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

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.