Small business advocates continue 33-year fight for rent protections

Distinctly New York City small businesses, like this bodega in Ridgewood, are under threat from rising rents. Advocates say a 33-year-old bill can help protect the companies.  Eagle  file photo by David Brand

Distinctly New York City small businesses, like this bodega in Ridgewood, are under threat from rising rents. Advocates say a 33-year-old bill can help protect the companies. Eagle file photo by David Brand

By Naeisha Rose

Mom-and-pop shops throughout Queens are closing at alarming rates, and small business advocates say one decades-old piece of legislation could stem the tide of evictions and closures. The City Council just has to act on it.

The Small Business Jobs Survival Act has undergone many iterations since it was first introduced in the Council in 1986. The city has changed significantly over that time period, and small business owners and employees now face their greatest challenges to staying open and employed.

The SBJSA would prevent landlords from gouging their commercial tenants with steep rent hikes and pricing the businesses out of their locations. The bill would require commercial landlords to offer commercial tenants 10-year lease renewals and give the tenants right of first refusal.

"[SBJSA] has been kicking around in one form or another since 1986," said Kirsten Theodos, the co-founder of the small business advocacy coalition TakeBackNYC. "This is the eighth time that [SBJSA] has been introduced in the City Council and it just had its eighth hearing, which was this past October and yet the City Council will not commit it to the floor for reaching a vote."

The city defines small businesses as companies that employ fewer than 100 people. “Very small” businesses employ fewer than 20 people. The inaugural “Small Business First” report published by the city in 2015 found that 98 percent of NYC’s 220,000 businesses had fewer than 100 employees, while 89 percent had fewer than 20.

These businesses are especially vulnerable to eviction or getting priced out of their locations and there is little they can do about it, Theodos said.

"If you are a rent-regulated tenant you have a right to renewal, commercial rent tenants have nothing like that," said Theodos. "As a result we have landlords dictating all the terms and what we are seeing are exorbitant rent increases. Landlords are denying lease renewals and those are the reasons we are seeing good businesses getting pushed out."

At first the closure of small businesses was a Manhattan problem, she continued. But in recent years, more and more outer-borough businesses are getting priced out, Theodos said.

It’s easy to observe the dissolution of these businesses in the number of vacant storefronts on bustling streets. But it’s hard to pinpoint exactly how many storefronts are vacant, as City Lab reported last year.  

A 2018 New York Times article estimated that 20 percent of Manhattan storefronts were vacant. The City Council responded that it’s more like 4 percent.

Exact answers are even harder to find in Queens, where shuttered shops have received less attention. Residents sense it, though.

"If you ask anyone, regardless of the borough they live, they can attest to the vacant storefronts in their neighborhood," said Theodos. "'If you ask them, ‘Did the businesses get kicked out because they were bad businesses?' the answer is going to be 'No, because they were either rent-hiked or denied a lease renewal.’"

This Middle Village taxidermy shop,  profiled by the Eagle earlier this month , is one of the small businesses that make New York City unique.  Eagle  file photos by David Brand

This Middle Village taxidermy shop, profiled by the Eagle earlier this month, is one of the small businesses that make New York City unique. Eagle file photos by David Brand

SBJSA support, without follow-through

The SBJSA boasts 29 council sponsors, more than enough votes to pass the 51-member City Council, but the bill has not been re-introduced since March 22, 2018 — more than a year ago.

Seven of the bill’s co-sponsors represent parts of Queens, but none have elaborated on the steps necessary to ensure its passage. There are no Queens councilmembers on the Council’s Committee on Small Business

"For years, even before I was elected, I have advocated for small businesses and [minority and women-owned businesses] in Southeast Queens for their contributions to our local economy," said Jamaica Councilmember Adrienne Adams. "Our city is at a critical juncture and the Small Business Jobs Survival Act is desperately needed as small businesses are closing at an alarming rate. We have the opportunity to change the course for small businesses on the brink of closure and we must act now. I am committed to support this bill as it advances through the legislative process and urge my colleagues to do the same."

Astoria Councilmember Costa Constantinides shared Adams sentiment about the bill.

"I am proud to be one of the 29 co-sponsors for the Small Business Jobs Survival Act," Constantinides said. "Small businesses in western Queens, as well as the entire borough, have traditionally been a window of opportunity into the middle class for so many New Yorkers.

“Sadly, we have seen the rise of e-commerce and unscrupulous landlords disrupt that pathway with negative results,” he continued. “It’s time we level the playing field so these businesses can continue providing quality jobs and services to our neighborhood."

Councilmember Jimmy Van Bramer, a candidate for borough president, said it was time for the council to take action on the bill, but did not describe specifics.

“The unique character and diversity of New York City’s small businesses is what makes this city what it is. We cannot sit idly by while cherished local businesses are driven away by exorbitant rent increases and taken over by large corporate chains.,” Van Bramer said. “Our city has long been a beacon of economic opportunity for immigrants and mom-and-pop shops and the Council must do all that we can to keep it that way.”

