CAN a YANKEE CHANGE STRIPES? with Attendance and Sales Revenue Tanking, Staten Island Yankees President Will Smith Is Looking to Create a New Brand PAGE 16

CRAINSNEW YORK BUSINESS

NEW YORK BUSINESS® JUNE 12 - 18, 2017 | PRICE $3.00 CAN A YANKEE CHANGE STRIPES? With attendance and sales revenue tanking, Staten Island Yankees President Will Smith is looking to create a new brand PAGE 16

KNEADING PROFITS AT AMY’S BREAD P. 8

THE LIST New York’s largest engineering rms P. 10 THE CITY’S AFFORDABLE- HOUSING KING P. 13

VOL. XXXIII, NO. 24 WWW.CRAINSNEWYORK.COM

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P001_CN_20170612.indd 1 6/9/2017 6:18:23 PM JUNE 12 - 18, 2017 CRAINSNEW YORK BUSINESS

FROM THE NEWSROOM | JEREMY SMERD | EDITOR IN THIS ISSUE

A clear objective 4 IN CASE YOU MISSED IT 5 HEALTH CARE EVEN BEFORE THE TRUMP ADMINISTRATION proposed cut- Health 6 WHO OWNS THE BLOCK insurers ting up to $370 million next year from the budget of the New want to hike York City Housing Authority, the agency overseeing 177,700 7 REAL ESTATE premiums. 8 SPOTLIGHT Will Cuomo low-income apartments was facing an epic funding crisis. To let them? help fill its $17 billion repair backlog, it has turned to devel- 9 VIEWPOINTS opers to build mixed-income apartment towers on its land. 10 THE LIST NYCHA last month selected Fetner Properties to develop FEATURES the first building in its NextGen Neighborhoods program: a 47-story, 344-unit tower on 92nd Street at First Avenue. Half 13 PRICE OF SUCCESS of the units would be considered affordable and inte- 16 MINOR HEADACHES grated into the building so as to be indistinguishable What’s the objective? from the market-rate ones. Of those 172 apartments, Adding affordable 20% would go to New Yorkers making $24,500 or less. “ The plan calls for a community facility with a public units or fixing up soccer field on its roof. Most important, Fetner would Housing Authority pay $25 million for a 99-year land lease. Half of that would go to repair Holmes Towers next door, where property? residents would get dibs on 25% of the low-rent units. P. 24 Still, this win-win is not enough for politicians. “It has to be 100% affordable,” Sabra Lewis said Upper East Side Councilman Ben Kallos. He claimed NYCHA is getting short- 24 GOTHAM GIGS changed, though the project was bid on competitively. Hal Fetner, president and CEO of Fetner Properties, visited our newsroom last 25 SNAPS week precisely because he was trying to ward off those kinds of slings and arrows. 26 FOR THE RECORD Fetner says 100% affordable is doable but would come with a big caveat: “Then the 27 PHOTO FINISH entire project has to be subsidized and NYCHA won’t get the $25 million,” he said. CORRECTIONS “What’s the objective? Affordable housing or fixing NYCHA’s property?” NYPD street stops dropped 95%, to 22,563, in Washington’s proposed cuts are a reminder that new affordable housing must 2015, from 191,185 in 2013. The 2013 figure largely pay for itself. The de Blasio administration gets this, which is why its afford- was misstated in Data Point, published June 5. able housing program focuses on mixed-income developments, as reporter Rosa Cornell Tech will open three buildings in September. Goldensohn details on page 13. That fact was unclear in “Cornell Tech starts up,” published June 5. Now the administration has decided to set aside more precious NYCHA land for the development of 100% affordable housing. These projects must either rely more on subsidies or define affordability upward to serve New Yorkers who make more money. Yet they will do little for the agency’s capital shortfall. NYCHA says it is doing this in areas where land costs are low and therefore the returns from market-rate development would be marginal. But certainly the land is not worthless. This is a missed opportunity that NYCHA cannot afford. Kallos says he will kill the Fetner deal if it comes before the council. Fortunately, ON THE COVER because it is subject to federal review, it won’t. PHOTO: BUCK ENNIS

DIGITAL DISPATCHES CONFERENCE CALLOUT Go to CrainsNewYork.com DEADLINE EXTENDED TO JUNE 23 REGISTER Every year CRAIN’S FASTEST- Crain’s identifies the GROWING COMPANIES best employers in > New York City. If you Each year Crain’s recognizes love working at your the New York–area companies company, let us know. with the highest three-year To register your firm or to revenue growth rate. Public learn more about the fea- and private companies with ture, go to bestplacestoworknyc.com. There at least $10 million in is a $199 registration fee, and the deadline revenue are eligible. is June 30. Go to CrainsNewYork.com/ BestPlaces to see our previous honorees. To submit a company, go to CrainsNewYork.com/Fast50. ■ SIGN UP Stay on top of business news by subscribing to our email newsletters. From the Morning 10, which lands in your Vol. XXXIII, No. 24, June 12, 2017—Crain’s New York Business (ISSN 8756-789X) is published weekly, except for double issues the weeks of June 26, July 10, July 24, Aug. 7, Aug. 21 and Dec. 18, by Crain Communications Inc., 685 Third inbox by 8 a.m., to our 4 p.m. Daily Alert, Ave., New York, NY 10017. Periodicals postage paid at New York, NY, and additional mailing offices. Postmaster: Send our newsletters have you covered. All our address changes to: Crain’s New York Business, Circulation Department, 1155 Gratiot Ave., Detroit, MI 48207-2912. newsletters are free, with the exception For subscriber service: Call 877-824-9379. Fax 313-446-6777. $3.00 a copy, $99.95 one year, $179.95 two years. of Health Pulse. (GST No. 13676-0444-RT) ©Entire contents copyright 2017 by Crain Communications Inc. All rights reserved. BUCK ENNIS

2 | CRAIN’S NEW YORK BUSINESS | June 12, 2017

P002_CN_20170612.indd 2 6/9/17 7:33 PM WHAT’S NEW June 12, 2017

AGENDAIn showdown over mayoral control, de Blasio wise to call enemies’ bluff

emember when elected officials and candidates routinely called for government to be run more like a business? Fifteen years ago then-Mayor Michael Bloomberg took that to heart, persuading Albany to try mayoral control of the city’s public Rschools for a six-year period. To no one’s surprise, a direct line of authority from the schools chancellor to the mayor worked a lot better than having A LESSON policies flow from seven Board of Education members appointed by six LEARNED: politicians. Albany politics could This is why successful businesses are run by chief executives who are harm the held accountable for results, not micromanaged by factional appointees school system the way it doing the bidding of their own politically ambitious masters. has hurt the Albany initially renewed mayoral control without batting an eye. Even subways. though not all of Bloomberg’s reforms worked, it made sense that someone elected by voters citywide should be responsible for the public schools of democracy (ahem)—would have introduced a bill, held hearings and and have the authority to run them without having to trade favors to as- heard testimony from experts. semble board majorities for every policy change. It is foolish and irresponsible to take a hostage without having a Plan B But since Bill de Blasio became mayor in 2014, Senate Republicans if the ransom is not paid. The Republicans’ political strategy is clearly have repeatedly taken mayoral control hos- to wrangle concessions for charter-school tage, threatening not to extend it unless they Senate Republicans are holding backers and other supporters that would get to tinker with the way schools are run. not get through the state Legislature on De Blasio has grown less inclined over effective school governance hostage their own. The way we see it, though, the the years to jump through all the hoops put and offering no alternative pressure is on the GOP to continue mayoral up by the Senate majority or to make con- control because otherwise it would plunge cessions that would weaken his and future mayors’ authority over city the school system into absolute chaos. schools. He has realized that, no matter what he gives them, Senate Re- We already have enough chaos in the subway system, which commut- publicans will keep coming back for more. But he has probably also fig- ers are starting to blame on state legislators’ failure to adequately fund it. ured out that the Republicans are bluffing—that their poker hand doesn’t With their control of the upper chamber perpetually fragile, Senate Re- contain a school-governance plan that would pass the Assembly, let alone publicans have picked a bad time to threaten schools with a similar fate. actually be effective. If they did, we assume that they—as earnest stewards They ought to take a more businesslike approach. — THE EDITORS

FINE PRINT The Department of Sanitation last year collected 23,000 tons of food and yard waste through composting programs covering 300,000 residents and 722 schools, agencies and institutions, The New York Times reported. Sounds like a lot, but it amounted to just 2% of organic waste collected by the agency, which is scaling up the effort. It aims to eventually collect 155,000 tons a year.

BY GERALD SCHIFMAN STATS

25 WORDS OR LESS GRADES PENDING THE CITY COUNCIL is expected to soon pass legislation requiring letter grades for street AND THE CITY vendors, who are shut down by health inspectors at a higher rate than are “If we are not brick-and-mortar restaurants. helping people, Portion of 2016 cart we should go the % inspections resulting 3.5 in shutdowns f--k home. VIOLATIONS PER INSPECTION FOR STREET VENDORS IN 2016 Portion of 2016 Manhattan 1.17 —Sen. Kirsten Gillibrand, % restaurant inspections describing to a group of activists Brooklyn 1.11 1.1 triggering closures Queens 1.09 her “framing principle” for working Portion of 2016 street-vendor in Washington, D.C. Staten Island 1.00 % violations attributed to improper 39 placement of the cart or its equipment The Bronx 0.82

GETTY IMAGES, BUCK ENNIS ADDICTED TO NUMBERS? GET A DAILY DOSE AT @STATSANDTHECITY. SOURCES: State Senate, city Department of Health

