Second Avenue, After Construction

Saving Small Business

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East Side leaders look for ways to protect Second Avenue businesses once the subway project is completed



There hasn’t been an initiative yet, but there needs to be one. If we as a community board don’t begin to start a serious conversation about our role in controlling the destiny of this avenue, it’ll be done totally by developers.”
Community Board 8 member Dave Rosenstein

The neighborhood’s portion of the project, from E. 63rd St. to E. 96th St., is slated to be completed in December 2016. And the small businesses that have long sat in the shadow of a construction command center or next to a muck house are looking forward to the increased foot traffic and popularity of an area rejuvenated by a new transportation option.

But how long will that last? How long until the five-story row houses come down and are replaced by high rises with retail rents that only large and established brands can afford? What will become of the small businesses that have stuck it out for eight years hoping for a brighter day?

These are questions that members of Community Board 8 are asking, some of whom already see signs of increased interest from developers in the neighborhood. “The developers are here now, putting together sites, buildings are already coming down on First, Second and Third Avenue and the side streets in between,” said Dave Rosenstein, a member of the board’s Second Avenue Subway Task Force. “The impact of this is just beginning.”

“If you stand at 79th Street and look north, you’ll see the tenement style buildings, the soft sights, and they’re usually the first to go,” said Teri Slater, co-chair of the board’s zoning committee. “They’re considered affordable housing and they’re unfortunately the first to come down. That’s the pattern of development we’re seeing here on the Upper East Side.”

The zoning committee met recently with Basha Gerhards, deputy director of land use for the Manhattan Borough President’s Office, to discuss zoning options similar to the Neighborhood Retails Streets Proposal that was implemented on the Upper West Side in 2012 with then-council member Gale Brewer’s backing. Brewer has since been elected Manhattan Borough President.

The proposal, referred to as the Upper West Side mom and pop zone, amended the zoning laws along a swath of the Upper West Side - from 72nd St. to 110th St. along Amsterdam and Columbus avenues - to limit new and expanding storefronts to 40 feet across and lobby widths to 25 feet. The idea, proponents of the zoning change say, is to curb the ubiquity and dominance of banks and pharmacies that have seemingly displaced independent stores.

“What we’re trying to do, long term, is have some influence on the future of Second Avenue, which is going to be dramatically transformed by the new subway,” said Rosenstein.

Slater said the issue is actually one the community’s been grappling with for over a decade. Slater remembers serving on the board’s now-discontinued mini-mall subcommittee 15 years ago, opposing the development of a food court that threatened to displace several mom and pop shops in the neighborhood.

“You can’t really have functional neighborhoods if you don’t have this wide variety of shopping,” said Slater.

And now, with the pending completion of 2nd Avenue Subway, the stakes seem higher than ever.

“Everyone in recent years has been very nervous about what is going to happen to Second Avenue once they complete their work,” said Slater. “There’s been no mitigation for [the subway project] and some of the small businesses have gone under. And yes, the community board and our committee have been very concerned about this.”

But the Upper West Side mom and pop zone hasn’t necessarily been the small business panacea that many hoped it would be. Rosenstein said he hasn’t seen that it’s helped keep small independent stores in the community. Small business on the West Side have been just as at risk of those in the rest of the city of being displaced because of skyrocketing rents.

This notion leads members of CB8 to wonder what might could be done differently – or on top of – the initiative that was put in place on the Upper West Side. Commercial rent control is a non-starter with the city’s powerful real estate interests and is unlikely to succeed.

The Small Business Jobs Survival Act, which would allow a small business owner to negotiate his lease with a landlord, has languished in the city council for almost three decades, despite having a tremendous amount of support both historically and at present among council members. Supporters of the act make a compelling argument that each and every effort to pass the legislation has been blocked by New York’s real estate industry going back to when it was first introduced in the mid-1980s.

“It’s a very tricky subject, real estate is the engine that drives the city,” said Slater. “It’s something that we should be grateful for but we shouldn’t be working against each other, which is what’s happening right now.”

And exacerbating the pressure on small businesses is a change in federal tax rules affecting retailers who rent space from co-op buildings. Prior to 2007, an “80-20 rule” required that these buildings receive 80 percent of their overall revenue from shareholders who owned apartments.

But in 2007, that regulation loosened, enabling buildings to generate more money from leasing out retail space. Now, as multi-year leases are expiring, co-op buildings are cashing in on the ability to dramatically increase their business tenants’ rents.

Brewer’s office noted that there hasn’t yet been a resolution at either the committee or full board levels yet that they could act on. Once a resolution is passed, they’ll consider the proposal like any other idea that originates from a community board.

So how do you make inroads on a proposal that will protect small businesses, and also make its way through the city council? What would that look like?

“That’s what we’re studying now,” said Slater. “No one has actually sat down to try to come up with a solution for this.”

Community Board 8 is holding a forum in the spring that will feature the borough president office’s input and other experts in zoning-based solutions with an eye towards protecting small businesses.

“There hasn’t been an initiative yet, but there needs to be one,” said Rosenstein. “If we as a community board don’t begin to start a serious conversation about our role in controlling the destiny of this avenue, it’ll be done totally by developers.”

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