CRAINSNEW YORK BUSINESS
NEW YORK BUSINESS® JANUARY 28 - FEBRUARY 3, 2019 | PRICE $3.00
SMOKE SIGNALS The governor’s budget calls for legalizing recreational marijuana. But how would the market work? And who would benefit? PAGE 19
E-BIKE INANITY P. 3
CRACKING DOWN ON WAGE THEFT P. 4
THE LIST Top executive recruiters P. 11
VOL. XXXV, NO. 4 WWW.CRAINSNEWYORK.COM CUSTOM CONTENT 2019 TAX GUIDE P. 13
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P001_CN_20190128.indd 1 1/25/19 6:26 PM JANUARY 28 - FEBRUARY 3, 2019 CRAINSNEW YORK BUSINESS
ON THE COVER
PHOTO: BUCK ENNIS
FROM THE NEWSROOM | BRENDAN O’CONNOR | MANAGING EDITOR Out of the weeds
NOT SO LONG AGO intrepid New Yorkers could witness an intricate ritual play out most nights in Washington Square Park. A young man would approach a slightly older man, who would give him a subtle nod. e younger man would put some money on the ground— likely $10—and the older man would take a tiny pouch of pot out of his pocket and put it on the ground next to the 10-spot. e young man would pick up the “dime bag,” the older guy would take the cash, and, because the transaction was technically indirect, the police would more o en than not look the other way. Or maybe they were just too amused to care. ings have changed quite a bit in the past 20 years or so. As cell- phones proliferated, the corner dealer was replaced by a bike- riding courier o ering delivery of lot more varieties of weed with much less ritual. Few people call it pot anymore, as “ ower” is the preferred term, and dime bags have given way to gummies, vapes, tinctures and P. 19 a wide range of cutting-edge THC-delivery devices. But the biggest change is yet to come. is month Gov. Andrew IN THIS ISSUE Cuomo unveiled his budget proposal, including plans for the legaliza- tion of cannabis for recreational use. If the bill passes the state Legisla- UP FRONT 8 ASKED & ANSWERED ture this spring, as is anticipated, New York will become the 11th state Nurturing three ower shops in a shrinking retail landscape to permit, regulate and, of course, tax the cultivation and distribution 3 EDITORIAL Government is a necessary 9 IN THE MARKETS of marijuana. (Medical use has been legal here since 2014.) evil, but must it be idiotic? A community bank links Crain’s has covered this business, illicit and otherwise, for several 4 IN CASE YOU MISSED IT its fortunes to health care; years now, and this week’s cover story (“Wading Into Weed,” p. 19) is Stiff punishment for companies capitalizing on the shutdown likely to be the rst of several to explore the wide-ranging social and that shortchange workers 10 VIEWPOINTS economic impacts of this soon-to-be multibillion-dollar enterprise. 5 ENTERTAINMENT A changed mind on Bloomberg And while it’s true that times have changed, there is a bit of histori- Nightlife industry contributes for president; make New York’s cal symmetry baked in: George Washington, the park’s namesake, was $700 million to tax revenue trucks electric a lifelong hemp farmer. 6 WHO OWNS THE BLOCK 11 THE LIST Two towers tell the tale of The area’s largest executive- Midtown old and new recruiting rms 7 REAL ESTATE City unveils overhaul to stop FEATURES CONFERENCE CALLOUT wasteful projects; construction FEB. 21 dipped in the city last year 19 WADING INTO WEED CRAIN’S BUSINESS How a legal-marijuana market BREAKFAST FORUM would work in the state and who would bene t ASSEMBLY SPEAKER Carl Heastie will 25 FOR THE RECORD discuss the state budget, pressing Our tally of the week’s buys, topics facing lawmakers and his busts and breakthroughs long-term goals for the Legislature. Register today: CrainsNewYork.com/ 26 SNAPS Photos from the city’s biggest Heastie events/Heastie2019. fundraisers and charity events NEW YORK 27 GOTHAM GIGS ATHLETIC CLUB A former aerospace engineer 8 to 9:30 a.m. helps steer his family’s [email protected] P. 27 reggae dynasty
Vol. XXXV, No. 4, Jan. 28, 2019—Crain’s New York Business (ISSN 8756-789X) is published weekly, except for double issues Jan. 1, June 25, July 9, July 23, Aug. 6, Aug. 20 and Dec. 24, by Crain Communications Inc., 685 Third Ave., New York, NY 10017. Periodicals postage paid at New York, NY, and additional mailing of ces. Postmaster: Send address changes to: Crain’s New York Business, Circulation Department, PO Box 433279, Palm Coast, FL 32143-9681. For subscriber service: Call 877-824-9379. Fax 313-446-6777. $3.00 a copy, $99.95 one year, $179.95 two years. (GST No. 13676-0444-RT) ©Entire contents copyright 2019
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2 | CRAIN’S NEW YORK BUSINESS | JANUARY 28, 2019
P002_CN_20190128.indd 2 1/25/19 7:06 PM JANUARY 28, 2019
AGENDAGovernment is a necessary evil, but must it be idiotic?
illions of times a day, New Yorkers break the law in plain sight, and the police let them. Good thing too, because allowing jaywalking is smart. Imagine how much time would be wasted if we all stood at the curb like tourists— Mmasses of humanity backing up behind us—rather than cross on the red during a break in tra c? A crackdown on illegal crossing would slow the city economy by making walking less e cient, worsen congestion by en- ticing ride-hailing and increase crime by occupying police. QUITE THE CATCH: ere’s a reason we don’t enforce all laws all the time. But too o en this The NYPD was roundly mocked simple logic escapes our government. for tweeting this Exhibit one: For two years overzealous inspectors from the Depart- photo of con s- cated e-bikes. ment of Buildings blitzed poor and working-class neighborhoods to crack down on illegal signage. Obscure violations such as missing permits for signs larger than 6 feet were deemed so perilous to the public that ciently spiriting food to the millions of New Yorkers who order in, but the struggling merchants were slapped with $6,000 nes. e shop owners state has yet to create a license for them, so the city considers them illegal. were outraged, of course, but also perplexed at being written up for pic- For several years the NYPD has been con scating these clever devices ayune infractions that hadn’t ever bothered anyone. e city’s action— and handing out he y nes, costing their immigrant riders a week’s wages bad enough by itself—has led to con art- with every bust. (By law, the restaurants are ists shaking down innocent entrepreneurs Every business has a shake-your-head supposed to pay, but in the real world, the worried about their signs. e City Council hapless worker does.) Mayor Bill de Blasio, nally stopped the madness this month, story about city bureaucracy, archaic who says he wants New York to be Ameri- passing a two-year moratorium on awning rules and overzealous inspectors ca’s fairest city, blesses this heartless policy, enforcement. saying he is worried about e-bikes hurting Every small business in this town has a people—which is exceedingly rare. Does he shake-your-head story about city government: dysfunctional bureaucra- not realize that the alternative—delivering by car—is far more dangerous? cies, clerks on power trips, cops with quotas, archaic rules misapplied to e mayor’s only response has been to legalize the few bikes with motors new technology. Owners of nonconforming signs eventually got a reprieve, that kick in only when the rider pedals. So nice of him. but there has been little relief for delivery people, nearly all of whom use Perhaps we should take advantage of the moratorium for illicit signs and bikes with silent, zero-emission electric motors. E-bikes are ideal for e - install one at City Hall: “Help Wanted: Common Sense.” — THE EDITORS
FINE PRINT With temperatures dipping below freezing recently, a familiar residential address produced the most heating complaints to 311. According to RentHop, 89-21 Elmhurst Ave. in Queens generated 1,078 com- plaints this winter, more than double the total at any other address. The Central Queens Properties–owned building had 1,298 complaints last year, which was also far more than any other building.
BY GERALD SCHIFMAN STATS
25 WORDS OR LESS UNSIGHTLY SUITS TOP WEB-ACCESSIBILITY A CLASS-ACTION LAWSUIT led this month LAWSUIT TARGETS, 2018 alleges Beyoncé’s website is inacces- AND THE CITY sible to the blind, in violation of Retail the Americans with Disabilities Tall buildings are a Act. Courts—mostly 38% in New York—saw a “ Food service reality. The days of spike in such cases last year. 11%
restrictions on buildings ADA web- Travel/hospitality accessibility cases 10% are really over” 2,285 led last year, nearly —Real estate developer Harry Macklowe, three times the 2017 total Banking/ nancial who is seeking approval to build a % Portion of ADA web- 7% 1,551-foot-tall tower on Fifth Avenue accessibility lawsuits led Entertainment and leisure 64 in New York last year between 51st and 52nd streets. Tower 7% Fifth would be the second-tallest building Portion of sued
in the Western Hemisphere. % companies based 25 in the state
SOURCE: UsableNet GETTY IMAGES, COURTESY OF NYPD10PCT/TWITTER
JANUARY 28, 2019 | CRAIN’S NEW YORK BUSINESS | 3
P003_CN_20190128.indd 3 1/25/19 6:43 PM IN CASE YOU MISSED IT CRAINSNEW YORK BUSINESS president K.C. Crain senior executive vice president Chris Crain group publisher Mary Kramer
EDITORIAL Cuomo tackles wage theft, managing editor Brendan O’Connor assistant managing editors Erik Engquist, a multifaceted problem Jeanhee Kim copy desk chief Telisha Bryan art director Carolyn McClain OV. ANDREW CUOMO WANTS EMPLOYERS who photographer Buck Ennis shortchange workers to face stiffer punishment, which digital editor Gabriella Iannetta is a strategy elected officials tend to adopt when they data editor Gerald Schifman G senior reporters Joe Anuta, Aaron Elstein, do not commit significant resources to enforcement. Matthew Flamm, Daniel Geiger Last week the governor proposed raising fines for wage reporters Will Bredderman, Jennifer Henderson, Jonathan LaMantia theft—a crime that could be on the rise, with the minimum digital fellow Lizeth Beltran hourly wage for most workers in the city having climbed to columnist Greg David contributors Tom Acitelli, Cara Eisenpress, $15 from $9 in recent years. Cuomo, whose press release cited Cheryl S. Grant, Yoona Ha, Chris Kobiella, a “dramatic increase” in wage violations, would subject any Miriam Kreinin Souccar employer to a felony charge for shorting even one employee to contact the newsroom: www.crainsnewyork.com/staff $1,000 or more, a penalty now reserved for repeat offenders. 212.210.0100 But five years after advocates called for the governor to 685 Third Ave., New York, NY 10017-4024 add 200 investigators to his Department of Labor, the agency ADVERTISING www.crainsnewyork.com/advertise has just 171 in total. Last year they handled 6,700 wage-theft advertising director Irene Bar-Am, cases, an average of 39 apiece. In a vast state of 19 million people, the department relies largely on complaints to 212.210.0133, [email protected] apprehend cheaters, but workers who fear losing their job or being deported tend not to blow the whistle on their senior account managers Lauren Black, Rob Pierce, Stuart Smilowitz boss. Some businesses, for their part, have complained of being targeted by authorities because of a few bad apples account manager Jameson Roberts in their industries—and by lawyers who bring lawsuits that are cheaper for employers to settle than to fight. integrated marketing manager Jonathan Yan, 212.210.0290, [email protected] Pursuing businesses that fail to meet pay standards has become a favorite cause of New York officials. The associate art director/marketing City Council required owners of salons and car washes to purchase surety bonds that compensate workers left Charles Fontanilla, 212.210.0145 [email protected] in the lurch. Former Attorney General Eric Schneiderman and his stopgap successor, Solicitor General Barbara sales coordinator Devin Cavallo, Underwood, brought numerous cases. City Comptroller Scott Stringer has pursued contractors who fail to pay the 212.210.0701, [email protected] prevailing wage—which is far higher than the minimum wage—and last week announced an outreach campaign CUSTOM CONTENT director of custom content to get unreached victims of wage theft to collect the $2.5 million his office has recovered for them. That such a sum Patty Oppenheimer, 212.210.0711, remained unclaimed helps explain why workers are fleeced in the first place. — WILL BREDDERMAN AND ERIK ENGQUIST [email protected] custom project manager Danielle Brody, [email protected] EVENTS Historic reopening DATA POINT Tow pain www.crainsnewyork.com/events Historic downtown Brooklyn restau- To speed up bus service, the city’s po- director of conferences & events THERE WERE 381 TAXI-MEDALLION rant Gage & Tollner, which closed in lice will deploy seven teams with one or Courtney Williams, 212.210.0257, [email protected] 2004, will return in the fall. It opened FORECLOSURE SALES LAST YEAR, more tow trucks to move cars parked in manager of conferences & events on Fulton Street in 1879 and drew lu- MORE THAN 10 TIMES THE NUMBER bus lanes. Towed drivers will pay more Ashlee Schuppius, minaries such as Mae West, Diamond than $185 to retrieve their vehicle and [email protected] IN 2017. MOST OF THE MEDALLIONS Jim Brady and Truman Capote. Its el- could pay or contest the $115 fine. AUDIENCE DEVELOPMENT egant features have been preserved WERE BOUGHT BY HEDGE FUNDS group director, audience development through interior landmark designation. Buzz cuts Jennifer Mosley, [email protected] AT PUBLIC AUCTION. BuzzFeed is preparing to prune 15% of REPRINTS Lights, cameras, tickets its staff, or about 220 workers. CEO Jo- reprint account executive Lauren Melesio, Gov. Andrew Cuomo proposed reform- nah Peretti told employees in a memo 212.210.0707 ing the city’s school speed camera pro- Hospitality comes under fire that the cuts would improve the media PRODUCTION gram, which he extended by an emer- The city is suing a group of real es- outlet’s operating model and end its re- production and pre-press director gency order in August after the state tate brokers, alleging they converted liance on additional outside funding. Simone Pryce Senate didn’t renew it. His bill would apartments in 35 buildings across the — CHRIS KOBIELLA media services manager Nicole Spell boost the number of school zones to city into hotel rooms through Airbnb. SUBSCRIPTION CUSTOMER SERVICE 290 from 140. But some city leaders Among the claims in the record-high www.crainsnewyork.com/subscribe want no limit, as allowed by the order $21 million lawsuit is that Metropoli- [email protected] Cuomo has been renewing monthly. tan Hospitality Group used fake iden- 877.824.9379 (in the U.S. and Canada). $3.00 a copy for the print edition; or $99.95 tities and more than a dozen corporate one year, $179.95 two years, for print Cliff hanger entities to facilitate 13,691 rentals from subscriptions with digital access. Pumpkin House, the Hudson Heights 2015 to last year. Entire contents ©copyright 2019 home jutting from a cliff above the Crain Communications Inc. All rights Hudson River, sold for $2 million after All for show reserved. ©CityBusiness is a registered three years on the market. The 3-story, Viacom acquired video-streaming ser- trademark of MCP Inc., used under license 3,144-square-foot structure was built vice Pluto TV for $340 million, giving agreement. in 1925 and resembles a jack-o’-lantern it another platform for its networks and CRAIN COMMUNICATIONS INC. when it’s viewed from the George another source of ad revenue. Pluto TV, chairman Keith E. Crain Washington Bridge. which debuted in 2013, will be an inde- vice chairman Mary Kay Crain Sky-high cost president K.C. Crain pendent Viacom unit, with Tom Ryan senior executive vice president Chris Crain Well-awarded stewardship continuing as CEO. Ken Griffin, CEO of Chicago-based secretary Lexie Crain Armstrong Adam Moss, New York magazine’s financial firm Citadel, paid editor-in-chief emeritus Rance Crain editor-in-chief since its redesign and Open books $238 million for a 24,000-square– chief financial officer Robert Recchia relaunch in 2004, will leave his post After sagging sales led to the an- foot penthouse at 79-story 220 founder G.D. Crain Jr. [1885-1973] March 31. During Moss’s tenure, the nounced closing of Westsider Rare & Central Park South, making the chairman Mrs. G.D. Crain Jr. [1911-1996] magazine and its digital sites won 40 Used Books two weeks ago, the store unfinished space the most expen- National Magazine Awards, more than has been saved by a resident’s $50,000 sive home in the United States.
