S T A T E   O F   N E W   Y O R K
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                                  4717

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                             April 19, 2013
                               ___________

Introduced  by  Sen.  AVELLA -- read twice and ordered printed, and when
  printed to be committed to the Committee on Cities

AN ACT to amend the administrative code of the  city  of  New  York,  in
  relation to enacting the "small business survival act"

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Short title. This act shall be known and may  be  cited  as
the "small business survival act".
  S 2. Legislative intent. The legislature finds that the small business
sector  of  the  city  of New York remains vulnerable at a time when New
York city is more dependent than ever on small business for  job  growth
and  revenues. The New York city commercial rental market has been nega-
tively influenced by speculators for such an  extended  period  of  time
that  the interest of small businesses and job creation, and the broader
general economic interest of the city, are being harmed. An unacceptable
number of established small businesses are being forced out of  business
solely  as  a result of the commercial lease renewal process.  Whereby a
breakdown has taken place in normal processes of bargaining and  freedom
of  contract  has become an illusory concept during the commercial lease
renewal process.   The  current  commercial  rental  market  results  in
unjust,  unreasonable, and oppressive leases for the payment of rent for
commercial space in New York city.  Landlords  continue  to  exact  such
agreements from tenants under stress of prevailing market conditions and
unequal  bargaining  power,  without  any  tenants'  rights to allow for
bargaining in good faith to arrive at fair and reasonable  lease  terms.
The  absence of legal protection for the interests of commercial tenants
in the lease renewal process has unnecessarily accelerated  the  closing
of  small businesses and resulted in lost jobs, lost tax revenues caused
higher inflation and cost of living rates, decreased job growth opportu-
nities for New Yorkers and community instability. It is  the  intent  of
the legislature, through this legislation, to give small businesses some

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD04995-03-3
              

S. 4717                             2

rights in the commercial lease renewal process, and therefore, a measure
of  predictability of future costs through a two-step procedure of medi-
ation and, if necessary, arbitration for  negotiating  commercial  lease
renewals.    This  process  would create a fair negotiating environment,
which would result in more reasonable and fair lease terms to help small
businesses survive and encourage job retention and growth in the city of
New York.
  S 3. Title 22 of the administrative code of the city of  New  York  is
amended by adding a new chapter 8 to read as follows:
                                 CHAPTER 8
               COMMERCIAL LEASE ARBITRATION AND MEDIATION
SECTION 22-801 SCOPE.
        22-802 DEFINITIONS.
        22-803 MANNER OF SERVICE.
        22-804 RENTAL GUIDELINES.
        22-805 SECURITY DEPOSITS.
        22-806 RETALIATION.
        22-807 WAIVER.
        22-808 EVALUATION.
        22-809 PENALTIES.
        22-810 INCONSISTENCY WITH OTHER LAWS.
  S  22-801 SCOPE. THIS CHAPTER SHALL APPLY ONLY TO ALL COMMERCIAL LEASE
RENEWALS FOR COMMERCIAL PREMISES. ON ANY OCCASION WHEREIN A LANDLORD AND
TENANT ARE REQUIRED TO NEGOTIATE  THE  TERMS  OF  A  LEASE  RENEWAL  FOR
COMMERCIAL  USES  THE  PROVISIONS  OF  THIS  CHAPTER  SHALL  APPLY.  THE
PROVISIONS OF THIS CHAPTER SHALL  APPLY  TO  ANY  LANDLORD  AND  CURRENT
TENANT  WHOSE  LEASE  EXPIRED ON OR AFTER JULY FIRST, TWO THOUSAND THIR-
TEEN.
  S 22-802 DEFINITIONS. A. "ADMINISTERING AGENCY" SHALL  MEAN  ANY  CITY
AGENCY,  OFFICE,  DEPARTMENT, DIVISION, BUREAU OR INSTITUTION OF GOVERN-
MENT, THE EXPENSES OF WHICH ARE PAID IN WHOLE OR IN PART FROM  THE  CITY
TREASURY, AS THE MAYOR SHALL DESIGNATE.
  B.  "ARBITRATOR" SHALL MEAN THE PERSON CHOSEN BY THE PARTIES OR BY THE
AMERICAN ARBITRATION ASSOCIATION, OR ANY  OTHER  RECOGNIZED  ARBITRATION
ORGANIZATION,  TO  RESOLVE  A  DISPUTE  BETWEEN  A LANDLORD AND A TENANT
CONCERNING A COMMERCIAL LEASE RENEWAL OR THE RENT TO BE CHARGED FOR  THE
COMMERCIAL PREMISES.
  C.  "COMMERCIAL  PREMISES" SHALL MEAN A BUILDING OR SPACE OCCUPIED FOR
NON-RESIDENTIAL PURPOSES INCLUDING, BUT NOT LIMITED  TO,  MANUFACTURING,
RETAIL, PROFESSIONAL SERVICES, OFFICES, ASSEMBLING, PROCESSING, CULTURAL
AND  NOT-FOR-PROFIT  ENTITIES  THAT ARE PRESENT IN THE CITY OF NEW YORK,
WHO HAVE A VALID COMMERCIAL LEASE.
  D. "LANDLORD" SHALL MEAN ANY OWNER, LESSOR, SUBLESSOR OR OTHER  PERSON
ENTITLED  TO  RECEIVE  RENT  FOR  THE USE OR OCCUPANCY OF ANY COMMERCIAL
PREMISES, OR AN AGENT THEREOF.
  E. "MEDIATOR" SHALL MEAN ANY PERSON, AGREED UPON BY THE PARTIES TO THE
DISPUTE OR CHOSEN BY THE AMERICAN ARBITRATION ASSOCIATION OR  ANY  OTHER
RECOGNIZED  MEDIATION  OR ARBITRATION ASSOCIATION, TO ACT AS AN INTERME-
DIARY BETWEEN THE PARTIES. THE MEDIATOR SHALL NOT OFFER A BINDING  DECI-
SION CONCERNING THE MATTER IN DISPUTE.
  F. "NEGOTIATION" SHALL MEAN THE PROCESS OF CONFERRING WITH ONE ANOTHER
THROUGH CONFERENCES, DISCUSSIONS AND COMPROMISE, TO ARRIVE AT A MUTUALLY
AGREEABLE SETTLEMENT.
  G.  "RENT"  SHALL  MEAN  ANY  AND ALL CONSIDERATION, INCLUDING BUT NOT
LIMITED TO PASS-ALONGS, RECEIVED BY THE LANDLORD IN CONNECTION WITH  THE
USE OR OCCUPANCY OF ANY COMMERCIAL PREMISES.

