Gotham Gazette https://www.gothamgazette.com/component/tags/tag/1519 Wed, 05 Aug 2020 14:17:29 +0000 Joomla! - Open Source Content Management en-gb webmaster@gothamgazette.com (Webmaster) Max & Murphy Podcast: Job Loss and New York City's Coronavirus Recession https://www.gothamgazette.com/city/9357-max-murphy-podcast-new-york-city-coronavirus-recession-job-loss https://www.gothamgazette.com/city/9357-max-murphy-podcast-new-york-city-coronavirus-recession-job-loss coronavirus rec 600

It's a very rainy day in New York City (photo: Benjamin Kanter/Mayoral Photo Office)


April 29, 2020 - Max & Murphy Podcast: Job Loss and New York City's Coronavirus Recession

james parrot 150Economist James Parrott of the Center for New York City Affairs at the New School joined the show to discuss his recent study of job loss in the city at the onset of the coronavirus recession, what exactly the unemployment situation looks like, and what may lie ahead.

Listen to the conversation and let us know what you think -- we're on Twitter @TweetBenMax and @JarrettMurphy. You can listen to the show through the embedded audio below or download the episode wherever you get your podcasts, under "Max & Murphy," and listen to Max & Murphy live on Wednesdays at 5 p.m. on WBAI radio, 99.5FM or wbai.org.

Max & Murphy · Episode 214: New York City's Coronavirus Recession And The Path To Recovery

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by Ben Max, Gotham Gazette
     

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Max & Murphy Podcast: Job Loss and New York City's Coronavirus Recession Wed, 29 Apr 2020 04:00:00 +0000
New Reports Paint Bleak Picture of New York City Economy, Budget https://www.gothamgazette.com/city/9315-reports-paint-bleak-picture-new-york-city-economy-budget-coronavirus-recession https://www.gothamgazette.com/city/9315-reports-paint-bleak-picture-new-york-city-economy-budget-coronavirus-recession bdb 200 citywide

New York City economy is at a standstill (photo: Edwin J. Torres/Mayoral Photo Office)


Economists and budget experts concede that they can make no concrete predictions about how long the economy will be in recession because of the novel coronavirus outbreak and the cumulative effects it will have on jobs and revenue. Nonetheless, the consequences that they have been able to forecast show that the city has a tough road ahead, experiencing a worse downturn than in the early 1970s as 1.2 million jobs have already been lost and, with extreme social distancing measures in place for the foreseeable future, more losses expected.

Last month, with what information was available, City Comptroller Scott Stringer predicted that the city would lose as much as $6 billion in revenue by the end of the next fiscal year, June 30, 2021. But a new report from the city’s Independent Budget Office estimates that the cumulative tax revenue loss in that time could be closer to $9.7 billion, with expected revenue down by 4.6% in the current fiscal year (FY2020) and 10.5% in FY2021. Though revenue may begin to climb by 2022, IBO still predicts it will be lower by 6.6% that fiscal year.

“Damage from the pandemic is particularly intense in New York City because the city’s economy relies heavily on industries that have been largely shut down in order to limit the spread of the coronavirus,” the report reads. Against this backdrop, Mayor Bill de Blasio is about to release his executive budget plan for next fiscal year, facing the need to cut billions from the spending plan and look to the federal government for a bailout.

IBO assumes that the city will lose 475,000 jobs between April 2020 through March 2021, after which the economy will slowly start adding jobs till the end of 2022. Retail employment will lose about 100,000 jobs, hotels and restaurants will lose 86,000, and the arts, entertainment and recreation industries will lose about 26,000, its forecast says. Other job losses will be across a range of industries and sectors of the economy, the IBO predicts. The only sector that will not see expected losses is health care.

Unlike predictions by budget experts of a prolonged recession, however, IBO assumes that the economy will see a “modest rally” between October and December this year. But, the report also presumes a high degree of doubt. “Given how little is known about the persistence of the Covid-19 crisis and how long the economy must remain shut, however, there is great uncertainty about the depth and duration of the expected recession and the strength of any post-recession bounce—let alone the recession’s eventual impact on tax revenue,” it reads.

What the report does note unequivocally is that job losses will be concentrated in low- and moderate-paying jobs.

A separate new report from James Parrott and Lina Moe at The New School’s Center for New York City Affairs comes to a similar conclusion, and notes that the coronavirus pandemic “has revealed a new dimension of inequality.”

“The effects of this public health crisis are widespread, touching nearly every facet of New York City’s economy, yet the fallout is also disproportionately affecting already-vulnerable workers and communities,” Parrot and Moe wrote.

The report analyzes three categories of jobs, excluding those in government: 1 million “essential” jobs (public health, safety, sustenance) that continue to be performed; 1.9 million “face-to-face” jobs (restaurants, hotels, transportation, administrative and building services, non-essential manufacturing and retail and wholesale trade), which have been restricted; and 1.5 million “remote” professional and managerial jobs that can be performed while social distancing.

There’s a stark contrast in how the coronavirus has affected each category of jobs. Essential workers, largely lower paid, are facing the most risk to their health; face-to-face workers are experiencing the worst fiscal impact from being terminated or furloughed; and remote workers are at relatively lower risk of exposure while continuing to receive pay and benefits.

The report finds that, by the end of April, the city will have lost 1.2 million jobs, about 27% of all private sector workers and independent contractors. Looking at the latest unemployment claims data from the state Department of Labor, it notes that despite 812,000 unemployment insurance claims having been filed in the four weeks ending April 4, New York has seen lower rate of claims filed (9.8%) compared with other large states, including the likes of Michigan (21.8%), Pennsylvania (20.3%) and California (15%). But that is likely to increase as the state improves its capacity for processing claims.

Making matters worse, face-to-face workers, who are already lower paid and less educated, will be hit the hardest by the coronavirus. The report estimates that five out of six jobs will be lost in face-to-face industries. About 64% of jobs lost already paid less than $40,000 a year. Among those who make more than $100,000 annually, there is only a 10% drop.

Consequently, the report estimates that while many workers already lacked access to employer-provided healthcare, the outbreak could leave nearly 800,000 newly unemployed New Yorkers without health insurance.

There are disproportionate geographic and demographic effects as well, the report finds. The highest number of face-to-face workers live in the Bronx and Queens, while more essential workers live on Staten Island and in the Bronx than other boroughs.

Elected officials have recently called for a racial breakdown to see how coronavirus deaths may be more concentrated among communities of color. As far as job losses go, Parrot and Moe found that there is indeed a stark racial disparity.

More than two-thirds of jobs lost, 68%, were among people of color. Latino workers were the worst off, accounting for 32% of lost jobs. A third of younger New Yorkers, between the ages of 18 to 24, lost their jobs, compared to the 27% job loss rate.

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by Samar Khurshid, senior reporter, Gotham Gazette
     

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New Reports Paint Bleak Picture of New York City Economy, Budget Wed, 15 Apr 2020 04:00:00 +0000
Commission Releases Long-Awaited Recommendations for Fairer City Property Tax System https://www.gothamgazette.com/city/9094-commission-releases-long-awaited-recommendations-for-fairer-city-property-tax-system https://www.gothamgazette.com/city/9094-commission-releases-long-awaited-recommendations-for-fairer-city-property-tax-system m b ncb

(photo: Michael Appleton/Mayoral Photography Office)


A long-awaited report from the city’s Advisory Commission on Property Tax Reform was released Thursday, outlining recommendations for potentially drastic changes to the way residential properties are taxed across the five boroughs.

