Gotham Gazette http://www.gothamgazette.com/component/tags/tag/1159 Sat, 20 Apr 2019 05:03:11 +0000 en-gb webmaster@gothamgazette.com (Webmaster) The Business Imbalance is Bad for the City http://www.gothamgazette.com/130-opinion/8415-the-business-imbalance-is-bad-for-the-city http://www.gothamgazette.com/130-opinion/8415-the-business-imbalance-is-bad-for-the-city business office

(photo: Michael Appleton/Mayor's Office)


The political imbalance in New York City between business and “anti-business” forces is becoming untenable.

What is happening here has been in the works for many years and was not difficult to predict. Rising income inequality and the perception of a corrupt ruling class brought us the Tea Party movement, Occupy Wall Street, and the 2016 presidential candidacies of both Bernie Sanders and Donald Trump.

As the nation gears up for the 2020 presidential race, rhetoric pitting “corporate interests” against “the people” is once again front and center. And this is cascading down to our local politics in a way that risks damaging our city’s economic potential.

“Business” has become such a bad word that some elected officials have shunned accepting campaign donations or even attending meetings and events that might suggest an affiliation. And public policy debates are increasingly premised on the notion that business is an adversary and somehow acting in nefarious ways.

We must not continue down this path at the local level.

The business community is a pivotal constituency in New York City’s continued success. For example, the real estate industry has a huge stake in keeping the city humming if for nothing else than because their assets are inextricably linked to the city’s prosperity. Employers here want New York’s quality of life to remain high so their best employees don’t move to other cities. Why wouldn’t we want them to be at the table?

Drowning out the voices of business enables the loud voices of an influential few to drive public policy – without adhering to the will of the many. Pushing out Amazon – which had support from a majority of New Yorkers to locate a new campus here – is a “prime” example. In that instance, several high-ranking elected officials refused to even meet with the company. Two-thirds of New Yorkers agree that the loss of Amazon, its projected 25,000 jobs, and its tens of billions of dollars in expected tax revenues is bad for our city.

Now there’s another issue that is playing out in a similar way.

The state currently allows restaurants in New York City to pay waiters $10 per hour, so long as tips ensure that the employee is earning at least the minimum wage (now $15 per hour) at the end of the day. It’s called the “tip credit,” and it enables restaurants – which often have notoriously low profit margins – to reduce their labor costs. Surveys show that tipped workers end up earning $25 per hour, on average, when tips are included. Some make even more.

The issue should be a no-brainer. Indeed, the vast majority of restaurant owners and their wait staffs want to maintain the current system. (When Maine phased out its tip credit in 2016, thousands of servers led the successful fight to restore it because their paychecks were diminishing.) But a well-funded contingent of celebrities and misinformed activists are trying to drown out these voices in order to eliminate the credit in New York – and sadly, it seems to be working.

Some elected officials are repeating inflammatory talking points, namely that waiters are somehow not earning the minimum wage under this system. That would be of paramount concern to me, as well, were it not absolutely false. Yet no one seems to be listening to the facts, so unwilling they are to believe that employers and their employees could actually be on the same side of an issue.

New York City loses when policy debates adhere to this ‘business versus anti-business’ divide, particularly when the business side is assumed to be biased and dismissed as a result. I am certainly not advocating for pay-to-play politics, which is unethical, illegal, and at odds with the development of smart public policy. We need robust, thoughtful solutions that will move New York forward, remembering that we all believe in a better, stronger city for the future.

This requires public servants to engage with all parties and then make determinations based on all of these points of view. If we don’t maintain that balance, and base decisions on facts and impartial analysis, poorly-informed public policies will increase – and New York City will be worse for it.

***
Jessica Walker is President of the Manhattan Chamber of Commerce. On Twitter @jessinharlem & @ManhattanCofC.

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Have an op-ed idea or submission for Gotham Gazette? Email opinion@gothamgazette.com

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The Business Imbalance is Bad for the City Wed, 03 Apr 2019 04:00:00 +0000
Opposing Responses to Cashless Retail on Docket for City Council Hearing http://www.gothamgazette.com/city/8277-opposing-responses-to-cashless-retail-on-docket-for-city-council-hearing http://www.gothamgazette.com/city/8277-opposing-responses-to-cashless-retail-on-docket-for-city-council-hearing cm rtorres funding

Council Member Ritchie Torres (photo: Emil Cohen/City Council)


The polarizing issue of local retailers going cashless has gotten the attention of New York City Council members, and on Thursday a Council committee will hear testimony on the topic and consider competing legislative proposals.

The Committee on Consumer Affairs and Business Licensing, chaired by Council Member Rafael Espinal, a Brooklyn Democrat, will hear the bills for the first time. One, sponsored by Council Member Ritchie Torres, would outright ban retailers from not accepting cash. The other, sponsored by Council Member Fernando Cabrera, would require cashless retail establishments to display conspicuous signage to alert consumers that they are card-only before they get to the register. Both Torres and Cabrera are Bronx Democrats.

After Torres introduced his bill last fall, it generated widespread media coverage and ignited a debate on the convenience of credit and debit cards versus how refusing cash excludes individuals without plastic. Notably, as of Tuesday afternoon, Torres’ bill has 18 co-sponsors in the 51-seat Council, including committee chair Espinal. Cabrera, along with Council Member Andrew Cohen, also a Bronx Democrat, are the lone sponsors of his bill.

