Crains New York - January 21, 2013 - (Page 6)

THE INSIDER LHOTA OPENS WAR CHEST THE CROWDED but under-the-radar Republican field for buck ennis by Andrew J. Hawkins Mayoral candidates drum up Dem dollars L ast week’s campaign-finance filing deadline, the first in six months, has given New Yorkers a clearer picture of the piles of money that mayoral hopefuls have gathered—and perhaps the viability of their campaigns. Among the four main Democratic contenders, of whom only 2009 runner-up Bill Thompson has declared his candidacy, City Council Speaker Christine Quinn is sitting on the largest stack: $5.3 million. She raised only $453,811 over the six-month period and spent $188,931, having toned down her efforts because—with matching funds—she had raised enough to spend the maximum of $6.4 million in this year’s primary. Any additional dollars that Ms. Quinn raises will go toward a possible runoff election—which will be held if no one notches 40% of the primary vote—and the November general election. (The runoff and the general election have their own spending caps for participants in the matching-funds program.) The next largest pile belongs to Public Advocate Bill de Blasio, who raised $725,274 over the last cycle, spent $316,388, and has $2.5 million on hand. With matching funds, he, too,is expected to have the maximum amount to spend in the primary. So will city Comptroller John Liu, whose straw-donor scandal has not stopped him from raising mounds of money. He collected $523,417 in the period but spent $346,066,mostly on legal fees. That leaves him with a little more than $2 million. Mr. Thompson, who had struggled to keep up,came roaring back to life, raising $1,017,191 and spending only $232,565. Still, his war chest of $1.8 million remains smaller than those of his three Democratic rivals. That puts Mr. Thompson at a slight disadvantage: While he dials for dollars, his opponents can focus on retail campaigning or on fundraising for a runoff. Over the past three years, the four Democrats have raised a total of $15.3 million and spent $3.6 million. Those are fair sums, but New Yorkers won’t experience the kind of advertising blitz they have grown accustomed to from Mayor Michael Bloomberg. If the leading Democrats all spent as much as the matching-funds program allows in the primary, the total would be a third of what Mr. Bloomberg spent on each of his three election victories. In other 2013 races, Community Board 1 Chairwoman Julie Menin has raised $1 million, the maximum amount she can spend in her bid to become Manhattan borough president.Councilwoman Jessica Lappin, also a contender in that race, has Code red at Brooklyn hospital SUNY Downstate, bleeding cash, faces possible closure BY GALE SCOTT A state comptroller’s audit last week showing that the State University of New York Downstate Medical Center could run out of cash by May has returned Brooklyn’s hospital crisis to center stage as state regulators and local politicians figure out how to manage several facilities mired in a financial swamp. Interfaith Medical Center filed for bankruptcy last year and is expected to form a partnership with Brooklyn Hospital Center. Now the future of Downstate Medical Center, which includes a medical school and hospital, is uncertain. The importance of community health care and local jobs—SUNY Downstate employs 8,000 people— must now be balanced against mounting losses caused by reductions in state and federal aid and a drop in hospital-bed occupancy. Closing the hospital is in order, said Stephen Berger, who last year headed a governor’s task force on the financial problems plaguing Brooklyn’s money-losing hospitals and inefficient health-delivery system. “SUNY has to use this [audit] as an opportunity to refocus its efforts on providing medical education and getting out of the hospital business,” Mr. Berger said last week. He favors a redesigned Brooklyn health care industry that would have existing hospitals like Maimonides Medical Center, Kings County Hospital Center and Lutheran Medical Center be the base for the practical training of Downstate’s medical school doctors, instead of Downstate’s antiquated University Hospital. The Cuomo administration did not dispute the comptroller’s findings, but it remained mum on what 6 | Crain’s New York Business | January 21, 2013 might happen if the hospital runs out of money. Downstate has already initiated some measures the comptroller recommended, like improving bill collections and better monitoring expenses. Careful what you wish for The report represented a clear setback for Brooklyn legislators and community activists. They had asked the comptroller to audit Downstate in the belief that the hospital had been unfairly saddled with administrative and operating expenses incurred by its academic parent, SUNY. “We ask that you restore state funding to Downstate and provide a bridge loan ... until a successful restructuring plan is developed,” legislators wrote the comptroller on Aug. 9 when they asked for the audit. But the audit tactic backfired. The comptroller’s report blamed decisions by Downstate’s past management for much of the financial mayor shifted last week when former Metropolitan