Big Breaks for the Big Boys
New York City has traditionally been a haven for small and independent businesses, but that seems to be changing. A new survey by the Center for an Urban Future titled “Attack of the Chains?” found over 5,700 chain stores in New York City’s five boroughs. As the Center’s Director told the Daily News, "There's no question that some neighborhoods and maybe most of Manhattan is really oversaturated when it comes to chain stores…Clearly this does present a lot of problems for the mom-and-pop businesses out there."
Not only are chain stores proliferating in NYC, but their bottom lines have been lifted by public money. Many of these chains have benefited from property tax breaks in New York’s recently reformed – but still problematic – Industrial and Commercial Incentive Program (ICIP), now the Industrial and Commercial Abatement Program (ICAP). Some of New York’s chains receiving subsidies: Dunkin’ Donuts, McDonald’s, White Castle and Rite Aid. And as big box stores have begun to creep into the city, they too have been subsidized. Most of the city’s seven Target and seven Kmart stores have received ICIP tax breaks.
At a cost of over $409 million to the city in 2007, ICIP, which provides as-of-right property tax breaks for construction or renovation projects, has been New York’s most expensive economic development program. Good Jobs New York has been a longtime critic of it, and even the city’s Economic Development Corporation has recommended reforms. In May, the Manhattan Borough President issued a report criticizing the millions in ICIP tax breaks that have gone to fast food restaurants, gas stations, and chain retail stores (we’ve also objected to the millions in ICIP subsidies for Midtown Manhattan commercial projects). The Borough President’s report noted that only about 12% of ICIP benefits for Manhattan retail went to independently owned businesses in 2008, with the remainder going to chain stores.
The state legislature passed program reforms this June (S6366 and S8705), converting ICIP into ICAP. Among the reforms, most retail space in Midtown Manhattan will be ineligible for benefits for any new renovations (though those already receiving ICIP will continue to). While this will affect both chains and independent stores, it has largely been the chains that have benefited. Still, the new legislation will not bar chain stores in Upper Manhattan and the outer boroughs from receiving the subsidies.
Of course, providing tax breaks to chain stores isn't something limited to New York. Cities and states across the country give millions in subsidies to chains, including big box stores such as Wal-Mart and Cabela's.