By Roger Paradiso
Easter in the Village During a Pandemic: Part Two
I came to the Village this past Easter Sunday, April 12th, to witness the devastating effects of the COVID-19 virus. I will leave it to the historians and media hosts to decide the true story of this virus and how it has put another dagger into the backs of Villagers and their favorite small businesses. Here is what I encountered.
Interviews with store owners started on Monday, the day after Easter. I was following up on how they were coping with the tremendous economic, health, and social implications of the virus and the state-mandated quarantine
I sent a text to Jamal, the owner of Village Music World. He texted back that he’d gone to his shop. “I came into my store today. I can’t sit home all day. Just doing some cleaning…”
Jamal’s store will not be covered by the Paycheck Protection Program part of the Congressional stimulus package. But, it’s not just about payroll. It’s also about the rent, which is very high. A real estate friend mentioned that you couldn’t get a small store in the Village for less than $10,000 a month. Depending on the size of the store, rents can be as high as $40,000 a month. Then, you have the dreaded add-on of NYC real estate taxes; landlords can pass on a percentage to their tenants.
Jamal has fewer than five employees. He personally kept them on for one month before the government did anything. He took out a loan to do that. Now he can’t afford them or another loan. He is waiting for state and federal grants to come in.
“For me, with the applications there is nothing going on, nobody called. I guess they are so busy with this virus.”
Jamal is fighting this war on an island called Manhattan, where the payroll for his few employees is far less than his rent, utilities, and other business expenses. The PPP mostly pays for employees salaries—for up to 75 percent of the loan. The rent and utilities can only take up 25 percent of what is called the “forgivable” loan. But what can’t be forgiven is this: the math doesn’t work out for an owner-operator of a small business hoping to stay in business with the assistance of these grants. Not when rent can be two to five times higher than your payroll.
“I tried to reach out. The phone keeps ringing and ringing. Then the phone hangs up.” He pauses. We are on cell phones in a digital world. I ask him if anyone is out there. “Nobody is on the street. Really empty. Maybe in this whole area there are three or four shops open for take-out.”
I look at the picture I took of Bleecker Street on Easter Sunday. It looks like a neutron bomb hit it.
Jamal says, “You know for most of these small businesses…after a month or two they just go out. It’s not the 90s anymore. Our margins are small, maybe a month or two.” I ask him how long he can last. He says, “A month or two.”
Now I know why Jamal came in today. He came to see his store. The prognosis is dire.
Not only did the PPP forgivable loan get gobbled up by people who are not in the Village, but it is written all wrong. It’s more about the RENT, not the payroll. If you can only use 25 percent of the loan for rent, you go out of business. No business means no employment. So, where’s the payroll protection? It’s not about the payroll baby. It’s the rent!!!
I called a very nice man, Erik Bottcher, on Friday afternoon around 2:00 p.m. Erik works with Speaker Corey Johnson. Publisher George Capsis had sent him an email and he wrote back that I should call him. We had a long conversation. I pleaded my case. He got it. “Please pass along this information,” I requested. I emailed him a summary of part one of this article. He said he would call Congressman Nadler’s office and try to get him to talk to me or to get a quote. It’s now late Friday afternoon and no word has come back.
When I walk by the Unoppressive Non-Imperialist Bargain Books, I notice the awning had dropped to one side. Not a good sign, pardon the pun.
I ask Jim how he feels about the situation. “I am nervous about being exposed or exposing others so early. If I can test for antibodies and find I did acquire an immunity from a mild case it would be more comfortable. I don’t see a realistic level of safety sooner than June or July.”
And what happens in July? “That depends on what protection follows the 90-day moratorium on landlord actions. As it is, on June 9th when those 90 days are up I surely won’t be able to pay three months back rent. My landlord wants money. If the state or city gives no further protections after 90 days, I hope to get my landlord to give me some… A few email discussions are not promising at all. Maybe if I gotta’ leave, I can share another space on Carmine quickly.”
Things are not sounding too good, are they? It’s like we see the blob coming down the street and it’s gonna’ swallow us up. And we just stand there.
On Saturday I email Erik. He emails back that he is on it. Later that afternoon he writes that he’s trying to contact one of Congressman Nadler’s staff. The next email I get is from Juan Soto who is also on Speaker Johnson’s staff. He tells me he’s on it. He knows the deadline for the article is coming up soon.
I call Vittorio (Victor), the owner of la Lanterna di Vittorio, who has been in business 42 years. It’s getting late and, in the darkness, we speak honestly about the situation. When I’d spoken to his son Victor Jr. weeks ago, he’d said they would be going to a takeout menu to keep the place going. But when one of the workers got sick (he’s since recovered) they shut it down. “The health of my employees comes first. I immediately shut down the café, as painful as that was to everyone” says Victor Sr. “I know we will get through this. We will find a way to survive.”
Even though he owns the building, he still must pay his mortgage and real estate taxes in New York City. That got us to wondering if the PPP is set up correctly. Victor confirms, “this is more than a payroll problem.”
Why don’t they just let the small business owners take out the PPP loan and use the money to stay in business? Have them show their payroll and rent costs. Then that part of the loan is forgiven. I’m still waiting for Congressman Nadler.
And here’s another issue the politicians didn’t figure out. As Victor says, “I’m sure COVID-19 will go away eventually, but how soon will anybody want to go to a crowded restaurant?”
The small business owners did nothing to unleash this pandemic. And they complied with all city, state, and federal mandates. As we wrap up our late-night conversation Victor’s last words resonate, “My business will be around as long as I have air in my lungs.”
