Crain's New York Business

BUSINESS OF ART

THE ART OF FORGERY, FRAUD AND THEFT

45%

market share of

auctions

Art is universal, but the art market is centered in New York, where nearly half of all auctions are held and world-renowned museums hold court. Collectors and investors spent $65 billion last year buying artwork, often with only a handshake to seal the deal, and millions more on collectibles from dresses to baseball cards to diamonds. is month Crain’s takes a deep dive into the unregulated world of art and “alternative asset” collectibles from multiple angles.

More independent contractors could soon qualify as employees

Biden administration has kicked off a sweeping rule change that could affect 900,000 gig workers in the state

BY CARA EISENPRESS

City gig workers and the technology companies they contract with are facing a shakeup, as the federal government seeks to revise a rule that determines

whether workers toil for themselves or for the companies paying them.

Gig workers, or independent contractors, generally do not have all the same bene ts, protections or pay as employees engaging in similar work.

e o cial change, promised early in the Biden administration, would likely go into effect next year, following a 45-day comment period that began late last week. It creates a more robust checklist for determining whether someone is on contract.

e proposed checklist now includes six factors, considered equally: how managerial skill plays into the ability to succeed in the position; the type of investment made by the

ASKED

the economics of affordable housing

ISTOCK/FRAMES,

GETTY IMAGES, BUCK ENNIS

EVENTS CALLOUT

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STATS AND THE

Early-stage startups could buoy city’s tech sector

BY AMANDA GLODOWSKI

As venture capital investments and deal counts dip in the city, early-stage startups may prove to be a bright spot in the tech sector’s tumult.

In all, just $5.6 billion was invested in the city’s startups, down nearly 50% from last quarter and 60% from the same period in 2021, according to PitchBook’s latest report monitoring venture activity.

There were 424 deals made in the city in the third quarter of this year, a 25% decrease from the second quarter and a 31% decrease from the same period last year, when deal-making activity was nearing its peak.

Although the steep drops appear to cement a trend of investor hesitancy amid a volatile public market, parsing the city’s late- and early-stage companies paints two different stories.

QUICK STATS 424

VENTURE DEALS made in the city during the third quarter

$5.6B

INVESTED into

startups in

SEED ROUND DEALS GROW IN VALUE, WHILE LATE-STAGE VC PLUMMETS

Median New York venture capital deal value by stage, in millions

Angel Seed Early-stage VC Late-stage VC

$3.58M

MEDIAN SIZE of deals for seedstage deals, a new high

Late-stage venture capital deals have dropped dramatically from 2021’s record highs, with the median deal so far this year coming in at $13.25 million compared with last year’s $20 million. Venture capital exit activity has tanked compared to recent quarters, with just $125 million in deals in the third quarter, compared with $13.9 billion in the third quarter of 2021 and nearly $3 billion in the third quarter of 2020. There were just eight initial public offerings in New York, New Jersey and Connecticut, down from 30 in the same period last year, EY found.

“The pressure that’s building at the late stage is definitely causing worries for investors and companies, and paints a shadow over the potential of these companies for the next few years,” said Kyle Stanford, a senior venture capital analyst at PitchBook.

On the other hand, a glimmer of hope could be found in early-stage companies, where the median deal amount is on the rise, contrary to their more mature counterparts, which are spiraling downward. In the New York metropolitan area, the median value of a seed-stage company is $3.58 million, a 31% increase from last year. However, late-stage companies’ median deal size has shrunk by 34% since 2021.

Stanford said the divergence likely stems from the fact that seed companies, which are likely at least five years away from considering an exit strategy, are insulated from the immediate volatility of the public market. New York is well suited to weather the storm, he said, because talent and companies are still attracted to the “vibrant” area. But the city’s sector can’t rely entirely on its newest companies.

“New York is in a really strong position,” said Stanford. “But from the broader perspective, everyone is looking at IPOs. It will be a worry until IPOs come back.”

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Big tab comes due for Times Square Applebee’s

BY NATALIE SACHMECHI

Applebee’s Times Square location was recently hit with a nearly $7 million judgment and an ejec tion notice by a state Supreme Court judge in Manhattan over unpaid rent and expenses dating back to June 2019, according to court records.

The company blamed cash flow issues for its prepandemic arrears, its attorney Peter Sartorius said during court proceedings. The pandemic exacerbated the problem and made it impossible to conduct proper busi ness at the restaurant, located at 234 W. 42nd St., he said. The restaurant reopened its doors in June 2021.

In October 2021 the landlord of the proper ty, Madison International Realty, served the tenant with a notice of default for the overdue amounts and a month later terminated the lease agreement, which was set to expire in 2025.

The location is owned and operated by a franchisee, Apple-Metro.

The parties tried to negotiate a settlement to have Applebee’s stay in the 11,000-squarefoot space, but none was reached, an attor ney for the landlord, Deborah Riegel of Rosenberg & Estis, said during court pro ceedings. The landlord wouldn’t accept any thing less than the full amount due, which the tenant said it would not pay.

The restaurant was allegedly rak ing in more than $700,000 per month, Riegel claimed in court, but none of that money has been paid back to the land lord. She also suggested that if Applebee’s was ejected from the space, ownership could fill it with another tenant that is prepared to pay the asking rent.

The eatery, however, employs 80 people at the location and doesn’t want to leave, Sarto rius said.

Hardship on the menu

Earlier in the pandemic, the restaurant’s owner submitted a hardship declaration claiming it was struggling financially be cause of govern ment-mandated closures and re strictions on restaurant capac ity.

To make things worse, the at tached Hilton Times Square hotel, which was a major source of customers for the restaurant, per manently shut down in September 2020, said Roy Raeburn, the co-founder of Apple-Met ro, in an April affidavit.

Since the pandemic began, the location's

sales are down 75% compared to the same two-year period prior to the pandemic, Rae burn said. Ever since the restaurant re opened in June 2021, sales have been 23% lower compared to the same 10-month peri od prior to the pandemic, he added.

In April 2020 the company received nearly $3 million in Paycheck Protection Program loans that were forgiven, according to Pro Publica, though all that money went to pay roll expenses rather than rent.

The building has struggled with tenant re tention during the pandemic. By March 2021 three spaces occupied by major tenants in cluding Modell’s, Ripley’s Believe It Or Not and the Liberty Theater were being marketed for lease.

In July it was announced that candy retailer It’Sugar had signed a lease to take over the 20,450-square-foot outpost formerly occu pied by Modell’s.

Sartorius did not respond to a request for comment.

and is served an eviction

AN ATTACHED HOteL WAS A bIG SOUrce OF CUSTOMERS, BUT IT cLOSeD DOWN

WHO OWNS

After a lag, a developer brings some relatively rare luxury housing to the Lower East Side

A 70-unit, two-tower condo project at 222 East Broadway is hitting the market following issues with a neighbor and years of delays

BY C. J. HUGHES

ALower East Side condo proj ect is hitting the market, after experiencing enough twists to resemble a map of its neighborhood.

Developer Optimum Asset Manage ment has been planning its project at 222 East Broadway since 2016. It ini tially sought to build a larger develop ment than what it is today: 70 condos across two touching towers. But Opti mum ran into some problems with a neighbor, forcing it to scale back and causing years of delays.

New condos are still rare in No. 222’s part of the Lower East Side, a bulge into the East River below Delancey Street with postwar megaprojects and modest rentals. The area has rapidly gentrified, making the development team hope the wait was worth it.

“The shabby-chic quality of the neighborhood is changing, and I guess we’re sort of part of that,” said Richard Cantor, a veteran real estate broker and a co-founder of Cantor Pecorella, which handles sales. “But we like to think of this building as where the past meets the future of New York.”

That dual nature is apparent with the design of the project. One of the towers, gray-toned, 28-stories tall and with 52 units, is new construction. The other, the 11-story former Bialystoker Center and Home for the Aged, which has 18 apartments, is an art deco land mark built in 1931. The units through out range from studios to four bed rooms and have herringbone floors and marble counters.

Prices average $2,100 per square foot and start around $975,000 for some studios. Optimum expects a $157 million haul, according to the of fering plan. Move-ins should begin next year.

The average price per square foot in Manhattan during the summer for new condos was $2,600, according to data from Miller Samuel.

The developer purchased the three tax lots that make up the development site for $47.5 million in 2016, records show. The developer then approached Seward Park Cooperative, a large apartment complex next door that’s lined with open spaces, about pur chasing its air rights, which usually transfer between adjacent buildings.

But reportedly because of concerns about overdevelopment and height, the co-op rejected the developer’s $54 million offer.

Had Optimum managed to secure that extra volume, it would have con structed a third 33-story tower on the property. The site where it was meant to go, a parcel at the corner of Clinton Street, will instead turn into a 6,700-square-foot green space.

Cantor, who used to shop for clothes on the Lower East Side as a child, hopes it doesn’t change too much.

“It’s always been an incredibly di verse place, with young and old, and all kinds of races and religions,” he said. “It’s wonderful.”

215 EAST BROADWAY

East Broadway can seem to be a hinge between two eras. To the west is the 20th century, courtesy of vast redevelopment efforts, while the east belongs to the 19th century, embodied by rows of short and skinny brick apartments. Fairly typical is this ad dress, a 5-story, 8,500-square-foot prewar walk-up with retail at its base, occupied by May Kaidee, a vegan restaurant. The building last sold for $7 mil lion in 2018. Its buyer, a limited liability company, appears to be controlled by a Huizhen Wang, based on a deed. According to the city, No. 215 has a mar ket value of $1.4 million, higher than its Covid-af fected 2021 estimate of $1.2 million but still not as strong as its 2020 valuation of $1.7 million.

409 GRAND ST.

This site contains two of the four multitowered 20-story complexes that make up the Seward Park Cooperative, a sprawling 1960 development financed by labor unions. Cherry trees dot spacious lawns at the site, which uses multiple addresses. Seward Park, a fully market-rate com plex since the 1990s, had a studio for sale for $489,000 this month. In the mid-20th century, this part of the Lower East Side was consid ered by many to be a slum. Officials condemned blocks and blocks of buildings before razing them, which displaced thousands of people, including many Puerto Ricans. Despite promises to rebuild, some of the razed sites sat dormant for decades. The nearby Essex Crossing megadevelopment, which broke ground in 2015, rose from land that was cleared in 1967 and subsequently served as parking lots.

222 EAST BROADWAY

209 EAST BROADWAY

This midblock site is home to the Primitive Christian Church, a denomination founded in the neighborhood in 1953 and based at this site from about that time. In 1973 the church was renovating two adjacent ten ements that it owned as part of an effort to accommodate its growing membership. But the $97,000 project reportedly went awry, and the buildings collapsed, injur ing 10 people, some of whom had to be pulled out from under piles of bricks. A new building went up in its place soon af ter and remains to this day. In a place that can feel as diverse as it did when it was an immigrant haven, the church offers several Masses in Spanish or English.

221 EAST BROADWAY

For years this 6-story, 26-unit prewar walk-up building, which is called the Mayflower based on a sign on its por tico, had a large deli on its ground floor. But things be gan to change when the owner of the 21,300-square-foot building, a limited liability company, sold it to a similar shell company for $11.3 million in 2013, records show.

The buyer appears to have ties to Michael Young Realty of Englewood, New Jersey. The new owner sliced up the deli space into a half-dozen retail berths, which had rents of around $100 per square foot annually—pricey for the area. But trendy businesses still arrived, including Eastwood, a bar with Scotch eggs on its menu. The pandemic seems to have put some tenants permanently out of business, although 7 Elephants, a Thai restaurant, remains open.

The most recent apartment to rent there, meanwhile, was a two-bedroom in April, last listed at $3,100 a month.

225 EAST BROADWAY

The condo from Optimum Asset Management that’s near ing completion on this site includes an art deco building that was once the Bialystoker nursing home, which closed in 2011 because of financial struggles after 80 years of operation. The city made it a protected landmark in 2013. Bialystok, a province in Poland, sent many migrants to the neighborhood; the fieldstone-fronted Bialystoker Syna gogue, a former Methodist church on nearby Willett Street, is another vestige. At 222 East Broadway, a green-paneled 1950s office building to the north of the nursing home was razed. The third lot, to the south, once contained the Dora Cohen Memorial Park. Residents will be able to relax there once a planned green space is finished.

