Bloomberg Businessweek Weekend - August 29th, 2025

24:28This is according to Bloomberg Economics. It's up from 13.3 percent earlier and significantly higher than the 2.3 % in 2024 before President Trump took office. Just today, the latest, the president imposed a 50 % tariff on Indian goods to punish the country for buying Russian oil. That's the highest tariff in Asia. I'm wondering how you're looking at the fraying relationship between the US and India and what's at stake more broadly when it comes to this tariff.

24:56Carol Massar:Unfortunately, what we should understand, and my colleagues at the Budget Lab are hard at work, by the way, updating our estimates with respect to what happens to the effective tariff rate and what happens to the type of revenue that we're going to see coming into this country. But roughly speaking, you've seen about an eightfold increase in the average effective tariff rate over the course of the last eight months of this administration, bringing in about $3 trillion of revenue into the country over the course of the next decade. Importantly, and this goes a bit to your point, Tim, it's never been super clear to me what exactly the objective is of this type of trade policy and where exactly it is that the administration is hoping to land.

25:38Carol Massar:Because part of what you've seen articulated is that this is really about sort of China and national security and being sure that our adversaries are held at bay. In that environment, you really are quite worried about the idea of alienating allies and being particular with respect to not just India, but if you think about Canada and Mexico and other countries where traditionally they've been very strong allies of the United States. And in fact, we've been encouraging of more manufacturing to shift, particularly to India and Vietnam, exactly because it shifts away from China. And so a little bit feels like this policy has been kind of in co-hate and all over the place.

26:17Carol Massar:And it's hard to analyze exactly why it is we're doing what it is that we're doing in order to be able to try and judge any success. What I can say is, as a result of the tariffs so far, prices are going up and going to go up further. The economy is going to be smaller. And it doesn't seem like a win from the perspective of the American consumer or from American businesses. I'm glad you brought that up because I'm curious if you think this will undo all the years of goodwill that the U.S. and India have built. Well, I think that I'm worried about, frankly, is that you are in a situation where we are very exposed to particular relationships that it's taken to, and this actually relates to our conversation about the Federal Reserve in that a lot of the sort of goodwill that you're describing are things that it's taken decades across administrations to try and build the types of working relationships with our allies that have made us this global hegemon and have made us a real marker of stability in the economy, a place that other countries want to invest in and other investors, both domestically and internationally, are keen to spend time in and around.

27:26Carol Massar:And so what you worry about in some sense is not just are you alienating one particular ally or are you moving us, sending some other countries closer into the arms of China? Of course, you're worried about all of that. But also, I think what you're worried about is the general sort of chaos of not exactly knowing where these tariffs are going to land, not knowing if it makes sense to try and shift part of your manufacturing supply chain into India, because if India's effective tariff rate is 50 percent, it's no longer the type of place where you're going to want to be pursuing a lot of that type of business.

28:01Carol Massar:So I think it makes decision making really complicated for the United States and for the businesses that are in this country. And it also runs real risks geopolitically that are pretty concerning. I promised we'd go everywhere. We have a few minutes left and I want to talk a little bit about the labor market and productivity in the context of record low birth rates in the United States, immigration that has come down quite a bit during this administration and what it means for a workforce moving forward. How do you weigh those two things? It's so interesting because I was actually talking to some colleagues at the or some friends who work at the Congressional Budget Office who have said that one of the reasons why you have productivity growth over the course of the next decade, that their estimates are going to average in the 1.82 % range, sorry, GDP growth in the 1.82 % range over the course of the next 10 years is precisely because it's on the back of an increase in labor supply that comes from immigration.

29:07Carol Massar:And the reason why that's so important is because, as you're describing, Tim, we have an aging population in this country. So a big chunk of people are going to age out of the labor force. It's really important that you have that supply coming in. In a world in which you don't have that supply coming in meaningfully, and you've kind of shut down pathways to immigration, as you've seen policy-wise over the course of the last many months, you start to lose a very significant driver of labor force growth, and And then you start to lose a very significant driver of productivity and broader economic growth.

29:37Carol Massar:But with AI investment booming, do you think that AI will be able to offset the lack of workers, whether in relation to immigration, the supply of workers that we have or are we facing right now? It's kind of hard to answer that question right now in some sense, because it's hard to know exactly what to make of the very significant capital expenditure investments we're seeing in AI. and hard to know what to make about the role that AI is having in the labor force thus far. There's a great new paper by Eric Verlnaston and co-authors where they look at the extent to which you're actually starting to see displacement in the labor force that has to do with artificial intelligence and its growth and usage across different sectors of the economy.

30:22Carol Massar:And they do find that you're starting to see, particularly for younger workers who are in the most exposed industries, you're starting to see actual impacts with respect to their possibilities of labor force entry. And so I do think that there is going to be an effect here that's meaningful. It's just really kind of early innings with respect to this type of productivity change and shift and early innings with respect to knowing whether AI is really a complement or a substitute for other aspects of the labor. Our thanks to Natasha Serin, president and co-founder of the Yale Budget Lab. Still ahead on Bloomberg Businessweek, more on the economy with the CFO of the fast casual chain Kava, who weighed in on the so-called fog affecting U.S.

31:05consumer.

31:26Carol Massar:and freed thousands of hours for strategic work. Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business, IBM. Let's talk about healthcare for a second. It doesn't always work the way people expect it to. If you've ever waited on a prescription refill or had a hard time getting the care you needed, you know the feeling. The system should just work better for everyone. That's exactly what the people at Optum are trying to do every day. They're a healthcare company linking patient care and pharmacy services and using data and technology to drive the whole system so care is connected, not complicated, for patients and providers.

32:06Carol Massar:Things like making it easier to get care that looks at the whole person, from primary care doctors to mental health support and even in-home care, and then using technology to make sure they all work together. Technology designed to help doctors spend less time on busy work and more time with their patients. And those prescriptions, Optum is working to bring costs down, save patients money, and make it easier to get refills. Little by little, Optum is helping make healthcare work as one for everyone. Head to business.optum.com to see how. As industries evolve faster than ever, companies need an environment that accelerates strategic growth.

32:44Carol Massar:And Michigan delivers on that promise. From emerging startups to global enterprises, Michigan offers what executives value most, a resilient, innovative ecosystem, diverse communities that attract top talent, and a quality of life that supports work-life balance. With our unified Team Michigan approach, businesses scale faster and compete at the highest level. Michigan, pure opportunity. Seize your opportunity at michiganbusiness.org. This is the Bloomberg Tech Minute brought to you by ChatGPT. Now with ChatGPT Work. I'm Carol Masser. Globetrotters hunting for airfare bargains are in for a rude awakening, as the days of stumbling across a cheap seat on a popular flight could soon disappear.

33:26Carol Massar:Bloomberg's Juan Ha reports that airlines from Delta to Virgin Atlantic are adopting artificial intelligence to change seat prices more quickly by weighing dozens of variables in real time, helping capture more revenue while shrinking pricing gaps that once allowed travelers to find bargain fares. Machine learning models can more accurately forecast demand by analyzing historical booking patterns, seed inventory, and seasonal trends, while also continuously tracking competitors' fares and capacity changes to update prices in near real time. The technology could lead to higher fares on busy routes as airlines pack flights closer to capacity, but may also result in lower fares on off-peak and lower-demand routes.

