SBC - The Small Business Congress
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Media Advisory Contact: Steven Barrison
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Jan. 25, 2017
City’s leading small business advocate gives warning
“Don’t panic in crisis and call to bring back former Mayor LaGuardia’s ‘Commercial Rent Control Law”
to save Mom & Pop.
City’s leading small business authority, Sung Soo Kim,
warns, “Today's commercial rental market is different from 50 years ago. Commercial Rent Control Law would be the end of
small businesses within a decade!”
The LaGuardia law without another
LaGuardia or honest lawmakers to oversee it would be just another
REBNY Trojan Horse and would mean extinction for mom and pop!
Dateline Jan. 25, 2017 NYC:
It is clear from the actions of City Hall leadership, especially Mayor de Blasio, Speaker Mark-Viverito and Public Advocate James, their records of years of remaining silent and doing nothing as the crisis faced by our city’s struggling small business owners grew worse, they have no intention to find a real solution to save our businesses. They abandoned their progressive values in favor of big real estates’ campaign money, political influence, and for their own political ambitions. Even as out of control sky high rents forced an estimated *1,000-1,200 businesses per month to close citywide, they used their offices to embrace the same actions of former Mayor Bloomberg and Speaker Quinn in “rigging the system” to keep the status quo protecting the windfall profits of big real estate.
Betrayed by self proclaimed progressive lawmakers who refuse to even hold a public hearing and an honest debate on the Small Business Jobs Survival Act, a law giving rights to renewal leases and rights to negotiate fair lease terms to all commercial tenants when their leases expire, it is not surprising that some community advocates began calling for the return of Commercial Rent Control law (LaGuardia bill) to save our small businesses. After all, in the past when the city’s small businesses’ future were threatened by sky high rent increases caused by speculators cashing in on the failed free market, it was the city’s greatest Mayor, Fiorello LaGuardia who took action to save them.** see bottom for details
This legislation could have been called Commercial Speculators’ Control law because that was the intent of the law. The law was well written with the goals of getting the speculators out of the marketplace, stop the evictions of businesses caused by high rents, level the playing field for tenants by encouraging bargaining in good faith in the lease renewal process, and be fair to the majority of landlords by assuring them a reasonable return.
With Commercial Rent Control’s almost two decades of proven success in protecting the businesses, stopping the evictions, and restoring order in the free rental market, why would any small business advocate not support bringing it back to end the crisis faced by today’s businesses?
Commercial Rent Control would not work with today’s corrupt politicians and REBNY’s control of City Hall.
The city’s leading authority of small businesses, Sung Soo Kim*** has issued a warning against fighting to bring back Commercial Rent Control legislation, “it offers only a false hope and would not save a single small business”. This rejection of bringing back the LaGuardia law to save our businesses, is the second time Kim and the majority of the city’s business advocates discarded the law, because it would not work with today’s corrupt politicians, REBNY’s control of City Hall, and the world’s largest commercial real estate bubble spreading of the crisis to every borough.
The primary reasons for rejecting the LaGuardia law thirty year’s ago that lead to the creation of the original Small Business Jobs Survival Act, are even more compelling today.
Kim, “ Mayor LaGuardia and Governor Dewey, along with most lawmakers, greatly respected and appreciated the contributions of our city’s business owners to our economy and to job creation. On the other hand, they dislikes speculators who wrecked havoc in the market place and caused inflation and loss of jobs. Therefore, they were committed to stopping the closing of businesses and save NYer’s jobs caused by these speculators.
The lawmakers of the mid 1980’s, lead by former Mayor Koch and Speaker Vallone, who would oversee the reinstatement of the LaGuardia law, held the exact opposite view on small businesses held by Mayor LaGuardia. They in fact encouraged real estate speculation in NYC to drive up real estate property taxes to bring in more revenue, which would allow the city’s corrupt political machines to begin hiring again. Proof of how unfairly City Hall lawmakers would have treated our city’s small businesses if the LaGuardia bill was reinstated is show in the Small Business Retail Study Commission. This commission was formed by Mayor Koch and Speaker Vallone to study the impact of high rents on retail businesses. The small business advocates called it the ‘Limousine Commission’ because most members, handpicked by Vallone, Koch, and REBNY arrived at the meetings in limousines. Consisting of presidents of real estate firms, Brooklyn Union Gas, savings banks, Wall St. firms, Macy’s and Chase Manhattan bank, etc., the commission took a year and half to reach its conclusion, namely: ‘Government should not interfere in the free marketplace.’ The Committee’s majority recommendations were called the “Landlords bills” by the advocates, because they were written by REBNY and kept the status quo. This sham commission had only two goals, stop any vote on then Council member Ruth Messingers’ Binding Arbitration Bill (original version of today’s Jobs Survival Act), and keep the status quo.