On Sunday, Erik emails me and tells me to contact Robert Atterbury in Congressman Nadler’s office. He wants to speak to me directly. I send him the summary I sent Erik, with a passionate introduction.
It is said that theaters are the horse and buggy of another age. We have entered, for better and worse, the digital age of streaming movies. This internet-driven delivery system rules the America of the 21st century. As Cinema Village owner Nick knows, the course is pre-ordained for these small theaters showing movies on a screen with a live audience. They will go the way of the horse and buggy. Or will they?
You can bet that during the quarantine these internet companies have been making a lot of money. What else can you do but watch cable TV?
To recreate “the old days” there are “watch parties” in a house, dorm room, or apartment where people stream and otherwise share the watching of a film. They say this is the way of the future. I say I can’t wait for the quarantine to end so that I can dare to sit in a movie theater among others, unmasked and ungloved, stuffing my face with popcorn and feeling alive with an audience even if they’re just strangers.
Nick is concerned, and he should be. The PPP doesn’t seem to work for him as he doesn’t have that many employees and he has huge rent and utilities bills. The Cinema Village has three small theaters.
” [I’m] trying to see how we can keep our theater going for a year or so till there is a vaccine available. I do not think people should be taking risks just to go to the movies, regardless of what the government decides. Under proper conditions, we will re-open despite the fact that we will be operating at a loss in order to maintain social distancing among patrons, along with other guidelines.”
I ask Nick if he has heard from any elected officials and he says, “No, can you help us with any contacts of council members and others in the East Village?”
Nick is maintaining the theater at a loss now, and it is significant. “We will fight even if we know we may lose, and if this lasts a really long time, we will never file bankruptcy to burden the taxpayers. That is what the movie chains will do.”
We’ve become members of a passive society, sitting by our television sets and computer monitors, typing in code to provide us with social interaction and entertainment.
A short time later, on Sunday afternoon, Robert Atterbury writes back in an email. “Hi Roger, this is definitely an issue we’re concerned about. Here’s a quote from Congressman Nadler.” “New York City small businesses pay some of the highest commercial rents in the country, and it is vital we fight to get all the resources they need,” said Congressman Nadler. “There are good proposals that would help tackle this problem both in the immediate and long term at all levels of government, from New York City’s Small Business Jobs Survival Act to New York State’s S8125A to suspend commercial rent, to proposals in Congress to reform the Paycheck Protection Program to cover a larger share of non-personnel costs. Small businesses are the backbone of our economy and we cannot let deferred costs overwhelm them at the end of this pandemic.”
On my way out of this city stricken with a pandemic, I notice a couple crossing the street corner at Tenth Avenue and 14th Street. They’d gone out for a walk to enjoy the day. The Hudson River is not far away. They wear face masks. And they keep their social distance. Is this the new normal that’s talked about?
A short while later, on Sunday afternoon, Juan Soto sends me an email. “Hi Roger, this is from the speaker.” It is a wonderful message. This is how government should work. How encouraging. Speaker Johnson wrote, “Our small businesses are being hit hard by the coronavirus pandemic and we must do everything we can to keep them afloat. As we battle this public health crisis, assuring the survival of mom-and-pop shops is critical. The Paycheck Protection Program is out of money and many small business owners were left out of the initiative. The next round of PPP needs to favor small businesses over large corporations, and it needs to cover a larger share of non-personnel costs. Our small businesses have no income, yet they’re still being forced to pay rent and other business-related expenses. We need to ensure that relief programs reach all those business owners who need the assistance. I thank our city’s Congressional delegation for fighting for these priorities in Washington.”
Breaking News: On Saturday April 26th I get a text and call from Jamal. He is upset. He tells me he has been turned down for the initial PPP loan and the Small Business loan and grant because he can’t show a 25 percent loss of income in 2020. And he says the bank was stringing him along about the Small Business Disaster Loan and the PPP. Message to Washington DC: The PPP is not working. The loans aren’t working. Nothing is working right for what many say is the backbone of our economy—the small businesses. Where’s our common sense?
Jamal has not only lost income this year, he is in the red. He owes the landlord rent even though the governor and mayor painted such dire predictions that no one came to shop on Bleecker Street since the end of January. When the mayor and governor said to shut down on March 22nd, business for Jamal and his friends in the Village had already slowed down to nothing. He also took out a small loan to pay his employees and small expenses in those dark days of late January through April 26th when the Village Stood Still. He is in a big hole. 25 percent loss? Jamal lost everything. Where I come from that’s way more than a 25 percent loss. He’s down 100 percent plus. It is a disaster he didn’t create. No one is helping him.
Jamal will lose his family business which has been in the Village since 1979. His rent is almost $17,000 a month for a very small shop. His payroll is almost $7,000 monthly.
It’s about the rent. Without giving Jamal a fair chance to obtain stimulus funds to pay his rent there will be no payroll. This does not compute. But it’s not that hard to figure out.
Jamal explains, “I have a family to feed. Kids that need to go to college. I can fix things, but we small business people need equity to stand up. Without equity, no business can survive.” I ask if he knows if any of his fellow small business owners have gotten any money from the government. “They all say no,” he says. “They will all have to close down at some point.”
What’s that they say about small businesses being the backbone of our economy? It’s just jive. They don’t care.La Lanterna café owner Victor asks, “how soon will anybody want to go to a crowded restaurant?”