34:08Carol Massar:That's the Bloomberg Tech Minute brought to you by ChatGPT. Put ChatGPT to work on your most ambitious ideas and projects. Get started at ChatGPT.com today by selecting Work Mode, available on Plus and Pro plans.

34:25Carol Massar:This is the Bloomberg Business Week Daily Podcast. Listen live each weekday starting at 2 p.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York station. Just say, Alexa, play Bloomberg 1130. Earlier this month, Kava reduced its outlook for sales growth this year, causing its stock to drop 22 % just in a single day. The fast-casual chain foresees a potential 20-basis point impact on margins from President Trump's tariffs in the second half of the year, as import costs for items such as Australian beef or Greek olives have gone up.

35:04The restaurant industry as a whole is feeling the effects of inflation and a slowing economy. Specifically, about so-called fast casual chains feeling a bit of pain. Shares of Chipotle and Sweetgreen have also each sunk around 20 % or more since reporting lackluster second quarter earnings. We wanted an update about what Kava is doing. For that, Bloomberg News Equities reporter Nora Melinda and I turn to Trisha Tolliver, chief financial officer at Kava. Also joining us was Bloomberg News senior editor Nina Trentman. Trisha, I want to start with the consumer because on the earnings call last week, you said, quote, quote, we're operating in a fluid macroeconomic environment, and it's one that sort of creates a fog for consumers during those times they tend to step off the gas.

35:46Are things getting at all less foggy? Are they putting their foot back on the gas?

35:51Carol Massar:Well, certainly in the environment, it's still a little fog out there and the consumers are doing the best that they can to navigate it. But what we're here at Kava is to make sure that we're delivering great value for the consumer with amazing cuisine and wonderful hospitality. And we believe when we do that well, the consumers want to keep coming back. So we want to do everything that we can to make sure that we are delivering a value for them so that if they're in a fog that they want and they want to enjoy a meal out, they want to come to Cava. And we believe we've positioned ourselves to do that.

36:20Trisha, thanks for joining us. And to follow up on that, just wondering why do you think your stock sold off so much after the results? Like, of course, I know you have strong comparisons. You grew a lot in recent years. So probably tough comparisons is a better word to say it. But why is the stock down so much?

36:37Carol Massar:Yeah, you know, hard to say. The stock market goes up and the stock market goes down. We're always focused on the long term and certainly making sure that we keep in mind those strong results that we were lapping as we entered into this year. So over the last three years, we've driven traffic 20 percent. And our two year same restaurant sales growth were over 16 percent and three year at about 35 percent. And so those are really strong dynamics and really reflecting the strength of Kava and how much the consumer loves the brand and wants to continue to be with us. So the reflection of the Q2 comps was more of an anniversary or lapping over some of those higher results in the prior year.

37:16And just wondering if we're thinking about the remainder of the year and also next year, of course, we'll see how that plays out. But I'm wondering, how far are you prepared for a slowing economy in which also a consumer might make changes to their preferences in terms of where they eat, how much they spend, how often they eat out?

37:35Carol Massar:Yeah, one of the things that we do know is consumers love innovation. And certainly at Kava, we're prepared for that over the upcoming quarters. Coming soon, we'll have chicken shawarma in our restaurants, which is a hand-stacked, spit-roasted white meat chicken. That is a new offering in our restaurants in September. And then closely following that will be our cinnamon sugar pita chips that are coming. Pita chips are a fan favorite for us, and we look forward to bringing them with a little side of honey to our guests later on this year. So those things, coupled with great service and incredible hospitality, really create an opportunity for guests to enjoy us and experience that newness that they so desire.

38:16So the goal is basically to also have new menu items on the calendar so that you basically have something that draws people in, potentially offsetting any weakness you might see.

38:28Carol Massar:Certainly a robust calendar with culinary innovation as well as continued execution and enhancements to our loyalty program, which are already planned for later this year. And right now, we've got some excitement in our restaurants. We partnered with Daddy's Coats, who was a former employee of ours, to create a plushie that is our pita chip plushie, which has created a lot of buzz and excitement. Even my mom down in Florida reached out to me and saw it on Instagram, which I was surprised. Nearing 80, she was in tune to what was going on. And she went to go find them in her market in Palm Harbor and was unable to find them.

39:06Carol Massar:They were already sold out. So making sure we're culturally relevant with great cuisine is a combination that we think will be successful. So I need to hear more about this plushie. Is it a Lububu? It is our version of a Lububu. So as I mentioned, we partnered with the creator of Hippie Potter. And he did work at Cava at one point in his career. And now he's a New York City-based creator. It's super cute. I encourage you to go take a look and see if you can find them if they're still left where you are. Well, Tricia, it sounds like you all are finding really interesting ways to get more creative during this uncertain time period.

39:42Carol Massar:What about any sort of price softening? Are you all thinking about bringing down the price point at all to meet consumers where they are? You know, price has been something we've been focused on for a very long time. So over the past five years, from the end of 19 to the end of 24, we raised our menu prices about 15 percent and CPI went up 23 percent. So we were 8 percent below CPI. And I believe, as you know, in the fast food place, prices went up during that time period over 30%. So we're always focused on creating strong everyday value for our guests. And we believe we're positioned to do that.

40:18Carol Massar:So in 2025, we've raised menu pricing less than 2 % at 1.7%, well below CPI for food away from home. And again, wanting to be thoughtful. At Kava, we have very robust restaurant level margins. And we want to make sure that we're reinvesting those margins back into team members and into guests. And one way we do that with our guests is to minimize price increases as much as possible. Tricia, just talk to us a little bit about the impact of tariffs. I know that you import beef from Australia. You also import olives from Greece. So I would assume there's some price impact from tariffs. Will you pass these on to consumers?

40:57And how about price increases next year?

40:59Carol Massar:Yeah, so we do receive some items from overseas and we have an excellent supply chain team that has really navigated this very fluid environment regarding tariffs and minimize the impacts as much as possible. But we have no plans for the rest of 2025 to pass along any price increases to absorb any tariff impact that we might experience. And we're looking thoughtfully at 2026. I know it's a supply chain question, but you're the keeper of the books. So there's obviously a reason you're importing some of these things. Could you buy U.S. beef rather than import it? We do buy U.S. beef. So we have a blend of U.S.

41:38Carol Massar:and Australian beef, and there's no antibiotics ever added. But could you exclusively buy U.S. beef? We think it's important to have a balanced, scalable supply chain strategy and having a very diversified base of suppliers with high quality ingredients is the best path forward for us. always exploring what options are, but want to make sure that we're in a position for the long term to provide these high quality ingredients to consumers each and every day. We're speaking with Kava's CFO, Tricia Tolliver, joining us from Baton Rouge, Louisiana. I want to talk a little bit about automation and ways that you can save costs within the restaurant.

42:14What can you tell us about ways you're exploring automation that consumers don't yet see, whether that's in the ordering process, whether that's in the delivery process and actually bringing that food to the consumer who's waiting for it, or if it's actually in the preparation process.