GOVERNORANDREWCUOMO/FLICKR, BLOOMBERG NEWS any other publication. GoFundMe campaign.
4 | CRAIN’S NEW YORK BUSINESS | January 28, 2019
P004_CN_20190128.indd 4 1/25/19 7:07 PM ENTERTAINMENT
Nightlife industry contributes $700M to local tax revenue Economic-impact report shows ride-hail services boost late-night crowds BY MIRIAM KREININ SOUCCAR
he first eco- “We’re seeing a growth Gans, senior executive permitting easier for the sumers, employees and challenges included reg- nomic-impact in liquor licenses in Wil- director of policy and industry to navigate. residents. Nearly 90% ulatory red tape and peo- study of the liamsburg, Prospect programs. The study, conducted of the owners and op- ple staying home more. nightlife sec- Heights, Bushwick—a Palitz added that plans during the summer, in- erators said their big- Yet 60% of the own- Ttor, released Jan. 24 by new nightlife mecca is are in the works to de- cluded 1,300 interviews gest challenge was rising ers expected to still be in
the Mayor’s Office of happening,” said Shira velop a portal to make with venue owners, con- commercial rents. Other business in three years. ■ BLOOMBERG NEWS Media and Entertain- ment, looked at restau- rants, bars, arts and cul- tural institutions, music venues and sports and recreation facilities open between 6 p.m. and 6 a.m. It found more than 25,000 such establish- ments in the five bor- oughs, and they contrib- ute $697 million in local tax revenue. “We have long known that nightlife is a funda- mental part of New York City’s culture and iden- tity,” said Ariel Palitz, senior executive director of the office of nightlife. “Now we can also quan- tify exactly how vital it is as an economic driver.” The city’s nightlife industry supports near- ly 300,000 jobs and has $35.1 billion in total eco- nomic output, the study found. Boost to Brooklyn The report also re- WHAT IT TAKES vealed that the sector is growing faster than the rest of the local econo- In today’s global job market, opportunities abound. Those with new ideas, hands-on experience, the ability to problem- my, with nightlife-relat- solve, and the vision to know what comes next, will be able to take advantage of all of the resources available to create ed jobs and wages grow- a distinct and successful career path. ing at annual rates of 5% At the NYU School of Professional Studies, our unique brand of industry focused graduate education sets you and 8%, respectively, apart, encouraging you to think strategically, lead decisively, and anticipate what lies ahead. Taught by top experts compared with 3% and in their fi elds, every program we off er aff ords you the chance to gain professional experience and to expand your 4% in the city overall. network. From internships at top corporations, to transformative career coaching, you are armed with what The study showed a it takes to succeed, and prepared with an NYU education that will serve you for a lifetime. shifting landscape. Man- hattan is still the place to NYU SCHOOL OF PROFESSIONAL STUDIES - GRADUATE PROGRAMS be, with 13,000 night- life establishments as of 2016, but Brooklyn, with Construction Management • Real Estate • Real Estate 5,500, is growing fast— APPLY sps.nyu.edu/applygrad Development / Event Management • Hospitality at an annual rate of 5%. ATTEND AN INFO. SESSION Industry Studies • Tourism Management / Global Officials attributed Aff airs • Global Security, Confl ict, and Cybercrime outer-borough growth March 27, 2019 • 6:00 - 8:00 pm 7 East 12th Street, New York, NY Global Sport • Sports Business / Human Capital to ride-hail services such RSVP sps.nyu.edu/graduate-events1g Analytics and Technology • Human Resource as Lyft and Uber. Taxi Management and Development / Integrated Marketing and for-hire-vehicle data LEARN MORE Public Relations and Corporate Communication from midnight to 4 a.m., sps.nyu.edu/grad1g • 212-998-7100 Management and Systems / Project Management for example, found that Professional Writing / Publishing: Digital and Print in northern Bushwick REQUEST INFO. sps.nyu.edu/gradinfo1g Media / Translation from 2013 to 2017, there was a 92% rise in trips. In addition, a new nightclub in Bushwick DOMESTIC APPLICATION DEADLINE: was Lyft’s No. 1 pickup FALL Semester 2019 - Final: July 1, 2019 spot in Brooklyn during the last year, they said.
NYUSPS Offi ce of Strategic Marketing and Communications January 28, 2019 | CRAIN’S NEW YORK BUSINESS | 5 Job Number: a1819-0641 Pub/Issue Date: CRAINS NY 1/28/19 Product: MS General_Model A Date 1/24/19 Size: 7.625” x 9.875” Artist: SH Bleed: N/A Proof #: 3 Color/Space: 4C P005_CN_20190128.indd 5 1/25/19 6:40 PM WHO OWNS THE BLOCK
405 LEXINGTON AVE. Two towers tell the tale of Midtown old and new Potential Chrysler Building sale could signal neighborhood’s future
BY TOM ACITELLI
ome 6 million square feet of new office 415–425 LEXINGTON AVE. space is expected to become operation- Manhattan-based Vanbarton Group., al in the city this year, and an additional a real estate investment and advi- 5.8 million square feet is planned by 2022, sory firm led by Gary Tischler and Richard Coles, bought this 31-story, Sconsultancy BTIG says. 780,912-square-foot office building That latter figure includes the 1.8 million– for $701 million in October of last 141 E. 43RD ST. AND 143 E. 43RD ST. square-foot 1 Vanderbilt under construction just year. The seller, an LLC associated with JPMorgan Asset Management, ac- The Roman Catholic Church of St. Agnes west of Grand Central Terminal, the first major quired the property for $664.4 million owns these two buildings, one of which is project to begin after the 2017 rezoning of Mid- five years earlier. the church, which dates from the 1870s. town East. Developer SL Green, which expects to finish construction next year, has positioned the 1,401- foot tower as an optimally located option for companies seeking ul- THE CHRYSLER BUILDING/405 LEXINGTON AVE. tramodern space in the classic of- Mubadala Investment Co.—an Abu Dhabi–controlled holding fice district. company and sovereign wealth fund—hired CBRE early this Just two blocks away, on the year to sell its 90% stake in the 1.3 million-square-foot tower. (Tishman Speyer owns the other 10%.) Mubadala acquired east side of Grand Central, stands the property through its merger last year with the Abu Dhabi the Chrysler Building. A majority Investment Council, which paid $800 million for controlling interest in 2008. stake of it was listed for sale in early 666 THIRD. AVE., 145 E. 42ND ST., January for an undisclosed asking AND 155 E. 42ND ST.
price. Tishman Speyer, the development and The two towers offer a distinctive ownership group run by Chairman glimpse of Midtown’s past and future, as Jerry Speyer and CEO Rob Speyer, 369 LEXINGTON AVE owns the majority stake in these three the traditional spires that made the neigh- commercial buildings, known as the borhood the city’s signature office district Triangle Assets, a real estate invest- Chrysler Center. At 32-stories, 666 is face increased competition from the state– ment firm based in Manhattan and the largest piece of the complex, with led by CEO and President Joseph Madison International Realty con- of-the-art, tech-friendly crop on the rise. Stavrach, purchased this 26-story, trolling just under 49% of the proper- But there’s more than just age and 145,733-square-foot office building ty. A Capital Grille outpost serves as competition that might affect a Chrysler for $46 million in 2004. 155 E. 42nd St.’s anchor tenant. Building sale. Last year the annual rent on the ground lease—which Cooper Union owns—went to $32.5 million from nearly $7.8 mil- lion in 2017. Another factor is a shortage of ten- 150 E. 42ND ST. ants; roughly one-fifth of the tower’s Investor David Werner led a partnership space is unoccupied. 355 LEXINGTON AVE that bought this 1.5 million-square-foot Even so, the Chrysler Building is tower, known as the Socony-Mobil Build- Rudin Management, the Manhattan development ing, for a reported $900 million in 2014. expected to fetch a handsome sum. The and ownership company controlled by the Rudin 90% stake being offered was acquired family and run by co-Chairman and CEO Bill Ru- din, has owned this 22-story, 277,250-square– 11 years ago by the sovereign fund of foot office building since 1959. Abu Dhabi for $800 million, and other, 622 THIRD AVE. older properties in the area have traded Cohen Brothers Realty Corp., for big sums in recent years, including an adjacent led by CEO and President building on Lexington Avenue that sold for nearly Charles Cohen, owns this 41-story, 1.2 million-square– $900 per square foot in October. foot office tower. CBRE, which is brokering the deal, had no comment beyond that the art deco gem remains for sale and that interest in it is coming from all over the world. In the end, the Chrysler Building’s cachet might prove its biggest selling point. ■
GOOGLE MAPS, BUCK ENNIS
6 | CRAIN’S NEW YORK BUSINESS | January 28, 2019
P006_CN_20190128.indd 6 1/25/19 11:34 AM REAL ESTATE
City unveils overhaul to stop wasteful projects Reforms at the Department of Design and Construction could save taxpayers millions BY JOE ANUTA
ay goodbye to the $2 million restroom. including minority- and women-owned businesses. Maybe. Grillo presented the findings to the New York Build- POOR PLANNING: The de Blasio administration plans to un- ing Congress last week. Watchdog groups want veil major changes to curb the eye-popping a process with fewer layers of approval and Scost overruns and delays that have wasted millions New rules changes. of taxpayer dollars on municipal projects, such as a Watchdog groups have found that major project 400-square-foot park bathroom that took eight years delays occur during the planning process, before to build. construction even begins. The department’s report Its target is the Department of Design and Con- proposed a more streamlined process up front with struction, which acts as the city’s contractor for most fewer layers of approval and less room to alter designs projects (although the $2 million comfort station was midstream. not among them). In 2017 the Center for an Urban “One of the things that has delayed the projects Future found that the agency’s average project took over time is changes: having the sponsor agency make seven years to complete and cost roughly twice per changes in the middle of a project or, at 90% design, square foot what the private sector spends to build of- they want to add a floor to a building,” Grillo said. dollars and restore faith in the system. But he sound- fice towers. A separate report from City Councilman “We’ve instituted a process where we sit down at the ed a note of caution. Brad Lander showed that nearly half of the depart- beginning, everybody agrees on the scope and signs “I think it’s great. I think it’s refreshing. But I also ment’s large projects were severely behind schedule. off on it, and then we have the project fully funded.” think the Department of Design and Construction “I was appointed commissioner in July of last year, The new rules, many of which the department can’t do it alone,” he said. “For this to have the im- and we immediately … began to do a deep dive into hopes to complete by next year, would create a ded- pact it deserves, it needs to be embraced by [the bud- processes that govern DDC and saw where the prob- icated pot of funding for change orders, a dread- get department] and so many of DDC’s partners in lems were,” said Lorraine Grillo, who also serves as ed term in the contracting business that describes government.” the head of the School Construction Authority and project alterations during construction, often after Lander, the councilman who has called out the de- has been credited with turning around that formerly discovering some environmental condition. Change partment’s bloated projects, went even further to say scandal-plagued agency. orders can require requesting additional capital and that the same effort should be applied to every agency, The Department of Design and Construction bring a project to a standstill. not just the department of construction. drafted a report that lays out a path to bring projects Jonathan Bowles, executive director of the Center “I think these are good strategies, and I think in on time and on budget and make dealing with for an Urban Future and an author of the 2017 report leadership seems serious about fixing what has been government less of a headache for vendors—which showing cost overruns, said he was encouraged by the broken at DDC,” he said. “But it’s not comprehensive
would increase competition and attract more bidders, proposal, which could help the city stretch its capital capital projects reform.” ■ COURTESY OF DDC
City construction dipped in 2018 Permits fell for first time since recession
CONSTRUCTION ACTIVITY DECLINED last year for the first time in nearly a decade, a drop that could signal the end of a historic run that transformed the skyline and altered entire neighborhoods. Contractors and developers filed for nearly 166,000 permits last year, the Department of Build- ings reported last week. That is only a slight dip from a record-setting 2017, but it marked the first decline since 2009. “While construction activity remains strong, the building boom may have finally hit its peak,” Rick Chandler, the department’s commissioner, said in a statement accompanying the numbers. Manhattan was home to the most high-profile projects of the boom, including 1 World Trade Center, the first portion of Hudson Yards and several contro- versial super-tall condo towers, such as 432 Park Ave. Brooklyn notched the most new building per- Quality Moving mits last year, with 414, continuing a trend since 2004. Brooklyn and Queens far outpaced the rest of the boroughs in construction from the ground up. Employment fell from a peak in 2017, drop- at a Reliable Price ping by 500 workers to 45,500, according to U.S. Department of Labor estimates. But many insiders remain bullish on the industry. flatrate.com (212) 988-9292 “The work planned in the next couple of years is astonishing,” said Carlo Scissura, head of the New York Building Congress, citing big projects such as EXECUTIVE RELOCATION • OFFICE MOVING Amazon’s headquarters in Queens, the overhaul of COMMERCIAL ACCOUNTS • RETAIL & DISPLAY Kennedy Airport and JPMorgan Chase’s office tower STORAGE & LOGISTICS on Park Avenue “To me, this decline is a nonissue.” — J.A.
