS President and CEO, Healthfirst AGE 66 BORN Jersey City RESIDES Manhattan EDUCATION Bachelor’s in history and East Asian studies, Princeton University; J.D., New York University School of Law FAMILY MATTERS Wang is married and has one son who lives in Brooklyn.

GLOBAL TIES She has lived in Croatia, Taiwan as well as China, where she had more than 20 first cousins.

FLARE FOR FOOD Wang has become reacquainted with the joy of cooking as a result of the pandemic.

EYE ON MEDICAID About three-quarters of Healthfirst’s members are Medicaid beneficiaries. The insurer’s initial response to the crisis included having its care managers make sure members had medicine and durable medical equipment to stay at home safely.

BUDGET CUTS Wang says the magnitude of the state’s Medicaid cuts—instituted to pare back on spending growth—is devastating. “Cuts to us as a Medicaid plan are cuts to hospitals.”

What happens when patients again begin seeking services?

We do see utilization coming back, and we have been encouraging our members to get needed care because people have put a lot of stuff off. We have to see whether the bounce back is gigantic or it just brings things back to a steady state. If we go back to a more normal utilization pattern, then the regular incentives of trying to align around good preventive care and avoiding unnecessary care, they just kick in.

How can the city safely bounce back from the pandemic?

Continue doubling down on the public health measures already in place: wearing masks, social distancing and hand sanitation. We know what to do. But I think a singular focus on getting the schools open for full learning should top the list of what we are aiming for. We should measure our success against that goal. As an employer, I can tell you that we will not be able to get fully back to work until the thousands of employees with school-age children can gget their kids back into school. It’s of course better for all children and particularlyy critical for poorer children. The city’s economic recovery is going to hinge on how quickly and how well we can get that done so that parents can resume their normal lives too. As a longtime resident of the city who has watched us recover from rece re reces ecession e cession, ssi sssion, sion, ion, 9/11 /11 1 and an an nd d Hurr icane Sandy, I believe in the city’s ability to bounce back against the odds. But this recession, Hurricane time e is going ng test te t all all of al of us, and we should be sober about the need for everyone to contribute to the solution.

What challenges es fface ace the broader insurance industry?

Balancing ncingg the tth he h e need ds and expectations of consumers who need and deserve good health care coverage, expandds needs ingg accesss however howeve o er we er we can can and doing it within an increasingly constrained economic environment. This is especially ttrue rue with th hM edicaid, where the state’s budget situation is dire at the same time as people’s needs Medicaid, are increasin ng. Given Giv iven ve ven ve en n that th that at Healthfirst has over 1 million Medicaid members, m member emb embers, s, the p potential impact p state s increasing. of the state’s budget iss e es ssp pe p e ecial a lyy con cconcerning. oncerning. cerning For me, me our priority priority has to be enabling enabl enab bling b blin ling in ngg as many people as possible n po ble to have full possi especially access to high-quality higggh-qua h h-qua - alitttyy ccare, are, and it’s going to be are be a challenge to figure ure e out ou ut how to do that in this this economic environment. Insur re errs also al n eed to be mindful of the hurt being experienced nced d by by so o much m Insurers need of the provider delivery system.

The value of of our ourr products p prod pro ro od ducts relies on havingg strong strong doctors, hospitals als and an nd d community communi co commun om om Balancing all of resources. Balancing this in a finan ncially allyy viable al vvia iable way is going to be a challenge. h ll financially ■ Reprinted with permission ission sssiion ioon on ffrom rom ro rom om Crains Crain’s rai rains aiins ains ins n n’s’s New ew w York Yo Y k Bu Busin Bus Busi Business B Business. usin ine n . © 22020 20020 0022200 C Cr Cra Crain rraaain in n Communicatio Communications ns Inc. All rights reserve reserved. ed. without Furthe Further rther ther th herr duplication her d du duplicati dupl uplication pl caaation attion tiion ion n withou w wit witho with ithout out permission ermission rmission missi m mission i io ission ion on is is prohibited. pro proh pprrroh #NB20080

For more information contact: Lauren Melesio, Director, Reprints & Licensing lmelesio@crain.com • (212) 210-0707

INDUSTRY ACHIEVERS ADVANCING THEIR CAREERS Recognize them in Crain’s

ACCOUNTING NONPROFIT

UHY LLP Eric Ribachonek has been promoted to Partner at UHY LLP. He has served the firm for over a decade and is responsible for servicing a range of clients from emerging businesses to Fortune 500 companies across the globe. His dedication to his clients and his ability to build and lead teams are just a few of the reasons for his promotion. Ribachonek has significant knowledge in several industries which include Technology; Media and Telecommunications and Manufacturing & Distribution.

LAW

Helen Keller Intl Freeborn & Peters LLP Freeborn & Peters LLP is pleased to announce that Marc B. Zimmerman has been named Leader of the Labor and Employment Practice Group. Marc advises clients on a wide range of labor relations and business issues, including wage and hour compliance, classification issues, restrictive covenants, discipline, management training, policy development, reductions in force, investigations, discrimination, harassment, retaliation, whistleblower and unemployment claims.

Helen Keller Intl, a global health organization dedicated to eliminating preventable vision loss, malnutrition, and diseases of poverty, elected William Toppeta, a former executive officer of MetLife, Inc., as Chair of its Board of Trustees.

His election coincides with a critical time for Helen Keller as it implements lifesaving measures for children and families during COVID. He will help shift the organization toward greater fiscal strength through donor recruitment and unrestricted support.

For listing opportunities, contact Debora Stein at dstein@crain.com or submit directly to

CRAINSNEWYORK.COM/PEOPLEMOVES

12 | CRAIN’S NEW YORK BUSINESS | FEBRUARY 8, 2021

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ASKED & ANSWERED New York state Senate INTERVIEW BY BRIAN PASCUS

A

s chair of the state Senate’s Racing, Gaming and Wagering Committee, Joseph P. Addabbo Jr. is one of the main organizers behind the push to legalize online sports betting across New York.

Gov. Andrew Cuomo recently came out in support of the measure, though his plan differs from Addabbo’s bill, which seeks to expand the number of sports book operators allowed under the state’s licensing umbrella. Addabbo, a lifelong resident of Ozone Park, Queens, describes both efforts as ways to bring much-needed revenue to the state.

