Like other taxi moguls who owned the properties where they parked their fleets, Victor Weingarten parlayed the wealth he made in the yellow cab business into another booming industry: real estate investment.
Weingarten, who accumulated so many medallions starting in the 1970s with his brother and cousin that they became known as the Three Wise Men, is also a real estate investor in New York City and beyond.
But as the well-documented troubles in the taxi business put the squeeze on owners following the medallion crash of 2014, so too have Weingarten’s real estate ventures felt the pinch.
Weingarten is facing foreclosure on an Upper West Side apartment building where he and his partner Simon Baron Development have struggled to execute a plan to turn rent-stabilized apartments over into free market units.
And according to a pair of Russian brothers who claimed the taxi chief owes them $18 million, the declining value of Weingarten’s medallions is partly to blame for his real estate woes.
“Weingarten’s cash flow situation has suffered greatly, and with the demise of the taxi industry with the increase in alternatives such as Uber and Lyft, Weingarten has reduced liquidity,” attorneys for Arkady and Maksim Guzovskiy wrote in a lawsuit filed last year.
A representative for Weingarten declined to comment. Simon Baron – headed by Jonathan Simon and Matthew Baron – did not respond to requests for comment.
The partnership is in default on a $19.6 million mezzanine loan on its 16-story, pre-war apartment building at 166 West 75th Street, according to a notice announcing a public auction for the debt next month.
Including a senior mortgage, the property has about $50 million in debt on it. But sources said the market believes it isn’t worth that much. And the property is arguably less valuable now than it was last month before the state passed sweeping changes to the rent-stabilization laws that make it more difficult to increase rents on regulated units.
“They’re willing to cut their losses and walk away from it,” one source familiar with the property said.
Simon Baron bought the 160-unit doorman building – a former SRO hotel converted into apartments – in 2013 for $13.4 million, property records show. But they’re really just managing the project for a “silent” investment group headed by Weingarten, which, according to the Guzovskiy lawsuit, owns slightly more than 96 percent of the equity in the project.
The Guzovskiy brothers say they met Weingarten – whose family is Russian and speaks the language – in 2011 through mutual friends in Miami. They partnered with him on the West 75th Street project, as well as a condo conversion Simon Baron is heading up on the Upper East Side.
The plan for the rental building – rebranded as AMSTRDM – was to deregulate the property’s stabilized units: Simon Baron claimed it spent $15 million on a gut renovation that included new mechanical equipment, cosmetic upgrades to common areas and apartment renovations.
When the developer bought the building, 144 of the 159 rental apartments (or slightly more than 90 percent) were rent stabilized, according to property records. That number is now down to 67, or about 42 percent of the building’s units.
But Simon Baron hasn’t been able to remove rent stabilized tenants without hitting bumps.
When the landlord moved to evict a pair of tenants it claims were behind on their rent, Simon Baron said it discovered a stipulation the previous landlord had entered into with the renters that entitled them to $250,000 in damages and a right to exercise a $3.5 million buyout if eviction proceedings were initiated.
The developer claims it was not aware of the stipulation when the company bought the building. And after a judge found in favor of the tenants, Simon Baron sued its lawyers at Belkin Burden Wenig & Goldman tasked with evicting the tenants, accusing the law firm of malpractice and “utter failure to properly represent” the landlord. (A judge in August of last year dismissed the suit and awarded the law firm more than $55,000 in counterclaims.)
Simon Baron also sued a married couple while they were in the midst of buyout negotiations. The couple earlier this year filed a lawsuit, claiming landlord left a hand-written note outside their door that said: “If you love your children, leave the building.”
The Guzovskiys claimed that Weingarten’s depreciating taxi business came to bear on his real estate investments around 2016, when Simon Baron put out a capital call for the condo conversion project at 12 East 88th Street.
Weingarten’s investment group couldn’t come up with the cash needed to keep the project afloat, so he leveraged the AMSTRDM building with “a massive loan that he improperly used to prop-up” the condo project, according to the Guzovskiy brothers.