The report, which contains ten recommendations to update and add equity to New York’s vast property tax system, comes after months of delay and almost a year after the commission, created by Mayor Bill de Blasio and City Council Speaker Corey Johnson, completed its mandated public hearings.

Among the recommended reforms are changing the assessment methods of co-ops and condos, which include some of the city’s most expensive real estate, to reflect their true market values. Another is removing caps on tax increases for small homes, a provision experts say has over time placed a disproportionate tax burden on homeowners in less affluent pockets of the city.

“It’s clear that there are certain properties in New York, in certain neighborhoods that have had a lot of appreciation, where people have lived there for a long time, where their taxes will go up,” said Marc Shaw, the commission chair, during a conference call just after the report’s release. “But by having a fairer system there will also be people that will have their taxes go down and the end result will be a fairer system that everyone will understand.”

Together the recommendations take aim at a limited but significant slice of the property tax, intended to make the system more transparent and rational for residential properties and setting the stage for a new cohort of “winners and losers” -- the common parlance for politicos discussing the sensitive subject of reforming a system that impacts every constituent. With the preliminary report out, commissioners plan to hold a new round of public hearings in each borough with the goal of producing a final report this calendar year. Most of the proposed changes would need approval in the state capital, with few measures the city can take alone.

The report doesn’t tackle commercial and utility properties, which in fiscal year 2019 made up 28 percent of the market value of taxable properties in New York City.

“The Commission’s recommendations are the most significant reforms proposed in forty years and will bring a much needed level of fairness, transparency and simplicity to the entire system,” said Mayor de Blasio, in a statement of notable support. “I thank the Commission for its hard work tackling these issues head on and look forward to their final report.”

Despite promising action on the antiquated and unfair property tax system during his first months in office in 2014, given the significant delays in forming the commission and from the commission itself, it is now unlikely de Blasio will advance a reform agenda for state consideration before 2021, his final year in office. The timeline sets the stage for additional years of public debate at both the city- and state-levels before most changes are likely to be made, if they advance at all.

Announced in 2018 by de Blasio and Johnson, both Democrats, the commission was intended to study the entire system, which covers residential, commercial, and utility properties, and develop proposals that would bring fairness without hurting the city’s $95.3 billion in annual revenue, about a third of which comes from property taxes. The formation of the commission came amid a class action lawsuit by a group called Tax Equity Now New York alleging the tax system results in disproportionate tax burdens for residents that violate constitutional protections and the Fair Housing Act. The suit is ongoing and could impact the final set of recommendations from the commission, as well as the city’s and state’s approach to advancing them.

One of the most significant proposals is adjustments to the property tax classifications, which would change the methodology for assessing the value of co-ops and condos, which include high-value units that are often taxed on a fraction of what they would be if they were classified as small homes.

Under the current classifications, set by state law, small homes are assessed on their sales value, while co-ops and condos are categorized with large rental buildings and are assessed on the gross annual income they would receive if rented. The commission proposes bringing co-ops and condos, along with small rentals (fewer than 10 units) into the same class as small one- to three-family homes, to be assessed on sales price and taxed on 100 percent of the market value.

Another major proposal is changes to assessment caps, which limit the amount property taxes for homeowners can grow over a one- or five-year period. Because of the cap, property taxes on homes in rapidly appreciating neighborhoods can rise slower than their market values. As a result, homeowners in more economically-stagnant areas of the city end up paying a greater percentage of their property’s value in real estate taxes. A 2018 analysis by Citizens Budget Commission showed that homes in the Bronx and Staten Island had larger tax burdens than comparable properties in Brooklyn, Manhattan, and Queens.

To help low- and moderate-income homeowners, the commission has proposed a “circuit breaker,” which would reduce property tax burden with a credit calculated based on the owner’s income. It also recommends creating a homestead exemption on properties which are the primary residence of the owner when the owner meets a certain income threshold.

“Those units occupied by non-primary residents would pay a higher effective property tax rate than primary occupants,” said James Parrott, a member of the property tax commission and an economist at the New School’s Center for New York City Affairs, in an interview with Gotham Gazette. According to Parrott, ongoing efforts in the state Legislature to enact a pied-à-terre tax on expensive second homes, while driven by a zeitgeist for a more egalitarian city, could, if continued, hurt this broader effort to reform the tax code.

“To the extent that the property tax commission is going to change the way properties are taxed in New York, it’s likely that there will be implications for non-resident-owned properties. The ability of the reform effort to balance the changes will be limited if the Legislature approves a pied-à-terre tax separate from property tax reform,” Parrott told Gotham Gazette in December. (Meanwhile, State Senator Brad Hoylman, a Manhattan Democrat, and sponsor of the pied-à-terre tax bill, plans to hold a protest Friday with activists in front of Jeff Bezos’ Fifth Avenue apartment, calling on him to pay over $2.5 million in pied-à-terre taxes.)

Many of the thresholds, ratios, and rates to pursue have not been settled upon in the advisory commission’s preliminary report, partially because more scenarios need to be run using Department of Finance data and evaluation tools, and partially because the commission is seeking more public input to determine the extent to which these recommendations should be applied in order to fulfill the commitment of being revenue-neutral.

“There is going to be winners and losers, so there is no simple answer...and as we start to hold hearings on it, people will get a better sense of how it’s going to affect them individually,” Shaw said. The winners may be those who own a small home in the northern Bronx who have seen their effective tax rate rise every year with the slow growth in market value. Big losers could be the owners of multi-million dollar co-ops in Midtown Manhattan or one- to three-family homeowners in some neighborhoods, Park Slope for example, who saw the values of their homes skyrocket above the statutory assessment cap.

“The city has to be somewhat careful about how it portrays some of this information so that it doesn’t hurt its own case,” he added, referring to the Tax Equity Now lawsuit.

The report recommends transitioning to a new tax system gradually for current owners, a position supported by many tax experts, while newly sold properties would enter the new system at the outset.

“The details of any proposal will be of great significance, and it is important to consider both the short-term and long-term implications of any set of proposals on both taxpayers and the City fiscal condition,” wrote Ana Champeny, director of city studies at Citizens Budget Commission, in an email.

"The Property Tax Commission has worked very hard to make this City's property tax system more fair and easier to comprehend for all,” Speaker Johnson said in a statement. “I look forward to reviewing the Commission's initial recommendations and I thank them for their efforts. There are outstanding issues to address like how the property tax system impacts renters in our City and how to best address luxury housing. This is a work in progress and I'm eager to hear the public's feedback on these recommendations."

With the public hearings yet to be scheduled and, ultimately, the need for a set agenda first from de Blasio and the City Council that is then approved by state legislators and the governor, it is unclear how the new reforms will shake out and who the winners and losers will be.

“I look forward to reading the commission’s report, and I hope they have recommended the kind of change that the home and business owners in the city need,” wrote State Senator Brian Benjamin, a Manhattan Democrat and chair of the Senate’s Committee on Revenue and Budget, in a text message before the preliminary report was released. Benjamin has held public forums and an expert roundtable on the subject in 2019, in preparation for possibly pursuing state level reform this year. But, like many others, he has previously expressed frustration by how long the city commission was taking to formulate its report and has questioned whether any change would be possible in the 2020 state session, which runs until June.

