CRAINSNEW YORK BUSINESS Far West Side ‘cells’ out P. 6 | THE LIST Largest real estate nancings P. 16 | Sports memorabilia market’s foul play P. 21 NEW YORK BUSINESS® MAY 1 - 7, 2017 | PRICE $3.00 CRAINSNEW YORK BUSINESS ALL ABOARD (Except the driver) Startups like Bandwagon believe the future of autonomous vehicles will be shared PAGE 18 VOL. XXXIII, NO. 18 WWW.CRAINSNEWYORK.COM NEWSPAPER P001_CN_20170501.indd 1 4/28/2017 6:05:20 PM CN018201.indd 1 3/22/17 11:02 AM MAY 1 - 7, 2017 CRAINSNEW YORK BUSINESS FROM THE NEWSROOM | JEREMY SMERD | EDITOR IN THIS ISSUE Make newspapers great again 4 AGENDA 5 IN CASE YOU MISSED IT DONALD TRUMP HAS BEEN A GIFT to media companies, as 6 ASKED & ANSWERED viewers and readers the world over tune in to find out what the unpredictable president is up to. There has been a rise in 7 HEALTH CARE subscriptions to national publications and a ratings bonan- 8 WHO OWNS THE BLOCK za for public polemicists and pundits. 9 REAL ESTATE Concrete Now New York print publications big and small may be 12 SPOTLIGHT ways able to get in on the action thanks to Trump’s tax plan. Yes, developers 13 POLITICS are making the plan would be good for newspapers—an unintended money 14 VIEWPOINTS result that underscores how our tax system is a cobbled- together set of policies designed to accommodate partic- 16 THE LIST ular interests. Eliminating a policy triggers a cascade of Not being able to FEATURES consequences, with winners and losers who will fight for 18 DRIVERLESS CARS or against it—whichever one is best for them. I’m not be- deduct state and “ 21 GAME-USED grudging our system. Self-interest is not the same as self- local taxes makes it ishness; it is rational and in many ways predictable. But it more expensive for also makes legislative change hard. Trump’s plan would make many New Yorkers losers me to live here. It’s a because it would eliminate their ability to deduct state double whammy and city taxes from their federally taxed income, reduc- ing their take-home pay. “New York City taxpayers get the shaft,” accountant Jonathan Medows told me. “Not being able to deduct state and P. 6 SUSAN local taxes makes it even more expensive for me to live here. It’s a double whammy.” SOLOMON A by-product of the plan—less federal tax revenue—could mean less state aid from Washington, leading to budget gaps in New York and local tax hikes to fill them. 25 GOTHAM GIGS (See how Mayor Bill de Blasio is not preparing for that possibility, page 13.) 26 SNAPS Which brings us back to newspapers. One of the centerpieces of the president’s 27 PHOTO FINISH tax plan is to slash income-tax rates for limited liability companies to 15% from 35%. That would be a huge boon to businesses. And by businesses, I mean pretty CORRECTION much anyone not employed full-time. That’s because if the measure passes, every State Street removed its plaque advertising its SHE exchange-traded fund April 2. That fact was mis- local freelancer would form an LLC to qualify for the 15% tax rate. “I would expect stated in “Fearless Girl is an advertisement. State to see an uptick in LLC formation at the state level,” Medows said. Street should pay to show it,” published April 17. Creating an LLC is fairly easy: Pay a small fee to the state, and find a name not used by anyone else. Oh, and advertise in a daily and a weekly print publication for six consecutive weeks. (Theatrical groups, inexplicably, are exempt.) The internet— Craigslist in particular—killed the classified-ad business. But in New York, the rule requiring new LLCs to publish notices of their creation has helped keep the deci- mated newspaper business from collapsing altogether. Those of us intent on bring- ON THE COVER ing readers great content are grateful for every dollar. With any luck the Trump tax PHOTO: BUCK ENNIS plan will pass and a boom in LLC formation will follow. But don’t bank on it. DIGITAL DISPATCHES CONFERENCE CALLOUT JUNE 14 Go to CrainsNewYork.com REAL ESTATE: DON’T JUST READ Last week we THINK BIG. BUILD BIG. featured “To make money, restau- SL Green CEO Marc Holliday > rants need to think will keynote a morning-long beyond the plate,” conference on the the latest in a series magnitude, complexity about being successful and necessity of in New York. To read building transformational installments on real estate and tech, go to projects like One Vanderbilt. CrainsNewYork.com/HowtoMakeMoney. SHERATON NEW YORK TIMES SQUARE HOTEL ■ NOMINATE Know a fast-growing com- pany headquartered in the