Cashless retail establishments are seen as problematic for the “unbanked” or “underbanked,” those without bank accounts and those without easy access to banks, respectively. In 2015, an Urban Institute study surveying New Yorkers found that nearly 12 percent, or 360,000 households, did not have bank accounts. The finding is higher than the approximately 8 percent of Americans nationwide who are unbanked. An additional 25 percent, or 780,000 New York households are underbanked, the study found, compared to the 20 percent of underbanked Americans across the country.

Shoppers in the U.S. are expected to generate 190 billion cashless transactions this year, including e-commerce, according to Kristen Regine, a professor of marketing at Johnson & Wales University in Providence, R.I. She cites millennials as leading the way on the consumer side, but the move is likewise a matter of convenience for retailers.

“A lot of people think money is dirty and they don’t want to touch and deal with it. For retailers, it’s more labor intensive to deal with, to reconcile the days’ end transactions. And for the retailer thinking about line queue, it’s swipe and go and quicker to get through the line. In some places you’re not even signing your name anymore,” said Regine. “In areas where there’s a lot of traffic and robberies, it’s safer for the person working behind the counter not to have cash.”

The growing trend of exclusively requiring plastic or mobile pay, like Apple Pay, for purchases is here locally, with fast casual chains such as Sweetgreen and Dig Inn, or higher-end restaurants such as Danny Meyer’s epicurean empire adopting the policy.

Cabrera also sees this as part of the trend Regine described. “This is not new, this is not someday, this is the now. And if that’s their business model, and they have taken into consideration the potential they could lose a few customers, you know, that’s their business model. My bill basically gives them the freedom to use their business model, but at the same time, gives strong consideration to the customers to be able to know right off the bat that business will accept cash or not,” said Cabrera.

Torres, seeking to ban establishments from going cashless, is more concerned with inequality baked into cashless policies. “If you have the money you should be able to use it. Cash is the great equalizer and the universal mode of currency. Not everyone accesses credit or debit, but everyone uses cash at some time in their life,” said Torres. “In New York City, we have a historic opportunity to set a national precedent for rest of country to follow.”

As for the country, according to Regine, over 40 percent of U.S. adults don’t carry cash. “It’s just kind of our way of life,” she said.

Yet, both Cabrera and Torres want to account for that other 60 percent, which may be higher in New York City given the unbanked population. Thursday’s hearing will provide insights into where their legislation may be headed. But, there won’t be any votes on Thursday. The Council committee will hear the bills and testimony from whomever has been invited or signs up to discuss the legislation, such as business owners and consumers. Then the bills will be laid over in committee, at which point they can be tweaked within the Council, or not, and picked back up for a vote by the committee. If successful in committee, a bill heads to the full Council for a vote.

Both Council members are cautiously confident their bills will move forward for a vote. “I believe we’re going to get this through. It’s a common-sense bill,“ said Cabrera.

Torres slightly hedged his bet. “There’s no telling what will happen in a City Council meeting,” he said, adding, “I see a clear path of passage for the bill.”

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Opposing Responses to Cashless Retail on Docket for City Council Hearing Tue, 12 Feb 2019 05:00:00 +0000
Adapting to $15 http://www.gothamgazette.com/city/8239-adapting-to-15-minimum-wage-new-york-small-business http://www.gothamgazette.com/city/8239-adapting-to-15-minimum-wage-new-york-small-business bkcupcakes

Carmen Rodriguez, owner of Brooklyn Cupcake in Williamsburg, opens her store


As the Minimum Wage Hits $15, New York City Business Owners Find Ways to Make It Work

Colin Cento tells his food couriers to take on additional gigs from delivery services such as Uber Eats and Postmates, even as they work for him. Cento, who co-owns a chain of three fast-casual restaurants in Lower Manhattan called Poke Green, encourages them to supplement their income with the extra jobs because he pays them as contractors rather than staff employees and only for the hours of heaviest demand.

As the minimum wage has increased sharply, outsourcing delivery workers is one of several measures Cento has taken to curb operational costs and avoid raising prices for his customers.

Like Cento, many of New York City's businesspeople have been able to adapt to higher labor costs through innovation and by increasing efficiency and revamping existing strategies, proving that concerns rising wages would hurt small businesses and lead to losses in low-wage jobs are so far misplaced. The survival of skeptical small businesses and a steady increase in jobs show that wage increases have been manageable and even fueled broader economic growth.

"There are restaurants opening everywhere, so if minimum wage gets in the way of our decision-making, it just leaves the door open for somebody else," Cento said. "As business owners, we have to just figure out a way to make it work, whether that's cutting a cost somewhere or adding a cost somewhere else."

Since 2015, the number of full-service restaurant jobs in New York has increased by more than 4 percent and the number of full-service establishments by 10 percent, according to a joint study by the Institute for Policy Studies and the Restaurant Opportunities Center United. The research found that restaurant workers also saw a salary increase of 10 percent. The numbers show the same story for retail and health care, two other industries opponents said would be hurt by wage increases.

"A lot of critics of minimum wage increases have cried wolf for so many years and it hasn't happened," said Yana van der Meulen Rodgers, an economist and professor of labor studies and employment relations at Rutgers University's School of Management and Labor Relations. "Rigorous econometric studies have shown that the disemployment effects critics were projecting just have not happened.''

Phasing in Higher Pay
As of the final day of 2018, the minimum wage in New York City had more than doubled to $15 from $7.25 per hour since 2013. The 2016 law that instituted the most significant hikes is being phased in elsewhere in the state. At the same time, the city has seen a broad economic expansion with rising wages across all income brackets.