Shaw was able to confirm, in broad strokes, the fate of some well-known property in booming Park Slope. When asked by a reporter on the call whether de Blasio’s famously low property taxes would go up or down under the proposed reforms, he said, “Under this reform effort, the property taxes on the mayor’s house will go up significantly.”

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by Ethan Geringer-Sameth, reporter, Gotham Gazette
     

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Commission Releases Long-Awaited Recommendations for Fairer City Property Tax System Thu, 30 Jan 2020 05:00:00 +0000
De Blasio's Record on Budgeting and Fiscal Health https://www.gothamgazette.com/city/7300-de-blasio-s-record-on-budgeting-and-fiscal-health https://www.gothamgazette.com/city/7300-de-blasio-s-record-on-budgeting-and-fiscal-health de Blasio city budget

De Blasio during a budget presentation (photo: Michael Appleton/Mayor's Office)


This article is part of a series on Mayor de Blasio's first term record as he seeks reelection this fall, in partnership with WNYC radio and City Limits. Find all pieces of the series here.

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Mayor Bill de Blasio inherited a city with a healthy economy and strong tax revenues, allowing him to add billions in new spending for his priorities and increase the size of city government while also saving substantial funds for a rainy day. Though fiscal monitors and budget experts generally agree that the city’s budget has been handled responsibly, they are cautious about the future. This is a mayor who has encountered few budgetary challenges, and numerous loom on the horizon, from slowing economic growth to federal policies that threaten to create a sharp financial crunch. There are also ongoing financial crises at the city’s public housing authority, NYCHA, and public hospital system, New York City Health + Hospitals.

As de Blasio seeks a likely reelection on Tuesday, budget watchdogs warn that the incumbent Democrat might face his biggest tests in a second term, to which there are no easy solutions.

Under de Blasio, the city’s operating budget grew to $85.2 billion for fiscal year 2018, an increase of $12.5 billion or 17.2 percent from the last budget that was modified under Mayor Michael Bloomberg. Much of the new spending has come from an increase in the municipal workforce. The administration has added more than 31,000 employees in de Blasio’s first term for a total headcount of about 328,267 full-time and full-time equivalent employees, the highest it has ever been. That number is expected to grow to 329,055 by the end of the fiscal year on June 30, 2018. These new employees also come with future obligations in terms of pension and health care costs.

The administration has simultaneously put aside what the mayor and others often refer to as “historic” levels of reserves. This includes $1 billion each year in the general reserve, $250 million each year till 2021 in the capital stabilization reserve, and $4 billion in the Retiree Health Benefits Trust fund. Those reserves added up to a $9.8 billion or 11.1 percent budget cushion (reserves as a percentage of adjusted expenditures) at the start of fiscal year 2018, according to City Comptroller Scott Stringer’s report on the adopted budget. Stringer noted that the cushion remained at the same level as fiscal year 2017 since increased savings were matched by expenditures. He recommended an optimal cushion of between 12 and 18 percent, and has emphasized that the administration needs to create more savings through efficiencies at city agencies.

De Blasio has eschewed targeted cost-efficiency initiatives at city agencies, which were a signature of previous administrations. He has opted instead for a voluntary Citywide Savings Program which identifies savings at agencies, more often through re-estimates of expenditure rather than efficiencies. He recently announced a partial hiring freeze at city agencies, though some see this as something of a gimmick given how many employees he’s already allowed to be hired.

“My broad assessment is that [de Blasio] and budget director Dean Fuleihan have done an excellent job of managing the city budget,” said James Parrott, director of economic and fiscal policy at the New School’s Center for New York City Affairs. “They’ve been fortunate that the revenue situation has been accommodating to an ambitious agenda and they’ve been fiscally responsible to build reserves.”

In keeping with his progressive agenda, de Blasio has massively increased funding for social services and related to homelessness, education, public safety, and mental health services, among other major investments.

The combined budgets for the Departments of Homeless Services and Social Services increased to $11.5 billion in the fiscal year 2018 budget, up from $10.6 billion in the modified fiscal year 2014 budget that de Blasio inherited from Bloomberg. Department of Education spending increased by $4.4 billion in the same period, owing in large part to the implementation of universal pre-kindergarten and its planned expansion to three-year-olds. NYPD funding increased by $600 million, largely from the hiring of 1,300 more officers, while the Department of Corrections saw a nearly $340 million increase in its budget despite a continued drop in the city’s jail population.

“I think we're in a sustainable position,” de Blasio told the New York Daily News editorial board in an interview last month. “I think it also interacts. I think the investments we're making are strengthening our tax base. Safer city, better schools, stronger tax base. So it works. It's not limitless. You're absolutely right. It's not like you can just add all the time. There's a point -- and we'll have to watch Washington in particular very carefully – there’s a point where we may have to make tough decisions. But to date, I feel they've been responsible, and thank god, and I knock on wood as I say it, the economy continues to cooperate.”  

Parrott noted that the administration’s strongest achievement, begun early in 2014, was the settling of 99.1 percent of expired municipal labor contracts, which provided thousands of employees with retroactive raises and dispelled significant uncertainty about how the administration would handle a “daunting challenge” in a fiscally prudent manner. “That was an amazing feat,” Parrott said. “He gets four gold stars just for that, even if he hadn’t done anything else.”

But, with an increase in the employee workforce and the new union contracts, the city also added significant long-term funding obligations. The last budget under Bloomberg predicted that salaries and wages would be about $26.3 billion in fiscal year 2018, while latest estimates show them to be about $1 billion higher. In total, the city will spend about $47 billion in salaries, wages, pensions and benefits for the city’s workforce this year, increasing to $52.5 billion by fiscal year 2021. (The city’s pension contributions are estimated to be about $9.57 billion this year and are expected to grow to about $10 billion by 2021. City employees receive guaranteed pensions, funded by taxpayers, but the administration can do little to reform pension obligations since they are controlled by the state government.)

“I think he’s just been very lucky,” said Nicole Gelinas, senior fellow at the Manhattan Institute. “He’s had a good economy. He hasn’t had to make any decisions. He’s just increased spending on everything.”

“The mayor has not used the good times to make any reforms in government spending, particularly on health care costs for government workers,” she added. The city will bear $10.1 billion in the cost of health care benefits this year, which will grow to $11.7 billion by 2019, and Gelinas insisted that the mayor should look to reduce that cost in the current round of contract negotiations. “The city should really be thinking about how to bargain that workers pay some of the costs without putting the burden on taxpayers.”

Currently, city employees pay no portion of their health care premiums, a fact that has been a point of contention over time but de Blasio has not shown any interest in changing.

“I think it’s easy to be responsible when times are so good,” she added. “The real test will be if we have a recession. No two-term mayor has avoided at least a mild recession.”

Most experts agree that some form of slowdown will hit the city’s economy, which is currently in the ninth year of an unprecedented expansion. Gelinas warned that though the city has reserves set aside, “it’s kind of easy to run through those.” In the 2008-2009 recession, she said, about $3 billion in tax revenue “sort of disappeared overnight.” In a similar situation, de Blasio would have to make some difficult choices, and signs of lower revenues are already evident. At the annual meeting of the State Financial Control Board in August, de Blasio said his administration had already projected a $416 million reduction in revenue in the 2018 fiscal year.