June 12, 2017 | CRAIN’S NEW YORK BUSINESS | 3

P003_CN_20170612.indd 3 6/9/17 7:33 PM AGENDA ICYMI CRAINSNEW YORK BUSINESS EDITOR IN CHIEF Rance Crain publisher, vp Jill R. Kaplan executive assistant Devin Arroyo, 212.210.0701 EDITORIAL After rare arrest of landlord, editor Jeremy Smerd managing editor Brendan O’Connor assistant managing editors Erik Engquist, bill aims to allow more like it Jeanhee Kim, Robin D. Schatz web editor Amanda Fung copy desk chief Telisha Bryan ANDLORD Steve Croman entered a guilty plea last art director Carolyn McClain week in response to charges from state Attorney photographer Buck Ennis senior reporters Joe Anuta, Aaron Elstein, General Eric Schneiderman that Croman illegally Matthew Flamm, Daniel Geiger L reporters Rosa Goldensohn, forced tenants out of their rent-stabilized apartments by hir- Jonathan LaMantia, Caroline Lewis ing an ex-cop to intimidate them, let units fall into disrepair data reporter Gerald Schifman web producer Peter D’Amato and filed frivolous lawsuits to drain residents of cash. Cro- editorial intern Alexandra Semenova columnist Greg David man is facing a year at Rikers Island and a $5 million fine, contributing editors Tom Acitelli, but not because he harassed tenants; rather, it is for tax fraud Theresa Agovino, Erik Ipsen, Cara S. Trager ADVERTISING and falsifying business records. www.crainsnewyork.com/advertise Tenant harassment is a big problem in the city, where ris- advertising director Irene Bar-Am, PROTECTING TENANTS: 212.210.0133, [email protected] ing real estate values give landlords motive to push out peo- A bill seeks to give senior account managers residents “a fighting Lauren Black, Zita Doktor, Rob Pierce, ple who pay regulated, below-market rents. Between 2011 chance” against Stuart Smilowitz, Debora Stein landlords such as senior marketing coordinator and 2015, tenant-harassment complaints filed in city Hous- Croman. Charles Fontanilla, 212.210.0145 ing Court doubled, yet not a single landlord has been con- [email protected] sales coordinator Devin Arroyo, victed since the state Legislature made harassment a crime 212.210.0701, [email protected] ONLINE 20 years ago. That’s because, under the law, prosecutors must not only prove that a tenant was forced out, but general manager also that the tenant was physically and intentionally injured by the landlord. “It is nearly impossible for criminal Rosemary Maggiore, 212.210.0237, [email protected] charges to be filed against even the worst offenders,” said state Sen. Liz Krueger, a Democrat representing Manhat- CUSTOM CONTENT tan. “It is high time this law was updated to protect tenants and give them a fighting chance.” director of custom content Patty Oppenheimer, 212.210.0711, Krueger has co-sponsored a bill that would make it easier to bring criminal cases against unscrupulous land- [email protected] multicultural sales manager Giovanni Perla, lords. Introduced by the attorney general last month, it would eliminate the need to prove physical injury and [email protected] senior custom marketing manager make it a crime if landlords engage in a “course of conduct” that makes a unit uninhabitable or is even reasonably Sonia David, [email protected] likely to do so. No position on the legislation has been taken by the Real Estate Board of New York, which in the custom project manager Danielle Brody, [email protected] past has opposed City Council bills on tenant harassment because they would accept tenants’ allegations as truth- EVENTS ful unless the landlord can prove otherwise. Schneiderman’s bill doesn’t make that presumption. — AARON ELSTEIN www.crainsnewyork.com/events director of conferences & events Courtney Williams, 212.210.0257, [email protected] manager of conferences & events A fitter city budget City jailbreak Adrienne Yee, [email protected] DATA POINT events coordinator Ashlee Schuppius, Mayor Bill de Blasio included $100 mil- The city’s pension plans are the nation’s [email protected] FROM 2014 TO 2016, REPORTED lion in his budget so that public schools first to fully divest from private pris- AUDIENCE DEVELOPMENT can comply with the state’s physical- SUBWAY SEX CRIMES ROSE 52%, ons. Around $48 million in stocks and director of audience & content partnership development Michael O’Connor, education requirements. Thirty-two TO 941, WHILE ARRESTS INCREASED bonds were sold. “Morally, the industry 212.210.0738, percent of city schools do not have a wants [to] turn back the clock on years [email protected] full-time gym teacher. The mayor’s ONLY 22%. LEWDNESS AND of progress on criminal justice,” Comp- REPRINTS reprint account executive Lauren Melesio, budget will add 500 more. FORCIBLE TOUCHING WERE THE troller Scott Stringer said, “and we can’t 212.210.0707 sit idly by and watch that happen.” MOST COMMON OFFENSES. PRODUCTION Suite music production and pre-press director Extell Development bought 45,000 A perch for merch Simone Pryce media services manager Nicole Spell square feet of air rights from Rockefel- Macy’s is considering developing the SUBSCRIPTION CUSTOMER SERVICE ler Group to build a Hard Rock Hotel Rappers’ delight roof of its Herald Square flagship store www.crainsnewyork.com/subscribe at 151–159 W. 48th St. The 445-room The Hip Hop Hall of Fame Museum is into a green space with restaurants as a [email protected] hotel is scheduled to open in 2019 and set to open on 125th Street, in Harlem, way to increase sales on upper floors, 877.824.9379 (in the U.S. and Canada). $3.00 a copy for the print edition; or $99.95 will sit on famed Music Row, which next year. It is hoping to raise $150 mil- the struggling retailer said. one year, $179.95 two years, for print went quiet in 2015, when the last in- lion for a planned 20-story hotel, retail subscriptions with digital access. to contact the newsroom: strument shop was unplugged. space, restaurant and concert lounge. www.crainsnewyork.com/staff 685 Third Ave., New York, NY 10017-4024 Apps hacked Stealing candy from a baby phone: 212.210.0100; fax: 212.210.0799 Taxi app Curb and ride-sharing app Via During the past six years, Donald Entire contents ©copyright 2017 Crain Communications Inc. All rights teamed up for a yellow-cab carpooling Trump directed more than $1.2 million reserved. ©CityBusiness is a registered service. Passengers using the service earmarked for St. Jude Children’s Re- trademark of MCP Inc., used under license receive a 40% discount off the metered search Hospital to the Trump Organi- agreement. CRAIN COMMUNICATIONS INC. fare. Sixty-five percent of yellow and zation by charging his son Eric Trump’s BOARD OF DIRECTORS green cabs are hooked up to Curb. The foundation for use of the Trump Na- chairman Keith E. Crain service applies to Manhattan routes be- tional Golf Club for St. Jude charity president Rance Crain treasurer Mary Kay Crain, Cindi Crain tween 110th Street and 32nd Street but events. senior executive vp, William Morrow will be expanded throughout the city. executive vp, director of strategic Another Mets strikeout operations Chris Crain Voluminous history executive vp, director of corporate Unsecured debt State Appeals Court judges upheld a operations K.C. Crain The Durst Organization hit the snooze lower-court ruling that a mall cannot be The Strand turns the page to its senior vp, group publisher David Klein 90th birthday. In 1927 Benjamin vp/production, manufacturing David Kamis button on the National Debt Clock at built on a Citi Field parking lot, which chief financial officer Bob Recchia 1133 Sixth Ave., between West 43rd is city-owned parkland. State legislative Bass used $300 to open the book- chief information officer Anthony DiPonio and West 44th streets, where it’s been approval would be needed for The Re- store on Fourth Avenue at East founder G.D. Crain Jr. [1885-1973] hanging since 2004. The clock was related Cos. and Mets owner Fred Wil- 11th Street. Thirty years later, his chairman Mrs. G.D. Crain Jr. [1911-1996] secretary Merrilee Crain [1942-2012] moved to make way for a new building pon and president Saul Katz to develop son moved it to its current location entrance. It will be reactivated in a few the lot, an approval the Bloomberg ad- at Broadway and East 12th Street.

WIKIPEDIA, LOUIS LANZANO/THE NEW YORK TIMES weeks at Durst’s 1 Bryant Park. ministration failed to score.

4 | CRAIN’S NEW YORK BUSINESS | June 12, 2017

P004_CN_20170612.indd 4 6/9/17 7:33 PM AGENDA HEALTH CARE

Insurers seek double-digit RATE-HIKE REQUESTS FROM DOWNSTATE INSURERS* health premium increases UnitedHealthcare of New York 38.5% Care Connect 29.7% Cuomo tries to stem an Obamacare exodus BY CAROLINE LEWIS Emblem (HIP) 24.9%

he state’s health in- whack this year if Gov. An- age increase of 20.3% across its Affinity 23.5% surance companies drew Cuomo makes good on plans. The state ultimately in- Total Weighted Average 16.6% are seeking premi- his threat last week to ban creased that request to 29.2%. um rate increases insurers that leave the mar- That decision was atypical, Healthfirst Insurance Co. 13.0% Taveraging 16.6% in the indi- ketplace set up under the Af- according to data compiled by Oscar vidual market and 11.5% in the fordable Care Act from partic- the New York Health Plan As- 11.1% small group market next year. ipating in Medicaid. Insurers sociation. In fiscal years 2015 Fidelis 8.5% The Cuomo administration have questioned the legality of through 2017, the Department is reviewing the requests pub- Cuomo’s directive. The Demo- of Financial Services approved MetroPlus 7.9% lished last week on the website crat has moved to maintain the rate increases for individual Empire** N/A of the Department of Financial Obamacare exchanges, where and small-group plans that av- * These averages may change based on a DFS review of the rate applications. Services, which ultimately sets nearly a quarter million New eraged 16% to 59% lower than **Empire submitted a filing that DFS is evaluating. each insurer’s rate. Yorkers get their insurance. the rates requested. SOURCE: New York state Department of Financial Services Insurers have complained UnitedHealthcare is look- Fidelis Care, the state’s that the state in recent years ing for the biggest premium leader in private health plan has kept rates artificially low. rate hike in the downstate area: sales this year, with about 32% seek double-digit premium in- time. “Just as troubling as the But it’s a balancing act. Pre- 38.5% for plans in the individ- of the market, is asking for an creases. But expectations that underlying cost drivers is miums that are too low can ual market. Last year it sought 8.5% rate hike across its plans. the companies are unlikely to the other recurring theme drive insurers out of the mar- a 45.6% increase, but the state Last year Fidelis asked for a get everything they’re asking here in New York, where the ket or, in the case of Health granted it a hike of 28%. 13% increase and was granted for also played a role. Department of Financial Republic Insurance of New On the lower end, NYC an 11.6% rise. “The year has changed, Services reduces the average York, bankrupt them when Health and Hospital’s Metro- The Health Plan Associa- but the story is the same,” requested increases.” ■ premiums don’t cover costs. Plus requested a premium rate tion last month said that ris- Paul Macielak, president and However, that delicate bal- increase of 7.9%. Last year ing health care costs would chief executive of the associa- Additional reporting by ance could be thrown out of MetroPlus asked for an aver- drive insurers to once again tion, said in a statement at the Jonathan LaMantia.

CRAIN’S Business Breakfast Forum: Wednesday, June 28, 2017 The Yale Club of New York GOP 50 Vanderbilt Avenue 8:00 a.m. – 8:30 a.m. Registration MAYORAL DEBATE and Networking Breakfast 8:30 a.m. – 9:30 a.m. Program Taking on de Blasio? The two leading Republican candidates for mayor will debate the issues on: Cost to Attend: - What went wrong in de Blasio’s fi rst term and how would they fi x it? $135 for individual ticket(s) - How will they grow the city’s economy? $1,350 for table(s) of 10 guests - Do they support the higher minimum wage, paid sick leave, calorie count requirements You must be pre-registered to attend this event. and other regulations on business. Would they seek to roll any of them back? No refunds permitted. - Are President Trump’s policies on immigration, trade and slashing aid to states and cities a threat to New York or not? SPEAKERS: For more event information: Assemblywoman Ashlee Schuppius Nicole Malliotakis 212-210-0739 New York State Assembly, [email protected] District 64 For sponsorship opportunities: Irene Bar-Am Paul Massey, Jr. 212-210-0133 2017 Mayoral Candidate, [email protected] President, New York Investments Sales, Cushman & Wakefi eld MODERATOR: REGISTERTODAY« Greg David, Columnist, Crain’s New York Business » crainsnewyork.com/events-events-gopdebate

Sponsored by:

June 12, 2017 | CRAIN’S NEW YORK BUSINESS | 5

P005_CN_20170612.indd 5 6/9/2017 4:04:50 PM AGENDA WHO OWNS THE BLOCK

420 KENT AVE.

Spitzer’s return The former governor makes a big splash in Williamsburg

BY TOM ACITELLI

350 KENT AVE. (DOMINO SUGAR PROJECT) fter failing to resurrect his political In 2014 the city signed off on Brooklyn-based Two career, when he lost the 2013 Dem- Trees Management’s $1.5 billion plan to redevelop ocratic nomination for city comp- what was once the world’s biggest sugar refinery into a 2,300-unit, 11-acre apartment complex. The troller to Scott Stringer, former Gov. first part of the project, a 522-unit building at 325 AEliot Spitzer rejoined the real estate firm started Kent Ave., is expected to open next month. Twenty by his father, Bernard. Now Spitzer is embarking percent of its units are designated as affordable and drew more than 87,000 applicants in a lottery on his biggest project yet: a $700 million, 857- earlier this year. The overall complex is also expect- unit, three-tower rental property at 420 Kent Ave. ed to include 500,000 square feet of office space 11 BROADWAY/15 DUNHAM PLACE in Williamsburg. and a 6-acre park. Manhattan-based L&M Development The complex is under construction and being Partners built this 14-story complex in marketed by Citi Habitats. Exec- 2010 and 2011. Its residential com- utive vice president David Maun- ponent is 160 apartments, 80 of them drell said apartments at 420 Kent 390 KENT AVE. designated as affordable. It has seven commercial condos as well as garage will likely lease for between $60 The city owns this 134,312- and retail space. The city’s Housing De- and $75 a foot, which is the going square-foot, 2-story commer- velopment Corp. provided residential cial property. The Department financing for the $97 million project. rate in south Williamsburg. of Citywide Administrative Spitzer Enterprises’ develop- Services uses it to conduct ment joins a steady stream of workshops for bricklayers, carpenters, electricians, paint- projects along the increasingly ers, plasterers, plumbers and pricey south Williamsburg water- sheet metal workers. front, which took off when inves- 409 KENT AVE. tors scooped up the old Schaefer Giles Cooper, the owner of a brewery site and began a residential conversion in local construction company, 2004. Schaefer Landing served as a petri dish for bought this 4-story building the Bloomberg adminis- for $475,000 in 2003. It tration’s plan to rezone the is currently vacant. Cooper 410–412 KENT AVE. did not respond to requests Greenpoint-Williamsburg for comment. waterfront to allow for The Prudenti family has owned this parcel since 1987. It hosts more housing. the Giando on the Water restau- The experiment proved rant and performance venue. successful: 90% of the 210 475 KENT AVE. condos at Schaefer Land- A group of Israeli investors bought this 11-story, ing sold within two years of its 2007 opening. (The 154,017-square-foot loft building from longtime City Council approved the rezoning in 2005.) owner Nachman Brach for $55.67 million in Feb- ruary. The Fire Department famously evacuated the Other projects have since then-industrial building’s squatters in the dead of gone up in the area, notably 420 KENT AVE. winter 2008 because of fears that an illegal mat- Two Trees’ mammoth rede- zo factory in the basement might explode. Many Spitzer Enterprises bought this 2.8- velopment of the Domino of those squatters were able to legally retain their acre site for $165 million in February apartments following a 2010 loft-law change. Sugar refinery. The first build- 2015. The company, headed by for- The building’s new owners reportedly plan to add ing in that project, a 16-story mer Gov. Eliot Spitzer, recently began ground-floor retail. leasing the 857-unit, three-building apartment tower, is expected project it developed on the site. In to open next month. June 2016, Spitzer took out a $330 440 KENT AVE./SCHAEFFER LANDING As for Spitzer’s venture, million loan from Starwood Capital to A joint venture between Allstate Realty fund the project. Twenty percent of the construction is ongoing, and Associates, L&M, and BFC Partners pretty units are designated as affordable. much kicked off the modern era of south Maundrell said leasing could Williamsburg waterfront development start within a year. ■ with the construction of a three-building complex at the site of the old Schaefer brewery in 2005 and 2006. The project included 210 luxury condos and 140 affordable apartments. At the time it was thought to be the largest U.S. project combining luxury condos with units designated as below market rate. GOOGLE MAPS, ODA