How do you view the proposed betting legislation?

This piece of legislation and the governor’s proposal form a basis of how we go forward. In my opinion, it’s not really one plan versus another. It’s figuring out what’s best for the state in the short term and long term—not just for revenue, but for job growth.

How much could sports betting bring in annually?

Our model and the governor’s are starkly different. The upfront guaranteed revenue depends on how much we charge for a licensing fee. We’ll be around $500 million just for the fees, and if you incorporate the downstate licenses, then we’re above a billion. Our bill incorporates

DOSSIER

The formula for mobile sports betting is accessibility.

We include everything in our bill: stadiums, arenas, off-track betting sites, racetracks and gaming sites. In order for wagers from a mobile device to be legal, the device that accepts the bet has to be on the land of a licensed casino. The activating of the licenses downstate would create jobs, and attached to each license there can be 1,000 jobs. That’s not even counting construction jobs. Three active licenses can go downstate to places like the MGM’s Empire City in Yonkers or Resorts World in Queens or they can be three separate sites. That’s something the Legislature and governor talk about.

WHO HE IS State senator representing the 15th District, which includes Ozone Park, Ridgewood, Woodside and the Rockaways in Queens BORN AND RAISED Ozone Park, Queens EDUCATION Bachelor’s in accounting, St. John’s University; J.D., Touro Law School OFFICE RÉSUMÉ Addabbo held a seat in the City Council from 2002 to 2008, representing the 32nd District. He has been in the state Senate since 2009.

Would these downstate licenses mean a casino could come to Manhattan?

FAVORITE BOOK Addabbo enjoys most Stephen King novels, but aside from those, he loved How to Win a Local Election, by Lawrence Grey. He read it before his first successful election and after every re-election since.

There’s a lot of apprehension among elected officials as to where to build a casino. It’s more acceptable to give an existing “racino”—a racetrack that offers computerized table games and slots—a license. But it can go anywhere: east into Long Island or it can come into Manhattan. But square footage is an issue. The acres that you normally need for a site are not found in Manhattan.

BEST ADVICE His father, a U.S. congressman for 25 years, told him, “As a public servant, look at an individual’s concern not through your eyes, but through theirs.”

What other legislation have you worked on in your career that you’re really proud of?

downstate licenses in that we say we’ll put the server on a licensed casino’s land. There are four active licenses—casinos upstate— and there are three downstate licenses that are inactive until the year 2023.

There are things I look back on and I was able to make a difference, especially legalizing gay marriage, medical marijuana and paid family leave—I’m very proud to be part of that for the whole state, but my constituents are my priority. My district was decimated by Hurricane Sandy, so there’s what we did with building it back and the legislation to protect Jamaica Bay from contaminants. ■

BUCK ENNIS

JOSEPH P. ADDABBO JR.

So how are mobile sports betting and downstate casino licenses connected?

VIRTUAL EVENT | EARLY BIRD PRICING TILL MARCH 10

NYC’s Commercial Real Estate Recovery Forecast Covid-19 has had a profound effect on the commercial real estate market in New York and could have lasting impact even after the danger of the pandemic passes. During this webcast, Crain’s and local real estate experts will examine the changes in leasing activity, including the decreased demand for office space and the creative ways landlords are redesigning infrastructure to meet a new normal.

Thursday, March 18 | 4-5 p.m.

Speakers Helena Rose Durst Principal, The Durst Organization

Don Peebles

Chairman and CEO, The Peebles Corporation

James Whelan

President, REBNY

Register today at www.crainsnewyork.com/MarchNYNSummit For event questions: Ana Jimenez | 212-210-0739 | crainsevents@crainsnewyork.com For sponsorship opportunities: Kate Van Etten | kvanetten@crain.com SPONSORED BY:

February 8, 2021 | CRAIN’S NEW YORK BUSINESS | 13

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AWARD CATEGORIES: n DIVERSITY CHAMPIONS n EMERGING LEADERS n TOP D&I OFFICER n BOARD HEROES n CIVIC DIVERSITY HEROES Crain’s first Excellence in Diversity and Inclusion Awards will celebrate New York City individuals and businesses that lead by example and hold themselves and others accountable for diversity-and-inclusion initiatives.

Join Crain’s in our commitment to celebrate diversity and cultivate a culture of belonging when you nominate a business professional or organization today for the awards program.

Finalists will be recognized June 21 in a special issue. Winners will be announced at an awards reception in July and recognized in an issue appearing the week after the event.

NOMINATE TODAY: CrainsNewYork.com/Nominations Deadline to nominate: March 12

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RESIDENTIAL REAL ESTATE

Millennials are changing the luxury real estate market the housing ladder in smaller, more affordable cities,” said a new n sharp contrast to the “slacker” report from Sotheby’s on global stereotype that has defined their luxury in 2021. “An emphasis on generation, millennials aren’t things like sustainability will cerliving in their parents’ basements. tainly go into overdrive with the They’re buying multimillion-dollar aging of millennials, who, at 72.1 homes. million, are the largest adult generAt 38%, millennials—adults born ation, with unique consumer preffrom 1981 to 1996—represent the erences that will profoundly influlargest share of homebuyers in the ence the direction of the U.S., according to a survey by the luxury-housing market.”

National Association of Realtors reMillennials are the most educatleased last year. “They’re just as in- ed generation in history, have highterested in owning a home. They er earnings and are set to inherit just waited longer to buy their first more than any prior generation, one,” said Bradley Nelson, chief according to a May report by the marketing officer of Sotheby’s In- Brookings Institution.

Characterized by their tech-savternational Realty.

Breaking from the notion of a vy and environmentally conscious “starter home” that older genera- values, millennial preferences are tions embraced, wealthy millenni- poised to dramatically shape the market, a dynamic that has been on als, Nelson said, are going big.

“In the past, people bought a display during the Covid-19 panmodest property, lived in it until demic. Beginning almost immedistarting a family and then traded up ately after the coronavirus hit, for to a larger property,” he said. “Mil- instance, buyers began to flock to lennials are finally coming out of the areas that offered walkability, nature and a well-rounded quality of life (think AT 38%, MILLENNIALS food and an art scene).

