Crain's New York Business, October 16, 2023

CRAINSNEWYORK.COM I OCTOBER 16, 2023

The CMA CGM Marco Polo made headlines in 2021.

GETTY IMAGES

The $6B race to lure jumbo cargo ships to New York Harbor Mammoth container vessels are only becoming more common and require especially deep ports

By Caroline Spivack

When the massive container ship Marco Polo sailed into New York Harbor on May 20, 2021, it was met with much fanfare. Even among hulking ocean carriers, the vessel is a behemoth: At 1,299 feet it is as long as the Empire State Building is tall and carries enough goods to fill more than 16,000 20-foot-long containers, each of which can pack up a one or two-bedroom apartment.

The CMA CGM Marco Polo made headlines that day for being the largest cargo vessel ever to call on an East Coast port. When the ship was built in 2013, it was the world’s largest. But a soaring global appetite for produce, electronics, clothing and other goods has driven shipping lines to make vessels larger and larger. Today, the Marco Polo isn’t even among the top 10 biggest ships.

Colossal carriers mean fewer trips to transport more goods, but to dock these ultra-large ships requires especially deep ports. For the Port of New See CARGO on Page 20

New York’s deep ties to Israel come to the forefront The two are economically and culturally intertwined, and the business world is watching the burgeoning war

By Nick Garber

The unexpected, violent conflict that erupted in Israel and Gaza this month had instant resonance in New York City, which maintains close cultural and economic ties to the region.

With his nation at war with Hamas, Israeli President Isaac Herzog still took time on Oct. 8 to speak on the phone with Gov. Kathy Hochul, in a sign of how much the

nation values its connection to New York.

New York is deeply economically intertwined with Israel, ranking first among all U.S. states in exports to the country — including more than $4.1 billion in manufacturing products sent last year, according to the nonprofit American-Israeli Cooperative Enterprise.

Israel consistently ranks as one of the

Israel supporters protest in Dag Hammarskjold Plaza. | BUCK ENNIS

See ISRAEL on Page 21

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GOTHAM GIG Antiques store owner appraises the future of centuries-old art.

Antonio Reynoso seeks to move beyond rezoning battles for Brooklyn’s future.

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Behind the push for Creedmoor center to become affordable housing.

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10/13/23 5:27 PM

Sen. Gillibrand, city and state lawmakers call for regulation of technology and AI

EVENTS CALLOUT

By Mario Marroquin

NOV. 15 HEALTH CARE FORUM A fireside chat with health commissioner Dr. Ashwin Vasan exploring the city’s role in meeting residents’ need for mental health care. The discussion will touch on how, in a post-Covid world, where cases have waned, but a mental health crisis persists, the city plans to build on established health care initiatives to address inequality, quality of life and access to care.

DETAILS Location: 180 Central Park South, New York City CrainsNewYork.com/forumevent

Correction ◗ In the Oct. 9 Notable Nonprofit

Board Leaders feature, the profile of Rick Lazio should have said he is board chair of Enterprise Community Partners.

Government agencies must be smarter and more proactive in regulating emerging technologies, from digital currencies to artificial intelligence, said a panel of government leaders Oct. 11 at a Tech Summit hosted jointly by Crain’s New York Business and Tech:NYC. The panel included U.S. Sen. Kirsten Gillibrand, state Sen. Kristen Gonzalez, chair of the state Senate’s Internet and Technology Committee; and New York City Council member Jennifer Gutiérrez, who chairs that body’s Committee on Technology.

They deliberated on the opportunities and potential threats that AI can pose to businesses and even national security, and agreed there’s a need for policy that addresses privacy and misinformation.

Gillibrand said an independent agency is needed to regulate the internet as we know it today and the decentralized web, including blockchain applications such as digital assets, and that she feels it is too easy for individuals to use AI to create content to misinform and deceive individuals.

“I think we need an independent agency to do tech-type of oversight

and accountability,” Gillibrand said.

“Legislators can try as hard as we might to be tech-savvy and to know what the best oversight and accountability is, but nine out of 10 times, they are probably going to get it wrong.”

Another speaker at the day-long event, Evan Smith, disagreed with the idea of prospective regulation in which bureaucrats in a room try to envision all that can go wrong and write rules to prevent the possibilities.

Smith, co-founder and CEO of Altana Technologies, which is mapping the global supply chain, said he would instead prefer jail time or large fines for companies that behave irresponsibly.

“Hold me accountable,” he told the audience.

At the state level, Sen. Gonzalez said legislators are gearing up to tackle AI in the next session, which begins in January.

Gutiérrez said the City Council is holding public meetings to come up with a framework of how AI should be used in public schools. Public school leaders initially opposed allowing students to use AI in the classroom, but the administration changed its stance on the technology after realizing that AI has the po-

of that money paid for tabtential to improve worklets for students and to inflow for administrators, crease internet access students and teachers, throughout the state.

Gutiérrez said.

Gillibrand noted there is Separately, Gillibrand a shortage of tech talent in said she is spearheading the federal government and new regulation to expand that in an effort to increase oversight over digital assets such as bitcoin. Although Kirsten Gillibrand digital asset and cyber security literacy, she has been there is no organized opposition to regulating these assets, she actively promoting a Cyber Service said progress has been slow due to Academy program she created. The the nature of the subject and the program covers tuition, books and fees for a tech-focused education in limited knowledge by lawmakers.

The U.S. Securities and Exchange exchange for a five-year commitCommission has tried to regulate ment to public service.

The Cyber Service Academy prodigital assets but is going about it wrong, Gillibrand said, and unsur- gram will begin taking applications prisingly its enforcement has had Nov. 1, she said. The new program limited success due to challenges in builds on the work that the National Security Agency is already doing court.

The officials also discussed efforts with higher education institutions to boost internet access in the city in New York and around the counand in the state, which Gonzalez try, and will make 1,000 scholarsaid is a top priority in Albany. The ships available to students, Gillistatement led to some pushback brand said.

Gonzalez and Gutiérrez also from Gillibrand, who noted that the federal government provided bil- spoke about increasing diversity in lions of dollars for state and local the city’s tech sector.

A report from the Center for an agencies across the country to buy tablets and expand digital connec- Urban Future found that as of 2023, tivity, but that she would like a full only about 20% of tech workers are accounting of where the money ac- Black or Hispanic. That’s despite jobs in the sector having grown by tually went in New York.

Gonalez and Gutiérrez said some more than 142% since 2010.

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2 | CRAIN’S NEW YORK BUSINESS | October 16, 2023

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Borough President Antonio Reynoso (right) talks about his Comprehensive Plan for Brooklyn, which includes broad calls for more housing construction as well as improvements to transit. | MICHAEL APPLETON/NYCMAYOROFFICEFLICKR

Antonio Reynoso has big plans for Brooklyn’s future

By Nick Garber

The borough president of Brooklyn released a “comprehensive plan” on Oct. 4 to inform the borough’s future growth, making him the latest city leader to try to move past neighborhood-level rezoning fights and embrace a longer-term vision for development.

The plan, released after more than a year of research, includes broad calls for more housing construction, especially in parts of central and South Brooklyn that have built little in recent years. Although Reynoso’s largely symbolic office gives him little power to implement the plan’s more ambitious ideas, he said its findings will dictate his stance on future land-use proposals that come before his office as part of the city’s formal review process.

“This document is in direct response to our city’s failure to plan,” Reynoso said in a press conference outlining the plan on Oct. 4. “In New York City, we zone, but we do not plan.”

New York is an outlier among major global cities for lacking any comprehensive plan to guide its growth. In 2020, then-City Council Speaker Corey Johnson proposed a citywide plan that would have streamlined New York’s convoluted land-use process, but it collapsed within months amid opposition from neighborhood groups who feared it would reduce their influence over projects.

Reynoso supported that effort while representing Bushwick and Williamsburg in the City Council, before replacing Eric Adams as borough president last year. Reynoso’s plan overlaps in some places with the mayor’s new proposal to rewrite zoning rules to boost housing. For example, Reynoso calls for eliminating parking mandates for new construction and prioritizing development in transit-rich areas. Like Reynoso, the Adams administration is seeking to eliminate the need for some small-scale battles over individual rezonings—in their case, by making sweeping changes to the city’s zoning code.

felt when developers approach Reynoso’s office seeking support for a rezoning, in which the borough president gets a formal, non-binding say. If a developer wants to build in a neighborhood that has seen little recent construction—maps included in the plan spotlight places like Bay Ridge and Mill Basin for hosting especially few projects— Reynoso said that developers can expect a fast-track to approval, at least from his office.

“When you come into Borough Hall, if your application applies through the principles of the comprehensive plan, you’re not going to spend a lot of time here,” he said. “We would apDevelopers prove it and move it on to the City CounBut Reynoso, cil as soon as possiwhile saying he ble.” supports Adams’ Reynoso rattled plan “for the most off instances where part,” called his own — Brooklyn Borough President Antonio Reynoso the city’s piecemeal effort more comapproach to planprehensive for looking at issues beyond zoning. The plan also ning has failed Brooklyn in recent years. A includes recommendations for more in- set of bike lanes in Bay Ridge and Dyker vestments in maternal health, supporting Heights stop abruptly at 14th Avenue bethe proposed Interborough Express rail line cause the next-door community board, that would link eastern Brooklyn and based in Bensonhurst, didn’t want them. In Queens, and encouraging City Hall to build Downtown Brooklyn, the city has had to more bike lanes and plant more trees, scramble to open a new public school because the neighborhood’s rezoning proamong dozens of other proposals.

The plan’s most tangible effects may be duced more residential units than expected.

“This document is in direct response to our city’s failure to plan. In New York City, we zone, but we do not plan.”

NICK GARBER

Reviving an idea that failed at the city level, the borough’s president is the latest politician seeking to move beyond rezoning battles And attempts to rezone individual neighborhoods have collapsed—something Reynoso experienced personally when he pushed a community-driven plan for Bushwick—amid struggles to reconcile the desires of residents, developers and City Hall.

“What it comes down to is, our city’s process puts politics and private gain above the public good,” he said.

No benchmarks laid out The Regional Plan Association, New York Academy of Medicine and the nonprofit Hester Street all helped on the report, which was crafted after months of research and public feedback. In addition to its recommendations, the 200-page plan document includes a slew of maps that document the borough’s present inequities, from transit access to supermarkets to life expectancy (about 76 years in majority-Black Brownsville, versus 82.9 years in Park Slope and Carroll Gardens).

Reynoso’s plan does not lay out any benchmarks for how its success would be measured, and even if successful, he said its effects would take decades to be fully felt.

Adams’ own housing-zoning plan could produce 100,000 new homes over 15 years, according to his administration—but City Hall, too, has said action from Albany will be needed in order to come anywhere close to alleviating the city’s desperate housing shortage.

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RESIDENTIAL SPOTLIGHT

TV industry honcho snaps up prewar condo in 18-story building on the Upper West Side Nexstar Media’s Perry Sook paid $15.1 million for a five-bedroom penthouse on Central Park West

By C. J. Hughes

18-story building at West 95th Street designed by architect RosaA Central Park roost has caught rio Candela, has been changing the eye of the chief of the largest over to a condo gradually as tenowner of TV stations in the coun- ants move out, meaning it’s not on the typical timeline of new develtry.

Perry Sook, the founder of Nex- opments. The building originally star Media Group, which owns had about 150 apartments, but combinations by Argo WPIX in the New York have whittled down area and dozens of other that number to around stations nationwide, has 100 today, records indipurchased a five-bed- Sale price for cate. The building’s ofroom penthouse at 360 penthouse at 360 fering plan, which origCentral Park West, a Central Park West inally foresaw a $195 condo conversion of a prewar apartment building, re- million sellout, got a stamp of approval from state officials in 2015. cords show.

Sook’s unit, itself a combination, The duplex unit, which offers more than 1,000 square feet of pri- features one level that has a living vate outdoor space, cost $15.1 mil- room, dining room and kitchen lion, according to a deed filed Oct. laid out in a sprawling open floor 5 in the city register, which indi- plan, according to its listing, and a more traditional layout for the bedrooms on the floor below. Central Park views are numerous throughout.

The post-Labor Day period has been slow for many high-end residencated that Sook and his wife, San- tial sales, including co-ops and dra, closed on the deal in June. The townhouses, as elevated interest seller was the developer convert- rates continue to bite. But some ing the building, Argo Real Estate. new development projects, espeWhy the deed took so long to cially uptown, have enjoyed appear in the register is unclear; big-ticket trades all the same.

In the third quarter in Manhatfilings usually follow closings by a tan, the median price for luxury few weeks.

But 360 Central Park West, an deals—defined as the top 10% of

$15.1M

360 Central Park West is an 18-story building at West 95th Street.

360 Central Park West, Upper West Side | ARGO REAL ESTATE

the market—hit $6 million, which was up 4% in a year, even as the total number of deals declined by 22%, according to the brokerage Douglas Elliman. The median sale price for new condos in Manhattan in the same period, meanwhile, was $2.02 million, the brokerage said.

A spokesman for Nexstar declined to make Sook available for comment. And Cameron Culver, the director of new development for Argo, who marketed the pent-

house, declined to discuss the buyer.

‘Very one-of-a-kind’ But Culver would say that the uniqueness of 360 Central Park West, in terms of being a condo tucked inside a prewar structure, not in a glassy new tower like many new developments, makes it unique, along with the fact that it is a rare condo in co-op-heavy Central Park West.

“It is very one-of-a-kind, especially considering its level of finishes,” Culver said.