S. 4717                             3

  H. "SERVICES" SHALL MEAN THOSE FACILITIES WHICH ENHANCE THE USE OF THE
COMMERCIAL  PREMISES,  INCLUDING,  BUT  NOT LIMITED TO, REPAIRS, MAINTE-
NANCE, PAINTING, HEAT, HOT AND COLD WATER, UTILITIES, ELEVATOR  SERVICE,
SECURITY DEVICES AND PATROLS, FURNISHINGS, STORAGE, JANITORIAL AND LAND-
SCAPING  SERVICES,  REFUSE REMOVAL, INSURANCE PROTECTION, PARKING SPACES
AND FACILITIES IN COMMON AREAS OF THE BUILDING OR PARCEL  IN  WHICH  THE
RENTAL UNIT IS LOCATED.
  I.  "TENANT"  SHALL  MEAN TENANT, SUBTENANT, LESSEE, SUBLESSEE, OR ANY
OTHER PERSONS LAWFULLY ENTITLED TO USE OR OCCUPANCY  OF  ANY  COMMERCIAL
PREMISES.
  S 22-803 MANNER OF SERVICE. ALL PAPERS AND NOTICES WHICH, BY THE TERMS
OF  THIS CHAPTER ARE REQUIRED TO BE SERVED, SHALL BE SERVED BY A PROCESS
SERVER, OR SHALL BE SENT BY FIRST CLASS MAIL AND CERTIFIED MAIL,  RETURN
RECEIPT REQUESTED OR BY ANY EXPRESS MAIL SERVICE.
  S 22-804 RENTAL GUIDELINES. A. ALL LEASES OF A COMMERCIAL PREMISES MAY
BE RENEWED AT THE OPTION OF A TENANT WHO DID NOT LOSE THE RIGHT TO RENEW
A  LEASE  UNDER  THE GROUNDS DESCRIBED IN SUBDIVISION D OF THIS SECTION.
SUCH LEASE RENEWALS SHALL BE FOR A MINIMUM TERM OF TEN  YEARS,  PROVIDED
HOWEVER,  THAT  AT THE TENANT'S OPTION, AND WITH THE WRITTEN APPROVAL OF
THE LANDLORD, A LEASE OF SHORTER OR LONGER DURATION MAY BE SELECTED.
  B. NO PERIOD OF LEASE EXTENSION REQUIRED BY THIS CHAPTER SHALL  EXTEND
BEYOND THE LANDLORD'S LAWFUL ABILITY TO RENT THE PREMISES TO THE TENANT,
WHERE SUCH ABILITY IS LIMITED BY:
  (1) THE OBLIGATION TO RENT THE PREMISES TO A THIRD PARTY PURSUANT TO A
BONA  FIDE  LEASE ENTERED INTO PRIOR TO THE EFFECTIVE DATE OF THIS CHAP-
TER;
  (2) THE EXERCISE BY A THIRD PARTY OF A BONA FIDE OPTION  TO  RENT  THE
PREMISES PROVIDED THAT SUCH OPTION WAS GIVEN PRIOR TO THE EFFECTIVE DATE
OF THIS CHAPTER; OR
  (3) ANY OTHER LAWFUL REASON ARISING PRIOR TO SUCH EFFECTIVE DATE.
  C.  ANY  LANDLORD  WHOSE OBLIGATIONS UNDER THIS CHAPTER ARE LIMITED BY
THE PROVISIONS OF THIS SECTION SHALL NOT BE REQUIRED TO NEGOTIATE OR  TO
ARBITRATE  AS  OTHERWISE  PROVIDED  FOR IN THIS CHAPTER BUT SHALL REMAIN
OBLIGATED TO NEGOTIATE AND TO ARBITRATE A RENEWAL LEASE FOR SUCH  PERIOD
OF  TIME FOR WHICH THE LANDLORD HAS A LAWFUL ABILITY TO RENT THE COMMER-
CIAL PREMISES TO THE TENANT. THE LANDLORD SHALL PROVIDE  NOTICE  TO  THE
TENANT  ONE  HUNDRED  EIGHTY DAYS BEFORE THE TERMINATION OF THE LEASE OF
THE BASIS ON WHICH THE LEASE CANNOT BE  EXTENDED  FOR  A  FULL  TEN-YEAR
TERM.
  D.  A TENANT SHALL LOSE THE RIGHT OF RENEWAL AND A LANDLORD MAY REFUSE
TO RENEW A LEASE ONLY ON THE FOLLOWING GROUNDS:
  (1) THE TENANT HAS PERSISTENTLY DELAYED RENT PAYMENTS  WITHOUT  CAUSE.
FOR THE PURPOSE OF THIS SUBDIVISION, "CAUSE" IS DEFINED AS THE WITHHOLD-
ING  OF  RENTAL  PAYMENTS BY THE TENANT DUE TO THE ALLEGED VIOLATIONS OF
THE RENTAL AGREEMENT BY THE LANDLORD.  IN ORDER FOR THE LANDLORD  TO  BE
EXCUSED  FROM  RENEWAL ON THIS GROUND, THE LANDLORD MUST HAVE SERVED THE
TENANT AT LEAST THREE PRIOR NOTICES DURING THE TERM OF THE LEASE TO  THE
TENANT  FOR DEMAND OF PAYMENT WITHIN THIRTY DAYS, AND THEN SHOW THAT THE
LESSEE HAS NOT PAID WITHIN SUCH THIRTY DAY PERIOD.  THE  LANDLORD  SHALL
NOT SERVE SUCH NOTICE UNLESS THE RENT PAYMENT WAS IN ARREARS FOR A MINI-
MUM OF FIFTEEN DAYS;
  (2)  THE TENANT USES THE COMMERCIAL PREMISES IN A MANNER SUBSTANTIALLY
DIFFERENT FROM THAT DESCRIBED IN THE LEASE;
  (3) THE TENANT CONDUCTS OR PERMITS ANY FORM OF ILLEGAL ACTIVITY ON THE
PREMISES;

