Mom and Pop Go to City Hall
Eliot Brown Nov. 23, 2009, 4:32 p.m.
On Friday, Nov. 20, Councilman Robert Jackson was exasperated.
The Harlem Democrat had put in a call to the chair of the Council’s Small Business Committee, David Yassky, asking for a vote on the Small Business Survival Act, a bill of Mr. Jackson’s that would regulate commercial rents.
“I told David today on the phone, I said, ‘David, everyone who testified spoke in favor of the bill,’” Mr. Jackson said. “I asked him to just vote it out,” he went on. “It can be put on the calendar to be voted out. Period. He’s not willing to do that.”
This didn’t sit well.
“What are people afraid of?” Mr. Jackson said. “Let people stand up and say, ‘Yes, I’m in favor of it,’ or, ‘No, I’m not.’”
With a month left before the current Council term ends and legislation expires, Mr. Jackson is scrambling to bring his bill to a vote—it has the official support of 30 of 51 members—making noise, threatening and pressuring fellow members to help him move on his top priority. The main resistance comes from Speaker Christine Quinn—Mr. Jackson said Mr. Yassky was deferring to her on a vote as is customary—who says she believes the bill would be ruled illegal by the courts.
“We can’t pass laws that we don’t have the legal authority to implement,” Ms. Quinn said in a phone interview Monday. “That isn’t right. It isn’t fair, doing something that you know, five minutes after you do it, that the rug is going to get pulled out from under it.”
Mr. Jackson’s unusually strong push has sent a jolt of fear through the real estate world that had, until recently, paid the bill little attention, and industry advocates are now working to erode the bill’s support on the Council (though they do not seem to think there is much threat that the bill will come up this year). Landlord groups balk at the mere mention of new regulation on commercial rents, and seem to find Mr. Jackson’s legislation nauseating.
THE BILL IS DUBBED commercial rent control by both supporters and opponents, but in actuality is a bit less extreme. It would require binding arbitration between small commercial tenants—retail or office—and their landlords if the two cannot agree on the price and terms of a new lease. The arbitrators would rule on a number of factors, including the landlord’s ability to pay expenses and the tenant’s ability to move to determine what the new lease should be.
This legislation has made a showing in the Council before: The bill is essentially the same as one pushed in the mid- to late-1980s by West Side Democrat Ruth Messinger, who, like Mr. Jackson, had the support of most of the Council; she failed to win over the speaker or the mayor.
The bill’s backers, led by a large set of minority business owners, call it absolutely essential for the survival of small businesses in the city. Landlords’ ability to dramatically raise rents after a lease expires forces far too many neighborhood stores to shutter, the advocates say, leaving streets with a limited and unhealthy variety of retail.
Detractors counter that the bill is an extraordinary intrusion into the private market, one that would suck away investment as well as the incentive to improve properties.
The real estate industry is particularly incensed, as landlords far and wide—those with retail at the base of residential buildings, and those who own office buildings—would be hit by the legislation. Supporters’ rhetoric centers on corner mom-and-pop stores, but the legislation’s net is far wider: It would apply to any business with 100 or fewer employees. Thus landlords across the city would be unnecessarily hit, real estate groups argue, stifling investment.
“What the hell—let’s destroy the city,” said Joe Strasburg, president of the pro-landlord Rent Stabilization Association, which fought the bill in the 1980s as well. “It makes absolutely no sense.”
Then there is also criticism over the bill’s timing. In a recession, when rents are naturally falling everywhere, there is less hue, cry and demonstrated urgent need compared to the heady days of rapid gentrification and rent hikes a couple of years back.
Handicapping the bill’s likelihood of passage is difficult, but its chances rest on two main factors: whether Mr. Jackson will be able to force a vote on it, and if he is, whether the supporters can withstand a strong pushback by the politically powerful real estate industry.
Ms. Quinn’s staff, which recently brought in both supporters and opponents of the bill to query them over concerns, has told others that the bill would likely be ruled unconstitutional over contract issues.
(Of course, the Council has passed bills with questionable legality before, to see them later shot down by the courts, but Ms. Quinn said this bill would clearly be reversed by the courts based on the legal advice she has received.)
Mr. Jackson’s strategy seems to be to ratchet up the pressure on Ms. Quinn—he’s threatened a rare motion to force a vote, called “sponsor’s privilege”—making noise within the Council and calling out members who have withheld support or pulled their support.
“Comrie, Dickens, Joel Rivera—all members of color,” he said, referring to three who have pulled support or are not on the bill: Councilman Leroy Comrie, Councilwoman Inez Dickens and Councilman Joel Rivera. “I’m going after them, too. I’m going to be asking them myself. I’m trying to put pressure on everyone.”
Of course, his task is made a bit more difficult by the lack of a competitive race for the Council’s speakership, as Ms. Quinn has no extraordinary political need to cater to the legislative needs and desires of every individual member given her likely reelection.
The real estate industry has recently become a bit more concerned about the legislation actually moving forward, as the political arms of the Real Estate Board of New York and the Rent Stabilization Association have begun pushing back.
Already, at least three members who were signed onto the bill have pulled their support, including Mr. Comrie, bringing the number of sponsors down to 30. Based on its prior testimony of opposition to the bill, the Bloomberg administration seems likely to veto any legislation, and thus 34 votes would be needed to override a veto.
THE BILL’S SUPPORTERS are no political fools. A set of small-business owners appear to have formed a pact with the increasingly influential Working Families Party to push the legislation. At a hearing last week on the WFP’s top priority, a paid-sick-leave bill, the small-business owners testified in favor of the commercial rent bill, which generally is opposed by businesses, as it adds to their cost. The WFP recently sent a letter of support to the Council in favor of Mr. Jackson’s bill (the group has previously said it is in favor of the legislation).
Sung Soo Kim, president of the Korean American Small Business Service Center, said there was no official deal on the matter. He said he wanted to urge the WFP to lend more support to the commercial rent bill—his top priority—and the paid-sick-leave bill does relatively little harm, if any, to his members.
“This is a crisis,” Mr. Kim said. “We really need rent stabilization.”
A WFP spokesman said the group has been “actively reaching out” to council members on the rent bill.
What this all means for Mr. Jackson is unclear. He still has the option to try to discharge the bill from the current committee, a motion considered highly confrontational in the Council; the sponsor’s privilege option, which would force a vote, could take more than a month.
Ms. Quinn, meanwhile, suggested she was working on a set of similar measures based on Mr. Jackson’s and others’ concerns about small-business costs.
“We have six or seven different ideas we’re looking at,” she said. “We hope to move very, very soon.”