The biggest uncertainty the city faces is cuts in federal funding and changes in federal policy on health care, taxes and infrastructure, though those have all remained a nebulous since before budget season. Efforts by the Republican-led Congress to repeal the Affordable Care Act have repeatedly failed; and a tax overhaul currently making it’s way through the two houses faces bipartisan opposition over a proposal to change the state and local tax deduction, which is a boon to filers in high-tax states like New York. Should it pass, however, tax revenues in the city will take a major hit.

De Blasio made no significant adjustments for federal policies in his 2018 budget, insisting that the city periodically adjusts its budget to account for economic trends. The next budget modification is expected later this month. “We have an obligation and responsibility to provide New Yorkers with quality services now,” said Freddi Goldstein, a mayoral spokesperson on budget issues, in an email. “We cannot and will not let threats of cuts to federal funding that have yet to be realized deter us from strengthening New York’s future.” The city has been cautious in revenue estimates, and tax revenues are expected to grow at 4.5 percent over last year, in keeping with the administration’s plans.

Carol Kellermann, president of Citizens Budget Commission, a nonpartisan fiscal watchdog, echoed Gelinas’ assessment of the mayor’s fiscal management. “He hasn’t really been tested in terms of fiscal policy,” she said, “because times have been so good so he hasn’t had to exercise as much restraint as CBC would’ve liked.” CBC gave the mayor’s last budget “mixed marks” over the growth in employee headcount and compensation costs.

Kellermann emphasized that many of the programmatic expansions made by the de Blasio administration are permanent and escalating in cost, making them harder to pare down in the future. “It’s very hard for public officials to cut back,” she said. “Every program has its constituency and it’s very hard to take those things away, and it’s very hard to layoff public employees.”

Both Kellermann and Gelinas also pointed out that the mayor has repeatedly touted the Retiree Health Benefits Trust fund as a reserve, even though it should be solely used to fund retiree health benefits and not in cases of a general shortfall.

The mayor has also significantly expanded capital investments to support his agenda. The ten-year capital budget increased by about $6 billion this year to $95.9 billion. The increase includes $1.9 billion in additional funding for affordable housing, $1.1 billion to create new borough-based jail facilities, $300 million to renovate 30 homeless shelters, among other investments. These investments also add to the city’s debt service -- the money spent to satisfy debt from borrowing each year -- which is $6.5 billion for fiscal year 2018, and is expected to grow to about $8.3 billion by fiscal year 2021. “If the interest rates go up, that’s gonna be a big burden down the road,” Kellermann said.

Assemblymember Nicole Malliotakis, de Blasio’s Republican challenger in the mayoral race, has repeatedly criticized the mayor’s ballooning budget and his “tax-and-spend” policies. At the first mayoral debate in the general election, on October 10, she attacked the mayor for the 300 new special assistants he has hired at City Hall, and his administration’s overall expenditure. “When we’re spending $15 billion more and we still have roads that are broken, we have subways that don’t run, we a homeless crisis, we have so many issues that are plaguing our city, then that is...the epitome of mismanagement,” she said, insisting that the city needs to streamline agencies.

She particularly noted the Department of Design and Construction’s consistent cost overruns for capital projects, which was a source of concern for the City Council as well when this year’s budget was adopted.

Two crucial areas where the city already faces a budget crunch, which would be further exacerbated by federal budget cuts, are NYCHA and Health + Hospitals. “These are two so-called independent authorities that all mayors, particularly this mayor, have forthrightly stepped forward to subsidize,” said Kellermann. “They were both meant to be self-sustaining and depend on federal revenue streams.”

NYCHA has a $17 billion capital backlog and though the mayor has made large capital investments -- including more than $1 billion to repair roofs at all NYCHA developments -- the agency’s woes are far from solved. The NextGen NYCHA plan has born some fruit, clearing the agency’s operating deficit for the first time in years, but progress would be threatened if the Trump administration follows through with funding cuts to the Department of Housing and Urban Development.   

NYC Health + Hospitals, the municipal hospital system, handles about 5 million patient visits each year and serves about 500,000 uninsured New Yorkers. But the cash-strapped hospital systems depends heavily on the city bolstering its finances. Even though the city has increased funding to the system from $1.3 billion in 2013 to $1.8 billion this year, Health + Hospitals projects an expected budget deficit of $1.6 billion in fiscal year 2019, growing to $1.8 billion by fiscal year 2020.

“[De Blasio’s] been hoping and saying that they will reinvent themselves into a new model, but it’s just not happening,” Kellermann said, referencing the city’s plan to overhaul the hospital system. “It’s the same thing with NYCHA. The [NextGen NYCHA] plan has the prospect of bearing fruit. But will it fill the $17 billion need? No...Both are open questions for which there are no answers at this point.”

Parrott, who recently co-authored a report on Health + Hospitals for the New York State Nurses Association, said the city’s approach to restructuring the system has been flawed since it only focuses on finances without taking into account the larger eco-system of healthcare. The city and state must work together, he recommended, to create an integrated system that involves private hospitals doing their fair share for a more equitable health care system overall.

“The testing of the ability to manage these things will come sooner or later,” said Kellermann. “He gets an incomplete,” she added about de Blasio’s budget record, “That’s the grade I would give.”

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This article is part of a series on Mayor de Blasio's first term record as he seeks reelection this fall, in partnership with WNYC radio and City Limits. Find all pieces of the series here.

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by Samar Khurshid, senior reporter, Gotham Gazette
     

Read more by this writer.

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De Blasio's Record on Budgeting and Fiscal Health Sun, 05 Nov 2017 04:00:00 +0000
De Blasio's Record on Poverty and Inequality https://www.gothamgazette.com/city/7280-de-blasio-s-record-on-poverty-and-inequality https://www.gothamgazette.com/city/7280-de-blasio-s-record-on-poverty-and-inequality de Blasio equality shaking hands crowd

Mayor de Blasio at an announcement (photo: Ed Reed/Mayor's Office)


This article is part of a series on Mayor de Blasio's first term record as he seeks reelection this fall, in partnership with WNYC radio and City Limits. Find all pieces of the series here.

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Bill de Blasio ran for Mayor in 2013 as an unabashed progressive, painting the image of a city cleaved in an even two by its wealth distribution. There existed, he explained, a relatively small class of New Yorkers at the top holding the majority of the city’s wealth and making immense sums of income each year. The rest, a large underclass of New Yorkers struggling to make ends meet, left behind during the boom of the Bloomberg years and decades of insufficient federal policy, especially on taxes and redistribution of wealth. De Blasio envisioned, with lofty rhetoric and ambitious policies, bridging that gap and pulling up those at the bottom while asking those doing very well to chip in a bit more.

He was elected overwhelmingly.

“New York has faced fiscal collapse, a crime epidemic, terrorist attacks, and natural disasters. But now, in our time, we face a different crisis – an inequality crisis,” de Blasio declared in his inaugural address as mayor on January 1, 2014. “It’s not often the stuff of banner headlines in our daily newspapers. It’s a quiet crisis, but one no less pernicious than those that have come before.”

Equity became the foundation of the de Blasio administration, enshrined in virtually every policy coming from City Hall and, more comprehensively, in the OneNYC roadmap for the city’s future, which sets poverty reduction and other goals to fulfill de Blasio’s promises.

