Executive Summary

Growing New York City’s economy means growing our small businesses. But all too often, these businesses struggle, or worse yet fail, as a result of the outdated, complicated, and costly web of rules and regulations, agencies, and bureaucracies across City government.

For years, City leaders have sought to reduce red tape and make it easier for small businesses to grow. Despite these efforts, red tape continues to sap the entrepreneurial energy that fuels growth across the five boroughs.

To overcome these challenges, in January 2015, New York City Comptroller Scott M. Stringer launched the Red Tape Commission. Co-chaired by Michael Lambert, Executive Director of the Bed-Stuy Gateway Business Improvement District (BID) and Jessica Lappin, President of the Alliance for Downtown New York, the Commission is a collection of 31 New Yorkers with experiences running small businesses, advocating for small businesses, and navigating City government. The goal was to go directly to business owners for ideas on how to make government a partner, rather than a barrier, to their growth.

Findings

The Commission interacted with hundreds of New Yorkers, who in general expressed dissatisfaction with the way that City government interacts with small businesses. The findings of a Red Tape Commission Survey of almost 300 business owners revealed:

  1. Broad dissatisfaction with City agencies: When asked to grade City agencies on a scale of 1-5, with 1 being very unsatisfied, business owners gave most agencies a grade of 2. The Buildings Department, Office of administrative Trials and Hearings, the Taxi and Limousine Commission, and the Department of City Planning were cited as the least satisfying to engage, while the Fire Department and Department of Small Business Services got the highest marks.
  2. Painfully slow permit and license approval processes: Nearly 30% of small businesses surveyed (29.65%) said it took them six months or longer to get all the approvals they needed from the City to open for business, and 13.4% took more than a year.
  3. Privately hired “expeditors” add cost but little value: Nearly 40% of small businesses surveyed (39.4%) said they found it necessary to hire a private “expeditor” to navigate the City bureaucracy, but more than half said spending the extra money was neither helpful nor effective.
  4. Lack of fairness, information and communication: Nearly half of all business owners surveyed (48.3%) said they did not feel like they had been treated fairly by city inspectors, and more than 57% said agency inspectors had failed to adequately communicate expectations and requirements.
  5. Frustration over City policies: Asked to identify their single greatest frustration with City government, fines and inspections were cited as the most common complaint among those surveyed (20.28%), followed by agency response times (18.4%) and high taxes and fees (17.4%).

Based on these findings, the report identifies 60 solutions to problems ranging from slow response times and poor customer service to a punitive inspection culture and inadequate support services.

Many of the ideas were suggested to the Commission by the small business owners themselves, while other ideas were developed by the Comptroller’s Office with help from the members of the Red Tape Commission. Taken together, these proposals will not only reduce existing rules and procedures that stifle small businesses, but will also reorient City agencies so that they can better serve these businesses going forward.

Solutions

The 60 solutions called for by the Red Tape Commission include:

  1. Establishing clear timelines for the approval of permits and holding agencies accountable if timelines are not met. Too many small business owners pay top dollar to wait months for agencies to approve applications, which very often have no timelines attached to them. Agencies should be held accountable for poor service.
  2. Abolishing expeditors at the Department of Buildings and creating Small Business Advocates in each City agency. So-called expeditors are private “fixers” hired to navigate the arcane City bureaucracy, principally at the Department of Buildings. Expeditors should be removed from the process and replaced with professional agency staff dedicated to serving all applicants.
  3. Improving services for Limited English Proficient New Yorkers. Business owners who are not yet proficient in English often have a very difficult time navigating the City bureaucracy and understanding how to comply with the law. The City can do more to improve these services, including providing better translations of websites and more guides, documents, and notices and in key languages of the City.
  4. Helping business owners to learn how to comply with rules and regulations rather than relying on fines. Many small business owners expressed frustration about the difficulty understanding all of the City’s rules and regulations. For example, restaurateurs must pay $400 to obtain a consultative session with an inspector. This cost discourages restaurants from engaging the City and creates a culture of distrust.
  5. Making better use of technology. Many of the challenges small business owners described could be mitigated through better use of technology. For instance, wider use of electronic filing for permit and license applications and the development of more online training courses and videos could make it easier for small business owners to interact with City agencies.
  6. Reforming the Commercial Rent Tax. The rapid increase of commercial rents is pushing many small businesses out of Manhattan. To help these business owners, the City Council should reform the Commercial Rent Tax.

New York City continues to be a magnet for business development. At the same time however, the City faces increasing competition from cities across the country and around the world. As a result, it is essential that our government work with the private sector to enhance our competitiveness and ensure that all businesses—big and small—can continue to grow and power the economy.