42:28Carol Massar:Yeah, so always looking at ways to make our team members' lives easier, really be more efficient in our restaurants, and also creating a better guest experience. So one example in our Connect to Kitchen platform of automation is leveraging our kitchen display systems, so KDS. And so we're adding those systems to over 200 restaurants across our fleet. And what that does is allow our team members to fill orders more accurately and efficiently. So finding a better, creating a better guest experience and delivering your bowl the way you've ordered it is super important. And that's something that we're focused on.

43:03Carol Massar:And this should also increase efficiency in the restaurant overall. Another way is, you know, even more simply and not automation is making sure that we find ways to make things more efficient in the restaurant. So a little while ago, we got all of our pita chips. We used to slice them in-house to make our pita crisps and worked with our partners to slice them ahead of time so that we remove that complexity out of the restaurants themselves. We also have explored and recently entered into an investment with a company called Hyphen to look at ways to automate our second digital make line. So we're in very early stages of that.

43:39Carol Massar:But think of a world where the team member can prepare bowls and pitas at the top of the line, and there could be automation underneath the line to prepare those bowls, creating greater efficiency in the restaurant. We don't plan to ever do that on the front of our line. We think human connection is so important. And the way we leverage technology is to enhance the human experience and not replace it. Tricia, you talked about all the ways that you are trying to make the space more inviting for customers. Do you all have any plans for maybe celebrity partnerships or any sort of advertising and marketing in that sense?

44:14Carol Massar:You know, in the first quarter of 2025, we partnered with Gabby Thomas on our campaign during that first quarter of the year and really liked the opportunity for Gabby to talk to us about how she loves our food and how it fuels her and highlighted our spicy lamb meatballs. So when it makes sense, we want to lean into different partnerships, but it has to be something that's really authentic and something that really means something to both us and the person that we're associated with. Tricia, one more question from me. I'm just wondering in terms of planned growth of the company, I know that you're expanding and you have upped your plan for new stores.

44:52I'm just wondering how you're thinking about construction costs on the back of tariffs, and also are you hiring new people at this point?

45:00Carol Massar:So our new growth is very robust. This year we expect to open 68 to 70 new restaurants. And much like the supply chain team, our design and construction team has done an incredible job navigating tariffs. And we're not expecting any impacts to our overall costs of our restaurants that we open. In some cases, they were able to minimize or offset some of the impacts by ordering because of our strong balance sheet, leveraging our balance sheet to pre-order items to make sure that we weren't as exposed to tariffs as we might be. So the team's done a great job. And as we grow, we anticipate that we will have needs to continue to support that growth as we move forward.

45:40That was Tricia Tolliver, CFO of Kava. Our thanks also to Nina Trentman, Bloomberg News Senior Editor and writer of the Bloomberg CFO Briefing Newsletter, Nora Melinda, joining us in our next hour as well. That wraps up the first hour of the weekend edition of Bloomberg Business Week from Bloomberg Radio. Ahead in our next hour, we check in with two mayors about how they're tackling challenges and creating opportunities for their communities.

46:03Carol Massar:Yes, well, Gary is one of those historic cities that helped build this nation, of course, founded in the early 1900s and 1906 by U.S. Steel. Gary works. The U.S. Steel plant is the reason why Gary even exists today. We sit on the southernmost tip of Lake Michigan. like you mentioned in your opening remarks about 30 minutes from downtown Chicago so our logistics and proximity in the midwest is is very unique plus from puck stopper to power starter new york rangers legendary goaltender mike richter on helping businesses transition to clean energy i've always had an interest in the environmental world and energy in particular and that intersection between finance and energy is a massive one.

46:51It's only grown in the last two decades. So the stop at Yale was excellent. It helped me position myself and have a segue from one world to another. This is Bloomberg Business Week. I'm Tim Stenevek. Stay with us. Today's top stories and global business headlines are coming up right now. So there's a lot of noise about AI,

47:12Carol Massar:but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now, a global workforce of 300 ,000 can use AI to fill their HR questions, resolving 94 % of common questions. Not noise. Proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business. IBM. Let's talk about healthcare for a second. It doesn't always work the way people expect it to. If you've ever waited on a prescription refill or had a hard time getting the care you needed, you know the feeling.

47:50Carol Massar:The system should just work better for everyone. That's exactly what the people at Optum are trying to do every day. They're a healthcare company linking patient care and pharmacy services and using data and technology to drive the whole system so care is connected, not complicated, for patients and providers. Things like making it easier to get care that looks at the whole person, from primary care doctors to mental health support and even in-home care, and then using technology to make sure they all work together. Technology designed to help doctors spend less time on busy work and more time with their patients.

48:24Carol Massar:And those prescriptions? Optum is working to bring costs down, save patients money, and make it easier to get refills. Little by little, Optum is helping make healthcare work as one for everyone. Head to business.optum.com to see how. As industries evolve faster than ever, companies need an environment that accelerates strategic growth. And Michigan delivers on that promise. From emerging startups to global enterprises, Michigan offers what executives value most, a resilient, innovative ecosystem, diverse communities that attract top talent, and a quality of life that supports work-life balance.

48:59Carol Massar:With our unified Team Michigan approach, businesses scale faster and compete at the highest level. Michigan, pure opportunity. Seize your opportunity at michiganbusiness.org. This is the Bloomberg Tech Minute brought to you by ChachiPT. Now with ChatGPT Work. I'm Carol Masser. Globetrotters hunting for airfare bargains are in for a rude awakening, as the days of stumbling across a cheap seat on a popular flight could soon disappear. Bloomberg's Juan Ha reports that airlines from Delta to Virgin Atlantic are adopting artificial intelligence to change seat prices more quickly by weighing dozens of variables in real time, helping capture more revenue while shrinking pricing gaps that once allowed travelers to find bargain fares.

49:43Carol Massar:Machine learning models can more accurately forecast demand by analyzing historical booking patterns, seed inventory, and seasonal trends, while also continuously tracking competitors' fares and capacity changes to update prices in near real time. The technology could lead to higher fares on busy routes as airlines pack flights closer to capacity, but may also result in lower fares on off-peak and lower-demand routes. That's the Bloomberg Tech Minute brought to you by ChatGPT. Put ChatGPT to work on your most ambitious ideas and projects. Get started at ChatGPT.com today by selecting Work Mode.

50:21Carol Massar:Available on Plus and Pro plans. You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business App. Or watch us live on YouTube. Plenty ahead in our second hour of the weekend edition of Bloomberg Business Week, including a lineup of mayors from across America's cities, touching on topics from housing affordability to rebuilding financial opportunities to even the president's threats of deploying the National Guard. Plus, he's a U.S. Hockey Hall of Famer, a three-time NHL All-Star, a Stanley Cup champion, and now he's dedicated to saving the planet one efficiency measure at a time.

51:07New York Rangers legend Mike Richter joins us later this hour. First up this hour, as you know from listening to or watching our program, we love talking to mayors across the U.S. They're the ones on the front lines of this economy, and they see how policies from Washington are affecting Main Street and their communities. I mentioned a rotation of mayoral voices. First up, Eddie Melton. He's the mayor of Gary, Indiana. It's just 25 miles from Chicago, and it's known for a once-thriving steel industry. Also once the second-largest city in Indiana. But as the steel industry has declined, so too did its population and the incomes of its residents.

