The City Council's Committee on Small Business will get back to work on the Small Business Survival Act either next month or in October. The bill will create "a small business lease program for establishing an environment for fair negotiations in the commercial lease renewal process in order to determine reasonable lease terms."
You can read the bill and see which City Council members are sponsoring it and also read the agenda and minutes of the hearing the committee held on June 29, 2009.
These are some of the statements in the 155 pages of Minutes:
Chairperson David Yassky: "The mom and pop stores on the commercial strips in our neighborhoods are the heart of the neighborhood. We cannot allow them to be pushed to the point of disappearance, which is what is happening now. The proposed legislation would represent a substantial departure from the current marketing for leasing space and involving city government in the process."
New York City's Department of Small Business Services spoke on behalf of the Bloomberg administration, which is against the legislation. The administration believes that it would cost New York City too much money for monitoring and enforcement.
Council Member Robert Jackson, who proposed the bill: "Nobody is suggesting that the city start regulating the rents. Many of the advocates here today will say that this is not commercial rent control. This is simply assisting them so they have a little bit more leverage because right now they're totally dependent upon the landlord of the building. The ironic thing is that the more successful these entrepreneurs are in building up their small business, the more valuable the landlord's property becomes and then the landlord can demand even higher rent. So what they're asking for is not for the city to institute rent control; they're asking for the city to stand on their side for a change and to help them with the negotiations that take place whenever their leases come up for renewal."
Mr. Jackson to Stephen Null, Founder, Coalition for Fair Business Rents: "Do you have any opinion as to what caused the landlords to stop bargaining in good faith with their tenants? You testified that for 40 years the landlords and tenants bargained in good faith successfully."
Mr. Null: "Three things happened. The first was that they allowed speculators to flip buildings and they allowed this to go on too long. What happens when somebody goes to buy a building to flip it, they don’t want to negotiate with the tenant. They would prefer to have the tenant out. The second thing was the franchises. Again, the landlord didn’t want to negotiate with the little mom and pop buy because he's going to negotiate a fair rent. He cannot compete against banks and franchises, even though they're going to go out of business. The last factor was the overall real estate speculation. Nobody wants an average profit. Everybody wants a fortune. So the poor little tenant who's negotiating and trying to get a reasonable lease, he's caught up with all this speculation and greed."
Sherri Donovan, Attorney, National Organization for Women: "Yes, this is a capitalist market but we have government to balance interests. Whenever there is a public interest, the government has the right to step in with reasonable regulation. This is so minimal. This is just sending them to an arbitrator process to negotiate. This is not established rent. This is not a percentage. This is not even a tax."
Mr. Yassky: "One concern I have about the bill is whether it would backfire. If you're a landlord and you know that a tenant is going to have the right to go to arbitration before renewal, you would not take a risk on a smaller tenant that you don’t know if they're going to stay in business. Maybe then whenever you have an empty store, you'll insist that it be Chase Bank or Rite Aid Drugs."
Luis Parra, president of the Latino Association of Tax Preparers: "Today, most people are speaking of small businesses like bodegas, Laundromats and other businesses. We have around 96,000 small businesses in the service sector like lawyers, accountants, tax professionals, doctors, dentists, engineers, real estate, day care providers, cleaning services, beauty salons, and others. This bill is going to protect these kinds of businesses along with the businesses we've heard of today. According to the New York State Department of Labor, this section of the professional businesses has 583,000 employees by April 30, 2009. That represents 30% of the total of the sector."