There has been much ado about the eminent closing of a neighborhood pioneer and institution, Union Square Café, due to an exorbitant rent increase. In Danny Meyer’s response to the article, his position is noted and shared, but he fails to mention one very important piece to the real estate puzzle. Under Mayor Bloomberg’s reign, he authorized two consecutive 25 percent real estate tax increases for all commercial landlords. Since a portion, if not all, of these increases are passed onto the commercial tenants, this represents a significant hardship in terms of paying the rent.
The real estate tax increases are so high now, that having spoken to several real estate agents in the NYC area, a raise of over 2% per annum for the next decade is unlikely, due to the stress the former Mayor’s tax hikes have caused on the commercial rental community.
There is no published formula for how real estate taxes are assessed. Essentially, an inspector is dispatched to assess property value based on other similar properties within the same area. Even during the recession years of 2008, 2009, and 2010, there were significant increases. The reason is to collect additional revenue to balance city budgetary deficiencies.
The result is a city landscape devoid of any mom and pop shops, or small businesses who dare to offer something different. The homogenization is buoyed by large corporations and chains. New York is starting to look like a Midwestern metropolis.
The business community needs a mayor to set the ship right, not continue to sap the funds from already struggling businesses. Landlords should be held accountable for empty storefronts, not given tax write-offs. An incentive to rent to locals should be top priority.
NYC neighborhoods may never return to their former glory days filled with charm and real characters, but a head start from our city government could set the course for a different future, one where smart businesses can operate at a reasonable cost, helping to maintain employment and the integrity of our communities.