Founded in 1996 with the purchase of WYOU in Scranton, Pennsylvania, Texas-based Nexstar today owns 20 stations in 116 markets, according to its website, which puts it ahead of rivals Sinclair, Fox and Hearst. Publicly traded since 2003, Nexstar has a $4.7 billion market capitalization.

Its stock was trading around $135 a share earlier this month.

In surprise move, SL Green Realty president to step aside after 16 years in the position as cost-cutting looms

By Aaron Elstein

SL Green Realty said its president, Andrew Mathias, would leave his job Dec. 31 after 16 years at the position. He is to remain a board member and adviser to CEO Marc Holliday.

The move surprised Wall Street analysts, who believe serious cost-cutting looms at the city’s largest commercial landlord.

“We interpret this news to reflect

SL Green owns several Midtown office towers and is grappling with eroding occupancy rates and sluggish demand for leases. To raise cash, over the summer the firm sold its stake in 245 Park Ave. for $1 billion and analysts expect it will soon part with a piece of the jewel in its crown, new office tower 1 Vanderbilt. Evercore ISI analyst Steve Sakwa said the value of that property is rumored at $4.6 billion.

The landlord that owns 29 million square feet of Manhattan real estate is also trying to land a license from the state to develop a casino in a Times Square tower.

Mathias, who wasn’t immediately available for comment, is 49. He and Holliday have worked together since they were investment bankers who helped take SL Green public in 1999. Holliday joined SL Green after that deal got done and Mathias followed six months later.

He rose from vice president to

“We interpret this news to reflect a desire by the company to cut costs aggressively.”

— Piper Sandler analyst Alexander Goldfarb in a note to clients a desire by the company to cut costs aggressively,” Piper Sandler analyst Alexander Goldfarb said in a note to clients.

chief investment officer before being named president in 2007, when he was a Crain’s 40 Under 40.

“Andrew has been a true partner in everything we’ve accomplished at SL Green from the very beginning,” Holliday said in a statement.

Holliday is to serve as interim president after Mathias leaves, the company said in a regulatory filing.

Mathias was awarded nearly $12 million in direct compensation last year, most of it in shares. The company’s most recent proxy filing shows he controls 1.2 million SL Green shares and units, or 1.75% of the total outstanding. That’s slightly more than Holliday’s 1.67% stake.

Mathias’ stake is worth $42 million, based on trading Oct. 10. SL Green shares were little changed, at $34.60 each, on news of his departure.

In a statement, Mathias said: “I couldn’t be prouder of everything we’ve achieved for our shareholders, our employees and our city.

Mathias at a Crain’s event in 2017 | BUCK ENNIS

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ON POLITICS

Adams’ misguided trip is fodder for doomsayers

His visit to Latin America substituted for more meaningful action on the migrant crisis, which has become the city’s defining issue

J

unkets abroad are a time-hon- vince migrants to stop coming to ored tradition for New York New York City altogether.

City mayors. Practically meaningless—mayors have no say Work permits over international matters—but politically resonant, these venThe junket is understandable tures can sometimes bolster a but ultimately foolhardy. Yes, the mayor’s standing with a constitu- municipal government can’t inency back home or demonstrate definitely care for every single misome serious thought over a com- grant who comes here, but it won’t plex policy debate. have to in the future. The Biden Mayor Eric Adams, in his four- administration wisely gave temday sojourn to Mexico porary protective status and Central America that to the Venezuelan miconcluded Oct. 8, was grants who are already theoretically doing what here. They are eligible for all of his recent predeceswork permits and will sors have done. He felt soon begin to exit homecalled to the region beless shelters and even the cause the migrant crisis city altogether. has become the defining The migrants escaping issue in New York City.

Venezuela didn’t come Many of the migrants Ross Barkan thousands of miles to coming from Venezuela molder in uncomfortable have braved the perilous Darién city-run shelters and not work.

Gap before crossing the Mexican They want to earn money for border. themselves, their families, and Adams, however, was not at- likely send some cash home to tempting to inspire Span- those who haven’t left. And there ish-speaking voters back home. are plenty of employers in the agHe was, in some sense, trying to ricultural and service sectors who bolster his immigration bona fi- want and need their labor. des, but in a way that no other A rational executive would say Democratic executive in America all of this. He would ask the Biden has done. administration to do more and He is hoping his trip will con- promise, in the meantime, the city

will do everything it can to help them—within reason. He would not declare migrants will “destroy” New York City. He would not indulge in hyperbole that only fuels the bloodlust of the country’s most xenophobic politicians and pundits.

By spending several days abroad warning migrants about the supposed horrors that await them in his own city, Adams was inadvertently helping to create a New York doom loop. Mayors are many things, but they must be, perhaps above all, cheerleaders for their cities. They have to convince people to come there, live there and pay taxes there.

They have to use their bully pulpits to promote their cities, not denigrate them.

New York City is far too large to crumble under the weight of fewer than 200,000 new residents. Almost nine million people live here.

Unless you happen to live directly next to a migrant shelter, your life has likely not been impacted by their arrival in any meaningful way. It’s not as if New York, long a home for Spanish-speaking immigrants, looks and sounds any different than it did before.

Adams must think hard about how he’s talked, over the last year,

Mayor Eric Adams, pictured visiting the Darién Gap on Saturday, sought to discourage migrants from coming to New York City. | BLOOMBERG

about the city he’s governed. From stoking fears about allegedly outof-control crime to the influx of migrants, he’s given fodder to every last person who wants to see New York fail. His predecessors all knew better.

Quick takes ◗ Keep an eye on a City Council

race in a redrawn southern Brooklyn district next month. Two council members, Justin Brannan and

Ari Kagan, are pitted against each other; Brannan is definitely the favorite, but Kagan, a Democrat-turned-Republican, is making it competitive. ◗ No special sessions are planned in Albany, so it appears Gov. Kathy Hochul and legislative Democrats will be content to let the housing and migrant crises fester without much state help until at least January.

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

Standard High Line Hotel returns to financial health, and creditors have dropped a lawsuit against its owner

By Aaron Elstein

The Standard High Line Hotel, once at risk of foreclosure, has returned to health alongside a broader resurgence for New York City hotels.

Earnings at the Standard have returned to prepandemic levels and the mortgage for the 338room hotel, part of a pool of loans packaged and sold to institutional investors, is now considered “performing,” Fitch Ratings said Oct. 3. Creditors have dropped a lawsuit demanding the Hong Kong-based private equity owner, Gaw Capital, make good on $170 million worth of obligations.

“The loan is now current on payments and is being reinstated as a performing loan,” said Fitch

ing Sept. 23, up from $294 in the prior year and $276 in 2019. Occupancy rates last month checked in at 88.7%, up from 86.5% last year but below 2019’s 91.1%.

NYC & Co., the city’s marketing arm, expects business travelers to increase by at least a third this year, to 12.1 million. Overall, 63.2 million visitors are expected this year, 13% more than in 2022 though still below 2019’s peak of 66.6 million.

Tourism return Tourism’s return has buoyed hotel owners broadly. Maryland-based Marriott International’s stock is up 28% this year, and Virginia-based Hilton Worldwide has risen by 16%. But not everything is rosy, particularly in the world of asset sales: In August, Midtown’s Park Lane Hotel was sold to the Qatar Investment Authority for $623 million, $31 million less than Witkoff Group and a partner paid for it in 2013.

In June, a Holiday Inn in Chelsea sold for $80 million, also $31 million less than in 2013.

The Standard High Line opened in 2009, the same year as a former

Business took a while to recover after the hotel reopened from a Covid shutdown of about six months. analyst Wasiq Chughtai.

The Standard’s return mirrors the New York market overall. The latest data from research firm CoStar shows revenue per available room hit $337 for the week end-

The Standard High Line was once at risk of foreclosure. | COSTAR

rail bridge was converted into a park, completing the area’s transformation to hipster haven from a neighborhood of blood-smocked meatpackers. The Standard was where Solange Knowles was recorded on camera assaulting Jay-Z, her brother-in-law, and the top-floor bar was called the Boom Boom Room. (It’s now just called Boom.)

In 2017 the hotel was acquired

by Gaw for $340 million. It shut down for about six months when the pandemic hit and didn’t make any loan payments between May 2020 and October 2021, according to the creditors’ lawsuit.

A Gaw executive complained that creditors were putting “financial greed above interests of all involved.”

Business took a while to recov-

er after the hotel reopened. Revenue per available room early last year was just $319, 8% below 2017, Fitch said. But that key figure had risen to $385 by this past March and net operating income for 2022 clocked in at $22.5 million. In June, the hotel’s mortgage was released from special servicing, which is where distressed debt gets worked out.

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City advances street vendor ban on the Brooklyn Bridge

By Caroline Spivack

Transportation officials are advancing a proposed street vendor ban on the city’s bridges with new rules intended to clear sellers off the tourist-clogged Brooklyn Bridge.

The Department of Transportation published rules in the City Record on Oct. 6 to ensure that “no peddler, vendor hawker, or huckster” shall “remain upon or otherwise encumber, any elevated pedestrian walkway or bicycle lane on a bridge or a bridge approach.”

The city declared its intent to prohibit street vendors from elevated spans in May, igniting concern among bridge vendors, and will host a hearing for public feedback on the industry-reshaping rule on

destrian mobility,” DOT Commissioner Ydanis Rodriguez said in a statement to Crain’s. “These proposed rules would make it safer and easier for pedestrians to enjoy the Brooklyn Bridge and take in the world-renowned view of New York Harbor.”

Big crowds common

Vendors have sold New Yorkthemed trinkets and cheap eats on the tourist attraction for years, but the number of street sellers, those with and without the proper licenses, has ballooned since 2021 when the city freed up space by shifting bikers to a protected lane on the roadway below.

Cheek-to-jowl crowds are not uncommon on the bridge, especially on holidays or during particularly pleasant weather, and vendors now find themselves on the receiving end of regulators’ concerns. Mayor Eric Adams’ administration has recently ramped up actions against street vendors, including a controversial sweep of 78 — Matthew Shapiro, legal director, Street Vendor Project stands from the celebrated Corona Plaza food market in Queens.

Nov. 15.

DOT officials say the new rules The change would apply to all 789 bridges under the DOT’s purview, are fueled by increasing bridge foot but is specifically designed to ad- traffic. In a typical fall weekend in dress overcrowding on the Brooklyn 2022, a daily average of more than Bridge, said the city’s transportation 34,000 pedestrians traversed the Brooklyn Bridge, according to the commissioner.

“The Brooklyn Bridge has been agency. That’s compared to 17,000 called America’s Eiffel Tower, and pedestrians on a similar weekend in it’s important that all New Yorkers 2021.

The average width of the elevated and the millions of people who visit our city each year can enjoy it with- pedestrian walkway on the Brookout impediments to safety and pe- lyn Bridge is roughly 16 feet, but

“The failure to engage the vendors on this issue and just take a really extreme, top-down approach is going to be disastrous for the vendors.”

A woman purchases a beverage from a hot dog stand on the Brooklyn Bridge. | BUCK ENNIS

narrows to less than 5 feet in multiple areas. Throw vendors into the mix and that can cause a dangerous bottlenecks, says the city.

“The ability of pedestrians to exit the bridge safely is jeopardized by vendors who display and store their wares, carts, tables, tents, tarps, canopies, coolers, and generators along the elevated pedestrian walkway, impeding pedestrian traffic flow,” the proposed rules state. Officials also point to the bridge’s high pedestrian traffic during protests or emergencies.

Licensed bridge vendors, however, say the rules would fundamentally upend how they earn a living.

“It’s not fair to take that away from us,” said Poncho Romero, 76, who commutes from Hunts Point to sell the lucrative baubles to tourists.

“People are buying, and the money is good.”

The bridge is popular with vendors not only because it is flush with tourists but because it is also among the limited remaining places where sellers say they can legally operate.

City rules require that stalls have at least 12 feet of room and can’t be too near crosswalks, building entrances, fire hydrants, mailboxes,

bus shelters and other sidewalk staples.

Those restrictions paired with the city’s newly proposed rules will make it a challenge for street hawkers to find legal spots with good foot traffic to sell their wares, said Matthew Shapiro, legal director at the Street Vendor Project, which is part of the Urban Justice Center.

“The failure to engage the vendors on this issue and just take a really extreme, top-down approach is going to be disastrous for the vendors,” Shapiro said in an August interview. “These policies are squeezing the vendors out little by little.”

probably have to pay a higher rate for the tower’s $860 million in debt.

Evercore estimates Paramount’s interest rate will rise to at least 8%.

The prospect of steadily mounting obligations in face of stagnant or falling cash flow helps explain why Paramount’s stock price has fallen by nearly 25% this year, to about $4.30 a share. Shares in Empire State Realty Trust, by contrast, have risen by 17% this year, in part because the landlord faces only $80 million in debt maturities next year.

With the markets turning chillier, some office landlords have cut dividend payouts to conserve cash and are appealing to banks for loan extensions. They’re also offering more collateral to secure loans, analysts say.

“Using secured financing is contrary to many REITs’ longheld financial policies,” said Moody’s analyst Lori Marks in a report this month, “but [it is] viewed as the best, or in some cases only feasible, way to safeguard liquidity.”

Popular with vendors

Office landlords face steep price for misjudging interest rates Last year Vornado Realty Trust CEO Steven Roth was confident interest rates wouldn’t remain high for long.

“If past is prologue, we expect rates to climb quickly up a mountain, slow the economy and inflation, and then quickly fall down the other side,” he said during a May 2022 conference call.

That bet hasn’t worked out.

