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20140512-NEWS--0001-NAT-CCI-CN --5/9/20144:56 PMPage 1CRAIN’SNEW YORK BUSINESSVOL. XXX, NO. 19FPO WWW.CRAINSNEWYORK.COMHOW MUCHMUST YOUPAY YOURSUMMERINTERN?P. 19MAY 12-18, 2014 PRICE: 3.00Alibabapost-IPOspendingtargets NYSHUT OUT: MonaWeisberg, of RCNBusiness, said dealsfor RCN to wire nearly40 buildings havecollapsed in the pastyear becauselandlords charge toomuch for access.City’s e-commerceretailers could getaccess to voraciousChinese consumersBY MATTHEW FLAMMAlibaba, the Chinese online retailerwhose upcoming initial public offeringcould value it at more than 100 billion, already has a small presence inNew York e-commerce, with a stake inManhattan-based art and antiquesmarketplace 1stdibs.But the announcement last weekthat the Hangzhou, China-basedcompany will go public on a U.S. stockexchange has experts wondering ifsome of its anticipated 15 billionwindfall will be spent on New Yorke-commerce companies to serve a Chinese consumer market that is growingSee ALIBABA on Page 44OPINION GREG DAVIDOutside looking inWiring NY buildings for faster, cheaper Internet is easy.Getting inside? That’s the hard partBY MATTHEW FLAMMCROSSED thousand dollars a month—peanuts in real estateWIRESterms—they are sometimes enough to kill a deal and0NEWSPAPER71486 01068519buck ennisNew York businesses unhappy with their Internet SECONDleave tenants with fewer choices and higher prices.ANaccess may have their landlords to blame: Many INSome landlords recognize that a robust selectionOCCASIONALbuilding owners block broadband providers from SERIESgives them a competitive edge with tenants who inwiring their properties unless they get something increasingly need high-speed connectivity. But manyreturn, whether it’s a share of revenue or a flat monthly fee. see fiber connections as a source of rent and are in no hurrySee BROADBAND on Page 44Although the fees range from a few hundred to a few to make Internet service fasterTHE LIST LARGESTMINORITY-OWNEDCOMPANIES P. 20Mayor hasa housingdilemmaThe de Blasio planfaces a dauntingproblem: the mathThe headline-grabbing figure inMayor Bill de Blasio’s housing planreleased last week is 200,000—thenumber of affordable-housing units heplans to build or preserve during thenext decade in what HOW THEhe described as CITY COULD“literally the largest TURN A BUCKand most ambitious INTO 3Baffordable-housingOP-EDprogram initiated by PAGE 14any city in this country in the history of the United States.”Three other numbers are equallyimportant—five, seven and eight—See HOUSING on Page 43
4:57 PMPage 1EDITOR’S NOTEReinventionsThe 102-year-old BroadwayAssociation last week honored 30year-old Crain’s New York Businesswith its Corporate LeadershipAward. I accepted in the name ofmy bosses. Naturally, I’m usingsome of my speech to fill thiscolumn: “Back when we started,Glenn Colemanwe produced a newspaper that wasa novelty: a weekly paper thatcared only about business and businesspeople inNew York. It arrived in the mailroom every Monday.The innovative technology back then? The faxmachine. Suddenly, one could zap a single-pagenewsletter straight into someone’s office. Today, mystaffers under 30 don’t know how to operate themachine gathering dust in a corner and coming aliveevery few days with maybe a message from Nigeriain which a kindly Oil Ministry official requests ourbank-account number. Now we are a daily, nonstop,online machine of our own, publishing stories on ourwebsite from 6 a.m. to midnight and blasting outbreaking news to readers’ smartphones and Twitterfeeds. And, oh, yes, we still deliver that newspapereach Monday. It’s often said that New York is a townof endless possibilities, but I prefer to call it a place ofendless reinventions. A kid out of college making hermark on the great, broad way. An immigrant forginga better life for himself. A company refocusing onnew markets. Yet few New York reinventions havebeen as dramatic as the transformation of TimesSquare and its environs these past 30 years—frommess to mecca—and with it the renewed vigor ofcivic groups like the Broadway Association. Crain’shas been with you from bottom to boom, coveringthis incredible, exasperating, exhilarating rebound:the good news, the bad news, the really bad news.More good news than bad, thankfully. Much moregood than bad. It’s stories such as yours that keepme, personally, on the positive side of the divide.”THIS WEEK IN CRAIN’SGREG DAVID ----------------------------------------------- 1IN THE BOROUGHS ---------------------------3IN THE MARKETS ----------------------------------4THE INSIDER AL ESTATE PLUS -----------------------10OPINION ------12STEVE HINDY ------------------------------------------13REPORT ---------16GOTHAM GIGSCLASSIFIEDS -----------------------------------------36Beagle & Potts’ Rob Pettit:a woodworker with plentyof bark P. 8NEW YORK, NEW YORK ----------45SOURCE LUNCH --------------------------------46vol. xxx, no. 19, may 12, 2014—Crain’s New York Business (ISSN 8756-789x) is published weekly, except for double issues the weeks of June 23, July 7, July 21, Aug. 4, Aug. 18 and Dec. 22,by Crain Communications Inc., 685 Third 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.2 Crain’s New York Business May 12, 2014FYICRAINSNEWYORK.COMAnother Queens official hitwith corruption chargeQueens residents might be wondering ifthere’s something in the water.Councilman Ruben Wills (pictured) lastweek became the borough’s ninthelected official accused of corruption since2006. Authorities alleged that he’d stolen 30,000 through a variety of schemes. ¶ Ofcourse, plenty of lawmakers from elsewhere inthe city and state have disgraced themselves in recent years. “No matter how inventive corruptpoliticians are in trying to abscond with public funds, they never seem to learn from the manywho have been caught previously with their hands in the public till,” said Dick Dadey, executivedirector of good-government group Citizens Union. “When will they learn that corruptionnever pays?” ¶ Of course, it might indeed pay for the more clever lawmakers, but Mr. Wills—who risked his 120,500-a-year job for the equivalent of four months’ pay—was certainly notone of them. The Campaign Finance Board tracks every cent it gives candidates, and auditorsfound that Mr. Wills routed his public funds through a shell company to a nonprofit hecontrolled, using it to feed his shopping habit. ¶ The notion of flying under the radar also did notoccur to the wayward pol, who traipsed around City Hall with a 7,500 Louis Vuitton bag. Mr.Wills capped his misadventure by telling reporters, “This is America, people. We are presumedinnocent before we are proven guilty. But because I know what I am, where I come from and thecolor I am, it doesn’t really work like that with you guys.”—erik engquistgetty images5/9/2014LIBRARY SHELVES REVAMP. Six years system and address challenges toafter unveiling a 300 million reno- mass transit such as population invation, the New York Public Library creases and Superstorm Sandy. Theabandoned its controversial plan to governor is looking for ways to modreplace its stacks and turn part of its ernize and improve the system. research flagship on Fifth Avenue OMNICOM-PUBLICISMARRIAGEinto a circulating library. The cost, CALLED OFF. The 35 billion merger,input from the public and a new ad- which would have created the world’sministration were cited as reasons for largest advertising firm by revenue,the change. There will, however, be was dropped because of regulatoryimprovements to open up more pub- and tax hurdles. Omnicom Grouplic space and refurbish the nearby and Publicis Groupe also had culturMid-Manhattan Library. PORT al differences and corporate-goverAUTHORITY REFORM. In a joint letter, nance issues. The merger was anGovs. Andrew Cuomo and Chris nounced last year. TIME SETSChristie said they had formed a com- SPINOFF DATE. Time Warner’s spinoffmittee to recommend changes for the of its magazine arm will take effect onPort Authority of New York and New June 6, when shares of the new TimeJersey. The panel will include two Inc. will be distributed to investors.commissioners from each state. This Shareholders will get one share ofsuggests that Messrs.Time for every eightCuomo and Christiethey own of Timeare not willing to diWarner. GOOGLEvide ownership of theDELIVERS IN NYC. Abistate agency, butyear after launchingthey may be open tosame-day delivery—United Federation ofpartitioning manageservice in the Sanment instead. SUB- Teachers President MichaelFranciscoarea,Mulgrew, on the recentWAY OF TOMORROW.Google has rolled itteachers’ union deal withMr. Cuomo alsoout in Manhattan.the citypenned a letter lastThe service—whichweek to MTA ChairdeliversproductsThomas Prendergast, calling for the from retailers including Costco, Tarcreation of a “transportation reinven- get and Walgreens—is free for thetion commission.” The panel will first six months, and will cost 4.99propose ways to overhaul the subway per store after. NEW CITY CHIEFS.‘We’re at warwith thereformers’HOORAY!A NUTELLABAR will openat Eataly onMay 12. Thechocolatehazelnut havenreplaces MarioBatali’s wineshop.bloomberg news20140512-NEWS--0002-NAT-CCI-CN --OY VEY!GOSSIP RAG National Enquirer isreturning to New York City after more thanfour decades in Florida.Anne Roest has been tapped as thecity’s tech commissioner. She will becharged with implementing the city’snew Wi-Fi program, which will turnpay phones into wireless hot spots.Daniel Nigro was appointed firecommissioner. Mr. Nigro, who willreplace Salvatore Cassano, joined theFDNY in 1969 and retired as chief ofdepartment in 2002.—emily laermerSTORIES TO WATCH THIS WEEKMay 12: NationalSmall BusinessWeek beginsMay 14: New Yorkstate GOPconventionin Rye BrookMay 15:Dedication of the9/11 museum; theObamas will bepresentMay 15:Preliminary vote byFCC on ChairmanTom Wheeler’s Netneutrality proposal
