Sponsored by Senator Brian Kavanagh, Assemblymember Yuh-line Niou, and Councilmembers Brad Lander and Keith Powers, the proposal would help relieve small businesses from crushing rent bills by providing a property tax incentive to landlords who enter into recovery leases that address past-due rent and cap future rent increases.
The COVID-19 Small Business Recovery Lease Act is designed to entice commercial landlords to renegotiate leases and offer long-term, affordable rents to small business owners in an effort to revitalize the small business sector as it seeks to recover from the economic damage caused by COVID-19.
Rent is among the top issues for struggling small businesses after months of closures, and the New York Hospitality Alliance found in a recent survey that 83% of restaurants were unable to pay full rent in July.
The Brooklyn Chamber of Commerce reported that more than half of businesses surveyed are worried about staying open, and just 20% have been able to negotiate some form of rent relief with their landlord.
Nearly one third are continuing to report missing rent payments due to the pandemic, and according to a report by the Partnership for New York City, as many as 520,000 jobs have been lost from the small business sector.
Black-owned businesses are particularly hard hit.
Even before this crisis, skyrocketing commercial rents were already straining small businesses, with many forced to close and commercial storefronts all over the city vacant due to unaffordable rents. Now, after months of closures and reduced revenues, mounting rent bills are one of the major hurdles to keeping small businesses afloat.
“Vacant storefronts and rising commercial rents are not a new phenomenon in New York, but the public health and economic crises have greatly exacerbated the hardships facing our small businesses,” Kavanagh said. “When storefronts are vacated, that can have a ripple effect, with reduced foot traffic making it harder for other businesses to thrive, jeopardizing the whole neighborhood. At the same time, many property owners are having difficulty paying their property taxes and maintaining their buildings. We know that we will need multiple approaches to solve these interrelated crises, but we hope that recovery leases will provide our neighborhood businesses and property owners with one significant path to relief and offer them some much needed long-term security.”
The bill would allow the city of New York to create a program to provide relief to both small business owners and building owners impacted by the COVID-19 pandemic. The program would grant property tax abatements to building owners who enter into recovery leases that last at least 10 years and limit annual rent increases. Commercial tenants restructuring their current leases, or those entering into new leases for spaces left vacant for reasons other than eviction would be eligible to enter into a recovery lease.
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