Gotham Gazette http://www.gothamgazette.com/component/tags/tag/913 Sat, 21 Oct 2017 04:50:36 +0000 Joomla! - Open Source Content Management en-gb webmaster@gothamgazette.com (Webmaster) On New York’s Amazon Wishlist? More Homegrown College Graduates http://www.gothamgazette.com/?id=7262:on-new-york-s-amazon-wishlist-more-homegrown-college-graduates http://www.gothamgazette.com/?id=7262:on-new-york-s-amazon-wishlist-more-homegrown-college-graduates amazon go via amazon dot com

(via amazon.com)


Bids are due today for Amazon’s new headquarters and it seems cities across North America have joined the fray. The suitors are lining up with billion-dollar bouquets, and with good reason. What mayor could resist the promise of 50,000 well-paying jobs and all the economic energy that comes with the headquarters—a massive boost to the tax base, new cafes and food trucks, spin-off companies, and a legion of happy vendors? New York City alone has nearly two dozen neighborhoods vying for Bezos’ bounty.

Pundits have frequently written off the five boroughs as Amazon’s second home because of the exorbitant cost of living. Some are pointing to the subway meltdown. Yet an even greater obstacle may be the city’s underprepared workforce.

While New York has always been a beacon for titans of industry, striving immigrants, and the creative cognoscenti, for too long, the city has failed to develop enough local talent into the kind of smart, savvy employment base a modern company like Amazon demands. Just 36 percent of New York City residents have a bachelor’s degree or higher, according to the latest Census data, compared to 45 percent in Denver, 46 percent in Austin, and 55 percent in Washington, D.C. In Amazon’s current home base of Seattle, it is a whopping 59 percent.

New York’s ability to lure the world’s fourth largest corporation, or even its 40th or 400th, will hinge on whether its workforce is primed and ready. By that measure, the city has a long way to go.

More than 3.3 million city residents over age 25 lack an associate’s degree or higher level of college attainment. Residents with a bachelor’s degree or higher are largely concentrated in Manhattan, where the attainment rate stands at 62 percent, followed by just over 30 percent in Brooklyn, Queens, and Staten Island. In the Bronx, it is a distressing 18 percent.

Amazon should still see boundless potential on the Hudson. New York boasts a booming and entrepreneurial tech sector with more than 115,000 jobs today, an unparalleled smorgasbord of arts and culture, and the brand new Cornell Tech campus, alongside other world-renowned educational institutions.

But if New York succeeds in attracting Amazon, or any large company for that matter, whether GE, Aetna, or Tesla, it will be in spite of the city’s education and training systems, not because of them. New York can do so much more to ensure that its residents can access the opportunities that an Amazon would bring, while offering employers a much larger pool of homegrown talent.

Yes, New York is full of tech talent today. This is true, in part, because the city has become increasingly successful at attracting engineering and computer science graduates from Stanford, Carnegie Mellon, and other top universities around the world. But in an economy where technically skilled workers are prized—not just on Silicon Alley but in nearly every large and mid-sized company—demand is through the roof. New York needs a much bigger pipeline, not just for Amazon, but for blue chip companies and local start-ups alike.

Even if the vast majority of Amazon’s 50,000 new hires were imported from other places, New York would still be better off with them here than in Denver or Chicago or Atlanta. But no company—and certainly not a company with so many hiring needs—is going to make locational decisions that are completely dependent on bringing in outside talent. It is simply not realistic, or sustainable. Meanwhile, if half those workers or more were born, raised, and educated in New York, the benefits would be far broader—allaying the fears of those who see Amazon as more of an economic development trophy than an opportunity generator.

Such an achievement today would be almost impossible.

While New York City has done an increasingly impressive job of getting students through high school, it continues to struggle with college success, leaving students without the credentials an employer like Amazon demands. Today, fewer than half of all four-year college students at the City University of New York (CUNY) graduate with a degree in six years. Just 22 percent of CUNY’s community college students earn a degree in three years.

CUNY’s highly successful ASAP initiative, which provides supports to full-time community college students, and the CUNY Start program, which provides intensive preparation for students with remedial needs, are important steps in the right direction. But New York has a long way to go to achieve true college success for all.

