Brain drain looms for de Blasio asrulesforceoutBloomberghires

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VOL. XXX, NO. 40 WWW.CRAINSNEWYORK.COM

Teel Lidow’s BoerumApparel is one ofseveral fashion firmsat the vanguard ofsustainable sourcing

BY CHRIS BRAGG

The de Blasio administration is fac-ing a major brain drain as a court de-cision, civil-service rules and statelaw will force it to shed thousands of

experienced middle managersacross dozens of city agencies.

The upheaval has already begunin some quarters: A city source saidthe Department of Design and Con-struction started letting employeesgo in August and September, and aspokesman for the agency confirmedthat 15 had lost their jobs last month.

But the real bloodletting willoccur over the next two years.

This week,Mayor Bill de Blasio’sadministration will submit a plan to

the state Civil Service Commissiondetailing how the city will slashthousands of “provisional” employ-ees from its payroll. The city mustreplace most of them with “perma-nent”employees by the end of 2016.

Some of these provisional work-ers—who,as their titles suggest,weresupposed to be temporary—havebeen on the city payroll for years.

The state constitution dictatesthat governmental appointments be

See BRAIN DRAIN on Page 31

Brain drain looms for de Blasio as rules forceoutBloomberghiresLayoffs have begunand could run intothe thousands

BY ADRIANNE PASQUARELLI

Teel Lidow visited New Zealand last year look-ing for happy sheep.

He traveled from his home in Brooklyn tofind merino wool good enough for hissweaters, the first products from his clothingbrand, Boerum Apparel.

Mr.Lidow,29,was searching not only for softfibers at the right price,but also a farm that raisedits animals humanely, a mill that didn’t pollutethe earth and a factory whose employees madedecent wages under safe working conditions.

“I was very good at purchasing things Ithought were made in an ethical way,” said Mr.Lidow,a corporate lawyer turned entrepreneur.“I started applying that way of thinking to oth-er products I was buying, and I realized thatinformation just wasn’t there in the apparelindustry.”

The fashion-conscious now have a con-science. Just as restaurants are catering tocravings for farm-to-table goodies,fashion houses are tailoring clothesfor customers who want to weartheir values on their sleeves.Boerum Apparel is among a hostof fashion firms that look tosource their materials and la-bor ethically. It’s a notableemergence for an industry

From farm to fashion

See FASHION on Page 28

®

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ARTISTS INRESIDENCE53,000 vie for 90 East Harlemapartments P. 33

REPORTHEALTH CAREHealth insurance fromyour hospital? Getready for it P. 13

THE LIST Largest benefits consultants P. 15

COUNTING SHEEP:Animals are treatedhumanely at thisNew Zealand farm.

CLEAN WOOL: Anearby mill spinsthe wool into yarnwithout usingheavy pollutants.

KNIT PICK: AnL.A.-area factorywith good workconditions makesthe goods.

GOOD VALUE:The finishedproduct sellsonline for $150 to $195.

SWEATER STORY The clothing sold by Boerum Apparel has beenon a journey that is itself a selling point.

CRAIN’SNEW YORK BUSINESS

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2 | Crain’s New York Business | October 6, 2014

JPM HACKED. A cyberattack onJPMorgan Chase compromised 76million household accounts and 7million small-business accounts. Farbigger than first reported, the breachbegan in June but wasn’t discovereduntil July. The bank said there’s noevidence that account information,including Social Security numbers,was taken. … 7 TRAIN ON TRACK.Thelong-awaited 7-line extension fromTimes Square to 11th Avenue is setto open by Feb.24. If it does, the $2.4billion project’s contractor will getnearly $5 million for meeting thatdeadline. Originally,the new station atWest 34th Street wassupposed to be com-pleted by last De-cember. … GRADINGNYC.The city govern-ment earned a D forits performance inawarding contracts tominority- andwomen-owned busi-nesses, according to areport by Comptrol-ler Scott Stringerthat ranked 32 agen-cies. Just 3.9% of thecity’s $17.8 billionprocurement budget for fiscal year2014 went to these firms,down from5% in 2012.… QUEENS PROJECT GETSGO-AHEAD. The City Planning Com-

mission approved the 1,700-apartment Astoria Cove develop-ment despite complaints of insuffi-cient affordable housing. Under theplan, one-fifth of the units will beaffordable. … TIMES DROPS THE AX.The New York Times plans to cut 100newsroom jobs through buyouts andlayoffs—7.5% of its 1,330-personnews staff. It is also shuttering itsNYT Opinion mobile app becauseof poor subscription numbers. Up to25 business-side employees receivedpink slips last week. … DIGITAL.NYCGOES LIVE.The city launched its one-

stop shop to connectinvestors, venturecapitalists and Sili-con Alley wannabes.The website, pow-ered by IBM, is thefirst city site with the.nyc domain. …MICHELIN-STARREDEATERIES. Six cityrestaurants, includ-ing Per Se and LeBernardin, receivedthree stars in the2015 Michelin Guide,down from seven lastyear. Daniel, for one,was downgraded to

two stars. … CORNELL’S FIRST LADY.Cornell University named ElizabethGarrett its president—the firstwoman in that post in the school’s

149-year history. Ms. Garrett, theprovost at the University of SouthernCalifornia, will become the fourthfemale to lead an Ivy League school.She succeeds David Skorton, whowill run the Smithsonian Institutionin Washington, D.C. … ALVIN AILEYLEADER RETIRES. Joan Weill, 80, willstep down as chairwoman of thedance company at the end of 2014.She’s held the role since 2000.

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FYICRAINSNEWYORK.COM

‘They arepoisoning thewell … and

the trust thatwe need iseroded by

some of theiractions’

—Police CommissionerWilliam Bratton, on oustingproblematic NYPD officers

STORIES TO WATCH THIS WEEKOct. 6: Stateunemploymentbenefits rise 4%, toa maximum of $420a week.

Oct. 8: CityCouncil hearing ona proposed 10-centplastic-bag fee

Oct. 9: PepsiCo announces third-quarter earnings

Oct. 9: Ninthannual Comic Conbegins at JavitsCenter.

EDITOR’S NOTE

Health scareThere are at least two reasons toinvite investment banker StephenBerger to speak at a Crain’s healthcare conference. The audience getsan honest zinger of a public-policycritique from a former state officialwho has served five governors. Andthe editor gets an easy way to fill hiscolumn. Here’s what Mr. Bergertold some 800 people last week at

the Crain’s event, which explored an $8 billion, feder-ally funded effort to change the wasteful ways of NewYork’s hospital industry so it can better serve thestate’s 5.3 million Medicaid enrollees. “We have beentalking for what seems like forever about the need tomove away from a brick-and-mortar acute-care hos-pital system and create an integrated delivery systembuilt around primary care,” Mr. Berger reminded thecrowd. “No one has offered up their institutions forclosure, reuse or downsizing except when financialcollapse seems imminent. Even the most desperateinstitutions have not asked to be put out of their mis-ery.” The $8 billion effort includes waivers of antitrustrules to encourage hospitals to collaborate regionallyto deliver more effective care in New York, whichdrops $57 billion a year on Medicaid. “It is funding tocreate ... wholesale system change,” Mr. Berger said.“It means changing how institutions, providers, unionofficials, community leaders, politicians and the popu-lation at large see the health care system. ... It meansalmost no one remains untouched. It means somehospital closures will be necessary. ... It will requirelongtime competitors to cooperate. It means being ahospital executive or a member of a community hos-pital board and seeing the regional delivery system asyour primary, fiduciary, legal and moral responsibility,as opposed to a historic worldview ending at the bor-ders of your particular institution. And it means con-vincing communities that change and consolidationwill bring better care.” This will be one hard pill forNew York to swallow, but it just might offer a cure.

Glenn Coleman

—emily laermer

IN THE BOROUGHS-------------------------- 4IN THE MARKETS----------------------------------5THE INSIDER -----------------------------------------------6OPINION --------------------------------------------------------10GREG DAVID--------------------------------------------11REPORT: HEALTH CARE----------13THE LIST---------------------------------------------------------15CLASSIFIEDS -----------------------------------------26REAL ESTATE-------------------------------------------29NEW YORK, NEW YORK----------33SOURCE LUNCH--------------------------------34

THIS WEEK IN CRAIN’S

GOTHAM GIGSJon Forrest Dohlin is hookedon marine life. P. 8

CORRECTIONS (SEE PAGE 32)

vol. xxx, no. 40, october 6, 2014—Crain’s New York Business (ISSN 8756-789x) is publishedweekly,except for double issues the weeks of June 23, July 7, July 21,Aug.4,Aug.18 and Dec.22,by Crain Communications Inc.,685Third Ave.,New York,NY 10017.Periodicals postagepaid at New York,N.Y., and additional mailing offices.Postmaster: Send address changes to:Crain’s New York Business, Circulation Department, 1155 Gratiot Avenue, Detroit,MI 48207-2912.for subscriber service: Call (877) 824-9379. Fax (313) 446-6777. $3.00 a copy, $99.95 oneyear, $179.95 two years. (GST No. 13676-0444-RT)©Entire contents copyright 2014 by Crain Communications Inc. All rights reserved.

HOORAY!

AN ARMEDrobber stole

$5,000 fromthe QueensZoo—during

daylight.

OY VEY!

AFTER A FIVE-YEAR renovation, thelandmarked Rainbow Room at 30Rockefeller Plaza reopened Oct. 5.

Mega-landlord takes upfight against Airbnb

One of New York’s top landlords ismobilizing against Airbnb, whichcould presage a wider crackdown on

the controversial room-sharing company bythe city’s real estate industry. ¶ The RelatedCos. blasted out a warning to buildingmanagers to watch for tenants using Airbnband weighed offering snitches cash rewards. ¶Related is advising its managers to troll Airbnb listings for Related-owned properties and to informthe company’s “Airbnb marshals” of possible violators. An earlier draft of the presentation offereda chance to win a $500 gift card “for every Airbnb find that you identify.”The offer was droppedfrom the final draft. ¶ The effort opens a new front in the war to curtail the company in New York.The majority of Related’s units are subject to rent regulation, which prohibits rentals shorter than30 days unless a leaseholder is present. Aware that tenants using Airbnb to rent out their unitscould invite negative attention from city and state regulators, Related is going on the offensive. ¶Airbnb argues it provides a valuable community service that allows homeowners to earn extra cashby hosting travelers and tourists. But housing advocates, lawmakers and hotel unions contend thetech company is exacerbating the housing crunch by incentivizing landlords to push out low-income tenants. ¶ Now with Related in the mix, those critics can say that they have one of thecity’s largest owners of luxury properties on their side in their widening fight against Airbnb.

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—andrew j. hawkins

STALWART, STARTUP: Related Cos.’ Steve Ross, Airbnb CEO Brian Chesky

20141006-NEWS--0002-NAT-CCI-CN_-- 10/3/2014 5:40 PM Page 1

BY THORNTON MCENERY

A shortage of engineering workersin Silicon Alley’s fast-growing start-up scene has spurred the rise of codeacademies thatteach novicetechies in-demandWeb developmentskills and then helpplace them in jobsat New York com-panies of all sizesand sectors.

App Academy,Fullstack Acade-my, General As-sembly and Flat-iron School are among the leadingplayers to crop up in recent years,

along with a handful of other weeks-long intensive coding courses, thatput the development of the city’stech workforce on a fast track.

Most are for-profit businessesbacked by venture-capital funders

who see both agrowth industryand a way to plugthe talent shortagethat could help theirother startup in-vestments expand.

“Companies arehungry for talent,”said Kristen Titus,director of the deBlasio administra-tion’s NYC Tech

Talent Pipeline project, whichlaunched last month to support the

development of the city’s engineer-ing workforce.

According to the NYC TechEcosystem Report released earlierthis year by a coalition of business-es, employment in New York’s techsector grew by 18% between 2003and 2013, outpacing the city’s over-

all job growth of 12%. Additionally,the more than half-million jobs thathave been created by the tech indus-try pay an average hourly wage of$39.50—49% higher than the city’smedian hourly salary.

Those salaries have drawn stu-dents to code academies whose job-

placement success would make anycollege career-development officeenvious. General Assembly ChiefExecutive Jake Schwartz puts hisschool’s success rate at 90%. Thathas helped the school attract peoplelooking to pay for the privilege of

Code red hot. So,too, code schools‘Academies’ opening all over townto teach the Web development skillsthat employers can’t find enough of

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GIRLS WHO CODE helpsbridge the tech genderdivide. Here, a class at IACheadquarters.


BY THERESA AGOVINO

Every day, hundreds of men wear-ing bright blue uniforms sweep thecity’s sidewalks as they attempt totransform their lives. They are partof the Doe Fund’s signature Ready,Willing and Able program, whichoffers homeless men—many ofwhom are ex-convicts or former ad-

dicts—an opportunity to learn jobskills and find permanent housingand employment.

At its gala later this month, theDoe Fund will launch a $20 mil-lion, three-year campaign to ex-pand the men’s ranks by 500 people,for a total of 1,483. It’s the largestfundraising drive in the fund’s 29-year history, and founder GeorgeMcDonald believes the moment is

ripe for a renewed commitment bythe city’s philanthropic communityto invest in programs that addresseconomic disparities betweenblacks and whites.The fund will usethe money to broaden its reach tohelp men in their late teens and 20sfind meaningful employment.

“The problems of our discon-tented youth are literally coming toa head—look at Ferguson,” said

Mr. McDonald. “If we continue [aswe are],we’ll have a generation suf-fering from neglect that doesn’tknow the difference between rightand wrong.”

There are certainly more pro-grams focused on the unemploy-ment and incarceration risks blackmen, especially young ones, face.Among them are efforts like My

Doe Fund expands its scope New $20 million campaign to focus on unemployment among young black men

Dump reborn as golfcourse drives newwave of prosperity

BY KERRY MURTHA

In 2001, Vivian Machura bought anew home across the street from a50-year-old municipal landfill at thefoot of the Whitestone Bridge in theBronx. She did so based on thepromise that a swanky new golfcourse would soon replace thesprawling eyesore. Thirteen yearslater, that has finally happened.

“I’m just glad it’s done,” said Ms.Machura.

After more than a decade of con-troversy and huge cost overruns, theJack Nicklaus-designed 18-holecourse on the site of the 222-acre for-mer dump is set to open next spring.

Already a verdant oasis of man-made grassy dunes with sweepingviews of the East River and Manhat-tan skyline, it sets a whole new tonefor the area.In fact,residents,businessowners and local officials are bettingthat the eyesore turned eye candy willtrigger rises in property values, injectnew life into the local economy andhelp turn an isolated slice of the EastBronx into a real draw.

In other words, they hope thecourse will do for the surrounding

Ferry Point teed upfor growth

IN THE BOROUGHSBRONX

BY DANIEL GEIGER

The executive order Mayor Bill deBlasio issued last week that requirestenants at city-subsidized projectsto pay their low-wage employeesmore looks likely to have a limitedimpact—and could even make itharder to create entry-level jobs inthe poorer neighborhoods that needthem most, critics said.

Mr. de Blasio lifted the hourlyrate under New York City’s living-wage law to $13.13,up from $11.90,for workers who do not receive ben-efits. The mayor said the orderwould raise the wages of about

18,000 workers during the next fiveyears, but most of those workerswere already expected to be in jobsthat would command pay above thatthreshold. The actual number ofworkers who would see an income

boost is closer to 4,100 retail andrestaurant employees, according toan analysis by the Economic Devel-opment Corp.

The modest number of NewYorkers who will see their wages rise

is also owed to the fact that the newrule does not apply to projects whereincentives have already been grant-ed.Those include the colossal shop-ping malls being built at HudsonYards on the West Side and theWorld Trade Center, on Staten Is-land, and in Willets Point, Queens,that together have received hun-dreds of millions of dollars of publicsubsidies and will employ thousandsof workers.

Meanwhile, higher wages man-dated for future projects could makeit more difficult for developers tobuild them, real estate analysts said,possibly counteracting the mayor’sobjective of creating better-payingjobs by preventing real estate devel-opments that would house thosenew positions from getting out ofthe ground to begin with.That’s be-cause retailers who are forced to of-fer higher wages will look to recoup

See LIVING WAGE on Page 31

Living-wage hike offers limitedpayoff, poses some big risks

See DOE FUND on Page 32

4,100 workers willearn more, butcreating new jobsmay get harder

STATS AND THE CITY

$42.8BNET WORTH of David Koch, the richest New Yorker.Bill Gates, who tops the list, is valued at almost

double that amount, with $80.6 billion

+0.7%INCREASE in Rupert Murdoch’sfortune since last year—

the largest increase of any New Yorker. He is now worth $14 billion

$4,373AMOUNT hedge-fund manager

John Paulson (No. 34) earned eachminute in 2013, for a total of $2.3billion

1NUMBER of female NewYorkers on the list. Joan Tisch

ranked 185th, with a net worth of$3.1 billion

$457.9MTOTAL charitable contributions from Upper East Side ZIP code 10021,

the highest in the nation

New rule won’tapply to somehuge malls nowbeing built

WILLING AND ABLE: (From left) Doe Fund workersMaurice Hilliard and CourtneySparkman, Doe Fund founderGeorge McDonald, andworkers Armani Burkett andSriram Rosario

See FERRY POINT on Page 12

ADDICTED TO NUMBERS? GET A DAILY DOSE AT @STATSANDTHECITY

by Nicholas Wells

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ISN’T IT RICH? The Big Apple is home to 53 of the 400 richest people in thecountry, according to Forbes magazine. These tony New Yorkers are collectivelyworth more than $313 billion, about the same as the GDP of Malaysia.

Sources: Forbes, Crain’s research, Institutional Investor’sAlpha, Chronicle of Philanthropy, CIA Factbook

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Learn MoreBlow the whistle,save the company?

IN THEMARKETS

Whistle-blowers identifiedproblems like price-fixing at ArcherDaniels Midland and accountingfraud at Enron and WorldCom. Butnever have they possessed thepower that they do now.

The Justice Department, theIRS, the Securities and ExchangeCommission and other authoritiesare offering big sums to insiderswho bring useful evidence of finan-cial fraud.Just so nobody misses thepoint, U.S. Attorney Preet Bhararasaid at a forum sponsored by Crain’slast week that corporate Americaneeds to foster a culture in whichwhistle-blowers aren’t just tolerat-ed, but awarded by their employersfor bringing bad news.

That, of course, is a tall order.There is a “human concern that ‘IfI come forward, my career is over,no one is going sit with me at lunch,and no one’s going to want to hireme because I’m a troublemaker,’ ”Mr. Bharara said. “And that, Ithink, has to change.”

He added: “You have to makesure that, whatever kind of institu-tion it is, in the corporate world orotherwise, there is a culture in

which people who see bad conductcome forward. It doesn’t matterhow loud someone blows the whis-tle if the referees are wearingearplugs.”

L-3 seems like it took itswhistle-blower seriously.The com-pany said in July that it had uncov-ered misconduct and accounting er-rors in its aerospace division, whichwould result in $87 million worth ofcharges.The firm’s stock fell by 12%after the announcement. In lateSeptember, L-3 reported materialweakness in its internal controls andsaid it uncovered more accountingproblems.

Bad as the news is, the companydoesn’t appear hurt in a major way.It has $12 billion in annual revenueand doesn’t seem to have lost anygovernment contracts as a result ofthe accounting snafus. A spokes-woman said that the whistle-blower is still employed by L-3.

Considering that employeeswho reveal unpleasant truths all toooften lose their jobs, L-3’s responsemay be a sign that companies arelearning to treat whistle-blowersbetter. �

by Aaron Elstein

L -3 Communications is a Manhattan-based defensecontractor whose revenue has tripled since early lastdecade.The company grew by making more than 50

acquisitions. But this past July, L-3 warned investors that itwould have to “revise” three years’ worth of financialstatements because of accounting problems.

Late last month, it announced that it would take $164million in charges—almost twice as much as it initiallyindicated when the issue came to light this summer.

What’s most interesting about this case is that theaccounting troubles were identified by a whistle-blower. Moreabout L-3 in a minute, but first a word about whistle-blowers.

2%INCREASE IN FEES collected thisyear by Goldman Sachs, MorganStanley and other big Wall Street

firms from underwriting, trading and otheractivities, according to an RBC Capital Marketsestimate. If the number proves accurate, bankerbonuses figure to be modestly higher this year.


Join our List for Event Notifications and Email Alerts

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Public financing of candidates islikely to be a top issue in the 2015state legislative session, with pro-gressive groups, good-governmentadvocates and unions pushing hard

in favor.But if Mr.Antonacci fails toqualify, critics in the RepublicanParty and the business communitywill be emboldened.

“People looking for a reason—

and certainly in the Legislature thereare plenty of them—not to supportthis program, then they’ll use this asan excuse,” said Larry Norden, a deputydirector at the Brennan Center,which supports public financing.