Whether it’s affordable housing, sustainability, economic development, community infrastructure, or education, the administration has sought to build equity, though de Blasio has at times been accused of not going far enough by those who had immense expectations of him. Tellingly, under de Blasio, the annual Mayor’s Management Report, which is mandated by law and details the accomplishments of more than 40 city agencies on hundreds of performance indicators, included for the first time evaluations of agency efforts for their “focus on equity.”

With data showing an acute poverty problem in New York City, amid its immense wealth and gleaming towers, de Blasio sought to drastically increase opportunities available to poor, working class, and middle class people, and reduce the number of people in or near poverty, a rate that stood at roughly 21 percent -- or 1.74 million people -- when he took office.

De Blasio set the city on a path that he believes will reach the OneNYC goal of pulling 800,000 New Yorkers out of poverty or near poverty by 2025. And though the results of many of his policy actions cannot easily be gauged in the short term, there are a few clear indicators that the city’s approach is working. Notably, between 2014 and the end of 2017, about 281,000 New Yorkers will have left poverty or near-poverty simply due to an increase in the minimum wage to $11. That wage, set by state policy that de Blasio and his allies have helped influence, is set to jump to $13 at the start of 2018 and hit $15 per hour in New York City on December 31, 2018 for companies with 11 or more employees (the wages will be $12 then $14 for smaller companies).

According to five-year estimates from the American Community Survey for 2011-2015, about 20.6 percent of New York City residents lived below the federal poverty level. The latest one-year ACS supplemental estimates for 2016, released September 14, show improvement. People living under the poverty level in New York City, measured by the federal threshold, fell to 18.9 percent or 1.59 million New Yorkers, itself still an astonishingly large number. And, the number remained marginally higher than the pre-recession poverty level of 18.5 percent in 2008 and far higher than the national poverty level of 14 percent in 2016.

The federal measure only takes into account pre-tax cash income. New York City has its own poverty measure which also accounts for non-cash benefits, tax credits, and housing subsidies, and sets a threshold that includes housing costs to judge poverty more accurately. By city estimates, poverty in the city is at its lowest since the Great Recession, at 19.9 percent in 2015, down from 20.7 in 2013. The city’s data does not account for the latest ACS microdata yet.

Although the mayor has little control over the broad contours of the economy, he has been able to use the significant authority at the local level to enact a multi-faceted approach to lifting up wages, giving low-wage earners better opportunities, and enhancing access to city services for New York’s most disadvantaged residents.

In his first term, de Blasio has invested heavily in early childhood education and the universal pre-kindergarten program, his signature achievement, is serving nearly 70,000 children in 2017 (up from 20,000 prior to the UPK expansion) and is estimated by the city to have put $1.4 billion back in the pockets of New Yorkers who do not have to pay for child care. About 500,000 people were covered by the city’s expansion of paid sick leave in 2014, especially helping low-wage workers become more likely to keep their jobs if they get sick and need to miss work.

And though the city’s homelessness crisis continues to be blight on the mayor’s record, he has taken steps to stem the tide by funding free legal assistance for tenants in housing court and increasing rental subsidies for low-income families. In the lead up to Election Day, de Blasio announced an expansion of his affordable housing program, from a target of 200,000 affordable rental units over 10 years to 300,000 over 12.

On Tuesday, the mayor said he would also double the number of units planned for seniors from 15,000 to 30,000. This, after having adjusted his housing plan earlier this year to increase the number of deeply affordable units and those for seniors.

De Blasio has increased funding and attention to NYCHA, the public housing authority home to about half a million New Yorkers, while launching a community parks initiative and a variety of other programs aimed at equity across neighborhoods and demographics. IDNYC, the city’s municipal identity program with 863,464 card holders, allowed more New Yorkers, particularly undocumented immigrants, to avail of city services. These are among other initiatives, both large and small, that the administration has set in motion to increase opportunity, especially for those struggling.

Most significantly in terms of income inequality, de Blasio made a concerted effort in his first term to push for a higher minimum wage at the local and state level. The increase in the minimum wage from $7.25 in 2013 to $11 has had its intended consequences. Last year, the mayor approved an increase to a $15 minimum wage, by the end of 2018, for all city employees and nonprofit human services contractors, the groups for which he has discretion. He also instituted a paid family leave program for 20,000 city workers whose contracts are not part of labor union collective bargaining. New York State followed in the city’s footsteps by announcing its $15 minimum wage program, which is phased in faster in New York City than several other parts of the state, and a paid family leave program that begins its phase-in in 2018.

“De Blasio deserves a lot of credit for that, and it appears to be having a pronounced effect in reducing poverty,” said James Parrott, director of economic and fiscal policy at the New School’s Center for New York City Affairs, of the minimum wage efforts.

Other than the paid sick leave law and universal pre-kindergarten, according to Parrott, a chief accomplishment of the administration has been the settling of 99.1 percent of expired municipal union contracts, which gave many low- and moderate-income workers wage increases. Parrott also cited other positive developments, including new labor protections for freelancers and the creation of an Office of Labor Standards at the Department of Consumer Affairs. “I’m not gonna give [de Blasio] all the credit but the things he has done have led to some pretty remarkable improvements in wages and incomes of the bottom 30-40 percent of the income distribution since 2013,” Parrott said.

Parrott also noted that there are limitations in judging progress from the federal poverty measure or from the Gini coefficient, a statistical tool used by the U.S. Census to measure income inequality. Instead, Parrott prefers to use income tax data, which he said shows a more complete picture of wealth distribution, combined with other data measures on wages and family income. All these together, he said, have shown “the best improvements in the last 30 to 40 years, it could even be 50 years if we had comparable data to make a careful comparison.”

An encouraging trend, evinced from 2016 census data, is that median household income in 2016  was $58,856, up from $56,457 in 2015, and surpassing the pre-recession peak level of $56,982 in 2008, according to an analysis by the Citizens’ Committee for Children of New York. Median incomes for families with children grew at 10.4 percent between 2015-2016, outpacing overall household income growth. Black and Latino New Yorkers benefited from the largest decreases in poverty rates -- nearly 2 percentage points each -- and poverty fell across racial and ethnic groups. The report did point out some worrying trends. Poverty on Staten Island, for instance, was 3.2 points higher than pre-recession levels; income increases were concentrated in Manhattan and Brooklyn; and the gap in median household income for racial and ethnic groups, which expanded during the recession, has continued to grow.

Jennifer March, executive director of CCCNY, praised numerous policies enacted by the de Blasio administration that are “positioned as vehicles to combat income inequality,” including universal prekindergarten and its planned expansion to three-year-olds, the paid sick leave expansion, the minimum wage increase, the recent implementation of free universal school lunch and universal after-school programs for middle school students. She also commended initiatives such as the piloting of child savings accounts, and the overall efforts at creating affordable housing and rent freezes for rent-regulated tenants.

“Those things combined really suggest that he has an ambitious multi-pronged approach to help families and New Yorkers afford to live here and to reduce the gap between those that are earning more and those that are really struggling,” she said.

In 2015, de Blasio launched an ill-fated attempt to influence the national conversation around income inequality through a nonprofit organization that brought together progressive elected officials, leaders, and celebrities from across the country. The nonprofit, the Progressive Agenda Committee, fizzled out after an unsuccessful bid to host a presidential candidate forum in Iowa in late 2015, and de Blasio’s message about economic inequality and the need to put it at the forefront of the Democratic platform was largely subsumed by the candidacy of Senator Bernie Sanders of Vermont.

