Villager fact check the legality of Jobs Survival Act
Legal History of Small Business Jobs Survival Act:
May 7, 1985 former Mayor Koch and Speaker Vallone created the Small Retail Business Study Commission to study the impact of higher rents on merchants, residents and neighborhoods and make recommendations. They appointed Frederick A. O. Schwarz the City’s Corporate Counsel and head of the Law Department of NYC to oversee all legal questions. As the Committee debated the final option positions, it requested the Law Department to do legal research on several points, one was if the City had authority (home rule) to enact commercial rent regulation legislation. June 3, 1986, the Law Department issued their case law findings to the Commission, concluding , “ these cases illustrate clearly that the City has broad powers to regulate economic activity if a public purpose is served.” This legal conclusion from Corporate Counsel has never changed publicly in over 30 years.
Preparing for the Commission’s Final Report released June 1986, the Commission requested law reviews on options under consideration. The NYC Law Department complied with their requests and reviewed the legality of all potential options, including the original version of the Small Business Jobs Survival Act which had been recently introduced by then Councilwoman Ruth Messinger. The Law Department cleared all options as being fully constitutional and within the City’s authority to enact. A Minority report, lead by Ron Shiffman , founder of Pratt Institute Center of Community and Environmental Development was issued which favored the Binding Arbitration law of Messinger. If the minority supported Arbitration bill were believed unconstitutional or lacked legal powers to be enacted, the majority members would have brought these facts out in their lengthily descent of the minority report , which they did not mention at all.
Oct. 1988, A special council hearing just on the legality of the original Jobs Survival Act was held prior to deciding if a vote on the bill was to take place by the Economic Development Committee of the City Council.
The main testimony came from *Corporate Counsel, The City of NY Law Department who after extensive research of NYS’s Commercial Rent Control Law and the many court decisions on this law, concluded that the bill was constitutional and the city had the powers to enact it. This legal conclusion was grounded in 18 years of extensive litigation in NYS courts, with many cases cited from the highest court, NYS Court of Appeals rulings on the nation’s first commercial rent control law. The testimony on the constitutionality of the Jobs Survival Act was overwhelming in support of the legality of the bill and at the conclusion, the Economic Development Committee was in agreement and scheduled a vote on the bill, for Dec. 1, 1988.
The powerful Mayor Koch and Speaker Vallone failed on legal grounds to stop a vote on the original Jobs Survival Act by committee. It would take over 20 years before Mayor Bloomberg and Speaker Quinn succeeded to stop a vote on the bill by committee on legal grounds never debated. When the debate was honest and public, the Jobs Survival Act was found constitutional.
Dec. 1, 1988 a vote on the Arbitration bill was taken by the Economic Develop Committee and it lost 4-3 , but no statements were made concerning any legal issues of the bill.
In Jan, 1989, Councilwoman Messinger gave notice she was reintroducing the bill and was open to any amendments by the Council’s legal department. Several were made by Corporate Counsel and Speaker’s legal which Councilwoman Messinger accepted and made the recommendations. The city’s Corporation Counsel responded to the changes,
“ substantially reduce their concerns about the bill’s ability to withstand a constitutional challenge in court.”
March 1989, Former Mayor Koch and Speaker Vallone announced a new bill as a substitute for the Messinger Bill. It was introduced by Council Member Victor Robles and touted by both the Mayor and Speaker as a better bill than the Messinger Bill. The bill was called the Bodega Bill because it gave rights to only businesses with 3,000 sq ft or less which fit most small bodega stores. One hearing was held in committee and both the Mayor and Speaker gave strong statements of support. The small business advocates attack the bill as a poor substitute for the Messinger bill and the prime sponsor withdrew the bill due to the outcry. What the Bodega Bill proved was the Mayor and Speaker supporting legislation that even on a small scale regulated commercial landlords in the lease renewal process. It also showed they felt the Home Rule issue had been resolved in favor of the city’s authority to enact.