Mr. Antonacci’s opponent,Comptroller Thomas DiNapoli, sup-ports publicly financed elections butdid not participate in the pilot pro-gram after its approval by the stateLegislature in March. The incum-bent, who would have had to returnlarge donations he’d collected forseveral years, called the program “aFrankenstein’s monster” that wascreated by lawmakers who eitherdidn’t understand public campaignfinance or at least didn’t believe in it.Mr. DiNapoli has about $2.8 mil-lion in his campaign coffers.

The program was modeled afterNew York City’s widely lauded sys-tem, which provides a 6-to-1 matchfor donations up to $175. But in-stead of applying it to all statewideand legislative campaigns in 2014,Gov. Andrew Cuomo and legislativeleaders restricted it to just the comp-troller’s race. It was the most thatSenate Republicans would tolerate.

Proponents, who say publicly fi-nanced elections empower candi-dates who are not independentlywealthy or backed by special inter-ests, were in-censed by thesmallness of thepilot program.Critics,such as theBusiness Councilof New York, saidpublic campaignfinancing of anymagnitude is a waste of taxpayermoney and invites cheating.

Although Mr. Antonacci’s ownparty is the primary objector to pub-licly financed elections, his viabilitydepends on it. A certified public ac-countant who has served as comp-troller for Onondaga County for thepast seven years, he said he wouldnot have sought statewide office ifnot for the pilot program. He isscheduled to debate Mr. DiNapoliOct. 15, but said if he can’t reach the$200,000 threshold, “the campaignmay be over by then.”

“We’ve tried everything,” Mr.Antonacci said. “It’s a tough pro-gram to explain” to donors.

The $200,000 target did not ini-tially seem challenging, but Mr.Norden said it might have been toohigh for a relatively obscure office.(A recent poll found that 52% ofvoters didn’t know enough aboutMr. DiNapoli, a seven-year incum-bent, to have an opinion.) Thethreshold needs to be high enough

The guinea pig for publicly financed campaigns in NewYork is dying. Robert Antonacci, the Republicancandidate for state comptroller, is $70,000 short of the

$200,000 in small gifts he needs to get $1.2 million in publicmatching funds.The sole participant in the state’s pilotprogram shows little optimism that he’ll reach the thresholdbefore the November election. “We haven’t been able to pushit over the goal line,” he said soberly. “We may not hit it.”

Hall of Fame2014

Join Crain’s and this year’s inductees representingthe city’s business community at its best.

For more information, contact the Events Hotline at 212-210-0739or email [email protected]. For sponsorship and journal advertising opportunities,contact Joanna Harp at 212-210-0278 or [email protected].

12:00 p.m. – 12:30 p.m.Registration and Networking Reception

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Karen Brooks Hopkins, President, Brooklyn Academy of Music

Kenneth Chenault, Chairman & CEO, American Express Company

Henry Kravis, Co-Chairman & Co-Chief Executive Officer,

Kohlberg Kravis Roberts & Co.

Terry Lundgren, Chairman & CEO, Macy’s Inc.

Danny Meyer, Chief Executive Officer, Union Square Hospitality Group

Dick Parsons, Senior Advisor, Providence Equity Partners

Steve Ross, Chairman and Founder, Related Companies

Jonathan Tisch, Chairman, Loews Hotels

Diane von Furstenberg, Founder & Co-Chairman, Diane von Furstenberg

monday, november 10, 2014

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Michael Bloomberg, Chief Executive Officer, Bloomberg L.P.

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Flailing for public financing

THEINSIDERby Andrew J. Hawkins

QUOTE OF THEWEEK: ‘The worldshould be wary ofGerman populists.But enough aboutBill de Blasio’

—Home Depot founder KennethLangone, roasting the mayor andother politicians at the annual Al

Smith Memorial Foundation Dinner

COMPTROLLERCANDIDATE ROBERTANTONACCI says hewouldn’t have run ifnot for the prospect ofpublic campaignfunds. But he mightnot qualify for them.

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$70KAMOUNT thatRobert Antonaccimust raise insmall donationsto qualify forpublic funds

See PUBLIC on Page 31


He’s hooked on marine life Disaster redoubles NY Aquarium chief’s resolve

Hundreds of kids clap and sway as Diego, a 375-pound sea lion, waves his flippers to the beat of“Happy” in the amphitheater of the WildlifeConservation Society’s New York Aquarium.Few move as enthusiastically as Jon ForrestDohlin, even though he’s seen the show countlesstimes before. “It just never gets old,” said Mr.Dohlin, who has been director of the ConeyIsland institution since 2008 and a WildlifeConservation Society vice president since 2010.¶ Teaching children about marine life and theimportance of protecting it are key parts of theaquarium’s mission, and one that he relishes. ¶Growing up in California, Mr. Dohlin, 54, had amenagerie of mice, snakes, lizards, fish and acouple of free-flying parakeets in his bedroom.Yet it took him a while to turn his love of animalsinto a career. He studied biology at HumboldtState University, but, he said, he didn’t have the

right demeanor to be a scientist. ¶ After stintsacting and running nightclubs, he enrolled inParsons to study architecture, hoping to designenvironmentally friendly buildings. His lastassignment, in 1997, was to create an exhibit forthe aquarium. He was hooked. Building anexhibit “involves animals, plus creating illusionand theater,” he said. ¶ His major task these daysis raising $41 million for a new shark exhibit toopen in 2016. It’s a year behind schedule becauseSuperstorm Sandy fried the aquarium’s powersystem. Mr. Dohlin and his staff spent 10 straightdays working to keep the fish alive, at times usinghand-held canisters to oxygenate the water. Butabout 15% of the animals died.The incidentintensified Mr. Dohlin’s resolve. ¶ “We need toget people to think about rising seawater andglobal warming,” he said. “We need to lead thatconversation.”

GOTHAM GIGS

‘We needto getpeople tothinkaboutrisingseawaterand globalwarming’

SeriousFunChildren’s Network:Mary Beth Powers,52, joined the campnetwork as chiefexecutive. She waspreviously associatevice president andcampaign chief for

the Newborn and Child SurvivalCampaign at Save the Children.Council of Urban Professionals:Brennon Marcano, 41, joined the lead-ership development organization asexecutive director. He was previouslyco-founder and executive director atWorkforce Opportunity Services.New York University School of Profes-sional Studies: Donna Quadri-Felitti,52, was promoted to academic chairof hospitality and tourism programsat the university. She was previouslyclinical associate professor.Fidelis Care: Michael Byrne, 40, joinedthe health insurance provider as med-ical director. He was previously med-ical officer and extensivist at Well-point and CareMore Health Plan.

Statue of Liberty-Ellis Island Founda-tion Inc.: Richard P.Flood, 39, joined thenonprofit as direc-tor of fundraisingand marketing. Hewas previouslydirector of market-

ing and community affairs for theWhitney Museum of American Art.Sam Schwartz Engineering: DanielSchack, 36, was promoted to directorof planning at the transportationengineering and planning firm. Hewas previously a project manager.David Burke Group: Natalie Dulaney,32, joined the restaurant group asdirector of wine. She was previously a sommelier, wine director andassistant manager at Steak HouseNo. 316.Brooklyn Chamber of Commerce:Michael Pantelidis, 26, joined as direc-tor of communications. He was pre-viously director of communicationsfor Councilman James Vacca.CBRE Group Inc.: Helene Jacobson, 47,was promoted to senior managingdirector in the New York tristateregion for the valuation and advisoryservices group at the real estate firm.She was previously managing director.

New York CityDepartment of SmallBusiness Services:Faiza Issa, 36,joined as assistantcommissioner ofinnovation andstrategy. She waspreviously director

of entrepreneurship initiatives in theCenter for Economic Transformationat the New York City EconomicDevelopment Corp.HR&A Advisors: Kumar Kintala, 30,was promoted to principal at the eco-nomic development, real estate andpublic-policy consulting firm. He waspreviously director.Thor Equities: Jonathan Banayan, 27,joined the real estate developmentand investment firm as director ofleasing. He was previously a retail

EXECUTIVE MOVES

B U S I N E S S

PEOPLE$7.5BBusiness taxes

collected by the cityin fiscal 2014, up12% from 2011

Source: Mayor’s Management Report

TANKS A LOT:Director Jon ForrestDohlin helped savemost of the New YorkAquarium’s fish afterSuperstorm Sandy.

—theresa agovino


buck

enn

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leasing broker at Winick Realty Group.HeartShare St. Vincent’s Services:Jennifer Glover, 42, joined the nonprofitchild-care agency as senior vicepresident of foster-care programs. Shewas previously a manager at WellPoint-Amerigroup.HUB International Northeast: AnthonyGiordano, 35, joined the insurancebrokerage as first vice president. He waspreviously senior vice president atKrauter & Co.Jacobs Associates: Bade Sozer, 39, waspromoted to associate at the consultingengineering firm. She was previously asenior project engineer.

Rooney & Associates:Jeanene Timberlake,34, joined the public-relations firm as asenior associate. Shewas previously theeditor of Wall StreetLetter andHFMTechnology.

Risa Heller Communications: James Yolles,33, joined the communications andpublic-affairs consultancy as anassociate. He was previously director ofcommunications at New Yorkers forParks.Cardiff Group: Phillip Gornail, 44,rejoined the management placement-services firm as an equity partner.He was previously producer of Forbes Living-FR Media, which he co-created.Peebles Corp.: Lowell D. Plotkin, 35,joined the real estate investment anddevelopment firm as general counsel. Hewas previously counsel at LowensteinSander.Goodwin Procter: Robert V. Cerwinski, 45,joined the law firm as a partner in itsintellectual-property litigation practice.He was previously a partner at Kenyon& Kenyon.Cynthia Lambert Hardman, 40, joined asa partner in the intellectual-propertylitigation practice. She was previously apartner at Kenyon & Kenyon.Elizabeth J. Holland, 49, joined as apartner in the intellectual-propertylitigation practice. She was previously apartner at Kenyon & Kenyon.Huiya Wu, 40, joined as a partner in theintellectual-property litigation practice.She was previously a partner at Kenyon& Kenyon.Goldberg Segalla: Stewart G. Milch, 46,joined the law firm as a partner andmember of the professional liability andappellate practice groups. He waspreviously a partner at MartinClearwater & Bell.

McCarter & English:Bernard L. Sacks, 71,joined the law firm asspecial counsel. Hewas previously seniorcorporate counsel atthe Louis BergerGroup.Dentons: Deepak

Reddy, 41, joined the law firm as apartner in its aviation finance group. Hewas previously counsel at Jones Day.Citrin Cooperman: Sylvie Gadant, 40,joined the accounting and consultingfirm as a partner. She was previouslyprincipal in charge of the transactionadvisory services at Rothstein Kass.Heller Organization: Joshua Abrams,24, has joined the full-service real estate firm as a sales associate.He was previously an associate in the commercial division ofaptsandlofts.com.

—nazish dholakia

CORPORATE LADDER

WRITING THE NEXT CHAPTER AT PENCILJOANNA CANNON’S role at education nonprofit Pencil won’t be that of the traditional chief operating officer. Managing theorganization will only be part of her responsibilities. Much of her focus will be on strengthening Pencil’s partnerships withbusinesses and schools. “I want to make sure we develop initiatives that are as high-impact as possible,” she said.

One initiative the nonprofit wants to expand with its $4 million budget is Pencil Fellows. The program places public-high-school students in internships at various companies including JPMorgan Chase, Bloomberg LP and JetBlue Airways.

“These students have high potential and have demonstrated success in core academic areas, but they lack the socialcapital and experience it takes to succeed in today’s labor market,” Ms. Cannon, 40, said. One-fourth of the city’s high-school students say they don’t have a parent or adult supporting their college plans, she said. Some 137 studentsparticipated in this year’s program. Pencil hopes to triple that number by 2017.

Ms. Cannon joins Pencil from the city’s Department of Education, where she was chief strategic officer for the Division ofTalent, Labor and Innovation. “Her strong ability to lead and grow an organization is something I saw firsthand,” said PencilPresident David Weiner, who previously worked with Ms. Cannon at the DOE. —NAZISH DHOLAKIA

EXECUTIVE PROMOTIONS

The fastest way to get an announcement intoCrain’s is to submit online. Fill out the form at www.crainsnewyork.com/section/executive_moves. The Executive Moves columnis also available online.


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OPINION

A dvocates for affordable housing oftenfocus on percentages, relentlessly pushingfor ever-higher portions of new buildingsto go to low-income tenants. Given thismyopia, they are sure to be disappointed,if not outraged, by the mandatoryinclusionary housing program expected

to be rolled out soon by the de Blasio administration.City officials have told Crain’s reporter Joe Anuta that the

revised program will result in roughly the same affordabilityratio as the one they inherited from the Bloombergadministration: 20%. But some activists and elected officialsdemand nothing short of 50%. What they miss is that NewYorkers cannot live in a percentage.They need apartments.A policy that requires an inflated percentage but yields nodwellings would not help them.

Alicia Glen, the deputy mayor for housing and economicdevelopment, was spot-on when she said, “If we get it wrong,there will be no buildings built—market or affordable.”

Unfortunately, some activists believe developers make somuch money that they will meet any mandate.These self-styled “progressives” can be decidedly progress-averse. Onegroup demanding 50% affordability at an Astoriadevelopment proudly declares its mission is to stop “theBrooklynization of Queens,” which it defines as “the loss ofmixed-income, economically diverse communities.” It isreferring to neighborhoods like Dumbo, Williamsburg andBushwick that have transformed the borough from a punch

line to a paradigm of urban revitalization. Reality check: Ifthe de Blasio administration had a magic formula forBrooklynization, cities by the dozens would line up to get it.They know progress when they see it.

For City Hall to meet its 10-year goal of 80,000 new unitsfor low-income households, it must leverage a limited supplyof housing subsidies to generate as many affordableapartments as it can. Rather than plow precious subsidiesinto projects that don’t need them, it aims to use them for

affordable projects thatcan’t be built withoutthem.

Fears that this willresult in exclusivecommunities areunjustified. Remember,affordable housingwould be mandatory inprojects benefitingfrom zoning changes.Such projects would

have to set aside 15% to 25% of units—as many as arefeasible without subsidies—for low-income households.City Hall would retain flexibility to ensure that thesedevelopments actually happen, and would use subsidiesinstead where upzoning is impractical or holds no value forbuilders.The result would be more units—affordable andmarket-rate—throughout the city.

The 20% solution

New Yorkerscannot live in apercentage. They needapartments


A TAX BILL’S TRUE IMPACTThe pied-à-terre tax proposedby state Sen. Brad Hoylman isa major concern among devel-opers building condos in theaffected price range—in otherwords, every new developmentin the city. But it’s not just de-velopers he’s after.

While the bill as posted isinconsistent, a possible readingindicates the tax includes anyClass 1 or Class 2 property val-ued at more than $5 millionthat is not a primary residence.It is the inclusion of Class 2properties that concerns me.Class 2 properties include mul-tifamily properties. Everyowner of a multifamily invest-ment property who doesn’t livein the building, including thosewho reside in New York City,are affected by this tax as well.

That is not the common def-inition of a pied-à-terre. Call-ing this a pied-à-terre tax is amisnomer and a poor attemptto spin the law as a tax against asmall segment of the popula-

tion when it really affects amuch larger segment of the realestate industry.

The senator’s justification forthe law attacks owners of cityreal estate who reside elsewhere.Moreover, the city’s largestprivate-sector providers of low-income housing are owners ofrent-regulated properties—thevery same Class 2 owners affect-ed by this bill.This bill is a taxon affordable housing.

To put this in terms that apolitician can understand:Themom-and-pop business ownerswho bought the mixed-usebuilding (ground-floor retailwith apartments upstairs) inwhich their retail business is lo-cated would now be subject toan additional tax. Owners ofrent-stabilized properties whodon’t live in their buildingwould face a tax on top of theminimal rent-increase al-lowances that are passed eachyear, as well as additional pres-sure to turn over regulated unitsto market rate and push upmarket rents to pay for this tax.

Pension funds invested in NewYork City apartment buildingswould incur an additional tax.

If Mr. Hoylman wants topass this bill on its merits, Ichallenge him to be honestabout the tax and who is af-fected by it. Promote an honestdebate. Calling this a pied-à-terre tax is disingenuous.

—arik lifshitzDSA Property Group

TISH JAMES’ JOBWhen I was a director at theHuman Resources Administra-tion, if any managers abused thetime-and-leave rules as PublicAdvocate Letitia James has,they would be disciplined(online poll, CrainsNewYork.com). An elected officialshould be held to the samestandard. Our tax dollars arebeing used to pay for this use-less, powerless position that isused by its occupants only as aplatform to seek higher office.It’s time to eliminate this office.

—marty

CCRRAAIINN’’SS OONNLLIINNEE PPOOLLLL

Pied-à-terribleCCOOMMMMEENNTTSS

CRAIN’S WELCOMES SUBMISSIONS to its opinion pages. Send letters to [email protected]. Send columns of 475words or fewer to [email protected]. Please include the writer’s name, company, address and telephone number.

FOR THIS WEEK’S QUESTIONS:Go to www.crainsnewyork.com/poll to have your say.

63%Uncle Sam

ARE YOU ROOTING FOR EX-AIG CEO MAURICE ‘HANK’GREENBERG OR THE FEDSIN HIS SUIT OVER THE U.S.BAILOUT OF HIS COMPANY?HANK. His lawsuit is forcing the financialsystem’s private and public players to accountfor their actions.

UNCLE SAM. The lawsuit reflects Mr.Greenberg’s hubris, which is symptomatic ofwhat caused the crisis in the first place. Date of poll: Sept. 30134 votes

37%Hank

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CRAIN’SNEW YORK BUSINESS

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on one man: Jeff Klein.Albany is currently divided into

several not-at-all-friendly tribes.The first is the overwhelminglyDemocratic and extremely pro-gressive Assembly.The second we’llcall the mainstream Senate Demo-crats, who are also pretty progres-sive.The third should be labeled theKlein Renegades, who have brokenwith the other Democrats and arefairly moderate. The fourth is theRepublicans, as conservative as itgets in New York politics (withmany caveats). The last is a tribe ofone, Gov. Andrew Cuomo, a pro-business centrist, at least during hisfirst term.

For the past two years, the gover-nor has run the show because theKlein Renegades and the Republi-cans have aligned to support Mr.Cuomo and his agenda. Now the

governor and Mr. Klein say theyplan to join forces with the main-stream Democrats, which they willdo to avoid an all-out war with therest of the party, and have signed onto progressive measures like the sep-arate state and city minimum wage.

First, voters have to elect a newstate Senate. A recent Capital NewYork story estimates that the Repub-licans can expect to win 25 seats (outof 63), and that seven races are con-sidered competitive.

If the Democrats win all sevenraces,they would command a major-ity.Unfortunately for the party, it hassuffered setbacks in Buffalo and onLong Island, and two Democrats—Ruben Diaz Sr. of the Bronx andSimcha Felder of Brooklyn—areunreliable and could side with theRepublicans.

The reality is there’s no way forthe mainstream Democrats to runthe Senate without Mr. Klein,whose four caucus colleagues seemassured of re-election and who is ex-pected to gain a new follower fromBrooklyn when Democrat JesseHamilton joins the tribe.

Many people I talk to say theydon’t believe Mr.Klein when he sayshe will align his group with themainstream Democrats. They ex-pect him to make another deal withthe Republicans, egged on by thegovernor.Then the mayor won’t gethis minimum-wage hike and Alaircan breathe easier about rentregulation.

But I am betting that Messrs.Klein and Cuomo stick by theirpledge. If they don’t, they will sparka bloodbath among the Democrats.I find it hard to believe they wouldthink that’s a good idea. If I amright, Mr. de Blasio will get his wayand Alair’s fears will come true.

NY’s future hangs on Klein, not Cuomo

millions of others. Here’s how itworks: Tipped employees are cov-ered by the same $8-an-hour mini-mum wage as all other employees inNew York.Their employers can paya lower base wage as long as em-ployees still earn the full minimumwhen tip income is included. If em-ployees fall short, employers arelegally required to make up the dif-ference.

Census Bureau data suggest thisisn’t a problem in practice: Tippedemployees report making more than$13 an hour on average, with topearners bringing in $24 an hour ormore.

This system works for the em-ployer, the employee and the con-sumer. Asked on MSNBC whatwould happen if the tipped wage

were eliminated, restaurateur TomColicchio estimated that full-service restaurant prices would riseby 25% to 30%. For many families,that could mean the difference be-tween dining out and staying in.And fewer customers means fewerjobs.

The economics aren’t complicat-ed. Full-service restaurants, where amajority of tipped employees work,are low-margin operations. A typi-cal business in this industry keepsjust 3 cents in profit from each salesdollar after paying wages, food costsand other expenses.

Raising prices to offset thosecosts can discourage customers andreduce sales. That’s why employersin states with a small or nonexistenttip credit have been forced to pursue

another strategy: reducing laborcosts.