“Weingarten has orchestrated ‘take from Peter to pay Paul’ movements of millions of dollars within his real estate projects,” attorneys wrote in court filings on behalf of the brothers, who accused Weingarten of taking advantage of their lack of understanding of English-language business laws. “[He] is as sophisticated as he is ruthless.”
(The Guzovskiy brothers claim they lent Weingarten $18 million with the understanding that they would be paid back in one year. Weingarten’s attorneys produced documents in court that showed the loan would be paid back only when the real estate projects turned a profit. A judge earlier this year threw out the lawsuit with prejudice, and the brothers have filed an appeal.)
A source familiar with the project, on the other hand, said it was Simon Baron that orchestrated the plan to use the debt from the West 75th Street rental building to fulfill the capital call on the East Side condo project.
The mezzanine lender on West 75th Street, Benchmark Real Estate Group, hired a team led by David Schechtman at Meridian Investment Group to market the debt for sale at a foreclosure auction scheduled for Aug. 12.
Benchmark and Schechtman declined to comment.
But Simon Baron and their partner may be looking back now and realizing they could have gotten out of the project in a better position earlier.
The owners in 2015 put the building up for sale asking $115 million. Sources said they turned down offers of $80 million and a few years later turned down offers in the mid-$60 million range.
Simon Baron is one of a handful of developers facing what industry experts expect to be an increasing number of foreclosures as the residential market continues to struggle.
Ceruzzi Properties and SMI USA recently recapitalized their luxury condo development project 520 Fifth Avenue in order to stave off a foreclosure auction initiated by lender Mack Real Estate Credit Strategies.
And earlier this month, the senior lender on 125 Greenwich street, United Overseas Bank, filed to foreclose on project being developed by China Cindat, Davide Bizzi’s Bizzi & Partners, Howard Lorber’s New Valley and investment firm Carlton Group.
Adams Clinical removes hurdle to clinical trial participation
How Adams Clinical increased retention and streamlined operations by switching to Uber.
One of the hardest parts of conducting a clinical trial is identifying willing participants. Once a participant is identified, strict qualifications and an often-lengthy time commitment limits who can participate, and a lack of access to transportation can make it difficult for participants to commit to and complete the study. To help improve recruitment and retention rates, Adams Clinical offered taxi rides to their participants. However, this solution became a burden on operational efficiency since taxis were only accessible to participants who lived close by and required the staff to pay at the end of each ride.
Finding the perfect transportation solution with Uber Health
To expand their transportation offering, Adams Clinical became an early beta partner with Uber in 2016. The team started using Uber’s web dashboard to arrange and pay for rides for participants with just a few clicks. Over the three years of this partnership, the switch to Uber Health simplified operational management, while reducing time spent on recruitment with increased retention rates. The easy-to-use Uber Health dashboard tracked all the rides and processed payments from one centralized interface, allowing the staff to arrange rides without the hassle of paying at the end of each trip. This flexibility, plus the extensive reach of Uber driver-partners in the Boston area, provided Adams Clinical with the transportation solution needed to successfully manage their participants in need of rides—which removed the headache from recruiting and retaining their study participants.
The result: Improved retention rates, simplified financial records, and an overall lift in team morale
By teaming with Uber Health, Adams Clinical enjoys a number of key benefits including:
• Expanded Recruitment—Using Uber Health cut down the length of enrollment by providing a larger pool to recruit from, resulting in a 5 to 10 percent reduction in recruitment time over the last two years.
• Centralized Billing—All rides are charged to one company credit card, which is then processed at the end of each month to streamline the amount of administrative effort required.
• Reliable Service—Each ride is tracked in the dashboard so the team knows when the participant will be arriving to help keep the rest of the study on schedule.
• Improved Retention—In the first two years of the partnership with Uber, Adams Clinical estimated up to 20 percent fewer people dropped out of a trial when transportation was arranged to and from the clinic.
• Financial Accountability—Details for each ride are available in the dashboard, and can be downloaded to a spreadsheet, offering convenient management with trial-specific reporting per participant.
• Easy to Use—Using Uber Health has been easy for both staff and participants, even among populations without smartphones or passengers new to Uber.
by Kendall Brown
Get a discounted lift to the polls on Election Day
By Jonathan Sperling
No MetroCard? No excuse to stay home on Election Day.
