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Real Estate Bisnow
The largest commercial real estate publication in the United States.
   
January 5, 2012 
 
 
 
Monday (Cab) LTile
CUOMO'S BIG IDEA

 
Gov. Andrew Cuomo threw out a whopper of a proposal in his State of the State yesterday: Build the country's biggest convention center in Queens, take down the hopelessly small Javits Center, and build something new and improved and master-planned on that more-valuable-than-ever land. Our vote is a curling stadium in another Olympic bid.
 

LePatner & Associates' Barry LePatner (snapped at Bisnow's NY Post-Recession projects event last month) tells us the city has lost billions over the past 30 years as conventioneers have headed to cities with bigger venues (Javits, on 18 acres, is the country's 12th largest). Cuomo's proposed development at the Aqueduct Racetrack venue in Jamaica (with $4B of private investment) would be 3.8M SF and could attract 30,000 more people to the city on some days. That's a lot of construction jobs, sales tax, income tax, hotel taxes, and tourism revenue. It also demands infrastructure work. Imagine the NIMBYism, Barry says, of those who frequent the Southern State and the LIE.
Aqueduct Racetrack subway sign
Cuomo also says he will push for a constitutional amendment to allow gaming in the state and is pursuing a JV with gaming development firm Genting Organization for the Aqueduct site. Genting operates the slots there now. That called to Barry's mind the design and construction work he did on Vegas' 3,000-key Venetian hotel and casino next to the Sands Expo center and the synergy of those components. (Did we mention that Cuomo says 3,000 hotel rooms will go up in Jamaica?)

Bisnow
COUNTDOWN TO OUR FIRST 2012 EVENT
 
Rick Krainin
Stop us if you’ve heard this one before, but New York’s a little different than everywhere else. (Actually stop us if you haven't heard that... we can show you some spots with ample proof.) Hospitals here are government-operated or not-for-profits, and that can make financing even harder to come by. Arent Fox’s Rick Krainin, who is moderating our Healthcare Real Estate Summit event on Jan. 17 at The Roosevelt Hotel, says that before the financial crisis, over half of munibonds (many of them for hospitals) used bond insurance to up their credit ratings, and many local hospitals that couldn't qualify for that sought FHA mortgage insurance. Well, bond insurers went bust with subprime mortgages (we told you to tell us if you’d heard this one before), and FHA became prom queen popular and diversified its portfolio. The 89% devoted to New York hospitals has dropped to 50%. Joining Rick on our panel are Lend Lease CEO of the Americas Bob McNamara and the pros below. Sign up now!

Paul Williams

Our panelist Paul Williams is president of the Dormitory Authority of the State of New York, which issues tax-exempt and state-supported debt for hospitals and higher ed. Without the option of the tax-exempt FHA deals, it’s been harder for healthcare projects to get financed, he tells us. One option is private placement of all bonds for a particular financing with a single qualified institutional buyer. That's what was done for a new patient pavilion at St. Mary's Hospital for Children in Bayside. But deals like that won’t get done without strong relationships, he says. Paul tells us his board authorized issuance of up to $350M in bonds for Memorial Sloan Kettering to refund old debt, and he expects it to seek authorization for another $100M for an outpatient cancer center in Westchester and $100M for real estate purchase and routine expenditures.

Elisabeth Wynn

Greater New York Hospital Association health finance and reimbursement head Elisabeth Wynn’s job is to protect the Medicare and Medicaid reimbursements flowing into her organization's 100 New York City member hospitals (and 31 others in four nearby states). She says the automatic, across-the-board federal budget cuts (triggered by November’s lack of a Supercommittee deal) means a 2% cut to Medicare reimbursements for hospitals a year from now. Not to mention the $155B in reductions to Medicare and Medicaid funding over the next 10 years from the Affordable Care Act. That’s a dangerous proposition for hospitals already struggling from the need to serve the uninsured.
Interfaith Medical Center, Brooklyn
Brooklyn seems to be the poster child for that problem. It has six hospitals on the brink of bankruptcy. DASNY holds significant debt on four of them, and Arent Fox works with a few. If those go under, it’s bad news for academic medical centers, primary care for patients in Brooklyn, and for Manhattan (spillover). The question New York needs to figure out, Rick says, is how to take care of patients in areas where hospitals don’t have the endowments or income diversity among patients to keep capital flowing.
 

Neil Calman

It’s an inefficient drain on the healthcare system that so many use ERs as their primary care sources, but without a private physician or community health center, that’s where people often go, getting urgent care but no preventive healthcare. Institute for Urban Family Health president Neil Calman’s organization brings healthcare to working-class and high-poverty communities through new facilities or existing community organizations’ space (like those that provide housing services). The institute is completing construction on an expanded 18k SF center in the Bronx and took over the primary care services of the recently closed North General Hospital. Construction has also just begun on a $30M renovation of a nearby office building into 38k SF community medical space in Harlem. Neil says the institute works with state and local grants and private philanthropic sources and maintains as little debt as possible, which puts it in good standing to get credit when it does needs to.
 

Phyllis Lantos

Our panelist New York-Presbyterian Hospital CFO Phyllis Lantos tells us her organization has 10M SF over five campuses on the UES, UWS, and Westchester. She says its most recent projects include a new floor in Weill Cornell’s Greenberg Pavilion and new procedure rooms and emergency department space there, plus an electricity/steam energy co-generation plant. There’s also the Millstein Family Heart Hospital, delivered in 2010. All that totaled $489M, financed with a $280M FHA loan. Institutions like hers with positive capital flow make facility decisions based on patient needs, she says. Right now, that means cardiac and oncology care and outpatient ambulatory centers. Hear from Phyllis and our other panelists on Jan. 17 (and don't forget the schmoozing)—sign up here!
 
What would you like to see replace the Javits Center? And we're asking the kid in you, not the real estate pro. We're thinking the world's largest miniature golf course. Email amanda@bisnow.com and amanda.metcalf@bisnow.com.
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