"And at the lower end, one of the reasons that there's been this upward pressure is the minimum wage increase," said economist James Parrott, the director of economic and fiscal policy at the Center for New York City Affairs at The New School.

Worker Retention and Better Business
Paying more results in workers who are more efficient, according to Teófilo Reyes, research director at the Restaurant Opportunities Center United and one of the experts who conducted the study examining the impact of minimum wage increases on food establishments. It also lowers training costs associated with new hires because workers stay around longer.

"You have employees who are more committed to these establishments, they are happier to work there and they're less inclined to leave," Reyes said. "So that leads to reduced turnover."

Charles Branstool, owner of Exit9 Gift Emporium, is already paying his employees above $15 per hour and is convinced higher wages improved his retention.

"It's expensive to find good people, and it's expensive when good people leave because they have a better prospect," Branstool said. "Being able to stay more competitive allows them to stick around."

A recent national study conducted by Harvard Business School found that only restaurants that were already performing poorly have closed as a result of increased labor costs associated with minimum wage hikes. The 2017 report, which examined data from the online review platform Yelp, stated that a one-dollar increase in the minimum wage leads to a 14 percent increase in the likelihood of exit for a 3.5-star-rated restaurant but has no discernible impact on a 5-star restaurant.

"There appears to be a relationship between management of a business and its ability to handle wage increases," Reyes said. "A business that is poorly managed is going to have difficulty succeeding under pretty much any circumstance."

Since having to up his workers' salaries, Cento has not had to lay anyone off—and he doesn't expect to after the latest increase for the start of this year. But he has switched food suppliers, explored different delivery and logistics options to reduce costs and considered offering discounts to customers who pay in cash to avoid incurring additional credit card fees. He also encourages diners to order directly from the shop rather than use an online delivery platform that keeps a roughly 30 percent cut of the sale.

"These are all things that we're working on to not force our prices to go up," he said.

Carmen Rodriguez, owner of the Williamsburg-based bakery, Brooklyn Cupcake, has made efforts to launch new products to help rival competitors, including a dairy- and egg-free cupcake line when the new vegan restaurant opened next door. She added ice cream to the menu for the first time this summer and upped her social media strategy to promote the business.

parks slope

Carmen Rodriguez, left, & Colin Cento

There has been evidence some eateries have instituted small price increases but surveys and continued spending have affirmed that customers are willing to pay them. Additionally, workers who have benefitted from the wage hike are likely to spend it on eating out, research shows.

Employers in New York City's fast food and restaurant industries have also increased innovation in terms of sourcing, fresh produce, and establishing good farm-to-market connections, Parrott said.

Cento, for example, continues to buy fish directly from China because of its quality despite trade tension-induced price increases. But he goes across the street to buy greens for the poke bowl base in bulk at Whole Foods because it is cheaper and he can buy smaller portions more frequently to ensure freshness. He has also revamped the menu at the fast-casual Japanese joint. He added Thai-style rolled ice cream and a variety of exclusive Asian soups that can't be found at competing eateries.

"Businesses are having to adapt and be more innovative, be more efficient in the way they utilize workers and produce," Parrott said. "The result at the end of the day is you get more competitive businesses who are able to pay workers a higher wage."

Help From the State
When the $15 an hour minimum wage was initially proposed, the health care sector was among its most vocal opponents, concerned over how significant the cost would be for hospitals and home care agencies. The Home Care Association estimated in 2016 it would cost hospitals $570 million and home care agencies up to $1.7 billion per year due to 24-hour shifts staffed by many low-wage workers in the industry. Some also argued that if low-wage, low-skill workers were being paid as much as $15 per hour, the rate of higher-skilled employees would have to be raised significantly.

The industry has been able to offset much of the cost by winning higher Medicaid reimbursement and other funding. About 90 percent of services provided by home health and personal care aides in New York State are funded by the Medicaid program.

But the industry has also made consolidations, mergers, and acquisitions. And growth in the healthcare sector remains strong, with home health care accounting for almost one third of all New York City employment growth in 2018, up from about 25 percent in the last two years, according to the New York City Independent Budget Office's most recent fiscal outlook report.

"We have to work to attract employees because there are so many home care agencies out there," said Natalie Quinones, corporate office manager of Preferred Home Care of New York, a home and personal care service with over 5,000 employees.

Retailers are coping too. Estimates showed that once New York's minimum wage is fully phased in, operating costs for retailers will be affected by only 0.2 percent. This ranks low when compared to food manufacturing at 0.8 percent, or restaurants at 7.1 percent.

The sector's challenges stem primarily from having to fend off competition from Amazon, noted David Belkin, senior economist at the New York City Independent Budget Office.

Branstool believes the best way brick-and-mortar stores can compete with online retail is by providing customers with a great in-store experience that makes them want to come back. And the way that happens is by paying and treating workers well to make them more enthusiastic to work there.

Wage growth and tightness in the labor market have also led employers into implementing better benefits, including more schedule flexibility and better paid leave policies, especially during the holiday season when worker demand spikes.

While wages are rising, the evidence of economic harm is simply nowhere to be found.

Since late 2015, the unemployment rate has decreased in New York City from 5.1 to 4.3 percent percent, and from 4.9 percent  to 4.5 percent for the entire state, according to government data. The number of people in low-wage industries has largely stayed the same.

