Gotham Gazette

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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.“

by Colin O’Connor, Gotham Gazette

Something Cuomo & De Blasio Agree On: City Shelters Need Improvement

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Gov Cuomo (photo: Kevin P. Coughlin/Office of the Governor)

As homelessness has become the latest front in the rivalry between Gov. Andrew Cuomo and Mayor Bill de Blasio, there is at least one thing that the State and the City agree on: New York City homeless shelters need improvement.

Considering all of the political posturing and seeming lack of coordination between city and state officials, the fact that eyes and efforts are being trained on substandard shelter conditions for tens of thousands of New Yorkers who lack stable housing, this source of agreement may lead to positive results.

"Homeless people don't want to go into a shelter," Cuomo said Monday during an aside as he gave a speech on his minimum wage push. "Why? Because it's dirty, it's unsafe. So they're staying out on the street...It's just not right...It's not right to have a shelter system that is so dirty and unsafe, that people have to stay on the street corner."

"Shelters absolutely have to be improved," de Blasio said Monday as he continued to be peppered by press questions about Cuomo's new executive order, which was announced Sunday and deals with homelessness in several ways, including insisting that shelters are in good condition. As Cuomo acknowledged to reporters on Monday, the state has oversight of homeless shelters across New York.

"There's been a safety issue in shelters for years, in fact for decades," de Blasio said, in what is a common refrain: that his administration is taking steps to mend a mess it inherited.

On Monday, de Blasio again pointed to the "shelter repair squad" that the city announced in May after a damning Department of Investigations report (which de Blasio had asked for), and said that "there are very real things that have to be fixed in our shelters...we're on the case."

For many, though, de Blasio isn't acting quickly or effectively enough in reducing the city's street and shelter homeless populations, which total around 60,000 people, or in improving the quality of the city's shelters. Thus leading to Cuomo's executive order and his promise to lay out new policy this month. A recently released audit from Comptroller Scott Stringer - which Cuomo referenced on Monday - brought further detail to shelter problems.

Calling the audit a "damning commentary on the shelter system," Cuomo said he'd be "contacting the comptroller, literally this week" to go over the report and Stringer's proposed remedies. Stringer's audit shows deplorable conditions in many shelters and a lack of city oversight of shelter providers with whom they contract.

In response to the audit, the de Blasio administration said it largely agree with Stringer's recommendations and explained that progress was already being made, including in terms of the repair unit, which, it said on Dec. 21, had "already cleared more than 12,000 violations and will continue until all are cleared."

De Blasio and his aides have continued to push back against some of the criticisms of their management of the homelessness crisis while the city also undergoes a shakeup in leadership and a reassessment of all aspects of its approach to the issue. They cite major increases in rental assistance programs and a significant increase in funding toward new supportive housing units, calling on Cuomo to match.

And, even as that 90-day review progresses, new homelessness-related policies have been rolled out by de Blasio and Steve Banks, commissioner of the city's Human Resources Administration and the administration's point-person on homelessness.

One of those announcements also came Monday: a plan to phase out so-called cluster site homeless sheltering over the next three years. Cluster siting means apartments being rented by the city as shelters, for which the city pays landlords above market-rate prices to provide shelter and services. But, this approach has proven ineffective on several levels, including the condition in which many landlords keep the cluster units - they had been found to be in the worst condition of all shelter types by the DOI.

The governor's executive order, which goes into effect Tuesday, includes a mandate that shelters are kept in good condition: "I direct all local social services districts to comply with their obligation to ensure that all facilities used for temporary housing assistance placements are safe, clean, well maintained and supervised and fully compliant with existing state and local laws, regulations, administrative directives, and guidelines," the order reads.

Stringer's audit says that the city has been placing "homeless families with children in shelters plagued by rodents, mold, peeling paint, and broken windows," among other structural and maintenance problems. There are also problems with theft and violence at and around some shelters.