Is it fair to compare today’s progressive leadership with the actions of the past corrupt political machines’ and REBNY’s influence over Koch, Vallone, and City Hall? Kim, “disregard the political rhetoric, today’s government is more controlled by REBNY than ever before.” In the past the council always had some strong independent progressives, lead by Council members like Ruth Messinger, Ronnie Eldridge, Guillermo Linares, Carolyn Maloney, Carol Greitzer, Miriam Friedlander, Sal Albanese, and others who had the courage and political will to stand up to the Mayor, Speaker and REBNY. As a result of today’s huge campaign contributions, REBNY has bought the loyalty of the majority of City Hall lawmakers, even the most progressive. In the long thirty year debate on legislation to save small businesses, only once did a Mayor and Speaker refuse to hold a public hearing on the Small Business Jobs Survival Act. The refusal to hold an honest debate on finding a real solution to save our businesses occurred under the self proclaimed progressive administration of Mayor de Blasio and Speaker Mark-Viverito, who were both once proud sponsors of the bill as council members. Even as this crisis spreads to every boro, not a single council member is protesting the “do nothing” actions of our government.
Would today’s progressive lawmakers give the small business owners fair treatment and justice in their oversight of a Commercial Rent Control law? Kim, “ if the LaGuardia law was reinstated today it would not save a single business or job. What would happen is exactly what happened under Koch and Vallone, a hand picked special interest committee to oversee the law with the same two goals: stop any real solutions from ever passing and make policy which would keep the status quo protecting the windfall profits of big real estate. “
City Hall’s Circus Olay- Progressives flipping
The proof of this reality is the number of once proud progressive lawmakers who strongly supported the Jobs Survival Act and fought for a vote and passage. But once elected to higher positions, flipped and abandoned their progressive principles. REBNY’s cronies at City Hall did more flipping on the Jobs Survival Act than a Circus Olay performance. Eight former sponsors of the bill, lead by Queens Councilwoman Julissa Ferreras-Copeland, Brooklyn Councilman Brad Lander and Speaker Mark-Viverito, withdrew their names as sponsors and never mentioned the bill again. Several other lawmakers lead by Manhattan Councilman Dan Garodnick, Public Advocate James, and Brad Lander
hide behind REBNY created “alternative facts” about the legality of the bill as lame excuses for not supporting the Jobs Survival Act. REBNY’s top cronies in government , Mayor de Blasio, Councilman Cornegy and Manhattan President Brewer colluded with REBNY to continue Bloombergs’ and Quinn’s “rigging the system” to stop any vote on the Jobs Survival Act and to substitute REBNY created legislation which would keep the status quo. In fact, all the proposed substitutes for the Jobs Survival Act: zoning, tax incentives, and non binding mediation with one year extension to move were the recommendations of the Limousine Commission , created by REBNY, to keep the status quo and were all rejected by the city’s business community and all ethical lawmakers.
Kim, “ at least Koch and Vallone were honest in that they never pretended to be a friend of small businesses or their workers. Today’s lawmakers lack any integrity and sincerity for “doing the right thing” and passing progressive legislation to end this crisis.”
Mr. Kim stated several other reasons he would reject bringing back the LaGuardia Rent Control Law.
Kim, “ the original law from the beginning years was specific in which types of commercial businesses were protected. After a short time, the law quickly decontrolled commercial protections till, at the end fewer and fewer businesses were actually effected. It would likely surprise many proponents of the law to know the bill did not include any protections for the arts and NFP, and little protection at the end for most professional businesses. In the mid 80’s the leading voices calling for legislation to save them from sky high rents came from manufacturing, arts and professional businesses. That is why Mayor Koch and Speaker Vallone formed only a Small Business Retail Study Commission, to exclude the businesses most in need of legislation and the most active. All of the recommendations of the Limousine Commission excluded 70% of NYC commercial tenants from any rights or protections. For that reason the businesses wrote their own law, the original version of Jobs Survival Act, which gave rights to all commercial businesses, arts, and NFP organizations.
Unlimited number of lawmakers willing to LIE for REBNY !
Today, REBNY controlled lawmakers have brought back the exact REBNY failed game plan of thirty years ago. The same Retail Storefronts study with the same recommendations for (retail only) legislation to again stop a vote on the Jobs Survival Act and keep the status quo thru substitute legislation REBNY created which excludes 70% of the city’s commercial tenants. The LaGuardia law would allow REBNY to succeed in keeping the status quo because of the dramatic changes in the manipulated free-market and the major loopholes in the law.
NO RIGHT TO RENEWAL COMMERCIAL LEASES
If proponents of a return of the LaGuardia bill would be upset learning they were excluded from the bill , they would be even more distressed when told the bill did not give tenants the right to renew, no rights to determine the length of leases, would not stop landlords from entering into negotiations with new prospective tenants, allowed landlords to pass along their costs to the tenants and in short would not save a single business in today’s marketplace. In LaGuardia’s time, it was the “ exorbitant rent increases and getting the speculators out of the free market” that were the focus of stopping the closings of businesses. Therefore, the law centered around “rent control” and “eviction protections” to stop the closings of businesses. In the mid 80’s , the issue was still the “high rent increases” forcing the businesses to close. Today’s commercial tenants face multiple times more hardships when their leases expire caused by new property owners with different ethics and commitment to society. Also causing today’s crisis to survive for our businesses is our government’s failure to take real action to protect tenants from a manipulated, one sided and failed lease renewal process.
