Council’s recommendations outline strategies to ensure communities have access to the basic goods and services they need
City Hall, NY ‒ New York City Council Speaker Melissa Mark-Viverito, Land Use Committee Chair David Greenfield, Small Business Committee Chair Robert Cornegy and Subcommittee on Zoning and Franchises Chair Donovan Richards released the Council’s 2017 report, Planning for Retail Diversity: Supporting NYC’s Neighborhood Businesses. The report is a detailed analysis of the challenges faced by New York City’s storefront business owners and a comprehensive set of recommendations to protect and promote retail businesses. Speaker Mark-Viverito called for a plan to address the issues facing neighborhood businesses in her 2016 State of the City address.
“While headlines often go to major multinational corporations whose names adorn Manhattan skyscrapers, much of the economic engine of our city is contained in the countless storefronts that line our blocks. Retail and restaurant business owners employ 600,000 people and provide critical goods and services to our residents. Our report sets forth a policy agenda to ensure the diversity and character of our city is reflected by our community businesses. It is our hope that this report will serve as a blueprint for comprehensive policy to foster retail diversity, affordability, and access throughout all New York City neighborhoods,” said Speaker Melissa Mark-Viverito.
“Retail is the backbone of our local neighborhoods. Our small businesses and restaurants not only provide economic opportunity to thousands of hardworking New York residents but also embody New York’s iconic street life. As our small businesses face competition from e-commerce and rising rents, the new zoning protections and policy recommendations outlined in this report will ensure that local retail will continue to grow and flourish. I applaud the Speaker and our outstanding Land Use staff for authoring this report that lays out a clear vision for protecting community businesses across our city,” said Council Member David Greenfield, Chair of the Council’s Committee on Land Use.
“There is a strong correlation between the strength of our small businesses and the health and well-being of our neighborhoods. When we find ways to promote and bolster the strength of our small businesses, our communities directly benefit. The importance of fostering retail diversity and shaping policies that allow small business owners to afford commercial space in the neighborhoods they serve is paramount to the success and sustainability of New York City’s economy. I look forward to moving many of the recommendations contained in this report forward with my colleagues in the Council and Mayor de Blasio over the course of the next four years,” said Council Member Robert Cornegy, Chair of the Council’s Committee on Small Business.
“As rising rents are threatening small businesses in hotter markets, many communities of color in the outer boroughs are starving for diverse commercial corridors. While e-commerce is an increasingly impending threat, the recommendations laid out by the City Council is a comprehensive strategy that will help provide relief for business owners and expand high-quality retail for residents who normally leave their own neighborhoods to do their shopping. It was an honor to co-chair our Retail Diversity hearing and I look forward to working with my colleagues to move forward with this plan as soon as possible,” said Council Member Donovan Richards, Chair of the Subcommittee on Zoning and Franchises.
The Council heard proposals and concerns from a wide variety of advocates including chambers of commerce, community-based organizations, trade associations, business improvements districts, elected officials, and small business owners.
The Council’s recommendations are:
- Designate the Department of Small Business Services (SBS) to manage planning and policy for retail storefronts
The administration should designate SBS to manage policy to advance retail affordability, diversity, and access. Today the responsibility for these issues is spread among multiple agencies.
- Empower SBS to file land use applications related to retail space and commercial corridors
For storefront retail and commercial corridor issues, SBS should work with local stakeholders to develop land use policy changes and guide them through the review process, a similar role to that played by the Department of Housing Preservation and Development (HPD) for affordable housing or the NYC Economic Development Corporation (EDC) for large-scale redevelopment projects.
DATA COLLECTION & RESEARCH
- Collect and analyze storefront retail data in each community district as part of a citywide Commercial District Needs Assessment
SBS should expand its CDNAs citywide and examine retail conditions in each community district periodically. These reports should then be aggregated into a citywide Commercial District Needs Assessment in order to better identify trends, opportunities, and potential policy interventions.
- Require Storefront Vacancy Reporting
The Council and administration should begin to address the problem of vacant storefronts by requiring landlords to register with SBS after a storefront has been vacant for 90 days and report on the status every 90 days thereafter. Registration could help SBS and others to identify corridors and neighborhoods where storefront vacancies may be creating a barrier to achieving a healthy diverse mix of retailers.
- Study the impact of the growth of e-commerce on the brick-and-mortar retail sector and develop additional policies and programs to help small businesses adapt
The administration should seek to mitigate the impending disruption of the retail sector by studying the potential impacts of the growth of e-commerce and developing additional policies and programs to help small businesses adapt.
ZONING AND LAND USE
- Expand and Reform Commercial Overlays
- Map overlays on corridors that have a significant amount of non-conforming retail
To preserve and expand the supply of retail spaces, SBS should examine corridors with significant non-conforming retail space and assist local stakeholders in expanding commercial overlays where appropriate.
