Kavanagh, Niou, Lander, Powers Op-Ed in Crain's NY: Small Businesses Need a Rent Lifeline

August 31, 2020

Originally published in Crain's New York Business on August 27, 2020.

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Small Businesses Need a Rent Lifeline

'Our recovery lease proposal would bring tenants and landlords together to make a plan for addressing past-due rent via mutual agreement.'

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By Yuh-Line Niou, Brian Kavanagh, Brad Lander, Keith Powers
August 27, 2020
 

New York City small businesses are slowly reopening, but the months of closure, reduced capacity, added costs and now lower revenues make it hard for many business owners to imagine catching up on the bills, which continue to pile up.

We’ve spoken with dozens of small-business owners, business associations and commercial landlords during the past few months, and we’ve heard over and over again that rent remains one of the biggest challenges.

Evictions are on hold for now, but businesses are desperately asking for rent relief. Some commercial landlords have been willing and able to renegotiate leases, but most have not wanted or been able to. Just 20% of businesses in Brooklyn have been able to negotiate any kind of rent adjustment, according to a survey last month by the Brooklyn Chamber of Commerce.

We are proposing a policy approach to bring landlords to the table with tenants to address past-due rent and enter into new “recovery leases” with limits on rent increases. By offering property-tax abatements to landlords, we can make it possible for mortgage holders to continue making their payments while giving a lifeline for small businesses trying to rebuild after the crisis. Pandemic recovery leases, along the lines of what we are proposing in Albany and the city, would be a win-win for tenants and landlords.

Even before the Covid-19 crisis, sky-high rents were pushing small stores and restaurants out of business. During the past decade, commercial rents have risen by at least 20% and as much as 50% in some neighborhoods, outpacing the growth of small businesses. Vacant properties sat empty, leaving our neighborhoods pockmarked by shuttered storefronts. Now, with months of lost revenue and an uncertain future, many small businesses are facing permanent closure.

Rent forgiveness or cancellation have been proposed, but without state or federal aid to help make it work and with the bills mounting now, another approach is urgently needed. Our recovery lease proposal would bring tenants and landlords together to make a plan for addressing past-due rent via mutual agreement (through some combination of rent cancellation, rent forgiveness, a one-time payment and additional monthly rent payments for a period of time), and then lock in stable, lower rates for the rebuilding and recovery yet to come.

Small businesses make up the best of our communities, providing jobs, places to buy necessities, and food options that make each of our neighborhoods lively and unique. Starting a neighborhood small business is a long-standing path to economic opportunity in immigrant neighborhoods and communities of color. Families invest their life savings, their labor and their dreams in the business, in the hopes of building something to provide for their children and their future.

When we lose small businesses, we lose the diversity and creativity of our communities, and we further marginalize those who are historically cut out of economic opportunities.

We must act urgently to ensure their survival. By providing tax relief for commercial property owners, we can help small businesses lock in rents at stable, lower rates. It won’t solve every challenge, but it will offer a path forward for both the landlord and tenant to get through this pandemic economy together. This legislation is an important first step in supporting our businesses before it is too late for any recovery.

The writers are Democrats. Niou is an assemblywoman, Kavanagh is a state senator and Lander and Powers serve on the City Council.