Labor activists point out thatrestaurants still exist in states with-out a tip credit. But that’s beside thepoint: Empirical data and real-world anecdotes show that highercosts carry consequences for em-ployees.

A peer-reviewed study pub-lished in the Southern EconomicJournal, for instance, found a clearrelationship between increases inthe tipped minimum wage and a re-duction in full-service restaurantemployment.

On the ground in Seattle, manyof the city’s restaurants, faced withone of the highest mandated wagesin the country, stopped hiring bus-boys and staffed fewer servers pershift to save on costs.

A similar phenomenon in NewYork City would have a devastatingimpact on less-educated youngadults who already face a 38% un-employment rate.

In a recent survey of 5,000 people who reported working in arestaurant and earning tips, nearly70% rejected even a $15 wage if itupset the tipping status quo. It’s animportant warning for the wageboard, which should handle aproposed tipped-wage hike as itwould a poorly cooked meal: Send itback.

Mr. Saltsman is research director at theEmployment Policies Institute, whichreceives support from businesses, foundationsand individuals.

MICHAEL SALTSMAN

Leave New York’stipped wage alone

This fall, a three-person board appointed by Gov.Andrew Cuomo will tour New York to gatherfeedback on whether to raise the minimum wagefor tipped employees.Labor groups have called foras much as an 80% increase in this base wage. But

the system of tipping that some activists want to destroy isn’t aburden to be tolerated—it’s a perk of the job.

I spent years working as a waiter for this very reason, as have

Mayor Bill de Blasio last week said the state’sminimum wage must be increased to $10.10in January, to be followed in short order by a$13-plus minimum in New York City.Mean-while, my colleague Alair Townsend warned

in her Sept. 29 Crain’s column about the stridently anti-landlord agenda heading New York City’s way.Both are assum-ing a Democratic takeover of the state Senate, which depends

GREG DAVID


IN THE BOROUGHS BRONX

neighborhood of Throgs Neck whatthe opening of Brooklyn BridgePark and the High Line have donein recent years for their sections ofBrooklyn and Manhattan, respec-tively.

Housing boomThe $180 million city-owned

course, located in the eastern half ofFerry Point Park, will be managedby Donald Trump and has alreadybeen earmarked as a site for futurePGA tournaments, possibly as soonas 2017. In addition, a 30-acre wa-terfront esplanade is under develop-ment, and a seven-acre communitypark along the eastern edge of thecourse opened to the public last year.

“We’ve waited so long for this,we’re pinching ourselves,” said CityCouncilman James Vacca, a sup-porter of the project since it was pro-posed in the late 1990s, when heserved as a member of the local com-munity board.

Back then, the prospect of the

golf course, coupled with the area’sdownzoning to a two-story maxi-mum for two-story residentialproperties, sparked a decade-longhousing boom on undeveloped lotsadjacent to the landfill site. In thatperiod, dirt streets were paved, sew-ers were laid,and nearly 400two- and three-family homeswere built, whilework on the golfcourse contin-ued fitfully atbest.

“People paidtop dollar forthese houses butthen wound upspending years living next to an un-sightly landfill,” said Mr. Vacca.

The mere prospect of trading aview of dirt piles and garbage for oneof lush green links has held proper-ty values steady in the past five years,according to statistics provided byZillow.com, an online real estate

database. But with the transforma-tion now complete, many real estateagents expect home values to in-crease rapidly.

“I think property values couldrise as much as 10% over the nextyear,” said Anne Gershkowitz, asales associate with ColdwellBanker. As an example, she pointedto a three-family house across fromthe course that she sold threemonths ago for $469,000. “Thathouse will be worth well over a half-million dollars when the courseopens,” she noted.

Moreover, homeowners who livein the houses on the tree-linedblocks that have sprung up aroundthe golf course now seem to be tak-ing a newfound pride in their prop-erties, putting in shrubs and otherimprovements.

“This will be a real game chang-er for the community,”said KennethKearns, district manager of Com-munity Board 10, which includesthe Throgs Neck neighborhood.“Not only for homeowners, but for

local businesses as well.”In fact, several restaurants along

East Tremont Avenue, the neigh-borhood’s main thoroughfare, havealready forged a partnership withthe Trump organization to helpthem cash in when the golfers beginarriving.

“The buzz around here istremendous,” said Albie Torressen,owner of Brewski’s Bar and Grill.The lifelong Throgs Neck residentand former Little League coachplans to organize and sponsor golfoutings at the new course as soon asit opens.

Dining locallyTrump representatives have al-

ready done some outreach of theirown. They recently accepted an in-vitation to dine at the Havana Café,an upscale Cuban restaurantlaunched three years ago by businesspartners Kevin Alicea, Ruben Rod-riguez and Troy Perez. “We’ve be-gun a dialogue with the course’s op-erators about having a presence

there, whether it is something on-site or through a directory of localeateries we provide to golfers,” saidMr. Alicea.

Joe Kelleher, chairman of theBronx Chamber of Commerce,not-ed that the much-touted golf courseis one in a series of developmentsthat is boosting the economy of theEast Bronx.

Less than a mile north, a 125-room Marriott Hotel opened inSeptember on Eastchester Road inthe Hutchinson Metro Center.What’s more,the city is studying thefeasibility of launching ferry servicefrom the East Bronx to Manhattan,making the difficult-to-access areajust a 10-minute boat ride awayfrom midtown, and allowing thearea to once again live up to thename it was given nearly a centuryago, when it was a destination for anumber of ferry boats.

“We’re on the map now,” saidMr. Kelleher. “We are no longer justthe borough where the zoo islocated.” �

Ferry Point teed up for growth

QUEENS

Gaelic football lands new fieldA Gaelic-football league has raisednearly $1 million to build a newhome field in Queens. For the pastfour years, the Shannon Gaels Foot-ball Club,which includes more than600 members from 4-year-olds toadults, has had only a small patch ofgrass in College Point’s Frank Gold-en Park to play Ireland’s most popu-lar sport, a sort of combination ofsoccer and basketball.

This year, the club struck a dealwith the city’s Parks Department foran additional seven acres in the parkand has embarked on a $2 millionfundraising effort to revamp its newgrounds.

The club is nearly halfway there,with the bulk of funds coming fromthe coffers of local pols includingQueens Borough President Melin-da Katz and City Councilman PaulVallone. Between them, they allo-cated $580,000.

“The funding will ... transformthe park by helping pay for the up-grading of utilities,the resurfacing ofthe playing fields and the installationof new fencing,” said Ms. Katz.

Once built, the grounds will in-clude a full-size field, an additionalscrimmage field, bleachers, parkingfacilities and new lighting. The firstphase of work is expected to begin bythe spring of 2016.

“We’ve been grateful to havesome land these past four years, butit’s like playing in a dust bowl rightnow,” said Colin Mathers, a teamcoach and chairman of the club’sField of Dreams initiative,which thefundraising effort has been dubbed.“The children really deserve better,and now they will get it.”

—kerry murtha

Continued from Page 4

FROMAROUNDTHE CITY


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2015OFFICIALOPENING DATE

$180MCOST (includingtwo parks)

222SIZE in acres

WELL ABOVE PAR:The new golf courseputs the surroundingarea on the map.

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BY BARBARA BENSON

Two decades ago,Montefiore Med-ical Center started investing mil-lions of dollars in technology andstaff to help it deliver better clinicaloutcomes at lower costs.

Now that long-ago investment ishelping the Bronx health systemadd a new line of business: medicalinsurance. In 2015, the MontefioreInsurance Co. will offer a healthcoverage plan to small businesses, aswell as insurance services in otherniches, including long-term care.

“It’s a business decision based onthe opportunities,” said Dr. StevenSafyer, Montefiore’s president andchief executive.

Montefiore isn’t alone in that as-sessment. The North Shore-LIJHealth System launched an insur-ance company, CareConnect, lastyear. Crystal Run Healthcare, amultispecialty practice with some300 health care providers in theHudson Valley and lower Catskillregion, is another provider gettinginto the insurance business.

Most hospitals get paid for the


H E A L T H C A R E INSIDE The List New York area’s largestbenefits consulting firms PAGE 15

‘Transparency has helped us, but it’sembarrassing to the hospitals’

—Dr. Jamie Cesaretti, radiation oncologist, Page 16

NY providers hopeoffering their ownhealth plans willgenerate big bucks

High deductibles have patients clamoring for cost clarity

REPORT

tests and procedures they perform.Taking on the risk of a patient’shealth, as insurance companies do,offers a new, potentially lucrativerevenue stream because federal andstate health reforms have put a pre-mium on paying medical providersnot for the quantity of care they pro-vide, but the quality. It’s new terri-tory for New York hospitals. Mosthave not yet adapted their clinical

RISKY BUSINESSMontefiore shares in the financialrisk of caring for 300,000 people,including ...

25,000

16,000

9,000

United-Healthcaremembers

Medicaremembers

1199SEIUmembers

See HOSPITALS on Page 14

BY IRINA IVANOVA

Cheryl Blum, a mother of four, is nostranger to discussing the cost of hermedical choices with her doctor.Af-ter her primary care physician re-

ferred her to a specialist for acolonoscopy, Ms. Blum used her in-surance plan’s online cost estimatorto find a doctor who could do theprocedure for less.

“I was very honest with the officemanager and said, ‘It’s nothing per-sonal, but the other facility has feesthat are $300 to $400 below yours,’ ”she said.

Ms. Blum is the embodiment ofthe new, informed patient.As work-ers shoulder a bigger portion ofever-rising health costs, providersand insurers are finally opening upabout prices.Employers hope that ifhealth care operates more like a re-tail business—with transparentpricing—patients will then be ableto shop for the best-quality care atthe lowest cost.

Behind the push for more pricedisclosure is the growth of high-deductible plans, which force pa-

tients to first spend their own mon-ey before their insurance picks upthe tab. These plans now make up36% of all commercial insurance,upfrom less than 7% five years ago.

“The train has left the station,”said Robin Gelburd, president ofFAIR Health, a nonprofit thattracks health care costs. “People fi-nally are embracing transparency.”

Finally, yes, but not in hugenumbers. Even though more con-sumers are being forced to consider

See TRANSPARENT on Page 16

Hospitalseye profitsin insurance

Transparent pricingfor health servicesmay allow workersto shop around

MONTEFIORE CHIEFDR. STEVEN SAFYERsaid the healthsystem’s new line ofmedical insurance is“a business decisionbased on theopportunities.”

MORE EMPLOYEES PAY FOR THEMSELVES

21%PORTION OF EMPLOYERS that will offer only a high-deductiblehealth plan next year, or do so now

16%PORTION OF EMPLOYERS that plan use a defined-contributionarrangement for employee benefits, or do so now

Source: Towers Watson survey

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REPORT HEALTH CARE

model of care to be financially ac-countable for a patient’s health.

Montefiore and North Shore-LIJ are the exceptions. Montefiorealready has an infrastructure in placeto manage the financial risk andother aspects of delivering healthcare. Montefiore’s footprint in theBronx and northward gives it thesize it needs to compete for employ-ers looking to offer insurance totheir employees. One out of everythree residents in the Bronx getstheir care from Montefiore. Thesystem recently added hospitals inWestchester County and mayswoop up another in Rockland.

The operations that support howMontefiore manages risk—data ex-perts, care managers, social workersand other staff—cost about $100million to run annually but help thesystem generate $2 billion in rev-enue from shared-risk or full-riskinitiatives. That infrastructure willserve the insurance company well.

“Other providers are creatinghealth plans that cost a lot of mon-ey,” said Dr. Safyer, referring to thestartup costs of becoming an insur-er.“I can move almost on a dime,andI want to be poised to move where

the market goes.”Already,Montefiore can take ad-

vantage of several increasingly com-mon payment approaches: It caresfor more than 300,000 people—with a goal of reaching 1 million—under shared-risk or full-riskmodels, including shared-savingsinitiatives where a payer and thehealth system both benefit from thefinancial savings for a specific pop-ulation of patients.

Similar movesIn September, for example, the

federal agency that runs Medicareannounced that Montefiore’s Pio-neer accountable care organization,which covers 25,000 Medicaremembers, generated $24.5 millionin yearlong shared savings forMedicare—of which Montefiorekept about $13 million.

The system has also embracedwhat’s called capitation, in whichMontefiore gets paid a set price perpatient and then manages his or herhealth to keep costs down.

Other health providers are mak-ing similar moves. Crystal RunHealth Insurance Co. and CrystalRun Health Plan will start sellinginsurance services in 2015.

North Shore-LIJ’s insurancecompany began marketing plans onOct. 1, 2013. Its premise is that alarge health care system with spe-cialty doctors and top-tier hospitalscan make treatment decisions thatare peer-reviewed, with few denials,because doctors are running theshow.

“The vision is working,” saidAlan Murray, president and chiefexecutive of North Shore-LIJ’sCareConnect, based in East Hills,L.I. “We treat people differently.”

The insurer is expanding its of-ferings for 2015. In addition to theproviders and facilities within theLong Island-based system, it willinclude hospitals it considers like-minded in their clinical operations.

New York City hospitals that will beadded to the network on Jan. 1 areMontefiore, Maimonides MedicalCenter and Wyckoff Heights Med-ical Center. In Westchester, the net-work will include two facilities innegotiations to join North Shore-LIJ: Phelps Memorial Hospital andNorthern Westchester Hospital.

“We’re partnering with only afew,” said Mr. Murray. “To executethe vision, you have to be small.”

To attract more New York em-ployers with workers in New Jerseyand Connecticut, the insurer isadding the Barnabas Health systemand Yale-New Haven Hospital.

CVS dealCareConnect does not offer out-

of-network coverage. For enrolleeswho travel out of the area, the insur-er announced a deal in Septemberwith MinuteClinic, the retail healthdivision of CVS Health. CareCon-nect members have access for mostservices at more than 900 Minute-Clinic locations in 29 states and theDistrict of Columbia.

“By adding a national provider ofwalk-in medical care to our net-work, we’re ensuring that businesstravelers, vacationers and collegestudents have easy access,” said Mr.Murray.

For individuals who buy theirown health coverage, CareCon-nect’s rates will drop 2% in 2015.

The insurer lowered its premiumsfor small groups by 14.6% comparedwith 2014 rates—a reflection of howthe new insurer is still getting a feelfor the industry.

Mr. Murray said that “pricingwas higher than the market,” result-ing in small-group enrollment thatwas slightly less than CareConnect’sprojections. Large-group and indi-vidual enrollment, however, beat itsestimates.

Total enrollment in its first yearwas about 10,000 members, andthat is a number that pleases Mr.Murray.

“We pressure-tested the model tosee if it was workable, and it was,” hesaid.“Now we have a platform to scaleand continue to be successful.” �

Hospitals’ health insuranceContinued from Page 13

‘The vision isworking. Wetreat peopledifferently’

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CARECONNECT CEO Alan Murray is buildingNorth Shore-LIJ’s insurance network.

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Obamacare has been a boon to benefits consulting firms in NewYork City. Thirteen firms on Crain’s list reported hiring localbenefits professionals in the past year, an overall increase of6.3%. Employers are handling the implementation of the Af-fordable Care Act by reducing costs, increasing transparency

and offering customized benefits packages based on employees’ needs.“Our employee benefits side of the house is growing by leaps and bounds,”

said Ami Shah,employee benefits practice leader at Lockton Northeast (No.12 onCrain’s list).“Much of that revolves around the question of the ACA and the dif-ferent types of [cost-containment] levers clients are starting to take a look at.”

Among the strategies employers are using to comply with the law—whosemajor provisions took effect in January—are what Ms. Shah calls “your basicblocking and tackling”: higher deductibles and co-payments, as well as in-creased wellness programs and tools to make medical costs transparent.

“Think of [transparency]like the old Kelley Blue Book,”Ms.Shah said.Lock-ton reported a 17% increase in head count at its New York office, and Ms.Shahsaid the private company broke $1 billion in revenue for the first time last year.

In 2012, HUB International Northeast (No. 13) expanded its consulting andbrokerage business with a private insurance exchange, where businesses canoffer employees a greater range of health insurance plans.

“I think everyone is looking for a more efficient, more effective way of de-livering employee benefits,” said Joseph Torella, president of employee ben-efits at HUB International Northeast. The advantage of a private exchangeis that employers can offer many different plans, rather than choose one ortwo HMOs for their employees to pick from.

“It’s really an old-fashioned flex-benefits approach that’s put in a high-techplatform,” Mr. Torella said. “It makes it easy to allow employees to make deci-sions that years ago would have been very difficult.” HUB’s marketplace has at-tracted 70 clients nationwide,30 of which are in New York.—nicholas wells


THELISTTHE SCOOP

Largest Benefits Consulting FirmsRanked by number of New York-area professionals

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TRENDS

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Source: Crain’s research

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Source: Crain’s research

Biggest gainersLargest increases in area professionals, 2013-2014

Power players

2014 number of professionals firmwide

Who’s covered?Portion of population with employer-based health insurance, 2013

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SHARE OF FIRMSon Crain’s list that offerHR, retirement andwelfare consulting. Only65% offer outsourcingconsulting.

20141006-NEWS--0015,0016-NAT-CCI-CN_-- 10/2/2014 6:04 PM Page 1


THE LIST Largest Benefits Consulting Firms

cost when making decisions, doingso is not easy.That’s because neithermedical providers nor insurers liketo reveal the cost of care. Insurers,which negotiate their prices direct-ly with providers, are loath to makepublic any information that couldgive away a competitive advantage.Doctors, meanwhile, say disclosingpricing without data on the qualityof care could lead patients towardmaking bad decisions.

“What is quality? They may giveyou a soft pillow and make you com-fortable, but the nurse may do thewrong procedure,” said Steve Blu-menfeld, a health and group bene-fits consultant with Towers Watson.“It’s a real issue, because the con-sumer can’t measure quality—con-sumers measure quality based onwhat they know.”

Quality tools themselves are rel-atively new and limited. Severaldozen cost-pricing resources havegarnered wide use, in addition toones insurance companies have de-veloped, according to Mr. Blumen-feld. Among the most popular areVitals, HealthSparq and CastlightHealth,whose initial public offeringthis year reflects the expectationthat the transparency niche willgrow.

The tools themselves reflect thedifficulty in making prices transpar-ent. Patients can often see the cost

of individual procedures,but not theprice of all the care needed to treat aparticular condition because thedata are fragmented.

A knee replacement requiresphysical therapy and an implant, forexample, “not just the surgical fee,”FAIR Health’s Ms. Gelburd said.Her firm’s website recently addedcost information for common med-ical devices and services such as am-bulance transportation.

Insurers have resisted makingdata on payments publicly availablebecause they negotiate discountsthat may be available only to planmembers. It’s a competitive advan-tage they don’t want to give up.

“Say a plan has negotiated a 20%discount with a provider for a par-ticular procedure,” said MitchRothschild, CEO of Vitals, a trans-parency software company. “Nei-ther one wants to make that infor-mation public, because then everyother plan will go to that providerand ask for the same discount.

Ranking doctorsStarting early next year,Mr.Roth-

schild said, SoHo-based Vitals.com,where patients can search for and ratedoctors, will post information onwhat a dozen insurance plans pay forcommon procedures.Patients choos-ing among plans will be able tocomparison-shop.

Doctors warn that price

shouldn’t be the only consideration.When one of Ms. Blum’s childrenneeded an MRI, she had to choosebetween two facilities, one of whichwas $175 more expensive. She con-sulted her child’s orthopedist.

“He came back and said, ‘I’dreally prefer place B,even though it’smore expensive, because they have abetter diagnosis rate,’ ” she said.

Her experience highlights whyadvocates and medical facilities sayquality-of-care data must be includ-ed alongside price. Quality meansdifferent things to different people,and patients often lack the knowl-edge to evaluate their doctor. Re-views on websites such as Yelp,Healthgrades and ZocDoc fre-quently focus on nonclinical factors,like bedside manner and wait times.

Dr. Jamie Cesaretti, a radiationoncologist at several locations inNew York City, remembers the “dis-belief and incredulity” among hiscolleagues when they realized thatpatients were ranking them onHealthgrades like a retail store orrestaurant.

“How could all my years of edu-cation and expertise boil down tothat they were angry that I was 20minutes late?” he recalled.

Dr. Cesaretti responded bybuilding an SEO-optimized web-site and increasing his presence onsites that allow doctors to challengereviews they see as inaccurate.

He also is upfront about costs withpatients who pay cash, and some-times adjusts prices to stay competi-tive. “I have control over my costs,”

Dr. Cesaretti said.“Transparency hasonly helped us, but it’s shockinglyembarrassing to the hospitals.”

Sticker shock over hospitalprices is the norm. With their high-er overhead,hospitals usually chargemore for procedures than do outpa-tient facilities. For example, a

lumpectomy—a common proce-dure to fight breast cancer—costssomewhere between $12,000 and$20,000 at Dr. Cesaretti’s practice,depending on the insurer. At a hos-pital, that procedure usually costs$20,000 to $30,000, he estimated.Some insurers and employer healthplans give patients incentives to gothe cheaper route.

