Tax Breaks Eyed in Council To Protect Small Business

Bemoaning the loss of "mom and pop" stores and the proliferation of banks, cell phone shops, and chain drugstores in parts of the city, City Council members say property tax breaks and zoning changes could be used to prevent bigger businesses crowding out smaller ones.

Upper West Side residents say their neighborhood has been particularly hard hit, with restaurants, grocers, and shops closing their doors in the face of rent hikes and expired leases.

It is unlikely, however, that the council members' plans will win the support of the Bloomberg administration.

The city's small-business commissioner, Robert Walsh, who is scheduled to testify at a council hearing today on small businesses, said he is concerned that during a strong economic period, people "are frowning upon, if you will, many of the nationally recognized businesses."

When he was the executive director of the Union Square Business Improvement District between 1989 and 1997, Mr. Walsh said the opening of a Barnes & Noble and a Virgin Records was celebrated "and meant we had turned the corner on what was a crime-ridden and vacant place."

He said the city should help small businesses, but added that he doesn't know how the tax breaks would work.

"Who is eligible? Who is not eligible? Where do you draw the line?" he asked. "We are always open to discussions to find creative ways to help businesses, but I don't know how you do this across the board."

A spokesman for Mayor Bloomberg, John Gallagher, said in a statement that the mayor's latest budget includes $1.5 billion in tax cuts, including targeted tax cuts for small businesses in all five boroughs.

Residents on the Upper West Side say there are myriad examples of local haunts closing to make way for larger businesses. Earlier this year a restaurant, Time Café, and an upstairs bar, Fez, on the corner of 85th Street and Broadway shut down, making way for a branch of Wachovia Bank.

On the stretch of Broadway between 87th and 88th streets, a green grocer and an Asian restaurant, Malaysia Grill, closed because the lease ran out and the landlord was looking for a single business to fill the space, the restaurant owner, Jimmy Yeo, said.

Mr. Yeo, who is reopening his restaurant on 104th Street near Broadway in about two weeks, said he didn't know what would be moving in.

"Maybe a bank. Maybe a Walgreen's," he said. "I think they want a big tenant over there."

Although no detailed policy responses have emerged to counter what some council members are calling a problem, a council member of Brooklyn, David Yassky, and a council member of the Upper West Side, Gale Brewer, said they are looking at tax breaks for small stores and zoning schemes to preserve neighborhood character.

"We're going to call on the administration to have a real, coordinated effort to try to protect some of the mom and pop businesses," Mr. Yassky said. "Not that people haven't been talking about this for a while, but we are hoping we can begin a very focused government conversation."

Both pointed to a zoning proposal in the works for 125th Street in Harlem that would bar banks, offices, and hotels from occupying first-floor retail space, except to allow entrances and lobbies.

"I guess you would call that a zoning solution," Ms. Brewer said.

A senior fellow at the Manhattan Institute, Steven Malanga, said the council should not be drawing up plans to restrict certain types of businesses from neighborhoods.

"Their goal should be to lower property taxes for all businesses in the city," he said, adding that the proposal to create targeted property tax cuts for neighborhood retailers is "a very narrow approach to a very large problem."

The director of special projects at the Municipal Arts Society of New York, a nonprofit organization that works to ensure the city is "livable," Vanessa Gruen, said the city might be at the point where government has to intervene.

"We are losing much of what makes New York so special," she said. "There are so many neighborhoods that are losing their neighborhood services. Banks are moving in. Duane Reades are moving in. It is going too far."

The society is holding an exhibit later this month on Jane Jacobs, the author of "The Death and Life of Great American Cities," published in 1961.

"Jane Jacobs was all about neighborhoods. Not only preserving your neighborhood, but enjoying your neighborhood," Ms. Gruen said. "We are trying to get ordinary New Yorkers to become active in what happens to their city."

The executive director of the West Side Chamber of Commerce, Andrew Albert, said he was torn on the issue of how to respond to a changing neighborhood.

"You have to walk a fine line between the need for these small interesting stores and the big chains that can pay whatever the cost is," he said. "There has to be a middle road here."