Beyond the classroom, the city’s workforce development system still functions too much like a cumbersome placement agency. The de Blasio administration has laid out an impressive new vision with its Career Pathways initiative, aimed at developing career trajectories through skills building and education. But after more than three years, there is too little to show for it. The city needs to double down on proposed investments in bridge programs, career exploration, and on-the-job training, while strengthening and expanding partnerships with nonprofit providers, employers, and the public education system.  

There’s no doubt that New York City is a formidable competitor in the quest for Amazon’s HQ2. No other city offers so expansive a world of culture and commerce in a single place, a paragon of urbanism and urbanity animated by an astonishingly diverse population. But if Amazon heads elsewhere, policymakers should not just blame cost and congestion. They should look to the serious shortcomings in the city’s human capital development system, which remains far from meeting its full potential.

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Matt A.V. Chaban is the policy director and Fisher Fellow at the Center for an Urban Future. On Twitter @MC_NYC and @nycfuture.

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

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On New York’s Amazon Wishlist? More Homegrown College Graduates Wed, 18 Oct 2017 04:00:00 +0000
Experts Analyze Mayor De Blasio's Jobs Plan http://www.gothamgazette.com/?id=7208:experts-analyze-mayor-de-blasio-s-jobs-plan http://www.gothamgazette.com/?id=7208:experts-analyze-mayor-de-blasio-s-jobs-plan 32122764952 40cb06af67 z

Mayor de Blasio and Deputy Mayor Alicia Glen (photo: Edwin J. Torres/Mayor's Office)


An expert panel convened at The New School on Wednesday by the Center for An Urban Future delved into Mayor Bill de Blasio’s plan to create 100,000 “good-paying” jobs in the next ten years, discussing the challenges of growing the city’s economy while ensuring that New Yorkers are its beneficiaries.

The mayor’s “New York Works” plan, unveiled in June, envisions targeted city investments in booming or burgeoning industries such as cybersecurity, life sciences, virtual reality, tech, culture, freight, and manufacturing to create 10,000 jobs each year that pay at least $50,000 a year, promoting the middle class and reducing income inequality in the city. Some have questioned the less-than-ambitious goal -- the city has created on average about 90,000 jobs each year in the last decade -- while others have raised concerns that the new jobs may not be sufficiently well-paying in a city that is increasingly unaffordable for many. The panel of experts explored those issues, and the related economic factors that they agreed were necessary to facilitate and maximize the impact of the job creation plan.

Deputy Mayor for Housing and Economic Development Alicia Glen kicked off the event with the administration’s pitch for its ten-year plan. She pointed to the city’s record-high employment rates and job growth -- employment is at 4.4 million jobs, unemployment is at 4 percent this year and the private sector has grown overall by 9 percent under this administration -- and laid out the strategies for creating quality jobs through city actions. Notably, the 100,000 target only accounts for jobs created directly through city intervention, and doesn't include employment that may be created as a secondary result.

“It’s really important to remember there’s a short game here and a long game and we have to play both of them,” she said, touting the administration’s first-term achievements as contributors to a stronger economy including universal pre-kindergarten, improvements in educational achievement, record-low crimes and the building of affordable housing, among other factors.

But she recognized that industry trends such as automation and globalisation are increasingly impacting the middle class and that the city would have to actively intervene to stem job losses and promote growth in specific sectors “where specific government intervention in either space or talent or certain kinds of incentive structures, we believe, are actually necessary for them to reach their true potential. So this is on top of any organic growth that would happen without our interventions.”

She also noted that the administration has leveraged its land use and regulatory powers to encourage economic development. Referring to comprehensive land use changes passed in East Midtown, Far Rockaway and East New York, she said, “All of these neighborhood rezoning plans are not just about housing, it’s also about creating opportunity for smart job growth and many of those will have very interesting overlaps with this plan.”

After Glen spoke, she quickly departed and a five-member panel comprising real estate insiders and urban policy experts, and one City Council member, took the stage.

