Rents, taxes a challenge, but overall picture improving

The former site of Don Vito's Pizza.

The former site of Don Vito’s Pizza. (Photo by Phyllis McCabe)

The recent demise of Don Vito’s Pizzeria, located at 85 Broadway, was a blow to fans of the crisp-crusted, authentically Italian pizza. It was also an unfortunate reminder of all the dozens of interesting retail businesses and eateries that have briefly flourished in Kingston over the years and then bitten the dust.

It was rumored one determining factor was the high rent — a common problem, especially in the Rondout, where another popular business on lower Broadway, the Rondout Music Lounge, is being forced to move to cheaper quarters on upper Broadway.


Yet the landlord for 85 Broadway, Ronan O’Neill, painted a more nuanced picture of Don Vito’s problems, including insufficient funds, his failure to offer delivery service, and a closed community.

“It’s just a very tough town to make money in,” he said. “If you’re from out of town, they make it tough for you.”

O’Neill said he himself was finding it difficult to make ends meet with his building on lower Broadway, which includes the storefront next door, number 83. After purchasing the building in 2002, he invested nearly $900,000 in fixing up the three commercial spaces and two upstairs apartments. He hoped to rent each beautifully renovated apartment for $1,600 but found he could only charge $1,000 in the current market.

Though he has rented out the two other commercial spaces and hopes to put a restaurant in the now-vacant storefront, “it’s even worse on the commercial side,” he said.

The “extremely high” taxes further cut into his investment. “I’m trying to renegotiate with the bank right now,” said O’Neill. “I know a lot of people in the same boat. I hope the next person I rent out the space to will be able to hang on a little longer.”

Taxes: Ow!

Neighboring landlord and business owner Larry Zalinsky, who runs an antique shop and B&B with his wife, B.C. Gee, said high property taxes continue to be the biggest obstacle to small businesses in the city.

He and Gee pay $13,000 in taxes for their building on lower Broadway. “There’s a point when you can’t pay the bills anymore,” said Zalinsky. “My expenses are going up at a faster rate than the income coming in. The taxes are a major killer.”

Despite these challenges, in Uptown, at least, there are clear signs the business climate has changed for the better. Tom Hoffay, alderman for Ward 2, noted that the city government has worked to lessen the tax burden on commercial building owners, lowering the non-homestead rate by 5 percent each year in the last two years.

Unlike Uptown, the Rondout waterfront district is seasonal, putting it a disadvantage in the slow winter months. A smaller infrastructure, weird geography (that hill!), and distance from the Trailways bus terminal, which attracts non-driving New Yorkers to Kingston, are other negatives.

Midtown’s blight and the pedestrian-hostile environment of Broadway also put it at a disadvantage. Yet its cheaper rents, abundant parking, and an industrious, mainly Hispanic residential population provide unique opportunities.

Quality will prevail

No matter the location, whether a business succeeds is obviously linked to the quality and plan of the business itself, as is demonstrated by two Midtown success stories, Monkey Joe Coffee Roasting Company and Joe Beez deli.

In fact, Midtown’s crown jewel, the 721 Media Center, is booming, said CEO Jeremy Ellenbogen. “We’re at 95 percent occupancy,” said Ellenbogen. “We’ve never been this full.” That’s despite the fact that the rents for office space at the media center are higher than elsewhere in the city, he said.
The success of the media center, open seven years, is no doubt attributable to its unique, collaborative business model, in which a full menu of digital media services is available to tenants as well as outsiders who can rent space on a temporary basis, he noted.

While some significant businesses in the media center have failed, the diversified client base, which includes SUNY Ulster and Congressman Chris Gibson, ensures stability, Ellenbogen said. (In the case of one failure, the closing wasn’t a complete loss, given that two of the principals of the failed business have since formed their own company and are now renting space in the facility.)

Ellenbogen said a significant reduction in 721’s property taxes helped put the media center in the black. The current tax levy of $46,000 is still high, though well below the former amount of $72,000, which was “insane.”

Uptown the leader

Yet, as stated, the most visible evidence of positive change can be found in Uptown, which is now chockablock with cafes, restaurants, specialty shops and storefront offices. Low real estate prices and the historic, pedestrian-friendly appeal of the 350-year-old streetscape — Wall Street made the American Planning Association’s top 10 list of the greatest streets in America in 2012 — are two of the contributing factors, as is the hard work, resourcefulness and vision of many of the business owners.

In some cases, businesses that previously rented are buying their own buildings. For example, Gabriel Vasquez, owner of Gabriel’s, reopened his café/restaurant in early February in a large storefront on Wall Street in a building he bought after his rent at his previous location went up 40 percent.

There are 2 comments

  1. Sean Griffin

    The taxes in Kingston need to still come down significantly! The homestead, non-homestead status needs to be eliminated!The city has a lack of diversity in housing. The housing it has is too dependent on the government, and grants. What is the incentive for an absentee landlord to fix their place when they have a steady stream of income coming from the taxpayer? This problem would be eliminated if the housing stock was not subsidized. Prices on apartments would be more competitive, and the apartments would be nicer if left to the free market. If the apartment you were renting was a dump, and expensive, people would rent elsewhere. Local housing organizations do as much harm as good. The city would do better to see them dissolved, and the housing stock returned back to the open market.

    We need more of our city, and county employees to live, and spend money here. They make significantly more than the average resident, and if their incomes were put back into the local economy it would make a substantial difference.

    Too many people on the council have never owned,or developed a business in this city, or anywhere else. Many of the decisions they make speak to their ignorance, and naivety. They get excited about all the grant opportunities out there, and fail to realize how this exacerbates the problem with our high taxes, and debt.

    The non-profit sector needs to pay more into city services so the tax burden is not shifted onto commercial, and residential properties. There should be a review board that looks at every non-profit annually to see if there is a benefit to the community, and to see if they are achieving their mission in a way that is sustainable, and not a constant drain on the taxpayer, through tax subsidized grants. The end goal of these non-profits should be to transition to self sustaining businesses with a conscience.

    The success of Uptown has everything to do with the rugged individuals who have made it happen here, and nothing to do with local,state, or Federal Government. In fact the leadership has done everything to undermine the success of this city, and the Uptown neighborhood.(The pike plan,meters, etc.) If the local “professionals” would get out of the way, and lower our taxes, perhaps we could see continued success in the city. We could see a true renaissance.

  2. bryan x

    Yes, taxes are high. But that sort of thing you price into your carry costs. And if the numbers don’t work, you locate somewhere else where the numbers do work. That’s where I’m at right now – ready to pull the trigger on investment/development, waiting for the right moment, the right price, the right city.

    I think a bigger issue is demand. Currently, demand is low. People are saving, paying down debt. Major chains are planning to shutter thousands of stores this year. Type “retail apocalypse” into google for the details.

    Further, Kingston has a structural issue: decades of sprawlification in Lincoln Park has created a situation where national chains provide a diversity of goods and low paying jobs while extracting a value out of the local economy. Money that gets spent at the big boxes is money not being spent in Kingston.

    Add to that the ongoing emergence of e-commerce experimenting with new ways of selling things; coming up with different techniques all the time. This poses a challenge to local brick n mortar operations, both local businesses and national chains alike.

    With bad news coming from UPS and FedEx, one might suspect that right now NOBODY is buying anything anywhere.

    It’s a dog fight out there.

    Waiting. Waiting for just a hint of positive change. Closely monitoring the indicators.

    One or two tiny little shifts in public policy in this city might be enough to spark investment.

    Kingston might be “wasting a perfectly good crisis”.

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