Crains New York - June 10, 2013 - (Page 4)

Tenants and landlords fret as IN THE MARKETS sequester cuts hit Section 8 by Aaron Elstein BY MATT CHABAN Government agencies that administer Section 8 housing vouchers for low-income New Yorkers will not issue as many as 6,000 new vouchers that had been planned for this year, while thousands in the system face subsidy cuts as federal sequestration snips $120 million from Section 8. This represents the first time the housing subsidy has been severely cut since President Richard Nixon created the program through the Department of Housing and Urban Development as a way to help lowincome Americans afford—and developers offer—private-market rentals. The cuts are likely to put landlords and their tenants in limbo. Forgoing vouchers Sequestration has resulted in cuts to the three New York agencies that administer more than 150,000 Section 8 vouchers in the city: the New York City Housing Authority, the city’s Department of Housing Preservation and Development and the state’s Department of Homes and Community Renewal. The cuts will affect not only land- lords whose tenants receive Section 8 vouchers, but also those landlords who contract directly with HUD in a program known as project-based Section 8. Some 630 properties with 75,000 units subsidized by the Section 8 program face cuts,which could lead to rent hikes for tenants or loan defaults for owners who have mortgages backed by the program. For the past two months, the various agencies have been scrambling to figure out a way to collectively address the cuts. “We think it’s best to have a unified approach,” said Mirza Orriols, acting regional administrator for HUD’s New York and New Jersey office. So far, however, the agencies are taking different approaches. Facing a $36 million cut, HPD has decided it will forgo issuing 1,000 new vouchers while changing the formula that determines subsidies for the 37,000 households it still has on the books. That could reduce monthly subsidies by an amount between $100 to $400. “The real problem is, these are our neediest tenants, the ones who cannot even afford the units in our developments,” HPD Commissioner Mathew Wambua said. Of HPD’s voucher holders, 32% are elderly and 44% are disabled. NYCHA, with 95,000 vouchers, has not publicly said how it will grapple with the cuts, but according to an insider, the agency will not issue as many as 5,000 new vouchers that it had planned. The housing authority has not issued vouchers to new people since 2009 because of budgetary problems. Thanks to sequestration’s $70 million hit to the authority’s voucher program, the issuance was canceled, though existing voucher holders will be spared, albeit at the cost of greatly depleting NYCHA’s reserves. Wambua to Washington The state, which has 44,000 vouchers, with about 20% in the five boroughs, is losing $22 million, according to HUD, but the agency refused to disclose how that would affect voucher holders. These cuts only carry the agencies through the end of the year, with the hope they will be restored. But that seems increasingly unlikely. Mr.Wambua was in Washington two weeks ago lobbying the New York delegation to fight for a carveout for Section 8, the same that airtraffic controllers and meat inspectors received after a public outcry. “It was really depressing, because there was relative unanimity these wouldn’t be restored,” Mr. Wambua said.“The discussion quickly shifted from reversing the cuts to managing them—and preventing more.” Should the cuts continue, housing officials, having run out of options, said they will have no choice but to begin rescinding vouchers, expected to number in the thousands. Ⅲ Turn Sunday into Executive MBA Day at Yeshiva University’s Sy Syms School of Business Apply Now to our Sunday-only Midtown Manhattan Executive MBA program Sy Syms School of Business We’ve designed our general management Sunday-only Executive MBA to ﬁt perfectly into your fasttracked life. Attend Yeshiva University’s Sy Syms School of Business Executive MBA program at our Midtown Manhattan location and beneﬁt from a unique emphasis on entrepreneurship and global market newscom Properties totaling 75,000 affordable units face lower federal payments Lebenthal is back in banking game L ast week, Pfizer Inc. disclosed it had summoned such usual suspects as Goldman Sachs and Credit Suisse to sell its $4 billion debt offering to investors. But the drug giant also enlisted one of Wall Street’s smallest shops to help with this mighty endeavor: Lebenthal & Co. The firm that New Yorkers of a certain age recall for its TV ads touting the benefits of municipal bonds has, after about a decade of dormancy, been reborn as a full-service investment bank. In addition to working on the Pfizer deal, Lebenthal last month helped Citigroup place $1.35 billion in bonds and helped sell the initial public offerings of Facebook and casino operator Caesars Entertainment. The 35-employee bank has served as lead or co-manager on 20 stock or bond sales so far this year, according to Thomson Financial, and has had a hand in 127 this decade. “I’m relentless when it comes to getting business,” said Chief Executive Alexandra Lebenthal (above), who said her firm generated $13 million in revenue last year and is profitable. The role of entrepreneur is fairly new to Ms. Lebenthal, who is 49. In 1995, she took over the family business founded 70 years earlier, but in 2001 sold it to a brokerage firm called Advest. The Lebenthal name disappeared a few years later when Advest was acquired by Merrill Lynch. In 2007, she approached a senior Merrill executive named Greg Fleming to buy back the name,and he put her in touch with one of the megabank’s lawyers, who asked her how much she would pay. She offered $1,000,and the lawyer accepted on the spot. “That made me think maybe I should have offered $100,” Ms. Lebenthal said. Since relaunching five years ago, Ms. Lebenthal has built the second-largest woman-owned financial institution in the city, according to Crain’s data. (Muriel Siebert’s Siebert Financial Corp. appears to be the largest, with $21 million in revenue last year.) Such success is rare. According to a study last year by American Express, only 20% of finance or insurance businesses are owned by women. Ms. Lebenthal said there are few women-owned firms because there aren’t many women working on Wall Street to begin with, and even fewer who can raise the capital should they decide to start their own business. One sign her shop is getting some traction is the repeat business it’s generating. In addition to helping Pfizer sell bonds, last month it helped the company complete the sale of a subsidiary through an IPO. Over the past 12 months, Lebenthal has also helped take public three companies controlled by Apollo Global Management, the giant privateequity firm controlled by Leon Black. Ms. Lebenthal said she doesn’t know Mr. Black personally. “But if you are a known entity to the finance team at a company,” she said, “it usually leads to other deals.” Ⅲ leadership, built on a foundation of ethics. Our students enjoy small personalized classes, outstanding faculty and an extensive alumni network. Apply now and start your remarkable journey today. For more information or to download an application visit www.yu.edu/syms/emba or contact Margie Martin at 917.326.4839 | mmartin4@yu.edu 4 | Crain’s New York Business | June 10, 2013 $1B AMOUNT OF MONEY that Manhattan-based cosmetics company Coty expects to raise in an initial public offering scheduled for this week. No fewer than 20 Wall Street banks have signed up to help sell the shares to investors. http://www.yu.edu/syms/emba http://www.yu.edu/syms/emba

Table of Contents for the Digital Edition of Crains New York - June 10, 2013

SOURCE DINNER
IN THE BOROUGHS
IN THE MARKETS
DIGITAL NY
THE INSIDER
BUSINESS PEOPLE
SMALL BUSINESS
OPINION
STEVE HINDY
GREG DAVID
REPORT: HEALTH CARE
THE LIST
FOR THE RECORD
CLASSIFIEDS
REAL ESTATE DEALS
NEW YORK, NEW YORK
OUT AND ABOUT
SNAPS

Crains New York - June 10, 2013