6 | CRAIN’S NEW YORK BUSINESS | June 12, 2017

P006_CN_20170612.indd 6 6/9/2017 4:05:18 PM REAL ESTATE

Rezoning could be boon for East Harlem landlords Increased density to allow for 3,500 new apartments BY JOE ANUTA

he city’s bid to rezone a large chunk of Har- could increase in value enough to attract developers. lem will increase the development potential Three Ross & Ross–owned properties along Third of at least 50 properties owned by a mot- Avenue could sprout more than 400 units alone, ac- ley collection of landlords—some of whom cording to a study from the Department of City Plan- Tmay be less than deserving of a big payday. ning. That’s a valuable prospect, though James said A Manhattan community board is set to weigh in the properties had been rezoned in the past, but the this month on the East Harlem rezoning plan, which family still did nothing. will boost the allowable size of buildings along certain Other large parcels in the area are controlled by corridors of a 96-block area. The change could create prominent developers, including BFC Partners and as many as 3,500 new apartments if the City Council L&M Development Partners, two of the city’s most signs off on the plan by the end of the year. sophisticated residential builders. The companies The initiative is meant to both jump-start new own sizable sites on neighboring Park Avenue blocks construction and influence the scope of projects that between East 118th and East 119th streets. Potential likely would have happened even without rezoning. projects there could produce as many as 450 new apart- All developers who receive a density boost will be ments in total. L&M has also been tapped to develop a required to include affordable housing in their new city-owned site elsewhere in the rezoned district. projects. Recasting a neighborhood in this way can A Harlem-based construction and develop- often deliver big benefits to longtime owners who ment firm called Artimus Construction also con- have stuck with the area during less prosperous times. trols several parcels, as does The Fane Organi- But as with any large-scale planning project, unpopu- zation and Queens-based landlord Loschiavo lar landlords could cash in on the spoils as well. Properties. That suggests that many of the biggest Landowner Ross & Ross, for example, has been chunks of privately owned property covered by the re- accused of blighting East Harlem for decades by zoning are already controlled by companies with the neglecting a series of vacant walk-ups blemished by real estate know-how to get shovels in the ground. boarded-up windows. Critics, including Council But much of the rest of the neighborhood is owned Speaker Melissa Mark-Viverito, say leaving the un- by nonprofits and small businesses that likely never sightly structures empty has denied housing to the imagined they would be sitting on a major develop- neighborhood, starved retailers of foot traffic and ment site. The purveyors of Upper East Side grocery made nearby public spaces less safe. store Grace’s Marketplace, for example, own an office “It’s a depressant to the community,” said local building along Park Avenue between East 120th and architect Warren James, who has spent years high- East 121st streets. If rezoned, that site could produce lighting the problem. a 127-unit residential complex. “We run our business The city’s overtures to help bring the buildings on- out of that location, so we’re not looking to do any- line have gone unanswered, and the Ross family did thing as of yet,” said Joseph Doria Jr., whose family not respond to a request for comment. But should the owns the company. “If someone gave us a nice offer, rezoning move forward, some of the family’s buildings though, we ’d have something to think about.” ■

Fraunces Tavern reopens after brief shutdown Historic pub’s owner blames rain for spike in health code violations

IT’S BEEN A WET SPRING, with 40% more Fraunces Tavern is a popular desti- precipitation through April than during nation with the Wall Street crowd and the first four months of last year, accord- tourists curious to see where George ing to the National Weather Service. That Washington and Alexander Hamilton rain has washed away countless picnics once hoisted tankards of ale. The build- and outdoor parties, but perhaps no one ing and block are on the National Regis- has suffered more than Fraunces Tavern ter of Historic Places. and its owner, Eddie Travers. Food-safety inspectors score restau- Last week the historic restaurant in rants based on how many violations lower Manhattan closed temporarily af- they find. Restaurants with 13 or fewer ter health inspectors discovered several are graded with an A; more than 28 vi- “critical” food-safety violations, includ- olations gets a restaurant a C. Fraunces ing contaminated food, evidence of rats Tavern had 85 violations in its inspec- and improper sewage disposal, prob- tion last week. At its previous graded lems Travers attributes to the weather. inspection, in November, however, the He said the establishment, which has restaurant had just 10. occupied the corner of Pearl and Broad “[Inspectors] don’t account for the streets since 1762, often has to cope fact this building is more than 300 years with water pooling in its basement after old,” said Travers, who was able to re- heavy rains. Early last week a city health open by the weekend after undertaking inspector saw the water and ordered the $50,000 in emergency repairs. place closed. “The violations may look terrible,” he “It was bad luck,” Travers said. “In added, “but if they went through your the past inspectors have visited during apartment, they’d find things.”

NYC DEPARTMENT OF CITY PLANNING NYC DEPARTMENT dry periods.” — AARON ELSTEIN

June 12, 2017 | CRAIN’S NEW YORK BUSINESS | 7

P007_CN_20170612.indd 7 6/9/2017 6:18:46 PM AGENDA SPOTLIGHT FOOD

PITCHING IN: The bread also rises Many hands go into making With costs for labor and rent going up, a gourmet bakery tries Scherber’s to squeeze a profit from 40-cent rolls BY CARA EISENPRESS European-style breads.

s her bakery business nears its 25th anniversary, Amy Scherber, founder and president of Amy’s Bread, barely has a moment to savor the milestone. Ever-tighter margins have pushed her to take on the additional role of bread production manager, for which she hires, trains and oversees the bakers and savory cooks; certifies product Aquality; complies with food-safety rules; and ensures her bread is packaged and distributed to her retail and wholesale customers. Scherber’s European-style bread helped feed the gourmet revival at the time taking hold of the city, and her dinner rolls still fill the breadbaskets at top restaurants, from Lilia to The River Café. But even as she plans to commemorate the anniversary June 20 by offering original menu items at 1992 prices, Scherber worries about the future and is paying close attention to costs and quality. That’s why she assumed the production manager job instead of hiring for it. “We’re in a phase of reduce and rethink,” she said. Scherber opened Amy’s Bread as a storefront in Hell’s Kitchen. The first big hit was a semolina loaf with raisins and fennel seeds. In 1996 she leased space in Chelsea Market for the bakery and a store. Now Scherber has a third retail location—on Bleecker Street—as well as kiosks at the main and performing arts branches of the New York Public Library, and a packaged-goods store called The Pantry, next door to the Hell’s Kitchen shop. About 55% of the business is wholesale and the rest retail, though the division has varied over the years as Amy’s has grown incrementally without major outside investors. The retail bakeries sell bread as well as everything from pastries to salads. In 2011, when Scherber was looking to expand beyond her 7,500-square-foot facility, she found out that Chelsea Market would be hiking the rent after her 20-year lease expired in 2017. So a year later she moved her baking operations to Long Island City, growing to 33,000 square feet but paying just $6,000 more per month. In the early 2000s, after Scherber’s husband, Troy Rohne, joined Amy’s for a second time, the business hewed to a new wholesale strategy: Be a restaurant’s all-in-one bakery. “What are you using for your croque monsieur?” chef Vincent Nargi of Odeon recalled Rohne asking him in 2007. The answer was a pain de mie, a white sandwich bread. Rohne said Amy’s could supply the loaf along with the hot dog buns and brioche it was already making for the restaurant. “I said, ‘You don’t have a pain de mie,’ ” Nargi said. “They went ahead and made it.” Odeon receives two deliveries a day from Amy’s, spending about $2,000 a week.

Keeping the dough rolling The move to Queens increased the bakery’s capacity, so it never needs to say no to orders. But crossing the river isn’t easy on bread, which can go from fragrant to stale in a matter of hours. “Fancy restaurants want fresh bread for lunch,” Scherber explained, so 11 a.m. deliveries can’t come out of the oven much earlier than 8:30 a.m. Yet the traffic-laden journey required Amy’s to add more routes and drivers to reach its accounts on time, doubling the cost of delivery, Scherber said. These are orders of 40-cent dinner rolls, perhaps a few hundred dollars in total. The city’s restaurants prize consistent delivery almost as much as good bread, said Andrew Coe, a food writer and historian. “It’s a difficult task,” he said. “You’re stuck in a traffic jam, and meanwhile the bread is dying in the back.” Scherber’s list of worries goes on. The rise of the minimum wage to $15 in 2019 will stretch her budget for staff, nearly half of whom make between $11 and $15. Almost all her products are made by hand over the course of a 24-hour schedule; FOCAL POINTS shaping the buns, gauging loaves’ rise and placing raisins on cinnamon twist rolls all require training. But there’s only so much you can increase the price of an NAME Amy’s Bread item that costs a couple of bucks to begin with, Scherber said. Amy’s employs 210 bakers, drivers and retail and office workers. INDUSTRY Wholesale and retail baked goods Rent for the warehouse, which is on the ground floor and has a loading dock, LOCATIONS Chelsea, Hell’s Kitchen, Long Island City and the West is now $43,000 a month, which Scherber said is a challenge to pay. She laid out Village $2 million to $3 million on renovations and wonders if it would have been better FOUNDED 1992 spent purchasing a facility. Scherber did inquire about buying the current space MAJOR INVESTORS None (self-funded, with loans) before signing the 15-year lease. At the time she didn’t think she could find an investor to help with the combined cost of a building and its renovations. MANAGEMENT Amy Scherber, founder and president; Troy Rohne, Some restaurant customers have also shrunk their orders, either because vice president and director of sales; Robin Keehner, retail division they make bread in-house or they now wait until a table asks for bread instead of manager; Joe Casale, controller; Kendall Jacques, director of customer serving rolls automatically. “We need people to want bread,” Scherber said. service and distribution; Cyril Chaminade, executive pastry chef To offset the lost revenue, Scherber recently sublet 3,000 square feet in the REVENUE $14 million Long Island City facility to Manhattan Fruitier. She has raised prices at the stores GROWTH RATE 11.5% from 2011 to 2016 and bought machines to automate some tasks without diminishing quality. And PROFIT An average of 2% to 3% she and her staff continue to simply be nice to customers, according to Nargi. “Sometimes I lose the passion,” Scherber admitted. But when she trains an EMPLOYEES 210 entry-level baker or tests techniques for a new product, she remembers how much WEBSITE amysbread.com

BUCK ENNIS she loves her work. “To make a great loaf of bread is a great satisfaction.” ■

8 | CRAIN’S NEW YORK BUSINESS | June 12, 2017

P008_CN_20170612.indd 8 6/9/2017 4:06:12 PM AGENDA VIEWPOINTS

Trump’s Russia problem reminds me of Watergate Several parallels take me back to the 1970s The officials who turned on Nixon LAST WEEK I made sure break so many laws as to endanger his Assuming that everyone is as uneth- to clear my schedule presidency? Why would Trump coun- ical as you are. For Nixon, three peo- revealed the danger for Thursday morn- tenance so many contacts with the Rus- ple wouldn’t go along: the deputy FBI of assuming everyone ing so I could watch sians as to put his presidency in peril? director who became Woodward and former FBI director In Nixon’s case, the historians eventu- Bernstein’s Deep Throat; John Dean, is as unethical James Comey’s testi- ally decided the answer was that Water- who spilled the inner maneuverings of as you are mony on what Presi- gate (the illegal campaign fundraising, the White House; and Alexander But- dent Donald Trump the dirty tricks of Donald Segretti and terfield, who volunteered information GREG DAVID did and did not try the break-in) was set in motion when about the existence of a taping system. law and pursued the scandal, or How- to do to the FBI in- Nixon was unpopular and a strong And they were the first of many. More ard Baker, a Republican who kept ask- vestigation of Russia’s meddling in the Democratic challenge seemed certain. Comeys are likely to emerge as well. ing “What did the president know, and presidential election. It was just like When the Democrats self-destructed, The underestimation of the press. when did he know it?” until the answer my mornings watching first the Senate no one pulled the plug on the now- Nixon won by a landslide despite the made Nixon resign. Watergate hearings and then the House unneeded operation. It may take histo- Woodward and Bernstein stories that It feels so much like the 1970s to me impeachment deliberations before head- rians to explain Trump’s actions as well. exposed most elements of Watergate that I have decided not to watch the ing to the national desk of the Charlotte The cover-up. Nixon might have sur- before the election. But those stories current season of House of Cards, about Observer, where I edited the stories on vived had he come clean immediately created a momentum that after No- an evil president. I have no patience for the scandal for the next day’s paper. about what happened and got rid of the vember riveted the country. Trump such fiction when we have a real-life It feels just like the 1970s to me, for culprits. Instead, he and his aides lied may think the “fake news” media has drama that is unnerving and depressing four reasons. and lied and lied—like someone else no credibility, but then so did Nixon. and puts so much at stake. n The stupidity factor. Why would Rich- we know. It is so similar to Trump’s ob- What may be different? There is no ard Nixon, with a huge lead in the polls, sessive loyalty to Michael Flynn, much Sam Ervin, the conservative North Car- GREG DAVID blogs regularly at put into place an operation that would less his son-in-law, Jared Kushner. olina Democrat who believed in the CrainsNewYork.com.