Panel moderator Winston Fisher, a partner at real estate firm Fisher Brothers and co-chair of the NYC Regional Economic Development Council, posed the central question. “If the economy is doing so well...do we need a strategy for good jobs?” he asked. “Why do we need this and how do we even measure this?”

“Absolutely we need it,” said Jonathan Bowles, executive director of the Center for an Urban Future. “This is the big economic development question today.” Bowles noted that projections show seven out of the ten occupations that will create the most jobs in the next ten years will be in low-wage sectors, and the other three in high-wage fields. “It’s not just that we need more jobs, we need more good-paying jobs that are accessible for a broad range of New Yorkers because so few of the new jobs are in that middle range that are accessible to people without a college degree.”

There was general praise for the administration's jobs plan but certain concerns among the members of the panel about whether it targets the right population, whether job growth will directly benefit the city’s residents, and whether it adequately accounts for the overarching factors that affect the economy and income inequality at large.

City Council Member Dan Garodnick, chair of the economic development committee, questioned whether the administration was being sufficiently ambitious in aiming for 100,000 jobs. “I do think we need to be asking the question, is that the right number? Is it aspirational enough?”

But panellist Seth Pinsky, executive vice president at RXR, a real estate firm, and former president of the NYC Economic Development Corporation, said the problem was not the number of jobs. His “quibble” about the plan was that it does not explicitly address the need to bring jobs to those who require them most, particularly New Yorkers without an advanced education.

“The problem is not creating jobs, it’s who’s getting the jobs,” Pinsky said, noting that the unemployment rate for those without a high school degree is three times that of those with a master’s degree or higher. That was, for him, the biggest challenge for the city, noting that the administration would need to figure out how to “creatively” educate those without a formal education and also establish a robust safety net for those who are likely to never catch up in education and job skills in increasingly automated industries. “This is a problem that’s bigger than New York City, it’s a problem that cities and countries all over the world are dealing with,” he said.

Kevin Ryan, an entrepreneur and founder of companies including MongoDB, Zola, Workframe and NoMad Health, echoed that uncertainty. Although the high school graduation rate in the city hit an all-time high of 79.4 percent last year, Ryan was pessimistic about the job prospects of the more than 20 percent who don’t receive diplomas. He also pointed to the city’s lack of affordable housing and abysmal transit infrastructure as factors that negatively impact the economy.

Marlene Cintron, president of the Bronx Overall Economic Development Corporation, stressed that jobs created should meet the needs of residents of communities and also the needs of current and prospective employers. Chiefly, she said, it was necessary to ensure that “our students, our New York City residents get the first bite of this New York City apple…Economic development and jobs start at the cradle, we need a healthy child, we need a great excellent education system, we need affordable education...to ensure our kids get the first crack at the apple.”

One of the more pressing issues, repeated often by different panellists, was the need to enhance affordability to complement increased wages among lower- and middle-wage job holders.

Pinsky emphasized the role real estate could play, by increasing housing density to create more affordability. And, if the city were to invest heavily in transit infrastructure and connectivity across the boroughs, he said, it would relieve stress on the housing market and automatically lead to more affordable housing units farther from the city center. He also pointed out that, since the economy is not organically creating middle-wage jobs, the city should take an aggressive approach to incentivise companies to create those jobs through subsidies, similar to the way the de Blasio administration has approached affordable housing.

Cintron repeatedly emphasized the need for affordable education, which she suggested could be implemented through the CUNY and SUNY systems by New York State, building on the recent Excelsior program that provides tuition-free college for families making $100,000 a year or less. Ryan added that creating a more affordable city, through infrastructure and housing, would also discourage companies from outsourcing jobs and would draw more qualified workers to the city.

Pinsky, Bowles and Garodnick also touched on the broader economic conditions that are necessary to promote job creation. Noting Pinsky’s argument about workforce development, Bowles said the mayor’s plan would need to incorporate jobs training and skill building to create a “talent pipeline” across diverse sectors. And he said that it was impossible to tell which job sector would grow the fastest. “We do know that New York has this amazing opportunity to scale up our small businesses,” he said, emphasizing that that could create more middle-wage jobs with benefits.

