New York would be better off treating these vendors like small businesses.

There probably isn't a more ideal place to be a street vendor than New York City. The density, huge population, high pedestrian concentration – all of these factors combine to make the city an almost perfect place to sell hot dogs or watches or handbags. But unless you're already a street vendor, the chances of becoming one are extremely low.

"With a legislative cap of only 853 licenses [for general merchandise], and a waiting list of thousands, the chance of obtaining a license at this time is unlikely," according to this informational sheet [PDF] from the city. Food vending permits are capped at about 5,100, and there are similarly long waiting lists to obtain these highly valuable permits.

According to the advocacy and industry group the Street Vendor Project at the Urban Justice Center, there are upwards of 20,000 vendors in the city, and maybe even more. Because of the shortage of permits and the difficulty of obtaining the ones there are, the majority of street vendors operate illegally.

This creates problems for the vendors – often low-income immigrants with few options for employment. These vendors run a high risk of being ticketed or shut down by city officials, and many of them have been. According to a recent study by researchers at the University of Wisconsin-Madison, more than 25,000 tickets are written to street vendors every year. The fines associated with those tickets can run as high as $1,000.

The report notes that as these fines build up, they can become oppressively expensive for vendors, even those with legitimate permits to operate. And while it makes sense to regulate vendors who may be serving food under unsafe conditions, the report found that most of the fines were levied for minor infractions unrelated to health and safety.

"You've got to be 10 feet from a crosswalk, less than 18 inches from the curb, your tables have to be 8 feet by 3 feet, you've got to be 20 feet from any building entrance, your permit has to be visible at all times," says Sean Basinski, director of the Street Vendor Project, which represents about 1,400 member vendors. "I could go on and on."

Basinski, himself a former street vendor, says these regulations are overwhelmingly the focus of fines and tickets, and that the tickets often build up to a point where even licensed vendors can't pay. When they don't pay, their licenses can't be renewed.

This is also a problem for the city. According to the report, the more expensive the fines are, the less likely vendors are to pay them. Fines over $400 were paid only 25 percent of the time. Fines over $800 were paid only 7 percent of the time. Of the $15.8 million in vending fines levied by the city in 2009, $14.9 million were not paid. With the cost of enforcing vending rules totaling $7.4 million that year, fining vendors literally cost the city millions of dollars.

For the past few years, the Street Vendor Project has been pushing for the city to reduce the fines it levies, arguing that lower fines have a greater likelihood of being paid. A city council motion to reduce the maximum fine from $1,000 to $250 stalled in committee in April.

"All the politicians love to say how they love small businesses but there's not so much respect for street vendors," says Basinski. "It's important to see vendors as a part of the small business community."

Historically, they have been. Major retailers like Macy's and Bloomingdale's started out as street vendors. "Street peddler" was even an official occupation tracked by the U.S. Census until 1940, according to Alfonso Morales, an urban planning professor at the University of Wisconsin and co-author of the report on fines in New York City. He agrees with Basinski that vending should be considered a valid starting point for businesses, and that more should be done to encourage it. In the report, he argues that lowering fines would not only increase revenue for the city but also improve chances for vendors to grow their businesses.

"City officials are usually only looking at things cross-sectionally, not longitudinally. They're not considering that over the long run small investments that people make in themselves and their families can sometimes turn into large paybacks in entrepreneurial activities," says Morales. "Not always; small businesses fail all the time. But sometimes they pay great dividends."

But it's not just about lowering fines. "These are folks who add life to cities. And cities can find ways to comprehend them and their purposes and integrate them more completely into the city's larger purposes," Morales says. "There's a variety of ways that commerce can occur on the street, and it think that cities should clearly be interested in encouraging across that spectrum."

That means getting the city more involved in working with vendors, according to Basinski. He says cities like New York need to use their business development arms to do more to help vendors understand the rules and to develop their vending operations into sustainable and even expandable businesses.

"A city that has the money and has the resources to do it should be doing it," Basinski says.

In the meantime, his own organization is taking on these tasks, working with vendors to better understand how to work within the city's regulations and to improve their business standards. He's even partnering with other street vending associations all over the continent to form the Street Vendors Association of North America, an advocacy group aimed at helping vendors in other cities secure their rights and function as legitimate businesses.

"That's going to be good for the city," says Basinski. "It's going to get vendors to comply with the rules, and it's hopefully going to let vendors grow their businesses. And that grows the tax base."

Photo credit: Chip East / Reuters

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