Ten years to close Rikers Island? Here’s how to cut that in half No action is being taken on the mayor’s pledge to shut the notorious jail BY RICHARD ABORN

ince a commission led by for- Judge Lippmann has outlined establish neigh- mer Chief Judge Jonathan Lipp criminal-justice policy changes to re- borhood adviso- mann determined in April that duce the jail population, including ry committees, Rikers Island must be closed improving the bail process and put- as the commis- Sand replaced with satellite jails around ting those accused of minor crimes in sion suggested. the city, the state has deemed the jail so programs, not jail. Those changes must Simultane- dangerous that it can no longer accept begin to happen now. ously, the city’s inmate transfers from outside the five Practical planning and budget Independent boroughs. The Department of Correc- moves must also be made quickly if we Budget Office tion’s head of internal affairs was also are going to close Rikers any time soon. should deter- fired after he and others were accused Thankfully the commission already set mine a detailed by the Department of Investigation of out a clear plan to close Rikers; now it budget for transitioning those who are timetable so that new jails are put into eavesdropping on investigators prob- just needs to be executed. Commission incarcerated from Rikers to local jails, use by the end of the next mayoral term ing corruption at Rikers. And report members are a cross-section of leaders including construction costs, changes should be the goal. after report has found human rights are in business, criminal-justice policy and in transportation methods and staffing One thing is certain: Now that we abused at Rikers on a regular basis. human rights, so there is no need to needs. The end of the third quarter of have the momentum to finally close This is a shocking affront to human start from scratch. this year seems an appropriate due date. Rikers and vastly improve our jail sys- decency and an embarrassment to our Here are three concrete steps that can From there, the agencies involved tem, we cannot let this languish. The city, not to mention an impediment to be put in motion tomorrow to end New can begin planning their work, and road ahead will be filled with obsta- reforming those accused of crimes. York’s disgraceful era of incarceration. City Hall and the City Council can cles—both practical and political—that The moral imperative here is, of First, we must immediately start figure out funding, including what the require strong leadership and resolve course, the most important reason for the process to allow for the siting state should pony up. from our elected officials. closing Rikers. But it’s worth detailing and use of one jail near each local Finally, the city must formally set But closing the facility must get how staggering the cost savings would courthouse throughout the boroughs. a date for when all of the incarcerated done. Rikers Island is an abomination be. The nonpartisan Lippmann Com- That starts at the Department of City will be moved off Rikers Island. That that must end. The social and economic mission (of which I am a member) Planning, which should commence way, the working group and all those costs are too high. estimated that using local jails instead drafting land-use changes so the review who will be responsible for getting this So let’s get going. Because the worst would save $540 million annually after and disposition of city-owned proper- done have a clear, shared deadline. thing we can do is nothing at all. Justice 10 years. Three decades later, the city ties can begin. The city has said closing Rikers will delayed is justice denied. n would save approximately $1.3 billion a This will start a clock that ensures take 10 years. That timetable does not year. That’s why everyone—advocates, the challenging but necessary review of match the urgency of the problem. Richard Aborn is the president of the experts, the mayor, the governor and the plans with local community boards, When met with a crisis, notoriously Citizens Crime Commission of New York the City Council—now agrees that Rik- borough presidents and the City Coun- slow government can move at a light- City and a member of the Independent ers needs to be closed. Yet no action is cil takes place on a finite timetable. As ning pace—it just needs the will and Commission on New York City Criminal

GETTY IMAGES being taken. part of this process, the city should motivation to do so. Halving the city’s Justice and Incarceration Reform.

June 12, 2017 | CRAIN’S NEW YORK BUSINESS | 9

P009_CN_20170612.indd 9 6/8/2017 6:11:24 PM AGENDA THE LIST NY AREA’S LARGEST ENGINEERING FIRMS Ranked by number of area engineers

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CONTINUED ON PAGE 12 10 | CRAIN’S NEW YORK BUSINESS | June 12, 2017

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12 | CRAIN’S NEW YORK BUSINESS | June 12, 2017

P010_P012_CN_20170612.indd 12 6/8/2017 6:13:07 PM REAL ESTATE | AFFORDABLE HOUSING

THE PRICE OF SUCCESS

Ron Moelis is king of the city’s affordable-housing industry. But his prowess—and his connections to Deputy Mayor Alicia Glen— have made him its top target

BY ROSA GOLDENSOHN

busload of protesters from Brooklyn and the Bronx marched up a quiet Greenwich, Conn., road in June 2016 toward a sprawling white colonial WINDOW OF OPPORTUNITY: house owned by the city’s largest Moelis’ projects help the Aaffordable-housing developer. Unfurled in front of mayor make his numbers. them was a black banner on which was written, with no hint of irony, “Ron Moelis = Gentrification King.” Nearly a year later, the protesters gathered at City Hall to accuse Deputy Mayor Alicia Glen of ing, and is the industry’s leading figure. He is also tecting the most affordable housing in a generation. exacerbating the affordable-housing crisis—the very criticized for not delivering enough housing that We can only do that if we talk to everyone and if problem that the former Goldman Sachs managing low-income New Yorkers can afford, even if many we work with everyone. We don’t pick favorites. The director was hired to address. of his apartments are considered affordable by the only way to get the job done is to hold everyone to Moelis and Glen have become targets because the mayor’s measures. Moelis’ 19-year friendship with the same standard.” activists believe their approach—and close working Glen fuels claims of coziness with the administration. That standard favors large developers such as relationship—is not serving the New Yorkers most in A review of their emails by Crain’s found he has exten- Moelis who have the resources to build big projects. need. Glen’s appointed task is to execute Mayor Bill sive access to Glen. At times she has said she would act And it does not give special preference to small-scale de Blasio’s 10-year, $41 billion plan to create or pre- on his or his company’s behalf, though she did not, for nonprofit builders for being connected to communi- serve 200,000 affordable apartments. To achieve that the most part, achieve the outcomes he sought. ties or for focusing on projects for very poor tenants. lofty goal, she has turned to for-profit developers of Moelis sees nothing to apologize for. “We’re not Glen’s strategy is to loosen the city’s tight market by affordable housing such as Moelis, who has drawn perfect, and not everything is 100% mission-driv- adding prodigious amounts of mixed-income hous- scrutiny from critics in part because of his long his- en. We are for-profit, and we don’t make any bones ing—Moelis’ specialty—rather than provide a small- tory with the deputy mayor. At Goldman Sachs, Glen about it,” Moelis said of his firm, L&M Development er number of heavily subsidized units for the poor. financed housing intended to deliver both social Partners, in an interview last June. “But we try to The vast majority of apartments in de Blasio’s plan are good and a profit. She collaborated with Moelis on at think about communities that we’re in and try to do for working-class households—for example, individ- least a dozen projects and a $100 million investment it in a way that’s thoughtful and approaches develop- uals making $33,401 to $53,440 a year and families fund. Moelis and Glen share the belief that they are ment in a way that’s not controversial.” of three earning $42,951 to $68,720. The administra- addressing the city’s affordable-housing shortage by Every Moelis contract seems to irritate his foes. tion, using federal definitions, considers these house- developing large-scale mixed-income buildings. In February he and developer Jonathan Rose beat holds “low-income.” It labels some units for six-fig- Moelis’ 13 affordable-housing projects since 2014 out other teams, including local nonprofits, for one ure earners “affordable” while allowing 70% or more make him a key contributor to the 62,000 units the of East Harlem’s last big city-owned development of a rezoned development’s apartments to be market- de Blasio administration says have rate. Detractors say this creates too- already been produced or preserved expensive units and gentrifies neigh- under the mayor’s housing plan. Glen “WE’RE NOT PERFECT, AND NOT borhoods. They want more units for last year told reporters at City Hall the 20% of New Yorkers under the her approach is “getting shit done at EVERYTHING IS 100% MISSION- federal poverty line: $12,060 for an a level the city has never seen with DRIVEN. WE ARE FOR-PROFIT, AND WE individual and $20,420 for a family of respect to housing.” three. About 14% of the units so far But it has made enemies of left-wing DON’T MAKE ANY BONES ABOUT IT” are designated for households mak- activists whom de Blasio once count- ing $24,500 or less. ed as his base and alienated nonprofit “We’re more concerned with neighborhood housing organizations that are losing sites. East Harlem nonprofit Hope Community Inc. quality and long-term affordability and reaching out to builders like Moelis. The critics say the may- had bid on it with a for-profit company, The Rich- lower-income populations and those that are more or’s plan prioritizes middle-income earners and ben- man Group. “I really feel like the city should place vulnerable than we are about reaching some arbi- efits for-profit developers who build units for a broad greater value on the work of the nonprofits and work trary 200,000-unit number,” said longtime Bronx range of incomes—unconstrained by missions to collaboratively to increase our opportunities of de- nonprofit housing leader Harry DeRienzo. serve only the poor. Moelis has been a focus of their ire veloping affordable housing in our communities,” The divide dates back to the affordable-housing because his company owns among the most income- said Hope’s executive director, Walter Roberts. industry’s origins in the 1970s, when vacant city- restricted units in the city, according to a Crain’s sur- Glen declined to be interviewed for this article owned land and buildings abounded. Tenants and

BUCK ENNIS vey of major developers who build affordable hous- but said in a statement: “We’re building and pro- CONTINUED ON PAGE 14

JUNE 12, 2017 | CRAIN’S NEW YORK BUSINESS | 13

P013_P015_CN_20170612.indd 13 6/8/17 10:28 PM REAL ESTATE | AFFORDABLE HOUSING

squatters fixed and took ownership of dilapidated finding a home for the 30 police cars that would be buildings. Some organized into community groups, displaced when the lot was developed. Building a arranging city programs to fund low-cost mortgag- parking garage in the development would be costly, es and improvements. Backed by foundation fund- Moelis said. Patricof believed he could help find a ing and federal financing, the community-based way to park the cars elsewhere and attempted to per- nonprofit builders became serious players in the suade then-Police Commissioner Bill Bratton. affordable-housing market. After an event for venture capitalists that Patricof Moelis and other for-profit affordable-housing sponsored for the NYPD Foundation at police head- developers surfaced in the mid-1980s. Moelis and quarters, Patricof told Moelis and Glen that Bratton Sanford Loewentheil founded L&M in 1984 and was open to the move but needed funding to be able used conventional bank financing to take on big- to house the cars in a private lot nearby. To get that ger projects. As property values increased, an in- funding approved, it would be helpful if someone dustry that once simply made projects viable by “whispered in the Mayor’s ear,” Patricof said Bratton assembling free land, tax breaks and subsidies suggested. Glen said she’d raise the issue with Deputy became increasingly lucrative—and the competition Mayor Anthony Shorris. more intense. Today, with little available city-owned Moelis’ spokeswoman, however, said the effort land, for-profit developers with the equity to acquire was unsuccessful and that Moelis planned to build adjacent properties hold a significant advantage. parking for the vehicles. L&M owns roughly 15,000 units, 80% of which are On other occasions, Moelis has contacted Glen income-restricted, mostly in the five boroughs. (The through her personal email address. Twice he used Related Cos. owns 11,700 such units in the city; it to send her potential candidates for city jobs. Glen Omni New York has about 7,500.) And Moelis’ port- promptly set a meeting with at least one of them. folio is growing—in 2009 L&M owned fewer than And when L&M discovered a deed restriction 8,000 affordable units, according to Affordable Hous- jeopardizing its 5,500-unit Greenpoint Landing ing Finance magazine. The Larchmont, N.Y.–based project in north Brooklyn, Gomez asked Glen to firm does about $600 million of development annu- help get it waived by the state (which it was—with- ally. It often serves as both general contractor and out Glen’s assistance, her office said). A de Blasio developer, and has a property-management arm. Its spokesman noted that Glen renegotiated to halve projects financed so far under de Blasio will yield city subsidies at that development. nearly $80 million in developer fees and get subsidies In 2015 Gomez sought Glen’s help in an effort to exceeding $39 million. get the state to clarify the law to show that afford- Kathryn Wylde, president of the Partnership for able-housing builders were not obligated to pay a New York City and a former affordable-housing ad- real estate transfer tax. “When you and I met we vocate, says Moelis’ company likely gets so much discussed dof [Department of Finance] and transfer work because it is one of the few reliable develop- tax. I think you said you were going to send a note to ers of quality affordable housing in the city and is someone at dof,” the COO and former trade organi- well positioned to deliver on the mayor’s ambitious zation chairwoman wrote. “Can you re-send me the plan. “It is not surprising the administration relies original email re: the issue?” Glen replied. “Not sure on them to achieve their housing goals,” she said. who it went to so if I have it, then I can push it.” The “When you’re doing a lot in a hurry, you tend to do city sought that clarification last year and got it, a de business with the people you trust.” Blasio administration spokesman said. L&M’s profile has risen dramatically in the past Moelis and Glen see each other a couple of few years. The company built or co-developed more times a month at events or for a drink or a meal; than 3,600 of the first 55,000 affordable units built they talk about life, not city business. In one mes- or preserved under de Blasio. It is among a handful sage Glen connected Moelis with a top de Blasio of large, for-profit affordable-housing developers, SPRAWLING PORTFOLIO: Moelis’ real estate empire aide about the redevelopment of Long Island Col- includes the Essex Crossing project on the Lower East such as Donald Capoccia’s BFC Partners, Sol Ark- Side, Section 8 housing in Bronxchester and Marcus lege Hospital “as we ‘discussed’ the other night,” she er’s The Arker Cos. and Rose’s eponymous firm. Garvey Village in Brownsville, Brooklyn. wrote. (Moelis later withdrew from the project.) The competitors frequently collaborate on projects In another message, Moelis mentioned a luxury and lobby through a trade association, the New tower L&M hoped to build on the Union Theo- York State Association for Affordable Housing, co- unit affordable-housing complex in Brownsville, logical Seminary campus in West Harlem. “As founded by Moelis. The organization until recently Brooklyn, that he acquired in 2014, he brought up you know I hate to admit when you’re right,” he was chaired by his chief operating officer, Lisa Gomez. the issue with Glen: In September 2015 he emailed wrote to Glen, “but the UTS thing is nuts and her for “help or guidance” and forwarded her a they haven’t even gotten beyond their students and A CLOSE RELATIONSHIP memo from his staff that mentioned the “exorbitant faculty ... and of course labor has already inserted Moelis has access to the deputy mayor that his labor costs” of moving the development’s trash to themselves into it.” competitors envy. Flying back from Shanghai, Glen one spot for collection. Moelis’ access and deals irk community groups wrote Moelis that she was “dying for a hamburger Glen forwarded Moelis’ request to the city’s and nonprofit developers who feel marginalized by and bottle of Montrachet.” The deputy mayor has Department of Housing Preservation and Develop- the de Blasio administration. “All these organiza- forwarded several news articles featuring her to ment, the agency that oversees affordable housing. tions put a lot of blood, sweat and tears into rebuild- Moelis, who responded with approval. “You are right Moelis’ request was not granted, the city said. ing these neighborhoods, and other people are com- on with this one,” he wrote about a piece in Crain’s. The builder also worked with the deputy mayor ing in to develop them,” said Michelle Neugebauer, On a profile of Glen in the Commercial Observer, to turn a city-owned parking lot in East Harlem executive director of Brooklyn’s Cypress Hills Local he wrote, “It definitely gets to the real you.” into a mixed-use affordable-housing complex called Development Corp. “We don’t have access at the mayor, deputy- Lexington Gardens. Glen dined with top banking, real estate and in- mayor level,” said Andrew Reicher, executive direc- She connected Moelis with venture capitalist vestment figures several times a week, her sched- tor of the Urban Homesteading Assistance Board, a Alan Patricof, who with his wife funds a well- ule during the first two years of her tenure showed, 43-year-old nonprofit that develops affordable co-ops. respected Harlem nonprofit that was looking for but rarely met with nonprofit housing executives He has not met with Glen since she assumed her space. (“Just here to help!” Glen wrote. “And you’re or advocates. “We’re not getting anywhere near post in January 2014. very good at that. Thank you,” Moelis responded.) the level of respect that we should be getting,” said Glen and Moelis’ emails show they joke about The nonprofit, Northside Center for Child Develop- DeRienzo, who met with Glen and her senior advis- their ages, confess worries and complaints, and ment, was looking to rent or purchase the 3-story, er for housing, Elaine Braithwaite (who was hired discuss deals. His staff collaborated with Glen and 35,000-square-foot facility planned for the complex. from L&M), for the first time in 2016. “I don’t think top de Blasio aides to push for zoning and state Patricof praised Moelis’ efforts on behalf of the non- there’s a lot of motivation to work with our sector.” rules that accommodate developers like L&M. After profit. “He’s been very decent and he is an altruistic Sanitation Commissioner Kathryn Garcia rejected person,” Patricof told Crain’s. A HISTORY OF DEALS Moelis’ request for the city to pick up garbage at After Glen’s introduction, Patricof went to bat for A Wharton School of Business graduate, Moelis

