Crain's New York Business

ASKED & ANSWERED: Transforming historic buildings to boutique offices

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CHASING GIANTS: Delivery startup challenges DoorDash CRAINSNEWYORK.COM

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APRIL 18, 2022

SPECIAL REPORT

HOSPITALITY

You can’t stay here

Better pay, benefits and culture on the menu at restaurants

Finding housing for street homeless is a bureaucratic nightmare

To address the labor shortage, eateries improve terms of work

BY CAROLINE SPIVACK AND BRIAN PASCUS

O

hen chef Dennis Ngo was coming up through the ranks of New York City restaurants, the answer to a boss’s demands, no matter how inconvenient, was always, “Yes, chef.”

Now, though Ngo helms Di An Di, a Vietnamese restaurant in Greenpoint, Brooklyn, he is still catering to the people in power, only this time they are his employees.

He sometimes wonders what happened.

His employees tell him, “The culture shifted, bro.”

As the long-term shifts from the Covid-19 pandemic meet a pre-existing hiring crisis, things are shaking out in workers’ favor.

To find and retain the talent they need to stay in business, employers have been increasing wages. If that’s not sufficient, they’re building charismatic internal cultures, offering never-before-considered benefits such as four-day workweeks, and designing structured paths for career growth.

There are still 70,000 fewer people employed in the food services and drinking places category in New York City, according to the state Department of Labor’s February employment numbers, compared with the average industry employment for the full year of 2019. Yet the number of restaurants fell by only about 1,000 by the third quarter of last year, according to a

n a frigid Wednesday morning in March, Marg Curran scanned the streets of East Harlem through the windows of a Toyota Rav4. Curran and Alexandra Long, in the passenger seat, kept an eye out for tents, electric-blue tarps draped over discarded furniture, shopping carts loaded with clothes—things that might indicate a homeless person was staying nearby.

“The people here haven’t been interested in talking to us, but let’s see how they’re doing,” Long said, as Curran parked the car on East 116th Street under the elevated Metro-North tracks.

Down the block, two men lingered near a makeshift storage Years of policy unit made of a pushcart and an ofmissteps contribute as city’s unsheltered fice chair, next to a LinkNYC kiosk.

One man balked when the outpopulation booms reach workers approached, declining to speak with them. But the second man said his name was Danny. He was middle-aged, with dark circles beneath his eyes, wearing a navy-blue puffer jacket, fuzzy white socks and Crocs.

When asked how long he’d been living on the streets, his response was barely audible. “A year,” he said. After some gentle prodding, he said he was open to sheltering on Broadway in a nearby church, where he could shower and get a hot meal.

For the city’s homeless outreach workers, the process of gradually earning the trust of someone living on the street can take months or years—encouraging them to move indoors and ultimately embark on the slow, bureaucracy-laden process of accessing permanent housing. There are no quick solutions, only the persistence of outreach teams that scour sidewalks, parks

See RESTAURANTS on page 22

See HOMELESS on page 16

BY CARA EISENPRESS

W

NEWSPAPER

VOL. 38, NO. 15

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HOMELESS

GOTHAM GIG

POLITICS

Monitored drug-use site director greets hate with love

What made it into the state budget

PAGE 23

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BUCK ENNIS

CRISIS

4/15/22 5:27 PM

CRIME

Subway shooting might delay return to office and discourage tourism, business leaders fear

B

usiness leaders across the city are weighing the impact that Tuesday’s subway shooting will have on workers and tourists returning to central business districts. Some predict the public will see the shooting as an anomaly, while others fear it will further erode confidence in public safety.

New Yorkers were shaken by the violence at the 36th Street station in Sunset Park, Brooklyn. At least 23 people were injured, and 10 were treated for gunshot wounds, though no one has died. Police arrested Frank James, 62, Wednesday afternoon after a manhunt. James was named as a suspect in the subway shooting and was charged with a federal terrorism offense.

In the aftermath, optimistic business leaders said New Yorkers and tourists are likely to view the incident as an aberration and continue their everyday return to the city, as New York tries to emerge from the Covid-19 pandemic.

“There will be an initial shock, and some people will swear off public transit for a while, but I think it’s a one-off,” said Dan Biederman, founder of the Bryant Park Corp., which operates the park. “This will be a big deal for a few days but not a big deal in June or July when we look at returning to the office.”

CRAIN’S NEW YORK BUSINESS

B R E A KFAST

There is evidence that many New Yorkers have already entered into a comfortable commuting pattern.

Subway ridership has plateaued at around 3 million straphangers per day since February. Meanwhile, the real estate market surged back last year: Condo and co-op sales in Manhattan were the highest in at least 32 years.

“We’re all seeing it, as we take the subways and commute in, that there are a lot more people on there,” said Rob Byrnes, president of the East Midtown Partnership.

“We’re trending upward.”

Byrnes is among those who don’t subscribe to the view that the shooting will affect the city’s recovery. He estimated that 40% of workers are back to a three-day, in-person workweek.

“As tragic as it was, I don’t think it will ultimately impact what’s happening in the offices in Midtown Manhattan,” he said. “I think New Yorkers are taking it as an isolated incident.”

Another blow Others disagree, saying the Brooklyn shooting will further deter commuters and office workers.

Widespread coverage could put off tourists who want to visit the city.

In a March survey by the Partnership for New York City, which questioned nearly 10,000 people working in city offices, almost 75%

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Living their lives

said using public transit has gotten worse since the beginning of the pandemic.

“This builds on the apprehension that New Yorkers, and especially commuters, were already feeling,” said Kathryn Wylde, president and CEO of the partnership. “I do think that it is going to slow our recovery, because recovery is about restoring confidence in the city, and that starts with public safety.”

Recent Police Department data backs up some of that apprehension.

There were 617 crimes committed in the subway system through April 10, compared with 367 in the same period last year, according to

the NYPD. Felony assaults are up by almost 30%.

“I think it’s another blow to our comeback, unfortunately,” Jessica Walker, president and CEO of the Manhattan Chamber of Commerce, said of the shooting. “This is one of those tragedies that are broadcast to the world. It hurts not only the psyche of New Yorkers but how we’re viewed by the world as a place tourists want to come to.”

The city’s tourism industry generated an estimated $80 billion annually prior to the pandemic, according to the state comptroller’s office. The industry accounted for 59% of the city’s $2 billion decline in tax collection in the fiscal year

Bess Freedman, chief executive of real estate firm Brown Harris Stevens, said people are more worried about rising interest rates, surging inflation, Russia’s war in Ukraine and two years of Covid-19.

“I don’t know if it’s normal, but it’s the new normal,” Freedman said. “We’re in a new space.”

The city’s residential real estate market is strong despite the challenges, she said, and nearly all of her 1,500 agents at 11 city offices are back in the office full time. Her firm ended hybrid work earlier this year.

The Industry City office of Randy Peers, president and CEO of the Brooklyn Chamber of Commerce, is a few hundred feet from the scene of the Sunset Park shooting. He was placed under lockdown in his office Tuesday and couldn’t leave the building, but Wednesday morning he took the subway to Industry City and exited at his normal station: 36th Street.

“I was heartened to come off the train this morning and see my friends and neighbors and workers and colleagues,” he said. “The train was pretty full, full as it ever would be, and the 36th Street station was open and active.” ■

ECONOMY

The pace of New York’s recovery is slackening

BY CARA EISENPRESS

CRAIN’S NEW YORK BUSINESS

that ended in June.

AP PHOTO

BY BRIAN PASCUS

T

he city’s recovery continued its slow pace last month— perhaps a reality check for elected officials who have been asking office workers to return to business districts and residents to go out and spend more.

New York City employers added 13,900 jobs in February, seasonally adjusted, and a total of 20,500 in the first two months of the year, according to the state Department of Labor.

That puts the total at 4.4 million, 6% lower than the record 4.7 million positions added in January 2020.

The unemployment rate dropped from 7.6% to 7%—a faster decrease than has been seen throughout the Covid-19 pandemic recovery. The number, however, is particularly unreliable at this moment because of hard-to-chart changes in the

city’s population.

The city’s jobs recovery plodded along again in March. Although temperatures warmed, some office workers returned and cultural events filled social calendars, the pickup failed to find much acceleration.

The city’s employers added 18,000 jobs in March, seasonally adjusted, according to the Labor

ployment rate dropped to 6.5% in March.

Increases occurred in the sectors that might be expected: ones hit hard by pandemic shutdowns.

“There were no significant decreases, but also no noteworthy gains, in industries other than those that have experienced steep pandemic losses,” said James Parrott, director of economic and fiscal policy at the New School’s Center for New York City Affairs.

Compared with the country as a whole, the rate of recovery in New York was faster, though the difference is narrowing: a 0.41% monthover-month growth for seasonally adjusted non-farm jobs in New York, compared with 0.28% nationwide. Employers across the country added 431,000 jobs last month, according to the federal Bureau of Labor Statistics.

In New York City, the industries with significant growth included leisure and hospitality, which add-

INCREASES OCCURRED IN THE SECTORS HIT HARDEST

BY THE PANDEMIC Department. With a small upward revision for February, that puts the total for the year at 40,900, or 5.9% less than the record 4.7 million positions in the same period just before the pandemic began.

The seasonally adjusted unem-

CORRECTIONS ■Lisa Kesselman is the assistant coordinator in the Center for Continuing and Professional Studies at the Fashion Institute of Technology. She was identified as a professor in “NYC fashion has designs on the future,” published April 11.

ed back 8,700 positions. Within that sector, arts and entertainment employers brought back 3,600 workers; hotels hired 1,900, representing a 6% increase from February.

Food services companies, including restaurants, added 3,200 jobs, and operators said they would bring on many more people if only they could find willing workers.

Other industries with relatively fast growth were construction, private educational services and home health care. The growth, however, was moderate. For the first three months of the year, the average monthly number of new jobs was occurring at less than half the pace as in the last six months of 2021, Parrott calculated.

Equally important to the city is that growth did not occur in the sectors that were basically recovered from the pandemic. With the exception of the seasonal accounting industry, employers in professional and businesses services did not add many positions last month.

Likewise, the number of jobs in securities and other financial activities was flat month over month. ■

Vol. 38, No. 15, April 18, 2022—Crain’s New York Business (ISSN 8756-789X) is published weekly, except for no issue on 1/3/22, 7/4/22, 7/18/22, 8/1/22, 8/15/22, 8/29/22 and the last issue in December. Crain Communications Inc., 685 Third Ave., New York, NY 10017. Periodicals postage paid at New York, NY, and additional mailing offices. Postmaster: Send address changes to: Crain’s New York Business, Circulation Department, PO Box 433279, Palm Coast, FL 32143-9681.

For subscriber service: call 877-824-9379; fax 313-446-6777. $140.00 per year. (GST No. 13676-0444-RT) ©Entire contents copyright 2022 by Crain Communications Inc. All rights reserved.

2 | CRAIN’S NEW YORK BUSINESS | APRIL 18, 2022

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CHASING GIANTS

BUCK ENNIS

SESAME FOUNDER Josh Morgan at Tacos Güey in the Flatiron District

Delivery startup Sesame embraces flat fees over commissions, to rival DoorDash Flatiron firm aims for more equity with eateries by charging $125 a month for unlimited transactions

C

hasing Giants is a biweekly column profiling budding startups in New York City and their plans to compete with, and potentially overtake, an industry leader.

The upstart: Sesame

His background helped persuade Matt Blomstedt, managing partner of SpringTime Ventures, to join Sesame’s $3.4 million pre-seed funding round.

The startup’s aims are ambitious, Blomstedt acknowledges, given that food delivery is perhaps the most competitive industry in the universe. “But they’ve been in the restaurant industry for many years and have deep relationships,” he said of Morgan and his team. “With their approach, experience and network, we felt there is at least a shot.”

Josh Morgan is fed up with the way delivery platforms treat restaurants. The stiff fees his eateries had pay for access to delivery apps during his years in the industry pushed Morgan to create what he says is a fair partnership between tech companies, restaurants and hungry New Yorkers.

The reigning Goliath: DoorDash The relationship felt tolerable before the Covid-19 pandemic, Morgan says. While the delivery platThe nation’s largest delivery platform has 6 million forms were taking a 25% to 30% cut of every order, couriers, 550,000 partner merchants and more than they also were promising to connect restaurants 25 million active users monthly. It earned $4.9 bilwith new customers. During the pandemic, restaulion last year and has filled more than 2 billion orrants started depending on the platforms for almost ders since its 2013 launch. all their business, and many couldn’t profit given How to slay the giant the high fees.

