CRAINSNEW YORK BUSINESS THE LIST: NYC’s top VC rms P. 10 | Macy’s falls into political divide P. 12 | Katz’s old-school young owner P. 24 NEW YORK BUSINESS® FEBRUARY 20 - 26, 2017 | PRICE $3.00 REDEMPTION VOL. XXXIII, NO. 8 WWW.CRAINSNEWYORK.COM How an entrepreneur built a multimillion-dollar business STORY one nickel at a time Page 14 NEWSPAPER P001_CN_20170220.indd 1 2/17/17 7:47 PM FEBRUARY 20 - 26, 2017 CRAINSNEW YORK BUSINESS FROM THE NEWSROOM | JEREMY SMERD IN THIS ISSUE Good intentions gone bad 4 IN CASE YOU MISSED IT 5 HEALTH CARE To solve the MAYOR BILL DE BLASIO’S “new front line in the battle to keep housing 6 WHO OWNS THE BLOCK crunch, look in New York City affordable” is jobs, as he said in his State of the basement the City address last week. But in his quest to create more 7 REAL ESTATE of them, he should be mindful not to hurt the private sector 8 ASKED & ANSWERED he’s purportedly trying to help. 9 VIEWPOINTS A case in point is the 300,000-square-foot facility in Sun- 10 THE LIST set Park, Brooklyn, that the mayor announced last week will FEATURES be used to help manufacturers grow and hire. The city says the $136 million investment will lead to 1,500 permanent 12 RETAIL POLITICS fashion, film and television jobs, helping the mayor achieve 14 CAN DO his goal of creating—over more than a decade—100,000 We are getting calls positions that pay $50,000 and up. That seems eminently from productions doable. After all, since he took office, the private sector has P. 8 “ MARTA created nearly three times that amount—a record gain of that want to film MARTINEZ 280,000. (See our editorial, page 3, on how we think the in New York, but mayor ought to refine his approach to job creation.) honestly there isn’t The question for me is whether the proposal supports or competes with private-sector companies already oper- enough space ating in film and television. For garmentos, it’s clear that subsidized maker space is needed, just as food manufac- turers and companies in the construction supply chain need space if they are to build their products nearby. It’s less clear to me why the city is subsidizing the film and television industry, 24 GOTHAM GIGS which has grown like gangbusters into a $12.5 billion sector in the dozen years since 25 SNAPS the state tax credit—now $420 million annually—was implemented. 26 FOR THE RECORD Julie Menin, commissioner of the Mayor’s Office of Media and Entertainment, 27 PHOTO FINISH said that despite property owners’ willingness to build large stages here—which they are currently doing—few have the kind of room offered by the vast Sunset Park facility. “Right now we are getting calls from productions that want to film in New York, but honestly there isn’t enough space,” she said, adding that the Sunset Park soundstage will “equal 5% of existing soundstage stock—and we need it.” It’s important to note, Menin said, that a company will be selected through competitive bidding to operate the stage. But the Sunset Park project may ultimately undermine the film and TV industry by fueling criticism that it is being lavished with things it can do without. And that is ironic because the one freebie that executives deem essential is the tax credit. Without it, they say 80% of the city’s production work will dry up. “Why is the city ON THE COVER intervening in an area where it’s not needed?” one industry source asked. “If you PHOTO: BUCK ENNIS overdo it, it actually hurts the industry.” DIGITAL DISPATCHES CONFERENCE CALLOUT MARCH 1 Go to CrainsNewYork.com READ Smith Elec- STEVEN BANKS MEET CITY HALL’S tric Vehicles Corp. > HOMELESSNESS CZAR shuttered its opera- Steven Banks, commissioner of tions due to a lack of the city’s Human Resources funding. The company Administration, will discuss the had been considered mayor’s plan to address the a promising source of rise in homelessness as well as emission-free delivery his efforts to change the city’s trucks. approach to welfare programs. ■ Cuomo administration officials defended THE NEW YORK ATHLETIC CLUB the governor’s plan to save $55 million in pharmaceutical spending by capping prices 8 to 9:30 a.m. on high-cost drugs. The cap is intended to [email protected]. target companies whose products are exorbi- tant because they do not face competition. Vol. XXXIII, No. 8, Feb. 20, 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 ■ Financial firm Tullett Prebon is moving Ave., New York, NY 10017. Periodicals postage paid at New