Aspen, Colo.; Austin, REPRESENT THE LARGEST Texas; and Montecito, SHARE OF U.S. HOMEBUYERS Calif.; were all prime beneficiaries, Nelson gate, and it’s not uncommon for the said. “It’s the difference of choosing first purchase as a first-time home- where you want to live versus living buyer to be a multimillion-dollar where you work,” he noted. “Millenluxury home in the U.S. or interna- nials are thinking about their overall lifestyle. It’s propelled these sectionally.”

As a result, millennials are quick- ond-tier markets into the top of the ly becoming a dominant force in interest list.” high-end real estate.

Total sales volume in Aspen hit a “Baby boomers are retiring to record of more than $1.5 billion in sunnier locales, while remote work the third quarter, while in some has allowed millennials to ascend neighborhoods of Park City, Utah,

I

median sales prices spiked by more than 50% during the summer, according to Sotheby’s 2021 Luxury Outlook.

Outside the U.S., the Mornington Peninsula outside Melbourne on Australia’s southeastern coast has also seen a similar influx, the report stated.

Permanent changes Going forward, developers are likely to integrate touchless, hightech features into more homes and focus on bolstering sustainability credentials in new buildings, Nelson said.

From energy-saving geothermal systems and solar panels to green roofs, “these are the features that are most attractive,” he added. “If a home is move-in ready and environmentally conscious and has a Tesla charger installed in the garage, those homes are generating a premium, because you have so many buyers interested in competing for them.”

Overall, the luxury real estate market is ripe for growth.

According to a December Sotheby’s International Realty survey, 63% of affiliates polled said they expected luxury home prices to rise in the next three years in their respective markets. More than 70% of respondents reported heightened demand at the end of 2020.

In the short term, however, disjointed vaccine distribution and renewed quarantine restrictions could hamper foreign buyers’ interest. Only one-third of Sotheby’s affiliates expect to see an uptick in demand in the first half of 2021, according to the report.

Tishman Speyer’s LIC apartments lose tenants

BY NATALIE SACHMECHI

J

ackson Park, one of Tishman Speyer’s prized apartment buildings, has lost nearly 40% of its tenants, according to data from analytics firm Trepp.

The 1,871-unit luxury development in Long Island City, which had been gaining popularity with renters for years, saw occupancy fall from 96% in 2019 to 59% by September of last year.

The property at 28-10 Jackson Ave. backs $1 billion in commercial mortgage-backed securities debt that Tishman secured in 2019, when the building was worth $1.6 billion, according to Trepp’s figures. The loan is now on the analytics firm’s watch list as the risk of default grows.

Construction on the building began in 2015, and it started opening its doors to tenants in 2018. Since then it had been fully occupied, a Tishman Speyer spokesman said, offering a number of amenities, including indoor and outdoor pools,

saunas, a golf simulator, and basketball and squash courts.

Because of the pandemic, common spaces in residential buildings have been closed to tenants or are operating at reduced capacity.

Moving out To make matters worse, tenants have been ditching their New York City apartments and moving out of the city, causing rents to fall dramatically. In Northwest Queens, which includes Long Island City, rents dropped nearly 18% compared to a year ago, according to a recent report by Douglas Elliman.

Yet, after 16 months of declines, leasing activity in the area surged in December, the same report showed.

“We have no doubt that we will quickly return to full occupancy once the current pandemic is under control,” the spokesman said.

“In fact, we have seen traffic and leasing activity return to 2019 levels over the past few months.”

Despite the drop in rental in-

come at the building, Tishman Speyer hasn’t missed a payment on the loan, which was current as of January, Trepp said.

Another Long Island City apartment complex, Rockrose’s 715-unit Linc LIC, experienced a similar fate. The building’s occupancy rate dropped to 67% during the third quarter of 2020 from 91% in 2019.

The developer announced in February 2020 that it was planning another residential development in the neighborhood, where it also owns Eagle Lofts and the nearly 1,000-unit Hayden.

In the past two decades, the area began receiving attention from developers seeking to transform the former industrial hub after a 2001 rezoning paved the way for more apartments. Thousands of apartments have come online in the past year, and the city is plugging away on its Hunter’s Point South project, which includes a waterfront park and 5,000 units of market-rate and affordable housing. ■

BLOOMBERG

BLOOMBERG

Additionally, amid indiscriminate declines in overall tax revenues caused by the pandemic, governments globally are reassessing property and wealth taxes as a means of filling budget gaps.

“Across all buyers, tax implications are going to be a larger part of their home-purchase consideration,” Nelson said.

For the fast-growing cohort of young, affluent buyers eager to

snag their dream homes, millennials face slim pickings for options that meet their unique tastes. “Inventories are at near-record lows in general, and especially for the homes with the features they’re looking for,” he said.

Still, Nelson added that with “wealth creation growing and cost of capital declining, it’s a promising storm for the high-end housing market.” ■

Profit • ability (n): The advantage Grassi Healthcare Advisors brings to your healthcare business. grassihealthcareadvisors.com

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overseeing dispensary licensing were sued over diversity requireFROM PAGE 3 ments. In Los Angeles, there have been delays for minority appliMelissa Moore, state director of the cants.

Cuomo’s new proposal calls for New York for Drug Policy Alliance, a nonprofit that advocates for legal- the creation of an Office of Cannaizing marijuana. bis Management, which would “New York can create a gold stan- oversee licensing details and endard,” Moore said. “It’s the heart of sure the money goes to the commuthe country’s financial system, and nities and people most affected by legalization in New York has a lot of the war on drugs. The plan would implications for how the rest of the also require that a certain number country’s financial system is en- of dispensary licenses be given to social equity applicants, defined as gaged.”

Fifteen states and Washington, those who’ve come from an area D.C., have legalized recreational with high marijuana arrests, povermarijuana for adults, and two- ty rates and unemployment. thirds of Americans now live in It’s an improvement over what states where it’s legal to use mari- Cuomo has supported in the past juana. But states still struggle to fig- because it sequesters the money for ure out the best uses for the tax rev- social equity purposes, as opposed to leaving it in a general fund that enue. could be redirected for other CUOMO’S NEW PROPOSAL CALLS uses, said Natalie Papillion, FOR THE CREATION OF AN OFFICE director of strategic initiatives OF CANNABIS MANAGEMENT for the Last Prisoner Project, a criminal justice So far youth programs, economic reform group.