259 EAST BROADWAY

This 6-story beaux-arts building appears to be owned by the Malkin family, which controls the Em pire State Building. A shell company with the same Midtown address as Malkin Properties purchased the 12,000-square-foot walk-up for $3.5 million from Shih Equities in 2013, records show. At the time its retail spaces contained takeout joints and DVD stores. Now, after a major renovation, a single tenant occupies the ground floor. Ernesto’s (as in Hemingway) is a Spanish restaurant serving tapasstyle dishes that opened just before the pandemic to strong reviews. Its walls, like some of the 15 upstairs apartments, are lined with exposed brick.

Around the turn of the last century, Jewish immigrants from Eastern Europe came to the Lower East Side in droves and built or converted many structures into synagogues, not all of which survived. Young Israel, an Orthodox congregation, was founded in 1912 at 205 East Broadway, a brownstone building that’s still there, before moving in 1929 to the larger No. 229, according to its official history. A relocation next door to No. 225 happened in the 1950s. But in later years the congregation appears to have had money problems, and the city foreclosed on Nos. 225 and 229 in 1985, records show. The side-by-side buildings were demolished a decade ago, and no new building permits are on file. Young Israel, which now has synagogues across the country, continues to meet at various sites in its original neighborhood.

BUCK ENNIS, GOOGLE MAPS

Prop-tech takes off in New York City

Technology designed for use in the real estate industry—known as prop-tech—is catching on, particularly in global real estate capitals such as New York City. e global prop-tech market is expected to grow from $18.2 billion this year to $86.5 billion in 2032, according to the market research rm FMI. In hot demand are technologies designed to create a better experience for tenants or to help landlords with investments or property management.

“Over time, prop-tech has become a global phenomenon comprising a broad array of technologies that drive innovation in the real estate market,” says Morris F. DeFeo, Jr., a partner and chair of the corporate department in the law rm Herrick.

Prop-tech technologies are improving operational e ciencies and data analytics, reducing expenses and enhancing the leasing and ownership experience for customers, DeFeo says, as well as facilitating the sale, leasing and nancing of real estate. ey also are improving the ability of owners, operators and nancing sources to extract and optimize value from real estate, he says.

DeFeo recently shared his insights with Crain’s Content Studio on how the prop-tech boom is a ecting the New York City real estate market.

DEFEO: Despite its apparent conventionality, the real estate market has evolved signi cantly and at an increasingly rapid pace. The industry has become more institutionalized, with enormous in ows of capital, resulting in a closer convergence of the industry and capital markets, particularly private equity. Covid, in ationary pressures and rapid technological changes have been additional catalysts for consolidation and differentiation in the industry and, consequently, a vastly more competitive real estate market.

expense side of the ledger. This includes solutions that are designed to identify and eliminate or streamline the numerous inef ciencies found in real estate, such as processes in project management, development, construction, maintenance and tenant services.

and governance technology companies that focus on real estate. Investors are anticipating that owners of real estate will need to make signi cant capital expenditures to reduce their carbon footprint and reduce energy costs.

the full range of prop-tech solutions available and under development as part of their strategy to strengthen their competitive position. No two REITs are the same, so the challenges they face and the opportunities presented will call for different solutions.

CRAIN’S: When did prop-tech take hold in New York City?

MORRIS DEFEO: The real estate industry is not the rst sector one thinks of when envisioning cutting-edge technology and innovation. In the past 20-plus years, however, participants in the New York real estate market have embraced various technology solutions that are designed to improve their overall value proposition and thereby create competitive advantages. New York is the world’s preeminent real estate market in virtually every segment of the industry. It is also the most competitive.

The dramatic increase in investment capital directed at the industry has accelerated these trends, as investors seek out real estate market participants that stand out from the crowd. Numerous prop-tech companies are active in the New York real estate market, such as Common Living, NeueHouse, EasyKnock, Latch and Realm.

CRAIN’S: How are technology solutions coming into play as a competitive factor?

In response, real estate owners, developers, operators, nancing sources and other industry participants are looking to technology as a means to reduce costs, improve operating

There is also an intense focus, however, on technologies that are designed to target opportunities to grow revenue and market share. These include, for example, solutions that help market participants gather and analyze data to identify market trends, enhance the experience of tenants and other users of real estate, and target potential marketing opportunities and acquisition candidates.

Investors are anticipating that owners of real estate will need to make signi cant capital expenditures to reduce their carbon footprint and reduce energy costs.

ef ciencies and pro tability, improve visibility into the needs and preferences of owners and tenants and identify potential growth opportunities, including potential acquisition targets. In addition, landlords and developers can use the proptech tools available to them to create more desirable spaces and creative environments with the balance in hybrid work environments that we have seen after Covid. Prop-tech can now be seen more fairly as a competitive necessity and not a luxury.

CRAIN’S: What new tech developments are most signi cant for this sector?

DEFEO: Unsurprisingly, much of the focus has been on technology targeting the

Trends that we see emerging include closer collaboration and integration between real estate businesses and tech companies in the form of joint ventures, consortia and other similar relationships, as well as a potential increase in business combinations between prop-tech entities and businesses focused on real estate ownership, construction, management and development.

In addition, as has been widely reported, nearly 40% of the world’s carbon dioxide omissions come from real estate both as a result of building operations and construction. Private equity, venture capital and other major sources of funding continue to raise and invest an enormous amount of capital targeting relating to environmental, social

CRAIN’S: How can real estate investment trusts position themselves for success in this environment?

DEFEO: Like all real estate market participants, REITs should seek out and assess

An increasingly dynamic and differentiated market calls for a more innovative and proactive approach to improving pro tability and seeking out opportunities for growth. Proptech solutions can and should be one weapon in that arsenal.

MORRIS F. DEFEO, JR. Partner and Chair of Herrick’s Corporate Department

Herrick lawyers bring a number of benefits to the deal table, including sophisticated legal advice, exceptional partner involvement and a relentless focus on efficiency.

Attorney

Herrick, Feinstein LLP

MORRIS F. DEFEO,

Chair, Corporate Department

Mayor’s response to the migrant crisis is inadequate

The migrant crisis in the city would have been a strain on any mayor, no matter how competent or well run the administration may have been. More than 18,600 asylum seekers have arrived since the spring, and at least 14,777 are in city shelters. ese numbers, quite simply, are unprecedented and are pushing the shelter system to its limits.

But the response from Mayor Eric Adams has been middling at best, disastrous at worst. He has complained about the Republican governors sending migrants here and has begun erecting an enormous tent complex on isolated Randall’s Island to house them. e tents are the second attempt Adams has made at temporary shelter—a plan for a tent city in the Orchard Beach parking lot was abandoned after he belatedly listened to critics who pointed out the location was a ood risk.

Randall’s Island isn’t much better. Activists aren’t always right, but again they are pressing Adams to do more and again they have a point.

FINANCE

New York has the existing hotel space to at least take some of the strain o the shelter system and avoid the need for dangerous, substandard tents on an island that exists for recreation, not habitation.

Adams should get aggressive about processing the migrants quickly and nding them rooms in as many vacant hotels as possible, especially those that have been shuttered already. To an extent, Adams has begun to listen; 200 families will be temporarily housed in a Midtown hotel. But this move came only after the outcry against the tents.

ere are other steps Adams should take: e city can immediately get rid of a waiting period that forces homeless people to live in shelters for 90 days before they can apply for city-funded housing assistance.

ing, with President Joe Biden introducing stricter eligibility requirements for Venezuelan asylum seekers. Rather than toughen the border further, the Biden administration should seek a national strategy for immigration so more cities can handle the new in ux, especially those that have struggled with population loss. If New York is bursting at the seams, Cleveland, Detroit and St. Louis are not, and Biden could coordinate with mayors there to take migrants that could, in the long run, help rejuvenate dying neighborhoods in those cities.

ough the in ux is ultimately a federal issue, the Adams administration can be blamed for some of the chaos because it lacks sta and vision. Adams keeps a tight inner

THE ADAMS ADMINISTRATION CAN BE BLAMED FOR LACKING STAFF AND VISION

e Adams administration can hire more workers to help expedite the application process.

In the meantime there should be some short-term federal help com-

circle of political allies, not policy experts, and he is slow to delegate responsibility. Talented sta have departed the city in droves. It is not clear that Adams or his team is ca-

Signature Bank reports record earnings, bypasses crypto winter

BY AARON ELSTEIN

Signature Bank’s stock price dropped by half this year amid concerns over its exposure to the wild world of bitcoin, but Chief Executive Joseph DePaolo insisted last Tuesday that his ship is steady.

Even though crypto customers yanked out $3 billion in deposits, total out ows were only $1.3 billion, thanks to other customers adding to their balances. e bank’s New York–heavy business loan portfolio showed few signs of stress even as interest rates have soared. Signature reported record quarterly earnings, and loan growth continued.

“Now that’s a good quarter,” DePaolo said, a phrase he used four times describing results in a conference call with analysts.

Investors took the cue, and Signature’s stock, the best performer in banking for many years until crypto winter set in, perked up 3% in midday trading to $153 a share.

Analysts noted some concerning trends on the margins. Even with record quarterly earnings of $358 million, total capital declined because of a $2 billion write-down in Signature’s investment portfolio, a consequence of rising bond yields.

e reduction would be reversed if bond yields fell.

Signature traded for as high as $365 a share in January because its

blockchain-based payments platform made it a favorite of the crypto crowd. e bank has 1,439 digital clients, and crypto exchanges have become its biggest depositors, management said, with $12.3 billion in deposits. Two weeks ago Signature unveiled a partnership with Coinbase.

‘Just not worried’

At the same time, the bank is trying to calm excitement around its crypto activities without alienating customers. It attributed strong third-quarter results to “an emphasis on safe, less risky assets.”

Investors have also been concerned about Signature’s New York real estate exposure, but borrowers have shown little stress so far. While the bank boosted provisions for loan losses to $29 million from just $4 million a year, reserves as a percentage of loans were almost at at 0.63%. e bank has $115 billion in total assets.

“We’re just not worried about our commercial real estate portfolio,” Chief Operating O cer Eric Howell said, adding that not a single o ce loan is delinquent. “We’re doing business with the right people.”

■

pable of e ectively governing the city in the long term. His rst year in o ce, at least, has done nothing to assuage critics.

At some point this crisis will pass. But the pace of housing construction in the city has slowed, and Adams has mostly abandoned creative solutions to housing shortages, such as converting old hotels into apartments for the working class and poor. ere is no plan to build on city-owned land or to revive single-room-occupancy units, which could take homeless people o the streets. ere is no plan, tragically, for much of anything.

Quick takes

● Can Lee Zeldin get within 10 points of Gov. Kathy Hochul? If he does, it will have been the closest gubernatorial election in 25 years or since Republican George Pataki unseated Mario Cuomo, the threeterm incumbent.

● Speaking of Cuomos, the disgraced Andrew has talked about starting a political action committee and launching a podcast. He should walk away from public life. He’s done enough damage. ■

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

Goldman Sachs demotes consumer lending division

BY SHELBY ROSENBERG

EVEN THOUGH THEY’RE worlds apart, Goldman Sachs’ consumer lending division now shares something in common with Pluto: Both have been demoted.

In its third-quarter earnings report last Tuesday, Goldman Sachs announced a major restructuring that will all but make Marcus, its consumer division, disappear. e rm will wrap Marcus into a new division called Platform Solutions.

e new sector will comprise transaction banking in one leg and consumer partnerships, such as a card deal with Apple, in another.

CEO David Solomon acknowledged that the restructuring of its consumer banking business represents a toning down of the lofty aspirations the bank touted for the division when it launched in 2016. He said the focus would be on maximizing pretax pro tability.

To do that, Goldman will move away from seeking to acquire consumers on a mass scale and instead focus on existing deposit customers and consumers who work at companies with which Goldman already has a relationship.