In June 1989, a motion to discharge the Messinger bill was made. Council rules allow for the prime sponsor of a bill to get signatures from several council members to gain a vote before the entire council on discharging a bill from committee without a vote by the committee. If the motion is passed, the bill can be discharged from committee and voted on by the entire council. This is done when a prime sponsor has strong support for a bill but can’t gain a vote by the committee.
A motion to discharge a bill is very rare because it challenges both the authority of the Speaker’s office and the Committee system of the council. But Councilmember Messinger stood up to Speaker Vallone who was not allowing her bill to ever be voted on by the entire council. What is relevant to the legality of the Jobs Survival Act is this fact: if legislation is found to not have Home Rule or is found unconstitutional it would be used by the Speaker to prevent a Motion to Discharge. Speaker Vallone fought hard against the Motion to Discharge but never offered any legal challenge to the bill. A vote was taken by the full council which Vallone won when the bill got only 7 votes to discharge Messinger’s bill.
In 1995 the bill had a new prime sponsor, Councilman Linares. The Speaker’s office was stalling a hearing based upon vague legal issues with the bill. Linares
sent a memo detailing the long legal scrutiny of the bill all confirming its legality.
Nerveless, Linares changed the bill twice to eliminate once and for all, the Speaker’s office using legal issues to hold up the bill. July 26, 1994 Memo to Council Legal Dept. “ Even though we feel this Bill is both fair and constitutional we added a landlord taking right to the bill….. Now to further assure the constitutionality of this Bill we are making two major changes… In the spirit of creating a fair and constitutional Bill we hope you can appreciate our efforts to comprise in order to achieve quicker action on this mush needed Bill. “
In 2008, then Councilman Robert Jackson become the prime sponsor and did a major overhaul of the bill before reintroducing. This overhaul would make the bill the simplest with no government involvement and the most constitutionally sound of any previous versions. For comparison purposes: The first legislation regulating commercial rents was the Commercial Rent Control law. The extensive 18 year court decisions were centered on a very strict commercial rent control law, which included both rent caps set by government as well as a “reasonable return formula” set by statue and interpreted by the Court. This law was immediately challenged in court as being unconstitutional
( Twentieth Century Assoc vs Waldman, 294 NY. 571 1945) . The landlords lost that challenge when the court upheld the constitutionality of the law , but
for the next 18 years , the real estate lobby challenged the law on every possible legal/constitutional ground and lost every case. In fact, the Commercial Rent Control law was upheld a record number of times in the highest court in NYS , the Court of Appeals.
The new Jobs Survival Act stripped away all government formulas and involvement. This made the law in line with today’s contracts calling for disputes resolved by Arbitration. The legality of Arbitration to settle disputes has been consistently upheld by every court in America. Sports contracts, union contracts, government contracts , cell phones, and stock brokers agreements etc. are all agreeing to resolve disputes thru arbitration. With no government formulas or controls or any government involvement at all , it is difficult to understand how any thorough legal review of today’s Arbitration bill could be seen as having constitutional issues causing it to not stand up to likely court challenges when the legal history proves the stricter rent control law won every court decision and was ruled repeatedly as fully constitutional at the highest court in the state, the Court of Appeals.
The most important event for the new bill which would determine its future was the public hearing before the Small Business Committee on June 29, 2009. Then Chairman David Yassky was on record that his committee was going to support legislation that stopped the closing of small businesses and save jobs, “it was not an option to do nothing”. This hearing would be the proper place for opponents of the bill to make their challenges and arguments on the legality of the bill or on home rule.
The attorney for the Jobs Survival Act was Sherri Donovan who successful argued the legality of the bill at the 1988 Council special hearing. Ms. Donovan also made the amendments to the bill for both CM Messinger and Linares. She testified before the committee with a table full of legal documents that the bill was fully constitutional and she was prepared to defend any legal challenges made against the bill. The powerful real estate lobby with their unlimited resources and attorney’s made NO challenges against the bill at this hearing! Neither did the Council’ Legal Division/Legislative Division testify at the hearing of any challenges to the constitutionality of the Jobs Survival Act or the city’s authority to enact such legislation. Nor did either party present any written legal arguments or challenges against the bill to the Committee Chairman , David Yassky, to go on the record.
