Crains New York Demo - (Page 11)

OPINION UWS zoning plan ignores Econ 101 H ow is it possible that a proposal from the Department of City Planning designed to preserve mom-and-pop stores on the Upper West Side will almost certainly result in the demise of the beloved Popover Café? The answer is actually quite simple. City Planning is ignoring how markets work as it rushes headlong into its worst decision since the ill-fated effort to preserve the garment district in have large spaces will benefit because they will be able to charge much higher rents; landlords who are stuck with small spaces will get less rent. The Popover Cafés in the area are doomed precisely because they have become successful enough to justify bigger stores (see “Victims of their own success,” March 19). National chains shut out elsewhere will be willing to pay premiums for grandfathered stores and can easily outbid the locals—even the ones that are thriving or are just outside the restricted area. City Planning’s job is to the late 1980s (see “Garment district policy fails the city,” Feb. 20). The plan would rezone retail strips on Columbus and Amsterdam to preserve small retail sites and would specifically limit bank frontages. Here, briefly, is what’s wrong with this plan. City Planning has decided to pick winners and losers among both retailers and landlords. It plans to stack the deck in favor of small retailers rather than letting consumers on the West Side decide who stays and who goes, according to where they shop. Landlords who currently GREG DAVID determine the appropriate amount of retail space,not which retailers ought to be favored. Finally, the plan is clueless about retailing trends. Banks are likely to start abandoning branches given how lousy their consumer business is these days. It also ignores the role played by drugstores. The reason they’ve been getting bigger is because they no longer serve just as pharmacies, but as convenience stores providing a fast shopping experience and a wide range of products at good prices. Even the Upper West Side needs more of them, not fewer. City Planning defends its proposal as a carefully calibrated one that will have only a modest impact. If so, why take such a step at all? It also insists that it addresses an extreme situation in a specific area of the city and that it is not setting a precedent. The department is deluding itself. If this proposal is adopted, other areas will clamor for similar treatment, and City Planning will have to agree,having abandoned a key principle of zoning. The mystery of this plan is why the Bloomberg administration is pushing it. It is nothing less than a repudiation of the mayor’s constant refrain that the market, not the city, should decide which retailers operate in New York. To be clear, it undermines the mayor’s support for Walmart in a fundamental way. It is past time for the grown-ups in the administration who understand economics to get involved. Pension wild card threatens reform T he pols in Albany ground out the sausage of pension reform buffeted by a union campaign asserting that workers were being asked to give up a reasonable retirement, even as they were prodded by a drumbeat of editorial commentary insisting that it was past time for bringing public-worker pensions more in line with private-sector practices and with what the public could afford. The result is less than the bold breakthrough proposed by Gov. Andrew Cuomo, but takes several significant steps in the right direction. The new provisions apply only to workers hired after April 1; no current employees will be affected because of restrictions in the state constitution. Most employees will have to contribute more to their pensions, thereby reducing the taxpayer burden.The retirement age for most workers was raised to 63, not 65 as the governor proposed. Pension-padding by counting overtime and unused sick leave in the base for pension calculations was reduced, although by far less than the governor wanted. The pension formula was adjusted, so most pensions will be somewhat smaller. One provision added late in the game is a nod to local officials who have watched the Legislature sweeten pensions for their employees year after year over their objections, with localities forced to pay for the provisions. Now these mandates will have to be funded by the state. In the past, state officials have wildly underestimated the cost of their sweeteners, and there is no guarantee they won’t do so in the future. But paying for the goodies they TOWNSEND ALAIR hand out is a sound principle. The governor proposed offering a 401(k) benefit to all state and local employees, recognizing that portability is a valuable feature at a time when few workers stay with the same employer for their entire careers. SUNY professionals now enjoy this kind of plan. But union leaders, in a burst of paternalism, succeeded in limiting this benefit to nonunion employees making $75,000 or more. The net result is that instead of saving $123 billion over 30 years as envisaged by the governor, the reform plan will save $80 billion, including an estimated $21 billion for New York City. Thrown in, probably at the last minute to assuage union leaders, is a wild card that could undo much of the progress. This “benefit enhancements” language hands the governor and the mayor the power to approve union petitions enabling workers to retire on full pensions at age 57 after 30 years of service. The legislation stipulates that the cost of any such enhancements must be covered by employee contributions.But it is unfathomable why, after all this Sturm und Drang, such power would be given to anyone. And it is impossible to believe that, in the end, the calculations for higher employee contributions would truly hold taxpayers harmless. It’s a safe bet that petitions are being prepared now. It’s also a safe bet that Mayor Michael Bloomberg won’t grant them, but who knows what his successors will do—or even the governor, for that matter. March 26, 2012 | Crain’s New York Business | 11 http://www.crainsnewyork.com/events-foye http://www.crainsnewyork.com http://www.crain.com http://www.crain.com

Table of Contents for the Digital Edition of Crains New York Demo

Crains New York Demo
Contents
Sweet project in danger of a total meltdown
More red ink on the books at Reader’s Digest
Bank in the tank: Bad bet on rates sinks Hudson City
Neighborhood Journal
The Insider
Small Business
Viewpoint
Really dumb move, Upper West Side
Real Estate Deals
Classifieds
Business Lives
Hot Jobs
Executive Moves
The Week Ahead

Crains New York Demo