Limit Chain Stores in Zoning

Title of bill

An act to amend the New York city charter, in relation to authorizing the enactment of zoning laws and ordinances to regulate formula retail uses

Purpose

To authorize New York City to enact local zoning laws to regulate formu- la retail.

Summary of provisions

Section 1 adds a new section 200-a to the New York city charter. This section defines "formula retail use" as a retail establishment with at least ten other retail sales establishments in the U.S. that share at least two of the following features: a standardized array of merchan- dise, a standardized facade, a standardized decor and color scheme, a uniform apparel, standardized signature, a trademark or a servicemark. Zoning resolutions enacted by the City of New York may include the regu- lation, restriction or prohibition of formula retail uses where enacted pursuant to a comprehensive plan and a valid public purpose.

Section 2 sets the effective date.

Justification

New York City residents are alarmed by a growing trend of vacant store- fronts. A 2017 survey of certain corridors in the 27th Senate District found a vacancy rate as high as 18.44% on Bleecker Street between 6th and 8th Avenues, with many of these vacancies representing former long- standing independent businesses

When these mom and pop stores are vacated, landlords will often leave stores empty for long periods of time in hopes of finding a tenant who can pay much higher rent. Instead of renting to another independent business for a similar rent as the previous tenant, landlords will hold out for a tenant - often a large corporate chain that is able to pay exponentially more than the previous tenant. As economist Tim Wu has said of this phenomenon, "That suggests waiting for Marc Jacobs instead of renting to Jane Jacobs."

The presence of "formula retail," which refers to chain stores that follow the same formulaic business model and decor in several stores, is one reason landlords can keep stores vacant for long periods of time. These chains are often large corporations that can and will pay much more than an independent business for rent. Formula retail has seen massive proliferation in New York City in recent years. According to the Center for Urban Future's annual "State of the Chains" report, the raw number of national chains in New York City grew for the ninth consec- utive year from 2016-2017, with stores like DufkiR Donuts, Subway, MetroPCS, and Duane Reade/Walgreens topping the list.

Unfortunately, studies have shown that formula retail can have a delete- rious effect on a local economy, as the store's profits are much less likely to stay in the community. For example, one study found that throughout the U.S. only about 13.615 of revenue from national chains is reinvested back in the local economy, compared to 47.7% returns from locally-owned businesses (Civic Economics, 2012). And a study in Austin, Texas found that $100 spent at a Borders bookstore generated $13 of local economic activity, compared to $45 for a local bookstore (Civic Economics, 2012).

Local New York City neighborhoods have expressed interest in enacting restrictions on formula retail uses, but have been confused by their statutory authority to do so. This legislation makes it clear that New York City has the authority to enact regulations to address formula retail uses.

Legislative history

2018: S.8577 (Hoylman) - Died in Cities

Fiscal implications

None to the state.

Effective date

This act shall take effect immediately.