Borrowing costs, typically the biggest cash expense for landlords after maintenance, are ramping up because, as old loans mature, they’re replaced by new ones at higher interest rates. Some $20 billion worth of debt will come due over the second half of this year at the largest real estate investment trusts, according to Morgan Stanley, and an additional $50 billion next year.

The rising cost to borrow is yet another source of pressure for landlords beset by stubbornly high vacancies and a sluggish leasing market.

A $975 million mortgage for a San Francisco office building owned by Paramount Group matures this coming February, and the rate for a new loan could be 8.5%, Evercore ISI said in a report Oct. 8. It would be more than double the current rate and raise the landlord’s annual interest expense by $8 million, equal to about 10% of its cash flow.

But that’s not all. This month a

Borrowing costs are ramping up because, as old loans mature, they’re replaced by new ones at higher interest rates.

Mortgage rates have risen sharply in recent weeks as the market concludes the Federal Reserve won’t be easing any time soon. Vornado and other commercial landlords must now confront a steep price for their miscalculation.

$273 million mortgage for a second San Francisco tower, carrying a 3.65% rate, matures. It’s expected to be replaced with a loan at an 8% rate, costing the company an additional $4 million a year, Evercore said.

Swaps and caps At Vornado, about $300 million worth of debt is scheduled to mature next year, according to a regulatory filing. That shouldn’t cause too much pain, considering the debt’s blended interest rate is 6.2%.

But 2025 could be more difficult, considering the developer has $1.3 billion worth of debt coming due at a blended rate of just 3.4%.

Debt maturities aren’t the problem facing commercial landlords.

Swaps and caps, which are agreements struck with banks to limit a borrower’s interest-rate exposure, are starting to sunset.

In August an interest-rate swap involving the mortgage at 1301 Sixth Ave. expired, and a second burns off next year. That means owner Paramount Group will

BLOOMBERG

By Aaron Elstein

October 16, 2023 | CRAIN’S NEW YORK BUSINESS | 7

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EDITORIAL

New York’s port authority needs to show more transparency, a sense of urgency I

continues to languish.

Now, here’s the real kicker: while New York dallies, other localities are champing at the bit. As Christopher Ward, a former executive director of the Port Authority, pointed out, various parts of the country are vying for the big Army Corps of Engineers projects. If we lag, there’s a real threat that the funds allocated by the federal Omnibus Appropriations Bill, signed in December 2022, might be diverted elsewhere.

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t’s no secret that New York and New Jersey’s port, a linchpin in our regional economy, is in dire straits.

As colossal cargo ships outpace the port’s capacity, there’s a need for evolution and expansion. The U.S. Army Corps of Engineers, after a revealing 2022 study, highlighted the port’s existing channel dimensions as “unsuitable” and alarmingly detrimental if unaddressed. This underscored the importance of the New York and New Jersey Harbor Deepening Channel Improvements project, aiming to dredge several channels from around 50 feet to 55 feet.

The urgency couldn’t be more pronounced, and yet, the project is in an infuriating state of limbo. Despite the federal funds having been approved for the project’s massive $6.3 billion expenditure, a bureaucratic muddle involving a design agreement is stalling its launch.

This sluggishness in procedure is precisely what frustrates businesses when dealing with governmental agencies. The business landscape thrives on forecasting and strategic planning, yet how can one

plan for the future when government decisions loom in uncertainty?

Worse, the Port Authority’s reticence to answer questions on the subject leaves everyone, from industry players to the general public, in the dark. Questions hang in the air, unanswered, as to why such a critical project remains paralyzed. Such opacity is not what stakeholders expect from an

organization of the Port Authority’s stature.

This issue’s gravity has been expertly dissected in this week’s cover story by Crain’s reporter Caroline Spivack, who shed light on the stakes of this port deepening endeavor. The comprehensive insights provided by her reporting emphasize the potential fallout if this project

Time to step up Such a scenario would pummel a port industry that, as of 2022, supported more than 266,000 jobs and contributed massively to the region’s economy.

In essence, it’s time the Port Authority and related agencies step up. Business abhors a vacuum, especially one created by indecision and lack of transparency. It’s imperative for those at the helm to realize the ripple effect of their inaction and rectify it, for the sake of the port, the region and its people.

PERSONAL VIEW

It’s time for a holistic approach to bring new life into Midtown and downtown

M

idtown and downtown are in The statistic is unnerving and is evident in trouble, weighed down by a com- our streets that are missing their iconic energy. Small businesses that support daily plex network of maladies.

The perception of spiking crime and a workers are suffering. Taxes on office struggling return-to-office. A growing buildings have filled our city’s coffers for generations. A revaluation of homeless crisis. Radically escathese could be devastating for the lating housing costs. Each of city’s fiscal health. these has been picked apart indiPublic and private investment vidually and solutions offered, must come together to repurpose but we need to recognize that struggling office buildings into they are intertwined. high-density, transit-connected While it’s easy to pin the blame housing and accompanying seron the pandemic, the Covid-19 vices. crisis merely exacerbated deNot every building will work as cades-long trends of underina conversion to residential; modvestment in public health, trans- Dan Kaplan ern buildings with massive footportation and civic infrastructure.

It’s time to take a holistic approach to prints and deep floorplates will be tough. breathe new life into Midtown and down- Prewar buildings, for example, are genertown — developing neighborhoods that ally more easily convertible. However, alreflect the way people want to live and most all office buildings can be adapted to a more diverse array of uses including work.

That means jettisoning the commercial medical facilities, and educational and office monoculture that dominates these civic institutions. A happy byproduct of a urban landscapes; re-envisioning office mixed-use, 24/7 environment is that it will space for the new work paradigm; and in- make for a more compelling place to work.

Second, it’s time to rethink the office. vesting in high-quality transportation and Today, employees need a reason to public realms to support the live-work “work from work.” The answer is social city.

First, we must do away with the commer- connection.

The work environment is being redecial office monoculture.

22.7% of New York’s offices are vacant. fined as a platform for collaboration, em-

phasizing group meet-ups, face-to-face mentoring, and impromptu brainstorming. Shoehorning as many desks as possible into a generic space is a thing of the past. Required are well-appointed, imaginative and diverse social spaces in the office, within the building, and extending into the surrounding neighborhood.

Now is the moment to recommit to public transportation for a live-work city.

Complicated commutes cause employee dissatisfaction; if we want to encourage people back into the central business districts, we need to make getting there easy and pleasurable. Working from home is an attractive alternative to long commutes plagued by delays, tired vehicles and dingy stations. Decades-long disinvestment in the maintenance of our subways, buses and commuter rail systems have taken their toll. Progress is being made, albeit slowly. Funds from the Inflation Reduction Act are helping to pay for the next phase of the Second Avenue Subway and the Gateway Tunnel. It took us two generations to get into this unfortunate situation; we need sustained investment to get us out of it.

Let’s reinvent our streets, sidewalks and plazas as imaginative and verdant spaces.

Over the past 20 years, New York has excelled at delivering signature public spac-

es such as The High Line and Brooklyn Bridge Park. In contrast, the quotidian environments of Midtown and downtown are lackluster.

To draw people back to our central business districts, we need to reconceive our sidewalks, streets and plazas as a network of inventive, high-quality people places.

World-class upgrades of Fifth Avenue, Park Avenue and Broadway, innovative redesigns of the left-over spaces at Herald Square, and a program of enhanced privately owned public spaces will be an irresistible draw that — to use Mayor Eric Adams’ words — “gets people off their couches and out of their pajamas.”

If New York and other major cities can use this post-pandemic opportunity to rethink and reward its inhabitants, then we can help coax our cities toward renewed vibrancy with better health, financial recovery and social wellbeing.

Dan Kaplan, FAIA, LEED AP, is a senior partner at FXCollaborative, a leading architecture firm committed to equitable and sustainable design.

Write us: Crain’s welcomes submissions to its opinion pages. Send letters and op-eds of 500 words or fewer to opinion@CrainsNewYork.com. Please include the writer’s name, company, title, address and telephone number. Crain’s reserves the right to edit submissions for clarity.

8 | CRAIN’S NEW YORK BUSINESS | OCTOBER 16, 2023

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PERSONAL VIEW

Proactive screening, fast-acting treatments can make huge difference in spotting, addressing postpartum depression

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he FDA has recently approved a new of early motherhood, such as lack of time medication to treat postpartum de- to eat and sleep as well as irritability. Many pression. This news comes on the women experience the “baby blues” startheels of a tragic incident of infanticide and ing a few days after birth. However, this short-term dip in mood usually suicide by a Mount Sinai physiresolves within two weeks, while cian. We don’t know if the drug PPD tends to last longer, with could have helped in this exmore severe symptoms. treme case, but it’s clear that failThe Edinburgh Postnatal Deure to properly identify and pression Scale, which includes manage PPD can seriously, even 10 questions about depression fatally, impact the lives of new symptoms, is commonly used to mothers and infants. diagnose PPD. Often, pediatriMaternal health is an area of cians will screen for PPD beparticular interest to me as a mother and physician, especially Nancy K. Klotz cause many mothers see their child’s pediatrician more fresince there are so many opportunities to improve how we diagnose and quently than they do their own doctor treat PPD. Proactive screening and shortly after delivery.

It’s also important to distinguish PPD fast-acting treatments can make a world of difference, particularly for patients who from other psychiatric conditions like bipolar disorder that require specialized lack adequate support systems. treatment. To do so, physicians should determine if there is a history of mania or hyEffective screening pomania and use the Mood Disorder Although most providers look for signs Questionnaire to screen new mothers who of PPD during the puerperium period — may show signs of bipolar disorder. four to six weeks after delivery — it can occur up to 12 months after childbirth or New avenues for treatment even during pregnancy, when it is referred to as prenatal depression.

PPD can be managed with counseling or When identifying PPD, the key is to dif- support groups, along with antidepresferentiate the condition from normal signs sants if needed. Only one drug on the mar-

ket has been specifically approved to treat PPD: Brexanolone (Zulresso). This fast-acting medication is administered as a 60-hour infusion and can significantly reduce depression symptoms for up to 90 days.

However, a new treatment will soon be available to consumers. In early August 2023, the FDA approved Zurzuvae (zuranolone), the first oral medication developed to treat PPD. Clinical trials have shown that doses of both 30 mg and 50 mg can lead to a reduction in depression

symptoms in just three days.

Zurzuvae could completely transform how PPD is treated. As a daily pill taken orally for just two weeks, it is much more convenient than an infusion of Brexanolone, and much faster-acting than SSRIs or SNRIs. Fortunately, mood disorders like PPD are very treatable and nothing for new mothers to be ashamed of. With the approval of Zurzuvae and growing recognition of the dangers of PPD, I look forward to a future where mothers are encouraged to prioritize their own mental health as well as the health of their children.

Nancy K. Klotz, MD, MBA, FACP, is chief medical officer at New York-based Brighton Health Plan Solutions, where she is responsible for clinical strategy across the company’s various business segments.

PERSONAL VIEW

The erosion of New York’s architectural heritage

T

he post-modern atrium at 60 Wall card occupies a sumptuous pre-war buildStreet, a extravagant architectural ing in the Flatiron District. Historic buildgem by Kevin Roche albeit one ings show up on Excel spreadsheets in called “tacky” and “weird” but also “oddly black ink.

There need not be a trade-off between compelling”, has been denied historic designation. This decision, both perplexing profit and preservation. Historic designaand deeply disconcerting, sheds light on a tion does not function as a straitjacket, stifundamental misinterpretation of the del- fling any prospect of change; instead, it icate interplay between urban develop- stands as a custodian against reckless obliteration. ment and historic preservation.

The commission’s rationale is In a letter to the Landmarks fundamentally flawed. To assert Preservation Commission, that post-modern architecture prominent architect Robert A.M. necessitates further study and is Stern and architectural critic not universally understood is to Paul Goldberger have articulated overlook the essence of architeca sentiment that resonates with tural discourse — the perennial many who understand the intrinclash of diverse perspectives. sic value of architectural history.

Limiting the subject of study by Their powerful prose, laced with permitting the erasure of such warranted criticism, mourns the Layla Lawstructures is an affront to intelmyopic stance taken by the com- Gisiko lectual rigor. To take a more promission.

According to LPC, financial prosperity saic analogy, the hot dog is universally unapparently trumps historic preservation. derstood, but it is not a rationale to ban A specious view at best, and one certainly sashimi from restaurants’ menus.

The wasteful approach taken by the real not rooted in economic reality. In the past two decades, historic districts and historic estate industry and the laissez-faire attibuildings have shown remarkable eco- tude on full display by city agencies denomic resilience. While retail vacancy rate note contempt not only for the buildings’ is high in non-historic districts, SoHo, the cultural value but also for our natural reMeat Packing and Ladies’ Mile Districts, sources. Letting that full old marble-carved all designated historic districts, show retail Penn Station, the granite, marble and strength. Three of the largest tech compa- brick Bancroft building, and soon the 60 nies, Google, Meta and Apple, all have Wall Street Carrera marble and granite their New York headquarters in historic atrium decay in a dumpster is incurably buildings. The credit card giant Master- reckless.

In essence, the decision to eschew the designation of 60 Wall Street’s public lobby as a historic landmark mirrors a broader predicament — an alarming proclivity to prioritize expeditious development over enduring legacy.

Who is so eager to obliterate New York’s character? LPC’s decision betrays our collective responsibility to conserve the diverse mosaic of architectural styles that enhance our cityscape.