"You find studies that say this, and you find studies that say that, but the average studies show that there are pretty limited employment consequences and pretty serious, large, positive earnings increases for low wage workers after a minimum wage increase," said Ben Zipperer, an economist specializing in minimum wage, inequality and low-wage labor markets at the Economic Policy Institute.

Some business owners do say they have had to lay off workers and remain fearful of the full impacts of labor cost increases when the minimum wage reaches $15 an hour.

Full Impact Still to Come
Josef Itskovich, owner of the Midtown-based handbag manufacturing shop Baikal, has had to lay off 35 percent of his staff since 2016, he said. Although, he acknowledged factors beyond the minimum wage, such as soaring rent and foreign competition, have played a role. Rodriguez of Brooklyn Cupcake has let two workers go as well.

Robert Brusca, an economist at his New York-based consulting firm Fact and Opinion Economics and a critic of minimum wage increases, expects more casualties to show up in the coming years.

"Right now, the job market is too tight and the minimum wage legislation is still working its way through the system," Brusca said. "But in time, a firm may realize it is not making its way into this new cost structure and will have to make decisions that will cost people jobs."

That is exactly what Rodriguez worried about.

"My biggest fear is that our doors will close if we can't meet this or that," she said.

***
by Alexandra Semenova and Sharif Paget for Gotham Gazette. This story was produced as the authors' capstone project at the Newmark Graduate School of Journalism.
@alexandraandnyc
@SharifPaget
@GothamGazette

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Adapting to $15 Tue, 29 Jan 2019 05:00:00 +0000
The High Stakes of Shopping Hyper Local http://www.gothamgazette.com/130-opinion/8148-the-high-stakes-of-shopping-hyper-local http://www.gothamgazette.com/130-opinion/8148-the-high-stakes-of-shopping-hyper-local nyc sbs 2

(photo: @NYC_SBS)


This holiday shopping season has been marked by the ninth annual Small Business Saturday, an initiative intended to encourage people to buy holiday gifts at small, independent brick-and-mortar shops instead of large chain outlets or online vendors. With the retail madness now in full swing, many small and independent businesses must wonder: can “shopping small” be an everyday experience rather than just an annual promotion?

Small businesses are at the center of an emotional debate about the economic and cultural vibrancy of our neighborhoods. But do their contributions justify the attention?

In new research with colleagues at the NYU Furman Center, we measure the importance of local patronage—the steady stream of customers that small and independently-owned businesses rely on to keep their doors open. Neighborhoods count on these businesses for services, personal goods, food, and keeping the streets dynamic and safe. Our results suggest that these benefits are at risk when external factors reduce support for local businesses.

In October 2012, Hurricane Sandy produced a large and unexpected economic shock that devastated a number of waterfront communities in New York City. There were also neighborhoods in the flood zone that were untouched, and we use this disparate impact to understand how an extreme interruption to local demand affects the viability of commercial businesses that rely on a nearby consumer base, like grocery stores or hardware stores. Data show that the storm had a larger negative effect on these neighborhood-based establishments than it did on businesses that draw on broader markets that are less location-specific, like financial services or building supply companies.

Among all classes of businesses we examined, only neighborhood-based establishments suffered meaningful and persistent losses. Moreover, losses were borne almost entirely by the smallest, independent enterprises. Retail operations were nearly 50 percent more likely to close in areas with more severe flooding. They also lost on average nine jobs per city block and experienced a 14 percent drop in sales revenues for a surprisingly long period following the storm – revenues and employment still had not rebounded as of late 2016. Establishments with broader consumer bases – the bankers and builders – also declined on severely flooded blocks. But unlike their neighborhood-based counterparts, this was largely due to fewer new openings rather than more closures. Businesses with broader customer bases also avoided the economic hit that shuttered so many neighborhood establishments.

These findings put numbers on the visceral losses felt by New Yorkers—fewer services and more empty storefronts, essentially the disappearance of a vibrant streetscape that is the lifeblood of urban neighborhoods. There are also fiscal implications for the city overall. Across the city those blocks with severe flooding experienced a net loss of 540 establishments, 3,700 jobs, and $2 million in sales revenue. Even if some of that is regained in other, less affected parts of the city (an outcome not apparent in our data), these are potentially millions of dollars lost in tax revenues.

While our focus was the response to a natural disaster shock, these results also have implications for the economic forces reshaping cities. E-commerce, for example, has dramatically changed how people shop for goods and services in their neighborhoods. There are growing calls for government policies to protect local businesses from such shocks, such as commercial vacancy taxes and rent protections, or for Internet sales taxes that can rein in online competition.

However, our data imply that much of the solution is in the hands of everyday consumers, in their decisions to walk to a nearby retailer rather than to order something from a far away distribution center. Though the price might be a few dollars higher, the benefits that you and your neighbors receive from having vital local businesses are well worth the cost. And even same-day shipping can’t compete with the instant gratification of a quick stroll to the store.

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Rachel Meltzer chairs the Public and Urban Policy M.S. Program at the New School’s Milano School of Policy, Management, and the Environment. On Twitter @ProfRachelM.

