Black people are approximately 22% of NYC’s population, yet we own only 2% of NYC’s businesses and we receive less than 2% of contracts from NYS and NYC agencies.
By Rev. Reginald Bachus
The following letter was written on behalf of the Black Business Empowerment Committee sharing their concern to New York’s elected officials about the negative impact COVID-19 is having on Black Businesses.
Dear Elected Official,
On behalf of a coalition of Harlem-based Black business owners, Community Development Corporations and faith community we thank you for your leadership as our nation navigates the COVID-19 crisis.
While no state in the union has been spared the ravages of COVID-19, New York finds itself at the epicenter of the COVID-19 threat. Given the density of NYC’s population; the threat to NYC is acute and understandably, government has taken action to minimize the loss of life. While the life and safety of NYC residents reign paramount, we cannot ignore the negative impacts of government actions on the spiritual, social, mental, physical, and economic well-being of all New Yorkers.
The Village of Harlem has been the cultural epicenter of Black America for the last 100+ years.
More recently, Black Harlem has been battling the adverse effects of gentrification and economic stagnation of the majority of its Black-owned businesses. It is well documented that Black-owned businesses decreased in NYC by 30% between 2007 and 2012 and the downward trajectory remains. We fear emergency measures put in place to combat COVID-19 will decimate the tenuous footing of NY’s remaining Black businesses; particularly in Harlem where gentrification has taken hold. In order to maintain the economic health and vibrancy of Harlem for all of its residents, businesses and houses of worship, immediate action must be taken to protect its most vulnerable, its historical residents. The Black Community will not be led in the COVID-19 boat of despair while white business owners receive the lion’s share of no-bid contracts, and financial relief is doled out to other communications. The following are four (4) key areas critical to the survival of Harlem’s Black community during this national crisis.
GOVERNMENT PROCUREMENT AND CONTRACTS
Prior to the COVID-19 crisis, New York’s Black business community had been battling prohibitive government procurement policies, gentrification, and ineffective legislation that resulted in the demise of thousands of Black businesses. Black people are approximately 22% of NYC’s population, yet we own only 2% of NYC’s businesses and we receive less than 2% of contracts from NYS and NYC agencies. However, current government actions to address the economic ravaging brought on by the COVID-19 crisis present an opportunity to ensure fair contracting opportunities, Black business revival and increasing economic empowerment. Given the sense of urgency; we cannot wait for NYC/NYS agencies to fix broken systems that have historically denied access to contracts to NYC’s Black-Owned Businesses.
Under the Governor’s Emergency Executive Powers, we request a $100M ‘No-Bid Master Contract’ for COVID-19 related services and products. The No-Bid Master Contract will be administered by the coalition with primary management by Harlem Business Alliance (HBA), Harlem Congregations for Community Improvement (HCCI) and Harlem Commonwealth Council (HCC). All three of these not-for-profits have established track records in the Black business community, hence, we request that they receive ‘First Responder’ and ‘Front Line Defense’ status for minimally 12 months as they manage the contract during the COVID-19 crisis and recovery period. The collective administration of funds will be used to:
- Identify needed services and supplies – finding incremental opportunities for existing businesses and the unemployed due to COVID-19 crisis.
- Match needed services and supplies with qualified service providers and vendors.
- Aggregate, as necessary, service providers and vendors to attain the capacity required for larger contracts/orders. • Provide appropriate and effective financial relief to Black-owned businesses in the form of grants and loans to ensure existing businesses survive the COVID-19 crisis.
- Provide back-office support, systems and structures for the delivery of all services and supplies.
- Provide program administration and reporting.
According to the New York division of the National Federation of Independent Businesses (NFIB), the average small business has enough “cash-on-hand” to sustain basic obligations and operations for 45 days without new revenue. A recent survey by NFIB indicated 76% of members surveyed reported being negatively impacted by COVID-19. When you factor in the Black Tax which Shawn Rochester defines as — the cost of being Black in America in his groundbreaking book by the same name, this most likely rises to 95% or higher. A grim picture for Black Businesses across NYS and in NYC in particular whereas stated earlier, Black businesses declined by 30% over a 5-year period. It is worth restating here—Black people are approximately 22% of NYC’s population, yet we own only 2% of NYC’s businesses. Hence, it is of the utmost importance that government does everything possible to preserve existing Black businesses during the COVID-19 crisis and that additional measures are put in place for Black Business Empowerment (BBE) during the COVID-19 recovery period. We request a $1M contribution to HCC’s Harlem Entrepreneurial Fund (HEF), a $500,000 grant to HBA for business support services, as well as the relaxation of tax and regulatory requirements.
Financial and Back-Office Support
- Immediately contribute $1M to HCC’s HEF to provide cash grants to Black business owners vetted by HBA, HCCI and HCC to pay their bills (rent, utilities, insurance, money owed to vendors, payroll, etc.).
