In the decades since Tom opened his Kingsbridge business, things had always been profitable and quiet. That was until last year when his landlord denied him his regularly five-year lease extension. Tom asked his last name be kept confidential for fear of retribution from his landlord who’s dangled month-to-month lease over his head.
“My future’s uncertain there,” said Tom. He’s since refocused his attention on kick starting his restaurant business in nearby Westchester County, where small businesses are welcomed, he noted.
Along Kingsbridge Road, a commercial area home to small businesses, many stores have maintained a holding pattern as the corridor awaits the opening of the Kingsbridge National Ice Center, considered a flashpoint in the future of the largely working class neighborhood. But talk of gentrification has become a predominant issue for small business tenants in Kingsbridge, thanks to the development project that’s still in the early stages.
The real estate industry has indeed made a comeback, given the escalating rents across the city. For small business owners, the comeback has deepened into a crisis, according to Take Back NYC, an advocacy group that views the commercial lease renewal process more as a shakedown than an evenhanded exchange.
The group has since been aggressively lobbying the New York City Council to introduce the Small Business Survival Jobs Act (SBJSA), which would give automatic 10-year leases to commercial tenants, a benefit to small businesses that rely on time to cultivate their venture. Long term leases are more attractive to banks, who interpret them as an indicator of stability and loan-worthiness.
The small business sector has long been a driver of job growth, with 66.7 percent of the city’s small businesses employing fewer than five workers, up from 65.2 percent in 2008, according to the Center for an Urban Future, a nonprofit think tank.
But as it stands, landlords have maintained a grip on their commercial leases, offering them up to the highest bidder, according to Kirsten Theodos, one of the lead organizers for Take Back NY.
“The only factor that’s taken into consideration in a commercial lease renewal process is how much is the landlord going to make?” said Theodos. “It never factors in, ‘Well, why can’t the commercial tenant make a living?’”
Other stipulations in the bill include arbitration rights for commercial tenants who can deem their lease unfair and reduced down payments for first-year commercial tenants. The bill would also end the unconfirmed, underground practice of landlords seeking an under-the-table bribe, or “key money” to keep a commercial tenant active.
The bill is intended to reverse a struggle that’s creeping into the Bronx: a priced-out borough. Rising rents by an unrelenting real estate industry have caused a drop in the number of small businesses opening and an escalating rise in big chain stores. In 2014, New York City saw a 2.5 percent increase in the number of national retailers opening in the city when compared to the .5 percent the city saw between 2012 and 2013, according to a report by the Center for an Urban Future.
In the Bronx, small businesses did not fare well in 2014 thanks to a 30 percent jump in the number of businesses facing court evictions. Rent, it seems, has been a burden that’s forced many to close or simply walk away from their business without recouping their initial investment.
“How this system’s set up today,” said Theodos. “It’s all about the landlord.”
Reintroducing the Bill
The bill was re-introduced in 2014 by Bronx Councilwoman Annabel Palma, who was unavailable to speak to the Norwood News as of press time. She’s one of a handful of legislators in the Bronx Council Delegation supporting the bill, with Council Members Andy King and Maria del Carmen Arroyo also endorsing.
Twenty-seven Council Members have now backed the bill, the magic number for a bill to pass the Council. Before a floor vote, the Committee on Small Business, which oversees business matters, would have to hold a hearing. No date has been set yet.
The bill has seen several incarnations since the mid-1980s, though it’s never gained enough traction to achieve support from mayoral administrations. Mayor Bill de Blasio, while a City Councilman and later the Public Advocate, had pushed for the bill. He has maintained his support in small businesses by lowering fines levied on small business owners, though he’s said little on his stance on the bill.
Theodos has long blamed the bill’s holdup on the financial reach of the real estate lobby, which has pumped millions of dollars into City Council campaigns. During the 2013 election cycle, the political action committee known as Jobs for New York pumped millions of dollars into seventeen Council races, according to campaign filings.
“The real estate industry does everything it can to push it down; even though it’s been introduced eight different times, it’s never made it to the floor for a vote,” said Theodos.
Other council members in the Bronx and beyond have largely kept quiet on the bill or have simply gone on the record saying they were examining it after inquiries from the Norwood News. Some have questioned whether the bill infringes on the legal rights of the landlord, a claim that surfaces whenever the bill grabs attention.
Those standing against the bill include the Real Estate Board of New York, a powerful lobbying group that’s fought the bill each time it surfaces. Its president, John Banks, has labeled the bill “unconstitutional.”
Nisha Mistry, director of the Urban Law Center at Fordham University, said the scope of the bill can be threatened in court since “state law governs this type of area.”
“It’s really not within the city’s authority to legislate, under the State Constitution, commercial activity in this kind of way,” said Mistry, pointing to the state’s authority over rent laws.
Mistry argued that rezoning of commercial corridors can serve as a roundabout way to keep the small business sector intact by only mandating mom and pops be established in certain areas.
But the question of legality had been addressed in 2010 when Borough President Ruben Diaz Jr. hosted a forum on the legislation. Invitations went to the Real Estate Board of New York and then-Council Speaker Christine Quinn, considered major opponents of the legislation, though they never appeared.
“Even at the 2009 public hearing of the bill, no one brought up challenging the legality,” said Theodos. She cited a report in 2009 that justifies the City Council authorization to pass the SBJSA bill with no legislative input from the state.