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Have an op-ed idea or submission for Gotham Gazette? Email opinion@gothamgazette.com

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The High Stakes of Shopping Hyper Local Tue, 18 Dec 2018 05:00:00 +0000
The City is Helping Small Businesses Now More Than Ever http://www.gothamgazette.com/130-opinion/7057-the-city-is-helping-small-businesses-now-more-than-ever http://www.gothamgazette.com/130-opinion/7057-the-city-is-helping-small-businesses-now-more-than-ever bishop mmv nyccouncil

SBS Commissioner Bishop, the author, right (photo: @NYCCouncil)


Earlier this week, an op-ed appeared in Gotham Gazette entitled "How the City Hurts Small Businesses." This column reminded me of a great saying by New York’s late U.S. Senator Daniel Patrick Moynihan: “Everyone is entitled to his own opinion, but not to his own facts.” The truth is that Mayor Bill de Blasio and the New York City Department of Small Business Services are working every day to support small, neighborhood businesses across the five boroughs. A few facts:

  • Our Small Business Support Center has provided more than 12,000 services to small businesses since its launch last year.
  • Small business fines are down 40% since the mayor took office.
  • Since 2014, we’ve helped small business owners access $169 million in capital to grow their businesses.
  • Restaurants that take advantage of our services open three months faster.
  • We’ve served more than 12,000 foreign-born entrepreneurs.
  • Over the last year alone, we’ve provided nearly 1,500 free, on-site consultations to help small business owners avoid costly fines and penalties.

The City offers these, and many other services because we recognize that part of what makes New York City special is the diverse mix of small businesses that give our neighborhoods character. We care about the local hardware stores, beauty salons, and pizza shops where the owners know your name and are invested in their communities. We are moving government out of the way of small business owners, cutting red tape, providing new legal protections, and leveling the playing field for minority, women, and foreign-born business owners.

Every year, our team at SBS reaches thousands of small businesses through an array of free, accessible services. We help small businesses in every phase of their development as they start, operate, and grow. This support helps small business owners cut costs and boost their bottom lines, offsetting some of the competitive pressures that exist in New York.  

We help small businesses to write business plans as they are starting up, learn how to negotiate a commercial lease, and understand City rules and regulations. We keep them running with free educational resources, legal consultations, and compliance services to avoid costly fines and penalties. And we help small businesses to grow through programs to help them secure financing, sell to the government, and other tailored services for minority, women, and immigrant-owned businesses.

This year SBS also launched a citywide program called Love Your Local, which encourages New Yorkers to share their favorite independent small business through social media and on an interactive map on SBS’ website. So far, over 2,000 businesses were shared for other New Yorkers to discover. In addition to this free publicity, these businesses are eligible to apply for grant funding to help them better compete.

The author of the op-ed also questions the value of the City’s work with Business Improvement Districts (BIDs). At SBS, we provide technical assistance to communities that wish to form a BID. We help make sure that BIDs are accountable and formed through ground-up community engagement. There are BIDs across New York City that are both big and small, providing supplemental sanitation services, merchant organizing, and neighborhood beautification to strengthen existing small businesses. The 74 BIDs that operate across the city include 35 low-to-moderate income neighborhoods and each of them is governed by a locally-controlled nonprofit board of directors.

The daily work of BIDs makes a difference for small businesses and local residents alike. If you drill down and look at the nuts and bolts of what BIDs are doing, it is work that benefits everyone. On an average day, BIDs across the city:

  • Collect 10,800 bags of trash.
  • Remove 233 incidents of graffiti.
  • Distribute 10,036 marketing materials promoting small businesses.
  • Interact with 5,752 visitors who keep shops bustling with activity.

We are proud of the work we are doing each and every day to support stronger businesses and build stronger neighborhoods across the five boroughs. I encourage all small business owners to take advantage of the free services that SBS offers. We can help your business start, operate, and grow, and we are also here to provide assistance to communities that choose to form a BID. More information on our services can be found by visiting our website or by calling 311.

***
Gregg Bishop is the Commissioner of the NYC Department of Small Business Services. On Twitter at @NYC_SBS and @GreggBishopNYC.

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Have an op-ed idea or submission for Gotham Gazette? Email opinion@gothamgazette.com

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The City is Helping Small Businesses Now More Than Ever Tue, 11 Jul 2017 04:00:00 +0000
How the City Hurts Small Businesses http://www.gothamgazette.com/130-opinion/7051-how-the-city-hurts-small-businesses http://www.gothamgazette.com/130-opinion/7051-how-the-city-hurts-small-businesses cn1bdgywyaael6s.jpg large

Street vendors protest the city's cap on permits (photo: @VendorPower)


Independent small businesses -- bodegas, pizza joints, shoe repair shops, fruit vendors -- are the heart and soul of New York City. But they are facing a crisis. Every day there is another story about some beloved neighborhood shop closing due to skyrocketing rents. Landlords then warehouse the vacant spaces in hopes of signing a lease with a bank or big chain. WNYC recently counted 17 vacancies on just two blocks of Christopher Street. And a report by the Manhattan Borough President found almost 200 shuttered storefronts on Broadway alone.

What is Mayor de Blasio doing to fix this problem? Nothing.

When asked about it -- and he frequently is -- the mayor claims the government’s hands are tied because the “free enterprise” system alone controls what landlords do with their space. The mayor had no real comment on a package of reforms unveiled last week by USBnyc, a new citywide coalition of small business owners, most of them immigrant-owned. And a couple months ago, speaking to Tony Danza, actor and owner of a 125-year-old cheese shop in Little Italy, the mayor’s only solution to the problem was to “urge the landlords to be less greedy.” Good luck with that!

But, in fact, the city is not a passive observer - it actively supports large landlords to the detriment of small business owners. For years, the main priority of the city’s Department of Small Business Services has not been to help mom and pops, but to organize and support Business Improvement Districts, the somewhat mysterious, quasi-public organizations that exist across the city, from Montague Street in Brooklyn to Melrose in the Bronx, with more being created each year.