York, NY, and additional mailing offices. Postmaster: Send from one lower Manhattan office to another. address changes to: Crain’s New York Business, Circulation Department, 1155 Gratiot Ave., Detroit, MI 48207-2912. The deal to lease a 125,000-square-foot For subscriber service: Call (877) 824-9379. Fax (313) 446-6777. $3.00 a copy, $99.95 one year, $179.95 two years. space at 200 Vesey St. will last 15 years. (GST No. 13676-0444-RT) ©Entire contents copyright 2017 by Crain Communications Inc. All rights reserved. BUCK ENNIS, COURTESY OF NYSERDA 2 | CRAIN’S NEW YORK BUSINESS | February 20, 2017 P002_CN_20170220.indd 2 2/17/17 8:01 PM WHAT’S NEW FEBRUARY 20, 2017 AGENDAMayor de Blasio talks jobs, finally. But he should focus on what works ill de Blasio has spent much of his mayoralty talking about af- fordable housing, prekindergarten, paid sick leave and a rise in the minimum wage as antidotes to inequality. Oddly absent from his talking points has been the creation of quality jobs, Bwhich must be part of any plan to help the poor and the working class. The omission has been ironic because employment growth has turned out to be a highlight of de Blasio’s first term: About 280,000 private-sector jobs were added in the city during his first three years—a historic achievement, NEW YORKERS are although not one attributable to his policies and perhaps despite them. going to work in It’s possible that the mayor did not initially emphasize jobs because of record numbers, but the mayor a prevailing sentiment that the economy was largely creating positions in says good jobs fast food, retail, home health care and other low-wage industries. That may are those paying at least $50,000. have been true in the aftermath of the Great Recession. But it turns out, retail employment has fallen slightly during de Blasio’s tenure, the only job mary obligations to businesses: to create the conditions in which they category to decline. And wage growth was strong in 2015 for the first time can thrive and to steer students on a path to employability. The city has in years, a sign that a shrinking pool of available workers is pressuring the improved in those two areas but still has far to go. It is infamous for red city’s employers to raise pay. tape, and of the 70% of high schoolers who graduate on time, only 37% Whatever the case, de Blasio last week are college-ready when they do. Sustaining suddenly made job creation the central pro- Once career ladders are built, many recent gains on these metrics is essential. But posal of his re-election year. He set a goal de Blasio is right not to give up on the vast of fostering 100,000 good jobs—that is, po- New Yorkers need support to ascend pool of underskilled, undereducated New sitions paying $50,000 or more—over a de- them because of issues in their lives Yorkers. Two keys for the mayor are work- cade. These jobs would result directly from ing closely with employers to design training city initiatives, he indicated, and be available programs and focusing resources on New even to New Yorkers who currently lack the skills to fill them. “We’re going Yorkers with ambition and potential. Once these career ladders are built, to provide the training and the support,” he vowed, offering few details but however, people typically need support to climb the rungs because of var- naming film and television production, life sciences, technology, advanced ious issues in their personal lives. That is what makes these undertakings manufacturing, construction and garment making as areas of focus. so challenging. We wish the mayor luck, but it will take more than that. This is a welcome effort, albeit peripheral to government’s two pri- — THE EDITORS FINE PRINT A day after a city official mused at a Crain’s forum that his agency might not be needed to regulate a consolidated carting industry, his policy director walked back the statement. Daniel Brownell, head of the Business Integrity Commission, had said, “I’m not even sure you’d need a BIC” if the city carries out a plan for zoned collection of commercial waste. The policy director said the BIC would continue to regulate the industry. BY GERALD SCHIFMAN STATS 25 WORDS OR LESS ROAD WORRIERS AS SUPPORTERS of an area traffic-reduction plan try again to get a bill through Albany, new figures show New York City's congestion is worsening. AND THE CIT We were from the Hours the average New York City driver spent in peak-hour “ congestion last year.