Tuesday, March 3, 2015


UPDATE: This recent Crain's article demonstrates the difficulty our small businesses face on a myriad of fronts. In this case, the city has consistently failed to protect manufacturing zones, so land prices have shot up. The business ultimately had to contract, which probably means job losses (though oddly, the article doesn't say). Similarly, when a landlord only offers a one or two year lease to a commercial tenant, that makes planning for the future virtually impossible. Without the ability to plan ahead, businesses can't expand or hire additional workers. Often, because of this state of limbo, they have to cut staff. The SBSJA would require lease renewals to be a minimum of ten years.

Over the summer, I reported about the latest revival in the City Council of the 'Small Business Jobs Survival Act' (SBJSA), a bill that's been kicking around in some version since the mid-1980's and initially championed by then-UWS member, Ruth Messinger. The *Villager newspaper has been one of the few media outlets consistently reporting on this issue over the last few years, including a vital explanation of history and the political context. I urge you to read this recent article

The bill would require arbitration between a landlord and a tenant to negotiate a fair lease for both parties, equalizing the currently lopsided relationship. As it stands now, commercial tenants have no rights whatsoever.

Significantly, it would definitively stop the rampant extortion by some landlords in order to grant a renewal--especially in immigrant communities. Even though this is technically already illegal, it's rarely been an issue about which law enforcement and elected officials have been particularly motivated to take action. In many ways, it's a perfect crime as few complain, especially immigrants.

It's been well documented local businesses contribute more to the local economy than franchises or chain stores do. But we often forget about those predominantly employed by them--immigrants, the under-educated and under-employed and even felons--and how these businesses have successfully served as a gateway out of poverty for many low-income families.

And by the way, many people don't realize this situation has also been a death knoll for countless arts and cultural groups, who have also been really affected by astronomical rents and rent increases.

Although probably about fifteen years too late to be truly effective, activists see the SBJSA as the only real way not only to save these NYC institutions, but also thousands of jobs. 

However, the chair of the Council's Small Business Committee thinks the answer is to have Albany subsidize landlords to not rent-gouge. Only in New York....  

But this plan has some key flaws. First, it's voluntary. Second, it relies on state action--not exactly a sure thing. It would not stop the extortion. Lastly, his idea would give landlords who have commercial tenants property tax subsidies, but apparently ignores the fact that most owners pass those taxes on to their tenants.

And, make no mistake--the fight has been and remains a real uphill battle. They are facing off against a litany of obstacles which include:
1-the power of big real estate;
2-the increasing suburbanization and homogeneity of NYC.

Small business advocates have little faith in the city's official representatives of their community, especially the agency for Small Business Services (SBS) and Business Improvement Districts (BIDS). That is critically important to understand how things have gotten so bad

BIDS are predominantly comprised of banks and property owners, who have a very different agenda than do commercial tenants. In fact, governing laws of BIDS mandate the majority of board members must be landlords. It's a blatant conflict of interest. So is the fact that SBS pushes its various loan programs with some of the very same lenders who sit on BIDS. 

Plus, banks themselves play a giant part in destabilizing neighborhoods because they considerably skew the rental curve upwards. Banks are willing to pay a lot more in rent so that most other tenants are simply priced out of the equation, and many landlords are singularly concerned with obtaining premium rents--not the character of a community or its needs.

And SBS is teaming with former employees from assorted BIDS and pro-development entities like the city's Economic Development Corporation or the state equivalent, Empire State Development. Both have been historically unfriendly to small businesses, particularly if large scale development projects are involved. Quite a few at SBS are Bloomberg-holdovers. 

In fact, of the executive staff listed on its website, I know of only one person with any direct experience owning a small business--and I know about that person from when I was writing my article. It's not even listed in her bio.

This point cannot be dismissed, though SBS staff have and do. Can you imagine say, the Transportation or Environmental Protection departments with almost no leadership having a background in those given fields? It would be completely unacceptable--so why is it permitted at SBS?

Well, one main explanation is the power of the financial and real estate sectors. They don't want to see the SBSJA passed because it would change the unfettered ability to speculate. It's in their best interest to keep SBS out of the hands of people who actually know something about owning or running a small business.

Interestingly, Council Member Bill de Blasio was an adamant supporter of the bill as a means to fight economic inequality--which as we all know, was a giant campaign theme for him in the mayor's race. It was actually former Council Speakers Vallone and Quinn who did everything in their power to quash it. Guess why? 

However, Public Advocate, mayoral candidate and now Mayor de Blasio all but ignored his own argument, eventually towing the popular status quo line that fines, fees and regulations are the biggest obstacles currently facing small businesses.

Certainly, these are sometimes significant issues, but it's the difference between problems versus complaints. Business owners complain about fees and fines, but realistically, they don't generally close down because of them. They do, however, close because of the epidemic of small businesses being unable to afford leases or aren't even given the option of renewing--that's a true problem.  At this rate, there will be no surviving independent small business left.

It's highly peculiar that for all of the divisions and programs at SBS, there's no emphasis on job retention, nor has it been something the mayor has made a priority. Job creation and training, sure. And the SBS will tell you that it offers pro bono legal advice to help commercial tenants but again, if these tenants have no rights to begin with, what good is any kind of legal advise? And this program is especially galling, in the face of what can only be construed now as willful inaction.

