Thursday, July 22, 2021

Land Use, Human Health, and Equity Project, Post 15: Zoning and Lease Mediation as a Way to Retain Critical Small Businesses

Elisabeth Haub Law School of Law
Pace University
Land Use Law Center
Supervisor: John R. Nolon, Distinguished Professor
Blog No. 15 of the Land Use, Human Health, and Equity Project
Editor: Brooke Mercaldi
Contributing Author: Jonathon Duffy [*]

Zoning and Lease Mediation as a Way to Retain Critical Small Businesses

 

The COVID-19 pandemic has exposed the fragility of small businesses throughout the country. These small businesses are the backbone of many of the communities they inhabit and losing them would come with devastating impacts. With a return to “normal” on the horizon, it is important to keep in mind just how much small businesses are still hurting and how much they contribute to walkable urban life, employment, and equity and how to sustain them in normal and troubled times.

            According to a study published by the New York Times in August 2020, one-third of small businesses in New York City will never reopen. That number is even more staggering when one considers that, according to the study, those roughly 80,000 businesses that will never reopen account for approximately 520,000 jobs. Six months after the study’s publication, nine million small businesses nationally were still in danger of shutting down without additional government aid. While all small businesses have been affected, minority-owned small businesses have been especially hit hard with eight out of ten minority-owned small business owners saying they are in poor financial condition, even after receiving government aid.

            These hardships faced by small businesses show just how vulnerable one of the most important sectors of our economy is. The U.S. Small Business Administration reported that two-thirds of jobs added in 2019 were created by small businesses. The 27 million small businesses represent 44% of economic activity and 50% of the total U.S. GDP. Small businesses play a critical role in the inner city where they provide roughly one-third of inner city jobs, as well as goods and services essential to lively and economic commercial neighborhoods. These small businesses and the jobs they represent, in some sense, are the lifeblood of cities and are keeping people tied to city living.

            As cities become more exposed to the vulnerabilities of small businesses and their impacts on the local community and economy, many have turned to zoning and lease mediation to help combat the effects of the pandemic. A popular strategy to accommodate social distancing has been the open streets programs. New York City has used zoning to the advantage of small businesses by allowing businesses to operate in certain streets. Relatedly, Santa Monica approved various zoning changes, including giving small businesses the ability to use their parking lots for outdoor retail and dining. This was done by increasing the change of use parking relief from 3 spaces to 10 and excluding any outdoor dining areas from the parking calculations. In order to remove the pressure of re-opening, Santa Monica also eliminated its one-year abandonment rule for legal, non-conforming uses. Clackamas County, Oregon used variances for areas zoned as commercial, industrial, or institutional to provide more space for social distancing. The County Planning Director of Clackamas County, Jennifer Hughes, stated that these variances could apply to restaurants whose owners wanted to use their parking lots for outdoor dining or to religious groups that wanted to set up a tent outdoors to allow for social distancing during gatherings.

            With the lack of revenue coming in due to the various shutdowns, many small businesses are at risk of eviction. Many owners cannot afford to pay their rent, while landlords only have so much flexibility as they have to pay their mortgages and other fixed expenses. The biggest problem tenants face with their lease is that they are simply not educated as to their rights. The Seattle Eviction Prevention Toolkit aims to address just that. Seattle partnered with local community groups and the law firm Perkins Cole to promote effective communication between landlords and tenants. This toolkit included sample lease provisions designed to mitigate the tensions of recovery, a summary of laws that would have an impact on tenants, and a webinar that explained the legal issues that may arise and how to address them.

            The impacts that small businesses are facing due to COVID-19 cannot be overstated. Many of these small businesses rely on a daily flow of customers just to break even. Their survival and the survival of the local communities that they inhabit are essential to keeping people in cities and to robust employment. The equity aspect of small businesses has come to light through the pandemic, and it is imperative that all businesses are afforded the same chance to rebound. Cities have looked past the basic financial recovery tools to more practical and innovative tools that allow these businesses to get up and running more quickly. City leaders have learned indelible lessons regarding small business vulnerability. As normalcy returns, they are likely to continue using zoning and eviction prevention to save these small businesses and protect them from the continuing risks of the future.

[*] Jonathon Duffy is a third-year student at the Elisabeth Haub School of Law and Land Use Law Center Volunteer.

Brooke Mercaldi is a second-year student at the Elisabeth Haub School of Law and Research Assistant to Professor Nolon.

The previous blogs in the series are listed here:

  1. Reframing Sustainability: Introducing the Land Use, Human Health, and Equity Project
  2. Planning for Public Health: A New Beginning for Land Use Law
  3. The Role of Density in Combatting Climate Change and COVID-19
  4. Novel Coronavirus Claims Implicate Age-Old Property Rights Questions
  5. State & Local COVID-related Emergency Powers: Individual Rights
  6. COVID-Related Land Use Regulations and Judicial Deference
  7. Mediation of Eviction Disputes May Hold the Key to the Survival of Small Businesses
  8. Using Zoning to Help Eliminate Food Deserts: A Few Steps Forward
  9. Urban Heat Islands and Equity
  10. Urban Heat Island and Equity: What Can Local Governments Do?
  11. The Recovery Lease: Preventing Evictions of Commercial Tenants During the Pandemic
  12. The Role of Hazard Mitigation Planning in Promoting Public Health and Resilience
  13. Hazard Mitigation Planning: A Case Study
  14. Complete Streets: Protecting Public Health

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