Solomon said the consumer division doesn’t make money, making

further investment a luxury Goldman’s shareholders have little patience for when the stock market is having a down year.

“Deposits are hugely valuable,” he said, so even though the rm is pulling back on how it gathers them, Goldman still believes “what we’re doing will deliver accretive returns for the rm.”

“We’re better to play to our strengths,” he acknowledged.

Evercore ISI analyst Glenn Schorr said Goldman was making the right move.

BLOOMBERG

SOLOMON

ROSS BARKAN

BLOOMBERG

BUCK ENNIS

MANUEL CASTRO, commissioner of the Mayor’s Of ce of Immigrant Affairs (second from left), greets a migrant exiting a bus from Texas at the Port Authority on Aug. 30.

With health-benefit costs headed for a 10% surge next year, employers are looking to get creative

stakeholders said they were bracing for higher costs.

The collision of inflation and increasing health care uti lization will drive health-benefit costs up roughly 10% next year for employ ers and insurers globally and up 6.5% across North America, accord ing to a new survey conducted by Willis Towers Watson.

The global increase outpaces both this year’s 8.8% cost growth rate and last year’s 8.2% increase, WTW found.

The human resources and actu arial consulting giant’s projection of a 6.5% increase for North Ameri ca would actually mark a slower rate of growth than that of the past two years. Across the continent, the cost of health care benefits rose 9.4% this year and 9.1% last year.

WTW’s findings suggest even steeper cost increases than the 5.6% growth that Mercer, another consulting firm, projected in Au gust. Mercer’s projection is based on a sur vey of nearly 900 employers across the United States, while WTW reached its figure by survey ing health insurers.

No matter the exact growth rate,

Leslie Moran, senior vice presi dent of the New York Health Plan Association, said high hospital and prescription drug prices remain the key cost drivers for insurance carri ers across the state, while health care utilization is expected to con tinue rebounding for non-Covid ser vices.

“Those show no signs of moder ating,” she said.

BY MAYA KAUFMAN ISTOCK

That means self-insured employ ers, which use their own funds to pay claims on behalf of their em ployees instead of purchasing a group health plan for them, will also feel the squeeze.

“We’re expecting pretty tough in creases,” said James Gelfand, presi dent of the ERISA Industry Com mittee, a national trade group representing self-insured employ ers.

A need for innovation

According to the WTW survey, 74% of insurers worldwide said the leading driver of medical costs was overuse of care, due to health care professionals recommending too many services or overprescribing

medications. Half of insurers iden tified underuse of preventive care as a significant cost driver.

Eric McMurray, global head of health and benefits for WTW, said next year’s steep cost growth would force employers and insurers to think differently about health bene fits.

“Old solutions will not work,” McMurray said in a statement. “Cost shifting is not an option. There’s a critical need for innova

tion, strategy and new solutions to have any substantive impact. Those that don’t lead will fall behind in their ability to manage cost and re tain key talent.”

To soften the blow, Gelfand said, self-insured employers are turning to add-on benefits that require an upfront investment but may mod erate costs over the year—histori cally a hard sell for human resourc es departments to make to the C suite. That might be a care-man

agement solution that can keep employees out of the hospital by making sure they are taking their medications or, if they have diabe tes, for example, that they are checking their insulin.

Cost-cutting measures

Employers may also resort to ex cluding certain high-priced hospi tals and health systems from cover age, taking advantage of data that is newly public under a federal price-transparency law. That was what the 32BJ Health Fund, the in surance plan of Local 32BJ of the Ser vice Employees International Union, did last year with New York-Presbyterian.

“You will see networks tightening in terms of inclusion of those outli er hospitals that are charging too much and, to a lesser degree, other sites of care,” Gelfand said, adding that drug formularies may also be come more restrictive to temper the cost growth.

WTW was formed in 2016 by the merger of Willis Group and Towers Watson. The company is head quartered in London, and its U.S. division is based in Arlington, Vir ginia. ■

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A competitive contest for governor should get voters answers to the tough questions

It’s unusual and refreshing to witness a governor’s race in New York where either candidate has a chance of winning. Recent polls show Rep. Lee Zeldin, a Republican, with a margin as small as four points behind the incumbent, Gov. Kathy Hochul, a Democrat.

e decline of the Republican Party as a contestant in statewide races has disenfranchised many voters and has allowed some runaway Democratic nominees to avoid tough questions.

e unfortunate aspect of the Hochul-Zeldin contest, however, is that Zeldin is so closely aligned with former President Donald J. Trump. In Congress, Zeldin voted to decertify the 2020 election. e Long Island Republican also supported the Supreme Court’s decision to overturn Roe v. Wade, putting him out of step with most New Yorkers and a wide majority of Americans.

Republican candidates to approach the governor’s mansion in recent memory.

For the most part, Hochul has responsibly led New York since she took over from former Gov. Andrew M. Cuomo in August 2021, with a few exceptions. She cynically inserted a last-minute, $1.4 billion deal for a new stadium for her hometown Bu alo Bills during state budget negotiations. And she has had to defend a decision to award a $637 million Covid test kit contract to a major campaign contributor.

ose actions raise valid concerns. Also concerning is the governor’s failure to spell out a vision for what she wants to bring to a rst full term.

CRAIN’S HAS A LIST OF MUSTDO ITEMS FOR NEW YORK’S NEXT GOVERNOR

Nothing is impossible in today’s polarized political climate, but Zeldin is one of the more extreme

OP-ED

Here is our list of must-do items, no matter who wins on Nov. 8.

● Put forward a plan to spur

needed new housing in the suburbs and the city, one that improves on the now-expired 421-a.

● Find a way to help tenants who are facing crushing city rents.

● Fix the funding of the Metropolitan Transportation Authority, which faces enormous budget gaps as federal aid dries

up and ridership remains soft.

● Continue to amend the bail reforms of 2019, so that they protect public safety but don’t penalize people simply for being poor.

And a note to our readers: Early voting begins Oct. 29, and in person voting will take place Nov. 8. Don’t forget to take part. ■

Satellite and remote learning systems can help build a diverse tech workforce

BY PLINIO AYALA

More than 82,000 tech roles were available in the New York metropolitan area during the rst quarter of this year. With nearly half of these job postings not specifying a minimum level of education and 45% not requiring prior tech experience, high-quality tech careers might be one of the most promising economic mobility strategies for many New Yorkers. Yet we’re leaving talent and opportunity on the table.

Extensive technology education can be hard to get outside of costly higher education and formal technical study programs. Who gets that training is another issue. Research shows that inclusive teams make better decisions up to 87% of the time, and diverse teams produce a minimum of 19% more revenue. Yet a recent analysis of the city’s tech sector shows underrepresentation of Hispanic and Black populations and women.

While we can blame Covid-19, which continues to exacerbate unemployment—especially among working-age Blacks—and low wages for the problem in the city, the continued burden of student debt, tired curriculums and lack of access to quality tech training all play a role. So where can we step in and channel this untapped passion, talent and curiosity into transformative careers—while building a more diverse workforce and stimulating the U.S. economy?

Let’s use satellite learning and job-training programs that help communities access tuition-free tech education from a locally accessible community center. It’s a proposal I’ve begun implementing to serve all ve boroughs from our two Per Scholas campuses, in the Bronx and Brooklyn. e results are encouraging and can serve as a blueprint to expand nationally.

rough a satellite model, students can overcome socioeconomic limitations and commuting chal-

lenges. e opening of a satellite on Staten Island this year eliminated a two-hour commute to one of the organization’s main campuses in the Bronx while it also ful lled the needs of local organizations and businesses seeking diverse and well-trained tech talent.

Tool for policymakers

e new model, which launched in earnest in mid-2021 with four satellite facilities, can serve as an important tool for policymakers, funders, workforce program leaders and others nationally to leverage one another’s skills across tech sectors and increase their impact and growth.

e case to focus those e orts on tech training is strong: e industry has been one of the bright spots in workforce development, given the relative accessibility to thriving wage jobs and career pathways for individuals who do not possess a college degree. Skills training, however, is absolutely necessary.

Tuition-free training that equips prospects with in-demand technical and professional skills, such as information technology support programs, software engineering, cybersecurity and Amazon Web Services courses, can move the dial. ese skills will provide individuals with long-term careers.

Looking beyond the “usual suspects” of major colleges and institutions for diverse tech employees is a rising trend. Companies need to rethink where they are looking for diverse talent and expand their searches to nontraditional learning and training environments. Diverse teams create more diverse products, leading to a stronger return on investment.

It’s the right thing to do for the welfare of our communities, our companies and our country. ■

Plinio Ayala is CEO of Per Scholas, a nonpro t that provides tuitionfree professional and technology training.

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HOCHUL

To turn around the city’s homelessness crisis, the mayor needs to embrace affordable housing

BY JACQUELYN SIMONE

As the city continues to flail under the crushing weight of its housing and homeless ness crisis, the recently re leased mayor’s management re port tells us two important things about Mayor Eric Adams.

The first is a good thing: He has taken some positive steps toward providing more meaningful hous ing metrics in the report—in con trast to the previous mayor’s frus trating reliance on obfuscation and spin. But what these metrics show brings us to the second point: Adams seems to have no in tention of actually addressing mass homelessness.

permanent housing and increase the housing capital budget to $4 bil lion per year.

But since being elected, Adams has paid only lip service to the city’s immediate and desperate need for vastly more affordable housing, dedicating far less funding for housing than promised.

Moving the goal posts

According to the report, the city financed only 16,042 affordable housing units in fiscal 2022, down 45% from 29,408 the year prior. Only 9,625 of these housing units were new construction, with the rest being preservation of existing housing.

units. To put these numbers in perspective, the same re port notes that 45,563 people in 26,463 households slept in Department of Homeless Services shelters on an aver age night last year. All of this has been exacerbated in re cent months by the large number of asylum seekers coming to the city.

The city’s homelessness crisis is at its core a housing crisis—a no tion embraced by Adams himself during his mayoral campaign last year, during which he promised to move homeless New Yorkers into

OP-ED

Rather than acknowledging that this level of produc tion fails to move us toward the goal of reducing homeless ness, the mayor moved the goal posts: The annual target for housing production was lowered from 25,000 to 18,000 units.

Just as troubling, the subset of housing started specifically for homeless households dropped by 24% last fiscal year, to only 2,170

While the mayor touted an increase in the number of homeless households that moved into affordable hous ing financed by the city, that figure was a mere 2,203 households for the entire year. The number of unique individuals in the DHS shel ter system at some point over the course of a year consis tently exceeds 100,000.

The impact of the mayor’s failure to create housing options for home less New Yorkers is further evi denced by another troubling metric in the report: The average length of stay in DHS shelters has risen to alltime highs, with single adults spending an average of 509 days in shelters, families with children spending 534 days, and adult fami lies spending a staggering 855 days.

This comes at a massive human and financial cost; DHS spends an aver age of $186 per family each day they sleep in a shelter.

Heed the numbers

Adams has a unique opportunity to dramatically improve the city for all who live, work and travel here.

He must commit to producing at least 6,000 apartments per year for homeless households and 6,000

apartments per year for households with extremely low incomes.

Doing so would cement his lega cy as the mayor who finally turned around the city’s homelessness cri sis, if he would just heed his own numbers and do what he promised to do: embrace housing as the an swer.

■

Jacquelyn Simone is policy director at the Coalition for the Homeless.

Targeted approaches to universal pre-K and other social programs are based on old, bad politics

BY JOSH WALLACK AND EMMY LISS

As two leaders of former May or Bill de Blasio’s Pre-K for All program, we applaud Gov. Kathy Hochul’s and Mayor Eric Adams’ commitments to early care and education.

But by linking these investments to an old approach of “targeting” them to only those judged to need them the most, their implementa tion will get bogged down in costly red tape, and we will undercut im portant progress that we made on early care and education by build ing one high-quality system for all New Yorkers.

system sorts families into the de serving and the undeserving through onerous, intrusive and stigmatizing rules—signaling to many voters that this program is meant for “others.”

A step forward

Families must meet punishingly specific rules: They must be low-in come, but if they make too little, they don’t qualify; they must pro vide multiple pay stubs, but if too much time lapses, they must start the collection process over.