Bottom line ignored It also shows a total misunderstanding of the extrinsic value of our historic fabric. The good, old, 60 Wall Street atrium | WIKIPEDIA tangible, capitalistic basis supporting historic preservation has been en- amount to sound urban policy. duringly demonstrated: historic buildings To sanction the elimination of these legmake money. They provide retail, housing, acies under the banner of growth is not office space, transit access (Moynihan just nearsighted; it is an act of self-deTrain Hall). When they stop serving their struction. original purpose (Chelsea Market), they New York’s architectural resources are are adaptively reused. But over the years, not expendable commodities; they are the their robust bottom line has been continu- custodians of our shared history and the ously ignored and denied. It begs the bearers of our cultural identity. The loss at question: How can a source of economic 60 Wall Street is a collective loss, one that growth be continuously blamed for many New York, with its indomitable spirit, of our city’s ills? Maybe it lies in the fact should never have to endure. that historic buildings do not benefit lenders or the real estate industry as much as Layla Law-Gisiko is the president of The new construction does. New Yorkers need City Club of New York, a civic organization to understand that speculation does not advocating for sound urban policies.

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MTA sets out 20-year needs list but punts on maintenance cost A report lacks price projections on the all-important work of upkeep

By Caroline Spivack

The replacement of more than 5,000 railcars. Modernization work on some 550 miles of signals. Upgrades to more than 490 elevators throughout the subway and commuter rails. These items are among the Metropolitan Transportation Authority’s exhaustive to-do list detailing what’s needed to maintain and improve the region’s mass transit in the coming two decades.

A report released Oct. 4, known as the 20-Years Needs Assessment,

service, but not for the all-important work of maintenance.

The exclusion rankled some transit observers who argue the figures are key to deliberations on what to prioritize. Andrew Rein, president of the Citizens Budget Commission, called the lack of dollar amounts a “glaring omission.”

‘Real failure in transparency’ “That is a real failure in transparency that stops all stakeholders from having a sense of what it takes to bring the system to a state of good repair,” Rein told Crain’s.

“If we don’t have a sense of those dollar figures, and a sense of the impact on service if that is or is not done, then we can’t have a discussion about the trade-offs,” he added. “We just can’t.”

The comprehensive look at the system is the first shared with the public since 2013.

Jamie Torres-Springer, president of MTA Construction & Development, told reporters during a briefing Oct. 3 that “the overwhelming conclusion here is that there is a lot more to do and [there are] an enor-

The lack of projected costs for crucial upkeep is an intentional shift, agency chief executive Janno Lieber said. details the condition of the agency’s infrastructure and identifies which equipment must be replaced.

Surprisingly absent from the detailed assessment are cost estimates for much of the work. The report offers potential budgets for projects to enhance and expand

mously ambitious set of needs.”

He pointed to aging infrastructure, climate change and shifting travel patterns as “existential threats that drive the need for investment.” The sprawling document spells out the many challenges ahead of the MTA, but also lays the groundwork for transit officials to prioritize projects in the authority’s upcoming five-year capital plan, which is due in 2024.

“We’re 15 months away from when the MTA board adopts the capital program,” said MTA chief executive Janno Lieber. “We wanted to start the discussion with as much informed analysis as possible.”

But Rachael Fauss, senior policy advisor with government watchdog Reinvent Albany, pointed out that cost estimates were provided in past reports and have served as “an important accountability measure.” The five-year capital plan usually emphasizes keeping the MTA’s networks in a state of good repair ahead of system expansions.

“We’re pushing the MTA to put some dollar figures to those needs before we get an actual capital plan because otherwise there’s going to be no way to assess if we are indeed spending everything we

A crew of MTA workers carries out track work. | MTA/LEONARD WIGGINS

need to be on the state of good repair first,” Fauss told Crain’s. “If your system is falling apart, what good is building a brand-new subway line?”

Fauss added that a public paper trail on projected costs versus the benefits of system improvements also helps ensure that the five-year capital plan is “influenced by the need rather than the pet projects of all the political forces that get involved with the funding in the capital plan.”

‘Unconstrained number’ The lack of projected costs on crucial upkeep is an intentional shift, Lieber said.

“Unlike prior capital plans we didn’t start with saying, ‘Okay, this is how much money we have to spend,’ because that immediately

goes to everybody fighting over the limited pool,” he said, “instead of taking advantage of the fact that this is the first time that the agency has done anything like this level of detailed analysis.”

Torres-Springer emphasized that the assessment is “not a budget-constrained document” and declared that “it’s not realistic to estimate what the capital cost is of investing in a system like this over 20 years.” In his view, the report is a starting point.

“It is an effort to look at the system’s true needs over the next 20 years without trying to constrain it as, frankly, previous 20-year needs assessments have done,” said Torres-Springer. “They’ve started with a budget number and basically fit the needs into that number. We did not do that. We started with an unconstrained number.”

Manhattan retail leasing picks up steam in third quarter Despite the dismal state of the office market in the city, a return to in-office work and an overall increase in foot traffic seems to have buoyed parts of Manhattan’s retail market in the third quarter of 2023. According to a new report from real estate research firm CoStar, the retail market in Manhattan saw some positive gains in leasing due to rising hotel occupancy rates, mass-transit ridership and tourism even as the retail market in the metropolitan area remained largely flat from July to September.

CoStar found that although retailers signed a number of leases for more than 50,000 square feet in

The gains in retail leasing were unevenly distributed across the city. locations outside Manhattan, the majority of new leases in the borough last quarter were for businesses in the dining and apparel sectors. These companies, the firm said, also favored storefronts of less than 5,000 square feet.

The gains in retail leasing were unevenly distributed across the city. And although the overall market showed signs of improve-

ment, neighborhoods such as Grand Central and Penn Plaza remained significantly out of step with the overall market. CoStar found that the retail vacancy rate in the metropolitan area reached 4.2% in the third quarter, the same as the national average, but the vacancy rate in these neighborhoods reached 14.7% at the end of September.

Landlord concessions On the other hand, the retail market in SoHo, which reached a 4% vacancy rate at the end of the quarter, saw a positive effect from increasing tourism and foot traffic in the summer months.

Moreover, retail landlords are still having to offer rent concessions to make deals pencil out, Matthew Chmielecki, a senior vice president at brokerage firm CBRE, told Crain’s.

“Concessions, which include landlord’s work, free rent and/or tenant improvement allowances, are still a large part of negotiating a deal that works for all parties,” he said.

“There is no set formula for concessions, but one or more of these elements is a part of every deal.”

The findings from CoStar are largely in line with those reported

by CBRE in July, when the brokerage firm found that Manhattan business districts with more ro-

BLOOMBERG

By Mario Marroquin

bust dining and retail options are seemingly affecting the pace of office leasing.

The report, titled “Restaurant Leases Restore Vibrancy to Manhattan’s Business Districts,” found that Times Square has attracted a number of dining concepts to Midtown since 2020, and the northern and southern boundar-

ies of the Theater District, where there is a large presence of office workers, has seen an uptick in leasing for fast-casual establishments. The Midtown East neighborhood, which in July had an office availability rate 8.9 percentage points lower than the 19.6% average availability rate in Midtown, has seen 37 new food and dining

leases along Lexington Avenue since March 2020.

CoStar warned that declines in consumer spending and the looming signs of another recession could hamper retail activity in the coming months. At the same time, Chmielecki said, retail leasing is likely to slow down during the upcoming holiday season.

10 | CRAIN’S NEW YORK BUSINESS | October 16, 2023

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SPONSORED CONTENT

talking

RECHLER

IPOs

Does a company need a PCAOB audit to go public?

Louis Pizzileo leads the SEC & Capital Markets Practice at Grassi. He has over 25 years of experience conducting PCAOB audits and helping public companies meet SEC reporting requirements and private companies achieve IPOs.

Many companies looking to go public have never been audited before. And if they were, the audit probably adhered to Generally Accepted Auditing Standards (GAAS), which are not accepted by the SEC. The differences between PCAOB and GAAS audits mainly lie in the auditor independence standards, level of regulatory scrutiny, and scope of details that the auditor opinion must address. An objective engagement quality review partner, separate from the engagement team, must also review and sign off on PCAOB audit results.

SEMAFOR

LOUIS PIZZILEO, CPA

Unlike private companies that may or may not need an annual audit of their financial statements for compliance or stakeholder purposes, all public companies do – and not just any audit. It must be one conducted under the specific rules and regulations of the Public Company Accounting Oversight Board (PCAOB).

RXR’s Rechler on the office crisis, hybrid work, office conversions THE CITY’S OFFICE MARKET IS HURTLING toward a valuation reset the likes of which we haven’t seen since the early 1990s as building owners sort through a “trifurcation” of office space, with superhigh-end spaces maintaining high occupancy and high rents and the rest in serious trouble, RXR CEO Scott Rechler said at an event Oct. 3 hosted by the digital media startup Semafor.

Rechler, whose company, RXR, owns about 25 million square feet across about 100 properties in the city, also shared his views on hybrid work and office-to-residential conversions, along with an update on his plans for a 2.8 million-square-foot, 83-story office and hotel tower adjacent to Grand Central Terminal.

His remarks have been lightly edited for brevity and context. | Interview by Cory Schouten Why the crisis for office real estate is different this time “We went through over a decade and a half with zero interest rates, and that became the way the world was functioning. People weren’t being irresponsible, but they were pricing buildings and pricing companies and leveraging themselves in a way they thought was conservative. But now that interest rates have gone up at this meteoric rate, whatever was bought in that early period of time—that low-interest-rate regime—doesn’t work today.

The challenge—and why this is the early innings—is it’s going to manifest as each of these loans mature. As they all start to mature into 2024 and 2025, the day of reckoning will come, and it will require a significant re-equitization and de-leveraging.

The last time we saw something like this was the early 1990s. It’s a multiyear process that we have to get through.”

On how Covid accelerated a change in what people want from office space and which buildings have a future “At RXR, we have coined it Project Kodak. Which of the buildings are ‘digital,’ that will have a future, and which are ‘film’ and we shouldn’t be investing in [them]?

You have to start with the quality of [the] building. But even the ones that are digital, the ones you’re going to invest in, you have to look at the capital structure and level of debt, and to make sure it can compete. All the basis has to come down in a world when you have higher interest rates, higher expenses and values that are lower.”

Lenders are starting to get realistic

“Just in the last six to eight weeks, you’ve seen some in the headlines and some behind closed doors, lenders are starting to get realistic about where values are coming in. Transactions are starting to happen. As those transactions and values crystallize, it’s harder for other institutions to close their eyes and not reprice their existing loans and their existing properties, which will then accelerate this process of creating re-equitization. Which owners decide to de-leverage, which lenders decide to take losses in exchange for new equity capital being put in, and which ones don’t and ultimately, hopefully would get sold.”

On banks and insurance companies facing pressure to reduce their real estate exposure “All real estate is being painted with the same brush. They’re not in the mood to lend. They’re more in the mood to just have you refinance them out, but there are no lenders to refinance.”

On the reality office landlords have to accept “Hybrid work is here to stay.

That means different things for different companies, but generally it’s coalescing around three or four days a week, fixed or with flexibility. The concept of full remote work is fading away quickly. Three or four days changes the nature of office space—the biggest thing is the urban ecosystem is thrown off balance. Post-Labor Day, we are at 70% of what we were pre-2019.

But Tuesday, Wednesday and Thursday, we are 90%. Monday and Friday drags that down.”

On RXR’s plan to build a giant

new office tower adjacent to Grand Central despite the city’s glut of vacant office space “There’s been a trifurcation of office space around the country, and New York in particular.

You have these uber-high-end new towers, like 1 Vanderbilt or Hudson Yards, with this tremendous demand from companies that are willing to pay significantly higher—almost double or more—the market price that you would get for a traditional [Class] A building. On the other side, you have these old buildings that are competitively obsolete, and there’s almost no price someone would pay to be there. The occupancy of those super, uber buildings is in the high 90s. We plan to build adjacent to Grand Central. We bought the air rights over Grand Central and are tearing down the Hyatt hotel that made Donald Trump famous and plan to build what would be the tallest building in the Western Hemisphere.”

On office-to-residential conversions and whether the numbers work “It works but not on a grand scale. That doesn’t mean it shouldn’t be pursued. We have old buildings that are obsolete, and we have an enormous housing shortage. Any building that can be converted affordably, let’s try to do that. The footprint needs to work. The values of those buildings have to be so low—almost land price—to make it work. You need to be purchasing those buildings for $200 to $300 per foot, which is 20% to 30% what someone had invested historically. You need this capitulation in values, which is happening in some buildings.”

Partner, SEC & Capital Markets Services Leader 516.336.2455 lpizzileo@grassicpas.com

While CPA firms that audit private companies face periodic peer reviews, PCAOB-registered auditors face more heightened and frequent scrutiny. A PCAOB inspection is a rigorous inspection and public reporting of the audit results.

A PCAOB audit is required before a company can file with the SEC. If a private company has never been audited before, it will need to provide PCAOB audits of at least the past two years. For example, to issue an IPO in 2023, your company would need to submit 2021 and 2022 financial statements plus unaudited interim financial statements for the period ending March 31, June 30 or September 30. This additional work should be factored into the audit engagement timing, relative to the target IPO timeline.

An audit can take anywhere from six weeks to several months depending on level of complexity and preparedness, but a company looking to go public should start the process much sooner. Leave enough time to get your company audit-ready with the help of a qualified CPA and public company reporting consultant. They can help plan and compile all necessary data and documentation for a seamless audit experience.