January 28, 2019 | CRAIN’S NEW YORK BUSINESS | 7
P007_CN_20190128.indd 7 1/25/19 6:38 PM ASKED & ANSWERED RETAIL INTERVIEW BY DIANE HESS
ERIC MOURKAKOS PLANTSHED
he Mourkakos family bought PlantShed in the 1980s, but their roots in the New York oral business date to the Depression, when Eric Mourkakos’s great-grand- The numbers aunt, a Greek immigrant, started a ower shop in the “wouldn’t support TBronx. Now the third-generation owner of PlantShed, Mourkakos our continuing as nurtures three healthy shops in a shrinking retail landscape. just a ower shop. I realized retail stores also need How have you transformed the business since taking over in 2009? When I took over, we were mostly lling orders for the big wire ser- to be lifestyle vices—1-800-Flowers, FTD and Tele ora—giving up a portion of the brands” pro t per order and paying membership fees. That’s not part of our business anymore. Now we have our own commercial clients, and they make up half of sales. Our accounts include Arizona Beverag- es, Bank of America, Columbia University, Chanel, Facebook and Kith. We have expanded our retail model by opening cafés, and we have boosted our e-commerce business to 20% of revenue.
Is there much e-commerce among your New York customers? Many of our local customers shop online. We also offer online ordering with next day, in-store pickup at any of our shops. This allows customers to make quick purchases on their way home or to work, or as they get their morning coffee from us. Mom-and-pop shops like yours are closing all over the city. How are you DOSSIER able to prosper despite minimum-wage laws and real estate costs? It’s dif cult to pay a real living wage. We are committed to it. My WHO HE IS Owner, PlantShed family owns the West 96th Street building and has considered selling it, but we want to keep a retail presence there. PlantShed LOCATIONS Two shops on the Upper West Side, one in SoHo needs more space for production, though. We might move of ces to New Jersey—where we recently got a warehouse—Long Island REVENUE “Low eight gures” City or further uptown. There are stresses on the business, but GROWTH 40% from 2017 to 2018 we’re making it work. When I took over, I realized we could not just FULL-TIME EMPLOYEES 60 be a retail ower store. The numbers wouldn’t support it. That’s BORN Teaneck, N.J. why we pursued the idea of putting cafés in our shops. Retail stores also need to be a lifestyle brand. RESIDES Alpine, N.J. EDUCATION Bachelor’s in economics, What does it mean to be a lifestyle brand? Boston University Our goal is to spread our love of plants and owers to people FLOWERS IN FEBRUARY PlantShed around the city and beyond. I’ve hired employees to facilitate part- ful lls about 5,000 orders each month in nerships and make our stores young and hip. Through the cafés, the city. But the week of Valentine’s Day, it we have created a way for people to gather and be surrounded sends out about 150,000 roses alone. by nature. Those who come in every morning for a cup of coffee COFFEE CREDO Mourkakos chose think of us when they need to buy a bouquet of owers. We want Brooklyn coffee roaster Tobey’s Estate for to foster community and build a local attachment to our brand. his shops. “We didn’t cut any corners. We wanted to make sure the cafés didn’t look What else are you doing to expand and innovate? like a secondary thing or that we were a orist trying to fake it as a coffee shop. I’m a partner in Haven, a boutique hotel in Montauk, which is a separate business from PlantShed. In the past few years, we have BENEFITS OF AGE Mourkakos says blown Haven out with plants, putting custom-made hanging bas- PlantShed buys locally whenever possible, even though farms in the area kets in the walkways and tropical houseplants in the hotel rooms. are relatively small. “Our relationships Guests love it. Now I am working on a hotel concept. I’m trying to go back a century. Even if produc- nd a location for a farmstead, greenhouse and inn in the Hudson tion is cut, we’ll get our owers.” Valley or the Catskills. PlantShed would own it, and it would be BUCK ENNIS something really unique, bridging biophilia and hospitality.
Can this concept work in the city? It’s de nitely something we could bring to New York City or another city down the line. We have found that incorporating plant life in an urban setting is appealing to people. We assume these trav- elers want a city vibe, rather than a country or tropical feel. So it would be a matter of incorporating plants and owers in a way that accentuates the look and feel of a city. ■
8 | CRAIN’S NEW YORK BUSINESS | JANUARY 28, 2019
P008_CN_20190128.indd 8 1/24/19 4:45 PM IN THE MARKETS
A community bank links its fortunes to the rising cost of health care Unheralded Webster Financial is a giant in the pro table world of HSAs
ongress created health sav- getting squeezed as interest rates rise ere are risks to Gilbert’s thesis, ings accounts in 2004, al- and the yield curve attens, so a stash starting with the fact that barriers to en- lowing consumers to pay for of ultracheap HSA deposits provides tering the HSA industry are low. Small- medical expenses with pre- Webster with a competitive advantage er providers could partner with Bank of Ctax earnings. Nearly 30% of over its peers—a rarity in the America, Fidelity and other giants that working Americans have an commoditized world of com- are already in the HSA business. And if HSA today, according to the munity banking. the Federal Reserve cuts the bank fund- Employee Bene t Research With HSAs growing by ing rate back to zero, the advantage of Institute. e accounts are about 15% per year nation- Webster’s 0.22% gure wouldn’t be so proliferating as companies ask ally, Webster’s tailwind could advantageous. employees to shoulder a great- be a long one. Although most ose factors might help explain er percentage of ever-rising people spend down HSA bal- why the lender has been slow to exploit health care costs. ances as soon as they build its competitive edge by issuing a lot of Quietly, a small commu- them, about a quarter use loans. In fact, during the past ve years, nity bank has found a way to AARON ELSTEIN them as savings or investment Webster's total loans have grown at half pro t from the trend. accounts. at gure could the rate of its peers’. But with the real Webster Financial Corp. increase as health costs rise— estate boom that stoked so much lend- of Waterbury, Conn., has $27 billion which would provide Webster with even ing showing signs of stalling, Gilbert in assets, about 170 branches (includ- more low-cost depos- said Webster stands ing a handful in Westchester County) its to turn into loans. Small banks are to be less a ected. Its and a Midtown o ce that serves com- In short, Webster has conservative lend- white ag. Investors Bancorp of Short mercial customers. Webster specializes found a way to attach its being squeezed as ing standards should Hills, N.J., began exploring a sale in in small-business loans and residential fortunes to the growing interest rates rise, help it avoid signi - November a er operating revenue mortgages, issuing credit cards and oth- cost of health care. cant loan losses, she dropped. Last month it said it would er standard stu . But it’s also the coun- “ ere is inherent so a stash of HSA added. close four branches and restructure its try’s second-largest administrator of quality to this busi- deposits provides A Webster spokes- balance sheet. Still, with more than 150 HSAs, which make up a quarter of its ness,” said Collyn Gil- woman said the bank branches in New Jersey and New York $22 billion deposit base. bert, an analyst at Keefe a competitive is committed to its and nearly $26 billion in assets, Inves- Webster loves those accounts be- Bruyette & Woods who advantage “di erentiated busi- tors would have many suitors, including cause it pays just 0.22% to hold the calls Webster her “best nesses” and progress- serial buyers such as M&T Bank, New money and is lending it out for much idea” for 2019. She es- ing with its “organic York Community Bancorp and Sterling more. e di erence—the net interest timates the bank’s stock growth.” Bancorp. margin—is how banks such as Webster is worth $68.50 per share, or 22% above e attening yield curve and dim- But a er biding its time for years, make most of their pro t. its current price. e stock already has ming economic prospects are leading Webster could be the tortoise that ulti-
A lot of small banks’ earnings are rallied by 14% this month. some commercial banks to wave the mately wins the race. ■ BUCK ENNIS, ISTOCK
Capitalizing on the shutdown Lenders cash in as federal contractors grow desperate
THE IPO MARKET is paralyzed because want to be inside your organization and Invitation to Prequalify and to Bid: Updated Notice Rehabilitation and Flood Mitigation of the New York Aquarium, Brooklyn, NY the Securities and Exchange Commis- help it grow.” sion isn’t open to approve prospectuses. Normally, inviting a lender to join the Turner Construction Company, an EEO Employer, is currently soliciting bids for the e Small Business Administration also board is a heavier price than many com- Rehabilitation and Flood Mitigation of the New York Aquarium from subcontractors and vendors for the following bid packages: is closed, and the market for speculative panies are willing to pay. But these aren’t corporate debt has frozen. normal times. BP # 11D Cold Storage Door Systems
But the government shutdown is pro- Chantengco is negotiating to provide Only bids responsive to the entire scope of work will be considered and, to be viding a big opportunity for lenders such $3 million in nancing to an unidenti- successful, bidders must be prequalifi ed by Turner. The door replacement at AAHC as J.R. Chantengco, president of New ed California business that specializes is expected to be awarded 2-15-19. Allow 4 weeks for Shop drawing Start to fi nish, assuming 6-7 week fabrication we anticipate the installation will occur late April. Or York–based Black Pearl Investments. in serving the Army Corps of Engineers early May Certifi ed M/WBE and Small Business (13 CFR part 121) companies are Chantengco specializes in providing - and the Department of Veterans A airs. encouraged to submit. nancing and advice to small business- e company needs cash to help pay its In order to receive the bid packages, potential bidders must submit a complete es, including government contractors. 50 employees and buy time to diversify Subcontractor/Vendor Prequalifi cation Statement. Prior prequalifi cation submissions Because government agencies are no its revenue streams. that remain current will be considered as previously submitted or may be updated at this time. All bidders must prequalify by the bid deadline by February 14th, 2019 longer paying their bills, many of those He’s also working with a North Car- and submission of a Prequalifi cation Statement not later than February 7th, 2019 is businesses are suddenly pressed for cash. olina cybersecurity rm whose multi- strongly encouraged. All bidders must have an acceptable EMR, and will be subject at puts Chantengco and lenders like million contract with the Air Force is on to government regulations such as 44 CFR and Federal Executive Order 11246. Successful bidders will be required to use LCP Tracker compliance verifi cation him in a strong bargaining position. hold because the government does not software. Note that while this is a New York City prevailing wage project, union “ ere’s a greater sense of urgency categorize it as “essential.” e company affi liation is not required. among companies because of the shut- is looking for up to $3 million to address To obtain further information about contracting opportunities and/or the prequalifi cation down,” he said. “Business has stopped al- immediate and long-term capital needs package and bid solicitation package/s, please contact Macarena Bermudez most completely for some of them.” while it searches for new customers. ([email protected] or 212-229-6000.)
Unlike commercial banks, Chanteng- “I’m happy to see all these opportu- All bids will be publicly opened at offi ce of the Purchasing Department, Bronx Zoo, co typically demands a seat on the board nities,” Chantengco said. “Although I do 2300 Southern Boulevard, Bronx New York, on February 15th, 2019 at 11 am. of companies he lends to. wonder how cybersecurity for the Air “We want to be involved,” he said. “We Force isn’t considered essential.” — A.E.
JANUARY 28, 2019 | CRAIN’S NEW YORK BUSINESS | 9
P009_CN_20190128.indd 9 1/25/19 2:33 PM VIEWPOINTS
Why I changed my mind WHO WOULD MAKE THE BEST PRESIDENT? about Bloomberg for president NY Polls aside, Democrats and the nation want someone entirely different NYers Democrats BLOOMBERG 28% 27% CUOMO 17% 26% A LOT OF Ne w York- politically adept than he is given credit shown, crime can be reduced without GILLIBRAND 11% 16% ers think Michael for; and, at 73, he hadn’t lost a step. stop-and-frisk. OCASIO-CORTEZ 7% 8% Bloomberg would Today, Bloomberg is the wrong per- In retrospect, he was wrong on is- make the best pres- son at the wrong time. Here’s why. sues such as paid sick leave, minimum DE BLASIO 5% 6% ident of the local Democrats and probably most Amer- wage and even housing. It is clear that SOURCE: Jan. 23 Quinnipiac poll politicians who have icans don’t want another billionaire increasing the minimum wage and re- either announced a president. The fundamental quiring paid sick days have White House bid, are reason politics in America helped millions of New York- control, Bloomberg’s two signature is- GREG DAVID toying with one or at has become so angry is that % ers without any significant sues, but their economics are much least fantasize about the recovery from the Great impact on jobs or the number more radical than his. running. I thought so too when the Recession has benefited the 3SUPPORT FOR of businesses. And Mayor Bill Last week a Quinnipiac poll (see city’s favorite homegrown billionaire few much more than the Bloomberg among de Blasio’s affordable-hous- above) showed New Yorkers felt flirted with candidacy in early 2016. many—even in areas that likely Democratic ing plan has produced many Bloomberg would make a better pres- The Democratic nominee that year have performed the best, caucus voters more units than Bloomberg’s ident than other New York politicians. was going to be either the very progres- such as New York. Electing in Iowa did, even considering the im- But given that he would run in a Dem- sive Bernie Sanders or the baggage- a rich person, especially one proving economy. ocratic primary, the poll’s presentation laden Hillary Clinton. While at the time who has never shown much An economic centrist and was misleading. When only Democrats no one (including me) gave Donald empathy, is not what the country wants Wall Street defender is not what Demo- were asked, Cuomo did nearly as well Trump much of a chance, any Repub- or needs. crats want. The Republican tax bill was as Bloomberg. If Quinnipiac were to re- lican nominee was going to be wrong Bloomberg was just wrong on crimi- the breaking point for most Democrats. peat the poll when a progressive alter- on issues ranging from climate change nal justice. He both instituted and de- They want a candidate who champions native such as Beto O’Rourke was get- to immigration to economic fairness. I fended stop-and-frisk, which targeted much higher taxes on the rich, an ac- ting more name recognition, the results wrote a column listing the four quali- minorities in an ill-conceived effort to tivist government that works to reduce likely would be very different.■ ties that made Bloomberg attractive: reduce crime by getting guns off the inequality and an expansion of health The former mayor sticks to what he be- street. As Police Commissioners Bill care protections. They also want efforts GREG DAVID writes a regular column lieves; he is really stubborn; he is more Bratton and James O’Neill have since to deal with climate change and gun for CrainsNewYork.com.