- Immediately provide a $500,000 grant to HBA to provide back-office support to businesses seeking grants, loans, disaster relief funds, etc. Relaxation of Tax and Regulatory Requirements
- Minimally, 6-month moratorium on penalties for late payments of business taxes or loans.
- Minimally, 90-day moratorium on remittance of real estate taxes, water & sewer payments, regulatory fees or penalties.
- Minimally, 90-day NYS/NYC moratorium on payment of quarterly sales taxes.
- Waiver of penalty and late fees for outstanding City & State payroll taxes. Allow interest-free payment agreement with City and State taxing authorities.
- Freeze unemployment insurance premiums thru December 31, 2020.
- Provide advanceable tax credits to small businesses to help offset payroll.
- Increase current state tax deductions, such as salary, wages, and other compensation as a cost of doing business, which will lower overall small business income tax bills.
HOUSES OF WORSHIP
In a March 2019 article in Crain’s, the writer said—Churches were a vital part of Harlem’s emergence as the cradle of Black culture, anchoring the Black community to the neighborhood, which runs roughly from West 110th Street to West 155th Street. “They were more than just places of worship,” said Michael Henry Adams, a Harlem historian, in the article. “The churches were a major element of the metamorphosis of Harlem. They were a combination of employment agency, settlement house, dating service and credit union.” While gentrification has changed the face of Harlem, Houses of Worship remain a vital part of the Black community and they continue to play the role they always have in Harlem. However, gentrification and a shift in the population’s values have resulted in dwindling congregations and severe reductions in offerings that have left many churches financially vulnerable. Government-mandated shutdowns in response to COVID-19 have exacerbated the situation. Social distancing and the prohibition of mass gatherings will have destructive consequences on Harlem’s faith community that was forced to close their doors and, in too many cases, cut off essential services and front-line support for New Yorkers.
In New York State, 71 out of every 100 New Yorkers have a religious affiliation according to the Pew Research Center. This means over 70% of New Yorkers have a faith community that is essential to their survival, especially in the face of a global pandemic. The damage to the spiritual, social, mental, physical, and economic well-being of New Yorkers with religious affiliations will be incalculable if Houses of Worship disappear due to financial instability as a direct result of government-mandated COVID-19 measures. The 400 Foundation, a collective of over 400 church ministers, has documented that government-mandated COVID-19 measures have already negatively impacted Houses of Worship and we are only in our second week of a social distancing mandate that is expected to last three to four additional months. In order to ensure the viability of this vital part of all communities, we request Mortgage Deferrals, ‘First Responder’ and ‘Front Line Defense’ status for minimally 12 months for the faith community during the COVID-19 crisis and recovery period; and assistance with utility payments. The faith community recommends:
- Negotiate a 90-day deferral payment on mortgage principal and interest on behalf of Houses of Worship with the term of the loan being extended by the 90-day period. This will relieve economically disadvantaged congregants from the burden of balloon payments that could result in church foreclosures as congregants try to get back on firm financial footings after work closures.
- The faith community is part of our safety net. They counsel congregants, and cater to the social, mental, and emotional needs of New Yorkers, as well as, provide social services through community care, food services, shelters, bereavement services, etc. Hence, they are worthy of ‘First Responder’ and ‘Front Line Defense’ status for minimally 12 months as we travel down what is expected to be a dark and deadly path.
- Through a faith-based partnership, immediately provide a $1M grant to the 400 Foundation to support ongoing ‘First Responder’ and ‘Front Line Defense’ work being rendered by over 400 Houses of Worship across NYS.
- Through a public-private partnership, negotiate a 6-month moratorium on remittance of water & sewer payments, utility payments and all regulatory fees payable by Houses of Worship, as well as, the waiver of all penalties for water & sewer payments, utility payments and regulatory fees. This can take the form of pro-rata utility company tax relief, dollar for dollar, with the relief passed on to the faith community.
AFFORDABLE HOUSING STOCK
Today, NYC’s Area Median Income (AMI) for 100% affordability is $96,000, but the median income for Black households is less than $47,000 making affordable housing unaffordable. Nearly 30% of NYC’s Black families are considered to be severely rent-burdened, defined as individuals or families spending more than 50% of their income on rent. Further, nationally, the number of Black families who own their own homes has dropped to 1960 levels, or 40.6%, compared to a white homeownership rate of 73.1% – effectively setting the clock back to levels that pre-date the Fair Housing Act, the lowest levels going back to 1970 for Black families. This data overlaid with the bleak unemployment numbers and economic recession that is expected to follow the COVID-19 crisis cannot be ignored.
Before the heightened desire for Harlem Real Estate, Harlem’s Community Development Corporations (CDCs) ensured quality low, moderate, and affordable housing for the Harlem Community and most Harlemites gained ownership of their domicile through NYC’s TIL HDFC Program. While most focus on the new luxury condominiums, homeownership for true Harlemites is tied to TIL HDFC’s and modest properties that have passed from one generation to another.
