Last week, lawmakers rallied to support the Small Business Recovery Lease Act, a state bill that they believe would provide relief for small businesses by providing a tax incentive to landlords who enter into “recovery leases.” The legislation would also address past-due rent and cap future rent increases.
It would also authorize the city to add any additional incentives or restrictions to the program.
Commercial tenants who are restructuring their current leases, and those entering new leases for vacant spaces, would be eligible for the initiative.
“This legislation is not a panacea and we know that much more needs to be done to assist small business owners and property owners,” said State Senator Brian Kavanagh of Brooklyn, a sponsor of the bill. “But I believe that recovery leases will provide our local businesses with one significant path to relief and offer them much more long-term security.”
Councilman Brad Lander said many small businesses were already facing challenges of rent affordability even before the pandemic, but now they’re facing giant arrears and anxiety about the future.
“With federal relief uncertain, we cannot wait to take action to help small businesses and others get through this crisis,” he said. “Recovery leases should be one tool in our toolbox to help small businesses lock in rents at stable, lower rates for long-term affordability that will be essential for the rebuilding and recovery yet to come.”
In July, 83 percent of restaurants were unable to pay their full rent, according to a survey by the New York Hospitality Alliance. The Brooklyn Chamber of Commerce, meanwhile, reported that more than half of businesses it surveyed are worried about staying open.
Just 20 percent of them have been able to negotiate some form of rent relief with their landlord, the chamber said.
“Real rent relief is needed if we are going to save our small business ecosystem,” said Randy Peers, executive director of the Brooklyn Chamber. “Recovery leases represent a creative solution to address the issue.”
Megan Rickerson opened Someday Bar in Downtown Brooklyn in July 2019. She said just when the bar was starting to “pick up steam,” the pandemic hit, forcing the watering hole to close. Rickerson furloughed all her staff and turned to to-go food and drinks.
“As a new business, I didn’t have years of income behind me to support my small bar and restaurant during a full closure,” she said.
Rickerson said her landlord is a “decent man” who tries to help where he can, but he isn’t receiving a mortgage or tax break, and therefore couldn’t give her business a rent break either.
“I am still required to pay my pre-COVID rent from my current COVID income and capacity,” she said. “We need rent relief to survive.”
Nate Shaw, owner and founder of the Brooklyn Music Factory in Gowanus, said he closed the studios’ doors on March 16 and still doesn’t know when he will reopen.
Normally, he said, roughly 570 kids would have joined the factory for summer camp, which would have employed 30 teachers and staff. The camp was cancelled, and his revenue for the third quarter was down 68 percent.
“With that amount of lost revenue, and no idea when we will be able to reopen and rebuild, we simply don’t have the money for rent,” Shaw said.
Ronna Welsh, owner of Purple Kale Kitchenworks in Sunset Park, was due to sign a new lease in April for the space her business has occupied for the past four years. Her landlords instead offered her a month-to-month lease.
Welsh said while she appreciated the option to stay without having to commit to a lengthy lease, she did not get a pause or reduction in her rent.
“Not only can I not afford the expense of moving at this time, I cannot leave behind the investment I made in the space itself,” she said. “Right now, my landlords are taking money straight from my pocket, and there is not enough left to pay much longer.
“At some point,” Welsh added, “I won’t even have enough money left to move.”