Small Business Bill Looks to Save New York, But Can it Save Queens?

Inside of a nondescript coffee shop. Photo by Joshua Rodriguez courtesy of Unsplash.

By Victoria Merlino

Rent hikes can be a Queens resident’s most tireless foe.

Coffee shops, souvenir stores and your aunt’s favorite Thai restaurant can all fall prey to rent increases from landlords, leaving empty storefronts in their wake.

Enter the Small Business Jobs Survival Act (SBJSA). The bill looks to support small businesses by giving more power to renters with the ultimate goal of preventing landlords from jacking up prices.

If the bill passes, it will have a significant impact on Queens, where two-thirds of businesses employ one to four people, according to the Queens Economic Development Corporation. Small businesses drive the borough’s economy.

Though the bill has many proponents across the city, some Queens entrepreneurs and leaders say the bill’s unintended consequences could cause problems.

The SBJSA is not a new concept. The city enacted a form of commercial rent control from 1945 to 1963, before that law expired. SBJSA was proposed in the City Council in 1986 and then again in 2009, though both times it did not gain enough traction to pass.

Today, however, the initiative is championed by 29 council members, including six from Queens.

The SBJSA would force landlords to tell commercial tenants 180 days before their lease expires whether or not the lease will be renewed. Landlords will also have to provide a legally valid reason why they will not renew the lease. The bill would establish 10-year leases and allow for arbitration if the tenant believes the rent hike is unfair. The bill would also prevent landlords from passing their own property taxes off to renters.

“Too many small business owners are struggling just to keep their doors open,” Mark Gjonaj, chair of the Council’s Committee on Small Business, said at the beginning of an eight-hour hearing on the bill on Oct. 22. “If we want to do more to help small businesses survive, we need to do more to create an environment that allows mom and pop shops to flourish.”

“It is no longer an option to sit idle waiting for things to get better on their own, because they have not and will not,” Gjonaj continued, urging the city to be proactive about finding a solution to the rising rent problem.

Rent hikes have hit Queens in a major way.

A 2016 report from real estate blog Commercial Café found that the average price per square foot for commercial rental space in Queens rose by 116 percent between 2012 and 2016.

Critics of the law, however, say that the side effects of SBJSA could end up hurting small business.

“My only concern with these bills is unintended consequences,” said Thomas Grech, president and CEO of the Queens Chamber of Commerce. “Somebody’s trying to do the right thing to help out a small business person, but in this case I kind of feel pretty strongly that it could block out less financially stable tenants and lock in a big-box [store].”

Grech said he is concerned that if landlords have to lock in tenants for 10 years, they may pick proven money-makers like a big box store over startup or less financially stable businesses.

Around 90 percent of Queens Chamber members are small businesses, Grech said.

“I don’t want them to be blocked out of being able to rent somewhere if they’re only looking for economically stable tenants,” he said.

The Real Estate Board of New York, which represents the interests of landlords opposes the bill.

Alex Sun, owner of the bubble tea shop called Tea Time in Elmhurst, is concerned that there may be a decrease in retail spaces over time as more landlords choose to develop residential spaces instead of commercial.

“Would this just push developers over the edge?” Sun said. “I think the long-term implication is a negative one.”

City zoning often locks in retail space and prevents commercial development without special permission, however.

There is also a question of legality if the courts allow the City Council to enact a bill like the SBJSA.

The Real Property Law Committee of the New York City Bar issued a report in September concluding that the City Council does not have the legal standing to launch the legislation. The committee opposes the bill.

Other city leaders remain divided. Mayor Bill de Blasio does not supporthe the SBJSA, but a coalition of groups like Friends of the SBJSA, the Greenwich Village Society for Historic Preservation, NY Women’s Chamber of Commerce and the NYC Hispanic Chamber of Commerce expressed their approval.