The Wall Street Journal - 31.07.2019

THE WALL STREET JOURNAL. **** Wednesday, July 31, 2019 |A12A

The county’s Department of

Health Services said it would

roll out the new wastewater

plan in four phases during the

next 50 years to address nearly

380,000 harmful residential

and commercial systems.

The initiative would replace

the old cesspools or septic

systems with individual nitro-

gen-reducing systems, or con-

nect home properties directly

to sewers. Existing federal and

state funding will pay for the

first phase of the plan.

Suffolk Deputy County Ex-

ecutive Peter Scully said ex-

cess nitrogen in local waters

over several decades has

caused harmful algal blooms,

destroyed marine habitat and

hurt the shellfish industry.

“What has become clear

over the past 15 years is that

all of the negative impacts

that have been predicted are

happening,” Mr. Scully said.

He said water quality would

noticeably improve within 10

years of the implementation of

the plan. The plan also estab-

lishes priority areas where

eliminating certain cesspools

and septic systems would have

the most immediate benefit to

the environment, such as com-

munities along the South

Shore, according to Mr. Scully.

Christopher Gobler, director

of the New York State Center

for Clean Water Technology at

Stony Brook University, said

the septic-based approach is

unsustainable and that the

new plan is the best way to

address the environmental

degradation that had occurred

in the county.

Suffolk’s wastewater prob-

lems haven’t before been ad-

dressed countywide. Projects

meant to address the problem

over the years have been de-

layed by high costs and politi-

cal corruption, Mr. Scully said.

At the start of July, Suffolk

County updated its sanitary

code to help address the sewer

issue. The county code doesn’t

require homeowners to update

their existing cesspools and

septic systems. But, if resi-

dents do replace the system

on their own, they must now

ensure it complies with the

1973 standards required of

systems for new construction.

Suffolk County offers incen-

tives for those who voluntarily

replace their cesspools with

innovative, advanced-treat-

ment systems.

Earlier this year, voters ap-

proved a project to connect

nearly 6,400 homes to public

sewers, a project to be paid

for with $360 million in state

and federal grants made avail-

able after superstorm Sandy in

2012.

Suffolk County officials an-

nounced a $4 billion plan

Tuesday to slash residents’

and businesses’ reliance on

cesspools and septic systems,

which have been identified as

a primary source of nitrogen

pollution in groundwater and

in local bays.

About 74% of the Long Is-

land county’s 1.5 million resi-

dents rely on cesspools or sep-

tic systems. Cesspools, which

collect sewage sludge under-

ground and send it seeping

into groundwater, were out-

lawed by Suffolk in new con-

struction in 1973.

BYALEXAST.JOHN

Suffolk County Will Roll Out $4 Billion Sewer Plan

high-rise in the Bronx. That

group is planning to rent all

its units to tenants with low

and moderate incomes in ex-

change for lower taxes.

The deals come when the

city is facing an acute lack of

affordable housing. Skyrocket-

ing rents helped housing advo-

cates win an unprecedented

victory in Albany earlier this

year as the state legislature

added a range of obstacles

preventing landlords from

raising rents or freeing apart-

ments from rent regulations.

In this atmosphere, city of-

ficials and investors have

dusted off a 1960s-era city tax-

exemption program known as

Article XI. The provision al-

lows the city to negotiate indi-

vidual deals with property

owners, where the city seeks

to balance the cost of lost tax

revenue with the benefit of

rents set at no more than 30%

of median income for renter

households who meet specific

income limits.

Housing advocates and city

officials estimate that thou-

sands of affordable units could

An investment group has
agreed to pay $1.2 billion for a
portfolio of 2,800 New York
rental apartments with an in-
vestment strategy that, at first
glance, appears to run counter
to conventional real-estate
wisdom.
In the past, real-estate in-
vestors have purchased thou-
sands of rent-regulated New
York rental apartments with
hopes of converting them into
market-rate units.
But the venture of L+M De-
velopment Partners Inc. and
its partner Invesco Real Estate
is moving in the opposite di-
rection: It is planning to con-
vert two-thirds of the units it
is purchasing from Brookfield
Asset Management and Urban
American into apartments that
are affordable to tenants with
limited incomes. All of them

BYKEIKOMORRIS
ANDJOSHBARBANEL

GREATER NEW YORK

are now market rate.

The deal is one of the big-

gest examples of what may be-

come an important tool in the

city’s effort to create more af-

fordable rental apartments.

L+M and Invesco have agreed

to subject the apartments to

rent regulations in exchange

for deep property-tax breaks.