A private company should ensure it has an adequate level of internal resources to support the PCAOB audit process, which requires demanding engagement from accounting staff. This internal support will need to be maintained to meet the heavy reporting burden that comes with being a public company.

Certain financial data that is not required in private company audits will need to be compiled, including source documentation, evaluation of complex accounting transactions and technical accounting memorandums.

One example is a capitalization (cap) table, a complex spreadsheet detailing all equity transactions, ownership stakes, types of shares and option pools.

The CPA will lead the audit process and serve as part of a larger team of advisors, including an investment banker and attorney, who will help your company manage and meet the many requirements of the SEC filing, IPO process and exchange listing.

Aspiring to go public is not the only reason a private company would want to pursue a PCAOB audit. Another motivating factor could be to make the company more attractive to potential public company buyers. Whatever the reason, it will be a big adjustment for the company’s accounting staff, particularly if the company has not been audited in the past. Reach out early and often to a PCAOB-registered audit firm that can guide you through the audit process and work collaboratively with your advisory team.

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New York City to make $30 million available to expand mental health support services via clubhouse model

By Jacqueline Neber and Amanda D’Ambrosio

The New York City Department of Health and Mental Hygiene announced Oct. 2 that it will make $30 million available to expand behavioral health support services through clubhouses—community spaces that offer social connection and resources to New Yorkers with serious mental illness.

The health department released a request for proposals to expand the clubhouse model with state and federal funding, doubling the current investment in clubhouses across the city. The expansion of clubhouses is a part of the second phase of Mayor Eric Adams’s mental health plan that was released in March.

Clubhouses help people with severe mental illnesses get peer support, find employment and education opportunities and connect to city resources. Studies show that the model reduces hospitalizations and interactions with the criminal-legal system, the health department said.

“Thousands of people live with serious mental illness and are at increased risk for social isolation, which can be extremely harmful to physical and mental health,” Health Commissioner Dr. Ashwin Vasan said in a statement.

“Clubhouses are important anchors in our community mental health system, and when combined with stable housing and treatment, form the ‘three legs of a stool’ to allow people with serious mental illness the chance to thrive in the community,” Vasan added.

The health department expects

Mayor Eric Adams announced early this month that New Yorkers can get abortion care via telehealth visits. | NYCMAYORSOFFICE/FLICKR

individual’s city address within days.

According to Stephanie Buhle, a representative for H+H, providing the service will come at no additional cost to the health system because existing Virtual ExpressCare providers will respond to patients’ calls. H+H is partnering with Honeybee, a California-based online pharmacy that allows users to compare prices and manufacturers for their medicines, on delivery, Buhle added.

Adams said at a press conference Oct. 2 that the service will be available seven days per week from 9 a.m. to 9 p.m. and in more than 200 languages.

“This is an important step forward of using technology to deal with major demand [from] those who are looking for access,” he said. “Our role is simple: to help New Yorkers make the choices they need safely and without discrimination.”

Anne Williams-Isom, the deputy mayor for health and human services, said at the conference that more than 50% of abortions nationwide are now occurring with the use of medication, according to the Guttmacher Institute. This emphasizes the importance of offering this service through telehealth, she added, and widening access for people who could struggle to get care.

To be eligible for medication, patients must attest they are in the city at the time of the call and that they’ll be there to take it. Individuals who are up to 10 weeks preg-

Five thousand individuals are currently served through clubhouses throughout the city. to make clubhouses available to 3,750 additional New Yorkers through this expansion. Five thousand individuals are currently served through clubhouses throughout the city.

The deadline to apply for funding is Nov. 22, 2023, and officials expect to award funding to organizations by July 2024.

—Amanda D’Ambrosio

Mayor announces New Yorkers can get abortion medication through H+H telehealth service

New Yorkers can now access abortion care through telehealth visits with New York City Health + Hospitals, Mayor Eric Adams announced Oct. 2.

Beginning this month, patients can call H+H’s Virtual ExpressCare service at 718-360-8981 or go online and speak to New York state-licensed professionals on a phone or video call. If the provider finds the patient eligible, they can deliver abortion medication to the

nant can qualify.

—Jacqueline Neber

Home health aides sue Williamsburg home care agency for alleged low pay during 24-hour shifts

Home health workers are seeking a class-action lawsuit against the Williamsburg-based agency Nursing Personnel Homecare, claiming that the provider failed to pay them adequate wages during 24-hour shifts and deprived them of meal and rest breaks required by law.

In a lawsuit filed in Manhattan Supreme Court on Sept. 29, home health attendant Mathew Boakye alleged that he was denied adequate pay for 24-hour shifts, adding that his employer failed to ensure he had breaks to eat and sleep. At least 100 other workers who were employed by Nursing Personnel have similar claims, according to the lawsuit.

Several of Boakye’s clients, who were elderly or sick individuals, required 24-hour care, the complaint said. When Boakye worked a 24-hour shift, he had to stay overnight at clients’ homes so that he could provide care at all times—which often made it impossible to get five hours of uninterrupted rest and three one-hour meal breaks, which home health aides are required to get under state law, the complaint alleged.

Boakye and other home health aides provided personal care services such as bathing, cleaning patients’ homes, cooking and feeding and escorting clients to

medical appointments.

The lawsuit claimed that Nursing Personnel paid Boakye $8 to $11 an hour for 13 hours of work during a 24-hour shift—failing to ensure that he received breaks required by law and failing to pay him for the full number of hours he worked.

Boakye also said he was not paid for overtime. Boakye often worked 24-hour shifts six to seven days a week, often exceeding a 40hour work week, the complaint stated.

Nursing Personnel Homecare did not respond to requests for comment by publication.

LaDonna Lusher, an attorney with Virginia & Ambinder, LLP who is representing the home care workers, said that the case against Nursing Personnel exemplifies the common industry practice of paying workers for 13 hours

of work over a 24-hour shift, noting that “generally, these agencies operate the same way.”

Lusher added that low pay for home care workers is a result of the way the industry is structured, because agencies are paid a fixed rate to provide services under Medicaid.

“I think the entire system is inadequate,” Lusher said. “Unfortunately it falls on the backs of home health aides who barely make minimum wage.”

Home health aides have long called attention to issues around low compensation for 24-hour shifts, but with little progress. In August, a group of home health aides sued the state Department of Labor for dropping a wage theft investigation into home health agencies for failing to adequately compensate workers during daylong shifts.

—A.D.

The industry’s structure is why home care workers get low pay, a lawyer says. | GETTY IMAGES

12 | CRAIN’S NEW YORK BUSINESS | October 16, 2023

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Behind the push for eastern Queens’ Creedmoor psychiatric center to become affordable housing The city and the state launched a community engagement process to develop a master plan for the site early this year

By Eddie Small

As New York continues to struggle with an affordable housing shortage, a coalition of activist groups says it has found the perfect location for the city’s next major residential development: a psychiatric center campus in eastern Queens.

The advocates recently launched a campaign dubbed Public Land for Public Good, calling on Gov. Kathy Hochul’s administration to commit to building a completely affordable housing development on more than 50 acres of the Creedmoor Psychiatric Center. The groups are focused on this particular site given that it is state-owned land, meaning the administration would not have to negotiate with developers on affordability, and given its massive size, which has the potential for thousands of new homes.

Members would like the affordability levels to top out at 100% of the area median income, meaning a family of three would need to earn $127,100 to spend no more than 35% of its income on rent.

They also view it as a prime opportunity to provide housing for the homeless, whose population in the city reached a record high of more than 72,000 in January, according to a Coalition for the Homeless report.

Empire State Development, the state’s economic development arm, launched a community engagement process to develop a master plan for the site in partnership with Queens Borough President Donovan Richards early this year, but the groups have criticized the state for showing a lack of urgency around coming up with a proposal.

“We know that Empire State Development, which is part of [Hochul’s] purview, is looking at it,” said the Rev. Patrick O’Connor, cochair of the advocacy group Queens Power, “but it can’t be five to seven years down the road. The crisis is now.”

Richards also wants to see affordable housing on the Creedmoor campus but pushed back strongly on the idea that officials are not moving quickly enough on a plan, especially given the scope of the project.

“This is not some 100-unit building,” he said. “We’re talking about 55 acres.”

‘An historic opportunity’ Creedmoor’s history as a mental health treatment center dates back to 1912, when an agricultural therapy program opened at the site as a satellite facility of Brooklyn State Hospital. The facility continued to expand in the ensuing decades, reaching a peak population of more than 7,000 patients in 1959. But the number of

The Creedmoor Psychiatric Center in Queens | WIKIMEDIA

space, infrastructure improvements, and new housing options for the area’s current and future residents, and ESD will continue to work closely with residents and stakeholders to bring this new vision for the facility to life.”

The groups pushing for Creedmoor to be home to a 100% affordable housing complex—Metro IAF New York, East Brooklyn Congregations, Queens Power, South Bronx Churches and Manhattan Together—argue that they are essentially just asking the governor to do something she has already said she supports. After the collapse of broader packages meant to help boost the — ESD spokeswoman Emily Mijatovic, in a statement state’s housing supply during this year’s budcommunity workshop taking get and legislative sessions, Hoplace Feb. 2. This process is ongo- chul announced a series of execuing, and two additional public fo- tive actions to this effect over the rums are planned for later this summer that included examining state-owned properties to see if year.

“ESD remains committed to a they could be used for residential long-term strategy for the Creed- projects.

But her actions so far on Creedmoor facility that takes the views of local residents seriously,” agen- moor have not yet matched up cy spokeswoman Emily Mijatovic with her words, according to the said in a statement. “Creedmoor’s advocates.

“The governor made a commitredevelopment represents a real opportunity to enhance and en- ment, but she hasn’t lived up to it liven eastern Queens with open yet,” said Rob English of Metro IAF patients declined in the ensuing decades, as did the need for such a large campus, and neighborhood groups received many of the facility’s land tracts from the state.

A small portion of the site continues to be used as a mental health center.

Empire State Development and Richards announced on Jan. 31 that they were starting an effort to redevelop the site, with the first

“ESD remains committed to a long-term strategy for the Creedmoor facility that takes the views of local residents seriously.”

New York. “We see Creedmoor as an historic opportunity.”

The coalition would like the project to include about 3,000 affordable housing units and opportunities for homeownership.

O’Connor acknowledged that the master plan process is ongoing but said the lack of concrete details about what officials are thinking is concerning.

“We understand that most development projects take years,” he said, “but if the governor were to put a stake in the ground around affordability — 100% affordability — this piece of public land could be used for public good to get regular New Yorkers who keep the city moving a place to live.”

Treatment importance Multiple Creedmoor stakeholders stressed the importance of continuing to use at least some of the campus for mental health treatment, a move the Public Land for Public Good coalition would support as well.

Councilwoman Vickie Paladino, who represents several Eastern Queens neighborhoods in the 19th district, said she would like to see some affordable housing on the site but does not think it should be the only type of development to go up there. Much of

the campus should still be used for New Yorkers who need the type of psychiatric care Creedmoor has long been known for, she said.

“Long-term and permanent care for the severely ill, shorter-term care for those who just need help getting on their feet, onsite medical professionals and social workers, addiction treatment, transitional housing and much more can all be comfortably built into the Creedmoor campus,” she said. “And, yes, some form of affordable housing can be part of the plan, but it would be a tragedy to give up this major asset to simply build housing alone.”

Richards similarly stressed the importance of having space for those who need mental health services on the campus and said a mix of income levels was important as well. He maintained that the project should be a good fit for recent college graduates looking for a place to live and New Yorkers who have long struggled to find decent housing. However, he does not view a completely affordable residential project as aiming too high.

“Absolutely, it’s achievable,” he said. “There’s a range of tools in the tool kit to make sure this project is 100% affordable. I have to see what the unit count is going to look like, but I think it’s definitely achievable.”

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New York City on pace to produce just 10,000 units of new housing this year, according to REBNY report The number of proposed units during the first eight months of 2023 dropped by 81% compared with the same period in 2022, the report says.

By Eddie Small

Tax break expiration REBNY highlights the June 2022 expiration of the 421-a affordable housing tax break as a turning point for the city’s housing construction. During the first six

200-unit condo project at 567 Third Ave., also in Murray Hill.

Firms filed plans for 20 large multifamily buildings in total during the first eight months of the year, according to the report.

Priority for mayor, guv

BUCK ENNIS

New York’s housing production remained slow over the summer, and the city is on pace to produce only 10,000 new residential units this year, according to a report from the Real Estate Board of New York.

Builders filed permits for about 6,500 new homes across 201 projects during the first eight months of the year, the report says. This puts the city far behind the 50,000 units per year it would need to produce to meet Mayor Eric Adams’ moonshot goal of building 500,000 homes over the next decade.

Firms filed plans for 76 projects during June, July and August, unchanged from the number in March, April and May. The average number of projects filed per month this year has been 25, much less than 2022’s monthly average of 58 projects, according to the report.

months of 2022, developers filed plans for 440 projects, totaling 31,750 units, but this plummeted to 186 projects, totaling 12,005 units, during the second half of the year and 157 projects with 4,847 units during the first half of 2023.

The number of proposed units during the first eight months of 2023 dropped by 81% compared to the first eight months of 2022, according to the report.

Plans for buildings with more than 100 residential units were

particularly slow, with no summer month seeing more than four.

Large projects that developers did file plans for included a 157-unit rental building with affordable housing from Brause Realty at 729 Second Ave. in Murray Hill and a

Adams and Gov. Kathy Hochul have both made increasing housing production major priorities for their administrations. Adams detailed multiple zoning changes in September that his administration estimates could help build up to 100,000 homes over the next 15 years, while Hochul announced several executive actions to this effect over the summer, including implementing a pilot replacement program for 421-a in Gowanus.