51:43Now the median household income in the city is about$35 ,000. That's according to the U.S. Census Bureau, compared with the median of$69 ,000 in the state. Speaking with Carroll and Bloomberg TV anchor Matt Miller, Mayor Melton says that Nippon Steel's deal with U.S. steel is central to reviving the U.S. steel industry. Yes.

52:03Carol Massar:Well, Gary is one of those historic cities that helped build this nation, of course, founded in the early 1900s and 1906 by U.S. Steel. Gary works. The U.S. Steel plant is the reason why Gary even exists today. We sit on the southernmost tip of Lake Michigan, like you mentioned in your opening remarks, about 30 minutes from downtown Chicago. So our logistics and proximity in the Midwest is very unique. So a lot of progress has been happening. We know that the downturn of the economy in the steel industry over the past 40 to 50 years, automation, U.S. Steel at its height had nearly 30 ,000 employees.

52:48Carol Massar:And right now we're about 4 ,000 employees, still one of our largest employers. but recently many of you already know the deal between the pond steel and u.s steel was on the table now that the deal has been finalized the pond will be investing nearly three billion dollars in the gary works plant estimating a little bit close to a thousand new jobs and that's going to help us in our resurgence back in the local and national economy i guess it's not a bad thing. I'm from, Mayor, I'm from Ohio, so I have seen a lot of Japanese-owned businesses do really well, employ a lot of Americans, make great products.

53:33But what does it mean to you that a company like U.S. Steel is now going to become a wholly owned subsidiary of a Japanese company?

53:43Carol Massar:Well, we know that U.S. Steel is an iconic brand. It's still an American company in my eyes and many of the eyes of those that are close to the city and to this deal. And I've been in close relationship with leadership at Nippon, with President Ono San, who is in the Nippon America president, chairman of the board, Chairman Mori San, who is extremely passionate about investing not only in the steel industry, but also in our communities in Mount Valley and Gary and Alabama and Arkansas, so many other places where U.S. still has a footprint. And we know from a national security perspective, Japan is one of our closest allies.

54:29Carol Massar:So like you mentioned, the investments in other businesses that they've done around the country, it just makes sense that U.S. Steel at one point was the number one steel producer in the world. Right now, they're ranked 24th. But Napan is already ranked number four in the world. So this collaboration and this partnership, I think, is going to yield tremendous outcomes on steel production, securing good union jobs, but also making sure that national security is still strong and vibrant and local communities will thrive. You know, from certainly doing some of these city leadership programs and city programs, and certainly anyone familiar with the programs that Bloomberg is involved in, in that a strong economy for a city is not just necessarily one industry, right?

55:23Carol Massar:You want diversification. Talk to us about what you're doing on that front. I know you've got the Hard Rock Casino, you've got some other things certainly there in the area, but talk to us about how important it is to maybe diversify the economy as well to provide for longer economic momentum. Yeah. So for so many years, the city had been dependent upon a steel industry. I've been very intentional on diversifying that. I was state senator for nearly eight years here in Indiana, representing Gary in Northwest Indiana, served as ranking minority on appropriations. So I'm very passionate about the economy from a macro and micro level.

56:06Carol Massar:But we're also in a very good and strong position of growing transportation and logistics in the city of Gary and Northwest Indiana in the Chicagoland area. For example, the city of Chicago and the city of Gary, we have a partnership with our very own airport, the Gary Chicago International Airport, which is primarily private as well as cargo. And we are doing great works in our partnership with UPS currently. Just recently, we have a developer that's partnering with FedEx to build a 300 ,000 square foot facility, a warehousing location right in the footprint near our airport, but also a deep water seaport in Buffington Harbor that made it available for shipments of goods and things of that nature that we're looking to partner and collaborate around dealing with trade.

56:57Carol Massar:And this airport sits right in a foreign trade zone. So not a lot of communities can say or share the logistics that we have when it comes down to transportation by 90 i-65 every major corridor if you look up and it says indiana is the crossroads to america which is one of our taglines and you look at the rail lines the highways the byways in gary we're definitely at the heartbeat of that so transportation logistics is tremendously a great opportunity. Tourism and hospitality right now, as you mentioned, our partnership with the Hard Rock has been solidified where Hard Rock has built a brand new casino on 8094, which is at the gateway and corridor going into the Illinois border.

57:42Carol Massar:But right now we've invested in a future partnership with the Hard Rock to build a brand new convention center to build out an entertainment corridor for Northwest Indiana. So$140 million investment that's going to be going into that gateway. Harrock is in preparation to build a new hotel at that gateway and corridor, along with other private developers that we're going to build at the same time to build that out. We are talking right now with, for those of you just joining us, with Mayor Eddie Melton, the mayor of Gary, Indiana, and a famous worldwide at one point for the Gary Steelworks and the city itself, the birthplace of the Jackson family, of course.

58:29I think the first major city with a black mayor, I believe, in the late 60s. And Mayor Melton, you have done some things. You've cut homicides in Gary. You've stabilized city finances in Gary. and you've reversed the population decline. How have you managed to do that? And I was going to ask how you keep up momentum, but how have you even done that to begin with, especially reversing the population decline? That seems like a huge step for any city, but certainly for Gary, Indiana.

59:03Carol Massar:Yeah, it's a collaboration, a partnership. We have a really good team. One of the things that I learned being a part of the Harvard Bloomberg program is, and this is something that Michael Bloomberg came and shared with us, is you have to build a good team first. And that was something I was very passionate about. I was one of the cohorts of 2024 of new mayors to help that Bloomberg helped build our 100 day plan with us. And this is the fruits of that labor. Right. So from the population decline aspect, we've done things to make it smarter and easier to build in the city of Gary. Home values are starting to increase significantly.

59:44Carol Massar:We've seen an increase in our building permits, individuals investing in real estate, coming to flip old and abandoned homes, but also building new construction as well. So Indiana University Northwest recently did a white paper that said for the first time in 50 years, Gary's population has grown. Not a significant growth, but it's definitely incremental growth, a little bit close to 600 new residents. But you got to think about it. We were losing hundreds of residents for decades. So we're definitely proud of that. When we talk about the homicide approach, sadly, when I was growing up, Gary had the stigma of being a dangerous place or, quote unquote, murder capital.

1:00:29Carol Massar:This is one of those stigmas that other communities have had as well. Well, that's not the case anymore. I think when you look at the work that we're doing on violence prevention, workforce development and training, collaborating with our schools. Right. And actually policing smarter using technology. All of that has played a part in that, but also great leadership with our new chief of police. Mayor Milton, I just want to ask you in just about 40 seconds. Indiana has come up as one of the possible states that could do redistricting mid cycle. J.D. Vance, the vice president, is going to Indianapolis.

1:01:03Carol Massar:Plus, I believe it's tomorrow. What impact might redistricting have on your efforts to revitalize your city? Well, I've always looked to be a bipartisan elected official. But I don't know how much more power they will want in the state of Indiana that they already currently have a supermajority. This is simply to win more congressional seats and to bring back the legislature right now. I don't know if that's going to be the best use of tax dollars. That was Eddie Melton, the mayor of Gary, Indiana, along with Carroll and Bloomberg News TV anchor Matt Miller. Another mayor who's been in the news lately is one who's a little closer to home for those who live in the tri-state area.