Pinsky agreed that certain sectors were ripe for growth, but he said it was a mistake for the city to focus too heavily on them. “People in government often think that they’re chasing the next big thing when, in fact, what they’re chasing is the last big thing,” he said. “We’re much better off trying to create the conditions for all sectors to thrive and then to let the marketplace sort through which are the ones that actually should be here and which are the ones that have a less logical connection to a specific place like New York.”

Reiterating that point, Garodnick said, “The plan makes only passing reference to those general conditions which are necessary for businesses to be successful in New York.” He said the city needed to account for the “fundamentals” that affect economic activity, be it the ongoing subway crisis or traffic congestion. “Until we’re adequately dealing with those, we’re gonna have challenges,” he said. He did praise the administration for including land use policy in the jobs plan, but was disappointed with inadequate steps taken to relieve burdens on small businesses. In particular, he called for reforming the commercial rent tax that is levied on businesses below 96th Street in Manhattan. “We can’t ignore some of these other issues that the city can actually act on right now,” he said.

Bowles agreed that the city should foster an “ecosystem” to strengthen small businesses and put resources into modernizing infrastructure, which would naturally create jobs as well.

The de Blasio administration is well aware that achieving its goals will require an organic approach that meets the needs of the economy as it develops and changes. Deputy Mayor Glen noted as much on Wednesday. “This is a ten-year plan,” she said. “I can’t say in year eight or nine where every single job is going to be. That would be an unrealistic expectation. So we have to be nimble, we have to be thoughtful. We have to adapt in real-time to changes in technology, to changes in capital markets, to changes in political and regional realities.”

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by Samar Khurshid, City government reporter, Gotham Gazette
     

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Experts Analyze Mayor De Blasio's Jobs Plan Wed, 20 Sep 2017 04:00:00 +0000
Time to Let New York Dance http://www.gothamgazette.com/?id=6886:time-to-let-new-york-dance http://www.gothamgazette.com/?id=6886:time-to-let-new-york-dance choreographer

(photo: choreographer Blacka Di Danca)


New York City is experiencing a sonic boom. From electronic cumbia in the Bronx to thumping techno in an East Williamsburg warehouse to experimental sounds in a former Greenpoint luncheonette, the energy of the city’s diverse music cultures is at a creative and popular peak. At the grassroots level, a diffuse network of DIY arts spaces cultivates the next generation of musicians. These fiercely independent venues exist to create opportunities for emerging artists and new voices, offering a first show, a supportive crowd, and a sense of community.

But not everyone is feeling the good vibrations: archaic laws and a punitive bureaucratic mindset are stifling small, local venues that are already struggling to cope with skyrocketing rents. Given a severely lacking support structure for the city’s DIY music and art spaces, a single misstep can prove disastrous. In this environment, the selective enforcement of current rules and regulations serves to criminalize nightlife—dampening economic opportunity and making New York less safe.

One particularly draconian example, the Cabaret Law, was passed at the height of the Harlem Renaissance in a bid to curb the rise of jazz clubs in the prohibition era. In the words of the Committee on Local Laws, the aim was to rein in “the ‘wild’ stranger and the foolish native” by prohibiting restaurants and bars from allowing more than three patrons to dance without receiving a separate cabaret license. For more than 60 years, the law specifically banned the principal instruments used in jazz, until a 1986 ruling found that provision unconstitutional. Despite this overtly discriminatory origin, the law has remained in force to this day.

In addition to its redundancy—strict rules already govern noise, alcohol, crowds, and other late-night nuisances—the Cabaret Law continues to have a chilling effect on specific styles of music, encouraging local music and art spaces to book rock bands or folk performers instead of hip-hop artists or salsa musicians that might inspire the crowd to dance. Applying for a license involves a gauntlet of additional regulations and costs, including additional security, surveillance, operational, and recordkeeping requirements. The cost and complexity help explain why just 94 of the city’s 25,000-plus food service establishments currently hold a cabaret license.