SBS spends more of its yearly budget fostering BIDs (what it calls “neighborhood development”) than it does supporting actual small businesses. Just last month, the city doled out $500,000 for BIDs to create mobile technology apps. And all that is apart from the millions in funding that BIDs receive each year from the City Council.

The BIDS have innocuous-sounding names like the 82nd Street Partnership and the Village Alliance. Their glossy annual reports invariably show smiling shopkeepers and kids frolicking in fountains. Usually they are structured to give some minority of votes to local commercial tenants or residents. But make no mistake: by law, BIDs are controlled by commercial real estate landlords. Their mission is to maximize the cash flow they receive from their valuable investments. If that means kicking out a 50-year-old beauty supply shop to replace it with an artisanal gelato chain, too bad. As Mayor de Blasio would say, that’s capitalism at work.

It’s true that New York neighborhoods are always in flux, and too much nostalgia can be dangerous. But it wasn’t always like this. BIDs have only existed in New York for about 30 years, since the Union Square Partnership was founded in 1984. With the city in financial distress, landlords sought permission to tax themselves to provide basic services, like sanitation and security, where the city was falling short. Who could refuse such an offer? Even as the city rebounded during the Giuliani and Bloomberg eras, the city pushed for BID expansion, boosting their number to 44 in 2002 and 73 today. And the trend continues under Mayor de Blasio, who blessed new BIDs in Springfield Gardens, Queens and New Dorp, on Staten Island.

But BIDs don’t just power-wash sidewalks and post security guards on the corner. They play an active role to advance the interests of real estate owners in shaping public policy. They attend Community Board meetings, hire lobbyists, and nurture relationships with elected officials. With a collective budget in the hundreds of millions, they have a powerful voice. For years, together with the Real Estate Board of New York, they have blocked the Small Business Jobs Survival Act, which would require landlords to sit down and talk with their commercial tenants before doubling or tripling their rent.

And, so far, the BIDs have stalled the Street Vendor Modernization Act. In October, no less than a dozen BID managers personally testified against the vending reform package in City Council chambers, while their lobbyists shook hands with officials in the hallway.

Everyone, of course, has a right to testify. But it’s time to have a public discussion about whether, as some have suggested, BIDs have outlived their usefulness. New Yorkers today are concerned about gentrification, not “white flight.” It’s time for a neutral study of whether BIDs lead to unfair distribution of basic services and the privatization of public space. And time to ask Mayor de Blasio why, if he cares about mom and pop small business owners, his administration continues to tip the scales in favor of the very same real estate companies that are driving them out.

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Sean Basinski is director of the Street Vendor Project at the Urban Justice Center. On Twitter @SeanBasinski.

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Have an op-ed idea or submission for Gotham Gazette? Email opinion@gothamgazette.com

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How the City Hurts Small Businesses Sun, 09 Jul 2017 04:00:00 +0000
The Holiday Season Opportunity to Bolster Our Local Businesses http://www.gothamgazette.com/130-opinion/6682-the-holiday-season-opportunity-to-bolster-our-local-businesses http://www.gothamgazette.com/130-opinion/6682-the-holiday-season-opportunity-to-bolster-our-local-businesses espinal supermarket tour

Council Member Espinal, the author (middle), tours a local market


The holidays are my favorite time of year: a time when we can open ourselves up to one another and reflect on what makes us grateful. Whether through wishing a stranger a happy holiday, participating in charity, or simply sharing traditions with friends and family, the holidays are a time for community.

Yet, amid the joy and cheer that accompany the holiday season, the pressure to find perfect gifts for our loved ones while also balancing our checkbooks can be daunting. Especially when income inequality in New York City is at an all-time high and working people are struggling to get by, the sense of obligation to buy presents is often an added burden on already financially strained families.

Even with specific family situations being what they are, New York City consumers will spend a lot of money this holiday season. We live in a heavily consumerist culture, with pressure constantly upon us to buy more and more -- pressure that is even more present during the holiday season. Whether through the temptations of often sneaky “sales” in big-box stores or more modern techniques, such as the constant slew of advertisements targeted at us on our Facebook pages or in emails, large corporations are always trying to reach us; always trying to sell us the next big thing.

Big companies often do provide us with the stuff we need to live our unique lives, while also providing jobs for our families and neighbors. But corporations do not have to be our main providers and an over-reliance on their services does not offer the best economic opportunities for our city.

This holiday season there is again an important opportunity for us to create a stronger local economy by patronizing local businesses. That is why, as a City Council member, the chair of the Consumer Affairs committee, and a Brooklynite, I am urging my fellow New Yorkers to shop locally.

Look for items made in New York to encourage local manufacturing and skip the big malls for your local business corridors. You’ll be amazed at the variety and quality of goods available to you locally, if you look.

If you prefer online shopping, consider replacing amazon.com for madeinnyc.org, an online platform that directly connects New Yorkers with local manufacturers offering the latest in food, fashion, furnishings, and other products. There's nothing like shopping local for all your last-minute gifts, too.

One recent study found that for every $100 spent at a local business, $68 stays in the community. Yet, when the same amount of money is spent at a non-local business, it produces only $43 for the local community. That difference of $25 per $100 could be going to community businesses, which are often owned by families and employ neighborhood folk. Local ‘mom and pops’ have long been the backbone of our society -- they sustain families and provide jobs to community members. In fact, since 1990, small businesses alone have created 8 million jobs and most owners support paying above and raising the minimum wage.