“When you’re backed in a corner, there’s only Delivery charges for mom-and-pop restaurants add fight or flight,” Morgan said, “and I chose fight.” up fast, even with a new city law capping commisANNE KADET His weapon is Sesame, which launched in protosions at 15%. An independent restaurant filling just type mode in November. The four-employee Flat15 delivery orders per day could easily pay platiron startup now serves about 50 Manhattan restaurants be- forms like DoorDash $2,000 in a month. tween Houston and 34th streets.

Sesame charges its restaurant partners just $125 per month The East Harlem resident has plenty of experience on both for unlimited transactions. sides of the app. He’s a food-ordering fanatic, spending about “It’s super low compared to all the other platforms,” says $300 each week on lunch and dinner deliveries from his fa- Amelie Kang, owner of MáLà Project, a minichain of Szechvorite spots, which include Ivan Ramen, burger joint Black uan restaurants with three locations in Manhattan. “Even Tap and Tacos Güey. though the volume is lower, we’re making a higher margin.”

But the Annapolis, Maryland, native also knows the chalFees can also add up for restaurant customers. The major lenge of managing a restaurant, having launched two New delivery platforms typically charge a percentage fee to the York City eateries: Choptank, a West Village seafood joint, end user of roughly 15%. Sesame charges a flat $3 per order. and Hammer & Claws in Chelsea. He most recently was an All told, a major delivery platform might pocket $15 on a executive at Aurify Brands, the New York-based restaurant $50 order, while Sesame would pocket just $3.25 at a rate of 15 group behind minichains Melt Shop, The Little Beet and orders a day.

Fields Good Chicken.

So how can Sesame make a profit?

“That’s a good question!” Morgan says. “We get asked this all the time.”

Unlike DoorDash, Sesame is not a courier service. Rather than create its own delivery network, it partnered with Relay, a locally owned provider that connects thousands of couriers.

Sesame’s restaurant partners pay Relay for delivery—typically $5 to $6 per order—and can choose how much of that cost to pass on to end users.

If you order through Sesame, then, you’ll pay the company’s $3 service fee and, typically, another $2 to $3 for each delivery. That’s likely more than you’d pay for a small order through DoorDash. But Morgan says folks who want to support local restaurants will pay a little more, as long as it’s convenient. And as order size climbs above $20, he notes, the savings start kicking in.

Sesame is currently waiving fees for both restaurants and diners. Yes, that means it isn’t earning a dime. But the plan (surprise!) is profitability through scale. Morgan foresees adding more than 1,000 New York City restaurant partners— there are already 200 waiting to join, he said—followed by expansion into new markets.

The added challenge Sesame has the same problem faced by any new marketplace platform, Blomstedt said. You need a lot of restaurants to attract customers, but you need customers to draw restaurants.

“It’s chicken and egg,” he said.

And while Silicon Valley delivery platforms notoriously spend vast sums on customer acquisition—luring folks with deep discounts and even free meals—it’s not a strategy Sesame can afford.

Morgan said he’s largely counting on Sesame’s restaurant partners to market the platform.

MáLà Project’s Kang, for one, said she’s glad to oblige: “When people come in, we’re happy to promote Sesame, because the fees are lower and our relationship is closer.”■ APRIL 18, 2022 | CRAIN’S NEW YORK BUSINESS | 3

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WHO OWNS THE BLOCK

7 WEST 57TH ST.

A new (old) face starts selling luxury condominiums on Billionaires Row

The Soloviev Group is selling the units at 7 W. 57th St., where non-penthouse units average $2,700 per square foot

BY C.J. HUGHES 9 W. 57TH ST. This sloping travertine-and-glass office building, designed by Skidmore, Owings and Merrill and developed by Solow Building, became an Avon headquarters upon its 1974 opening. For decades it was one of New York’s top corporate addresses. But the building, which demanded a skyhigh $200 per square foot in annual rents, reportedly was troubled by double-digit vacancy rates for years. At the same time, its ground-floor commercial space sat empty for more than two decades before high-end restaurant Brasserie 8½—a reference to its sitting a half-story below No. 9—debuted in 2010. Entered by way of a spiral staircase, the restaurant is known as Cucina 8½ today. Also on the site is the Solow Art and Architecture Gallery, a showcase for a $500 million collection of paintings by Vincent van Gogh, Henri Matisse and Joan Miró. It has not been open to the public since it was created in the 1990s, and critics say its claims of being a not-for-profit museum appear to be a tax dodge. Soloviev now says it will open the gallery’s doors next year. Upstairs are cosmetics giant Chanel as well as Apollo Global Management and other private-equity players.

754 FIFTH AVE. Department store Bergdorf Goodman occupies almost the entire block at this site, which once contained a mansion belonging to Cornelius Vanderbilt II. Developer Frederick Brown, an Austrian immigrant, bought the property in 1926 and completed the sprawling store two years later with a vaguely French-chateau design by architect Ely Jacques Kahn. In 1970 city officials tried to turn the building into a landmark, though Bergdorf opposed it. The idea got shelved until 2015. The second time, though, was the charm.

7 W. 57TH ST. This new 19-story, 15-unit development from the Soloviev Group—which replaces a building that once housed a Burberry store—offers condos with a tech-centric, minimalist vibe. That’s in keeping with the types of apartments and office buildings developed by Soloviev’s precursor, Solow Building, a prolific firm that favored black-toned facades. All apartments at No. 7 have two bedrooms, according to the offering plan, and most encompass either 1,464 or 1,723 square feet. Solow bought the site in 2005 for $26.5 million, property records show.

30 W. 57TH ST. On a street that once had a bohemian flair, this building was home to the Art of This Century gallery from Peggy Guggenheim in the mid-1940s.

The top floor of the 7-story building hosted shows for Salvador Dalí, Max Ernst and Wassily Kandinsky. But by the 1960s, the area was known more for its hair salons, as office buildings proliferated. In 1974, one of the two retail spaces here was Le Zebra, a Black-focused hair salon. Most recently, the 34,300-square-foot building, which was purchased (along with its air rights) by the LeFrak Organization in 2008 for nearly $57 million, held chain stores including GNC and Sunglass Hut.

SOLOVIEV GROUP, GOOGLE MAPS

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oes Billionaires Row, which 35 W. 57TH ST. already includes One57, Steinway Tower, Central This 6-story beaux-arts building, which Park Tower, 432 Park Ave. sports a large bay window, is one of the and 220 Central Park South, have room street’s few remaining prewar edifices. The for another pricey condominium? A 11,300-square-foot building last changed developer with long ties to the Midhands in 2006 for $24 million. The seller town enclave is betting the answer is was Friedphil Realty, a Queens firm, which yes. also appears to have unloaded 14 E. 52nd The Soloviev Group—the next-genSt., another skinny commercial building, eration version of Solow Building— for $13 million around the same time. has started selling condos at 7 W. 57th St., a 15-unit property that is squeezed alongside the firm’s signature office building, the slope-faced 9 W. 57th St. With non-penthouse units 60 W. 57TH ST. averaging $2,700 per square The luxury high-rises sprouting up in recent foot, starting at around $4 milyears weren’t the first apartment buildings to lion for a two-bedroom, the grace this commercial district. Indeed, people condos are aggressively priced have been living in this part of Midtown for defor the neighborhood, but resicades, including here at Hemisphere House, a dential buildings in Midtown 20-story, 242-unit white-brick postwar apartseem to be rebounding from the pandemic better than many ment building. Tourist-friendly brasserie Rue other areas in Manhattan.

57 is at its base. When Hemisphere opened in “The workforce does not ap1963, after being developed by Andros Realty, pear to be back. I can tell you rents ranged from $155 to $640 per month, that based on how quickly I can according to The New York Times. In early April, drive over from the West Side a two-bedroom with parquet floors was listed Highway,” said broker Joelle at $6,250 per month, according to StreetEasy.

Pergolotti, a longtime Midtown Hemisphere was a bit of a game-changer when resident who is not involved it opened. Midtown, home to Carnegie Hall, with the project. “But I have was to that point an artists’ enclave. To build seen a tremendous amount of Hemisphere, Andros demolished Sherwood residential traffic at all price Studios, a 19th-century studio-and-apartment points.” building with a communal kitchen.

Although 7 W. 57th St. is a relatively late entry into the field, it’s also a pioneer as one of the first projects from the firm’s chairman, Stefan Soloviev, since his father—Sheldon Solow, one of New York’s most ac10 W. 57TH ST. complished builders—died in 2020.

Even if the Solow family’s projects are few and far No. 7, which is anticipating a $75 between, the firm has worked steadily to sew up conmillion haul, has been slow to take trol of this block. Soon after No. 9 opened, in 1977, shape. (Officials approved demolition Solow snapped up 6 W. 57th St. for about $1.4 milpermits in 2017.) Similarly, a threelion, followed in 2004 by No. 24 for $41 million. block family-owned site on First AveNext, in 2007, was the purchase of No. 20 for $60 nue in the East 30s that once housed a million, and then in 2012 there was No. 10 for $120 power plant has been barren for years. million. Finally, in 2016, the Solows bought No. 16 Soloviev, who last year consolidated for $128 million, deeds show. Conflict sometimes various family holdings in real estate, followed. For years, Solow battled the retail tenant agriculture and energy under one roof, at No. 10, Metropolitan Fine Arts and Antiques, has been plugging away at One United over an eviction effort. Meanwhile, the south side Nations Park, a black-glass condoof the property is slated to be razed for a 52-story minium at 695 First Ave. The firm has hotel-and-apartment building. Demolition has been managed to sell only half of its 148 slow; only Nos. 10 and 20 have been bulldozed. units since beginning in 2018. He could not be reached by press time.

Midtown might be straining to fill empty offices, but its apartments— popular with the kinds of well-heeled investors, overseas executives and pied-à-terre buyers who are in better shape to weather a pandemic—have been an easier sell.

Prices in the Central Park–adjacent enclave, especially for condos, had a decent winter, according to some first-quarter market reports. The Serhant brokerage, which is not involved with 7 W. 57th St., calculated the median price there at $1.4 million, up 20% year over year. The average price per square foot in Midtown is $2,200, below what 7 W. 57th St. seeks. ■ 4 | CRAIN’S NEW YORK BUSINESS | April 18, 2022

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OneWTC Sets the Stage for Exponential Growth.

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4/12/22 12:05 PM 4/12/2022 10:41:56 AM

IN THE MARKETS

Leading minority-owned brokerage lands big investment from a private equity powerhouse

S

COMPARE CAPITAL

$90M

THE LARGEST minority-owned brokerage firm’s capital (Chicagobased Loop Capital)

liams said his firm has helped it and the numerous companies it owns raise financing in the past.

Headwinds

Apollo’s investment is timely because the headwinds GOLDMAN SACH’s provided by capital base years of ultralow interest rates are giving way to a more unyielding environment. That could mean fewer deals because clients won’t be refinancing debt as often, but the ones the firm does get could be larger.

“We won’t be restricted going forward,” Williams said. ■

$100B

SIEBERT WILLIAMS SHANK

iebert Williams Shank, a Bill Thompson, is a former city leading minority-owned bro- comptroller and was a candidate kerage firm, will roughly dou- for mayor in 2008. ble its capital after an investment from private equity giant Slow inroads Apollo Global Management.

Minority-owned firms have “This will significantly enhance prodded municipalities and penour opportunities besion funds to set aside a portion of their trading cause we can participate and underwriting activity in capital-intensive activfor decades. Although ities that historically we they’ve made inroads, couldn’t engage in,” SWS they lack the capital to Chairman Christopher compete with large Wall Williams said.

Street institutions. ChicaApollo’s investment comes a week after the go-based Loop Capital, Federal Reserve Bank of the largest minoriNew York named its first ty-owned brokerage firm, minority-owned primary AARON ELSTEIN has $90 million in capital. dealer.

Goldman Sachs has $110 Founded in 1996 and based in billion the Financial District, Siebert WilMeanwhile, the latest data from liams Shank specializes in under- the U.S. Equal Employment Opporwriting and trading municipal and tunity Commission showed Blacks corporate bonds. The firm had $43 and Hispanics made up 13% of million in capital at the end of last Wall Street’s workforce in 2018, year, according to a regulatory fil- down from 14% in 2008.

