Jeff Reed/NYC Council

New speaker Corey Johnson has indicated strong support for the 'Small Business Jobs Survival Act,' which his predecessor did little to advance.

The end of 2017 saw a welcome wave of attention to the plight of small businesses. Numerous reports brought to the fore the noticeable blight of vacant storefronts in neighborhoods across the city.

This attention spurred some action at City Council. Some commercial tax reform finally passed, with stores that make less than $5 million in revenue and pay less than $500,000 a year in rent being exempted from the Commercial Rent Tax that currently applies to businesses located south of 96th Street in Manhattan. It is predicted to allay the burden on 2,700 businesses.

But there has been for a long time now a deafening silence regarding a longstanding proposed solution that would help businesses citywide—the Small Business Jobs Survival Act (SBJSA).

This common sense, fair bill would grant shop owners the right to negotiate for a lease renewal of up to 10 years, so that they can plan and invest for a future in a way that month-to month or one-year leases don’t allow. It would also mandate arbitration for rent increases if the two parties cannot agree on a fair price, reducing the possibility of triple or quadruple rent increases we hear so often about as the cause of a shop’s demise. And it would prohibit landlords from passing on property taxes and other responsibilities to their small-business owner tenants. The most recent incarnation of the bill was introduced in 2014 by former Councilmember Anabel Palma of the Soundview neighborhood of the Bronx.

Although supported by a majority of councilmembers, advocates blamed the lack of even a hearing on the bill over the last three years on the chair of the Council’s small business committee and the former speaker, both of whom seemed determined to prevent movement on the bill.

Opponents of the bill on and off the City Council painted it as fraught with legal problems. But this ignored the expert legal review panel convened in 2010 by the Bronx borough president in conjunction with the Bronx Overall Economic Development Corporation, which refuted this claim. Their assessment was that “no section of the Small Business Survival Act is found to be ‘vulnerable’ enough to rise to the level in a court challenge to cause the bill to be found unconstitutional.”

In any case, if there were such real but fixable vulnerabilities, a committee hearing would allow them to be verified, or dismissed—something the former Council leadership never permitted.

But advocates have reason to hope in 2018. There is a new speaker in town, one who was a co-sponsor of the bill and says he is committed to greater democracy and transparency in the Council, and independence from the mayor, who is also believed to have quietly opposed the bill.

In one public forum hosted by Crain’s at the end of 2017 during the Speaker’s race, Corey Johnson said “We’ve seen enough Duane Reades. No offense to Duane Reade or Bank of America or ATM branches, but we need mom-and-pop small businesses. Right now, if you operate in New York City and your lease comes up for renewal, [landlords] can jack up your rent three, four, five times what is was, and [then] the property sits vacant for a long time.”

With that incisive observation, the new speaker diagnosed the precise issue that the SBJSA is designed to address. In case that was not clear, he tweeted “I support the Small Business Jobs Survival Act and as Speaker I would ensure that it gets a hearing and the rigorous debate that it deserves.”

By allowing commercial tenants the right to renew their leases and to engage in binding arbitration to determine fair rent increases, SBJSA would help level the playing field and address the currently unfair dynamic in which landlords wield all the power and have little concern for the blight their empty property causes in neighborhoods across New York City.

One other device that the powerful real-estate lobby has used is to try to block SBJSA is to label it as commercial rent control, as if it that might be a uniformly reviled approach for anchoring independently-owned stores in communities. This attempted smear also ignores the fact that New York actually had commercial rent regulation before (from 1945 to 1963) that controlled both rents and evictions in commercial and office space. In any case, SBJSA would not cap or limit rent increases by statute; it would instead allow for a fair arbitration process to determine an appropriate increase.

Unreasonable increases that make the rent too darn high are what cause the closing of many beloved shops across the city. This results in empty storefronts which remain unutilized and suffer no penalty for doing so. Advocates and elected officials are looking for solutions. 2018 may finally be the year for the SBJSA.

Harry Bubbins is the East Village & Special Projects Director at the Greenwich Village Society for Historic Preservation.

9 thoughts on “CityViews: Will the Council Finally Act on Strong Protections for Small Businesses?

  1. It’s NYC’s ever-expanding small businesses mandates that is killing them off. Starting with the $15/hour minimum wage. In no sane business model does paying someone $31200/year to hand out pasties or pizza make economic sense. Then add in mandatory paid family leave, medical coverage and scheduling laws and you’ll understand why more small NYC businesses fail every year.

    The NYC property taxes on commercial buildings go up every year. Landlords of course pass those costs on to their commercial tenants, they are not charities. Same situation with water/sewer charges. Under this absurd scheme a landlord could be forced to lose money on his property if the ‘agreed’ rent doesn’t cover his costs. Then what?

  2. The $31k that person earns “handing out pizzas and pasties” is every bit part of the cost of doing business as licenses, utilities, taxes. That person makes the business possible. Pay him/her a fair wage and with the respect you believe you deserve. That is not only ethical; it’s good business.

    • Except that in the real world New Yorkers won’t pay $6 for a cheese danish or that slice of pizza. Maybe in certain parts of Manhattan and brownstone Brooklyn but no place else. Restaurants will be the first to go, followed by other retailers. It’s already starting in the outer boroughs.

  3. In 2009, former Small Business Committee Chairman David Yassky stated , “there is no option” but pass legislation to stop the closing of small businesses. Government can’t allow the creators of jobs to go out of business. If we (small business committee) do not formulate legislation protecting small businesses they will disappear. A walk down any main street in NYC proves his prediction was correct. A crisis ignored by government favoring big real estate lobby has grown worse each year. We are heading for a economic tragedy if we allow our largest employers of resident New Yorkers to go out of business. Its just bad government
    controlled by the campaign dollars of a powerful lobby.
    with everyone but a handful being the victims

  4. Your native New Yorker misses the point about arbitration and how it works. The idea is so that the landlord makes a “reasonable return” on their investment; they would not “lose money” at the native New Yorker put it, It just means that the commercial tenants would finally have some rights where now they have none. After thirty years of huge real estate profits and outrageous rent hikes hundreds of times higher than the cost of living or carrying the property, it is simply a way of injecting some fairness into the current unfair lease renewal process in NYC, and long overdue. This article was a good quick summary, but will the new Small Business Chair, a real estate investor himself, step back from his clear as day conflict of interest here and let the JOBS Survival Bill pass before small businesses become extinct in NYC? for the rest of the real facts look at http://www.SmallBusinessCongress.org

    • So then who determines ‘reasonable return’? Most commercial landlords outside of Manhattan are individuals or small corporations.

      • Native New Yorker: As Steve B so well explained above: That is part of arbitration. I expect a commercial landlord (small business or individual notwithstanding) will have adequate fiscal and legal experience or resources by to navigate the process and make his/her case to the arbitrator just as well as will the tenant.

      • The members of the arbitration association, professional, agreed on by both parties. Likely taking such a factor as you noted.

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