Since the election of President Donald Trump, de Blasio has doubled down on his agenda, pushing multiple proposed tax increases on wealthy New Yorkers -- which would require action by the State -- to fund items such as affordable housing for seniors and subsidized transit fares for low-income commuters. De Blasio has regularly criticized the Hillary Clinton campaign for not focusing on economic populism enough.

As he heads toward an expected second term, de Blasio has announced a shift to actively creating better paying jobs in burgeoning economic sectors and building talent pipelines to ensure that New York City residents are the beneficiaries of city-funded economic growth. He acknowledged, in a sobering State of the City speech this year, that “people are so fundamentally challenged by the affordability crisis that this city simply must do more and must do it quickly.”  

“So many people love this city. But here is a blunt truth,” he said. “They love it, but that doesn't mean it's easy to live here. Right? For a lot of seniors, this is not an easy place to live. For a lot of young people just starting out, it's not so easy. For folks struggling to make ends meet, this can be a punishing environment.”

De Blasio announced the broad contours of a plan to use city resources to spur the growth of 100,000 jobs paying at least $50,000 over a 10-year period. A few months later, he and his team unveiled a more detailed plan, which was met with snickers about a lack of detail and questions about its necessity, or whether it is more of an election year gimmick.

As many people evaluate the mayor in his reelection bid, the stubborn nature of income inequality and the fact that so many New Yorkers continue to struggle to live secure, decent lives raise questions about de Blasio’s ability to deliver on his core 2013 promises. The mayor has largely shifted his lens, at least when speaking publicly, from income inequality and toward efforts to lift up those at the bottom.

De Blasio is, in part, a victim of his own rhetoric, says Alex Armlovich, adjunct fellow at the Manhattan Institute, a conservative think tank. “That wasn’t a good promise to make on the mayoral level,” said Armlovich, of the mayor’s commitment to fight the “tale of two cities” that he evoked on the campaign trail. “Inequality is a national issue. At the local level, [population] displacement and retention effects are going to swamp your efforts to reduce inequality.”

In a report released earlier this month, Armlovich noted that income inequality as judged by the Gini coefficient has in fact remained flat under de Blasio and that changes in income inequality were affected by compensation trends in the financial sector rather than by the city’s policies. The Gini measures income distribution on a scale of 0 to 1, and the higher it is, the higher the inequality. The city’s Gini score in 2016 was about 0.55. Armlovich pointed out that city policies that help poor New Yorkers live in the city, such as more affordable housing, naturally increase the Gini, even though they are laudable policy goals, because they wind up keeping many low-income people from moving elsewhere.

Debate over the use of the Gini notwithstanding, Armlovich said the mayor should focus on providing equitable services across the five boroughs. “That’s what you can hold the mayor accountable for, because the mayor doesn’t control the economy,” he said. “His whole mistake in all of this was making himself politically accountable for a statistic that he doesn’t control.”

In an interview with The Daily News editorial board, the mayor insisted that the static Gini score was not reflective of a failure by his administration. “I'm very comfortable saying when I think something that I've done has not worked, or hasn't worked well enough,” he said. “But on this one, because we have seen job growth, we have seen wage growth, we have seen people getting out of poverty, we certainly have tangible evidence of reducing people's economic burdens. I think the central question is, were we going to give folks, low-income folks, working class people, middle class people, all of whom felt economically stuck, were we gonna give them more upward mobility? That's the central question in New York. It's also the central question in the country. Here we've been able to prove, not just because of public sector policies, but sustainability because of public sector policies, that we can increase upward mobility. That doesn't answer the question about the rich getting richer. Now, again, how do you address that? In my view, most notably, through tax policy.”

Indeed, income is one measure of inequality, and de Blasio has consistently sought to go further, whether in his attention to NYCHA or his parks or community schools efforts. He’s increased the city’s annual operating budget by about 18% since taking office, up to its current $85 billion, in large part to expand services and add to the public payroll, including thousands more early education teachers, police officers, and others. While some can aptly criticize this budget growth and others question how effective additional spending has been in certain areas, there is little question that de Blasio has heavily invested taxpayer money in building equity.

The CUNY Institute for State and Local Governance devised the NYC Equality Score, a tool for a more holistic view of inequality in the city, first published in 2015, with 95 indicators across six areas: economy, education, health, housing, justice, and services. Out of a possible 100, the city’s 2016 score was 46.01, up from 45.45 in 2015. “These scores suggest that NYC continues to be characterized by vast inequalities, and that when looking at the city as a whole, little has changed,” the report reads. “Generally speaking this score means that overall, the disadvantaged groups represented here are almost twice as likely as those not disadvantaged to experience negative outcomes in fundamental areas of life, as measured by the Equality Indicators.”

“It’s such a daunting challenge,” said City Council Member Stephen Levin, chair of the general welfare committee, which tackles with issues including poverty and homelessness (and was once chaired by de Blasio himself), “because you’re dealing with broader economic issues, you’re dealing with the persistent challenge of lack of affordable housing, and you’re dealing with the issues in Albany.” Levin was referring to state government, where Republicans hold power over the state Senate and often put the kibosh on progressive legislation floated by Democrats who control the Assembly and supported by de Blasio. Governor Andrew Cuomo, a Democrat who de Blasio often feuds with, is inconsistent in his support for policies backed by the mayor, regularly opposing any tax increases.

Levin, a fellow Brooklyn Democrat who has endorsed de Blasio for reelection, said the mayor’s dedication on equity is “indisputable.” “This mayor and administration are using every tool in their toolbox,” he said, lamenting their inability to affect larger trends that can be influenced much more strongly by either state or federal policy. “I expect that over the next four years, this continues to be a priority.”

De Blasio does face significant challenges ahead. Federal policy proposals on taxes and healthcare threaten to blow holes in the state and city budgets, and could shred the city’s social safety net. Large-scale budget cuts at a time when the city’s budget has ballooned by billions of dollars would put the mayor in a tough spot, despite the significant rainy day funds built up over the last four years.

“What remains to be fixed is the highly regressive nature of the local tax structure, and mainly the property tax system,” said Parrott, of the New School. “He has to really work on it to figure out how to build the alliance in Albany. And he’s gotta keep making tweaks to his policies on affordable housing, homelessness, and education.” De Blasio has promised to push property tax reform if he’s reelected but has not provided specific details for addressing a system that is seen as disadvantageous to many middle-class New Yorkers of color because of how assessments are made in part based on geography.

CCCNY’s March said the mayor should advocate for deepening the earned income tax credit and the child care tax credit, both of which bolster the finances of working families and would require the state to pass legislation. “I think the challenge he will face moving forward, assuming he’s reelected, is the federal context in which we’re working,” she said, noting for instance that 900,000 children in New York rely on some form of public health insurance, which face proposed federal cuts. She also stressed the need for increased investment in affordable housing and reducing family homelessness. “One of the biggest conundrums will be that incomes have not kept pace with rising rents in the city,” she said, pointing to a challenge frequently cited by de Blasio and his top aides, like social services Commissioner Steven Banks.