Cuomo’s charge: Make NY trucks electric How the governor can rid the transportation sector of carbon emissions BY LAURIE JOAN ARON
-commerce is reshaping New increasingly skeptical eye on gas pipe- York City, even before Ama- lines and power plants. Now is the time zon HQ2 arrives. There are to put the spotlight on transportation, more delivery trucks on our which in New York is now responsible Estreets than ever, most of them burning for more carbon emissions than elec- diesel fuel and pumping out particulate tricity generation. There are many ways pollution and greenhouse gases. They the governor can do this—key among are bad for New Yorkers’ health and them, given the newly Democratic won’t help us head off the dire conse- state Senate, would be supporting the quences of climate change predicted in economywide framework for emissions recent reports from the United Nations reductions offered by the Community and the U.S. government. and Climate Protection Act pending in There are powerful arguments for the Legislature. trucking to make the switch from dies el Transportation is not only a New to electric. One economic reason is the York issue, of course. Cuomo needs far lower cost of ownership of medi- to work with other governors to set a um- to heavy-weight electric trucks. goal of reducing regional transporta- With lower “fuel” costs, fewer engine A RENDERING of a UPS Thor tion emissions by 50% by 2030. To fight electric truck, soon to be parts and no oil changes, electric trucks deployed in Los Angeles both air pollution and climate change are cheaper to own over time. They are and the dire consequences they bring also the perfect urban delivery vehicles, locally and globally, we must have ur- which typically spend most of their Already the New York State En- heavy-duty electric vehicle purchas- gent action. That needs to include more time on a start, stop and idle cycle, and ergy Research and Development Au- es, at 80% of the incremental cost, or incentives for companies to buy electric don’t travel far enough to need a charge thority is partnering with UPS and $150,000 per vehicle. This funding, trucks. Our goods should be delivered during the business day. Unique Electric Solutions to introduce which is arcane to apply for, as is all by trucks powered not by fossil fuels The business case for electric trucks new electric trucks to the UPS fleet in state money, is shared between trucks such as diesel or natural gas but by is in the process of being made. The New York City. The authority provid- and buses. electricity generated from water, sun cost of switching over is still daunt- ed $500,000 to back the plan, which is It’s a good start but not enough. Cuo- and wind. ■ ing. That’s why right now Gov. Andrew supposed to make 66% of the city’s UPS mo already has taken critical steps on Cuomo needs to ramp up the incen- fleet electric by 2022. climate pollution in the electric sector Laurie Joan Aron is a retired contribut- tives for truck owners and municipal This year the state also put up $9 by supporting the substitution of wind ing editor to Supply Chain Technology
COURTESY OF UPS/THOR fleets to go electric. million to support electric medium- to for coal power, and he is casting an News and Inbound Logistics.
10 | CRAIN’S NEW YORK BUSINESS | January 28, 2019
P010_CN_20190128.indd 10 1/24/19 6:19 PM P011_P012_CN_20190128.indd 11 B CUTTING STAFF,CUTTING ADDINGVALUE recruiters by nearly 3%last year. Yet there was sig local recruiterslocal and now ranks phen Viscusi cruiters better.’ phonethe old-fashioned the way and say, ‘Hey, I’ve got ajobthat pays ers more than ever to get qualitysomeone people. They need to pick up LinkedIn what’s to see out there,” Viscusi said. “Companies recruit need cruiting firms to maintain an important role incompany staffing. contends that massive the volume of online listings allows executive-re ing fee of 33%of position’s the first-yearcash compensation. But Viscusi as LinkedIn and Indeed, don’t which industry-standard the recruit carry on company sites at no cost and picked up byaggregators high-traffic such challengesface new from space. technology Job the openings listed can be operates that, inan industry like many others, longtime has seen firms trend with alot of executive-recruiting firms.” recruiter is more intouch with customer’s the a that be Ithink needs. will has cut costs, profits raised and made customers us to closer becausethe account is same the person cold-calling and candidate. poaching the It work on job candidates, achange that appears paying to be dividends. Now staff the interiortheirat do firm backgroundown design–focused is largely aresult of TVG eliminating its designated research department. low its place last year. employee The decreased count decreased their metro-area their decreased headcount. nificant variation acrossthe companies. Six actually THE LIST “With unemployment low, so people are busy and not as involved on This is one way his 35-year-old has Viscusi modernized business,which “Our researchers were out of touch with our customers,” said Thelargest percentage dropcame from
” , which finishedthe, which yearwith 17.5% fewer recruiters are expanding ranks. their Al y and large, New York’s biggest executive nual list number increased their of local together top the 25firms on Crain’s , chief executive. “Now recruiter the handling acompany’s No. 14 , one- spot be TVG Re- an - - - VISCUSI — GERALDSCHIFMAN 5&8'C 0$DA@ 5@065D $5E6 %6@@$)' 36D&636465 Ste- - - - LARGEST EXECUTIVE-RECRUITINGFIRMS SOURCE: the companiesalsospecializeinhealthcarerecruiting. half asthedominantone.Nearly with financialservices coverThe top25executive-recruiting firms manysectors, HOT AREAS FORCOLDCALLS NONPROFIT DIGITAL CEO SEARCH CONSUMER TECHNOLOGY INFORMATION TECHNOLOGY ACCOUNTING HUMAN RESOURCES HEALTH CARE FINANCIAL SERVICES Crain’s research 6 6 6 7 Ranked by numberofNew York–area recruiters 9 9 9 10 12 NUMBER OFFIRMS Jan u a
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C R state Department ofLabor state Department SOURCES: the rankedfirms at working U.S. recruiters RATE inthenumberof 2017–2018 GROWTH 5.1 from 2016 City in2018, a2.8%rise York inNew recruiters) (including executive resources specialists NUMBER OFhuman 19K employed atthetop25 metro-area recruiters RATE inthenumberof 2017–2018 GROWTH 2.9 A I N ’S N EW Crain’s research, Y % ORK BUSI % N ESS |
1/25/19 12:47 PM 11
COURTESY OF TVG RECRUITERS
36D&636465 %6@@$)'
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THE LIST LARGEST EXECUTIVE-RECRUITING FIRMS
FOR ALL CRAIN’S LISTS, VISIT CRAINSNEWYORK.COM/LISTS.
12 | CRAIN’S NEW YORK BUSINESS | January 28, 2019
P011_P012_CN_20190128.indd 12 1/25/19 12:47 PM SPECIAL ADVERTISING SECTION A ROUNDTABLE DISCUSSION
What New York Taxpayers Need to Know About the New Tax Landscape
JOE BUBLÉ CPA JOSEPH M. GIAMPAPA CPA RENATA STASAITYTE CPA IRAIDA STROKOVSKAYA CPA Partner, Tax Practice Partner, Tax Group Senior Tax Manager Partner, Tax Group 212.697.1000 x1426 212.201.3165 212.381.4700 516.874.8830 [email protected] [email protected] [email protected] [email protected]
On balance, the 2017 Tax Cuts and Jobs Act may not have brought true “sim- only a few of the changes. A new method of taxing foreign income of U.S. plifi cation,” but it did bring meaningful changes to the tax code. And taxpayers taxpayers was enacted and a “transition tax” regime was also added in in New York must deal with the added tangle of state and federal rules that fre- order to eff ectuate the change. The IRS has issued hundreds of pages of quently contradict each other. Throw in the Supreme Court decision in South proposed regulations on just these four topics so far. Furthermore, some Dakota v. Wayfair, Inc., and New York business owners are staring at a 2019 changes are permanent and others sunset after eight years. Now, add in the full of new acronyms, new strategies and new tax compliance burdens. fact that New York has decoupled from some of the federal changes and you can see that the TCJA was anything but simplifi cation. To bring light to the relative darkness, Crain’s turned to four experts in tax planning to explain what the TCJA means for corporate and individu- Stasaityte: I had a 70-year old college professor who taught me the three al taxpayers in 2019. fundamental paradigms of taxation: only two things are certain in life— death and taxes; the correct answer to every tax question is “it depends”; They are: and there is no such thing as tax simplifi cation. The tax reform proved him right once more. • Joe Bublé, a tax partner at Citrin Cooperman’s New York office and the firm’s tax practice leader. He specializes in tax planning and sophisti- Strokovskaya: Individual income tax rates were reduced; personal exemp- cated tax research for businesses and individuals. tions were eliminated; the standard deduction was increased and the ability to itemize deductions was limited. For individuals who do not itemize deductions, • Joseph M. Giampapa, a partner in Marks Paneth LLP’s tax group. He has the TCJA may be viewed as simplifying the tax process. However, complica- more than 15 years’ experience in tax preparation for high-net-worth indi- tions may still be found as not all states have conformed to the federal tax law viduals, partnerships, corporations, estates, trusts and private foundations. changes and the “old” provisions may still apply at the state level.
• Renata Stasaityte, a senior tax manager at UHY’s New York office. She From a corporate and pass-through entity perspective, the landscape has provides tax planning and due diligence for complex transactions and changed dramatically and increased in complexity. New acronyms such as represents clients before the Internal Revenue Service, New York state and BEAT, GILTI and FDII, in the international context, will add complexity to the other tax authorities. tax compliance process. A 20 percent deduction was implemented for pass- through entities subject to signifi cant restrictions and limitations. A new Qual- • Iraida Strokovskaya, a partner in FLSV’s business tax services group. Her ifi ed Opportunity Zone Fund Investment initiative was also implemented. In- clients include private equity funds, closely held entrepreneurial businesses terest expense deduction limitations and new bonus depreciation rules have and middle-market companies across a wide range of industries. also altered the planning and calculation of a business’s tax liability.
Giampapa: While the Tax Cuts and Jobs Act did result in some tax simplifi ca- Crain’s: Did the Tax Cuts and Jobs Act result in tax simplification? tion, it also created complexity in many areas. For example, there are compli- cated calculations involved with the new Section 199A deduction and Section Bublé: No, it didn’t. In fact, it added to the complexity. The individual al- 163(j) interest limitation. We are also still waiting on fi nalized regulations for ternative minimum tax was retained and brand new provisions that are ex- some of the new provisions, which has left many taxpayers and practitioners ceedingly complex were added—such as the 20 percent qualifi ed business guessing how the IRS will view the treatment of their tax situations this year. It income deduction and the interest expense disallowance rules, to name appears that the new U.S. tax regime will be far from simple.
An Advertising Supplement to Crain’s New York Business
Roundtable_2019 TAX MECH B.indd 1 1/24/19 1:25 PM SPECIAL ADVERTISING SECTION SPECIAL ADVERTISING SECTION A ROUNDTABLE DISCUSSION
Bublé is a tax partner at assurance, tax and advisory fi rm Citrin However, there are some pitfalls that taxpayers will want to avoid. and he leads the fi rm’s tax practice. Withdrawals made from a qual- ifi ed tuition program to pay for “ Tax advantages, coupled with an extensive treaty kindergarten-through-12th-grade network and a business-friendly environment, expenses, for instance, will not be considered qualifi ed distribu- have now catapulted the U.S. to the short list of tions and will be subject to tax on ideal sites for a holding company structure.” the earnings that are withdrawn. In addition, alimony received will have to be added to New York taxpayers’ federal adjusted gross income in order to come up with their New York AGI, which will re- sult in a higher state tax. Alimony JOE BUBLÉ CPA paid, however, will continue to de- crease taxpayers’ New York AGI, Crain’s: How does New York state’s decoupling from certain aspects even though it will not be a deduction to federal AGI going forward. of the TCJA affect taxpayers? Strokovskaya: The foreign derived intangible income deduction, or FDII, Stasaityte: It certainly adds to the complexity, uncertainty and confusion will not be permitted for New York income tax purposes. Additionally, New surrounding the tax reform. Not only does a taxpayer need to learn the new York attempted to mitigate the eff ects of the cap on state and local tax de- federal rules, but they must also fi gure out how each state, including New ductions through the establishment of an additional payroll tax and local York, has responded to each change. For example, I am expecting that many government and school district charitable funds. The IRS publicly indicated individual taxpayers will miss the New York itemized deduction since it is no regulations will deem amounts contributed non-deductible. The state has longer simply based on federal amounts. While New York is pretty quick to also proposed a new business-entity-level tax for pass-through entities. react to federal changes, many other states are a lot slower and have not issued comprehensive responses to the tax reform. The budget left unaddressed other provisions, including global intangible low-taxed income, or GILTI, and Section 199A. For individuals, the calcula- Giampapa: New York state taxpayers who have large deductions that are now tion of New York income tax starts with federal AGI. Therefore, the Section deemed to be either limited or eliminated for federal purposes will still be able to 199A deduction appears to be unavailable to individual New York taxpayers, enjoy the benefi ts of decreasing their state taxable income by these amounts (as- as the deduction is applied after calculating AGI on the federal return. suming they are below the $1 million New York adjusted gross income threshold). Bublé: In addition to New York State decoupling from TCJA laws aff ecting individuals, the state decoupled from a TCJA provision which increased a nonprofi t employers’ unrelated business taxable income by certain fringe benefi t amounts. New York created a subtraction from nonprofi ts’ federal unrelated busi- ness taxable income for fringe benefi t amounts in- cluded under the new law. In decoupling from this provision, the New York legislature characterized the federal change as an unintended new tax that could divert millions of dollars from the nonprofi t sector each year. Therefore by decoupling, NYS is not divert- ing additional money from the nonprofi t sector.
Crain’s: The TCJA includes a $10,000 cap on the deduction for state and local income and real estate taxes. How does that cap affect tri-state area taxpayers?
Bublé: The cap adversely aff ects taxpayers in the tri-state area who were not subject to the alterna- tive minimum tax in prior years (or paid a small amount of AMT). Without the ability to deduct these taxes, the combined federal, state and local marginal tax rate for people in the top tax brackets is approximately 50 percent, depending upon the type of income. This is an increase of 11 percent from the 45 percent combined federal, state and local marginal tax rate from prior years.
Giampapa: With many in the tri-state area paying a fair amount of real estate taxes, as well as state and local income taxes, there are many taxpayers left with a higher tax bill due to the $10,000 cap on this deduction.
An Advertising Supplement to Crain’s New York Business
Roundtable_2019 TAX MECH B.indd 2 1/23/19 1:38 PM SPECIAL ADVERTISING SECTION SPECIAL ADVERTISING SECTION
to evaluate its personal holding company Giampapa is a partner in the tax group at Marks Paneth. status and the applicability of the accu- mulated earnings tax. Pass-through en- tities provide the non-tax benefi t of flexi- “ With the decision in South Dakota v. Wayfair, bility from an ownership and operational Inc. changing the requirement for online and perspective. A pass-through entity also can allocate losses to the partners and other remote retailers to collect sales tax, allow more tax-effi cient grants of equity. many more taxpayers will have the burden Additionally, an investment made into a of filing and remitting income taxes in pass-through entity could result in a basis additional states.” step-up for the investing partner. Stasaityte: As with any tax question, it depends. There is no “one size fi ts all” an- swer. There are multiple variables to ac- JOSEPH M. GIAMPAPA CPA count for—the conversion (is it possible to structure it as a tax-free transaction?), Strokovskaya: Over time, it’s possible we will see a migration of taxpayers to operations (projected tax liability as a flow-through versus as a C corpora- states with lower eff ective tax burdens. Business and personal opportunity costs tion), expansion (new capital infusions) and eventual exit (sale to a buyer or as well as other operational considerations should factor into such a decision. passing down the business to the next generation). We generally found that clients prefer to stay as a flow-through entity due to the eventual double Stasaityte: While it has been certainly a focus of politicians in Albany and taxation of C corporations, the new 20 percent deduction for flow-through Hartford, we are actually fi nding that many taxpayers end up owing almost business income and the political uncertainty about the longevity of the tax the same or less on the same levels of income. Many of the middle-class reform. taxpayers were previously subject to the AMT, which disallowed state and local income and real estate taxes altogether, while the upper-class taxpay- Crain’s: How does the decrease in the corporate tax rate affect the ers were paying taxes at the marginal tax rates of 39.6 percent. The new amount of research and development credits a corporation can use? tax reform contains some signifi cant tax cuts for individuals—the reduced overall maximum rate from 39.6 percent to 37 percent, increased AMT ex- Giampapa: Under the TCJA, corporate taxpayers will be able to gain the emptions, the new 20 percent deduction for flow-through income and in- benefi t of higher research and development credits. One reason for this in- creased standard deductions. crease is the elimination of the corporate alternative minimum tax. Large corporations (those with average gross receipts of more than $25 million Crain’s: Now that the corporate tax rate is 21 percent, should owners of pass-through enti- ties consider converting to a C corporation?