S. 4717                             4

  (4) THE TENANT HAS SUBSTANTIALLY BREACHED ANY  SUBSTANTIVE  OBLIGATION
UNDER THE CURRENT LEASE AND HAS FAILED TO CURE SUCH BREACH WITHIN THIRTY
DAYS FOLLOWING WRITTEN NOTICE TO CURE BY THE LANDLORD;
  (5) UPON THE TERMINATION OF THE CURRENT TENANCY, THE LANDLORD INTENDS,
IN  GOOD FAITH, TO DEMOLISH OR SUBSTANTIALLY RECONSTRUCT THE PREMISES OR
A SUBSTANTIAL  PART  THEREOF,  OR  TO  CARRY  OUT  SUBSTANTIAL  WORK  OR
CONSTRUCTION  ON  THE  COMMERCIAL  PREMISES  OR SUBSTANTIAL PART THEREOF
WHICH HE OR SHE COULD NOT REASONABLY DO WITHOUT OBTAINING POSSESSION  OF
THE  COMMERCIAL PREMISES. THE LANDLORD SHALL NOTIFY THE TENANT OF HIS OR
HER DECISION TO REOCCUPY THE COMMERCIAL PREMISES AT LEAST ONE YEAR PRIOR
TO THE TERMINATION OF THE LEASE. IN THE EVENT THAT  THE  LESSOR  FRAUDU-
LENTLY  INVOKES  THIS  JUSTIFICATION FOR A REFUSAL TO RENEW A COMMERCIAL
LEASE, THE DEFRAUDED TENANT MAY COLLECT  TREBLE  DAMAGES  FOR  ANY  LOSS
SUFFERED AS A RESULT OF SUCH ACTION;
  (6) THE CURRENT TENANCY WAS CREATED BY THE SUBLETTING OF THE PROPERTY,
WHEREBY  THE  PRIME TENANT DID NOT NOTIFY THE LANDLORD BY CERTIFIED MAIL
OF THE SUBTENANT'S EXISTENCE AND DID NOT OBTAIN THE WRITTEN  CONSENT  OF
THE  LANDLORD. THIS GROUND IS VOID IF THE LANDLORD AND TENANT HAD AGREED
IN THE LEASE TO ALLOW SUBLEASING RIGHTS WITHOUT THE CONSENT OF THE LAND-
LORD AND ALL OBLIGATIONS OF THE PRIME  TENANT  ON  THE  ISSUE,  WERE  IN
COMPLIANCE;
  (7)  IT  HAS BEEN DETERMINED BY THE ADMINISTERING AGENCY OR BY A CIVIL
COURT OF COMPETENT JURISDICTION THAT THE TENANT IS A GROSS AND  PERSIST-
ENT  VIOLATOR  OF  NEW  YORK  CITY  TAX LAWS, OF ANY LICENSE OBLIGATIONS
RELATED TO THE USE OF THE PREMISES OR OF ANY LAWS OF  THE  CITY  OF  NEW
YORK;
  (8)  UPON THE TERMINATION OF THE CURRENT TENANCY, THE LANDLORD INTENDS
TO OCCUPY THE RETAIL PREMISES IN ORDER TO CARRY OUT  ITS  OWN  BUSINESS,
WHICH  CANNOT  BE  THE  SAME TYPE OF BUSINESS THAT THE CURRENT TENANT IS
OPERATING, UNLESS THE LANDLORD COMPENSATES THE  TENANT  AT  FAIR  MARKET
VALUE AS DETERMINED BY AN ARBITRATOR AS RESTITUTION FOR THE LOSS OF SUCH
TENANT'S  BUSINESS.  THE  LANDLORD SHALL NOTIFY THE TENANT OF HIS OR HER
DECISION TO REOCCUPY THE PREMISES AT LEAST ONE HUNDRED EIGHTY DAYS PRIOR
TO THE TERMINATION OF THE LEASE. IN THE EVENT THAT THE LANDLORD  FRAUDU-
LENTLY  INVOKES  THIS  JUSTIFICATION FOR A REFUSAL TO RENEW A COMMERCIAL
LEASE, THE DEFRAUDED TENANT MAY COLLECT  TREBLE  DAMAGES  FOR  ANY  LOSS
SUFFERED AS A RESULT OF SUCH ACTION.
  E.  PROCEDURE  FOR  LEASE  RENEWALS.  (1) WHERE THE LANDLORD AGREES TO
RENEW THE LEASE OF THE CURRENT TENANT, SUCH LANDLORD  SHALL  NOTIFY  THE
TENANT  AT  LEAST ONE HUNDRED EIGHTY DAYS PRIOR TO THE EXPIRATION OF THE
LEASE OF HIS OR HER WILLINGNESS TO NEGOTIATE THE RENEWAL OF THE  COMMER-
CIAL LEASE AGREEMENT.  IF THE LANDLORD AND TENANT AGREE, THEY MAY AT ANY
TIME  RENEGOTIATE  A NEW LEASE, WITH ANY AGREED TO TERMS AND CONDITIONS,
NOT INCONSISTENT WITH THE PROVISIONS OF THIS CHAPTER. THE TENANT  IS  TO
CONTINUE RENT PAYMENTS AS SET FORTH IN THE LEASE UNTIL THE PARTIES REACH
AN  AGREEMENT  ON  A  LEASE  RENEWAL  OR  UNTIL  A DECISION IS OTHERWISE
RENDERED THROUGH THE ARBITRATION OR MEDIATION PROCESSES DESCRIBED IN THE
PROVISIONS OF THIS SUBDIVISION.   THE  FIRST  NINETY  DAYS  OF  THE  ONE
HUNDRED  EIGHTY-DAY  NOTICE  PERIOD  IS FOR THE PURPOSE OF NEGOTIATIONS.
ALTERNATIVELY, EITHER PARTY MAY COMPEL THE OTHER PARTY TO THE DISPUTE TO
USE THAT NINETY-DAY PERIOD, OR ANY PART THEREOF,  FOR  THE  PURPOSES  OF
MEDIATION. IF EITHER THE LANDLORD OR TENANT CHOOSES MEDIATION, HE OR SHE
SHALL  NOTIFY THE OTHER PARTY THAT A MEDIATION SESSION IS REQUESTED. THE
PARTIES SHALL CHOOSE A MEDIATOR WHO IS AGREEABLE TO  BOTH  THE  LANDLORD
AND  TENANT,  OR IF NO SUCH PERSON IS AGREEABLE, THEN THE AMERICAN ARBI-
TRATION ASSOCIATION SHALL APPOINT A MEDIATOR  OR  ANY  OTHER  RECOGNIZED