BUCK ENNIS multiple locations at Marcus Garvey Village, a 625- Moelis. One of the challenges with the project was began buying and selling co-ops in the mid-1980s

14 | CRAIN’S NEW YORK BUSINESS | JUNE 12, 2017

P013_P015_CN_20170612.indd 14 6/8/17 10:28 PM and later became adept at piecing together housing Gale Brewer and City Councilwoman Rosie Mendez deals out of subsidy programs and tax exemptions. learned in November that L&M and BFC Partners In the late 1990s a mutual friend connected him were getting a 50% ownership of the apartments and with Glen, an Amherst College and Columbia Law the land under them, the deal was done. School graduate working at a law firm at the time. Never before had Housing Authority units been Moelis later worked with Glen and Goldman sold to private investors, who will pay for upkeep Sachs on at least 12 projects. Glen brought the bank’s and repairs, in such a deal. Yet the agency did not deep pockets, her knowledge of her former city announce it. “They put out press releases about so agency and faith in government. The partnership many other things,” Brewer said. “I don’t know why proved so successful that, in 2008, Goldman and they wouldn’t tell people.” The administration in No- L&M started a $100 million fund to take on more vember held public meetings at each of the six sites projects. “We share a very strategic approach to ur- to inform tenants that the buildings had been sold ban investing and are taking the relationship to the to Moelis and Capoccia, but Brewer notes that be- next level,” Glen told globest.com at the time. cause the plan was set, the residents “had no input.” In September 2013, three months before Glen In December, more than three weeks after the city landed her city post, she and Moelis and other part- approved $235 million in bonds for the project, Men- ners won the bidding to carry out one of the largest dez, Brewer and other elected officials discussed the city-assisted projects in years: the $1.1 billion Essex deal with the Housing Authority. “It was a bolt when SEEING RED: The deputy mayor’s Crossing. It is intended to transform a neglected I went to that meeting and I realized it was going full affordable-housing swath of Delancey Street on the Lower East Side into steam ahead and it was going to be turned around in philosophy has drawn 1,000 rental units—half of them affordable—as well such a short time,” Mendez said. the ire of protesters. as condos and a vast commercial complex. When Crain’s visited one apartment complex in In a 2009 personal deal, Glen and her husband, the portfolio, residents praised L&M’s new wash- media and entertainment lawyer Daniel Rayner, ing machines, manicured grounds and a bright en- nonprofits, is often at odds with the Association for bought a unit in the Kalahari, a Harlem condo com- tranceway. But anxiety around privately operated Affordable Housing over who should build what plex that was one of Goldman and L&M’s first joint public housing has prompted numerous protests and for whom, and how it should be paid for. It opposes ventures. On Jan. 8, 2014, a week after de Blasio press conferences. Bronx Councilman Ritchie Torres, 421-a, which developers and the de Blasio admin- was sworn in as mayor, Glen and Rayner put down who chairs the council’s Committee on Public Hous- istration consider essential for robust construction a deposit for a two-bedroom apartment at another ing, worries that private investors will not keep the of rentals. The Association for Affordable Housing complex that Moelis built and Goldman bankrolled, units affordable. A de Blasio spokeswoman said the recommended that the administration seek the re- The Adeline on West 116th Street. Glen was offered authority can block any attempt to convert units to moval of a state requirement that for-profits work a 10% “friends and family” discount but declined it, market rate and “will, without question, protect the with nonprofits to qualify for another tax break, instead getting a 6% discount because she did not long-term affordability of these homes.” 420-c. Some nonprofits and construction unions use a broker. Glen sought the city Conflicts of In- The apartments are subsidized by the federal gov- formed a coalition named Real Affordability for All terest Board’s counsel on the investments, neither of ernment’s Section 8 rent vouchers under a contract that to demand deeper affordability in the mayor’s hous- which have previously been made public, and was expires in 2034. Moelis said it would make no sense to ing plan and higher wages for construction workers. told she would have to recuse herself from L&M take the units out of the affordable program because Glen and de Blasio would not budge on wages, matters if she purchased the Adeline unit. Glen got the government’s subsidies paid so well—yielding, which Moelis and others said would make afford- her deposit back. She was allowed to keep her unit in along with tenants’ rent, $3,700 for a two-bedroom on able housing uneconomical. “I absolutely feel that the the Kalahari because by then L&M no longer owned East 12th Street, for example. The agreement has 17 relationship of Alicia Glen to [the Association for any units there. years remaining; for 10 years after that, tenants must Affordable Housing] has really been like a wall here,” Another L&M deal overseen by Glen has drawn make 60% or less of the area’s median income and pay said Gary LaBarbera, president of the Building and criticism. In one of the largest housing transactions of below-market-rate rent. Construction Trades Council of Greater New York. “I 2014, the Housing Authority sold a stake in hundreds Moelis and his COO also use their perch to dis- have not really been able to make any progress.” He of apartments across three boroughs. The deal had its cuss policy matters with Glen and other de Blasio got a wage deal on 421-a projects from Gov. Andrew roots in the Bloomberg administration, which had administration officials. Gomez not only had a high Cuomo and the state Legislature. selected MDG Design & Construction to rehabilitate post at the New York State Association for Affordable In the fight over rents, de Blasio weathered the co- 874 units at 10 buildings across six sites in Brooklyn, Housing, which advocates on behalf of developers, alition’s attacks for three years before announcing in the Bronx and Manhattan. After MDG bowed out be- but she is married to John Banks, president of February an extra $1.9 billion for more low-income cause of legal issues, the city quietly went back to the developer-backed lobby the Real Estate Board of housing. But it hardly placated Real Affordability for two runners-up, Moelis’ team and The Arker Cos., New York. In response to one of Gomez’s emails to All, which followed up with the City Hall protest of and asked them to submit new best-and-final offers. Glen on the tax issue, the deputy mayor wrote: “How Glen, mocking her by reading aloud from a New York Both did so, and the Housing Authority board in Sep- about a drink on the 28th?????” Another email sent Times piece on how she spends her Sundays. tember voted to give Moelis the deal. Reached for to Glen cc’d Moelis, Capoccia and two administra- Jonathan Westin, a core organizer of the group and comment, Sol Arker said only, “That’s past history.” tion officials, Director of Intergovernmental Affairs a former backer of de Blasio, sees the connection be- The administration noted that the deal with Emma Wolfe and Glen’s former chief of staff, James tween Glen and Moelis as a problem. It was Westin’s Moelis netted the city $55 million more than the Patchett (who now heads the Economic Develop- organization that picketed Moelis’ house. “I think one with MDG would have. ment Corp.). The email focused on their collective there’s an issue when private developers have a way- Glen presided over the Housing Authority during efforts to renew 421-a, a tax break that makes it too-close-for-comfort relationship with city officials,” the process, which was completed so quietly that cheaper to build rental housing. he said. It seems like long ago when business interests local politicians complained about being kept in the The Association for Affordable Housing’s sway feared that Westin, a leading liberal activist, would dark. By the time Manhattan Borough President with City Hall has alarmed nonprofits, who say they support the administration, not protest it. are better stewards of afford- “Advocates like Jonathan Westin were in the room able housing because, unlike when the housing plan was formulated,” de Blasio for-profits, they plow develop- spokesman Wiley Norvell said. “Nonprofits, for prof- er fees back into programs, are its, unions and advocates have been a part of inform- deeply rooted in communities ing this policy for the last three and a half years.” and have less incentive to con- Torres, however, said it should be no surprise that vert apartments to market rate. city housing officials and industry titans travel in the For-profits counter that they same circles and trust each other. “But if those are the manage large projects better, only people in the room making the decisions, then and say nonprofits sell buildings human nature being what it is, it’s going to breed in- too and build inferior housing. sularity,” the councilman said. “It’s going to create an Myriad policy differences mo- echo chamber.” ■ INVESTMENT PROPERTY: In 2009 tivate critics of Glen and Moelis. Glen bought a unit in a Moelis The Association of Neighbor- This article was produced with support from the Urban building that she helped finance. hood and Housing Develop- Reporting Program of the CUNY Graduate School of ment, the trade group for the Journalism.

JUNE 12, 2017 | CRAIN’S NEW YORK BUSINESS | 15

P013_P015_CN_20170612.indd 15 6/8/17 10:28 PM

P016_P017_CN_20170612.indd 16 the ballclubaround. has aplantoturn DIGGING OUT:

BUCK ENNIS 16 SPORTS |

CRAIN’S NEWYORKBUSINESS Smith Smith

| MINOR MINOR HEADACHES BRANDING

With attendance dropping and the Statenthe Island Yankees are limited talent to draw fans, mulling aname change BY AARON ELSTEIN

J une 12,2017

D wrestling event inAugust. beer-and-taco festival month this and a professional ing in more events on non–game days, including a caps, and other jerseys merchandise. He’s bring also - given fanswhen be domestically manufactured will promoting sixMade nights inAmerica season, this 10% and reduced fees on online orders by 40%.He’s park. He has cut many ticket prices by more than to team’s the handsome, $30million waterfront- ball ago,half has plenty of for ideas luring people back Md., before coming to Staten Island ayear and a ness sideof teams inTrenton, N.J., and Hagerstown, chance,best but it’s getting close.” borough president. “I wouldn’t say is this lastthe dies on vine,”the said James Oddo, Staten Island’s need toneed make a splash June begins as season their 19. game,2,250 per minor the Yankees league urgently watching attendance by sink 60%since 2010,to just and owned partly by Bronx the But Bombers. after adramaticbe step for ateam that’s an affiliate of that stares you face.” inthe ness,” said Smith. “There’s alot of value to a name Rats. Pizza the even Maybe Pigeons. Rock Trolls Bridge or the the become and moniker edgier to adopt an team baseball league minor struggling financially it’s for his time presidentYankees thinks Island Staten Bay.head the fandom, But his despite in Sheeps together fishing Gehrig Lou and Ruth a office, plus photo Babe of his in cards ly baseball Donof Matting afistful He 18 keeps in years. Series won first its World team 1996 the when in bleachers The 43-year-oldthe whorun Smith, helpedbusi - “They have“They to changetheir ways thingthis or Dropping Yankees the brand would obviously “I rebranding think is right the thing for our busi- bat. He was sitting in the right field right the in sitting Hebat. was signature Jackson aReggie getting 1980 and around Yankee Stadium Day Bat at attending remembers Smith Will fan Yankees ie-hard - -

yearly attendance exceeds 125,000,according to team share ticket revenue with city the only when lyn. The Staten Island Yankees’ lease requiresthat the build ballparks new on Staten Island and in Brook- league clubs here with $70 million of public funds to formerwhen Mayor Rudy Giuliani lured minor the Swinging forthefences off while,”after a Kronheim said. years. novelty “The seeing minorof wearsball league in response to own their drops inattendance over the clubsleague have discounting been tickets more often togoes games anymore, big- local the because inpart of average the price at Yankee Stadium. But he seldom likes that tickets are less than $20, roughly a quarter says he enjoys ballparks’ both atmosphere seaside and tracks minor attendance league at numbertamer.com, fans as Staten Island. draw still 2007, thoughmore they thanas many twice haveLeague, attendance seen drop by 30%since lyn Cyclones, play also who New inthe York-Penn attendance off. hasConey fallen Island’s Brook- advance much beyond minors’ the lowest rung. levels, leaving fans to watch players never will who prospects are quickly shipped to more competitive ner have through passed Staten Island, but most top All-Stars such as Robinson Canó and Brett Gard- are firsttheir experiencing taste of pro ball. Future with players often only weeks outschool who of high Penn aClassA,short-season circuit League, stocked two major teams league order. is atall inamarket minorselling baseball league that boasts our park place is to afun be,” Smith said. at areasonable price and making sure people know This isn’t howthings were supposed to play out David Kronheim, aFlushing fan who baseball level so-so The of play may help explainwhy The Staten Island Yankees playthe in New York- Still, there’s no getting away from that fact the all aboutis “This providing family entertainment 6/8/2017 6:22:05 PM