The cannabis industry—includdevelopment, substance-abuse programs and law-enforcement ing companies that already have training have been recipients, but medical marijuana licenses in New many states just funnel the funds York, such as Columbia Care, Cresinto omnibus general accounts or co Labs, Curaleaf Holdings and so-called rainy day funds.

Green Thumb Industries—broadly Some states have also become supports the idea that they have a mired in controversy and litigation, role in fixing the racial and social including Illinois, where officials disparities exacerbated by the war

on drugs. In fact, it’s become one of the cannabis industry’s best arguments to decriminalize marijuana—a broad stroke they say would help end a source of racial inequality in the country.

Cannabis companies will clearly benefit from having their product legalized, regardless of what the government does with the taxes it collects.

Racial divide Critics of Cuomo’s plan say it doesn’t go far enough, given the racial inequity around New York’s record of cannabis arrests.

“Some people think it should be tied to the arrest rate,” said Moore, of the Drug Policy Alliance. “Eighty percent were Black and Latino New Yorkers for decades, despite the fact that people use cannabis at a similar rate across racial groups.”

The disproportionate number of arrests of minorities has led to longterm social problems in their communities.

In New York City, which has been at the center of Black incarceration for marijuana, seven of the city’s 10 lowest-income neighborhoods were also among the top 10 neighborhoods for marijuana arrests, according to a 2018 report from the city comptroller. Those neighborhoods also had high unemployment rates and low homeownership rates.

Budget hearings on Cuomo’s proposal begin this month. He will have to face competing legislation

CUOMO

that calls for 50% of annual cannabis tax revenue to flow to affected communities, after program costs.

MRTA, which has been reintroduced every year since 2013, would deliver $150 million in revenue starting as soon as marijuana is legalized.

And although the pandemic is sure to create arguments that money is needed elsewhere, it may also

BLOOMBERG

LEGAL POT

end up highlighting the importance of more generous legislation.

“The communities hardest hit by the drug war are also facing the highest Covid deaths and the highest job losses from the pandemic,” Moore said. “It’s because of the same structural factors, the structural racism that these communities have experienced for decades.” ■

DEADLINE TO NOMINATE: FRIDAY, FEB. 12

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COMMERCIAL REAL ESTATE

Knotel bankruptcy doesn’t signal end of flex office space in NYC, brokers say

K

notel’s bankruptcy filing may have shaken up the flexible office space world, but the concept itself is not going anywhere, according to multiple commercial brokers.

“I think that business is here to stay,” said B6 Real Estate Advisors CEO Paul Massey. “The situation we’re in now is extreme, and there will be volatility in that business, but probably not to the extent that there is now.”

Knotel announced Jan. 31 that it had filed for Chapter 11 bankruptcy protection in Delaware and planned to sell the business to a Newmark Group affiliate. Although the firm largely avoided the massive wave of scrutiny and bad press that its competitor WeWork dealt with following its botched IPO attempt, it had struggled to operate

tions in the city, according to its listings portal. It plans to leave multiple locations in the country as part of its bankruptcy process.

Co-founder Amol Sarva singled out New York and San Francisco as two cities where it has become increasingly hard to do business amid the pandemic in a statement accompanying the bankruptcy announcement, but the company declined to comment on whether New York was one of the markets it would exit.

Limited impact

The immediate impact of the bankruptcy filing on New York’s office market should be fairly limited, as Knotel does not have a large enough footprint to upend the office sector on its own, according to Peter Riguardi, chairman of JLL’s New York tristate region.

“These are trying times, and in that space, maybe had too many KNOTEL’S BANKRUPTCY COMES we providers to begin with,” RiguarAT A ROUGH TIME FOR THE di said, “and so MANHATTAN OFFICE MARKET only the strong will survive and amid the pandemic and was hit develop their marketplace.”

The bankruptcy should also prowith several lawsuits from its New York landlords in recent months vide Knotel’s landlords with some over claims that Knotel was not much-needed clarity on the future paying its rent. The bankruptcy fil- of the office spaces that the compaing will likely put a stay on those ny currently occupies, Transwestlawsuits. ern Real Estate Services’ Stephen The firm has more than 20 loca- Powers said.

BLOOMBERG

BY EDDIE SMALL

“It allows the Band-Aid to be ripped off and for there to start to be change and the potential to reoccupy those spaces,” he said. “That needs to happen, so sooner rather than later is actually forward movement.”

Knotel’s bankruptcy comes at a rough time for the Manhattan office market. Last year was its slowest year of the 21st century, with firms leasing slightly less than 19 million square feet of space, a 55.9% decline from 2019, according to a report from Colliers International.

January brought mixed news.

Leasing activity for the month was 1.9 million square feet, the highest total since July and an 18.6% in-

crease from December. However, the borough’s availability rate increased for the eighth consecutive month to hit a record high of 14.9%, according to Colliers.

A November CBRE report found that flexible office space providers took up 13.4 million square feet of Manhattan office space overall, or about 4% of the borough’s inventory. Brokers did not see Knotel’s bankruptcy as a sign that landlords would aim to avoid leasing space to similar firms in the future.

“Coworking has a place going forward,” Riguardi said. “I think the next generation of tenants will prefer flexibility, and also, many of them prefer their space to be built

for them so they don’t have to go through that process.”

Massey was similarly optimistic about the flexible office space model and praised Newmark’s acquistion of Knotel as “a great investment at the perfect time.”

Powers echoed this, adding that the deal with Newmark is likely a sign that landlords will take a more active role in the flexible office space sector as it evolves.

“There’s a real opportunity for landlords to be providing those flexible terms and flexible scaling options,” he said. “There’s going to be a ton of vacant space. There is a ton of vacant space, so that’s a way to fill it.” ■

Governors Island welcomes four new tenants

BY WILLIAM JOHNSON

the Trust for Governors Island.

The Billion Oyster Project is an ome businesses may be flee- environmental nonprofit deing New York City, but Gover- signed to preserve the city’s oyster nors Island’s list of yearlong population, the Beam Center tenants just grew by four. partners with schools to teach The Billion Oyster Project, Beam youths to collaborate on building Center, the Institute for Public Ar- projects, and the Institute for Pubchitecture and Shandaken Projects lic Architecture focuses on social will take up residence in three equity in design. The fourth buildings in the island’s Nolan tenant, Shandaken Projects, offers Park section, the city announced residencies in various visual arts last Tuesday. The new tenants are including printmaking. part of a program to turn the isGovernors Island has long been a spring and summer cultural spot, but the city GOVERNORS ISLAND HAS would like to turn it into destination all year LONG BEEN A SPRING AND along.

