Legal facts supporting the constitutionality of the
Small Business Jobs Survival Act
The recent claims made by Council’s Legal and the real estate lobby (REBNY) challenging the legality of the Small Business Jobs Survival Act (Jobs Survival Act) were all resolved conclusively two decades ago, and again more recently in 2010 with an independent special Legal Review Panel of the Jobs Survival Act sponsored by Bronx Borough President Ruben Diaz Jr.
The city’s small business advocates, lead by the Small Business Congress, believe the legal challenges to the Jobs Survival Act arose out of a collaboration of the Speaker’s Office and REBNY to cook up a bogus legal roadblock to stop a vote on the Jobs Survival Act , which would have easily passed a vote by the full Council. Even though this legal roadblock has been proven to be without any legal merit, with the help of REBNY’s friends at City Hall, it has persisted for the past seven years in providing the only excuse for lawmaker to not give the Jobs Survival Act an honest debate and hearing in the Council.
Past legal scrutiny of original version of Jobs Survival Act:
Four events occurred between June 1986 and July 1994, which required extensive legal scrutiny of the legality of the original version of today’s Jobs Survival Act by City’s Law Department and the City Council’s Legal and Legislative Departments.
I. In May 1985, former Mayor Ed Koch and Speaker Peter Vallone created the Small Retail Business Study Commission to study the impact of higher rents on merchants, residents and neighborhoods. The Mayor appointed the City’s Corporate Counsel, Frederick A. O. Schwartz, head of the Law Department of the City of New York to oversee all legal questions for this commission. As the Committee debated the final option positions, it requested the Law Department to do legal research on several legal points as well as the options being considered. One major legal issue was if the City had authority to enact commercial rent regulation legislation. In June 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 Law Dept. has never been changed publicly in over 30 years nor has the Law Dept. issued a written statement or testified in a pubic forum, changing this position. (see A. Law Dept. report to Commission)
Furthermore, in preparing for the Commission’s Final Report released June 1986, the Commission requested law reviews on all 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 Jobs Survival Act which had been recently introduced by former Council Member Ruth Messinger and was being considered by the minority members lead by Ron Schiffman, Director and Founder of the Pratt Center for Community Development. The Law Department cleared all options as being fully constitutional and within the City’s authority to enact.
A Minority report was issued which favored two options, one being the original version of the Jobs Survival Act , Ruth Messingers' Binding Arbitration Act ( see B Page 12-17 app III) . It would be highly implausable for a Mayoral and Speaker’s special Commission with NYC Law Department oversight to issue a Final Report recommending any option (legislation) which was found later to be illegal and unconstitutional. If any proposal were believed unconstitutional or lacked legal powers to be enacted , the majority commission would have brought these facts out in their lengthily descent of the minority report (specifically against the Jobs Survival Act), which they did not mention at all. “ The Commission majority vigorously opposes both versions of the binding arbitration proposal “ ( see B)
In the Final Report (B) ( Sec. C I page 11 ) from the Majority who strongly oppose the Binding Arbitration option, “ Is the City legally empowered to adopt this option, or indeed any of the others that would regulate commercial landlord-tenant relations? As Assistant Corporation Counsel has advised the Commission that the answer is probably yes.
In June 1986 , The City of New York Law Department , Mayor Koch (obsessed with opposing the Arbitration bill), Speaker Vallone ( lead the council’s fight to stop the Arbitration bill ), the Majority of the Commission, and the minority Commissioners who issued a separate minority report, all accepted the legality of the original Binding Arbitration Bill ( Councilwoman Ruth Messinger introduced 1986) and the authority of the City to enact it into law.
II. In Oct.1988, prior to a scheduled vote on the Arbitration bill by the Economic Development Committee of the City Council, a special Council public hearing was held. The topic of this hearing was exclusively on the legality of the original Jobs Survival Act and the City’s authority to enact it. The main testimony came from Mr. Zimroth and Friendlander of the City’s Corporate Counsel, gave testimony based upon extensive research of 18 years of litigation on the NYS Commercial Rent Control Law and the numerous court decisions arising from challenges to that law, with many cases cited from the highest court , NYS Court of Appeals rulings in favor and upholding the constitutionality of the nation’s first commercial rent control law. They testified in support of the bill’s legality and that the City Council had the powers to enact it. The Corporate Counsel’s testimony was confirmed by the testimony of legal scholars such as Prof. Dennis Keating, recognized as America’s leading constitutional authority on Commercial property rent law. He consulted on a Berkeley Ca. law which regulated commercial rents in a small section of Elmherst Calif. , and authored several papers on NYS 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 full agreement with City’s Law Department on the constitutionality of the bill and scheduled a vote on the bill for Dec. 1, 1988.