1:01:45Ahead of New York City's upcoming mayoral election in November, Mayor Eric Adams sat down with Bloomberg News senior reporter Miles Miller to address President Trump's threat to deploy the National Guard in New York, like he's done in Washington, D.C.

1:01:59Carol Massar:The partnership between the federal government and the city and state governments is extremely important. And I think there's a role we need. My role is to make sure New Yorkers are safe and the numbers are shown we're doing that. And the partnership of making sure guns don't come into our city. And that's what we want to continue to do with the federal government. We already collaborate with the federal government every morning, 10 a.m., with HIDA, city, state, and federal authorities, to go after shooters and those who bring guns into our cities. We are very clear, always have been, I have never moved away from the public safety.

1:02:35Carol Massar:That's the prerequisite to our prosperity. And we're going to continue to do an amazing job. And if the federal government wants to communicate with us and ask us to go to other municipalities and help them see what we're doing, we're willing to do that. because it's safe. America is a safe New York City, and we want to help any way we can. You're listening to Bloomberg Businessweek. Coming up, we stick with the mayors of America and check in with the mayor of New Rochelle, New York, on tackling housing affordability. That's next. This is Bloomberg.

1:03:07The thing about AI for business, it may not automatically fit the way your business works.

1:03:12Carol Massar:At IBM, we've seen this firsthand. But by embedding AI across HR, IT, and procurement processes, we've reduced costs by millions, slashed repetitive tasks, and freed thousands of hours for strategic work. Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business, IBM. Let's talk about healthcare for a second. It doesn't always work the way people expect it to. If you've ever waited on a prescription refill or had a hard time getting the care you needed, you know the feeling. The system should just work better for everyone.

1:03:50Carol Massar:That's exactly what the people at Optum are trying to do every day. They're a health care company linking patient care and pharmacy services and using data and technology to drive the whole system so care is connected, not complicated, for patients and providers. Things like making it easier to get care that looks at the whole person, from primary care doctors to mental health support and even in-home care, and then using technology to make sure they all work together. Technology designed to help doctors spend less time on busy work and more time with their patients. And those prescriptions? Optum is working to bring costs down, save patients money, and make it easier to get refills.

1:04:28Carol Massar:Little by little, Optum is helping make healthcare work as one for everyone. Head to business.optum.com to see how. As industries evolve faster than ever, companies need an environment that accelerates strategic growth, and Michigan delivers on that promise. From emerging startups to global enterprises, Michigan offers what executives value most, a resilient, innovative ecosystem, diverse communities that attract top talent, and a quality of life that supports work-life balance. With our unified Team Michigan approach, businesses scale faster and compete at the highest level. Michigan, pure opportunity.

1:05:04Carol Massar:Seize your opportunity at michiganbusiness.org. This is the Bloomberg Tech Minute brought to you by ChatGPT. Now with ChatGPT work. I'm Carol Masser. Globetrotters hunting for airfare bargains are in for a rude awakening as the days of stumbling across a cheap seat on a popular flight could soon disappear. Bloomberg's Juan Ha reports that airlines from Delta to Virgin Atlantic are adopting artificial intelligence to change seat prices more quickly by weighing dozens of variables in real time, helping capture more revenue while shrinking pricing gaps that once allowed travelers to find bargain fares.

1:05:41Carol Massar:Machine learning models can more accurately forecast demand by analyzing historical booking patterns, seat inventory, and seasonal trends, while also continuously tracking competitors' fares and capacity changes to update prices in near real time. The technology could lead to higher fares on busy routes as airlines pack flights closer to capacity, but may also result in lower fares on off-peak and lower-demand routes. That's the Bloomberg Tech Minute brought to you by ChachiPT. Put ChachiPT to work on your most ambitious ideas and projects. Get started at ChachiPT.com today by selecting Work Mode, available on Plus and Pro Plans.

1:06:24Carol Massar:this is the bloomberg business week daily podcast listen live each weekday starting at 2 p.m eastern on apple carplay and android auto with the bloomberg business app you can also listen live on amazon alexa from our flagship new york station just say alexa play bloomberg 11 30 well housing is an issue all over the country we know this there's not enough of it it's too expensive because there's not enough of it. And politicians at the national level only have so much control thanks to local zoning laws and the reality of local politics. So what is a city to do? New Rochelle just outside of New York City is trying to buck the trend and build homes.

1:07:07We're joined by the mayor, Yadira Ramos Herbert. She's a Democrat of New Rochelle. She joins us here in the Bloomberg Interactive Brokers Studio. We should note that the city of New Rochelle has received funding as part of the Bloomberg Philanthropies Mayor's Challenge, and the mayor has participated in various Bloomberg Philanthropies programs.

1:07:26Carol Massar:Mayor Ramos-Herbert, thanks for being here. Thank you for having me. As we've been discussing, we know the U.S. housing supply and affordability really remains a prominent issue for so many Americans who are looking to find a place to live. Tell us a bit more about what you're doing in the city of New Rochelle, which, of course, we know is only about 17 miles away from where we're sitting right now in midtown Manhattan. And what are you all doing to address some of these concerns? Absolutely. So back in 2015, New Rochelle set up what we now call the New Rochelle model, a form-based zone code. Essentially, the city council, in partnership with RXR and working with residents, really sat down and took a look at where can we build?

1:08:02Carol Massar:And what do we need to do to streamline processes, sort of front load some of the environmental reviews and processes, so that when developers come in, they can be approved in as little as 90 days, break ground, and essentially start leasing out in three years. 90 days. I mean, that's like a different language than we're like a different reality than we're used to if we're talking about development. Just contextualize that for us. How long would it typically take if you if you weren't able to fast track this? I mean, I guess anywhere from five to 10 years. Yeah. OK. I mean, within the last 10 years and not years.

1:08:34Yeah, exactly.

1:08:35Carol Massar:Exactly. You mentioned RXR. Talk a little bit about public-private partnerships here and how you view as mayor the need to partner with for-profit companies in order to get this done. Absolutely. It's been a key to what's allowed it to be successful. Those resources allow us to invest in our community without raising property taxes. We worked with the community here. What do you want to see in New Rochelle? And through our public-private partnership, we've enhanced plazas, we've brought murals, we've increased EV charging stations, We've bought a black box theater right to our main street. We're opening parklets.

1:09:07Carol Massar:And so really working together, providing assurances to developers, everybody essentially wins. Never mind that rents are actually holding steady and actually decrease the median rent in 2020 to 2023 at a rate that's unheard of in the region. So what have been some of the challenges? Of course, this isn't something I imagine had to have been easy to accomplish. So what were some of the challenges that you all experienced as you were trying to deliver a world, an area, a city in which things are a bit more affordable? Sure. I mean, what's really wonderful is when this started, I wasn't on the city council.