This regulatory relic is just one example of the adversarial relationship that characterizes the city’s interactions with independent nightlife and local arts communities. Many DIY spaces never recover after accruing multiple violations and thousands of dollars in fines. Even modest fixes can be out of reach, especially for smaller spaces: changing a certificate of occupancy, applying for a public assembly permit, or undertaking renovations to comply with byzantine building codes all pose significant hurdles. The lost revenue from just a few days spent closed for repairs can mean the difference between making rent and risking eviction.

In a city where one experienced entrepreneur cites costs upward of $1 million to open a 100-capacity venue, it’s no surprise that artist- and youth-run spaces end up mired in a constant struggle to operate legally. The result is that the city’s small, local arts venues—which account for more than 12,000 jobs and $800 million in annual economic output—struggle to make ends meet.

Rising rents are a major contributing factor, but the city government presents obstacles of its own. In order to prepare for the onslaught of city agencies, DIY spaces are not only paying artists and staff, but also attorneys, expeditors, compliance consultants, and contractors to satisfy health, building, fire, water, gas, and electrical regulations. Faced with escalating costs, zoning pressures, and an enforcement-focused system of regulatory agencies, New York City’s status as an incubator of arts and culture is under threat.

The Center for an Urban Future’s Creative New York report found that at least 24 music venues closed between 2011 and 2015, with more DIY spaces, such as Palisades and Shea Stadium, shuttering in the past few months (although the latter is poised to return). A recent report from the Mayor’s Office of Entertainment and Media confirmed these findings, announcing that more than 20 percent of the city’s smaller music venues have closed over the past 15 years.

Sustaining independent music and nightlife means supporting efforts to create safer physical spaces. It is essential that all spaces comply with common sense safety rules, such as clear paths of egress and working fire extinguishers. But the existing financial and regulatory burden creates a two-tiered ecosystem, with fully licensed, for-profit venues operating aboveground while many artist-run or not-for-profit spaces are forced into the shadows. This has the paradoxical effect of pushing vital arts spaces further underground, making artists and patrons less safe, not better protected.  

New York needs a strong base of local arts venues to create opportunities for emerging artists and sustain the next generation of musicians, organizers, and cultural producers. The city should take steps to cultivate its grassroots music and nightlife venues, or risk undermining the foundation of its creative growth. The creative sector now employs roughly 300,000 New Yorkers, or 7 percent of all jobs in the city. And small clubs, bars, and music venues account for thousands of additional jobs, fueled by live performances every night of the week.

A strategy to support these entrepreneurial endeavors could include free or subsidized legal advice and architectural services for artists and venues; a grantmaking or matching-funds program for urgent safety improvements and public assembly permits; a program to provide mock inspections to local music and art venues; and a nightlife liaison inside City Hall—an approach successfully undertaken by some of New York’s cultural rivals, including San Francisco and Berlin.

Perhaps the simplest step in the right direction is to repeal the Cabaret Law. After nine decades of antagonism toward nightlife, the time has come to let New York dance.

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Eli Dvorkin is managing editor of the Center for an Urban Future and a founding member of the Silent Barn. On Twitter @nycfuture.

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

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Time to Let New York Dance Sun, 23 Apr 2017 04:00:00 +0000
The City's Next Steps to Ensure Vibrant, Creative Communities http://www.gothamgazette.com/?id=6139:the-citys-next-steps-to-ensure-vibrant-creative-communities http://www.gothamgazette.com/?id=6139:the-citys-next-steps-to-ensure-vibrant-creative-communities nyc culture

photo via @NYCulture


Earlier this month, the city's Department of Cultural Affairs announced a promising new program aimed at strengthening cultural organizations in targeted neighborhoods. The initiative, known as Building Community Capacity, was introduced in conjunction with Mayor de Blasio's rezoning proposal in East New York, where the program will be launched.

The new initiative is consistent with several of the recommendations from Creative New York, the Center for an Urban Future's recent report on the city's arts economy. The report found that a number of small and mid-size arts organizations in low- and middle-income neighborhoods are financially strained. To address this issue, it encouraged the de Blasio administration to integrate the arts into its rezoning proposals, ensuring that existing artists and arts organizations are supported, preserved, and fortified.