The idea is that the value of

the tax break would make up

for the lost rent from the

2,800 apartments in East Har-

lem and Roosevelt Island. L+M

is investing in the properties

through its workforce-housing

fund, which is focusing on

units that would stay near

fully rented regardless of eco-

nomic conditions.

“It’s defensive and more cy-

cle-resistant than conventional

executions where you are rely-

ing on market forces,” said

Eben Ellertson, a managing di-

rector at L+M.

Similar strategies are being

pursued by a small but grow-

ing group of other investors.

In another large deal that

closed in June, Camber Prop-

erty Group and Belveron Part-

ners paid $77 million to buy

Highbridge House, a 400-unit

be created through the pro-

gram. Landlords have removed

more than 100,000 units from

city rent regulations during

the past decade.

“We’ve seen an increase of

these [Article XI] agreements

since the start of the mayor’s

housing plan,” said Matthew

Creegan, a spokesman for the

New York City Department of

Housing Preservation and De-

velopment.

But Article XI isn’t a pana-

cea. The program is complex

and requires negotiations be-

tween owners and the city, and

approval by the City Council.

City records show the taxes

on just three of the four L+M

projects for which figures are

available would have totaled

$11.2 million this year. They

will now pay a fraction of that,

but the exact figure wasn’t

disclosed.

The venture of L+M and In-

vesco beat out offers from in-

vestors including sovereign-

wealth funds from Asia and

the Middle East and foreign

and domestic pension funds,

said Adam Spies, co-head of

the Cushman & Wakefield

team representing the sellers.

Investors to Make Rentals Affordable

In a switch, buyer would

subject market-rate

units to rent rules in

exchange for tax breaks

Two-thirds of the units at the Parker in East Harlem will be rented to tenants on limited income.

MARK KAUZLARICH FOR THE WALL STREET JOURNAL

A deputy commissioner at
New York City’s social-services
agency was fired after a judge
in a disciplinary trial ruled he
inaccurately designated 30
employees as performing Med-
icaid work, forcing the city to
repay more than $7 million to
the state.
In a decision last month, a
city administrative judge
found that Thomas Colon, 49
years old, wrongly designated
employees as performing only
Medicaid-related work, which
is eligible for a state reim-
bursement.
The city’s Human Resources
Administration/Department of
Social Services connects resi-
dents with benefits, ranging
from rental assistance to food
stamps. About three million
New Yorkers receive Medicaid
benefits through the agency, an
official said.
While the city pays for the
salaries of most of its employ-
ees in the agency, some are

compensated with federal
money through the state for
Medicaid work. However, be-
tween 2015 and 2017, some of
the agency employees paid
with Medicaid money were per-
forming general duties, which
violates the reimbursement
rules, according to the decision.
John Spooner, a judge at
the city’s Office of Administra-
tive Trials and Hearings, found
Mr. Colon’s actions to be seri-
ous, “undermining the integ-
rity of HRA’s entire personnel
and budget operation.”
Judge Spooner recommended
Mr. Colon be terminated. Com-
missioner Steve Banks, who has
been in charge of the agency
since 2014, fired Mr. Colon.
Mr. Colon, who began work-
ing for the city in 1990 as an
investigator and had no prior
disciplinary actions, admitted
during his administrative trial
that he was aware of the im-
proper job classifications, but
said he wasn’t responsible for
the state payments.
His lawyer, Richard Wash-
ington, said his client “stood
to gain nothing from the mis-
classification” and is taking
the blame for a larger mistake
within the city agency.
He said he plans to file a law-
suit in state court seeking to
overturn the termination.
“As stewards of vital bene-
fit programs and taxpayer dol-
lars, program integrity and fis-
cal prudence are paramount—
and individuals who violate
our standards must be held
accountable to the fullest ex-
tent possible,” said Isaac
McGinn, an agency spokesman.

BYKATIEHONAN

Official Is

Fired After

Medicaid

Ruling

METRO MONEY|By Anne Kadet

Once Snubbed, Subway Ad Space Is a Hot Buy

When mon-

day.com, a

startup offer-

ing an online

team manage-

ment platform

for businesses, was looking to

boost brand awareness, it

chose an unusual advertising

venue—the crowded, gritty

New York City subway system.

Last October, it bought up

all the ad space in Manhat-

tan’s Union Square and Bry-

ant Park stations, plastering

every surface from turnstile

arms to mezzanine pillars

with the cryptic message,

“What is monday.com?”

This year, it splurged on

two additional campaigns,

buying up half the ad space

on 570 train cars throughout

the 6,636-car system.

If you want to reach New

York City thought leaders,

the subway is a great way to

reach them, says Joel Gold-

stein, the company’s creative

marketing lead.

