20160118-NEWS--0001-NAT-CCI-CN_-- 1/15/2016 6:51 PM Page 1 EDITORIAL: Cuomo’s cuts P. 4 | Lobbying liberty P. 7 | Up-and-coming East New York P. 8 CRAINS ® JANUARY 18-24, 2016 | PRICE $3.00 NEW YORK BUSINESS SKYSCRAPERS ON STILTS The little loophole that’s helping developers VOL. XXXII, NO. 3 WWW.CRAINSNEWYORK.COM build their supertall towers even higher PAGE 15 03 5 PLUS: Full real estate coverage PAGES 14-19 NEWSPAPER 71486 01068 0 OPPORTUNITY It’s the very essence of New York. From its beginning, our City has been a magnet for talent. The most ambitious, enterprising and creative—from all walks of life—have driven New York forward. Today, our City’s energy has led to robust job gains, historic additions to the skyline and a future that is as exciting as its past. CBRE is proud to play a part in our City’s continuing success by helping our clients succeed here—ensuring that New York remains the land of opportunity. 20160118-NEWS--0003-NAT-CCI-CN_-- 1/15/2016 6:56 PM Page 1 JANUARYCRAINS 18-24, 2016 FROM THE NEWSROOM | JEREMY SMERD Funding cut hurts makers IN THIS ISSUE 4 AGENDA BROOKLYN BUSINESSES ARE riding the borough’s boom, 5 IN CASE YOU MISSED IT feeding off its creative energy and the desire of young 6 ASKED & ANSWERED professionals to work near where they live. But demand for 7 POLITICS space is taking its toll, especially on the entrepreneurs who 8 WHO OWNS THE BLOCK have made the maker economy hip again. 9 TRANSPORTATION Sleep center Crain’s traveled to Brooklyn last week to meet with 10 shuts after businesses in the borough. Many were manufacturers INSTANT EXPERT hospital poaches dream team representing the gamut of old Brooklyn (Belmont Metals, 11 HEALTH CARE Lee Spring), new Brooklyn 12 VIEWPOINTS (Suneris, maker of a blood-clotting agent)and the old-is- How can you cut [our 14 THE LIST new-again Brooklyn (Kings County Distillery, New York Distillery, Van Brunt Stillhouse). “funding] by so much FEATURES All said they could grow if only they had enough space, when it’s already 15 REAL ESTATE capital or talent. Lee Spring, for example, said its business is so hard to make 61 GOTHAM GIGS growing but its head count isn’t, because it can’t find 64 EXECUTIVE MOVES qualified workers. “We can’t even find qualified it in New York? 65 SNAPS applicants,” its president, Al Mangels, later told me. Now a major resource the businesses have relied on to survive is being squeezed. 66 FOR THE RECORD ITAC, a technical assistance organization that is a nexus for manufacturing in the 67 PHOTO FINISH city, provides the kind of below-market-rate consulting that has helped these high-tech and manufacturing companies operate more efficiently in tight spaces and grow into new markets. But in late October, ITAC was told that its funding, P. 61 Rick Rome which is disbursed through the state, would be slashed 54%—a change that would take place Jan. 1, not midyear, when its contract was scheduled to expire. To get its remaining budget, it had three weeks to respond to an RFP. Only in late December was it told it would get even that. “How can you cut it by so much when it’s already so hard to make it in New CORRECTION York?” asked ITAC Executive Director Kinda Younes. She hasn’t gotten any answers. ZEESY STERN is an occupational therapist, not a Empire State Development told me that its funding is based on the number of special-education teacher. This information was misstated in manufacturers in each region with fewer than 500 employees, but didn’t elaborate. the Jan. 11 “3-D printers helped give Zeesy Stern a Politicians pay lip service to helping the city retain good-paying manufacturing new jaw.” jobs, but the companies that have received ITAC’s help say its funding cut is an ominous sign. ITAC is one of 10 such technical development organizations in the state. Now New York’s funding has dwindled to about $166 per manufacturer in the city, compared with the $800 per company statewide average, ITAC said. Other states court our businesses all the time. We can’t compete on space, but we can compete on almost everything else. Organizations like ITAC help entrepreneurs ON THE COVER do more with less and are exactly what we should be investing in if Brooklyn is to : retain the makers remaking the city. Ⅲ ILLUSTRATION MICHAEL KORFHAGE CONFERENCE CALLOUT FEBRUARY 25 DIGITAL DISPATCHES CRAIN’S BUSINESS Go to CrainsNewYork.com BREAKFAST FORUM READ Flatiron district-based software Melissa Mark-Viverito, speaker of the service provider Datadog, which has an City Council, will outline A-list roster of clients including Netflix and her