Most contradictory of all: They must have a job to qualify but have to wait up to 30 days to receive care—putting the very job they have at risk. The re sult is that families don’t get what they need and services go unused, despite the large number of families that should qualify.

were serving close to 70,000 4-year-olds, and we were fill ing seats for 3-year-olds as fast as we could create them.

What’s more, our leaders should not follow the old ar gument that a system that ser ves everyone cannot be of high quality. This represents a false choice: Universal pro grams give decision-makers and voters the confidence to invest in the systems and re sources that build quality.

In the city, thanks to the ef forts of the hundreds of ex pert early childhood educa tors and social workers that visited thousands of class rooms several times each year, we saw pre-K program quality on national measures improve even as we expanded.

Targeted approaches to social programs are based on old, bad politics. Our federal system of child care is an example: Because it was a product of the backward race and gender politics of welfare reform in the 1980s and ’90s, the

Pre-K for All represented a step forward from this failed mod el. Families chose their program with an easy application, registered and showed up; all they needed was proof that they lived in the five boroughs. Before the pandemic we

Finally, our economic recovery depends upon a robust child care system for families across the in come spectrum. During the pan demic many women with children left the workforce for lack of child care, erasing decades of progress.

Universal care can help bring them back; Washington, D.C.’s universal pre-K program drove a 10% increase in maternal work

force participation.

Common purpose

Our city must not return to a failed approach that separates children into different classrooms based on their families’ circum stances and makes this one of our children’s first, formative experi ences.

The best way to foster a sense of common purpose, understanding

and hope in our children is to build one free, excellent system of early care and education for all. ■

Josh Wallack and Emmy Liss partner with local and state governments to create universal pre-K programs. They were deputy chancellor and chief operating officer, respectively, for the Division of Early Education at the city Department of Education.

ADAMS HAS PAID ONLY LIP SerVIce TO THE NeeD FOR VASTLY MOre HOUSING

BUCK ENNIS VIVVI

How Jocelynne Rainey keeps nonprofits alert to community needs

INTERVIEW BY BRIAN PASCUS

As president and CEO of the Brooklyn Community Foundation, Jocelynne Rainey leads an organization that is the first public foundation dedicated to supporting Brooklyn’s charitable community. Since its start in 2009, the foundation has provided $75 million in grants to nonprofits throughout the borough.

Rainey has deep ties to Brooklyn. She lives in Bedford-Stuyvesant and worked for eight years at the Brooklyn Navy Yard Development Corp., where she attained the role of chief administrative officer and executive vice president. Rainey was instrumental in turning the derelict Navy Yard into a neighborhood jobs hub.

The former human resources executive sat down with Crain’s to talk about her career and what she’s learned about people, communities and mission-driven work.

How did you come to your position as CEO of the Brooklyn Com munity Foundation?

I started my career in nonprofits, and I’ve been working in the nonprofit industry for most of my career, with an eight-year stint in the for-profit world. At some point I realized I missed doing nonprofit or mission-driven work, and I found that my personal and professional passions had to match. The work I was doing in the for-profit sector was, how do I use my human resources expertise to level the playing field for people who look like me? I wanted to do it in a more meaningful way.

takeaway for business professionals

The Brooklyn Community Foundation supports local nonprofits, an essential part of the city’s economy. City nonprofits generated nearly $78 billion in economic activity last year and employ almost 20% of the workforce across the five boroughs.

I was at the Brooklyn Navy Yard for eight years, and Getting Out and Staying Out for two years, when this job at the Brooklyn Community Foundation became available. It was the intersection of all the things I care about most— mainly philanthropy, which I believe can be done regardless of your social or economic place in this world.

Could you tell us about the importance of the Brooklyn Community Foundation? We have gone to a completely participatory grant-making model. It’s one of the things I’m hugely proud of. During Covid and the Black Lives Matter movement, the foundation was able to galvanize donors to give $6 million, which we immediately gave to our nonprofits. That was huge. There weren’t a lot of obstacles or questions on an application, and we were able to get that money in and get the money out. It helped nonprofits keep their doors open.

The other thing we’re doing is a listening tour across all of Brooklyn and really trying to understand what is going on with communities—what do communities need, what is happening in the communities, and who is doing the work?—so we can be sure we’re supporting the right nonprofits.

What’s the biggest misconception New Yorkers have about the nonprofit sector?

I think that nonprofits need a lot more support than New Yorkers understand. Even if nonprofits are funded by the city and other foundations, there’s so much red tape and difficulty in getting to that funding. [There is a lack of] understanding that nonprofits need support to do the work they do, because the work they do is really the heart of New York City.

and that goes across all nonprofits, whether cultural institutions, advocacy organizations or those that give direct services. They’re the ones allowing mothers to work because they have evening babysitting or allowing people to [stay] in place because of housing insecurity or feeding young people due to food insecurity. They’re helping everyday New Yorkers thrive.

How did the Brooklyn Navy Yard become what it is? What was the secret to that project’s revival?

I think the biggest secret is we didn’t just talk the talk; we walked the walk. I worked under the leadership of Andrew Kimball and David Ehrenberg, and I think they were both visionary leaders.

When I got to the Navy Yard [in 2014], there were 3,000 people coming to work every day; when I left [in 2020], there were 10,000 people coming to work every day. That had to do with two

businesses that represented Brooklyn, that represented the community, and businesses that had the ability to hire people from the community.

What’s the key to being a successful chief executive?

I think the key is courage—the courage to be able to hold people accountable but also hold yourself accountable. The courage to know what you don’t know and the courage to bring your full self to your role every day. And the courage to surround yourself with people who are experts or smarter than you or will help you realize your vision.

How do you define power?

Power to me is about creating equity for all. The most powerful people know how to share power and lift up everyone else. The more powerful people are, the more powerfully they can contribute to communities. It’s true that the

DOSSIER

NUMBER OF EMPLOYEES 19. “A small team doing a lot of work,” Rainey said.

ON HER RÉSUMÉ Director of human resources, Independent Living Associ ation (1991–2004); regional human resources manager, Boar’s Head Provi sions (2004–2007); director of human resources, J.A.V. Food Corp. (2007–2011); senior vice president, chief ad ministrative officer and executive vice president, Brooklyn Navy Yard (2011–2020); chief executive officer, Getting Out and Staying Out (2020–2021); president and CEO, Brooklyn Communi ty Foundation (2021–present)

BORN Richmond, Virginia

RESIDES Bedford-Stuyvesant, Brooklyn

EDUCATION Bachelor’s in sociology, Southern Connecticut State University; master’s in administration, Metropoli tan College of New York; certification in nonprofit executive leadership, Columbia Business School; doctor of education in executive leadership, St. John Fisher University,

BREAKING THE MOLD Rainey helped start the Brooklyn Navy Yard Employment Center, which implemented a new workforce development model. The center moved away from a social ser vices philosophy to allow people to try jobs with some of the more than 500 businesses in the Navy Yard.

organizations that are most successful allow a diversity of thought, and that results in the best outcomes. There’s power in sharing power.

Where is your favorite place to connect with people?

Great question. I will say my favorite place is going for walks. I love Brooklyn. I love to be outdoors. There’s something about not having a ceiling or a wall that allows people to really connect.

What do you do for fun?

I’m an empty nester. My children are done. They were my whole life outside of my work for a long time, so now what I’d like to do for fun is I like to spend time with my husband and friends, and I love to cook. When I’m cooking for someone, it’s how I show love. I like to have people enjoying my food while we’re enjoying good wine. I feel like I’m giving while I’m getting. ■

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RICK GROPPER Camber Property Group

INTERVIEW BY NATALIE SACHMECHI

As the city grapples with a housing crisis, the future of affordability has come into question. Although some developers have taken a step back from build ing ground-up rental projects, others like Rick Gropper, principal of Camber Property Group, are continuing to invest in public housing and affordable developments. Since it was founded in 2016, Camber has built, bought and preserved about 7,000 units of mostly affordable hous ing primarily in New York City, and has several ground-up projects in the pipeline. But Affordable New York, a popular tax-abatement program known as 421-a that incentivized developers to build affordable housing, expired in June. Without it, Gropper says, the economics make it tough to keep building rental units in the city.

Why is your firm still committed to affordable housing? From a financial perspective, we have investors who are mission-oriented and are interested in providing a social good, providing housing that wouldn’t otherwise be available to people on the market because the rents are discounted or it’s Section 8.

What programs are you using, now that 421-a is gone, to continue creating and preserving affordable housing units?

For now we’re using tax abatements like Article 11 and 420-C as well as city subsidies and tax-exempt bonds. We also buy and preserve affordable housing under Section 8. We’ve bought market-rate properties and converted them to affordable housing using a tax abatement. Without 421-a, it’s very difficult to make the economics work for constructing new market-rate housing without a tax-abatement. The city’s tax system makes it really difficult, and you can end up paying 30% of your gross income to real estate taxes. The rents might be high, but they’re not high enough to justify the fact that you’re taking 30% off the top to pay your real estate taxes. It’s not worth it for the investment you have to put into a brand new building. Without 421-a, the new construction rental market has really slowed down to nothing.

REAL ESTATE

DOSSIER

WHO HE IS Principal, Camber Property Group AGE 40

GREW UP Ridgewood, New Jersey

RESIDES Murray Hill

EDUCATION Bachelor’s in sociology, Connecticut College; master’s in real estate development, Columbia University

ATHLETIC NATURE “I’ve done the NYC Marathon three times in a wheelchair,” he said. “But I used to be a semi-professional ski racer.”

TV STAR Gropper appeared on MTV’s in a Wheelchair

CRAIN’S MVP He was a 40 Under 40 honoree in 2021.

Why are landlords hesitant to offer Section 8 housing?

There are certain connotations about that type of housing. But I think it’s changed in the last 10 years— investors now realize the value of it.

During the pandemic, many tenants were able to pay rent because the U.S. Department of Housing and Urban Development will cover it if a tenant loses his or her job. Investors saw the value in that security.

But not everyone is accustomed to doing Section 8; it has a lot of regulations.

Do you anticipate the state replacing 421-a with another program, or do you think it’s gone for good?

Something has to be done in order to continue building rental housing in New York City. It’s really important to build all types of housing, and I don’t

think housing leads to gentrification. I think there’s an opportunity to create a new program that provides an additional level of affordable housing that also works for developers. If that means requiring 30% of units at 80% of the area median income and making that work, I think there’s a conversation that can be had to revive the program.

What have you been working on recently?

The project we closed on most recently is with the Bowery Residents’ Commission, one of the best operators of homeless shelters in the city. We’re building a 150,000-square-foot building that has two components: one is transitional housing with 100 beds, and the other is a 147-unit permanent affordable housing component through city subsidies. It’s not Section 8, but there’s an operating subsidy from the city for the people who will be living in the building.

Your company recently made headlines when a building it owns in the Bronx caught fire, killing 17 people. What is Camber doing to make sure you’re keeping tenants in your properties

The fire was beyond tragic, and I think one thing that we did was jump in and do everything we could to respond to our residents. We have spent more than $2 million on hotel rooms, rent waivers, arrears forgiveness and worked with our partners in the city and state to help anyone move into other buildings that we or other affordable housing developers own.

What did you learn from the experience?

As a result of this fire, we have been working on a program for our portfolio that really focuses on education and training on fire safety systems for our property managers, for our team and for our residents. Everyone learned from this horrific event. I think the biggest takeaway is something that we started the company with, which is that the people who live in our buildings are paramount, and we do everything we can to assure their safety and security. ■

South Bronx to get new 15-story homeless shelter as migrant crisis continues to put strain on system

BY EDDIE SMALL

Anew homeless shelter is be ing planned in the South Bronx as the surge of asylum seekers arriving in the city puts ex treme pressure on the shelter sys tem.

The project from developer Da vid Sjauw will span about 166,000

and 162 feet tall with 195 residential units. Curtis + Ginsberg is the archi tect of record.

The site is currently home to a 2-story parking facility, city records show.

