SBS Commissioner Doris at a small business (photo: @NYC_SBS)
Frustrated City Council members and hopeful––yet weary––small business advocates took to a hearing Tuesday to express their concerns about the Open Storefronts program launched recently by Mayor de Blasio after outcry from the business community, particularly smaller retailers. Small businesses, many of which are struggling to hold on if they haven’t already closed due to the pandemic and a lack of government help, can enroll in the program that, as of now, will give them through December 31 to sell their merchandise right outside their establishments.
After months of city government action mostly focused on the restaurant industry, the city’s Business Improvement District Association wrote a letter in early October to the mayor and City Council Speaker Corey Johnson calling for such an initiative, proposed to mirror the success of the Open Restaurants program, increase foot traffic, and drive up sales for retailers. The BID Association pushed for the inception of the program for months before its launch on October 28, weeks after its open letter.
Tuesday’s City Council hearing was led by the Council Member Andrew Cohen, a Bronx Democrat who chairs the Council Committee on Consumer Affairs and Business Licensing, and Council Member Mark Gjonaj, also a Bronx Democrat, who chairs the Council Committee on Small Businesses.
Cohen began by acknowledging the effect online shopping has had on local communities, citing a lack of storefronts in “typical high-traffic areas.” He acknowledged the impact of COVID-19, calling the pandemic a “final nail in the coffin” for some small businesses and large retailers alike. He attributed the survival of small retailers to either resilience or “pure New York-style hustle,” but also pointed out that as of November, small business’ retail revenue was down 35% compared to January. Whether it’s due to the lack of the tourist market, the number of people working from home or avoiding shopping, or the capacity restrictions for stores, even small businesses that are weathering the storm are still suffering, he said.
Open Storefronts is intended to combat some of these trends, and help small businesses in the city survive.
“Today, the committees are eager to hear directly from retailers on their experience with the program,” Cohen said. “We are also grateful that the administration has made time to be here today, as we would like to hear the reasoning for some of the elements of the program. For instance, I’m curious as to why the program was not started earlier, perhaps in the summer when people could take advantage of the good weather. I’d also like to know why the program doesn’t fully extend the same permissions as the outdoor dining initiative…We’re also keen to hear how widespread the program is. Outdoor dining has been well-received so much so that we have passed legislation to make it permanent, but the success of outdoor retail is less clear.”
Gjonaj opened with a handful of daunting statistics regarding unemployment rates, revenue loss, and business closures. “According to a city comptroller report,” he said, “over 800 retail establishments have closed permanently between March 1 and July 10, causing a permanent loss of jobs and wages in the city, as well as tax base.” He acknowledged gratitude small business owners feel for the city Department of Small Business Services’ funding assistance programs and thanked SBS Commissioner Jonnell Doris for his work to get the initiatives up and running.
But Gjonaj also made clear his worries of whether or not it's enough to sustain struggling businesses. “I fear that small retail stores will soon be a relic of the past,” he said. “They need more than we’ve given them, and they need it today.”
According to Commissioner Doris, roughly 40,000 businesses across the city are eligible to participate in the Open Storefront program, but just 563 businesses are signed up so far — a rate Cohen called “modest.”
When asked, Doris did not have data for how many retailers do not qualify for the program due to issues like a lack of sidewalk depth (participating stores must have 8 feet clearance for foot traffic as well as space for merchandise).
The commissioner cited a couple of reasons for limited participation thus far. “One, we know that some of the stores are already participating in the program,” he said. “We also know that many of the stores put their wares out front [without applying], so we have to go around––which we have been doing––to just tell them to sign up for the program. That’s just that information gap there. The reality, the harsh reality, is that...we’ve heard from some of our BID partners, we’ve heard from businesses, as well, that the pandemic has caused somewhat of a slowdown, [with the] uptick in COVID transmission in hot zones, et cetera.”
In response to Cohen’s question on why the urgency to create this program wasn’t parallel to that of the urgency for Open Restaurants, Doris responded, “We do know that this is the time that our small businesses need it––particularly our storefront businesses. This is the time that they actually get 70% of their sales. We want to make sure that we highlight this time and give them the opportunity to do it during the holiday season. The last several months of the year [are] when they make the majority of their sales.”
While “no one is turned away” from the application according to Doris, there was a general acknowledgement at the hearing that there is a lack of awareness about the program. Council Member Karen Koslowitz, a Queens Democrat, said that while walking down Austin Street, the “5th Ave of Queens,” she noticed only one store had their merchandise displayed outside. The commissioner explained that outreach is “extensive,” noting they are partnered with 76 BIDs, have conducted 233 webinars and done trainings, have taken to the grounds to speak with businesses, connected with the chambers of commerce in the boroughs, utilized media, and sent out materials.