“At Apollo, our commitment to ing. Its chief administrative officer,

WILLIAMS

expanding opportunity extends to the marketplace and making an intentional effort to support the success of diverse financial institutions and employers,” co-President Jim Zelter said.

The amount and terms of Apollo’s investment in SWS wasn’t disclosed, but Williams said it is a combination of debt and equity.

Apollo has about $500 billion in assets under management, and Wil-

ON POLITICS

Lock down ‘discipline of message’ or risk being fired, Adams warns

M

ayor Eric Adams asked Adams on the call if he wantreportedly wants to ed to approve press releases for relacontrol every commu- tively innocuous announcements nication that comes out such as tree plantings, Adams said he would. of every city agency.

“What is imperative to know is: On a recent Zoom call with 50 officials from city agencies, the mayor You are assigned to an agency under a commissioner but you said he’s been surprised work for me,” the mayor by some press announcesaid. “The commissioner ments and warned that leads an agency, but I lead anyone violating his “disthe city. I’m the mayor of cipline of message” will be the city, and all communifired.

“The first few months cations that come through we’ve noticed that press this city government are advisories have gone out coming through my mesor press releases have sage.” gone out and, No. 1, we It’s natural for any execROSS BARKAN utive knew nothing about it or it to want to control the was something that we flow of information comwere still contemplating here—and ing out of government. Officials that’s just not how I operate,” Adams need to be in sync; no one wants the said, according to Politico, which chaos of the Trump White House, obtained audio of the March 31 call. where cabinet officials and the presAdams said he is rolling out a “city ident would routinely contradict agency press release tracker,” where each other and policy seemed to communication officials from doz- emanate from whatever stray ens of departments must submit re- thought entered President Donald leases and plans for news confer- Trump’s head.

Adams, however, has gone further ences or other public statements for than any recent mayor in declaring his direct approval.

That kind of micromanaging, in he wants to personally sign off on all City Hall at least, is unprecedented press releases and announcements in modern times. When an official from every agency under his control.

New York City has a workforce of 400,000 people; each bureaucracy is like a small city, and it is virtually impossible for a single human being to weigh in on all decision-making that occurs. There is a reason the Department of Transportation and the Parks Department have commissioners. It is challenging enough for an individual to manage one agency, let alone dozens.

Over the weekend, Adams confirmed that he is personally reviewing every city news release, and said it takes only about 15 minutes in the morning.

The best leaders delegate. Michael Bloomberg had many faults as mayor, but one of the best aspects of his 12-year tenure was his willingness, as an executive, to trust the smart people he hired to implement far-reaching policy. Bloomberg delegated transportation to Janette Sadik-Khan, a well-regarded transit expert who was allowed to reimagine the city’s streetscape, pedestrianizing Times Square and introducing bike lanes across the five boroughs. Adrian Benepe was permitted to dream big at Parks. Joel Klein, at the Department of Education, was controversial on many fronts, but it was inarguable that

AP PHOTO

Mayor’s need to personally approve every press statement will inevitably result in bureaucratic paralysis and gridlock Bloomberg trusted Klein to pursue an education agenda he believed was best for the city.

Bill de Blasio, in comparison, meddled more and too often frustrated city officials with his political-operative instincts. But even de Blasio, on bigger policy fronts, was willing to step back and trust the experts he hired. Polly Trottenberg built on Sadik-Khan’s vision at DOT. Richard Buery was allowed to fully implement the universal prekindergarten expansion. Bob Linn had free rein to negotiate new contracts with municipal unions.

Adams is not following either Bloomberg’s or de Blasio’s example right now. The agencies announce few new initiatives, and commissioners are largely absent from the public. Policy itself seems secondary in the Adams administration; new programs, for the most part, are not being proposed. There is no equivalent to de Blasio’s universal pre-K plan or Bloomberg’s public health crusades. Rather than talk about healthy living, Bloomberg banned smoking in bars and restaurants, kicking off a national trend that probably has saved many thousands of lives.

If Adams can’t trust his commissioners, the inevitable result will be paralysis and gridlock. Policy staff might decide clashes with Adams aren’t worth the trouble. The smartest and most ambitious could decide they don’t want to work in city government at all. Micromanagers aren’t attractive to new recruits. Adams will learn they’d rather not have their boss govern their every move.

Quick takes ● By dragging out state budget negotiations in secret, Gov. Kathy Hochul demonstrated she had little interest in changing how Albany works. Blame the Democratic legislative leaders, too, for another budget process in the shadows. ● Will the new congressional and state legislative districts be thrown out in court? It still seems unlikely, but Democrats have to be getting a little nervous. ● It’s time to raise the fare on the ferries the city is heavily subsidizing. Most passengers are wealthier than average and can afford to pay more. ■

Ross Barkan is an author and journalist from New York City.

6 | CRAIN’S NEW YORK BUSINESS | April 18, 2022

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

EDITORIAL

publisher/executive editor

This problem has a solution: conversion and construction of permanent housing

N

ew Yorkers have grown accustomed to happening upon a human lying on the ground. Dirty, in rags, with a makeshift shelter made of cardboard or blankets.

We are hardened to the sight.

What alternative do we have?

We’re just individuals. We’ve got jobs, deadlines, bills, family arriving for the holidays. Certainly everyone who is reading this knows the drill.

Individuals have little power to fix the problem of homelessness, but a city doesn’t have to continue to look the other way. If New York has the will, there are practical steps it can take.

people can build a life while maintaining autonomy and dignity. Permanence.

Gregory Russ, head of NYCHA public housing, spoke at a Crain’s event this month about the magic that happens when people become secure in their home. For one thing, they can reach out from that base for jobs and training.

Many other cities also have a homelessness problem. It didn’t begin with the pandemic, but the absence of commuters from downtowns during the past two years left a vacuum that homeless encampments often filled.

Now that New York wants workers to return to the office, Mayor Eric Adams is trying to ensure they are not troubled by the sight of destitute humans. He ordered teams of police, social workers and other city agents to clear the homeless from subways and 239 tent communities.

Adams says he wants to connect unsheltered people to beds and services, but few have accepted the city’s offer to sleep indoors.

Does the mayor’s effort end there? If so, it’s tempting to read his message to the homeless as: “Just stay out of sight.”

EDITORIAL editor-in-chief Cory Schouten,

cory.schouten@crainsnewyork.com managing editor Telisha Bryan assistant managing editor Anne Michaud data editor Amanda Glodowski digital editor Taylor Nakagawa audience engagement editor Jennifer Samuels art director Carolyn McClain photographer Buck Ennis senior reporters Cara Eisenpress,

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IF WE HAVE THE WILL, THERE ARE PRACTICAL STEPS WE CAN TAKE As Crain’s reporting this week shows, everyone closely studying the problem points to more housing as the answer. Not barracks-style shelters—where theft and regulations run amok and where people must vacate during the day—but spaces where

Frederick P. Gabriel Jr.

BUCK ENNIS

sales manager Courtney McCombs account executives Kelly Maier, Marc Rebucci,

Laura Warren people on the move manager Debora Stein,

dstein@crain.com

Meanwhile, owners of buildings in central business districts are anxious that their offices will no longer be needed by workers.

Might some of those buildings be put to use as homes? The Hotel at New York City, at 161 Lexington Ave., is in the process of converting to “transitional

housing.” There will be more opportunities. With the right regulatory support, the business community could invest in single-room-occupancy buildings.

New York isn’t the only city beset by a homeless crisis. But imagine if our city found a way to lead others toward a solution. ■

CUSTOM CONTENT associate director, custom content

Sophia Juarez, sophia.juarez@crainsnewyork.com custom content coordinator Ashley Maahs,

ashley.maahs@crain.com EVENTS

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

OP-ED

Ana Jimenez, ajimenez@crainsnewyork.com

To meet our renewable energy goals, we need clean power from upstate

BY JULIE TIGHE AND TOM WRIGHT

T

hanks to a state climate law passed in 2019, New York is on track to meet 70% of its electricity needs with renewable resources by 2030 and 100% with zero-carbon electricity by 2040.

However, up to 65% of the state’s population is being left out of the benefits due to the constraints of transmission from upstate renewable energy sources to the New York City metropolitan area.

To address the discrepancy, in 2020 New York’s utility regulator, the Public Service Commission, expanded the state’s Clean Energy Standard—the comprehensive goal for the percentage of energy coming from clean sources—to ensure downstate residents get sufficient clean energy transmission through a new program, Tier 4.

The PSC voted April 14 on the first of many projects to come before it under the program. It was a make-or-break moment.

An economic win Tier 4 would be an economic win for all New Yorkers, allowing the state to meet its clean-energy goals, improve health in overburdened communities, stabilize energy prices, lower electricity costs and boost renewable transmission to the downstate energy grid.

Opponents have stated that the plan is too expensive, but an initial investment is needed to attract federal funding. The U.S. Department of Energy has launched the Building a Better Grid initiative, which can deploy $20 billion in funds, including a new $2.5 billion transmission facilitation program, created by the recent Infrastructure Investment and Jobs Act. If New York does not have a functioning process to approve new transmission projects, it will not be in position to access the funding.

Tier 4 would save all New Yorkers money in the long run. According to one analysis, if more transmission had been in place in January, customers would have saved more

senior manager of events Michelle Cast,

michelle.cast@crainsnewyork.com REPRINTS director, reprints & licensing Lauren Melesio,

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than $100 million in energy costs in that single month alone.

Most of the benefits of New York’s renewable energy plan have gone to upstate residents—including building the tax base, new jobs, lower electricity prices and cleaner air. Meanwhile, downstate residents have shouldered much of the investment. Renewable energy transmission enabled under the Tier 4 program would begin to right the imbalance.

A path toward cleaner energy Without new transmission to homes and businesses, we likely will experience curtailment, meaning wind and solar plants will generate electricity no one ever uses— requiring more generation from dirty sources and increasing the cost of renewables for everyone.

We need renewable energy sources not just to clean up the electricity we’re already using but to replace imported gasoline and diesel as we transition to electric vehicles and to replace fracked gas

and home heating oil as we transition to cleaner electric heat.

Most of the state’s fossil-fuel power plants are downstate. New York City has many of the state’s oldest and most polluting plants, generating not only greenhouse-gas emissions but also nitrogen oxide, particulates and sulfur dioxide that cause health problems.

With Tier 4, the downstate region can begin to wean itself off those harmful energy sources and open all of New York state to a more diverse energy supply.

That would allow utilities to hedge against global fossil-fuel commodity prices and would put downward pressure on prices.

Our climate crisis is worsening by the day. New Yorkers can’t wait any longer to begin transitioning to cleaner energy. ■

Simone Pryce

Julie Tighe is president of the New York League of Conservation Voters. Tom Wright is president of the Regional Plan Association.

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

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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 editor-in-chief emeritus Rance Crain chief financial officer Robert Recchia founder G.D. Crain Jr. [1885-1973]

8 | CRAIN’S NEW YORK BUSINESS | APRIL 18, 2022

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OP-ED

BY DEBORAH RIEGEL

A

recently proposed City Council bill, developed in response to January’s tragic fire in the Bronx, would increase the mandated minimum temperatures in apartments during coldweather months. The bill is unlikely to make tenants safer, though, and it could drive up rents.

The measure also is inconsistent with New York City’s laudable efforts to reduce buildings’ carbon footprint.

Few can fully fathom the horror of the Fordham Heights fire, which

New York Times and other news outlets reported. Indeed, residents reportedly had learned to ignore the fire alarm because it was notorious for sounding repeatedly and seemingly randomly.

Also, fire investigators said the self-closing doors malfunctioned, causing smoke to flood the building, and it was the smoke that killed many of the victims.

Misguided legislation Unsurprisingly, consumer protection agencies and public officials have called for more education regarding the need to close doors when escaping a fire, as well as safer ways to use space heaters.

The council bill, which would raise minimum temperatures to 70 degrees during the day and 66 at night (from 68 and 62, respectively), is not the answer.

Problems arise when landlords don’t meet heating requirements, and the Bronx building had a history of tenant complaints, according to City Council members.

The bill is, rather, a superficial reaction to the heartbreak we all witnessed. Apartments are not cold if they’re heated to the legally required levels. In fact, the number of New York City tenant complaints about a lack of heat has actually fallen nearly 31% since 2018, according to a recent Real Deal analysis of 311 data.