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October 16, 2023 | CRAIN’S NEW YORK BUSINESS | 15

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Boston Properties lands loans to start playing ‘offense’

By Aaron Elstein

Boston Properties borrowed $315 million from three new banks this month and is expected to use the cash over the next 12 to 18 months to acquire buildings from owners ready to throw in the towel.

The new financing—at a moment when loans are scarce for commercial real estate—“is a remarkable achievement” for the owner of Midtown’s General Motors Building, Evercore ISI analyst Steve Sakwa said in a client note, because it “allows the company to start playing ‘offense’ and acquire high quality assets.”

The loans from M&T Bank, Sumitomo Mitsui Banking Corp. of Japan and Banco Bilbao Vizcaya Ar-

testament to BXP’s strong financial position,” Chief Financial Officer Mike LeBelle said in a statement.

Blood on the streets

Many office landlords are struggling to ride out the storm of high interest rates and stagnant occupancy rates. Loan originations for the office sector were 52% below pre-pandemic levels in the second quarter, according to MSCI Real Assets. About $150 billion worth of office loans mature this year or next.

“There is no cheap debt at easy terms as in the past,” MSCI economist Jim Costello said, and relative to sectors such as residential or industrial real estate, “the office sector is in the worst state.”

But as the old saying goes, the best time to buy is when there’s blood on the streets, and Boston Properties officials said at a private meeting this month that they see “significant investment op— Chief Financial Officer Mike LeBelle in a statement portunities unfolding.”

CEO Owen Thomas and gentaria of Spain expand Boston President Doug Linde “both talked Properties’ borrowing capacity to about several deals they were pur$1.8 billion, and the banks have suing today as good assets may beagreed to about $200 million more come available as financial sponif certain conditions are met. Inter- sors or private landlords may not est rates and other terms weren’t be willing to invest more capital to lease up assets,” Sakwa wrote. disclosed.

An example of the deals Boston “This upsizing, especially in current market conditions, is a further Properties has in mind may have

“This upsizing, especially in current market conditions, is a further testament to BXP’s strong financial position.”

Boston Properties’ GM Building at 767 Fifth Ave. | BUCK ENNIS

come this month, when the firm and majority owner Blackstone Group sold a 654,000 square-foot office building in downtown Washington called Metropolitan Square for $305 million. The building was only 56% leased after WeWork recently departed and Blackstone, which held an 80% stake, wasn’t prepared to invest any more. Boston

Properties still likes the property, though, so it and new owner Artemis Capital Partners agreed to provide $100 million in debt and equity financing to help refill the space.

Template for future deals?

Boston Properties believes it can achieve a double-digit return on its

share of the investment while also collecting leasing and management fees.

“This type of structure may serve as a template for future deals,” Sakwa said.

Boston Properties is also partnering with Norway’s $1.4 trillion sovereign wealth fund on a new office skyscraper near Grand Central.

Developer-vs.-developer battle over Brooklyn’s William Vale Hotel appears to be nearing its end

By C. J. Hughes

A long-running and messy Brooklyn real estate feud appears to be winding down.

Developer Zelig Weiss, an owner and operator of Williamsburg’s trendy William Vale Hotel, has agreed to relinquish his role running the property, paving the way for the sale of 111 N. 12th St., according to new court filings.

The property, a 22-story, 184room structure at Wythe Avenue, has for years been tangled up in court fights pitting Weiss against co-developer Yoel Goldman over alleged financial mismanage-

ings say. But on Sept. 29, Weiss suddenly abandoned his dreams of completely owning the property, according to people close to the talks, and will instead now walk away from the hotel on Oct. 31.

‘Smooth handover’ pledged The hotel, which is known for its pool, its roof deck and Andrew Carmellini’s Leuca restaurant, will not shut down then, however. LW Hospitality Advisors, a Manhattan-based consultancy that had been advising the owners, will take over William Vale’s day-to-day management, according to sources close to the settlement. Weiss, who has technically been renting the property from the ownership group that in a complicated turn also includes Weiss as a member, will be reimbursed almost $3.8 million as part of the deal.

Goldman’s lawyer, John Brooks, had no comment, and a message left with LW Hospitality President Daniel Lesser was not returned.

But Stephen Selbst, an attorney at Herrick, Feinstein who represents the ownership group that includes stakes controlled by Weiss and Goldman, said in a statement that hotel guests shouldn’t notice any difference.

The property for years has been tangled up in court fights pitting Zelig Weiss against co-developer Yoel Goldman. ment. The back-and-forth and increasingly bitter battle culminated with William Vale seeking bankruptcy protection in 2021.

As part of the reorganization effort, Weiss had been negotiating for months with the hotel’s Israeli bondholders so that he might take control of the entire hotel, the fil-

“Mr. Weiss has committed to facilitating a smooth handover,” Selbst said, including retaining all current staff and maintaining third-party vendors, leases and subleases.

Jutting up like a rocket ship from a former industrial tract of Williamsburg, the white, truss-lined William Vale was developed in 2016 for $130 million and refinanced a year later with Israeli bonds for $166 million. Weiss and Goldman, who had previously partnered on residential projects in Brooklyn, launched their legal skirmishes shortly af- William Vale Hotel, Williamsburg | COSTAR GROUP terward.

Goldman, the founder of the ments in 2020. The hotel also innow-bankrupt firm All Year Man- cludes 40,000 square feet of storeagement, accused Weiss of being fronts and office spaces.

For its part, Goldman’s All Year too opaque with bookkeeping.

Weiss, in turn, sued Goldman for filed for bankruptcy in 2021. Health appointing an arbitrator with a care executive and investor Avi supposedly shady background. Philipson bought the company’s The pandemic then dealt a major 133-building Brooklyn portfolio, blow to the finances of the hotel, valued at $435 million, last spring. which began missing debt pay- But plans by Philipson to also buy

William Vale apparently fell apart.

Weiss’s departure doesn’t put an end to all the legal drama, however.

A note attached to the filing states that Weiss “will continue to prosecute the adversary proceeding” in an earlier suit “for the purpose of determining and recovering the debtor’s damages against the defendants.”

16 | CRAIN’S NEW YORK BUSINESS | October 16, 2023

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Regional hospitals hit financial stability milestone not seen since the pandemic, even as expenses continue to rise

By Amanda D’Ambrosio and Jacqueline Neber

Northeast and mid-Atlantic hospitals saw consistent positive margins during the first half of this year, indicating that health systems are reaching levels of financial stability they have not seen since the start of the Covid-19 pandemic, new data shows.

Hospitals in the northeast and mid-Atlantic region sustained positive margins for the six months leading up to August 2023, hovering at around 1%, according to data from Chicago-based software company Syntellis Performance Solutions. In August, the median margin among the 190 regional hospitals included in the company’s data was 1.1%, up slightly from July’s margin of 0.8%.

“The margins have been in an unfavorable position for a long time,” said Steve Wasson, chief data and intelligence officer at Syntellis. “This was the first break of that.”

Positive margins were driven by a rise in median gross operating revenue among hospitals—revenue increased by nearly 10% between August 2022 and August 2023. Since August 2021, gross operating revenue rose by 14%, Syntellis data shows.

that hospitals are still struggling to recover financially, mainly due to lagging volumes and the high cost of workforce retention.

Member hospitals from GNYHA have not seen their volumes fully rebound to levels seen before the pandemic, Wynn added. GNYHA’s monthly hospital utilization survey data—the latest of which goes through July 2023—shows that hospitals still have yet to achieve inpatient or outpatient volumes that surpass volumes in January

Outpatient demand Outpatient revenue grew faster than inpatient revenue, with the median outpatient revenue among regional hospitals growing nearly 13% between August 2022 and 2023.

Bea Grause, president of the Healthcare Association of New York State, an organization that represents hospitals, nursing homes and other health providers, said that the faster growth in outpatient revenue is not surprising.

“That’s where patient care is gravitating to,” Grause said. The aging population has created more of a demand for ambulatory care, and technological advances have made more procedures—including hip and knee replacements—possible in outpatient environments.

While positive margins represent an upward trend for hospital finances, Grause noted that a 1.1% median margin does not necessarily mean that all hospitals are thriving.

“The fact that you’re seeing this positive trend is good news,” Grause said. “It just doesn’t mean that everybody’s there yet.”

Despite the positive margins, hospitals have still had to contend with cost pressures, Syntellis data shows. Northeast and mid-Atlantic hospitals saw a 5.1% increase in their total expenses between August 2022 and 2023, driven by a 3.1% increase in labor, 7.4% increase in supply and 13% increase in drug costs.

Elisabeth Wynn, executive vice president of health economics and finance at the Greater New York Hospital Association, told Crain’s

2020, she said.

Challenges stemming from the tight labor market have also not let up. Wynn said that labor shortages have become even more acute for some specialties, such as certified nurse aides who are nurse anesthetists, requiring unique specialty hospitals to rely on contract labor.

As hospitals struggle with staff turnover for both medical professionals and support staff, they also see their costs rise to continue to train new workers, Wynn said.

Wasson said he does not expect costs — and specifically, labor costs — to decline in the near future. “Generally, people’s salaries don’t go down,” he said.

However, the positive margins indicate that overall, hospitals may be managing their costs more efficiently. Wasson said that larger hospital systems can rely on internal labor resources to reduce staffing expenses, and many have created float pools that allow them to draw from an internal supply of

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Not all hospitals, specifically smaller facilities, have an internal resource pool to draw from. But Grause said all hospitals are working to reduce reliance on agency staff and streamline operations to meet a positive margin month after month.

“I think the field has a way to go on becoming stable,” Grause said.

“But I think everybody’s working hard to get there.”

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Notice of Qualification of ZENDABLE CARDS, LLC Appl. for Auth. filed with Secy. of State of NY (SSNY) on 09/29/23. Office location: NY County. LLC formed in Delaware (DE) on 04/26/23.

SSNY designated as agent of LLC upon whom process against it may be served. SSNY shall mail process to c/o Corporation Service Co., 80 State St., Albany, NY 12207-2543. DE addr. of LLC: 251 Little Falls Dr., Wilmington, DE 19808. Cert. of Form. filed with Secy. of State, John G. Townsend Bldg., 401 Federal St., Ste. 4, Dover, DE 19901. Purpose: Any lawful activity.

Notice of Formation of MHR CONSULTING SERVICES LLC Arts. of Org. filed with Secy. of State of NY (SSNY) on 09/28/23.

Office location: NY County. Princ. office of LLC: 39 Fifth Ave., Apt. 4C, NY, NY 10003. SSNY designated as agent of LLC upon whom process against it may be served. SSNY shall mail process to Corporation Service Co., 80 State St., Albany, NY 12207-2543.

Purpose: Any lawful activity

POSITION AVAILABLE Notice of Formation of FWLG LLC Arts. of Org. filed with Secy. of State of NY (SSNY) on 09/05/23.

Office location: NY County. SSNY designated as agent of LLC upon whom process against it may be served. SSNY shall mail process to Cohen & Cohen, LLP, 122 E. 42nd St., 4th Fl., NY, NY 10168.

Purpose: Any lawful activity.

MATTHEW EVAN ROTH, Ph.D., PSYCHOLOGY, PLLC filed Arts. of Org. with the Sect'y of State of NY (SSNY) on 8/18/2023. Office: New York County. SSNY has been designated as agent of the LLC upon whom process against it may be served and shall mail process to: Matthew Evan Roth, Ph.D, 315 Gates Ave, Apt 1B, Brooklyn, NY 11216. Purpose: Psychology.

Banana Bean Productions LLC filed Arts. of Org. with the Sect'y of State of NY (SSNY) on 9/14/2023.

Office: New York County. SSNY has been designated as agent of the LLC upon whom process against it may be served and shall mail process to: The LLC, 10 Liberty St, Apt 27G, NY, NY 10005.

Purpose: any lawful act.

Notice of Formation of Nicol Furniture, LLC Arts of Org filed with the Secretary of State of NY (SSNY) on 8/4/23.

Office location: NY County. SSNY designated as agent upon whom process may be served and shall mail copy of process against LLC to 64 E. 111 St. Unit 609, NY, NY 10029. Purpose: any lawful act

Notice of Qualification of RGNMCA PORT JERVIS I, LLC Appl. for Auth. filed with Secy. of State of NY (SSNY) on 09/26/23.

Office location: NY County. LLC formed in Delaware (DE) on 09/25/23. SSNY designated as agent of LLC upon whom process against it may be served. SSNY shall mail process to Corporation Service Co., 80 State St., Albany, NY 12207-2543. DE addr. of LLC: 251 Little Falls Dr., Wilmington, DE 19808. Cert. of Form. filed with Secy. of State, 401 Federal St., Ste. 4, Dover, DE 19901. Purpose: Any lawful activity.

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Notice of formation of Limited Liability Company. Name: West 48 Owner LLC (“LLC”). Articles of Organization filed with the Secretary of State of the State of New York (“SSNY”) on July 24, 2023. NY office location: New York County. The SSNY has been designated as agent of the LLC upon whom process against it may be served.

The SSNY shall mail a copy of any process to The Limited Liability Company, 7 Penn Plaza, Suite 600, New York, NY 10001.

Purpose/character of LLC is to engage in any lawful act or activity.