1:09:36Carol Massar:I was a mom of two kids. So I was the resident sort of being like, I want to see stuff in the downtown. I want to know what's going on. I think change is hard. Right. And right now I kind of call it like our teenage years, you know, where two thirds of our buildings have been approved. We've authorized 11 ,000 units, 11 ,000 kitchen table moments and about two thirds have been authorized and leasing up. And so there's construction and there's noise. And maybe with the right turn you make for coffee, you have to make a left and wait a few more minutes at the light. But it's staying engaged with the community and reminding them there are little tangible assets in our downtown that did not exist six years ago.

1:10:08Carol Massar:Never mind, again, contributing to the housing and other investments we've made surrounding the downtown. What have been the politics of this? Because when we talk about zoning and we talk about the idea of building more dense and affordable housing or just more housing, people, I guess I could rephrase this. People love to complain that housing is too expensive. But then when it comes to actually building that housing, if it's put up to a vote, they strike it down. Not in my neighborhood. They don't want it. I understand. Well, it depends on it depends on where you live, because that has to do with zoning.

1:10:37And that might not actually be up to you in certain parts of New York City. It's not necessarily up to us. And we've seen we've seen that play out. But politically, this stuff can get really charged. What do they think of it?

1:10:47Carol Massar:Absolutely. I mean, it's the forum based zone coding essentially allows the city council, the elected officials to set the scaffolding and sort of pinpoint where, and then hands off. The professional staff actually close the deal. We have a council manager form of government. So our city manager, our commissioner of development, we have an industrial development agency that really work out the nuances, the financial elements of it, and the projects are authorized. So again, when you decide to build a new Rochelle, there's assurances. You don't have to worry about a project being voted down the way maybe other regions and municipalities do.

1:11:16Carol Massar:If you fit the specs that we have already identified, again, the council working with the staff and the community, you have an assurance that you're going to be able to lease up within two to three years of breaking ground. So you mentioned that you spent a lot of time talking to the community, engaging with the community to see what they'd like to see reflected in the area. What are some of the things that they've been interested to see? Green space, of course, more space for kids to play, more dogs are a big hit. And so dog runs and opportunities for dogs to have space to kind of stretch their legs, I guess, leaving the apartment.

1:11:45Carol Massar:We are a huge lover of the arts. So as I mentioned, we have a black box theater that's going to open the first half of 2026. and we've added murals to the community. But the downtown development has also served as the catalyst for other parts of development. So we have a project called The Link. We're taking three lanes of a Robert Moses kind of project and making it a linear park, connecting parts of our farther out of our downtown to the actual downtown proper. We just approved a project, Pratt Landing is what we call it. It's going to give waterfront access in addition to a community asset in an armory, 99 condos, 100 apartment buildings and a hotel.

1:12:19Carol Massar:and we're revitalizing our train station. In three to five years, we'll be the only station in Westchester where with one seat, you can go to Grand Central or Penn. And so this development has allowed us to really respond to resident needs, concerns, and what they want to see in a really holistic way. So we like talking to mayors because everybody who listens and watches our program knows that. It's where the rubber meets the road when it comes to actually getting stuff done. For sure. Really being accountable each and every day to the people you serve because you see them out. You are there with them.

1:12:46Carol Massar:Catch us live on that. I'm wondering specifically about transportation and in an environment where you talked about, okay, well, if there is more density, if there is more housing, you might have to wait more when you take a right turn to get your coffee because the traffic has increased. Do we live in a world where we can realistically think that we could improve mass transit in small towns? Or have we shown that as a country, we just cannot make those investments? I mean, And look at California's high-speed rail and the failure that I think many people would say we saw there. So New Rochelle already has the privilege of being the second busiest line on the New Havens lines, second only to Grand Central, believe it or not.

1:13:24Carol Massar:And the majority of our buildings are actually being built around this transit-oriented development. We're also a hub to nine bus lines, county and city bus lines, so you can get to the Bronx or Yonkers right from the same transit center. And our development allowed us to invest in some micro-mobility options. We have something called the Circuit, which is an electric shuttle. You can call it like you call Uber. Absolutely free. and takes you to various parts of the city. We're a scooter nation as well. So micro-mobility and we're investing in bike lanes. The link will actually add bike lanes and connectivity in another way.

1:13:53Carol Massar:So I think based on our foundation, but also the way we've been able to expand, we are addressing transportation in a green way. That's interesting to hear that, like on a micro-mobility level, in addition to changing the way traffic patterns are. We're speaking with Yadira Ramos-Herber, the Democratic mayor of New Rochelle, joining us here in the Bloomberg Interactive Brokers Studio. As I mentioned, housing is probably one thing that Democrats and Republicans at the national level can agree on needs to be addressed. Their way of doing that doesn't necessarily fall in line with one another. They don't see eye to eye.

1:14:24We heard from J.D. Vance at the vice presidential debate last year talking about opening up federal land, for example, to build more housing. What is your advice to leaders around the country? Because you've been able to do this successfully as ways that other communities can do this.

1:14:39Carol Massar:I mean, I think some of the models that can be borrowed from it, streamlined processes. What are the pain points? Every municipality knows. You're essentially saying get rid of regulation. Streamline processes. Okay. How do you do that without getting rid of regulation? How do you make sure that environmental review, that you're not going to kill the sea turtles or whatever if you build here? So we did conduct an environmental review back in 2015 and in partnership with RXR. So it's not that we're getting rid of it. We're just front loading that process so that you have a sense already of if you choose to develop in this site, what are some of the issues?

1:15:09Carol Massar:What's the investment you're going to have to make to meet those kinds of codes? So I think that's one. We looked at a lot of underutilized sites. Some of our sites were like old parking lots that were not being used, that were in bad shape. You know, former schools that were closed, but the structure was still there. And so every municipal leader knows their community. They know their corners where there could be a little bit more energy and lights on. And that, but that in combination with streamlining processes, I think will allow some positive results for this on the housing front. So I want to go back to your earlier question just about what types of advice.

1:15:41Carol Massar:I mean, I know you mentioned like some of the things that you all are working on, but I would say, you know, more logistically, what type of advice would you give to other parts of the nation? Because not everywhere is like New Rochelle, of course. We were talking about L.A. We could talk about New York City here in Manhattan, Midtown. Sure. What is some advice that people can really take away here? I still stand by it. You know your corners. You know your blocks. You know the underutilized sites. You know where maybe it's like they're really business hasn't grown there. It really has. It's been empty.

1:16:07Carol Massar:There's lack of density. And I know it's tricky to say midtown Manhattan, right? If you're going to use that specifically, I appreciate where we are. But every leader knows every corner. I know every corner, every block and where to think about that. And so really thinking about what can be catalyzed. And again, we all know our own zoning and processes. Really being honest and holistically reviewing that, I think, will allow different communities to catalyze and also add housing in a way that helps to address the crisis that we're facing. You have a law degree. Yes. You're a litigator. Yes. In a previous life or currently, is this a job that you can do while you're mayor?

1:16:40Carol Massar:Yes. That's a great question. I would not be able to do it at the same pace that I did when I was a new lawyer. I was also an associate dean at Columbia Law School prior to becoming mayor. But I actually am looking to do a little bit of practice on the side. So it raises the question about your own future and how you think about your own political path forward. What's next for you? I don't think about my political path forward right now. The job is to make sure all 11 ,000 units, homes, kitchen table moments are catalyzed. It's to make sure the link launches. It's to see the Pratt Landing Project, the Waterfront Project.