If enacted today, under the La Guardia law a tenant could receive a month to month lease, pay a rent increase established by REBNY’s pawns, pay the landlords property taxes, all the while the landlord was looking for a new “deep pocket” tenant to rent to. The business advocates rejected the LaGuardia law and wrote the Jobs Survival Act because they did not trust their government to protect their businesses and investment. Also, they did not trust the ideals and values of the new real estate property owners growing in NYC. The centerpiece of the Jobs Survival Act and any legislation to save the small business owners must be the “right to renewal of lease”, without this right all legislation will fail to stop the closing of businesses. The length of the leases must be adequate in length to assure businesses’ predictability of the future which is necessary to encourage growth and job creation. Huge windfall profits being made in the commercial real estate bubble, have produced
unscrupulous landlords extorting cash from mom and pop businesses, empty storefronts on main street where once thriving businesses were. Only legislation that focuses on stopping all these unhealthy conditions can save our businesses and the past successful LaGuardia law falls far short in stopping any major problem our small businesses face today when their leases expire.
**Mayor LaGuardia called upon Albany to establish a commission to study the problem of escalating high rents. After extensive investigation, the commission concluded : An emergency existed characterized by oppressive rents and rent increases unrelated to actual costs. The absence of freedom to contract due to the unequal bargaining power between landlord and tenant, resulting in an abundance of actual and threatened eviction proceedings.
The findings of the Joint Legislative Committee and the language of the law could apply word for word to describe today’s state of the commercial rental market in NYC and the lease renewal process. By substituting ( zealous real estate speculation and demand by big banks and chains for prime space) in place of (accelerated by war) as the cause of the rent increases, and substituting (closings of businesses and loss of jobs and job opportunity) in place of (obstruct the production and distribution of essential civilian commodities), for outcome of high rents, you have same failed lease renewal process.
1945 Commercial Rent Control Law
Unjust, unreasonable, and oppressive leases and agreements for the payment of rent in certain cities having been and being now exacted by landlords from tenants under stress of prevailing conditions, accelerated by war, a breakdown has taken place in normal processes of bargaining and freedom on contract has become an illusory concept, and whereby there have come into existence conditions threatening to obstruct the production and distribution of essential civilian commodities, and to cause inflation, and all of the foregoing situations and conditions being a threat to essential civilian activities, and to the public safety, health , and general welfare of the people of New York, it is hereby declared that a a public emergency exists without promise of relief so long as conditions brought about by war condition, and that action by legislature is imperative and will not permit of delay. It is herby found by the legislature that for the duration of such emergency, the establishment of a maximum rent for commercial space.. will curb the evils arising from such emergency and will accomplish the purposes here-by sought to be achieved.
With the full support of then Governor Dewey, swift action was taken with the passage of the Commercial Rent Control law. This law represented the way good government is suppose to work, doing solid unbiased research to acknowledge any problems and not be influenced by special interests, then create legislation that offers a real solution to the problem.
The law was suppose to last for one year but was so successful in stopping the evictions and getting the speculators out of the market that it was extended each year for 18 straight years until 1963. Furthermore, the law was immediately challenged in court by the real estate lobby where they lost when the court upheld the law as fully constitutional. For the next 18 years the real estate lobby challenged the law on every possible legal ground and lost every case, many in the states’ highest court of Appeals.
***
Sung Soo Kim, known as the “Godfather of Small Business”, is widely recognized as the city’s leading authority on small businesses. He founded the Korean American Small Business Service Center, the oldest small business service center in NYC; co-founding the New York City Small Business Congress and Coalition to Save New York City Small Businesses. He is responsible for creating the Small Business Bill of Rights given to elected officials since 1991. He was Chairman of the Mayor’s First Small Business Advisory Board, appointed by Mayors Dinkins and Giuliani. Over two decades he consulted on many of city’s small business regulations. He is the major reason Korean families invested in NYC to achieve their American Dream. Six days a week for over 30 years, Mr. Kim dealt with the problems facing small business owners.. In three decades he negotiated over 50,000 new and renewal commercial leases for his members. In thirty years he went to court to represent his members against warrants and eviction notices in over 4,000 cases. Before the Small Business Services agency and Giuliani’s big store Republican Trickle Down economic policies, the city’s economic policy for small businesses was most influenced by Mr. Kim as Chairman of the Mayor’s Small Business Advisory Committee. He refused to take a salary for his Chairmanship and later refused to take any government funding, grants, or establish a BID in Flushing Queens.