ARE BASEBALL FANS GOING, GOING, GONE? the comptroller’s office, a threshold the team hasn’t Average per-game attendance at hometown ballparks crossed since 2013. So while the Cyclones paid the city $550,000 in rent last year, Staten Island handed over just $144,000, based on ads and other sales. 2007 2016 60,000 10,000 Still, after nearly two decades, the economic activity that Giuliani predicted the Staten Island 50,000 52,729 8,000 Yankees would trigger is finally emerging—but 47,580 8,194 not necessarily to the good of the ballclub. 40,000 6,000 Nearby construction has aggravated the team’s at- 37,820 30,000 34,440 5,614 tendance problem. On one side of the ballpark, the 4,000 4,321 New York Wheel—billed as the world’s tallest Ferris 20,000 -28.3% -27.6% -31.5% wheel—is slowly rising, while a series of outlet stores 2,250 2,000 is going up on the other side. Over the long term, 10,000 -47.9% that should bring more visitors to Staten Island, but 0 0 last year nearly 950 parking spaces were removed NY YANKEES NY METS BK CYCLONES SI YANKEES near the ballpark to accommodate construction, a SOURCES: New York-Penn League; baseball-reference.com. The Yankees and the Mets both moved into new, smaller stadiums in 2009. major burden in a borough where most people travel by car. Though much of the parking has been restored, Smith said many fans are avoiding the “Ownership believes in the future and the sooner Smith thinks changing the team’s name and logo area until the long-delayed projects are completed, we get there, the better,” Smith said, adding that the could boost revenue by stoking merchandise sales. perhaps next year. team has extended its lease to 2030. He said management has talked its big-league part- But even after construction is done, the location Smith said the team generates about $3 million in ners into supporting a switch and was poised to do of the team’s ballpark represents an ongoing prob- revenue, with ticket sales, ads and concessions each it last year until minor league officials intervened. lem. While its proximity to the Staten Island Ferry contributing 30%, and merchandise making up the (Turns out, they were less than thrilled with endors- makes a trip to a game relatively convenient for Man- rest. Player salaries are tiny, typically about $1,600 a ing a team called the Pizza Rats or the Bridge Trolls.) hattanites, it is not easily accessible for most of the month during a season that’s less than three months. Smith said the club will forge ahead this year with a borough’s 475,000 residents. Asked if the club makes a profit, Smith said, “It has.” new name, to be determined. “People who work off the island might have two- Jordan Kobritz, a sports-management professor hour commutes and don’t feel like getting in their Homegrown talent at SUNY Cortland, said bidding the fabled Yankees cars and driving to a game after work,” said Linda Minor league teams succeed when they become name adieu could pay dividends. He’s an investor Baran, chief executive of the Staten Island Chamber part of the community fabric, and Smith’s sales staff in a New Orleans minor league team that recently of Commerce. is busy cultivating ties with Staten Island business changed its name from the Zephyrs to the Baby Nevertheless, Smith said the club’s owners re- and civic leaders. In the meantime, he has to play a Cakes after rejecting such possibilities as the Po’ main committed to Staten Island and are confident little hardball, abolishing the practice of giving away boys, the Tailgators and the Night Owls. Sales of there are better times ahead. The team was acquired about 20,000 tickets a year so that people get accus- Baby Cakes merchandise is already quadruple that in 2011 for a reported $8.3 million by Nostalgic tomed to paying to see a ballgame. of last year’s totals and the season is only half over. Partners, a consortium of financial executives, the But it will take time to boost a fan base in a city “Some people love the new name, and some third ownership group since the squad relocated where the media have plenty of major league sports to hate it,” Kobritz said. “But this is a case where any from Oneonta in 1999. cover and fans enjoy countless entertainment options. publicity is good publicity.” n

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P016_P017_CN_20170612.indd 17 6/8/2017 6:22:25 PM ADVERTISING SUPPLEMENT TO CRAIN’S NEW YORK BUSINESS INSIDE CORPORATE ACCOUNTING

In Commercial Real Estate Deals, Snapshot of the New York City Accounting Advice Becomes Critical Commercial Real Estate Market n New York City’s fast-paced commercial real estate Imarket, even sophisticated investors can overlook ob Gilman, co-chair of the real estate practice new lease accounting standards from the Financial important tax considerations on the deals they are at Anchin Block & Anchin, often gets new Accounting Standards Board. Corporations that making quickly. Here are some market conditions that Rcommercial and residential real estate clients lease offi ce space and equipment, rather than keep them busy. seeking his help after they’ve made big tax mistakes. buy it, must account for these leases on their books to ensure that their true indebtedness Office space: With fi rst-quarter leasing hitting 9.2 One common error is neglecting to pay the is clear to average investors who buy stock in million square feet—up 25% from the fourth quarter of unincorporated business tax on the sale of condos these companies. Under the new standards, all they have developed. While income from renting leases that exceed 12 months must be reported 2016—New York City’s 6.5% offi ce space vacancy rate in out and selling residential rental properties is as assets and liabilities on a fi rm’s balance sheet. the fi rst quarter of 2017 was the second lowest among exempt from the tax, income from selling condos Companies will need to begin providing parallel the top U.S. 10 markets, according to Colliers. Average that were developed for sale is not. income statements to illustrate what has changed asking rates hit an all-time high of $73.92 per square foot on their balance sheets starting at the end of 2017. across the market and in Midtown South and Downtown. After Gilman informs them of the oversight, it’s time to do damage control. In some cases, he’ll advise “The actual changes to the lease accounting Retail: Although asking rates declined across Manhattan them to go back to a group of investors who have model are pretty diffi cult,” said Chris DeMartini, in 14 of the 17 high-profi le corridors that the Real Estate already received their share of profi ts from the sale audit managing director at Grant Thornton. His Board of New York City (REBNY) surveys annually, asking and ask them for money back to pay the tax. fi rm has put together a program to help clients rates rose 18% in lower Fifth Avenue in the Flatiron dis- make the transition. trict (between 14th and 23rd Streets) to $456 per square In the highly competitive commercial real estate foot, and 11% in lower Broadway corridor (between Bat- market of New York City, it is very easy for investors to Another big concern is transitioning to the new tery Park to Chambers Street) to $362 per square foot. make costly tax mistakes in their haste to close deals revenue recognition model published by the quickly. Accountants like Gilman say that avoiding the International Accounting Standards Board (IASB). Multifamily rentals: New luxury apartments have flood- do-it-yourself approach and seeking help early in the The model, which became eff ective this year, ed the market, forcing landlords to make concessions to process can help investors to avoid later frustration. aff ects the timing of revenue and profi t recognition renters. New leases in Manhattan with concessions rose in cases when companies have contracts with “The one thing that makes accountants so customers. This is another area where fi rms like to 28.6% in the fi rst quarter, up from 13% the prior year, essential in real estate transactions is there are Grant Thornton are providing extensive advisory according to The Elliman Report. In Queens, thanks to an so many tax implications that can make such a services. influx of new developments in Long Island City, Astoria, diff erence in the after-tax return,” said Gilman. Sunnyside and Woodside, the percentage of new leases “Revenue recognition is always of the utmost with concessions rose to 45.5% from 14.6%. In Brooklyn, A key area of confusion for many investors are the importance,” said DeMartini. the percentage more than doubled to 14.7%.

Crain's Corporate Accounting 4 Page Section MECH.indd 1 6/8/17 3:03 PM ADVERTISING SUPPLEMENT TO CRAIN’S NEW YORK BUSINESS INSIDE CORPORATE ACCOUNTING With Construction Booming, Contractors Seek Strategic requisition to make sure what they were requisitioning was installed and furnished,” Advice From Accountants Oliveri said. “We went through it line by line.”

ew cranes and backhoes are sitting idly in and to get their accountants’ help in doing so. “I Raising capital New York City these days. Construction work with clients on making sure they have good In a market where growth opportunities are Fspending hit a record $43.1 billion in 2016— procedures and these procedures make sense in plentiful, many construction firms need financing up 26% since 2015, according to the New York light of what they are trying to accomplish,” said Ed to go after new projects and still maintain healthy Building Congress. That figure is expected to grow Opall, a director and member of the real estate and cash flow. Many are turning to their accountants to $42.1 billion in 2017 and $42.3 billion in 2018. construction services group at EisnerAmper. to prepare their balance sheets so they can obtain a loan or attract outside investment partners. But with new opportunities come increased One key challenge for many construction firms is demands on construction companies. As staying compliant with complicated contracts and “Generally the banks are very cautious when contractors go after bigger jobs, they must follow billing terms. Being disorganized can increasingly extending credit to contractors and view the increasingly complex rules and regulations. land them in legal trouble, noted Oliveri. industry as risky,” said CPA John Helkowski, a That puts pressure on them to improve their partner in J.T. Shulman & Company, P.C., a Carle compliance strategies. They also need to do big- If, for instance, a contractor is obligated to pass Place, Long Island firm whose clients frequently picture financial planning, so their balance sheets along savings from a concession in a contract do projects in New York City. are strong enough to help them obtain needed to the building owner and fails to do that, the financing and cover their overhead when the contractor could be at risk, depending on the Some contractors are turning to accountants to payments for big projects are months away. perceived intent of the contractor. “Noncompliance help them improve their capacity to secure bonds with contracts, specifically billing terms, doesn’t to guarantee their projects, a requirement of the “Construction is at a historic level,” said CPA Carl only carry financial penalties—it could be insurance companies involved. In some cases, Oliveri, partner and construction practice leader construed as a criminal act today,” said Oliveri. they need to bring in outside investors in venture in the New York City office of Grassi & Co. “With capital or private equity firms to do so—but that those levels come a slew of other issues and In this tougher environment, Grassi & Co. means making sure their finances make them an complications.” recommends that larger public works contractors attractive partner. proactively hire an integrity monitor or internal The answer for many contractors is to turn to their compliance officer. These professionals educate their Although many construction firms are eager accountants for strategic advice. “It’s a different teams on why they need to follow contract language for this outside financing, they need to make marketplace than it has ever been,” said Oliveri. and arrange ethics training, Oliveri explained. sure that any deals with outside investors have a strong upside. Given the complexity of these Reducing risk The firm also helps clients audit their own deals, this task often requires input from their With many contractors focused on scaling up, contract compliance. Recently, Grassi did this for accountants. “We’re involved in helping them to it has become more critical for them to put the a contractor at the Weill Cornell Medical Center. structure the terms of the deal,” said CPA David right financial systems and controls in place— “Our goal was to review the general contractor’s McKelvey, partner at accounting firm Friedman.