A popular Mayor Koch, a powerful Speaker Vallone, and wealthy lobby REBNY could not stop a vote on the original version of Small Business Jobs Survival Act!
III. On Dec. 1, 1988 a vote on the Binding Arbitration bill was taken by the Economic Development Committee and the original version of Jobs Survival Act , Ruth Messinger’s Binding Arbitration bill lost 4-3. In the heated debate leading up to the vote and included the day of, no statements were made concerning any legal issues of the bill, nor did the real estate lobby in its aggressive and extensive arguments to persuade councilmembers to vote against the bill , ever mention any legal issues of the bill. The only arguments made to vote against the bill was that the bill was really “commercial rent control”, passage would do more harm than good, and government should not interfere in the free market which was being defined by big business as robust. If the Arbitration bill had any legal concerns whatsoever, the Economic Development Committee would have never voted on it.
IV. After the special legal review public hearing in the City Council on the legality of the Arbitration Bill followed by the vote by the Economic Development Committee on Dec. 1, 1988 , the City’s Corporate Counsel and Council’s Legal and Legislative Division accepted the legal findings and worked with the bill’s then prime sponsors CM Ruth Messinger and later CM Guillermo Linares to recommend amendments to the Arbitration bill based upon legal concerns Council’s Legal and General Counsel expressed. In both cases , the prime sponsors of the Arbitration bill amended the bill based solely upon the recommendations expressed by Council’s Corporate Counsel and Legislative Division to satisfy any legal concerns they had. If either Corporate Counsel or Legislative Department believed the City lacked Home Rule to enact this legislation, why then were they making recommendations to the bill? If either Corporate Counsel or Legislative Department believed the bill was unconstitutional , why didn’t they recommend amendments to the bill to correct their concerns? It is clear from the two prime sponsors memo’s that two of the bill’s prime sponsors at different times were willing to make any changes to the bill which would satisfy Legal’s concerns. See attachment : C CM Messinger Memo to Speaker Vallone and CM Linares Memo to Speaker and Legislative Director
Fact: At no time during two separate occasions and with two different prime sponsors , did anyone from either Legal or Corporate Counsel make any legal challenges to the bill concerning the City’s authority to enact this Arbitration legislation. Nor, on either occasion, once the prime sponsor amended the Arbitration bill did anyone make the claim that the changes to the bill were unsatisfactory to satisfy their stated legal concerns.
V. Recent Legal scrutiny of the Jobs Survival Act :
1994-2009 The Arbitration Bill had several sponsors (5) and it was reintroduced with several changes. At no time during this period did anyone from either the Speaker’s Legal or Legislative Departments make any claims or challenges to the bill’s legality or the City’s right to Home Rule.
* neither did the powerful real estate lobby with its unlimited legal resources.
VI. In 2008, the Jobs Survival Act was amended and streamlined and made simpler by eliminating any and all government controls and formulas in the statue. This made the composition of the statue in line with the majority of today’s contracts calling for binding arbitration to resolve disputes. With no government formulas or controls or any government involvement at all , and today’s universally positive court rulings upholding the Arbitration process, it is difficult to understand how any thorough legal review of today’s Arbitration based bill (Jobs Survival Act) could be seen as having constitutional issues causing it to not stand up to likely court challenges. The legal history proves irrefutably that 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.
Why was a public hearing held on the Jobs Survival Act if the city did not have Home Rule? Why were 32 Council Members allowed to sponsor a bill that was unconstitutional and not under Home Rule?
VII. June 29, 2009 A public hearing of Jobs Survival Act before Small Business Committee: No testimony was given which challenged the legality of the Jobs Survival Act or Home Rule . Neither the powerful real estate lobby nor the Speaker’s legal gave testimony or submitted written arguments challenging the legality of the Jobs Survival Act. The only testimony given at the hearing on the constitutionality of the Jobs Survival Act was given by Attorney Sherri Donovan who testified at the Oct, 1988 hearing on the original version of the bill. Ms. Donovan testified to the Committee that the Jobs Survival Act was fully constitutional and the city had Home Rule to enact it . None of Ms. Donovan’s testimony was disputed by either the powerful REBNY attorneys or Speakers legal department.
VIII. In Oct 2009, prior to a vote by the Small Business Committee, for the first time in 30 years the legality of the Jobs Survival Act was challenged by the Speaker’s Office, and this claim was not made in public nor was any written legal documentation substantiating the claim made public. The claim was made that the Jobs Survival Act had legal issues and would not stand up to a court challenge. This claim was viewed by the bill’s advocates as nothing more than a desperate disingenuous “legal roadblock” to stop a bill certain to pass a vote.
