By Katie Honan

The New York City Council is considering a bill that would give commercial tenants the right to longer leases and the ability to negotiate rents with an arbitrator, although it faces strong opposition from top city officials and those who say it could hurt small businesses.

Under the proposed law, called the Small Business Jobs Survival Act, businesses would be able to negotiate lease terms with their landlords, renewing with a minimum 10-year term. There is currently no restriction on commercial rent increases in New York City.

Tenants and landlords would also gain access to a third-party arbitrator to help negotiate rent if they can't work it out on their own. Lawmakers haven't yet determined how arbitrators would be appointed. The bill would also put limits on security deposits required of tenants.

A version of the bill was introduced in the City Council in 1986 and has been reintroduced many times since but never passed into law. Each iteration has faced questions over its legality and strong resistance from real-estate groups.

Councilman Ydanis Rodriguez, who represents upper Manhattan, co-sponsored the latest version. At a public hearing on the bill on Monday, he and other council members who support the legislation said it was one way to save small businesses from rising rents. He and other officials pointed to large stretches of vacant storefronts across the city and listed small businesses that either have closed or plan to shutter because of onerous rent.

"I can't imagine a New York without its mom-and-pop shops, and I don't want to," City Council Speaker Corey Johnson said. But Mr. Johnson voiced concerns, saying the bill's far-reaching language allowed protection for smaller shops as well as larger businesses and franchises.

"It's hard to have this conversation when white-shoe law firms would qualify for arbitration under this bill," he said.

Mayor Bill de Blasio is among the bill's detractors. A spokeswoman for the mayor, Jane Meyer, said the city already had many programs in place to help small businesses.

"We are concerned about potential unintended policy-consequences of this bill that could result in harmful outcomes for all commercial tenants, existing and new," she said in a statement Monday.

Gregg Bishop, commissioner of the city's Department of Small Business Services, also testified against the bill, saying he feared landlords would raise commercial rents to increase their earnings ahead of arbitration protections taking effect. He also raised concerns that the law could harm small businesses without formal leases and might discourage new businesses from opening.

"In our experience we have seen landlords give shorter leases or no leases to new businesses due to uncertainty of a business's survival," he said.

There are approximately 230,000 small businesses across the city, according to Mr. Bishop. The city's Small Business Services has programs that assist businesses with lease renewals, but only a small percentage -- about 250 businesses -- used the program last year, he said.

John Banks, president of the real-estate industry trade group Real Estate Board of New York, said the bill didn't address important issues facing small businesses and landlords.

"We think it does not do that which it seeks to do, which is protect small businesses from the variety of economic challenges that they have, " he said.

Those challenges include recent policy changes such as the minimum-wage increase and the requirement to provide family leave to employees as well as the rise of e-commerce and changing consumer behavior, Mr. Banks said.

"You cannot focus solely on the landlord portion of the equation, to try and single them out as the reason why retail is struggling," he said.

Ruth Messinger, the former Manhattan borough president who first introduced the bill while serving in City Council, testified on Monday to say it was still needed.

"This is a huge problem citywide," she said.

(END) Dow Jones Newswires

October 22, 2018 19:04 ET (23:04 GMT)

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