Friday Report: Tappan Zee funding questions; Westchester home sales up in 3rd Q; Armonk Square approved

Inside Track sincerely apologizes for the radio silence of the past couple days – it was particularly hectic in the newsroom. We’re back with a chock-full of topics this morning, and then later today we’ll wrap up the work week with a recap of what has made news in Westchester during the past week.

Driving the Week: This week, the Obama administration effectively fast-tracked the Tappan Zee Bridge replacement project in an executive memorandum that expedited environmental reviews and permitting the Tappan Zee and fourteen other so-called “shovel ready” infrastructure projects from around the country. However, I challenge the presumption that right now, the bridge is, in fact, shovel ready.

The U.S. Dept. of Transportation have told the Business Journal that $3 billion of the estimated total $5.2 billion cost of replacing just the bridge would come from bonds purchased by NY state and backed by toll dollars. The two problems with that are (1) How much would that require raising toll fees? and (2) Where is the remaining $2.2 billion coming from?

I just returned from a conversation with Westchester County Executive Rob Astorino, and he said that while he is happy the project was put on the fast-track and that it is moving ahead, he too has concerns about the lack of communication from Albany and Governor Andrew Cuomo, about the lack of certainty over the project’s funding, and about the apparent lack of public transit being oriented into the bridge’s design.

Driving the Week (Part II): In the Westchester Putnam Association of Realtors’ third-quarter residential real estate report that was released this week, we saw some notable increases in sales from the second quarter of this year. In fact, the 1,944 sales in Westchester County during the third quarter of 2011 represented the highest number of 3Q sales since 2008.

A decline in the home prices may have impacted the increase: for the third quarter, the median sales price for one-family homes was down six percent from 3Q 2010. More on the residential and commercial real estate markets in the next couple of weeks.

Driving the Week (Part III): On Wednesday, the town of North Castle Planning Board gave the Armonk Square development the last remaining approval that was needed before development on the 3+ acre project could begin. More on this coming in the weekly wrap-up this afternoon, but great news for a development that has been delayed for literally decades due to a number of economic and political reasons.

Outlook: Slowly but surely, the markets are clawing back, with both the DJIA and S&P 500 posting strong weeks and noticeable gains. Also, one area to watch is always commodity prices, and crude oil hit a three-week high today in New York (crude oil on the NY Mercantile Exchange is up 4.3 percent this week). A hint from the experts (I am not one of the experts, for clarification): the best indicators of the economy are not the stock indexes but instead are commodities, namely oil and copper (which is present in a really wide range of goods).  

Headlines:

National retail sales rose by 1.1 percent in September; biggest gains in seven months (Bloomberg).

Apple poised for record-breaking iPhone 4S sales this weekend following today’s release (Bloomberg).

UPDATE: Tappan Zee Bridge review to be expedited

Today, Gov. Andrew Cuomo announced that President Barack Obama has put the Tappan Zee Bridge project on the fast-track for federal review.

In a statement, the governor’s office said:

“With this expedited federal review of the Environmental Impact Statement (EIS) and the processing of certain permits, the Tappan Zee project could begin as early as next year, potentially creating more jobs than any other infrastructure project in the country.”

Tuesday Morning Report: 10,000 securities jobs to leave NY? Tappan Zee Bridge project gets boost from Cuomo; PEF contract talks continue

Good Tuesday Morning! Today the FDIC will vote on an initial version of the infamous Volcker Rule, so keep an eye on Wall Street as that vote looms. Speaking of Wall Street, did you know that the city of New York has already racked up $2 million in overtime pay as a direct result of the Occupy Wall Street protests?…

BEFORE we dive into the news, I would like to talk about my alma mater, Boston College, and a little-known competition that takes place on campus every year. It has nothing to do with our hockey team – winners of two national titles in the last four years, I might add – or our football team, which currently stinks; rather, it is a venture capital competition run by a professor in the Information Systems department. Each year, this competition awards a $5,000 grant to the team of students that generates the best and most inventive business plan, leaving them to do what they will with their new company and earnings.