IX. Oct –Nov 2009 Jobs Survival Act lead counsel Sherri Donovan, with 30 years experience defending the legality of the bill wrote a detailed Memorandum of Law in support of the legality of the bill and met with Council’s Legal to defend her case law review of the bill. see D attorney Donovan’s legal reviews
Fact: At no time after stopping a vote on the Jobs Survival Act did anyone from the Council’s legal or legislative divisions offer to recommend changes/amendments 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 future prime sponsors. In fact, when then prime sponsor CM Chin in a 2012 letter to Robert Newman , Director of Legislative Division , asked “I am hoping for some assistance in looking at the bill (Jobs Survival Act )…... Specifically, 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.” , her request was ignored with No reply from Speaker’s office.
(See attachment E Chin Letter to Newman page three)
X. Nov 9, 2009 A memo was sent to Jobs Survival Act Prime sponsor CM Robert Jackson from Council’s legislative and Corporate Counsel rejecting Sherri Donovan’s arguments on the legality of the bill and highlighting a single case in CA court where a similar commercial rent regulation law was overturned (Ross case). This was the first and only written legal statement made in 7 years substantiating their claims against the Jobs Survival Act. (F Memo )
Fact: What is significant about this memo is the bottom statement which goes to length to highlight the fact the Speaker’s Legislative and Legal are not challenging Home Rule for the Jobs Survival Act:
“We are not questioning here that the City’s ability to legislate in the area of commercial rent”
XI. Nov 25, 2009 CM Robert Jackson as prime sponsor of the Jobs Survival Act , along with seven council members filed a Motion to Discharge the Jobs Survival Act out of committee and voted on by the full council. A hearing on this discharge was set for Dec. 2009 at a council stated meeting. The Speaker’s office aggressively contacted every council members to persuade them NOT to support the Motion to Discharge the bill and convinced several key members of the Black, Asian and Latino Caucus to meet with and convince CM Jackson to withdraw his Motion to Discharge. In the end, they succeeded and Jackson withdrew the motion prior to the scheduled hearing before the full council.
Fact: If the City did not have Home Rule on the Jobs Survival Act , then this fact alone would have prevented a Motion to Discharge in the first place!! There would have been no need for the Speaker’s office to assertively lobby the council members to not support the Motion. In fact, the Speaker’s staff did not mention either Home Rule or legal issues as an argument to persuade members to not support a Motion to Discharge the bill.
XII Oct 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 the Bronx Presidents’ Office to hold a Legal Review Forum of the Jobs Survival Act in the Courthouse in the Bronx. Bronx President Diaz Jr. agreed and assigned his economic director to organize the review. Attachment (G PR of Review, Invite to Speaker’s Office )
Ruben Diaz Jr. John DeSio
Bronx Borough President Communications Director
Contact: John DeSio 718-590-3543/ Liseth Perez Almeida 718-590-2509
November 5, 2010
BOROUGH PRESIDENT DIAZ TO HOST FORUM ON
THE SMALL BUSINESS SURVIVAL ACT
Bronx Borough President Ruben Diaz Jr. and the Bronx Overall Economic Development Corporation (BOEDC) will host 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.
Fact: The Speaker’s Office was sent a special invitation to attend this Legal Review Forum , and to publicly present their legal arguments supporting their claim against the bill’s legality. Again, they refused to make any public statement or present any legal facts , even in writing, substantiating their legal challenges to the Jobs Survival Act.
XIII. 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 ( the focus of the legal challenge by Speaker’s legal) . 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, supporting Jobs Survival Act and City’s authority to enact legislation, and that the Ross vs Ca. case which the Speaker’s office based their claim on was not relevant to the Jobs Survival Act. ( H Final Report )
In Dec. 2010 , The Legal Review Panel released a Final Report: Findings of Legal Review Panel on the
Small Business Survival Act,
NYC Council Bill Int. 0154-2010
"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."
The Speaker’s legal and legislative offices as well as REBNY’s attorneys did not refute the findings of the Legal Review Panel Report. The Speaker’s Offices’ “legal roadblock”, even after being exposed as having no legal merit and should have never been made, would still be used to stop any progress of the Jobs Survival Act for the next 6 years.
IX. . Strongest arguments supporting the legality of the Jobs Survival Act are made by the actions of REBNY
Whenever the issue of the Jobs Survival Act comes up, the response of the real estate lobby is always the same; denial, misinformation without support and reliance upon bureaucrats at City Hall to support their position.
Real Estate Lobby relies upon friendly bureaucrats at City Hall to privately make the legal claims against the Jobs Survival Act and give credibility to their vague claims, while never providing legal proof to support them.
March 29, 2015 , Villager interview with editor Lincoln Anderson:
Steven Spinola, president of the Real Estate Board of New York, blasted the bill, saying that it’s not even clear if it can be legally implemented. Yes, I’m very familiar with it,” Spinola, head of REBNY since 1986, said of the S.B.J.S.A.. 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.” 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 don’t think, we’re not sure, it’s not even clear …." Purposeful legal double talk
Yet, with unlimited resources, the most powerful lobby in NYC has never produced a single case law decision that supports their vague legal challenges.
