Legislators Announce Proposal for “Mom & Pop Rent Increase Exemption” to Help Save NYC’s Most-Beloved Small Businesses

Legislators Announce Proposal for “Mom & Pop Rent Increase Exemption” to Help Save NYC’s Most-Beloved Small Businesses

New York City’s small businesses are increasingly under pressure as commercial rents rise, often facing rent increases upwards of 50 percent, especially when their leases expire. New legislation would create a property tax exemption for landlords who offer independently-owned small businesses a long-term lease with fair increases & a fair renewal clause. This “Mom & Pop Rent Increase Exemption” would save some of NYC’s most-beloved small businesses, preserve retail diversity, and create more livable neighborhoods.
December 15, 2017
Whit Hu (Council Member Brad Lander) whu@council.nyc.gov, 718-499-1090
New York City

Today, a group of New York elected officials announced their plan to create a new “Mom & Pop Rent Increase Exemption” program to help save some of New York City’s most-beloved small businesses. The program would encourage landlords to enter into long-term, affordable leases, with fair renewal clauses, with mom & pop retailers. The announcement comes on the heels of a new City Council Report, Planning for Retail Diversity, which demonstrates the explosive growth of chain stores, rent increases as high as 86% for retail space since 2006, and evidence of “high rent blight” where landlords leave retail storefronts vacant in the hopes of attracting higher rent tenants.

“Every week, we lose another much-loved small business in our neighborhoods. Rising commercial rents are pushing out the ‘Mom & Pops’ who are the heart of our communities. We need a new tool to help save them,” said NYC Council Member Brad Lander, Deputy Leader for Policy, who pushed for the City Council’s new policy report. “The Mom & Pop Rent Increase Exemption” would give landlords an incentive to provide affordable rents and a fair renewal clause to independently-owned small businesses. It’s a common-sense step we can take to save small businesses -- and what’s special about our communities. Thanks to Senator Kavanagh and Assembly Member Niou for leading the way in Albany. They’ll have the strongest possible support from NYC.”

“New York City’s affordability crisis isn’t just hurting residential tenants — it’s forcing out many of the small businesses that we know and love. Our city’s diversity should be reflected in the storefronts we see walking down the street, and I’m proud to introduce legislation that will empower New York City to support neighborhood shops,” State Senator Brian Kavanagh said. “These small businesses give our neighborhoods the rich character we treasure, employ New Yorkers in their communities, and drive our local economy. That’s why supporting these businesses is so important, and why I’m happy to work with Council Member Lander and Assemblymember Niou on this important legislation.”

"Small businesses across my district in lower Manhattan are fighting to stay open, but with rising rents, they often struggle to make ends meet and remain viable," said Assemblymember Yuh-Line Niou. "That's why it's critical that we come up with tools to help our 'Mom & Pop' shops across our City. This proposal would give our beloved local shops a leg up when negotiating rent and lease renewals, and I look forward to pushing this bill in the Assembly. Thank you to Councilmember Lander, Senator Kavanagh, and all of our small business advocates for supporting this proposal."  

The New York State Senate and Assembly bills will give New York City the authorization it requires to create this new tax program. As the Planning for Retail Diversity report recommends, the bill will be structured as a property tax abatement in exchange for a property owner providing certain commercial storefront tenants with a multi-year lease with a fair renewal rider setting a maximum threshold for annual increases.

The bill will serve the dual purpose of keeping rents low for local businesses and discouraging storefront vacancies. The report indicates that  landlords are leaving more than 20% of retail space is currently sitting vacant in prime commercial districts throughout Manhattan, as landlords wait for an expected higher price to rent or sell the space. This ‘warehousing’ of space offered at unrealistically high rents makes it nearly impossible for small business owners to find affordable commercial space.

The abatement program would be limited to landlords who rent to local, independently-owned businesses to discourage the proliferation of chains and big box retail in NYC, which tend to drive up commercial rents dramatically.

“Brooklyn’s Mom and Pops are the lifeblood of the borough – they are what drives Brooklyn’s economy. Of the 600,000 jobs in Brooklyn, 150,000 of those are in retail and hospitality combined. That means that almost one in every four jobs in Brooklyn is in the retail and hospitality sector. Considering the borough loses six billion dollars in retailing spending to places other than Brooklyn, strengthening our Mom and Pops will lead directly to job creation, a better quality of life in our neighborhoods, and a stronger and more equitable economy,” said Brooklyn Chamber of Commerce President and CEO Andrew Hoan.

“Our city of almost 9 million people is built of almost countless neighborhoods, each creating a sense of identity, community, entrepreneurial opportunity and even comfort,” said Adam Friedman, Director of the Pratt Center for Community Development. “Nurturing our diverse neighborhoods by supporting small retail businesses is critical to the long-term wellbeing of the city and the proposed legislation would add to the city’s ability to advance that objective.”   

“Rising commercial rents and vacancies are two difficult challenges that small businesses and our communities face every day. We thank Council Member Lander and State Senator Kavanagh for their leadership and we look forward to working to create a law that will strengthen our critical small business commercial corridors,” said Mark Caserta, Executive Director, Park Slope Fifth Avenue BID.

"The merchants of Atlantic Avenue welcome any tools that would ensure their longevity on this commercial corridor. The retail climate is difficult right now, and we look to Council Member Lander to incentivize the creation of a stable business environment," said Sara Nordmann, Executive Director, Atlantic Avenue BID.

"The Chinatown BID/Partnership are delighted to learn of this new effort to help the small businesses and our community.  Any relief to take the pressure off the merchants will, in the long run, be beneficial to all and bring stability to the wasteful cycle of vacating, removal and the long wait for the next tenants," said Wellington Z. Chen, Executive Director, Chinatown Partnership.

"Small business is the lifeblood of the US economy. "Mom and Pop" shops add unique character and charm to our communities that help shape and mold our neighborhoods . In an ever evolving rapidly changing landscape this newly proposed legislation by Council Member Lander and Senator Kavanagh lends hope to New Yorkers working towards the American dream.  This sounds like a true win-win proposal,” said Jonathan Bayer, SkyIce, Small Business Owner.

"This proposal offers an important and overdue step toward counter-balancing the global pressures that are warping New York City's real estate market and making it hard for local owned, independent businesses to continue operating in the city.  Small businesses are vital for cities.  Research shows that having a strong population of new and growing local businesses broadens opportunity, increases prosperity, and leads to a more equitable distribution of income. Local businesses also make neighborhoods healthier and more interesting. By leveling the playing field for local businesses, this proposal will help make the city’s economy and its neighborhoods work better for the people of New York,” said Stacy Mitchell, co-director of the Institute for Local Self-Reliance and co-author of the 2016 report "Affordable Space: How Rising Commercial Rents Are Threatening Independent Businesses, and What Cities Are Doing About It."

“In this increasingly challenging retail climate, it would be great for the city to provide tax relief for both businesses and property owners that would help create jobs and maintain the character of our local communities,” said Jessica Lappin, President of the Downtown Alliance.

“As a small business owner and renter of a commercial storefront for 18 years, I am for any legislation or incentives that would prevent the blight of vacant storefronts on our avenues.  The successful retail environment in my neighborhood was built on the blood, sweat and risk of good people invested in the community. Now that the neighborhood is flourishing, the commercial rents are causing impossible hurdles for small business owners who have helped to bring this success.   Landlords face their own challenges and I am glad to see progress towards a win-win effort to mitigate skyrocketing commercial rents,” said Jennifer DeLuca, Owner, BodyTonic Pilates Gymnasium.

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