“New Yorkers already SUMMER CULTURAL SPOT enjoy Governors Island land’s collection of historic build- in the warmer months—and the ings into a zone for year-round art, beautiful open space that makes public policy and environmental this island so special is here to stay,” Mayor Bill de Blasio said. activity.

“Governors Island is poised to “But taking full advantage of our serve as an even greater hub for city’s space means getting more cultural exploration, research and from Governors Island yearpublic programming,” said Clare round. Today’s announcement Newman, president and CEO of does just that.” ■

S

Connect with us on social media @georgearztcomm:

February 8, 2021 | CRAIN’S NEW YORK BUSINESS | 17

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INSTANT EXPERT

Rolling the dice on expanded gambling THE ISSUE

THE PLAYERS

1

2

5

GETTY

The future of legalized sports betting in New York will hinge on budget negotiations in the next few months. A new budget must be passed

by April 1, and the competing visions put forth by Cuomo and Addabbo will find their supporters and detractors among legislators in Albany.

The main difference between their visions is the number of skins given out to operators for online wagering.

Regardless of which plan is chosen, legalized online sports betting could lead New York City to be awarded one of three downstate commercial casino licenses up for grabs in 2023.

The dream of a casino in Manhattan goes back to Donald Trump’s days of lobbying former Gov. Hugh Carey to support legalization that would have allowed him to build one at the Grand Hyatt hotel on 42nd Street.

But casinos need square footage and space, as Addabbo has pointed out, so it’s unlikely one would appear in Manhattan if an expansive online sports wagering law were enacted.

Even without a casino in Times Square, a nearby commercial casino in Queens or Yonkers could be a boon for tourism as the city seeks to recover from the pandemic.

NEW YORK’S PROPOSAL NEEDS TO FIND A WAY TO KEEP RESIDENTS— AND REVENUE— INSIDE THE STATE

YEAH, BUT

3

Addiction is the main issue in legalizing online sports gambling. Approximately 1% of U.S. adults have a gambling addiction, according to figures from the National Center for Responsible Gambling. Addabbo’s bill carries funding for addiction treatment.

Underground bookies have moved from meeting gamblers in person to running websites to facilitate the wagering. In addition, online sports gambling powerhouses such as FanDuel and DraftKings could throw their weight around in dictating the direction online sports betting takes in New York.

State politicians are pressed to come up with a solution because of the competition from New Jersey and Pennsylvania. Nearly 20% of New Jersey’s sports betting revenue comes from New Yorkers crossing over state lines, the governor’s office said. With $6 billion worth of bets placed, New Jersey’s sports betting volume soared last year.

New York’s proposal would need to find a way to keep residents—and revenue—in the state.

SOME BACKGROUND

4

Upstate New York has four Class III commercial casinos like those found in Las Vegas. They offer a sportsbook and table games such as blackjack, poker, roulette and craps. Native American tribes operate four other commercial casinos on their sovereign land near Buffalo and Niagara Falls, but the state does not receive any of that revenue.

The state legalized video gambling at racetracks in 2001, paving the way for racinos—racetracks that allow electronic table games and video slot machines. The two racinos downstate are in Queens and Yonkers, but they don’t draw anywhere near the same activity as commercial casinos in neighboring states.

In 2018 the U.S. Supreme Court decision in Murphy v. NCAA paved the way for online sports betting to gain national approval as states see fit. Today 14 states have legalized the practice. Once a custom only reserved for Las Vegas and Atlantic City, the sportsbook has gone national, and it’s now predominately used on smartphones.

GETTY

WHAT’S NEXT

Cuomo is the most important player in the issue. His plan allows for the New York State Gaming Commission to select a small number—one or more—of sports book operators, or “skins,” through competitive bidding.

The skins would manage mobile sports betting servers in partnership with existing licensed casinos. Cuomo’s plan is projected to bring in $500 million in annual state revenue.

Addabbo’s bill is more expansive and would allow for sports betting kiosks at stadiums, racetracks and off-track-betting sites to send wagers to online servers at licensed casinos in the state. The Addabbo bill would imeplement an 8.5% tax on the sports wagering done in person and a 12.5% tax on the bets placed online. It would require a licensing fee of $12 million for each skin that is allowed to conduct mobile sports betting.

Addabbo says his plan would bring $1 billion in revenue per year.

Addabbo’s plan in the Senate is a unified bill with Gary Pretlow’s plan in the Assembly. Together, their bills present a shared model for the two chambers to consider.

Andrew Yang’s recent proposal to bring a casino on Governors Island is a nonstarter, because the island is not zoned for it.

GETTY

Gov. Andrew Cuomo announced his support last month for the legalization of online sports betting in New York, a reversal of his previous position. As the state faces a $15 billion deficit in the next two years and a $39 billion shortfall in the next four years, Cuomo’s embrace of legalized online gambling comes as a response to an urgent need for revenue.

Fortunately for Cuomo, the path to bring legalized sports betting to New York has already been paved by state Sen. Joseph Addabbo Jr. of Queens.

The two men, however, are offering starkly different versions of how legalized sports betting could begin—and expand—across the state.

FLICKR

BY BRIAN PASCUS

18 | CRAIN’S NEW YORK BUSINESS | February 8, 2021

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OFFICE FROM PAGE 1

traffic for stores and more riders on Metro-North and the subway, Sachs said.

“The city of New York has a lot of space downtown and in Brooklyn,” he said, “but a lot of the retail that services that workforce has really been struggling. It’ll bring the streets back. It’ll bring a lot of the retailers back.”

Kyle Bragg, president of the union 32BJ SEIU, was similarly excited about the potential ripple effects of the city bringing its workers back, noting that several union members remain furloughed because of the

The mayor’s office referred those questioning whether the return will be mandatory for employees to de Blasio’s State of the City address and to his recent appearance on The Brian Lehrer Show. The mayor indicated the return would be mandatory on Lehrer, saying that “anyone else doing remote work, they’ll be coming back beginning in May, because it’s time.”

