COVID-19’s impact on Chinatown.
T!C’s response to the effects of the COVID-19 pandemic on Chinatown’s business ecosystem is focused on four areas: 1) inequity of resource distribution in relief programs; 2) current and future instability of food systems; 3) property tax burden for small property owners and commercial rent burden for their tenants; and 4) lessons learned from post-9/11 recovery.
These issues affect all of us, yet T!C’s lens is specific to the context of Manhattan’s Chinatown, given the early on-set of the effects of “PAUSE” and shock waves of xenophobia and anti-Asian bias and violence. Chinatown’s experience has been unique, and the tools deployed for the neighborhood’s recovery should be crafted in a way that addresses that reality. Solutions must address the compounding effects of these inequalities and involve the community in the solution, rather than just construct Chinatown as a recipient of aid.
I. Inequity in COVID Response Mechanisms across levels of relief
Summary: Relief programs at all levels of governance as well as the private sector fail to adequately support Chinatown, and a community specific plan needs to be put in place to ensure a smooth and safe reopening process. Asian Americans have some of the highest unemployment rates of any racial group, and the vulnerability of the businesses and families in the community is being dramatically exposed by the virus.
We have identified the following gaps in the relief plans that have left Chinatown behind:
Institutionally Excluded: Community based lending programs like Renaissance Economic Development Corporation (Renaissance EDC), an affiliate of Asian Americans For Equality (AAFE), did not qualify for the first round of Federal PPP distribution. AAFE lending capacity was not large enough to meet the threshold for the first round. Second, the NY Forward Grants (private money administered through the state) did not select Renaissance-AAFE as a CDFI. This has left our community’s CDFI that has the language/cultural capacity and networks to support our community’s small businesses without adequate resources. Existing loan services in Chinatown have only had the capacity/funding to support a fraction of applicants, leaving many small business owners to fend for themselves. The Chinatown we return to after the Pause will be unrecognizable if tailored steps are not taken.
Language Access: The SBA have only recently provided any official translation of their application or support materials (2+ months after the launch and also after the depletion of the EIDL funds). The work of language accessibility fell onto grassroots efforts (such as www.thinkchinatown.org/covidhelp) scrambling to translate and disseminate in an ad hoc way. Given the first-come-first-serve nature of the relief applications (specifically the EIDL), these barriers resulted in leaving many of the most vulnerable without support or with significant delays in support. For equity in the distribution of resources, translated documents must be made available in a timely manner.
Cash Economy: Given the cash-based economy and informal payroll in family businesses, they are less likely to be able to provide adequate proof of need and more likely to qualify for smaller loan amounts.
Need for data transparency: Zip code or neighborhood level data on how the aid is being allocated is not available at this time. T!C and others have called for transparency, but the data is not yet available. It is urgent that transparency at how federal aid is distributed to understand the full picture of how Chinatown is being left out of relief.
II. Food Supply and Wholesale Insecurity
Summary: The food system feeding Chinatown is facing unique challenges during COVID-19 that have long-term implications for supply. Given the seasonal nature of wholesale orders and their close relationship with farmers around the continent, today’s closures are at risk of leading to very unstable futures of food supply as restaurants reopen. Government intervention and reopening plans should closely consider the security of the wholesale industry to ensure supply and pricing remain as steady as possible for the community.
Recommendations:
Adjust Recognition of Wholesale Businesses by broadening Agricultural Designation
As of right now, the experiences shared in our interviews show that wholesale businesses are categorized as part of the service industry, creating limits to how much and what type of support they are eligible for that address the unique dynamics of their business and the risk they take on.
In the words of one of our interviewees, Sasha Wang of Fresh Goods Trading: “we share all the same risks as the farms but do not share the benefits” (Interview on May 15, 2020).
Including wholesale in the agricultural industry would make the direct relief and purchasing policies open to supporting wholesale, recognizing the critical role it plays in our food supply.
Address industry cash flow and market price fluctuation challenges.
The dynamic between the wholesale industry and the farms operates a season in advance. Wholesalers must place orders with farms for the season ahead, and do so with varied methods of price negotiation and pay schedules. For example, some agree on pricing at the time of the deal, while others wait until market rate and the time of delivery, which can lead to wildly different needs for capital upfront.