The new facility will serve as a re placement for an older site current ly serving families with children experiencing homelessness, said Neha Sharma, a spokeswoman for the city’s Depart ment of Social Ser vices.

Sjauw did not re spond to a request for comment by press time.

care, according to DSS.

State of emergency

New York’s shelter system has come under extreme pressure with waves of migrants coming to the city. Mayor Eric Adams recently de clared the situation to be a state of emergency. The shelter system is at capacity, with 61,000 people, and the city will likely spend $1 billion to deal with the crisis in the current fiscal year, he said.

square feet at 1298 Inwood Ave. in the borough’s Mount Eden neigh borhood, according to plans re cently filed with the Department of Buildings. It will stand 15 stories

The nonprofit Department of So cial Services partner HELP will pro vide multiple services at the shelter, including counseling, housing placement assistance and child

His administration has asked af fordable housing developers to help by taking their units out of the city's housing lottery and using them for the homeless instead. The City Council is also trying to change New York’s homeless policy to make more room in shelters for asylum seekers, including ending a rule that requires people to be in shelters for 90 days before becom

ing eligible for the city’s rental voucher program, known as City FHEPS

The 1298 Inwood Ave. shelter is unlikely to provide any immediate

relief for the crisis. Demolition per mits have not been filed for the ad dress yet, and its anticipated open ing date is mid-2025, according to DSS ■

BUCK ENNIS

THE CItY WILL LIKELY SPEND $1 BILLION TO DEAL WITH THE ISSUE THIS FISCAL YEAR

INWOOD AVE.

BUSINESS

Art-market phenom sees forgery unravel

Forgery, fraud and theft in New York’s art market

NEW YORK has been the nation’s art capital since John Singer Sargent immortalized the great and the good of the Gilded Age. A century later, in the 1980s, the art world transformed into the art market as collectors began reaping enormous sums from selling works by the hottest artists. Art remains one of the leastregulated markets around, and this month’s Forum explores how an ambitious young dealer took advantage of its blind spots to create a massive Ponzi scheme.

It’s not just art that’s hot. Collectibles of all kinds are fetching record sums, and so we also meet a diamond dealer who is ready to give the people what they want after they’ve perhaps grown tired of speculating on crypto and NFTs.

Meanwhile, reporter Caroline Spivack takes a look at one of the art world’s third rails: how New York museums

displaying art that has passed through Nazi hands must now acknowledge that history in their galleries.

—Aaron Elstein, senior reporter

INSIDE

A West Village-raised

paints a cautionary tale about

for

assets like ne art

BY AARON ELSTEIN

Some boys grow up wanting to be baseball players or re ghters. Inigo Philbrick wanted to be a world-famous art dealer. Specically, his mother recalled, he aspired to be the next Julien Levy, who introduced New Yorkers to Salvador Dali and Frida Kahlo. Or maybe Pierre Matisse, son of impressionist Henri Matisse.

“Inigo is authentically art world born and bred,” recounted Jane Philbrick, a former lecturer at Parsons School of Design whose husband, Harry, was director of the Aldrich Contemporary Art Museum in Connecticut. eir West Village-raised son was a constant studio companion, attending every exhibition and opening “from literally one week old,” Jane remembered.

At 27 Philbick opened a gallery bearing his name in London’s posh Mayfair district. He dealt in Jean-Michel Basquiat and other hot artists whose works sold for $5 million or more at Christie’s in Midtown and other leading auction houses. He ew in a private jet, wore a $50,000 watch and got engaged to a British reality TV star after breaking up with his Argentinian girlfriend who runs a perfume

studio.

By 2016 the gallery Inigo Philbrick Ltd. was generating $65 million in sales, according to a ling with British regulators, and nearly double that the following year. In 2018 he opened a branch in Miami as clients swooned over the young charmer.

“He is extremely well educated and mannered.” recalled Ferdinand Gros, a Paris gallery owner. “I never felt like he was interested in me for my family or business opportunities.”

Yet Philbrick’s success was a forgery. In July he entered a federal prison in Allenwood, Pennsylvania, after pleading guilty to running an art world Ponzi scheme in which he defrauded customers and lenders out of $86 million. He sold the same painting to multiple buyers without their knowledge, forged sale documents and photoshopped paintings to make it look as if he possessed them. U.S. Attorney Damian Williams called him a “serial swindler” who committed “extensive fraud.”

When it all came crashing down Philbrick, who is

As the FBI steps up its quest to nab art criminals, age-tested advice holds true: Buyer beware

JUDD B. GROSSMAN

CATHERINE K.B. LUCAS

An art market that’s “intertwined with the deeply personal” demands a sensitive approach to government regulation

RANDOLPH J. DEATON IV

GETTY IMAGES

PHILBRICK (right) with an ex-girlfriend

BUSINESS OF ART

35, tried eeing to Vanuatu, an island nation near Australia.

“It seems very clear that he was a keen and talented young man with big dreams,” recalled a sympathetic neighbor, Karen Adams, a 49-year-old retired General Electric oil and gas executive. But Philbrick, she understood, was “manipulated by unscrupulous people in the already corrupt world of art dealing.”

Corruption was endemic in art dealing long before Humphrey Bogart hunted down a fake Maltese falcon. Art is the largest unregulated market in the world after bitcoin, and last year $65 billion worth changed hands. Deals are still based on handshakes and faith that a dealer won’t eece you. After the U.S. Senate published a report showing Russian oligarchs used art to dodge sanctions, the Biden administration is writing regulations to make the market less accommodating for bad actors.

“It’s a market where if you look right, talk right and dress right, you can fool some people a lot of the time,” said Judd Grossman, a Manhattan attorney who rep-

1987, at Sotheby’s on the Upper East Side, when the son of former New York Mets owner Joan Payson auctioned o Irises by Vincent van Gogh. e painting sold for $54 million, even though the stock market had sunk by 22% in a single day a month earlier. It was the third van Gogh to sell for more than $20 million in 1987 alone. e rst sale was nearly twice the previous auction record of $11.9 million, set in 1983 by a medieval manuscript.

e van Gogh transaction a rmed that art was the hottest investment opportunity in town.

“I hope it–everything in the art market–will continue, as the mother of Napoleon used to say, ‘as long as it can last,’” New York dealer David Wildenstein said after the van Gogh sale.

Along the way art became, in the jargon of nancial marketing, an “alternative asset class” that appealed to collectors and investors alike. In 2017 Leonardo da Vinci’s Salvator Mundi sold for $450 million, still the highest sum ever for artwork. In the spring of this year an Andy Warhol silkscreen of Marilyn Monroe sold for $195 million at Christie’s in Midtown, a record for American and 20th-century art.

resents some of Philbrick’s victims.

iago Piwowarczyk, CEO of New York Art Forensics, whose clients include the United Nations and the State Department, said art is unique for the way it makes starry-eyed dreamers out of wealthy buyers who usually are astute bargainers.

“Art is the only place where the more unbelievable the story is,” he said, “the more people believe it.”

Blessed thou art Philbrick’s birth in 1987 coincided with the art world turning into the art market. e transformation occurred on Nov. 12,

An index for top 100 artists compiled by the marketplace Artnet calculated an 8% compound annual growth rate between 2000 and 2018, compared with 3% for the S&P 500. A price database maintained by Artnet grew from 8,300 artists at 18 auction houses in 1988 to 90,000 artists and 632 auction houses in 2012. rough it all New York remained the dominant destination for art sales, with a 45% market share, Deloitte found.

e art world-born-and-bred Philbrick got his start as a docent and gallery attendant at his father’s museum. In 2010 he landed an internship at White Cube, a contemporary art gallery in London run by Jay Jopling, whose clients include Julie Mehretu and Damian Hurst. After a year at White Cube, Philbrick was promoted to director of secondary sales. His ancee’s sister deemed working conditions “in nearly all respects, immoral [and] inappropriate.”

“ e pressure to hit sales targets and slaving absurd o ce hours was comparable to those kept by Wall Street bankers,” she said.

For an ambitious young salesman, contemporary art o ered opportunities. With old masters and impressionists priced out of reach, contemporary art grew from 1% of sales in 1988 to 14% in 2018, according to Artnet’s gures.

Yet as the young Philbrick made his way into this fast-moving market, his personal life was in turmoil. In 2006 his parents divorced after his father had an a air with a secretary and left the younger Philbrick responsible for supporting his family, according to court documents.

“My mother very clearly told 19-year-old Inigo that he was nancially responsible for both her and me,” his sister, Clara, said in a federal sentencing

memorandum that contained statements from family members and friends.

Harry Philbrick denied cutting o his family, though agreed Inigo was given “completely inappropriate emotional and nancial responsibilities.” is, he opined in a court document, rendered his son “unable to discern that he was on an inappropriate path.”

“You will die”

Philbrick’s London gallery opened in 2014, when global art sales reached $68 billion, a record that hasn’t been broken, according to a report from Art Basel and UBS. He sold fractional stakes in artworks to customers who hoped to resell them at a pro t, the way someone would ip a stock or a house. “ is wasn’t a group of collectors that cared about art,” Philbrick’s lawyer, Je rey Lichtman, said in an interview.

A handwritten note by Philbrick’s assistant in Miami discussing a repeat customer asked “How to f— them?” Philbrick did that mostly by selling more than 100% shares in paintings to multiple buyers without telling clients.

His crime spree involved 29 artworks over three years. To help pay for it, Philbrick turned to Athena Art Finance. Park Avenue-based Athena was founded in 2015 by Olivier Sarkozy, half-brother of the former president of France, and backed by private-equity giant Carlyle Group.

Art- nance houses such as Athena grew fast in the past decade, partly because they don’t have to verify customer net worth or sources of funds like banks, which are subject to rigorous “know your customer” laws adopted after 9/11. One dealer told U.S. Senate investigators that she “relies on her gut” when picking and choosing customers.

e nancial system’s blind spot suited Philbrick just ne. “You will die” when you see Athena’s bare-bones nancial-disclosure requests, he said, according to a victim’s lawsuit.

Athena gave Philbrick a $10 million revolving loan in early 2016. Funding secured, Philbrick began living his dream as the next Julien Levy or Pierre Matisse.

He approached London collector Sasha Pesko about teaming up to acquire Basquiat’s Humidity for $18.4 million directly from its owner. Pesko sent $12.2 million for a 66% share, but Philbrick used the money to buy the painting from the auction house Phillips for $12.5 million. He didn’t tell Pesko, nor did he tell him when he sold a 12.5% stake in the painting to a third investor for $2.75 million. Athena raised Philbrick’s credit line by $3.25 million.

He also targeted White Cube Gallery owner Jay Jopling, described by prosecutors as his mentor. e two bought an untitled Christopher Wool painting for $3.5 million, which Philbrick quickly sold.

When Jopling asked for his cut, Philbrick said there were legal hangups and blamed Martin Herrero, an Argentinian nancier related to his girlfriend at the time. For a year Jopling got emails from Herrero explaining why the money hadn’t come.

But Herrero didn’t exist. Philbrick and an assistant had sent the emails.

Philbrick’s Ponzi scheme unraveled when he misjudged the market for a portrait of Pablo Picasso by Rudolf Stingel.

Philbrick sold more than 100% of the work to three parties for more than $15 million in cash and commitments. Unfortunately, the picture sold for only $5.5 million at a May 2019 auction at Christie’s.

Unable to pay his partners, Philbrick defaulted on his Athena loan in October 2019

MANHATTAN ATTORNEY Judd Grossman represents some of Philbrick’s victims.

ART

“THE MORE UNBELIEVABLE A STORY IS, THE MORE PEOPLE BELIEVE IT”

BUCK ENNIS

BASQUIAT’S “Humidity” remains in a Queens warehouse for now.

PHILLIPS

and a week later ed to Vanuatu, where he lived in a boat house with ancee Victoria Baker-Harber, a cast member on the show Made in Chelsea

“He nds joy in the simplest of things,” neighbor Adams said in a letter to the court. “A beautiful tree, a kaleidoscopic sunset, a cheap but exquisite bottle of Sancerre.”

e fugitive’s idyll ended in June 2020, when FBI agents swooped in and arrested Philbrick, leaving behind a ve months pregnant Baker-Harber. An indictment was unsealed a month later, and he spent the next two years at the Metropolitan Detention Center in Brooklyn so he couldn’t ee again. His cellmate, who pleaded guilty to trolling dating websites, said Philbrick kept mostly to himself and avoided con ict, “which can be almost impossible at MDC.” He helped inmates write legal letters and read a biography of Catherine the Great.