Rebranding opportunityThe power of pricing is most ob-

vious for patients paying cash. Dr.Robert Haar,an orthopedic surgeonwith a practice on the Upper EastSide, a neighborhood crowded withhospitals, lists his prices prominent-ly on his website, hoping to winbusiness. A partial knee replace-ment costs $13,500 at his practice,and that covers everything from theconsultation to the postsurgical vis-it. In New York state, the averagehospital charge for a partial knee re-placement is $33,980, according tostate Department of Health data.

For health insurers, which aresometimes maligned by their ownmembers, the move toward trans-parency represents a unique re-branding opportunity.

“All of a sudden, the patientmight get to see the cost of some-thing, or might get a check sent tothem for going to a cheaper place,”said Vitals’ Mr. Rothschild. “Theplans have all this data. Are they go-ing to be able to flip it around andbecome entities who are liked, if notloved, because they made this infor-mation public?” �

Transparent pricingContinued from Page 13

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HERNIA COSTCOULD GIVE YOUA HEART ATTACK Most patients have no idea thatthe prices NYC providers chargeto fix a hernia vary widely

$4,098Lincoln Medical and Mental HealthCenter (median charge, 2011)

$37,116Lenox Hill Hospital (median charge,2011)

$13,321Lenox Hill Hospital (Aetna memberrate, in-network)

$4,400-$7,500FAIR Health’s range of rates chargedby Manhattan doctors performingoutpatient hernia surgery

Source: New York State Department of Health, Aetna, FAIR Health

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FOR ANY CRAIN’S LIST, GO TO WWW.CRAINSNEWYORK.COM/LISTS

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20141006-NEWS--0015,0016-NAT-CCI-CN_-- 10/2/2014 6:05 PM Page 2

BECAUSE A TRANSFORMING

HEALTHCARE SYSTEM

DEMANDS INNOVATIVE

COLLABORATIONS IN

COMMUNITY-BASED CARE:

VNSNY ISBRINGINGMEDICINE HOME.New challenges and new opportunities

are spawning a burst of creative energy

across the healthcare continuum. And

nowhere is this more evident than at

VNSNY. Throughout our enterprise we are

collaborating with providers on innovative

solutions that are patient-centered,

evidence-based and outcomes-driven.

This is what VNSNY calls Bringing Medicine

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rigorous clinical disciplines to the practice

of healthcare in the home.

We have some extraordinary outcomes to

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Please consult with your VNSNY Account

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© 2014 VNSNY

MADE INNEW YORK

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-REGISTER today- crainsnewyork.com/MINY

DATE:THURSDAY, OCTOBER 23, 2014LOCATION:Fashion Institute of Technology227 W 27th St | NYC

and cocktail reception.You must be pre-registered to attend. No refunds permitted.

For event information: 212-210-0739 | [email protected] event sponsorship information: Joanna Harp | 212-210-0278 [email protected]

speakers*:Melissa Autilio Fleischut, President and CEO

New York State Restaurant AssociationDara Furlow, Founder, With Love, From BrooklynMichael Gitter, Partner, First Press Public RelationsAmanda Hesser, CEO and Co-Founder, Food52Paul Leone, Executive Director, NYS Brewers AssociationMarc Murphy, Chef + Owner, Benchmarc Restaurants

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GUIDE TO WEALTH MANAGEMENT

� Managing Your Elderly Parents’ Finances...S2

� What’s a Wealth Manager, and Why Do You Need One?...S4

� Estate Planning Mistakes: Lessons from the Stars...S6

A Special Advertising Section to Crain’s New York Business

Managing Your Elderly Parents’ Finances By Christopher Hosford

Special Advertising Section

S2

No man (or woman) is an island, and individuals generally have more people to worry about financially than just themselves. These include spouses, children and, often, elderly parents.

With parents, the most important concern is their future, and sometimes that means taking the financial reins.

But when is an appropriate time? “Immediately” may be the answer if a parent suffers a physical crisis and becomes incapacitated. If arrangements haven’t been planned for in advance, however, taking the reins may be difficult and expensive. For the best results, arrange these details as early as possible.

Irene Zelterman is executive director of Hearthside Care Coordinators, a Brooklyn-based firm that specializes in helping people cope with the challenges of caring for older and physically-challenged adults. Ms. Zelterman says of all the little and great concerns that the elderly face, financial insecurity is perhaps the biggest.

A desire for control“Money seems to be the last thing they want to lose control of,” Ms. Zelterman says. “But when the kids do take over, [parents become] relieved. I’ve never seen them not relieved. It’s important to just do it.”

As for identifying the proper time to transition responsibility, Ms. Zelterman says adult children should watch for mail piling up, or parents’ failure to pay physician co-pays.

“Go with where the pain is,” she suggests. “If they say they’re overwhelmed by their bills, that’s when you can say, ‘let me take care of it.’ You don’t have to [be aggressive].”

The AARP suggests a multi-step approach to this delicate situation, beginning with an offer to relieve concern. Start the conversation with a positive question like, “How can I help make sure your finances are handled with your wishes in mind?” Assure the parent(s) that you’re looking out for their best interests.

You’ll want to ask for permission to review bank accounts and investment information, insurance policies, mortgages and deeds, other loans, pensions and Social Security statements. And don’t forget the contents of safe deposit boxes.

AARP also suggests talking to parents about putting their legal affairs in order and placing their wishes in writing. This includes creating or updating a will or other estate plans, designating a financial representative through a power of attorney, and composing legal documents to guide future health care decisions.

Power of attorney is essentialThe most essential document allowing an adult child to act on his or her parents’ behalf is power of attorney, which should be arranged for when the parents are still able to understand the situation. Gaining this authority will allow the designated power of attorney to deal with banks, wealth management advisors and creditors. If left too late, and the parent or parents are truly incapacitated, the only recourse may be going to court to seek guardianship, which can be lengthy and expensive.

Adult children also should be on the alert for scams aimed at their parents. This might be revealed in the parents’ checkbook or insurance claim forms. The FBI maintains a list of typical scams that the elderly fall for (www.fbi.gov/scams-safety/fraud/seniors), which includes equipment manufacturers offering “free” products and then charging for them, and unnecessary and sometimes fake tests provided at retirement homes or shopping malls.

Perhaps most distressing of all is when one adult child recognizes patterns of elder financial abuse at the hands of another adult child or caregiver. The actions run the gamut from out-and-out theft and forgery to having the elderly person sign a deed, will or power of attorney through deception, coercion or undue influence.

Elder financial abuse can be difficult to detect. The National Committee for the Prevention of Elder Abuse notes such signals as unpaid bills and withdrawals or transfers between and from bank accounts that the older person cannot explain. Sometimes the withdrawals can be accounted for, perhaps indicating that the parent was scammed. Staying in close contact with the parents’ financial advisor or tax preparer also can illuminate early signs of abuse.

Watching for warning signsRed flags may also appear when the other sibling or caregiver has substance abuse, gambling or financial problems, or is verbal in expressing fear that the parent will get sick and use up what they thought would be an inheritance.

“Nearly every time I lecture on financial abuse, people will approach me with their personal stories,” Elizabeth Loewy, a Manhattan assistant district attorney, told Consumer Reports. Loewy was a lead prosecutor in the 2009 conviction of Anthony D. Marshall for defrauding and stealing from his elderly mother, philanthropist Brooke Astor.

“They will talk to me about their grandmother, aunt or neighbor, usually a senior with cognitive issues, who had ‘this problem,’” Loewy says. “And it’s like a light will go on, and they’ll ask, ‘So this could be a crime?’” �

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Why do you need a wealth manager?To boost the value of your investments, you say? Yes, wealth managers help clients to identify potentially profitable stocks, bonds and mutual funds. But they do far more than just manage investments.

In seeking and adopting wealth management advice, it’s the big picture that counts. Wealth managers help you prepare for retirement. They determine the allocation of investments based on life’s realities. They help with inheritance issues and the transfer of assets, including businesses, to heirs. They help preserve wealth as well as manage it.

Wealth managers are more than investment guides — they can be true financial partners.

“A lot of wealth management is about making sure you don’t hurt yourself,” says Peter L. Maltin, principal with Maltin Wealth Management, based in Paramus, NJ.

One-off advice“The key is, wealth management isn’t a cookie-cutter situation,” Mr. Maltin says. “Rather, a wealth manager looks at a client as an individual, and doesn’t simply put you in an investment model along with everyone else.”

A white paper published in March by Vanguard details the value of wealth management advice, in particular when it comes to what the firm calls “alpha,” or relationship-based, services. These services — such as financial planning, discipline and guidance — go beyond trying to outperform the market.

The paper, titled “Putting a Value on Your Value,” cites seven “quantification modules” that constitute strengths wealth managers bring to the table. These modules include asset allocation, cost-effective implementation, rebalancing investments, behavioral coaching, asset location, considering withdrawals and total return versus income investing.

“[The topic] is as subjective and unique as each individual investor,” concludes Vanguard’s four-author team headed by Francis M. Kinniry, Jr. “For some investors, the value of working with an advisor is peace of mind. Although this value does not lend itself to objective quantification, it is very real nonetheless. For others, we found that working with an advisor can add about 3% in net returns.”

Let’s look at just a few of a wealth manager’s typical responsibilities:

Retirement planning. “What’s your number?” is a basic question wealth managers ask of their clients. That’s the amount of money a person needs, and will be able to spend, upon retirement. This can fall under Vanguard’s “behavioral coaching” topic, as well.

“I had a meeting recently with someone who spends $300,000 a year, [but] in order to meet his retirement

goal he can spend no more than $120,000,” Mr. Maltin notes. “That’s a dramatic conversation to have.”

Rebalancing investments. Individual investors who manage their own portfolios can be prone to “irrational exuberance,” to employ the memorable phrase of former Federal Reserve Board Chairman Alan Greenspan. This entails buying and selling without a clear view of proper portfolio balance.

Vanguard notes a do-it-yourself

investor may pad his or her

portfolio a bit, but “The true benefit

of rebalancing is… controlling risk.

If the portfolio is not rebalanced,

the likely result is a portfolio that

is over-weighted to equities and

therefore more vulnerable to

equity-market corrections.”

Fiduciary responsibility. A consideration when hiring a wealth manager is how he or she is compensated. Some wealth managers are compensated based on a small percentage of the client’s holdings, while others earn commissions on the investments they sell to clients. Some firms offer both arrangements.

Whichever model is employed, clients should feel assured that an investment decision is being made for his or her own good. “The question to ask is, ‘is your advisor working for you or for his company?’” Mr. Maltin says.

Asset allocation. Among the biggest investment stories recently was Bill Gross leaving his longtime post as CEO of investment management firm Pacific Investment Management Company (PIMCO) to become a portfolio manager at Janus Funds. Given Mr. Gross’ reputation as a premier bond-fund manager, it fomented concern about the future of PIMCO and the funds it manages.

In response, Mr. Maltin sent a letter to clients analyzing the turmoil and his decision to immediately eliminate two PIMCO investments held in client portfolios because of their volatility. But he noted other concerns, which typify the comprehensive wealth managers’ view.

“There could be negative tax impacts due to the sale of the underlying investments,” Mr. Maltin wrote of Gross’ quick decision to rid portfolios of the PIMCO funds. “This had been a concern of ours before this announcement.” �


What’s a Wealth Manager, and Why Do You Need One?

B y C h r i s t o p h e r H o s f o r d

©20

14 C

ity

Nat

iona

l Ban

k

“ My fi nancial needs are complex, I trust the professionals at City National.”Bob Lieber Executive Managing DirectorIsland Capital Group

Visit cnb.com/TrustCNB to hear other City National clients.

Call (917) 322-5245 to fi nd a Wealth Management advisor near you.

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As the year draws to a close, it’s worthwhile to huddle with wealth management and tax experts to ensure all loose ends are tied up and all financial matters are squared away. But not everyone does — and this oversight can be catastrophic.

For recent examples, look to the deaths of actors James Gandolfini, 51, and Philip Seymour Hoffman, 46. News of their passing echoed throughout the world of entertainment, but estate planners and the financially savvy took note, as well.

Why? Mr. Gandolfini of “The Sopranos” fame and Mr. Hoffman, an Academy Award winner, left behind financial messes that put their families at an extreme tax disadvantage. It has been estimated that Mr. Gandolfini died with an estate worth about $70 million, but with some 80% left unprotected against death taxes of about 55%. Mr. Hoffman’s heirs, meanwhile, will see some 40% of his $35 million net worth go to taxes.

It didn’t have to be that way.

Whatever one’s wealth, no one

wants to see a lifetime’s worth of

work taken from loved ones. Death

and taxes may be inevitable, but the

blow of the latter can be mitigated

quite a bit, experts say.

Dealing with the difficult“Dying is an emotionally difficult thing to come to grips with, but it will happen 100% of the time,” says Jared J. Finkelstein, senior vice president at Lee, Nolan and Koroghlian, a New York-based estate, insurance and financial strategies firm. “So, if you know it’s going to happen, are you prepared when the government comes with its hand out?”

In August, the Reelz channel debuted its “Celebrity Legacies” television series. Its first episode explored the financial ramifications of Gandolfini’s death for his two young children, a current wife and a former wife.

Instead of using a revocable living trust to keep his affairs private and separate from probate court, Mr. Gandolfini relied primarily on his will, according to Danielle and Andy Mayoras, estate planning and probate litigation attorneys who appear on “Celebrity Legacies.” Probate courts are expensive, and unwanted publicity exacerbates family tensions, they said.

Further, Mr. Gandolfini did not consider his children’s youth and if they would be ready to inherit millions of dollars. His daughter is currently two-years-old — she will inherit 20% of the balance of Mr. Gandolfini’s assets

when she reaches 21, whether or not she’s prepared to handle it, the Mayorases said.

Avoiding a fire sale“A lot of what Mr. Gandolfini gifted was property, which is illiquid,” Mr. Finkelstein says, citing the actor’s Italian and New York City residences. “But upon death, the IRS wants its cut. How does the family come up with $40 million they don’t have? They have to go into fire-sale mode.”

According to the Mayorases’ analysis, Mr. Gandolfini could have placed his assets in trusts for a more sophisticated estate tax situation and to avoid probate court. This still would have allowed Gandolfini to provide for family and friends, but without the hefty estate tax bill.

“On the plus side, Gandolfini designated his 14-year-old son as the beneficiary of a $7 million life insurance policy, which the boy will receive tax-free,” Mr. Finkelstein added. “So, he did the right thing in this situation.”

As for Mr. Hoffman, he too relied on a will rather than trusts. He last updated his will 10 years ago, providing for one son but not for two daughters who were born later. Also, the will didn’t mention Mr. Hoffman’s mother, brother or any of his philanthropic causes, which

included nonprofit theaters.Mr. Hoffman’s lifestyle choices may have also

hampered his estate planning efforts. First, it’s not clear if Mr. Hoffman had a life insurance policy — but with a lifelong struggle with drugs, he may not have been insurable. Secondly, Mr. Hoffman was not married to Mimi O’Donnell, the mother of his children. As a result, her estate tax liability will be significant.

“Nobody expects things to happen, so you have to plan,” Mr. Finkelstein says. “The goal of good estate planning is making sure money goes where you want it to go.” �

Guide To Wealth Management is published by Crain’s Custom

Connections Studio. For more information, please contact

Trish Henry at (212) 210-0711 or [email protected].


Estate Planning Mistakes: LESSONS FROM THE STARSBy Christopher Hosford

S6

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NOTICE OF FORMATION OF ZJKVentures LLC. Arts of Org filed withSecy of State of NY (SSNY) 3/28/14.Office location: NEW YORK County.SSNY designated agent upon whomprocess may be served and shallmail copy of process against LLC toprincipal business address: 205Third Ave 2N, NY NY 10003.Purpose: any lawful act.

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Notice of Qualification of BROOKFIELDRETAIL HOLDINGS II SUB II LLC.Authority filed with Secy. of State of NY(SSNY) on 08/20/14. Office location:NY County. LLC formed in Delaware(DE) on 10/17/13. Princ. office of LLC:250 Vesey St., 15th Fl., NY, NY 10281-1023. SSNY designated as agent ofLLC upon whom process against it maybe served. SSNY shall mail processto c/o Corporation Service Co., 80State St., Albany, NY 12207-2543. DEaddr. of LLC: 2711 Centerville Rd., Ste.400, Wilmington, DE 19808. Arts. ofOrg. filed with DE Secy. of State, Div.of Corps., John G. Townsend Bldg.,401 Federal St., Ste. 4, Dover, DE19901. Purpose: Any lawful activity.

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41 West 68, LLC. Art. of Org. filed withthe SSNY on 11/17/11. Office: NewYork County. SSNY designated asagent of the LLC upon whom processagainst it may be served. SSNY shallmail copy of process to the LLC, c/oTrinidad Hidalgo, 80 Central Park West,Apartment 22F, New York, New York10023. Purpose: Any lawful purpose.

Notice of Formation of RAFFLESBISTRO LLC. Arts. of Org. filed withSecy. of State of NY (SSNY) on09/04/14. Office location: NY County.SSNY designated as agent of LLCupon whom process against it may beserved. SSNY shall mail process tothe LLC, 511 Lexington Ave., NY, NY10017. Purpose: Any lawful activity.

Charles K. Goldner, LLC. Arts. of Org.filed with Secy. of State of NY (SSNY)on 05/26/99. Off. loc.: NY Co. SSNYdes. as agent of LLC upon whomprocess may be served. SSNY shallmail process to 155 West 72nd St., NewYork, NY 10023. Purpose: General.

NOTICE OF QUALIFICATION of MOFIII GP LLC. Authority filed with Secy ofState of NY (SSNY) on 8/11/14. Officelocation: NY County. LLC formed inDE on 3/27/14. SSNY designatedagent upon whom process may beserved and shall mail copy of processagainst LLC to: CORP SERVICECOMPANY, 80 STATE ST, ALBANY,NY 12207. Principal businessaddress: 375 PARK AVE, 33RD FLR,NY NY 10152. DE address of LLC:2711 CENTERVILLE RD, STE 400,WILMINGTON, DE 19808. Certificateof LLC filed with Secy of State of DElocated at: Division of Corp, John G.Townsend Bldg., 401 Federal St, Ste4, Dover, DE 19901. Purpose: anylawful act.

NOTICE OF QUALIFICATION of MOFIII MANAGEMENT LLC.Authority filedwith Secy of State of NY (SSNY)8/26/14. Office location: NY County.LLC formed in DE on 3/27/14. SSNYdesignated agent upon whomprocess may be served and shallmail copy of process against LLC to:CORP SERVICE COMPANY, 80STATE ST, ALBANY, NY 12207.Principal business address: 375 PARKAVE, 33RD FLR, NY NY 10152.DEaddress of LLC: 2711 CENTERVILLERD, STE 400, WILMINGTON, DE19808. Certificate of LLC filed withSecy of State of DE located at:Division of Corp John G. TownsendBldg,401 Federal St, Ste 4, Dover,DE 19901. Purpose: any lawful act.

Notice of Qualification of MHRINSTITUTIONAL PARTNERS IV LP.Authority filed with Secy. of State of NY(SSNY) on 06/26/14. Office location: NYCounty. LP formed in Delaware (DE) on12/21/11. Princ. office of LP: 40 W. 57thSt., 24th Fl., NY, NY 10019. SSNYdesignated as agent of LP upon whomprocess against it may be served.SSNY shall mail process to the LP atthe addr. of its princ. office. Name andaddr. of each general partner areavailable from SSNY. DE addr. of LP:c/o Corporation Service Co., 2711Centerville Rd., Wilmington, DE 19808.Arts. of Org. filed with Secy. of Stateof DE, Dept. of State, Div. of Corps.,John Townsend Bldg., Dover, DE19901. Purpose: Any lawful activity.

BEE LIQUORS, LLC. Art. of Org. filedwith the SSNY on 05/26/05. Latestdate to dissolve: 12/31/2104. Office:New York County. SSNY designated asagent of the LLC upon whom processagainst it may be served. SSNY shallmail copy of process to the LLC, 225Avenue B, New York, NY 10009.Purpose: Any lawful purpose.

Notice of Formation of White CrestConsulting LLC. Arts. of Org. filedwith Secy. of State of NY (SSNY) on9/4/14. Office location: NY County.SSNY designated as agent of LLCupon whom process against it maybe served. SSNY shall mail processto: Davis & Gilbert LLP, 1740Broadway, NY, NY 10019. Purpose:any lawful activity.

PENN EQUITY GROUP LLC, Arts. ofOrg. filed with the SSNY on 07/23/2014.Office loc: NY County. SSNY hasbeen designated as agent upon whomprocess against the LLC may beserved. SSNY shall mail process to:21 E. 4th St., Ste 617, NY, NY 10003.Reg. Agent: Jaime Kurt Oriol, 21 E.4th St., Ste 617, NY, NY 10003.Purpose: Any Lawful Purpose.