20140512-NEWS--0003-NAT-CCI-CN --5/9/20147:01 PMPage 1IN THEBOROUGHSMANHATTANPARKED: DavidSchillace of Mexicueused his truck to gaina following. Now he’sexpanding the brand.CentralPark sharesthe greenAffluent conservancyhelps poorer ones;should it do more?new father and former partner inRickshaw Dumpling Bar. “Thetrucks break down easily, and thenit’s incredibly stressful because youand your employees are not makingmoney.”Mr. Weber is now the chief operating officer of Architizer, an ar-A visitor to Morningside Park on asunny, early May morning wouldundoubtedly have assumed that thefive men in gray coveralls followinga soil aerator and spreading grassseed were Parks Department workers, or perhaps green-thumbed volunteers.But those guesses would havebeen wrong. Unbeknown to most,the crew works for the Central ParkConservancy, or CPC, the deeppocketed nonprofit under contractwith the city to manage and maintain New York’s richest and most famous park (sorry, High Line), located just one block east of Morningside on West 110th Street.On the surface,it’s hard to see theconnection between the two verydifferent green spaces, but the conservancy has done this work foryears. In fact, during the past decadeit has quietly spent millions of dollars annually on upkeep not just inMorningside, but in 12 parks acrossthe city. Conservancy executives seeit as part of being a “good neighbor,”and plan to expand the outreach ef-See FOOD TRUCKS on Page 43See TWO PARKS on Page 39Food trucksstuck in parkdavid schillaceFacing financial challenges, some ownerstrade up to eateries or opt out altogetherBY LISA FICKENSCHERFood trucks may be ubiquitous in thecity,but most are not making enoughdough to survive on street foodalone. Some, like the popular Mexicue, have recently abandoned thedaily grind,shifting gears to focus onmore lucrative catering gigs, brickand-mortar eateries or even wholesale products sold in grocery stores.The hip industry, which hit NewYork City about seven years agowith its flashy trucks and foodiecrowds, is going through a midlifecrisis. Many of its founding members are graduating to grown-up en-deavors that offer more financialstability. Others supplement theirincomes with part-time jobs in realestate or personal coaching, for example. Even David Weber, president of the three-year-old NewYork City Food Truck Association,no longer has a stake in the business.“It was too hard on me,” said theCity Hall’s spending hasbusiness interests worriedBudget proposalexhausts surpluses,relies on growth;higher tax bills fearedBY ANDREW J. HAWKINSMayor Bill de Blasio deemed the 73.9 billion budget he unveiled lastweek “a cautious document on purpose,” adding that his spending plantakes “a careful stance to protectagainst future disruptions,” such aseconomic downturns.The business community isskeptical. Major landlords foreseehigher property taxes, and thebudget’s “aggressive spending” oneducation, housing and labor contracts requires the city economy togrow 3% annually, said KathrynWylde, president of the Partnershipfor New York City.The mayor’s budget office saysits spending plan is based on 2.2%average economic growth over fouryears—though growth was just0.1% last year after a 2.8% jump the‘We’re confidentthat we will beable to handle[the deficits]’year before. But Mr. de Blasio proposes to increase spending by 5.5%for fiscal 2015, which begins July 1.He will do that by exhausting thecity’s surpluses, including 3.5 billion set aside for union raises, and bytapping a taxpayer-funded accountjointly controlled by the city and itsunions to pay for workers’ benefits.He puts no money into a rainy-dayfund, as his predecessor MichaelBloomberg did during the mid2000s boom.The mayor’s projections showdeficits of 2.1 billion in fiscal 2016, 2 billion in 2017 and 3.2 billion in2018. “We’re confident that we willbe able to handle them in time,” themayor said.The city forecasts that privateemployment will increase 1.7% incalendar 2014 and 1.5% annuallyuntil 2018, while wages will rise2.5% and 2.6%, respectively.But continuing job losses onWall Street will weigh downgrowth. And business leaders notethat while Mr.de Blasio is relying oneconomic growth to fund his initiatives, he hasn’t rolled out programsSTATS AND THE CITYby Nicholas WellsAGING EMPIRE STATE: A study last week concluded that New York is theworst state in the country to retire in. The Big Apple’s high cost of living andabove-average violent crime pushed the whole state to last on the list.in city residents over 65 from 2010 to40%2040, to more than 1.4 million, the fastest-growingdemographicPROJECTED GAINMedicare spending for thestate’s seniors in 2012, 12th 2,076highest in the nationPER CAPITAof total city19%workforce of 327,793who were eligible to retire at thePORTIONend of Michael Bloomberg’stenure as mayorof seniors76Kliving in publichousing—nearly 20% of allNUMBERcity-housing residentsSEGMENT of city seniors9.2%who experience physical,psychological or financial abuseand/or are neglected each yearSources: Bankrate,“Housing New York: AFive-Borough Ten-YearPlan,” U.S. CensusBureau, Centers forMedicare and MedicaidServices, “2013 NYCWorkforce ProfileReport,” NYC Department for the Agingistockphotobuck ennisBY ANDREW J. HAWKINSADDICTED TO NUMBERS? GET A DAILY DOSE AT @STATSANDTHECITYSee SPENDING on Page 43May 12, 2014 Crain’s New York Business 3
