BY REBECCA FIORE | In yet another effort to save New York City’s threatened mom-and-pop shops, local legislators announced the latest plan to save small businesses.
Called the “Mom & Pop Increase Exemption,” the proposal would encourage landlords to enter into long-term affordable leases, with fair renewal clauses, with independently owned businesses, in exchange for property tax abatement, according to a press release from Brooklyn Councilmember Brad Lander.
The idea came from a recently released City Council report, “Planning for Retail Diversity: Supporting NYC’s Neighborhood Businesses.” One of the report’s recommendations — specifically, No. 19 — said that while the city and state have tools to support the development of new commercial space, help individual businesses, support growth in certain areas, and facilitate access to credit, New York lacks the tools to support retail diversity and save small businesses owners from increasing rent demands.
“Every week, we lose another much-loved small business in our neighborhoods,” Lander said. “Rising commercial rents are pushing out the ‘Mom-and-pops’ who are the heart of our communities. We need a new tool to help save them.”
The bill, Lander said, “is a common-sense step we can take to save small businesses — and what’s special about our communities.”
According to the City Council report, businesses in some neighborhoods are facing rent increases of more than 50 percent, on average, and the rapid rise in Manhattan rents has a direct relationship with the loss of small business and retail diversity.
Supporting the legislation at the state level are state Senator Brian Kavanagh and Assemblymember Yuh-Line Niou. Lander’s press release included statements from both of them.
“Our city’s diversity should be reflected in the storefronts we see walking down the street,” Kavanagh said, “and I’m proud to introduce legislation that will empower New York City to support neighborhood shops. These small businesses give our neighborhoods the rich character we treasure, employ New Yorkers in their communities, and drive our local economy.”
Added Niou, “Small businesses across my district in Lower Manhattan are fighting to stay open, but with rising rents, they often struggle to make ends meet and remain viable.”
The Albany bill would authorize New York City to create this new tax program. The bill would not only keep local businesses’ rents low, but also discourage landlords from keeping their storefronts vacant in hopes for higher tenants, according to the bill’s sponsors.
Additionally, the tax-abatement program would be limited to landlords who rent to local, independently owned businesses, in order to discourage the proliferation of chains in the city, which tend to drive up commercial rents drastically, the press release said.
Two local business improvement districts support the initiative.
“The Chinatown BID / Partnership are delighted to learn of this new effort to help the small businesses and our community,” said Wellington Chen, executive director of the Chinatown Partnership. “Any relief to take the pressure off the merchants will, in the long run, be beneficial to all and bring stability to the wasteful cycle of vacating, removal and the long wait for the next tenants.”
Added Jessica Lappin, president of the Downtown Alliance, “In this increasingly challenging retail climate, it would be great for the city to provide tax relief for both businesses and property owners that would help create jobs and maintain the character of our local communities.”
However, not everyone is pleased with a proposal that would keep commercial rent under landlords’ control. Steven Barrison, the spokesperson for the city’s Small Business Congress, said giving tax exemptions to landlords only further suppresses the voices of small business owners.
Barrison said that since this program would be on a voluntary basis, landlords would not have to comply.
“Like every other Council proposal thus far, It doesn’t give any rights to small business owners,” Barrison said. “It doesn’t change anything. Small businesses still have no voice and zero fairness; if they had a voice they would say that this is ridiculous. This is an insult to democracy.
“If the councilmembers were truly interested in fairness and helping the small businesses to survive, they would solve the unfair lease-renewal process and ensure that good-standing tenants could get a ‘right to renewal’ with a minimum 10-year lease renewal at a fair rent, so that both the landlord and business get a reasonable return on their investment. The new Council proposal accomplishes neither and will not save one business.”
Since commercial rents currently are not regulated, landlords can charge whatever they want. Plus, as the S.B.C. Web site notes, commercial tenants are required to pay their landlord’s property taxes in a “pass-along” tax.
“Once a landlord gets a tax break by claiming he would have doubled the rents, that higher increase now becomes the standard for all his other businesses and in the neighborhood area,” the S.B.C. Web site states. “Unscrupulous and greedy landlords will jump upon the higher rents as the new ‘fair market-rate rents,’ thus forcing more businesses to close and workers losing their jobs. Then the rents go even higher.”
