Outdated Zoning Rules are Hurting the City’s Small Businesses

“As businesses evolve to meet changing consumer preferences, it has become clear that zoning regulations too often put up real, often unnecessary obstacles for businesses looking to make these necessary pivots as a matter of survival.”

Adi Talwar

Small businesses are in Inwood, Manhattan.

The world has changed and so too have the ways in which people spend their time and money—but regulations are slow to change, and small businesses are suffering because of it. When New Yorkers spend our money locally, we increasingly do so on goods and services that cannot be purchased online, or on dining out at local restaurants and bars.

As businesses evolve to meet changing consumer preferences, it has become clear that zoning regulations too often put up real, often unnecessary obstacles for businesses looking to make these necessary pivots as a matter of survival. This is why the zoning modifications in the Department of City Planning’s “City of Yes for Economic Opportunity” proposal are so important—many of our regulations were written decades before the COVID-19 pandemic and have not been updated for the post-pandemic economy , to support small businesses in the present day.

The impact of the pandemic on very small businesses (fewer than 10 employees), who make up 89 percent of all New York City businesses, has been particularly challenging. Whether pre-COVID or post-COVID, the fact remains that small local businesses start off with less capital than their national counterparts. JP Morgan Chase found that the median small business pre-COVID held only 27 days cash buffer in reserves, for example, and retail businesses held less: only 19 days’ reserves.

They also often lack the expertise to navigate challenging bureaucracies, resources to hire expeditors, or deep pockets to pay rent while waiting for permits and approvals. Eliminating these hurdles and helping businesses open their doors more quickly will help these entrepreneurs preserve their liquidity and better weather financial shock and irregular cash flows, which in turn saves more small businesses from failing.

New York’s City of Yes for Economic Opportunity proposal, up for a vote at the City Planning Commission next week, includes several key changes that cities across the country should learn from.