Giampapa: While the 21 percent corporate tax rate is very attractive, there are many factors that should go into the decision to convert to a C corporation or to remain as a pass-through entity. One of the main considerations is whether the current partner/ shareholder would want to take out dividends/dis- tributions from the entity. If the answer is yes, then this could cause a double taxation on the dividends paid if the entity was a corporate taxpayer, thus EVERY ACCOUNTANT eliminating some of the benefi t of the lower tax rate. If capital is going to be kept in the entity, then be- HAS EXPERTISE coming a C corporation is defi nitely more attractive, and a conversion could be warranted. IN NUMBERS.
Bublé: The maximum individual federal tax rate on MINE HAS qualifi ed dividends is 23.8 percent, which includes the net investment income tax. Assuming all of a C EXPERTISE IN ME. corporation’s after-tax income is distributed, this re- sults in a combined federal corporate and individual tax rate of 39.8 percent. This rate is slightly higher than the maximum federal individual tax rate of 37 percent and signifi cantly greater than the 29.7 per- cent eff ective tax rate on income that qualifi es for the qualifi ed business income deduction. There are also state and local income taxes to take into account in any analysis.
I NSIGHTS AND EXPERTISE TO Strokovskaya: Several additional tax and non- DRIVE YOUR BUSINESS FORWARD. tax considerations should be carefully evaluated by taxpayers. For example, a second level of tax SUCCESS IS PERSONAL on corporate earnings is imposed on shareholders ©2018 Marks Paneth LLP MARKSPANETH.COM who receive dividends. A C corporation also needs
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rate of 35 percent. As a result of Stasaityte is a senior tax manager at UHY’s New York office. the TCJA, the net benefit from the R&D credit increased from 65 percent (100 percent minus “ A 70-year old college professor taught me the 35 percent) of R&D credit to 79 three fundamental paradigms of taxation: Only percent (100 percent minus 21 percent) of R&D credit. two things are certain in life—death and taxes; the correct answer to every tax question is “it Crain’s: How does the Way- depends”; and there is no such thing as tax fair decision about “economic nexus” affect business state simplification. The tax reform proved him right and local income tax burdens? once more.” Giampapa: With the decision in South Dakota v. Wayfair, Inc. RENATA STASAITYTE CPA changing the requirement for online and other remote retail- for the last three tax years) can now enjoy the benefits of the credits since ers to collect sales tax, many more taxpayers will have the burden of filing the TCJA eliminated the hurdle of the tentative minimum tax limitation. and remitting income taxes in additional states. This decision changed the “physical presence” rule to a “substantial nexus” test, thus giving way for Stasaityte: R&D credits are not refundable, meaning they can lower tax more states to require gross receipts to be allocated into a jurisdiction. liability to zero but cannot generate a refund. With the lower tax rate at 21 While the Supreme Court did not provide one standard test for the amount percent, most corporations are looking at the lower tax liability and would of transactions or dollar amounts, it appears that many states will follow or need less of the R&D credit to get the tax liability to zero. Additionally, post- adopt the same thresholds that South Dakota requires ($100,000 annual 2017 net operating losses can now offset only 80 percent of taxable income. sales of goods or services or 200 or more separate transactions). That means that even if a corporation has massive NOLs from prior years, it will still have some taxable income in a profitable year. Luckily, the R&D Strokovskaya: Since the Quill decision in 1992, numerous states have be- credit can help offset that. gun implementing economic nexus standards with respect to income taxes. For example, in 2014, New York adopted an economic nexus standard re- Bublé: Before the TCJA, a taxpayer claiming R&D credit was required to re- quiring out-of-state corporations to pay the corporate franchise tax if they duce their deduction by the amount of the R&D credit. Alternatively, such receive more than $1 million in receipts from New York sources. Following a taxpayer could elect to take a reduced R&D credit. The amount of the re- the decision in Wayfair it is expected that states will only be more aggressive duction was the product of the R&D credit and the maximum corporate tax in applying economic nexus standards in the income tax context.
Additionally, many companies will have to file sale tax returns in more states. The tax accrual and provision surrounding state taxes will also need to be carefully reevaluated.
Stasaityte: Many businesses are now faced with the possibility of needing to collect sales tax in all 45 states and more than 12,000 local jurisdictions that have sales and use tax—and each state has its own registration requirements, rules of what is taxable and what is exempt, tax rates, filing fre- quency, etc. This is certainly keeping the in-house accountants and IT specialists busy figuring out how to extract sales data and how to automate the reporting processes. This is particularly bur- densome for technology companies, as taxation of digital products and services is still not very well established in every state.
Bublé: For most companies the Wayfair decision will mean a significant increase in both a sales/use and income/franchise tax compliance burden, as well as a potential increase in the business’s over- all tax costs.
Crain’s: What pitfalls should businesses avoid when it comes to the new rules about deduc- tions for meals and entertainment?
Giampapa: With the elimination of the entertain- ment deduction, taxpayers will no longer receive the benefit fo expensing these amounts even when they are directly related to, or associated with, the active conduct of the taxpayer’s business. Starting
An Advertising Supplement to Crain’s New York Business
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they are confronted with a tax bill for foreign Strokovskaya is a partner in FLSV’s business tax services group. income that traditionally was not subject to current U.S. taxation.
“ O ver time, it’s possible we will see a BEAT applies mostly to larger multi-na- migration of taxpayers to states with tional corporations. It generally applies only to corporations that have average lower effective tax burdens. Business and annual gross receipts of at least $500 personal opportunity costs as well as other million over the past three years. Aggre- operational considerations should factor gation rules apply for this purpose. The into such a decision.” potential tax of 10 percent (5 percent for 2018) could disturb valid transfer pricing methodologies for outbound payments, such as interest, royalties, etc.
IRAIDA STROKOVSKAYA CPA Giampapa: With the enactment of GILTI and BEAT, U.S. individuals will now be re- after 2025, employer-provided meals will also be considered non-deduct- quired, in many instances, to pay tax on a portion of the current earnings of ible, as long as they are excludable from an employee’s income or are con- their foreign corporate holdings. Under GILTI, a U.S. taxpayer owning at least sidered de minimis fringes. 10 percent of a controlled foreign corporation will be taxed on its current earn- ings and profits that exceed a notional return on the CFC’s depreciable prop- Strokovskaya: Prior to the TCJA, business meals and entertainment ex- erty using the existing Subpart F income provisions in the code. penses were 50 percent deductible. Now that entertainment expenses are no longer deductible, taxpayers need to separately track expenses that used to Taxpayers could be faced with large amounts of tax on earnings that they re- be accounted for in a “meals and entertainment” expense account catchall. ceived through distributions or dividends from the foreign entity. However, a shareholder of a U.S. corporation that owns a foreign corporation will gain a sig- A 50 percent deduction for meals is still permitted if the cost is separately nificant benefit under GILTI due to the 100 percent dividends-received deduc- charged at an entertainment event. However, if the cost of meals is not sep- tion available for certain qualifying dividends. In certain instances, this could arately charged, the expenditure may not qualify as a business meal eligible lead to no income tax due on CFC earnings unless there is Subpart F income. for the 50 percent deduction. Strokovskaya: Depending on the structure, the GILTI rules may cause tax- Stasaityte: For decades, business lunches and baseball tickets were payers to incur a deemed income inclusion for a portion of the active in- lumped into one category without much thought. Now, more analysis is needed. The lunch is 50 per- cent deductible, the game ticket is entirely not de- ductible, and food and beverages purchased during the game are 50 percent deductible (provided they are stated separately on the bill). An office holiday party is neither entertainment nor a meal and it Committed to serving the Financial Services is fully deductible. Meals provided in the office to Industry and Entrepreneurial clients: Business Tax & Advisory Services employees could be fully deductible. Bookkeepers 1475 Franklin Avenue H i g h N e t W o r t h T a x & A d v i s o r y S e r v i c e s need to be properly trained to recognize the differ- Garden City, NY. 11530 Family Office & Accounting Services ent meal categories and to communicate them to (516) 874-8800 tax preparers. flsv.com
Bublé: Businesses still need to be mindful of the substantiation rules when it comes to deducting business meals. The business must show that the expense is directly related to the conduct of a trade Since 1995 or business, and the business should have ade- quate records that document the amount, time, place and business purpose of the meal’s expense. Global Sophistication Crain’s: The TCJA includes tax rules for global Personal Service intangible low-taxed income and a base ero- sion and anti-abuse tax. When combined with the TCJA’s other international provisions, what do these changes mean for taxpayers who re- port U.S. taxes on international operations?
Bublé: GILTI can be viewed as tantamount to world- wide taxation. In many situations, legitimate deferral of offshore profits is no longer an option. The term “intan- gible” is a misnomer. Practically all foreign income of the controlled foreign corporation (notably, except for traditional Subpart F income) in excess of a deemed routine return is caught in the GILTI net. It has pro- duced many unwelcome surprises for taxpayers when
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come of the controlled foreign corporation. Taxpayers may also find that tax Crain’s: How does the TCJA impact a company’s accounting for in- attributes such as net operating losses and foreign tax credits do not pro- come taxes as it relates to the valuation allowance assessment? vide the same benefit as they once did prior to the enactment of the TCJA. Strokovskaya: The TCJA added a layer of complexity to the valuation al- Proposed regulations are expected to provide much needed clarity. New, lowance assessment. The international provisions contained in the TCJA and in some cases modified, tax forms have been provided. In sum, the new have arguably made tax attributes less valuable. For accounting purposes, rules are complex and interconnected, contain many areas of uncertainty taxpayers need to consider whether to establish or increase valuation allow- and require the preparation of new forms. U.S. taxation of international op- ances against deferred tax assets. erations will be vastly different going forward. For instance, under BEAT, taxpayers pay an incremental tax on modified Stasaityte: These provisions were designed with the U.S. multi-nationals taxable income above regular taxable income after net operating losses. For like Apple and Google in mind, but have roped in many unsuspecting indi- a taxpayer with significant NOLs and no regular tax liability, the entire tax viduals—only without some of the significant tax advantages available for payment would consist of the incremental BEAT. If the taxpayer expects to C corporations. I anticipate that many individuals will be caught off guard be a BEAT taxpayer in future years and offset regular tax liability with NOLs, by the additional compliance burdens and tax bills. Proper and proactive is the taxpayer still benefiting from the NOLs or should a valuation allow- planning is more crucial than ever. ance be established? Similar questions arise with respect to the impact of other international tax changes enacted under TCJA. Crain’s: Do you expect the U.S. to be viewed more favorably as a tax-efficient holding company location as a result of numerous cor- Bublé: A taxpayer may come out of a three-year cumulative loss position porate tax-advantageous provisions, including low corporate income due to a large amount of taxable income from deemed mandatory repatria- tax and participation exemptions? tion of foreign earnings. However, this one-time income alone does not war- rant the reversal of valuation allowance because VA assessment requires all Strokovskaya: A reduction in corporate income taxes with a limited par- available evidence to be weighed. ticipation exemption will make the United States more attractive from an income tax perspective. However, the United States is not the only coun- Taxable income in prior carryback years can no longer be considered a try with a relatively favorable corporate tax regime. Non-U.S. taxpayers can source of taxable income to assess the realizability of deferred tax assets only add the U.S. to the list of jurisdictions that have these features. because the general two-year carryback was repealed for NOLs arising in a tax year ending after 2017. On the other hand, post-TCJA NOLs are car- Stasaityte: The tax reform has certainly made an effort to combat multi- ried forward indefinitely (subject to 80 percent of taxable income limita- nationals’ flight to tax havens. The new international tax provisions can also tion) ,while pre-TCJA NOLs can be carried forward for 20 years. As a result, be seen as a unilateral response to the international Base Erosion and Profit the realizability of deferred tax assets should be assessed separately for Shifting Project launched by the Organization for Economic Cooperation these NOLs. and Development.
At the same time, the U.S. has been very stingy on sharing any information with other countries—it did not adopt the so-called Com- mon Reporting Standard, a global agreement to automatically share beneficial owner infor- mation with different countries. States like Delaware or Nevada are happy to provide the secrecy and privacy that many foreign inves- tors desire. But when we speak with foreigners wanting to invest in the United States we of- ten find that their primary motivators are not tax-related. They value political and economic stability, as well as investment opportunities above all.
Bublé: The flat federal corporate tax rate of 21 percent is extremely attractive and is among the lowest corporate tax rates throughout the world. If structured properly, state corporate income taxes could be largely eliminated as well.
In addition, the U.S. now competes with pat- ent box regimes offered by other countries, in terms of intellectual property. With the in- troduction of a deduction for foreign income (including royalties) derived by U.S. C corpo- rations, the federal corporate rate of tax can be reduced to 13.125 percent.
Tax advantages, coupled with an extensive treaty network and a business-friendly envi- ronment, have now catapulted the U.S. to the short list of ideal sites for a holding company structure.
An Advertising Supplement to Crain’s New York Business
Roundtable_2019 TAX MECH B.indd 6 1/23/19 1:38 PM GREEN WAVE: Legalization activists will push for changes in Cuomo’s marijuana bill.