Notice of Qualification of BluehengeCapital Secured Debt SBIC, L.P.Authority filed with NY Dept. of Stateon 9/5/14. Office location: NY County.Princ. bus. addr.: 152 W. 57th St., 20thFl., NY, NY 10019. LP formed in DE on1/29/14. NY Sec. of State designatedagent of LP upon whom processagainst it may be served and shallmail process to: c/o CT CorporationSystem, 111 8th Ave., NY, NY 10011,regd. agent upon whom process maybe served. DE addr. of LP: TheCorporation Trust Co., 1209 Orange St.,Wilmington, DE 19801. Name/addr.of genl. ptr. available from NY Sec. ofState. Cert. of LP filed with DE Sec.of State, 401 Federal St., Dover, DE19901. Purpose: all lawful purposes.

NOTICE OF FORMATION OF Art ofAnesthesia, PLLC. Articles ofOrganization filed with the Sec. ofState of NY (SSNY) on Aug. 7, 2014.Office location: New York Co. SSNYhas been designated as agent uponwhom process against it may beserved. The Post Office address towhich the SSNY shall mail a copy ofany process against the PLLC servedupon him/her is: Art of Anesthesia,PLLC, c/o Julia Iwamasa, 752 WestEnd Ave 21B, New York, NY 10025.The principal business address of thePLLC is: 752 West End Ave 21B,New York, NY 10025. Purpose: anylawful act or activity.

15.5 Partners LLC. Arts. of Org. filedwith Secy. of State of NY (SSNY) on06/26/14. Off. loc.: NY Co. SSNY des.as agent of LLC upon whom processmay be served. SSNY shall mailprocess to 810 7th Ave., 18th Fl., NewYork, NY 10019. Purpose: General.

Notice of Formation of F4 ServiceGroup LLC, Art. of Org. filed Secy. ofState of NY (SSNY) on 11/12/2013.Office location: New York County.SSNY Designated as agent of LLCupon whom process against it maybe served. SSNY shall mail copy ofprocess to: The LLC, 9 Broadway,New York, NY 10004. Purpose: anylawful activity.

Notice of Formation of AMG 104Quickserve LLC. Arts. of Org. filedwith Secy. of State of NY (SSNY) on8/20/14. Office location: NY County.SSNY designated as agent of LLCupon whom process against it maybe served. SSNY shall mail processto: c/o Atlantis Management Group,555 So. Columbus Avenue, Ste. 201,Mt. Vernon, NY 10550. Purpose: anylawful activity.

Notice of Formation of CA 40-56Tenth Holdings LLC. Arts. of Org.filed with Secy. of State of NY(SSNY) on 8/14/14. Office location:NY County. SSNY designated asagent of LLC upon whom processagainst it may be served. SSNY shallmail process to: c/o The LLC, 1407Broadway, 41st Fl., NY, NY 10018.Purpose: any lawful activity.

NOTICE OF FORMATION OF A. M.RICHARDSON, III, LLC. Articles ofOrganization filed with the Secretary ofState of NY (SSNY) on 08/12/2013.Office location: NEW YORK. SSNYhas been designated as agent uponwhom process against it may beserved. The Post Office address towhich the SSNY shall mail a copy ofany process against the LLC servedupon him/her is: 40 Wall Street, 35thFloor, New York, NY 10005. Theprincipal business address of theLLC is: 40 Wall Street, 35th Floor,New York, NY 10005. DissolutionDate: (If Applicable). Purpose: anylawful act or activity.

NOTICE OF FORMATION OF RedRoom Hospitality LLC. Arts of Orgfiled with Secy of State of NY (SSNY)on 08/11/14. Office location: NYCounty. SSNY designated as agentupon whom process may be servedand shall mail copy of process againstLLC to: 95 Delancey Street, NewYork, NY 10002. Principal businessaddress: 95 Delancey Street, NY, NY10019. Purpose: any lawful act.

Notice of Formation of SNB NYCConsulting LLC. Arts. of Org. filedwith NY Dept. of State on 8/8/14.Office location: NY County. Sec. ofState designated agent of LLC uponwhom process against it may beserved and shall mail process to: c/oCT Corporation System, 111 8thAve., NY, NY 10011, regd. agentupon whom process may be served.Purpose: all lawful purposes.

Name of LLC: Summers BK LLC. Arts.of Org. filed with NY Dept. of State:5/16/13. Office loc.: NY Co. Sec. ofState designated agent of LLC uponwhom process against it may beserved and shall mail process to: c/oBusiness Filings Inc., 187 Wolf Rd.,Ste. 101, Albany, NY 12205, regd. agt.upon whom process may be served.Purpose: any lawful act.

2254 LLC. Arts. of Org. filed with Secy.of State of NY (SSNY) on 07/17/14.Off. loc.: NY Co. SSNY des. as agentof LLC upon whom process may beserved. SSNY shall mail process toc/o Silver Star Properties Corp., 3505th Ave., Ste 6908, New York, NY10118. Purpose: General.

3Square Project Management LLC.Arts. of Org. filed with Secy. of Stateof NY (SSNY) on 08/27/14. Off. loc: NYCounty. SSNY des. as agent of LLCupon whom process may be served.SSNY shall mail process to c/oRobinson Brog, et al., Attn: Neil S.Goldstein, 875 Third Ave., 9th Fl., NewYork, NY 10022. Purpose: General. AZIMUTH MORNINGSIDE LLC, a

domestic LLC, filed with the SSNYon 6/20/14. Office location: New YorkCounty. SSNY is designated as agentupon whom process against the LLCmay be served. SSNY shall mailprocess to Azimuth DevelopmentGroup LLC, 40 Fulton St., 12th Fl.,NY, NY 10038. General Purposes.

Noble Sensors, LLC. Arts. of Org.filed with Secy. of State of NY (SSNY)on 08/27/14. Off. loc.: NY Co. SSNYdes. as agent of LLC upon whomprocess may be served. SSNY shallmail process to c/o Robinson Brog, etal., Attn: Marshall J. Gluck, 875 3rdAve., 9th Fl., New York, NY 10022.Purpose: General.

Notice of Qualification of INTEGRATEDMACRO ADVISORS, LP. Authorityfiled with Secy. of State of NY (SSNY)on 08/14/14. Office location: NYCounty. LP formed in Cayman Islands(C.I.) on 07/21/14. Princ. office of LP:c/o Integrated Macro Advisors, LLC,Attn: Howard Kurz, 450 Park Ave., Ste.1901, NY, NY 10022. SSNY designatedas agent of LP upon whom processagainst it may be served. SSNY shallmail process to the LP at the addr. ofits princ. office. Name and addr. of eachgeneral partner are available from SSNY.C.I. addr. of LP: c/o Maples and Calder,P.O. Box 309, Ugland House, S. ChurchSt., George Town, Grand Cayman, C.I.KY1-1104. Arts. of Org. filed withRegistrar of Exempted LimitedPartnership, Registrar of Companies,P.O. Box 123, Ground Fl., GovernmentAdmin. Bldg., 133 Elgin Ave., GeorgeTown, Grand Cayman, C.I. KY1-9000.Purpose: Any lawful activity.

15 EAST 128TH STREET LLC, Arts. ofOrg. filed with the SSNY on 08/07/2014.Office loc: NY County. SSNY hasbeen designated as agent uponwhom process against the LLC maybe served. SSNY shall mail processto: 17 E 128th St., NY, NY 10035.Purpose: Any Lawful Purpose.

Notice of Formation of PJ 207 LLC.Arts. of Org. filed with Secy. of State ofNY (SSNY) on 09/15/14. Office loca-tion: NY County. SSNY designatedas agent of LLC upon whom processagainst it may be served. SSNY shallmail process to c/o Rosenberg &Estis, P.C., Attn: Michael E. LefkowitzEsq., 733 Third Ave., NY, NY 10017.Purpose: Any lawful activity.

Notice of Qualification of Ocean LightProductions, LLC. Authority filed withSecy. of State of NY (SSNY) on05/27/14. Office location: NY County.LLC formed in Delaware (DE) on05/21/14. SSNY designated as agentof LLC upon whom process againstit may be served. SSNY shall mailprocess to: c/o Larry Wasserman,100 Universal City Pl., Bldg., 5121,Universal City, CA 91608. Addressto be maintained in DE: c/o 3500 S.Dupont Hwy, Dover, DE 19901. Artsof Org. filed with the DE Secy. ofState, John G. Townsend Bldg., 401Federal St., Ste. 4, Dover, DE 19901.Purpose: any lawful activities.

Notice of Qualification of 1901 FirstStreet Associates, LLC. Authorityfiled with Secy. of State of NY (SSNY)on 09/24/14. Office location: NYCounty. LLC formed in Delaware (DE)on 09/25/13. SSNY designated asagent of LLC upon whom processagainst it may be served. SSNYshall mail process to: NationalRegistered Agents, Inc., 111 EighthAve., NY, NY 10011. Address to bemaintained in DE: 160 Greentree Dr.,Ste. 101, Dover, DE 19904. Arts ofOrg. filed with the DE Secy. of State,John G. Townsend Bldg., 401Federal St., Ste. 4, Dover, DE 19901.Purpose: any lawful activities.

Notice of Formation of PCDC HealthOpportunities Fund XI LLC. Arts. ofOrg. filed with NY Dept. of State on6/13/14. Office location: NY County.Sec. of State designated agent of LLCupon whom process against it maybe served and shall mail process to:Primary Care Development Corp., 45Broadway, Ste. 530, NY, NY 10006,principal business address. Purpose:any lawful activity.


Notice of Formation of 368 THIRDLLC. Arts. of Org. filed with Secy. ofState of NY (SSNY) on 09/11/14. Officelocation: NY County. Princ. office ofLLC: c/o Continental Ventures, 641Lexington Ave., 24th Fl., NY, NY 10022.SSNY designated as agent of LLCupon whom process against it maybe served. SSNY shall mail processto the LLC at the princ. office of theLLC. Purpose: Any lawful activity.

NEVILLE DANCE THEATRE LLC, adomestic LLC, filed with the SSNYon 8/5/14. Office location: New YorkCounty. SSNY is designated as agentupon whom process against the LLCmay be served. SSNY shall mailprocess Brenda Neville, P.O. Box 1625,NY, NY 10101. General Purposes.


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P026-28CL_CN_20141006.qxp 10/3/2014 1:02 PM

that has faced worldwide condem-nation for the use of South Asiansweatshops and dissatisfaction overinexpensive, trendy clothing de-signed to last only a short period oftime and sold by fast-fashion giantssuch as Zara and H&M.

For a handful of labels, the storiesbehind their eco-friendly or ethical-ly made wares are a selling point.De-tails about natural dyes and do-gooddesigners are part of the sales pitchon e-commerce site Of a Kind,basedin the financial district. One-year-old Zady sells about 60 sustainablelabels and plans to launch its ownline this year. Even large retailers aretaking notice.

“It’s time to pay attention to howyour things are made,” said SorayaDarabi, co-founder and co-chief ex-ecutive of Zady, which has seen

double-digit monthly sales growthsince its debut.“You can’t rationalizehow people can be paid fairly for $3tanktops and not have great environ-mental dangers associated with it.”

Mr. Lidow found his sheep on afarm in Central Otago, on NewZealand’s South Island, and a 100-year-old mill nearby. Manufacturedat a factory outside Los Angeles,his sweaters now sell from hisBrooklyn-based website.

Paying a premiumHigh-minded clothing, howev-

er, is not cheap. Mr. Lidow, whostarted his company with $100,000of his own money, estimates that hisproduction methods are about twoand a half times more expensivethan those of conventional retailers.

“Consumers have to pay a premi-um for that if they want the most so-cially conscious product,” said Ed-ward Hertzman, founder andpublisher of Sourcing Journal,an on-line publication that focuses on the

retail apparel and textile industry.Those who can afford it are rela-

tively few, making the clothing aniche trend and, like the farm-to-table movement, a possible subjectof parody. (One could imagine thecomedy series Portlandia skeweringfashionistas as it did foodies in itspopular chicken-cult sketch, inwhich a couple leaves a restauranttable mid-order to visit the localfarm of the fowl they plan on eating,a “heritage breed, woodland-raisedchicken that’s been fed a diet ofsheep’s milk, soy and hazelnuts.”)

Still, those who can afford it sayit’s worth the extra money: Theclothing will last longer.

Mr. Hertzman said the invest-ment community has taken notice.Several of these e-commerce com-panies are attracting funding. Zadyhas received $1.4 million thus far,and Everlane, a San Francisco-based firm well known for pioneer-ing sustainable fashion,has generat-ed $1.1 million.

Two companies in particularhave gained mass appeal on a social-ly conscious platform: Toms Shoesdonates a pair of shoes to someonein need for every pair it sells. WarbyParker does the same with glasses.

“There’s an opportunity to edu-cate consumers about the value of apiece and why it costs what it does,”said Of a Kind’s co-founder ClaireMazur. “It creates an emotion with-in the purchasing act.”

Retail chains are paying atten-tion. The Retail Industry LeadersAssociation and nonprofit Forumfor the Future recently introduced aproject on sustainability strategiesthat was sponsored by Target Corp.

Denim brand Levi’s has pledgedto use less water when making itsjeans, and more brands are begin-ning to engage in exchange pro-grams so old goods can be recycled.

Though most of these new play-ers are online,many host regular pop-up shops.Ethica tells the stories of allits apparel and accessories and is

planning a temporary Big Apple lo-cation in time for holiday shopping.The Long Island City, Queens-based company also will expand intobeauty in the next few months, saidMelissa Cantor, a co-founder.

Zady, too, is putting together aholiday shop, while Of a Kind islooking into partnerships with someexisting brick-and-mortar retailers.

It’s still early to see huge sales suc-cess, but most companies are grow-ing in both size and awareness.Zadyrecently doubled its office space,moving downtown from Chelsea.Mr.Lidow,who plans to expand intocotton in a few months,expects to beprofitable, though not hugely so.

“This is an economically viablemodel,” he said. “It’s not too expen-sive to produce excellent designwith excellent production at afford-able costs. Those things can coexisthappily.” �

FashionContinued from Page 1


NOTICE OF FORMATION OF SJMusovic Management LLC. Articles ofOrganization filed with the Secretaryof State of NY (SSNY) on May 12, 2014.Office location: NEW YORK. SSNYhas been designated as agent uponwhom process against it may beserved. The Post Office address towhich the SSNY shall mail a copy ofany process against the LLC servedupon him/her is: 244 East 79 Street,New York, NY 10021 The principalbusiness address of the LLC is: 244East 79 Street, New York, NY 10021.Dissolution Date: (If Applicable).Purpose: any lawful act or activity.

Notice of Qualification of NYNJ LinkDeveloper LLC. Authority filed withNY Dept. of State on 11/1/13. Officelocation: NY County. Princ. bus. addr.:125 W. 55th St., 15th Fl., NY, NY10019. LLC formed in DE on 7/8/13.NY Sec. of State designated agent ofLLC upon whom process against itmay be served and shall mail processto: c/o CT Corporation System, 1118th Ave., NY, NY 10011. DE addr. ofLLC: The Corporation Trust Co., 1209Orange St., Wilmington, DE 19801.Cert. of Form. filed with DE Sec. ofState, 401 Federal St., Dover, DE19901. Purpose: all lawful purposes.

Notice of Formation of ORIENTISGROUP HOLDINGS, LLC. Arts. ofOrg. filed with Secy. of State of NY(SSNY) on 08/15/14. Office location: NYCounty. SSNY designated as agentof LLC upon whom process againstit may be served. SSNY shall mailprocess to Ballon Stoll Bader &Nadler, 729 7th Ave., 17th Fl., NY, NY10019. Purpose: Any lawful activity.

Notice of Qualification of BSREP UAHeritage LLC. Authority filed with Secy.of State of NY (SSNY) on 08/22/14.Office location: NY County. LLCformed in Delaware (DE) on 08/13/14.Princ. office of LLC: Brookfield Pl., 250Vesey St., NY, NY 10281-1023. SSNYdesignated as agent of LLC uponwhom process against it may beserved. SSNY shall mail process toCorporation Service Co. (CSC), 80State St., Albany, NY 12207-2543. DEaddr. of LLC: CSC, 2711 CentervilleRd., Ste. 400, Wilmington, DE 19808.Arts. of Org. filed with DE Secy. ofState, John G. Townsend Bldg., 401Federal St., Ste. 4, Dover, DE 19901.Purpose: Any lawful activity.

Notice of Qualification of NorthwoodSecurities LLC. Authority filed withNY Dept. of State on 8/6/14. Officelocation: NY County. Princ. bus.addr.: 575 5th Ave., 23rd Fl., NY, NY10017. LLC formed in DE on 5/30/14.NY Sec. of State designated agent ofLLC upon whom process against itmay be served and shall mail processto: c/o CT Corporation System, 1118th Ave., NY, NY 10011, regd. agentupon whom process may be served.DE addr. of LLC: The CorporationTrust Co., 1209 Orange St.,Wilmington, DE 19801. Cert. of Form.filed with DE Sec. of State, 401Federal St., Dover, DE 19901.Purpose: all lawful purposes.

NOTICE OF QUALIFICATION ofMEDLEY OPPORTUNITY FUND IIILP. Authority filed with Secy of Stateof NY (SSNY) 8/11/14. Office location:NY County. LP formed in DE on3/27/14. SSNY designated agent uponwhom process may be served andshall mail copy of process against LPto: CORP SERVICE COMPANY, 80STATE ST, ALBANY, NY 12207.Principal business address: 375 PARKAVE, 33RD FLR, NY NY 10152. DEaddress of LP: 2711 CENTERVILLERD, STE 400, WILMINGTON, DE19808. Certificate of LP filed withSecy of State of DE located at:Division of Corp John G. TownsendBldg,401 Federal St,Ste 4,Dover,DE19901. Purpose: any lawful act.

Notice of Qualification of KAZTRONIXLLC. Authority filed with Secy. ofState of NY (SSNY) on 08/29/14.Office location: NY County. LLCformed in Virginia (VA) on 10/26/01.SSNY designated as agent of LLCupon whom process against it may beserved. SSNY shall mail process toc/o Corporation Service Co., 80 StateSt., Albany, NY 12207-2543. VA addr.of LLC: 8260 Greensboro Dr., Ste.150, McLean, VA 22102. Arts. of Org.filed with Clerk of the CommissionCommonwealth of VA, Tyler Bldg.,1300 E. Main St., Richmond, VA23219. Purpose: Any lawful activity.

Notice of Qualification of BSREP UAMiles LLC. Authority filed with Secy.of State of NY (SSNY) on 08/22/14.Office location: NY County. LLCformed in Delaware (DE) on 08/13/14.Princ. office of LLC: Brookfield Pl., 250Vesey St., NY, NY 10281-1023. SSNYdesignated as agent of LLC uponwhom process against it may beserved. SSNY shall mail process toCorporation Service Co. (CSC), 80State St., Albany, NY 12207-2543. DEaddr. of LLC: CSC, 2711 CentervilleRd., Ste. 400, Wilmington, DE 19808.Arts. of Org. filed with DE Secy. ofState, John G. Townsend Bldg., 401Federal St., Ste. 4, Dover, DE 19901.Purpose: Any lawful activity.

NOTICE OF FORMATION OF 66PEARL STREET HOLDING LLC. Artsof Org filed with Secy of State of NY(SSNY) on 9/9/14. Office location: NYCounty. SSNY designated agent uponwhom process may be served andshall mail copy of process againstLLC to principal business address:260 Madison AV, Ste 204, NY NY10016. Purpose: any lawful act.

Notice of Qualification of ARCHospitality Portfolio I HIL TRS, LLC.Authority filed with Secy. of State of NY(SSNY) on 09/25/14. Office location:NY County. LLC formed in Delaware(DE) on 09/11/14. Princ. office ofLLC: 106 York Rd., Jenkintown, PA19046. SSNY designated as agent ofLLC upon whom process against it maybe served. SSNY shall mail processto c/o CSC, 80 State St., Albany, NY12207. DE addr. of LLC: 2711Centerville Rd., Ste. 400, Wilmington,DE 19808. Arts. of Org. filed with DESecy. of State, Div. of Corps., 401Federal St., Ste. 4, Dover, DE 19901.Purpose: Any lawful activity.

Notice of Qualification of ARCHospitality Portfolio I Owner, LLC.Authority filed with Secy. of State of NY(SSNY) on 09/25/14. Office location:NY County. LLC formed in Delaware(DE) on 07/23/14. Princ. office of LLC:106 York Rd., Jenkintown, PA 19046.SSNY designated as agent of LLCupon whom process against it maybe served. SSNY shall mail processto c/o CSC, 80 State St., Albany, NY12207. DE addr. of LLC: 2711Centerville Rd., Ste. 400, Wilmington,DE 19808. Arts. of Org. filed with DESecy. of State, Div. of Corps., 401Federal St., Ste. 4, Dover, DE 19901.Purpose: Any lawful activity.

