It’s no secret that commercial rent in New York City is astronomical. Substantial rent increases are sighted as one of the leading causes of small businesses closing and the high rate of vacancies. Leading to the loss of jobs, community disenfranchisement and economic stagnation. There has been a bill mulling around the New York City Council for decades best known as the “Small Business Jobs Survival Act” which is scheduled for a hearing on October 22, 2018 (City Hall 1PM). Proponents of this bill believe this will buck the trend and provide robust support to NYC’s small business community. Opponents claim this will lead to retailers holding onto valuable space regardless of community needs as well as the overregulation of private property. Throw in the fact that this bill deals with commercial rent only while there are myriad other problems facing small businesses, many due to the City’s own poor planning, and it is easy to see where this bill can be controversial. So, what does this bill set out to do?
There are three main asks in this legislation (Full copy of legislation is available below):
- Allow tenants a minimum 10-year lease with the right to renewal.
- Allow tenants equal terms when it comes time to negotiate and renew their lease forcing binding arbitration by a 3rd party if fair terms cannot be agreed upon.
- Restrict landlords from passing their property taxes on to small business owners.
Is this commercial rent control?
No, but it’s reasonable to see how it can make many uneasy. This sets guidelines not actual rent prices and those guidelines only apply to existing tenants whose lease is coming up for renewal. There are no guidelines for new leases. Essentially the purpose of this bill is to protect successful business from closing due to skyrocketing rent. The thinking is that by negotiating as partners in good faith, the tenant and the landlord can come up with an agreement that works for everyone. At the end of the day the landlord and the small business owner must be able to turn a profit and the community must get a benefit as well.
What does this bill consider as a small business?
- Performing arts and theater groups
- Service businesses
- Professional medical offices and businesses
Regardless of what one think of the merits of the leasing part of this bill the fact that the City is beginning to acknowledge that small businesses include first floor retail, manufacturing, services, theaters, as well as second floor tenants like lawyers, doctors, and accountants is a wonderful sign.
Unfortunately, though, there are so many other issues which negatively impact small businesses from rezoning, to street redesigns, to heavy handed enforcement and that’s just the city. Health care costs are rising, the minimum wage is rising, the State is pushing to classify contractors as employees, not to mention how highly taxed we are here. None of these issues are addressed with this legislation.
Not only is New York becoming less affordable by the day it is also becoming more sterilized. There is no point in paying New York prices if it is just going to look like any other town in the US. New Yorkers have woken up to that and their anger is a big reason why there is a hearing on this bill in the first place. It is essential that small businesses owners as well as those who service and patronize them keep the pressure on the elected officials and guide them towards better policy.