There's also an odd disconnect within the administration. The excellent commissioner for the Human Resources Administration, Steve Banks, told NY1 in an interview last year that their data analysis revealed a quarter of "clients" (nice Orwellian euphemism from the Rudy/Bloomberg days) who had utilized some kind of city employment program returned to the agency for assistance within a year. Banks said that given the $200 million spent on employment programs, "We need better results for people, we need programs that work." So clearly, as early as a few months into the de Blasio administration, they knew what existed was not solving the problems, with the ultimate goal of helping people out of poverty.

The NY1 anchor had enough wherewithal to follow up the line of thinking by asking what good job training is if there are no jobs to fill? But he didn't take that thought further in asking why aren't there the jobs, other than to recite the obvious post-recession explanation.

For what it's worth, Banks' job focuses on the social needs of the city, and doesn't include land use and development. In the NYC of the 21st century, these somehow appear to be mutually exclusive and distinct areas.

As one activist emailed me, how much of the answer rests with the "anti-small business /pro-real estate policy" of the mayor and "progressive" Council Speaker. Speaker Mark-Viverito can't be absolved, given the role the Council has played over the years to not pass this bill, and because there is no evidence she is doing anything differently. (It would be very interesting to see how many members of the Council's central staff--particularly in areas like the newly created Development/Land Use Unit--either previously worked for or left the Council's employ to work for a developer/real estate entity. I made two formal requests to the Council's press office regarding the unit's employees and their professional backgrounds, but was seemingly ignored.)

"Does NYC have a jobs crisis with the closing of all our small businesses? Does NYC have a wage crisis, with businesses unable to pay fair wages due to paying exorbitant rents?" the activist asked. In actuality, the email read, there are three crises going on simultaneously--the closings, the job losses, "and stagnant wages at the same time as sky high prices caused by exorbitant rents. Yet, no mention of any crisis by our government. That is Bloomberg 100%." 

The data appears to bear out this sentiment. Commercial evictions during this administration remain on par with the two previous. Updated data from Landlord and Tenant Court for all five counties obtained by the Small Business Congress (SBC) to include 2014 reveals the average monthly number of eviction warrants issued was 485 in 2012, 499 in 2013, and 491 for 2014 (up to August). 

Extrapolating from this data, the SBC estimates this translates into 900-1200 closings per month, and thousands of jobs lost. As I wrote last year, these numbers tend to be lower than the actual numbers because they don't include the businesses who just walked away without a fight.  

For many years now, I've said the beauty of this city was always that anyone could come here and adapt to the energies of what used to make it so unique. But since Giuliani decided to become the 'Mayor of Niketown' (as expressed by the genius of Fran Lebowitz) and his push to make the city "family-friendly" at the expense of everything else, our once incomparable home is now a place where suburbanites come and expect it to change for them, conditioned by tv shows like "Sex and he City" and musicals like "Rent," all in an effort to give their sheltered little lives some glamour and excitement. 

These people are comforted by suburban norms like the chain stores that populate their insulated existences--how else can you explain Domino Pizza's presence here? Many insist on having a car--even in Manhattan--when we have one of the world's best mass transit systems (if you aren't disabled).

Frankly, the New York New York Hotel Casino in Las Vegas has more authenticity than does this current version of the city.

In what really is the last ditch effort to keep long-established businesses around, the SBC will be holding a series of forums in each borough, and have sponsored a petition urging the mayor, speaker and council members to support the SBJSA. This is the link. All but two Manhattan members have signed on--the two representing the mid and UES.

And here is information for the first community forum, to be held in Manhattan on Thursday 3/5:

A Community Forum

Solutions to Save Small Businesses,
Art and Cultural Institutions5  7-9 PM

Judson Memorial Church

 55 Washington Square South

New York, New York 

Sponsored by:  The Villager and
Village Independent Democrats

Join your neighbors, local business people, and a panel of experts to discuss how we can save and protect the small businesses that are the lifeblood of our community and our city.  Landlords now have all the rights that determine the destiny of owners, their workers, and the character and culture of an entire community. 

Because the gateway to the American Dream has been locked, and government has given the key freely given to big Real Estate…let’s throw a life line and empower our struggling small businesses drowning in a sea of greed.

Two opposite pending legislations claiming to be the solution to save our small businesses are at City Hall and in Albany : 

One, a new resolution was introduced at City Hall calling upon Albany to pass legislation establishing a property tax credit for commercial landlords who ”voluntarily” limit rent increases upon renewal - incentives to not rent gouge.

The other in Council committee: the Small Business Jobs Survival Act, (S.B.J.S.A.). regulates lease renewal process giving rights to business owners to arbitrate fair lease terms and 10 year leases.

Which is the best solution?  Or is there a better solution? 

Let your voice be heard on taking real action to save our businesses, art  community, neighborhood’s identity, middle class and jobs. 

Log onto The Villager or VID website for more details.
*Note: It should be acknowledged The Villager has had a controversial relationship with former Speaker Quinn in the past. 

Coming soon: A Tale of One City, Part 2

1 comment:

  1. Excellent article. Shows de Blasio says all the right things but has kept in tact Bloomberg's Republican Economics which are anti small business and thus anti jobs. A EDC officer said it best at a public hearing on the Small Business Jobs Survival Act, " At a global level, this (bill) would be an intervention in the commercial real estate market that really is a dramatic departure. There really is a potential for the dampening of the attractiveness of investing in commercial space in New York City. That is what its all about - Real Estate Profits Matter