By Sabina Mollot
The City Council is mulling a package of legislation aimed at protecting mom-and-pops that ranges from creating a registry to track storefront vacancies to providing affordable retail spaces at developments where owners collect $1 million or more in subsidies.
On Monday, the bills were debated at a hearing chaired by the City Council Small Businesses Committee Chair Mark Gjonaj, after a rally on the front steps of City Hall.
The piece of legislation that would require the city to maintain a vacancy registry is being sponsored by Council Members Helen Rosenthal, Carlina Rivera, Ben Kallos and Mark Levine as well as Speaker Corey Johnson. The registry would include the location of the property, the reasons for the vacancy, the owner’s name, contact information for the property and the day it became vacant. Property owners would be expected to register once a property is vacant for more than 90 days. Failure to register would result in a penalty of $1,000 for every week after that.
Another bill, sponsored by Rosenthal and Johnson, would require the city to maintain a database of commercial properties.
The database would be publicly searchable online and include information about property size, location, commercial use and monthly rent as well as contact information. Owners would be required to submit information at least annually as well as any time the property becomes vacant.
A bill by Vanessa Gibson would require commercial property owners to apply for a “certificate of no harassment” (or COHN) before they can obtain approval from the Department of Buildings for construction documents and permits. If the city rescinds the certificate, the owner would pay a fine of $100-$1,000 and not be approved for construction documents for 2-24 months. The bill would also broaden the acts or omissions that are considered harassment.
A bill by Gjonaj, Kalman Yeger and Rafael Espinal is aimed at helping businesses avoid fines by having agencies like the Department of Health and Fire Department evaluate current codes and laws to see where provisions or rules can be repealed and whether businesses can be given a period to cure the violations.
A bill by Espinal, Laurie Cumbo and Margaret Chin would require developers of economic development projects receiving $1 million or more from a city or city partner agency to provide affordable ground floor retail place at the property.
Another bill, by Rosenthal, Johnson, Yeger and Mark Levine, would require the city’s Department of Small Business Services (SBS) to provide small businesses with financial training and counseling aimed at helping them digitally market themselves.
A bill by Levine, Keith Powers, Rivera, Rosenthal and Diana Ayala would provide legal representation for small tenants facing eviction. The program for providing assistance would be established by July 31, 2022.
A bill by the Council’s Small Business Committee Chair, Mark Gjonaj, and Levine, would streamline the sources of rules and regulations small business owners must comply with by having the SBS compile all of them in plain language. The information would have to be updated every 90 days.
A bill by Johnson, Rivera, Yeger, Levine, Alicka Ampry-Samuel and Stephen Levin would require SBS to do an assessment of the state of storefront businesses in every community district every five years. This would analyze the districts’ storefront environments, the number of vacancies and opportunities for increasing retail diversity.
Not included in the package of legislation was the now over three-decade-old Small Business Jobs and Survival Act, sponsored by Ydanis Rodriguez. The SBJSA had its first hearing in nearly a decade last October. A spokesperson for Rodriguez said at this point, it’s up to the speaker to schedule another hearing.
The Small Business Congress, an advocacy group for the bill, which would require binding arbitration between tenant and owner if an agreement on lease renewal cannot be reached privately, had previously urged supporters to boycott Monday’s hearing. But the president of another support group, David Eisenbach, president of Friends of the SBJSA, spoke about the legislation at the pre-hearing rally.
Eisenbach, a Columbia professor, said he had no beef with the other bills, but said ultimately, “The SBJSA is the real solution to the small crisis, because it’s all about the rent. Until we deal with the rents we’re not dealing with the crisis. It’s not commercial rent control. Commercial Rent Control is defined legally as putting a cap on the rent. This is legally binding arbitration.”
The hearing was also attended by SBS Commissioner Gregg Bishop who said he had some concerns about the bills from a budget perspective. Meanwhile, Gjonaj had some heated debate with Bishop at times, specifically when Gjonaj argued that the biggest concern he hears about from business owners is about burdensome fees imposed by the city over minor infractions. He gave an example of how a business was fined $20,000 for having the print on a store sign than is larger than what’s allowed, 12 feet.
“Those violations close businesses,” he said.
Gjonaj, a Democrat from The Bronx who is also the president of MP Realty Group, also said that the way real estate taxes have gone up has forced landlords to raise rents. On top of that, the city has over 5,000 rules that businesses must comply with. Pointing out that a few years ago, the city announced an effort to modify some rules that seemed unnecessary, Gjonaj said, “All we’ve done is modify eight. We haven’t removed a single regulation that’s a burden on our small businesses.”