S. 4717                             5

MEDIATION  OR ARBITRATION ASSOCIATION. THE FULL COSTS OF MEDIATION SHALL
BE EQUALLY SHARED BY BOTH PARTIES.  THE MEDIATOR SHALL NOTIFY THE  LAND-
LORD  AND TENANT, NO MORE THAN TEN DAYS AFTER HIS OR HER APPOINTMENT, OF
THE  DATE,  TIME,  PLACE  AND  RULES  OF THE HEARING. THE MEDIATOR SHALL
FOLLOW HIS OR HER CUSTOMARY RULES AND MAY RENDER AN  OPINION  CONCERNING
THE  DISPUTE, WHICH SHALL NOT BE BINDING ON THE PARTIES. IF AFTER NINETY
DAYS OF NEGOTIATION AND ANY MEDIATION SESSIONS, THE LANDLORD AND  TENANT
DO  NOT  REACH AN AGREEMENT ON A NEW LEASE, THEN THE TENANT IS TO NOTIFY
THE AMERICAN ARBITRATION ASSOCIATION OR ANY OTHER  RECOGNIZED  MEDIATION
OR  ARBITRATION  ASSOCIATION,  WITHIN FOURTEEN DAYS OF THE EXPIRATION OF
THE FIRST NINETY DAY PERIOD, THAT AN ARBITRATION HEARING  IS  REQUESTED.
FAILURE  BY THE TENANT TO NOTIFY THE AMERICAN ARBITRATION ASSOCIATION OR
ANY OTHER RECOGNIZED MEDIATION OR ARBITRATION ASSOCIATION  WITHIN  FOUR-
TEEN  DAYS OF THE EXPIRATION OF THE FIRST NINETY DAY PERIOD SHALL RESULT
IN THE FORFEITURE OF THE TENANT'S RIGHT OF RENEWAL.
  (2) WHERE THE LANDLORD REFUSES TO  RENEW  A  LEASE  WITH  THE  CURRENT
TENANT,  SUCH  LANDLORD IS TO NOTIFY THE TENANT A MINIMUM OF ONE HUNDRED
EIGHTY DAYS BEFORE THE EXPIRATION OF THE LEASE THAT SUCH LANDLORD IS NOT
GOING TO RENEW THE TENANT'S LEASE AND STATE THE REASON  OR  REASONS  FOR
SUCH DENIAL IN DETAIL. FAILURE OF THE LANDLORD TO GIVE SUCH NOTICE SHALL
SUBJECT  THE PARTIES TO THE PROVISIONS OF PARAGRAPH THREE OF THIS SUBDI-
VISION. THE LANDLORD IS TO FURNISH THE TENANT WITH  ALL  PERTINENT  DATA
SUPPORTING  SUCH  REASON OR REASONS. IF THE TENANT STILL WISHES TO CHAL-
LENGE THE REFUSAL TO RENEW THE LEASE AND APPLY  FOR  A  RENEWAL  OF  THE
LEASE, THEN THE TENANT MUST NOTIFY THE LANDLORD WITHIN THIRTY DAYS AFTER
THE  RECEIPT  OF THE LANDLORD'S NOTICE OF HIS OR HER INTENT TO CHALLENGE
THE REFUSAL AND SEEK ARBITRATION SOLELY ON THE  VALIDITY  OF  THE  LAND-
LORD'S  GROUNDS  FOR DENIAL OF TENANTS' RIGHT TO RENEWAL ON THE ISSUE OF
RENEWAL. THE TENANT SHALL THEN NOTIFY THE AMERICAN  ARBITRATION  ASSOCI-
ATION  OR  ANY  OTHER  RECOGNIZED  MEDIATION OR ARBITRATION ORGANIZATION
WITHIN FOURTEEN DAYS AFTER NOTIFICATION BY THE TENANT  TO  THE  LANDLORD
THAT  A HEARING IS REQUESTED TO DETERMINE WHETHER THE LANDLORD'S GROUNDS
FOR REFUSAL ARE VALID.
  (3) IF AN ARBITRATION HEARING IS REQUESTED PURSUANT  TO  EITHER  PARA-
GRAPHS ONE OR TWO OF THIS SUBDIVISION:
  (A) THE LANDLORD AND TENANT SHALL CHOOSE THE ARBITRATOR FROM A LIST OF
ARBITRATORS  PROVIDED  BY  THE  AMERICAN  ARBITRATION ASSOCIATION OR ANY
OTHER RECOGNIZED MEDIATION OR ARBITRATION ASSOCIATION.  IF  THEY  CANNOT
AGREE  ON  THE  SELECTION  OF  THE  ARBITRATOR WITHIN THIRTY DAYS OF THE
TENANT'S NOTICE TO SUCH ASSOCIATION THAT A  HEARING  IS  REQUESTED,  THE
TENANT  SHALL  NOTIFY  WITHIN  FOURTEEN  DAYS  SUCH  ORGANIZATION OF THE
PARTIES' FAILURE TO MAKE A SELECTION AND SUCH  ARBITRATION  ORGANIZATION
SHALL  DETERMINE  THE  ARBITRATOR  WITHIN  FIVE  DAYS OF RECEIPT OF SUCH
NOTICE FROM THE TENANT.  BOTH PARTIES SHALL FOLLOW THE RULES ESTABLISHED
BY THE ARBITRATION ASSOCIATION IN PREPARING FOR  AND  HOLDING  AN  ARBI-
TRATION HEARING.
  (B)  THE ARBITRATOR SHALL NOTIFY BOTH PARTIES OF THE DATE, PLACE, TIME
AND RULES OF THE HEARING WITHIN FOURTEEN DAYS OF RECEIPT  BY  THE  ARBI-
TRATION ASSOCIATION OF THE REQUEST FOR A HEARING. THE HEARING SHALL TAKE
PLACE  IN  THE  BOROUGH WHERE THE COMMERCIAL PREMISES ARE LOCATED UNLESS
OTHERWISE AGREED TO BY THE LANDLORD AND TENANT. THE LANDLORD AND  TENANT
SHALL  FURNISH  THE  ARBITRATOR WITH ALL RELEVANT DOCUMENTATION, AND THE
ARBITRATOR SHALL CONDUCT A PRELIMINARY MEETING OR  CONFERENCE  TELEPHONE
CALL  PRIOR TO THE HEARING TO REVIEW THE DATA AND FAMILIARIZE HIMSELF OR
HERSELF WITH THE CASE. THE MATTERS THE ARBITRATOR SHALL DETERMINE DURING
THE PRELIMINARY MEETING SHALL INCLUDE, BUT NOT BE LIMITED TO,  THE  NEED

