Will The City Council Finally Pass The Small Business Jobs Survival Act?

Issue 240

Apoorva Tadepalli Oct 8, 2018

Sick of the chain pharmacies plastering New York’s corners with stock photos of grotesquely happy people? The Windex windows, wall-to-wall carpeting and Muzak atmosphere of fecundating bank branches? Tired of peering into the dark, padlocked spaces where your favorite butcher, vinyl purveyor, hairdresser used to greet you and wondering why the place has sat vacant for months? Feeling lost in a city that looks more and more like a suburb of itself day by day?

New York’s small businesses employ more than half of the city’s overall workforce. They often serve as a first rung up on the economic ladder for working-class immigrants. And they are part of what makes New York New York.

“These small businesses are run by human beings, with families, with culture, with history in their neighborhoods, connecting to social networks that keep people in their neighborhoods alive,” says Jeremiah Moss, author of Vanishing New York. “In order to have a healthy city you need to have long-lasting stable businesses.”

‘We feel like we’re in a chokehold.’

Marni Halasa, who runs Red Eye Coffee in Chelsea with her husband, says that even though her store is small, it is popular because she and her spouse have created an intimate atmosphere. “People come to see my husband,” she says. “My husband knows when their grandkids are coming to visit them, when their kids are graduating, when they’re going on vacation — it’s what New Yorkers need! You don’t need an impersonal chain store. You need someone who knows your name.”

The lease on the couple’s café expires this year and Halasa says their landlord is hiking their rent well beyond what they can manage: “We feel like we’re in a chokehold. Either we take it or we have to leave. It’s really difficult because most spaces are even more expensive.”

There’s a bill before the City Council that could help Halasa and thousands of small business operators like her but the legislation has atrophied at councilmembers’ fingertips for three decades since it was introduced in 1986, largely thanks to the power of the city’s real estate lobby. This October, however, the Small Business Jobs Survival Act (SBJSA) is slated to have another chance at passage.

Here’s what the bill does for mom-and-pops:

  • Requires landlords to notify commercial tenants 180 days before their leases expire and inform them whether they will be granted an option to renew and, if not, provide a valid reason why.
  • Gives small-business renters the option of signing a 10-year lease.
  • Enables them to send lease disputes to binding arbitration.
  • Sets a cap on security deposits.
  • Imposes “prohibitions on landlord retaliation.”

“Small businesses are the backbone of our economy and are major employers,” Councilmember Ydanis Rodriguez said in a statement when he reintroduced the bill in March. “The pizzerias, the bodegas, the hardware stores, the Jewish bakeries, the Indian restaurants, among many others, have all shaped the character and culture of New York City that must be protected.”

‘They should have passed this bill 30 years ago.’

In August, Council Speaker Corey Johnson announced he would allow a public hearing on the legislation. Johnson has expressed concern over the number of vacant storefronts and chain stores proliferating throughout the city but has so far shirked from taking a public position on SBJSA.

“This hearing will be an opportunity for stakeholders and experts to present testimony and answer questions so the council may fully evaluate the bill on its merits,” he told The Indypendent via email, describing protecting small businesses as a top priority.

“They should have passed this bill 30 years ago,” complained writer and New York historian Luc Sante. “There’s a crisis. You have rows and rows of storefronts that are just shuttered because nobody can meet rent that’s being demanded by these commercial landlords.”

Sante and others have also called for a vacancy tax that would penalize large landlords for leaving properties empty, a practice often carried out in the hopes of luring wealthier tenants. Mayor Bill de Blasio has said he supports such a tax but opposes SBJSA.

Nevertheless, Moss and others are cautiously optimistic that this time the bill will receive a fair public hearing and that political pressure could lead to enough support on the council to withstand a mayoral veto and/or change de Blasio’s mind if it passes with a simple majority.

“It’s wise to support this [bill],” said Moss. “Since the election of [Donald] Trump, we’re seeing a spectacular rise in interest in democratic socialist movements. We’re seeing progressivism come back into popularity and this is a progressive bill.”

Currently, 15 councilmemembers have lined up to sponsor SBJSA but, in 2009, 32 lined up behind it and it was set to pass. Yet then-Speaker Christine Quinn (who is eyeing a bid for Public Advocate) refused to bring the bill to the floor. She cited talking points from the Real Estate Board of New York (REBNY), which claimed the legislation impinges on private property rights and that it is a form of rent control, which is regulated by the state under the 1971 Urstadt Law.

A recent New York Bar Association report concurred with the latter assessment, although SBJSA does not impose restrictions on the amount of rent landlords charge, merely binding arbitration.

On the matter of private property, New York City actually had commercial rent control beginning 1945. It withstood numerous attempts to overthrow it in the Court of Appeals until it was eventually allowed to expire in 1963.

The city’s Law Department raised no qualms with SBJSA when the bill was originally introduced. Its alleged illegality only became an issue in 2009 when it looked set to pass, but it has since become the most frequent explanation given for not backing the legislation offered by the mayor and councilmembers, who straddle a line between satisfying their constituents and keeping out of REBNY’s crosshairs.

“REBNY has been holding this back,” says Kirsten Theodos, co-founder of TakeBackNYC, a coalition of small business owners, residents and advocacy groups who support SBJSA. “They have an unlimited amount of resources and it’s no secret that in New York City and in Albany they have a strong hold on our elected officials.”

Given REBNY’s reach, she is less optimistic than Moss that the legislation will pass this time around.

Corey Johnson received $63,000 from developers when he last ran for office, part of a $500,000-campaign chest that he shared with other candidates who later helped him secure the speakership in December. Nevertheless, Johnson’s office said the speaker is weighing the bill on its merits, not its legality.

“What is vital here is that we discuss policy issues related to the bill,” a spokesperson told The Indy on Johnson’s behalf. “Bills are amended during the process and we are not going to tie ourselves to a legal interpretation.”

TakeBackNYC wants clarity going forward.

“The best thing to do is to get in writing from the speaker’s legal department — is the SBJSA constitutional or not? Does New York City have the ability to enact this piece of legislation or not?” Theodos said.

The Small Business Congress, which also supports the legislation, is planning to boycott the upcoming hearing. It is convinced that Johnson is not as dedicated to giving the bill a fair airing as he claims and notes that the Small Business Committee chair, Mark Gjonaj opposes the legislation.

Even if SBJSA clears the council, it could hit a dead end when it reaches de Blasio’s desk, should advocates fail to garner a two-thirds majority to override the mayor.

“If the mayor thinks he can veto this bill and there not be a massive blowback to his political career, then he doesn’t understand New York,” Friends of SBJSA member David Eisenbach told The Indy.

De Blasio’s office did not respond to requests for comment.

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Photo: Marni Halasa’s coffee shop in Chelsea. Credit: Elia Gran.

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