These are key reasons to shop local this holiday season -- and beyond.

Small businesses no doubt contribute to the economic fabric and sustainability of our local communities. And, if that is not reason enough to support your local shops, consider this: a Harvard Business School Study found that CEOs make 350 times more than the average worker. Income inequality is one of the most crucial and wide-reaching issues of our day. We saw this as a major theme in our recent presidential election, both in the Democratic primary between Hillary Clinton and Bernie Sanders and in the general election with the nomination of Donald Trump -- a radical rejection of the political status quo -- because it spoke to many Americans’ innermost economic and social grievances.

Each of us has ample opportunities to make personal choices that hold large corporations accountable and bolster our local businesses. As chair of the City Council Committee on Consumer Affairs, and as a proud Brooklynite, I urge New Yorkers to spread the cheer to their local retailers and shop locally this holiday season.

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Rafael Espinal is a New York City Council member representing parts of Bushwick, East New York and Oceanhill-Brownsville in Brooklyn. As Chair of the Committee on Consumer Affairs, Council Member Espinal works to enact legislation that protects consumers, strengthens businesses, and empowers New Yorkers. On Twitter @RLEspinal.

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Have an op-ed idea or submission for Gotham Gazette? Email opinion@gothamgazette.com

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The Holiday Season Opportunity to Bolster Our Local Businesses Wed, 21 Dec 2016 05:00:00 +0000
Proposed Zoning Changes Raise Questions About Small Businesses http://www.gothamgazette.com/city/6062-proposed-zoning-changes-raise-questions-about-small-businesses http://www.gothamgazette.com/city/6062-proposed-zoning-changes-raise-questions-about-small-businesses morschers pork store queens james karla murray

Queens, 2009; photo by James and Karla Murray from Store Front II: A History Preserved

 


 

As the mayor‘s recently proposed, and in many cases fiercely opposed, zoning text amendments have fanned the flames of New Yorkers‘ ever-simmering fear of gentrification, one type of at-risk tenant has gone unmentioned: small business owners.

Whether it is the famous Arepa Lady of Queens who cooks up corn pancakes with mozzarella, the baby Jesus doll boutique showcased in Frederick Wiseman‘s recent film “In Jackson Heights,” or the local bodega still selling expired $1 honey-buns, locally-owned and servicing mom-and-pop boutiques provide much of the diverse commercial life that has long characterized New York City.

As the de Blasio administration looks to change zoning requirements throughout the city, including to allow more and better retail space, and wants to see significant real estate development to increase affordable housing, there is a great deal at stake for small business owners - both current and prospective.

“Small business are critical to the vitality of the community,” Rachel Meltzer, an assistant professor of urban policy at the New School’s Milano School, told Gotham Gazette. “In economics terms there are ‘positive spillovers’ in a community from having operating, lively, and functional business, but there are also benefits that extend beyond just what it means for that owner.”

In a recent column for City Limits, Meltzer detailed how these local enterprises increase diversity, develop community, and provide economic stability.

Yet as rents skyrocket, chains descend upon New York City, and bodegas transform into banks, local shops into Duane Reades. The free market largely dictates these trends, while some continue to call for commercial rent control or, more moderately, adjusting leasing rules to help protect current tenants.

With the city economy and population booming and neighborhoods changing, it is increasingly difficult for small businesses to survive. There is little city policy dedicated to protecting these institutions of community character from the ruthless churn of the New York real estate market.

Commercial space is treated quite differently from residential space. Discussions around zoning guidelines, tax breaks, and other government policy almost exclusively centers around affordable housing.

“There really is no [preservation strategy] that I know of, and I do research in this area.” said Meltzer about small businesses.

Benjamin Dulchin, executive director of Association for Neighborhood and Housing Development (ANHD, an equitable development advocacy group), told Gotham Gazette that in one sense, this is understandable.

“Rent stabilization,” he explained, “exists because there‘s a sense that [residential] tenants are uniquely vulnerable because the stability of your home is a tremendously important thing and it is uniquely necessary for family and neighborhood stability...It’s a different thing between a landlord and a business.”

On the other hand, Dulchin says, “part of what we like about our neighborhoods are small- to medium-size indigenous businesses” and “as a neighborhood gentrifies, as rents go up, you see displacement pressure not just on the current residents, you also see lots of stores finding it very hard to hang on...I don‘t think the city has figured out what an effective tool for addressing that would be.”

With gentrification on the move in all five boroughs and the de Blasio administration looking to change the rules of the game while also spurring more development, there’s no clear indication about what may be done to protect existing small businesses in the next hot neighborhoods.

Meltzer suggests a place to start might be expanding various zoning initiatives designed to support small business and stymy the invasion of national corporations. She listed legislation from the Upper West Side, where former City Council Member Gale Brewer (now Manhattan Borough President) passed storefront width restricts to stop the spread of banks, as an example. So far this measure has been successful.

De Blasio’s Zoning for Quality and Affordability proposal (one of the two zoning plans, along with Mandatory Inclusionary Housing) includes allowing for taller first-floor retail space in mixed-use development, but proponents note that the new allowances would still be unconducive to bigger chain stores.

Meanwhile, this past summer residents of the Lower East Side proposed a type of zoning amendment already enacted in San Francisco that would cap the number of chain stores allowed in the neighborhood.

Meltzer also mentioned “productive zoning” as a potential tool, which instead of mandating spatial inputs like height limitations and store width, focuses on the outputs of the space - meaning what, generally speaking, the space will be used for. This way zoning can mandate retail space goes towards meeting certain communal needs, as opposed to merely stipulating what types of stores cannot be there through measurements.