About 74,000 city workers will be affected by the return, and around 80% are back already in some fashion, said Mitch Schwartz, spokesman for the mayor’s office.

The city will “continue to work with its agencies and public health experts to add additional precautions and ensure the health and safety of personnel” as May approaches, said Nick Benson, a spokesman for the Department of Citywide Administrative Services.

Benson did not respond to a request for more details on the additional precautions.

city’s low office occupancy rates.

Bragg acknowledged, however, that the pandemic is unlikely to be over

by May, and he still wants the city to release more specifics about its plan for bringing back workers.

“I think the devil is in the details. I would like to see more details,” he said. “But, in general, I think it’s good. We’re certainly looking forward to the day that people begin returning to office space.”

BLOOMBERG

“THIS IS ALL ABOUT BRINGING NYC BACK, SO NATURALLY THAT EFFORT SHOULD START WITH THE CITY ITSELF”

A necessary step Multiple real estate firms, including SL Green, started bringing back their workers months ago. SL Green, which bills itself as New York’s largest office landlord, is happy the city now plans to do the same, CEO Marc Holliday said.

“This is all about bringing NYC back, so naturally the leadership of

that effort should start with the city itself,” he said. “Reopening its offices, getting its employee workforce back and showing those that have any level of doubt it’s safe to commute that it’s safe to be in office space and that this is what people should be doing, I think it’s an ex-

cellent and necessary first step.”

JLL likewise has had its employees working in person since the summer, said Peter Riguardi, president of the company’s tristate region. Riguardi said it was “disappointing” that the city is not starting its process until almost a full year

later, but he’s happy to see the return begin.

“I think the mayor’s announcement is a great step in the right direction, and I’m happy that he did it,” he said. “But, again, I wish we would have started this a little bit sooner.” ■

2021

EXECUTIVES

INDUSTRY LEADERS NEW YORK NEEDS TO KNOW APRIL | Notable in Non-profits and Philanthropy | CLOSING FEB. 12 MAY | Notable in Marketing and PR JUNE | Notable LGBTQ Leaders & Executives JULY | Notable Women-owned Businesses AUGUST | Notable in Healthcare SEPTEMBER | Notable Women in Accounting & Consulting OCTOBER | Notable Hispanic Leaders & Executives NOVEMBER | Notable Veteran Executives DECEMBER | Notable Women in Law

View upcoming programs and nominate at

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NOTICE OF FORMATION OF GY HONG KONG, LLC. Articles of Organization were filed with the Secretary of State of New York (SSNY) on 11/20/2020.

Office Location: 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 LLC served upon him/her is 36 West 47th Street, W03, New York, NY 10036. The principal business address of the LLC is 36 West 47th Street, W03, New York, NY 10036. Purpose: any lawful act or activity.

NOTICE OF QUALIFICATION of HVPG JACKSON TERRACE MANAGER, LLC. App. for Auth. filed with Secy of State of NY (SSNY) on 12/22/20. Office location: New York County. LLC formed in Delaware (DE) on 10/5/20.

SSNY designated as agent of LLC upon whom process against it may be served. SSNY shall mail process to: c/o 28 Liberty Street, New York, NY 10005. DE address of LLC: c/o 1209 Orange Street, Wilmington, DE 19801. Arts. of Org. filed with DE Secy of State, Townsend Bldg, Dover, DE 19901. Purpose: any lawful activity.

2496 Amsterdam LLC, Arts of Org. filed SSNY 11/05/20. Office: NY Co. SSNY design agent of LLC upon whom process may be served & mail to c/o Yeshiva University, 500 West 185th St., Belfer Hall Ste. 1001, NY, NY 10033. General Purpose.

Notice of Qualification of HUDSON PELHAM HOUSE ASSOCIATES LLC Appl. for Auth. filed with Secy. of State of NY (SSNY) on 11/25/20. Office location: NY County. LLC formed in Delaware (DE) on 11/20/20. Princ. office of LLC: c/o The Hudson Companies Inc., 826 Broadway, 11th Fl., NY, NY 10003. SSNY designated as agent of LLC upon whom process against it may be served. SSNY shall mail process to the LLC at the addr. of its princ. office. DE addr. of LLC: 251 Little Falls Dr., Wilmington, DE 19808. Cert. of Form. filed with Secy. of State, 401 Federal St., Ste. 4, Dover, DE 19901. Purpose: Any lawful activity.

Notice of Formation of 120 E. 70TH STREET LLC Arts. of Org. filed with Secy. of State of NY (SSNY) on 12/16/20. 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 David A. Stein, Esq., Withers Bergman LLP, 430 Park Ave., 10th Fl., NY, NY 10022. Purpose: Any lawful activity.

ATOM CARES LLC, Arts. of Org. filed with the SSNY on 01/13/2021. 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, 303 Fifth Avenue, Ste 1205, NY, NY 10016. Reg Agent: Ganga Mukkavilli, 303 Fifth Avenue, Ste 1205, NY, NY 10016. Purpose: Any Lawful Purpose.

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Notice of Formation of MS RESIDENCE LLC Arts. of Org. filed with Secy. of State of NY (SSNY) on 12/23/20. Office location: NY County. Princ. office of LLC: Philip J. Michaels, c/o Norton Rose Fulbright US LLP, 1301 Ave. of the Americas, NY, NY 10019. SSNY designated as agent of LLC upon whom process against it may be served. SSNY shall mail process to the LLC at the addr. of its princ. office. Purpose: Any lawful activity.

Notice of Qualification of SJV 1 Sheepshead Bay OpCo LLC Appl. for Auth. filed with Secy. of State of NY (SSNY) on 12/30/20. Office location: NY County. LLC formed in Delaware (DE) on 11/24/20. SSNY designated as agent of LLC upon whom process against it may be served. SSNY shall mail process to Corporation Service Co. (CSC), 80 State St., Albany, NY 12207-2543.

DE addr. of LLC: CSC, 251 Little Falls Dr., Wilmington, DE 19808. Cert. of Form. filed with Secy. of State, John G. Townsend Bldg., 401 Federal St., Ste. 3, Dover, DE 19901. Purpose: Healthcare.

RS8M LLC. Articles of Org. filed with Secy. of State of NY (SSNY) on 12/ 24/20. Off. loc.: New York Co. SSNY des. as agent of LLC upon whom process may be served. SSNY shall mail process to the LLC, One Manhattan Square, 252 South St, Unit 8M, New York, NY 10002. Purpose: General.