- Explore a new low-intensity business commercial overlay for side streets
To create a new supply of commercial spaces for low-impact neighborhood service businesses like professional offices, SBS should work with the Department of City Planning (DCP) to create a new type of commercial overlay limited to these uses that may be appropriate on predominantly residential blocks.
- Consider expanding overlays to New York City Housing Authority (NYCHA) superblocks fronting commercial corridors
To bring additional retail spaces to under-retailed areas such as NYCHA campuses, the administration should explore what kind of retail is needed and how to support its growth with NYCHA residents.
- Study expanding the use groups allowed in commercial overlays
The administration and Council should explore a potential amendment to the zoning resolution to allow certain additional low-impact uses of an appropriate scale in commercial overlays, such as light manufacturing and artist workshops.
- Expand Use of Special Enhanced Commercial Districts that require retail space on the ground floor of new development.
To ensure that new residential developments on commercial corridors include ground floor retail, SBS and DCP should map new Special Enhanced Commercial Districts that mandate the inclusion of commercial space.
- Expand Special Enhanced Commercial Districts that restrict the size of storefronts.
In neighborhoods where local stakeholders have expressed concerns about the spread of large-scale retailers and bank branches, SBS should work with communities to apply Special Enhanced Commercial Districts that restrict the size of storefronts, as currently exist on Amsterdam and Columbus Avenue in the Upper West Side.
- Examine Formula Retail Restrictions
Where communities have expressed concerns about preserving neighborhood character and a diversity of local independent businesses, such as in the East Village, SBS and DCP should work with stakeholders to examine potential zoning restrictions on chain stores and restaurants.
- Study a potential zoning bonus for affordable retail space
SBS and DCP should explore creating a new inclusionary commercial space zoning tool that incentivizes or requires new development to set aside commercial space as “affordable” with a preference for locally owned businesses and/or businesses that could close a retail gap. This set-aside floor area could be discounted from the overall floor area ratio limit as supermarket space is in the Food Retail Expansion to Support Health (FRESH) program. This would be a limited tool for use in certain circumstances.
- Strengthen & expand the FRESH program
The FRESH program provides zoning and tax benefits to new grocery stores in neighborhoods that are underserved by fresh foods. Since the program was adopted by the City Council, Council Member Richards in coordination with the administration has been leading an effort to expand the applicability to additional neighborhoods that have limited access to fresh foods and high rates of poverty.
- Prioritize affordable local retail space in city-sponsored developments where appropriate
The administration should prioritize creating affordable commercial space for local businesses in certain city-sponsored developments where appropriate and publicly owned buildings of a certain scale, and in some cases the administration should consider turning these spaces into commercial condominiums for community development organizations to manage as affordable commercial space.
- Eliminate special permit requirement for gyms and health clubs
At present the Zoning Resolution requires gyms and health clubs to obtain a special permit from the Board of Standards and Appeals (BSA). This is a needless policy that originated in the 1970s as part of the effort to combat illicit massage parlors and is no longer required. The City Planning Commission should propose an amendment to the Zoning Resolution to allow these facilities as-of-right.
NEIGHBORHOOD PLANNING & ECONOMIC DEVELOPMENT
- Help local nonprofits develop affordable commercial spaces in underserved areas
- Strengthen capacity for CDCs to engage in economic development work
SBS should increase the capacity of local community organizations as partners in economic development, including storefront commercial development issues, through expanded technical assistance and training programs.
- Create a Neighborhood Commercial Development Fund
To provide funding for local community developers to redevelop vacant or underutilized commercial spaces, SBS and EDC should establish a Neighborhood Commercial Developer Fund on the model of the Industrial Developer Fund and pursue other innovative funding programs.
- Create a Retail Diversity Fund
SBS should establish a new competitive grant program targeted specifically at neighborhood retail diversity.
- Strengthen Chamber on the Go
The Chamber on the Go initiative, which began with a partnership between Council Member Robert Cornegy and the Brooklyn Chamber of Commerce, should continue to be strengthened and expanded in order to increase capacity to provide on-the-ground canvassing of neighborhood small businesses and offer direct assistance to businesses instead of relying primarily on requests for consultations.
- Help incubator & entrepreneurship program graduates find storefront space
SBS and EDC should create a new program to help these entrepreneurs find affordable storefront space by subsidizing a short-term initial lease and/or offering low-interest loans specifically targeted at graduates from the incubator and entrepreneurship programs.
- Expand support for public markets and increase use of pop-up markets
Public markets can enhance retail options in a neighborhood and provide space for new businesses. The administration should better support public markets via local nonprofit management and increased capital funding, and it should also increase the use of pop-up markets on vacant and underutilized sites.