S. 4717                             6

TO INSPECT THE PROPERTY REQUESTING ADDITIONAL DATA FROM EITHER PARTY AND
ANY FACTS DEEMED RELEVANT TO THE ARBITRATOR, LIST OF POTENTIAL WITNESSES
WITH  BACKGROUNDS  OF  EACH,  AND THE NEED TO HIRE EXPERT CONSULTANTS TO
CERTIFY  THE  ACCURACY  OF  DATA.  THE ARBITRATOR MAY SEEK TO CONDUCT AN
INSPECTION OF THE PROPERTY AFTER NOTIFYING BOTH PARTIES AT  LEAST  THREE
DAYS  IN  ADVANCE OF THE INSPECTION AND INFORMING THEM OF THEIR RIGHT TO
BE PRESENT DURING THE INSPECTION.
  (C) THE HEARING BEFORE THE ARBITRATOR MAY BE RECORDED BY DIGITAL, TAPE
OR VIDEO DEVICE, AT THE REQUEST OF EITHER PARTY AND  AGREED  TO  BY  THE
ARBITRATOR  AND  WHOSE  COSTS  WILL BE BORNE BY THE PARTY WHO DECIDED ON
THIS METHOD TO CREATE A RECORD OF THE HEARING. IF BOTH  PARTIES  ARE  IN
AGREEMENT,  THE  COSTS FOR RECORDING THE HEARING WILL BE SHARED EQUALLY.
SUCH RECORDING MAY BE TRANSCRIBED UPON THE  REQUEST  OF  ANY  PARTY  WHO
POSTS  IN  ADVANCE THE ESTIMATED COST OF THE TRANSCRIPTION. EITHER PARTY
MAY PROVIDE, AT THEIR EXPENSE, A REPORTER TO TRANSCRIBE THE HEARING. THE
OFFICIAL RECORD OF THE HEARING SHALL INCLUDE ALL DOCUMENTS AND OFFERS OF
PROOF PRESENTED TO THE ARBITRATOR, THE WRITTEN DECISION OF THE  ARBITRA-
TOR AND ANY TRANSCRIPT OF THE HEARING. THE LANDLORD AND TENANT WILL EACH
BE  GIVEN  ADEQUATE  TIME  TO  PRESENT THEIR CASES, AS DETERMINED BY THE
ARBITRATOR TO PRESENT TESTIMONY, WITNESSES, PICTURES, VIDEOS, DOCUMENTS,
INCLUDING CHARTS, COMPARABLE RENT DATA AND ANY OTHER RELEVANT DATA. EACH
PARTY SHALL BE ALLOWED TO CONFRONT AND CROSS-EXAMINE ADVERSE  WITNESSES.
THE  ARBITRATOR CAN CHOOSE TO INVESTIGATE ANY ASPECT OF THE CASE TO HELP
ARRIVE AT A DECISION.
  (D) FOR A DISPUTE BROUGHT BEFORE AN ARBITRATOR UNDER PARAGRAPH ONE  OF
THIS  SUBDIVISION,  SUCH ARBITRATOR SHALL RENDER A WRITTEN DETERMINATION
SETTING THE RENT TO BE PAID  DURING  A  RENEWAL  PERIOD  OF  TEN  YEARS,
TOGETHER  WITH  THE  BASIS  FOR THE DETERMINATION OF THE RENT, AND SHALL
