Tuesday, May 9, 2017

Why commercial rent control is such a hard sell

On a recent visit to Utica, NY as a presenter at "Main Street Boot Camp", a workshop sponsored by the New York State Office of Community Renewal, I left the hotel for lunch. Downtown Utica is stunning. But the streets were quiet. It was cold and rainy and I didn't have much time, so I turned left out of the hotel and ended up at the first restaurant I saw. A local pizzeria. I walked in and at once regretted it. The space was dark, the food under the heat lamps looked unappetizing, and while there were a few people inside, it was fairly empty. The restaurant had clearly been there for awhile. I walked up to the counter and asked about salads (which were not listed on the menu). The woman behind the counter handed me an old menu and I saw the options were limited. I was embarrassed to do it, but I turned and left without ordering.  I thought for sure I could better.  I walked another two blocks in the drizzle and stumbled upon another dining spot. It had transparent windows and from the outside I could see the place was buzzing. This time I opened the door and the line was backed up all the way to the door. There was not a single place to sit! After waiting in line for ten minutes, I was told that the kitchen was so busy that it was going to take another twenty minutes for my lunch. Unfortunately I didn't have the time. So I went back to the hotel - now three blocks uphill - and ate a mediocre buffet at the hotel restaurant.

My take away? It was pretty clear that the pizzeria was no longer meeting the needs of the local customer base. The business owner hadn't invested in the storefront or the interior appearance in quite some time. The place was stale, and felt like it. On the other hand, a healthier food concept down the street could barely meet demand.  And while I can't say for sure, it's more likely that the owner of the pizzeria is the one griping about high rents. As a public sector partner, differentiating between these two kinds of businesses when applying public policies is exceedingly difficult. How can you ensure that limited public resources - resources that could be going to schools and parks and public resources - are not being utilized to help business owners who quite frankly should be doing a better job. And to make matters worse, some communities are pursuing policies that might even penalize success. Imagine that the small, local restaurant was so successful that it rapidly spun off a few additional restaurants. Don't we want that kind of small business growth? Yet sometimes well intentioned policies like "formula ordinances" (policies that limit stores that share a "formula", including menu, decor and offerings, i.e. chains) are put in place that effectively prevent businesses with too many stores from locating in certain defined districts. While these policies may have their time and place, these two businesses should give us pause before we employ such blunt tools to solve for problems that require much more nuanced approaches.

This pizzeria was in clear need of updating, inside
and out. It was my first lunch option. And despite
not knowing whether I would find another lunch
spot down the street, I took the chance. 
This bakery/cafe, about a block away, was
packed to the gills at lunchtime.
They were clearly doing something right. 
Inside the bakery/cafe, patrons were standing around
waiting for tables or for their orders.

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