5/9/20146:06 PMPage 1Lords of a new domainLaunch of suffix .nycmakes the Big Applefirst U.S. city to tielocals to locale onlineCity officials are hoping that JessiePressman, chief executive of a techeducation startup for adults calledBite Size Learning, is indicative ofhow local businesses feel about taking on a New York-branded Internet identity.Ms. Pressman jumped at thechance last week to apply to becomeone of the first New York companiesto own a Web address ending in.nyc. The initial rollout made NewYork the first city in the UnitedStates with a localized top-level domain name.Program backers are selling .nycas a marketing opportunity for thoselooking to identify themselves andtheir businesses with the Big Appleand improve their visibility onsearch engines, especially amongmobile users who make locationbased searches.“New York City is an incrediblebrand,” said Jeff Neuman, vice president of Registry Services at NeustarInc., a Virginia-based telecommunications company managing thelaunch. “Associating yourself withthat brand is an amazing opportuni-jessie pressmanBY THORNTON MCENERY‘This is NYC,’Ms. Pressmansaid. ‘Everyonewants to bea part of it’ty for real New Yorkers and real NewYork businesses.”If enough New Yorkers see it thatway, .nyc might also be a moneymaker for city coffers. Per the termsof its deal with Neustar, the city willgenerate revenue by collecting 60%of annual domain registration feesfrom the new Web addresses.Neustar has set all .nyc domainannual registration fees at 20, plusa sliding-scale, one-time setup cost,though several companies that areauthorized to sell and register .nycdomain names are expected to addtheir fees on top of that.“Smaller companies, like incubator-level and up-and-coming techstartups, will pay a premium for a.nyc address,” said Dan Roche, vicepresident of marketing at technology communications firm TalkPoint.“It will show your real involvementand allegiance to Silicon Alley. It’s amarketing play.”In that vein, the city is testing theappeal of .nyc addresses through amultistage rollout.The “sunrise phase” began lastweek and runs through June 20. It’sopen to any business that has a physical address in the five boroughs andhas registered its domain name as atrademark—to avoid squabbles overownership rights.From that initial pool of applicants, Neustar and the city will select up to 50 sites as part of their“founders’ program,” websites operated by individuals, businesses orcauses they feel best represent NewYork City. In addition to a discounted setup fee,founders will be included in a marketing push that willhighlight their sites as part of thewider marketing of .nyc domains.“As it is the first localized domainname for a city, Google and othersearch engines might lag behind, sothe immediate benefits might not beenormous initially,” said AustinIN THEMARKETSby Aaron Elsteindavid nolesP004 CN 20140512.qxpOn the sideof the angelsYou may have heard last week that China-basedInternet giant Alibaba Group filed to go public.Analysts believe Japan’s SoftBank, which led a 20million venture-capital investment back in 2000, nowcontrols a stake that could be worth about 30 billion.Astronomical returns like that are out of the reach of mostmortals, but the big scores from venture capital don’t have tobe. That is the thesis propounded by David Rose (pictured),a prominent New York VC investor behind such successes asComiXology, a digital-comics retailer acquired last month byAmazon.com for an undisclosed sum, and Drop.io, which isnow owned by Facebook.See DOMAIN on Page 44bloomberg newsMr.Rose is urging people with atleast 1 million they can afford tolose to consider angel investing,whichmeans funding startups at their veryearliest stages. For as little as 25,000 per company, investors canassemble a portfolio of fledglingoutfits that Mr.Rose contends couldgenerate annual returns of 25%.“This is a form of venture-capital investing that’s accessible forpeople who don’t have hundreds ofmillions or billions,” explained Mr.Rose, who recently wrote a bookabout angel investing.He argues that people who invest in enough startups—and700,000 are launched
at Eataly on May 12. The . more lucrative catering gigs, brick-and-mortar eateries or even whole-sale products sold in grocery stores. The hip industry,which