De Blasio said multiple times Monday that the city must "fix" shelter problems and indicated he feels the city is on the right track. Banks said progress has been made, but also that these processes are under review like everything else involved in the city's approach to homelessness.

Cuomo said on Monday that he would be laying out a "comprehensive plan on the entire matter" in his Jan. 13 State of the State and budget address. He indicated that improving the shelter system will be a part of that plan, saying, "We have to improve the shelter system, one way or another."

Shelters in all New York municipalities are under the governor's purview, of course. "The state regulates the city system," Cuomo said Monday. "The constitutional responsibility runs to the state. The state delegates the responsibility to local - what they call local service districts - basically, cities. We regulate and we reimburse the shelters all across the state. If shelters are not up to code, then we are going to be very diligent in our inspection and management of the existing shelter system. I'm going to lay out that program in the State of the State."

Though they may not be working hand in hand, Cuomo and de Blasio both now own the homelessness crisis, including the shelter crisis therein.

by Ben Max, Gotham Gazette

Doing Business With The City Gets Easier


Comptroller Scott Stringer

There are tens of thousands of individuals, non-profits, for-profits, and other entities that do business with New York City every year. The paperwork and communications systems involved can be antiquated, cumbersome, and slow - but the city is taking steps to make things easier for vendors.

Two changes being announced Wednesday by Comptroller Scott Stringer will help modernize the procurement process, moving key aspects of doing business with the city away from a paper-first model and allowing for quicker online function.

The reforms will make filing tax documents easier and improve the system by which vendors are notified of new business opportunities. Stringer points to the changes as part of a mission to improve the overall system by which the city contracts out billions of dollars per year.

"In 2015, getting a contract with New York City shouldn't require waiting in line at the post office or firing up a decades-old fax machine," Comptroller Stringer said in a statement. "Our new systems will make it easier for vendors to do business with the City – and that's good news for all New Yorkers."

For tax documents that vendors must have on file with the Comptroller in order to do business with the city, the W9 vendor information forms will no longer have a hard copy requirement. Instead, vendors will be able to file and edit these forms online.

The comptroller's office says it has processed about 3,000 W9 forms each of the past several years and that the move to a more digital system will save time on both the vendor and government ends, not to mention paper. This change will go into effect for the new year.

The more exciting of the two changes relates to vendor notifications, whereby the city puts out requests for proposals (RFPs) or other contracting opportunities, letting potential providers know about new business available. This change likely won't be fully operational through the Mayor's Office of Contract Services until the summer, but it is set to make a significant difference in how vendors learn about chances to do business with the city.

Having passed the city's Procurement Policy Board, the change, which was proposed by the Comptroller, moves to email the default method of releasing RFPs and Competitive Sealed Bids. It has been a traditional mail based system. Again, this change is aimed at reducing time, expense, and paper. It also targets ensuring that more individuals and small enterprises are able to access information easily and quickly.

"These reforms will leverage 21st century technology to increase productivity, save taxpayers' hard-earned dollars, and enable all vendors, large and small, to do business with New York City," Stringer said.

The Comptroller recently held a series of public hearings of his Red Tape Commission, aimed at helping to identify ways to improve the city climate for small businesses, and had previously introduced his Vendor Roadmap, an online, user-friendly guide to doing business with the city. He's also exploring a shift for the city to an electronic invoicing system.

The de Blasio administration, too, has been seeking new ways to help entrepreneurs, independent contractors, and small businesses compete through its Small Business First initiative.

Part of virtually any city government reform to contracting practices or business regulations is a concern about increasing the number of contracts and dollars awarded to qualifying women- and minority-owned businesses (MWBEs). The de Blasio administration announced a significant increase in contract dollars awarded to MWBEs in the most recent fiscal year. Still, Stringer has pointed out limits to the city's MWBE hiring, handing out annual letter grades to city agencies, including his own, with many of them lacking.

Stringer is among those hopeful that modernizing paperwork and business notification protocols will help improve the city's MWBE record.

by Ben Max, Gotham Gazette

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