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Small businesses would get help negotiating leases under proposed bill

Councilman Ydanis Rodriguez called small business closures a crisis comparable to the problems with the city's subway system.

Vacant storefronts, seen here in the West Village

Vacant storefronts, seen here in the West Village on Oct. 16, are the focus of a new City Council bill that would place more regulations on commercial lease renewals. Photo Credit: Getty Images/Spencer Platt

City lawmakers and small business owners rallied outside of City Hall on Wednesday in support of a bill they say will help save mom-and-pop shops on the brink of closure.

Introduced by City Councilman Ydanis Rodriguez in March, the Small Business Jobs Survival Act – Intro. 0737 – would establish “fair negotiations” standards for renewing commercial leases, including regulations on security deposits, landlord retaliation and conditions that would prompt arbitration. The legislation will be considered by the City Council Committee on Small Business on Monday.

"This is not about commercial rent control. This is about rights and fairness,” Rodriguez said as he stood on the steps of City Hall, surrounded by City Council colleagues and several small business owners.

It took Sarah McNally three years to break even on her first bookstore. Fourteen years later, she owns four bookstores and two stationery stores in Brooklyn and SoHo. One of the few independent bookstores thriving in the city, McNally Jackson recently lost its lease for its flagship store on Prince Street.

“My landlord knows what he wants and the tax code is on his side and having the store vacant might not cost him any money," said McNally, a small business advocate who moved from Canada to the city 20 years ago.

About 20 percent of Manhattan’s commercial storefronts remain vacant – up from roughly 7 percent in 2016, The New York Times reported, citing a survey by real estate firm Douglas Elliman.

Rodriguez – who represents Inwood, Washington Heights and Marble Hill in Manhattan – suggested that a lack of oversight of commercial lease negotiations has significantly contributed to the rise of small business closures in the city.

Nick Velkov, who owns a small yoga studio in Astoria, said problems with a neglectful landlord forced him to close another yoga studio in West Harlem in 2015.

"Our landlord ignored us,” said Velkov, who supports the bill. "Without lease protections, there is no way to assert our rights here in New York City against a neglectful landlord."

While the bill has gained the support of some small business owners and over a dozen council members, including Jimmy Van Bramer and Margaret Chin, it is staunchly opposed by a number of business organizations, building owners and other advocates who argue the legislation is ill-advised and should not be passed.

"The Small Business Jobs Survival Act is a misguided policy that could actually have the unintended consequence of hurting small businesses that need help," Jessica Walker, president and CEO of the Manhattan Chamber of Commerce, said on Wednesday. "It would discourage building owners from ever offering leases to small businesses, and its arbitration process would require small business owners to allocate time and resources that most cannot realistically afford."

Walker said the city should help small business owners buy property instead, and suggested there are more factors involved in the plight of mom-and-pop shops than lease renewal negotiations, including a decline in customers. 

"High rents are not the only reason businesses are closing. In fact, a recent survey of our small business members showed that challenges related to real estate and rent were dwarfed by concerns surrounding government regulations, taxes and increasing competition," she said. "City government has direct control over many levers that can ease these burdens such as reductions to the commercial rent tax and property taxes and implementation of a formal economic analysis process to ensure small businesses won’t be hurt by proposed legislation.”

The Alliance for Downtown New York, Grand Central Partnership, East Midtown Partnership, Rent Stabilization Association, Real Estate Board of New York and the New York State Association for Affordable Housing are among the groups that have also voiced opposition to the legislation. Representatives for the organizations plan to testify against the bill at Monday's committee hearing.

The Small Business Jobs Survival Act has been considered in the City Council for over three decades but has never been passed. Rodriguez admitted previous efforts to get the legislation approved had failed but added that there is new momentum, calling small business closures a crisis comparable to the problems with the city's subway system.

“We are fed up,” Rodriguez added.

With Sushmita Roy

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