Until recently, the subway

was a bit of an advertising

backwater, largely featuring

ads from local trade schools,

divorce lawyers and plastic

surgeons. Now, it’s the un-

likely ad platform of choice

for flush local startups. In

the last two years, more than

200 such businesses started

advertising in the subway

system, according to the

Metropolitan Transportation

Authority.

“Successful startups un-

derstand the value of adver-

tising on MTA subways, and

we certainly appreciate the

revenue it generates,” says

Janno Lieber, MTA chief de-

velopment officer.

Startups say they jumped

on the subway—with its 6

million weekday riders—be-

cause it presented a cheap

way to reach a mass audience.

It was the poor startup’s an-

swer to a Super Bowl ad.

“Now that’s changing, as

everyone’s crowded in,” says

Leo Wang, founder and CEO

of Buffy, a home-goods

startup that advertises on

the train. Due to rising de-

mand, he says, subway ads

are no longer a bargain.

Alexandra Fine, co-founder

and CEO of Dame Products, a

Brooklyn-based sex-toy

startup, wants to advertise

on the subway so badly her

company sued the MTA in

June after it refused to carry

her Dame posters, citing its

ban on ads promoting a “sex-

ually oriented businesses.”

M

s. Fine, who considers

her company’s vibra-

tors a “wellness prod-

uct,” says there is no substi-

tute for subway advertising.

It’s not just consumers who

take trains, she says, it’s po-

tential employees, investors

and influencers. “If you want

to be in Vogue or Cosmo, so

many of those writers and ed-

itors ride the New York City

subway,” she says.

“It might be silly, but

there’s also this X factor

about the subway, this pres-

tige,” she adds. “It’s what

the startups are doing.”

Marketers say the first

startup to go big on subway

advertising was Casper, the

mattress-in-a-box purveyor.

“We’ll happily take the

credit,” says Neil Parikh,

Casper co-founder and chief

strategy officer.

In 2014, Casper was a

small startup looking to shake

up the sleepy mattress indus-

try; it saw a similar opportu-

nity for disruption in subway

advertising. “It offered a cap-

tive audience, but when you

looked up, the ads were so

terrible,” Mr. Parikh says.

Following its first big

funding round, Casper took a

gamble in January 2015, buy-

ing entire half train-car inte-

riors and customizing each

ad panel with a different

message, creating a clever

story that ran the length of

the car. “The people at the

MTA thought we were ba-

nanas,” Mr. Parikh recalls.

The move got startups

competing to produce the

most clever, interactive ads.

The bar keeps rising, says Jeff

Brooks, Casper’s chief mar-

keting officer. The company’s

latest campaign features pic-

togram puzzles and the tag-

line, “Sleep is the answer.”

Businesses looking to ad-

vertise on city transit go

through OUTFRONT Media, a

big “out-of-home” ad agency

that has an exclusive con-

tract with the MTA to sell

ads on every train platform

and bus side in the system,

not to mention all 130,

ad slots inside subway cars.

T

he advertising isn’t

cheap. Startups that

worked with the

agency within the past year

say the price of advertising

on the side of 75 Manhattan

buses for four weeks starts

at about $60,000. Advertis-

ing on 1,000 interior subway

cards for four weeks scat-

tered throughout the system

starts at $50,000. Roughly

$300,000 buys the entire half

side of 570 cars, also for four

weeks. OUTFRONT, which

doesn’t reveal prices, says

these rates are outdated.

Startups say they gener-

ally are pleased with the re-

sults of their ad buys, but

the physical realities of ad-

vertising underground can

be challenging.

Shane Pittson, vice presi-

dent of growth with oral

health-care company Quip,

says that compared with on-

line advertising, subway ads

take a lot more planning and

commitment, not to mention

the occasional poster in-

stalled upside down. And

while OUTFRONT says that

damaged posters are removed

within 24 hours, subway ads

are an easy target for vandals.

The high-profile “In Doers

We Trust” subway campaign

for freelance-services mar-

ketplace Fiverr was sub-

jected to scribbled comments

such as, “Join a union, fight

together for higher pay!”

“There’s a whole street

art movement of people ad-

justing the images on the

New York City subway,” says

Fiverr Vice President of

Brand Duncan Bird. “As a

New Yorker, I like that. As a

marketer, it depends on how

someone is adjusting it.”

[email protected]

Running subway ads comes with pitfalls, says an executive for the oral health-care firm Quip, which advertised on turnstiles in 2018.

OUTFRONT MEDIA

Judge says social-

services deputy

commissioner’s error

warranted his ouster.

NY