Why the Small Business Jobs Survival Act Is Good for Artists

Last month, the Small Business Jobs Survival Act (SBJSA), which would provide New York City commercial lease holders — including artists — with greater renewal negotiation rights and housing stability, received four new co-sponsors. That means the SBJSA needs only three more votes to meet the 26 needed for passage, as lobbying group TakeBackNYC emphasized on its online petition that calls for support from council members.

Authored by Small Business Congress, a long-time coalition of small businesses, the bill has been knocking around city council for over three decades, since then-councilwoman Ruth Messinger introduced it in 1987. Struck down that year by Mayor Ed Koch, the bill resurfaced in 2009, when it actually received more than enough votes from city council to pass before former Speaker Christine Quinn pulled it from the floor.

The bill has recently been resurrected, however, largely thanks to efforts by TakeBackNYC, Artist Studio Affordability Project (ASAP), and The Villager, who has covered the bill’s development in its pages. As debates are ongoing, Hyperallergic spoke with artist Jenny Dubnau, an activist with ASAP, to learn more about the SBJSA, what it offers artists, and the broader issues at stake.

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Claire Voon: What exactly does the SBJSA propose?

Jenny Dubnau: The bill is not commercial rent control because there’s no set maximum increase per year that landlords are able to raise rent on commercial properties. What it does is three very basic things:

1. It gives commercial tenants a basic right to renew — unless you have broken the law or started a fire or something like that — which we don’t have. Right now a landlord can quickly and legally say, nah, we’re not going to renew you.
2. If you wanted, you can ask for — and they would have to give you — a 10-year lease extension, which is huge for any small business or artist because you can’t be moving every year or two with your business. It’s extremely expensive and extremely disruptive. If you don’t want a 10-year renewal you don’t have to get it, but if you ask for it they legally have to give it to you.
3. If on renewal, you think that the increase is too high, you can bring the lease to unbinding mediation. If that doesn’t work, people go into binding arbitration, which tends to have you meet in the middle somewhere and would have the overall tendency to move down rent a little.

This is a pretty good bill, although it’s not a panacea, the be-all-end-all, because the increased rent will be too much for some small businesses and artists. But in general, it would have a dampening, a cooling down impact. Commercial rent control would be the best solution, but we don’t have the political power at this point to get real commercial rent control passed. But this bill is good intermediary stuff. It will do a lot of good things for artists. Even if you couldn’t take advantage of the arbitration process, we could still have the right to renew and have a 10-year lease extension.

CV: And why should artists in particular care about the bill?

JD: We are currently in the worst rent crisis, commercially, that we’ve ever been in in the history of the city. We’ve all seen hollowing out of the neighborhoods. I think for artists our biggest problem — the most pressing one I hear most people talk about, is rent. Rent’s just soaring. Once you get beyond about $2 per square foot, which is most parts of the city now, it really becomes untenable for most to afford a studio. You can’t be paying that much a month. I think that the crisis is severe enough that setting aside a few little programs for artists here and there is just not enough, unfortunately. I think we need legislation.

I don’t think any artist wouldn’t want a 10-year lease. I know a lot of artists whose landlords give them a year-long lease, and that’s it. And then a year from now they face insecurity again, and their rents could be jacked up. With a long, long lease, as long as it’s rent you can basically afford, at least you can plan … you know what’s facing you. I think it’s a longterm battle and also an opportunity for a common cause for groups in neighborhoods being gentrified. I think it’s important for artists to start making common cause and realizing that if Sunset Park gets completely gentrified and Latino and Asian immigrants get kicked out because of rising rents, saving the neighborhoods is what’s going to save studio space.

CV: How does the bill act as a brake on gentrification?

JD: It basically would give small businesses and artists a fighting chance to stay in their spaces. So I think it’s an anti-gentrification bill. I’m not saying it would stop gentrification, but I think it would slow it. Then if you have bodegas that could stay in place, and Latino-owned restaurants that can stay in place — in Bushwick, let’s say — then the surrounding commercial rents are less likely to skyrocket. It’s once you get the fancy chain stores moving in, all the rents rise in the surrounding neighborhood. And if the neighborhood community could stay, then it’s a break in the cycle of rising rents.

CV: What is the current state of the bill, and what needs to be done?

JD: Right now it’s sitting in the Small Business Committee. So a lot of what our groups are doing is hardcore lobbying of council members to really get them to sign onto the bill. Right now we’re actually working with Jimmy Van Bramer [who recently told Art F City that he is “generally supportive of the bill”]. We want him to understand that this bill helps artists’ survival in the city. We need him to get on board.

CV: What kind of opposition is the bill receiving that’s holding it back?

JD: What we’re getting from a lot of council members who should sign onto this bill is radio silence. My opinion is that even some of the progressive on this council … this should be a no-brainer to them. I think that there is a reluctance for them to take on this additional battle. I think they have a lot of battles to fight, and other very important issues, but I don’t know if they have the political will to take on the commercial rent issue. I think they’ve just been at loggerheads with the Real Estate Board. We have to make them understand artists and also New York residents are tired of seeing chain stores close businesses.