1:17:14Carol Massar:And we also started something called the Vanguard Initiative. We are investing$2.25 million in small businesses. I want to turn on those lights on every one of those first floors in my downtown. That's my mission. That's the only thing I'm focused on right now. You don't think at all about a bigger platform? I love the portfolio that New Rochelle has given me. And that's really why I want to finish the job. And to think otherwise would take my distraction. When do you think the job will be finished? That's a great question. I mean, the link, you know, maybe I think within, I would argue within five to seven, we will see a significant transformative change in the downtown that can be measured through sales tax revenue and other initiatives and incentives coming to life.

1:17:51That was Yadira Ramos-Herbert, mayor of New Rochelle, New York. Bloomberg News cross-asset reporter Emily Grafeo joining me there as well. You're listening to Bloomberg Businessweek, coming up from saving pucks to saving the planet. How New York Rangers legend Mike Richter is looking to build bigger, better and more sustainable buildings. We are simply transferring heat. It's the idea of a cold beer in your hand on a warm summer day. There's a really a therm transfer, a heat transfer from that warm hand to the cold beer. The beer heats up, your hand cools down. We use the thermal mass of the earth to do that.

1:18:26And it sounds complicated, but it's just physics. And really, the general temperature of the Earth doesn't waver a lot once you go about four feet down below the frost line. The ambient temperature is about 55 degrees, and we take advantage of that. That's next. This is Bloomberg.

1:18:46The thing about AI for business, it may not automatically fit the way your business works.

1:18:52Carol Massar:At IBM, we've seen this firsthand. But by embedding AI across HR, IT, and procurement processes, we've reduced costs by millions, slash repetitive tasks, and freed thousands of hours for strategic work. Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business, IBM. Let's talk about healthcare for a second. It doesn't always work the way people expect it to. If you've ever waited on a prescription refill or had a hard time getting the care you needed, you know the feeling. The system should just work better for everyone.

1:19:29Carol Massar:That's exactly what the people at Optum are trying to do every day. They're a health care company linking patient care and pharmacy services and using data and technology to drive the whole system so care is connected, not complicated, for patients and providers. Things like making it easier to get care that looks at the whole person, from primary care doctors to mental health support and even in-home care, and then using technology to make sure they all work together. Technology designed to help doctors spend less time on busy work and more time with their patients. And those prescriptions? Optum is working to bring costs down, save patients money, and make it easier to get refills.

1:20:07Carol Massar:Little by little, Optum is helping make healthcare work as one for everyone. Head to business.optum.com to see how. As industries evolve faster than ever, companies need an environment that accelerates strategic growth, and Michigan delivers on that promise. From emerging startups to global enterprises, Michigan offers what executives value most, a resilient, innovative ecosystem, diverse communities that attract top talent, and a quality of life that supports work-life balance. With our unified Team Michigan approach, businesses scale faster and compete at the highest level. Michigan, pure opportunity.

1:20:43Carol Massar:Seize your opportunity at michiganbusiness.org. This is the Bloomberg Tech Minute brought to you by ChatGPT. Now with ChatGPT work. I'm Carol Masser. Globetrotters hunting for airfare bargains are in for a rude awakening as the days of stumbling across a cheap seat on a popular flight could soon disappear. Bloomberg's Juan Ha reports that airlines from Delta to Virgin Atlantic are adopting artificial intelligence to change seat prices more quickly by weighing dozens of variables in real time, helping capture more revenue while shrinking pricing gaps that once allowed travelers to find bargain fares.

1:21:20Carol Massar:Machine learning models can more accurately forecast demand by analyzing historical booking patterns, seed inventory, and seasonal trends, while also continuously tracking competitors' fares and capacity changes to update prices in near real time. The technology could lead to higher fares on busy routes as airlines pack flights closer to capacity, but may also result in lower fares on off-peak and lower-demand routes. That's the Bloomberg Tech Minute brought to you by ChatGPT. Put ChatGPT to work on your most ambitious ideas and projects. Get started at ChatGPT.com today by selecting Work Mode, available on Plus and Pro Plans.

1:22:02Carol Massar:you're listening to the bloomberg business week daily podcast catch us live weekday afternoons from 2 to 5 eastern listen on apple carplay and android auto with the bloomberg business app or watch us live on youtube bright core energy is digging deep for geothermal heating and cooling not just geothermal though they're also working on energy efficient lighting solar energy really everything to help big buildings use less energy mike richter joins us he's president of bright core energy also former three-time nhl all-star goalie a 1994 stanley cup champion with the new york rangers he joins us from armonk new york also with us in the bloomberg interactive brokers studio will wade he's energy reporter for bloomberg news did you play in the nhl i did not i can't skate at all okay i can't either i just wanted to make sure before we move forward a uh Full disclosure, Mike Richter's brother, Joe Richter, works here at Bloomberg for Bloomberg's research arm, Bloomberg Intelligence.

1:23:00Good to have you both with us. Mike, I just want to start with you for people who know you from your career in the NHL. What was your transition like going from playing hockey professionally to working in sustainability with a little stop at Yale between that? Well, well, first, thanks for having me on. Great. It was it's it's an adjustment, I think. And I ended my career about 38 years old back in 2024. And you're a little rudderless. You've been given your time, energy, focus to being as good as you can be in one very specific area. And it is a bit of an artificial world. And I loved every second of it.

1:23:42And I had a, you know, it was a great gift to be able to play in the league and in the, you know, New York area in particular. It's really a special place. But I had a young family at the time and I was injured and there was a decision to make. You know, do you stay within the confines of that same, I guess, focus? And I've always had an interest in the environmental world and energy in particular. And that intersection between finance and energy is a massive one. It's only grown in the last two decades. So the stop at Yale was excellent. It helped me position myself and have a segue from one world to another.

1:24:21And this is just a great opportunity and a really worthwhile pursuit. So Mike, tell us about your transition to developing sustainable buildings. I'm particularly interested in the geothermal. I've seen some projects do that. It's unique. It's not something we're seeing a whole lot of yet, but I think we might be seeing more of it. Yeah, great question. I guess two things. The energy efficiency is kind of always invoked, right? If you're using less resources, you're going to be paying less. And so ultimately, our value proposition is selling savings to commercial industrial buildings. And there is no better way of heating and cooling a building than ground source heat pump.

1:25:06And I just want to make a distinction there. Geothermal, as we see a lot of, Google's doing some work out there. some really great companies are working on the hot rock geothermal out west very deep in the ground using steam to turn turbines as you would with a coal power plant or even a nuclear power plant and literally creating electrons we don't do that we are simply transferring heat it's the idea of a cold beer in your hand on a warm summer day there's a really a therm transfer a heat transfer from that warm hand to the cold beer. The beer heats up, your hand cools down. We use the thermal mass of the earth to do that.

1:25:43And it sounds complicated, but it's just physics. And really, the general temperature of the earth doesn't waver a lot once you go about four feet down below the frost line. The ambient temperature is about 55 degrees, and we take advantage of that. You have heat pumps just like you would in your air conditioning unit or more particularly in your freezer and refrigerator. And instead of blowing that hot air down the ground and keeping the cool air in the box, we just put it through a closed loop system into the ground. That heat transfer takes place and you're lifting the air from 55 degrees in the wintertime to maybe 70 to be warm inside.

