Photography by Philip Jensen-Carter
Videos by Simon Feldman
Our thanks to Frankie & Johnnie’s Steakhouse in Rye for graciously accommodating us.
Mary Beth Sheridan
- Advertisement -
As much as we know about business in Westchester, we could always stand to know more. So we cooked up this meshugenah idea to break out of the office for lunch with a half-dozen execs to—what else?—talk shop. The following is an edited transcript of what ensued.
Robert Schork: What do you see as the biggest challenge to conducting business here in Westchester?
Keith Safian: At Phelps Hospital, we have sixteen-hundred employees or so, and recruiting people who can afford to live in this area, including physicians, is a problem. Between the New York State income tax and the property taxes, we find that our workforce has to live more distantly, and physicians who have to be on-call really can’t live too far. The other factor is that we can’t compete with the salaries in Manhattan. So we have a very interesting combination of this huge metropolis to the south, which competes with us for a workforce; a high cost of living; and the need for people to be recruited from further north and further west.
Greg Rand: Until recently I was running a decent-sized real estate company, but last summer I started a brand new company, which is really small, so I’ll try to speak from both perspectives. At Better Homes and Gardens Rand, we had about four-hundred real estate agents, independent contractors, and about forty employees. I can’t complain about the cost of living because that’s how we made our money—if real estate was cheap, we wouldn’t have made as much money. The issue now is customers moving to Connecticut because the taxes are lower. My new company is a national Internet marketing and education firm with no client base here. So my wife and I are considering moving to the Carolinas, because it’s becoming too expensive to live here.
Keith Safian: I’ve lost employees who have moved to the Carolinas and to Tennessee.
Esther Davidowitz: Because of the cost of living?
Keith Safian: Yeah—you can buy a mansion down there with three-thousand dollars a year property taxes and no state income tax. The killer for me, by the way, is the MTA surcharge. That costs my hospital three-hundred thousand dollars a year—and none of my employees use the New York City subways.
Tony Cicio: I agree with Keith. Our number one issue at Dannon is the cost of living and quality of life. With our headquarters based in White Plains, we have roughly four-hundred employees here. Trying to convince people from outside of the New York area to move here is very difficult. It’s a real challenge to match the standard of living and the quality of life that they have at one of our factory locations in Ohio, Utah, Texas. And then, you’ve got the commute.
Greg Rand: Especially when they’re used to a four-thousand-square-foot Colonial with three-quarters of an acre! When I used to work with prospective clients who were relocating here, I’d fly out, talk to them about it, start to show them what three-hundred-fifty thousand dollars buys you here, and then I’d have to duck. I’d come back with scars.
Mary Beth Sheridan: For Lord & Taylor in Eastchester, our biggest problem is parking. On our busy days—in the spring season leading up to Easter and Mother’s Day, and then again, in the fall from Thanksgiving to Christmas—we cannot accommodate everybody who wants to visit our store.
Robert Peyreigne: We haven’t had a lot of trouble hiring, because most of the people who are attracted to Morgan Stanley are highly motivated, highly educated, and very well compensated; we have a long line of people who want to come work here. The biggest issue we face is the property taxes—and trying to get some of the larger financial advisors from Connecticut to come think about working at our headquarters in Westchester. As soon as you move across the state line, your taxes go up thirty- to forty-thousand dollars a year. But the issues we are talking about are not unique to Westchester. They exist on Long Island and in the city. We have a very high cost of living, but that has also attracted a very high amount of assets. This is where the wealth is. But if we don’t fix some of the things we’ve been discussing, people are going to move to South Carolina and take their money with them.
Robert Schork: When it comes to doing business in Westchester, has government been more of a help or a hindrance?
Tony Cicio: They haven’t been an issue for us either way. But as a resident, when you send your kids to school and you start to see how the school budget is calculated… We looked recently at how school budgets are calculated in White Plains. First they decide how much money they need, then they figure out how much they think they’re going to get, and, if there is a shortfall, they just dice it among all the different taxpayers and just increase property taxes. That would be an interesting way to run a business, no? The customer would just walk out.
Robert Peyreigne: The County Executive came to our offices about three months ago, and we spent a lot of time talking about what the county is doing to get more biotech firms to Westchester. I think that the current regime gets it, and they know that taxes are too high. I’ve never seen anyone from the Nassau County government partnering with the business sector or trying to figure out how to drive biotech there.
Keith Safian: I had a meeting with Astorino a couple times as well, and a few of his deputies. The fringe benefit rate for public employees is fifty-five percent. The fringe benefit rate for my employees is seven percent, and that includes me giving everybody free health insurance. There is no justification for public employees to get such high benefits. They should have competitive benefits in the fiftieth percentile and competitive salaries.
