Deputy Mayor: City Supports Small Business But Not Commercial Rent Control

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The topic of small business survival got some attention yesterday at the Municipal Art Society’s “Summit for New York City.”

Last spring, Deputy Mayor Alicia Glen told WNYC Radio she was interested in figuring out how to save New York’s “cool, funky” mom-and-pop shops. At the time, she said the administration was working on some proposals to address the problem of skyrocketing commercial rents. Glen said they would be unveiled within a couple of months. At the summit yesterday, she was asked about commercial rent control as a possible solution. Let’s turn to Politico New York for a recap:

“It is a very complicated issue, like most issues,” said Glen. “And I’m not sure that necessarily adopting commercial rent control would lead to solve the problem that people think the problem is.” In April, Glen said she’s committed to preserving “cool, funky New York,” even as she warned against over-romanticizing the past. On Thursday, she again warned of the dangers of wearing rose-colored glasses, while also arguing, “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… Glen said said the city has taken measures to create more transparency in the retail market for small businesses, and to prioritize local businesses in the developments the city helps underwrite. She also argued that in some real estate developments, smaller tenants quite simply won’t work. “I do think that there are neighborhoods that are changing rapidly and real estate prices are at a place where commercial landlords in particular and landlords of large residential buildings are needing to get more traditional credit tenants in the bases of their building in order to make the math pencil,” said Glen.

At the moment, there’s no concrete proposal for rent control on the table. But real estate interests say a bill being pushed by small business advocates in the City Council would have the same effect. The Small Business Jobs Survival Act would set up a mediation and arbitration system for commercial rent renewals. Its proponents, including the advocacy group Take Back New York, say the legislation simply aims to give mom-and-pop retailers a fighting chance.

This week, Sunset Park Council member Carlos Menchaca became the 25th sponsor. He’s chair of the immigration committee. It takes 26 members to pass legislation in the New York City Council, but Speaker Melissa Mark-Viverito has so shown no signs of bringing the measure up for a vote. While intimating four months ago that there could be a hearing on the issue, one has not been scheduled. The Real Estate Board of New York is strongly opposed to the bill, which it calls an illegal violation of property rights.

Manhattan Borough President Gale Brewer also attended the Municipal Art Society Summit. She’s proposing alternative City Council legislation that would require mediation for tenants and landlords, but not binding arbitration. Another idea that has been raised is a property tax credit for landlords who agree to keep independent businesses in place. Asked about the idea, Brewer noted that it would require the approval of the New York State Senate, which is heavily influenced by the real estate industry. “How would that go down?,” Brewer asked. “I don’t think that would happen.” State Sen. Daniel Squadron expressed similar sentiments in our most recent Small Business Survival report.

The de Blasio Administration has not weighed in on any of the small business proposals currently languishing in the City Council, nor has it announced substantive plans for dealing with the issue of commercial rent escalation.

The Lo-Down has launched a year-long reporting project on Small Business Survival. To read our full coverage, click below.

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4 COMMENTS

  1. cool and funky shops are the window dressing stores provided by developers to put places like Nolita on the map – what the advocates are stumping for is much more frightening and will open up those leaseholders to attracting organized crime interests in buying a looong sublease from these non-landlocked retailers.

    No landlord would let someone hold their ground floor hostage because landlords are locked to the property. A retailer who is gifted to a permanent low lease by the advocates will transfer interest in their corporations on the lease to the highest bidder.

    They haven’t thought this out other than how to kill the little owners further.

    Do a google – there is a lawsuit involving Chinatown Ice Cream Factory with a really really long lease and really below market rent.

    Another place on Canal Street has something similar.

    The advocates will squawk that landlords are evil and don’t deserve to be able to afford their property taxes but have fun with the retail that you create.

    But as a form of just desserts, it won’t be NYC anymore. Yeah you will have uncommonly blessed every struggling mom and pop who doesn’t get the press annointment of Prosperity Dumpling back in the day.

    I’m not going to say what you will miss out on but this world that you wish for is the world that the advocates personally deserve.

    Not every Chinese bakery is excellent – some just have a better location. Is there going to be a review process so great bakeries get better locations as a MERITOCRACY under commercial rent control so they don’t have to do somersaults to the TONGS to get a lease?

    Are the associations going to be exempt? Is anyone going to be exempt? or is coincidentally this is just going to fall on tenement buildings since most spaces don’t exceed 2500 square feet on a single floor and you can always legislate for max each floor so owners can’t offer a basement to try to escape the legislation.

    I can definitely see how this can be done – but will the tenement developers want you to do that?

    That is how you see once again that all legislation is for residential to be unbearable for small tenement owners so they leave Manhattan. As soon as every small owner is forced to sell in Manhattan, rent control will fall out of favor in Albany.

  2. Not at the moment but thank you for asking.

    It doesn’t sound like blanket commercial rent control will go through without harming important people like Jared Kushner so they need to write the law so that it only hurts people like my family who are overassessed in property taxes which in effect make the city government overchargers who don’t get penalized with treble damages as they would if they were overcharging tenants.

  3. But absolutely no action on REDUCING property taxes? Wouldn’t that help? It’s so simple yet ignored. I think Mayor Bloomberg allowed overassessments and Mayor DeBlasio doesn’t want to lose the revenue even when it is an overcharge.

    We are judged on market value not the fact that we are rent regulated and even though the city claims they take vacancies into consideration, there is no way that the taxes are unaffordable.

    And scarily, the city will not tell you how to lower your taxes – there’s no transparency and obviously a power imbalance but the city isn’t supposed to be profiteering – oh they would hate to help an intolerated regulated landlord or lose the income from overcharging them.

    It’s not right that they are knowingly imposing huge taxes on small buildings ($170,000 for a ten unit building with 7/10 regulated where the collected rents are 234(2), 303, 404, 700) and then propose nonsense changes that intentionally skirt the elephant in the room – that the city is charging too much – that’s why small businesses are suffering as well. Why won’t the tax assessor answer a direct and simple question – which gets taxed more x in rent or y plus z in rent that totals x? They don’t seem to want to tell you how it works as if they want to be able to charge you more as if it is a zero sum game for them – that’s not what government is supposed to be.

    http://www.thelodownny.com/leslog/2015/10/small-business-survival-government-gridlock-stymies-solutions.html

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