NEXT IN LINE
First-time founders share strategies for succeeding in a volatile market
BY CARA EISENPRESS
Here’s one way to become a leader in New York City’s tech world: get hired in consulting, jump to the fastest-growing local company and lead an impactful new team there. Or join the founders of an out-of-town startup in a sector you adore, learn as much as you can about scaling, and when the moment is right, move back to the city to take your own big swing. Maybe seek out the most innovative team at an established bank and become an expert on payments tech. Another option: Climb the ladder at the fourth most valuable tech company in the country until you run its largest ful llment center in the world.
ese are real-life stories of tech leaders whose paths to success in New York City’s technology world illustrate the momentum in the sector, even as challenges mount throughout the economy.
Crain’s New York spoke to more than a dozen upand-coming leaders, founders and investors, to identify who is at the head of the pack, the lineage
See FOUNDERS on page 18
POLITICS
Assembly, state Senate budget proposals take sledgehammer to Hochul’s plans
BY OLIVIA BENSIMON, JACQUELINE NEBER, EDDIE SMALL AND CAROLINE SPIVACK
Gov. Kathy Hochul and the state Legislature will have plenty to debate about as they try to reach a budget agreement in the coming weeks.
e one-house budget proposals from the Assembly and state Senate both make extensive changes to Hochul’s ambitious plans for key industries in the city.
ese proposals are the Legislature’s formal response to the governor’s February budget plan: e Senate released one, as did
the Assembly. Negotiations between both chambers and the governor will now commence, and the nal budget is due by April 1.
For the real estate industry, the one-house proposals eliminate several of the tax
See BUDGET on page 22
Police commissioner talks crime and bail reform, says NYPD does not need a residency requirement
BY CAROLINE SPIVACKShe opposes a residency requirement for police o cers, city Police Commissioner Keechant Sewell told Crain’s Wednesday morning, emphasizing that “as long as they’re connected to the community” where they work, that’s more than adequate for her.
“If you work in a city and you have a post in the city, that is your home,” Sewell said at a Crain’s Power Breakfast in Midtown during a discussion with Editor-in-Chief Cory Schouten. “I want an o cer to have that investment in that community no matter where he or she lives.”
Sewell con rmed that she herself lives in Long Island’s Nassau County “six or seven blocks” beyond the Queens border. She lives in the Valley Stream home she purchased 16 years ago. Sewell added that because of the time she spends in the city, “I think I live here in New York City more than anywhere else.”
On the campaign trail, Mayor Eric Adams supported a requirement for police o cers to live within the ve boroughs. In January
2022, Adams said he believed a city residency requirement for new ocers is “a smart idea,” and questioned why the city would use its tax dollars to “pay for an o cer to be here for eight hours and then 16 hours he’s going to one of our ve neighboring counties and protecting them.”
e mayor reiterated that he is “a big believer in the residency requirement” at a Wednesday press conference.
Residency requirment
City lawmakers and government watchdogs have long called for a residency requirement for uniformed members of the New York Police Department, arguing that having a police force made up of more city residents would improve accountability and public safety.
Currently, ocers must live in the ve boroughs or in suburban counties east and north of the city.
Sewell said she’s instead focused on ensuring a greater mix of New Yorkers are represented by the city’s police force through recruitment. About 18% of the Police Department’s 52,000 employees are women.
“I think in ve to ten years the NYPD is going to be the most diverse police department in the world,” Sewell said. “I plan to make the NYPD the most public facing,
POLITICS
accessible police department in the world.”
In January the Police Department released the agency’s 2023 strategic plan with four primary goals: strengthening its workforce with diverse talent, innovating policing methods, better engagement with community partners and promoting public safety through neighborhood policing initiatives.
Sewell touted a recent dip in crime, pointing to department data of a 5.6% drop in major crime compared to the same month in 2022. e dip was mostly driven by a 28% decrease in murders, 22% fewer rapes and 15% fewer burglaries. But not all crime has trended downward.
Sewell acknowledged that the department has seen “some stubborn numbers” around felony assaults and car thefts, which were both slightly up in February compared to the same time last year. Crime on the city’s subway and buses also edged up, by 1.9%, which comes after the mayor and Gov. Kathy Hochul praised a recent short-term decline in crime on mass transit.
Other takeaways include:
● Sewell described the Police Department’s shutdown of the recent in ux of unlicensed pot shops as
“Whac-A Mole” and said better regulation would likely be needed. “We’ll still keep whacking those moles,” she said. “ ey are absolutely a nuisance to the city and they are also victims of robberies as well so they bring crimes to those locations.”
● Sewell said she is “optimistic” that Hochul’s proposed tweaks to bail reform will result in meaningful changes. She reiterated—to applause—that judges should have the ability to determine whether a person is a public safety risk when they set bail, remand or release.
● For those taking on leadership roles, Sewell advised them to sur-
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Join us for a live interview with New York’s top federal prosecutor, Damian Williams, the U.S. attorney for the Southern District of New York. He’ll share his priorities, outlook and impressions since he took over the of ce in late 2021.
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round themselves with people who know more than they do. “Coming in, you have to take a back seat,” she said. “You have to gure out where the car keys are, where to put your jacket, where to park your car, and see what’s working and what isn’t.”
● To blow o steam, Sewell said, she enjoys cooking when she can nd the time, often while pumping artists like Gregory Porter, Sadé and Phil Collins through her iPod speaker. One of her favorite dishes to cook is a re-creation of her mother’s broccoli casserole that is her go-to for pretty much every family event. ■
State Senate proposes ending MSG’s 41-year property tax break in order to fund the MTA
BY AARON ELSTEINMadison Square Garden’s property tax abatement, a bene t that has saved the arena’s owner more than $900 million over 40 years, may soon be no more.
e New York state Senate’s budget proposal contains a provision that would deliver a death-blow to the exemption. Now the question is whether the tax-break-killing bill, which did not make the cut in the Assembly’s budget proposal, will be resuscitated during nal budget negotiations in Albany.
“I hope the Assembly and governor will join the Senate in repealing MSG’s property tax break so we can use that money to fund the MTA,” said state Sen. Brad Hoylman-Sigal, whose district includes the Garden.
In a statement the company said:
“It’s interesting that Sen. Hoylman is rallying to end governmental subsidies for corporations when just last year he voted in favor of legislation that extends a $420 million governmental subsidy for the lm industry and currently sponsors legislation to create new subsidies for the musical and theatrical production industry.”
It continued: “Our tax abatement is no di erent than the government subsidies that every single stadium and arena in New York city and state receive and in fact, is hundreds of millions of dollars less than most other venues.”
MSG’s tax abatement is di erent from subsidies granted to the Yankees and Mets. Both baseball teams are exempt from property taxes too, but they make tens of millions in payments in lieu of taxes annually and will do so until their bene ts sunset in about 20 years. ( e payments go
to bondholders, not the city.) e Garden’s tax exemption continues until the Legislature votes to end it.
Decades of savings
e bene t saved MSG $42 million last year, according to city records. e Independent Budget Ofce estimates that, since inception, it has cost the city $916 million in foregone revenue. Lawmakers have tried for years to eliminate the bene t without success, but the Garden’s clout may have waned since scandal broke over the arena using facial-recognition technology to boot out unwanted ticket-holders.
Last week on Fox 5, Gov. Kathy Hochul was asked if she supports ending the Garden’s tax break.
“I know how important the Garden is to the city,” she said.
She wouldn’t commit when asked if she’d veto a budget that
ends the exemption.
MSG’s tax abatement dates back to the spring of 1982, when the New York Knicks and Rangers considered moving to New Jersey. In exchange for a promise that the teams would stay put, city leaders agreed to grant a temporary reprieve on property taxes for the Garden, which somehow morphed into a permanent abatement when the state Legislature approved it.
According to a formal memorandum of understanding dated July 15, 1982, MSG’s tax exemption “shall continue, as long as both of said teams play their home games therein and no longer.”
Only a month after MSG and the city reached an agreement, the Garden’s leverage disappeared. In May 1982 a failing hockey team in Denver relocated and became the New Jersey Devils. ■
“I THINK IN FIVE TO TEN YEARS THE NYPD IS GOING TO BE THE MOST DIVERSE POLICE DEPARTMENT IN THE WORLD”NYPD COMMISSIONER Keechant Sewell sat down with Crain’s at a Wednesday Power Breakfast
Knaq keeps the Port Authority’s elevators and escalators on the up-and-up
The upstart: Knaq
When Brian Carey launched Lower Manhattan startup Knaq in 2017, the engineer and Stanford research fellow planned to develop monitoring devices for industrial equipment including wastewater pumps and compressors. But the rst client he landed was a tiny elevator company in New Jersey. And thus his long ride began.
“I never thought in a million years I would know this much about elevators and escalators,” Carey says now.
Exploring the industry, he discovered something wild: ere were no devices on the market that could send real-time status alerts to elevator and escalator operators. Hospitals, transit agencies and lots of other institutions were still relying on customer complaints or a daily maintenance check to learn when a people mover was on the fritz.
Now Knaq provides elevator, escalator and moving-walkway monitoring services to a dozen clients operating more than 1,000 people movers, largely in the New York area. e company’s devices send instant text or email alerts to operators as soon as the equipment stops running—potentially eliminating hours of downtime.
Customers pay an upfront device fee of several hundred dollars plus an annual subscription fee of a similar amount for each elevator, escalator and moving walkway being monitored, Carey says.
Knaq’s biggest client is the Port Authority of New York and New Jersey, which operates more than 860 public-facing elevators, escalators and moving walkways across its portfolio of properties including LaGuardia, JFK and Newark airports.
e agency teamed up with Knaq in 2020 after the startup won a contest sponsored by the Transit Innovation Partnership’s Transit Tech Lab, designed to help the area’s public agencies nd technology solutions for transportation problems, says Shawn Lenahan, Port Authority program director. e pilot program—which started by installing Knaq devices on two escalators and one elevator in each airport, along
with PATH, the Port Authority Bus Terminal and the World Trade Center—led to a big contract awarded in August 2021.
e Port Authority has so far installed Knaq devices on 212 elevators, 267 escalators and 21 moving walkways. Hundreds more are on the way, Lenahan says.
“We now have real-time status and real-time noti cation when something goes wrong,” he says.
Knaq’s data analysis and prediction technology are expected to help the agency optimize its maintenance schedules.