WADING INTO WEED
e governor’s budget plan puts egal marijuana would bring big chang- Manhattan. His revenue was about $850,000 last legal pot atop the state’s agenda. es to New York. e bill that Gov. year, he said, around triple what it was in 2015. Andrew Cuomo unveiled in his state Eric is eager to put his business experience to use How the market would work— budget proposal earlier this month in the new, legal industry. He reasons that making and who would bene t— would set up a licensing structure for the licensed market attractive to underground op- will drive the debate Lcannabis production, distribution, sale and deliv- erators—and their customers—could help avoid ery; seal the records of some past o enders; help some of the challenges that have arisen in Califor- minority entrepreneurs enter the market; and col- nia, where a robust black market has vastly undercut BY MATTHEW FLAMM lect tax revenue that would go toward a number of that state’s new recreational program. public health initiatives, including driver safety and “I’ve been in this business, in some fashion or an- substance-abuse prevention. other, for all of my adult life,” Eric said. “I’ve dealt What it would not change, at least in the short with every problem there is. I don’t see why some- term, is how most weed is sold in New York. one in my position shouldn’t have an open door to Eric (not his real name) is a tattooed former the white market,” as in, the legal enterprise. restaurant manager whose marijuana delivery busi- But should Cuomo’s bill become law, how open ness is one of perhaps hundreds in the nation’s big- that door would be is hard to predict, say advocates gest and most sophisticated underground market. who want legalization to include what they call un- It’s a market that Eric says has grown with the licensed operators—like Eric. ey also question country’s move toward legalization. When Crain’s how well the legislation will achieve the key goals rst spoke to him three years ago, he employed two that have long driven the anti-prohibition move- bicycle messengers and served 500 customers in ment: providing restitution in the form of economic Brooklyn. He now has three bikers delivering four opportunities for former drug o enders—young strains of weed and assorted cannabis products to men of color for the most part—and reinvesting in
more than 1,400 clients in Brooklyn, Queens and the low-income communities that were on the front BUCK ENNIS, ISTOCK
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CRAIN’S NEWYORKBUSINESS poses giving big the poses players much so leeway. support minority entrepreneurs, but Greene op- still small-business incubators and low-interest loans to ket to licensed grow and recreation sell marijuana. andstriction become only the operators mar- inthe bids inan auction to an earn exemption to that re- agement, companies medical the could submit also use. At discretion the of O the ce of Cannabis Man- produce, process and distribute pot for recreational to applychoose for aretail cannabis licenseor one to suppliers, to medical the friendlier could who supports co-ops and businesses, small but it is far operations to ourish. low cooperatives, microbusinesses and other small operators, legislators the say, would al- market power of deep-pocketed those obtaining retail licenses. Limiting the providerssale—and bar medical from trolling supply the chain to from seed ing large corporate players from con- recreational market—e ectively block- would integrational ban vertical inthe each. tocensed operate four dispensaries cannabis products and sell are they li- marijuana providers, grow which and process the is role the of state’s the 10registered medical– users to growical own their plants. tive to retail outlets. Cuomo’s only bill permits med- advocates say could provide an a ordable alterna- some home-cultivation for recreational users, which ital-intensive. enter market the and makingventure the more cap- a smokingrunning establishment, raising bar the to have acannabis retail licenseinaddition to one for Peoples-Stokes’, would require operators those to smoking apartments. intheir housing residents are prohibited by law federal from consider that option afairness issue public because towould Amsterdam’s akin be co shops.ee Activists ple can purchase and smoke cannabis on-site, which including restrictions the on businesses where peo- diversity workforce.” inthe up,”ed she said. “ ere are no stated standards for don’t know how revenue tax the is going divid- to be justicefor inmarijuana social laws. We agroup to Legalize, Rise formed recently to push drugs,” said Samaria Phillips, campaign manager for nities disproportionately a byected war the on Authority. Liquor State Cannabis Management, agency within a new the allocation decisions to of head the O the ce of and other initiatives, but it leaves funding further “pragmatic,” mentions spending on substance-abuse forused community reinvestment. explaining, for example, how revenue tax would be 2017, is speci c about justice its objectives, social Peoples-Stokes. at bill, substantially updated in Krueger Liz and Bu Assemblywomanalo Crystal a 2013measure introduced by Manhattan state Sen. ance, leading the ght for legislation. of acoalition, includes which Policy Drug the Alli- for Reform the of Marijuana Laws. egroup is part Newthe York chapter of National the Organization Greene, legislative director of Empire State NORML, lines of war the on drugs. e auction proceeds to would fund used be Cuomo’s integration bans bill also vertical and eKrueger/Peoples-Stokes propos- Possibly biggest the two the bills between gulf Another sticking point: Krueger’s bill allows e governor’s bill, Krueger’s unlike and Advocates other ways see Cuomo’s short, bill falls But Phillips doesn’t “teeth” see or details: “We “ ere is alot of nicelanguage about commu- Cuomo’s plan, hiswhich o ce characterizes as Greene legislation had hoped to see resembling “ is is not bill the that Ihoped to get,” said Doug
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JANUARY 28,2019 EXPERIENCE HAVE AN OPENDOOR THERE ISINTHISBUSINESS.WHY SHOULDN’T SOMEONEWITHMY “I’VE FACED EVERY PROBLEM as they areas they issued “judiciously.” low for amore open and competitive market, as long prices to lead greater abuse of drug. the into a state-sanctioned lifestyle product, say cheaper publicthe consequences health of turning cannabis tion, some already policymakers, concerned about statees—the misses out on revenue. tax In addi- cheapertimes seven than typical black market pric- can weed retailgal for as little as $2agram, roughly grown.be If low—in too prices fall Washington, le- where massive amounts continue weed of illegal to of part problem the haswhich been inCalifornia, blackthe market, and businesses fail, licensed will retail customers cost high, too continue will to use say.gram, experts If taxes and regulations push the Oregon and Washington state. duction and that sales has to led aprice collapse in ket tightly controlled to avoid explosion the inpro- regulatornew issues. Cuomo wants to keep mar- the could on depend also how many retail licensesthe thedrugstore Cornering try, not just an opportunity for jobs or job training.” communities that to need have equity indus- inthe are publicly and don’t traded, they represent the out-of-statebasically corporations, some of which by operators],” [medical the he said. “ are ey big, TO “If you don’t have license caps, there’s greater op- But Greene contends that more al- licenses will Pricing is key to legalization asuccessful pro- Just how becomes diverse actually industry the “We there think is areal potential for dominance THE LEGALMARKET?”
business to go around. reational customers show there would plenty be of dition, estimates of up to 1.5million potential rec- for minority- and women-owned operators. In ad- industry, say, they would create greater opportunity cate” for would good businesses. be both Ahealthier letting recreational and marijuana medical “co-lo- to gettingcritical program the o ground, the and establishedtheir and infrastructure trained sta is campaigningbeen for a central role. argue ey that representswhich sixof 10distributors, the have they New York Medical Cannabis Industry Association, viders. rough arecently formed group, trade the on taking registered the be marijuana medical pro- provision allowing municipalities to opt out of legal- encies saying how that revenue tax should spent. be implemented. ere won’t ashortage be of constitu- with program the $83 million in2021,when is fully erate annual revenue tax of $300million, starting market weed legal the eventuallymo expects to gen- over bill. the Senate Finance Committee, has which jurisdiction ity Assembly, inthe leader and Krueger heads the have Peoples-Stokes allies. powerful is now major- Cuomo’s bill coming in the weeks, and may they with proper administration, you can address that.” portunity,” he said. “ edownside is low prices, but providerse medical span arange: from But biggest the challenge facing advocates will In Nassau County, could which make of use a But have they work their cut out for Cuo- them. Advocates are preparing to push for changes to cants. training and loans for quali appli-ed that would provide assistance, technical uity licensing and an incubator program nor pointed to provisions eq- for social justice. Aspokeswoman for gover- the onthat social focused bill the is indeed it subways. inthe New York City, have calls come to invest moneythe toward law enforcement. In ization, one o of has talked puttingcial Meanwhile, Cuomo’s o ce maintains 1/25/19 3:03 PM PARSING THE PLAYERS IN NEW YORK’S MARIJUANA PLAN
RECREATIONAL MARIJUANA is poised to become a major industry in the Empire State. A report last year by city Comptroller Scott Stringer estimated sales could total $3.1 billion annually, including $1.1 billion in the city. But the rules that Albany lawmakers hash out could be in uenced by these key stakeholders.
ACTIVISTS. The National Organization for the Reform of Mari- juana Laws, started in 1970 with funding from Playboy mag- FORD of iAnthus Capital azine, represents the old guard of legalization advocates. But raised money in Canada in recent years NORML has adopted the social justice rhetoric because of restrictions and priorities of newer groups. Its New York leader, David Hol- on U.S. banks. land, has reservations about Gov. Andrew Cuomo’s Cannabis Regulation and Taxation Act. It fails to expunge the records HOLLAND thinks Cuomo’s bill comes of those convicted under current laws, bars individuals from up short. growing any amount of their own weed, centralizes power and discretion in the Of ce of Cannabis Management and leaves apparent “wiggle room” for large national and international rms to dominate the market by establishing operations that grow, distribute and sell the product (see below).
BLACK AND HISPANIC LEADERS. When actress-activist Cynthia Nixon pitched legalizing marijuana as a form of “reparations” during her gubernatorial campaign last year, Hazel Dukes, president of the NAACP New York State Conference and a Cuomo ally, dismissed the idea, saying, “We don’t need pot shops in our communities.” In an interview, Dukes reiterated her concern that dispensaries could become concentrated in low-income black and Hispanic neighborhoods, which has happened with liquor stores and homeless shelters. But she simultaneously expressed optimism that the governor’s women-owned, Westchester-based Etain to pub- proposal would provide jobs, tax dollars and business oppor- licly traded, Manhattan-based Acreage Holdings, tunities for individuals and areas disproportionately harmed by the war on drugs. The struggle to attain this balance will DUKES says the plan could add jobs which counts John Boehner, the former speaker of but worries about its social effects. the House of Representatives, as a board member. take place not only in Albany during the spring, but also But they share a reluctance to being characterized when outlets begin to seek licenses, assuming legalization passes. as wealthy outsiders set on dominating the industry. “My partner and I started this at my kitchen table in New York City, with $250,000 scraped together LIQUOR STORE OWNERS. In the past decade, Jeff Saunders from friends and family,” said Hadley Ford, chief ex- and his group, Last Store on Main Street, held off repeated ecutive of Manhattan-based iAnthus Capital, which legislative attempts to let grocery stores sell wine. Now the went public on the Canadian Securities Exchange in liquor store leader intends to bring the same ferocity to a 2016 and has a market cap north of $360 million. new battle: to let booze merchants offer cannabis products. Last year the rm, which now has pharmaceuti- Saunders cited studies nding or forecasting a drop in alco- cal cannabis licenses in 11 states, bought New York hol sales in states that have relaxed strictures on marijuana provider Citiva Medical. It recently opened Brook- consumption and declared the matter an existential issue for lyn’s rst medical dispensary, on Flatbush Avenue his industry. He further posited that he and his compatriots near the Barclays Center. are ideal marijuana sellers because they are already vetted “I consider us to be a small business,” Ford said. and licensed to sell a restricted product to people over 21 “Yes, we’re well capitalized, but that’s key to being and could immediately begin reaping revenue for the state. able to provide good quality products and do things Moreover, he said, liquor store owners in the ve boroughs are overwhelmingly nonwhite. But some advocates and the right way.” policy experts are squeamish about having two intoxicants Raising money in Canada was a necessity, he under one roof, and sources suggested this might prove the LIQUOR STORE owners are eager to added, because federal law prohibits U.S. banks sell cannabis products. toughest legalization-related ght of all. from doing business with cannabis companies. Ford, a former health care executive who does not belong to the industry’s trade group, is all for ex- MEDICAL-MARIJUANA DISTRIBUTORS. MedMen, the punging convictions of drug o enders. But beyond California-based medical-marijuana giant led by CEO Adam that he thinks legalization’s focus should be on cre- Bierman, gave the maximum, $65,000, to Cuomo’s re- ating businesses that “delight customers.” election campaign during the summer—just months after Getting a recreational program up and running it opened a high-end pharmaceutical weed dispensary on will be good for the whole industry, he said, and en- Fifth Avenue. Why such generosity? Sources told Crain’s the trepreneurs who follow will have the advantage of company and its competitors want to preserve and expand learning from the forerunners. their share of the market under the new legal regime, par- “ ey can look at us and say, ‘I’ve got a better ticularly in the production of smokeless extracts. The draft of Cuomo’s bill says at least 10 sites could distill marijuana idea,’ and kick my ass,” he said. essences, but only four retail outlets could wholly belong to Ford also might be willing to help with another the owners of those distilleries. It sets no limits on partially kind of diversity. For purely commercial reasons, he owned stores, though. While the legislation bars cultivators is interested in working with underground dealers of recreational cannabis from owning dispensaries, growers like Eric. registered under the 2014 medical-marijuana law could “Why wouldn’t I sit down with somebody who’s seek an exemption. That could give some 10 seed- already been successful and has taken greater risks to-sale operations economies of scale with no middlemen. BIERMAN’S company gave $65,000 than I have and gure out how to bring them into — WILL BREDDERMAN to Cuomo’s re-election bid. the legal business?” he said. “I don’t have an answer