SHERRI DONOVAN: “Good afternoon, Council. “My name is Sherri Donovan. I am the original drafter of the bill over 20 years ago. I worked with Ruth Messinger at the time. I've followed this bill for over 20 years. I've heard all the legal arguments from the city about trying to stop this bill. This is not new. I've heard them mention home rule. I've heard them mention constitutionality. I've heard them mention interference with property rights. I've researched the cases. I've done the briefs years ago on this issue and updated it as of today. This bill is completely constitutional. This bill is completely reasonable. There is not a legal challenge that would be upheld in the courts on this bill. You do not need to be afraid of the real estate developers and their lawyers to pass this bill.”
Early Oct 2009, when the Small Business Committee met to vote on the Jobs Survival Act were they informed by then Speaker Quinn’s office they could not vote on the bill because of legal concerns to the bill which made it vulnerable to a challenge in court. NO written details of the legal concerns were given nor was any law reviews or cases sited to substantiate this vague claim. This was the first time since the 1988 special hearing on the original bill had any legal issues been brought up.
On Oct 16, 2009 a meeting was held with Speaker’s Legislative and Council’s Legal and Attorney Sherri Donovan along with prime sponsor CM Jackson and several small business advocate groups. Ms. Donovan presented her Legal arguments supported with extensive case law ruling from NYS courts, including the highest court of Appeals. At this meeting the legal concerns, which stopped a vote on the Bill, were never raised or defended. Ms. Donovan left the meeting fully confident that her written Memorandum in Support of the bill and oral arguments would satisfy any legal concerns anyone may have had.
November 9, 2009 Memo to Councilman Jackson from Legislative Division and General Counsel responding to Ms. Donovan’s report supporting the constitutionality of the Jobs Survival Act. This short memo is the first and only written statement given on the challenge to the Jobs Survival Act! The intent of the memo was to imply that Attorney Donovan failed to mention to CM Jackson the Ross v Berkely Case in Calf which overturned a commercial rent law, “similar to NYC Arbitration law”. Ms. Donovan knew about the Ross case prior to the special 1988 special hearing because she, as well as REBNY’s attorneys and Corp Counsel all reviewed the ruling and spoke with the parties involved and all reached the same conclusion, it was not relevant to the Jobs Survival Act. Furthermore, in her meetings with Council legal, Attorney Donovan in fact gave specific details of the decision to the Councils’ attorneys and stated precisely why this ruling did not apply to the Arbitration Bill in NYC. The response to this memo from Attorney Sherri Donovan was one of outrage that certain misinformation was given to the prime sponsor by someone or persons in the Speaker’s office who’s sole motivation could only be seen as to justify the “legal roadblock” to stop a vote on Jobs Survival Act. When in fact Ms. Donovan exclusively relied upon decisions from the highest courts in NYS and the USA Supreme Court. With NYS enacting the first Commercial Rent Control law in the nation and having it in effect for 18 years, this produced numerous court decisions which all upheld the constitutionality of the Commercial Rent Control law.
With so many NYS court rulings on the issue of commercial rent control , why would the Legislative Division and Legal Counsel have to rely upon a single California court ruling to prove their argument? The answer is simple, because every NYS court decision over 18 years, ruled the Commercial Rent Control law as constitutional, therefore if you challenged the legality of Commercial Rent Control law you had to rely upon out of state court rulings and then likely had to misinterpret the findings in order to give any legal merit to your claim.
One good legal fact came out of this Memo, the city’s General Counsel put in writing
that the council had Home Rule for this bill .. “We are not questioning here the City’s ability to legislate in the areas of commercial rents . The Court of Appeals is clear that appropriately crafted legislation based upon adequate finding and addressing a major problem in the City would withstand scrutiny.”
Nov 2009 Attorney Donovan issues lengthily memorandum reply to Counsel Memo. The Council’s Legislative and Counsel refused to respond to this supplemental memorandum supporting the Jobs Survival Act against the statement’s made in the June 9, 2009 Memo.