The reigning Goliath: Otis Worldwide
Otis, the world’s largest manufacturer and servicer of elevators and escalators, maintains 2.2 million units worldwide. Its latest models are equipped with real-time monitoring and alert capabilities. e Farmington, Connecticut–based corporation’s 2021 net sales topped $14 billion.
How to slay the giant
Knaq needed to develop a small device that, using accelerometers and electric current detectors, could monitor the performance of just about every make and model of elevator and escalator. That scared off many potential investors, because it can take a lot of time and money to create a prototype, then manufacture, ship, test and debug a new gadget, and it had to be accomplished before market demand was proven.
“So many investors see hardware and say, ‘No, not for me,’” Carey says.
The company eventually landed $1 million in preseed funding from angel investors and smaller, targeted venture-capital funds that were wiling to be patient and saw the large market potential. There are an estimated 90,000 elevators and escalators in New York, 1.25 million in the U.S. and 15 million worldwide.
Among the investors was early-stage VC firm Lakehouse Ventures.
“We naturally gravitate to businesses that feel kind of in-
tuitive: ‘My goodness, that should exist. Why doesn’t it exist?’” Lakehouse founder John Neamonitis says. “Knaq monitors elevators and escalators, which we all know go out a lot. That just made a ton of sense.”
The pandemic nearly ruined the fledgling company because Knaq’s monitoring devices rely on semiconductor chips made in Asia. Chip prices rose tenfold thanks to supply chain issues, and Knaq had to deliver its devices to clients at prices agreed upon before Covid-19 arrived. The startup took a heavy loss on each installation and sought further funding to stay afloat.
In some cases, the right chips weren’t available at all. Knaq’s five-engineer team redesigned its device several times on the fly to incorporate the chips they were able to get their hands on.
The company was fortunate to have its entire engineering staff in-house, Carey says: “A lot of other companies will outsource the hardware design, but then if you need to change something, you have to rehire a contractor.”
The company now uses several iterations of similar circuit boards to accommodate what chips are available at the time of production.
Last year the company faced a much happier challenge: relying on its tiny team to fulfill the giant Port Authority contract.
“It was a busy year,” Carey says in his understated way. “Christmas break was much needed.”
The next challenge
With the Port Authority and institutions such as NYU Langone Health on its customer list, Knaq is ready to assemble a sales team and go big, Neomonitis says.
“Now,” he says, “it’s time to get this in every transit system, every airport and every major hospital, university and corporate campus.” ■
Lower Manhattan startup’s monitors are installed all over LaGuardia, JFK and Newark airportsANNE KADET CAREY at LaGuardia Airport KNAQ’S MONITORING DEVICES send real-time performance data to elevator and escalator operators at LaGuardia.
Selling an Upper East Side townhouse is a family affair
Media executive Jon Steinberg’s father, a real estate agent, is marketing his son’s 5-story home on East 64th Street $18.5M
BY C. J. HUGHESDigital media executive Jon Steinberg has turned to a familiar face to sell his 5-story townhouse on the Upper East Side: his father, Compass agent Richard Steinberg.
Steinberg père, one of the city’s top brokers, has big ambitions about what he can fetch for the five-bedroom, five-and-a-halfbath home at 36 E. 64th St., near Madison Avenue.
The 18-foot-wide, contemporary art-filled property, which has eight fireplaces, a kitchen with marble counters and a roof deck with an outdoor kitchen, is listed for $18.5 million, which is nearly double the $9.7 million that Jon Steinberg and
bergs, who had to finish the former owner’s half-completed renovation, Richard Steinberg said.
The younger Steinbergs are moving to London. Last month Future plc, a British media company that owns the magazines Marie Claire, Guitar World and PC Gamer, tapped Jon Steinberg as its new CEO. The 3,000-employee company, which has been rapidly expanding in the past few years, had revenues of about $1 billion in 2022.
Previously, Steinberg fils was CEO of the North American arm of British tabloid the Daily Mail. He was chief operating officer of BuzzFeed, the digital news and entertainment company, from 2012 to 2014.
his wife, Jill, paid for the property in 2019, according to public records.
“The townhouse market is the first submarket that I have seen on the Upper East Side that’s rebounding with gusto,” Richard Steinberg said. “It’s very strong.”
But the hefty markup at the 1881 property might also be explained by the multimillion-dollar upgrade undertaken by the younger Stein-
Even if Richard Steinberg, who began his career as a podiatrist before switching to real estate in the late 1980s, is bringing his expertise to bear, Jon Steinberg might also have benefited from additional know-how from within his family circle.
His mother, Renee Steinberg, used to be an agent at Warburg Realty, which once also employed Richard. Jill Steinberg once sold homes for the firm too. ■
Instagram’s head of fashion makes her four-bedroom duplex in Gramercy Park a social media star
BY C. J. HUGHESAtop Meta executive has purchased a duplex in Manhattan’s Gramercy Park neighborhood.
Eva Chen, who handles fashion partnerships for Instagram, bought 242 E. 19th St., No. 5C-6C, for $4.6 million, according to public re-
CHEN WAS THE EDITOR-INChIEF OF SHOPPING TITLE LUCKY, THOUGH IT FOLDED TWO YEARS LATER
cords. The trust that officially bought the unit lists two trustees, Chen and her husband, Thomas Bannister, the owner of a granola company.
The four-bedroom, three-and-a-
half-bath prewar home, at Second Avenue, first came on the market about a year ago at $4.8 million. The 3,200-square-foot unit has hardwood floors, beamed ceilings and three fireplaces, according to a recent video Chen posted to Instagram featuring her hanging out in still-empty rooms. “When you finally find a new apartment, but the budget does not have a line item for furniture,” reads the caption.
Nick Gavin, the Compass agent who marketed the property, had no comment, and Chen could not immediately be reached.
In 2013 magazine publisher Condé Nast tapped Chen to be the editor-in-chief of the shopping title Lucky, though it folded two years later. Chen joined Instagram the same year. Last year she published
a children’s book, I Am Golden, an affirming tale about being young and Chinese American that Chen has said was a response to antiAsian rhetoric.
Last Tuesday Meta, which was
formerly known as Facebook, said it would let go of 10,000 workers in the next few months, which came on the heels of last fall’s announcement of 11,000 job cuts.
Tech companies have not been
immune to some of the forces battering businesses in the past year, including high interest rates, recession fears and slackened demand. Layoffs have also dented Amazon, Microsoft and Alphabet. ■
“THE TOWNhOUSE MARKET IS THE FIRST SUBMARKET THAT I HAVE SEEN ON THE UPPER EAST SIDE THAT’S REBOUNDING WITh GUSTO”
Democrats in the Legislature pump the brakes on passing public financing for political campaigns
Astrange thing is happening in Albany these days, mostly out of view.
Assembly Democrats, with the tacit approval of Senate Democrats, are trying to pump the brakes on a long-planned implementation of public financing for legislative and statewide campaigns. These are the very Democrats who, with progressives and socialists among them, are supposed to apply pressure on a more conservative governor, and they are on the verge of scuttling the most significant overhaul of New York’s antiquated campaign finance system in history.
posal goes through, more money could be theoretically added to the program next year.
But state lawmakers, led by Assembly Speaker Carl Heastie, have expressed new skepticism of public financing of elections. They claim that since Assembly districts are due to be redrawn again by a quasi-independent commission, thanks to last year’s redistricting fiasco, going forward with the plan in the short term may not make sense. All members of the Assembly facing re-election in 2024 will encounter districts that have changed at least slightly.
ROSS BARKANAs a result, it’s Gov. Kathy Hochul, the recipient of so much cash from wellheeled donors last year, who is the best hope for good-government and civil rights organizations that want to see public financing happen in time for next year’s legislative contests. In her executive budget, Hochul has earmarked $25 million to fund the program with an additional $4 million for 54 new staff members. The governor will negotiate the budget with the Legislature this month. If Hochul’s pro-
Redistricting, however, shouldn’t affect how elections get funded. Why can’t an incumbent and a challenger receive matching funds if they’re running in brand-new districts? What difference does it make, really?
If public financing is implemented, Assembly candidates would be eligible to receive up to $350,000 in matching contributions in both the primary and the general election. The system, for those who opt in, would also apply to candidates for state Senate and
statewide office, including governor.
City has its own system
The city has its own successful system for financing municipal campaigns. The New York Campaign Finance Board oversees the program and aggressively audits every campaign, checking for malfeasance. Because small donations can be matched 8 to 1 with public money, the system allows people who aren’t wealthy or well connected to credibly run for office. City
Council primaries, in particular, are always crowded and fairly competitive. Public matching takes the strain off fundraising and allows candidates to spend most of their time talking to voters. Candidates for state office face a very different reality. Donor limits for Assembly and Senate campaigns are higher than those permitted for congressional campaigns, which is absurd. Millionaire donors and political action committees can swing these legislative races because they are allowed to
write such large checks. It’s legal for a single donor to give $70,000 to a gubernatorial candidate. This system is a national embarrassment. Public finance isn’t perfect. There are valid criticisms that matching funds allow for unserious candidates to emerge and consultants to feast on them. But the alternative is clearly worse.
Assembly Democrats don’t have a valid excuse for delaying the implementation of a matching funds program, and Senate Democrats should stop giving them cover. It will be up to Hochul to force it through in the budget, due at the end of the month, and she should.
Quick takes
● An Upper West Side community board voted against allowing an e-bike charging station near the subway. The board was wrong to do this, but it should be up to private app companies to help pay for the infrastructure they require for their workers.
● Will Mayor Eric Adams benefit from a gradual decline in crime? It’s plausible—if perception begins to align with reality. For Adams, that will be a steep challenge. ■
Ross Barkan is a journalist and author in New York City.
Bank failures create another blow, more grim news for New York’s already-reeling office landlords
BY AARON ELSTEINThe failure of two major banks is yet another blow for the city’s office landlords.
Signature Bank is the secondlargest tenant for the owner of the Empire State Building, while a division of Silicon Valley Bank added more space only two years ago in a Midtown tower owned by Paramount Group. The struggling First Republic Bank is a big tenant at Hudson Yards.
The fates of banks and commercial landlords are deeply entwined. Not only do banks rent lots of space, but commercial property tends to
office space.
The timing is unfortunate for landlords already coping with the loss of tenants from other sectors and the persistence of remote work.