Qualification of Blackstone PropertyPartners L.P. Authority filed with theSect of State of NY (SSNY) on 9/5/14.Office Loc: NY County. LP formed inDE on 6/30/14. SSNY has beendesignated as agent of LP upon whomprocess against it may be served andshall mail process to: 200 BellevuePkwy, Ste 210, Wilmington, 19809. DEaddress of LP: 200 Bellevue Pkwy, Ste210, Wilmington, 19809. Name/addrof genl ptr avail from SSNY. Cert ofLP filed with DE Sect of State, 401Federal St, Ste 4, Dover, DE 19901.Purpose: any lawful activity.

Qualification of Blackstone PropertyPartners F.1 L.P. Authority filed withthe Sect of State of NY (SSNY) on9/4/14. Office Loc: NY County. LPformed in DE on 6/30/14. SSNY hasbeen designated as agent of LPupon whom process against it maybe served and shall mail process to:200 Bellevue Pkwy, Ste 210,Wilmington, 19809. DE address ofLP: 200 Bellevue Pkwy, Ste 210,Wilmington, 19809. Name/addr ofgenl ptr avail from SSNY. Cert of LPfiled with DE Sect of State, 401Federal St, Ste 4, Dover, DE 19901.Purpose: any lawful activity.

Notice of Qualification of OwnDevelopment Company, LLC.Authority filed with Secy. of State of NY(SSNY) on 09/17/14. Office location:NY County. LLC formed in Delaware(DE) on 09/09/14. SSNY designatedas agent of LLC upon whom processagainst it may be served. SSNYshall mail process to: 45 Main St.,Ste. 536, Brooklyn, NY 11201.Address to be maintained in DE: c/oIncorporating Services, Ltd., 3500 S.Dupont Hwy, Dover, DE 19901. Artsof Org. filed with the DE Secy. ofState, John G. Townsend Bldg., 401Federal St., Ste. 4, Dover, DE 19901.Purpose: any lawful activities.

NOTICE OF QUALIFICATION ofPLASTIC SURGERY CENTER OFFAIRFIELD, LLC. Authority filed withSecy. of State of NY (SSNY) on6/13/14. Office location: NY County.LLC formed in CT on 12/6/2013. NYSfictitious name: PLASTIC SURGERYOF FAIRFIELD. SSNY designatedas agent of LLC upon whom processagainst it may be served. SSNYshall mail process to the LLC at addr.of its princ. office: 33 Miller Street,Fairfield, CT 06824. Arts. of Org. filedwith CT Secy. of State, 30 TrinityStreet, Hartford, CT 06106. Purpose:Medicine. The LLC is to be managedby one or more managers.

Notice of Formation of Trask Foods,LLC. Arts. of Org. filed with NY Dept.of State on 9/2/14. Office location:NY County. Princ. bus. addr.: 411 W.14th St., 4th Fl., NY, NY 10014. Sec.of State designated agent of LLCupon whom process against it maybe served and shall mail process to:CT Corporation System, 111 8thAve., NY, NY 10011, regd. agentupon whom process may be served.Purpose: all lawful purposes.

NOTICE OF FORMATION OF GWEELLC. Articles of Organization filedwith the Secretary of NY (SSNY) on06/03/2014. Office location: New YorkCounty. SSNY has been designatedas agent upon whom process againstit may be served. The Post Officeaddress to which the SSNY shall maila copy of any process against the LLCserved upon him/her is : 301 East22nd Street, Apt#9M, New York , NY10010. The principal business addressof the LLC is: 301 East 22nd Street,Apt #9M, New York, NY 10010.Purpose:any lawful act or activity.

NOTICE OF FORMATION OF LIMITEDLIABILITY COMPANY. NAME:KATESHIN GALLERY LLC. Articles ofOrganization were filed with theSecretary of State of New York(SSNY) on 05/23/14. Office location:New York County. SSNY has beendesignated as agent of the LLC uponwhom process against it may beserved. SSNY shall mail a copy ofprocess to the LLC, c/o KateJunghee Shin, 170 East 80th Street,New York, New York 10075. Purpose:For any lawful purpose.



Notice of Formation of ACMOS onChrystie LLC. Arts. of Org. filed withSecy. of State of NY (SSNY) on8/21/14. Office location: NY County.SSNY designated as agent of LLCupon whom process against it may beserved. SSNY shall mail process to:c/o Nexus Building DevelopmentGroup Inc., 41 Wooster St., Ste. 2, NY,NY 10012. Purpose: any lawful activity.

GREGORY WAYNE DESIGNS LLC,Arts. of Org. filed with the SSNY on08/20/2014. Office loc: NY County.SSNY has been designated as agentupon whom process against the LLCmay be served. SSNY shall mailprocess to: 145 E 84th St., 9D, NY,NY 10028. Purpose: Any LawfulPurpose.

LISTEN to a discussion at CrainsNewYork.com/podcasts


The median price of Manhattan homes inched up only slightlyduring the third quarter of the year, but all too many owners arepricing their properties as though the market were still soaring,according to several real estate experts.

The median sales price for a Manhattan home hoveredaround $900,000, according to reports released last week. But despite an in-ventory jump of nearly 25% from last year, the volume of sales slumped near-ly 15%. Many experts believe the decline can partly be attributed to sellers,inspired by the aggressive pricing at some trophy condos across the city,who

REAL ESTATE

High prices take tollon residential sales

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PLATINUM SPONSORS: CITY SPONSOR:

CONFIRMED SPEAKERSJeffrey H. Barker, NYC Market President, Bank of America

Jamshed Bharucha, Ph.D., President, Cooper Union for Advancement of Science and Art

Daniel L. Doctoroff, President & CEO, Bloomberg L.P.

Michael Dowling, President & CEO, North Shore-LIJ Health System

Chancellor Carmen Fariña, New York City Department of Education

Chancellor James B. Milliken, The City University of New York

Hal Rosenbluth, President/CEO, Kaufman Astoria Studios

Jonathan Tisch, Chairman, Loews Corporation

Additional panelists to be confi rmed.

“The firm has had so muchgrowth and success here, it’s part ofwho we are and our good fortune,”said Barry Wolf, Weil’s executivepartner. “There’s something niceabout sitting in our conference cen-ter and overlooking the park.”

Rents at the General MotorsBuilding soar to about $200 persquare foot for the top floors,amongthe highest rates in the city.Accord-ing to market sources, the askingprices for space in the tower’s mid-section could be as high as $125 to$150 per square foot.

That would make Weil’s transac-tion, which totals about 400,000square feet, one of the priciest seenin the city in years.

Mr. Wolf, acknowledged thebuilding’s nosebleed rates, but saidthat Weil and the tower’s landlord, apartnership led by Boston Proper-ties, found ways to make the dealmore economical. The tenant alsorenewed for about 100,000 squarefeet less than it currently occupiesand will fit its staff into the newspace by building more efficient of-fices during the renovation.

Weil was represented in thetransaction by a CBRE leasing teamled by Robert Flippin and LewisMiller, as well as by Weil real estatepartners Michael Bond and PhilipRosen. A CBRE leasing team alsorepresents the building’s owners.

—daniel geiger

Downtown sitefetches $171MWith many developers predictingthat demand for residential prop-erty in the financial district is set tosoar, the price of development sitesin the area has already taken off. Acase in point is a deal in which abuilding site was sold by a develop-er for $171 million—more thantriple what it paid less than twoyears ago.

In that transaction, the Light-stone Group closed on the sale of adowntown development site at112, 114, 116 and 118 Fulton St., onthe corner of Dutch Street, to aCalifornia firm that plans to builda 63-story tower there, accordingto official city records.

The property, including devel-opment rights, was bought by SanFrancisco-based real estate firmCarmel Partners. The transactioncomes less than two years after Light-stone reportedly paid $63 million fora number of sites along Fulton Street,along with hundreds of thousands ofsquare feet in development rightsfrom surrounding parcels.

The dramatic increase in valuecomes as construction of officespace has outpaced that of housingin a neighborhood where more thana third of residents walk to work.Alltold, about 12 million square feet of

new office space is set to come on-line in the near future. That trans-lates to roughly 60,000 jobs beingadded in the area, yet only about3,000 new apartments are planned,according to Lightstone Chief Ex-ecutive David Lichtenstein.

“That means housing and rentalvalues should increase exponential-ly,” he said. His firm had crunchedthose numbers when it first boughtthe parcel, but nonetheless couldn’tturn down the offer from Carmelwhen it unexpectedly came in.

—joe anuta

BARE BONES883 SIXTH AVE.ASKING RENT;TERM: High $50sper square foot;16 years

SQUARE FEET:23,000

TENANT; REPS:The Yard; LanceLeighton andEvan Margolin ofSavills Studley

LANDLORD; REP:Tower 111; BarryGoodman ofNewmark GrubbKnight Frank

BACK STORY: The co-working-spaceprovider will take the entire secondfloor at its new location, its fifth in thecity.


are overpricing their apartments.“[These sellers] feel like they are

going to ride the wave,” said PamelaLiebman,chief executive of the Cor-coran Group. “But the buyers areleaving their surfboards at home.”

Although the supply of apart-ments on the market is low by histor-ical standards, buyers are still reluc-tant to pay up for what they can get.

“They aren’t seeing the addition-al inventory coming out becausethey aren’t going to look at some-thing if it is overpriced,” saidJonathan Miller, chief executive ofappraisal firm Miller Samuel,whichprepared the report for DouglasElliman Real Estate.

By all accounts, the more stablerate of price growth has caused buy-

ers to become more cost-sensitive inorder to avoid overpaying for an as-set whose value may not double inthe near term. —joe anuta

Big law firm inks pricey leaseThe largest tenant in one of the city’smost expensive office towers has de-cided to pay the freight for anotherdecade and a half.

Law firm Weil Gotshal &Manges, which moved into theGeneral Motors Building when itopened in 1968, has renewed itslease for 15 years. The marble-cladFifth Avenue tower is regarded asone of the city’s premier properties.



NEW IN TOWN

Companies that would like to have detailsof openings published should submitdescriptions following this format [email protected], with “Newin Town” in the subject line.

● King’s Clam Bar622 Washington Ave., BrooklynThe seafood restaurant opened inProspect Heights. The sustainable-foods menu offers barbecue-style fishwith a choice of six sauces and six salads,as well as other seafood items.

● MatchaBar93 Wythe Ave., BrooklynThis matcha tea shop opened inWilliamsburg. It serves items made withthe green-tea powder, including lattesand guacamole.

● Sincerely, Tommy343 Tompkins Ave., BrooklynThis clothing boutique opened inBedford-Stuyvesant. It offerswomenswear and lifestyle items fromboth local and international designersand serves Irving Farm coffee.

● Uniqulee36 Mott St., ManhattanThe design store opened in Chinatown.It sells home-decoration items,including a cast-iron piggy bank and ahandcrafted banana-fiber bowl.

COMPANY MOVES

Companies that would like to have detailsof recent moves published should submitdescriptions following this format [email protected], with“Company Moves” in the subject line.

● Fox’s147 E. 86th St., ManhattanThe national discount department storeopened its third New York City location,on the Upper East Side. The store offerscoats, dresses and athletic wear.

● Maje114 Spring St., ManhattanThe French fashion store opened itsfifth Manhattan location, in SoHo. Itoffers parkas, sweaters and boots forwomen.

● Patacon Pisao139 Essex St., ManhattanThe Venezuelan eatery opened its thirdNew York City outpost, on the LowerEast Side. The menu features plantainsandwiches, sweet corn cakes and arepas.

BANKRUPTCIES

The following listings are selected from themost recent available filings by companiesseeking bankruptcy protection in theSouthern and Eastern Districts of NewYork. Information was obtained from U.S.Bankruptcy Court records available onPublic Access to Court Electronic Records.Listings are in alphabetical order.

● Kemistry Entertainment Group260 Flatbush Ave., BrooklynFiled for Chapter 11 bankruptcyprotection on Sept. 22. The filing citedestimated assets of $0 to $50,000 and

estimated liabilities of $100,001 to$500,000. The creditors with the largestunsecured claims are 260 FlatbushAvenue Realty, owed $300,000; BuckingBull, owed $42,000; and Rad & Dylan,owed $35,000.

● Rancho Vida, dba Mamajuana Cafe570-572 Amsterdam Ave., ManhattanFiled for Chapter 11 bankruptcyprotection on Sept. 19. The filing citedestimated assets of $100,001 to$500,000 and estimated liabilities of$100,001 to $500,000. The creditorswith the largest unsecured claims areSignapay Ltd., owed $85,285; InternalRevenue Service, owed $50,887.65; andNYS Taxation & Finance, owed$49,488.04.

● Rotenier Ltd., dba RMUSA Inc.15 W. 72nd St., ManhattanFiled for Chapter 11 bankruptcyprotection on Sept. 21. The filing citedestimated assets of $500,001 to $1million and estimated liabilities of$500,001 to $1 million. The creditorswith the largest unsecured claims areChase Line of Credit, owed$199,883.62; MT&T Bank, owed$146,000; and MT&T Bank, owed$144,907.

GOVERNMENT CONTRACTOPPORTUNITIES

Following are selected contractopportunities recently announced by NewYork City agencies. To learn how to sellgoods and services to city government, visitwww.nyc.gov/selltonyc. For a searchabledatabase of current procurement notices,visit www.nyc.gov/cityrecord. Listings arealphabetical by category and department.

CONSTRUCTION SERVICES● Department of Design and ConstructionSeeks competitive sealed bids by 11 a.m.on Oct. 15 for the construction of stormappurtenances on Grantwood Avenueon Staten Island. Bid documents areavailable at nyc.gov/buildnyc and requirea $35 deposit per set, payable bycompany check or money order. Tomake inquiries, contact EmmanuelCharles at (718) 391-2200 [email protected].

● Department of Parks and RecreationSeeks competitive sealed bids by 10:30a.m. on Oct. 16 for the construction of arain garden and erosion control inWesterleigh Park, located at WillardSpringfield, Neal Dow and Maineavenues on Staten Island. Biddocuments are available at the BlueprintRoom, Room 64, Olmsted Center,Flushing Meadows Corona Park,Queens, for a $25 fee, payable bycompany check or money order to theCity of New York, Parks and Recreation.To make inquiries, contact MichaelShipman at (718) 760-6705 ormichael.shipman @parks.nyc.gov.

● School Construction AuthoritySeeks competitive sealed bids by 10:30a.m. on Oct. 22 for low-voltage fire-alarm and public-address systems. Theproposed range must be between$1,770,000 and $1,867,000. Biddocuments require a nonrefundable feeof $100, payable by major credit card,certified check or money order to the

New York City School ConstructionAuthority. To make inquiries, contactStacia Edwards at (718) 752-5849 [email protected].

GOODS AND SERVICES● Department of Information Technologyand TelecommunicationsSeeks competitive sealed bids by 2 p.m.on Oct. 16 for audio and video switchingat the Mayor’s Office of Media andEntertainment. To make inquiries,contact Anne Cody at (212) 788-6276or [email protected].

● Economic Development Corp.Requests proposals by 4 p.m. on Oct. 17for the updating of its WaterfrontInspection Guidelines Manual, reviewof its inspection standards and an update to its Waterfront FacilitiesMaintenance Management System. Tomake inquiries, contact MaryannCatalano at (212) 312-3969 [email protected].

REAL ESTATE DEALS

Companies that would like to have details of their recent transactions appear in these listings should emaildescriptions following this format [email protected],with “Real estate transaction” in the subject line, or enter them online atcrainsnewyork.com/submitadeal. Deals are listed in order of square footage.

COMMERCIAL● Gawker Media signed a 15-year leasefor 58,900 square feet at 114 Fifth Ave. in the Flatiron district. The mediacompany’s space will span the second,third and fourth floors of the 20-storyoffice tower. The tenant was representedby Jared Horowitz and Jonathan Tootellof Newmark Grubb Knight Frank. Thelandlord, L&L Holding Co., wasrepresented in-house by David Berkeyand Andrew Wiener. The asking rentwas $78 per square foot.

● AKF Group signed a 16-year lease for57,000 square feet at 1 Liberty Plaza inthe financial district. The engineeringconsulting firm will relocate its TimesSquare office to the 22nd and 23rdfloors of the 54-story building. Thetenant was represented by Ruby Hwang,Paul Mas, Mike Shenot and RoxanneTehranian of JLL. The landlord,Brookfield Properties, was representedin-house by Jeremiah Larkin andDuncan McQuaig, along with NickBerger, David Falk, Peter Shimkin andHal Stein of Newmark Grubb KnightFrank. The asking rent was notdisclosed.

● AIQ signed a 10-year lease for 9,300square feet at 1500 Broadway inmidtown. The financial-informationpublisher will move out of subleasedspace in the building into an office onthe top floor of the 33-story building.The tenant was represented by GaryKamenetsky and Sam Seiler of CBRE.The landlord, the Tamares Group, wasrepresented by Paul Amrich, EmilyJones and Patrice Meagher, also ofCBRE. Asking rents in the space are inthe $70s per square foot.

RETAIL● Shake Shack signed a lease for 3,300square feet at 1333 Broadway in HeraldSquare, midtown. The burger andmilkshake restaurant, owned by DannyMeyer, has 11 existing locations in NewYork City. The tenant was representedby Matt Chmielecki and Andrew S.Goldberg of CBRE. The landlord,Empire State Realty Trust, wasrepresented in-house by Ryan Kass andFred Posniak. The asking rent was $300per square foot.

● Just Salad signed a 10- to 15-year leasefor 2,700 square feet at 2056 Broadwayon the Upper West Side. The eatery’snew location will be its 16th in NewYork City. The tenant was representedby Charles Rapuano of Winick RealtyGroup. The landlord, the BrodskyOrganization, was represented byWinick’s Steven E. Baker. The askingrent was $25,000 per month.

STOCK TRANSACTIONS

Following are recent insider transactions atNew York’s largest publicly held companiesfiled with the Securities and ExchangeCommission by executives and majorshareholders. Listings are in order oftransaction value. The information wasobtained from Thomson Reuters.

● Regeneron Pharmaceuticals (REGN)Sanofi purchased 172,349 shares ofcommon stock at prices ranging from$340.88 to $349.91 per share betweenSept. 12 and Sept. 16, in a transactionworth $59,617,308. It now indirectlyholds 22,377,200 shares.

● Bristol-Myers Squibb (BMY)Francis M. Cuss, executive vicepresident and chief scientific officer,research and development, exercisedoptions on 63,667 shares of commonstock at prices ranging from $24.74 to$25.45 per share on Sept. 16, in atransaction worth $1,602,575. On thesame day, he sold 63,667 shares ofcommon stock at $50.77 per share, in atransaction worth $3,232,074. He nowdirectly holds 238,446 shares.

Giovanni Caforio, chief operatingofficer, sold 26,691 shares of commonstock at $49.87 per share on Sept. 15, ina transaction worth $1,331,155. He nowdirectly holds 40,755 shares.

● ABM Industries (ABM)James P. McClure, executive vicepresident, exercised options on 69,349shares of common stock at prices rangingfrom $17.90 to $25.30 per share betweenSept. 16 and Sept. 17, in a transactionworth $1,422,256. In the same period, hesold 109,148 shares of common stock atprices ranging from $27.52 to $27.64 pershare, in a transaction worth $3,009,981.He now directly holds 92,573 shares.

● Cambrex Corp. (CBM)Shawn P. Cavanagh, executive vicepresident and chief operating officer,sold 56,251 shares of common stock at$22.56 per share on Sept. 11, in atransaction worth $1,269,062. He nowdirectly holds 46,250 shares.

● Steven Madden Ltd. (SHOO)Arvind Dharia, chief financial officerand secretary, sold 36,025 shares ofcommon stock at prices ranging from$33.61 to $33.79 per share betweenSept. 15 and Sept. 16, in a transactionworth $1,213,500. He now directlyholds 128,079 shares.

● Nasdaq OMX Group Inc. (NDAQ)Bruce E. Aust, executive vice president,corporate client group, sold 26,389shares of common stock at $43.75 pershare on Sept. 12, in a transaction worth$1,154,519. He now directly holds72,350 shares. �

ABOUT THIS SECTIONFOR THE RECORD is a weekly listing of information from the public record thatcan help businesspeople in the New York area find opportunities, potentialnew clients and updates on competitors.

To ask questions or get more information on this section, contact Crain’sresearch department at [email protected].

DEALS ROUNDUP

Attachmate Group $2,302.4 Micro Focus International SB M&AInc./Thoma CresseyBravo, Francisco PartnersManagement, Golden GateCapital, Elliott ManagementCorp. (Manhattan), ThomaBravo, CCG AV-Series A,FP Annual Fund, InvestorsCCG AV-Series C, GoldenGate Capital AssociatesII-AI, Francisco Partners GP

Get AS/Goldman Sachs $2,156.6 TDC A/S SB M&AGroup, Merchant BankingDivision (Manhattan),Quadrangle CapitalPartners (Manhattan)

Portfolio of 52 hotels/ $1,100.0 NorthStar Realty Finance Corp. SB M&AInland American Real (Manhattan), Chatham Lodging TrustEstate Trust Inc.