“Many of the things that he started in his first term, we will see the real benefits of years from now,” March added. “Whether that’s universal pre-K, universal school lunch, or universal after-school for middle school, all of those things. It’s the consistent access that populations have to programs that are designed to promote school preparedness or reduce hunger or promote a college-oriented identity, over time we will see the results of these things.”

Mayoral spokesperson Eric Phillips declined to comment for this article. Emails and messages to spokespersons for the Human Resources Administration/Department of Social Services went unanswered.

A Quinnipiac University Poll from July 31 showed that a majority of New Yorkers, 63 percent, disapproved of the way de Blasio has handled poverty and homelessness while only 29 percent approved. In eight polls conducted by Quinnipiac between 2015 and 2017, it was the worst appraisal the mayor received on the issue, likely due to the problems de Blasio has had in controlling and reducing homelessness.

Another particular issue related to poverty and inequality where de Blasio has disappointed advocates has been his lack of direct support for the “Fair Fares” proposal, which would provide half-price MetroCards to 800,000 low-income New Yorkers.

The proposal was created by two advocacy groups, the Community Service Society and Riders Alliance. De Blasio refused to fund the proposal in the city budget and wouldn’t support a pilot program floated by the City Council either, instead insisting the state-run MTA should provide the funds to those riding its services. Eventually, in his “Fair Fix” proposal for funding mass transit through a tax increase on the highest-earning New Yorkers -- which would need state-level approval -- the mayor included a set-aside for Fair Fares, which he called an “ultimate act of justice” despite his hesitance to identify the roughly $200 million to cover it annually. It’s unlikely that the state Senate, run by Republicans, or Governor Andrew Cuomo, a Democrat who largely opposes tax increases, would approve the so-called millionaires tax in 2018, which is a state-level election year.

“That would have a significant impact on low-income New Yorkers, first financially, but also by helping them access better jobs, training, things that would increase their upward mobility,” said Nancy Rankin, vice president for policy, research and advocacy, CSS. “It’s unfathomable to us why [Mayor de Blasio] wouldn’t want to do something that’s at the core of what he says his administration is about. That’s why people voted for him. That’s a practical step that would make an enormous difference in people’s lives.”

Council Member Levin holds out hope that the balance of the state Legislature would shift in next year’s election cycle towards Democrats who are friendlier to New York City and its progressive priorities. “Hopefully some of the dynamics shift and we can move the dial in a more accelerated way,” he said.

Jesse Laymon, director of policy and advocacy at the New York City Employment and Training Coalition, an organization comprised of more than 150 workforce providers, praised the de Blasio administration for leveraging economic growth into lifting wages at the bottom of the economic ladder, but nonetheless had pointed criticism for their policies. “It’s one thing to make it less terrible to be poor in New York, and I think they’ve done a good job of making it less terrible to be poor, but they have not done a great job of making it easier to get out of poverty,” he said. “And that’s really the goal that they should focus more attention on in the second term.”

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This article is part of a series on Mayor de Blasio's first term record as he seeks reelection this fall, in partnership with WNYC radio and City Limits. Find all pieces of the series here.

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by Samar Khurshid, senior reporter, Gotham Gazette
     

Read more by this writer.

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De Blasio's Record on Poverty and Inequality Tue, 31 Oct 2017 04:00:00 +0000
Why Don’t We Ever Hear About Commercial Rent Policy? https://www.gothamgazette.com/government/5792-why-dont-we-ever-hear-about-commercial-rent-policy https://www.gothamgazette.com/government/5792-why-dont-we-ever-hear-about-commercial-rent-policy levine small biz

Council Member Levine & co outside an evicted business (photo: @MarkLevineNYC) 


Mid-June, it was a block in Washington Heights that was poised to be the next to close up shop. The landlord, Coltown Properties, looked to evict the mostly Latino-owned stores on the street, which included a barbershop, restaurant, and income tax service. The store proprietors faced the same issue as many other small business owners in New York — there was nothing they could do.

“Collectively, the businesses on this block have been in operation for over 80 years,” local City Council Member Mark Levine said at a press conference on 162nd Street and Broadway. “At a time when unemployment rates in our neighborhood are disproportionately high, these businesses are vital to the economic livelihood of this area.” Levine’s office is partnering with Legal Aid Society to provide legal assistance to small businesses in his district.

This is New York today, the plight of the city’s small businesses is grumpily accepted like a late train. It’s perceived by many New Yorkers as a part of the city grind, the dog-eat-dog, if-you-can-afford-it-here-you-can-afford-it-anywhere reality of a town teeming with opportunity, but becoming evermore competitive - and expensive.

Echoing all too quietly in the halls of both city and state government, the average retail rent in Manhattan has risen 22 percent over the past decade, causing a sprawl of small businesses to relocate or simply close. It is a disease that’s spread to Brooklyn too.

As news and debate over residential rent regulation dominated Albany and New York City over the past several months, what happens on a daily basis to small businesses throughout the city tends to fall by the wayside. Commercial tenants have far less protection against sudden rent increases than residents do, and now, that deficit is playing out in pockets of the city at an increasingly rapid pace. In comes another Chase, next to the new Duane Reade.

Depending on who you ask, the reasons vary as to why elected officials in New York and Albany have acted — or, to some advocates, failed — on reforming commercial rent policy.

“No one is lobbying the state Legislature for commercial rent control, so obviously legislators are not thinking about the issue,” Michael McKee, the treasurer of Tenants PAC, says. “I am not even aware that there is a bill that would provide protections to small businesses.”

As it stands, the only bill in the New York State government that pertains to commercial rent in New York City is the “Small Business Survival Act,” first proposed by Senator Tony Avella of Queens in 2013. It aims to level the playing field between tenant and landlord by mandating arbitration privileges to small businesses. Landlords must follow certain criteria when setting a lease, and the commercial tenant has more time in negotiations. “The current commercial rental market results in unjust, unreasonable, and oppressive leases for the payment of rent for commercial space in New York City,” the bill reads. As of this legislative session, it has not seen a vote.

The more common small business bills that do exist are like the resources offered by the city and state’s economic development agencies: they seek to provide clarity with forms, regulations, and other bureaucratic nuances that come attached to opening and operating a small business in a tax- and rule-heavy state. The same situation stands in the Business Council, the most prominent lobby for businesses in Albany. Providing commercial tenants with some sort of leverage in lease negotiations did not make its 2015 ‘Top Ten Objectives’ list, or the webpage for its subdivision of small businesses. Rejecting a higher minimum wage did, though.

“If there is ever to be any movement on this issue, folks have to organize,” McKee said, talking with Gotham Gazette while he was in the midst of yet another major push to influence tenant rent regulations being set by lawmakers in Albany and the city’s rent guidelines board.

As many can attest, it is especially tough to compete against what is, without a doubt, the most powerful force in New York politics: real estate. This is a business community that spends millions every year on political campaigns; the contributions of one of its biggest entities, the Real Estate Board, made up a tenth of the entire state’s campaign money last election cycle. And that’s just one group.

To James Parrott, the deputy director and chief economist of the Fiscal Policy Institute, a left-leaning think tank, that wealth of influence explains the radio silence both down- and up-state, among Democrats and Republicans, on an issue that directly threatens real estate hegemony. Reasoning seems to be that if small businesses had more protections against space-seeking developers, it would cut into the pace and profits of the city’s longstanding natural order. Landlords either want to charge more for commercial space or developers want tenants out so they can sell or demolish and build anew.