“There is no market for office buildings except for the 1 Vanderbilts of the world,” Piper Sandler analyst Alexander Goldfarb said, referring to the new Midtown tower developed by SL Green Realty.
make up a large portion of their loan books.
Not only do the recent, stunning failures eliminate two tenants from the rolls, but other banks, venture capital firms and other institutions are expected to take steps to lower costs, which would mean employing fewer people and renting less
As it happens, SL Green may be the most exposed to the bank fallout. Financial institutions of all kinds account for 43% of tenants, Goldfarb said, although SVB wasn’t one. The tech sector, which has struggled for a year, represents 15% of SL Green’s tenants. The landlord’s stock price has dropped by 18% since SVB failed on the morning of March 10. Vornado Realty Trust, Empire State Realty Trust and Paramount Group have also fallen.
SL Green shares are their lowest since 2009 and Vornado’s, since 1996.
Big leases
Analyst Steve Sakwa of Evercore ISI said Signature Bank rented
308,000 square feet at 1333 Broadway and 1400 Broadway at a cost of $18 million in annual rent. If none of the space is used by whichever institution buys Signature’s remains, the gross market value of Empire State Realty’s properties could fall by $265 million, he said.
Paramount Group is also exposed. In 2021 SVB signed a lease for an investment banking division, Leerink, to occupy 139,000 square feet at the landlord’s 1301 Sixth Ave. property. If Leerink isn’t bought by another bank in the near term, Sakwa estimated, Paramount’s rev-
enue would fall by $10 million. First Republic Bank occupies a third of 410 Tenth Ave., a 630,000-square-foot building in Hudson Yards, according to Trepp. ■ C. J. Hughes contributed to this article.
“THERE IS NO MARKET FOR OFFICE BUILDINGS EXCEPT FOR THE 1 VANDERBILTS OF THE WORLD”
ZOHRAN MAMDANI
New York state Assembly
INTERVIEW BY CAROLINE SPIVACKQueens Assembly member Zohran Mamdani has big ideas for the Metropolitan Transportation Authority. In a recently proposed package of eight bills, known as “Fix the MTA,” Mamdani and his progressive colleagues seek to go far beyond stabilizing the agency’s finances by funding dramatic service improvements, including six-minute subway service and free bus fares. Seven bills would enact policy change, while an expansive spending bill calls on the state to pump about $3.3 billion per year, over four years, into the agency. And components of the legislative package are gaining traction. Both the Assembly and the state Senate called for a fare freeze and included a pilot for free bus service in their one-house budgets released Tuesday in response to Gov. Kathy Hochul’s February budget proposal. The progress is encouraging to Mamdani, who says it is absolutely possible to create a transit system that New Yorkers deserve by rethinking how the state taxes the rich.
For you, why focus on building a better MTA?
The MTA, for many New Yorkers, is the way that they most frequently interact with government. It is how people get to work, how they see friends, how they go to worship. And I think it’s critical for us to have New Yorkers expect more from their government. If we want to create that, it’s necessary to begin at the most frequent point of interaction. I’d argue the MTA is one point.
Your proposed spending bill tackles a lot. Can you break it down for us?
I’d synthesize it into four major planks. The first plank is to resolve the MTA’s operating budget deficit. The second plank is to freeze fares at $2.75. The third plank is to fund frequency, so six-minute headways for trains and a 20% increase in bus service. And a fourth
POLITICSDOSSIER
WHO IS HE Assembly member, 36th district, which includes Astoria and Ditmars-Steinway
AGE 31
BORN Kampala, Uganda
GREW UP Kampala, Cape Town and Morningside Heights
RESIDES Astoria
EDUCATION Bachelor’s in Africana studies, Bowdoin College
FAVORITE STATION Mamdani enjoys commuting through Herald Square, solely, he says, because of a permanent interactive installation that allows straphangers to play notes akin to a xylophone with other passengers while waiting to catch a train.
SUBWAY SETTING Before his political career, Mamdani rapped under the name Mr. Cardamon. He shot part of the music video for “Nani” on the Astoria Boulevard subway platform, where he later canvassed during his run for his Assembly seat.
THE SPOT If he had to recommend one eatery in his district, Mamdani suggests Egyptian seafood restaurant Abuqir on Steinway Street. Customize how your seafood is prepared and don’t skip the baba ganoush or eggplant to start, he advises. The bread is also “some of the best I’ve had in my life,” said Mamdani. It all adds up to “a quintessential Astoria experience,” he said.
plank is to make buses free over the next four years. What is at the heart of this fight is making it clear to New Yorkers that the MTA that we deserve is truly possible. The only thing that is stopping us is political will. If we want to have more frequent service, we can create that by funding it.
Some would say making buses free is coun terintuitive given the MTA’s finances. Free buses make buses faster, safer and universally accessible. In terms of faster, we’ve seen when this was implemented
on three lines in Boston that the dwell times of those lines decreased by 23%. In terms of safer, we’ve seen that when this was implemented in Kansas City that 80% of bus riders felt safer, and bus incidents went down 39%. And in terms of universally accessible, buses are the only method of public transit that our disabled neighbors can use at any juncture—trains are simply not that way because of the lack of elevator access. And to make it truly accessible, if we took away fares, it would provide relief to the most working class of New Yorkers; the average bus rider makes about $30,000 a year. If fully implemented, the most expansive cost would be $778 million per year. That is about 4% of the state budget.
So where would all that money come from?
The entirety of the spending bill costs about 1.5% of our state budget. Last year it was $222 billion; this year the governor has proposed a $227 billion budget. The money that we are calling for is but crumbs compared to the amount we could raise by taxing the wealthiest New Yorkers. The corporate tax right now in New York is 7.25%. New Jersey has an 11.5% rate. What I, and many other legislators, are proposing is that we raise our corporate tax on companies making more than$2.5 million a year in profit. And we spend the money raised on critical public goods like, but not limited to, the MTA.
How would this account for raids on the MTA’s budget that we’ve seen in Albany, in which funds committed to the agency are used for other purposes?
One critical piece of legislation in this package is a bill to remit the internet sales tax. This is a source of funding for the MTA right now, but it is not fully safeguarded from the possibility of executive raids. We have seen previous governors take money out of the MTA, for example, to shore up the finances of upstate ski resorts. A key thing is not simply to increase the amount of funding the MTA receives; it’s also safeguarding what they already receive. ■
Deputy sheriffs’ union balks at cracking down on unlicensed and unregulated smoke shops
BY OLIVIA BENSIMONAmid the buzz of the city’s first three legal weed dispensaries opening in the past few months, a lot of focus has been on addressing the pervasive issue of the more than 1,200 smoke shops selling unlicensed and unregulated cannabis and related products.
Mayor Eric Adams launched a joint task force in November to combat the proliferation of the stores, but now the union representing the city’s deputy sheriffs has questioned if its members have the authority to carry out these crackdowns, according to a report by the news website The City .
“We have been unable to find any legislation related to the inspection of unlicensed retail locations, or any cannabis legislation mentioning the sheriff as an enforcement officer,” reads the letter from the deputy sheriffs’ union, dated Feb. 2 and ad-
dressed to Sylvia Hinds-Radix, who leads the Law Department; Department of Finance Commissioner Preston Niblack; and Sheriff Anthony Miranda.
Ingrid Simonovic, president of the Deputy Sheriffs’ Benevolent Association, said that it should not fall to sheriff’s deputies to conduct these inspections. As things stand, under the Marijuana Regulation and Taxation Act, enacted in 2021, the state Office of Cannabis Management is responsible for inspecting legal dispensaries. Simonovic said it should be that office’s responsibility to inspect unlicensed shops as well.
“It’s confusing for the public, it’s confusing for legislators, but it’s not confusing, at least to the union, because we know what our authority is, and that is not one of our authorities,” she told Crain’s. “We are clear on what we are authorized to do. The city seems not to be clear, and
they’re not explaining to us.” Simonovic added, “My members and the union are concerned that we are crossing those lines and violating people’s rights.”
Pilot program
The task force the mayor formed in November includes the sheriff’s office, the city Police Department, the city Office of Consumer and Worker Protection and the state’s Office of Cannabis Management. During the task force’s two-week pilot program in the fall, inspectors visited 53 storefronts and seized more than 100,000 illegal products worth an estimated $4 million .
The sheriff’s office, a division of the Department of Finance, is authorized to conduct a regulatory inspection of a shop that has a cigarette or tobacco license displayed, according to the city’s administrative code. A sheriff’s deputy can conduct an inspection if an unli-
censed shop is advertising the sale of these products without a license.
But because the code doesn’t mention cannabis, and because the task force is primarily looking to seize cannabis products, these inspections should require a warrant, Department of Finance employees said, speaking to Crain’s on the condition of anonymity.
“I can’t stop you and search you, find a gun, and then arrest you. How did that interaction start, legally? That’s the question that we still have not had answered,” one of the Finance Department employees said. “What was the legal authority to initiate that [inspection]? There are a lot of gray areas, and we’re trying to get it in black and white. We want to be out of the shadows: ‘This is what we should be doing. These are the laws.’ ”
An Adams administration representative said the sheriff’s office has the authority to inspect shops
and can seize anything if deputies uncover unlawful activities during the inspection.
“Our law enforcement entities involved in the multiagency task force have broad legal authorities to conduct business inspections, which have been exercised for years and allow for the seizing of illegal contraband,” said Jonah Allon, the mayor’s deputy press secretary.
“While we continue to call on the state Legislature to make changes to the cannabis law that would strengthen the city’s enforcement capabilities further, the multiagency citywide task force created under the leadership of Mayor Adams remains committed to utilizing its legal authority to ensure businesses are in full compliance with the law,” Allon said.
The city has escalated its efforts by targeting landlords who rent to retailers suspected of selling illegal marijuana products. ■
BUCK ENNIS
City can’t wait to gure out who’s responsible for smoke shop crackdown
When Mayor Eric Adams announced in November that his o ce would convene a task force to crack down on the proliferation of smoke shops illegally selling marijuana in the ve boroughs, it seemed like a boon for both the city and the burgeoning legal market for recreational cannabis. Residents might get some respite from pot dealers with storefronts who have taken over block after block, and the city would have a clearer message about which shops are sanctioned to sell weed, with the tax money bene tting the state, and which are not.
