Report: Small Business, Big Impact

Expanding Opportunities for Manhattan’s Storefronters  – A report by The Manhattan Borough President’s Office

This month, we are interviewing some long-time small business all-stars here in the Lower East Side and we are so excited by many colorful conversations being added to our FABRIC!

In this post, we wanted to bring to attention “Small Business, Big Impact: Expanding Opportunity for Manhattan’s Storefronters,” a report from the Manhattan Borough President’s Office (MBPO) in support of small businesses in New York and some worthy recommendations towards helping storefronters survive and flourish. This report was released in March 2015 and sits nicely with our theme this July & August. 

photo from EVCC Report; Artist: David Leslie

MBPO recognizes that “small businesses have historically provided the majority of jobs for New Yorkers and a gateway to the middle class, especially for immigrants and ethnic communities.” Similar to EVCC’s recent report, “Preserving Local, Independent Retail,” we shared in our last newsletter (you can read EVCC’s report here , and you can sign up for FABnyc newsletter here), the MBPO makes a distinction between small business storefronters and formula retail, or chain, stores, and states boldly, “When small businesses are replaced with chain banks or chain drugstores, the market fails both the business owners and New Yorkers who prefer unique and specialized services. It also fails the economy.” The newly accepted wisdom, as well known urban theorist Jane Jacobs has advocated for years, follows that “most of the jobs added in an economy are added in small businesses, not from growth in already large businesses.” 

Briefly, here are the MBPO recommendations to help independent small business thrive in this current climate: 

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1. Help small businesses cope in the current real-estate market

  • A strategy proposed is to install a mandatory negotiation and mediation period during lease renewals to encourage a frank, informed conversation for both small business owners and property owners.
  • Suggestions include strategically expanding the supply of retail space; requiring the landlord to inform the small business commercial tenant at least 180 days before the end of the lease to let the tenant know whether they intend of offering a lease renewal; If both parties do not agree on lease terms, the tenant’s current lease is extended for one year with up to a 15% increase in rent. 

2. Improve government interaction with small businesses

  • This includes maximizing city inspector efficiencies, such as overlapping inspections which requires greater communication among departments; reforming and expanding the role of the inspector to a Small Business Education Specialist to assist small businesses in achieving
    compliance. 

 3. Reform the city’s commercial rent tax

  • For example, base gross annual rent should be raised from $250,000 to exclude the majority of storefronters from qualifying for the tax. All retail tenants should also be allowed to ignore any property tax pass-throughs when calculating gross annual rent. (More in-depth explanation of the problems with the current commercial rent tax also in report.)
     

4. Maximize resources among government agencies

  • This includes greater communication and integration of city-state-federal services. This could be something as simple as co-locating agencies from different levels of government to share an office space for overlapping and complementary programs [e.g. Department of Small Business Services/SBS (NYC), Empire State Development Corporation/ESDC (NY State), Small Business Administration/SBA (Federal)] where employees who cover intake, handoffs, and strategic planning can work, communicate, and build partnerships.
  • This also includes leveraging local BID’s existing, rich resources to better serve constituents.

Next steps: MBPO plans to convene a series of roundtables with small business stakeholders, elected officials, and city, state, and federal agency representatives to a) gather information from city, state, and federal agencies to produce a menu of the most common pitfalls that can doom a business in its infancy and provide it as a resource for new and existing businesses; and b) focus on recommendations in the report and determine how to tailor strategies to serve a particular neighborhood or community. 

“Storefronters and small businesses more generally are essential to preserving the character of our neighborhoods and maintaining the livability of New York City for the middle and working class.” 

We cannot agree more! Though the impact of this report remains to be seen, we are excited by this report as a starting point. 

Read the full report HERE.

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