All that Jazz -- Paying Off for At-Risk Students

Arturo O'Farrill, Grammy-winning pianist, composer, and educator and I are introducing the first Afro Latin Jazz Alliance-sponsored Music in School program at the UA Bronx Studio School for Writers and Artists. Read here for the whole story, and check out Arturo's Afro Latin Jazz Alliance website here.

Computers are bad for you (unless you are a lawyer billing by the hour)

As I sit here reading the fifth draft of an 80 page lease, I can’t help but to think that if it had not been for the advent of the computer I could probably be doing something far more productive with my time.

Back in the big hair day of the early 80s when I was a practicing attorney and before the widespread use of computers and word processing software, it was rare that a lease would exceed 20 pages or go through multiple drafts before being finalized. Ironically, the advent of computers did not necessarily make the practice of law any more productive but instead encouraged the creation of excruciatingly long and complex documents that can be negotiated ad infinitum until either the lawyers tire of the game or the client finally screams "uncle."

Back in the good old days of low technology typewriters, onion skin paper, "white out," and correction tape making wholesale changes to a document was very difficult and time-consuming. Consequently documents were kept simple and were not over-negotiated. Have we really accomplished anything today by preparing complicating leases and having long protracted negotiations? Other than the exorbitant legal fees that often accompany these documents, probably not!

Mortgage Recording Tax Savings

Did you know that any taxpayer who has paid mortgage recording tax is entitled to a one quarter of a point refund of the amount paid? On a $5 million loan, this would be a $12,500 refund. Definitely not chump change. The proper way to obtain the refund is by claiming a credit on your tax return (I assume it is claimed on the New York state tax return) that is filed for that year. If this is something that you failed to do for any mortgages you refinanced or obtained over the past several years, you are not completely out of luck. There's a three-year statute of limitations on obtaining a refund. However, for any past tax years you would then need to file an amended return. Depending upon the amounts involved, this is something you may consider taking advantage of.

Graffiti Removal Program:

A new law recently went into effect (Local Law 65-2009) that fast tracks removing graffiti on buildings in New York City, and makes it easier for business owners and residents to get it removed at no cost.

How the graffiti-free process works: the new law went into effect on April 7, 2010, and the Administration has been focused on smoothing out technical issues that might arise as the 35-day notices are sent in to city government. The highlights of the law are:

• If you’re the owner or authorized representative of a property, you can request free removal of graffiti on your building by filling out a Forever Graffiti Free form here. (Forms are also written in Spanish and Chinese).
• If you see graffiti on someone else’s property, call 311 to report it.
• If graffiti is observed on your building and you do not already have a Forever Graffiti Free form or waiver in the City’s system, you’ll receive a “Notice of Intent to Clean” from the Department of Sanitation.

This notice will explain that you have three options:

• You can inform the City that you want to clean the graffiti yourself. Call 311.
• You can inform the City that you consent to the markings identified as graffiti on your building, for whatever reason. Call 311.
• If you don’t take either of those two steps, the City will route your property for cleaning after 35 days.

A few things to note:

• The City of New York will send the “Notice of Intent to Clean” to all addresses on file for the property, checking all City databases (DOF, HPD).
• Property owners or representatives can request a 15-day extension, if they need more time to make up their minds.
• If you already have a waiver or Forever Graffiti Free form on file, you don’t need to fill another one out as long as you own the property.

Here are more detailed FAQs.

Sierra in the news

Emily Geminder in The Commercial Observer has a nice mention of our lease with pastry chef François Payard and his new shop in Greenwich Village. The 8,000-square-foot bakery and cafe on West Houston Street will come to a neighborhood that is, as our own Peter Braus said, "renowned for its great culinary personalities." Sierra is the exclusive broker for the Y&H-owned building. Ruth Shnay, also of Sierra, represented Mr. Payard, along with independent broker Nevin Danziger, in the negotiations for the 15-year lease.

Delicious news!

Articles 2.03.10

Two interesting articles.

From the New York Housing Journal: deadbeat tenants getting you down? Believe it or not, there is something you can do to deal with the deadbeat tenant that only pays rent once you start legal action. Check out "How to Win A Chronic Nonpayment Case."


And from Time Out New York: "100 Best Things... You Must Eat and Drink."
Prepare yourself for the finest burger in the city, plus life-changing fired chicken, pizza, sea-urchin toast, and caramel-chocolate popcorn.

Buzz Words du jour

Our industry, like many others, loves buzzwords.

Often, a lot can be read into these buzzwords besides just their intended meaning. Probably the buzzword that best exemplifies a word or phrase that has meeting way beyond that which was intended is the phrase "burn rate."

For those of you with short memories this phrase came to prominence during the dot com boom and referred to the rate at which unprofitable "new economy" (another buzzword rife with unintended meaning) companies were burning through their capital.

Unbelievably, at the time this was not necessarily meant to be a bad thing but just another metric to be considered in valuing a business. However, in retrospect and with the value of hindsight, it is clear that this buzzword signified the mania of an era.

Similarly the term "capital stack" (sorry, but it makes me think of pancakes) is a recent real estate industry buzzword that has similar significance. It refers to the many layers of equity and debt and hybrids of each that are created as part of the "financial engineering" (another great buzzword) to allow developers and property entrepreneurs to acquire huge amounts of real estate with little or none of their own money.

What this innocuous term really signifies is a transaction that is so overly leveraged that the capital stack is in danger of collapsing. This buzzword pretty much sums up the last five years of our industry.

The Law of Unintended Consequences

During a period of economic downturn and increasing unemployment, it is important to consider the many obstacles to economic growth that have been created by well-meaning laws meant to address a whole host of societal problems.

While many laws have been passed that on the face of it serve a very high moral purpose, often they have an unintended consequences that can stifle economic growth and, ultimately, cause more of a problem than the evil they were meant to address.

Anyone who has managed a business over the past 20 years has witnessed how the landscape of employer/employee relations has changed to the point that the ability of a company to manage employees has become so fraught with potential litigation etc., that hiring decisions are influenced by the potential "litigation cost" of each employee. All it takes is for one grievance or lawsuit to be filed by an employee against an employer for that employer to allow future hiring decisions to be affected as result.

Because of the breadth and magnitude of well-meaning laws enacted to protect employees and various classes of individuals it is difficult, if not impossible, to run a company for any period of time without at some point being sued. Compounding this problem is that the bar is so low for an "aggrieved" employee to file a claim or initiate a lawsuit against a employer that many claims are filed and suits commenced that have little or no merit.

And while these claims may ultimately be decided in favor of the employer, the employer still incurs significant expenses to defend these actions. Almost every small business owner I know has had such an experience. Recently, an organization I support suggested supporting a law that would require employers to allow employees to take time off during the course of the day to attend parent teacher conferences at their children's school.

While I am sympathetic to this as an employer and would allow my own employees to take time off for such purposes, I objected quite strenuously to supporting a law which would mandate that employers grant such leave. I felt very strongly that inviting the government to micromanage how businesses function in this manner only ultimately acts as a disincentive to hiring and that the law should not be supported. In fact, rather than enacting new laws now that will stifle business and economic growth our politicians should focus eliminating existing laws that discourage hiring and are of marginal utility.