NEW YORK – As the New York City mayoral race moves into high gear, entrepreneurs and venture capitalists have begun speculating on how a different mayor will affect their livelihood.
With an indisputable lifestyle improvement over the past few years, New York City residents have long debated whether Mayor Giuliani’s policies led to the city’s prosperity, or if the rising tide of the stock market simply floated all the boats.
A recent study from the Diebold Institute for Public Policy Studies Inc. downplays the role of public intervention in the growth of New York businesses. The report gives the credit to local financial services companies and the entrepreneurs themselves – products of the area’s media companies and the technology divisions of major corporations.
Depending on their connections to City Hall, people claim the city prospered because of, in spite of, or indifferent to public efforts. However, all the spin-doctors say their candidate will make the difference for the city’s future.
Among the dozen of unlikely contestants for the position, four front-running Democrats are fighting for the opportunity to tangle with Michael Bloomberg who seems to be a lock for the Republican nomination. Those Democrats include City Comptroller Alan Hevesi, Public Advocate Mark Green, City Council Speaker Peter Vallone and Bronx Borough President Fernando Ferrer.
Small businesses face unique obstacles in New York, a city dominated by well-established, non-tech businesses. Expensive real estate, high costs-of-living, high taxes and an industrially-oriented workforce make life difficult for tech start-ups in New York, but that has not stopped a recent boom in entrepreneurial activity in the Big Apple.
Kathryne Wylde, president of the New York City Partnership (NYCP) and the New York City Investment Fund, says real estate is an obstacle for a new business in New York. She says real estate factors led to the rise of the Silicon Alley community. In 1995, about 22 million square feet of wired office space concentrated in Lower Manhattan lay vacant. The City Hall-led Lower Manhattan Plan, a modest group of zoning and tax incentives, encouraged building owners to renovate buildings for entrepreneurs and convert unused office space to residences.
As entrepreneurs took advantage of the inexpensive rents – $20 per square foot – Silicon Alley grew. Now with higher occupancies, Wylde estimates the same space rents for twice that much.
With real estate remaining an issue, the NYCP and others worry that the city lacks any real space that would be appropriate for biotech companies. With several leading teaching hospitals in the area and pharmaceutical giants based in nearby New Jersey, New York would be a natural choice for biotech start-ups, but the space is non-existent.
Several groups, including NYCP, have advocated developing technology and biotech centers around the city’s community colleges and universities and developing areas outside of Manhattan’s central business district. If communities were to develop around these areas, below market rents may attract entrepreneurs.
Being a New York entrepreneur himself, Bloomberg is expected by most observers to be friendly to small businesses, but the founder of the financial information company bearing his name lacks political experience. He will likely face a Democratic contender with considerable experience in the public arena and an extensive political network.
The four Democrats currently hold city government positions and point to their efforts while in office as evidence of their ability to influence the small business environment.
Green recently earned the public support of 50 Silicon Alley entrepreneurs following the release of a white paper: NYC is I.T.: Mark Green’s Priorities for Promoting Information Technology in NYC. The paper lists several initiatives that could benefit entrepreneurs, such as improving technology-focused worker education, establishing a chief technology officer for the city and developing new technology-start-up-friendly areas of the city.
In a written statement, Vallone touted his prior efforts to support the entrepreneurial community including several initiatives to help companies find affordable office space and a $25 million Emerging Industries Fund that invests in resident high-tech companies.
During Vallone’s tenure on the council, several city business tax rates were frozen or decreased from the high rates of the Dinkins administration. He also claims to have helped small, unincorporated business owners with a personal tax credit.
“As mayor,” he writes, “I will continue to make sure small business owners, entrepreneurs and venture capitalists can prosper in New York City.”
Hevesi also claims credit for eight business tax breaks that have helped entrepreneurs prosper in the city. With his financial experience as the Comptroller, many observers believe he will be supportive of venture interests. He even made a cameo appearance at the National Venture Capital Association’s recent national conference.
Finally, Ferrer has been noted for his efforts to improve conditions in the Bronx using the borough’s economic development office and warmly supporting local business people.
None of the candidates will likely ignore the city’s financial and business community, and they would be very foolish to stall the small-business growth that has coincided with the city’s late 90s renaissance.
In a political move of its own, the city’s strongest business-oriented non-profit will not play a favorite either. “From the standpoint of the New York City Partnership and New York City Investment Fund,” Wylde says, “we consider it our responsibility to educate all the candidates [on the issues important to the entrepreneurial community].”