In 1978, NYC introduced the Tenant Interim Lease (TIL) program. The program provided renters that lived in NYC-owned buildings the opportunity to own their unit as a cooperative. Under the program, many Harlem residents purchased their apartment for $250. Prior to the deed transfer, NYC through HPD, renovated the buildings using a modest scope and in some cases, gut-rehabilitation. Some 40+ years later, many TIL buildings which were converted to HDFC’s in the Black community are inhabited by the original shareholders. Most of the buildings are in a severe state of disrepair, few have capital reserves to make needed repairs and most struggle to pay basic operating costs.
Whether we are talking about TIL HDFC’s, affordable rental units created by local CDC’s with government subsidies or modest properties passed from one generation to another – most operate on the margins and, few if any, have reserves to sustain them through months of unpaid rent.
The survival of Harlem’s CDCs, the preservation of HDFC units by long-term owners and the retention of Black-owned properties passed from one generation to another are essential to ensuring that indigenous Harlemites remain in the community they call home and that future generations will be able to afford to live in the Black Mecca. Absent relief measures, HDFC units and properties passed from one generation to another will be sold to the highest bidder as owners seek economic relief in the open market and many CDC owned properties will wind up on the auction block as a cascade of unpaid bills and taxes mount, repairs and maintenance falters and staff is laid off due to non-payment of rent by unemployed tenants. To be clear, none of these properties can be operated without income in the form of rent payment. We recommend:
• Provide interim rental assistance funds to existing tenants who can demonstrate loss of income due to COVID-19 work restrictions who do not qualify for the additional $600 per week in state unemployment insurance for the duration of the crisis, including self-employed individuals.
• Immediately provide a $1M grant to HCCI to determine the needs of property owners and to provide technical assistance to HDFC’s with 80% or more original owners seeking loans, grants, disaster relief funds, etc.
• Minimally, 6-month moratorium on remittance of water & sewer payments, utility payments, regulatory fees and real estate taxes, if any.
• Minimally, 6-month waiver of all penalties for water & sewer payments, utility payments, regulatory fees and real estate taxes, if any.
• Minimally, 6-month moratorium on NYC DOB fines for building violations.
• Immediately permit all government-subsidized buildings with regulatory agreements access to any available Tenant Social Services, Operating and Replacement reserves to cover COVID-19 related expenses and provide grants to replenish the reserves during the recovery period.
• Minimally, 6-month moratorium on HTF, HPD, and HDC payment on mortgage principal and interest. • Apply any government mandated waived rent payments, dollar for dollar, to NYC Water and Sewer charges.
• Publish list of banks who have agreed to suspend mortgage and loan payments for a specified period and mandate the notification to all mortgages and loan recipients via USPS.
• Currently, NYC’s Family Eviction Prevention Program (FEPS) limits participation to renters whose rent does not exceed $900. Increase this limit to the average rent for a two BR unit in NYC which is $1,951 for existing tenants who can demonstrate COVID-19 related loss of income.
• Create a Harlem Capital Fund—a Public-Private partnership (Banks, Insurance, Philanthropic Community) to help subsidize low AMI Buildings and commercial spaces in Low Income Housing.
The question is—will NY’s elected officials continue to ignore the economic health of the Black community, or will you put measures in place that will ensure the economic health of the Black community during and after the current COVID-19 crisis?
The Black business community and the Black faith community are watching.
We will respond accordingly as the 2020 and 2021 election seasons unfold. We thank you for your sincere and urgent consideration of the concerns and remedies detailed above.
Rev. Reginald Bachus\The Black Business Empowerment Committee
The Black Business Empowerment Committee (BBE) is a collective of Black community organizations, churches and business owners that have come together to put forth a Plan for Black Business Empowerment. The goal is to make Black economic health and Black business empowerment a priority for all elected officials. Primary organizers: The 400 Foundation The 400 Foundation, a moral movement for economic equality, was birthed in February 2019 as a historical acknowledgment of the 400th year since the end of Chattel Slavery in North America and a biblical response to the Exodus liberation story after 400 years of oppression. www.the400foundation.org
Harlem Business Alliance
Since its founding in 1980, the Harlem Business Alliance (HBA) has been a force of advocacy for the development and empowerment of Harlem’s small business community. HBA offers free one-on-one counseling services to aspiring entrepreneurs maneuvering through the start-up phase as well as to established small business owners. www.hbany.org
WEG is an alliance of Harlem based Black entrepreneurs formed in 2018 in an effort to level the playing field for Black business owners in NYC. WEG seeks to buck the trend by advocating for Black-owned businesses and identifying contract opportunities and Black entrepreneurs prepared to accept the opportunity. www.WEGNYC.org