Nov 2009, Councilman Jackson files Motion to Discharge bill from committee. Jackson is not buying the legal roadblock the Speaker’s office cooked up.
Like the Motion to Discharge of the original bill by Councilwoman Messinger, the Speaker’s Office was totally opposed and fought to stop it. Just like the first motion, the Speaker’s office made NO legal challenges to the bill as a reason to reject the Motion. Instead, what was used to stop a vote was political pressure on the prime sponsor by jeopardizing his important chairmanship of the education committee. This threat worked and resulted in him dropping the Motion to Discharge.
March 2012, CM Jackson reintroduces Jobs Survival Act. Speaker’s Office will not allow a hearing on the bill and at the same time will not recommend changes to the bill which would correct the legal problems they claim. At no time after submitting the June 9, 2009 Memo to the Arbitration’s prime sponsor CM Jackson did anyone from the Council’s legal or legislative divisions offer to recommend changes to the bill which would satisfy their legal concerns. Unlike past Council’s legal and legislative divisions who twice before willingly recommended changes to the original versions of Arbitration bills, and whose changes both times were accepted by the bills’ prime sponsors, no such willingness or attempt was made to the bills’ future prime sponsors.
November 12, 2010 , to gain a fair legal review of the Jobs Survival Act which was being denied by the Speaker’s Office, a request was made to Bronx President Ruben Diaz to hold a Legal Review Forum. Bronx Borough President Ruben Diaz Jr. and the Bronx Overall Economic Development Corporation (BOEDC) hosted a special “Legal Review Forum” on the Small Business Survival Act, City Council Int. 0154-2010, to evaluate the legal arguments and the supportive case law dealing with the constitutionality of the proposed law. The Speaker’s Office and REBNY were sent a special invitation to attend this Legal Review Forum, and to publicly present their legal arguments against the bill’s legal concerns. Again, they refused to make any public statement or present any legal facts, even in writing, to support their legal challenges to the bill.
Nov. 12, 2010 a Legal Review Forum was held at the Bronx Courthouse. The most compelling testimony given, other than the detailed case law of NYS and Supreme Court rulings by Attorney Sherri Donovan , came from the attorney who was to appeal the Ross decision in 1987. Professor Myron Moskozitz, by conference call, gave testimony on his views of the constitutionality of the Jobs Survival Act and made legal comments on the Ross v. City of Berkeley court decision. His testimony confirmed all of the legal arguments made by Attorney Sherri Donovan.
In Dec. 2010 , The Legal Review Panel released a Final Report:
The Small Business Survival Act, as it is presently written, is fully constitutional and legally sound to withstand likely court challenges. The legal assessment of the Small Business Survival Act by the Legislative Division and The Office of the General Counsel, “that the bill is vulnerable to the legal challenges”, is an inaccurate legal assessment of the bill due to an excess reliance upon a deficient evaluation of a single court decision handed down in 1987 in another state, California. No section of the Small Business Survival Act is found to be “vulnerable” enough to rise to the level in a court challenge to cause the bill to be found unconstitutional. NO response from either General Counsel or REBNY attorneys!
June 7, 2012 New prime sponsor CM Margaret Chin letter to Council’s Legislative Division, R. Newman, she questions why General Counsel did not respond to Donovan’s response to their Memo and whether Donovan’s legal arguments addressed any of General Counsel’s concerns . NO response In the same letter, CM Chin asked for , “I am seeking a list of amendments to the bill that would address for General Counsel what they see as the current legal issues with the bill.” NO response
March 29, 2015 The biggest proof of the legality of the Jobs Survival Act came in a rare interview with Steven Spinola, past president of the Real Estate Board of New York. When asked about the constitutionality of the Jobs Survival Act by Villager editor Lincoln Anderson, Spinola said, “it’s not even clear if it can be legally implemented. We have not had this conversation with the new administration or the leadership of the new City Council yet, but have conveyed that we don’t think it’s legal.” …We have had discussions with the Corporation Counsel [the city’s Law Department]. At the very least, it would have to go to the state — and we’re not sure that the state would have the power to impose this.” The most powerful lobby in NYC with unlimited access to the best attorneys and the President of REBNY said , “don’t think it’s legal, it’s not even clear if it can be legally implemented, we’re not sure ”. If the bill was not legal, Spinola would have come to the interview with a handful of legal facts showing it’s not legal. Instead, he comes empty handed just like at the June 2009 hearing on the bill, no proof. If he had a shred of legal case reviews or court ruling to substantiate his challenge he would have had attorneys at the “Legal Review Forum” presenting them or at least submit a written reply to their final report. Again, no response because they have no legal facts. They rely upon misinformation without support and reliance upon nameless bureaucrats at City Hall to support their position, which is always vague.
