Oct. 26, 2015 By Christian Murray
With mom and pop stores throughout Manhattan and Brooklyn disappearing at a rapid pace, local advocates are backing a City Council bill that they believe will prevent similar hemorrhaging here, before hefty rent hikes take their toll.
The bill, called the Small Business Jobs Survival Act, aims to provide commercial tenants –including artists with studios – with more clout at the bargaining table when their lease comes up for renewal. Furthermore, it requires landlords to provide greater notification if they don’t intend to renew a lease due to the potential for development.
The bill is being pushed by a group called #SaveNYC that claims that New York’s small businesses continue to close at unprecedented levels and are being replaced by big-box stores such as banks and retail chains. Other groups such as TakeBackNYC and the Artist Studio Affordability Project have also taken it up.
On Friday, Councilman Jimmy Van Bramer said that he had signed on to the bill.
He said that the bill would help protect small businesses and artists in good standing.
“We know that there are a lot of successful businesses that have improved properties,” Van Bramer said, adding that it would be unfair if they were then thrown out at the end of their lease with little notice due to a hefty rent increase.
Sunnyside Chamber of Commerce president Rigo Cardoso said, “we are grateful to the Councilman for supporting our members when we need it most.”
The Chamber began backing the bill earlier this year after it started to gain momentum in other parts of the city.
Jeremiah Moss, who leads the SaveNYC campaign and who has been an outspoken advocate for the bill, told the Sunnyside Post in June, “I’m sick of New York turning into a suburban shopping mall.”
Moss, who goes by a pseudonym, claims that many family-run businesses that have been in operation for decades are being forced to close when their leases come to an end.
“They’re not closing because business is bad,” Moss said. “They’re closing because the landlords are doubling, tripling, even octupling the rents — or simply denying lease renewals,” he added, citing Manhattan examples.
“With no penalties to stop them, landlords leave the spaces vacant for months or years, waiting for a national chain, a bank or a high-end business to pay the asking price of $40,000, $60,000, $80,000 a month,” Moss said.
The bill, which currently has 27 Council sponsors, is a form of commercial rent control. The bill only applies to commercial tenants in good standing, such as those that have paid rent on time and have met the terms of their lease.
The significant provisions include (click here for bill):
1) The tenant has the right to renew the lease
2) The bill requires new leases to be a minimum of 10 years
3) If the landlord and tenant are unable to negotiate terms (such as the rent) a “mediator” will be brought in to render a “non-binding” opinion
4) If the parties are still unable to agree, the matter goes to arbitration
5) The arbitrator’s decision is final and is “binding”
6) If the tenant fails to pay the amount required by the arbitrator, he or she is able to stay until a landlord finds another tenant
7) The landlord must provide the existing tenant with the opportunity to match the terms of the prospective tenant
8) If the landlord wants to demolish a building or rebuild the premises when a lease ends, the landlord must notify a tenant one year prior to the termination of the lease so the business owner can make preparations to leave
9) If the landlord wants to operate his or her own business out of the location after a lease ends, he or she must notify a tenant 180 days before termination of the lease that it won’t be renewed.
The argument put forward by advocates of the bill is that it will help protect the owners of mom and pop stores, many of whom have put their life savings into their businesses.
Van Bramer said that the bill’s provisions are reasonable. “None of them are extreme,” he said, adding that “this is about fairness.”
“I agree with giving business owners better notification and working out fair renewals for people who have paid their rent on time for years and years.”
He said the bill is also about protecting communities.
“You get to know these men and woman who own these cafes, pubs and wine bars and they can be your friends and neighbors…places where good memories are made.”
He said that real estate owners can still make a good profit, which they are entitled to make.
The Bill’s Detractors
The real estate industry and several public officials oppose the bill.
Some commercial property owners say they face difficulties too. Many landlords — particularly the smaller ones – have put their life savings on the line to buy a building and they argue that it is not fair to block their ability to maximize the value of their property.
Furthermore, the real estate industry argues that the bill could distort the rental market which would damage commercial property values.
The bill could also put many landlords in a jam if a tenant fails to abide by an arbitrator’s binding decision and does not leave the premises.
They claim that it would be hard to lure prospective tenants to a space currently occupied by an existing tenant — since they would know that they would miss out on getting the space if the existing tenant matches the terms of the lease.
Furthermore, some — such as Manhattan Borough President Gale Brewer – question whether the bill is even constitutional since it deals with property rights.
The supporters of the bill claim that it is constitutional based on the legal opinions they have sought.
Councilman Costa Constantinidies, who represents Astoria, has not signed onto the bill, citing these legal issues.
“I’m committed to helping small businesses in Astoria,” he said. However, he added, he is looking for solutions that won’t be challenged in court and overturned.
“I will look at any bill that has a realistic chance of protecting small businesses,” he said, adding that Astoria is a neighborhood built on such businesses.
He said that he has been helping small businesses through the creation of the Doe Fund, which brings street cleaners to commercial corridors, as well as adding funds to the Central Astoria Local Development Coalition, to be used to advertise and help retain businesses.
Meanwhile, Alicia Glen, the deputy mayor, said last week that the Small Business Survival Act is no quick fix, Capital New York reported.
“It is a very complicated issue, like most issues,” Glen reportedly said. “And I’m not sure that necessarily adopting commercial rent control would lead to solve the problem that people think the problem is.”
She argued that “there are some small businesses that are probably going to just fail because they’re not very good businesses,” and therefore shouldn’t necessarily be protected.
Sunnyside Calls For Protection
In the past year, a number of small businesses in Sunnyside have closed. They are expected to be replaced by ground floor retail space and apartments.
King Boulevard, SSS Video and Azteca Restaurant all closed last year to make way for a development on the corner of 48th Street and Greenpoint Avenue.
Meanwhile, Center Cinemas and dentist Dr. Arthur Kubikian were notified that their leases would not be renewed in order for the 43rd Street/Queens Blvd development to rise.
Rudy Prashad, the former owner of Center Cinemas, said that while he was aware that the movie theater’s future looked bleak, he said that he was only notified five weeks before the lease ended that it would not be renewed. He said he would have liked to have known in advance so he could have planned better for his departure.
Pat Dorfman, director of the Sunnyside Chamber of Commerce, said that “Jimmy as Majority Leader signing on to support the SBJSA is a shot in the arm.”
Dorfman said, “we need this bill passed, before we are paved over and have only chain drug stores and restaurants able to afford the rents. Current law leaves small business and professionals on the street in the real estate boom.”
Meanwhile, Van Bramer said, “I support the overarching goal of supporting mom and pop businesses and artists…and we want to do everything to help them.”