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Chelsea Now: Vacancy Tax Would Fine Landlords Who Let Storefronts Languish

By Dusica Malesevic, May 1

As the specter of empty storefronts continues to haunt the city, Mayor Bill de Blasio’s floating of a possible penalty for landlords who leave properties vacant for long periods of time has been greeted by elected officials and advocates as an encouraging sign.

“I’m heartened [by] City Hall’s attention to the issue and the mayor’s personal interest,” State Senator Brad Hoylman said in a phone interview late last week.

On March 30, de Blasio told WNYC, “I am very interested… in fighting for a vacancy fee or vacancy tax which would penalize landlords who leave their storefronts vacant for long periods of time in neighborhoods because they are looking for some top-dollar rent, but they blight neighborhoods by doing it…”

He added, “That’s something we could get done through Albany.”

A vacancy tax falls under the state legislature’s purview.

Hoylman said, “We’re engaged with City Hall on pursuing legislation, but it’s early in our process.” He noted they are looking at bill language and there is a possibility it could be ready at the end of the legislative session in June.

Whether Albany would pass the measure is another matter. Republicans still control the New York State Senate as Simcha Felder, a Democrat who represents parts of Brooklyn, continues to caucus with Republicans.

The mayor’s office said there is no update on the vacancy tax, and did not respond to questions regarding details or a timeframe.

“One of the major challenges we’re still working through is how to thread the needle and do something that will actually result in people leasing storefronts they otherwise may not. If we don’t do that successfully, it’s just a tax without purpose,” Freddi Goldstein, the mayor’s deputy press secretary, said in an email.

Assemblymember Richard Gottfried said that he supports the idea.

“A vacancy tax or fee imposed on landlords with vacant storefronts would discourage landlord[s] from evicting commercial tenants just because they hope they can get a much higher rent. Of course what we really need, especially to help small businesses, is a commercial rent protection system,” Gottfried said via email.

Last year, Hoylman released a report — “Bleaker on Bleecker: A Snapshot of High-Rent Blight in Greenwich Village and Chelsea” — that took a look at vacancies on “selected streets that we knew to be major commercial corridors in the East Village, Stuyvesant Town/Peter Cooper Village, the West Village, and Chelsea.”

The total vacancy rate on all four streets was 9.76 percent, according to the report.

“Our constituents want to know why storefronts are vacant,” he said.

Hoylman noted that there are “a lot of factors at play” when it comes to why a storefront is empty.

Amazon and online shopping have taken a chunk out of retail, which has been struggling nationwide. In Manhattan, commercial rents have increased, putting greater pressure on small businesses that also contend with taxes and regulations.

From 2006 to 2016, “average retail asking rents rose from $108 per square foot annually to $156 in Manhattan,” however, that figure masks “significant differences at the neighborhood level,” according to a December City Council report titled “Planning for Retail Diversity: Supporting NYC’s Neighborhood Businesses.”

In Midtown South, for example, rents rose from $85 to $143, according to the report.

“For many neighborhood retailers and restaurants coming off 10-year leases, this is a shocking increase that is in some cases impossible to absorb,” the reports states.

According to the report, the top 10 zip codes that lost small retailers and restaurants include Midtown East, Times Square/Hell’s Kitchen, Chelsea, the Upper East Side and Upper West Side.

“You don’t have to walk far in Chelsea or Hell’s Kitchen to know that there’s a crisis underway with our street level retail. The empty storefronts not only cause blight and a loss of character, they also reflect the loss of basic neighborhood staples like laundromats, supermarkets and other essentials,” Speaker Corey Johnson said in an emailed statement.

Johnson noted this issue is one of his top priorities as Speaker. “I am determined to achieve solutions from government after many years of inaction of inertia,” he said. “I’m also [hopeful] that Albany, with a Democratic majority in the State Senate, will enact a vacancy tax on empty storefronts. The future of our neighborhoods — and our city — depends on it.”

The City Council report, which came out during Johnson’s predecessor, Melissa Mark-Viverito’s tenure, made several recommendations, including requiring “landlords to register with [the city’s Department of Small Business Services] after a storefront has been vacant for 90 days and report on the status every 90 days thereafter.”

When asked about this, Goldstein, from the mayor’s office, said that it “still reviewing” the City Council’s report.

Last year, Manhattan Borough President Gale Brewer’s office surveyed the entire length of Broadway and found more than 188 vacancies.

“Cushman & Wakefield did a similar survey, with similar findings, a month later,” Brewer said in via email. “This is a real problem, and the truth is, we don’t have enough data. It’s hard to solve a problem when you don’t have a full picture of where it’s happening, how long it’s happening, and why it’s happening.”

Brewer said she is “very encouraged that the mayor is open to a tax on storefronts that sit vacant for months. This is a tactic that’s been used in other cities, and it’s something we should be looking at.”

Armando Moritz-Chapelliquen is the campaign coordinator for equitable economic development for the citywide organization Association for Neighborhood & Housing Development, which is part of a coalition called United for Small Business NYC, and part of its platform calls for a penalty for landlords “who neglect vacant properties or intentionally leave space vacant” for more than six months.

“We want to see some movement on this,” Moritz-Chapelliquen said in a phone interview.

A penalty is needed to hold people accountable, he said.

“The policy needs to be worked out but the acknowledgement that this is a citywide problem is a good development and a good step forward,” he said.

SaMi Chester, a tenant organizer with Cooper Square Committee, called small businesses the “backbone of the city.”

“The fact that there are empty storefronts — it boggles the mind because they are so many small businesses that have been displaced,” Chester said by phone. “I think we owe small businesses a lot more respect and urgency to this problem.”