One such start-up to come out of the Boston College Venture Capital competition was called WePay. Founded in 2008 by Bill Clerico and Rich Aberman as a more specialized payment service than PayPal, WePay has raised over $10 million in seed funding to date. All it took was a great idea, a few very smart students and some start-up cash to help them attract the attention of the likes of Highland Capital Partners, Y Combinator, and SVAngel.

If a private university in Chestnut Hill with 9,000 undergraduates can have its own venture capital competition, why doesn’t Westchester County? There is a wealth of talent and capital in Westchester, so why can’t we harness that in the form of a venture competition or business incubator? America’s strength has alway been beating the other guy to the punch. Since 2008, we have lost that risk-taking, fighter’s mentality.

Believe it or not, this is something that an independent panel of businesspeople – including GE chief executive Jeffery Immelt – is advocating for. From the Wall Street Journal article on the Web this morning:

“…Among its ideas to spur start-up activity, the council recommends Congress eliminate taxes on income from investments of $25 million or less in a privately held firm as long as the investment is held for at least five years. It also calls for cuts to corporate income taxes for the first three years of a company’s existence to encourage it to expand…”

Ideas like this one are needed on a national scale, but why not on a local scale as well? Here in Westchester, we have the resources, we have the higher education institutions, we have the capital, and we have the collective intellect – so what are we waiting for?

Headlines:

Wall Street to lose 10,000 jobs? A new report by NY state Comptroller Thomas DiNapoli said that New York City’s securities industry could lose nearly 10,000 jobs by the end of 2012, and that bonuses are likely to be considerably smaller this year.  

Gov. wants federal approval of TZ Bridge expedited. Yesterday, Gov. Andrew Cuomo announced that he has asked the federal government to expedite the review and approval process to allow work to begin on the Tappan Zee Bridge project, which represents a multi-billion dollar investment that will create tens of thousands of jobs.

PEF contract negotiations “ongoing.” Contract talks between the Public Employees Federation and NY State are ongoing after union members rejected the contract that was negotiated by union leadership. Just over a week remains before the nearly 3,500 pink slips sent out to PEF employees as a result of the contract rejection become official and permanent.

Monday Report: Economic outlook improved as analysts see no double-dip, increased capital investments

Good Morning! Occupy Wall Street has apparently migrated up to Nyack, of all places – more proof that people need to find more constructive things to do with their lives. In a Journal News photo of the “protest” in Nyack, there are at least three people with signs that have some version of “Expose the 9/11 Cover-Up.” If anyone can explain to me what that has to do with the big financial players on Wall Street, I’m all ears.

So in an otherwise quiet morning on the Westchester front, I offer a brief take on why analysts have cooled to the prospect of another recession:

Driving the Day: In a survey conducted by consulting firm Deloitte of nearly 700 executives from mid-sized firms (meaning those with between $50 million and $1 billion in annual revenue), more than 75 percent of those surveyed say they plan to either maintain or boost capital investment over the next year. Also of note, 40 percent of those queried say they plan to hire workers, albeit while keeping an eye out for people with specific skill sets.

Local Angle: I talked about this in my last post, so I’ll keep it short here, but business confidence in Westchester is at a new low for the post-recession crowd, according to the Business Council of Westchester / DataKey Consulting Business Confidence Index.

Many of the county’s small businesses – which comprise 70 percent of the total firms in Westchester – do not fit into $50 million to $1 billion in annual revenue category that Deloitte looked in to in its own survey. Those local small firms are struggling with the exceedingly high cost of doing business in Westchester, something that we will continue to look into over the next several weeks at the Business Journal. Things ranging from health care to unemployment insurance to taxes are pricing small businesses out of Westchester, and until mandate relief becomes a reality business owners will continue to struggle.  

For the full story on the BCW/DataKey Business Confidence Index, see here.

For a look at whether mandate relief is coming from Albany, see here.

National Outlook: For the first time in months, analysts are revising GDP projections upwards rather than downwards, with Bloomberg News reporting this morning that a number of economists are predicting 2.5 percent GDP growth during the third quarter (rather than 2.0 percent growth, which was the previous consensus). See the full article here. What this means, the analysts say, is that chances of a double-dip recession are, well, dipping. High-fives all around!