NOTIFY THE PARTIES OF SUCH DETERMINATION NO LATER THAN THIRTY DAYS AFTER
THE HEARING HAS BEEN CONCLUDED. FAILURE TO  NOTIFY  THE  PARTIES  WITHIN
THIRTY  DAYS  SHALL NOT AFFECT THE ENFORCEABILITY OF SUCH DETERMINATION.
ARTICLE SEVENTY-FIVE OF THE CIVIL PRACTICE LAW AND RULES  GOVERNS  ARBI-
TRATION  PROCEDURE IN NEW YORK STATE. THEREFORE, THE RULING OF THE ARBI-
TRATION WILL BE GOVERNED BY THIS NEW YORK STATE STATUTE.  SUCH  DETERMI-
NATION  SHALL  BE  BASED ON (I) THE COST OF MAINTENANCE AND OPERATION OF
THE ENTIRE PROPERTY INCLUDING LAND AND BUILDING IMPROVEMENTS,  INCLUDING
ALL  SERVICE DEBT SUCH AS MORTGAGES, (II) THE KIND, QUALITY AND QUANTITY
OF SERVICES FURNISHED BY THE LANDLORD, (III) THE CONDITION OF THE  SPACE
INCLUDING CAPITAL IMPROVEMENTS MADE BY THE TENANT, (IV) CURRENT INTEREST
RATES  ON  BANK  DEPOSITS  AND  UNITED  STATES GOVERNMENT BONDS, (V) THE
CURRENT FAIR MARKET RATES FOR COMPARABLE PROPERTIES IN THE AREA IN WHICH
THE PROPERTY IS  LOCATED,  (VI)  THE  LEASE  HISTORY  AND  ANY  RELEVANT
SUBLEASE  HISTORY,  (VII)  THE  LONGEVITY  OF  THE  BUSINESS, (VIII) THE
LOCATION OF THE BUSINESS, (IX) THE EXTENT TO WHICH THE BUSINESS IS BOUND
TO ITS PARTICULAR LOCATION, (X) THE SIZE OF THE SPACE, (XI) THE COST  OF
LEASING SIMILAR PREMISES WITHIN A ONE MILE RADIUS OF THE PROPERTY, (XII)
THE  PAST TEN YEAR RENTAL MARKET HISTORY WITHIN A ONE MILE RADIUS OF THE
PROPERTY, AS WELL AS, THE LENGTH OF TIME OF ANY CONSISTENT  REAL  ESTATE
SPECULATION  OCCURRING  IN  THE  MARKET AND DEGREE OF REAL ESTATE SPECU-
LATION FOR A PARTICULAR AREA WHICH  THE  BUSINESS  IS  LOCATED  IN,  THE
EXISTENCE  OF EMPTY STOREFRONT PROPERTY FOR EXTENDED PERIODS OF TIME AND
THE IMPACT UPON THE LOCAL COMMERCIAL RENTAL MARKET OF UNUSUAL CONDITIONS
AND (XIII) ALL OTHER RELEVANT FACTORS.  THE  ARBITRATOR  SHALL  CONSIDER
THAT  EACH SMALL BUSINESS AND LANDLORD RELATIONSHIP SHOULD BE DEALT WITH
ON A CASE-BY-CASE BASIS. WHERE THE COMMERCIAL PREMISES IS LOCATED  IN  A
MIXED-USE  BUILDING  WITH  LESS  THAN TWENTY-FIVE RESIDENTIAL UNITS, THE

