Report suggests solutions for small businesses after the Downtown Brooklyn rezoning

On July 24, I wrote about the unanticipated impacts of the Downtown Brooklyn rezoning and wondered what policy changes might emerge. A new report, Out of Business: The Crisis of Small Businesses in Rezoned Downtown Brooklyn, from FUREE (Families United for Racial and Economic Equality) and the Community Development Project of the Urban Justice Center cites extensive displacement of small business (mainly run by immigrants) and suggests four policy solutions, including grants and reserved commercial space.

(Here's a video from the press conference--and another.)

Joe Chan, president of the Downtown Brooklyn Partnership, the public-private organization steering the rezoning, offered a noncommittal quote to Brownstoner, which offered some lengthy coverage yesterday: "Downtown Brooklyn is one of the fastest growing urban centers in America. The redevelopment activity in the area brings with it jobs and a permanently enhanced local economy. The Downtown Brooklyn Partnership with its BID partners work to connect small business owners with available resources and appropriate service providers." (It has, in some cases, but not enough, according to FUREE.)

Solutions in the report

The first solution involves grants:
1. Create a small-business assistance fund for Downtown Brooklyn businesses.
New York City should support immediate and long-term financial assistance to area small-businesses. In the short-term, city dollars and developer contributions should be channeled into a fund that would address the hardships faced by small businesses displaced by the rezoning. Displaced small-businesses need to be compensated for their relocation and moving costs, for increased costs incurred by being forced to move when rent is at an all-time high, for lost revenue due to displacement, and for the advertising and marketing needed to rebuild their customer base. Displaced workers need high-quality job training and placement services.

New York already has active Business Relocation Assistance Corporations (BRAC). The Greenpoint-Williamsburg BRAC disburses grants of up to $50,000 to displaced businesses so long as they relocate within the five boroughs and the recent rezoning in Harlem also included a fund for displaced small-businesses. Finally, in addition to a flat reimbursement, the city fund could subsidize low-interest small-business loans or offer a loan-forgiveness program for businesses displaced by development.

This is a political decision. If the rezoning creates more wealth, shouldn’t some of that wealth be shared? How much?

Affordable space

2. Secure affordable commercial-space for small businesses.
Before the first brick is laid on new construction, the city, developers, and independent businesses must agree on a way to maintain space for the small businesses that enhances the neighborhood’s character. Since redevelopment raises area rent and is marketed to a different customer-base, small businesses must be given a chance to adapt to the changed competitive market. New developments, particularly those such as City Point at Albee Square Mall that displaced small businesses, should be mandated to provide 15% of their space to local businesses at subsidized rents. This allotted commercial space should go first to previous tenants and then to local minority- and woman-owned small-businesses.

There are models to point to for this type of community support: in San Jose, developers working on a $140 million multi-use project set aside 10% of retail space for existing downtown small-businesses…. Finally, in all cases new developments should practice targeted local hiring for displaced workers and residents of the surrounding community.

In some cases, tax breaks are granted for new housing in exchange for some subsidized units. This transfers it to the commercial side, though it’s clearly a less established concept.

Additionally, FUREE recommends increasing affordable land supply by developing upper-floor retail in Downtown Brooklyn for small businesses. With careful planning, the activation of vacant upper-stories for small-business use could help sustain the area’s diverse retail mix. Specifically, the underutilized upper-floors of many buildings on the Fulton Street Mall present a remarkable economic opportunity for the area. By tapping this space for mixed-use occupancy, both local entrepreneurs and shoppers will be better served and Downtown Brooklyn’s dynamism will endure.

Well, those floors are underutilized, but only certain retail establishments thrive with off-the-street access. Brownstoner’s Sarah Ryley reports that “a prominent local broker explained to us that Fulton Mall's retail space is so lucrative that landlords actually removed stairwells and elevators in many of the buildings to create more ground-floor space” and landlords stopped maintaining lower-rent upper floors.

More input

3. Ensure community and small-business participation in the decision-making process of public and private developments.
Before an urban area goes through revitalization it is important to have a system or policy in place that allows the community and small businesses to have input on projects that will ultimately affect them. Planning codes that attempt to limit formula retail-stores, such as those implemented in San Francisco, can include a clause that requires residents and businesses in the surrounding area to be notified of proposed developments.

Once notified, the community has the option of requesting a public hearing and subjecting the applicant to additional assessment that should focus on the effect of the new plan on community stakeholders. By starting a project with a community impact review, new commercial developments won’t be able to begin until all affected parties are served.

This may be the most contentious solution (though all likely will meet resistance), given the unwieldiness of deciding what community gets to speak.

FUREE also recommends that the Downtown Brooklyn Partnership consult with area small-business owners as they spend millions on extensive streetscape improvements in the area. To date, small-business owners have not been included in any discussion of streetscape improvement, despite the fact that they have unique and valuable insights...

How hard would it be to consult?

The broader challenge

The fourth solution speaks to a broader challenge:
4. Implement long-term protections for small businesses in Downtown Brooklyn and all of New York City.
Gentrification and the subsequent displacement of small business are not unique to Downtown Brooklyn. Several neighborhoods around New York City are experiencing different versions of the same story and are attempting to organize around this issue. City government must develop holistic, broad-based policies to account for the peril its rezoning has wrought on local communities. These solutions include commercial rent control, zoning and land-use policies limiting big-box stores that don’t benefit the community, requiring community impact reviews before major developments are allowed to break ground, and tax breaks for small businesses and the property-owners who rent to them.

Moreover, protections against landlord harassment and outlawing eminent domain for the sake of private development would also greatly safeguard small businesses in changing neighborhoods. Many of these strategies have been implemented in large and small cities around the country to great success.

This points to the general sense, in multiple neighborhoods, that New York may be “losing its soul,” an issue raised last year in the first Jane Jacobs panel. It’s worth a look beyond Downtown Brooklyn.