Freedom! 2,000 businesses to escape commercial rent tax

City Council approved bill that changes how tax is applied

New York /
Dec.December 01, 2017 08:59 AM

Dan Garodnick, Bill de Blasio, Mel Gibson as William Wallace, and a vacant NYC storefront (Credit: Icon Productions)

Some 2,000 businesses in Manhattan won’t have to pay a pesky commercial rent tax.
The City Council approved a bill on Thursday that will change who pays a 3.9 percent tax on base rent. In its current form, the tax applies to tenants who pay more than $250,000 a year. The bill changes that threshold so that tenants who make $5 million or less in annual income and who pay less than $500,000 in rent are free from the tax.
The measure also gives a break to businesses that don’t quite meet those parameters. Commercial tenants who make $5 million or less and pay between $500,000 and $550,00 in annual rent, as well as businesses who bring in between $5 million and $10 million and pay less than $550,000 per year, can receive a partial, sliding credit. Council member Dan Garodnick, who proposed the bill in 2015, said during a press conference on Thursday that another 900 stores will receive some relief.
The legislation is expected to cost the city $38.6 million in foregone revenue in fiscal year 2019. This was a sticking point for the de Blasio administration, which criticized the bill in August.
The measure aims to help struggling mom-and-pop stores stay afloat as rents and vacancies rise in the city. Garodnick, whose term ends at the end of the year, billed the legislation as a tool to combat the proliferation of banks and chain stores and to help other small stores stay in business.
“Finding ways to address the retail crisis is going to be very important,” Garodnick told The Real Deal in an interview earlier this month. “We have too many vacant storefronts and a need to think creatively on how to combat that problem.”

Related Articles

arrow_forward_ios
Richard Wagman, managing partner, Madison Capital (Care/of, Madison Capital, iStock)
Madison Capital signs wellness company in Brooklyn office
Madison Capital signs wellness company in Brooklyn office
Vornado co-head of real estate Glen Weiss and Sharebite President Mohsin Memon (VNO, Facebook, iStock)
Vornado sweetening Manhattan properties with food delivery partner
Vornado sweetening Manhattan properties with food delivery partner
Thomas Cangemi, chief executive officer, New York Community Bank (New York Community Bank, iStock)
Looming interest hikes prompt multifamily lending spree
Looming interest hikes prompt multifamily lending spree
Retailers are falling behind on their rent (Stock, Photo illustration by Priyanka Modi)
These retailers fell behind on rent last year
These retailers fell behind on rent last year
Jeff Aronson (iStock, Jeff Aronson, CC BY-SA 2.0, via Wikimedia Commons/Photo Illustration by Steven Dilakian for The Real Deal)
Centerbridge closes $2B real estate fund
Centerbridge closes $2B real estate fund
Scott McIntyre, chief executive officer, Guidehouse (Guidehouse, iStock/Photo Illustration by Steven Dilakian for The Real Deal)
New York rent relief contractor boasted about profits as program struggled
New York rent relief contractor boasted about profits as program struggled
Adir Levitas, founder and CEO, Faropoint (Faropoint, iStock, Illustration by Kevin Cifuentes for The Real Deal)
An industrial “David” in a field of Goliaths
An industrial “David” in a field of Goliaths
Equity Group Investments chairman Sam Zell (Getty, iStock)
Office market’s recovery will outpace retail amid “viability” questions, Zell says
Office market’s recovery will outpace retail amid “viability” questions, Zell says
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...