S. 4717                             7

ARBITRATOR SHALL GIVE SPECIAL CONSIDERATION TO THE  CRITERIA  LISTED  IN
ITEMS (I) AND (II) OF THIS SUBPARAGRAPH. WITHIN THIRTY DAYS OF THE HEAR-
ING,  THE ARBITRATOR SHALL SEND THE DECISION AS TO THE RENT PRICE TO THE
PARTIES  INVOLVED  BY CERTIFIED MAIL.  THE COSTS OF ARBITRATION SHALL BE
BORNE EQUALLY BY LANDLORD AND TENANT.  ARTICLE SEVENTY-FIVE OF THE CIVIL
PRACTICE LAW AND RULES GOVERNS ARBITRATION PROCEDURE IN NEW YORK  STATE.
THEREFORE,  THE  RULING  OF THE ARBITRATION WILL BE GOVERNED BY THIS NEW
YORK STATE STATUTE.
  (E) FOR A DISPUTE BROUGHT BEFORE AN ARBITRATOR UNDER PARAGRAPH TWO  OF
THIS  SUBDIVISION,  SUCH ARBITRATOR SHALL RENDER A WRITTEN DETERMINATION
STATING THE BASIS FOR SUCH DETERMINATION AND NOTIFYING  THE  PARTIES  OF
SUCH  DETERMINATION NO LATER THAN THIRTY DAYS AFTER THE HEARING HAS BEEN
CONCLUDED. FAILURE TO RENDER A  TIMELY,  WRITTEN  DETERMINATION  AND  TO
NOTIFY PARTIES WITHIN THIRTY DAYS SHALL NOT AFFECT THE ENFORCEABILITY OF
SUCH DETERMINATION. SUCH DETERMINATION SHALL BE BASED ON (I) APPROPRIATE
LAWS  APPLICABLE  TO  COMMERCIAL SPACES; (II) THE TERMS OF THE LEASE AND
COMPLIANCE THEREWITH; (III) RENTAL GUIDELINES AS SET FORTH BY THE ADMIN-
ISTERING AGENCY; (IV) FOLLOW THE PROVISIONS OF  PARAGRAPHS  ONE  THROUGH
EIGHT  OF  SUBDIVISION  D OF SECTION 22-804 OF THIS CHAPTER; AND (V) ANY
OTHER RELEVANT AND MATERIAL FACTORS THAT THE ARBITRATOR SHALL DEEM PROP-
ER. IF THE ARBITRATOR DECIDES IN FAVOR OF THE LANDLORD, THEN THE  TENANT
SHALL HAVE UNTIL THE END OF THE CURRENT LEASE TO VACATE. IF THE ARBITRA-
TOR DECIDES IN FAVOR OF THE TENANT, THE PARTIES WILL BEGIN THE RENEGOTI-
ATIONS  OF  NEW  LEASE  TERMS  AND IF NECESSARY, THE MEDIATION PERIOD AS
DETAILED IN PARAGRAPH TWO OF SUBDIVISION E OF  SECTION  22-804  OF  THIS
CHAPTER.    THE    MAXIMUM   LENGTH   OF   TIME   PERMITTED   FOR   THIS
RENEGOTIATION/MEDIATION PERIOD WILL BE REDUCED FROM NINETY DAYS TO THIR-
TY DAYS FROM THE DATE OF RECEIPT OF ARBITRATOR'S RULING. IF THE  PARTIES
HAVE  NOT  REACHED  A  MUTUAL AGREEMENT ON THE TERMS OF A NEW LEASE, AND
MEDIATION FAILED TO ACHIEVE AGREEMENT WITHIN THE THIRTY DAY PERIOD AFTER
ARBITRATORS' RULING ON "RIGHT OF  RENEWAL",  THEN  THE  PARTIES  ARE  TO
PROCEED  TO ARBITRATION AS DETAILED IN PARAGRAPH TWO OF SUBDIVISION E OF
SECTION 22-804 OF THIS CHAPTER.
  (F) THE ARBITRATOR'S DECISION SETTING THE RENT PRICE  SHALL  BE  FINAL
AND  BINDING  ON  BOTH PARTIES EXCEPT AS PROVIDED HEREIN, AND THEY SHALL
ENTER INTO A LEASE INCORPORATING SUCH RENT WHICH LEASE DOES NOT DIMINISH
ANY SERVICES PROVIDED BY THE LANDLORD PURSUANT TO  THE  EXISTING  LEASE.
SUCH  RENEWAL LEASE SHALL BE ENTERED INTO BY THE TERMINATION DATE OF THE
CURRENT LEASE AND SHALL COMMENCE AT THE TIME OF EXPIRATION OF THE EXIST-
ING LEASE. IF, HOWEVER, THE TENANT ELECTS NOT TO PAY THE RENT SET BY THE
ARBITRATOR, THEN THE LANDLORD AND TENANT SHALL  NOT  ENTER  INTO  A  NEW
LEASE AGREEMENT OR RENEW THE EXISTING LEASE.
  (G)  IF,  PURSUANT  TO  SUBPARAGRAPH (F) OF THIS PARAGRAPH, THE TENANT
ELECTS TO NOT PAY THE RENT SET BY THE ARBITRATOR,  THE  TENANT  WILL  BE
ALLOWED  TO REMAIN IN POSSESSION AT A RENT NO GREATER THAN A TEN PERCENT
INCREASE OF THE AVERAGE RENT CHARGED DURING THE FINAL TWELVE  MONTHS  OF
THE  LAST  RENTAL  AGREEMENT  BETWEEN  THE  LANDLORD AND TENANT FROM THE
TERMINATION DATE OF THE EXISTING LEASE UNTIL  SUCH  DATE  ON  WHICH  THE
TENANT  SHALL  REMOVE  HIS OR HER PROPERTY FROM THE PREMISES AS PROVIDED
HEREIN. IN THE EVENT THE LANDLORD RECEIVES A  WRITTEN  BONA  FIDE  OFFER
FROM  A PROSPECTIVE TENANT TO RENT THE PREMISES, THE LANDLORD MUST FIRST
OFFER THE CURRENT TENANT THE OPTION OF ENTERING INTO A LEASE AT THE RENT
AND OTHER TERMS AGREED TO BY THE PROSPECTIVE TENANT TO THE LANDLORD. THE
LANDLORD IS TO NOTIFY THE TENANT OF SUCH  OFFER  WITHIN  THREE  DAYS  OF
RECEIPT  OF  SUCH WRITTEN BONA FIDE OFFER. IF THE TENANT DECLINES TO PAY
THE RENT OR FAILS TO ACCEPT THE OFFER WITHIN FOURTEEN DAYS OF RECEIPT OF