Currently, as Olivia Bensimon
pointed out in a recent Crain’s article, there are three licensed cannabis dispensaries in the city. But there are more than 1,200 so-called smoke shops selling unregulated marijuana locally. During a two-week pilot program in the fall, inspectors from the task
OP-ED
force, which includes members of the sheri ’s o ce, the city Police Department, the city O ce of Consumer and Worker Protection and the state’s O ce of Cannabis Management, visited 53 shops and seized more than 100,000 illegal products worth an estimated $4 million.
At last week’s Crain’s Power Breakfast, Police Commissioner Keechant Sewell described the Police Department's e orts to shut down the in ux of unlicensed pot shops as “Whac-A Mole” and said better regulation would likely be needed. “We’ll still keep whacking those moles,” she said.
“ ey are absolutely a nuisance to the city, and they are also victims of robberies as well, so they bring crimes to those locations.”
So it’s distressing to note that, with so much work still to be done on this front, the union representing the city’s deputy sheri s has questioned its members’ authority to carry out these inspections.
e sheri ’s o ce, a division of the Department of Finance, is authorized to inspect a storefront that has a cigarette or tobacco
license on display, the city’s administrative code says. A sheri ’s deputy can conduct an inspection if a shop is promoting the sale of these products without a license. But because the code doesn’t mention marijuana, and because the task force primarily seeks to seize such products, these inspections should require a warrant, Department of Finance employees told Crain’s. e employees basically compared the inspections to a style of stop-andfrisk.
Ingrid Simonovic, president of the Deputy Sheri s’ Benevolent Association, said, “My members and the union are concerned that we are crossing those lines and violating people’s rights.”
Although those concerns are valid, the Finance Department and deputy sheri s union must remember that the city’s legal cannabis industry is brand-new, and the kinks are being ironed out with the opening of each dispensary. It’s unreasonable to think the administrative code would be updated before the government has the complete lay of the land.
e best time for the city to underscore that it will not tolerate a legal-looking illegal industry as the legitimate industry ramps up is now. Waiting will only allow more of these illegal dealers to pop up without fear of reprisal, becoming a blight on neighborhoods and a detriment to the economy. ■
Beware ‘simple’ solutions to housing crisis
BY MOUJAN VAHDATFinding solutions to New York’s housing crisis will be the de ning political challenge of this generation.
Building more homes at an affordable price, potentially using state land, sounds like a simple solution, but there are barriers standing in the way that need to be the focus for politicians at all levels of government.
Let’s start with needed improvements to the planning process, which is slow and di cult. If politicians are truly serious about solving the housing shortage, this is a good place to start.
e rst step would be to remove regulatory barriers at the local, state and federal levels to allow more homes and apartments to be built and to reduce the time and cost for builders.
States hold the legal authority to establish the parameters for zoning at the local level and, therefore, to encourage local jurisdictions to allow more housing to be built in
their state.
We also need to look at new ways to ght homelessness and all available technologies to increase our housing supply. San Francisco-based New Story Charity has built more than 2,700 homes globally, a ecting 12,000 lives, in part by partnering with a company called Icon in Mexico and using 3D printing to drive down costs of new homes.
Assurances and stability
One of the most expensive aspects of housing development is the cost of capital. Municipalities have the ability to borrow money at lower rates than developers, but once again, red tape and cumbersome processes cause delays and uncertainty at a time when we need assurances and stability.
Creative thinking leads to e ective solutions. For example, Oregon lawmakers are pushing for a “transformational” bipartisan plan to speed housing construction by streamlining local rules, ending rigid land-use mandates and
lengthy approval processes that stall construction and drive up costs. Is New York paying attention? Oregon’s ideas could work here.
e housing crisis is a complicated issue that requires bold thinkers nding an almost in nite number of solutions and all levels of government working together with developers and other privatesector stakeholders.
In the meantime, we also have to remember that there are people on our streets who are hurting and have nowhere to turn.
People with mental illness experience homelessness for longer periods of time and have less contact with family and friends. ose with severe mental illnesses over-represent those experiencing homelessness.
My 30 years of experience with building shelters has shown me that while we struggle to house New Yorkers who are the most
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marginalized in our community, we need to provide supports and shelter space as a positive alternative to living on the street or sleeping on a subway.
New York state’s new $1 billion commitment to improve access to mental health care would be the most signi cant change since the deinstitutionalization of the 1970s and could be a major step on the road to solving the housing crisis for all. ■
Moujan Vahdat is CEO of Elmo Realty and a philanthropist.
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EFFORTS TO SHUT DOWN UNLICENSED POT SHOPS CAN BE COMPARED TO A GAME OF WHAC-A MOLEBLOOMBERG NYCMAYORSOFFICE
Preserving New York’s inadequate Scaffold Law is a danger to workers, taxpayers and progress
BY TOM STEBBINSThe New York Committee for Occupational Safety and Health recently released a report identifying a troubling increase in construction deaths. Did NYCOSH suggest a change to current laws in order to enhance worker safety? No. Instead, the report’s authors curiously took the time to promote one of the Empire State’s most costly and ineffective laws: Labor Law 240/241.
more than welcome by politically connected, profit-driven trial attorneys and their network of allies.
The Scaffold Law was enacted in the 19th century, when construction workers had few protections. Under the law, courts hold contractors and property owners fully liable for gravity-related worksite accidents, even if they had nothing to do with the cause of the injuries. Scaffold Law litigation is one of the main drivers behind New York’s highest-in-the-world construction costs.
NYCOSH’s report reveals the Scaffold Law’s failures.
The law is ineffective by NYCOSH’s tacit admission. If these unique-to-New York sections of law, known as the Scaffold Law, truly protected construction workers, there wouldn’t be an increase in injuries to report. What signals bad news for construction workers is
Findings show a 9% increase in construction worker fatalities. New York, the only state where the Scaffold Law exists, leads the nation in worksite deaths. Absurdly, rather than admitting the Scaffold Law is clearly ineffectual, the NYCOSH report recommends defending the law.
A 2015 study from the Transportation Research Board of the National Academies questions the Scaffold Law’s efficacy. The study
revealed that rather than protect workers, the Scaffold Law ultimately leads to higher insurance premiums for contractors. The study also found a direct link between rising costs and reduced worker safety. Where is the logic in promoting a law that not only drives up costs, but it also increases the number of fatal and near-fatal accidents?
As Gov. Kathy Hochul and the Legislature acknowledge the need to improve public transportation,
increase housing stock and bolster drinking water infrastructure, they should look to tear down obstacles to realizing their ambitious agenda. The same holds for time-sensitive initiatives to develop climate resiliency and renewable energy sources across New York.
Litigation costs
How many public-housing units could be constructed with the money spent on litigation and in-
surance? The New York School Boards Association estimates that the Scaffold Law wastes $200 million that could be put toward maintaining and building schools upstate each year. In the city the School Construction Authority says the wasted costs of the law could pay for more than 75 major renovations.
Taxpayers and the private sector, including minority- and women-owned contractors that struggle to find affordable insurance, watch as billions of dollars are wasted on out-ofcontrol liabilities. Meanwhile, state trial attorneys surround construction sites with advertising, eager to take their 33% cut of slam-dunk settlements.
The construction fatalities report paints a grim picture. It proves that the Scaffold Law is a costly and dangerous relic. That NYCOSH recommends it be preserved and protected goes against the best interests of workers and taxpayers. It is time to finally fix this costly law. ■ Tom Stebbins is executive director of the Lawsuit Reform Alliance of New York.
State needs to raise Medicaid reimbursement rate by
for long-term nursing home services
BY SCOTT LA RUEThe pandemic has driven renewed attention to the quality of nursing home services in the state.
Gov. Kathy Hochul’s administration has been at the forefront of this movement, creating an office entirely devoted to improving the delivery of long-term care. As chief executive of ArchCare, the health care ministry of the Archdiocese of New York, I appreciate the gover-
imburses continuing-care organizations in the state. For not-for-profit health care systems such as the one I lead, which serve elderly, vulnerable and poor New Yorkers, the impact of this decision will be tremendous— and will have lasting ramifications on our ability to serve those most in need. That’s why I urge lawmakers to increase the state’s Medicaid reimbursement rate by 20%.
Some background: New York has one of the largest Medicaid reimbursement shortfalls in the country—approximately $80 per day per resident. It’s been more than 15 years since the base Medicaid rate has increased, and operating costs have increased exponentially in that time.
nor’s support.
But now we need to address the most significant underlying issue facing our industry: raising the amount of money that providers of long-term care receive from Medicaid.
In April the state Senate, the Assembly and the governor’s office will decide on the rate that Medicaid re-
The pandemic only added to the financial stress for historically under-resourced not-for-profits, from the higher costs associated with hiring temporary staff to increasing wages for those on the front lines. Too many have been forced to close their doors.
ArchCare cares for more than 10,000 seniors and people with spe-
cial needs and profound disabilities daily. The majority of them are struggling with economic insecurity and racial inequity. We’re able to ser ve them because of government subsidies through Medicaid.
Advancing health equity
If we as a society are going to make strides in advancing health equity and caring for the vulnerable, we need to address this fact: The primary and, in many cases, only source of revenue available to
care for disadvantaged individuals pays $80 a day less than the actual cost to care for them.
Our mission is to provide every person who walks through our doors with exemplary care—to honor them as individuals and meet their physical, emotional and spiritual needs. Government leaders, the health care community and the families that entrust their loved ones to long-term-care organizations are aligned here. We all want quality, we all want more staffing,
and we all want to care for the people most in need.
We can’t do it without proper funding.
Unless there is action to address the chronic gap in Medicaid rates, the result, as unintentional as it may be, will be the loss of high-quality health care services by those who need them most. The national conversation to date has focused on oversight and regulation. Though those elements are important pieces of the puzzle, there is a marked lack of discussion about the inadequacy of the Medicaid rate and how it affects staffing and quality.
This is a gap we cannot overcome on our own. Thousands of good people across the state—doctors, nurses, social workers and other caregivers—come to work every day with clear intentions to do the right thing. We want to ensure that people are cared for and that their loved ones can rest easy. We just need help to do it. ■
Scott La Rue is president and chief executive officer of ArchCare, the Archdiocese of New York’s nursing home network.PEOPLE ON THE MOVE
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THE LIST
REAL ESTATE STILL REIGNS
TOP TARGETS
More than a third of all lobbying dollars spend were in
clients, consistent with prior years.
