Report finds small businesses are facing very big challenges

By Heather Murray

Children’s clothing outlet Bunnys, Gems discount store, Bates Records, the East Village Laundromat, Gregory’s Party Supply and Ratners are just a few of the Lower East Side stores that Good Old Lower East Side executive director Damaris Reyes has watched close up shop in the past decade.

“Gregory’s Party Supplies store, the little bodega, the shoemaker. These were the shops that catered to our community,” said Reyes, a lifelong Lower East Side resident. “I don’t know where to get my shoes fixed anymore,” she said. “If you know of a place to do that, let me know.”

Her organization decided to dig deeper to find out why small businesses are being pushed out of the area and what can be done about it after the issue came up at a community meeting in 2005 about the proliferation of bars on the Lower East Side.

GOLES released a small business report last week in conjunction with the Urban Justice Center’s Community Development Project titled, “No Go for Local Business: The Decline of the Lower East Side’s Small Business Identity.”

The GOLES report is based on a small business survey that the organization’s staff conducted in 2006 and 2007. The survey documented which businesses are at risk of being displaced and why, characteristics of the average small business owner and how the displacement of small businesses impacts the Lower East Side community.

GOLES staff gathered 59 surveys of small business owners located between 14th St. and the southern side of Houston St. from Avenue A to Avenue D. Businesses surveyed were mostly neighborhood merchants of five years or more, able to provide goods and services affordable to low- or moderate-income residents, who had experienced a decline in profits in recent years.

The survey found that small businesses are constantly facing the possibility of rent increases or eviction. Almost half of small business owners reported that their overhead costs were rising. Nearly one-third identified rising commercial property rents as their “greatest challenge,” and three-fourths said that their profits are not growing at a sustainable rate compared to the substantial increase in the cost of doing business on the Lower East Side.

Ninety-five percent of small business owners surveyed rent their store space, and nearly half of them hold leases of five years or less.

Redevelopment and gentrification of the Lower East Side were cited by 46 percent of business owners as directly affecting their businesses.

Reyes highlighted that many of the businesses cater specifically to lower- and moderate-income residents, the demographic that GOLES serves.

The survey revealed that 24 percent of small business owners on the Lower East Side are immigrants, and that nearly half are run by Hispanics or Asians. Close to 40 percent of business owners surveyed also live in the Lower East Side.

GOLES recommends that small businesses be provided with technical assistance to more effectively compete with chain stores.

GOLES supports the Small Business Preservation Act advanced by City Councilmember Robert Jackson. The act would give small business owners the right to negotiate the terms of their lease with property owners; create guidelines requiring that city-owned and New York City Housing Authority-owned property be rented to small businesses at below-market rates; and institute zoning regulations to protect small businesses. GOLES also encourages community boards to require developers and landlords to sign on to community-benefits agreements when leasing buildings to ensure small business growth.

Alexa Kasdan, director of research and policy for the Urban Justice Center’s Community Development Project, said her organization worked with GOLES to compile and analyze the survey data and write the report, but that GOLES came up with the project idea and did all of the legwork.

The Urban Justice Center has also worked with Downtown Brooklyn and Chinatown organizations to create similar reports analyzing small business displacement in their areas.

Kasdan feels a more wide-ranging economic-impact study needs to be undertaken by the city.

“We need to look at how businesses are affected across the city,” she said.

For the Lower East Side, Kasdan said one effort that could help small businesses — apart from zoning and policy changes — would be to start up “a more grassroots type of chamber of commerce, so that small businesses also have a voice.”

The Lower East Side Business Improvement does not overlap with the survey area, only including three blocks — Allen, Orchard and Ludlow Sts. — on the south side of East Houston St., which are west of the studied area. The BID district is primarily along Allen and Orchard Sts.

GOLES helped to form a local merchants association in the late 1990s, according to Reyes, “but then businesses started disappearing” and the association died, she said.

GOLES has traditionally worked on fighting gentrification and displacement affecting the low-income residents it serves.

“We’re starting to look at this more holistically,” Reyes said. “It’s not just about the people in the apartments, but also the small businesses that help make this a community.”

For the GOLES director, the things that are changing in the community are the ones she loves most.

“What’s made this neighborhood so attractive in so many ways to so many people is its history, its grittiness, its rebelliousness,” she said.