Putting Heads Together to Save Small Business

Policy makers came together to discuss ways to stem the tide of small business loss

The question of how to keep small, independently owned businesses alive in Manhattan is one that plagues everyone from the owner of an Upper East Side restaurant to the president of the borough, and there are no easy answers.

Last week, Our Town convened a panel at CUNY's Baruch College to discuss that question and attempt to address it in all its intricacies. Editor-in-chief Kyle Pope moderated a discussion with Consumer Affairs Commissioner Julie Menin, herself a former small business owner, along with Andrew Rigie, Executive Director of the NYC Hospitality Alliance, an organization that represents restaurants, bars and hotels in the city, Manhattan Borough President Gale Brewer, who worked on this issue as an Upper West Side city council member, and Nancy Lee, owner of the beloved Chinese restaurant Pig Heaven, which was recently forced to leave its longtime location on Second Avenue when her lease was not renewed.

The panel participants, as well as the audience - many of them small business owners looking for answers too - were interested in ways that the city can help independent owners stay afloat in an environment of rising costs and landlords who can turn around and demand a 300 percent rent increase for a shop or restaurant with razor thin margins.

Commissioner Menin said that her agency is working to give small business owners some relief by reducing the number of fines levied against them for small infractions, and making it easier to understand the rules and avoid fines in the first place.

"We don't believe that city revenue should be made on the backs of small businesses," Menin said. "All ships ride on a rising tide."

She said that by reducing or eliminating fines on small, nitpicky details like incorrect signage, the Department will cut fines for the city by about $5 million across the board.

Andrew Rigie also brought up the issue of fines, noting that in 2012, the Department of Health charged over $50 million in fines to restaurants. He said that aside from rent concerns, that's the number one issue he heres about from his members.

"Not much can be done to adjust rent, so you have to adjust elsewhere," Rigie said.

But the rent issue is the one looming largest for many small business owners, and the one that's most intractable, especially at the city level. (The Real Estate Board of New York was invited to participate in the panel, but declined.) "This is the hardest issue to solve," Borough President Brewer said. In her time in the city council, she said, they tried giving tax breaks to landlords who rent to owner-operated or "mom-and-pop" shops, but that measure has to be approved in Albany, which proved impossible. Brewer also acknowledged a recent change in co-op regulations that allow co-op boards to bring in 100 percent of their maintenance revenue from a commercial tenant, which makes it more appealing for boards to rent their ground floors to a chain like CVS or a bank branch.

On the Upper West Side, Brewer was able to pass new zoning regulations limiting banks and store frontage on Amsterdam and Columbus avenues in 2012. She hopes that similar measures could be taken elsewhere, but warned that it's difficult to even get attention to the matter from outer borough council members.

"It's mainly a Manhattan issue," Brewer said. "It's hard to get others to care."

Rigie, while cautious not to villainize chain stores or landlords, also acknowledged that national retailers bump up the rents for everyone else on the block, once building owners see how much they can get in rent.

Nancy Lee, who was visibly emotional about the recent struggles of her restaurant, said that she feels the situation for most small business owners is hopeless unless they buy the building they're in. Pig Heaven was successful and popular, but that fact alone couldn't save it. When her lease expired this year, she said, the landlord refused to renew it; she thinks they plan to knock down the building and build a high rise, or sell it empty.

"I'm not kidding, I cried every day because I knew that I was going to have to close my restaurant," Lee said.

Luckily for Lee, she's found a new space nearby in the neighborhood, on Second Avenue between 80th and 81st Street, but said that between the rent and the constant hassle from city agencies with regulations to follow, it was not an easy decision to re-open.

"I think I'm crazy, otherwise I'd give up already," Lee said with a laugh.

When it came time for the Q&A portion from the audience, several pointed questions were raised about how the city would combat inflated rents. A woman who owns a small music shop on the Upper East Side near Second Avenue wanted to know what would stop her landlord from raising her rent once the Second Avenue Subway was completed. Brewer said that's a problem she's trying to figure out, and one she's acutely aware of. Legally, there is nothing to stop a landlord from letting a small business suffer through years of construction woes, only to oust them when the subway starts running and the area suddenly becomes much more desirable and accessible.

The takeaway from the discussion seemed to be that the city needs to pay attention to small businesses before they all die off, but it's not solely a city problem. Any changes to the tax code - one of the best incentives for businesses and landlords - must be approved by the state legislature.

Brewer agreed that there are more problems then there are solutions, and that one of the best options - buying a building - is simply out of reach for most small business owners.

"There's no magic wand," she said.