Signature Bank’s fingerprints turn up across New York City’s real estate industry
BY C. J. HUGHESWith the shutdown of Signature Bank, the city may have lost one of its most dependable sources of funding for real estate deals.
Holding about $33 billion in outstanding mortgage loans at the end of last year, the majority of which were backed by buildings in New York, Signature poured into real estate with fervor in the years after opening its first office in 2001.
lished and bigger institutions such as JPMorgan Chase, Wells Fargo and Citigroup.
Projects across the boroughs
And its financing powered projects across the boroughs, from boutique condos to modest walkup rentals and soaring office spires.
Clients included low-profile family-run firms as well as major developers who shaped New York’s skyline. And some presumably had give-and-take relationships with Signature, not only borrowing money but also keeping funds in the bank.
Indeed, though Signature may have been closely associated in recent months with cryptocurrency deposits, the Melville, Long Island-headquartered company has consistently been one of the city’s busiest real estate lenders, frequently winding up on “most active” lists alongside better-estab-
Signature does not appear to have originated much in the way of construction financing for new-development projects. But the company’s impact can still seem broad.
In December Sage Realty, which owns several large office buildings in Midtown, borrowed $155 million from Signature to refinance a loan behind 777 Third Ave., an office tower that it built in 1963. The
loan included $15 million in gap financing. Sage, which was founded by the prolific Kaufman family, leases the land at No. 777 but owns its tower. A message left at Sage’s Manhattan office was not returned by press time.
BUTTON TEXT
Signature also played a role in last summer’s acquisition by the
Kahen family of three side-by-side rental buildings on a different part of Third Avenue. The Kahens paid $34 million for the sites, between 1020 and 1026 Third Ave., near Bloomingdale’s. Signature chipped in $19 million. Majid Kahen had no comment.
The lender, which was founded
in 1999, has also recently invested in portfolios controlled by landlords such as Mocal Enterprises, Delshah Capital and Briarwood Organization, according to public records. The bank was also a lender to Donald Trump, before he became president, and Ivanka Trump once sat on its board. ■
CLIENTS INCLUDED LOW-PROFILE FAMILY-RUN FIRMS AS WELL AS MAJOR DEVELOPERS WHO SHAPED NEW YORK’S SKYLINE
What’s next after the failure of Silicon Valley and Signature banks
BY CARA EISENPRESS AND AARON ELSTEINQuestions are swirling around the swift and surprising failure of two large regional banks and what it means for depositors, investors and the broader economy. Here's what we know about some key issues.
WHAT JUST HAPPENED AND WHY?
SILICON VALLEY BANK failed March 10, and Midtown-based Signature Bank followed suit March 12. Normally banks collapse when they’re overwhelmed by bad loans, but that’s not what happened here. Instead, Silicon Valley was brought down by too many depositors racing to withdraw money—$42 billion in deposits—at the same time. The panic spread to Signature, and regulators deemed that an unacceptable risk to the financial system, causing them to step in and shut down the bank.
COULD THIS HAPPEN AT MY BANK?
IS THIS A GOVERNMENT BAILOUT?
FOR ALL INTENTS AND PURPOSES, yes, although the government and banking industry officials were careful not to frame it that way.
Essentially, the federal government is now valuing the bonds on banks’ balance sheets at face value, not what they are worth today on the open market, in order to back-stop all deposits, even those above the normal limit of $250,000 per account. The transaction will make depositors whole, even those whose accounts were above the insurance limit, but will not protect shareholders. Regulators say taxpayers won’t be on the hook at all because any losses that cover uninsured deposits will be recovered by a special assessment on banks. Going forward, the government is guaranteeing that it will buy any safe assets—such as government-backed mortgage and Treasury bonds—on a bank’s balance sheet, even if they are technically illiquid, and no one but the government would buy them at face value.
DID THE CRYPTO CRISIS PLAY A ROLE?
BARNEY FRANK, a former director at Signature Bank, thinks so. But crypto’s collapse is a supporting player to the star of the show: rising interest rates. Higher rates forced Silicon Valley Bank to swallow a big loss when it sold Treasury bonds to meet depositors’ demand for cash. The bank’s depositors were especially anxious because the tech sector has had an awful year since the Federal Reserve started raising interest rates. It’s true that Signature Bank housed deposits for crypto exchanges and billions of deposits had left the door in the aftermath of FTX’s collapse. But before the run on Silicon Valley, Signature had reported deposit balances were steady.
WILL THE FED CONTINUE ITS PLANNED INTEREST RATE HIKES?
THE MARKET IS BETTING NO. Early last week futures traders bet the Fed would pause, at least for a while, now that the failures have revealed a downside of rate increases. The battle to bring down inflation continues, however, and the Fed may view bank failures as unfortunate but unavoidable casualties. February’s inflation reading ran slightly down from January, at 6% for the year, which could give the Fed cover to hold the line on rates. But 6% is still a lot higher than 2%, which makes the Fed’s deci sion more difficult. The other interest rate question, notes Nick Colas in his DataTrek newsletter, has to do with whether the Fed’s capital requirements are strict enough for the current moment. Banks have to hold a certain amount of funding in reserve to cover risky activities. But those levels “as sume very low Treasury rates in a crisis,” according to DataTrek. With rates high, they “are inadequate in the current environment.”
SVB AND SIGNATURE WERE unusual banks in that both specialized in serving businesses and had relatively few retail customers. Business clients (often with much bigger balances) are more prone to yank their deposits when they sense something is amiss, such as when Silicon Valley couldn’t raise cash to fill a $1.8 billion hole created by the bank’s selling Treasury bonds at a loss. When the government seized Silicon Valley, it said accounts whose deposits exceed the Federal Deposit Insurance Corp.’s $250,000 insurance cap would be given an IOU instead of a guarantee they could access their money. On March 12 the government reversed course and said all bank deposits would be guaranteed. Banks with large retail deposit bases such as JPMorgan Chase and Bank of America have been barely affected by the turmoil. Some regional banks, however, such as First Republic Bank, are seeing big share drops, suggesting wariness remains among depositors and investors.
HOW DO INTEREST RATES PLAY INTO SVB’S PROBLEMS?
SILICON VALLEY HELD OVER HALF of its deposits in longterm bonds purchased when interest rates were low, often less than 1.5%. Since then the Federal Reserve has been battling inflation, and interest rates have gone up to 4.5%. But when interest rates go up, old bonds are worth less. The shrunken assets were not a pressing problem until depositors asked for their money. That’s when the balance sheet problems became real. By the close of business March 9, customers’ requests had driven SVB’s cash balance to negative $958 million, according to paperwork filed with the state of California.
McGraw Hill building residential conversion to begin this summer
BY NATALIE SACHMECHIThe famed McGraw Hill building, once home to the eponymous publishing house, is slated to begin converting some of its floors to apartments this summer. Its owner, Resolution Real Estate Partners, revealed last year that it was mulling a partial conversion of the building at 330 W. 42nd St. in response to a struggling office market.
The company announced last Monday that floors 12 through 32 will be converted to 224 luxury, loft-style rental apartments, while floors 33 and 34 will have amenity space for residents.
The units will have 12- to 15-foot ceilings and large windows.
The first 11 floors will be revamped as amenitized office space that will feature 7- to 12-foot-high operable windows. The renovations will cost $100 million, and the entire project is expected to be complete as soon as the second quarter of 2024, according to Resolution.
The residences will be studio, one-bedroom and two-bedroom apartments and will have an entrance separate from the office portion of the building.
The renovations will include a
modernized lobby that connects the lower level and ground and second floors with a 35-foot atrium. It will also have lounges and conference rooms plus a wellness center and landscaped outdoor terraces.
Resolution had already spent $120 million in 2021 to renovate the 650,000-square-foot building, including replacing its HVAC system. The company says it currently has no plans to convert other properties in its portfolio. Last month now-defunct lender Signature Bank began marketing for sale a $140 million performing loan attached to the building.
Other conversions
The largest office-to-residential conversion in the city, 1 Wall St., was completed by Macklowe Properties; it plans to begin moving in residents this month. Metro Loft Management and Fortress Investment Group are working on plans to convert 85 Broad St. to apartments.
Mayor Eric Adams’ administration is currently working on plans to amend the city’s zoning regulations to encourage more office conversions in areas that do not allow the construction of apartments, including the Garment District and parts of Midtown. ■
Housing Authority tenants could get $389M in rent relief
BY EDDIE SMALLLEGISLATORS HOPE to include $389 million in rent relief for public housing tenants in the state’s upcoming budget.
The proposal, spearheaded by state Sen. Brian Kavanagh and Assemblywoman Grace Lee, would add this money to the emergency rental assistance program, providing a boost for New York City Housing Authority tenants and others who have been essentially excluded from the program so far.
The $389 million would be enough to cover the estimated cost of helping all of New York’s eligible tenants who have already applied for rent relief but have been rejected only because they live in public or subsidized housing, according to Kavanagh’s office.
“It is long past time for the state to meet the emergency needs of residents of public and subsidized housing who have been relegated to last-in-line status for ERAP funding due to an unjust provision deprioritizing these New Yorkers’ applications,” Kavanagh said in a statement.
The office of former Gov. Andrew Cuomo insisted on putting language into the law establishing the program that gave public housing residents and other federally subsidized tenants last priority for receiving the funds, Kavanagh previously told Crain’s. Given that the demand for relief funding has consistently outweighed the supply, this has effectively excluded those tenants from the program.
The state’s Office of Temporary and Disability Assistance runs the program, which had paid out about $2.9 billion as of March 1. The state closed its application portal on Jan. 20 after exhausting its funds. Although the U.S. Treasury Department allocated an additional $63 million for New York’s program in January, this was not enough to merit reopening the portal.
“An investment in public housing will ensure residents are secure in their homes, allow for the continuation of vital services and help housing authorities across the state balance their budgets,” NYCHA Interim CEO Lisa Bova-Hiatt said in a statement. ■
HEALTH CAREMedRite lays off 295 staffers as mobile Covid program ends
BY JACQUELINE NEBERUrgent care company MedRite has shuttered its mobile treatment program and laid off 295 workers, almost two-thirds of its workforce dedicated to that project, according to a notice filed with the state Department of Labor.
