Commercial rent regulation bill is stuck in limbo


By Patrick Hedlund 

When a real-estate developer acquired a block-long residential complex on Ninth Ave. in Chelsea in 2007, he wasted no time in outlining plans to clear out the longtime mom-and-pop businesses on the ground floor in favor of high-end retail.

Now, nearly two years after the purchase, the first new tenant has arrived. Subway — a fast-food chain that’s difficult to classify as high-end, even by the loosest definition of the term — recently took over the space between 17th and 18th Sts. occupied for more than three decades by Chelsea Liquors.

While many would not argue that a liquor store serves some greater community good than a sandwich shop, nearby neighbors nonetheless mourned the loss of the familiar face behind the counter, who started working there in 1974 and stayed until his final days last November. Subway, on the other hand, just earned the distinction of ranking No. 2 for having the most chain stores citywide, with 361 across the five boroughs and 151 in Manhattan alone, according to a report by the Center for an Urban Future.

At a rally held last year in support of the string of shops on the block, Chelsea Liquors owner Brian Rhee said that his new landlord planned to more than double his rent — from $2,400 to $6,000 — a decision that ultimately led to Rhee’s departure less than seven months later.

“There’s two other delis [on that block] that make sandwiches,” said Miguel Acevedo, president of the tenant association at the Fulton Houses, the public-housing complex across the street from the strip of Ninth Ave. stores. “Subway is just competing against these small businesses that have been there for years,” he noted.

Acevedo attended another rally outside Chelsea Liquors last year to tout a proposal aimed at preserving small businesses by requiring landlords and tenants to submit to mediation and arbitration if the two parties can’t agree on a fair rent. The legislation, introduced by Upper Manhattan Councilmember Robert Jackson, initially received a cool reception from some of his Council colleagues for its possible implications on the free market. Seen as a form of commercial rent control, the bill was subsequently amended to remove the portion calling for set rent increases that would have been triggered if arbitration proved unsuccessful.

“This is the mildest thing ever presented to the City Council,” said Steve Null, the director of the Coalition for Fair Rents, who helped write similar legislation in the 1980s that fell short of passing by one vote. With the predetermined rent increases outlined in the original measure excised from the new version, Null explained that the “Small Business Survival Act” currently only seeks to resolve rent disputes through a third party.

“It’s common as apple pie to use arbitration,” he said. “Almost all contracts call for arbitration mediation.”

After a lengthy hearing on the issue, the revised proposal won over former critics like Brooklyn Councilmember David Yassky, chairperson of the Council’s Small Business Committee, as well as his four colleagues on the committee. The bill currently has support from 33 councilmembers — enough to pass — but still faces one major roadblock at City Hall.

Council Speaker Christine Quinn has refused to bring the bill to a vote, citing the possible legal implications it presents as a regulatory measure.

“If I’m not sure to a reasonable sense that the action the Council is taking is legal, I have to be cautious, because you don’t want to create hope you’re not sure you can sustain,” Quinn said, adding that attorneys continue to research the proposal.

However, advocates for the legislation claim that Quinn is just acting as an agent for Mayor Mike Bloomberg, who would likely veto the bill if it were adopted.

“Quinn will never regulate the landlords — she’s their player,” Null charged. “Everybody seems to get it except for Quinn and the mayor.”

Queens Councilmember Tony Avella, a Democratic candidate for mayor, went so far as to stage a boycott at the Council’s Aug. 20 meeting in response to Quinn’s unwillingness to bring the measure up for a vote. While his protest ultimately failed to recruit other councilmembers, the message was clear.

“Obviously, [Quinn’s] not even listening to her own members,” Avella said. “The real-estate industry and the landlords control the legislation in this city. She’s not about to turn away that money.”

Quinn contended that whereas a “housing emergency” must be proven to justify residential rent regulations, no similar method exists for identifying a comparable situation in the commercial market.

“So if you did the Small Business Survival Act, the legal question we’re trying to answer is, without the kind of construct like that…are you engaged in some level of taking of the owner’s private property right?” Quinn said.

The speaker did make small business preservation a centerpiece of her State of the City address earlier this year, unveiling initiatives to fast-track the permit-application process for startup companies and coordinate the city agencies to expedite inspections.

“I’m extremely anxious — almost kind of obsessed with the idea — of finding something that is legally doable that will bring relief to small businesspeople and their rent,” Quinn said. “But it has to be something that I have some sense of confidence will stand up.”

Null and Avella both scoffed at the speaker’s proposals, viewing them as incapable of preventing the continued displacement of mom-and-pop businesses.

“They’re going to do whatever it takes to protect the landlords,” Null said of Quinn and Bloomberg. “Their dog-and-pony show has run out of dogs and ponies.”

Avella believes the city’s numerous small businesspeople — many of them operating in the outer boroughs — will make their voices heard come Election Day.

“They have to exercise the political power they have,” he said.

Even Acevedo, one of Quinn’s most ardent local supporters, differs with the speaker on this issue.

“Maybe she should sit down with Councilmember Jackson and discuss with others how this bill can be tweaked,” he said. “That’s the only way it’s going to happen.”

Acevedo added that he still keeps in regular contact with Rhee, who has expressed interest in opening a new shop in the neighborhood.

“If they became part of our community, they’re family to us — they’re just not people out of business,” Acevedo said. “Let’s keep them in the community.”