Ride-sharing giant Lyft is getting in on Get Out the Vote efforts by offering discounted rides to polling locations in New York City on Election Day.
Use code VOTENYC19 between 4:00 a.m. and 11:00 p.m. on Election Day to receive 50 percent off the price of a Lyft ride, up to $5. The deal is inspired by the fact that more than 15 million registered voters didn’t vote in 2016 because of transportation issues.
“At Lyft, we’re working to improve lives by connecting people and their communities through the world’s best transportation. This Election Day, we want to help make it easier for people in New York City to get to the polls,” said Lyft’s Director of Public Policy Jen Hensley. “Every voice is important, and we’re excited to help make them heard in this year’s elections.”
Uber, Lyft, and DoorDash kick off $90 million fight against California’s gig worker law
Under the ballot measure, drivers could get earnings guarantee of 120 percent of minimum wage
A group of drivers and couriers for Uber, Lyft, and DoorDash launched a new group called Protect App-Based Drivers and Services, which is aimed at passing a ballot initiative in California to counteract the effects of the state’s recently passed gig worker bill. The effort is being supported by the companies, which have vowed to spend $90 million to get the measure passed in 2020.
Assembly Bill 5, which was signed into law by California Gov. Gavin Newsom (D) on September 18th, enshrines the so-called “ABC test” for determining whether someone is a contractor or employee. Legal experts agree the law will make it more difficult for gig economy companies like Uber, Lyft, and DoorDash to classify their drivers and couriers as independent contractors. And the companies have argued that the law represents an existential threat to their business models.
As such, the companies were preparing this contingency plan even before Newsom signed the bill into law. On August 29th, The New York Times reported that Uber, Lyft, and DoorDash would spend $90 million ($30 million each) to pass a ballot initiative that would essentially exempt them from the law. (InstaCart is also involved, but it hasn’t committed to spend any money to support its passage.) The hope was that after striking out with lawmakers and labor groups, the companies could win a reprieve by appealing directly to voters.
The ballot measure would ask voters to approve the following:
- At least 120 percent of the minimum wage
- $0.30 per mile for expenses such as gas and vehicle wear-and-tear
- Health care subsidies consistent with employer contributions under the Affordable Care Act for drivers who work 15 hours a week or more
- Occupational accident insurance to cover on-the-job injuries
- Automobile accident and liability insurance
- Protection against discrimination and sexual harassment
- Recurring background checks of drivers
- Mandatory safety training of drivers
- Zero tolerance for alcohol and drug offenses
- A cap on driver hours per day to prevent sleepy driving
It’s a new spin on the failed proposal that Uber and Lyft presented to state officials as a compromise to prevent the passage of AB5. The companies had promised to pay their drivers $21 an hour (but only while on a trip), provide them with sick leave, and “empower” them to “have a collective voice” — a nod toward drivers forming a union.
After AB5 passed, though, Uber and Lyft warned that drivers could lose their flexibility to drive when they wanted. “Drivers would not be able to choose when to sign on anytime they want it,” Tony West, Uber’s general counsel, said in September. “They would work in shifts like every other employee works in shifts.” Experts have said there is nothing in federal or state law that precludes Uber from offering its drivers the same flexibility as employees as they have now as contractors.
(West also claimed that Uber could ultimately pass the ABC test because “drivers’ work is outside the usual course of Uber’s business.”)
The ballot measure is a risky — and costly — move for Uber and Lyft, insofar as it could further antagonize labor unions that have been hugely influential over the passage of AB5. Unions championed the bill throughout the legislative process, and have been at the center of the fight over gig work in California.
“This measure is another brazen attempt by some of the richest corporations in California to avoid playing by the same rules as all other law-abiding companies in our state,” Art Pulaski, executive secretary-treasurer of the California Labor Federation, said in a statement. “California’s unions will join drivers who want fair wages, better treatment and flexibility to defeat this corporate ploy.”
Meanwhile, union-backed groups and other supporters of AB5 are planning to protest outside the homes of key Uber investors, including Uber board member and Benchmark Capital partner Bill Gurley.
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