The company took the actions because the city terminated MedRite’s Covid-19 Test to Treat program, according to the filing. MedRite laid off the workers on March 10.
MedRite was founded in 2010 and had 465 employees working on the project, according to the notice. It operates a network of 25 urgent care locations in New York and four in New Jersey. The clinics offer rapid Covid antigen tests, polymerase chain reaction tests and a three-hour PCR viral test that costs patients $225 in the New York area, according to the company’s website.
by the Test to Treat closure were offered the opportunity to interview for roles at urgent cares or on other projects, and some were offered positions, he added.
The city launched the mobile Test to Treat program in June 2022. There are more than 30 mobile units that give New Yorkers the opportunity to get tested for Covid-19 and get Paxlovid medication immediately afterward.
The city has said the Test to Treat
Test to Treat program and is doing so now because community transmission is low. The hospital system will continue to update New Yorkers as the program changes, he added.
Mpox outbreak
AS COVID TRANSMISSION LEVELS
PROGRAM
Bill Miller, MedRite’s senior vice president of business development, said MedRite is scaling its testing efforts down as the federal Covid-19 emergency comes to an end by May 11. All of the employees impacted
program has tested nearly 30,000 New Yorkers since its launch and has prescribed Paxlovid medication to more than 1,000 people. In addition, the New York City Test & Treat Corps has distributed almost 80 million at-home rapid tests to New Yorkers.
Adam Shrier, a New York City Health + Hospitals representative, said that as Covid transmission levels have changed throughout the pandemic, the city has adjusted the
In July MedRite was also part of the city’s plan to treat the mpox outbreak. The city Department of Health and Mental Hygiene had initially contracted with the firm to administer its mpox vaccine supply, but it tapped medical services company Affiliated Physicians instead after patients had issues booking vaccine appointments through MedRite.
Miller said MedRite continues to add employees to its urgent care locations and just opened a new facility in Midtown.
MedRite is the latest firm to wind down Covid operations. In December a Long Island City testing lab filed to shutter and lay off 185 workers. Pandemic Response Lab had also contracted with the Department of Health and Mental Hygiene, and it notified the department so it could find another lab, the company reported. ■
HAVE CHANGED, THE CITY HAS ADJUSTED THE TEST TO TREAT
Capsule finalizes move to Harlem pharmacy location with $25M investment plans
BY JACQUELINE NEBERCapsule has fully activated its 43,000-squarefoot pharmacy in Harlem in which it will invest $25 million over eight years, the digital pharmacy company announced March 10.
More than 120 full-time employees are now stationed at 122 W. 146th St. after beginning to
it is renting, Stevens said.
Capsule serves customers in the five boroughs, northern New Jersey, Westchester County, the Lower Hudson Valley and Connecticut’s Fairfield County.
caPSULE OFFErS PATIENTS
DELIVERY FOr
Capsule offers patients medication delivery for free as well as refill transfers. According to the company, it aims to reduce patients’ wait times for their prescriptions, reduce the number of m e dications that are out of stock and increase price tr ans parency.
AS WELL AS REFILL TRANSFERS.
move from a 7,000-square-foot Midtown location in August 2022, said Amy Stevens, a Capsule representative. The Harlem facility will create 50 jobs and, with the $25 million going toward technology improvements, allow the company to scale up and serve more customers and doctors. Capsule initially invested $7 million in opening the space, which
Capsule works with commercial insurers, Medicare and Medicaid, with the goal of creating higher fill rates and improved adherence among customers.
The company’s New York growth is “robust,” said Eric Kinariwala, Capsule’s founder and chief executive officer.
Capsule has 12 other pharmacy locations across the country. It was founded in 2016 and has raised $570 million to date. ■
Vornado inches toward the finish line, close to selling all units at 220 Central Park South
BY C. J. HUGHES
Vornado Realty Trust has sold another apartment at the condo 220 Central Park, a rare bright spot for the landlord as it grapples with tough markets elsewhere.
No. 22B at the Midtown luxury high-rise, a three-bedroom sponsor unit, sold for $14.8 million, according to the city’s register. The buyer appears to be an executive with AMTD, a Hong Kong-based financial company, according to its deed, which was signed by New York lawyer Justin Marques. His clients include “high-net-worth foreign and domestic individuals” according to his website.
Last summer an AMTD fintech platform spin-off called AMTD Digital debuted on the New York Stock exchange at about $8 per share.
About a month later the company’s stock price suddenly surged by 21,000% for still-unknown reasons, though the share value has since come back to earth. On Wednesday AMTD Digital, which has a market capitalization of $1.6 billion, was trading around $8.
Six units left
With the sale of No. 22B, which closed March 3, Vornado appears to have just six units left at the 117unit tower, though some owners of apartments have been selling their homes there too. Most of what Vornado has left are smaller units on lower floors of the 70-story high-rise, which should ultimately generate a haul of $3.4 billion for Vornado when every sponsor unit has traded, according to the condo’s offering plan.
For example, No. 20F, a studio that presumably will be taken as a staff room, remains unsold, according to public records. Also available is No. 22A, a two-bedroom.
Sales appear to have been slow since last summer, when there were 10 unsold sponsor units at the address, according to a Crain’s analysis, though Vornado may be intentionally holding back some units from the market until conditions improve.
It’s been a challenging few months on other fronts. In February the company, which is primarily a commercial landlord, announced it would put all new development on hold. Vornado also recently wrote down its Midtown portfolio, which is mostly retail real estate, by 30%.
And a highly anticipated plan to build up to 18 million square feet around Penn Station appears dead in the water because of the econo-
my’s “headwinds,” according to a statement from chairman Steven Roth last fall. On Wednesday Vornado’s stock was trading around $16 a share, a recent low.
Though Vornado may no longer be able to count on 220 Central
Park South as a revenue stream, it can still boast the priciest home ever sold. In 2019 Vornado unloaded a four-floor berth to hedge fund executive Kenneth Griffin for $239 million, a record that appears to still stand. ■
VORNADO CAN STILL BOAST THE PrIcIEST hOME EVEr SOLD, UNLOADING A FOUR-FLOOR BERTH FOR $239 MILLION
of entrepreneurs fueling growth and how the sector is providing opportunity to a diverse swath of the city’s workforce.
From 2018 to 2020, an average of 431 rst-time founders raised money for their startups in New York, according to data by Pitchbook. Two years ago, the number jumped.
In 2021, 643 rst-time founders closed rounds totaling $3.3 billion. In 2022, in spite of less optimism, 621 rst-timers raised funds of $2.9 billion for their startups.
ere were about 348,000 tech workers spread among roughly 25,000 tech companies and tech teams at the city’s traditional rms as of 2020, according to a report on tech talent by CBRE. By comparison, the Bay Area has about 25% more companies, 7% more workers and more than double the investment dollars.
“Every year for the last 15 years, [the New York scene has] been getting bigger,” said Kevin Ryan, who’s often referred to as the Godfather of New York City’s tech sector and who now nances and builds startups as the founder of AlleyCorp. After one successful company trains a group of future leaders, the theory goes, some of them start or nance more successful companies and repeat the same pattern. Called a virtuous cycle, it’s ultimately a numbers game. If each year a steady percentage of employees leave to nd something new—“maybe 5%,” Ryan estimated—the total number of new founders grows, and the strength of the sector compounds.
And despite the crash in venture capital dollars last year amid a major cooling o for the industry, some say there is no better time to take advantage of the knowledge and relationships they have built on their way up.
“It’s a di erent time to be at a tech company today, with the layo s, and internally things become di erent when that is the case,” said Arthur Leopold, who left a job in Chicago to co-found a stealth startup in the entertainment industry in New York. Dollars for seed-stage companies are still relatively accessible, even as some rms have struggled to close larger rounds. “It felt like the perfect time to take the leap,” he said.
Fertile ground
Raymond Roach grew up in Bedford-Stuyvesant, Brooklyn. e 39-year-old’s parents, Jamaican immigrants, never earned more than about $12 an hour.
In June 2022 he became general manager of Amazon’s largest ful llment center in the world, on Staten Island. Amazon would not disclose the salary range for his position, but estimates from Glassdoor put it at $300,000, including bonuses and stock options.
Although Roach expressed no plans to leave Amazon for something new, his position at the top of the local logistics organization is emblematic of the kind of generational growth possible within the city’s tech ecosystem and the breadth of opportunity within industry companies.
“Google, Amazon—those are
great training grounds for entrepreneurs,” said Julie Samuels, executive director of industry group Tech:NYC. eir scale in New York has been instrumental to the sector’s growth. A small local startup might employ hundreds here; Google and Meta have more than 10,000 each, adding to the total numbers and lowering the risk of entering the industry, as Samuels put it.
“As the larger tech companies really doubled down on New York,” Samuels continued, “that created a sense of security that you could come here and build a tech career that allowed you to work somewhere large, or small, or be a founder of your own startup.”
Networks of tech employees stay in touch post-Amazon, Meta or Google, founding companies together and investing in each other.
ere is even an o cial company that brings former Google members together. e company, called Xoogler, has gained traction during the winter’s layo s.
Roach said he credited his meteoric rise in ve and a half years at Amazon to the company’s methodical training and mentorship systems, giving him the ability to support a team of 6,000 who ful ll more than 500 million customer orders annually.
Local entrepreneurs are also tapping into a lineage of a small number of founders and investors who paved the way. Much of the growth in the city’s tech sector can be traced to Ryan of AlleyCorp, who in 2007 was the head of the digital adtech rm DoubleClick and brokered a $3 billion sale to Google.
DoubleClick’s technology laid the bedrock for the digital ad industry of today and gave Ryan the ability to fund and co-found a dozen tech rms. ose include Gilt Groupe, DataDog and MongoDB.
Flatiron Health is a newer company known for minting founders.
After its acquisition by Roche in 2018 for $1.9 billion, leaders working in product, business development or engineering at Flatiron formed ve or six early-stage companies, said Zach Weinberg, threetime co-founder of Invite Media, Flatiron and Curie.Bio.
Similarly productive terrain for startups includes doctor-listing site ZocDoc, health-tech insurance
Company in 2021. ere were about 100 employees when she joined. Ramp founders Eric Glyman and Karim Atiyeh, she said, put trust in employees’ potential, not just their age or experience.