 

 

Aureon Biosciences closes, Westchester business confidence plummets, and the Weekly Roundup

Lots of mixed news coming out of Westchester this week, but the forces of optimism fought back today with a stronger-than-expected U.S. employment report.

Aureon Biosciences closes in Yonkers, after an 11-year run. The company had been touted as one of the bright, up-and-coming biotech companies by Westchester business leaders and politicos, with hopes that Aureon would rank among the county’s best with Regeneron, Progenics and Acorda (Westchester’s unofficial “Big Three” of the biotech/pharmaceuticals industry). Instead, Aureon made a swift and silent exit from the stage. On Tuesday Oct. 4, the company released 95 of its employees, according to documents obtained from the N.Y. Department of Labor. (Get the full story online here).

  • “The decision was made for reasons unclear to pull the funding from the company and put the company’s intellectual property up for sale,” said Michael Oates, president and CEO of the Hudson Valley Economic Development Corp. (HVEDC) in New Windsor. “It absolutely comes as a shock to us and frankly to a great deal of the (Aureon) employees as well.”

Business confidence index plummets in Westchester during the third quarter of 2011, according to research conducted by DataKey Consulting LLC in Mount Kisco on the behalf of the Business Council of Westchester. The BCW Business Confidence Index showed that from the second to the third quarter of this year, confidence among Westchester business owners dropped 37 percent – even more significant when taking into account that the confidence index had risen for five consecutive quarters prior to this one. For more, see the Westchester County Business Journal

ALSO MAKING NEWS:

> An Albany bill would shift Medicaid costs borne by counties and local property owners to the state.

> Preliminary Westchester County budget projections show a $114 million shortfall; White Plains extends open-space moratorium; Moody’s cuts Yonkers’ bond rating; and more political news from around the county.

> LCOR Inc. seeks a zoning change to develop a hotel and big-box retail stores at the Landmark at Eastview in Greenburgh.

> With speculation that PepsiCo could gain value by splitting its food and beverage units, the company launched the Power of One – Americas Council to facilitate better coordination between the company’s brands.

> At the Business Council of Westchester’s 2011 Annual Dinner Oct. 6, the council announced it has hired former state Assemblyman John Ravitz as senior vice president and chief operating officer.

> P. Gilbert Mercurio, the longtime head of Westchester Putnam Association of Realtors, talks market trends as he readies for retirement.

> A convention hosted last Tuesday in Tarrytown by SCORE and American Express OPEN provided small-business owners with marketing and financial advice.

 

Friday Roundup: U.S. adds 103K jobs; Aureon Biosciences folds; State approves Memorial Sloan-Kettering project

TGIF. It is a beautiful Friday, the weekend is shaping up to be a great one, and Alex Rodriguez made it two consecutive seasons in which he has ended the New York Yankees’ playoff run with a strike-out. On to the news!

Driving the day: The U.S. economy added 103,000 non-farm jobs in September, exceeding nearly every analysts’ projections. That said, the employment rate held steady at a discouraging 9.1 percent. T.D. Bank senior economist James Marple said, “This was definitely a good report and a repudiation of the most strident calls that the U.S. has already slipped into recession. Nonetheless, we should hold off on breaking out the champagne.” Marple also predicted that the U.S. GDP grew at a rate of two to two and a half percent for the third quarter of this year (which would be an improvement over the second quarter, but still far below pre-recession levels).

Some notes of importance:

  • The employment numbers were buoyed by the return to work of approximately 45,000 striking Verizon employees.
  • The Bureau of Labor Statistics revised last month’s job data up by 57,000 (from initial estimates of zero job growth), another positive.
  • Including the above revisions, the last two months have averaged job growth of 80,000 per month.
  • Moody’s chief economist Mark Zandi said on MSNBC this morning that the economy needs to add between 125,000 and 150,000 jobs each month if we are to see the unemployment rate drop.

**New York State will release the state’s unemployment data for September on Oct. 20th.

They Said It: “I think we’re in as much a psychological slump as a real economic slump.” - Eleanor Clift, at Business Council of Westchester’s 2011 Annual Dinner, held last night at the Hilton Rye Town.  

