By Sabina Mollot
In an effort to help Manhattan’s mom-and-pop shops, Council Members Dan Garodnick and Helen Rosenthal have introduced legislation to relieve many small businesses of their commercial rent tax.
Since 1963, any business in Manhattan below 96th Street paying over $250,000 a year in rent (or nearly $21,000 a month) has been made to pay the tax, which is a 3.9 percent surcharge on the rent. The legislation, introduced last Wednesday, would make the tax applicable only to businesses paying $500,000 or more. To make up for the loss in city revenue, businesses paying over $3 million would get a small increase. That increase would rise slowly as businesses pay more in rent, but at its highest would be an additional one third of one percent on businesses paying over $4 million.
While the mayor has not made his point of view known on the bill, Garodnick said his colleagues in the Council have been fully in support of it with the entire Manhattan delegation having signed on as co-sponsors.
“This bill is motivated by a desire to cut a break to small businesses who are getting hit in every direction,” said Garodnick. “This is a way to grant them some relief.”
He noted that while business owners haven’t told him that the taxes alone are killing them, the cost, he said, adds up for small retailers and restaurants, who’ve faced the citywide problem of getting booted out in favor of banks and other chains.
The legislation has been cheered by Manhattan Borough President Gale Brewer, who in March drafted legislation of her own aimed at helping “storefronters” by giving them the option of a one-year lease extension before an owner can kick them out, with a maximum increase for that year of 15 percent. Meanwhile, the landlord would have to be willing to at least negotiate with the tenant.
On Garodnick and Rosenthal’s tax relief bill, she said it was “a smart, sensible reform plan that will help relieve the burden on hard-hit smaller tenants without breaking the bank.”
Garodnick said the next step for the bill is a hearing although a date for that has not yet been set.
Meanwhile, businesses owners who heard about the bill from Town & Village said they were hopeful about it.
“Anything helps these days,” said Yves Jadot, who, with his brothers, owns the Belgian Petite Abeille restaurant in Peter Cooper Village and another location on West 17th Street.
While the Petite Abeille restaurants don’t pay enough rent to have to pay the tax, nor does Vamos, another Peter Cooper restaurant that Jadot owns, he has another restaurant with another partner, Jason Hicks, on East 39th Street, that does. That would be the Peacock, an upscale English pub-style restaurant located at the William Hotel.
He said the break from a tax would be some relief considering some struggles he’s had at the other businesses. One would be that the last two winters have been so brutal, this meant offering al fresco dining far later into the spring than he normally would have at Petite Abeille. Other challenges there have been changing demographics in the neighborhood. Specifically, Petite Abeille has always been a family-friendly place but families are fewer these days and young people in roommate situations are more plentiful. Still, Jadot said he’s been trying to adapt to the influx of younger people in Stuyvesant Town/Peter Cooper. He’s begun changing the décor to a look that’s a bit darker and he plans to bring in a pool table to the bar area.
A recently closed Petite Abeille location in Tribeca will become a cocktail bar since the restaurant had faced too much competition for the lunch crowd from nearby food trucks and healthier options for fast food.
“If your competitor is serving people for $13, you try to compete by lowering your prices, but then people are staying longer and there’s no turnover,” Jadot explained.
He added, “Restaurants like Petite Abeille will likely disappear from Manhattan in the next five years. The rent is becoming a major issue.”
Muriel Frost, one of the owners of Ess-a-Bagel, said she was also hopeful about the legislation’s potential impact. Ess-a-Bagel recently closed its original location on First Avenue after losing its lease to another bagel shop and a Bank of America. The landlord of the building, an LLC owned by L&M CEO Ron Moelis, said Ess-a-Bagel wouldn’t budge when given a rent increase on what had been below market rent. But Ess-a-Bagel’s owners had said they were denied the chance to renew when the landlord decided they were taking too long to sign on the dotted line. Meanwhile, the company has continued to operate out of another shop in midtown where Frost said the rent is “a fortune.”
“I hope he gets it passed,” she said of Garodnick. “It’s a big difference to a small business. I could increase the salaries of a few people.”