New York area 8 a.m. to noon that had at least $10 million in revenue [email protected]. last year? Let us know. We are looking for companies to feature on our annual Vol. XXXIII, No. 18, May 1, 2017—Crain’s New York Business (ISSN 8756-789X) is published weekly, except for Fast 50 list. To submit a company, go to double issues the weeks of June 26, July 10, July 24, Aug. 7, Aug. 21 and Dec. 18, by Crain Communications Inc., 685 Third CrainsNewYork.com/Fast50Nominate. Ave., New York, NY 10017. Periodicals postage paid at New York, NY, and additional mailing offices. Postmaster: Send To view previous honorees, go to address changes to: Crain’s New York Business, Circulation Department, 1155 Gratiot Ave., Detroit, MI 48207-2912. For subscriber service: Call (877) 824-9379. Fax (313) 446-6777. $3.00 a copy, $99.95 one year, $179.95 two years. CrainsNewYork.com/Fast50. The deadline (GST No. 13676-0444-RT) ©Entire contents copyright 2017 by Crain Communications Inc. All rights reserved. for submissions is May 31. BUCK ENNIS May 1, 2017 | CRAIN’S NEW YORK BUSINESS | 3 P003_CN_20170501.indd 3 4/28/2017 6:50:07 PM WHAT’S NEW May 1, 2017 AGENDAThe city’s plan to tax Midtown East development rights doesn’t add up anhattan Borough President Gale Brewer is not shy about government intervening in the market. So when she testi- fied at a hearing last week that the city is overreaching in a crucial rezoning, it was as bright a red flag as can be. MEveryone agrees on the premise of the plan: to allow modernization of Midtown East’s office buildings and construction of new ones, and use new tax revenue to pay for public-realm improvements to accommodate the added activity. An ancillary provision would allow landmarked build- ings, notably several religious institutions, to sell their development rights CENTRAL SYNAGOGUE just to projects elsewhere in the district. The sales would be taxed to fund wants to sell its air rights for as things like wider sidewalks and subway platforms to alleviate crowding. much as it can. The question is how to ensure that the tax on the sale of air rights pro- duces enough money to pay for the needed public improvements but is not so steep that it discourages the sales that would trigger it. The de Blasio it be taxed as a $10 million sale because it might have fetched that five administration wants a 20% tax to be based on a minimum value for the years earlier? What about a handbag placed in the discount bin because it air rights, even if the actual sale price is much lower. is last year’s fashion? Taxing it at the original price could prevent it from “If we pick a price that’s a little low we can all live with that,” Brewer being sold at all. In the case of Midtown air rights, a nonsale prevents the said. “If we pick one too high, we could undermine all our efforts.” She private- and public-realm improvements the neighborhood needs. fears the city’s proposed minimum tax of City officials justify the price floor be- $78.60 per every square foot would deter A tax on air rights makes sense. But cause they say it will eliminate any incentive sales. Councilman Daniel Garodnick, whose let property owners determine how for sellers and buyers to conspire to reduce verdict will determine the council’s decision much they’re willing to sell them for the price of air rights, thus reducing their this summer, is also worried. tax bill. All taxes are subject to evasion, but The mayor’s office says the city would would landmarked houses of worship really evaluate the fee every five years and adjust it as needed. But the very no- risk fraud charges for a few extra bucks? What else could they get for air tion of the government setting the market price is a contradiction. Market rights besides money? The city won’t say. City interference in the market prices are what the market pays. Imagine if other sales taxes were based on has backfired in the past—for example, rent regulation has contributed to what the government thinks something is worth, rather than what it actu- evictions, dilapidation and high housing costs. There’s reason to believe it ally sells for. If a townhouse sells for $5 million in a down market, should would do so again. — THE EDITORS FINE PRINT The first of two new Kosciuszko Bridge spans opened April 27, not even three years after a contract to replace the aging structure was signed. That quick turnaround was possible because the contract was designated design-build and awarded to a single bidder, saving time and money.