Notice of Formation of REVENUESOLUTIONS PARTNERS, L.L.C. Arts. of Org. filed with Secy. of State of NY (SSNY) on 12/10/20. Office location: NY County. Princ. office of LLC: One Penn Plaza, Ste. 6328, NY, NY 10119. SSNY designated as agent of LLC upon whom process against it may be served. SSNY shall mail process to Corporation Service Co., 80 State St., Albany, NY 12207.

Purpose: Any lawful activity.

Notice of Formation of MERIDIAN BRANDS LLC Arts. of Org. filed with Secy. of State of NY (SSNY) on 11/24/20. Office location: NY County. SSNY designated as agent of LLC upon whom process against it may be served. SSNY shall mail process to Corporation Service Co., 80 State St., Albany, NY 12207-2543. Purpose: Any lawful activity.

Notice of Qualification of Elite Media, LLC, Fictitious Name: Elite Advertising, LLC. Authority filed with Secy. of State of NY (SSNY) on 07/31/20. Office location: NY County. LLC formed in Delaware (DE) on 05/16/13.

SSNY designated as agent of LLC upon whom process against it may be served. SSNY shall mail process to: 92 Morningside Ave., Unit 1B, NY, NY 10027. Address to be maintained in DE: Worldwide Incorporators Ltd., 3411 Silverside Rd., Ste 104, Tatnall Bldg., Wilmington, DE 19810. Arts of Org. filed with the Secy. of State of the State of DE, Townsend Bldg., 401 Federal St., #4, Dover, DE 19901.

Purpose: any lawful activities.

C O M P A N Y ’ S

Notice of Formation of OMAHA FALLS II LLC Arts. of Org. filed with Secy. of State of NY (SSNY) on 12/07/20. Office location: NY County. SSNY designated as agent of LLC upon whom process against it may be served.

SSNY shall mail process to Robert Milam, 150 Charles St., Unit M3, NY, NY 10014. Purpose: Any lawful activity.

NOTICE OF FORMATION of Bardock Sales, LLC. Arts of Org filed with Secy. of State of NY (SSNY) on 9/ 23/20. Office Location: NY County.

SSNY designated as agent upon whom process may be served and shall mail copy of process against LLC to 300 E 34th St, 35H, NY, NY 10016. R/A: US Corp Agents, Inc. 7014 13th Ave, #202, BK, NY 11228. Purpose: any lawful act.

Notice of Qualification of PRIVATE EQUITY V GP LLC Appl. for Auth. filed with Secy. of State of NY (SSNY) on 01/11/21. Office location: NY County. LLC formed in Delaware (DE) on 01/04/21. Princ. office of LLC: 9 W. 57th St., 12th Fl., NY, NY 10019.

SSNY designated as agent of LLC upon whom process against it may be served. SSNY shall mail process to c /o Summit Rock Advisors, LP at the princ. office of the LLC. DE addr. of LLC: c/o Corporation Service Co., 251 Little Falls Dr., Wilmington, DE 19808. Cert. of Form. filed with Secy. of State, 401 Federal St. - Ste. 4, Dover, DE 19901. Purpose: Investments.

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GETTY IMAGES

ROBOTS

server. It then assesses mates data entry from how humans do their emails to company servjobs and eventually ofers. He said too often cliFROM PAGE 1 ents of his were losing fers digital shortcuts time copying-and-pastthrough bots and other insurance and health care—has automation. ing data from financial helped launch a new generation of TD Ameritrade used documents sent by email startups focused on this technoloEXPECTED Hyperscience to process into formats they could gy. At the same time, the technolo- Exploding market spending on automation easily use. gy’s growing popularity raises diffiEY is both a client and a partner the sea of customer docsoftware this The firm raised $5 milcult questions about whether it will of UIPath, a Midtown startup that uments it received after year soon replace jobs, rather than mak- is a leader in robotic process auto- its $4 billion acquisition lion in seed funding last February and has since ing them easier. mation. UIPath, which moved its of Scottrade in 2017, Automation is typically depicted headquarters from Romania to which the company said expanded its staff from five to 30. Demand has in media as physical robots— Park Avenue in 2017, is valued by in a case study cut the increased as more comthe Jetsons’ maid Rosie or the private investors at $35 billion. It process from an estiAMOUNT New humanlike machines of I, Robot. filed confidentially for an initial mated 12 months to ­ panies are operating reYork startups While physical robots are increas- public offering at the end of last four. motely. that make “The Hyperscience raised is mailroom ingly used in warehouses and hos- year. software “This is a market that is really ex- $60 million from invesclosed, and everyone is pitality settings, some of the fastfor businesses doubling down on digiest-growing automation is ploding right now,” said Matt tors in June, followed by raised last year happening through corporate soft- Turck, a partner at venture capital an additional $80 miltal,” Collet said. ware. firm FirstMark. “The whole hoopla lion in October. The firm Software automation is not new, around the term ‘digital transfor- employs 250, about 90 of whom Friend or foe? as some programs date back more mation,’ that’s really what this is: have been hired in the past 12 A challenge for the emerging inthan a decade. But the challenges deployment of software and data, months. dustry is proving it can bring value of the pandemic—working remote- and AI, to accelerate the agility of Hypersicence, UIPath and two and win over employees to break other New York–based firms, their work habits. A Boston Conly and processing documents solely companies.”

“The problem is that the back Workfusion and Kryon, were in- sulting Group survey of 825 corpoin digital formats—has accelerated its trajectory. Research firm Bain & offices of the largest enterprises in cluded on a list of the fastest-rising rate executives in October found Co. estimated last May that based the world have not kept up with automation firms last summer by that just 30% of automation projthe technologies CB Insights. ects fulfilled their goals, such as in the marketWhen Work-Bench began in- cutting costs or boosting producplace at all,” said vesting in New York startups seven tivity.

“AUTOMATION OFTEN COMES Charlie Newark-­ years ago, the city’s biggest success During his 2020 presidential WITH THE SENSE OF DOOM, THAT French, chief stories came from advertising and bid, Mayor Bill de Blasio warned officer consumer products, not business automation could cause economic THE ROBOTS ARE TAKING OVER” operating of Hyperscience, software, noted Jonathan Lehr, the upheaval and proposed a “robot an automation Flatiron District firm’s co-founder. tax” to penalize companies that As tech giants like Facebook and automate jobs. on a survey of 800 corporate execu- startup with an office at 1 World Google opened offices and built Andrew Yang focused his presitives, the number of companies Trade Center.