Raising minimum temperatures would not help, but a bill proposed

by Rep. Ritchie Torres—in whose Bronx congressional district the fire occurred—might. Torres has called for the installation of heat sensors in federally owned buildings, to share real-time data and ensure units have adequate heat and hot water, and to augment smoke detectors by exposing dangerous temperature increases.

THE COST TO TURN UP THE THERMOSTAT WOULD FALL ON PROPERTY OWNERS

Environmental concerns

took 17 lives, and it is natural to want to respond. The tragedy’s causes, however, lie more in a failure to comply with or enforce existing laws than in any gaps in the law.

The 19-story building lacked a working fire alarm and properly functioning self-closing doors, The

Heating buildings more also would heat the planet, running counter to the council’s Climate Mobilization Act of 2019, which has been called America’s most ambitious urban effort to lower building emissions.

Meanwhile, the added cost to turn up the thermostat would fall

GETTY IMAGES

Requiring landlords to turn up the heat in winter is not the answer to preventing apartment fires

on property owners just as they are expected to spend an estimated $4 billion to retrofit buildings to meet city environmental mandates.

The city’s Rent Guidelines Board, which oversees increases for rent-stabilized apartments, also is legally obligated to consider a building owner’s increased energy costs—potentially resulting in higher rents for tenants.

The Bronx fire was so horrific that it is understandable legislators

would look for solutions. Unfortunately, the proposed legislation fails to provide them, while it would unreasonably burden owners and increase greenhouse gas emissions.

The city should instead be working to increase enforcement of existing laws—which would actually protect tenants. ■ Deborah Riegel is a member of Rosenberg & Estis, a real estate law firm in New York City.

OP-ED

Patients with disabilities deserve convenient, timely dental care. Here’s how it can happen.

I

magine contacting a dentist office to schedule an appointment and finding out there is an extensive waiting list and it might be two years before a slot becomes available.

Many don’t have to imagine that scenario. It is the unfortunate, disappointing and unacceptable reality people with developmental and intellectual disabilities face.

To maintain good oral hygiene, such people not only need support in daily activities but also specialized approaches to dental care check-ins.

Ordinarily, scheduling a routine dentist appointment is easier than

patience and a spot on a long list among others awaiting care.

Demand exceeds supply Because of the specialized training required, demand for the specialists exceeds the supply. A 2021 survey by the Office for People With Developmental Disabilities’ Task Force on Special Dentistry found that no region of New York state has the capacity to treat people with severe to profound intellectual disabilities, many of whom require care in hospital settings.

That ultimately creates long waiting lists and forces people with intellectual and developmental disabilities to wait years for a simple appointment. Some travel hours for an appointment that should be routine.

That is why we have called on the state to support an initiative to train dental students to provide care to patients with intellectual and developmental disabilities. One of us, state Sen. John Mannion, recently proposed allocating $750,000 for dental fellowships to kick off the effort. The

PEOPLE HAVE TO WAIT YEARS AND TRAVEL HOURS FOR A SIMPLE APPOINTMENT. trying to get into a specialist’s office. But for many with intellectual and developmental disabilities, dentist appointments are specialized appointments—ones that require personal preparation,

fellowship, successfully piloted last year by the New York State Academic Dental Centers, would create a pipeline of young dentists prepared to meet the disabled community’s needs.

According to a 2012 study by the University of Rochester focused on New York Special Olympics athletes, nearly 30% of people with developmental and intellectual disabilities need urgent dental care or have untreated tooth decay.

When those health needs are delayed because of a lack of trained professionals, they lead to the catastrophe we have now. For too long, the disparity in treatment has been ignored, or consolidated to an individual level and separated from policy initiatives.

Funds for training The first step in boosting the sector and making it more inclusive of people with disabilities is training and increasing the number of professionals providing dental care for them. The proposed funds would be used to create a fellowship in each of the state’s six accredited dental schools.

Investing in such programs in support of people with disabilities is simply the right thing to do, but

GETTY IMAGES

BY JOHN MANNION AND JONATHAN TEYAN

it also provides opportunities to create jobs, leverage local expertise and forge a new path for our schools to become leaders in the dentistry industry. There is a nationwide shortage of dentists trained to support patients with disabilities, opening the door for our six dental schools to evolve into leaders in the field.

We believe in our community.

We have the students to make the effort succeed, and we have the foundation within our dental

schools to make it work.

At its core, the fellowship investment can alleviate the damaging reality of not having enough dentists to care for people with disabilities. It’s about making sure that individuals can get the dental care they need. It’s about diversity, equity and accessibility. ■ John Mannion is a New York state senator. Jonathan Teyan is president of New York State Academic Dental Centers.

Write us: Crain’s welcomes submissions to its opinion pages. Send letters to letters@CrainsNewYork.com. Send op-eds of 500 words or fewer to opinion@CrainsNewYork.com.

Please include the writer’s name, company, address and telephone number. Crain’s reserves the right to edit submissions for clarity.

April 18, 2022 | CRAIN’S NEW YORK BUSINESS | 9

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ASKED & ANSWERED WHO HE IS: Co-founder and CEO of KPG Funds

INTERVIEW BY NATALIE SACHMECHI

T

AGE: 46

hrough shrewd investment strategies and attention to design, Greg Kraut has made a name for himself in the world of office redevelopment. His firm, KPG Funds, targets architecturally significant buildings in need of rehabilitation, funding and management and transforms them into boutique office spaces that demand rents upward of $100 per square foot, even during a pandemic. In May KPG made a bullish announcement: With so many properties in distress, it would pick up $1 billion worth of office and retail space around the city to redevelop.

That included two SoHo properties from Vornado Realty Trust, one of which once housed Topshop.

Your firm specializes in value-add opportunities. What can you add that others can’t?

There are several things. The first is we're able to add institutional capital. Most of the owners we purchase from have owned these buildings for generations. They haven’t had the capital to put into redoing any of the lobbies, elevators or facades, nor do they have the expertise. I was a broker for 20 years. I know the layouts they want, the amenities they want, the type of design.

A year ago KPG announced a $1 billion fund to pick up office and retail space. Where does that stand?

Since then we’ve bought three office buildings and spent $150 million. We target certain submarkets in the city:

WHERE HE GREW UP: Roseland, New Jersey WHERE HE RESIDES: Westport, Connecticut EDUCATION: Bachelor’s in international relations and affairs, George Washington University FASHION ICON: Once upon a time, Kraut won best dressed out of his entire sixth grade class.

HUMANITARIAN: Kraut says he has personally donated $18,000 in supplies to aid Ukranians and has urged fellow industry members to give to war-relief efforts.

SoHo/NoHo, Chelsea, the Meatpacking District and Hudson Square. Those are the areas where we see the most tenant demand. We’ve developed a brand similar to hotels. We have different themes for each building, and we designed them for women—it’s really the women-owned businesses that are attracted to our buildings. The high design of the kitchens, the bathrooms. In our next building we’re putting in lactation rooms and sleep pods.

Why did you decide to pick up Vornado’s struggling SoHo properties?

We approached them, and

we picked out the two assets we wanted. We had a different business plan. The former retail space at 155 Spring St. is now fully occupied, and it’s a money-earning building now. At 40 Broadway, the Topshop building, we’re turning that into an office. Now it’s 40 Crosby St., and we’re calling it The Crosby. It was vacant for two years before we bought it. I’ve always loved that building—it’s the only multi-floor escalator in SoHo.

What is the future for boutique offices?

The only thing harder than convincing someone to invest in retail in the city is convincing them to invest in office space.

Midsize tenants are the stickiest in the marketplace—they don’t move. We target these tenants in high-demand areas. They go, “Oh, shit, I don’t see anything in the market like this at all.” We’re not the cheapest option, but we like to think we’re the best option.

Which neighborhoods do you see opportunity in?

In Midtown South, only 30% of office buildings are renovated and a significant amount of tenants want to be there.

What advice do you have for real estate investors?

I would say that New York is the greatest city in the world and that tenants are still expanding. Now is the time to bet on the city.

I think you’re going to see crime drastically go down. You’re going to see more of an influx in tenants. Around 70% of employees in New York City are under 35 years old, and they want to get out of their apartments. ■

BUCK ENNIS

GREG KRAUT KPG Funds

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Second home ownership 1 for /8 the cost

pacaso.com

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THE LIST TOP-PAID HOSPITAL EXECUTIVES AND DOCTORS Ranked by fiscal year 2020 cash compensation

$4.48M $3.1M AVERAGE SALARY of top executives, a 19% increase from last year

AVERAGE SALARY of top doctors, a 3% increase from last year

AMANDA.GLODOWSKI@CRAINSNEWYORK.COM

HIGHEST PAYING EMPLOYERS NYU Langone Health System had the most executives and doctors on the list, edging out Northwell Health, which had held the top slot for the past two years.

Number of execs/doctors on the list

NYU Langone Health System

14 Northwell Health 13 Memorial Sloan Kettering

6

NUMBER of orthopedic specialists on the doctors list

7 Catholic Health Services of Long Island 6 Hospital for Special Surgery 6

$267K

AVERAGE AMOUNT of other compensation, such as deferred pay and health care benefits, by the 70 executives and doctors on the lists, a 13% decrease from last year

SOURCE: Crain’s analysis of 990 tax filings

TOP-PAID EXECUTIVES

TOP-PAID DOCTORS TOTAL CASH COMPENSATION FROM ORG./ FROM RELATED ORGS.

OTHER COMP.

St. Francis Hospital

$6,563,893 $6,563,893/$0

$52,072

Richard Shlofmitz, M.D. Chairman, cardiology

St. Francis Hospital

$5,929,189 $5,929,189/$0

$49,372

Bryan Kelly, M.D. Surgeon in chief

Hospital for Special Surgery

$5,856,172 $5,856,172/$0

$79,205

Samin Sharma, M.D. Professor, cardiology

Mount Sinai Hospital

$5,091,363 $1,097,319 /$3,994,044

$39,233

Viviane Tabar, M.D. Chair, attending neurosurgery

Memorial Sloan Kettering

$4,838,365 $4,838,365/$0

$39,904

6

Robert Michler, M.D. Chair, surgery and cardiothoracic surgery

Montefiore Health System

$3,869,857 $3,869,857/$0

$46,514

Jessica Jacob, M.D. Obstetrician/gynecologist

North Shore University Hospital

$3,516,373 $3,516,373/$0

$66,398

Jacob Shani, M.D. Chair, heart and vascular center

Maimonides Medical Center

$3,498,724 $3,498,724/$0

$39,023

$767,506

7 8

$69,336

9

Memorial Sloan Kettering

$3,285,223 $3,285,223/$0

$73,743

$5,589,093 $1,997,542/$3,591,551

Babak Mehrara, M.D. Chief, plastic and reconstructive surgical service

$5,281,288 $2,640,644/$2,640,644

$1,297,200

NYU Langone Health System

$3,279,875 $585,785/$2,694,090

$37,569

$5,164,478 $0/$5,164,478

$0

John Bendo, M.D. Vice chair, orthopedics

NYU Langone Health System

$3,174,618 $15,873/$3,158,745

$37,793

$4,831,612 $3,781,702/$1,049,910

$777,737

Answorth Allen, M.D. Orthopedic surgeon

Hospital for Special Surgery

$3,170,390 $3,170,390/$0

$72,653

$1,190,422

Eugene Krauss, M.D. Director, orthopedic surgery

North Shore University Hospital

$3,048,321 $3,048,321/$0

$55,274

$4,736,054 $4,736,054/$0

Aubrey Galloway, M.D. Chair, cardiothoracic surgery

NYU Langone Health System

$2,970,024 $945,062/$2,024,962

$35,827

Northwell Health

$4,690,609 $4,690,609/$0

$61,164

Eduardo Dejesus Rodriguez M.D. Chair, plastic surgery

NYU Langone Health System

$2,753,814 $1,048,377/$1,705,437

$0

Christopher Panczner10 Senior vice president and general counsel

Montefiore Health System

$4,617,017 $0/$4,617,017

$26,736

10 11 12 13 14 15 16

John Golfinos, M.D. Chair, neurosurgery department

St. Francis Hospital

$2,738,939 $2,738,939/$0

$52,201

16 17 18

Brian Gragnolati11 President, chief executive

Atlantic Health System

$4,214,047 $4,214,047/$0

$791,346

Newell Robinson, M.D. Chairman, cardiothoracic and vascular surgery department

Hospital for Special Surgery

$4,076,953 $3,261,562/$815,391

$86,208

William Ricci, M.D. Chief, trauma service

Hospital for Special Surgery

$2,734,049 $2,734,049/$0

$61,645

Louis Shapiro President, chief executive

Memorial Sloan Kettering

$3,677,428 $3,677,428/$0

$73,086

Sheeraz Qureshi, M.D. Spine surgeon and research director of the spine service

Hospital for Special Surgery

$2,667,238 $2,667,238/$0

$52,370

Kathryn Martin Executive vice president, chief operating officer

17 18

19

RWJBarnabas Health

$3,630,950 $3,630,950/$0

$188,849

Jeffrey Drebin M.D. Chair, attending surgery

Memorial Sloan Kettering

$2,658,017 $2,658,017/$0 $2,561,380 $2,561,380/$0

$66,937

Annette Johnson Senior vice president, vice dean, general counsel

NYU Langone Health System

$3,449,686 $1,724,843/$1,724,843

$566,242

Alan Hartman, M.D. Chair, cardiovascular and thoracic surgery

North Shore University Hospital

20

19 20

$73,951

Jennifer Velez12 Executive vice president, community health

$18,343

21

$2,527,875 $2,527,875/$0

NYU Langone Health System

$3,449,686 $1,724,843/$1,724,843

$566,242

James Wittig, M.D. Medical director, orthopedic surgery, orthopedic oncology and sarcoma surgery

