For July, it was reported that over eighty percent of NYC restaurants could not pay their rent. And a whopping ninety percent say that they do not expect to realize any profit over the next six months—at least not without some form of help from the government. And yet, with talks stalled, such aid doesn't seem to be anywhere close to coming through.
Recently though, a group of New York City lawmakers arrived at a proposal they deem the "recovery lease" bill. Essentially this bill would offer landlords certain tax incentives for restructuring lease agreements with smaller businesses. The city needs to get landlords more open to working with those businesses currently struggling to make ends meet, much less pay their rent. This bill would make it profitable, at least to some extent, for landlords to do just that. So, the landlords would get breaks come tax time and smaller businesses would get a bit of breathing room—hopefully putting all parties on the same page at least in theory.
As it stands now, many landlords are finding that having their buildings stand empty is just as profitable if not more so than when they were occupied. This is because if they do then lower the rent to attract new tenants, their property values go down, and the less then that they pay in taxes. While many landlords have been extending an olive branch to tenants, doing what they can to help, there are still others who refuse to do so. They'd rather see the space vacant and thus get the tax write off. So the recovery lease program would still allow for tax abatement but be an incentive for the landlords to renegotiate with current tenants.
At the time, this is merely a proposal being introduced by city lawmakers. In the end, the state will have the final say as far as whether or not this can be enacted. At that point, it would have to be introduced as a local law.
The actual components of the proposal have not been released yet; in other words, details are scarce at the moment regarding what this would look like when put into practice. The idea is that landlords would get property tax breaks if they work something out with tenants versus evicting them. Part of the proposal suggests that leases can last up to ten years with a cap on any yearly increases. The program is optional; meaning, if the landlords want to keep storefronts vacant, they can. While it doesn't tick all of the boxes, lawmakers are hoping this does offer small NYC businesses some help.
First Union Lending has been assisting smaller companies throughout the crisis. We offer short term loans and lines of credit, among other programs. We are invested in helping our clients through this. Even if your credit is not ideal, we likely have a funding solution for you. Call today and let's get started!