S. 4717                             8

THE LANDLORD'S NOTIFICATION TO THE TENANT OF SUCH OFFER, THEN THE TENANT
HAS THIRTY DAYS, FROM THE DATE SUCH NOTICE IS RECEIVED, TO REMOVE  PROP-
ERTY  FROM  THE COMMERCIAL PREMISES PROVIDED THAT THE LEASE HAS EXPIRED.
IF  THE  TENANT  ACCEPTS  THE  OPTION OF FIRST REFUSAL, THE LANDLORD AND
TENANT SHALL ENTER INTO A LEASE BASED UPON THE TERMS OF  THE  BONA  FIDE
OFFER RECEIVED BY THE LANDLORD FROM THE PROSPECTIVE TENANT.
  S  22-805  SECURITY  DEPOSITS.  SECURITY  DEPOSITS SHALL NOT EXCEED AN
AMOUNT EQUAL TO TWO MONTHS RENT. ALL SECURITY DEPOSITS SHALL  BE  PLACED
IN  ESCROW  IN  AN  INTEREST-BEARING ACCOUNT AT A FEDERALLY INSURED BANK
LOCATED IN NEW YORK STATE. THE TENANT SHALL BE NOTIFIED  IN  WRITING  OF
THE  LOCATION OF SUCH ESCROW ACCOUNT. INTEREST PAID ON THE ACCOUNT SHALL
BE PAID IN FULL TO THE TENANT UPON TERMINATION OF THE LEASE. THE  AMOUNT
OF  INTEREST  PAID  TO  THE TENANT SHALL EQUAL THE INTEREST PAID BY SUCH
FEDERALLY INSURED BANK LESS ONE PERCENT FOR THE  LANDLORD'S  ADMINISTRA-
TIVE COSTS.
  S  22-806  RETALIATION. NO LANDLORD SHALL IN ANY WAY RETALIATE AGAINST
ANY TENANT FOR THE TENANT'S ASSERTION OR EXERCISE OF  ANY  RIGHTS  UNDER
THIS  CHAPTER.  ANY  SUCH RETALIATION MAY SUBJECT THE LANDLORD TO A SUIT
FOR ACTUAL AND PUNITIVE DAMAGES, INJUNCTIVE RELIEF, AND ATTORNEY'S FEES.
PROOF OF RETALIATION BY THE LANDLORD OCCURRING PRIOR TO  OR  DURING  THE
ARBITRATION PROCEEDING SHALL BE CONSIDERED BY THE ARBITRATOR IN MAKING A
DETERMINATION AS TO THE RENT TO BE PAID.
  S  22-807  WAIVER.  NO  PROVISION  IN  ANY LEASE, RENTAL AGREEMENT, OR
AGREEMENT MADE IN CONNECTION THEREWITH WHICH WAIVES  OR  DIMINISHES  ANY
RIGHT OF TENANT UNDER THIS CHAPTER IS VALID.
  S  22-808 EVALUATION. AT THE END OF EACH FIFTH YEAR, THE ADMINISTERING
AGENCY SHALL REPORT TO THE MAYOR AND THE COUNCIL ON THE EFFECTIVENESS OF
THIS CHAPTER IN CARRYING OUT THE PURPOSES SET FORTH IN  THE  LEGISLATIVE
FINDINGS.  THE  RECOMMENDATIONS  SHOULD  TAKE  INTO ACCOUNT THE EXISTING
COMMERCIAL  RENTAL  MARKET  WHICH  INCLUDES  AMONG  OTHER  FACTORS   THE
INFLATION  AND INTEREST RATES. THIS REPORT SHALL ALSO IDENTIFY ANY OTHER
POSITIVE OR NEGATIVE EFFECTS OF THE LAW.
  S 22-809 PENALTIES. A. A LANDLORD OR TENANT MAY SEEK INJUNCTIVE RELIEF
MANDATING ARBITRATION AND/OR APPROPRIATE DAMAGES AGAINST ANY LANDLORD OR
TENANT WHO FAILS TO SUBMIT VOLUNTARILY TO ARBITRATION OR OTHERWISE FAILS
TO ACT IN GOOD FAITH.
  B. ANY AND ALL LEGAL EXPENSES INCURRED BY ONE PARTY AS A RESULT OF ITS
ATTEMPT TO COMPEL THE OTHER PARTY TO COMPLY WITH THE PROVISIONS OF  THIS
CHAPTER  MAY  BE AWARDED TO THE APPROPRIATE PARTY BY THE ARBITRATOR OR A
CIVIL COURT OF COMPETENT JURISDICTION.
  S 22-810 INCONSISTENCY WITH OTHER LAWS. IN THE EVENT OF ANY INCONSIST-
ENCY WITH ANY OTHER LAWS OF THE CITY OF NEW YORK, THIS  LAW  SHALL  TAKE
PRECEDENCE.
  S 4. Severability. If any clause, sentence, paragraph, section or part
of  this act shall be adjudged by any court of competent jurisdiction to
be invalid and after exhaustion of  all  further  judicial  review,  the
judgment  shall  not affect, impair or invalidate the remainder thereof,
but shall be confined in its operation to the  clause,  sentence,  para-
graph,  section or part of this act directly involved in the controversy
in which the judgment shall have been rendered.
  S 5. This act shall take effect on the one hundred thirtieth day after
it shall have become a law.