throughout Manhattan by reforming the commercial rent tax. To his left is Natasha
Amott, a local business owner, and to his right is Councilmember Dan Garodnick who
sponsored the bill. Borough President Gale Brewer is at far left and Councilmember Helen Rosenthal is second from right. | Photo by Rebecca Fiore
BY REBECCA FIORE | At a City Hall press conference held on Nov. 30, East Side City Councilmember Dan Garodnick was joined by Mayor Bill de Blasio, Manhattan Borough President Gale Brewer, and Upper West Side Councilmember Helen Rosenthal in celebrating passage of Garodnick’s bill that reforms the commercial rent tax (CRT) that can often have a severely negative economic impact on local small businesses.
CRT was created in 1963 as a revenue generator that charged businesses citywide paying more than $250,000 in annual rent a 3.9 percent levy on that rent. In the 1990s, it was restricted to Manhattan businesses below 96th St.
The last time this tax had seen reform was in 2001, Garodnick said, when the “average ground floor commercial rent in the heart of Soho was $175 per square foot. Today that rent is more like $755 per square foot. That’s an increase of 431 percent.”
Prime benefit is for small businesses paying less than $500,000 in annual rent
The councilmember added, “You know what hasn’t changed, commercial rent tax. It has been stuck. Every year of inaction by the city has basically been a tax hike on small businesses that were never meant to be affected by this tax in the first place… We are doubling the threshold of commercial rent tax to $500,000 that will deliver relief to nearly 3,000 Manhattan businesses.”
He said that out of those businesses, about 1,800 with less than $5 million in annual revenues and that pay less than $500,000 in annual rent will no longer be liable for any CRT. In addition, another 900 businesses, making up to $10 million in revenue and paying up to $550,000 per year in rent will pay a reduced tax, based on a sliding scale. The tax relief will come in the form of an offsetting credit against the CRT liability, according to a release from Garodnick’s office.
Businesses that pay over $550,000 in rent would not receive any credit.
The credit will be available to taxpayers Jan. 1, 2018.
Both Garodnick and de Blasio said the bill was designed to ensure only small businesses would benefit from the reform.
Natasha Amott, owner of a kitchen supply store, Whisk, at 933 Broadway btw. E. 21st & E. 22nd Sts., didn’t know this tax existed when she opened her store in 2012.
“It was only in the beginning of 2015 that I received notification from the city that not only did I have to start paying the tax immediately but that I also had to pay the other years with interest,” she said at the press conference.
Since then, Amott said, she has paid tens of thousands of dollars to the city in taxes.
“My frustration led to questioning those in the government about the fairness of the tax,” she said.
Working with the City Council, politicians, and other local business owners, Amott said she finally felt heard.
“Not having to pay this annual tax means that each year I can consider making needed updates in my stores, upgrades to my website, and pay increases to my staff.”
“The small businesses that are going to benefit will save on average $13,000,” de Blasio said. “For a long time this was the city of small business. If you had a great idea, you could thrive. We need New York City to be the best place for small businesses in this country.”
Councilmember Rosenthal said everyday she’s heard from constituents on the Upper West Side who are concerned about local businesses.
“Bringing nearly a billion dollars, we have treated for far too long the tax collected from these businesses as an ATM for the rest of the city,” Rosenthal said. “But let’s be clear, the cost of this tax is felt citywide. These businesses employ residents from throughout the five boroughs, so when Manhattan small businesses close, all New Yorkers lose.”
The mayor discussed the significance of small businesses, which not only serve local neighborhoods, but also bring character to communities, bringing them together. He said that everyone has seen stores leave at an alarming rate, replaced by empty window fronts or major corporate chains like Starbucks and CVS.
“Anyone with eyes understands that there is a crisis with our mom and pop stores,” he said.
While this bill is a step in the right direction, it’s just a first step in solving the retail crisis, de Blasio said.
“Consumers have a role to play here too,” he said. “Buy local. It makes a big difference. If you love a store, patronize it. Don’t talk about patronizing it, actually patronize it. They cannot pay the bills with your good intentions.”