Atlantic Health System

Nancy Sanchez Senior vice president and vice dean, human resources and organization development and learning

21

Danyal Nawabi, M.D. Orthopedic surgeon

Hospital for Special Surgery

$2,302,468 $2,302,468/$0

$64,108

Craig Thompson, M.D President, chief executive

Memorial Sloan Kettering

Earnest Sink, M.D. Chief, hip preservation service

Hospital for Special Surgery

$2,301,552 $2,301,552/$0

$65,859

Steven Abramson, M.D. Senior vice president and vice dean, education

NYU Langone Health System

22 23 24

George Petrossian M.D. Director, interventional cardiovascular procedures

St. Francis Hospital

$2,289,893 $2,289,893/$0

$62,209

TOTAL CASH COMPENSATION FROM ORG./ FROM RELATED ORGS.

OTHER COMP.

$10,669,618 $10,669,618/$0

$1,258,784

$9,596,180 $4,798,090/$4,798,090

$3,366,134

New York–Presbyterian Hospital

$6,997,143 $6,997,143/$0

$312,173

4 5 6

Philip Ozuah, M.D.4 President, chief executive

Montefiore Health System

$6,539,217 $0/$6,539,217

$883,393

Robert Garrett5 Chief executive

Hackensack Meridian Hospital

$6,532,806 $6,532,806/$0

$338,911

Peter Costantino, M.D.6 Former director, New York Head & Neck

Lenox Hill Hospital

$6,365,719 $6,365,719/$0

7

Joseph Scott7 System executive vice president, former president and CEO of Jersey City Medical Center

RWJBarnabas Health

8

Daniel Widawsky Senior vice president, chief financial officer

NYU Langone Health System

9 10

Kenneth Davis, M.D. Chief executive

Mount Sinai Hospital

Andrew Brotman, M.D. Senior vice president, vice dean and chief clinical officer

NYU Langone Health System

11 12

Steven Safyer, M.D8 Former officer

Montefiore Health System

Robert Cerfolio, M.D. Senior vice president and chief of hospital operations

NYU Langone Health System

13

Barry Ostrowsky9 Trustee, president and chief executive

RWJBarnabas Health

14 15

Michael Dowling President, chief executive

RANK

NAME/TITLE

HOSPITAL/SYSTEM

1 2 3

Steven Corwin, M.D.1 President, chief executive

New York–Presbyterian Hospital

Robert Grossman, M.D.2 Dean, chief executive

NYU Langone Health System

Laura Forese, M.D.3 Executive vice president, chief operating officer

22 23

RANK

NAME/TITLE

HOSPITAL/SYSTEM

1 2 3 4 5

Joseph Levine, M.D. Chief of electrophysiology

$1,976

$6,113,831 $4,927,720/$1,186,111

$190,339

$5,765,824 $2,882,912/$2,882,912

$3,331,238 $3,331,238/$0

$262,680

$3,325,211 $1,030,815/$2,294,396

$420,235

BY M

D

mill high the first ic, a C pac $2.3 mill pay he mor fore L exec ope the lion the O York

TO

RAN

24

25 26 27 28 29 30

31 32 33 34 35

SOUR

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4/15/22 3:15 PM

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r. Steven Corwin, New York– Presbyterian’s chief executive, earned nearly $10.7 million in 2020, making him the highest-paid hospital executive in the metropolitan area during the first year of the Covid-19 pandemic, a Crain’s analysis found.

Corwin’s total compensation package that year included nearly $2.3 million in base pay and $3.9 million in bonus and incentive payments, records show. In sum, he took home about $1.5 million more than he earned the year before.

Laura Forese, the health system’s executive vice president and chief operating officer, landed third on the Crain’s list, with about $7 million in total cash compensation for the year.

Other compensation for New York–Presbyterian executives in-

,514

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,653

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cluded a monthly housing allowance for certain, unnamed executives and transportation costs, which might be business-class for trips longer than four hours.

New York–Presbyterian did not respond to requests for an interview with Corwin and did not respond to a list of written questions.

Instead, a spokesman provided a statement referring Crain’s to its nonprofit tax filing.

Big bonuses In its filing for the year, the system said compensation for top-level executives included payouts from an annual incentive plan and a long-term incentive plan. Those are tied to performance measures such as operational and financial strength, patient quality and safety, patient satisfaction, advancement of patient care and people development and partnership, the hospital said.

“This initiative is critical to assuring that New York-Presbyterian has the requisite leadership to create and manage a highly motivated and engaged workforce,” the filing said.

New York–Presbyterian also said in its filing that incentive payments “may only be granted if the organization achieves a financial surplus.”

But the system ended 2020 in the red, with a $651 million operating loss, according to audited financial results.

Dr. Robert Grossman, who serves both as chief executive of NYU Langone Health and dean of the NYU School of Medicine, ranked second, with a haul of $9.6 million for the fiscal year that ended Aug. 31, 2020.

That included two $3 million bonuses, one for each of his roles.

Grossman’s pay package rose by 180% from the prior year, a higher rate than any other executive on the

Crain’s list, the analysis found.

Lisa Greiner, a s p o ke s w o ma n for NYU Langone, said Grossman’s pay package surged “due to perfor- CORWIN, GROSSMAN AND FORESE The highest paid hospital mance goals that executives in the city. Together, they make over $27 million. were set over a period of two years and triggered tive-based and varies from year to by the achievement of a number of year based on goals set by the board ambitious milestones, including of trustees.” surpassing philanthropic, quality Greiner did not immediately reand financial goals and concluding spond to questions about the perhospital mergers.” formance goals used to determine Additionally, Greiner said, his Grossman’s compensation, but his compensation the year before did online biography says he increased not include bonuses.

NYU Langone’s revenue from $2 bil“Dr. Grossman serves in multiple lion in 2007 to $10.2 billion last year. roles, including being the head of The average cash compensation two medical schools and leader of a for hospital executives on the list multistate health care system,” was $4.48 million, a 19% increase Greiner said in a statement. “His from the average of $3.78 million in compensation is highly incen- 2019. ■

PHOTOS: BUCK ENNIS

of

Analysis: Hospital executive pay hit new heights in 2020; NY Presbyterian CEO took home $10.7M

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

TOP-PAID EXECUTIVES

TOP-PAID DOCTORS

RANK

NAME/TITLE

HOSPITAL/SYSTEM

TOTAL CASH COMPENSATION FROM ORG./ FROM RELATED ORGS.

OTHER COMP.

24

Nader Mherabi Senior vice president, vice dean, chief information officer

NYU Langone Health System

$3,272,942 $1,636,471/$1,636,471

$480,680

25 26 27 28 29 30

Vicki Match Suna Senior vice president, vice dean, real estate

NYU Langone Health System

$3,267,702 $1,633,851/$1,633,851

$606,706

Mark Solazzo Executive vice president, chief operating officer

Northwell Health

$3,260,884 $3,260,884/$0

$53,849

Kenneth Gibbs13 President, chief executive

Maimonides Medical Center

$3,188,998 $3,188,998/$0

$50,871

Andrew Mitchell President

Central Suffolk Hospital

$3,050,820 $3,050,820/$0

$55,274

Joseph Lhota Senior vice president, vice dean, chief of staff

NYU Langone Health System

$3,030,697 $1,212,279/$1,818,418

$480,735

Robert Glenning14 President, financial and information technology services, chief financial officer

Hackensack Meridian Hospital

$2,998,298 $2,998,298/$0

$43,840

31 32 33 34 35

Michael Israel President, chief executive

Westchester Medical Center

$2,834,662 n/d

$0

Thomas Biga15 President, hospital division

RWJBarnabas Health

$2,830,616 $2,830,616/$0

$1,220,032

Herbert Pardes, M.D.16 Executive vice chairman

New York–Presbyterian Hospital

$2,817,436 $2,817,436/$0

$35,098

Mark Stauder17 Chief operating officer

Hackensack Meridian Hospital

$2,593,599 $2,593,599/$0

$36,824

Montefiore Health System

$2,557,455 $0/$2,557,455

$44,593

Green-Lorenzen18

Susan System senior vice president, operations

TOTAL CASH COMPENSATION FROM ORG./ FROM RELATED ORGS.

OTHER COMP.

St. Francis Hospital

$2,241,622 $2,241,622/$0

$59,462

S. Jacob Scheinerman, M.D. Chairman, cardiovascular and thoracic surgery department

Lenox Hill Hospital

$2,241,092 $2,241,092/$0

$55,274

27 28 29 30

David Langer, M.D. Chair, neurosurgery

Lenox Hill Hospital

$2,225,015 $2,225,015/$0

$66,937

William Long, M.D. Orthopedic surgeon

St. Francis Hospital

$2,192,775 $2,192,775/$0

$23,606

Emad Eskandar, M.D. Chair, neurological surgery

Montefiore Medical Center

$2,189,959 $2,189,959/$0

$41,832

David Rivadeneira, M.D. Director of surgical services, director of colorectal surgery, and vice chair, surgical strategic initiatives, Northwell Health

Huntington Hospital Association

$2,128,896 $2,128,896/$0

$66,937

31

James Taylor, M.D. Co-director, Sandra Atlas Bass Heart Hospital, and cardiothoracic surgeon

North Shore University Hospital

$2,104,584 $2,104,584/$0

$66,937

32 33

Gene Coppa, M.D. Chair, surgery

North Shore University Hospital

$2,076,569 $2,076,569/$0

$43,595

David Jones, M.D. Chief, thoracic service, department of surgery

Memorial Sloan Kettering

$2,005,450 $2,005,450/$0

$75,107

34 35

Patrick Borgen, M.D. Chair, surgery

Maimonides Medical Center

$1,989,629 $1,989,629/$0

$48,607

Joseph Disa, M.D. Plastic surgeon

Memorial Sloan Kettering

$1,986,937 $1,986,937/$0

$80,961

RANK

NAME/TITLE

HOSPITAL/SYSTEM

25 26

Craig Radnay, M.D. Orthopedic surgeon

,343

,108

,859

,209

SOURCE: 2020 Forms 990 of New York–area hospitals and health systems. Area includes the city’s five boroughs plus Nassau, Suffolk and Westchester counties in New York and Bergen, Essex, Hudson and Union counties in New Jersey. Research by Amanda Glodowski and Zachary Smith. Total cash compensation includes base compensation, bonus and incentive compensation and other reportable compensation from the organization and related organizations. Other compensation includes nonreportable compensation, deferred compensation, retirement plan benefits, health care benefits and other fringe benefits from the organization and related organizations. Hospital employee compensation might not include medical school pay. Individuals might have additional titles. SERP-supplemental executive retirement plan. Notes on top-paid executives: 1- Compensation included a $2,154,764 participation in a SERP as reported on the W-2 and $1,463,647 in a legacy nonqualified retirement plan reported on the W-2. 2- Participated in a SERP and a long-term incentive plan during calendar year 2019. The employer contributions to these plans were $2,650,400 and $692,600 for calendar year 2019. These amounts are reported as a shared cost between NYULH and NYU Grossman School of Medicine. 3- Compensation included a $214,167 participation in a SERP and a $1,032,478 in a SERP as reported on the W-2. 4- Received a payment of $1,988,478 from a pooled supplemental executive retirement plan. Received $840,000 from SERP reported as deferred compensation. 5- Participated in a SERP, contributing $715,088. A payment of $1,309,744 in benefits was made under a long-term incentive plan. HMH made a $4,520,514 payment for FICA taxes on participant’s defined benefit executive retirement benefit plan. 6- Compensation includes a severance payment of $4,600,000. 7- Received a one-time separation of employment payment of $3,662,499. Compensation includes $498,470 in a SERP, $1,186,111 in a 457(F) plan that can’t be forfeited and $178,125 in a 457(F), which is subject to substantial risk or complete forfeiture. 8- Received a severance payment of $5,164,478 that was accrued and reported as deferred compensation in the prior-year 990.

