Sustaining Small Businesses – Christian Butron

The decline of small businesses is a widely overlooked consequence of gentrification despite the fact that their loss is just as impactful as the loss of low-income residents. Small businesses not only provide places shop and work, but are direct products of the cultural makeup of neighborhoods. Their loss and replacement by higher-income businesses also plays a role in accelerating gentrification by increasing the cost of living. Take Back NYC’s Small Businesses Jobs Survival Act is an attempt to stem the tide against small businesses.

However, despite the organization’s good intentions, the language of the act makes me concerned as to the impartialness of the organization and whether or not they are truly looking at every facet of the issue. My concerns are mainly focused on the language specifically targeting landlords, calling for laws that prohibit what Take Back NYC describes as “landlord abuses.” Certainly many of the things they listed as abuses are definitely horrible and should be prohibited. However, I think that the loss of small businesses is caused by more than just landlord abuses. The problem is systemic in that a lot of the change has been and is currently being propagated by the city government. It also does not help that the global economy has been suffering as of late. Foreign investors are looking for sure things to keep their money safe and that place is New York City real estate. Besides, some of the things that Take Back NYC describes as abuses such as passing on property taxes onto tenants seem to me as natural things to do. Property taxes are rising due to the rising property values. In both Small Business Survival articles, local property owner Michael Forrest argues against the popular point of view that most landlords are simply out to make money. He argues that like small businesses he values long-term customers and that he does try to accommodate them, but rising property taxes and other costs forces landlords like him to raise rents. Landlords have bills to pay too. Landlords make their money by owning land and renting it out while small businesses provide goods and services for profit. It isn’t unreasonable that landlords would want to pass on their costs to their customers as all businesses do.

Overall, Take Back NYC falls into the trap of targeting an easily-identifiable enemy and pushing its greater message on the back of attacking that enemy. While the intentions may be good and the technique is effective in gaining the most passionate supporters, like many causes that have employed this technique, the main goal and message will get lost in translation. Not to mention the act does little in actually solving the issue.

Solutions:

Finding an effective long-term solution to this problem will be tough, but I believe we can make great progress by being pragmatic and controlling the things we can control now. One thing we can control is property taxes. One solution that we can implement is property tax reform in that property taxes should be both progressive and based more on income rather than market value. Thus, landlords who own land with high value on the free market, but charge low rents will not be saddled with high property taxes. We can also provide incentives for landlords who intend to keep their rents low by paying for the difference in market value and current value in exchange. Also, since the tax is progressive it can decrease the amount of realtors attempting to gentrify the city. Those who wish to invest in city real estate are looking at a large tax bill.

Questions to Ask Shop Owners:

1. How long have you’ve been in the neighborhood? How involved are you in the neighborhood?
2. Who are your customers? Are most of them long-term customers or are they short term? Do you know many of your customers personally?
3. How has increasing rents/property taxes/cost of business affected your business? Have you had to increase your prices?