Retail rent control bill beaten back at City Hall

By Patrick Hedlund

A proposed measure that would require commercial landlords to enter into arbitration with small business owners if they cannot agree on a fair rent has been effectively spiked from the City Council following the lead sponsors’s decision last week to back off the bill.

The Small Business Survival Act, a far-reaching piece of legislation that aims to protect primarily mom-and-pop operations through a form of commercial rent control, gained momentum in recent months after Upper Manhattan Councilmember Robert Jackson recruited enough co-sponsors to pass the measure. However, Council Speaker Christine Quinn refused to bring the bill to a vote based on questions over the legality of the legislation, compelling Jackson to file a motion to discharge in order to bypass Quinn.

Then, last week, Jackson decided to drop the rarely used motion only days after filing it, likely because forcing a vote would have put the bill’s supporters in the uncomfortable position of defying the speaker.

“The only reason this bill didn’t pass is 100-percent politics,” said Steve Null, director of the Coalition for Fair Business Rents and one of the chief architects of the measure. “People never got cold to this bill until it went up for a vote.”

Null, who helped craft similar legislation in the 1980s that fell just short of passing, said the bill had been tweaked multiple times to appease opponents, and that by his estimation the measure appears “perfectly legal.” “They’ve never shown in writing a single case law to substantiate that this is illegal,” he noted.

Quinn explained that forcing landlords into binding arbitration by law would amount to an infringement of an owner’s property rights, and that the measure doesn’t effectively address how it would impact existing lease agreements.

“We can’t recklessly venture into areas that we believe are taking [people’s property rights],” she told Downtown Express, adding that a housing emergency must be proven to justify residential rent regulations, but that no such mechanism currently exists for commercial properties.

Instead, Quinn has outlined a multipoint proposal to help small businesses, including possible legislation that would tackle the under-the-table dealings of building owners.

Mom-and-pop storeowners have long regarded landlords’ practice of asking for “key money” up front to negotiate a new lease a method of extortion, and the speaker wants to enable small businesses to have a private right of action to use against landlords if they attempt to engage in backdoor dealing. “That really creates a process that gives these people the ability to go to court,” she added, because “we can’t make extorting money illegal.”

Other proposed measures include the creation of a unit in the city’s Small Business Services division that would be charged with assisting small businesses in lease negotiations; creating a tax break for small retail businesses so that they may be removed from the city’s General Corporation Tax; creating a tax incentive for landlords to renew the leases of small retail businesses; and beginning a zoning reform process that would look at changes in the zoning laws that currently force small businesses to compete with large drug stores and bank branches for commercial street space on certain commercial strips.

Nevertheless, proponents of the commercial rent regulation bill—which both Null and Jackson’s office said will be reintroduced next year—believe there has never been a better time to enact the legislation.

“It’s almost unbelievable that you bring a rational bill to save your small businesses, and it’s being rejected,” Null said. “Does the city have to go into a depression? What exactly has to happen for somebody to regulate these guys?”