“ ey believed a 25-year-old could start and lead a team,” Brown said. e company now has 10,000 employees around the globe, and last year its fundraising round of $750 million put the company’s value at $8.1 billion.
e experience is common. A look through the two recent fellowship classes at Primary are a LinkedIn album of high-performing tech talent from across the big companies. (Some join the program experimentally before alerting their bosses of their big leap.)
Leopold, the CEO of the stealth entertainment startup, said he had been harboring the idea for his rm for more than ve years. After working in nance, he joined video-sharing startup Cameo in 2017 as its chief operating o cer and eventually moved to Chicago, where the company, now worth $1 billion, is based.
“I really missed New York,” he remembered. “I’m an early bird—I like to get to the o ce early. At 7 a.m., New York is humming. In Chicago, you could re a cannon.”
Last year he began to feel ready to take the leap. In January he and co-founder Jonathan Meyers, formerly an engineering manager at Spotify, started their new company from a co-working space in Williamsburg, Brooklyn. Meyers left Spotify this month. So far, the two are funding themselves and expect to launch publicly by summer, possibly raising capital around then too.
provider Oscar, e-commerce leader Jet, clothing company Rent the Runway and expense-management rm Ramp. Similar cycles have been going on longer out West— PayPal, for one, has famously produced Tesla, SpaceX, Palentir and Founders Fund.
“A lot of folks told me that if I was considering tech, I should go work at Ramp,” said Sarah Brown, who is now the Union Square-based rm’s head of enterprise platforms. Brown joined the company after three post-college years at Bain &
“When you are exposed to that growth, it’s an unbelievable training opportunity,” Weinberg said. “You see so many problems in such a short time, which you are thrown into the mix to solve.”
Taking the leap
Jumping ship to start a new venture is not only the standard in the city, but it’s also encouraged.
“ ere is a sense of pride in being one of those companies that churns out the next generation of incredible founders,” said Emma Balin, who runs a fellowship program for founders at Primary VC.
Balin noted that earlier-stage companies usually want to hold onto their talent, but “we do see Primary portfolio companies valued in the billion-dollar-plus range tend to encourage a culture of entrepreneurialism and celebrate those who set out on the journey.”
e opposite wouldn’t really make sense, Weinberg said.
“You get a combination of really smart, self-selected people, paired with a bit of cash that gives them a risk appetite, paired with exposure to a lot of complicated problems in a small period of time,” he said.
At Ramp, Brown said, it is basically a given that people come to the company for entrepreneurship training. In less than two years, she already has a number of former colleagues who have launched startups. Brown is an angel investor in some.
Many founders stay in close touch with the city’s robust network of funders, whom they meet along the way. “When the market was hot, investors were throwing money at people before they left [their fulltime jobs],” said Melody Koh, a partner at NextView, which makes pre-seed investments. “We’ve even backed concepts. You can’t wire money until they’re incorporated though—these are handshake deals—but we tell them that when and if you guys leave and incorporate, we’ll be an investor.”
However, working at tech companies is not the only way to get ready to be a founder. e proximity of tech to local behemoth industries such as health care, nance and social services is a feature of New York’s ecosystem whose cross-pollination makes its virtuous cycle unique, Tech:NYC’s Samuels said.
Eli Polanco, who started payroll-tech rm Nivelo, went to college with the idea of becoming an entrepreneur like her parents. But as an immigrant from the Dominican Republic, she needed the assurance and visa sponsorship that came with employment at a big company. She worked in mergers and acquisitions at JP Morgan before joining a team then called New Product Development and Emerging Technologies. It was tiny, almost like a startup.
Suddenly, at the largest payments provider in the world, she was working with a small team to build new products in ntech. Her colleagues went on to become founders and venture capital investors themselves—even without the messy glory days of early startup life.
Polanco was then equipped to start serving a speci c niche: payroll. With her deep subject-matter
“I BELIEVE WE CAN RECOGNIZE TALENT WITH DEEP INDUSTRY KNOWLEDGE … AND ARE NOT AFRAID OF BACKING FOLKS WITH NONTRADITIONAL BACKGROUNDS LIKE OURSELVES.”BUCK ENNIS POLANCO Polanco founded the payroll-tech startup Nivelo after working at JP Morgan. BROWN joined Ramp when the ntech startup had 100 employees. It now employs 10,000 and is valued at $8.1 billion. ELLIE BAER
knowledge, she looked at which industries had not yet modernized their payments processing.
“I couldn’t see a more interesting or needed industry to build for than payroll,” she said.
She founded Nivelo in 2020, raising $5 million. With an eight-member team, Nivelo is planning more hires. Several former colleagues have invested, including Charley Ma, head of growth at Alloy, a ntech platform for onboarding customers and a well-known angel investor. (Ma also made a stop at Ramp as an early hire.)
“I think it’s interesting that a lot of us have not only become operators outside the bank but also investors,” Polanco said. “Not just because paying it forward is important, but because I believe we can recognize talent with deep industry knowledge in nancial technology and are not afraid of backing folks with nontraditional backgrounds like ourselves.”
Future diversity
Compared to other hubs, New York has more tech workers from underrepresented backgrounds.
Black and Hispanic New Yorkers already make up 20.8% of New York’s tech sector, compared with 8.5% in the San Francisco Bay Area and 9.7% in the Boston-Cambridge area, according to research from the Center for an Urban Future.
So far, that has not been re ected in fundraising, where the vast bulk of money is invested with white
male founders. Only 5% of venture funding goes to Black and Latino founders in the New York region, according to Crunchbase data. Women are also disproportionately underrepresented, bringing in about 2% of funding nationally. A list of the 30 founders who have started the most companies locally is all male, although not all white.
e question now is whether a new class of founders is bound to change the numbers. Tech employment is more diverse at junior levels, so if trends hold, underrepresented groups such as Black and Latino workers could make inroads in senior teams and, eventually, increase the diversity of rst-time founders. Of the employees in 2018
who held equity—something of a proxy for tech industry workers—6% were Black. By 2022 that had risen to 11%, according to data shared by Carta, which manages equity o erings for companies.
A growing number of rms and funds are dedicated to investing in diverse and female founders. Harlem Capital, a venture capital rm,
has announced a plan to invest in 1,000 diverse founders over the next two decades. ere are a handful of fellowship and accelerator programs such as the city’s Founder Fellowship program, created by the New York City Economic Development Corp., that reserves 100 spots for startups with minority founders to receive mentorship, build community and improve access to capital.
Regarding diversity, Ryan noted that there are many nonwhite workers—many are of East Asian and Indian descent—on both coasts. However, there is a limitation early in the talent pipeline: Computer science departments still mostly attract men, and startups, especially early ones, tend to need a lot of engineers. Women make up just one-quarter of computer and math professionals, according to the National Girls Collaborative Project, which tracks women in the science, tech, engineering and math elds.
For Roach and the dozens who sit just below him at Amazon—including “four powerhouse women” on his senior leadership team—the opportunity to have a career like his at a mammoth tech company in the city where he was born is a breathtaking feat, even now. He credits open access to the mentors he needed to help him along on a leadership track. He pays it forward by o ering the same advice and help to leaders in line below him. “It’s emotional,” Roach said. ■
NICOLA ANTONAZZO PHOTOGRAPHY LLC
Arts of Org filed with the SSNY on 01/23/23 .Office: NY County.
SSNY designated as agent upon whom process against it may be served. The SSNY shall mail a copy of any process against the LLC: 9900 Spectrum DR., Austin, TX, 78717, USA. The principal business address of the LLC is 228 Park Ave S #494670, NY, NY, 10003, USA.
Purpose: any lawful act or activity.
Notice of Qualification of 45 WEST 27TH STREET PROPERTIES, LLC
Appl. for Auth. filed with Secy. of State of NY (SSNY) on 03/10/23. Office location: NY County. LLC formed in Delaware (DE) on 03/09/23. SSNY designated as agent of LLC upon whom process against it may be served. SSNY shall mail process to c/o Edison Properties, LLC, 110 Edison Pl., Ste. 300, Newark, NJ 07102. DE addr. of LLC: c/o Corporation Service Co., 251 Little Falls Dr., Wilmington, DE 19808. Cert. of Form. filed with DE Secy. of State, Div. of Corps., John G. Townsend Bldg., 401 Federal St. - Ste. 4, Dover, DE 19901. Purpose: Any lawful activity.
Contact
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NOTICE OF FORMATION OF Hunkinsworks, LLC. Articles of Organization filed with the Secretary of State of NY (SSNY) on 2/23/2023. Office location: NEW YORK County. SSNY has been designated as agent upon whom process against it may be served. The Post Office address to which the SSNY shall mail a copy of any process against the LLC served upon him/her is: 50-52 Metro Way, Secaucus, NJ 07094.The principal business address of the LLC is: 547 West 47th Street # 908, New York, NY 10036. Purpose: any lawful act or activity
UBERMENSCH LLC, Arts of Org filed with SSNY on 12/20/21. Off Loc: New York County, SSNY designated as agent of LLC upon whom process against it may be served. SSNY shall mail a copy of process to: The LLC,401 1st Ave Apt #19F, New York NY 10010. Purpose: to engage in any lawful act.
Notice of Qualification of HYDRO ALUMINUM METALS USA, LLC
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Notice of Formation of WUMBO DESIGNS LLC Arts. Of Org. filed with the SSNY on 12/15/22. Office location: NY County. SSNY designated as agent of LLC upon whom process against it may be served. SSNY shall mail process to the LLC at the princ. office of the LLC. c/o 225 Cherry St, Apt 43D, NY, NY 10002
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Arts. of Org. filed with Secy. of State of NY (SSNY) on 12/22/2022. Office location: NY County. Princ. office of LLC: 447 Broadway, 2nd Floor Suite #1535, New York, New York 10013. SSNY designated as agent of LLC upon whom process agains it may be served. SSNY shall mail process to Firstbase Agent LLC 447 Broadway 2nd FL #187 NY, NY 10013.
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POSITION AVAILABLE
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Operations Analyst (Citadel Enterprise Americas Services LLC – New York, NY); Mult. pos. avail.