Pioneer Corp., DJ $550.4 Kohlberg Kravis Roberts & Co. FB M&AEquipment Business/ (Manhattan)Pioneer Corp.

Sierra Oil & Gas S. de $525.0 EnCap Investments, Riverstone Holdings GCIR.L. de C.V./not disclosed (Manhattan), Infraestructura Institucional

S. de R.L. de C.V.

180 Maiden Lane/SL $470.0 Clarion Partners Americas (Manhattan), SB M&AGreen Realty Corp. Murray Hill Properties (Manhattan)(Manhattan), MoinianDevelopment Group(Manhattan)

Privia Health/not disclosed $400.0 Cardinal Partners, Goldman Sachs Group, GCIMerchant Banking Division (Manhattan),Health Enterprise Partners (Manhattan),Pamplona Capital Management (Manhattan),Brighton Health Partners, Morgan NobleHealthcare Partners

Commercial condominium $275.0 SL Green Realty Corp. (Manhattan) SB M&Aunits in office propertylocated at 55 W. 46thSt./not disclosed

Youxin Hulian Information $260.0 Tiger Global Management (Manhattan), GCITechnology Co. Ltd./not Warburg Pincus (Manhattan)disclosed

Selected deals announced for the week ended Sept. 11 involving companies in metro New York.SB M&A: Strategic buyer M&A represents a minority or majority acquisition of existing sharesof a company without the participation of a financial buyer. FB M&A: Financial buyer M&Arepresents a minority or majority acquisition of existing shares of a company with the participa-tion of a financial buyer. GCI: Growth capital investment represents new money invested in acompany for a minority stake. source: capitaliq

TRANSACTION SIZETARGET/SELLERS (IN MILLIONS) BUYERS/INVESTORS TRANSACTION TYPE

FOR THE RECORD


that additional expense by negotiat-ing to save on their rents. Despitelower land costs in poorer neighbor-hoods, developers operate in theseareas with slimmer margins,makingit more difficult for them to acceptthose kinds of rent concessions.That was certainly the case in 2009,when a living-wage mandate killeda deal by the Related Cos. to rede-velop 575,000 square feet of theKingsbridge Armory in the Bronxinto a retail mall.

By contrast, higher rents thatlandlords can command in upscalesettings like Madison Avenue or theTime Warner Center usually attracthigher-end retailers whose marginsare bigger and, in some cases, whoalready pay employees more.

“This is a concern for develop-ment in the outer boroughs particu-larly,” said Steven Polivy,chair of theeconomic development and incen-tives practice at law firm Akerman.“Developers will essentially have tolower their retail rents to compen-sate for the rule, and that will essen-tially reduce the impact of the in-centives that were given to theproject’s developers in the firstplace.”

Mr. Polivy has helped arrangeseveral high-profile developmentdeals in the outer boroughs thathave benefited from city incentives,including the large City Point proj-ect in downtown Brooklyn. He saiddevelopers in the bor-oughs often rely on breakslike real estate and sales-tax abatements and elec-tricity discounts handedout by the city’s Econom-ic Development Corp.,the same ones that wouldnow require them to adoptthe new living-wage standard.

Vital handouts“There’s a reason why these proj-

ects have gotten these incentives,”Mr. Polivy said. “Without them,they just won’t get built.”

The $13.30-an-hour wage thatthe mayor’s executive order requiresfor tenants in properties that receive$1 million or more of these types ofsubsidies is expected to rise to morethan $15 an hour by 2019.

For the city’s real estate industry,the new mandate is just the latestsetback under the de Blasio admin-istration.Carl Weisbrod,head of theDepartment of City Planning, an-nounced that the city will requiredevelopers to include affordablehousing in residential towers thatare approved for taller construction.State Sen. Brad Hoylman proposed

a pied-à-terre tax for luxury apart-ments that includes a $370,000 sur-charge and 4% levy on propertiesworth more than $25 million. Andlate last week, City CouncilmanDan Garodnick called for more

oversight and public disclo-sures for the subsidies hand-ed out by the EDC, one ofthe main providers of taxdiscounts and other breaksto real estate developers andtenants.

“I do applaud the may-or’s actions because livable

wages have to be a part of the equa-tion here in terms of what the pub-lic gets for the subsidies that are giv-en out,” Mr. Garodnick said. “Weneed to at least have greater claritywhy this money is necessary. It can’tjust be a gift.”

But builders in low-incomeneighborhoods like East New Yorkin Brooklyn,where the mayor wantsto encourage new affordable hous-ing, say that the living-wage lawcould hamstring that development.

That’s because developers say theycount on the higher income frommarket-rate retail space at the baseof an affordable-housing project tosupplement the reduced-rent resi-dential units upstairs.

Fewer amenities“A strong retail component can

be a driver of value to a developer ofan affordable development,” saidBob Knakal, chairman of MasseyKnakal Realty Services. “The newliving-wage requirement will nega-

tively impact the value of that retailspace.”

The living-wage rule could alsobe especially onerous for retailersmost needed in outer-boroughneighborhoods, such as grocerystores, which often depend on pay-ing low wages in order to afford be-ing in new spaces.

A store planned for Astoria,Queens, is a prime example. There,the Durst Organization last monthbought a $100 million stake in ahuge residential complex along thewaterfront.

A spokesman for the companysaid there is now concern that theliving-wage rule could upend theeconomics of a deal to have a20,000- to 30,000-square-foot gro-cery store as part of the project.Thatstore has been billed as a majoramenity for both the residents of the2,400-unit development and for thesurrounding neighborhood.�

Living-wage falloutContinued from Page 4

to discourage unserious candidatesfrom running, but low enough to beattainable for major candidates.

“If you have a candidate from oneof the major parties running for of-fice and they can’t reach that level,that should tell you that maybe youneed to rethink the thresholds, atleast for that office, in any futureprogram,” Mr. Norden said.

But others attribute Mr. An-tonacci’s struggles to the Republi-can Party’s diminishing brand inNew York.

“Certainly New York state’spublic financing law was the workof people who had no vested inter-est in it and who may well have had

a vested interest in its failure, but italso reflects the inability of the Re-publican Party to be a viable oppo-sition party in New York politics,”said Kenneth Sherrill, a professoremeritus in Hunter College’s polit-ical-science department. “A viableparty would not have had troublefinding the contributors necessaryfor one of its candidates to meet the$200,000 requirement in smallcontributions.”

Mr. Antonacci said he has“begged, pleaded and cried on theshoulder of every [Republican] par-ty chairman” in the state, but has lit-tle to show for it. At the same time,he said he is proud of the donationshe’s received, especially those from

voters who had never given to a po-litical campaign.

Advocates blame the way the pi-lot program was created for its fail-ures, saying the bill was tucked intothe state’s fiscal 2015 budget, whichwas negotiated behind closed doorswithout input from experts. Assuch, many believe that Mr. An-tonacci, as the sole participant, wasdoomed to fail.

“This ‘pilot program’ had asmuch a chance of taking off as theSpruce Goose,” said Bill Mahoney, acampaign finance expert at the NewYork Public Research InterestGroup, referring to HowardHughes’ ill-fated aircraft.“The gov-ernor still hasn’t enacted most of thecampaign finance reforms he prom-ised in his first term, and he’ll needto get serious about cleaning up Al-bany if he’s re-elected.” �

Public financingContinued from Page 6

based on “merit and fitness,”and, formany job classifications, that is de-termined by scores on civil-serviceexams. In many cases, only the topthree scorers are allowed to be inter-viewed for a position.

Circumventing the systemThe longstanding policy was de-

signed to root out political patron-age. But former Mayor MichaelBloomberg felt hamstrung by it be-cause the exam scores reflect knowl-edge of agency procedures and oth-er arcane facts but not necessarilywork experience, managerial skills,temperament and other qualities.

The mayor therefore had hisagencies circumvent the system byhiring “provisional” employees. By2007, nearly 37,000 were swellingthe ranks of city government, occu-pying more than 19% of the “com-petitive”city job titles that were sup-posed to be filled based on examscores.

“The civil-service system was aprogressive reform to ensure goodgovernment—but that was 100years ago,” said Steve Malanga, asenior fellow at theManhattan Institute.“Now there’s far moresophisticated technol-ogy and different typesof positions. But youmay still want this kindof test for someoneworking in the Sanita-tion Department.There are no easyanswers to this.”

Mr. Bloomberg’swork-around was dealta major blow by a 2007court decision in a case pitting LongBeach, L.I., against CSEA, a laborunion representing employees in thetown. The court found it unlawfulfor municipalities in the state to re-tain provisional employees for morethan nine months.

To be in substantial compliancewith the ruling, New York Cityneeded to slash the portion of com-petitive jobs held by provisionalworkers to 5%—down to about9,500. In 2008, the Bloomberg ad-ministration developed a plan to cutthe provisional ranks to just 3,300within five years. But it fell wellshort: As of late last year, nearly22,500 provisional employees werestill on the payroll, according to acity report.

‘As fast as they could’“They went as fast as they reason-

ably could,” argued one source closeto the process,alluding to the impactthat wholesale personnel changeswould have had on city operations.

Data released late last year showthe Department of Education hadmore than 4,000 provisional em-ployees, while the Parks Depart-ment, Housing Authority, HumanResources Administration and De-partment of Health and MentalHygiene each had more than 1,000.Current provisional employees arebeing encouraged by their agenciesto take civil-service exams.

Many of these provisional em-ployees are union members, said

Arthur Cheliotes, president of theCommunications Workers Local1180. Still, public-sector labor lead-ers chafed because the provisionalworkers lacked civil-service protec-tions and were afraid to call outmanagers’ misdeeds, including con-tracting abuses, he said.

Unions also felt the Bloombergadministration was stifling the up-ward mobility of civil-service work-ers by hiring provisional managersrather than promoting from thelower ranks.

“It used to be that these kinds ofappointments came from the polit-ical clubs. [Then] they started com-ing from the country clubs,” wise-cracked Mr. Cheliotes, who chairsthe civil-service committee for theMunicipal Labor Committee, anumbrella group for city unions.

Unions push city to actLabor interests, which had felt

that the Bloomberg administrationdragged its feet in complying withthe court ruling, pressed the stateLegislature to accelerate theprocess. This year, two Brooklynlawmakers, Republican state Sen.

Martin Golden andDemocratic Assem-blyman Peter Ab-bate, advanced billsgiving the city a dead-line, and after negoti-ations with the deBlasio administra-tion, a deal was struckto give it until the endof 2016. (Laborsources said the ad-ministration, fearingrapid turnover woulddisrupt agencies,

wanted much more time than itgot.)

The bill also required the city toissue a new plan to achieve compli-ance. Gov. Andrew Cuomo signedthe bill into law in August. On Oct.8, the Department of Citywide Ad-ministrative Services is expected toissue a plan on how the city willcomply with the court decision.

An agency deputy commission-er, Julianne Cho, declined to com-ment until the plan is released.

The department is now headedby a de Blasio appointee, StaceyCumberbatch.She and Ms.Cho areboth Bloomberg holdovers.

Labor leaders had grumbled thatthe Bloomberg administration didnot schedule enough civil-serviceexams and often tried to reclassifyprovisional employees’ jobs to ex-empt them from civil-service rules.

The de Blasio administration,however, has been “vigorous” in giv-ing civil-service exams, Mr. Che-liotes said. Top scorers can fill jobscurrently held by provisional em-ployees, some of whom have beentaking the tests in an effort to stay on.

“The whole point is that you’renot supposed to just be able to hireyour buddy,” said Mr. Cheliotes.“Now there will be an opportunityto take the tests. And the generalpublic will have as much access tothe jobs as anyone else.” �

Brain drain loomsContinued from Page 1




‘Civil servicewas aprogressivereform—100years ago’4K

NUMBER OFWORKERS likelyto actually get awage increase,not the 18,000predicted

DEALBREAKER: Living-wage criticspoint to the Kingsbridge Armory as anexample of how mandates for tenantscan kill development projects.

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becoming entry-level Web devel-opers.

“Close to 4,000 people camethrough our doors in the past fewyears to take immersive courses,”said Mr. Schwartz, whose companycharges up to $11,500 for a three-month program similar to Flat-iron’s. “In fact, we’re currently in theprocess of tripling our capacity.”

Getting into some of theseschools is itself a feat.Flatiron reportsa 10% applicant acceptance rate, notdissimilar to elite universities aroundthe country. (Harvard’s applicant ac-ceptance rate is 6%, Princeton’s 7%.)Flatiron’s 16-week program beginswith four weeks of “prework” assign-ments—80 to 120 hours of home-work that must be completed beforestudents begin their 12-week courseof study that requires them to be inschool from 9 a.m. to 6 p.m.Mondaythrough Friday.

‘Code ninjas’The skills students learn are in-

tended to be as marketable as possi-ble. Flatiron and App Academy, thetwo most selective and intensive, fo-cus on the most widely used Webdevelopment language, Ruby onRails, which is necessary for entry-level coding jobs. The schools alsogive students groundwork in othercoding languages so they can be-come versatile programmers knownas “fullstack developers” or “codeninjas.”

Flatiron’s selectivity and gruelingcoursework mean its output of talentis small. Since it launched in 2012, ithas graduated approximately 60 stu-dents a year in three batches of 20students each. The small class sizesincrease the odds for job placement,one reason why the $12,000 tuitionhasn’t scared off potential students.Graduates who get a job with one ofthe school’s hiring partners—almostall of which are in the five bor-oughs–also receive a $4,000 refund.

One of Flatiron’s recent success-es is Heat Seek NYC, a companyfounded by Flatiron graduates thatwon the two biggest awards at NewYork City’s Big Apps competition inSeptember. At the awards ceremo-ny, one of its founders, wearing aFlatiron T-shirt, posed for pictureswith Mayor Bill de Blasio, who hasmade supporting the developmentof a tech talent pipeline a priority inrecent weeks.

A city tech pipelineMr.de Blasio made two key hires

to his tech team last month. Miner-va Tantoco became the city’s firstchief technology officer, focusing onpolicies that could support the techindustry. He also brought on Ms.Titus, who will build on city initia-tives like the Web DevelopmentFellowship program.That effort hasallowed 56 New Yorkers to graduatefrom the Flatiron School withoutpaying full tuition.

The NYC Tech Talent Pipelineis being built with input from peo-ple like Mr.Schwartz and Ms.Titus’old boss, Girls Who Code founderand CEO Reshma Saujani,a formerdeputy public advocate under Mr.de Blasio. Girls Who Code, a pri-

vate and publicly funded nonprofit,intends on bridging the gender gapin the industry by educating morethan a million girls nationally andputting them into the tech work-force by 2020.

“We are focusing on girls betweenthe ages of 10 and 16, getting themhooked early and preparing them forthe future,” Ms. Saujani said.

The code academies fill the tal-ent niche in a system waiting forhigh-school students to complete

college tech programs and join theworkforce. As more top-level engi-neers graduate from universities likeCornell NYC Tech and become thenext generation of innovators andCEOs, the need for quality coderswill only get deeper. For code acad-emy executives, that means trainingmore ninjas will be very good busi-ness. �

Filling in the tech equationContinued from Page 3

Brother’s Keeper, which the Obamaadministration started earlier thisyear, and initiatives started by for-mer Mayor Michael Bloomberg.Mr.McDonald himself used his un-successful run for mayor last year tohighlight the issue.

Doe’s record has won praise. Ac-cording to a 2010 study by HarvardUniversity and Case Western Re-serve University,men who completethe Ready, Willing and Able pro-gram,which can last from nine to 12months, are 30% less likely to be ar-rested. In the program, participantsmust spend some time cleaning thestreets before training for other jobs.The program isn’t inexpensive,however. It costs $15,000 a person ayear, but that provides a social sav-ings of 20% by eliminating costssuch as incarceration.

“I’m a fan of the program becauseit really looks at creating a workethic,” said Cheryl Wilkins, seniorprogram manager at the Center forJustice at Columbia University.“They are giving them an opportuni-ty to train for jobs that pay more thanminimum wage.”

Still, despite itssuccess, the DoeFund has faced fi-nancial problems.It has run a deficitfor each of its lasttwo fiscal years,and its net assetsdwindled to $5.5million for theyear ended June30, 2013, from $9million a year ear-lier. It also ran a$3.5 milliondeficit in fiscal2013 after postinga $3.9 million deficit a year earlier.

Mr. McDonald said that’s be-cause he invests donor funds in op-erations, not his organization’s en-dowment.“I’m running a nonprofit,not a for-profit company,” he said.

In certain ways, though, the DoeFund resembles a family business.Mr. McDonald started the organi-zation 29 years ago with his wife,Harriet, who is its executive vicepresident. His son John is its chiefoperating officer. Some nonprofitmanagement experts view thearrangement as highly unorthodox,and the trio’s combined pay of morethan $1 million is seen as a little toogenerous by some.

Unusual, ‘but it works’Doe Fund Chairman Richard

Schaps acknowledged the familyties at the top are odd. “Is it unusu-al? Yes, but it works,” said Mr.Schaps, who is chairman of VanWagner Communications. “Theseare highly accomplished people. Ifthey were entrepreneurs, they’dmake a lot of money, but they don’tmeasure success that way.”

Mr. McDonald was handing outsandwiches to the homeless inGrand Central Terminal 30 yearsago, when one of his regulars—ahomeless woman known as MamaDoe—died in the cold. After that,the former garment-industry exec-utive decided to make improvingthe lives of the homeless his full-time occupation.

“I knew that homeless peoplejust wanted a hand up, not a hand-out,” said Mr. McDonald.

The Doe Fund’s methods haveattracted corporate admirers. In-vestment firm State Street Corp. lastyear gave the Doe Fund $60,000, in-cluding $10,000 for its initiative foryounger men.The Doe Fund’s workto provide job training dovetails withState Street’s philanthropic interestin workforce development.

“The Doe Fund is about takingpeople who are struggling and get-ting them ready to contribute to so-ciety,” said Barbara Wentzel, seniorvice president of the philanthropycommittee at State Street. She saidthat State Street was impressed bythe effort to reach out to younger

men. “They arehelping them ac-quire the skillsthey need to ma-ture,” she said.

GED prepMr. McDon-

ald said the re-newed focus onyounger men is anattempt to getthem on the rightpath now. Muchof the youngermen’s program issimilar to that ofthe older partici-

pants: They must clean the streetsand learn a skill. But the youngermen work only three days a week in-stead of five and spend the othertwo days taking classes they need,such as GED preparation, whilestill getting paid. They also mustundergo therapy as part of theirstint. “A lot of the older guys arelooking for their second or thirdchance,” said Mr.McDonald.“Let’sget them started right.”

Doe Fund participants say theydon’t know what they would dowithout the organization. CoreyFaison, a 43-year-old who has beenin and out of rehab and detox pro-grams for his cocaine addiction,sought help in July as a “birthdaypresent to myself.”

Mr. Faison now lives at the DoeFund’s Harlem shelter and is work-ing cleaning the streets. He is stick-ing with the program because hewill eventually learn a skill. Plus, itoffers him a sense of structure in hislife without being stifling.

“I feel like they really have myback,” said Mr. Faison. “I feel likethey want me back in society.” �

Doe Fund campaignContinued from Page 4


CORRECTIONS

Accenture partners with IPsoft on the development of new technologies. Its relationship to IPsoft wasmisstated in the Sept. 29 “Looking smart.”

Spaceworks kicked off work on a $650,000 renovation of the top floor of the Williamsburg branch ofthe Brooklyn Public Library. When completed, that space will house four artists’ studios and tworehearsal studios. Some 218 visual artists applied to participate in the lottery for three available spots.This information was misstated in the Sept. 29 “Spaceworks makes room for creatives.”

An opportunityfor homelesspeople to trainfor jobs thatpay more thanminimum wage

APP ACADEMYClass size: 20Class length: 12 weeksCost: $13,000 up frontor 18% of your first-yearsalary

MEMBERS OF THE ACADEMY In addition to an Ivy League-esque 5%acceptance rate, App Academy claims a 95% job-placement rate in positions paying an annualaverage of $90,000. The lab-style academy offersstudents the opportunity to bet on themselves bypaying a percentage of their first-year salary astuition. Students “pledge” to spend as many as100 hours per week learning skills for the tech jobmarket. App Academy is revenue-based and haspartnerships with private employers.

BYTE ACADEMYClass size: 10-25Class length: 12 weeksCost: $10,000

A relatively new player, Byte Academy is focusedon fintech. Courses teach a mix of tech andfinance. Students are funneled into the high-paying Wall Street tech jobs that financial-servicescompanies are struggling to fill. Students who takejobs at partner firms like Goldman Sachs andAmerican Express within six months of graduatingare entitled to partial refunds on tuition.

