Natasha Amott tuned in to a livestream of Mayor
Bill de Blasio’s State of the City address on the web Thursday as she
placed online orders for the last of her three kitchen supply stores.
The mayor grabbed her full attention when his “save our city” speech turned to efforts to help small business owners — including creating a panel to study the legality of commercial rent control, a longtime nonstarter.
“I was honestly both surprised and very happy to
hear the mayor really making small business, and the plight of small
businesses in New York City, such a prominent issue,” said Amott, who
owns Whisk, based in Downtown Brooklyn.
Her Williamsburg branch, with about a dozen
employees, shuttered after her landlord hiked her monthly rent from
$18,500 to $26,500 last year, she said.
“At the end of the day, I realized I would have to
change my business model, prices would have to go up, staff wages would
be depressed and it would not be fun any longer,” she said.
‘Go to Albany’
In his address, de Blasio proposed a vacancy tax on
owners of long-unoccupied storefronts and announced plans for a “blue
ribbon” rent commission at a time of growing vacancy rates in some areas
and increasing pressure on shopkeepers amid online competition.
But even as he raised the hopes of small business owners — and the hackles of landlords — he tempered expectations.
“For years and years, I’ve heard different
proposals around commercial rent control and I have not for one day been
able to find one that I thought was legal,” de Blasio said during his
address at the American Museum of Natural History.
Mayor Bill de Blasio delivers his State of the City address at the Museum of Natural History, Feb. 6, 2020. Photo: Ben Fractenberg/THE CITY
“That’s the truth,” he added. “But I think the time
has come to settle this once and for all because we — at this point in
our history — we may need this to be able to save our small businesses.”
The commercial rent control commission will be
comprised of real estate and legal experts who will complete their
research this year, de Blasio said.
“If it’s a yes, we should go to Albany and get it done in 2021,” he added.
New Commission, Old Concern
But a trip to Albany is far from a sure thing.
Some small business advocates have for years been
urging City Hall to champion a rent control system for commercial
properties. In 1985, then-Manhattan Councilmember Ruth Messinger
pressed for rent control restrictions on commercial spots. Then-Mayor
Ed Koch convened a commission to review the idea, which never gained
traction.
City Councilmember Ydanis Rodriguez (D-Manhattan) introduced a bill
in 2018 that would have granted certain rights to small businesses in
the lease renewal process. But his Small Business Survival Act failed to
move out of committee.
Councilmember Ydanis Rodriguez (D-Manhattan) Photo: Ben Fractenberg/THE CITY
The city’s Bar Association analyzed that measure and concluded the City Council was not authorized to enact the legislation without approval from state lawmakers.
In November, Councilmembers Steven Levin (D-Brooklyn) and Brad Lander (D-Brooklyn) introduced the Commercial Rent Stabilization Act, which would create a panel akin to the Rent Guidelines Board to determine rent hikes for small retailers and other businesses.
The legislation drew fire
from a coalition of business groups that said the bill didn’t address
other pressures, including rising wages and real estate taxes. Some
predicted the measure would wind up hindering growth and helping big-box
chain stories.
Meanwhile, an August study
by the mayor’s own Department of City Planning that looked at retail in
two dozen areas found varying vacancy rates and multiple
neighborhood-specific factors creating challenges for store owners.
The report shows “the reasons for storefront
vacancies are complex and varied and that solutions must be nuanced and
targeted – or we may do more harm than good,” City Planning Director
Marisa Lago said at the time.
No Easy Answers
De Blasio’s commission is stacking up to be similar
to one that in 2018 was charged with reviewing the city’s property tax
system. That panel recently announced 10 recommendations, many of which would require Albany lawmakers to approve changes to state law.
The city’s top real estate group argued that those changes should be enacted before discussing commercial rent control.
“To create a more affordable, equitable and
sustainable city requires creative solutions to help families and small
businesses alike,” said Real Estate Board of New York President James
Whelan. “We can’t ignore the fact that the city continues to inequitably
tax retail properties and multifamily rental housing that hurts small
businesses and exacerbates our affordability crisis.”
De Blasio’s focus on small businesses comes as
empty real estate space throughout the city has nearly doubled over the
past decade to 11 million square feet in 2017, according to an analysis by the city Comptroller’s Office released in September.
That’s equal to a vacancy rate of 5.8%, the report found.
“We have a retail vacancy crisis in our city,”
Comptroller Scott Stringer said at the time. “We can’t roll back the
clock, but we can do more to protect our mom and pops and adapt to our
changing economy.”
Hours after the mayor’s address, City Council
Speaker Corey Johnson described the myriad challenges facing small
businesses, from online retailing to a “broken property tax system” and
“dysfunctional regulatory system” during an interview on NY1’s “Inside City Hall.”
“There’s not a silver bullet that takes care of
this,” he said, alluding to the commercial rent control concept. “So
when we talk about it, we have to talk about it in a responsible way,
and the biggest issue here is, how do you create public policy that
affects all of these businesses that fall under the umbrella of all of
the issues.”
The last remaining branch of the kitchen supply store Whisk on Atlantic Avenue in Brooklyn, Feb. 7, 2020. Photo: Gabriel Sandoval/THE CITY
As for Amott, her third storefront, in Manhattan, told a different story than in Williamsburg, she said.
She paid $10,000 a year in property taxes in 2012, but that grew to $54,000. “It was killing me,” she said.
While the challenges facing small businesses are
numerous, Amott conceded, she pointed directly to the cost of land as
the core problem.
“We are at that point where rents are so out of
control, property taxes are so out of control, that we may need to look
at some kind of commercial commercial rent stabilization,” she said. “I
don’t think there’s an easy answer.”
https://thecity.nyc/2020/02/de-blasios-retail-nyc-commercial-rent-control-longshot.html
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