1:26:23And in the summertime, it's almost free air conditioning. So we always say the coefficients of performance are as good as you're going to get right now. And honestly, we try to be agnostic on what we're offering. And if there was a better method of heating, cooling, and building, we'd be on it. But this has been going on in New York for about two decades. And I'm speaking to you in Ironman, New York. We have an office in Brooklyn, but also one in Stockholm, Sweden, where they have been leading the charge with a lot of the design and the execution. So we're thrilled by this. And as you know, energy costs are going up and demand is skyrocketing.

1:26:56So good time to be in this place. The geothermal involves digging a lot of holes in the ground. is this something you can add to an existing building or does it have to be when you build the building new yeah and that is a great question that is the choke point where it gets quite complicated um you know 80 of the building stock in a city like new york for example is going to be here in 20 years so we've done new builds and we love it it's virgin territory you come in you get the wells stuck in the ground you cap them and you connect it to the mechanical system inside build a building around it and you're done.

1:27:30How do you go into a building that's existing and then do that same routine? Very, very difficult. You're space constrained and you're even sometimes technologically constrained with what's already in the building. So that's been the technological transformation that we've been able to pull across the Atlantic from Europe. Just like the oil and gas industry has had such great innovation, we are really starting to ride in the coattails of that innovation. And we are able to go now. The addressable market is blown up in terms of its scale. When you can start doing the space constraint places like an urban setting, New York City is a great example.

1:28:08And the retrofit market, we literally have smaller rigs now that can get into these tight spaces, nine and a half feet of clearance and be able to go 500 feet down through the substructure of the building into Manhattan Schist, the bedrock. And it's very stable. seismically. The thermal conductivity is phenomenal. It's a really amazing thing that you can do, and it actually enhances the strength of the building. It doesn't weaken it at all, but you get a transformation in terms of not only your greenhouse gases, but really, as I said, we're selling savings, what you're paying operationally month to month to the energy companies.

1:28:47So you could put solar on the roof and geothermal in the basement and make savings at both ends of the building. You really can, actually. And these heat pumps are moved by the power that they use is electricity, and they're very, very efficient. But I think in a place like New York, there's limited opportunities. We can change every light bulb. We're probably not putting solar because you think of a post-it stamp roof with this massive building below, 50-story building, for example. You're just not going to get much power from that small solar array. What do you do? And we've been able to actually do retrofits in Manhattan, right in the heart of Manhattan.

1:29:24And it profoundly changes the trajectory of that building's ability to afford payments on the energy and just see an ROI that's really substantial. We're speaking with Mike Richter, president of BrightCore Energy, also former three-time NHL All-Star goalie, 1994 Stanley Cup champion with the New York Rangers. Also with us in the Bloomberg Interactive Broker Studio, Will Wade, energy reporter for Bloomberg News.

1:29:49Carol Massar:Mike, talk a little bit about the regulatory environment. There's been a lot of, you know, headlines when it comes to tax incentives for green energy. Is that area helping or hurting your business right now? There's no question. We're a young industry in North America anyway. And so the incumbents have an advantage. They have scale. And that's why you have these incentive structures. The Trump administration recognized the efficiency that's brought by geothermal. And this reconciliation bill, we came out really well. These massive federal tax treatments are transferable. So not-for-profits can use them.

1:30:31Higher ed, houses of worship. Again, we're in the commercial industrial space and it's really meaningful. You can actually start to save up to 40. And if it's an economic development zone, 50 % of the capex of the front end costs. And it's already established that the operational costs are there. The problem was you could never get to them because it's so expensive up front. All those holes in the ground, that's a meaningful expense that you wouldn't have, say, with air source heat pumps. What's great about this is the ground source heat pumps are two times as efficient as air source. So four times efficient is often what we're replacing.

1:31:07So there's really meaningful savings if you just unlock that CapEx up front. Now you can have third-party finance, of course. But the big thing is we've maintained those incentives, and they're really significant. And that's at the federal level. These things are stackable. So you have federal incentives. You have individual states, have better or worse, and even different utility zones. And the utilities understand the squeeze that they're in because there's so much demand coming with AI and data centers. So what do you do with that? You look toward efficiency. And if I can make, say, the Empire State Building more efficient than it once was, and it's using 40 % less electrons, that's a meaningful diminishment for Con Ed, in this case, and Con Ed territory.

1:31:50So they've been incredibly creative and supportive. So we're in a very, very good spot with that. The upfront costs, though, with this technology are pretty high when you think about the CapEx involved. How do you make the numbers work and sort of especially compared in places where energy isn't that expensive? Well, thankfully, this is where my goaltending background helps. I leave it to the finance department and they've been incredible. Look, you can't lie with these numbers. So you just pass the problem. You pass the problem, right? But the physics have to work. And so we do a no-go-to-go evaluation right up front.

1:32:25understanding what the thermal load of the building is and how many boreholes we can get in there and how much it's going to cost per linear foot and all those things come into play. Excuse me. But in the end, with these incentives, net of the stackable incentives, it can often be less than what the incumbent was going to be to replace anyway. So we stack up very well against air source heat pumps and natural gas peakers and whatnot. And it's case by case. You have to do that evaluation. And truly, we don't expect people to say, hey, I want to pay extra for being green or sustainable. No one knows what that is.

1:33:02They do understand I'm saving operationally and there's a return on investment. And these things are really robust, right? They're not just flood proof and fire resistant because they're literally underground and capped, but they have a life expectancy of 75 to 100 years. So I sound like a used car salesman sometimes when you give that pitch, but there's a lot that lends itself to really suggesting these things should be the kind of the shape of where buildings are going in the next five to 10 years. Our thanks to Mike Richter, president of Bright Core Energy. Mike, a three-time NHL All-Star and a 1994 Stanley Cup champ with the New York Rangers.

1:33:38He joined me alongside Bloomberg News energy reporter Will Wade. Our thanks to Emily Grafeo for joining me there as well while Carol was out. And that wraps up the weekend edition of Bloomberg Business Week from Bloomberg Radio. Thanks so much for joining us. Be sure to tune into Bloomberg Business Week daily, Monday through Friday, starting at 2 p.m. Wall Street time on Bloomberg TV, Bloomberg Radio, and on Sirius XM channel 121. And you can listen to us on Apple CarPlay and Android Auto, free in the Apple App Store or on Google Play. You can also watch our daily broadcast on YouTube. Just search Bloomberg Podcasts.

1:34:12And we're simulcast on Bloomberg Originals, available at Bloomberg.com slash Originals, and streaming platforms like Roku, Amazon Fire TV, Samsung TV Plus, and more. Find our Bloomberg Business Week Daily podcast at Bloomberg.com, Apple, or wherever you get your podcasts. And the latest edition of the magazine is available on newsstands now at Bloomberg.com and always on the Bloomberg Terminal.

1:34:35Carol Massar:This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify, and anywhere else you get your podcasts. Listen live weekday afternoons from 2 to 5 p.m. Eastern on Bloomberg.com, the iHeartRadio app, TuneIn, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg Terminal.

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