The Wildlife Conservation Society: wcs.org, is soliciting a Request for Proposal for the LED Retrofit of buildings at the Bronx Zoo, Please request a copy of the RFP from Jodelle Anderson janderson@wcs.org. Pre-Proposal Meeting at Bronx Zoo 10/18/23 at 8:30am. Bids Due 11/10/23

Notice of Qualification of SANDY 350 DE SPE LLC Appl. for Auth. filed with Secy. of State of NY (SSNY) on 09/25/23.

Office location: NY County. LLC formed in Delaware (DE) on 09/15/23. SSNY designated as agent of LLC upon whom process against it may be served. SSNY shall mail process to Corporation Service Co., 80 State St., Albany, NY 12207-2543. DE addr. of LLC: 251 Little Falls Dr., Wilmington, DE 19808. Cert. of Form. filed with Secy. of State, 401 Federal St., #4, Dover, DE 19901. Purpose: Any lawful activity.

Notice of Qualification of GENIUS & POISON LLC Appl. for Auth. filed with Secy. of State of NY (SSNY) on 09/05/23.

Office location: NY County. LLC formed in Delaware (DE) on 08/29/23. SSNY designated as agent of LLC upon whom process against it may be served. SSNY shall mail process to c/o Corporation Service Co., 80 State St., Albany, NY 12207-2543. DE addr. of LLC: 251 Little Falls Dr., Wilmington, DE 19808. Cert. of Form. filed with Secy. of State, PO Box 898, Dover, DE 19903.

Purpose: Any lawful activity.

Notice of Qualification of MUZINICH DIRECT LENDING ADVISER, LLC Appl. for Auth. filed with Secy. of State of NY (SSNY) on 09/28/23.

Office location: NY County. LLC formed in Delaware (DE) on 07/06/23. Princ. office of LLC: 450 Park Ave., NY, NY 10022. SSNY designated as agent of LLC upon whom process against it may be served. SSNY shall mail process to Corporation Service Co. (CSC), 80 State St., Albany, NY 122072543. DE addr. of LLC: c/o CSC, 251 Little Falls Dr., Wilmington, DE 19808. Cert. of Form. filed with Secy. of the State of DE, Div. of Corps., John G. Townsend Bldg., 401 Federal St., Ste. 4, Dover, DE 19901. Purpose: Any lawful activity

PUBLIC & LEGAL NOTICES Notice of Formation of TRESS XPRESS LLC Arts of Org filed with Secy. of State of NY (SSNY) on 3/30/2023. Office Location: NY County. SSNY designated as agent upon whom process may be served and shall mail copy of process against to 2266 Fifth Avenue, Unit #584, NY, NY 10037.

Purpose: any lawful act.

Notice of Formation of SOUTH STREET 68J, LLC Arts. of Org. filed with Secy. of State of NY (SSNY) on 09/22/23.

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, 33 W. Main St., Holmdel, NJ 07733.

Purpose: Any lawful activity.

Notice of formation of Limited Liability Company. Name: DD ECF West 48 JV LLC (“LLC”). Articles of Organization filed with the Secretary of State of the State of New York (“SSNY”) on July 24, 2023. NY office location: New York County. The SSNY has been designated as agent of the LLC upon whom process against it may be served. The SSNY shall mail a copy of any process to The Limited Liability Company, 7 Penn Plaza, Suite 600, New York, NY 10001.

Purpose/character of LLC is to engage in any lawful act or activity.

Notice of Qualification of SHERMAN TIGER LLC Appl. for Auth. filed with Secy. of State of NY (SSNY) on 09/26/23.

Office location: NY County. LLC formed in Delaware (DE) on 09/12/23. SSNY designated as agent of LLC upon whom process against it may be served. SSNY shall mail process to Corporation Service Co. (CSC), 80 State St., Albany, NY 12207-2543. DE addr. of LLC: CSC, 251 Little Falls Dr., Wilmington, DE 19808. Cert. of Form. filed with DE Secy. of State, Div. of Corps., John G. Townsend Bldg., 401 Federal St., Ste. 4, Dover, DE 19901. Purpose: Any lawful activity.

OCTOBER 16, 2023 | CRAIN’S NEW YORK BUSINESS | 19

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CARGO From Page 1

York and New Jersey — the largest on the East Coast — projects to deepen the harbor’s channels and raise the Bayonne Bridge linking Staten Island and New Jersey have fueled growth within the last decade.

The largest cargo ships, however, are growing faster than the port. A 2022 study by the U.S. Army Corps of Engineers found that the existing channel dimensions of the New York-New Jersey port are “unsuitable” for its current needs, and that those limitations could have “a significant adverse effect” on the port’s usage unless addressed.

As a result, the Army Corps, in partnership with the Port Authority of New York and New Jersey, aims to embark on a sprawling new port deepening project. It’s an immense undertaking: several channels would be dredged from roughly 50 feet to 55 feet, at an estimated cost of $6.3 billion, the federal funds for which were approved in 2022.

But the project is in limbo. To move forward the Army Corps must enter into what’s known as a design agreement to share the cost with the Port Authority. The snag is there’s no deadline for the agreement’s signing. Officials estimate that might happen in early 2024, but there’s no legal pressure to hit that date. Meanwhile, other U.S. port cities are exploring similar projects, and some industry observers fear the New York-New Jersey port industry could suffer if the pace doesn’t pick up—especially given that the project timeline is an estimated 16 years.

“The problem is there are other parts of the country that are looking for big Army Corps of Engineers money,” said Christopher Ward, a former executive director of the Port Authority, in an interview.

“Other states could say New York-New Jersey’s got all this money they haven’t signed the agreements for,” he added. “Send that money down to Houston and let’s deepen the Houston ship channel.

It’s not a zero-sum game; there is potentially money that could be at

Comparing ships New York harbor is designed to support ships like the Regina Maersk. A U.S. Army Corps of Engineers project aims to deepen the harbor and channels to support larger ships like the Regina Triple E. These larger ships offer a capacity of up to three times more than the Regina Maersk, which would enable millions of dollars more in goods to reach the Port of New York and New Jersey.

Christopher Ward, a former executive director of the Port Authority of New York and New Jersey | ALAMY

due to climate change, for instance, is an increasingly present factor. In theory, higher sea levels could actually make the job of deepening ports easier; but organic matter settling in the seabed likely outpaces any real gains in ocean depth, according to the Army Corps.

‘Naked, cold and hungry’

NOTE: TEU = 20-foot equivalent units, a measure of volume in units of 20-foot long containers.

SOURCES: U.S. Army Corps of Engineers, The Geography of Transport Systems, The Port Economics, Management and Policy

risk if we don’t activate these contracts.”

John Nardi, president of the New York Shipping Association, noted that “it’s difficult to regain freight once we’ve lost it.”

“Ships are getting larger and there’s an economic advantage to

ments project — is currently in the early stages of pre-construction, engineering and design, according to Hector Mosley, an Army Corps spokesman.

Once a design agreement is signed to split the initial project costs, Mosley said the Army Corps can begin to develop specific plans.

“There’s no timeline on when a non-federal partnership agreement will be signed, that’s why it’s important that we continue to work closely with our non-federal partners, so it will be done in a timely manner,” he said.

Steven Burns, spokesman for the PANYNJ, said the authority is “working closely” with the Army Corps to move the project forward. He did not answer Crain’s questions about when, exactly, the Port Authority hopes to solidify a design agreement, or whether ­PANYNJ has concerns about funding its share.

Bethann Rooney, port director at the PANYNJ, stressed the project’s significance last year in a statement.

“We look forward to working with port stakeholders so that one day we will be able to welcome the industry’s largest container vessels,” Rooney said. “The regional economy depends on the Port of New York and New Jersey to be able to keep pace with consumer and population demands.”

Just one inch of water in a port could mean millions of dollars worth of additional cargo. the shippers,” he added. “Newer ships are more environmentally friendly. These are the vessels we want coming here.”

The project — known as the New York and New Jersey Harbor Deepening Channel Improve-

Port plan The U.S. Army Corps of Engineers wants to deepen the pathway to the Port of New York and New Jersey by 5 feet to roughly 55 feet.

Immense economic impact The economic impact of regional port activity is immense. In 2022, the New York-New Jersey port industry directly supported 266,200 jobs, accounted for some $135 billion in business income and made up nearly $15.7 billion

in tax revenue for 31 counties in New York, New Jersey and Pennsylvania, according to a June report by the Shipping Association of New York and New Jersey.

In New York City alone, the report found, the port industry directly supported some 19,500 jobs and generated almost $20 billion in business activity. The industry generated more than $2.2 billion in federal, state and local tax revenue — nearly $1 billion of which went to city and state coffers. The port is also a key nexus for goods to be shipped by rail and truck elsewhere.

“The gateway coming into New York is crucial to not only the regional economy, but the entire East Coast and Canada,” said Stephen Lyman, executive director of the Maritime Association of the Port of New York and New Jersey, an advocate for the commercial maritime industry.

With all the goods and revenue currently cruising into the harbor, it can be hard to imagine how an extra five feet of depth would actually matter. But just one inch of water in a port could mean millions of dollars worth of additional cargo. With one more inch a cargo ship could carry an additional 50 tractors, 5,000 55-inch televisions, 30,000 laptops, or 770,000 bushels of wheat, according to data from the National Ocean Service.

The New York-New Jersey harbor deepening project aims to add at least 60 inches of depth.

In 2016, harbor officials completed a decade-long, more than $2 billion project to deepen the port from 45 feet to 50 feet. The effort sought to prepare for bigger ships sailing through a wider and deeper Panama Canal.

Such projects are extraordinarily complex and must account for a mix of variables. Rising sea level

For shipping companies, the growth in vessel size makes economic sense because they can save on construction, staffing and fuel costs. The more cargo that can be loaded onto a ship means fewer trips and less planet-warming emissions pumped into the air.

When the Marco Polo cruised into New York Harbor two years ago, it was made possible by port officials’ prescient investments in dredging the harbor and lifting the Bayonne Bridge by 64 feet.

“The full Panama Canal usage wasn’t triggered until New York went to 50 feet,” said Nardi.

That previous harbor deepening project was designed to accommodate vessels roughly the size of the Regina Maersk, which is 1,044 feet long, 140 feet wide and can handle between 6,000 and 8,500 20-foot trailer units. Now supersized-ships seeking to enter the port can be more than 160 feet longer, 17 feet wider and up to four feet deeper when fully loaded, according to the Army Corps.

“These vessels are depth-constrained at the existing channel depth and experience maneuverability inefficiencies within the existing channels,” according to the 2022 feasibility study by the Army Corps.

Based on a forecast of the size of future fleets, the study team crafted its new plan to accommodate ships roughly on par with the Maersk Triple E. The cargo vessel is 1,308 feet long, 193 feet wide, and can carry between 18,000 and 21,000 20-foot containers.

Amazingly, there are larger ships sailing the globe that can hold as many as 24,000 20-footcontainers, and even with the 55foot deepening project, still wouldn’t be able to dock at the region’s port.

“With the evolution of supply chains, vessel sizes have traditionally increased,” said Lyman. “To support this increase, critical infrastructure projects, such as the harbor deepening project, are needed.

Without these infrastructure upgrades, food and other consumables would not be on our shelves, leaving us naked, cold and hungry.”

20 | CRAIN’S NEW YORK BUSINESS | October 16, 2023

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ISRAEL From Page 1

state’s top trading partners. How the war could affect that status is unclear.

Many of New York’s 1.6 million Jews have some connection to Israel, while a far smaller but visible population of Palestinians also

Wylde said business leaders’ prevailing reaction to the burgeoning war has been horror at the acts of terror perpetrated on unsuspecting civilians by members of Hamas.

“Taking seriously the re-emergence of global terrorism in the Middle East is a frightening prospect,” she said. “New York remains a high-target city, so we consider this particularly threatening—when it can happen there it certainly can happen here.”

A Partnership spokeswoman shared an analysis of news reports prepared for the organization by the public relations firm Rubenstein, which concluded that global CEOs have had a muted response to the conflict thus far — focusing mostly on its effects on business operations rather than on its humanitarian impacts.

The city is also linked with Israel

Divisions have already emerged in New York’s political class in its response to the conflict. call the city home, concentrated in enclaves like Bay Ridge, Brooklyn.

Israel’s status as a “start-up nation” was driven in part by New York investors, noted Kathryn Wylde, president of the Partnership for New York City, which represents the city’s business community.

politically and culturally. Every New York City mayor has visited Israel since the 1950s, a tradition that Mayor Eric Adams continued in August. And Israel’s presence in New York includes the Jacobs Technion-Cornell Institute on Roosevelt Island’s Cornell Tech campus, which formed as a partnership between Cornell and Israel’s Technion — Israel Institute of Technology.

Rally controversy Divisions have already emerged in New York’s political class in its response to the conflict. While most elected officials have sided steadfastly with Israel, controversy erupted over a pro-Palestinian rally in Times Square on Oct. 8. The city’s Democratic Socialists of America chapter joined the rally in support of Palestinians despite condemnation from much of the political establishment.

Religious divisions can have a major impact on New York poli-

A pro-Palestinian rally Oct. 9 in New York | BUCK ENNIS

tics. Last year, Orthodox Jewish support for Republican Lee Zeldin helped propel his strong showing in the state’s gubernatorial race, and contributed to Democratic candidates’ losses in Hudson Valley races where the regulation of private religious schools was a

major issue.

Longtime political consultant Hank Sheinkopf predicted that the new war could have a similar effect.

“It’ll polarize the city more, and it’ll have a long-term impact on our politics,” he said.