9- Compensation includes $1,146,250 in a 457(F), which is subject to substantial risk or complete forfeiture. 10- Received a payment of $3,230,564 from a pooled SERP, of which $2,591,417 was reported as deferred compensation. 11- Compensation includes $74,902 in basic long-term disability, supplemental long-term disability, life insurance and long-term care and $767,864 in SERP credits. 12- Termed on June 26, 2020. Compensation includes $142,951 in a SERP and $162,498 in a 457(F), which is subject to substantial risk or complete forfeiture. 13- Compensation includes $1,837,741 in a SERP. 14- Participated in a SERP, contributing $337,931. A payment of $566,555 in benefits was made under a long-term incentive plan. HMH made a $449,592 payment for FICA taxes on participant’s defined benefit executive retirement benefit plan. 15- Compensation includes $2,276,000 in a 457(F), which is subject to substantial risk or complete forfeiture. 16- Compensation included a $67,808 participation in a SERP as reported on the W-2. 17- Participated in a SERP, contributing $210,000. A payment of $224,000 in benefits was made under a long-term incentive plan. 18- Received a payment of $884,992 from a pooled SERP. April 18, 2022 | CRAIN’S NEW YORK BUSINESS | 13

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4/14/22 4:33 PM

INSTANT EXPERT

What to know about what’s in the new state budget

BY CRAIN'S STAFF

T

he budget passed by New York state government earlier this month breaks a record at a whopping $220 billion. It contains a negotiated compromise among divided segments of the state Democratic Party, including Gov. Kathy Hochul, Senate Majority Leader Andrea Stewart-Cousins and Assembly Speaker Carl Heastie. The deal—a first for Hochul, who took over as governor in August—was a week late and dragged over disagreements on amending the 2019 Bail Reform Law and investing public money in a new stadium for the Buffalo Bills.

The budget reflects billions of dollars in emergency funding provided by the federal government during the pandemic, as well as a desire to spend on social services and capital needs as New York emerges from Covid-19. It covers the year from April 2022 through March 2023.

Here’s what you need to know.

THE BUDGET INCLUDES $800 million for the emergency rental assistance program— which is likely to be the most significant influx in funding it sees for the near future.

That should cover about 54,000 applications, according to the Office of Temporary and Disability Assistance, which is administering the program.

This was not New York’s first attempt at rent relief during the Covid-19 pandemic. The state launched a $100 million initiative administered by the Division of Homes and Community Renewal during the summer of 2020, but it was beset with criticism throughout its existence. It initially was open for applications from July 16 through Aug. 6—which tenant groups argued was not nearly enough time.

Also included is $125 million for landlord and homeowner assistance.

GETTY IMAGES

EMERGENCY RENTAL ASSISTANCE

STATE REGULATORS soon will begin charging cryptocurrency companies for the time inspectors spend examining them. The change brings the regulation of crypto companies in line with that of banks and insurers.

Companies that wish to facilitate trading cryptocurrency in New York are required to receive a BitLicense from the state Department of Financial Services.

A long-running complaint from the crypto industry is that the state takes too long to review BitLicense applications. About 30 companies have received the license in the seven years the program has been active. Adrienne Harris, DFS superintendent, said “This new authority will empower the department to build staff with the capacity and expertise to best regulate and support this rapidly growing industry."

“THIS WILL EMPOWER THE DEPARTMENT TO REGULATE THIS RAPIDLY GROWING INDUSTRY”

RESTAURANTS MAY RESUME selling drinks-to-go now that the popular measure was agreed upon.

“We’re legalizing to-go drinks,” Gov. Kathy Hochul tweeted, “to support small businesses and because I know we could all use a drink!”

The once-temporary program is still not quite permanent, though: It is scheduled to expire in three years.

The restaurant industry had been hoping for the return of to-go drinks ever since June, when a temporary pandemic measure that allowed them expired.

STATE LAWMAKERS approved $7.7 billion to increase the minimum wage for home health aides. The Education, Labor and Family Assistance budget bill calls for a $3 per hour increase to the regional minimum wage that will be phased in over two years.

KATHY FEBRAIO The initial $2 per hour bump will go into effect Oct. 1, and the additional $1 per hour will kick in October 2023.

The city's minimum hourly rate for home health aides is $19.09, including a required benefits portion.

Kathy Febraio, president and CEO of the New York State Association of Healthcare Providers, which represents home and community-based providers, said the wage increase is a step in the right direction but will not be sustainable without higher Medicaid reimbursement rates. Legislators have promised to work on the reimbursement formula.

GETTY IMAGES

DRINKS TO-GO

PAY BUMP FOR HOME HEALTH AIDES

NYS ASSOCIATION OF HEALTH CARE PROVIDERS

CRYPTO LICENSE FEE

CLIMATE RESILIENCE FUNDING A CORE COMPONENT of the state’s vision for a greener future is the $4.2 billion environmental bond act, which New Yorkers will have the opportunity to vote on in November. The Clean Water, Clean Air and Green Jobs bill is expected to fund capital projects to reduce the impact of the climate crisis, including resilient infrastructure, water quality upgrades and habitat restoration.

If the measure passes, the state would issue and sell bonds to fund projects.

“It is proactive rather than reactive so that we can help protect communities,” said Julie Tighe, president of the New York League of Conservation Voters. “That’s going to be a big infusion of funding for dealing with environmental infrastructure as well as really using nature to protect us from climate change.”

Some key investments include $1.5 billion for climate-mitigation projects, $1.1 billion for efforts to reduce flood risk and $650 million for land conservation and recreation.

April 18, 2022 | CRAIN’S NEW YORK BUSINESS | 15

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4/15/22 3:09 PM

FROM PAGE 1

and subways in the predawn hours and well after dark to build relationships with homeless New Yorkers.

At the other end of the persuasion spectrum are recent sweeps ordered by Mayor Eric Adams.

Beginning in February, he directed police to keep people from sheltering in the subway system. Last month a multiagency task force cleared 239 homeless encampments. Adams paired teams of outreach workers and mental health clinicians with police, and he directed them to connect people staying on the streets to shelters and other services. In the days following the camp clearings, just five people accepted city workers’ offers to spend the night in a shelter, City Hall said, while 312 went into a shelter following the subway-clearing campaign.

Adams’ visible street clearings and the deliberate, often unseen daily work of outreach workers are two very different fronts of the city’s multidecade struggle against homelessness. Both seek to address the unsheltered population, which has doubled since the mid-1990s, even as city spending on homeless services has quadrupled—to $2.8

homeless services] has mushroomed because the fundamental need of people finding a permanent place to live has never really been fully acted upon,” said Ellen Baxter, founder and executive director of the Broadway Housing Communities nonprofit. “Housing policy and homeless policy have never interacted well.”

Adams’ latest budget proposes a reduction in homeless services of $600 million, to spend roughly $2.1 billion. The mayor also promised to allocate about $1.6 billion annually to affordable housing construction during the next four years. His spokespeople said he’ll unveil a comprehensive affordable housing strategy in the coming weeks.

In addition, the city recently added 350 Safe Haven and stabilization shelter beds. The transitional spaces are meant to appeal to the chronically street homeless—people Curran and Long often work with. But there still are not enough beds to serve every unsheltered person.

Building trust For outreach workers, understaffing and large caseloads often add a layer of complexity to the already challenging task of connecting New Yorkers to shelter and other services.

Curran and Long are part of the street outreach team at the Center for Urban and Community Services, which is a member of the Manhattan Outreach Consortium.

The consortium has a $15 million annual contract with the city to work with street homeless across the borough and operate temporary housing for New Yorkers living on the streets.

Each consortium member focuses on the community where its roots are deepest. For CUCS, that’s every neighborhood north of 110th Street on the West Side, and above 96th Street on the East Side.

Outreach teams also respond to 311 calls and have people referred to them by local organizations. Last year the CUCS outreach teams per-

“HOUSING POLICY AND HOMELESS POLICY HAVE NEVER INTERACTED WELL” billion last year. But neither effort can be successful without the city acknowledging the crux of the issue: No matter how many interagency teams and outreach workers are combing the streets to aid unsheltered New Yorkers, there simply is not enough housing to move people to. And years of policy missteps have created a tangle of red tape to get people into the limited housing that is available so thick that people are often stuck in limbo.

“The city’s budget allocation [for

manently housed 31 people and helped 209 people move into transitional housing. So far this year, workers have helped six people land a permanent home and placed 49 people in transitional housing.

Typically, CUCS covers its communities with a team of 18 staff members, who work with some 200 people at any given time, but the outreach program currently has six open positions.

That is due, in part, to burnout.

The work can be physically and emotionally taxing.

A large part of outreach is finding and keeping track of people who tend to move around. On the early shift, which is from 5:30 a.m. to 1:30 p.m., workers in pairs hop into one of four vehicles branded Manhattan Outreach Consortium in white lettering. They cruise through known hot spots and sites of encampments, such as under stretches of the Harlem River Drive, to follow up with existing clients and touch base with new faces. It can take months of checking in with people, getting to know them—offering necessities such as warm gloves or treats, like a cup of hot chocolate—before a person will accept help.

“You have to be strategic about it.

Showing up for someone and what they care about in the moment is going to build that relationship to where they’re ready to talk about housing,” Curran said. “In the back of my mind I’m always thinking, what's my angle for talking to someone about engaging in the housing process?”

Homeless out of sight Beginning March 18, city workers dismantled tents and other makeshift homes at encampments across the city. Unsheltered New Yorkers, who took what they could carry, watched as sanitation workers tossed their belongings into garbage trucks. Officials said they were enforcing sanitation codes.

Critics said the forced removals had more to do with optics than empathy.

The mayor’s office did not disabuse that notion when it touted the removal of 500 hypodermic

COALITION FOR THE HOMELESS serves food every night at St. Bart’s in Midtown and distributes clothing on Saturdays

PHOTOS: BUCK ENNIS

HOMELESS

needles from encampments on Meeker Avenue in Williamsburg.

“Look at this condition that a fellow New Yorker was living in,” Adams said, standing in the City Hall rotunda with a blown-up image of dozens of needles. “I’m supposed to allow this to stay? I’m supposed to act like I don’t see this? Some would say, ‘Well, this [encampment] is a warm place for them.’

Please!”

The visual of a mayor cleaning up a homeless camp is hardly novel; it’s been a mostly unsuccessful strategy of previous administrations. Former Mayor Bill de Blasio initiated similar cleanups as early as May 2016 and carried them out every month until he left office in December.

“It’s an escalation, and it is, in part, clearly intended to send a message to the business community that Adams plans to hide street homelessness,” said Craig Hughes, senior social worker at the Urban Justice Center, a social services nonprofit. “It’s to facilitate what

THE CITY'S HOMELESS POPULATION HAS STEADILY CLIMBED OVER THE PAST THREE DECADES New York City homeless municipal shelter population 70,000 65,000 60,000 55,000 50,000 45,000 40,000

There were 48,413 homeless people when Mayor Adams took office

35,000 30,000

CREATED WITH DATAWRAPPER

25,000 20,000 15,000 10,000 5,000

Mayor Dinkins 0 Jan ’90

Mayor Bloomberg

Mayor Giuliani Jan ’95

Gaps indicate missing data

Jan ’00

Jan ’05

Jan ’10

Mayor de Blasio Jan ’15

Jan ’20 SOURCE: Coalition for the Homeless

business leaders are saying they want to see happen in this city.”

But clearing street encampments can make it harder for the city to build trust and persuade homeless people to move off the streets.

“To be blunt, [the city is] trying to make life as miserable as possible for someone who is homeless and living unsheltered, to compel them to go to the shelter system—which just isn’t how it works,” said Josh Dean, executive director of human. nyc, which advocates for reforms to the outreach process.

