Brooklyn City Council Member Talks About Details of Commercial Rent Bill
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Landlords have rejected the possibility of a commercial rent regulation board, while some small businesses have lined up to support them. Board member Steve Levin, who introduced the bill to create the board two years ago, is trying to get it passed before his term ends in two months. PoliticsNY spoke with the Council member to get a feel for the real purpose of the bill.
After a hearing on Friday, September 17, Levin told PoliticsNY he still has hope.
âIt’s nothing but a level playing field when their lease expires,â Levin said.
The bill creates a seven members appointed board of directors of commercial rents, similar to the Residential Rent Guidelines Board, and it would establish guidelines for rent adjustments in commercial spaces each year.
Homeowners and tenants have suffered during the pandemic, on the commercial and rental side. Job closures have removed the ability for tenants to pay rent, and eviction moratoria have barred landlords from enforcing rent payments.
One supporter, Natasha Amott, closed her business in Williamsburg due to a rent increase, around the same time Levin created the bill. Even though she sees rents go down during the pandemic, she knows it’s not something to count on.
That’s what Levin says he’s trying to address: the uncertainty, lack of flexibility and foresight that companies can have when their lease is up.
âLandlords often offer a reduced rent and then increase as the business grows and makes capital improvements. They don’t want this to go away, âLevin said.
âCommercial tenants have very little weight in any negotiation,â he continued.
Amott said its main competitor are national and multinational companies, which are willing to pay higher rent. Small businesses have different considerations. âIf I had taken this 44% rent increase, it would put a cap on my staff salaries,â Amott told Politics NY.
She added that the prices for her products at Whisk, her housewares store, would be higher. âNone of these scenarios made me feel very good,â she said.
The council Levin wants to create would create regulations on how much rent can increase each year in commercial spaces.
Here’s how the residential guidelines process works now, for an overview of how the business process might fare:
The Rent Guidelines Board studies factors such as current tax rates, operating costs, availability of financing and overall housing supply and vacancy rates. Then they hold meetings, hearings and voting meetings where they listen to comments from the public and industry experts. Then they vote on the rent guidelines for the leases.
âIt doesn’t guarantee them the right to renew,â Levin says.
There are things that work in the current framework, says Levin. âIt’s a dynamic marketâ¦ They don’t want it to go away. “
The New York Real Estate Board spoke out in opposition, tell the real deal that it would harm homeowners after they have already suffered from the pandemic.
As long as the vacancy rate is high, homeowners and small business owners will suffer. Office space and retail vacancy specifically peaked in 30 years last May. Whether or not this trend continues depends on negotiations between the two.