Fast-changing Long Island City to be studied with goal of producing neighborhood plan including zoning changes

By Nick Garber

City Council member Julie Won battled Mayor Eric Adams’ administration last year over a major rezoning in her Western Queens district. Now, the two sides have teamed up in hopes of accomplishing something bigger: creating a comprehensive plan to govern the growth of the rapidly developing area.

Won and City Hall officials announced Oct. 10 that they will start a study of Long Island City, covering an area that stretches from the glassy waterfront towers near Anable Basin and Court Square to the enormous Queensbridge public housing complex — with the goal of producing a neighborhood plan by 2025 that will include zoning changes.

Separately, Won’s office plans to embark on its own study of another section of her district, covering the largely industrial and low-rise residential stretches of Northern Boulevard and Roosevelt Avenue that run through Astoria, Sunnyside and Woodside. Both plans

Separately, council member Julie Won’s office plans a study of another section of her district. will study ways to build new housing, improve transit and open the neighborhoods to more investment.

“For years, the city’s land use approach in Western Queens has been project-by-project, focused on individual-site zones and plans rather than a neighborhood-wide approach,” Won said at a press conference on Oct. 10 at Queensbridge Park, alongside Council

City Council member Julie Won (center) announced the new Long Island City neighborhood studies at Queensbridge Park on Oct. 10, joined by Council Speaker Adrienne Adams (left) and Deputy Mayor Maria Torres-Springer (right). | NYC COUNCIL MEDIA

Speaker Adrienne Adams and Deputy Mayor Maria Torres-Springer. “Under our current developer-led process, we’ve seen record-high rents and have said goodbye to too many of our longtime neighbors who could no longer afford to live here.”

Both studies represent an effort to dispense with smallscale rezoning battles in favor of a broader vision for the area’s future. Parallel efforts are underway across the city: an upcoming rezoning of Brooklyn’s Atlantic Avenue, which officials say could result in 4,000 new homes, grew out of a neighborhood planning process that resembles the one slated for Western Queens.

Meanwhile, Brooklyn Borough President Antonio Reynoso unveiled a similar plan this month that would govern his entire bor-

ough, and the Adams administration is pursuing its own citywide zoning reforms that could also reduce the need for individual rezonings.

Flurry of proposals Won’s Western Queens district has been host to a flurry of development proposals in recent years, including Amazon’s scuttled headquarters, a spate of new office and apartment towers, and the five-block Innovation QNS development in Astoria, which Won finally endorsed last fall after holding out for months to secure a commitment for more affordable housing. Both Speaker Adams and Mayor Adams pressured Won to approve the 3,200-unit project, citing the city’s housing shortage.

During that rezoning fight, Won also faced intense pressure from

neighborhood groups skeptical of new development, which they feared would indirectly displace longtime residents and businesses. The new efforts are likely to arouse some local skepticism as well, but Won stressed on Oct. 10 that the new neighborhood studies will put residents at the forefront, allowing them to contribute their ideas.

The so-called Long Island City Neighborhood Study, funded by Adams’ administration, will cover the area from the East River and Gantry Plaza State Park near Queens’ southwest corner up to 40th Avenue towards Astoria, extending east to include Court Square and some blocks near Queens Plaza. Officials aim to complete the study by June 2024, then produce a rezoning plan that the City Council could approve by the end of 2025.

The territory includes the blocks that surround Anable Basin, an inlet in the Hunters Point area of Long Island City that Amazon eyed for its New York headquarters before the company withdrew that plan in 2019. About a half-mile of largely industrial blocks currently separates Hunters Point from the Queensbridge area further north, and Won said the eventual rezoning will seek to link them as “one connected neighborhood” along the East River waterfront.

The second effort, dubbed “Heart of District 26” and led by Won’s office, will study about two miles of Northern Boulevard and one mile of Roosevelt Avenue, both bounded by Queens Boulevard and the Brooklyn-Queens Expressway. It will be funded by Speaker Adams’ office, with public engagement led by the nonprofit Hester Street. (Officials noted that the area does not include Sunnyside Yards, the enormous rail yard that the de Blasio administration eyed for a major housing development. That effort stalled in the wake of the Covid-19 pandemic.)

The ultimate output of the Northern-Roosevelt effort is less clear than the Long Island City plan, but Won said it, too, could result in a rezoning if residents express an interest. Both study areas are mostly distinct from the 37 Long Island City blocks that the city previously rezoned in 2001, which has resulted in a construction boom surrounding Queens Plaza.

Similar forward-looking development schemes have sputtered in the past, such as former Council Speaker Corey Johnson’s 2020 proposal to implement a citywide comprehensive plan. But Torres-Springer, who heads up housing development in the Adams administration, said officials wanted to avoid a “false start” this time.

“We have to move with urgency,” she said.

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By Amanda D’Ambrosio

The health system One Brooklyn Health operated with large deficits and attracted concerns about its financial stability long before the board of directors voted to remove LaRay Brown as CEO. Amid allegations of financial mismanagement, the organization has been mum about the leadership change, leaving some health experts wondering what precisely changed and what’s next.

Last month, board members voted not to renew Brown’s employment contract, which expires at the end of December. The decision stemmed from a performance review conducted by a compensation task force earlier in the year, according to Brown, but board chair Alexander Rovt told Politico that Brown mismanaged the health system’s funds. Rovt did not respond to several written requests and phone calls from Crain’s.

It was unclear just how large the health system’s operating deficit will be for 2023; the system has not filed public disclosures yet, which are not due until after the end of the year, and declined to provide the information to Crain’s. Additionally, it’s uncertain what catalyzed

Brown’s removal at this time, since the health system has consistently operated in the red despite significant investment from the state, according to 990 forms and federal cost report data reviewed by Crain’s.

One Brooklyn Health was established in 2016, after a state-commissioned report recommended that Brookdale Hospital Medical Center, Interfaith Medical Center and Kingsbrook Jewish Medical Center merge to serve central Brooklyn, which has a majority of Black and brown residents. In addition to its hospitals, One Brooklyn Health has a large ambulatory care network, two nursing homes and a senior care and housing center.

One Brooklyn received a $664 million transformation grant from the state in 2018 to support its effort to upgrade Brooklyn’s safety-net hospitals and make them financially sustainable.

But the hospitals have yet to achieve that sustainability. The facilities affiliated with One Brooklyn Health reported $628 million in net patient revenue and $1.2 billion in operating expenses in 2021, the most recent year that data is available. The data comes from a hospital cost report that Brookdale filed

to the Centers for Medicare and Medicaid Services, which includes self-reported data from Brookdale, Interfaith and Kingsbrook.

The filings show that the gap between patient revenue and total expenses for the three hospitals amounted to $600 million in 2021, equating to an operating margin of -96%.

Borough’s largest gap Financial challenges are not unique to One Brooklyn Health, though the system’s gap is the largest in the borough.

One Brooklyn’s hospitals have continued to operate in the red despite state efforts to funnel money into the system. A recent analysis conducted by the Albany-based fiscal think tank Empire Center for Public Policy found that state investments totaled $1.1 billion in operating aid between 2015 and 2019. Grants allocated through that program require hospitals to report on quality and patient outcomes.

Bill Hammond, senior health policy fellow at the Empire Center who conducted the analysis, said that the operating deficits despite state aid raise concerns about the health system’s plan to sustain itself

financially. “This is money that should be spent on providing health care,” Hammond said, “not keeping an institution open.”

The health system also received an additional $341 million in government appropriations in 2021, according to its cost report. Total other revenue, which includes subsidies and other income, reached $546 million that year. Based on a Crain’s analysis of patient revenue, other revenue and government contributions, the hospitals’ total deficit in 2021 was $57 million.

Juanita Scarlett, a partner from the public affairs firm Bolton-St. Johns, who was recently hired by One Brooklyn Health, said that combined cost reports for the system—which include additional financial information for its two nursing homes and family health center—will likely show a total deficit of around $110 million for 2021, higher than what was reported in Brookdale’s filing. Individual 990s for the combined entities show a $92 million overall deficit, she added.

Because most patients at safety-net hospitals are covered by Medicare and Medicaid—which reimburse at lower rates than commercial payers—they bring in less

BUCK ENNIS

One Brooklyn Health’s financial wellness murky after surprise ouster of CEO

LaRay Brown

money than private hospitals. Additionally, the reduction in patient volume during the Covid-19 pandemic and sustained high labor and medical supply costs have exacerbated financial distress for these institutions.

The total deficits reported by One Brooklyn are lower than what previous reports have shown. Dr. Alexander Rovt, chairperson of the board, told Politico that the board decided to remove Brown after it learned that One Brooklyn had a deficit of $600 million, a claim that Brown has contested. She told Crain’s that the deficit was closer to $500 million.

Elected officials and health care workers have urged the state to further fund One Brooklyn Health and intervene in the decision to change leadership.

Scarlett said that “the viability of the One Brooklyn Health network is the most important consideration for the board of trustees, the hospital leadership, our partners in government and community stakeholders, who are all committed to preserving this vital health care safety-net and the communities served.”

One Brooklyn Health has not announced who will become CEO.

22 | CRAIN’S NEW YORK BUSINESS | October 16, 2023

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GOTHAM GIGS

CrainsNewYork.com President and CEO KC Crain Group publisher Jim Kirk (312) 397-5503 or jkirk@crain.com Publisher/executive editor Frederick P. Gabriel Jr. Editor-in-chief Cory Schouten, cory.schouten@crainsnewyork.com Managing editor Telisha Bryan Assistant managing editors Anne Michaud, Amanda Glodowski Director of audience and engagement Elizabeth Couch Audience engagement editor Jennifer Samuels Digital editor Taylor Nakagawa Opinion editor Jan Parr opinion@crainsnewyork.com Creative director Thomas J. Linden Associate creative director Karen Freese Zane Digital design editor Jason McGregor Art directors Kayla Byler, Carolyn McClain, Joanna Metzger Senior digital news designer Stephanie Swearngin Photographer Buck Ennis Notables coordinator Ashley Maahs SENIOR REPORTERS Aaron Elstein, C.J. Hughes, Eddie Small REPORTERS Amanda D’Ambrosio, Nick Garber, Mario Marroquin, Jacqueline Neber, Caroline Spivack CONTACT THE NEWSROOM editors@crainsnewyork.com www.crainsnewyork.com/staff ADVERTISING www.crainsnewyork.com/advertise Senior vice president of sales Susan Jacobs (312) 649-5492 or susan.jacobs@crain.com Sales director Laura Lubrano laura.lubrano@crainsnewyork.com Account executives Miriam Dreese, Paul Mauriello, Philip Redgate People on the move manager Debora Stein Classified sales Suzanne Janik, (313) 446-0455 or sjanik@crain.com Sales assistant Ryan Call Inside sales Isabel Foster

Jack Seidenberg of Seidenberg Antiques | BUCK ENNIS

Antiques store owner appraises future of centuries-old art as sales go online The owner of the Union Square retailer feels love from his neighborhood as others take their wares to the internet. He survives by serving buyers who want to consult a professional. | By Aaron Elstein

W

alking into Seidenberg Antiques near Union Square is like entering a museum. The 5,000-square-foot space is filled from floor to ceiling with magnificent European and Asian decorative art from the 18th through 20th centuries.

How many vases, statues, can-

the bills, considering a 19th-century silver and enamel Viennese tankard depicting angelic children and Bacchus costs $60,000.

(Some items cost as little as $200.)

But fewer passersby walk in, and interior decorators, who used to bring in checkbook-armed clients, seem to prefer to shop online.

Seidenberg’s 36-yearold son, David, who helps run the business, thinks it would make sense to relocate to a smaller space when the lease expires in a few years. But Jack isn’t sure that’s the right move. Retailers are a dime a dozen, but there’s only one Seidenberg Antiques.

“Do I need the store? It’s the million-dollar question,” he said.

“What do you think I should do?”

As a young man, he had to squabble with his family to run the store and has made more of it than his father, who had him endure two unhappy years practicing law before handing over the keys. Seidenberg never studied

“Do I need the store? It’s the million-dollar question. What do you think I should do?”

— Jack Seidenberg delabras, lamps and bowls does the store hold?

“No clue,” said owner Jack Seidenberg. “What I do know is my father started building this collection when he opened the store a few months after coming from Germany in 1940. I’ve been adding to it ever since I started running the place in 1972.”

It costs $35,000 to rent the space on East 12th Street, so Seidenberg doesn’t need to sell much to pay

art — “Maybe I should have” — but learned how to spot worthy items at auctions and estate sales by talking to other dealers and reading everything he could.

Luxury a commodity There were lots of people to talk to when Manhattan was filled with family-run auction houses and antiquarians. Dealers in other cities sometimes sold Seidenberg’s antiques on consignment.

The internet wiped out that world, and luxury has become a commodity marketed by global brands, said Seidenberg, who survives by serving buyers who want to consult a professional before investing in serious home decor.

Even though the store’s neighbors may not bring in much business, they implore Seidenberg to keep going.

“A woman stopped by and said she didn’t have the money to buy anything, but please don’t leave,” he said. “I didn’t know if I should feel sorry for her or if she felt sorry for me.”

Jack Seidenberg Raised: Washington Heights Resides: Washington Heights Education: Bachelor’s in psychology, Hunter College.

J.D., St. John’s University School of Law His collection Seidenberg is an art collector as well as a dealer. “Dealers always collect the sorts of things they sell,” he said.

Street smarts Seidenberg moved his store to East 12th Street in 2000 because the Lower East Side location opened by his father had run out of room. “It’s not as if I had the sechel to move,” he said, using the Yiddish word for street smarts.

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