Offering salary of $100,413$160,000 per year. Deliver robust reference data ops, focus’g on instrument master data & reference data, includ’g party & EOD pric’g data. Reqs a Bachelor’s degree (or foreign equivalent) in Finance, Math, Stats, Comp Sci/Engineer’g, or a related field plus 3 yrs of experience in the job offered or related finance data analytics operational role/s. Pos reqs 3 yrs of experience w/ the follow’g: Manag’g projects involv’g automation of data flow, sett’g data standards, & dev of operational strategies in support of trad’g & investment activities; financial products & instruments w/ focus on convertible/corporate bond space; development & implementation of data-driven process improvements; & produc’g & maintain’g operational procedures & controls. Experience may be gained concurrently. F/T. Apply w/ resume to citadelrecruitment@citadel.com.
Ref. Job ID: 6520439.
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Purpose: Any lawful activity
breaks Hochul raised and alter her controversial plan to bring more housing to the city’s suburbs. Neither house’s proposal includes tax exemptions meant to encourage accessory dwelling unit construction, and the Assembly’s does not include the tax exemption for office-to-residential conversions. The Legislature omitted Hochul’s tax incentive meant to spur affordable housing production outside of the city as well.
The state Senate’s budget proposal does include a loose commitment to examine a potential alternative program to the affordable housing tax exemption known as 421-a “outside of the budget process.” It similarly pledges to address the deadline for current 421-a projects “on an individual basis outside of the budget process.” The Real Estate Board of New York has estimated about 33,000 affordable housing units are at risk of not coming online due to 421-a’s current construction deadline of June 2026.
The Assembly and state Senate also proposed sweeping changes to the governor’s plan for building more housing in the suburbs, which would require all downstate communities to grow their supply by 3% every three years and rezone areas around many Metro-North and Long Island Rail Road stops to permit more homes.
The Legislature’s budget proposals remove the state mandates and the state’s ability to override local zoning laws, which Hochul has slammed as “the most restrictive in the nation.” They instead seek to incentivize towns outside of the city to build more housing through a $500 million fund.
The Assembly budget specifies that the city will receive $125 million to take part in this program and that projects centered on affordable housing, transit and renovating abandoned buildings would receive special consideration toward hitting the growth target. Towns that receive funding but do not hit their targets could have the payments rescinded.
The Assembly also gets rid of Hochul’s requirement to have towns rezone areas around commuter rail stations. The state Senate proposal appears to do the same.
Neither house included the governor’s plan to let the city establish a program legalizing basement apartment conversions.
The Assembly and state Senate do include “good cause” eviction pledges in their plans, albeit vague ones. The Assembly’s budget says members “will continue to explore pathways to protect tenants from arbitrary and capricious rent increases and unreasonable evictions of paying tenants. This has long been a major priority for tenant activists, and recent court rulings have made it clear that it likely needs to be passed at the state level to be viable.
TRANSPORTATION
On the transit front, the Senate and Assembly have proposed freezing subway and bus fares at $2.75 and funding a pilot program to eventually make bus rides free.
Legislators rejected virtually all of Hochul’s fiscal rescue package for the financially strapped Metropolitan Transportation Authority. Hochul has laid out a plan that, among other proposals, would see fares rise to $3.
Instead, the Senate and Assembly each recommended other ways to fund the MTA.
The Assembly suggested providing the MTA with $196.6 million to stave off the 5.5% fare increase and $50 million to set up a pilot program to try free bus routes. Other ideas include repealing the Madison Square Garden tax exemption, creating residential parking permits for the city, adding a transit surcharge for Uber and Lyft, and raising the corporate franchise tax.
The governor’s proposed fiscal
rescue package includes roughly $1.3 billion in new annual revenue, funded in large part through an increase in payroll mobility taxes— which the Legislature also opposed—and earnings from casinos, along with $500 million from the city to cover student MetroCards and paratransit.
Both the Senate and Assembly rejected the governor’s plan to raise the payroll mobility tax to 0.5% from 0.34% on downstate employers. Hochul’s office estimated that the relatively modest payroll tax increase would generate $800 million in new annual funding for the MTA.
HEALTH CARE
For the health care sector, the one-house budget resolutions recommend modifications to the executive budget proposal to give a larger Medicaid reimbursement rate increase to hospitals.
The governor’s initial proposal allocated a record $35 billion for the state’s share of Medicaid funding. Her proposal was met with criticism from health care providers, who said a 5% Medicaid reimbursement rate for hospitals, nursing homes and assisted living providers was not sufficient for struggling organizations.
The Senate’s resolution would add about $412 million to support a 10% reimbursement rate increase for hospitals—exactly what they asked for—as well as reduce the state’s share of the indigent care pool so more high-need facilities can get funding. This part of the res-
olution would add $624 million for the state’s share of taking over local Medicaid costs and make the state Health Department’s ability to award temporary payments to distressed facilities permanent as well. According to the Assembly’s summary of aid to localities, meanwhile, it would provide $425 million for that 10% increase.
Safety-net hospitals that care for a high percentage of Medicaid patients can be particularly vulnerable to reimbursement rate shortfalls. The Senate’s resolution adds $1 billion in state funding for distressed safety-net hospitals, and the Assembly’s summary adds $850 million.
Furthermore, the Senate and Assembly have added $187 million and $100 million, respectively, to support distressed nursing homes. Providers raised concerns throughout 2022 about their ability to continue providing care as staffing shortages and low reimbursement rates forced some facilities to leave beds empty.
In the Assembly’s summary, just over $157 million has been added to support a 10% reimbursement rate increase for nursing homes. The Senate document notes that the Department of Health should find solutions to ensure that New York’s staffing shortages do not create nursing home bed underutilization.
Overall, Hochul spokesman Justin Henry said, the governor “looks forward to working with the Legislature on a final budget that meets the needs of all New Yorkers.” ■
Dumbo startup looks to battle household waste through logistics
Tech powers The Rounds’ automated subscription for household essentials delivered in reusable containers
BY CARA EISENPRESSDumbo, Brooklyn startup e Rounds has a technology solution for a very quotidian problem: running out of toilet paper.
“ is is a textbook example where technology is better than a human,” said e Rounds co-founder Alex Torrey. “You have no idea how much toilet paper you really use. A computer is really good at it—it tracks patterns and household size and other factors.”
e rm, founded in 2019, o ers a plan that restocks cabinets and shelves with coffee, paper towels, olive oil, soap and other essentials as you need them.
But the technology to manage customers’ household inventories e ciently is just one piece of e Rounds’ play. Torrey and co-founder Byungwoo Ko have a bigger picture: managing household waste.
For years leading consumer goods companies like Nestle, PepsiCo, Unilever and Mondelez have tried to work toward sustainable packaging. A consortium of such companies announced late last year that a 2025 goal to have all plastic packaging be reusable, recyclable or compostable was actually going in the wrong direction, with an increase in new plastic.
e hardest part of the push is reusable plastic, the market share of which actually fell from 1.5% in 2019 to 1.2% in 2021, according to Ellen MacArthur Foundation’s Global Commitment 2022 progress report. Most laundry detergent bottles, for example, are
thrown in the trash.
By contrast, when subscribers buy their detergent from e Rounds, they send the container right back. Subscribing costs $10 per month. en, e Rounds hits each subscriber’s residence weekly, dropping o needed re lls from their essentials list and picking up any empties. Back at its hubs in the four cities it serves–Philadelphia; Washington, D.C.; Miami; and Atlanta– e Rounds sanitizes containers and either re lls them or hands them back to suppliers—for example, a local co ee roaster—when they drop o lled goods. e list of items includes dog food, almonds, soda, diapers, chocolate-covered pretzels, granola bars, dish and hand soap, name-brand M&Ms, coconut milk, lentils, toothpaste, pasta and salt. Customers manage their accounts via text message. Last year, when the assortment of products was smaller, an analysis showed that the average member saved 50 pounds of packaging waste a year.
Dealing in actual goods makes the entire system a complicated endeavor for a tech rm.
“We’re operating a logistics business on the ground,” Torrey said. “It’s route optimization and inventory management.” A handful of super-speedy grocery delivery companies have struggled in recent months, because speed is expensive, as Torrey put it. E ciency can cancel out the need for speed. You don’t need an avocado in 15 minutes if you’ve put your avocado order on repeat, he explained.
So far e Rounds serves more than 10,000 customers and has raised over $41 million
from venture capital rms including Redpoint Ventures, First Round Capital and Andreesesen Horowitz. Between revenue from sales and capital raised last fall, Torrey said, the company has plenty of runway.
More to learn
Torrey moved the company to Brooklyn in 2021 because he felt that New York was the best city for building an ambitious, scalable business and for nding the right employees.
“We need the best talent to do the best work of our careers,” Torrey said. He made the bet that he would nd it in New York.
e Rounds will launch in New York eventually, though local employees do have secret access to the service.
“We know we will do extremely well in New York,” he said. “ e e ciency part of our model only compounds here.”
For the moment, there is more to learn elsewhere. “Our view is that operating in New York doesn’t teach you how to operate anywhere else,” he said. “Whereas operating in Atlanta is like being in Houston or L.A.”
New sign ups swell each time e Rounds expands its route to a new high-rise building, Torrey said. e rm partners with building owners and managers for marketing; they nd value in the service because it saves them time and space both on receiving copious e-commerce packages and disposing of the boxes and bags they came in.
“ e building managers are inundated,” he said. “UPS comes three times a day, and the
FOCAL POINTS
COMPANY The Rounds FOUNDED 2019 MANAGEMENT Co-founders Alex Torrey and Byungwoo Ko FULL-TIME EMPLOYEES Over 100, including both corporate and delivery staff
CUSTOMERS Over 10,000 PRODUCT MIX 250 household and pantry goods, including toilet paper GROWTH STRATEGY The Rounds wants to increase subscribers and delivery routes in its current four cities before expanding to more places. All employees work in the of ce.
“We are an on-the-ground business,” he said. “Those rounders”—as the company calls delivery people—“are my teammates, and they can’t work from home.”
WEBSITE therounds.co
building has to break down and palletize boxes, plus they get charged for waste management.” Fewer things arriving means fewer things to dispose of later.
On the supplier side, e Rounds seeks out smaller local vendors who can sell co ee, pastries and granola. Such purveyors can simply put a Rounds logistics hub on their delivery route, same as they would a new coffee shop.
As the company grows, Torrey nds scaling doubly satisfying. e more people who sign up as subscribers, the less packaging waste there is. “ e social impact is attached to the growth engine of the business,” he said. “As we launch more buildings, revenue increases, our member base grows, and we have even more packaging waste reduction.” ■
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