By Sabina Mollot
A day after Mayor de Blasio released his executive budget, a handful of local elected officials took the opportunity to push for legislation that would eliminate the Commercial Rent Tax for about 3,400 small business owners in Manhattan.
The bill, which is sponsored by Council Members Dan Garodnick and Helen Rosenthal, was first announced in 2015, and at this point has 35 co-sponsors in the Council.
If passed it would raise the threshold of rent retailers who must pay the tax from those paying $250,000 a year to $500,000 year. The tax, which was first implemented in 1963, only applies to Manhattan businesses between Chambers Street and 96th Street. Garodnick has said raising the rent threshold would help 40 percent of the businesses owners now paying the tax while only costing the city six percent of the revenue the tax brings in, about $4.5 million.
Natasha Amott, the owner of Whisk, a kitchen related goods shop in Flatiron, where the announcement on the bill was made last Thursday, said her CRT costs her $15,000 a year. This is on top of the $315,000 she pays in rent each year and another standard corporate tax.
“We’re already being penalized by paying high rent,” said Amott. “And the city says since you pay this high rent I want you to pay this tax as well.”
The money, she said, she wishes could be used on paying employees more and helping pay off the debt she accrued when opening her business in 2012. She also said she would like to invest more in her website to be able to sell more online and fend off competition from online retail giants like Amazon.
Amott said she was unaware of the tax when she first signed a lease, “so I couldn’t even use it as leverage,” she added. The attorney she’d hired to help her negotiate her lease apparently had no idea about it either.
While the high rent she pays presents a much bigger challenge than the tax, she still called the CRT one of her “top three” problems, and called the legislation an easy fix.
Garodnick, when discussing the bill, called out de Blasio for not including any small business relief in his executive budget.
“Mr. Mayor, you cannot forget about the city’s small businesses,” said Garodnick, who’s been rumored to be interested in running for mayor himself.
He added that the CRT only exists in one other municipality outside Manhattan, and that’s in Florida.
“It is so bizarre and so unfair to subdivide the city in Manhattan,” said Garodnick. “If we were to implement a tax (today) on one part of the city, no one would believe it and no one would stand for it.”
He added that the number of businesses impacted has grown significantly since the year 2000, giving the example of how rents have tripled in the SoHo neighborhood since then and doubled in midtown.
“Manhattan businesses are evaporating before our eyes,” he said. “Businesses are voting with their feet.”
Asked if there were other ways the Council could help small businesses, when the biggest obstacles are high rent and competition from Amazon, Rosenthal admitted, “There is no easy fix.”
She added, “We have to come at it multiple ways. This is one way.”
She also referred to legislation passed in the Council a day earlier by Small Business Committee Chair Robert Cornegy that would give businesses a heads up if someone has made a 311 complaint. “Then they can fix it right away,” said Rosenthal. “So when it gets to the agency that might inspect it, they’ve fixed it already.”
Rosenthal said she also supports the Small Business Jobs Survival Act, which is aimed at getting businesses an automatic ten-year lease renewal, although she acknowledged that it’s been going nowhere fast in the Council. Rosenthal is a co-sponsor of the bill, which critics, such as the Real Estate Board of New York, have called unconstitutional. As for the bill’s current status, Rosenthal said it is currently being examined by counsel.
“My understanding is there’s a hiccup lawyers are trying to work out,” she said.
As for how other business related legislation is doing, Manhattan Borough President Gale Brewer, who was also at the press conference, and a couple of years ago announced separate legislation aimed at helping mom-and-pops, admitted that particular bill is dead. The legislation was introduced with Cornegy, but never drafted, due to it being too similar to another bill.
The goal of it was to give retailers more negotiating power by making it mandatory for property owners to at least go through mediation with a storefront business when a lease is up. If the owner and tenant still can’t come to an agreement there would be arbitration although the arbitration wouldn’t be binding. If no deal is reached after that, the tenant would be given one additional year past the lease’s end with a 15 percent increase to give the tenant time to find a new space. Brewer created the bill after saying she didn’t believe the SBJSA will ever get passed.
Now instead of working on that legislation, Brewer said she’s going to try to find a way to get long-vacant storefronts occupied again. She noted how owners of businesses surrounding vacant storefronts have told her their own businesses suffer due to the appearance of blight.
Town & Village reached out to the mayor’s office for comment on the Garodnick/Rosenthal legislation, but did not hear back.