The hearing, however, demonstrated that there are multiple concerns––the narrow timeline being one of them. Responding to Gjonaj’s question on whether or not the program will be extended after the end of the year, Doris said he did not have an announcement to make but that the administration is open to, and reviewing, the idea. Gjonaj urged Doris and the administration to give small businesses a “fighting chance” and to make the decision sooner rather than later, adding, “They’ve got four more weeks, hopefully, to the end of the year. They’re second-guessing whether or not they should make any investment, and the creativity of how to market their products, enclosures, so on and so forth…There’s no reason to wait for the last moment.”
Gjonaj continued to bring up the $37 million Lower and Moderate Income Storefront Loan spearheaded by de Blasio and Doris, clarifying with the commissioner that $35 million of that investment is for loans, not grants. He raised the clause within participation in the loan program that requires storeowners to make personal guarantees, calling this requirement “odd” in light of New York’s recent ban on similar clauses presented to renters by landlords. He suggested that these types of clauses are potentially deterring small businesses from participating.
“We’re partnered with a lender…and those are regular loan procedures that occur when we have small business loans,” Doris said. “We certainly hear that as a concern. We don’t believe that that would be an issue based upon our research with the businesses that are potentially able to utilize this program. We will monitor it to see if it is, but don’t think it will be and we don't think it's something that is prohibited…It’s generally how business loans are operated now.”
There is a “backstop” to handle these challenges, he clarified, citing a loan loss reserve and noting the program is interest-free. He claimed confidence in the product, that it is a “targeted” fund to lower- and moderate-income communities who were not assisted by the federal government.
In response to Gjonaj asking if the commissioner believed $35 million in the loan program to be “enough,” Doris said no and called for another federal stimulus package, saying the only entity that can make a true difference is the federal government. To this, Gjonaj recalled the recent de Blasio proposal for a $900 million school bus program.
“The money that we’ve thrown into this so far is laughable…We’ve abused small businesses as the piggy banks in the well that we constantly go to to draw water from, and in their time of need, we weren’t there for them,” Gjonaj said. “The facts are in the dollar amount. I know, commissioner, that if you had it your way, if we had a magic wand, we’d be giving billions of dollars out in grants…To replace the word ‘targeted,’ I would use the word ‘discouraging.’”
Issues regarding the physical execution of storefront operations like utilizing sidewalks while following guidelines, sharing space with restaurants, obtaining access to roadways, and dealing with competing street vendors were also detailed as problems during the hearing.
Council Member Peter Koo of Queens referred to downtown Flushing, in his district, asking how businesses are supposed to compete with large amounts of unlicensed vendors selling “everything under the sun” and taking up sidewalk space without any authoritative enforcement. He also mentioned security concerns with putting merchandise outside (they are required to be pulled back inside at the end of each day) and inquired about the possibility of a tax moratorium for small businesses during the holiday season. Doris said the Department of Small Business Services is not an enforcement agency and that he doesn’t have any information about a tax moratorium. He acknowledged the concerns and pledged to continue to work with downtown Flushing businesses and Koo.
Koslowitz, Gjonaj, and Cohen expressed similar concerns regarding street vendors, alleging that rules are not enforced by the city. Gjonaj said it’s a potentially dangerous race to see who can get on the sidewalk first. “We need to make a plan before we have to be reactive to a tragedy,” he said. Expressing frustration, Cohen said that there were no answers given on the matter during the hearing because there are no policy answers in general.
Mark Caserta, the executive director of the Park Slope 5th Avenue BID representing the BID Association, outlined reasons for hesitation to join the program and presented numerous suggested improvements. He noted that concerns include budget and staffing restrictions, lack of experience with outdoor setups, busyness and stress, and weariness to be “early adopters” of such a program. He recommended that the program be extended at least until capacity limitations inside stores are lifted, an education program for businesses who do not benefit from BID Associations, and a publication of data in a similar vein to that of the Open Restaurant program.
The president of the Bronx Chamber of Commerce, Lisa Sorin, agreed and addressed concerns similar to Caserta’s. She attributed the short timeline to use the program as well as the late notice of its existence, weather issues, worries about enforcement problems resembling what restaurants experienced, and oversaturation of sidewalks with merchandise, restaurants, and homeless individuals. She also brought up the storefront loan program, telling an anecdote about a minority-owned business facing eviction and in “desperate need” of the money, but unable to apply until after December 13 because they are in the second phase of the loan distribution. The store will only be eligible if there is money left in the loan program and if the store meets all criteria, she said.
Camelia Tepelus of the Morris Park BID in the Bronx continued the conversation on vendors, calling for more enforcement. She also said there is no visual distinction between vendors and small businesses once they’re operating outside and suggested some kind of demarcation for participating businesses. CEO and president of the New York Women’s Chamber of Commerce Quenia Abreu called for more promotion, and more direct involvement of small businesses in decision-making roundtables, as well as the inclusion of the organizations that work closely with small businesses and assist with loans and grants.
In final remarks, Cohen acknowledged the work SBS has done facing a daunting task. Gjonaj closed saying, “Nothing is perfect, but as long as we keep trying and improving on what we have, we continue to make a difference.”