In recent years, government support for New York City cultural organizations has declined significantly. Adjusted for inflation, programmatic and operating grants from the National Endowment for the Arts fell by 15 percent, from the New York State Council on the Arts by 37 percent, and from the city's Department of Cultural Affairs by 16 percent. As a result, cultural organizations have become increasingly dependent on private philanthropy. Many mid-size and small organizations have struggled with this adjustment. In 2012, for instance, we identified 14 "mid-sized" performing arts venues whose revenue did not cover expenses.

Small organizations are also under pressure, particularly those located outside of Manhattan and those serving communities of color. Among New York organizations that explicitly listed their constituents as non-white, earned revenue—primarily attendance fees—covered 32 percent of their expenses, compared to 55 percent for those with a general audience. Likewise, individual and board donations covered only 11 percent of expenses for these organizations, but a much higher 21 percent for those serving a general audience.

Given the extensive challenges facing small and midsized art organizations—particularly those in communities outside of Manhattan—it's encouraging to see the Department of Cultural Affairs (DCLA) focus on fortifying these groups.

While the specifics of the DCLA program will be developed in partnership with local community members and organizations, Building Community Capacity has several worthwhile objectives. They include: helping organizations with board development and fundraising capacity, equipping arts leaders with essential management skills, activating underused spaces for cultural activities, and streamlining the permitting process.

To address these challenges and achieve these goals, DCLA and community-based cultural organizations should look to nonprofits and other city agencies for inspiration. To assist with board development and fundraising capacity, for instance, DCLA could replicate the Robin Hood Foundation's Board Placement Program. Robin Hood helps connect talented, committed and wealthy individuals with social service nonprofits throughout the city. The DCLA could provide a similar matchmaker role for small cultural nonprofits.

Likewise, to help arts administrators develop their management skills, DCLA should look to the New York City Economic Development Corporation's Fashion Fellows, a yearlong training and networking program for rising stars in fashion management. The DCLA could introduce a similar platform for administrators at cultural nonprofits in low-income neighborhoods.

As East New York artists and arts organizations search for affordable and underutilized performance and rehearsal facilities, they should partner with the Department of Education. Schools in East New York (District 19) contain 46 "primary" and "non-primary" dance rooms, 64 music rooms, 50 theater classrooms, and 61 auditoriums. After school hours, most are left unoccupied. Opening these facilities in the evenings and on weekends could provide stable, affordable space to hundreds of local artists, helping them remain in the neighborhoods where they live and work.

Finally, to streamline the permitting process and enliven vacant retail spaces in the target neighborhoods, DCLA should look to the Mayor's Office of Film, Theatre & Broadcasting (MOFTB) or the Street Activity Permit Office (SAPO) for assistance. The current permitting process is extremely cumbersome and expensive, requiring individual approval from several agencies, including the police and fire departments.

For film and street fairs, on the other hand, the MOFTB and SAPO have established a one-stop-shop, helping to simplify this bureaucratic tangle. Given their resources and expertise, the MOFTB or SAPO could assume permitting duties for all East New York performances and exhibitions, on a pilot-basis. If it runs smoothly, the city should consider delegating all performing and visual arts related permitting to one of these two agencies.

With the Building Community Capacity program, the de Blasio administration is redoubling its efforts to strengthen local organizations and improve access to the arts in all of the city's neighborhoods. From permitting to management training, board development to activating underused spaces, the Mayor's initiative can help build more vibrant, resilient and creative neighborhoods.

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Adam Forman is a Senior Researcher at the Center for an Urban Future.

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

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The City's Next Steps to Ensure Vibrant, Creative Communities Wed, 03 Feb 2016 00:18:43 +0000
As City Eases Burdens, Access to Capital, Rising Rents Remain Issues for Small Businesses http://www.gothamgazette.com/?id=5621:as-city-eases-burdens-access-to-capital-rising-rents-remain-issues-for-small-businesses http://www.gothamgazette.com/?id=5621:as-city-eases-burdens-access-to-capital-rising-rents-remain-issues-for-small-businesses torres-springer sbs

SBS Commissioner Torres-Springer (photo: @NYCBusSolutions)


Small business assistance is a perennial political promise. Few can argue with the goal of stimulating the city's economy and almost everyone has some connection to the issue.