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Crain's Corporate Accounting 4 Page Section MECH.indd 2 6/8/17 3:03 PM ADVERTISING SUPPLEMENT TO CRAIN’S NEW YORK BUSINESS INSIDE CORPORATE ACCOUNTING

As Retirement Beckons, Boomers Navigate Complex Private Equity Deals

ith about 10,000 baby boomers turning with the cycle timing, it is creating the sense that firm’s books into the shape a private equity firm 65 every day, many New York City we are approaching the top of the seller’s market will want to see—a factor for which owners need to Waccountants are hearing from business cycle.” Potential changes to the tax code that are now plan. “If they start early in preparing for diligence, owners who are approaching retirement age and under discussion could also have an effect on how the diligence effort won’t be as cumbersome,” said looking to sell their firms. Often, the potential companies are valued and lead financial buyers to Ferreira. buyers aren’t other entrepreneurs. offer a lower price for businesses in the future, FLSV pointed out. Be prepared. A common mistake is underestimating “Amongst our business, an estimated 50% of the level of due diligence required by private equity transactions are private equity buyers,” said But navigating deals with these funds can be tricky firms. “I oftentimes tell my clients it’s hard to ask a Carlos Ferreira, the Metro New York/New England even for successful business owners. “The transactions private equity firm to give you $50 million and then Advisory practice leader for Grant Thornton, are extremely sophisticated and require the assistance not allow them to come in and do a basic home whose firm works mainly with sellers whose annual of an experienced team of professionals,” said attorney inspection,” said Ferreira. “The more prepared you are revenues are above $10 million. The other half are Sean M. Aylward, vice chair of the Corporate & for that, the easier it will be for the organization and strategic corporate buyers, he said. Securities group at Chiesa Shahinian & Giantomasi the less distraction it will cause in the business.” PC, which has an office in New York City. Here are Fueled by money invested by pension funds looking five strategies New York accountants recommend to Turn to a specialist. Business owners often benefit for better returns, private equity buyers are eager business owners who want to strike a private equity from bringing in an accounting team that specializes to acquire thriving firms that will help them deliver deal that works in their favor. in private equity transactions, even if they have a on that goal and tend to have very deep pockets. staff accountant. “Typically the in-house accountant Nationwide, 38% of buyers of businesses with $5 Plan a gradual exit. Private equity buyers generally doesn’t see as many transactions as the outside million to $50 million in revenue are private equity want business owners who are managers to continue CPAs see,” said CPA Nicholas Tsafos, an audit partner funds, according to the 2017 Market Pulse Report working at their firm for at least a few years, to ensure a at EisnerAmper. “They are not as familiar with all of published by the International Business Brokers smooth transition; so it’s a good idea to start preparing the nuances.” Association, M&A Source and the Pepperdine to sell a couple of years before you want to retire. “In a Private Capital Market Project. majority of private equity investments, they are looking Get realistic. Owners who have built their for the owner, managers to help grow and execute businesses over many years often have an inflated Many business owners are eager to take advantage on the strategy of the business,” said Ferreira. Some sense of what their firms are worth, because of of today’s market before present conditions change. private equity funds will consider a deal where the emotional attachment, say accountants. Working Currently it is a seller’s market but it won’t remain owner wants to retire immediately if there is a strong with an outside accounting firm can provide a so forever. As the advisory firm Frankel Loughran management team that is already in place, he added. needed reality check. “We can help them realize the Starr & Vallone noted in a recent tax and financial highest value and understand what market value news bulletin, “Many in the field see the private Seek accounting help early. Even at a well-run really is,” said Ferreira. “With that information, they business landscape as picked through; combined company, it may take six to nine months to get a can get the best deal they can get.

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Crain's Corporate Accounting 4 Page Section MECH.indd 3 6/8/17 3:03 PM ADVERTISING SUPPLEMENT TO CRAIN’S NEW YORK BUSINESS INSIDE CORPORATE ACCOUNTING

advantage of buying a home over renting would Rattled By Tax Uncertainty, High-Net-Worth Clients Seek erode the most, Trulia found. Accountants’ Advice Trump’s plan would also eliminate the ability of fi lers arolyn Mazzenga hears from many affl uent Many such tax payers thought some relief was in to deduct property taxes and other state and local clients who are wondering how President sight when Trump’s tax plan proposed elimination taxes. Many New York City home owners or potential CTrump’s yet unrealized plans for individual of this tax. “Repealing the AMT would be exciting home buyers are paying attention, because losing and corporate tax cuts will aff ect their fi nances. news for many high-net-worth individuals,” said the property tax deduction could mean there is less Clarence Kehoe, chair of Anchin Block & Anchin’s upside to buying certain properties. But accountants “As always, uncertainty is what rattles people, rattles tax department, co-practice leader of the fi rm’s are advising them to operate as if nothing has the markets and rattles business,” said Mazzenga, Compensation and Benefi ts Services Group and a changed for the moment. “Right now, mortgage partner-in-charge of Marcum’s Family Wealth member of its Private Client Group and executive interest is still deductible,” said Kehoe. Services group. “If you don’t know what is happening committee. However, with no clarity on whether the with tax law, tax reform and estate taxes, it makes it AMT will actually be repealed yet, Kehoe and many Residency audits. Many high-net-worth individuals diffi cult to plan—and it makes it diffi cult to strategize other accountants have continued advising clients who claim a change of residency are concerned what you want to do with your wealth, [such as] on how to reduce or avoid it, using strategies such about residency audits by the state tax authorities. transfer wealth and make new investments.” as accelerated deductions. Favorite targets are individuals who claim a change of residency, often to low-tax or no-tax states, shortly Like most accountants, Mazzenga is advising The property tax deduction. According to before a large income-recognition event, such as clients to make decisions based on the tax laws Treasury Secretary Steven Mnuchin, Trump a large capital gain on the sale of a business, said that are in place at the moment, while keeping an does not plan to get rid of the tax break for Jack Trachtenberg, a principal at Deloitte. “New York eye on the latest developments. “We can only go mortgage interest. However, he plans to raise State and City have very aggressive residency audit by what we know is for certain: the law as it exists the standard deduction for a married couple programs,” said Trachtenberg. This is a perennial right now,” she said. fi ling jointly to $24,000—up from $12,700. This issue, and one for which many seek advice from their could reduce the number of people for whom it accountants. “The issue of residency may not be a Here are some of the top concerns of high-net- makes sense to itemize to seek the mortgage black and white one,” said Trachtenberg. worth New Yorkers and a look at how accountants interest tax deduction; the standard deduction are advising clients to address them. might be greater for them unless they have other Tax risks. Anthony Parent, a lawyer and founding substantial deductions. partner of the attorney and CPA fi rm Parent and The alternative minimum tax (AMT). This hard- Parent, which has expertise in international tax to-avoid tax, designed to prevent high earners According to recent analysis by real estate law, fi nds many affl uent New Yorkers worry about from maneuvering their way out of paying taxes, site Trulia, the biggest impact would be on getting tripped up in the complexities of doing is the bane of many affl uent New Yorkers. These homeowners with home-loan balances of business overseas. Some have come to his fi rm after taxpayers must calculate their taxes twice, once $358,000 and $676,000 and who take out a tax generalists have given them advice that cost with certain deductions removed, and pay the mortgage between $322,200 and $608,400. them money. “We fi nd huge errors, with signifi cant higher amount. The New York City metro area was one where the consequences,” he said.

Committed to serving the Financial Services Industry and Entrepreneurial clients: Business Tax & Advisory Services 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 Garden City, NY. 11530 Family Office & Accounting Services (516) 874-8800 flsv.com Since 1995 Global Sophistication Personal Service

Frankel Loughran Starr & Vallone LLP

Crain's Corporate Accounting 4 Page Section MECH.indd 4 6/8/17 3:03 PM TO PLACE A CLASSIFIED AD, CALL 1 800 444 6007 OR VISIT CRAINSNEWYORK.COM

PUBLIC & LEGAL NOTICES

Notice of Formation: USTV Rentals LLC Notice of Formation of Omri Dime LLC. SD Flushing DE LLC filed an App. for (LLC) Arts. of Org. filed with the Sec. of Arts. of Org. filed with Secy. of State of Authority with the NY Dept. of State on State NY (SSNY) on April 4, 2017. NY NY (SSNY) on 5/5/17. Office location: 3/30/2017. Jurisdiction DE. The date Office Location: New York County. NY County. SSNY designated as agent of its org. is 3/30/2017. Office locat- Contact Joanne SSNY Desig. Agent of LLC upon whom of LLC upon whom process against it ed in NY County. The Secretary of the process against it may be served. may be served. SSNY shall mail proc- State of NY ("SSNY") is designated as SSNY to mail copy of process to the ess to: c/o The LLC, 800 3rd Avenue, agent upon whom process against it Barbieri at 212- LLC at its principal business location at Ste. 3703, NY, NY 10022. Purpose: may be served, the address to which PO Box 809, New York, NY 10108- any lawful activity. the SSNY shall mail a copy of such 210-0189 for 0809. Purpose: any lawful purpose. process is: 26 W 17th St., Ste 801, NOTICE OF FORMATION of Kith Creative NY NY 10011. Address maintained in LLC. Arts of Org filed with Secy. pf Notice of Formation of 75 East Central, DE is 850 New Burton Rd. Ste. 201, classified State of NY (SSNY) on 11/9/2016. Of- LLC filed with SSNY on 4/4/2017. Lo- Dover DE 19904. The authorized offi- fice location: NY County. SSNY desig- cation: Rockland County. SSNY desig- cer in DE where a copy of its Certifi- nated agent upon whom process may advertising nated as agent of LLC upon whom proc- cate of Formation can be obtained is be served and shall mail copy of process may be served. SSNY shall mail DE Sec’ty of State, 401 Federal St., ess against LLC to: US Corp. Agents, opportunities. process to Peter Agho 10 Dixwell Road, Dover De 19901. The purpose of the Inc., 7014 13th Ave. Ste. 202, Brook- New City, New York 10956. Purpose: company is: any lawful act. any lawful act or activity. lyn, NY 11228.Purpose any lawful act.

Contact Joanne Barbieri at 212-210-0189 for classified advertising opportunities.

22 | CRAIN’S NEW YORK BUSINESS | JUNE 12, 2017

P022_P023_CN_20170612.indd 22 6/8/2017 3:31:26 PM CRAIN’S REAL ESTATE ROUNDTABLE ADVERTISING SECTION: INSIDE THE MULTI-FAMILY MARKET

Issue date: September 11 • Close date: August 17 • Materials due: August 31

Crain’s Real Estate Roundtable is a thought-leadership forum that lets advertisers inform and educate Crain’s readers about hot-button issues tied to the multi-family real estate market. Perfect for investors, developers and experts in NYC’s commercial real estate industry.

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CN018289.indd 1 6/9/17 3:26 PM GOTHAM GIGS

THE SWEET SMELL OF SUCCESS: Lewis developed a taste for wine in her mid-20s. Now people pay for her expertise.

BY LANCE PIERCE

Landing in second position A former Rockette finds a demanding new career as awine consultant and sommelier

abra Lewis is living many a wine-lover’s dream: day and taste anywhere from six to 10 wines at each vine- She retired from her dance career at age 30 and re- yard, taking detailed notes throughout. “Ultimately, I’m the SABRA LEWIS launched herself as a certified sommelier. Now she translator between the winemaker and the guest who will gets paid to taste and talk about wine. But that’s be drinking it,” she said. AGE: 37 Snot as easy as it might sound. Like many Americans, Lewis discovered wine in her BORN: Plano, Texas “You can’t just sit around and drink all day and pontifi- mid-20s. She had trained to be a ballet dancer and at age RESIDES: Battery Park City cate,” she said. “You have to do a lot of studying: farming, vi- 20 moved to New York and became a Rockette. She went on ticulture, the economics of wine—pricing to perform in the Broadway musicals EDUCATION: International Wine Center, WSET Advanced program is huge—historical context, wine laws in “I’m the translator Phantom of the Opera, Chitty Chitty each country. I love it, but it’s exhausting.” Bang Bang and Spamalot. RARE VINTAGE Lewis found a between the wine- mentor in master sommelier Laura Lewis works up to five nights a week maker and the During a 2004 vacation to Tusca- Williamson. “Most sommeliers in at Terroir Tribeca, the downtown wine bar ny, she fell in love with wine culture. New York are men,” Lewis said. owned by James Beard Award–winning guest drinking it” “There’s always a jug of wine on the “She’s a unicorn in the wine world.” sommelier Paul Grieco. She also runs her table,” she said. “The tomatoes, the NEW ACQUISITIONS Lewis own consulting business, Wine by Lewis & Co. Her clients wine, the pasta all had the same level of importance. I’d recently started collecting wine, include the International Business and Wine Society and never experienced that before.” primarily champagne, Burgundy and Riesling. She keeps about 100 the new restaurant Icelandic Fish & Chips. Back home Lewis enrolled in wine classes by day and bottles in a EuroCave wine fridge in Her job at Terroir involves recommending and serving performed on Broadway at night. Thanks to years of side her apartment and another 300 in wine and being able to answer any questions about the gigs in restaurants, she was able to land bartending jobs at storage. restaurant’s extensive wine list. “Each table is a little bubble eateries known for their wine lists. GETTING THE VIBE “If I can tell in the palm of my hand,” Lewis said. “It’s up to me to give Lewis believes being a good sommelier is all about “the it’s a Tinder date, I get out of there them the best experience at whatever budget they have.” art of reading a table.” Some people want to learn, and the as quickly as possible,” she said. Lewis takes a few wine trips a year, usually on her own sommelier can be the star, she said. “But if you can tell it’s a “People are already intimidated and uncomfortable; no need to dime. She recently returned from a week of sherry tasting in business dinner, it’s about being a ninja: getting in and out make it worse.”

BUCK ENNIS Southern Spain. She’ll visit about three wine producers per of the table without anyone noticing.” — HILARY POTKEWITZ

24 | CRAIN’S NEW YORK BUSINESS | June 12, 2017

P024_CN_20170612.indd 24 6/9/2017 6:19:09 PM SNAPS

Testing the evidence Inspired by her role on Law & Order: Special Victims Unit, Mariska Hargitay founded the Joyful Heart Foundation in 2004 to help survivors of sexual abuse and violence. At the nonprofit’s May 23 gala, Hargitay showed the crowd a clip of I Am Evidence, a documentary she produced about the nationwide backlog of rape kits whose contents have not been tested. The film had its world premiere at the Tribeca Film Festival in April and eventually will be shown on HBO.

