Borough President, Advocacy Groups at Odds Over Commercial Lease Proposals

clinton street for rent
These storefronts, once home to Culturefix on Clinton Street, have been vacant for many months.

The fate of small business in New York has been an especially hot topic this year. Most everyone agrees that spiraling commercial rents are making it almost impossible for many “mom-and-pops” to survive.  But the disagreements about the best solution to the problem seem to be growing sharper by the day.

This week we’ve received a flurry of emails from groups such as the Small Business Congress, #SaveNYC and the Artist Studio Affordability Project. They are all stepping up opposition to a proposal from Manhattan Borough President Gale Brewer that, if approved by the City Council, would set up a mediation system for rent renewals between commercial tenants and landlords. The groups have been pushing an alternative plan (the Small Business Jobs Survival Act) that also includes mediation but adds mandatory arbitration when necessary.

In a press release, #SaveNYC spoke out against a series of roundtable discussions Brewer’s office began hosting on the topic of small business survival this week:

#SaveNYC lends its support to the argument against the May 6 “fact-finding” roundtable on small business, sponsored by Manhattan Borough President Gale Brewer. A grassroots movement dedicated to protecting and preserving the diversity and uniqueness of the urban fabric in New York City, #SaveNYC officially endorses the Small Business Jobs Survival Act and rejects all other plans currently on the table. No proposed legislation currently offered by city or state politicians will save or protect a single small business in New York City, with the exception of the SBJSA. The status quo proposals being offered only provide non-binding negotiation and mediation, with one-year extensions before the tenant will be forced to move or close. They leave business owners powerless without the basic commercial rights they need to negotiate fair lease terms and remain in business. These are not solutions to the city’s small business crisis, but only ways of maintaining business as usual.

The Small Business Jobs Survival Act (SBJSA) has been knocking around the City Council in various forms since the mid 1980s. It’s always been vigorously opposed by the real estate industry. Brewer, a former Council member who backed earlier versions of the bill, believes it’s time for a new strategy. This week, we asked her office to elaborate.  Here’s the response:

The fact is that SBJSA relies on arbitration that’s binding for one side but not the other – an unbalanced and unworkable system. And by creating a right of first refusal for existing tenants, SBJSA could even make it tougher for new small businesses to find space of their own. I agree with the supporters of SBJSA that small businesses, new and old, need a fairer lease renewal process. I’m pushing a workable plan that will make a difference for both existing and new small business owners, rather than rallying around a bill that’s spent decades collecting dust. We’re proposing to institute a mediation period, require landlords to notify small business tenants of their intentions six months before a long-term commercial lease ends, and provide a one-year lease extension option as a safety valve. These are commonsense solutions that can pass, and would protect small businesses that right now live in a world where they can find out that their rent is tripling without enough time to find an alternative in a red-hot market.

#SaveNYC, of course, disagrees with the Borough President’s characterization of the bill. Arbitration, they say, applies to both parties and is a time-tested process successfully used in sports, government, labor negotiations, etc.  The Small Business Jobs Survival Act is meant to give commercial tenants rights that they now lack. Brewer’s plan, #SaveNYC argues,”does the opposite, giving no rights to the business owners except for one year to find a place to move.”

As for the observation that SBJSA has “spent decades collecting dust,” the group points out that the bill attracted 32 Council sponsors in 2009. “Only a false ‘legal roadblock’ claim that the bill had legal issues, stopped a vote on the bill certain to pass unanimously,” said #SaveNYC’s Kirsten Theodos.

19 Council members have signed on to SBJSA. 26 votes are required for passage. About 3500 people have signed an online petition in support of the legislation.