During encampment clearings “people lose birth certificates and medications—essential things that they need to survive,” Dean said.

“I’ve also met people who have had photographs of their family discarded, like, really personal belongings that they treasured until one day someone came with a sanitation truck and destroyed it.”

Affordable housing scarce Once a person accepts help, the truly hard part begins. At CUCS, outreach staff work with the city’s network of Safe Haven shelters. The Safe Haven sites, along with stabilization beds, have fewer restrictions—such as curfews and sobriety requirements—than the main shelter system and offer more autonomy and services to residents.

But demand for the Safe Haven beds is high, particularly among those needing to be near a specific location such as a clinic, or who don’t feel comfortable venturing to an unfamiliar part of the city.

Social service officials operate roughly 1,500 Safe Haven beds and 1,000 stabilization beds citywide.

Although the city’s 2021 count of unsheltered New Yorkers puts the street homeless population at 2,376, advocates say the number is an undercount. The Coalition for the Homeless points to data that 9,231 homeless individuals accepted offers of transportation to shelters at end-of-line subway stations during the first 21 months of the Covid-19 pandemic, suggesting there is a much larger unsheltered population.

Although gaining access to tran-

16 | CRAIN’S NEW YORK BUSINESS | APRIL 18, 2022

P016_P017_CN_20220418.indd 16

4/14/22 4:50 PM

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units; 421-a, he said, incentivized minimums.

“When you have subsidies that allow developers to build 80% luxury and 20% affordable, it’s simply the wrong approach,” McKee said.

WORKERS FROM the Manhattan Outreach Consortium say the path to permanent housing is riddled with dead ends, and many give up

sitional housing can be a stumbling block, securing a permanent apartment presents much more formidable hurdles. Barriers can include exhaustive documentation requirements, residency restrictions such as income thresholds and administrative red tape securing city housing vouchers. Applicants who are selected for housing go through interviews—the scheduling of which can be tricky.

“Many of the steps in the process have been created with the goal of rationing a scarce resource,” said Jacquelyn Simone, policy director for the Coalition for the Homeless.

“And it can actually have the unintended consequence of lengthening someone's homelessness, because they’re not able to provide all the documentation.”

That, paired with the citywide lack of affordable housing, is a recipe for a yearslong wait for a place to call home. The process can be discouraging for unsheltered New Yorkers, some of whom give up out of frustration, Curran said, adding that transparency and steady reassurance are needed to keep people positive.

“It's really important, as outreach workers, to have hope for our clients’ futures—because it can feel hopeless,” Curran said. “It’s hard to say, ‘No, your homelessness will end.’ It’s hard as a worker to believe that sometimes, you know?

“But there is no greater feeling than when someone moves into their new home. That’s what we have to focus on.”

Managing instead of solving If Adams is going to be the mayor to flip the script on the city’s homeless crisis, he will need to notice that spending more money on services hasn’t solved the problem.

For more than 25 years, the city’s homeless population has ballooned. The count was nearly 24,000 people when Rudy Giuliani took office in January 1994. The figure increased to roughly 31,000 when Michael Bloomberg took charge in 2002, and it jumped to more than 54,000 when Bill de Blasio was inaugurated in 2014. Under

de Blasio, the city’s total homeless population peaked at nearly 64,000 people in shelters in February 2019, according to data from the Coalition for the Homeless.

In January, there were more than 48,000 people living in the city’s municipal shelter system, according to the Coalition for the Homeless. The Family Homeless Coalition says 70% of them were families with children.

City leaders have consistently grappled with the problem by pouring more money into it. Giuliani budgeted $500 million per year; Bloomberg spent $1 billion by 2011; de Blasio allocated more than any previous mayor to homelessness, budgeting $3.2 billion in 2019 before capping his final budget with nearly $2.8 billion annually.

“Every mayor starting with [Ed] Koch has done the same thing.

Their entire approach is to manage homelessness instead of solving it,” said Michael McKee, treasurer of Tenants PAC, a housing advocacy group. “The only way to solve homelessness is to put people in permanent housing. Some need social and mental health services, that’s true, but all of them need a place to live.”

Coalition for the Homeless. “From the beginning, it was a constant barrage of new ways to stick it to the city on homelessness.”

There have been some recent, well-intentioned efforts, but they’ve mostly fizzled out.

Take the end of the city’s Advantage voucher program under the Bloomberg administration in 2011.

The program successfully transferred thousands of New York families from the shelter system into apartments, through one- and twoyear rent subsidies. But then, due to state and city budget cuts, officials shelved the program.

At the time, Bloomberg suggested that Section 8 subsidies were so successful that they were contributing to families deliberately enrolling into the shelter system to access the rent subsidy. The Bloomberg administration refused to re-prioritize people in shelters for Section 8 or NYCHA based on this belief. His claim, said Hughes of the Urban Justice Center, outraged advocates.

The decision to pull city funding from Advantage left most people in shelters with no way to sustainably exit homelessness.

Similarly, de Blasio sought to design new rent subsidies—Living in Communities—to help single adults and families transition out of shelters and into market-rate rentals. But the maximum rent levels the subsidies could pay were lower than the price of available units, leaving many eligible homeless New Yorkers with an effectively worthless voucher.

“The city was offering a below-market-rate subsidy, and landlords could get more money from

A place to build a life

people without subsidies, or those with higher-paying federal subsidies,” said Hughes, adding that the failure of de Blasio’s subsidy “was compounded by landlords who refused, against local law, to accept voucher holders.”

New solutions needed Most who follow the problem say the solution starts and ends with housing. To that end, Adams might be able to avoid the missteps of his predecessors by leveraging public-private partnerships to build more affordable housing.

Aaron Koffman, managing principal at Hudson Inc., which builds affordable housing, said such partnerships “must be part of the toolkit.” In order to make the partnerships realistic, he said, the government must prioritize affordable housing subsidies.

“We need a sea change in the way this country thinks about housing.

It’s the stabilizing force in our country,” Koffman said. “It starts with the Feds, it flows to the state and, yes, it even flows to the city.” Koffman noted the gap in funding between the $777 billion federal defense budget, and the $100 billion for the Department of Housing and Urban Development, which holds the keys to housing construction subsidies.

The future of the state’s 421-a tax abatement also could play a role.

The abatement program is due to expire in June, and Albany is debating a replacement. McKee, from Tenants PAC, argued that Adams and other Democrats must demand a new incentive that forces developers to build more affordable

Making permanent homes more accessible would give hope to outreach teams. For Curran and Long, the way to get someone such as Danny permanently off the street will always be an apartment.

That day in March, Danny ultimately did not show up to the Broadway church for shelter.

But the interaction, however incremental, was still a kind of win: He told the outreach workers his name, where he tends to sleep at night and that he’d be willing to talk again.

That is all crucial to finding him, keeping the conversation going and helping him access housing.

Danny had accepted a canary-yellow “street sheet” pamphlet from Long with names, addresses and numbers for different shelters and services. He’d also tucked her card into his pocket, in case he wanted to call later.

The sad reality is the CUCS outreach workers could go months before they run into Danny again— and if they do, there’s no guarantee he’ll want to speak with them or take a step toward shelter.

“There are some people that I really, really wish would come inside, because I worry about them,” Long said. “But I think one thing you really have to learn is [that] what might be a crisis in my eyes might not be a crisis for the person experiencing it—because we have different thresholds, right? I want more for them. But if that’s not what they’re ready for, I can’t push that on them.”

But when people are ready, Long, Curran and other outreach workers are poised to help.

“People sleeping on the streets deserve a safe place to stay,” Curran said. “That safe place ultimately is permanent housing—not a shelter, not Safe Haven, not a stabilization bed. It’s an apartment where they have a lease and have rights and can build a life for themselves.” ■

Previous policy blunders A further complication has been the combative relationship between the city and the state over spending. Gov. Andrew Cuomo sought to shift the cost almost entirely to the city, by exerting control over federal welfare dollars sent to New York.

As the cost of operating city shelters rose by $1.2 billion from 2011 to 2021, New York City picked up 95% of the tab for single-adult shelters.

The state covered only a sliver of the cost increases to run single-adult and family shelters—4% and 7%, respectively, according to the Coalition for the Homeless.

By last year, the state spent $16 million on DHS shelters for single adults, while the city shelled out nearly $700 million.

“Oh my gosh, it was so destructive,” said Shelly Nortz, deputy executive director for policy at the

CHRISTINE QUINN with children in the WIN program for homeless families. She’s the organization’s CEO. APRIL 18, 2022 | CRAIN’S NEW YORK BUSINESS | 17

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TECHNOLOGY

BY RYAN DEFFENBAUGH

A

s workers slowly return to the office—many of them arriving at new workplaces—some of the city’s top landlords and office managers are using mobile apps to help guide them around.

The apps allow office workers to check for crowds ahead of time at the gym or their floor, move through security turnstiles with their phones and book conference rooms.

These so-called tenant-experience apps, often branded by building owners, drove hundreds of millions of dollars in acquisition deals and venture capital investment last year. Now those bets are being put to the test as landlords try to attract workers back.

For example, Related Cos., the developer of Hudson Yards, struck a deal with HqO last week to invest in and use its office app platform.

The startup pitches its technology as a universal remote control to buildings. Terms of the investment were not disclosed.

For Related, the app is a way to showcase amenities at buildings such as 30 Hudson Yards, which is home to Facebook, KKR and Warner Media. It includes the ability to

call an elevator ahead of time, order food directly to your floor and earn rewards points for spending at Hudson Yards retailers.

“Those amenities are all the more important now as companies look to attract top talent—which is harder than ever to find—and inspire those people to be in the office and collaborate,” said Philippe Visser, Related’s president office development.

Doubling down Office apps first came to prominence around 2018, as companies raced to compete with tech-forward coworking operations such as Industrious and WeWork. The outlook for the industry appeared grim when the Covid-19 pandemic emptied out office buildings in 2020.

“What was fascinating, and a pleasant surprise, is that the smart landlords actually doubled down on this,” said Zach Aarons, co-founder and general partner at MetaProp, a Manhattan venture-capital firm focused on property technology, whose limited partners include brokerages CBRE, Cushman & Wakefield and JLL. MetaProp is an investor in HqO. Last year was filled with deals.

HqO raised $60 million in a Series C funding round in April and then, in

October, acquired European software company Office App in a deal it said created a company worth more than $500 million. Clients for HqO include Hines, JLL, JPMorgan and Vornado.

VTS, a property tech startup in Midtown, spent a reported $300 million last year to acquire startups Lane and Rise, which provide mobile office apps. The deal created a tenant app across more than 1,400 buildings in the U.S. and Canada, including ones owned by Brookfield, Oxford Properties and Starwood Capital. In addition to the app, VTS software facilitates office management and leasing.

Some landlords developed apps on their own, including Silverstein Properties and RXR Realty. CBRE offers the Host app in buildings it manages. In December, RXR sold its custom-built app, WorxWell, to View, a California-based maker of smart windows and other property technology.

Related also previously developed its own app, but it is turning to HqO in part because of its analytics capabilities. Chief Executive Jeff Blau is joining HqO’s board of directors as part of the investment.

FOMO Polling features found in many of

the apps can help property managers better understand what workers want in the office.

“We want to help find the FOMO [fear of missing out],” said Charlie Stephens, who leads New York City and tristate partnerships for HqO. “What are the events and amenities that create the community feeling to entice workers back?”

A term that has caught on in real estate circles is “flight to quality.”

It’s the idea that the pandemic and remote work have tilted the commercial office market even further in favor of new, shiny buildings, loaded with amenities employers say convince employees that trips to the office are worthwhile.

Office apps can monitor the usage of conference rooms, gyms and more.

“In the next couple of years, we are expecting a modernization boom within the industry,” said Ryan Masiello, chief strategy officer of VTS. “How [landlords] are going to invest that capital needs to be more data-driven than ever. Hope is not a strategy.”

Privacy advocates have raised concerns—especially with apps that track movements to enforce social distancing or power contact tracing.

Both HqO and VTS said the apps

HQO

Top landlords turn to apps for return-to-office edge

are optional for workers, and data shared with landlords is aggregated and anonymized.

Back in the office It remains to be seen whether an app can lure workers from home.

The average office occupancy in the city sits at roughly 37%, according to data from Kastle Systems. A fiveday in-office workweek is still a long way off for many industries.

