Editorial: Hold that hearing any day now

The recent statements made by City Council Speaker Corey Johnson about wanting to see the Small Business Jobs Survival Act get a hearing, after being blocked for many years, should be encouraging news to anyone who owns a small business or enjoys patronizing them.

In this column, we’ve shared our support for this piece of legislation, which is aimed at getting commercial tenants an automatic lease extension when it’s time to renew despite some unexplained claims that it’s unconstitutional.

What we are asking now though is that the SBJSA finally get that hearing.

If council members continue to just talk about it (or not) then we really don’t see how they aren’t willfully ignoring the systematic annihilation of mom-and-pop shops.

What we don’t need is another study on why storefronts are vacant. We know perfectly well why. Amazon, while a game changer for sure, isn’t solely responsible for murdering brick and mortar stores. Astronomical rents and warehousing of retail spaces by speculative owners are still the biggest problems.

On a block north of Town & Village’s office in Flatiron, four small, adjoining stores in one building were recently shuttered to make room for a new Bank of America, which wanted to expand from the small ATM hub it was already inhabiting at the property. Two of the businesses that were there were forced to move, while a jewelry store that was there is still looking for an affordable space in the neighborhood, and another of the businesses, a location of clothing retailer Pinkyotto, simply closed.

In and of itself these stories aren’t tragic, but they become so when it’s a pattern repeated all over the city. And no local elected official will deny that it is.

So, since landlords in this city can’t be relied on to be realistic about what small businesses can actually afford to pay in rent, the ball is now in the court of the City Council and the mayor to end this toxic, unbalanced relationship and transfer some power to the city’s commercial tenants.

Council Member Keith Powers, who has said he would like to see the SBJSA get a hearing, told us this week he expects it to come to the floor sometime in 2018.

Hopefully it won’t be too late.

5 thoughts on “Editorial: Hold that hearing any day now

  1. The real estate industry claims aren’t totally “unexplained”. The takings clause of the Fifth Amendment and Fourteenth Amendment both work to protect private property interests, notwithstanding considerable success in NY courts in matters like rent control and eminent domain.

    That said, requiring a landlord to renew a commercial lease seems to me a pretty high threshold to pass muster in a federal (as opposed to a New York) court.
    A better solution for protecting small businesses might be something called “formula business zoning”, which limits the number of “formula” – that is, franchise or chain – businesses that can occupy a particular zoning block. This leaves entire store fronts aavailable for prospective single or small entity businesses, presumably at lower rents.

    There are a number of public purposes that support formula business zoning that don’t run afoul of the Fifth or Fourteenth Amendment, although it would not be without challenges, for example as an impediment to interstate commerce for multistage businesses like Starbucks.

    Maybe the best course is to pursue the SBJPA and formula business zoning on a dual track?

    The worst alternative is to abandon the NYC streetscape to something that looks like the Paramus Park Mall.

  2. Every time this comes up there’s a flurry of blah-blah-blah to tamp it back down again. At one of our council debate forums, someone in the audience asked…if Rent Stabilization is legal, why can’t something similar not be applied to commercial property?

    And up came the Takings clause in the 5th Amendment: “nor shall private property be taken for public use, without just compensation.”

    The 14th Amendment extends the above protection at the State level and includes a provision for due process.

    The takings clause apparently applies to those public domain situations where the gov’t is ‘taking’ private property for public use. And we saw in the New London case how far the courts were prepared to bend this when it allowed a public taking for private use that would have had a purported public benefit.

    The SBJSA mandates arbitration between commercial tenant and landlord, 10 year lease periods and disallows tax pass-thrus. This definitely adds governments controls that give commercial tenants some leverage. This is hardly a public domain ‘takings’ situation. To argue this isn’t worth passing because it violates the ‘takings’ clause is a stretch at best.
    Even viewed as a “taking”, considering what the courts sanctioned in the New London case, to contend the law is unconstitutional without it having a full hearing, is fairly ridiculous.

    The only way this is going to be settled is if it’s passed and adjudicated. All the rest is self-serving babble.

    Apart from law, there is another issue at work here. Politicians look to the real estate industry for contributions and for jobs and work once they leave office. So all the arguments against action that come from council members should be viewed with a great deal of skepticism. The simple ongoing fact is…small businesses across Manhattan are being destroyed by commercial landlords…all to public detriment.

    • The problem with Kelo v. New London is that the defendant City of New London had an arguable case against blight and for economic development. Even with those, it was 5 to 4, so not the best decision to use when setting policy to avoid the takings clause.

      I don’t see and argument for blight and or economic development in the SBJPA to justify taking private property for a public purpose, as much as I would like to.

      On the other hand, zoning,to benefit small businesses, has a whole slew of public purposes: conveniences for residents for things like hair dressers, dry cleaners, shoe repair; stronger local ties to the community (I don’t see to many “Duane Reade” or “Starbucks” uniform sponsors at PSLL); more money retained by local businesses than by chain operators; local decision-making; etc.

      Someone said, “It’s too late” in another thread and I mostly agree. I’ve been trying to advance this effort for some time to at least preserve existing small businesses leaseholds, even though an existing tenant might have to compete with another small business for a leasehold renewal. Most small businesses would prefer competition from another small business than J.P. Morgan Chase or Starbucks.

  3. Over 30 years there have been 11 public hearings on the issue of finding a real solution to stop the closing of small businesses. The last hearing in June 2009 the small business committee concluded , “the cornerstone of stopping the closing of small businesses is the Small Business Survival Act.” This conclusion was supported by every progressive lawmaker in NYC , de Blasio, James, Mark Viverito, 32 sponsors and was t confirmed by the testimony of every real business group in NYC, not funded by government or controlled by big banks and real estate. While the name of the bill has changed , 7 times when updated and reintroduced, the one fact that every business owner will agree on is that for any legislation to stop the closing of businesses and level the playing field to allow for fair negotiation of a commercial lease, the commercial tenant must get the right to renewal of the lease. The city’s leading small business advocate is Sung Soo Kim who founded the oldest small business service center for Korean and Chinese owners. In 34 years working daily with small businesses and negotiating and renegotiating over 50K commercial leases, he testified at all 11 hearings that legislation “without the right to renewal commercial leases, all proposals will fail and small businesses will become extinct in NYC. ” This debate is about RIGHTS , rights of commercial tenants vs rights of landlords and a powerful lobby buying our lawmakers to make sure landlords have ALL the rights.

    • Mr. Kim means well and I support his intent. But we should all be wary of purported “progressive” politicians – and especially de Blasio – who talk a good game about helping small businesses while simultaneously taking huge contributions from REBNY, particularly when they can’t even get the SBJPA intro into law.

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