The legal limitations of what zoning can achieve are unclear, though, according to Meltzer. “I’m not sure to what extent you can say ‘you have to put this type of business here with this kind of owner,’” she said. “I am not a lawyer.”

The ZQA text amendment, which is currently under City Planning Commission review and will soon move to the City Council, has some version of each of Meltzer‘s suggestions. City Planning told Gotham Gazette that the retail space permitted by ZQA is not suitable for big box retail (although Target started a program to get around this) and that in certain locations the city‘s FRESH program, which incentivizes supermarket development in health-deficient neighborhoods, will help fill the space.

The lack of protective zoning for the small business entrepreneurs of the city, Meltzer says, is only indicative of a larger void in the government‘s supportive framework for those individuals and enterprises. The “institutional arrangement and responsibilities” fall short, she says.

To fill the gap, Meltzer argues the government could create some type of bureaucratic infrastructure for retail space oversight - an entity that would have responsibilities comparable to that of the Department of Housing Preservation and Development, but for retail space. Such a body could supply subsidies to businesses when it made sense and assure the spaces these businesses occupied were not being exploited by landlords hungry for profit.

“HPD is really sophisticated and experienced in regulating housing and thinking about ways to preserve it,” she said. “There have been a lot of affordable housing developments that in the past have tried to be very conscientious about the retail that goes into those projects, but the success has been limited partially because the subsidy for housing is separate from the commercial subsidy. So when [the government says to the developer], ‘we will give you x dollars per unit,‘ that doesn’t include commercial space. There is no way to say ‘this is what the market is asking, we want a certain type of business that may not be able to pay that, so we will give a subsidy to fill that gap.’ There is not anything, at least that is coming out of the City, that does that in a large scale way like HPD or HDC does with housing.”

Meltzer went on to say that if the city did try something like that, the small business services agency could be the one to oversee it, but none of this is part of the equation right now.

Whether or not subsidizing commercial space, like HPD does residential, is even a good idea is up for debate. Meltzer said herself that she was “not prepared to argue that we should be subsidizing commercial rent,“ but went on to say that such a practice could prove a powerful tool in supporting businesses in rapidly gentrifying neighborhoods, adding “I think it‘s the government’s responsibility to support these businesses to try to stay in business.”

However, businesses should only receive subsidies, Meltzer says, if they show adequate interest in adjusting to the changing climate of the neighborhood. There‘s no point in financing an owner who wants to run their business the same regardless of environment.

Supporting businesses in transitioning neighborhoods is where existing services provided by the Department of Small Business Services (SBS) can be of use. In a response to an inquiry from Gotham Gazette, an SBS spokesperson said the agency was working to roll out programs targeting these businesses and listed business education and assistance, along with tools to help businesses navigate leases and the retail market as examples.

SBS also pointed Gotham Gazette to two other programs geared toward supporting the city’s less powerful retail operations: NYC Business Solutions, which, among other things, provides businesses with free financial assistance, recruitment and training services, and referrals to pro-bono legal services, and Small Business First, a program aiming to consolidate small business resources and requirements currently spread across 15 different city agencies into one portal. (Unfortunately, NextCity reported in September that there has been little progress since the program launched in February.)

Mayor de Blasio has dramatically cut fines imposed on small businesses across the city and worked, through SBS, to expand opportunities for immigrant entrepreneurs. The administration got a recent boost for its zoning proposals when a dozen ethnic and local business groups, including the Brooklyn Chamber of Commerce, endorsed the plans, as reported by the Daily News. The proposals are being considered by the City Planning Commission before it sends recommendations to the City Council for consideration.

Over the past couple of years there has also been clamor about commercial tenant protection, as landlords have been accused of dumping their property taxes onto small business owners and multiplying rents by four or five upon lease expiration. City Council Member Robert Cornegy, head of the Council’s small business committee, introduced legislation in July along with Council Member Mark Levine aimed at curbing harassment, but their bill has not moved.

Many small business advocates point to the Small Business Jobs Survival Act (SBJSA), which gives tenants a prodigious amount of lease negotiating power and has been floating around the City Council in various iterations for around 30 years, as the holy grail of business preservation.

Manhattan Borough President Gale Brewer, who helped craft the bill while working for Ruth Messinger in the ‘80s, says SBJSA is misguided. Among other critiques, Brewers insists the law would make the lease negotiation process inefficient and there are “serious” doubts as to the bill‘s legality. She plans to propose a more moderate plan with Cornegy in the near future.

Ultimately, Meltzer thinks tenant protection and lease renewal negotiation reform are “great,” but that the best hope for strong, long-lasting mom-and-pop commercial retail space stands in how the city negotiates with developers looking to build.

“What we want to think about are the best points of leverage, which are new development,” Meltzer says. “Even in housing, you cannot do that much with existing orders. When a building gets built and the developers are trying to secure zoning and subsidies, those are the moments when the city can say ‘oh, OK, you want the rights from us? Here’s what you are going to have to do in order to build bigger.’“

Commenting on the zoning proposals currently up for review, Meltzer said, “It would be interesting to know if in the zoning, because it is not finalized by any means, [the city] would start to incorporate things like that.“

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by Colin O’Connor, Gotham Gazette
@GothamGazette

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Proposed Zoning Changes Raise Questions About Small Businesses Tue, 05 Jan 2016 02:48:52 +0000