Newark Mayor: Cities will take a big financial hit if businesses don’t function

Mayor of Newark Ras Baraka joins Yahoo Finance’s On The Move to address how Newark, New Jersey is responding to the coronavirus.

Video Transcript

JULIE HYMAN: We've talked a little bit about the fights that we have seen, in some cases, between cities, and states, municipalities, and the federal government in getting adequate funding to fight-- not only fight coronavirus, but fight the economic slowdown that has come along with it.

On that front, we are joined now by the mayor of Newark, New Jersey. That is Ras Baraka, who is joining us from Newark, of course. Mayor, if you could just unmute yourself so we can begin this conversation. There it is.

Mayor Baraka, thank you. So first of all, just set the scene for us, if you would, the current state of affairs in Newark in terms of the economic backdrop and how much aid you have been able to give to the business people in your community and what it looks like right now?

RAS BARAKA: So we've probably-- we've been under a stay-at-home order for more than two months, a little bit more than two months now. The businesses have been closed except for essential businesses-- supermarkets, pharmacies, gas stations, auto repair shops, stuff like that. Most of these businesses are very small.

In Newark, we have a little over 9,000 small businesses from sole proprietorships to, you know, maybe 10, 15 employees. And those are the majority of the businesses that we actually have in the city. We stood up a $6 million fund with the help of local corporations here, private sector, public sector together. We've been able to give a few businesses grants from as small as $2,000 to as large as $10,000.

The state EDA set up an additional fund, but it's a loan fund, of course, low interest kind of loan for $10,000. 72 hours into them opening up the application, there were tens of thousands of applications sent in already from across the state. So obviously, very few of the businesses in the city have been able to access funding from us, the state, or the federal government, for that matter.

And we've set up various kind of opportunities for the help-- help people navigate the PPP and the Cares Act, all that through audible business here. We put together a kind of a system to help people navigate that. And we also partner even with Diddy Enterprises with Sean Combs and-- and did another thing for minority businesses in the city to try to help them connect.

And some people were successful with that. I just want to shout-out at Goldman Sachs, who also helped us, as well, connect businesses to this kind of funding through smaller financial institutions. But for the most part, many of us are still, many of the businesses are still suffering up right through the summer.

ADAM SHAPIRO: Mayor, it's Adam Shapiro. Thank you for joining us. What-- what would you say to President Trump or to the Senate-- because I know Senator Booker is pushing for further assistance--

RAS BARAKA: Right.

ADAM SHAPIRO: --and the House has passed a bill to help. What would you say to politicians in Washington on how to help cities like Newark? Because cities your size are more the norm throughout the country than, say, a megapolis like New York City.

RAS BARAKA: Well, one, I mean, it is incredibly needed. It is much needed. You have millions of businesses that will never be able to get funding from the way it's happening now, because most of that is going to bigger financial institutions that have relationships with businesses already and are loaning those people money and giving it to them because they have trust in these folks, and they haven't-- their hands are not in these-- deeply in these communities.

So they have millions of businesses that will not make it. As a result of that, it will take the bottom out of the economy of many of these cities. If these businesses don't function, they don't hire local people, they're not paying their mortgage, they're not paying their taxes, they're not paying their lease payments, it has a deleterious effect on the economy as a whole.

And cities like Newark will suffer tremendously if this doesn't-- if it's not filled. And it's just not payroll because the payroll-- a lot of these businesses are sole proprietors. They have two or three or maybe five employees. They need money not just for payroll, they need money for mortgage.

They need money for lease. They need money to pay bills. They need it to sustain themselves, or they're going to close. And all over America, you're going to have these abandoned kind of downtown areas that look like post-war or post-rebellion in the city of Newark. Yeah.

RICK NEWMAN: Hey, Mayor Barack. Rick Newman here. I'm wondering when I can go to the Ironbound District and get some great Brazilian food? How are you talking to-- or thinking about reopening restaurants? I mean, is it going to be 25% of capacity? Can restaurants even stay in business at 25% of capacity? I mean, how are you going to do this?

RAS BARAKA: It's very difficult, and we-- we put together a committee that is outlining our steps out of this. Obviously, what you said, there's going to be a reduction in the capacity. We're going to allow businesses to use spaces that they have outside as long as they can social distance. We actually prefer that better. There's a whole list of things that they're going to have-- obviously have to do to.

The state has allowed them to now sell liquor in containers outside of the store. So just being very creative about how this is, in fact, done for them. And a lot of businesses are suffering.

Some people can still deliver, but they-- you know, other folks do not have the capacity to do that. I mean, that wasn't in their business model, obviously. So they have to rethink what they're doing. And it has taken a lot out of our economy here in the city to have Ferry Street and the Ironbound closed down like that.

JULIE HYMAN: Mayor Baraka, there's been a lot of investment in Newark over the past several years, right? You've had a lot of new construction. You've had a lot of development.

RAS BARAKA: Right.

JULIE HYMAN: What happens now? Are those plans still-- the plans that are in progress, are they still going on? Or have you seen a pause or even cancellation of any-- any projects [AUDIO OUT]

RAS BARAKA: Right. We get a lot of optimism from these guys. And you know, I just off a phone-- a Zoom this morning about a downtown project, bridge, walking bridge, development around it. So these folks are still going forward.

I think they still-- they have the same optimism that the Wall Street guys have. They believe there's going to be some kind of recovery really quickly. I mean, I'm not as optimistic as they are around these kind of things, but they are very-- very optimistic and they're still moving forward.

JULIE HYMAN: And when you're thinking about Washington and the aid that you want, we talked about Senator Booker's bill, but specifically, what are your top three things that you would want from Washington, whether it's an amount of money or other measures that would be helpful to Newark and cities like yours?

RAS BARAKA: Well, I think Senator Booker's plan is-- is a great first step. It would give us $75 million to give to small lending institutions, non-profits to give money directly to these small businesses that they don't have to just use on payroll. They can use on various other things. I think that is incredibly helpful.

We also need money to anticipate the loss of revenue that-- that takes-- that's taken place because of the non-taxes being paid, particularly commercial taxes, business taxes, payroll, parking taxes that we're losing. We need those. It's going to take the bottom out of our budget, which is going to affect the state's budget, which will affect the federal government as well.

So they need to be able to take care of these businesses-- I mean, of these communities, these cities. That's-- that's secondly what we need. And then I think the last thing is, like, robust testing. They need to help make sure that we have the capacity to test as many people as we possibly can.

JULIE HYMAN: Mayor Ras Baraka of Newark, New Jersey. Thank you so much, Mayor Baraka. All the best to you, and good luck as to all of us in dealing with this. Appreciate it.

RAS BARAKA: Thank you.