Nor have they sited legal references to the many court decisions on regulation of commercial rents by NYS highest court of Appeals, and not issued a written legal briefs rebuttal to the legal memorandum of support for Arbitration bill’s by Sherri Donovan, attorney for the Arbitration bill.
Why? Because when NYS Commercial Rent Control law was in effect from 1943 to 1963 it was immediately challenged in court as being unconstitutional. They lost that challenge when the court upheld the constitutionality of the law ( Twentieth Century Assoc vs Waldman, 294 NY. 571 1945) . 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 numerous times in the highest court in NYS , the Court of Appeals. This is likely a record for a bill being challenged in court and the real estate lobby losing every time.
Therefore, with a long legal history of losing every court ruling, it is not surprising when the Real Estate lobby head Steven Spinola was asked by Villager editor “ what about the fact that the city actually had commercial rent control from 1945 to 1963? Spinola said, I’m not aware of 1945 to 1963,” he shrugged. “I don’t know what they’re talking about.”
Mr. Spinola and the real estate lobby’s friends at City Hall will not mention the legal history of commercial rent regulation in public because the Law regulating commercial rents in NYC was the most legally scrutinized legislation in NYC history. 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. The real estate lobby lost every case and therefore must draw attention away from the legal history of rent regulation legislature and instead rely upon making vague legal claims and directing all to their friends at City Hall to give credibility to these merit less claims in private.
Villager interview with editor Lincoln Anderson;
Steven Spinola, REBNY spokesperson, “We are absolutely convinced that the City Council, the mayor do not have the power to impose control on the leasing of properties”.
If Spinola was so convinced then why didn’t the real estate lobby testify at the June 29, 2009 hearing on the Jobs Survival Act and bring this “absolutely convincing legal proof” to the attention of then Chairman Yassky?
Why doesn’t the real estate lobby produce case law review and past government findings and submit to every council member hard case law review which substantiates that the City does not have Home Rule on this bill?
Why didn’t the real estate lobby send a team of attorney’s to give testimony at the Bronx Legal Review of the Jobs Survival Act which was open to all to give legal facts ?
Why didn’t the real estate lobby’s attorneys present a rebuttal to the findings of this Legal Review Panel?
REBNY has the lawyers and resources but lacks the legal rulings on both the legality of Jobs Survival Act and Home Rule, and can’t produce a single legal ruling to support their claims.
REBNY has lost in every public forum: courts and hearings , therefore must rely upon friends at City Hall
in private conversations to sell their misinformation concerning the Jobs Survival Act.
REBNY/Quinn’s bogus legal roadblock, having been exposed as without any legal merit has become a lame excuse for REBNY’s cronies to hide behind any longer. The newest excuse for some lawmakers to “do nothing” and " continue rigging the system" to deny an honest debate on the Small Business Jobs Survival Act is “The City does not have Home Rule”, therefore, send the responsibility for the future of our small businesses and jobs to corrupt Albany.
Fact: This issue was fully resolved 30 years ago, and only came up now because of the weakness of the excuse that the Jobs Survival Act has “legal issues”. (see above legal facts on history of Jobs Survival Act) It is the last desperate “talking points” of REBNY to stop a vote on Jobs Survival Act. REBNY’s former leader Steven Spinola said, “ The only way the bill could be approved is if Albany were to declare a “state of emergency” regarding small businesses.” Another BIG LIE which has been proven without merit long ago. One that New York City lawmakers never believed (see below)
Exhibit I :
After the vote on the original Small Business Jobs Survival Act, Speaker’s statement with no reference to legal issues or Home Rule. Instead, focus upon other issues like defining the bill as “Commercial Rent Control” and believing it “ open the city to serious financial liability “.
Letter from Speaker Vallone to a small business owner. Speaker committing to introducing his own legislation to address the high rent problem. If City did not have Home Rule why would the Speaker be preparing legislation?
Fact: Former Mayor Koch in fact introduced his own legislation the “Bodega Bill” which regulated commercial leases for smaller grocery stores, but was withdrawn after just one public hearing in the City Council due to opposition. Even the lawmakers most vocally opposed to the Jobs Survival Act, knew the city had Home Rule and introduced substitute legislation to take its place.
Re-submission of Small Business Jobs Survival Act in 2008. One of many reversions of the original Arbitration Bill re-introduced over the years. All approved by Corporate Counsel as proof of City having Home Rule. If the City did not have Home Rule , anyone of these Arbiration bills could have been stopped from being approved on that ground alone. NONE were