“The real estate community has always been aggressive in campaign contributions,” Parrott explains. “And, by doing so, they’ve successfully prevented anything that would restrict them.”

This, of course, includes commercial tenant rights. Parrott makes a key point: in a state government where the recently former Speaker of the Assembly and Majority Leader of the State Senate are both indicted for crimes involving real estate’s influence, it’s hard to believe a bill called the Small Business Survival Act would even last a day. Not to mention the probe into the abrupt closing of the Moreland Commission by Governor Andrew Cuomo; an investigation that is specifically looking into tax breaks for huge developers.

City government is not excluded, either, Parrott argues.

The tale of the Small Business Jobs Survival Act (better known as the SBJSA) in the City Council is a long yet uneventful one. Basically, the bill — which, in structure, is very similar to its upstate counterpart — has been floating around the chambers of City Hall since 2008. (Last year, Gotham Gazette dove into its reintroduction.) It would let commercial tenants have the right to lease renewal ten years or more. If a landlord wants to raise rent, mediation with the tenant would be mandated, and, if the parties don’t come to an agreement, an arbitrator would make the final decision.

In essence, it is a flexing of New York City’s municipal home rule, which allows the Council to bypass Albany and regulate commercial code on its own turf. Similar proposals have existed in the Council for decades now, but all have met the same fate: failure. No surprise, Parrott says: the power of real estate is as strong in the city as it is upstate, if not stronger. Also, past mayors and council speakers have strongly sided with that community, meaning any bill is unlikely to ever see a vote, and even if passed by Council, likely vetoed.

But, to tenant advocates, this time around offers hope. Finally, they argue, a legislative body and a mayor progressive enough to actually take up the issue. At least on paper.

“Historically, the deference to Albany has served as a smokescreen/distraction for elected city officials to validate their appalling inaction on issues that they, in all actuality, have complete control over,” Kirsten Theodos, a spokesperson for Take Back NYC, a grassroots advocacy group for tenants and subset of the larger group Save NYC, told Gotham Gazette.

Right now, the SBJSA has 19 City Council sponsors in a 51-member boday. Seeing the bill heard at a committee hearing and then brought to a vote is unlikely, and would probably first require a number of additional sponors signing on (Council members can support a bill without co-sponsoring, but sponsorship levels show strength). To land those additional sponsors, Theodos hopes that situations like the eviction of businesses in Washington Heights will shed light on the issue. When asked if Speaker Melissa Mark-Viverito, who endorsed the bill before becoming speaker, would support the bill now, a spokesperson pointed to remarks made by Mark-Viverito to The Villager in late May. She did not provide an endorsement of the bill then, but mentioned an argument that has been repeatedly made by the real estate community in the past: that the SBJSA is illegal.

“The bill gets introduced once the [Council] staff do their due diligence,” the Speaker said. “Then there are hearings to hear from all sides. And then we figure out what the next steps will be — because sometimes options are being explored that legally we don’t have the ability to implement as a city or as a legislative council.”

Last year, in Gotham Gazette, the president of the Real Estate Board, Steven Spinola, called the bill an “unconstitutional intrusion” on property owners. A spokesperson for the Board told me this position hasn’t changed. Essentially, the board believes it is not in the Council’s jurisdiction to regulate commercial tenants. Home rule doesn’t apply here, they say.

Theodos stresses that this is not true; SBJSA would target the negotiations process, she says, and not install commercial rent control. The legal counsel to the Small Business Congress, a coalition of tenant advocates, supported this argument last year, citing Supreme Court decisions that enable local autonomy.

As a member of the City Council, Mayor Bill de Blasio supported the SBJSA, but he has remained relatively mum on the bill since entering his current office. For many advocates, the hope is that he’ll extend the drive that he has recently demonstrated around housing rent regulations in Albany to the parallel issue for small businesses. However, although he was elected on a ‘helping the little guy’ message and a promise to embrace them, small business owners and their allies also worry that his tendency to meet with representatives from the Real Estate Board and other commercial heavyweights threatens his adherence to their cause. Holding an office that naturally attracts real estate interests, Council Speaker Mark-Viverito has also met with REBNY heads. While neither de Blasio nor Mark-Viverito appears especially cozy with real estate titans, neither has pushed directly on the commerical rent issue either.

That isn’t to say nothing has been done by the de Blasio administration to help small business owners since he took office in January of 2014, though. His office’s Department of Small Business Services (SBS) is spending upwards of $27 million to streamline and defuse the regulatory process and, with the Department of Consumer Affairs, made sure that fewer fines are handed out to small businesses that can barely afford rent. More importantly, SBS has rolled out initiatives aimed at providing pro bono legal services to small businesses in lease negotiations; a policy which will soon expand, SBS spokesperson Merideth Weber told Gotham Gazette.

“We are working to roll out additional programs that span the range of supports we can provide including education, assistance, and tools that can help businesses avoid pitfalls in leases, and make the retail market more transparent,” Weber said in a statement.

When asked if the mayor supports SBJSA, Weber responded, “We’re reviewing the bill and this administration is working on a comprehensive plan to ensure that small businesses have the tools and resources they need to compete in an ever-changing marketplace.”

Still, tenant advocates argue that these measures dance around the main issue: that small businesses have no legal powers against immediate evictions or rent gouging. In a hyper-developing environment reaching further into several boroughs, small business owners are often defenseless. With a state government not inclined to act on commercial rent policy in New York City, and a city bill that, for now at least, is on the back burner of the Council agenda, the urgency stressed by owners and advocates doesn’t seem to be resonating here nor there.

Council Member Mark Levine, who spoke out against the eviction of the small businesses on a block in Washington Heights, in his district, says that there are other options that can help stem the tide of closing small businesses. And these, he said, do not necessarily require either a dying bill or a dead government. “Albany is not acting in any domain, really,” he quickly noted.

The city government, Levina argues, could set an example by not renting out its own real estate to chain stores. Also, zoning laws can be regulated in order to prevent chains and encourage small businesses — a policy that Columbia University has undertaken in Morningside Heights, Levine said. He added that the city should look into preventing developers who receive city subsidies from renting out to chains.

One of the 19 sponsors of the SBJSA, Levine argues that the city needs to set out a structure in which commercial tenants can have enough time whereby they are properly notified of a lease change. He also referred to a bill recently introduced by Council Members Helen Rosenthal and Dan Garodnick that would raise the commercial rent tax exemption in Manhattan (below 96th Street) from $250,000 to $500,000 per year. As of now, the bill has 16 sponsors.

In terms of Albany attention, residential tenants supersede their commercial counterparts in numbers, Levine says, and the politics involved are different. But still, the council member describes challenges faced by small businesses in New York right now as a “crisis;” one that is perhaps even more alarming than the affordable housing problem, given the conditions. “There’s not much a tenant can do,” he says. “Therefore, we’re seeing dramatic changes in our streetscapes, and the scale of the problem is great.”

“It is the mom and pop stores that make this city,” Levine said. “And the city government should be doing much, much more to protect them.”

***
John Surico is a freelance journalist. His reporting can be seen in The Wall Street Journal, The New York Times, The New York Daily News, The Village Voice, and elsewhere. He lives in Brooklyn.

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Why Don’t We Ever Hear About Commercial Rent Policy? Wed, 01 Jul 2015 05:01:01 +0000