Small Business Committee Hearing Oct 22, 2018

On the Small Business Jobs Survival Act

CHAIRPERSON GJONAJ: Thank you.

LENA AFRIDI: Good afternoon. Thank you, Chair Gjonaj and Speaker Johnson and members of the Committee on Small Business. My name is Lena Afridi, and I’m the Director of Economic Development Policy at the Association for Neighborhood and Housing Development. ANHD is a membership organization of New York City Neighborhood-based community groups. We have over 100 members throughout the five boroughs. Our mission is to ensure flourishing neighborhoods and decent affordable housing for all New Yorkers. One aspect of that work is to support and protect New York City’s small businesses from the threat of displacement with particular focus on owner-operated low-income minority and immigrant-run businesses. ANHD believes that new solutions and tools are needed to fight the rampant displacement of small businesses. However, we do not support the Small Business Job Survival Act as it is currently written, because we believe that legislation as important as this and which will have a major impact on small businesses on our city should be fully understood and evaluated to ensure that it will have the correct impact. What follows is a partial list of some questions that we believe should be fully considered before any action is taken. So, the bill functions by creating a complex system of individually negotiated mandatory arbitration between the commercial tenant and the landlord at each rent renewal with potential to create enough delays, pitfalls, and expense for both the commercial tenant and the landlords if periods of vacancy could be extended. Commercial rental markets in different parts of our city face different circumstances and any solution to the problem of commercial stability should take those with a complex schedule of deadlines for notices and actions laid out. This process has the differences into account. The impact on the luxury rental markets of much of Manhattan for example would be very different from the impact on genuinely struggling commercial rental markets in many areas of the outer boroughs. The landlords and the worst examples of aggressive rent increases fueled by a desire to take advantage of rising rents in gentrifying neighborhoods deserve sympathy. However, it’s important not to create a mechanism that does damage the health and viability of the commercial rental market of other neighborhoods as well. I’m going to speak a little bit also about the unintended consequences on some types of vulnerable small businesses. The central provision of the bill binding mediation and arbitration could risk making immigrant-owned small businesses even more vulnerable to the threat of displacement. Without a structure to ensure that the process is equitable, including an explicit Know Your Rights campaign in several languages and city funding for arbitration and mediation, this process could create even more arduous red tape for immigrant small businesses and tip the scales in favor of landlords who can afford the cost of the process and have a savvier

understanding of what it entails. In addition, the bill could exacerbate incentives for the landlord that increase the threat of tenant harassment, a problem to which immigrant small business owners are especially vulnerable when landlords could also be spurred to choose chain stores over mom and pop businesses. Rather than filling a property with a small business with the risk of repeated arbitration, landlords could be made more willing to find a chain that will simply pay rent increases without challenge. In neighborhoods with high vacancies, this could mean that empty spaces will be filled, but more likely with chain stores. This would be a particular risk in immigrant-dense neighborhoods already susceptible to displacement pressures caused by gentrification such as Bushwick and Jackson Heights. Any bill that takes on this issues should keep in mind the material realities of immigrants. We’re committed to finding solutions to keeping New York small businesses thriving. While we deeply believe that immediate measures must be taken to curb the displacement of New York small businesses, more information is needed in order to better understand the impact of SBJSA and to prevent any unintended consequences. Thank you. 

LENA AFRIDI: So, I would like to make a couple of suggestions that my panelists might not actually agree with, my fellow panelists. So, this bill is not commercial rent control, right? So, why aren’t we talking about commercial rent control? The bill that is currently in place right now or that’s being suggested right now is-- it might help in the far west side, but it might have completely deleterious consequences in Bushwick, in Jackson Heights, and is it worth it for putting immigrant small business owners on a line for a select few minority of small business owners. Any solution that we come up with can’t put immigrant small business owners, communities of color, low-wealth communities at risk for the sake of, you know, just passing something. Whatever we pass has to be equitable. It has to be fair. It has to have real steady consequences that are going to have an impact over a long period of time. So, this bill, you know, parts of it might work, but across the board, it’s not going to work for everybody. That’s something that we need to figure out. We need to work together to figure that part out.