CV: Those council members who have been vocal have challenged, in particular, the bill’s legality. Steven Spinola, president of the Real Estate Board of New York, for instance, spoke with the Villager about his uncertainty regarding the bill. Why do some question its legal standing?

JD: We have heard a few council members make statements to us that “the bill may have legal problems,” but it rarely gets more specific than that, at least not yet. Back in 2009 and 2010, when the bill was exhaustively legally vetted, a legal panel rejected the anti-SBJSA arguments being made at the time, which included saying that the bill was an unconstitutional “taking” from landlords because a court ruled, in an older California case, that a similar bill didn’t allow enough leeway for landlords to re-occupy their own spaces. But the SBJSA clearly does do that; the bill contains many loopholes for the landlords to use the space if it’s for “legitimate business purposes,” similar to residential rent regulations allowing landlords to take over regulated apartments if for the use of themselves or family members.

As well, some have trotted out the “home rule” Urstadt Law which is in place in NY State that gives Albany power to set NYC rent laws. But according to the aforementioned legal panel, the law only mentions residential rent laws, not commercial. If the SBJSA were to pass, it is certainly possible that the Real Estate Board of New York would mount a legal challenge: this bill would reduce the sky-high commercial rents they’ve been enjoying for many years. But this doesn’t make their legal objections sound, and hopefully the city council will not back down to these vague legal clams, which have already been vetted 5 years ago.

[Manhattan Borough President] Gale Brewer also feels the SBJSA is unfair to the landlord because it gives the present tenant the right of first refusal to remain in their space at a rent they feel is too high even after arbitration, and Brewer feels that because the landlord may in the meantime have gotten a new tenant to take the high rent, that it would have been a waste of the landlord’s time to have done so. This seems pretty minor to me: a simple solution would be for the landlord to refrain advertising the space until mediation and arbitration have concluded. As well, it is very interesting to me that Brewer is suddenly having doubts about the fairness of the SBJSA to landlords: after all, she was in fact one of the sponsors and a strong supporter of the SBJSA when she was in the city council back in 2008. Interestingly, Melissa Mark-Viverito, who also [objected to the bill’s legality] was also a sponsor, as was then-council member Bill de Blasio. This report shows the sponsors back in 2008.

CV: Brewer, along with Small Business Committee Chair Robert Cornegy, Jr., introduced an alternative proposal to help small businesses in March. It offers “a mandatory, nonbinding negotiation and mediation period … with the option of a one-year lease extension with no more than a 15% rent increase to give business the opportunity to transition to a new space smoothly.” Why may that not be as ideal as the SPJ?

Brewer’s weaker proposal (which is not yet a bill, but probably will be soon) is first of all exclusionary to most artists, because it only applies to storefront level spaces: no upper story spaces will be included. As well, it contains mediation, but is missing the “teeth” of binding arbitration if no agreement can be reached between tenant and landlord. As well, there is no option for a 10-year lease extension in her bill: if no agreement can be reached on a rent increase, the tenant gets to stay for one year (at a very high 15% increase, by the way!) “to give the tenant a reasonable amount of time to move.” In many peoples’ opinions, her proposal wouldn’t stop any displacement of commercial tenants at all.

CV: So what is at stake if the bill isn’t backed?

JD: We will continue to see an acceleration of what we’re already experiencing, which is really terrifyingly fast … it took SoHo 10 or 15 years to become a high-rent district that’s not amenable to artists anywhere. But Bushwick — how long did it take Bushwick to suddenly become gentrified? Three years? I mean, Williamsburg happened quickly, and I think that the landlords, the commercial building owners, are getting really good at this. They know exactly what they need to do.

I mean, look at Industry City in Sunset Park: they brought all the artists in with cheap rent, then they started doubling rents for artists. Artists were getting kicked out, and now they’re building an “Innovation Alley.” It’s really like an Onion article. They’re having an exclusive breakfast and discussion and a walking tour for high-end firms whom they’re trying to lure to Industry City. Time Inc. just signed a big contract there. It is insane. And then the whole surrounding neighborhood gets affected with the spiraling rents, and then the condos start going up, and the cycle happens over and over and over.

So artists have got to start thinking politically and fighting back. My hope is that we can get commercial rent stabilization happening, but that’s going to be a very difficult task, and I don’t think we have that kind of power at this point.

CV: What can New Yorkers do right now to fight back and get the bill to the floor?

JD: They can go to the ASAP website to download flyers, sign the online SBJSA petition, and they can share the petition via social media. They can also find out who their council member is and contact them via email or phone if they are not yet SBJSA supporters. Most importantly, to stay in touch with breaking news, they can join the ASAP Activists Facebook group.