yet, but it is a cool concept.” ■ GETTYY IMAGES, ISTOCK, WIKI
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TELECOMMUNICATIONS PUBLIC & LEGAL NOTICES
Notice of Formation of NAVONA GROUP Notice of Formation of CAMPBELL TER- JOSEPH SERINO LIMITED LIABILITY LLC Arts. of Org. filed with Secy. of RACE PRESERVATION GP, LLC COMPANY Art. OF Org. Filed Sec. of State of NY (SSNY) on 11/20/18. Of- Arts. of Org. filed with Secy. of State of State of NY 10/29/2018. Off. Loc. : fice location: NY County. SSNY desig- NY (SSNY) on 11/30/18. Office loca- New York Co. United States Corpora- TWO WAY RADIO nated as agent of LLC upon whom proc- tion: NY County. Princ. office of LLC: tion Agents, Inc. designated as agent COMMUNICATIONS ess against it may be served. SSNY 60 Columbus Circle, NY, NY 10023. upon whom process against it may be shall mail process to c/o John V. SSNY designated as agent of LLC upon served. SSNY to mail copy of process • PICKUP AND DELIVERY Vincenti, Vincenti & Vincenti, P.C., 61 whom process against it may be to The LLC, 7014 13th Avenue, Suite • 48 HOUR TURNAROUND Broadway, Ste. 1310, NY, NY 10006. served. SSNY shall mail process to Cor- 202, Brooklyn, NY 11228. Purpose: Purpose: Any lawful activity. poration Service Co., 80 State St., Alba- ON REPAIRS Any lawful act or activity. ny, NY 12207-2543. Purpose: Any law- • EMERGENCY SERVICE ful activity. • CUSTOM ENGRAVING Notice of Qualification of 116 JOHN NOTICE OF FORMATION OF PARKLEDGE • RENTALS STREET NEW SUBTENANT LLC PRESERVATION, LLC Articles of Organi- SPICE BROTHERS, LLC, Arts. of Org. zation filed with the SSNY on 11-21- • WIDE AREA SYSTEMS Appl. for Auth. filed with Secy. of State of NY (SSNY) on 12/20/18. Office loca- filed with the SSNY on 11/28/2018. 2018. Office: New York County. SSNY tion: NY County. LLC formed in Dela- Office loc: NY County. SSNY has been designated as an agent of LLC upon ware (DE) on 12/14/18. SSNY desig- designated as agent upon whom proc- whom process against it may be The Largest Motorola Dealer in nated as agent of LLC upon whom proc- ess against the LLC may be served. served. SSNY shall mail a copy of proc- New York State ess against it may be served. SSNY SSNY shall mail process to: Emma- ess to 200 Vesey Street, 24th Floor, nuel Jaegle, 55 East 59th St, Ste 250 West 40 th St. shall mail process to Corporation Serv- New York, New York 10282. Purpose: 15A, NY, NY 10022. Purpose: Any ice Co., 80 State St., Albany, NY any lawful activity. New York, NY 10018 Lawful Purpose. 212-532-7400 12207. DE addr. of LLC: 251 Little www.metrocomradio.com Falls Dr., Wilmington, DE 19808. Cert. NOTICE OF FORMATION of of Form. filed with DE Secy. of State, Notice of Formation of 119TH ST HOLD- OTHERWISE PICTURES, LLC. Arts. Of John G. Townsend Bldg., 401 Federal INGS LLC. Arts. of Org. filed with Secy. Org. filed with Secy of State of NY St.-Ste. 4, Dover, DE 19901. Purpose: of State of NY (SSNY) on 12/28/2018. (SSNY) on 12/6/18. Office location: PUBLIC & LEGAL Any lawful activity. Office location: New York County. NY County. SSNY designated agent SSNY designated as agent of LLC upon upon whom process may be NOTICES whom process against it may be served and shall mail copy of Notice is hereby given that a license, served. The post office address to process against LLC to 9 Murray St, Serial Number 1315591, for on- which the SSNY shall mail a copy of #10NW, NY, NY 10007. Purpose: any premises consumption of wine, beer, any process against the LLC served Opus87 Piano Quartet, LLC. Arts. of lawful act and liquor, at retail on a vessel, has upon him/her is: McCarthy Weidler, P. Org. filed with the SSNY on 10/05/18. been applied for by SailawayNY LLC, un- C., 800 Third Avenue, 28th Floor, New Office: New York County. SSNY desig- Notice of Qualification of PRESIDENT der the NYS Alcoholic Beverage Control York, NY 10022. The principal busi- nated as agent of the LLC upon whom STREET GLOBAL LLC Appl. for Auth. Law,at 250 Vesey Street, New York, ness address of the LLC is: 18-37 process against it can be served. SSNY filed with Secy. of State of NY (SSNY) NY. SailawayNY LLC/Paul Dauriac 119th Street, College Point, NY 11356. shall mail copy of process to the LLC, on 10/18/18. Office location: NY Coun- Purpose: To engage in any lawful act or 720 W 172nd St Apt 4B New York, NY ty. LLC formed in Delaware (DE) on 10/ activity. 10032. Purpose: Music performances. Notice of Formation of CES Advisory 12/18. SSNY designated as agent of Services, LLC. Arts. of Org. filed with LLC upon whom process against it may Notice is hereby given that a license, NOTICE OF FORMATION OF Fear The Secy of State of NY (SSNY) on 12/ be served. SSNY shall mail process to Serial Number 1315592, for on- Writer LLC. Articles of Organization filed 14/18. Office Location: NY County. c/o Corporation Service Co. (CSC), 80 premises consumption of wine, beer, with the Secretary of State of NY SSNY designated agent upon whom State St., Albany, NY 12207-2543. DE and liquor, at retail on a vessel, has (SSNY) on 12/05/2018. Office loca- process may be served and shall mail addr. of LLC: c/o CSC, 251 Little Falls been applied for by SailawayNY LLC, un- tion: NEW YORK County. SSNY has copy of process against LLC to 635 Dr., Wilmington, DE 19808. Cert. of der the NYS Alcoholic Beverage Control been designated as agent upon whom Park Avenue, 12th FL. NY. NY. 10065. Form. filed with Jeffrey W. Bullock, Div. Law,at 250 Vesey Street, New York, process against it may be served. The Purpose: any lawful act of Corps., John G. Townsend Bldg., NY. SailawayNY LLC/Paul Dauriac Post Office address to which the SSNY 401 Federal St., Ste. 4, Dover, DE shall mail a copy of any process 19901. Purpose: Any lawful activity. NOTICE OF FORMATION of BYROE, LLC. against the LLC served upon him/her NYCMSC, LLC, Arts. of Org. filed with Arts. Of Org. filed with Secretary of is: 132 East 96th Street, Apt. 1A, New the SSNY on 01/09/2019. Office loc: Notice of Formation of CAMPBELL TER- State of NY (SSNY) on 11/26/18. Of- York, New York, 10128. The principal NY County. SSNY has been designated RACE DEVELOPER, LLC Arts. of Org. fice location: NY County. SSNY desig- business address of the LLC is: 132 as agent upon whom process against filed with Secy. of State of NY (SSNY) nated agent upon whom process may East 96th Street, Apt. 1A, New York, the LLC may be served. SSNY shall on 11/30/18. Office location: NY Coun- be served and shall mail copy of proc- New York, 10128. Purpose: any lawful mail process to: The LLC, 20 E. 9th ty. Princ. office of LLC: 60 Columbus ess against LLC to 21 West End Ave, act or activity. St., NY, NY 10003. Purpose: Any Law- Circle, NY, NY 10023. SSNY designat- Unit 4306, NY, NY 10023. Purpose: ful Purpose. ed as agent of LLC upon whom process Any lawful act. against it may be served. SSNY shall Notice of Qualification of NY STONE mail process to Corporation Service STREET HOTEL XLIII OPERATOR LLC Notice of formation of limited liability Co., 80 State St., Albany, NY 12207- Appl. for Auth. filed with Secy. of State NOTICE OF FORMATION OF SALT & SKY company (LLC) Name TAI MOTT of NY (SSNY) on 01/08/19. Office loca- LLC. Articles of Organization filed with STREET, LLC. ArticlesOf Organization 2543. Purpose: Any lawful activity. tion: NY County. LLC formed in Dela- the Secretary of State of NY (SSNY) on filed with secretary of state of state of ware (DE) on 12/20/18. SSNY desig- 12/18/2018. Office location: NEW YORK New York (SSNY) on 11/29/2018. NY Notice of Formation of MARINA VISTA nated as agent of LLC upon whom proc- County. SSNY has been designated as office location New York SSNY has PRESERVATION GP, LLC Arts. of Org. ess against it may be served. SSNY agent upon whom process against it may been designated as agent of LLC upon filed with Secy. of State of NY (SSNY) shall mail process to the LLC, Attn: Le- be served. The Post Office address to whom process against it may be on 01/18/19. Office location: NY Coun- gal Affairs, 5425 Wisconsin Ave., Ste. which the SSNY shall mail a copy of any served. The post office address to ty. Princ. office of LLC: 60 Columbus 700, Chevy Chase, MD 20815. DE process against the LLC served upon which the SSNY shall mail a copy of Circle, NY, NY 10023. SSNY designat- addr. of LLC: 322 A St., Ste. 300, Wil- him/her is: 800 State Street Albany, NY any process against the LLC served ed as agent of LLC upon whom process mington, DE 19801. Cert. of Form. filed 12207-2543. The principal business ad- upon him/her is TAI MOTT STREET, LLC against it may be served. SSNY shall with Secy. of State, 401 Federal St., dress of the LLC is: 220 120th Ave NE, C/O 56 West Dayton street Pasadena, mail process to Corporation Service Ste. 3, Dover, DE 19901. Purpose: Bellevue, WA 98005. Purpose: any lawful CA 91107 Purpose/character of LLC: Co., 80 State St., Albany, NY 12207- Any lawful activity. act or activity any lawful purpose. 2543. Purpose: Any lawful activity.
22 | CRAIN’S NEW YORK BUSINESS | JANUARY 28, 2019
P022_P023_CN_2019028.indd 22 1/25/19 2:31 PM TO PLACE A CLASSIFIED AD, CALL 1 212-210-0189 OR EMAIL [email protected]
PUBLIC & LEGAL NOTICES
Notice of Qualification of ATLAS IM- Notice of Qualification of ATLAS IMPACT Notice of Qualification of Interior Re- Notice of Qualification of NEW YORK PACT PARTNERS GP, LLC Appl. for PARTNERS, LP Appl. for Auth. filed with sources Group International, LLC. Appl. CITY DOWN PAYMENT ASSISTANCE Auth. filed with Secy. of State of NY Secy. of State of NY (SSNY) on 11/ For Auth. filed with the Secy. of State of FUND LLC Appl. for Auth. filed with (SSNY) on 11/20/18. Office location: 20/18. Office location: NY County. LP NY (SSNY) on 11/20/18. Office loca- Secy. of State of NY (SSNY) on 11/ NY County. LLC formed in Delaware formed in Delaware (DE) on 05/18/18. tion: NY County. LLC formed in Massa- 20/18. Office location: NY County. LLC (DE) on 05/18/18. Princ. office of LLC: Princ. office of LP: 164 W. 79th St., Apt. chusetts (MA) on 9/28/10. SSNY des- formed in Delaware (DE) on 11/16/18. Attn: Richard Billig, 164 W. 79th St., 11C, NY, NY 10024. Duration of LP is ignated as agent of LLC upon whom SSNY designated as agent of LLC upon Apt. 11C, NY, NY 10024. SSNY desig- Perpetual. SSNY designated as agent of process against it may be served. whom process against it may be nated as agent of LLC upon whom proc- LP upon whom process against it may be SSNY shall mail process to c/o Karen served. SSNY shall mail process to Cor- ess against it may be served. SSNY served. SSNY shall mail process to Attn: Boegemann, 810 Boston Turnpike poration Service Co. (CSC), 80 State shall mail process to Attn: Robert Efrem Kamen, 888 Seventh Ave., 6th Fl., Road, Shrewsbury, MA 01545. MA St., Albany, NY 12207-2543. DE addr. Brown, 164 W. 79th St., Apt. 11C, NY, NY, NY 10106. Name and addr. of each addr. Of LLC: 810 Boston Turnpike of LLC: CSC, 251 Little Falls Dr., Wil- NY 10024. DE addr. of LLC: Corpora- general partner are available from SSNY. Road, Shrewsbury, MA 01545. Cert. of mington, DE 19808. Cert. of Form. filed tion Service Co., 251 Little Falls Dr., DE addr. of LP: c/o Corporation Service From. Filed with MA Secy. of Common- with DE Secy. of State, Div. of Corps., Wilmington, DE 19808. Cert. of Form. Co., 251 Little Falls Dr., Wilmington, DE wealth, Corp. Div., One Ashburton John G. Townsend Bldg., 401 Federal filed with Secy. of State of the State of 19808. Cert. of LP filed with Secy. of Place, 17th, floor, Boston, Massachu- St., Dover, DE 19901. Purpose: Any DE, Div. of Corps., John G. Townsend State of the State of DE, Div. of Corps., setts, 02108-1512. Purpose: any law- lawful activity. Bldg., Federal & Duke of York Sts., Do- John G. Townsend Bldg., Federal & Duke ful act or activity. ver, DE 19901. Purpose: Any lawful ac- of York Sts., Dover, DE 19901. Pur- tivity. pose: Any lawful activity. NOTICE OF QUAL. of S3 RE Ryer Ave Notice of Formation of P C INSURANCE Funding LLC. Auth. filed Sec’y of State AGENCY LLC Arts. of Org. filed with Notice of formation of Propel Success NOTICE OF FORMATION of THE HAPPY (SSNY) 9/25/18. Off. Loc: NY Co. LLC Secy. of State of NY (SSNY) on 12/ LLC, a domestic LLC. Articles of Organi- PENGUIN LLC. Arts. Of Org. filed with org. in DE 8/3/18. SSNY desig. as 03/18. Office location: NY County. zation filed with the Secretary of State Secy of State of NY (SSNY) on 11/ agent of LLC upon whom proc. against Princ. office of LLC: 247 W. 30th St., of New York (SSNY) on 11/21/2018. 8/18. Office Location: NY County. it may be served. SSNY shall mail copy Fl. 15F, NY, NY 10001. SSNY designat- Office location: New York County. SSNY SSNY designated agent upon whom of proc. to c/o Spruce Capital Partners, ed as agent of LLC upon whom process is designated as agent upon whom process may be served and shall mail 444 Madison Ave, Flr 41, New York, NY against it may be served. SSNY shall process against the LLC may be copy of process against LLC to 145 10022. DE off. Addr.: 160 Greentree mail process to the LLC at the princ. of- served. SSNY shall mail process to: West 67th St, Apt 40D, NY NY 10023. Dr., Ste 101, Dover, DE 19904. Cert of fice of the LLC. Purpose: To sell insur- Registered Agents Inc. 90 State Street, RG Agent: US Corp Agents, Inc. 7014 Form. on file: SSDE, Townsend Bldg., ance products, to engage in any other Suite 700, Office 40, Albany, NY 13th Ave, #202, BK, NY 11228. Pur- Dover, DE 19901. Purpose: any lawful actvity incidental thereto, and to en- 12207. Purpose: Any lawful purpose. pose: any lawful act. activity. gage in any activity permitted by law.
JANUARY 28, 2019 | CRAIN’S NEW YORK BUSINESS | 23
P022_P023_CN_2019028.indd 23 1/25/19 3:18 PM Advertising Section To place your listing, visit crainsnewyork.com/people-on-the-move PEOPLE ON THE MOVE or for more information contact Debora Stein at [email protected]
ACCOUNTING ARCHITECTURE CONSTRUCTION MANAGEMENT CONSULTING
Weaver Woods Bagot Aurora Contractors, Inc. HBR Consulting
Weaver continues to expand Cliff Bollmann, AIA, has Anthony Vero was promoted David Craig is a managing its financial services industry joined Woods Bagot as to President of Aurora director and now leads the practice with the addition of the Regional Leader for Contractors, Inc. He is Information Governance Matthew DiBrienza, CPA, as Transportation. Over his 25 responsible for overseeing practice within the Advisory an audit partner in the New years of experience, Cliff has multiple projects from business at HBR Consulting. York office. DiBrienza, offers become skilled at guiding estimating and procurement With over 25 years of Weaver’s investment fund complex assignments that through TCO and closeout. management consulting clients more than 20 years of experience merge thoughtful design with technical Anthony has a proven track record of experience, he aligns clients’ business, serving the alternative investment industry. leadership, helping stakeholders achieve successfully delivering numerous high- risk management and operational He offers the full range of services to his their goals. A specialist in aviation and profile retails, hospitality, & industrial efficiency objectives with information clients, which have included hedge funds, education, he has worked on airports construction developments, totaling over governance policies and data management private equity funds, fund-of-funds and worldwide from JFK to Jeddah, and on $1 Billion for clients over the last decade. practices. David has assisted on notable commodity pools. DiBrienza is a CPA major cultural and educational institutions His sincerity, honesty, and jovial spirit investigations and regulatory inquiries from licensed in New York and New Jersey. including Hongqiao (Shanghai) Theater are certain to serve Aurora, its clients, & the SEC and FINRA and served as an expert District and Princeton University. employees well, for years to come. witness in criminal and civil proceedings.