“I beg you take courage,” the Russian empress said, according to a letter from Philbrick’s mother to court. “ e brave soul can mend even disaster.”

“I burn”

Two weeks after Philbrick was indicted, the Senate permanent subcommittee on investigations released a 150-page report calling to reform the art market. “Given the intrinsic secrecy of the art industry, it is clear that change is needed,” the report concluded. In response, Congress passed the Anti-Money Laundering Act of 2020. e Treasury Department is drafting regulations that are expected to require auction houses and art- nance rms to know their customers better.

“As we tackle systemic challenges like corporate transparency and other loop-

ART $65B

holes that allow criminals to abuse the U.S. nancial system, we will look at what else might be needed to address money-laundering risks speci c to other industries, including the art industry,” said Scott Rembrandt, deputy assistant Treasury secretary for strategic policy in the O ce of Terrorist Financing and Financial Crimes, in a statement earlier this year.

e Basquiat that Philbrick secretly bought with his partner’s money and then sneakily sold a part of is in a Queens warehouse, according to court papers. Athena was acquired by Yieldstreet, a Midtown rm that works in private-market investments and wouldn’t comment for this article. In November 2021 Philbrick pleaded guilty to one count of wire fraud and was ordered to pay $83 million in restitution. On Sept. 23 business partner Robert Newland pleaded guilty to one count of conspiracy.

At the hearing in which Philbrick entered his guilty plea, U.S. District Judge Sidney Stein asked why he did it.

“For money, your honor,” he replied.

“ at simple?” the judge said.

“ at simple.”

Daniel Tümpel, a client in Germany, lost $22 million and told the judge that Philbrick “knew how enormous the nancial damage would be for us—and yet he did not care.”

It will take years in court to sort out the rightful owners of the paintings Philbrick sold. Grossman, the attorney representing some of the victims, said collectors wishing to demonstrate ownership of art not in their possession can use a UCC-1 form, available on the New York Department of State’s website for a nominal fee.

“It can solve a lot of problems,” he said. “You’d be surprised how few people do it.”

At his sentencing in May, Philbrick attributed his criminal activity to the fact that although his name was on the gallery door, the real owner was Jopling.

“As I tried to x that rst small problem, all I did was like mushroom, create more problems,” he said.

He is paying a dear price. Philbrick has never met his younger daughter because he’s been locked up her entire life. Federal records show that he will be released in May 2026.

“I burn for her to know me,” Philbrick told the judge, “without the separation of prison walls.” ■

Investors boost values for collectibles from diamonds to dresses

Crypto collapse revives fervor for alternative assets

BY AARON ELSTEIN

“He’s your guy

When stocks are high

But beware when they start to descend

It’s then that those louses

Go back to their spouses

Diamonds are a girl’s best friend.”

e wisdom of Marilyn Monroe’s words has been time-tested.

Diamonds, along with ne art and even baseball cards, are ultra-hot investments. Not only are they nice to look at, their performance is supposed to be untethered to the broader market’s ebbs and ows. It doesn’t always work out that way—in 2009 and 2020 art prices correlated closely with falling stocks—but it’s certainly the case that in the past decade, collectibles of all kinds have soared in value.

Monroe’s “naked dress,” worn by Kim Kardashian at the spring Metropolitan Museum of Art gala, sold for $4.8 million in 2016, or 300% more than in 1999. In August a Topps 1952 Mickey Mantle baseball card sold for $12.6 million, a record for sports memorabilia.

For some 20 years, marketers of nancial products have preached the gospel of

investing in “alternative asset classes” that can range from real estate and private equity to art, wine and even sneakers. e frenzy got turbocharged by the rise of cryptocurrency and non-fungible tokens; both sparked great excitement among novice investors. At Sotheby’s 44% of the bidders were new last year and a third of the new buyers at Christie’s were millennials.

If anything, the collapse of bitcoin and NFTs has only intensi ed the fervor for collectibles.

‘The opposite of crypto’

From an o ce near West 47th Street’s diamond district, Cormac Kinney, a former top trader for renowned hedge fund manager Paul Tudor Jones, is amassing diamonds. Earlier this month he launched a marketplace to trade them. He’s gotten backing from senior executives at Wall Street giant BlackRock and secured tens of millions in customer commitments. Over the past 18 months the value of diamonds has risen by 17%.

In uncertain times the value of tangible things becomes more clear, he said.

“ is,” he said, showing eight diamonds worth $60,000, “is the opposite of crypto.” ■

ART MARKET global sales in 2021, the second-largest unregulated market after bitcoin

AMOUNT Philbrick was ordered to pay in restitution

BUCK ENNIS

BUCK ENNIS

CORMAC KINNEY launched a marketplace to trade diamonds.

New York museums must label Nazi-looted art

Experts question the impact of a new law, signed by Gov. Hochul in August, that’s light on details

BY CAROLINE SPIVACK

Anew state law requires New York museums displaying art that has passed through Nazi hands to acknowledge that history in their galleries. But the law is light on details and lacks a method to hold institutions accountable for what information they include and how they share it.

Nazis looted at least 600,000 works of art from Jews during World War II. Some of that art was destroyed, other pieces were put into private collections, and several works eventually made their way to museums. Research e orts since the war have sought, with varying success, to trace and return the artworks to their original owners or descendants.

e new requirement for New York museums seeks to highlight the complex stories behind such works and was signed into law by Gov. Kathy Hochul in August as part of a legislative package to promote education on the Holocaust and to better support surviors.

As written, the law requires museums to “prominently place a placard or other signage” acknowledging works that were seized, forced into sale or otherwise taken by Nazis from 1933 through 1945.

Room for interpretation

e language of the law, which is about a paragraph long, leaves a great deal of room for interpretation. at’s by design, said Long Island state Sen. Anna Kaplan, who wrote the law.

“ e spirit of the bill is to bring awareness,” Kaplan explained. “We’re not trying to make this di cult on museums. at’s why we left it at their discretion, but we hope that they do the right thing.”

Historically, museums have shied away from acknowledging art with murky histories to avoid legal challenges and potential damage to their reputation. e new law lacks an enforcement mechanism and stipulates that museums create the disclosures “to the extent practicable,” potentially allowing institutions to say they’re tight

returned to Rothschild’s widow in 1948 and sold to the Met in 1950.

Andrea Bayer, deputy director of collections and administration at the Met, said the museum has asked the state for clearer guidelines. While the Met waits, she said, it plans to install labels with provenance information on the works.

“We’re committed to this law because we know that these pieces have a history that tells a remarkable story about the 20th century,” Bayer said, “a deeply distressing one, but one in which now we hope these objects have found their nal home.”

nized area, but if you look at antiquities or stolen sacred artworks or objects taken from colonized countries, you don’t yet have that sustained scrutiny.”

Beyond ethics

Stolen art isn’t just a question of ethics but of public nances, Bayer said. Museums with public funding put those dollars toward acquiring works that they may ultimately repatriate, and when institutions receive art as gifts, looted or otherwise,

donors claim tax deductions.

Kaplan described the issue as “de nitely worth looking into” for future regulation.

“You and your constituents are paying for these objects to be in museums through subsidizing tax deductions, through donations to the museums,” ompson said. “We can ask if our co ee is shade grown, if our cotton is Fair Trade. Why can’t we ask if the artworks that we are admiring are also ethically supplied to the museum?” ■

on resources or space.

e Whitney Museum, the Museum of Modern Art and the Guggenheim Museum did not return requests for comment on how they’re approaching the requirement.

e Brooklyn Museum said it was working to have provenance-related information displayed in all galleries and online.

Other institutions said they had embraced the law. Curators at the Metropolitan Museum of Art have selected 53 Nazi-looted works in the museum—identi ed through the museum’s provenance research project—that were restituted to their rightful owners and subsequently donated or purchased by the museum.

Among those items is the 1695 “Gamepiece with a Dead Heron,” by Dutch painter Jan Weenix. Nazis seized the painting, and other works, from Baron Alphonse Mayer Rothschild in 1939. e piece was

Some art historians are skeptical of how much the law truly achieves in advancing provence research when it mostly requires museums to disclose information some may already have publicly available on their websites.

e law has spurred a conversation about the need to raise awareness and repatriate work not just looted by Nazis but pieces taken from regions across the globe during a variety of eras—and contemporary acquisitions.

“If I’m being cynical, the law looks like something that’s passed to make legislators feel like they’re doing something without actually achieving something,” said Erin ompson, associate professor of art crime at the John Jay College of Criminal Justice. “To me, this is a measure that directs yet more attention to a well scruti-

“WE KNOW THESE PIECES HAVE A HISTORY THAT TELLS A REMARKABLE STORY

BUCK ENNIS BUCK ENNIS

“GAMEPIECE with a Dead Heron” by Jan Weenix at the Met will soon get a disclosure based on the new law.

THE METROPOLITAN MUSEUM OF ART

ART AND CULTURAL PROPERTY CRIME, including theft, fraud, forgery, and the looting and traf cking of antiquities, is a global problem. It often involves organized groups of criminals operating both within the U.S. and abroad, and leads to billions of dollars in estimated losses each year.

In 2004 the FBI formed the Art Crime Team, a group of FBI special agents who deploy domestically and internationally to investigate, support and provide investigative expertise to art and cultural property investigations.

BUSINESS OF ART

RANDOLPH J. DEATON IV

The Art Crime program is situated within the FBI’s Criminal Investigative Division and the Transnational Organized Crime threat section at FBI headquarters in Washington D.C. The program provides oversight to all FBI domestic and international matters related to art and cultural property crime. With a dedicated program and a team of agents stationed around the U.S., the FBI is well positioned to combat the art crime threat.

Art forgers and fraudsters employ new technology and more advanced techniques every day to evade detection and defraud victims. In this vein the FBI anticipates art-related crime will continue to be committed via online marketplaces because of the perceived anonymity afforded by the internet. Where vulnerabilities exist in the art world, criminals will be there to exploit them.

As the threat has evolved, so has the FBI’s response to these crimes. To protect victims and enforce violations of federal law affecting the art market, the FBI seeks the cooperation of art market participants, subject matter experts, museums and cultural institutions, other specialists and the public. Combating art and cultural property crime threats requires close coordination with our domestic and international law enforcement partners, prosecutors and related governmental agencies.

The FBI can and will leverage its sophisticated technology and investigative techniques to enhance our operational capacity when attempting to recover stolen works of art, uncover complicated fraud schemes, disrupt looting and illicit

OP-ED

traf cking networks, and bring those responsible for such crimes to justice. Art collectors, investors and institutions should be proactive in protecting themselves from fraud before the purchase of any work of art. Buyers should conduct due diligence regarding the authenticity and history of ownership of the object under consideration, which should include checking the FBI’s National Stolen Art File. Those who think they have been the victim of theft or fraud related to an art transaction should immediately report the incident to law enforcement. ■

HOW TO CLEAN UP THE ART MARKET? NOT WITH MORE REGULATION

ART-MARKET SCANDALS AND LAWSUITS grab headlines. And every time they do, legislators and commentators bemoan the lack of transparency that supposedly enables the art world’s shady actors, and wonder aloud whether the art market needs increased oversight and regulation.

But attributing the art market’s lack of transparency to nefarious motives is an oversimpli cation. And more regulation is not necessarily the answer; indeed, it may be harmful to certain sectors of the market.

JUDD B. GROSSMAN

Of course there are those who are purely investors, seeking only to maximize returns, like in any other business transaction. But for many, art is intertwined with the deeply personal and fundamentally human, wrapped up in marriages and divorces, good times and hard times, inheritance and family legacies, reputation and identity.

And these two sides of the art market are not neatly bifurcated; there is signi cant overlap, and no meaningful way to regulate one and not the other. Increased regulation may come at the cost of discouraging many would-be participants from investing not just their money, but their own personal lives into this unique market.