Wholesalers need support to create a sense of stability due to unpredictable market price fluctuations. This buffer, coupled with grant programs that enable wholesalers to secure orders for the season to come, will help stabilize the supply chain in all of the uncertainty. With the disruption in the market now, wholesalers are at risk of not being able to address demand later this year if the government does not intervene.
Examples of price fluctuations: Bok choy - usually they buy at $23-25 for a box, now it’s $32. NAPA Cabbage - usually they buy at $13-15 per case, now is $35-$38. Some veggies are higher in demand because they have longer shelf life.
When the market tanks, it tanks really fast, eg. Eggplant - usually sell $42 per box but became $28 per box when the restaurants all closed. They work on economies of scale so these differences are huge.
Provide a benefit for essential workers in the food supply network to keep the necessary manpower at work in a safe way.
Labor shortage: Employees have been opting to take unemployment benefits and stay home rather than take the risk of coming back to work. This has led to the warehouse to be short of hand.
Note: because of their connections in the supply world, the wholesalers do have access to enough PPE and cleaning supplies to keep their warehouses safe.
Other Pain Points:
Dramatic reduction in demand:
Important to understand a single company’s sense of scale and how it is affected by COVID-19.
For example, on a typical day, pre-COVID-19, a wholesaler may move 4,000 boxes of vegetables a day. Since March, that has averaged about 600 per day.
Relief programs have provided some benefits, but it has not been enough.
In our interviews, we learned that some wholesale organizations are benefitting from PPP, but the payroll is not the primary financial challenge in their mind.
Like many other businesses in Chinatown and across the city, wholesale companies rely in part on the cash-based economy, which creates challenges in securing proportional relief.
Increased expenditure on transportation costs.
Wholesalers have experienced increases in shipping costs, leading to instability in pricing and unexpected expenses. Eg. cost for a container truck from CA-> to NYC before the crisis was $5600, during the crisis it is $6800
III. Small Property Owners and the upcoming July 1st Tax Deadline
Summary: Small family-run businesses are the backbone of the cultural fabric that makes Chinatown, Chinatown. During and leading up to the shelter-in-place orders, many of these businesses have not been able to pay rent, putting the property owners in a difficult place. Chinatown’s historic tenement mixed use buildings hold a large proportion of rent-stabilized apartments to keep families in the neighborhood. As such, these small property owners rely heavily on the income generated from the commercial space to care of the aging buildings. This precarious position vulnerable to the pressure of development in the neighborhood, is exacerbated by ever-climbing and opaque assessments based on potential to earn. While taxes may hold steady, assessment grows and even spikes because of encroaching gentrification. Because the assessments and property tax payments are on an 18 month lag, the payment due July 1, 2020 does not take the COVID-19 crisis in account.
The small property ownership in Chinatown are mostly multi-generationally owned by Chinese American families and provide affordable housing to Chinese American families. Oftentimes these buildings were purchased at times of low real estate prices, when others were not willing to invest in the community. Without action, many small property owners will have to default July 1st.
The following recommendations below are drawn from Councilperson Margaret Chin’s letter to the Mayor, derived in part from conversations with small Chinatown property owners.
Recommendations:
Provide targeted property tax deferrals for small property owners, especially those who provide rent relief to their tenants, and advocate for federal funding to forgive some of these deferrals.
Implement the New York City Council’s proposal to pay for this targeted deferral program by encouraging larger property owners, if they can afford to, to pay their FY2021 property tax bills on July 1, which will allow the City to quickly access critical cash flow.
Institute an immediate moratorium on administrative nuisance violations for this group of small property owners and dismiss and forgive any fees or fines that do not drastically impact public health or safety.
Postpone real estate taxes and lien sales.
Provide emergency subsidies for small property owners to cover utilities, water, and sewer bills, especially since sheltering-in-place has spiked these costs.
Temporarily suspend Commercial Rent Tax payments for small businesses in these properties.
Pursue opportunities to provide relief to these properties through existing City preservation programs and creating multilingual literature to educate small property owners about their options and how to apply.
Support State legislation to fund emergency rental assistance vouchers (S8140A, Senator Kavanagh) and expand funding to HRA’s rental voucher program.
Support the postponement on mortgage payments and mortgage forbearance without adding penalties to lenders.
Support the postponement of sales tax payments for both quarterly and annual filers to help small businesses cover their rent and pay workers.
Support a sales tax holiday after the state of emergency is fully lifted to incentivize consumers to shop and dine.