Crain's New York - October 1, 2012 - (Page 11)

O A stark choice on capital gains ne of the city’s leading real estate firms sent an email last week with a dire warning. As a result of the Affordable Care Act, better known as Obamacare, a new 3.8% capital-gains tax will be imposed on anyone selling real estate who has a family income of $250,000—a 25% jump, the firm warned. Even more ominous,the email continued,is the prospect that President Obama is re-elected and the Democrats keep control of the Senate.If so,the Bush tax cuts would be far more likely to expire, resulting in a 23.8% capital-gains tax rate—an increase of more than half. The conclusion was obvious: Anyone thinking of selling property should do so now and contact the real estate firm immediately to make sure the sale closes by Dec. 31. It’s clear the 2012 election will result in changes that will affect economic, tax and social policy for decades to come. As President Obama’s lead in the polls widens, and as the Democrats improve their position in Senate races around the country, it is likely that the short-term economy will be affected as well. The New York real estate firm is GREG DAVID correct. Anyone thinking of selling real estate at a profit should do so before the end of the year. Why lose part of the profit by waiting a month or two? The same applies to stocks and bonds.Many investors have sig- nificant gains from what is now a three-year rally in the market. Holders of intermediate and longterm bonds are also sitting on big profits from the fall in interest rates. They shouldn’t wait, either. The results are pretty easy to predict. The stock and bond markets will falter as a wave of selling ensues. Ditto for real estate. For this year, there will be a big boost to city, state and federal coffers from capitalgains taxes on the profits—even the MTA will benefit, since it gets a tiny piece of every real estate sale. Next year will be another story. Markets will seek to figure out what effect the changes will have on investor returns, and tax revenues will fall as taxable transactions decline. Whether the result will be good or bad for the country depends on what you believe. If you think the growing inequality gap is unfair and is eroding the economic life and quality of life of most Americans, a 23.8% tax rate is needed. If you believe that low capitalgains taxes encourage investment, which boosts capacity and allows the country to grow,then such an increase will be an economic disaster. It is also true that capital gains aren’t indexed for inflation (unlike income-tax brackets) and, therefore, a portion of the profits are illusory. Oh, that’s right—this is one of the most important things the presidential election is about. KATHRYN S. WYLDE L PA is finally moving in the right direction ittle in New York City is more controversial than the tolls on the bridges and tunnels. The Port Authority of New York and New Jersey recently released detailed reports on its operations and finances by two independent expert firms that document how necessary recent toll increases are to our region’s capacity for continued growth. Long regarded as an insulated, unresponsive bureaucracy, the Port Authority has finally opened its books. The reports, by Navigant Consulting and Rothschild Inc., reveal an agency facing serious fiscal challenges but now taking the actions required to achieve its mission of maintaining and improving our transportation infrastructure. Just seven months ago, Navigant described the authority as a “dysfunctional organization.” Navigant’s updated analysis makes clear that the governors of New York and New Jersey, as well as the authority’s leadership, are reorganizing it to operate more efficiently in an era of diminishing public resources while making it more accessible and accountable. This comes at a critical moment. The Port Authority needs the confidence of residents and businesses as it fulfills its nearly $27 billion capital plan over the next 10 years. Despite the unpopular decision in 2011 to raise tunnel and bridge tolls, the authority has had to put off another $17 billion in projects. Although rebuilding the World Trade Center has contributed to this shortfall, the funding gap is largely a result of aging infrastructure. Some assets, such as the George Washington Bridge,are more than 80 years old and require extensive repairs. Others, such as the Goethals Bridge, must be replaced. Also in need of swift attention are the outdated airports. Our region cannot remain a global economic center if our access and mobility are second-rate. The airports’ condition is a particular concern. They are the only line of Port Authority business that generates surpluses. A 2009 study by my organization, the Partnership for New York City,found the cost of our airports’ obsolescence and inefficiencies to business and the flying public, if unaddressed, would top $50 billion by 2025. Employment losses attributed to airport delays and congestion would surpass 100,000 full-time-equivalent jobs. One of the ways the Port Authority is trying to stretch its resources is through public-private partnerships. As Rothschild noted, it has had some success. The authority has attracted enormous private investment from Delta and JetBlue at JFK, and is pursuing private partners to redevelop the antiquated Central Terminal Building at La Guardia and replace the aging Goethals. This is only a first step in dealing with regional infrastructure challenges. Given the federal fiscal cliff, we are unlikely to see much help from Washington. Gov. Andrew Cuomo has an impressive program for rebuilding the Tappan Zee Bridge with public and private funds and industry-labor cooperation.The MTA has also put forward its own plan for needed toll increases. The city has an opportunity to help address the fiscal problem by tolling the free East and Harlem river bridges—an essential part of any long-term solution. The Port Authority’s commitment to openness and reform is a hopeful sign that meeting the region’s infrastructure challenges will be an all-hands-on-deck effort that generates the political will and local financial resources to keep New York the world’s pre-eminent metropolis. Kathryn S. Wylde is the president and CEO of the Partnership for New York City. Crain’s Arts & Culture Breakfast: How To Stand Out In A Crowd DATE: Tuesday, October 9, 2012 Join Crain’s New York Business at our Arts & Culture Breakfast as we will explore a critically important issue facing arts groups across the city: How To Stand Out In The Crowd—A candid discussion on how small and mid-size arts institutions can compete for audiences and donors. New York’s major arts institutions typically have vast resources to survive a downturn. The small to mid-sized organizations are hardest hit. Crain’s will bring in the experts on both sides—the fundraisers and the funders—to discuss the challenges institutions face while trying to grab the public’s and donor’s attention and the techniques that have brought them success. PLACE: Con Edison Conference Center, 4 Irving Place at 14th Street TIME: Networking Breakfast: 8:30AM - 9:00AM Program*: 9:00AM - 10:30AM *Program extended. Patricia Cruz Tom Finkelpearl Kate D. Levin John Tomlinson Luis A. Ubiñas PANELISTS: Patricia Cruz Executive Director, Harlem Stage / Aaron Davis Hall, Inc. COST TO ATTEND: $80 for individual ticket(s). $800 for table(s) of ten. For more information, call the Events Hotline at 212-210-0739. You must be pre-registered to attend this event. No refunds permitted. Tom Finkelpearl Executive Director, Queens Museum of Art Kate D. Levin Commissioner, New York City Department of Cultural Affairs John Tomlinson Executive Director, Paul Taylor Dance Company Luis A. Ubiñas President, Ford Foundation MODERATOR: Alair Townsend Crain's Columnist and Chair of the David H. Koch Theater at Lincoln Center For sponsorship opportunities, please contact Trish Henry at (212) 210-0711 or thenry@crainsnewyork.com. SPONSORED BY: REGISTER TODAY! crainsnewyork.com/events-fallarts October 1, 2012 | Crain’s New York Business | 11 http://crainsnewyork.com/events-healthcaretech http://www.crainsnewyork.com/events-fallarts

Table of Contents for the Digital Edition of Crain's New York - October 1, 2012

IN THE BOROUGHS
IN THE MARKETS
THE INSIDER
BUSINESS PEOPLE
CORPORATE LADDER
FROM AROUND THE CITY
OPINION
GREG DAVID
REAL ESTATE DEALS
REPORT: SMALL BUSINESS
CLASSIFIEDS
FOR THE RECORD
NEW YORK, NEW YORK
SOURCE LUNCH
OUT AND ABOUT
SNAPS

Crain's New York - October 1, 2012