The fact is powerful tools already exist to prevent many legal problems in the art world. For example, in our busy litigation practice, we deal with a signi cant number of disputes stemming from the absence of a written contract—in some cases parties engage in multimilliondollar deals with nothing in writing at all, or merely a onepage, bare-bones invoice.

CATHERINE K.B. LUCAS

Parties would bene t from using more comprehensive agreements addressing and allocating common risks present in art deals. (For example, the risk that a work might have a title, authenticity or condition problem.)

Parties can also negotiate, and adjust nancial terms, to address their own unique concerns and priorities, such as con dentiality or resale restrictions.

We also litigate disputes that could have been prevented by ling what is known as a Form UCC-1 nancing statement—a simple one-page document permitting lers to make a public record of their interest in an artwork being held by someone else. (For example, when an owner consigns a painting to a gallery.)

Conversely, some problems can be avoided by performing a simple UCC-1

search, to check whether someone else has led a UCC-1 regarding an artwork. These mechanisms, used correctly, can help parties preserve their rights proactively, and can help potential buyers avoid purchasing a work that might be subject to competing claims.

Questionable and even fraudulent business practices can be found in any market, even heavily regulated ones such as securities. And the art market is, of course, no exception.

But rather than increasing regulation—thereby risking alienating a large sector of the market—the art world should encourage more education and awareness about straightforward, already-accessible tools and best practices that can help participants avoid legal snafus before they happen. ■

Judd B. Grossman and Catherine K.B. Lucas are attorneys with Grossman, a Manhattan law rm specializing in art-related matters.

AS ART FRAUD AND THEFT BECOME MORE SOPHISTICATED, SO HAS THE FBI’S RESPONSE, WITH A DEDICATED PROGRAM AND TEAM OF AGENTS

GETTY IMAGES ISTOCK

Randolph J. Deaton IV is a supervisory special agent and FBI art crime program manager.

ART BUST

The FBI’s Art Crime Team

HIDER

Scenes from Crain’s events

Best Places to Work

Power Breakfast

On Sept. 21 Crain’s Editor in Chief Cory Schouten interviewed Mayor Eric Adams in front of a sold-out crowd at the New York Athletic Club.

In attendance at the breakfast were (from left) Eliot Rubenzahl of The New 42, Michael Klein of Urban Strategies and Julio Peterson of The Shubert Organization.

Fast 50

Crain’s celebrated the 50 quickest-growing local companies at its Fast 50 event at Dear Irving on Oct. 12. In attendance were (from left) Joe Brown of DearDoc (No. 5 on the list) and Phil Berdugo of Wellbots (No. 7).

On Sept. 29 Crain’s toasted the Best Places to Work in New York City, announcing the overall company ranking at a lunch event at 583 Park Ave. AdTheorent came in at No. 17 on the overall list.

Empire BlueCross BlueShield took the 77th spot on the overall list of 100 companies.

FOR MORE EVENTS, GO TO CRAINSNEWYORK.COM/EVENTS.

(From left) Darren Phinney, Daniel Polise and Michael Paladini of Penelope Bourbon, No. 2 on the list

PHOTOGRAPHS BY BUCK ENNIS

New York reaches an all-time-low rank in nation for women’s and children’s health outcomes, report nds

BY JACQUELINE NEBER

New York state has reached its lowest rank—21st nationally—when it comes to women’s and children’s health outcomes, according to a new report from the United Health Foundation, insurer United Healthcare’s nonpro t arm. is was the state’s lowest ranking since 2016, when the foundation began conducting America’s Health Rankings annual surveys for women’s and children’s health; that year it ranked 20th.

e report analyzed New York’s publicly available data for more than 100 metrics in 2020 and 2021, including social and economic factors, such as food insecurity and residential segregation; physical environment factors, such as housing problems and climate change; and clinical care outcomes, such as maternal mortality, prenatal care and access to care.

All of these metrics a ect New Yorkers’ overall health, said Dr. Rhonda Randall, United Healthcare’s chief medical o cer.

is marks the rst time New York didn’t make the top 20 in the nation. From 2016 to 2018, New

York came in 19th, and in 2019 the state took the No. 13 position. e United Health Foundation did not rank states in 2020 and 2021 because states experienced pandemic outbreaks at di erent times that affected behaviors and how people received care.

e most notable factor contributing to New York’s ranking dip,

deaths per 100,000 live births in New York. Although this maternal mortality rate is better than that of much of the country, with the state ranking seventh for the metric, there is a widening gap in rates among women of di erent races that is concerning, Randall said.

THERE’S A WIDENING GAP BETWEEN DIFFERENT RACES THAT IS CONCERNING

Randall said, could be the state’s 30% increase in mortality rates for women who are of childbearing age from 2019 to 2020. e 2021 report shows about 91 deaths per 100,000 women in New York annually.

Deaths caused by drugs are becoming a larger factor in mortality rates among women, Randall said. ey have increased from about 8 deaths per 100,000 women in 2016 to about 17 per 100,000 women in 2021, according to the United Health Foundation’s gures. ere are about 18 maternal

According to the state Department of Health, whose latest maternal mortality reports include data from 2018, the three-year rolling average of maternal mortality rates was highest among Black New Yorkers. Black New Yorkers experienced just over 53 deaths per 100,000 women; just under 13 white New York mothers per 100,000 died.

Fresh focus

Combating maternal mortality has been a recent focus of several initiatives as the city’s policymakers reckon with di erent outcomes for mothers of di erent races. City Council Speaker Adrienne Adams has reported that New York is responsible for about 30 of the approximately 700 pregnancy-related

PEOPLE ON THE MOVE

CONSTRUCTION MANAGEMENT

CM&B

Francesco Gambino has joined CM&B as a Senior Project Manager in the rm’s NYC of ce. Gambino brings fteen years of industry experience in pre-construction and project management while working over a broad spectrum of market sectors for several of NYC’s most prominent construction management rms. His industry knowledge and practical experience will support CM&B’s capabilities as the company’s client base and market presence continue to expand in the greater NYC area.

FINANCE

TriState Capital Bank

Kristin Castellanos has joined TriState Capital Bank as senior vice president, fund nance manager of the commercial banking team.

In this role, Castellanos is responsible for developing new businesses locally and nationally. Castellanos comes to TriState Capital from MUFG Investor Services, where she was managing director/alternative investment fund nancing for the past six years. Prior to that, she held multiple director roles for seven years at Deutsche Bank.

HEALTH CARE

Ashley Wharton has a background in technology and healthcare, working brie y with technology before becoming a Registered Nurse and working in both acute and community-based settings. After several years at VNACJ, an opportunity arose to join BAYADA Home Health Care, providing support to the Home Health Practice with a focus on the intersection of clinical, technology, and operations, responsible for continuous process improvement supported by appropriate technology solutions.

deaths that occur in America each year, and that Black women are eight to 12 times more likely to die from pregnancy-related causes than white women.

In August the City Council passed a package of legislation focused on improving outcomes for women’s health, including Introduction 409, sponsored by City Council member Farah Louis, that would require the city Department of Health and Mental Hygiene to post an annual maternal mortality and morbidity report on its website.

Coney Island and Woodhull sites.

18MATERNAL DEATHS per 100,000 live births in New York

New York’s housing crisis is negatively a ecting its rank. e state’s high cost of infant care (it ranks 46th), high rate of residential segregation (it ranks 47th) and high rate of people experiencing homelessness—as well as a high rate of women experiencing mental distress—are other areas of concern identi ed in the report. ese factors can all decrease access to health care.

Introduction 472 in the package requires the department to establish a program to train doulas in birth equity, trauma-informed care and the like, and provide doula services to underserved communities for free.

Among the city’s other initiatives to decrease maternal mortality and morbidity include Brooklyn Borough President Antonio Reynoso’s dedicating all of his $45 million scal 2023 budget to improving care at public hospitals, including the New York City Health + Hospitals/

Despite these challenges, New York has succeeded in some arenas. e rate of teenage women giving birth in New York has dropped by 44% to 10 births among 1,000 women in 2020. HPV vaccination has increased by almost 20% from 2019 to 2020, and nearly 70% of young people ages 13 to 17 are vaccinated against the virus.

e United Health Foundation has conducted health outcomes surveys for decades, with the women’s and children’s health surveys representing the largest data pools. e top three states in the report were Minnesota, Massachusetts and Vermont. ■

RECOGNIZE INDUSTRY ACHIEVERS IN CRAIN’S

NONPROFIT

New York Public Radio

New York Public Radio, home of WNYC and WQXR, announced LaFontaine Oliver as the new President and CEO. A veteran leader in commercial and public radio, he brings to NYC’s agship public radio station 20+ years’ experience of driving local journalism, news/talk radio and non-commercial music, as well as growing revenue and audience, and pursuing innovative programming. Mr. Oliver joins from WYPR in Baltimore, where he serves as President and CEO and is in his second term as NPR Board Chair.

REAL ESTATE Suffolk

Suffolk, one of the nation’s most successful and innovative builders and real estate enterprises, today announced it hired Julie Hewitt as Vice President of Business Development for Suffolk New York to pursue new project opportunities, cultivate client relationships and continue the builder’s rapid expansion in the New York metro market.

Listing opportunities: Debora Stein at dstein@crain.com or submit directly to CRAINSNEWYORK.COM/PEOPLEMOVES

To place your listing, visit www.crainsnewyork.com/people-on-the-move or, for more information, contact Debora Stein at

/ dstein@crain.com

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Notice of Formation of CHARTER VILLAGE PRESERVATION GP, LLC

Arts. of Org. filed with Secy. of State of NY (SSNY) on 09/20/22.

Office location: NY County. Princ. office of LLC: 30 Hudson Yards, 72nd Fl., NY, NY 10001. SSNY designated as agent of LLC upon whom process against it may be served. SSNY shall mail process to Corporation Service Co., 80 State St., Albany, NY 12207.

Purpose: Any lawful activity.

Notice of Qualification of PARFUM FRANCIS KURKDJIAN, LLC

Appl. for Auth. filed with Secy. of State of NY (SSNY) on 08/10/09.

Office location: NY County. LLC formed in Delaware (DE) on 07/20/09. SSNY designated as agent of LLC upon whom process against it may be served. SSNY shall mail process to c/o Corporation Service Co., 80 State St., Albany, NY 12207-2543. DE addr. of LLC: 2711 Centerville Rd., Ste. 400, Wilmington, DE 19808.

Cert. of Form. filed with Secy. of State, DE, John G. Townsend Bldg., 401 Federal St. - Ste. 4, Dover, DE 19901.

Purpose: Any lawful activity.

Contact Suzanne Janik at 313-446-0455 or email: sjanik@crain.com

PUBLIC & LEGAL NOTICES

Notice of Formation of Construction Bae LLC. Arts. of Org. filed with the SSNY on 06/28/2022. Office: Brooklyn County. United States Corporation Agents, Inc. designated as agent of the LLC upon whom process against it may be served. SSNY shall mail copy of process to United States Corporation Agents, Inc. at 7014 13TH Avenue, Suite 202, Brooklyn, NY 11228. The principal address of the LLC is 557 Grand Concourse, Suite 6046, Bronx, NY 10451.

Purpose: Any lawful purpose.

Notice of Formation of HER INCLUDING THEM LLC Arts. of Org. filed with Secy. of State of NY (SSNY) on 02/11/22.

Office location: NY County. SSNY designated as agent of LLC upon whom process against it may be served. SSNY shall mail process to Corporation Service Co., 80 State St., Albany, NY 12207-2543.

Purpose: Any lawful activity.

Notice of Formation of TOMPKINS TERRACE HOUSING CLASS B, LLC

Arts. of Org. filed with Secy. of State of NY (SSNY) on 10/03/22. Office location: NY County. Princ. office of LLC: 30 Hudson Yards, 72nd Fl., NY, NY 10001. SSNY designated as agent of LLC upon whom process against it may be served. SSNY shall mail process to Corporation Service Co., 80 State St., Albany, NY 12207.

Purpose: Any lawful activity.

