The Croissant Clause--A Plea for Commercial Rent Stabilization

It is a truism, and has been for a long time, that small businesses are being squeezed out of New York.  We have been a small but growing business for 39 years.  In an aggressive, cutthroat real estate climate, there is no protection for small businesses.  Even larger enterprises close or go under.  In the hospitality business I am thinking of the restaurant City Hall downtown and in particular of the legendary Danny Mayer, who decided to close (and move) the Union Square Cafe after 30 years because the rent became insupportable.

With no protection for small businesses, the character of New York has changed (and continues to change) and not for the better. This is a plea for commercial rent stabilization, if only for small and medium businesses.

 

THE CROISSANT CLAUSE

In the spring of 1977 three of us, all artists, stumbled across a tiny dilapidated storefront on a one-block street in Greenwich Village and thought it the perfect place to open a café. Why a café? Perhaps it was simply, as I later characterized it, a lunatic whim. Perhaps it was because even artists at a certain point contemplate the notion of a steady income—even in something as dull and stable as the restaurant business. Anyhow, after two months of cleaning out these Augean stables, sanding, plastering, painting, and doing the intricate dance one has to do with the authorities who live beyond the Village (nine city agencies and two years to get permission to put two tables on the sidewalk), we looked up, and mirabile dictu, we had a café.

It was not grand by any stretch of the imagination—a toaster-oven was the engine of our little machine—but perhaps because of who we were (one Irish-American actor, one Argentinean-Italian-Canadian visual artist, and one Anglo-German-Jewish writer/director/performer—moi), we almost instantly had an arts program that reminded people of what the Village was supposed to be about. Poets, puppets, shows of paper and air, songwriters, ventriloquists, cellists, art installations, a play written for the café, stiltwalkers and mime shows on the street outside, stuff in every conceivable genre (and quite a few inconceivable ones).

I mention this because, despite my trepidation at signing a five-year lease, it was magnificently doable. Our rent was 450.00 a month. Eventually, the plumber who had tinkered with the ancient plumbing for decades bought the building—there were 29 apartments above and surrounding us—and his lawyer son drafted a lease that was long and fair. It was tied to the Consumer Price Index and it expired 30 years after our original signing.

Inevitably the building changed hands—once, we almost pulled off buying it, but were squeezed out by a more conventional entrepreneur, who instantly flipped it. The present owner, a notoriously rapacious landlord (I use “rapacious” in the nicest possible sense), gloated nine years ago as our first thirty years were coming to an end. Yes, we had taken over the place next door, had built a tiny kitchen, had inherited the attached apartment in the back, which became a dining room, but all these expansions were in our first few years and were incorporated into our lease. Brilliantly, that lease survived through thick and lean years, benefitting the landlord in certain markets and us in others. Brilliantly, too, as our expiration date approached we were at market rate. And now?

And now a brief interlude . . .

Shortly after we opened, I moved from a sublet in a fifth floor walk-up in the East 20’s to a small loft on the top floor in the heart of FCD—the Filing Cabinet District, 23rd Street between 6th and 7th. The building was owned by my friend Bernard, a Jesuit-trained Vietnam vet, who virtually invented loft living in New York. He was also a wit and the lease he proposed (and I accepted) contained what we referred to as “the croissant clause.” My rent would fluctuate according to the price of croissants at the Cornelia Street Café. Obviously prices tend to go up and he trusted me not to cut the price of croissants as the renewal date approached.

I improved the place, sanding the floors, painting, building a more sophisticated kitchen, etc. When I moved out seven years later—to get married and eventually move to Brooklyn—Bernard paid me handsomely for the improvements.

Back to the business at hand:

As the expiration date of the café’s long lease approached I (and a rather expensive real estate attorney) negotiated with the landlord’s representative.

Now, I say “representative” advisedly. He used to be an attorney but had been disbarred after embezzling two million dollars of his clients’ money to open a strip club in the East Village for a young woman with whom he had become infatuated; this landed him in Rikers for a couple of years but did not in any way blunt his negotiating skills.

We asked for a 10-year extension at the same annual increase which had tied us so successfully to the market rate. Rikers said five years and a 50 per cent increase—plus 40% of the increase in Real Estate taxes on the whole building after the new base year. We offered fifteen per cent. Rikers laughed (or perhaps more accurately snorted). Nothing doing. Clearly, moving the Cornelia Street Café to, say, Jones Street, apart from the expense, would compromise not just the nomenclature but our identity. He had us over a rather expensive barrel.

So here we are—“a culinary as well as a cultural landmark” as Mayor Koch proclaimed us on our 10th anniversary more than 29 years ago—and our rent is almost 80 times what it was when we opened. We have improved the landlord’s commercial space beyond recognition, including the hideous dungeon in which we now do some 700 cultural events a year. But, unlike my friend Bernard, he is not going to pay us for the renovations—or even return the three months’ security he demanded when we renewed—should we find life in the bohemian capital of the US no longer viable.

So my proposal to the city—and the myriad agencies involved—is that we adopt a version of the croissant clause for commercial tenants. As things stand now, small business is being squeezed out and the character of the City is being homogenized. Landlords might balk a bit. But let’s look at it from a tenant’s point of view. If we were to apply our landlord’s increase to the price of a croissant, you would be paying something north of 75 bucks for one simple flaky pastry. Even if we factor in the 50% increase in our usable space, you would be paying 50.

Seems a bit steep, doesn’t it?

 

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