priorities for the second half Spotify, nabbed $95 million from Iconiq of her term and answer Capital and existing investors. questions from ■ Facebook co-founder Chris Crain’s journalists. Hughes, who owns a majori- > ty stake in The New Republic, said NEW YORK he will be talking to interested ATHLETIC CLUB buyers. The magazine has had a 8 a.m. to 9:30 a.m. rough year: Editors resigned and [email protected] the publication’s frequency was halved, to 10 issues a year. Vol. XXXII, No. 3, January 18, 2016—Crain’s New York Business (ISSN 8756-789X) is published weekly, except for double issues LISTEN to a discussion of our cover story, the weeks of June 27, July 11, July 25, Aug. 8, Aug. 22 and Dec. 19, by Crain Communications Inc., 685 Third Ave., New York, analysis of the mayor’s housing promises NY 10017. Periodicals postage paid at New York, NY, and additional mailing offices. Postmaster: Send address changes to: and the state’s effort to have lobbyists dis- Crain’s New York Business, Circulation Department, 1155 Gratiot Avenue, Detroit, MI 48207-2912. close their interactions with journalists. For subscriber service: Call (877) 824-9379. Fax (313) 446-6777. $3.00 a copy, $99.95 one year, $179.95 two years.(GST No. 13676-0444-RT) Music by Relations. CrainsNewYork.com/podcast BUCK ENNIS, OFFICIAL COUNCIL NYC BY PHOTO ARMAN DZIDZOVIC ©Entire contents copyright 2016 by Crain Communications Inc. All rights reserved. JANUARY 18, 2016 | CRAIN’S NEW YORK BUSINESS | 3 20160118-NEWS--0004-NAT-CCI-CN_-- 1/15/2016 6:54 PM Page 1 AGENDAWHAT’S NEW JANUARY 18, 2016 Cuomo’s budget discpline suddenly comes at New York City’s expense ov. deserves great credit for holding increases in state spending under 2% in every one of his budgets, following years of unsustainable growth. It was meaningful because it was done without accounting gimmicks, which had Gbecome routine in state government. But last week the governor proposed a change that would eventually save the state more than $1 billion a year by shifting the expense to New York City. That’s not reform. Cuomo’s budget director initially said the reason the city should pay more for Medicaid and the City University system is that the city’s budg- et picture looks good for the next few years. Essentially, she said, Gotham can afford it. A day later, Cuomo backed away from that rationale, saying that the state would work with the city to find efficiencies to achieve the savings. The city has budgeted responsibly and enjoyed robust growth since Unfortunately, his budget does not lay out any such efficiencies. Only the recession, but the state already benefits from that—our residents and cuts. And only New York City would businesses provide the lion’s share of state get this treatment. Not Rochester, not The governor deserves credit for fiscal income-tax revenue. Several years ago, Syracuse, not Utica. Just us. the state capped all localities’ Medicaid Cuomo has an answer for this: The discpline during his tenure. But costs and agreed to pay for any growth. city was exempted from the state’s merely shifting state expenses Tax revenue reaped from New York City is 2% cap on property-tax growth. But to the city? That’s not reform the reason Albany can afford to do so. To Medicaid had nothing to do with that exclude the city from that benefit would decision. Most states ask their locali- be perverse. ties to pay very little toward Medicaid, and they don’t have tax caps. Cuomo has a better argument on CUNY funding, given that the state Rather, they recognize the burden Medicaid would impose on cities picked up that expense to help the city out of its 1970s fiscal crisis, which with many poor people who qualify for the program. And despite the is long over. That said, announcing $730 million in cuts over two years rosy picture that Cuomo’s budget director painted of New York City’s was a rude way to start the conversation. But his Medicaid proposal is fiscal situation, we still have a high poverty rate and easily the largest where the big money is. There should be one funding system for the state, Medicaid population in the state. not a special hell where only New York City pays more. – THE EDITORS FINE PRINT City pools will now be required to post a sign forbidding swimmers from having breath-holding contests, or face a $200 penalty. Four people died at city pools from underwater swimming or breath-holding between 1988 and 2011, according to the city’s Department of Health and Mental Hygiene. The agency held a public hearing on the rule change in November at which no one testified.