Honoree Cyrus Vance Jr., district attorney of New York County, and Kym Worthy, prosecutor of Wayne County, Mich., attended the gala, which brought Tony-winning actress Cynthia Erivo in $2 million. performed at the Joyful Heart event held at Spring Studios. Emmy winners Mariska Hargitay and Debra Messing also took part.

Supporting students

Home away from home Ronald McDonald House New York held its 25th anniversary gala May 15 at the Grand Hyatt New York. Tina Lundgren, board chairman of the nonprofit, which provides housing and other services to families whose children are Breakthrough New York, which provides low-income students with educational sup- receiving medical treatment far port from middle school through college, hosted a benefit that raised $765,000. The from home, attended with her attendees included Niraj Shah, a managing director at Citigroup; Lester Owens, a husband, Terry Lundgren, managing director at JPMorgan Chase & Co.; Gerald Cooper, partner at Campbell chairman of Macy’s. Lutyens; and Mary Gay Townsend, managing partner at Norgay Partners.

Robert Wolk, investment manager at the Wolk Family Office, and Quentin Chu and Adam Klein, partners at Crestview Partners, at the May 16 fund- raiser at event space NBC News correspondent Harry Smith shared master of ceremonies duties with 583 Park Ave. his wife, sportscaster Andrea Joyce. Former Mayor Michael Bloomberg was honored at the event, which raised $4.5 million.

PATRICK MCMULLEN, CHARLES MANLEY FOR RONALD MCDONALD HOUSE NEW YORK, ANDREW KIST PATRICK SEE MORE OF THIS WEEK’S SNAPS AT CRAINSNEWYORK.COM/SNAPS. GET YOUR GALA IN SNAPS. EMAIL THERESA AGOVINO: [email protected].

June 12, 2017 | CRAIN’S NEW YORK BUSINESS | 25

P025_CN_20170612.indd 25 6/9/2017 4:08:39 PM FOR THE RECORD*

NEW IN TOWN one offers a complimentary counsel, sold 5,000 shares landlord, Deonarine Sing, entire ninth floor of the building for eight years. The apple pie dessert. of common stock for $13.08 and the tenant in the deal. building between Fifth and asking rent was not dis- ■ Canal Street Food Hall per share May 15 in a trans- Sixth avenues. The compa- closed. CBRE represented 265 Canal St. action worth $65,400. He COMMERCIAL ny will vacate its current the sublandlord, Aon. New- A food hall opened in ACQUISITION now holds 164,518 shares. ■ Film Forum renewed its offices at 162 Fifth Ave. mark Grubb Knight Frank Chinatown last month lease at 200 Varick St. The over the summer. The ask- represented the subtenant. with 12 eateries, including ■ Coloredge ■ Garrison Capital Inc. nonprofit movie theater has ing rent was $65 per square Ippudo’s to-go ramen joint, 132 W. 31st St. (GARS-O) been in the 10,500-square- foot. CBRE represented the ■ Elysium Health signed Kuro-Obi; San Francisco– The marketing company Joseph Bertrand Tansey, foot Hudson Square space sublandlord, Group SJR. a lease for 7,205 square based bubble tea shop The that works with retail, CEO, bought 16,700 shares since 1990. The asking Newmark Grubb Knight feet at 434 Broadway. Boba Guys; Nom Wah Tea museum and event-venue of common stock at prices rent was $200 per square Frank represented TrueEX. The consumer health care Parlor’s sister restaurant, clients to provide imaging ranging from $8.70 to $8.94 foot. Landlord Newmark company that develops Nom Wah Kuai; and East and digital display solutions per share from May 12 to Holdings was represented ■ Havkins Rosenfeld dietary supplements and Village–based ice cream acquired Color by Number, May 16 in transactions in-house. Ritzert & Varriale signed antiaging pills will move shop Davey’s. an agency that offers pack- worth $147,532. He now a deal to move its offices from 594 Broadway during age prototyping and design. holds 884,606 shares. ■ TrueEX inked a sublease from 5 Bryant Park to a the summer. JLL brokered ■ Esther and Carol for 10,600 square feet 8,068-square-foot space at the deal for the landlord, 341 Broome St. at 22 W. 21st St. The 1 Battery Park Plaza. As Savanna. CBRE represented This new-American eatery BANKRUPTCIES REAL ESTATE global, electronic inter- part of the sublease, the law the tenant. The asking rent in Little Italy, named after est-rate-swaps exchange firm will occupy part of the was $75 per square foot for its owners’ mothers, is ■ Certo’s Pork Store RETAIL plans to move into the sixth floor in the 35-story the eight-year lease. ■ where diners can grab 27 Seguine Ave., ■ Jennifer Furniture signed a burger and a drink, Staten Island a relocation lease for 9,400 then head downstairs to The deli and catering square feet at 655 Sixth a recording studio that’s company filed for Chapter Ave. The furniture compa- available to rent. The own- 11 bankruptcy May 15. ny plans to shutter a smaller DEALS ROUNDUP ers plan to open a takeout The filing cites estimated store at 902 Broadway and TRANSACTION SIZE BUYERS/ window this summer. assets and liabilities of $0 to will open its flagship store TARGET/SELLERS [IN MILLIONS] INVESTORS TRANSACTION TYPE $50,000. No creditors in the O’Neill Building, CardConnect Corp., Angelo, Gordon $752.2 First Data Corp. SB M&A ■ Miss Ada with unsecured claims between West 20th and & Co. (Manhattan); Brightleaf Capital; 184 DeKalb Ave., Brooklyn were listed. West 21st streets. The Cantor Fitzgerald & Co. (Manhattan); FTV Capital; Nantahala Capital Management Named for the Hebrew asking rent for the 10-year LLC; Palestra Capital Management LLC word for restaurant, mis- ■ 175 Lenox Restaurant lease was $60 per square (Manhattan); Silver Creek CS SAV LLC ada, this Middle Eastern d/b/a Little Bamboo foot. J.W. Burke & Co. bro- The Yield Book Inc. and Citigroup $685.0 FTSE International Ltd. SB M&A eatery in Fort Greene is 175 Lenox Ave. kered the deal between the Index LLC, Citigroup Financial Products run by a former chef at The sushi restaurant filed for landlord, United American Inc. (Manhattan) Lupa in Greenwich Village. Chapter 11 bankruptcy May Land, and the tenant. Tanker Investments Ltd., BlueMountain $558.6 Teekay Tankers Ltd. SB M&A Outdoor seating is available 15. The filing cites estimated Capital Management LLC (Manhattan); (Remaining 88.7%) for 30 diners. assets and liabilities between ■ Steep Rock Bouldering Mangrove Partners (Manhattan); $100,001 and $500,000. The inked a five-year lease for Tennenbaum Capital Partners LLC ■ Planet X creditors with the largest 6,500 square feet at 79 Contextmedia Health LLC $500.0 Balyasny Asset Management LP; GCI 99 Canal St. unsecured claims are M2 Quay St., Brooklyn. The CapitalG; Goldman Sachs Asset Management LP (Manhattan); DJ Venus X, best known Lease Funds, owed $55,698; East Harlem–based rock Leerink Transformation Partners LLC; for throwing a series of Frandel Electric, owed climbing gym plans to Pritzker Group Venture Capital underground parties called $36,047; and Out of the Blue open its third location, in Chromalox Inc., Irving Place Capital $415.0 Spirax-Sarco Engineering plc SB M&A Ghe2ogoth1k (pronounced Wholesale, owed $12,584. Greenpoint. The asking (Manhattan) ghetto Gothic), opened her rent for the deal was $24 DoubleTree by Hilton Amsterdam; $391.2 Anbang Insurance Group Co. SB M&A first store, in Chinatown. ■ Tiramisu Restaurant per square foot. All Points The Blackstone Group LP Ltd. It sells designer vintage 1410 Third Ave. Real Estate represented the (Manhattan) pieces and indie streetwear The Italian restaurant filed landlord, Quay Plaza, and Beijing Zhenguanyu Science and $120.0 Tencent Holdings Ltd. Investment GCI brands. for Chapter 11 bankruptcy the tenant in the deal. Technology Co. Ltd. Arm; Warburg Pincus LLC (Manhattan) May 15. The filing cites ■ Victoria’s Secret assets of $50,000 to $99,000 ■ Viand Café signed a DoubleTree by Hilton Hotel New York $106.0 Barrydale Hotel REIT LLC SB M&A Times Square South (Manhattan), Museum and liabilities of $500,000 to 15-year deal for 1,856 CM-36 LLC 640 Fifth Ave. $999,000. The creditors with square feet at 517 The lingerie brand opened the largest unsecured claims Columbus Ave. The café Bundl Technologies Private Ltd. $80.1 Accel Partners; Bessemer GCI Venture Partners; Harmony Partners a lingerie museum in its are Helene Hines, owed will be open in the middle (Manhattan); Naspers Ventures; flagship store. The current $150,000; Express Working of August and plans to Norwest Venture Partners; SAIF Partners exhibit includes designs Capital, owed $135,000; and open a second location Deciphera Pharmaceuticals LLC $52.0 New Leaf Venture Partners LLC GCI from recent Victoria’s the state Transaction Audit in the neighborhood. The (Manhattan); Redmile Group LLC; Secret runway shows. Bureau Queens District asking rent was $35,000 Sphera Funds Management Ltd.; Viking Global Investors LP Office, owed $153,000. per month. Walker, Malloy & Co. represented the Chengdu Xinan Gynecological $48.6 Warburg Pincus LLC (Manhattan) GCI MOVES AND EXPANSIONS landlord, Shared Equities. Hospital Co. Ltd. STOCK TRANSACTIONS Eastern Consolidated rep- Berggruen Hotels Private Ltd. $31.0 Berggruen Holdings Inc. (Manhattan) GCI ■ Artists & Fleas resented the tenant. Selected deals announced for the week ending June 1 involving companies in metro New 568 Broadway ■ AllianceBernstein York. SB M&A: Strategic buyer M&A represents a minority or majority acquisition of existing The popular flea market in (AB-N) ■ PPP Family, the shares of a company without the participation of a financial buyer. GCI: Growth capital Williamsburg and Chelsea Board director Scott family-run company investment represents new money invested in a company for a minority stake. has opened its third city lo- Schoen sold 61,985 shares behind Thaiker by Plant SOURCE: CAPITALIQ cation, in Soho, with nearly of common stock at prices Love House, a Thai 100 merchants. ranging from $21.09 to restaurant in Prospect GET YOUR NEWS ON THE RECORD * $21.28 per share from May Heights, signed a 10-year To submit company openings, moves or real estate deals, or to receive further information, ■ Butcher Bar 12 to May 15 in transac- lease at 752 Coney Island ABOUTemail [email protected] SECTION. 146 Orchard St. tions worth $1,314,385. He Ave., Brooklyn, to open a For the Record is a listing to help businesspeople in New York find opportunities, potential The Astoria-based butcher now holds 15,627 shares. 1,600-square-foot restau- new clients and updates on customers. Bankruptcy filings from the eastern and southern shop and barbecue joint rant. The asking rent for districts of New York are listed alphabetically. Stock transactions are insider transactions opened its third location, ■ AmTrust Financial the deal was $40.88 per at New York companies obtained from Thomson Reuters and listed by size. Real estate on the Lower East Side. Services Inc. (AFSI-O) square foot. Ideal Proper- listings are in order of square footage. Like its sister spots, this Stephen Ungar, general ties Group represented the

26 | CRAIN’S NEW YORK BUSINESS | June 12, 2017

P026_CN_20170612.indd 26 6/9/2017 4:07:30 PM PHOTO FINISH

The end of the dollar slice? anging on the wall of 99¢ Fresh Hot Pizza in Downtown Brooklyn last Wednesday, the above sign was giving at least one customer indigestion. “I’m gonna go right across the street,” a middle-aged man told the cashier as his wife ordered two slices. “I’m just warning you now.” HDollar pizza has been a key ingredient for tight lunch budgets since the Great Reces- sion. But the balancing act of maintaining that price point requires keeping the costs of labor, ingredients and rent under control while attracting a steady stream of customers with uncomplicated tastes. After seven years in business, that equation is getting out of whack for co-owner Hoq Bablu. “We can’t afford 99 cents anymore,” he said. Mozzarella is up 25 cents per pound on average compared to 2016, according to the USDA, and a drought has ravaged the spring wheat harvest. Eateries are facing minimum-wage increases along with rising rents. At the counter, the same irate customer was keen to buy low. “Before the price goes up, give me two more,” he said. Of course, Bablu’s joint is far from his only dollar-pizza option. 99¢ Fresh Pizza—which has no relation to Bablu’s business and has been around since at least 2007—has seven city locations; 2 Bros. has nine. And just as 99¢ Fresh Hot Pizza wasn’t the first to hawk dollar slices, it looks like it won’t be the first to raise prices either. By Friday the sign had been taken down, and employees said the planned increase had been scrapped. — PETER D’AMATO PETER D’AMATO

June 12, 2017 | CRAIN’S NEW YORK BUSINESS | 27

P027_CN_20170612.indd 27 6/9/2017 6:19:36 PM 3745 RIVERDALE AVENUE | BRONX, NEW YORK +/- .5 ACRES OF PRIME RIVERDALE DEVELOPMENT SITE FOR SALE

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CN018282.indd 1 6/5/17 12:13 PM