Other Queens supporters of the bill, including Council Members Karen Koslowitz, Antonio Reynoso and Daniel Dromm, I. Daneek Miller did not comment.

Stanley Hardware in Ridgewood. Eagle photo by David Brand

Stanley Hardware in Ridgewood. Eagle photo by David Brand

One of many potential business protections

Council Speaker Corey Johnson’s spokesperson Juan Soto said "the small business crisis" is a top priority for him." Johnson is working on various proposals, including the SBJSA, to protect small businesses.

“Last month we had a hearing on a series of bills designed to help small businesses thrive in New York City,” Soto said. “One bill would require the City to maintain a vacant storefront registry similar to the bill that San Francisco just passed. Under this bill, landlords who do not register their vacant storefronts could face fines of up to $1,000 per week.”

Soto said the council will consider a bill that protects small business owners from harassment by “unscrupulous landlords” and another to create a “regulatory review panel” that considers rules and laws governing small businesses to eliminate outdated restrictions.

“Yet another would require the city to provide legal assistance to tenants facing eviction,” he said.

An additional bill would require the Department of Small Business Services to conduct a citywide assessment of all small businesses in the city.

“When bodegas, bakeries, barber shops, repair shops, laundromats shut their doors, we lose jobs, services, and a piece of our city,” Soto said.

Small business advocates say many of these bills amount to window-dressing, however.

"For every piece of legislation that is supposed to help, you have to ask yourself 'is it going to save them, because if the answer is 'no' it's worthless," Theodos, from TakeBack NYC said. "We are losing are artists, our music venues, our commercial institutions — they are all getting put out because they are considered small businesses too."

Pushback to the bill

Opponents of the SBJSA say it can be problematic for both tenants and entrepreneurs.

Councilmember Robert Holden of Middle Village said the SBJSA isn’t strong enough to protect businesses and may have unintended consequences.

“Mainly, I think that forcing landlords to sign 10-year leases may discourage them from renting to small businesses that have more uncertain futures than chain stores,” Holden said. “Arbitration could also present a challenge to the tenants when negotiating a renewal lease. I want to go over the possible side effects of this bill in more detail and await the results of upcoming hearings."

Hillcrest Councilmember Rory Lancman’s office said the bill was a form of "commercial rent control."

Councilmembers who haven't co-sponsored or commented on the bill include Councilmembers Eric Ulrich of Ozone Park, Paul Vallone of Bayside, Francisco Moya of Corona, Barry Grodenchik of Oakland Gardens and Peter Koo of Flushing.

Gregg Bishop, the commissioner of Small Business Services, testified at a 2018 Council hearing that he is "supportive of helping commercial tenants," but said the legislation may actually do "more harm” because of mandatory arbitration of leases to settle disputes, which would likely favor wealthy property owners.

“In arbitration, both parties would need to provide data and documents to determine fair lease terms,” Bishop said. “However, arbitration often favors the party who is able to provide more resources and information into the arbitration process.”

“Therefore, larger and more well-resourced parties, such as landlords and multinational corporations, will likely have the upper hand," Bishop continued, adding that the bill could also increase commercial rents “because landlords may incorporate the anticipated cost of arbitration into lease agreements."

Despite the lack of support of the bill by SBS, Bishop did direct entrepreneurs to use its Commercial Lease Assistance Program.

Theodos disputed the unintended consequences that Holden and Bishop cited.

"The SBJSA levels the playing field for the commercial tenants and up until this point landlords have been enjoying windfall profits, they just don't want it to pass," Theodos said. "They know it is Constitutional. Their only play is to make sure it doesn't reach the floor."  

An acute need for action

Jenny Dubnau, 55, is a working artist in Jackson Heights who is struggling to maintain her art studio in Long Island City. She said she is not surprised that so many small businesses are closing up shop throughout Queens.

"There is a crisis for affordable commercial leases of any type," Dubnau said. "Rent can go as high as the landlord would like it to go and for artists it's an incredibly increasing problem."

Most of her working artist friends have either a freelance job or teaching position to support them and maintain a working space for their art, she said.

In the mid-80s she was able to pay for a studio for 50 cents per-square-foot for an entire floor of a building, which measured to 400 square feet, she said. She and four friends paid $250 monthly for that space. She now pays around $2 per-square-foot on average for 400-square-feet.

Dubnau pays $1,150 a month for her art studio, but she said she is facing a rent hike that will raise the cost to $1,700.

"The rent has nothing to do with what people who have commercial leases can afford, but the landlords don't seem to care," said Dubnau. "You have to ask is the market healthy. Are they distorting the market? What does market mean if people can't afford the market rate?"

Other artists who worked in the same building as Dubnau left New York City to cheaper locations Upstate, in the South or in the Midwest when the landlord raised rents, she said.

"My building use to have a ton of artists," Dubnau said. "Just across the hall from me the entire hallway was filled with artists, but they are almost all gone now because they got gigantic rent hikes

This story has been updated to include a statement from Councilmember Jimmy Van Bramer.