The battle over small business News

A recently formed coalition of small business advocates have injected new life into the old cause of passing the Small Business Jobs Survival Act. The standard-bearer for the legislation, which was introduced in the 1980s, has traditionally been the New York City Small Business Congress. But years of stagnation on the legislative docket, coupled with what one organizer said is a record number of small businesses being forced out of their storefronts due to skyrocketing lease terms, has resulted in a renewed push to pass the law.

The SBJSA would allow commercial tenants in good standing to negotiate fair lease renewal terms for the next 10 years upon expiration of an existing lease. If a tenant and landlord cannot come to an agreement, non-binding mediation would occur followed, by binding arbitration if necessary.

Advocates for the bill say that the real estate industry, namely the Real Estate Board of New York, have consistently worked to block the legislation behind the scenes. REBNY President Steven Spinola maintains the legislation is unconstitutional, and that the city council does not have the legal authority to set controls on the leasing of private property.

The new coalition, comprised of Save NYC, a grassroots organizing group, and Take Back NYC, a full-blown lobbying entity, together with the Small Business Congress NYC, say legal arguments against the bill are just a smokescreen.

“We’ve yet to see a single legal document be produced which unsubstantiated the legality of the bill,” says Kirsten Theodos, an organizer with Take Back NYC.

REBNY did not return a request for comment.

But the new coalition has also sets its sights on elected officials who they feel are focusing on the wrong solutions, or, much worse, actively shilling for the real estate industry. Manhattan Borough President Gale Brewer, who worked on the SBJSA as a member of former council member Ruth Messinger’s staff, has found herself in the unusual position of being criticized for her advocacy on behalf of small businesses.

While in the City Council, Brewer passed legislation limiting the amount of space banks and drug stores could take up on Upper West Side streets. As borough president, she’s exploring a law that would require landlords give commercial tenants a six-month heads up if they’re going to increase the rent. If the two sides can’t come to an agreement, the tenant can request non-binding mediation, or they can opt for a one-year extension with a 15 percent rent hike, allowing them time to find another location.

The idea of the bill – which in its current form is just a rough sketch – is to eliminate the last minute doubling, tripling and quintupling of rents that force longtime mom and pops out of the very neighborhoods they helped create.

Brewer has been holding roundtable discussions with Brooklyn council member Robert Cornegy and the small business community to solicit ideas related to her legislative sketch and also new ideas to ease the small business crisis (Cornegy is chair of the small business committee in the city council).

“The small business roundtables are to get ideas from people about how to save mom and pops, that’s just one example,” said Brewer. “I think the issue is all ideas should be on the table. We’re trying everything.”

One thing Brewer is sure of is that SBJSA has no chance of passing.

“I wrote the bill with Ruth Messinger in 1985, so I know it very well,” said Brewer. “It’s been sitting there since 1985, and I can’t wait another 30 years, so I want to get something done. I don’t think that bill is going to pass. I’ve been around a long time, I know what’s going to pass and what’s not going to pass. That bill is not going to pass.”

In an op-ed published in this paper in May, Brewer wrote that in addition to the constitutional issues with the SBJSA, the bill’s “mandatory arbitration system applies only to landlords via a right-of-first-refusal for existing tenants. If an arbitrator doesn’t construct lease terms to a tenant’s liking, the tenant can reject the arbitration and suffer no consequences - they stay in the storefront until and unless a new potential tenant can negotiate terms that the current tenant then refuses to meet! This mechanism is wildly inefficient, and will have the additional result of tightening the market for newer small businesses seeking space.”

But pushing for anything other than the SBJSA has earned Brewer the opprobrium of groups like Take Back NYC, who have mounted campaigns to boycott her roundtables and regularly criticize her and her allies in the press.

“They can do their thing. I know all of them, I like them and I appreciate them, I just want to get something done. And we all have the same goal, which is to save the mom and pops,” said Brewer. “One thing I’m not is backed by REBNY, that I can promise you, and they know that.”

In this Q&A, Theodos talks about her group’s stance and why when it comes to saving small businesses, it’s the SBJSA or bust.

Is Take Back NYC pushing for a city council hearing on the legality of SBJSA?We are not pushing for a public hearing on the legality of the SBJSA as there are no legal issues with the bill. We’ve yet to see a single legal document be produced which unsubstantiated the legality of the bill. We are however pushing for a public hearing on the bill as a step toward the SBJSA making it to the floor of the City Council for a vote. A public hearing is the right of any introduced legislation to provide an opportunity for the public to weigh in on the merits of the bill.

Why is Take Back NYC so sure SBJSA will pass this time around? For decades, it’s never even gotten out of committee, legality not-withstanding. There seems to be forces aligned against it in the city council, regardless of how much support it has. If by forces aligned against it in the city council, you mean the real estate lobby, REBNY, then yes, there is definitely a David v. Goliath situation here. What’s different today is that while real estate speculation has been going on for decades now, small business closures have become significantly worse as we are seeing record closings and rents which are tripling, quadrupling and in some cases even quintupling. We are past the tipping point, now more than ever action needs to be taken to address this worsening crisis.

We write about small business issues a lot, and are surprised at how aggressively this coalition is targeting Brewer’s legislation and roundtables. Why is she the target and not REBNY? It is our elected officials who are supposed to be making policy for New York City. We would be focused on anyone who was trying to propose a legitimate solution. We hold all elected officials accountable for understanding the severity of this crisis and providing real solutions. So, while it is meaningful Brewer and Cornegy have validated the small business crisis and the need for a solution, what they’re proposing does not address the root of the problem, which is escalating rents, an unfair lease renewal process, and extortion of immigrant business owners.