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Budget, Education & City Services

Community Board Five Support of NYC Councilmember Powers’s Bill to Exempt Additional Small Businesses from the NYC Commercial Rent Tax

At the regularly scheduled monthly Community Board Five meeting on Thursday, September 10, 2020, the following resolution passed with a vote of 41 in favor; 0 opposed; 1 abstaining:

WHEREAS, New York City imposes a commercial rent tax on businesses of a certain size operating between Murray Street and 96th Street in Manhattan; and

WHEREAS, The tax is a 3.9% levy on annual rent applied to businesses paying more than $500,000 in annual rent and with more than $5 million in annual revenue; and

WHEREAS, The tax applies to thousands of businesses, small and large, in the designated area; and

WHEREAS, The tax represents a substantial revenue stream for New York City, but also represents a significant burden on small businesses; and

WHEREAS, In 2017, then-Councilmember Daniel Garodnick, with support from Mayor de Blasio, sought to alleviate some of that burden on up to 2,700 small businesses by raising the prior $250,000 rent threshold to $500,000 for those businesses earning $5 million in revenue or less, and by implementing a discounted sliding scale on the tax for those businesses earning between $5 and $10 million in revenue with rent between $500,000 and $550,000.  That bill was implemented beginning June 2018; and

WHEREAS, Councilmember Keith Powers has introduced a bill, Int 2007-2020, to temporarily suspend the commercial rent tax during the COVID-19 emergency for all businesses paying less than $1 million in rent, regardless of business income; and

WHEREAS, This temporary suspension could exempt up to 5,000 additional businesses from the commercial rent tax, which represent slightly more than half of the total number of businesses subject to the commercial rent tax; and

WHEREAS, Councilmember Powers’s office does not have a precise estimate for the impact this bill may have on City revenue or the budget for 2020, but noted that based on available 2019 data, this temporary suspension would cost the city $21.3M in quarterly tax revenue; and

RESOLVED, Community Board Five strongly supports thoughtful and data-driven measures that will promote the sustainability and growth of small businesses in New York City, particularly during this time of economic crisis; and

RESOLVED, Community Board Five expressed concern that the proposed bill would include high-revenue businesses that are not in need of tax relief, but happen to rent smaller spaces between 96th Street and Murray Street in Manhattan.  Community Board Five seeks to ensure that a temporary suspension of the commercial rent tax is focused on those businesses actually affected by the COVID-19 emergency, and strongly encouraged the City Council to establish additional requirements to ensure the temporary suspension only applies to businesses in need, leaving it to the Council to determine the simplest way of doing so; and

RESOLVED, Assuming the bill seeking to temporarily suspend the commercial rent tax does develop additional requirements that ensure it applies to business actually in need, Community Board Five asks our Mayor and City Council to pass this legislation. 

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