Headlines:

> Yonkers biotech company Aureon Biosciences unexpectedly closed last Tuesday, according to documents filed with the N.Y. Department of Labor. Founded in 2002, Aureon was a founding member of “N.Y. BioHud Valley,” a public-private campaign aimed at promoting the Hudson Valley as a hub for biotechnology research and development. With the closing, the company’s 95 employees were laid off. More on Aureon Biosciences closing coming soon at WestfairOnline.com.

> Memorial Sloan-Kettering’s plan to build a $143 million, 114,000-square-foot cancer treatment center at 500 Westchester Ave. in Harrison was approved yesterday by the N.Y. Public Health and Health Planning Council, clearing the last major hurdle for the project.

Jobs numbers due out at 8:30 a.m. – no change predicted to 9.1% unemployment

We will check in shortly after the employment numbers are revealed by the Bureau of Labor Statistics at 8:30 this morning. Predictions range from 50,000-80,000 new jobs, which would not be enough to lower the unemployment rate from its September level of 9.1 percent if they turn out to be accurate. Stay tuned.

UBS, Barclays say ‘Buy! buy! buy!’

In a Bloomberg survey of a dozen financial strategist representing the likes of UBS AG, Barclays Plc and Oppenheimer & Co., the average estimate for the S&P 500 during the fourth quarter is quite bullish.

According to the report (find it here) the S&P 500 will climb 14 percent over the last three months of 2011 in response to excessively low values.

Analysts are saying (and rightly so, for what my opinion is worth) that the debt crisis in Europe combined with August’s haggling over the debt ceiling and subsequent debt downgrade by Standard and Poors is responsible for the third quarter’s huge drops in the major stock indexes. As such, many companies’ stock is under-valued, making this a major buyers market.

The last time the S&P 500 Index gained 14 percent over one single quarter was in 1998. Also from a historical perspective, often when the stock market approaches a bear market, there is a big rebound following what investors view as opportunistic market conditions.

Thursday Morning Report: County budget projections; Small business funds wasted?; Friendly’s declares Chapter 11

There is very little I can say that would do justice to what Steve Jobs accomplished in life: he was an innovator, a creative genius, and he had a far-reaching effect on how the world works that will endure now in his stead – an effect that has been and will be so profound that we will not be able to properly gauge it for years to come. We shall merely say to Steve: thank you.

(For the text of Steve Jobs 2005 commencement address to Stanford University, see here).

Driving the day: The Wall Street Journal reports today that community banks may have misspent over $2.2 billion in federal funds that were meant to boost small business growth and instead went toward paying off what the banks owed in bailout funds (for the full story, see here). The WSJ says that 332 community banks received roughly $4 billion from the federal government under the Small Business Lending Fund that was intended to be lent directly to small businesses. However, at least 137 of those banks used at least a portion of what they were granted to pay off funds that were received under TARP.

Driving the Day, Part II: County Executive Rob Astorino unveiled his preliminary budget projections yesterday, saying that the county would likely be facing a $114 million shortfall between revenue and expenditures (with revenue increasing by just 1 percent to a 5 percent rise in expenditures). Astorino proposed a week-long furlough for all public employees of the county government and for union employees to contribute more to health care costs as means of closing the gap (see here for all the details). As part of his plan, Astorino vowed to not raise taxes and to work to avoid layoffs.

Outlook: Tomorrow, the Bureau of Labor Statistics will release U.S. unemployment numbers for September. Economists are forecasting that employers added 59,000 workers to payrolls during Sept. and that unemployment held steady at 9.1 percent.

By the Numbers: 6,000 – Claims for unemployment benefits rose by 6,000 in the week ending Oct. 1 to a total of 401,000 – well below analysts’ predictions that the total would top 410,000.

Headlines:

> Friendly’s files for Chapter 11 bankruptcy; to close 63 restaurants, keep 424 open (Reuters).

> Target Corp., Limited Sales Inc. beat September sales projections (Bloomberg).

> Don’t look now, but the Anti-Wall Street protests are growing and show no sign of weakening (Bloomberg).

Sports Blink: Three of the four MLB divisional series made it to decisive game 5’s. And who said baseball was boring? Lets go Yanks!