The tech sector has been particularly slow in bringing its office workers back. Just 37% of tech employees want to work in an office more than three days per week, according to national polling by the Slack Future Forum.

Related says its office properties are averaging near 60% capacity— which Visser said shows it has the type of high-end offices workers want to report to.

A better app, Visser said, “is one more tool in the toolkit.” ■

2022

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REAL ESTATE

New Museum of Women taking over a former retail space in SoHo

NYU lawsuit challenges city’s SoHo rezoning

BY NATALIE SACHMECHI

NATALIE SACHMECHI

The building is the only one in the neighborhood with escalators going to every floor. Asking rents were $200 per square foot.

The lease is the first at the building since Topshop left in 2019. The property remained vacant for two years before KPG picked it up from Vornado Realty Trust, along with 155 Spring St., for $85 million last year.

Vornado announced in August it would sell the building, along with other retail properties along Madison Avenue, for $184.5 million.

The Reuben Brothers purchased the Madison Avenue properties.

The rest of the building on Broadway, atop the museum, will be repositioned as a luxury boutique office building addressed as 40 Crosby St., with a new entrance

THE MUSEUM IS EXPECTED TO FEATURE 14 IMMERSIVE EXPERIENCES this summer across the ground, first and second floors of the building.

Founder Abby Trott and her business partner Avery Riester, who was director of operations at

N

Boutique offices upstairs

COURTESY OF KPG FUNDS

S

oHo is getting a new museum dedicated to empowering women—in a building that used to house apparel brand Topshop.

The Museum of Women inked a 25,000-square-foot lease at 480 Broadway, with plans to be there for one year, said landlord Gregory Kraut of KPG Funds.

The attraction is expected to feature at least 14 interactive and immersive experiences, as well as a gift shop and a commissary that sells goods from women-owned vendors. It is scheduled to debut

the nearby Museum of Ice Cream, are expected to curate the museum’s programming, along with a team of women.

on Crosby Street, KPG said. It said it will create a contactless experience for tenants through an app that could be used to enter the building and access its amenities.

The office space will be pre-built, it added.

Josh Berger of Norman Bobrow & Co. represented the museum in the lease deal. ■

ew York University has filed a lawsuit against the city, seeking to overturn a provision in the SoHo/NoHo rezoning law that bans college and university use in new buildings—which it says is unconstitutional.

The City Council amended the law at the last minute to prohibit higher education institutions from moving into the newly rezoned area, among other changes, delaying its final vote to Dec.15 so that the legislation could go back to the Department of City Planning for approval.

Other critics of the SoHo/NoHo rezoning have called for its complete overhaul, but NYU is focused on the restrictions to building new dormitories or classrooms in the neighborhoods.

NYU suggested in its complaint that the council included the university exclusion to placate some activists who objected to the rezoning.

In May neighborhood activist group Village Preservation said the rezoning “included one huge new terrible element: It would allow

NYU … to build and locate in these neighborhoods.”

“NYU has been trying to get into NoHo and SoHo for years, but current zoning prohibits it,” the group wrote on its website. “The city’s plan would swing the doors wide open to the university” and allow developers to avoid building affordable housing in the neighborhoods.

According to the university, the law violates the Cornell Doctrine, a piece of case law that establishes that the total exclusion of educational or religious institutions from historic residential districts is unconstitutional.

For now, the Greenwich Village– based university has no plans to build new facilities in the area, spokesman John Beckman said in a statement.

“But NYC zoning laws typically stay in place for decades until updated, and it is impossible to predict how things will change and what circumstances New York City, NYU or other nearby colleges or universities may confront over that long period,” Beckman added.

NYU currently owns four buildings in the newly rezoned area. ■

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RESTAURANTS FROM PAGE 1

survey published in the Labor Department’s quarterly census of employment and wages.

Employers realize the best way to attract staff is to try to improve their workplaces.

“It often feels like we are in the human resources business, not the food business,” said Chris Khalifa, founder and CEO of Zooba, a quick-service Egyptian restaurant.

“We are in the culture-building and training business.”

Salary has been the first item on the table. The average quarterly pay in the industry for the third quarter of last year was $9,405, up 12% from $8,377 in the same quarter of 2019.

Some of the increase is a result of the final stage of the minimum-wage hike, to $15 per hour on Dec. 31, 2019—whose impact was somewhat swallowed by the events of March 2020. But the rest seems to be from competition among shortstaffed employers.

Leaders at Hot Bread Kitchen, which trains immigrant women and women of color in culinary skills, said graduates used to make around the minimum wage in their first position. Now the average starting wage is $16, said Karen Bornarth, vice president of industry partnerships at Hot Bread. Several employers are offering $18 to start, she said. One alumna with about five years of experience just inter-

viewed as a pastry cook at a hotel for a $30-per-hour position.

“That’s kind of unheard of,” Bornarth said.

At some point, though, food businesses and restaurant operators simply reach a limit of how much they can pay, especially amid increases in the cost of ingredients, insurance and more.

“For us to have to do that, the businesses have to be healthier too,” said Sean Feeney, co-founder of Grovehouse, which runs restaurants Misi and Lilia in Brooklyn.

Feeney helped found Relief Opportunities for All Restaurants, a group that has supported the industry throughout the pandemic.

“When you raise everyone’s wages, that comes from the business.

Most of the businesses weren’t healthy,” Feeney said.

The question of how restaurant owners can pay more is central to the survival of the industry, said Steven Picker, executive director of Food Industry Partnerships at the city Department of Small Business Services, which is also running training programs for potential restaurant workers.

“Business owners need to take time to develop a plan for this,” Picker said, “and implement what they feel is right for their business and employees.”

Benefits accrue Employers often come to Hot Bread Kitchen with job offers for the program’s graduates. But Bor-

narth said those sometimes go unfilled, especially ones from small businesses, because they are not the caliber of jobs that the leadership wants for its alumni.

That has led the organization to create a training program for employers, taking them through the ways they can change to become better places to work.

“There is precedent to developing quality jobs in other industries,” Chief Executive Leslie Abbey said.

“So why not apply this to the food industry now?” Employees at Starbucks’ Reserve Roastery, who voted to unionize in early April, seem to have the same question.

At Boy Blue, a two-person outfit founded as a delivery-only food business during the pandemic, the question of benefits is playing a central role in its planned growth.

Partners Michael Davis and Camila Nevin are hoping to sign a lease to bring the firm to a brick-and-mortar space in a food hall. They hope to hire five employees, the largest number that seems sustainable while providing a livable wage and a benefits package.

“That is important to us—it dictates how many we can hire,” Davis said. “I grew up as the son of a single mom who was a waitress. Our life was dependent on how good tips were that day.”

Some improvements for hospitality workers have come down from the government. New York City’s Fair Workweek Law for larger companies, as well as paid sick

leave and an additional paid Covid-19 sick leave program, have extended some of the security of office jobs to restaurant work.

Yet it’s possible to overregulate paid leave and schedules, said Carolyn Richmond, a restaurant lawyer at Fox Rothschild. When proprietors make mistakes on certain wage forms, they open themselves up to lawsuits. That can penalize small-business owners who can’t afford to retain an attorney.

A career path In the restaurant industry, employers often infer that “better jobs” simply means higher wages, but Bornarth said her members and graduates want other things too: to be in a well-organized environment, with the opportunity to learn new skills and get promoted, as well as simple recognition of their work.

In an attempt to give that to employees, Ngo has put his 30-person staff on salary rather than hourly wages. He also changed the workweek. Staff members work four days each week; on the fifth day, they get the chance to learn from Ngo about the restaurant operations or ordering or culinary skills.

It gives them an opportunity to expand what they know and begin to carve out a career path.

At Zooba, a fine-tuned growth ladder awaits new hires. They come on as entry-level dishwashers, for example, making $16.25 per hour before any tips. After getting a food

handlers’ license, they can be prep cooks, at which point those interested can train to lead teams.

Dig raised $65 million in the fall, some of which went toward workforce initiatives such as a four-day workweek and a six-week training program for would-be leaders.

There are limits, however. Some of the fundamental lifestyle complaints from restaurant workers, such as working nights and holidays, and dealing with rude patrons, are hard to remove.

Labor economist James Parrott of the New School said the time-tothink aspect of the Great Resignation is important to the question of the lingering labor shortage. For some portion of the restaurant workforce, the demands just stopped being worth it.

Ngo said some of his pre-pandemic employees tired of dealing with what he described as the 1% of unkind diners who make restaurant work intolerable. On the bright side, the turnover also might mean the current crop is eager to work in service, especially in the shined-up workplaces being created.

Feeney said he has noticed people entering the industry from different backgrounds and fields. Just like restaurant workers changed careers, he said, other professionals recalibrated and decided that service was their future.

“We are definitely getting emails and calls from people in other professions that they want to do this now,” he said. ■

2022

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GOTHAM GIGS

BUCK ENNIS

RIVERA at the East Harlem location of OnPoint NYC

SAM RIVERA TITLE: Executive director of OnPoint NYC AGE: 59 BORN AND RAISED: Lower East Side RESIDES: Teaneck, N.J. EDUCATION: Went to Connors State College and Ohio State University for accounting and business administration but did not graduate FREE SPIRIT: Rivera is part of the Redrum Motorcycle Club, which brings together Indigenous members.

LITTLE-KNOWN SKILL: He is talented with the djembe, a drum from West Africa played with bare hands.

A SOURCE OF INSPIRATION: “My mother had me when she was 15 and raised me against all odds. She was an emergency room nurse. I hope to have her work ethic.”

‘It’s the best job I’ve ever had’

BY SHUAN SIM

and access to food and housing.

am Rivera, executive director of OnPoint NYC—a nonprofit that runs the country’s first two overdose prevention centers—initially was reluctant to take the job.

When he realized his 30 years of working with social services, advocating for people with HIV/AIDS, harm reduction and mental health primed him for the job, he decided to go for the position. It was an opportunity to run facilities that provide supervised consumption for drug users.

“It’s the best job I’ve ever had,” said Rivera, who will have been with the organization for two years in June.

The OnPoint centers, located in Harlem and Washington Heights, were backed by former Mayor Bill de Blasio and the City Council.

In addition to supervision, counseling and medication-assisted treatment for drug users, the centers provide showers, laundry

A strong start

S

Since the facilities’ launch Nov. 30, they have handled more than 1,000 visits, supervised 14,000 utilizations and reversed 250 overdoses through intervention, already exceeding initial projections of 130 reversals annually.

The staff, comprising people with lived experiences as drug users as well as medical professionals, have been instructed to treat individuals seeking help with empathy and dignity.

Rivera, in his early 20s, was convicted of a drug and gun charge.

While in prison, he saw a room where several men were cooped up and looked like they were dying. He explored the room, reporting a broken window to the administration that might be unsafe for the men. In a whirlwind, he said, he was whisked to a quarantine room and made to sign a waiver that whatever might happen to him was not the fault of the facility,

leaving him confused and scared.

Rivera’s mother, a nurse, told him the room was for people with HIV, and that he didn’t have to worry that he might have contracted the virus from them.

Rivera was struck by his mother’s reassurance. “Those men who were in fact dying had no such comfort.”

When Rivera was freed from prison in 1990, he joined the Fortune Society, a nonprofit in Long Island City that provides re-entry services for the incarcerated two years later.

Over the decades, no matter his stint, Rivera’s guiding principle has remained constant: Be a voice for the voiceless.

As he came to helm OnPoint— whose centers skirt a fine line running afoul of federal law—he had to figure out what the organization’s voice should be.

“In my whole life as an advocate, I’ve always had to fight,” he said.

“But this time around, we’re not going to fight. We’re going to ap-

proach people [who fear] what we do with love and invite them to sit with us.”

Returning the anger from opponents with anger would do the organization little good, Rivera said, especially given its frail existence.

Funding is constantly a worry, as the centers may not use public money to pay for services, due to the Anti–Drug Abuse Act of 1986, commonly known as the “crack house statute.”

“There is no war on drugs.

There’s a war on drug users,” Rivera said.

He hopes his approach will get critics to see people seeking help as simply those who fell astray.

Rivera referenced the Disney movie, Encanto, and its popular song, “We Don’t Talk About Bruno.” Like Bruno, drug users are often shunned for committing an act that society does not understand.

“Bring us Bruno,” he said, laughing. “Let us help bring that conversation with the fearful that there can be a way forward.” ■

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