CONSULTING CONSULTING CONSULTING CONSULTING
HBR Consulting HBR Consulting HBR Consulting HBR Consulting
Kevin Colangelo is now Lauren Chung is a managing Matt Gillis is now president Wafik Guirgus is a managing the vice president of director and now leads of the Managed Services director and now leads the client engagement at HBR the Strategy + Operations business for HBR Consulting, Legal Technology practice Consulting. A veteran practice within the Advisory where he is responsible for within the Advisory business business development business at HBR Consulting. the strategy and delivery of at HBR Consulting. With executive, legal services She has over 20 years of HBR’s IT Managed Services over 20 years of legal entrepreneur and corporate management consulting business, serving the full operations consulting and lawyer, Kevin is responsible for optimizing experience and works with general spectrum of law firms’ global IT needs. Matt corporate experience, Wafik’s expertise the client acquisition, retention and growth counsel and law department leadership has over 20 years of experience in legal includes law department and contract processes. Kevin speaks frequently and has on strategic, process and operational technology services and software, focused lifecycle management assessments; been quoted widely on legal innovation, improvement initiatives. Lauren has led on business development, marketing and strategic planning; process and technology client relationship management and the the annual HBR Law Department Survey, a account and product management. He improvements; contracting organizational business of law in numerous media outlets. leading source of benchmarking data for has a proven track record and passion design; complex legal matter management; law departments, since its inception. for building high-performing technology and spend management implementations. teams, services and products.
FINANCE LAW LAW NONPROFIT
BankUnited Latham & Watkins LLP Latham & Watkins LLP The Andrew W. Mellon Foundation Jaclyn Coffin has been David Beller has joined the Alexander Johnson has promoted to senior New York office of Latham joined the New York office Michele S. Warman has vice president, treasury & Watkins as a partner in of Latham & Watkins as a been promoted to Executive management sales the Corporate Department partner in the Corporate Vice President and Chief manager responsible for and member of the Mergers Department and member of Operating Officer at the the sales teams in New York & Acquisitions and Private the Mergers & Acquisitions $6.3 billion Andrew W. and Florida. She joined Equity Practices. Beller has and Private Equity Practices. Mellon Foundation. Working BankUnited in 2013 as a vice president and a broad M&A practice encompassing Johnson advises private equity firms and with Foundation President Elizabeth senior treasury management sales officer both public and private acquisitions, multinational corporations on US and cross- Alexander, Ms. Warman will help advance in the New York City market. Coffin will be dispositions, tender offers, co-investments, border transactions, as well as on a variety a dynamic program strategy and align based at the 50th & 5th Avenue banking joint ventures, carve-outs, and general of other corporate matters, including joint the Foundation’s operations to support center, located at 623 5th Avenue, New corporate matters, including corporate ventures, strategic investments, spin- its program areas: higher education and York. governance and takeover defense. He offs, financings, and recapitalizations. He scholarship in the humanities; arts and received his JD from Benjamin N. Cardozo received his JD from Fordham University cultural heritage; diversity; scholarly School of Law at Yeshiva University. School of Law. communications; and international higher education and strategic projects.
TECHNOLOGY
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24 | CRAIN’S NEW YORK BUSINESS | January 28, 2019
P024_CN_20190128.indd 24 1/24/19 10:42 AM FOR THE RECORD*
NEW IN TOWN serves an eight-course West Village. Its menu is REAL ESTATE ■ The North Face agreed ■ Hudson River Trading omakase lunch menu for identical to that of its East to lease 13,000 square feet signed a 15-year lease for ■ Caron Callahan $45 and a 16-course dinner Village restaurant, which RETAIL from Olmstead Properties 136,000 square feet at 3 243 Elizabeth St. for $130. closed after a December fire. ■ Life Time plans to open at 584–588 Broadway World Trade Center. The The designer, who has a 74,000-square-foot fitness for 10 years. The outdoor fintech firm will move from worked for Derek Lam, ■ Zola ■ Venus Et Fleur center at 1 Wall St. next apparel company will 4 WTC and double its office debuted a store in Nolita, 168 Fifth Ave. 185 Greenwich St. year. The Dartmouth Co. move from 139 Wooster space. The asking rent was where she sells quilted coats, The wedding-planning site Buyers can choose chemi- represented the tenant, and St. The asking rent was in the $80s per square foot. jumpsuits and other pieces. opened its first brick-and- cally treated rose arrange- RKF represented the land- $200 per square foot on the CBRE brokered for the mortar location, in Mid- ments in 27 colors that last lord, Macklowe Properties. 7,000-square-foot ground landlord, Silverstein Proper- ■ Citroën town. Two thousand of the for a year at this World The asking rent was not floor and $50 per square ties, and the tenant. 931 Manhattan Ave., registry’s most popular gifts Trade Center shop, the disclosed. foot in the 6,000-square- Brooklyn will be for sale in a setting second for the company. foot basement. JLL brokered ■ Citadel nabbed an A French bistro with where shoppers can nibble ■ The RealReal is moving for the tenant. additional 120,400 square 1920s-inspired decor on CBD-infused snacks and into 27,760-square feet at feet at 425 Park Ave. The opened in Greenpoint. print 3D wedding-cake top- STOCK TRANSACTIONS 53 W. 36th St. The luxury COMMERCIAL Chicago-based hedge fund pers. The store’s clerks are consignment brand signed a ■ WeWork signed a lease now occupies 331,800 ■ Man Cave Health ordained, so shoppers can ■ Blue Apron Holdings Inc. 10-year lease with an asking for the 14th through 21st square feet in the tower. 625 Madison Ave. be married on the spot. (APRN-N) rent of $59 per square foot. floors—totaling 236,000 JLL represented the tenant. The men’s health nonprofit Chief Technology Officer Newmark Knight Frank square feet—at 1440 Broad- The landlord, L&L Holding partnered with the Depart- Ilia Papas sold 133,334 represented the tenant. LSL way. CoStar Group data lists Co., handled the lease in- ment of Urology at Mount MOVES AND EXPANSIONS shares of common stock Advisors brokered for the the average asking rent as house. The asking rent was Sinai to operate a prostate for $0.91 per share Jan. 8. landlord, an investor group ranging between $53 and between $185 and $255 per cancer center in Midtown. ■ Black Press Coffee The transaction was worth led by Fatollah Hematian. $64 per square foot. square foot. – YOONA HA 274 Columbus Ave. $120,813. He now holds ■ Mejuri The second location, on the 69,690 shares. 43 Spring St. GET YOUR NEWS ON THE RECORD Upper West Side, offers cof- * The Toronto-based jewelry fee from around the world, ■ Scholastic (SCHL-O) To submit company openings, moves or real estate deals, or to receive further information, ABOUTemail [email protected] SECTION. brand debuted its first U.S. roasted in Brooklyn. General counsel Andrew outpost, in Nolita. Hedden sold 2,000 shares For the Record is a listing to help businesspeople in New York find opportunities, potential ■ Fiaschetteria Pistoia of common stock for $40.96 new clients and updates on customers. Bankruptcy filings from the eastern and southern districts of New York are listed alphabetically. Stock transactions are insider transactions at ■ Takeshi 114 Christopher St. per share Jan. 7 in a transac- New York companies obtained from Thomson Reuters and listed by size. Real estate listings 28 Grand St. The Tuscan comfort food tion worth $81,920. He now are in order of square footage. Sushi chef Takeshi Sato restaurant opened in the holds 42,592 shares.
January 28, 2019 | CRAIN’S NEW YORK BUSINESS | 25
P025_CN_20190128.indd 25 1/24/19 5:37 PM SNAPS BY CHERYL S. GRANT
Real estate celebrates banner year On the heels of seismic development announcements by Amazon and Google, the Real Estate Board of New York held its annual gala Jan. 17 at the New York Hilton Midtown for 2,000 guests. The trade organization, which advocates for and lobbies on behalf of both residential and commercial real estate companies, honored several of its members. Sen. Charles Schumer was among the featured speakers.
Carolee Fink, chief of staff to the deputy mayor;Melissa Burch, executive general manager of New York development at Lendlease; Leila Bozorg, deputy commissioner for neighborhood strategies at the De- REBNY President William Rudin, CEO and co-chairman of Rudin partment of Housing Preservation and Development; and Alicia Glen, Management; honoree Daniel Tishman, principal and vice chairman deputy mayor for housing and economic development of Tishman; and REBNY President John Banks
Dining for life The Prostate Cancer Rock the casbah Foundation held its Central Park Conservancy New York dinner held its annual winter party Dec. 6, taking in $11 Dec. 6. “A Night in Morocco” million to support its brought in $1.3 million to efforts to fund cancer help maintain, enhance and James manage the park. Among the research. 700 guests were ABC News Coleman, founder and correspondent Deborah managing partner of Roberts and Agenia Clark, Hanley Advisors, and president and CEO of the Girl Sex and the City writer Scouts of Middle Tennessee. Candace Bushnell during the event at the restaurant Daniel.
Philanthropist Marie Bernstein and Michael Milken, founder and chair- Conservancy President and man of the foundation, CEO Elizabeth Smith and were among the 130 guests. Rick Cotton, executive director of the Port Authority of New York and New Jersey. The evening featured belly dancers and palm readers in- side heated tents transformed into desert oases.
BUCK ENNIS, JARED SISKIN/PATRICK MCMULLAN, ARIA ISADORA AND JULIAN MACKLER/BFA.COM BUCK ENNIS, JARED SISKIN/PATRICK SEE MORE OF THIS WEEK’S SNAPS AT CRAINSNEWYORK.COM/SNAPS. GET YOUR GALA IN SNAPS. EMAIL [email protected].
26 | CRAIN’S NEW YORK BUSINESS | January 28, 2019
P026_CN_20190128.indd 26 1/24/19 5:36 PM GOTHAM GIGS
CHIN still loves vinyl, but marketing BY LANCE PIERCE digital music is his main focus now.
Adding data to the rhythm How a former aerospace engineer helps steer his family’s reggae dynasty
ake the subway to Jamaica, Queens, and in a non- Chin had not anticipated this role. He studied aviation descript warehouse past the Van Wyck Express- engineering and for a decade worked for Boeing in Los An- RANDY CHIN way you’ll find a portal to the other Jamaica. It geles. But his interest turned to business, and after getting is the headquarters of VP Records, the world’s his MBA, he decided to come home and joined VP in 1997. BORN Kingston, Jamaica Tlargest reggae music company, which is celebrating its 40th It was a culture shock. “Everybody’s talking about the RESIDES Island Park, Long Island anniversary with a boxed set and concerts in Kingston this vibe and making music,” he said. “I asked what calculations EDUCATION Bachelor’s in month and in Central Park in August. they did to make decisions.” engineering, Embry-Riddle “Everybody in reggae has in some way, We’re talking Chin joined during a boom time for the Aeronautical University; “ master’s in engineering, California shape or form been connected to VP Re- company. But as digital music overtook about growing, State University, Long Beach; cords,” said Grammy-winning artist Lukes CDs, VP had to consolidate its warehouses MBA, UCLA Anderson School of Morgan. “They believe in reggae—not just which is very and cut staff. The company survived by di- Management the music but the lifestyle and culture.” different than the versifying. In 2008 VP bought Greensleeves FIRST GENERATION Chin’s VP’s president, Randy Chin, said that conversations 10 Records, which had a publishing arm, and father died in 2003; his mother, beyond popularizing artists such as Beenie years ago began producing festivals and merchandis- as co-owner, is still in charge—of Man and Sean Paul, VP helped mainstream ” ing. “A lot of labels merged, sold or went everything. “My boss at Boeing certainly didn’t make sure I’d eaten reggae and dancehall, a style of music that out of business,” Chin said. breakfast.” has influenced megastars such as Justin Bieber and Rihan- Now with streaming taking off in Latin America and MAKING DAD PROUD “With na. “We were an important bridge between what was hap- Africa, Chin sees robust times ahead. “We’re now having the 40th anniversary, I think pening in Jamaica and what took place in the U.S.” conversations about growing, which is very different than about my dad. He got to see Family was key to that conduit. Chin’s father, Vincent, the conversations five or 10 years ago.” some of the success, but he’d be began the business as a record store and recording studio Chin uses data to decide how best to market VP’s 10 to 15 very proud of how we survived the decline.” in Kingston. Then in the 1970s, he and his wife, Patricia, active artists. “The barrier to entry once was distribution— moved to New York and expanded their recording and getting your record in the store,” he said. But now it’s using SECOND SHIFT “I have three kids. When I go home, my second job is distribution business. Today Chin’s brother, Christopher, streaming services to get noticed around the world. “We being an Uber driver for them.”
BUCK ENNIS is the CEO, while Chin oversees business and marketing. need to digest data and see the patterns.” — STUART MILLER
January 28, 2019 | CRAIN’S NEW YORK BUSINESS | 27
P027_CN_20190128.indd 27 1/25/19 2:15 PM 2019 HERITAGE HEALTHCARE INNOVATION AWARDS Presented by Richard Merkin, MD Founder and CEO, Heritage Provider Network
Who is solving today’s big healthcare challenges?
DEADLINE March 22 2019 Nominations open now Visit NOMINATE INDIVIDUALS OR ENTITIES: A COLLEAGUE, A PEER, crainsnewyork.com/ YOURSELF, AN ORGANIZATION heritage
Nominees will be eligible to be finalists or winners in the following categories: Heritage Innovation Heritage Healthcare Heritage Healthcare Heritage Innovators Heritage Research in Healthcare Organizational Leadership Award in Healthcare Award Investigators in Delivery Award Leadership Award Translational Medicine Award Finalists will be honored at a luncheon in NYC on May 20 Mark Wagar, President, Heritage Medical Systems, Master of Ceremonies
Awards open to individuals and to organizations of all sizes located in New York City, Long Island, and in Westchester and Rockland counties.
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