- Reform regulation of street food vendors and increase the number of available permits
The administration and the Council should convene a street vending task force to develop reforms to increase the ease of compliance, create pathways from vending to brick-and-mortar restaurants, and create a new street vending enforcement unit. After a dedicated enforcement unit is established, the number of street vending permits should be gradually increased and assigned to individuals rather than to carts/trucks in order to eliminate the illicit market for permits and reduce barriers to entry.
TAX POLICY & FINANCIAL INCENTIVES
- Create a new tax abatement and/or direct subsidy program to incentivize property owners to offer affordable long-term leases
The administration should quickly move to create new tools to incentivize commercial affordability in order to preserve retail diversity and the presence of essential neighborhood goods and services.
- Property tax abatement to support affordable commercial leases
In order to create a new tax abatement, the City would need to obtain State authorization. A commercial affordability tax abatement could be structured as a property tax abatement of a certain dollar amount per square foot in exchange for a property owner providing a commercial storefront tenant with a ten-year lease with an “affordable” renewal rider setting a maximum threshold for increase. The program could potentially be piloted in a specific geographic area and/or limited to a cap on total tax expenditure, and limited to small businesses and/or certain types of retailers.
- Direct Subsidy – Legacy Business Fund Model
SBS should consider a direct subsidy program aimed at retention of longstanding neighborhood businesses on the model of the San Francisco Legacy Business Fund.
- Reform the Commercial Rent Tax
To help small independent retailers in Manhattan below 96th Street maintain profitability, the Council and administration should develop a long-term solution for CRT reform. As a first step, in November 2017 the Council created a tax credit to effectively increase the minimum rent at which business owners become liable for paying the commercial rent tax.
“The City Council’s report provides the first quantitative analysis of my zoning initiative to protect storefront businesses on the Upper West Side, and it shows that we really can make a difference when we’re willing to try new ideas. I’m thrilled the Council is taking a wide-ranging look at how to help storefront businesses. Public discussion of these issues has been stuck in a rut, and I hope this report and the Council’s upcoming hearing will spur us all to new action,” said Manhattan Borough President Gale Brewer.
“Late last month, the Council approved my measure to reform Manhattan’s unfair commercial rent tax — yet this should be only our first step to support struggling small businesses. With New York City’s strong economy and unique character depending on these neighborhood shops, it is imperative that policymakers conquer the challenges in this sector over the years to come, and today’s report presents a wide array of options to achieve this goal,” said Council Member Daniel Garodnick.
“ANHD applauds City Council on the release of “Planning for Retail Diversity.” The report provides a timely and broad analysis of issues faced by small independent retail tenants across the five boroughs. It provides a robust template of policy solutions and recommendations to address these problems,” said Benjamin Dulchin, Executive Director, Association for Neighborhood and Housing Development (ANHD).
“New York City is a leading city in the midst of a rapidly changing globe, and planning comprehensively will be key to our success. The recommendations outlined in this report have the depth and breadth to protect and expand a critical industry in the city that employs so many of our residents, and to make our streets more livable from Junction Boulevard to Wakefield, and everywhere in between,” said Pierina Sanchez, New York Director at Regional Plan Association.
“Brooklyn’s neighborhood businesses are an essential driver of the local economy as they provide numerous jobs to residents and attract tourism to the borough. We cannot afford the negative impact of their displacement, as it not only affects business owners, but also impacts their families and the local community, as a whole. We must continue to incentivize retailers and property owners to work together, and commend the City Council on taking a thoughtful and proactive approach to this issue,” said Andrew Hoan, President and CEO of Brooklyn Chamber of Commerce.
“Preserving and promoting local retail is a rare cause that unites New Yorkers across all five boroughs. It is one of the most effective tools we have for investing in our neighborhoods and a bulwark against the encroaching homogenization of our streets. We applaud the City Council, especially Speaker Melissa Mark-Viverito, Council Members Robert Cornegy, Jr., David Greenfield and Donovan Richards, for laying out this comprehensive plan to protect retail diversity, one of New York’s greatest community-building resources,” said Elizabeth Goldstein, President of The Municipal Art Society of New York.
“New York would not be a true home for many of us without its extraordinary retail diversity, which is planning shorthand for those special, unique, neighborhood stores that create a sense of place and community and make the city manageable,” said Adam Friedman, Director of the Pratt Center for Community Development.
“‘Planning for Retail Diversity’ is as much a blueprint for health as a strategy to sustain neighborhood-serving businesses. The Council’s 20 recommendations — from zoning changes that expand retail in NYCHA and other city developments to benefits for new supermarkets — will help grow the food retail sector, improving access for those under-served by conventional grocers or priced out of the market by ‘food gentrification,’” said Nevin Cohen, Research Director of the CUNY Urban Food Policy Institute.