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Commercial Rent Control Testimony

Today, the Partnership for New York City submitted the following testimony to the New York City Council Committee on Small Businesses in opposition to commercial rent control.

The Partnership for New York City represents the city’s business leaders and largest private sector employers who seek to maintain the city’s position as the preeminent global center of commerce, innovation and economic opportunity.

The Partnership opposes Int. 737-A, which would create a new set of requirements around commercial lease renewals. We suggest that the Committee undertake more careful research into the causes of storefront vacancies and escalating commercial rents. Laws should not be enacted based on anecdotal evidence or emotional appeals, particularly when their passage could disrupt the city’s main source of tax revenue.

There is no citywide database that establishes the number, size and type of commercial properties in the city or the tenants and owner-occupants of that space. Without that data, it is impossible to determine whether this legislation, if enacted, would address the true causes of commercial vacancies and business closures in multiple local markets across the five boroughs. It is also impossible to calculate the economic and fiscal impact that Proposed Int. 737-A would have on the city or its neighborhoods.

Ironically, there have been many actions by state and local government over the past few years that have contributed to the challenges facing small businesses in our neighborhood commercial corridors. For example, small retail and service businesses have been hardest hit by the increase in the minimum wage, new mandatory benefits such as paid sick leave, and a general increase in compliance costs and litigation exposure.  Rising rents are only one factor that the Council should be considering if they want to promote small business survival.

We also object to Proposed Int. 737-A because it is an overly broad and complicated piece of legislation. Despite its stated intent to “help small businesses,” the legislation would substantially change the process for commercial lease renewals for all businesses, including large businesses and upper-story office space. It would mandate a poorly conceived arbitration process and would add substantial time and cost to the commercial leasing process.

We all sympathize with the Mom & Pop stores that are struggling to survive in the face of rising costs, changing consumer demands, and increasing competition from online retailers and national brand stores. But sympathy is not sufficient justification for city government to make a major change in public policy without much more research and consideration than this bill has received.

Thank you.