SPEAKER JOHNSON: Just before Commissioner Ortiz, before you speak, Ms. Afridi, could you just expound a little bit more on-- and I know you testified to it, but I think it’s actually a very important thing-- more than 40 percent of people living New York City right now were not born in the United States. They were born in another country. That is the great strength of our city is our diversity, and to drill down a little bit more on your nuanced and specific concerns on how this would, you believe, affect small businesses in the neighborhoods that you discussed, immigrant-owned where English may not be their first language, can you just talk a little bit more about that. I think it’s important to understand this.

 

LENA AFRIDI: Yeah, sure. So, it’s less about the way that the bill is written and more about the process. I will say that ANHD worked on the Commercial Tenant Anti-harassment legislation that was mentioned earlier. We work with UJC on NTDP on the CLA program. However, that program was, you know, it was not-- we didn’t get enough city funding in order to make it actually useful across the board, and if we don’t have that included in the process with SBJSA we leave out a large, large number people who are particularly vulnerable at this time. Immigrant small businesses face rampant harassment. You know, what we see on the residential side we see on the small business side. We have an example of a woman in Bushwick named Esmeralda who own a restaurant. You know, the landlord came, they turned off her water during her restaurant rush. They turned off her electricity. In some cases we see people calling ICE on their tenants. That’s a conversation that’s not addressed, right? That’s not addressed in this piece of legislation. It’s a conversation that’s not come up when we talk about small businesses in general. And we talk about immigrant small businesses, there’s little that’s been done to provide real translation, little that’s been done to provide real legal services. We need to expand CLA so people--

 

SPEAKER JOHNSON: [interposing] No, but tell me why--

LENA AFRIDI: [interposing] I’m sorry.

SPEAKER JOHNSON: you do not think SBJSA addresses these concerns? What changes would you seek to the bill to address the concerns that you’re talking about?

 

LENA AFRIDI: Yeah, I would say, you know, add something in there to make sure that people are getting the resources that they need, and without those resources, let’s think about who benefits first. In the meantime, in the gap when we’re waiting for those resource to get to immigrant businesses, they’re going to say, “I can’t navigate this process. I don’t understand this red tape. I’m not going to sit down with my landlord who has threatened to call ICE on me. I’m never going to sit down with my landlords who has ever threatened to call ICE on me. And so I would rather just shut down rather than, you know, wait for the services to come to me.” And so people who have resources can use this bill to their advantage or this piece of legislation to their advantage, but those who don’t get left behind.

 

SPEAKER JOHNSON: Got it. So, you’re saying the-- I mean, we, we put together here at the Council just a flow chart to understand what the bill says as currently written, and you know, the top is the commercial lease ends in 180 days, and then the four boxes below: landlord agrees to renew the lease at agreed rate; the landlord agrees to renew lease but no agreement on price; landlord does not provide notice of regarding renewal; and landlord refuses to renew lease, provides written reasons, and then kind of the flow chart of what happens in each one of those. And I think people have talked earlier and used language around the process being cumbersome in some ways and being intensive where not ever small business may be equipped to be able to handle a process designed like this. Is that what you’re saying, that some of these immigrant small businesses may have a harder time or smaller businesses that may not even have a lease may have a harder time navigating a process like this?

LENA AFRIDI: Correct, yeah, that’s what I’m saying, and that’s something that we’ve seen, you know, working with small businesses across the board in all five boroughs of the city, immigrant small businesses in particular. We talk about red tape being an issue. Red tape is an issue for everybody, but it’s especially an issue for people who don’t speak English, who don’t have a lease, who are again facing rampant tenant harassment. You know, I’m not saying that the bill across the board doesn’t work, but there are some serious considerations to be taken in order to make sure that it’s applied equitably.