In response, Bishop said that not all those rules necessarily apply to retailers. He also said the administration is aware more work needs to be done, but that the SBS has been working with hundreds of small businesses, mostly immigrant owned, on things like financial training and providing legal assistance for lease negotiation, though the city doesn’t get involved in litigation. There is also training offered for establishing an online presence and search engine optimization. Bishop also said that through the launch of a program called Small Businesses One, SBS has helped small businesses save a collective $59 million. The city is also, he said, looking at ways to make offering healthcare cheaper for employers.
“We share the same goal,” said Bishop. “Our job is to ensure small businesses are empowered to survive.”
Gjonaj to some extent agreed, at least about the city having more work to do, “and time is not on our side,” he added.
He offered a few stats as well, specifically saying 50 percent of small business don’t make it to year five, and 80 percent of restaurants don’t make it to year five.
“I can’t say they all have flawed businesses models,” said Gjonaj. “We make it an unfriendly business environment for them to thrive.”
At one point, Bishop said that whenever he hears about a business closing, “It’s personal for me. Business owners put in their sweat and life earnings to launch their businesses and when the business closes, it hurts.”
The issue of vacancy gets complicated, he argued, because the reasons for closures vary in different commercial corridors.
“The narrative in the media is that the landlord wants $6,000 and when the lease is up, it’s $12,000,” said Bishop, “but there are landlords who have viable storefronts but don’t have the capital to upgrade their storefronts to attract the right tenant or business owners who don’t know that the neighborhood is looking for that particular service. It’s very complicated and we need data that’s consistent and reliable.”
That said, the city is pushing the vacancy tax being proposed in Albany, said Bishop. “We have landlords who are thinking, ‘There’s a Starbucks on the corner. I too can charge that particular rent.’ We want to make sure they’re thoughtful. If there’s a vacancy tax, they will be thoughtful.”
Bishop also touched on the subject of the bill for affordable retail spaces, saying that sometimes lenders will demand certain types of tenants. A representative of a co-op and condo organization also asked the Council to reconsider the bill, saying the properties rely on the rents from commercial tenants to offset operating costs. A representative for the Department of Housing Preservation and Development also commented that it seemed “overly broad.”
The bill’s sponsor, Espinal, said it was important for tenants moving into lottery apartments to be able to afford to shop in their own neighborhoods. “They will be priced out before they even get their keys,” he said.
The vacancy registry bill was cheered by Laura Sewell of the East Village Community Coalition, saying that for too long the task of tracking empty storefronts has been left up to neighborhoods BIDS and community boards. “That’s energy we’d rather spend on programming,” she said.
The no-harassment bill was cheered by Abigail Ellman of the Cooper Square Committee, who said a survey of businesses on the Lower East Side, a quarter of the respondents experienced harassment.
The vacancy registry and database bills faced some opposition by Michael Brady, the executive director of the Third Avenue BID in the Bronx. The bills, “while well-intentioned, lack the proverbial teeth to be of assistance to small businesses and do not provide sustainable, accurate or reliable data that can be used in litigation,” said Brady. He also said that sometimes vacancies are due to court action or lengthy construction or just being held by a prior tenant.
The entire set of bills got support from an East Village shop owner, Bonnie Slotnick of Bonnie Slotnick Cookbooks. Slotnick described having to find a new space after being denied a lease after 15 years in business and then having to pay property tax as high as her rent. Other problems she’s faced over the years have included a leaky ceiling and an infestation of mice from a nearby restaurant, for which she had to pay the exterminator. “We need all the help we can get,” she told Gjonaj.
Manhattan Borough President Gale Brewer, who also gave testimony at the hearing, pitched a few ideas of her own to help the retail crisis. She also explained how the vacancy registry bill, of which she is a sponsor, would work.
“New Yorkers will be able to monitor their local businesses and help ensure that property owners are in compliance by reporting vacant storefronts to SBS through an anonymous complaint hotline,” she said.
She also mentioned how last fall, her office formed a small business task force to try to find solutions for problems faced by mom-and-pops. One of the proposals it has come up with is “legacy rent regulation” for businesses that have been open in the city for more than 20 years. She also mentioned another idea for small business leases to include a provision that would specify the percentage of annual rent increases and other mechanisms by which an owner could raise rents.
Brewer also spoke of the need to help local businesses adapt to compete with e-commerce.
“If we don’t address this issue, we will see more and more money flowing out of our neighborhoods out of our city, and into large corporations thousands of miles away,” she warned. One possible solution, Brewer said, could be to reduce sales tax for brick-and-mortar transactions and increase those on e-commerce transactions.
While not included in the legislative package, Council Member Keith Powers spoke about how scaffoldings, left up for long periods of time, are hurting small businesses. In response, Bishop agreed that in some cases, building owners opt to pay fines for keeping them too long over completing the work they were installed for. “Because it can take 10 times as much (money) to fix the actual problem.”
There was no vote held on the bills at the hearing, which ended after three hours when the Council chamber was needed for something else.
“I feel like I’m being harassed and evicted out of this room,” Gjonaj remarked.