Transportation Authority Chairman Joseph Lhota announced his candidacy at a New York Building Congress event. The warm reception he received from the wellheeled businesspeople bodes well for Mr. Lhota, who also filed paperwork to start raising money and plans to apply for public matching funds. He doesn’t have far to go to catch four of his Republican rivals. In the past six months, publisher Tom Allon raised $91,000 but spent $124,000, leaving his campaign with just $31,000. (In a statement, Mr. Allon touted his following of more than 2,000 Twitter users.) Doe Fund founder George McDonald, who aims to raise $14 million and won’t take matching funds, collected $227,000, with many of the donations two or three times larger than the city’s $4,950 limit, which he is suing to overturn. His haul includes $120,000 borrowed from Manhattan-based National Enterprises Corp., a loan that the city Campaign Finance Board called legally questionable. Former Bronx Borough President Adolfo Carrión, an independent seeking to run on the GOP’s ballot line, transferred more than $1 million from his aborted 2009 city comptroller campaign into his 2013 account, but has not done any new fundraising. He is not taking matching funds. Queens state Sen. Malcolm Smith, a Democrat also vying for the Republican line, has yet to open a mayoral campaign account, but did donate $500 from his state Senate campaign to the New York City Independence Party several days after the party gave him an award in December. The wild card in the GOP race is billionaire grocer John Catsimatidis, who has lent his campaign $1 million but has spent less than $4,000. It remains –CHRIS BRAGG unclear whether he will run. Joseph Lhota Tom Allon George McDonald John Catsimatidis raised $683,740. Two others, Council members Robert Jackson and Gale Brewer, have raised much less. Political consultant Cindy Darrison said she was impressed with the fundraising this cycle,especially after the 2012 presidential race and Superstorm Sandy charity drained cash from the city’s donor community. “There is a definite awareness that it makes sense to raise your matchable threshold early in the process,” she said. “And we’re seeing that with more and more candidates, whether it’s at the City Council level or the citywide and boroughwide level. The people that do that early are way ahead of the game.” Meanwhile, Gov. Andrew Cuomo’s towering pile of cash continues to grow. He raised more than $4 million in the past six months, mostly from real estate and business interests, putting his total war chest at $22.5 million. He spent money to make money: nearly $900,000 in campaign expenses for the period, including $201.42 on balloons, $6,896.14 on flowers and $36,120 on a fundraiser with the New York Yankees. He remains unopposed for re-election in 2014. Ⅲ distress. There was no mention of SUNY’s wrongly assigning expenses. Instead, it described a “very bleak” financial picture. To remain open would require massive layoffs or another cash infusion from the state. That appears unlikely to happen. The state advanced the medical center $75 million in June 2011. It was gone in three months. Losses continued at a pace of $3 million a week. That translates into an expected $200 million shortfall when 2012 operations are fully counted. The hospital’s most conspicuous bad expenditure: acquiring Long Island College Hospital from Continuum Health Partners, a deal that was made possible with the help of a state grant. According to the audit, Downstate bought a property worth $143 million but assumed $170 million in liabilities. The hospital refutes that number, saying that the property is worth far more and that the liabilities are only $30 million. The auditors cited a report from Pitts Management Associates, a Louisiana consultancy hired by the hospital with state approval, that rec- ommended Downstate lay off another 175 employees.The center has laid off nearly 500 people whose salaries were about $50,000 each, but the audit questioned the hospital’s decision to employ 15 administrators, each making more than $290,000. ‘Not a jobs program’ As is often the case in hospital turnarounds, Pitts is making out just fine. It got $3.1 million to try to untangle hospital finances in 2011 and in December got the nod for a second, $5.6 million contract. Downstate Medical Center’s president, John Williams, said the hospital has agreed to look at those salaries, which he defended as typical for the health care industry. “I’d never say the state would never close the hospital,” said David Sandman, senior vice president of the New York State Health Foundation, but doing so would not mean losing the medical school, as some have feared. “There are plenty of medical schools, including Harvard and Duke,that train doctors without owning a hospital. A hospital is not supposed to be a jobs program.” Ⅲ

Table of Contents for the Digital Edition of Crains New York - January 21, 2013

Crains New York - January 21, 2013
In the Boroughs
In the Markets
The Insider
Business People
Corporate Ladder
Opinion
Greg David
Real Estate Deals
Report: Small Business
Classifieds
New York, New York
Source Lunch
Out and About
Snaps

Crains New York - January 21, 2013