A debate that started in the mid 1980’s continues today: What is the solution to stopping the closing of long-established businesses by speculators who have highjacked the commercial marketplace?
The city’s greatest advocate for small business was Mayor Fiorello LaGuardia. When speculators drove up rents during the early years of WWII, he joined with Governor Dewey to form a Joint Legislative Committee to study commercial rents in NYC. Their findings could apply to any neighborhood in the city today: an emergency existed characterized by oppressive rents and rent increases unrelated to actual costs, as well as the absence of freedom to negotiate contracts due to the unequal bargaining power between landlord and tenant. A Commercial Rent Control law was promptly passed, which gave rights to business owners and was successful in driving the speculators out of the marketplace, and kept them out for the next eighteen years until the law expired in 1963.
But instead of using this successful law as a foundation to create a real solution, then-Mayor Edward Koch and Speaker Peter Vallone ignored good government action and instead established a bias commission.
Mayor Koch and Speaker Vallone created the Small Retail Business Study Commission. The city’s business community called it the “Limousine Commission” because most of its members arrived at meetings in limousines. This hand-picked commission was comprised of heads of banks, Wall Street, real estate, and big business. The predictable findings of this commission were the opposite of Mayor LaGuardia’s: no regulation of commercial landlords and no rights for the tenants. This commission had one purpose, to stop the Arbitration Bill presented by Councilmember Ruth Messinger.
The Limousine Commission’s primary recommendation, mediation only with one year to move, once rejected by all, is being brought up today as the best proposal to save our small businesses.
This proposal is an insult to the city’s desperate business owners. City Hall has rejected the Arbitration bill for 30 years, not even allowing a vote.
Now the crisis has worsened, and they have put forth a solution that was rejected decades ago as being nothing more than a scheme of the real estate lobby to stop a real solution from being passed. “At least the mediation bill can pass, something is better than nothing.” This was exposed decades ago as nothing. It is a landlord’s bill which offers no rights to tenants, mediation without arbitration, one year to move. To every business owner, it is not better than nothing, it is nothing. Compare this to the Small Business Jobs Survival Act: rights to tenants, mediation with Arbitration,10 years and STAY PUT.
Mayor LaGuardia did it right, he understood that for any legislation to be successful and save businesses, it must give rights to the commercial owners to protect them from either a breakdown or manipulation of the free market. Without these rights to negotiate equally with landlords for fair lease terms, then the city will lose all of its independent small businesses.
The claim that the mediation- only bill will be easier to pass is true. At City Hall any bill that benefits big real estate is easy to pass. Given their campaign contributions and high-paying private jobs, the real estate lobby controls economic policy at City Hall. At the same time, any bill that regulates landlords will be hard to pass.
After the city went into the major recession of 2008, Small Business Committee Chairman David Yassky said, “We have to do something to help small businesses, It’s not an option to do nothing. We cannot allow them to be pushed to the point of disappearance, The cornerstone foundation for stopping the closing of our small businesses is the Small Business Survival Act”. The majority of council members followed that pledge and were ready to “easily” pass the SBJSA. Instead, behind the Speaker’s closed doors a disingenuous claim was made that the bill could not be voted on because of legal issues.
Time is running out for our government to do the right thing and pass the SBJSA, the best and only real solution to save our small businesses. Otherwise these business owners who have become endangered species will become extinct in the near future.
Sung Soo Kim founded the Korean American Small Business Service Center, the oldest small business service center in NYC; co-founding the New York City Small Business Congress and Coalition to Save New York City Small Businesses; and was chairman of the Mayor’s First Small Business Advisory Board, appointed by Mayors Dinkins and Giuliani.