DEV BOOTCAMPClass size: 16-20Class length: 19 weeksCost: $12,200

A genuine Silicon Valley institution, DevBootcamp is now operating in the Alley as well.Unlike other programs, the training is longer andhas three separate stages. Dev Bootcamp is arevenue-based operation and offers discountedtuition for women and minorities.

FLATIRON SCHOOLClass size: 20Class length: 16 weeksCost: $12,000

Flatiron prides itself on its program’s intensity, lowacceptance rate (10%), high job-placement rate(98%) and a strong Silicon Alley alumnicommunity. Flatiron, which has moved to thefinancial district, is a venture-backed operation thatraised $5.5 million in a Series A round this April.

FULLSTACK ACADEMYClass size: VariesClass length:10-16 weeksCost: Up to $12,500

Backed by Silicon Valley-based acceleratorprogram Y Combinator, Fullstack claims a 97%job-placement rate and works closely with many YCombinator-launched companies in the hiringprocess. Fullstack, known for its “no a—holes”admissions policy, checks egos at the door.

GENERAL ASSEMBLY Class size: 20-25Class length: 12 weeksCost: Up to $11,500

The biggest city-based player operates programsacross the country and is moving into Europe andAsia. It claims a 90% job-placement rate and hasbeen funded with $49.7 million in venture capitalsince 2011.

HACKER SCHOOLClass size: 35Class length: 12 weeksCost: Free

Hacker School relies on partnerships to fund itsprograms. Companies pay Hacker to identify andtrain promising students, who receive a livingstipend. The admissions process is focused onthe recruitment of women. Hacker School hasraised $217,000 in venture capital since 2010.

METISClass size: 15-20Class length: 12 weeksCost: Up to $14,000

Part of education giant Kaplan, Metis offers “bootcamps” in a variety of coding languages. Metisalso works with a variety of hiring partners.


NEW YORK CODE ANDDESIGN ACADEMYClass size: 15-17Class length: 12 weeksCost: $10,000

NYCDA has a much more open-door policy thanits FiDi neighbor, the Flatiron School, and makesits revenue on a variety of classes that includeafter-school programs for high-schoolers.

—THORNTON MCENERY

P032_CN_20141006.ps.qxp 10/3/2014 5:48 PM Page 1

INSIDESource Lunch Puttingthe mayor’s agenda intoaction PAGE 34Out and AboutA Mad Man talks aboutwomen PAGE 35

BY THERESA AGOVINO

Getting past the notoriously selective co-op boards at fabled buildings like740 Park Ave. or the Dakota appears to be a breeze when compared withnabbing a home at El Barrio’s Artspace PS109 in East Harlem. ¶ Some53,000 people applied for one of the 90 apartments in the decommissionedschool, which is in the last stages of being converted to affordable housingfor artists. Less than 0.2% of them will secure a space.That ratio puts theacceptance rates at snobby co-ops to shame. ¶ The chosen few are slated tobegin moving into the grand, Gothic-style 116-year-old building on East

99th Street by the end of the year, when the two-year, $52 million renovation is completed. It’sbeen a long time coming.The school was mothballed in the mid-1990s because of its deterioratingphysical condition and low student enrollment, but local leaders say it’s been worth the wait. ¶“Artists are always the first to go as gentrification takes hold,” said Gustavo Rosado, executivedirector of El Barrio Operation Fightback, a housing nonprofit that’s developing the building withMinneapolis-based Artspace Projects.

Concierges have their sayWhen the city’s hotel conciergesare asked for recommendations toa show or restaurant, chances aretheir guests will be referred to oneof the 15 winners of the annualConcierge Choice Awards.

In September, nearly 200concierges cast their votes incategories including the top touristattraction (the Intrepid Sea, Air &

Space Museum), the most elegantrestaurant (Le Perigord) and thebest Broadway show (Beautiful).

Guests’ reviews are a criticalfactor in the process, saidFrederick Bigler, co-founder of theawards and concierge of thePeninsula New York Hotel.

Le Perigord is hardly thesexiest eatery in town—in fact, it’scelebrating its 50th year—“butwhen we send our guests therethey come back raving about theservice,” Mr. Bigler added.TheFrench restaurant beat outnominees Le Bernardin, Casa Lever,the Lambs Club and Tocqueville.

For the Broadway prize, evenSting was lobbying the group to puthis upcoming musical, The LastShip, on top next year. Heperformed at the awards ceremonyheld at the Loeb Boathouse. Go toconciergechoiceawards.com to seeall the winners.

—lisa fickenscher

CBGB 2.0The third annual CBGB Music &Film Festival will take over 35venues across Manhattan andBrooklyn from Oct. 8 to 12,

featuring some 200 artists,including ’80s rockers Devo andJane’s Addiction performing a freeconcert in Times Square.

Tim Hayes, a co-owner of theCBGB brand and one of thefestival’s organizers, said his teambought the rights to CBGB in2011, “recognizing that this is aniconic name and symbol.”

He added that his company is“investing in the future of CBGB,trying to expand the audience andintroduce it to a new generation.”

He hopes to take the festival toJapan and is on the hunt for spaceto open a new CBGB on theLower East Side, featuring someof the famed interior of the oldBowery haunt, which closed in2006. And in each quarter of 2015,starting in the spring, he hopes tolaunch something new: forexample, a rock-inspired fashionline, a microdistillery and a labelallowing artists to record using allof the original CBGB soundequipment. —jessica kramer See ARTISTS on Page 34

HELLUVA TOWN


A home for creativity Shuttered East Harlem school converts to a living and working

space for artists as a hedge against gentrification

LONG ODDS

NEW YORK STATE OF MIND:Shawn McLearen, Artspace’s VPfor property development, saidthe Minneapolis-based companyhad to adapt to localidiosyncracies during itsrefurbishment of PS109.

90NUMBER OFAPARTMENTS availableat Artspace PS109

53KNUMBER OFAPPLICATIONS for thoseapartments

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In April, Mayor Bill de Blasioappointed Julie Menin com-missioner of the city’s De-partment of Consumer Af-fairs, the agency that will

oversee the mayor’s paid-sick-daylaw and expanded living-wage re-quirements, among other mandatesthat businesses find burdensome.

How is paid-sick-leave enforcementgoing?We’ve had 220 complaints thathave come in since July 30.The ma-jority are from workers who havenot been given the notice about paidsick leave—often,the employer wasnot aware. We’ve been able to me-diate 100% of those complaints[without issuing fines]. We had acouple of “retaliation” complaints,and again, in those instances, we’vebeen able to step in and mediate.

Are the regulations posted? They are all on our website. We alsoadopted and implemented an onlineapplication tool for small businesses,where they can track an employee’saccrual time—it’s not required, butit’s helpful and very easy to use.

What have you been doing to cut small-business fines?In July the Department of Con-sumer Affairs announced 24 re-forms that will mean an approxi-mately $5 million reduction in theupcoming fiscal year.That’s going togo back into the pockets of businessowners to hire more employees.

What are the reforms?We’re giving small businesses,for al-most all signage violations, the op-portunity to cure violations first.We’ve also reduced the fine amountsin many categories. As someonewho dealt with DCA in the past, insmall-business life, many times aDCA inspector would come in, and

a small business would say,“What isthe inspector looking for?” Theywere told, “Well, go and read therules online.” But that’s not practi-cal, or fair. So we have posted an in-spector checklist online, so peoplecan be very clear what it is the in-spector is looking for.

And we’re usingan online mappingtool. It gives us im-mediate data to knowwhen one neighbor-hood is being overin-spected, another un-derinspected. Wehave a new legal om-budsman whose solefunction, all day long,is to answer questionson our rules.

Instead of these fines,where should ConsumerAffairs be focusingenforcement?Where there arehealth, safety, fraudand abuse scams—that is where we’re go-ing to be aggressive.For example, the saleof tobacco to minors—we have un-dercover teenagers who go out andtry to purchase tobacco. The sale ofexpired medication—we are goingto step in and aggressively enforcethat.We recently issued 200 subpoe-nas to the used-car industry becausewe believe very strongly that they areselling recalled cars—there’s a loop-hole in the federal law.We are doinga very aggressive investigation ofemployment agencies,which we be-lieve are engaging in predatory anddeceptive practices.

How do you decide where to focus?We obviously are extremelycomplaint-driven.I always encour-age people, if they’ve had a con-

sumer-protection issue, to pleasecall 311 or contact us directly. Butwe also monitor issues where wefeel there needs to be aggressive en-forcement. There’s not always go-ing to be consumer complaints onan issue where there needs to be aninvestigation. So we really try to

look holistically.

A group representing processservers sued your agency. Itfeels it’s being overregulated. The lawsuit against theagency was dismissed. Andthere clearly was a com-pelling reason why theagency had to step in. Peoplewere saying they weren’tserving papers—and theprocess servers said theywere serving the papers.

There’s a City Council bill underwhich Consumer Affairs wouldregulate the car-wash industry.Are consumers not happy withcar washes?On the car-wash bill, if juris-diction is given to the De-partment of Consumer Af-fairs, I imagine we’d start

seeing a lot more interaction fromthe public. We believe this car-wash bill has protections all the wayaround, both for employees of carwashes and consumers—and thecar-wash owners. For those engag-ing in any kind of bad conduct, theyare undercutting the good actors.

Has the City Council under MelissaMark-Viverito been sensitive tobusiness owners’ needs so far?Absolutely. The expansion of thepaid-sick-leave law, you really sawthat in the number of employerscovered—there was really a bal-ance. And you see that with themayor’s commitment to reducingfines on small businesses. �


New Consumer Affairs chiefoversees mayor’s mandates

Artists’ residence“This was an opportunity to main-tain our artists.”

The community had feared thefortress-like, five-story buildingwith terra-cotta adornments wouldbe reborn as an expensive condoproject to match the other luxury de-velopments and pricey restaurantsand shops creeping into EastHarlem. But local leaders not onlydemanded affordability, they alsosought a project that would help pre-serve the neighborhood’s culturalheritage, which includes being atrailblazer of salsa music.

“Artists help build the spiritual,political and cultural essence of aneighborhood,” said poet and writerJesús Papoleto Melendez, who hasapplied for a one-bedroom.

Mr. Melendez, who was raised inEast Harlem and now resides onEast 111th Street, said the rent onhis dream apartment would be about$500, or about $225 less than he’spaying now. The 64-year-old saidthe savings would be a huge benefitbecause his income is “like a roller-coaster ride” that’s dependent ongrants and teaching gigs—even sell-ing books from the trunk of a car.

It is a tale that both OperationFightback and Artspace have heardbefore. Artspace has been develop-ing affordable housing for artiststhroughout the country since 1979.It has become expert at using a widearray of tools to finance projects.

Tax credits from New York City’sDepartment of Housing Preserva-tion and Development (HPD), theNational Park Service and the NewYork State Historic PreservationOffice helped fund the conversion ofPS109. There were also a variety ofprivate and public grants from insti-tutions such as the city’s Departmentof Cultural Affairs, the Manhattanborough president’s office and theFord Foundation.

Shared spacesStill, this is Artspace’s first project

in New York City, and its vice presi-dent for property development,Shawn McLearen, said that meantadapting to some of the local idiosyn-crasies. PS109 was configured withthe high price of real estate in mind.

For example, the building offersspace for nonprofit offices, but theyis relatively small, to keep rents low.

The former school also provides sev-eral shared community areas that canbe used for meetings, performancesand exhibitions, relieving the organ-izations of the cost of maintainingtheir own facilities.

“We knew we had to maximizespace,” said Mr. McLearen. “Weknew we had to lower overhead.”

Individual residents will benefitfrom a design that uses the building’shigh ceilings to create loft storagespaces that will be especially usefulfor artists’ tools. Apartments in thebuilding range from $494 a monthfor a studio to $1,022 for a two-bedroom, depending on the resi-dent’s income. Half the apartmentsare earmarked for locals.

‘Anchors’ of the communityThe developers are working with

HPD to ensure residents meet theincome criteria. “The building issuch an asset for the community,”said HPD Commissioner VickiBeen. “Artists really anchor a com-munity.”

HPD isn’t playing a role in choos-ing who should be considered anartist. That is left to a panel of up tosix people that includes at least oneArtspace employee, as well as localartists and representatives from artsorganizations, who will ask prospec-tive tenants about their commitmentto their craft and their feeling aboutliving among others working in thecultural sphere.

“We are not judging the quality ofthe art,” Mr. McLearen said. Yet, headded, there is no easily defined for-mula for selection. “At the end of theday, it is a human thing,” he said.

Selection is done on a rolling ba-sis, so those whose applications areevaluated first may have a better shotat an apartment.

Interviews have begun,and muchlike those waiting to hear if they’ll begranted the privilege of shelling outmillions of dollars for a co-op,would-be renters are anxious abouttheir chances.

Mr. Melendez said the upside ofmoving into the building extends be-yond reasonable rent. It also repre-sents an opportunity to meet moreartists, and, with luck, forge collabo-rations.

“I really hope I get it,” said Mr.Melendez. “It would really changemy life.” �

Continued from Page 33

SOURCELUNCH:Interview by Chris Bragg

ATHLETE’S FOOT: Ms.Menin used to be anavid runner, but toreher Achilles tendon aweek before her new

job began. “So, if youhad met me twomonths ago, I was inone of those bigboots.”

KINDRED SPIRITS:Ms. Menin has threesons: an 11-year-oldand 9-year-old twins.“When I witness my

twins together,it’s just magicalto see. Theyunderstandeach otheralmost like noone else does.”

INSPIRATIONALAUTHOR: She lovesMilan Kundera(pictured), the Czech

and French authorand critic oftotalitarianism, partlybecause her motherwas a Holocaustsurvivor who grew upin Budapest.

EARLY CAREER: Ms.

Menin started off asa consumer-protection lawyer, butlater opened arestaurant andcatering business inlower Manhattancalled Vine, nowhome toBobby Van’s.

POST-POLITICS: Ms.Menin ran forManhattanboroughpresident in

2013, and finishedfourth with 17% ofthe vote. She’s notlooking to run againsoon. “I love being inthis administration,”she said. “To me, thisis the perfect job.”

PLAY/LIST People, places and things that make Julie Menin tick

JULIE MENIN

WHERETHEYDINEDADRIENNE’SPIZZA54 Stone St. (212) 248-3838adriennespizzabarnyc.com

AMBIENCE: Wall Street-heavycrowd, with alarge outdoorarea on StoneStreet

WHAT THEY ATE:� One “OldFashioned” pizza� Water

PRICE: $27, including tip

OLD SCHOOL:PS109 is a 116-year-old, Gothic-style building.

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SNAPS Benefit raises funds for Iraq, Afghanistan veteransOUT ANDABOUTCULTURE FIXTUESDAY, OCTOBER 14At Madison Square Garden, the NHLEastern Conference champion NEWYORK RANGERS host their archrivals, theNew York Islanders—playing their lastyear in Nassau County before moving toBrooklyn—in the teams’ first head-to-head matchup of the 2014-2015 hockeyseason. Ticket prices vary, and can bepurchased at thegarden.com.

SUNDAY, OCTOBER 19Get juiced on the Lower East Side.Everybody’s favorite gherkin party isback for LESPICKLE DAY,featuringmore than 20producers, aswell as localfood andfashionvendors,activities, games, live music, DJs and ahome-pickling contest. The free fairtakes place from noon to 5 p.m. onOrchard Street between East Houstonand Delancey streets. For moreinformation, visit pickleday.nyc.

CAREER BUILDERTHURSDAY, OCTOBER 16Silicon Harlem presents its TECHNOLOGYCONFERENCE, billed as “the first-evertech conference in Harlem,” aiming totransform the community throughtechnology and innovation. LongtimeDemocratic Rep. Charles Rangel is afeatured speaker. The conference takesplace at 7:30 a.m. at My Image Studios,40 W. 116th St. Tickets are $150 andcan be purchased at event.siliconharlem.net.

FRIDAY, OCTOBER 17, AND SATURDAY, OCTOBER 18NYU Polytechnic School ofEngineering presents CAREER DISCOVERYIN CYBER SECURITY: A WOMEN’SSYMPOSIUM. The two-day conference isaimed at women interested in making ashift to the computer-security field, andfeatures some of the nation’s leadingfemale security professionals, includingIBM’s chief information security officerand McAfee’s senior vice president incharge of endpoint protection. It takesplace at 6 MetroTech Center, Brooklyn.Tickets are $75 and can be purchased atcybersymposium.isis.poly.edu.

MARK YOUR CALENDAR… SATURDAY, NOVEMBER 29FOR A POST-TURKEY BREAK, check out ARLOGUTHRIE’S ANNUAL THANKSGIVING CONCERT. The folksinger and son of Woody offers a performance thatis now a New York City tradition and features theperennial holiday favorite, “Alice’s Restaurant.” Theshow starts at 8 p.m. at Carnegie Hall, 881Seventh Ave. Tickets can be purchased atcarnegiehall.org.

FUNDRAISERS WEDNESDAY, OCTOBER 15The LUNGevity Foundationpresents its CELEBRATION OF HOPEGALA to raise support for lung-cancer research. The party kicks offat 6:30 p.m. with a cocktail hourand will be followed by dinner, abrief award presentation,entertainment and an after-party.The event will be held at the PierreHotel, 2 E. 61st St. Tickets start at$750 and can be purchased atnygala.lungevity.org.

THURSDAY, OCTOBER 16The ASPCA’S ANNUAL YOUNGFRIENDS BENEFIT features cocktails,hors d’oeuvres, music, a silentauction and special appearances bysome adoptable animals. The fetestarts at 7:30 p.m. at the IACBuilding, 555 W. 18th St. Ticketsstart at $160 and can be purchasedat aspca.org.

OPENINGWEDNESDAY, OCTOBER 15, THROUGH SUNDAY, FEBRUARY 15, 2015The Museum of the City of New Yorkpresents JEFF CHIEN-HSING LIAO’S NEWYORK: ASSEMBLED REALITIES. The exhibitfeatures more than 40 works from theTaiwanese artist turned New Yorker. Mr.Liao creates large-scale panoramas andcomposite photographs of such iconic NewYork locales as the Grand Concourse,Coney Island, the late Shea Stadium andthe 72nd Street subway station. Themuseum, at 1220 Fifth Ave., is open sevendays a week from 10 a.m. to 6 p.m. There isa suggested $10 admission fee for adults.For more information, visit mcny.org.

by Jessica Kramer

See more of this week’s Snaps online at CrainsNewYork.com/galleries.

FAREED ZAKARIA and ALI VELSHI at Pratham’sannual NYC Gala. The Sept. 18 fete raised more than$2 million for the India-based education nonprofit.

JOANNE TUCKER, ADAM DRIVER, ZACH ISCOL and MEREDITH MELLING at theHeadstrong Project’s Words of War Benefit. The Oct. 1 event raised more than $400,000for comprehensive mental-health care for veterans of the Iraq and Afghanistan wars.

MARK WAGAR and STEPHEN BERGER at Crain’sHealth Care Summit. The Oct. 1 conference addressedthe transformation of New York’s health care industry.

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MILO E. RIVERSO, MALCOLM WILLIAMS, AMY WINCKO and RICHARD GARLOCK atthe ACE Mentor Program of Greater New York’s Fall Cocktail Reception. The Sept. 17gala raised more than $140,000 to benefit high-school students interested in pursuingcareers in the building industry.

FRIDAY, OCTOBER 17The new French reading room and bookstoreat the French Embassy hosts a week’s worth offree events, and a chat with Mad Men creatorMATTHEW WEINER is a highlight. Musicjournalist Greil Marcus moderates theconversation with Mr. Weiner and AlexandraClert, co-creator of French television seriesEngrenages (Spiral), for an exploration of howwomen are portrayed in the workplace inpopular culture. The event takes place at 7 p.m.at Albertine, 972 Fifth Ave. For moreinformation, visit albertine.com.

DON’T MISS MAD MAN

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November 17-18Pier Sixty, NYC

Learn How Tech is Shaping the Future of Healthcare

Eric J. Topol, MDDirector, Scripps Translational Science Institute

Ezekiel J. Emanuel, MDVice Provost for Global Initiatives & Chair of the Department of Medical Ethics and Health Policy, University of Pennsylvania

Keynote Speakers:

2014 Sponsors & Exhibitors

Exhibitors

Platinum

Silver

Gold

Cocktail Reception

Join 850 senior-level professionals from across the healthcare ecosystem for two days of unparalleled networking, exploration, and dynamic conversation addressing how healthcare is being redefined through technology.

Join your peers and help shape the future of healthcare!

� facebook.com/NYeHealth � @NYeHealth | #DHC14

REGISTER TODAY: DigitalHealthConference.comCrain’s New York Readers: Receive a 10% Registration Discount. Use Code CRAINS.

Brain drain looms for de Blasio asrulesforceoutBloomberghires

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