After all, the Department of Small Business Services (SBS) reports that 98 percent of the city's 220,000 businesses are considered small (fewer than 100 employees). The number has increased in recent years due to an entrepreneurial boom in the city. According to the Center for an Urban Future, nearly twice as many businesses were incorporated in the city in 2011 than in 1991. Every day, many New Yorkers go to work or shop at these businesses, often doing both.

Mayor Bill de Blasio sees owners and employees of these businesses as squarely in the crosshairs of his mission to reduce inequality and create opportunity. The needs of individual business owners vary some because the category is so large, but, there are many commonalities among those looking to start, maintain, or grow a small business.

After a first year in which the de Blasio administration drastically reduced fines levied on small business, the City has just launched a new, multifaceted approach to reduce regulatory burdens. While these moves are certainly welcome, many in the small business community say that access to capital and ever-rising rents remain their largest challenges.

According to the Federal Reserve Bank of New York's 2014 Small Business Credit Survey, 40 percent of local business owners say they're struggling with common problems of finding customers and managing cash flow. Many businesses also said that securing loans was a major issue.

"Twenty percent [of businesses] cited credit availability as a top concern. Most small firms reported needing micro loans of $100,000 or less," said Claire Kramer Mills, an assistant vice president in the Federal Reserve Bank of New York's Community Affairs Office.

The survey was conducted over a two-month period during the fall of 2014. More than 2,000 businesses with fewer than 500 employees were surveyed from 10 states. Responses were weighted to reflect the full population of small businesses in each state. Specific New York City figures were then highlighted for Gotham Gazette.

Most businesses need some kind of loan in order to launch or stay alive, especially in New York City. "Very small" businesses with fewer than 20 employees make up the majority of the city's small businesses and are growing at the fastest rate. These are local restaurants, tech start-ups, boutique retail stores, neighborhood coffee shops, and more.

Many of these business owners have little or no additional support outside of family or friends, and navigating the banking system can be difficult. According to the Federal Reserve survey, more than 20 percent of local business owners applied for funding from online lenders last year despite often higher interest rates.

Aissatou Bah, a loan officer at the Brooklyn Cooperative Federal Credit Union, cautioned against using online lenders for their expediency, because interest rates can be double or triple the standard.

The Brooklyn Cooperative's mission is to help community businesses, but that doesn't mean it can give money to just anyone. Bah said that a strong business plan and a little patience is essential.

"Every lender wants to lend money, that's what business owners tend to forget sometimes," said Bah.

She said that the average loan decision can take two weeks. In cases where people aren't fully prepared, she'll refer them to SBS or local business development centers for more guidance before giving them financing.

The Brooklyn Small Business Development Center (SBDC) is one of those places where owners can get advice at any stage of a very complicated process. Operated by the State University of New York and funded by federal money, the Brooklyn SBDC helps people with business plans, networking, research, and other services from the start-up phase onward.

"It's a very daunting situation to open a business," said Director Robert Piechota. "You better make sure you know what the heck you're doing."

The Brooklyn SBDC also helps people, particularly those who don't speak English, understand the City's complex bureaucracy, "It's not very easy to open a business or maintain it given the constantly changing landscape of regulations," said Piechota.

The city offers similar services as well. The Department of Consumer Affairs, which investigates many businesses, not only scaled back the fines it levies, but launched expansive new initiatives in order to communicate with businesses in a variety of languages. SBS operates seven "NYC Business Solutions" centers where people can get pro-bono legal services, help reviewing leases, business courses, and access to capital. According to an SBS spokesperson, the department helped connect businesses with approximately $58.5 million in capital last year through various methods.

The City Economic Development Corporation (EDC) also helps small business get lines of credit and loans of up to $250,000 through its Capital Access Loan Guaranty Program. The EDC helps facilitate financing through various lenders and provides up to a 40 percent guarantee for qualified applicants.

Many of these systems were already in place under the Bloomberg administration. As a council member and the public advocate during that time, Mayor de Blasio often talked about the need to reduce the regulatory burden on small businesses. Since taking office he's made efforts to reach that goal.

