Commercial rent control bill aims to protect small businesses
The New York City Council proposed a bill aimed at protecting small businesses, which will create a commercial rent control. A common problem many small business owners have is being faced with extreme rent hikes following the expiration of their leases, often forcing them out of business. This policy is the city’s response to soaring vacancies in retail chain stores in recent years.
The proposed bill, named the Small Business Jobs Survival Act would give small business owners more rights during lease negotiations, entitling them to the right to binding arbitration if new lease terms are contested. The bill had a hearing in front of the City Council recently.
Though supporters of the bill feel that it would decrease the number of empty storefronts by keeping more in business, opponents of it think that the new measure will result in even more empty storefronts.
Critics claim that the new bill would make landlords less likely to rent out to non-established businesses, which could be forced to renew leases at cheaper prices and are not guaranteed rent. Critics also warn that the bill will stunt economic growth by getting rid of profit for landlords. It may also lead to disinvestment and physical degradation of these properties.
SBJSA would require landlords to offer a minimum 10-year lease renewal to commercial tenants that have behaved according to the guidelines set in the bill, including paying rent on time. It would also give tenants the decision of whether they will renew the lease or sign for a shorter term. There are concerns that the bill could actually drive the cost of commercial rents up and that the arbitration process might actually help landlords more than tenants.
Washington Heights Councilman Ydanis Rodríguez reintroduced the bill, which has been introduced in different forms since the 1989s, into the City Council in March. The bill is sponsored by 25 council members, which is one short of the majority needed for it to pass into law.
Supporters of the SBJSA showed up for the City Council hearing last week, setting up a display of a “graveyard” of small businesses that “died” due to the rent pressures they were faced with. Opposers came in blue hats reading, “Vote No on Commercial Rent Control,” which is how many perceive the bill is doing.
Critics of the bill say that commercial rent is skyrocketing in New York and the city government has no place in the matter. Protesters argue that the market regulates itself and the businesses that cannot stay afloat under their new rent conditions are unable to do so because of problems with their business, competition and changes in demand. Additionally, as the bill is written, the legislation suggested would apply to all commercial lease renewals including big businesses.
Adding to the controversy of the bill, it is uncertain whether or not the city has the power to implement it as law in the first place.
The New York City Bar Association released a report in September saying that though the bill doesn’t provide a rent cap, it does limit building owners’ rights on the space that they claim is essentially rent control. To bring this matter under its control, the city would have to declare it an emergency, showing that high rents were stopping access to necessities, which is not the case.
The decision about this bill is being watched by many other cities with retail vacancy problems as brick-and-mortar stores continue to fall due to the rise of e-commerce. First introduced in 1986, this is the bill’s 12th hearing in the City Council.
As it stands, the SBJSA must be amended before it can be put to vote by the Council. The Council will continue to edit the bill’s legal and logistical specifics.
After the Council committee reviews and revises the bill, it is given to the speaker to approve and then put to a full vote. If SBJSA gets to that point, it will be given to the mayor to sign or veto it, and Mayor Bill de Blasio has voiced many concerns about it. He fears that housing development, for example, will be stalled by it.