“This legislation will do nothing to solve the underlying issues behind storefront vacancies,” he said, “and instead would have a catastrophic impact on our local economy.”
The bill at issue has been dubbed the Small Business Jobs Survival Act and aims to help the city deal with its epidemic of retail vacancies and store closures. It would grant commercial retail tenants lease renewals of 10 years provided they meet the terms of their existing contracts. A version of the bill was first introduced more than 30 years ago.
Banks said the bill would make property owners less willing to take risks on newer and smaller businesses.
“This bill will kill jobs, kill ingenuity and ensure homogenization of retail in the City of New York,” Banks said in testimony before the Council. “It was deeply flawed 30 years ago … and it remains deeply flawed.”
Council Speaker Corey Johnson had an intense back and forth with Banks following his testimony. He pressed him to come up with an alternate suggestion for what to do when an otherwise thriving business is forced to close because of a sudden and drastic rent increase. Johnson also disputed Banks’ claim that the city had no legal authority to pass a bill like SBJSA, something that the New York Bar Association had argued in a September report.
“We have some legal authority. We’ll figure out what that authority is,” Johnson said. “I’m sure you guys will challenge that authority.”
“You can be sure we will challenge it,” Banks replied.
Banks said that the city should enact some type of incentive program to help otherwise thriving businesses stay open in the face of rising rents and said that retail opportunities were moving to other parts of the city such as neighborhoods in Queens and Brooklyn. Both he and Johnson agreed that the city needs more information and data about the state of retail in the city to help ensure that any solution the Council passes makes sense.
“We hope any bill the City Council puts forward will be legal and based on data and not anecdotes,” Banks said.
Council member Mark Gjonaj, who chairs the council’s small business committee, called the hearing and stressed that it was not meant to be an endorsement of the bill. Rather, it was just a way to figure out more about the legislation and how effective it could be as a solution to the struggles that small businesses are facing in New York City.
“Whether it is this bill, some version of it, an alternative, or a fully comprehensive set of solutions, we as a city must act now,” he said.
The bill’s sponsor is Council member Ydanis Rodriguez, who was much more emphatic that this was the solution to New York’s retail vacancy crisis. He said they were “here to get this bill to cross the finish line” and rejected the popular framing of the bill as something that amounted to commercial rent control.
“This is not about commercial rent control. I repeat: it is not about commercial rent control,” he said. “Rather, it is a bill that gives both parties more clarity and rights in the lease renewal process.”
REBNY had come out against the bill prior to the hearing, along with multiple other real estate organizations such as the New York Building Congress and the Council of New York Cooperatives and Condominiums. A trio of business improvement districts recently announced their opposition to the bill as well.
One of those BIDs was the Alliance for Downtown New York, whose president Jessica Lappin also spoke out against it at the hearing. She said high rent was not a particularly typical concern they heard from small business owners and listed bureaucracy, unresponsive city agencies, high property taxes and scaffolding as bigger problems.
“This bill doesn’t address these problems,” she said, “and we think would have unintended consequences that would make it worse.”