Last year, he lowered revenue targets for fines given out by the Department of Consumer Affairs and the Department of Health and Mental Hygiene. Keeping with this tack, his administration recently announced its Small Business First program to further improve the climate for small businesses.

Led by SBS, the $27 million initiative seeks to streamline the regulatory process across more than 15 different city agencies over the next four years. Opening any business - particularly one involving food - requires permits and inspections from more agencies than many people may realize. While the initiative won't change that, it includes 30 ways in which the City is making the process easier - including an online portal to find and file forms, translating materials into multiple languages, and more.

Local business groups have reacted positively to the plan, but say that regulations will still pose a challenge for owners.

"Small Business First won't eliminate all of the regulatory barriers small business owners face, but anything the City does to make it easier for small business owners to understand and comply with local regulations is a step in the right direction," said Victor Wong, director of business outreach and GoBizNYC at the Partnership for New York City.

SBS will be creating a Small Business Advisory Board - made up of city personnel, elected officials, and small business owners - to monitor the program's success and offer future recommendations.

City Comptroller Scott Stringer has also announced a "Red Tape Commission," made up of various business and community leaders, that will spend a year producing recommendations for streamlining the regulatory process. How this will differ from Small Business First remains to be seen, but representatives from SBS and the comptroller's office both said they plan to work together on the issue.

"I am confident that the Red Tape Commission's work will provide valuable new insight, reform proposals, and audit topics that will help make city government more responsive to the needs of the small business community," Stringer said in a statement.

City Council members have been getting in on the action as well. Speaker Melissa Mark-Viverito proposed the idea of a "small business advocate" position in her February State of the City address and other ideas have been floated by various members.

Robert Cornegy, Jr., chair of the Council's Committee on Small Business, said that he supports increasing access to capital and finding ways to reduce regulatory burdens by providing industry-specific advice. Cornegy told Gotham Gazette that one of the most pressing issues is the ability for businesses to afford space.

"So many small businesses have been devastated by enormous and unmanageable rent increases and it's heartbreaking. Too often, businesses that have been part of a neighborhood's renaissance are unable to remain and reap the rewards of the changes they have helped to create," Cornegy said by email.

Cornegy said he often hears stories of commercial tenants being harassed by landlords in his Brooklyn district, but they have less protection than residential tenants.

The council member has introduced a resolution calling on the State to pass legislation that would establish a property tax credit for commercial landlords who limit rent increases to small business owner tenants upon lease renewal. Council Member Jimmy Van Bramer, of Queens, has introduced a similar resolution, focusing on small businesses that own property.

Council Member Helen Rosenthal said that she's also seen this happening in her district on the Upper West Side, particularly when landlords get an opportunity to bring in larger corporate tenants for more money. She hopes to change this when designing new construction.

"In new buildings I'd love to have an opportunity to negotiate for physical spaces that would imply a small business," Rosenthal told Gotham Gazette.

Some advocates worry that rent increases will have an irrevocable effect on the small business community. Steven Barrison, executive vice president of the Small Business Congress, estimates that thousands of "mom and pop" businesses are closing shop every year.

"Businesses are in a crisis, they're on life support now," he said.

City and state officials are often wary, of course, of alienating the real estate industry - and there is a limit to what the City can do without receiving more support from Albany for commercial rent regulations.

Good news includes that as the economy continues to grow, small businesses are seeing better success rates. According to the U.S. Small Business Administration, 80.7 percent of the establishments that opened in New York State during 2013 survived through 2014, and bankruptcies have declined since 2010.

Despite positive trends, entrepreneurs still face tough odds when running one of the city's many thousands of small businesses. Even with the possibility of additional federal and state funding, and the city's efforts to reduce regulatory hurdles, starting a business in New York will always be a risky proposition.

"Just having an idea is not enough in this country to have a sustainable business," said Cornegy. "You can open one, but sustainability is based on a good solid plan."

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by Cole Rosengren, Gotham Gazette
@ColeRosengrenNY

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As City Eases Burdens, Access to Capital, Rising Rents Remain Issues for Small Businesses Thu, 12 Mar 2015 05:00:00 +0000