Notice of Qualification of MENAI MARKETS LLC

Appl. for Auth. filed with Secy. of State of NY (SSNY) on 10/03/22. Office location: NY County. LLC formed in Delaware (DE) on 07/31/20. Princ. office of LLC: 520 Madison Ave., 21st Fl., NY, NY 10022. SSNY designated as agent of LLC upon whom process against it may be served. SSNY shall mail process to Corporation Service Co., 80 State St., Albany, NY 12207-2543. DE addr. of LLC: 251 Little Falls Dr., Wilmington, DE 19808. Cert. of Form. filed with Secy. of State, 401 Federal St., Dover, DE 19901. Purpose: Digital asset financial services provider.

Notice of Formation of 3923 CARPENTER AVE II LLC Arts. of Org. filed with Secy. of State of NY (SSNY) on 06/30/22. Office location: NY County. Princ. office of LLC: Zachary Hering, 10 Cuttermill Rd., Ste. 400, Great Neck, NY 11021. SSNY designated as agent of LLC upon whom process against it may be served. SSNY shall mail process to the LLC at the addr. of its princ. office. Purpose: Any lawful activity.

Notice of Formation of 3923 CARPENTER AVE I LLC Arts. of Org. filed with Secy. of State of NY (SSNY) on 06/30/22. Office location: NY County. Princ. office of LLC: Zachary Hering, 10 Cuttermill Rd., Ste. 400, Great Neck, NY 11021. SSNY designated as agent of LLC upon whom process against it may be served. SSNY shall mail process to the LLC at the addr. of its princ. office. Purpose: Any lawful activity.

POSITIONS AVAILABLE

Notice of Formation of TOMPKINS TERRACE DEVELOPER, LLC

Arts. of Org. filed with Secy. of State of NY (SSNY) on 10/03/22.

Office location: NY County. Princ. office of LLC: 30 Hudson Yards, 72nd Fl., NY, NY 10001. SSNY designated as agent of LLC upon whom process against it may be served. SSNY shall mail process to Corporation Service Co., 80 State St., Albany, NY 12207.

Purpose: Any lawful activity.

Notice of Formation of LAUREN J. HOFFMAN PSYCHOLOGY, PLLC

Arts. of Org. filed with Secy. of State of NY (SSNY) on 10/07/22.

Office location: NY County. SSNY designated as agent of PLLC upon whom process against it may be served. SSNY shall mail process to Corporation Service Co., 80 State St., Albany, NY 12207-2543.

Purpose: Practice of psychology.

Notice of Formation of TOMPKINS TERRACE HOUSING GP, LLC

Arts. of Org. filed with Secy. of State of NY (SSNY) on 10/03/22.

Office location: NY County. Princ. office of LLC: 30 Hudson Yards, 72nd Fl., NY, NY 10001. SSNY designated as agent of LLC upon whom process against it may be served. SSNY shall mail process to Corporation Service Co., 80 State St., Albany, NY 12207.

Purpose: Any lawful activity.

Notice of Formation of CHARTER VILLAGE DEVELOPER, LLC Arts. of Org. filed with Secy. of State of NY (SSNY) on 09/20/22.

Office location: NY County. Princ. office of LLC: 30 Hudson Yards, 72nd Fl., NY, NY 10001. SSNY designated as agent of LLC upon whom process against it may be served. SSNY shall mail process to Corporation Service Co., 80 State St., Albany, NY 12207.

Purpose: Any lawful activity.

REQUEST FOR PROPOSAL

Associate, Financial Control (Citadel Enterprise Americas Services LLC – New York, NY); Mult. Pos. Avail. Own client deliverables related to the NAV process, includ’g fin. statements, investor statements, & other ad-hoc report’g as required. F/T. Reqs a Bachelor’s degree (or foreign equivalent) in Account’g or a rel. field & 1 year of exp. in the job offered or in fin. report’g. Must have 1 year of exp. in each of the follow’g: improv’g processes & work’g on projects designed to improve efficiencies; utiliz’g Excel to create & utilize vlookups & pivot tables; ensuring compliance w/ regulatory requirem’ts; & prepar’g fin. & investor statements. CPA certificat’n req. Exp. may be gained concurrently. Resumes: citadelrecruitment@citadel.com. JobID: 6562895

Business Associate (Citadel Americas Services LLC – New York, NY); Mult. Pos. Avail.

Partner w/ Investm’nt Analysts, Portfolio Mngrs, & the internal tech special’ts to design & implement innovative tools that enhance the investment process, portfolio construct’n, & risk management for the sector investment teams. F/T. Reqs a Bachelor’s degree (or foreign equiv.) in Finance, Statistics, Engin, Comp Sci or a related field.

Education, train’g, or exp. must include the follow’g: financial account’g, equity valuation & statistics; perform’g fundamental analysis & public markets invest’g; programm’g with SQL, VBA, Linux/Unix exp., statistics, or data analysis; & building custom analysis & data visualizat’ns using built-in funct’ns, aggregat’n, lookups & creat’g dashboards, or Tableau.

Resumes: citadelrecruitment@citadel.com. JobID: 5890276

design and

gate contiguous with wrought iron security fencing; design and installation of

installation of

wrought iron fencing. NYS Certified MWBE participation is encouraged. Specification and bid requirements can be obtained via email at: stavnitz1847@gmail.com All interested firms will be required to request proposal documents and provide primary contact, telephone, fax and email address. Quote/ Proposal is required by November 15th,2022

WORKERS

worker to do the work; the degree of permanence of the position; how much control the worker has over the work, including supervision, scheduling and the ability to work for other companies; how integral the work is to the employer’s business; and the type and specialization of the skills needed.

A Trump-era rule, which took effect in January 2021, had looser guidelines, such as whether a worker was free to work for a competitor, for example.

In New York state, nearly 900,000 low-paid workers—one-tenth of the workforce—are likely misclassi ed as gig workers when they are truly employees, said New School economist James Parrott. He has studied the conditions around contingent work in the city and state, particularly in the transportation, con-

drivers as employees,” a post on the San Francisco–based ride-share service’s blog reads. It also “does not force Lyft to change our business model.”

1 in 10

struction, personal services, building services and retail industries.

Companies that rely on contractors have said that they expected the rule change.

“ is rule does not reclassify Lyft

e companies also maintain that many workers prefer to remain contingent. e city counts 65,000 total delivery workers, and Parrott estimates that 180,000 app-based gig workers are in the city.

App-based independence

In December 2021 DoorDash, also based in San Francisco, released a survey conducted among its New York City delivery people, known inside the rm as Dashers.

Dashers in Manhattan earned an average of more than $33 per hour in the fall of 2020, the company said. at’s 50% more than the national rate.

“App-based work, in particular, is fundamentally di erent from traditional 9-to-5 work,” reads the blog post from Lyft, which also operates in the city. “Nowhere else can you nd the same minute-by-minute exibility to decide when, where and for how long you want to earn. is type of independence and exibili-

ty is the primary reason people turn to app-based work in the rst place.”

However, gig workers are leaving money on the table, Parrott said. He’s found that misclassi ed independent contractors receive only half to two-thirds of the equivalent compensation of payroll workers in the same industries.

In general, one-third of all civilian worker compensation comes in the form of bene ts, the Bureau of Labor Statistics found.

In recent years legislators hoping

to protect workers in the city and the state have introduced or passed rules for nonemployee workers.

e City Council created minimum hourly pay levels for ride-share drivers in 2018, and the rates were boosted by 5.3% in February of this year.

In September 2020 the city set requirements for minimum pay per delivery, travel distance and bathroom access for food delivery workers in order to improve working conditions. Earlier this month the city announced it would convert

unused newsstands to hubs for delivery workers, o ering batterycharging capability, bike repair supplies and shelter.

Better laws and enforcement

Whatever the impact of the federal rule on gig workers and companies around the country, their fate in New York will be tied to these and future local rules, Parrott said.

“ e rubber meets the road on this issue at the state level, where better laws and enforcement can make a huge di erence,” he said. ■

Join us to hear from Andrew Kimball, President & CEO of the New York City Economic Development Corp., interviewed live on stage by Crain’s New York Business Editor-in-Chief Cory Schouten. Find out how the agency plans to drive the next round of corporate investment in New York, which industries it is prioritizing, where the city economy is heading, and how the EDC envisions the future for public-private partnerships.

Andrew Kimball President & CEO

New York City Economic Development Corporation

“NOWHERE ELSE CAN YOU FIND THE MINUTE-BYMINUTE FLEXIBILITY”

GETTY IMAGES

MAY BE MISCLASSIFIED as gig workers when in fact they are employees

Funding fuels Mexican brand’s appetite for growth

BY JAMES O’DONNELL

Dario Wolos, founder of Mexican taqueria and food company Tacombi, has shepherded his brand through not one pandemic, but two.

Shortly after opening his rst taco stand in Playa Del Carmen out of a Volkswagen bus in 2006, swine u shut down all tourism to the Mexican beach town. Dismayed, Wolos set his eyes on uprooting and heading to New York to give the business a second chance.

After establishing its rst location and headquarters in Nolita and opening 10 other locations across the city, Tacombi has recently raised $27.5 million from investors including Danny Meyer to go bigger.

“ e goal from the beginning was always to build a global brand,” Wolos said. “Sell what’s beautiful about Mexico so we can invest in its people.”

Tacombi will use the funds to open 75 more restaurants, serving Mexican classics and cocktails, over the next ve years. Some of those sales will fund its nonpro t, the Tacombi Foundation, which supports education e orts in Mexico. e company will open more outposts in Miami, Washington, D.C. and Chicago, as well as expand into locations in New York’s suburbs such as Jersey City and Westport and Westbury in Connecticut.

Wolos hopes the new storefronts will sup-

port Tacombi’s consumer-facing brand Vista Hermosa, which leverages the restaurant’s existing ingredient pipeline to sell staples including organic tortillas and chips in Whole Foods and other grocery stores.

“By focusing on the ingredients, you end up building a supply chain that has to deliver those ingredients to the restaurant of a certain quality,” he said. “Because it’s a big category for consumers, I think a multibrand strategy works.”

Making a name

Although the new national locations are still being nalized, Wolos envisions more growth in the ve boroughs. Harlem, Fort Greene and Long Island City are all contenders for Tacombi restaurants.

Even with its 11 locations in New York, the rm can feel like a little-known brand in the city. “No one knows us, at the end of the day,” Wolos said. “One of the best things about building a brand is seeing how many people don’t know you.”

On the road to change that, Wolos has found a mentor in Meyer. Enlightened Hospitality Investments, which is a liated with Meyer’s Union Square Hospitality Group, led the $27.5 million growth equity round funding Tacombi’s expansion, but Wolos gained inspiration from Meyer’s book years before the deal was made. Wolos rst met Meyer

when the acclaimed restaurateur had just taken Shake Shack international. A key lesson Meyer shared at that time was to trust your sta and give up control.

“You’re able to push something pretty far on your own. But eventually that will start to fall apart,” Wolos recalled being advised. “To give up control to a certain extent, to improve what you’re doing—that’s been a fundamental shift.”

Empowered employees

Other companies might understandably be putting their expansion plans on hold at the moment. Some consumers are spooked by the cost of dining out—prices for food away from home have risen 8% in the past year—and the Federal Reserve aims to continue raising interest rates in an e ort to slow the economy and reel in in ation.

“From a macro point of view, there’s no playbook for what’s happening right now,” Wolos said. “You have to make the best of the situation.”

at’s not to mention the post-pandemic labor market. With record employment opportunities, workers are more likely to be quitting their jobs in the hospitality industry than in any other sector.

Restaurant workers are more vocal than ever before about the working conditions leading them to quit their jobs in droves, and

Tacombi appears to be making preparations to strengthen its workforce ahead of the expansion. e company has partnered with Ownership Works, a nonpro t group that helps companies launch employee ownership programs among sta in an e ort to reinvigorate their corporate culture.

“ ese problems are all solvable, and they’re solvable through empowered team members,” Wolos said. e goal is “to design a system where team members are truly empowered.”

WOLOS started the company in Playa del Carmen.

BUCK ENNIS