May 5, 2015 Councilmember and Prime sponsor Palma holds special forum at City Hall for all council members and staff to listen to Attorney Sherri Donovan give legal proof that the Small Business Jobs Survival Act is fully constitutional. Angry that councilmembers were using the excuse “the bill has legal issues” to not hold public hearings, Palma gave notice to all lawmakers to come and learn the truth about the legal history of the bill proving beyond any doubt the legality of the bill. This forum was well attended with a full room and Sherri Donovan answered every question and gave out the Legal Review Panel’s Report to all.
After extensive research on the legal history of the Jobs Survival Act, the only rational conclusion that can be reached is this bill (and versions) is the most legally scrutinized legislation in the history of NYC. The original version had the benefit of having a much stricter, with government caps and formulas, commercial rent control law in effect covering the same city for 18 years. This stricter law was immediately challenged as unconstitutional and repeatedly challenged on every possible ground for 18 years and the real estate interests lost every case.
It is not surprising when Real Estate lobby head Steven Spinola was asked “ what about the fact that the city actually had commercial rent control from 1945 to 1963? He shrugged “I’m not aware of 1945 to 1963,.. I don’t know what they’re talking about.”
A special hearing was held in the city council just on the legality of the bill and it was found to be legal with the city having the authority to enact. Two Motions to Discharge the bill from committee were made and one lead to a vote. This has never happened to any legislation in the history of council, two motions to discharge and no challenge based on the bills’ legality. The bill has had 11 public hearings where the most powerful lobby’s attorneys can present legal challenges to the bill, none were made. The bill had its own, Legal Review Forum where the constitutionality of the bill would be argued. No legislation has ever had such legal scrutiny and its legality upheld every time in every court ruling as being fully constitutional.
On the other side are those making the claim they can’t pass the Jobs Survival Act or hold a hearing due to the bill having legal problems. What legal proof have they shown to substantiate this claim, what legal proof was shown to them to make the claim? To my knowledge, this claim against the Jobs Survival Act has been primarily these lawmakers who have made this claim in public or in the media: Mayor B de Blasio, Public Advocate L James, Manhattan President G Brewer, Council members: B. Lander, C Johnson, M Chin, D Garodnick and H Rosenthal.
An example of a lawmaker making the claim but refusing to back it up with facts was an OP ED by Manhattan President Gale Brewer. In the May 13, 2015 Chelsea News, Brewer’s number one reason why the Jobs Survival Act Can’t Pass was , “It raises serious constitutional issues about contract and property rights.” I sent a request to both Ms. Brewer and to her General Counsel, James Caras to please send me any legal documents which you base this statement on. No reply , No proof.
At a May 2017 rally in Councilman Dan Garodnick’s district he said, “When it comes to helping struggling small businesses, we need sound legislation that will provide real relief, Unfortunately, I believe the Small Business Job Survival Act is unconstitutional.”
He is an attorney and as such, he knows when making a statement on the legality of legislation you need solid legal case law proof to substantiate the statement. He also is the only Manhattan member who has not sponsored the Jobs Survival Act. Are all his colleagues sponsoring an unconstitutional bill? Where is his legal proof? To date he has never produced a single legal document supporting this claim against the Jobs Survival Act.