That’s an opportunity for Hy- workforces in the city, “people got dential campaign around the scaling up software automation will double in the next two years. Spend- perscience. Founded in 2014, the experience solving the hardest threat of automation, proposing ing on such software will reach $2 firm uses artificial intelligence to data and cloud challenges and universal basic income as a solubillion this year, up 20% from last automate data extraction. The soft- then spun out and built these en- tion. He has brought a modified year, according to Gartner’s re- ware sits in the background as em- terprise startups,” Lehr said. version of that policy to his platHarald Collet left an executive form for the 2021 mayoral race. ployees tackle regular daily tasks, search.

The World Economic Forum New York startups that make such as transferring data from a role at Bloomberg LP in 2016 to software for businesses raised a re- mortgage application to a central launch Alkymi, a startup that auto- projects that automation could cord $5.5 billion last year, up from $3.3 billion in 2019, according to a report from Flatiron District venture capital firm Work-Bench, with automation technologies capturing 20% of that capital.

DIGITAL DOLLARS

$2B

$5.5B

displace 85 million workers by 2025 in roles that include bookkeeping, data entry and auditing.

But the October report noted that 97 million new jobs could come from automation in that same period, including in data science and software development.

“Automation often comes with the sense of doom, that the robots are taking over,” said Iris Chung, director of learning experience design at General Assembly, a technology training company in the Flatiron District.

She said companies investing in training can fight that perception.

General Assembly has partnered with Midtown-based Guardian Life Insurance, for instance, to train actuaries on using data science skills.

The Center for an Urban Future has spent several years advocating for the city and the state to offer or incentivize workplace training.

The Manhattan-based group estimates at least 450,000 jobs in New York could be at risk “A lot of job training focuses on getting people into the market,” said Jonathan Bowles, the organization’s executive director. “But this will have to be about bolstering the skills of workers already in the labor force.”

To companies like Hyperscience, software automation isn’t displacing any jobs, just eliminating monotonous tasks so companies can move faster.

“If you can make taking out an insurance policy quicker and easier, more customers will enter that market,” said Newark-French.

“Companies that embrace automation would then become larger and employ more people.” ■

22 | CRAIN’S NEW YORK BUSINESS | February 8, 2021

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OUT OF OFFICE GENERAL TSO’S CHICKEN

BUCK ENNIS

NICE DAY’S Zhao and Zhang

NICE DAY THE ORIGINAL CONCEPT Junzi Kitchen

Pandemic pivot: Junzi Kitchen looks to have a Nice Day

2020 REVENUE DECLINE In 2020 Junzi made about 30% of the revenue it earned in 2019.

EMPLOYEES The chain’s workforce dropped from about 100 to 30 as customers stopped coming in.

When business fell for their chain, these restaurateurs tried a new concept

BY CARA EISENPRESS

A

t the beginning of last year, the leadership team of Junzi Kitchen, a fast-casual Chinese spot with five locations in the city and one in New Haven, Conn., was planning the first steps of a big, new endeavor. The team wanted to disrupt the model for typical family-owned Chinese American takeout restaurants by investing in them and improving their equipment, operations and cooking.

“The ideation process was based on the fact that the majority of these operators are in the retirement phase, and their sons and daughters don’t want to take over,” said Yong Zhao, one of the co-founders of both Junzi Kitchen and the new business.

Then came Covid. Many of Junzi’s customers were Midtown workers or students at Columbia, NYU or Yale.

Business dropped off substantial-

ly when companies and campuses locked down. Junzi’s model is like Chipotle, where guests customize noodle bowls or bing (Chinese-style pancakes) by picking out fresh ingredients at the counter. It was hard to replicate that experience with online-only ordering, so to keep the business going, the team tried different ideas. They included a distance dining series, which let customers cook along with Junzi’s chef, Lucas Sin, from home. They also sold products like chili oil on Junzi’s site.

“Junzi Kitchen went into survival mode,” said Zhao. Revenue for 2020 would end up being about one-third the amount of 2019.

The lull gave Zhao, his co-founder, Wanting Zhang, and Sin the chance to test their new idea. The team rebranded Junzi’s Bryant Park space as Nice Day, where they sold a menu of typical Chinese American dishes for takeout only. The plan was to create

an enticing menu and a business model they eventually could replicate or scale at existing takeout spots.

Sin put his spin on familiar favorites such as General Tso’s chicken, crab rangoon, spring rolls, sweet and sour chicken, and beef and broccoli. In time for Lunar New Year, he is adding barbecue pork, sweet and sour pork, spare ribs and a dozen more dishes.

Because customers are already accustomed to ordering these favorites as takeout dishes, Nice Day has seen quick growth. The team converted what was once a Junzi Kitchen on Bleecker Street into a second Nice Day and is planning three more locations in the first half of this year— one in New York City and two in the suburbs. By the end of the year, they plan to open 10 more.

With lessons learned from the first batch of Nice Day sites, Zhao aims to have a serious pitch by December for a model that can buy up or help

MAJOR STRATEGY CHANGES After seeing a drop-off in restaurant traffic, Junzi Kitchen’s co-founders and chef turned their attention to developing a new model for producing and delivering Chinese American favorites that’s less labor-intensive and more profitable. Their test case is a new company called Nice Day, which sells Chinese takeout favorites online and at takeout spots.

MOST POPULAR NICE DAY DISHES Crab rangoon, General Tso’s chicken and spring rolls HOURS 5 p.m. to 9 p.m. Monday through Friday; noon to 9 p.m. Saturday and Sunday LOCATIONS 170 Bleecker St.; 135 W. 41st St. WEBSITE eatniceday.com

Chinese American joints around the country—supported by a $10 million investment he plans to raise. And Yong says the team won’t invest in growth for Junzi until traffic can resume, maybe by the end of this year.

“Junzi won’t recover quickly,” Zhao said. “But the Nice Day market is here now.” ■

FEBRUARY 8, 2021 | CRAIN’S NEW YORK BUSINESS | 23

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