For many New Yorkers, August signifies the hot sun, the beaches, slowdowns at work, and fun. It is easier to get a reservation at a new restaurant, and the waiting time for a cocktail is tolerable. If you are fortunate, there is some getaway awaiting you on the weekends, and if not, well there is always a picnic hidden away at the Bramble in Central Park.
But for small business owners like myself, August brings bad tidings. Business traffic slows down, which translates to a large reduction in sales. That is fine and to be expected, however this also coincides with something I have been dreading each of the last five years of my lease, real estate tax increases.
Real estate tax increases are inevitable. In practice, an “inspector” comes to each commercial building or home, and reassesses the property value. Since this is New York City, the property value seldom decreases, and therefore the tax assessed is raised. As part of most commercial leases, landlords pass some percentage, if not all of these tax increases on to the tenant (s), even though the tenant does not own the property nor can benefit from any tax relief come tax time.
As per my lease, the store I rent for Pata Negra, I am on the hook for 20% of the increase. That may not sound like much, and it didn’t to me at the time of lease signing, but a modest six floor building in New York City can command an increase of over $100,000.00 in property taxes. Do the math. I am required to fork over $2000.00 per month for a space that is less than 500 square feet, for a property I have no ownership in. It amounts to over 50 percent of my actual rent, $24,000.00 +.
I have long been a proponent of the phrase, “That is the cost of doing business in NYC.” It helps ease the pain of unexpected expenses, and makes me feel stronger and more informed as a small business owner. I said this when Mayor Bloomberg unleashed his witch hunt also known as the Department of Health with his money making letter grading scheme. I said this when worker’s compensation screwed up my paperwork and fined me $20,000.00, which I had to fight to plead down to a $3,500.00 fine, and I said this when the NYS Dept of Labor fined me $1,000.00 and forcefully extracted the sum from my business bank account because I was late in paying $54.00 in taxes. I said this when there was zero compensation from my insurance company over Hurricane Sandy for lost revenue and food spoilage, and I said this as recently as last month when a repairman from Family Refrigeration held me hostage on a hot, humid Sunday for ten hours promising to repair my refrigeration and my ice machine, a job he left incomplete while pocketing $400.00 to add insult to my injury.
My first fiscal year in business, the management company was late to bill me for the real estate taxes, and handed me a lump sum bill of $12,000.00. I opened in 2008, and struggled to pay this bill retroactively. And this was at the height of the recession. How can the property value go up at the height of the recession? Who performs this real estate assessment, and under what parameters or guidelines can the property value be raised?
The second year I paid $16,000.00, and every year it has gone up to the current $24,000.00 and change. I have four and a half years left on my lease. What will the real estate tax increase be in 2017? $40,000.00? At what point is it worth it to actually do business in New York?
Look around. There is a reason why the city landscape has changed so much. Mayor Bloomberg has been successful in creating a city for the super rich, and those workers who actually work the infrastructure need not reside in Manhattan or Park Slope or even Williamsburg for that matter. There is a reason that every where you turn there is Duane Reade, Seven Eleven, ______ bank or Starbucks. Only corporate America can and will pay these extortionist real estates tax increases. So move over mom and pop, man or woman with a great idea, any small business model. New Your City is no longer that place where you can take your business idea, plant it and watch it grow into something that can withstand the test of time. Not when the city is collecting $20,000.00 per year or more on a 450 square foot space. Mayor Bloomberg says he is for small businesses. I think not.
The upcoming primaries and elections have me wondering where the city of New York will be headed in the next four years. My top question for the candidates is what is going to be done about the punitive, inflated real estate tax increases affecting small business owners. I have spoken to Gale Brewer on the street, and she has helped pass for legislation against large corporate stores on the Upper West Side. I spoke to Mark Landis briefly regarding this problem, and he proposes a tax credit for small business owners to offset some of these taxes. I wrote a letter to Christine Quinn over two weeks ago, and she has not responded (and at this point, I don’t expect her to).
Mayor Bloomberg has done many things to make this city I grew up in safe and prosperous, but under no other administration have I paid more taxes and earned less than these three terms. Perhaps the next candidate will be more liberal and make matters worse, but I have to give someone else a try at least.
Which candidate will champion small business, helping to increase employment and maintain the integral fibers of our communities? Let’s start there, and then I’ll vote my conscience.