Melinda White: I came from a blue-collar background. In 1972, when my father went to work for the city of White Plains, if you went into public service, you got paid less but enjoyed the security and the benefits of public sector employment. But today public sector employees make just as much as the private sector and have the benefit of these platinum pensions and benefit plans that the private sector cannot afford to pay.
Tony Cicio: You asked what the government is doing—what it’s not doing is taking care of the roads. It’s just incredible to me why someone doesn’t fix these problems.
Keith Safian: There is a huge failure in road designs and infrastructure that hurts business. Every time it rains here, all the parkways flood and close, and nobody can get anywhere—patients, clients, customers. I went to engineering school, and I don’t understand how the government remains incapable of correcting these problems.
Esther Davidowitz: So why do business here?
Tony Cicio: Our company grew up in the New York area. And if you look at specific departments at Dannon, like marketing, it would be very difficult to find the necessary talent outside of this particular area. And because we are a European-owned business, there is quite a bit of traffic back and forth to Paris, so the proximity to the airports makes it much easier to exchange between our European counterparts and with our executives in Europe.
Greg Rand: I had made a comment before that now that I’m un-tethered from conducting business locally, I can go anywhere. But the likelihood is that I will stay put. The advantages here are two-tiered. The reason you can live in Florida so cheaply is the prices are down to 2001 levels. Compare Westchester County to all other parts of the country—the values have stayed and stayed. There is also something about Westchester in terms of brand identity. People in Beverly Hills know about Scarsdale. There is awareness from coast to coast about this county; it’s the prime suburb of New York. In Charlotte, try to get your change from the guy behind the counter without having an entire conversation about the weather—everybody is so slow. There is an energy here. No grass growing under people’s feet here.
Mary Beth Sheridan: Being positioned near a major city and a major hub is a huge opportunity. You really have to be a go-getter and thrive on that to enjoy it. Not everybody wants that.
Keith Safian: You want to live here because of the people and the culture. You want your kids to go to school here because the kids are smart and the parents are proactive.
Tony Cicio: I think the diversity is a huge plus. We have so many people from different cultures living in this area and the richness of that diversity also brings a tremendous asset to our company.
Esther Davidowitz: So, if you were to solve the number one problem facing business in Westchester now, what would you do?
Keith Safian: I would fix the pension issue. That to me is the single biggest act to take in order to reduce the cost of government.
Tony Cicio: Maybe government needs people with more business acumen to run things more efficiently.
Keith Safian: You need to eliminate redundancies. Why are there villages? How many tax collectors are there in Westchester? How many water companies? I’ve never met anybody who cares about who their water company is—as long as it’s drinkable, good-quality water. This is where we can make a change.
Tony Cicio: At this moment, everybody seems to be in favor of finally re-negotiating contracts, finally eliminating redundancy—but, of course, that means someone will lose their job. My sister-in-law will lose her job as a result of school closure, and she told me to protest. I told her, ‘Why don’t you spend time redoing your resumé?’
Melinda White: If municipalities start defaulting on their bonds, that will affect everyone because most retirement assets are invested in somebody else’s budget. If Orange County, for example, can’t afford to pay its bonds it’s going to affect a lot of retirees, so balancing the budgets is not about, ‘We want to be against teachers,’ or ‘We want to be against the police.’ It is really a problem for all of us.
Robert Peyreigne: We’re spending too much money on things we really don’t need. We either need to raise taxes—which I am highly confident no one at this table is in favor of—or we need to reduce spending. It is one or the other, and in this country right now we have people who scream on both ends of the spectrum. The left screams, the right screams, and the middle just sits there and goes, ‘I can’t listen to them.’
Greg Rand: I actually think we’re at a point right now where the people in the middle are screaming, also.
Robert Peyreigne: However, when you ask people what do you want to do about it, you get: ‘Oh, don’t cut my water district because my cousin is head of the water company,’ and ‘Don’t close that school because that is right by my house,’ or ‘I know the police chief and I don’t want the Ossining department cut.’
Keith Safian: Yes, ‘I can talk my way out of a ticket with the local village police, and that’s why I like having a separate police.’
Melinda White: Would you rather pay a hundred-and-fifty dollars for your ticket, or would you rather your taxes be fifteen-hundred dollars more a year for the next twenty years because you have to pay that person’s salary?
Robert Peyreigne: It’s all about services and amenities. There is no Fairfield County Medical Center. They don’t have an abundance of county parks for people to go play golf. They don’t maintain six or seven beaches; they don’t have a Rye Playland, and there is no county police force. So there’s a lot of stuff that exists here in the infrastructure that doesn’t exist in other places, and you can say, ‘Wow, in Connecticut taxes are low,” but they don’t have all these things. People have to figure out what they are willing to do without.