Council Member Mark Gjonaj at the Joint Committee Hearing Image Credit: City Council
Committee hearing calls into question the amount of loans and protections for small businesses during COVID outbreak. On April 29, 2020, the City Council’s Committee on Small Business and Committee on Consumer Affairs and Business Licensing held a joint public hearing on the impact of COVID-19 on small businesses in New York City. Of the thirteen proposed bills, three were specifically labeled as part of a COVID-19 Relief Package. The bills address personal liability for commercial tenants, commercial tenant harassment and fees for sidewalk café licenses. Each bill is discussed in further detail below:
COVID-19 Relief Package Bills
Intro 1932, sponsored by Council Member Carlina Rivera, would prohibit the enforcement of personal liability provisions in commercial leases or rental agreements involving a COVID-19 impacted tenant, where the default or other trigger happened during the state of emergency. These personal guarantees can make a business or an individual, which may otherwise shield the owner from liability, answerable in a court of law for unpaid debts or damages. The Bill would take effect immediately. Speaker Johnson and Council Members Kallos, Van Bramer, Rosenthal, Chin, Ayala, Levin, Lander and Koslowitz also sponsored the bill.
Intro 1914, sponsored by Council Member Adrienne E. Adams, would make it a form of harassment to threaten commercial tenants based on their status as a COVID-19 impacted business. The harassment would be punishable by a civil penalty from $10,000 to $50,000. The bill was also sponsored by Speaker Johnson and Council Members Kallos, Van Bramer, Chin, Louis, Ayala, Levin, Lander and Koslowitz. The bill would take effect immediately upon enactment.
Intro 1916, sponsored by Council Member Andrew Cohen, requires the Department of Consumer Affairs to waive or refund all sidewalk café license fees due in the year 2020. Since the COVID-19 outbreak and the emergency executive order by Governor Cuomo requiring restaurants to stop providing dine-in services, the city’s restaurant industry is facing unprecedented financial losses and sidewalk cafes have essentially been rendered useless. The law would apply retroactively to January 1, 2020 and immediately take effect. The bill is also sponsored by Council Members Chin, Powers, Yeger, Louis, Ayala, Rivera, Lander and Koslowitz.
Public Hearing
The hearing, for the most part, centered around Council Members questioning Small Business Services Commissioner Gregg Bishop about the process and extents which his agency is providing aid to the city’s small business community. Many Council Members appeared to be upset that not nearly enough money had been given out in loans and grants, and the loans were not being processed in a timely manner. Reportedly only $49 million in loans and grants had been given out at the time of the hearing. Council Member Mark Gjonaj called this “less than crumbs for our small businesses,” adding, “the administration spends more on parades.”
In written statement, Bishop said his office “appreciate[s] Council’s leadership in increasing protections for commercial tenants at this trying time and look forward to discussion Intro 1914 and Intro 1932 together.” Bishop also called for help from the federal government. He stated “we will continue to identify these gaps in resources and advocate to the Federal government to ensure that future stimulus packages capture the unique needs of New York City’s small business economy.
Lorelei Salas, Commissioner of the Department of Consumer and Worker Protection also testified. Regarding Intro 1916, Salas stated, “circumstances resulting from COVID-19 are impacting the bottom lines of thousands of different types of businesses. DCWP, alone, licenses more than 75,000 businesses across over 50 business categories, and sidewalk cafés represent less than 1,000 of those businesses. As a general matter, DCWP will continue to explore ways that we can help businesses tied to the pendency of the State of Emergency.”
In a statement submitted to the Council, the Real Estate Board of New York (“REBNY”) had concerns about some parts of the COVID-19 Relief Package Bills. While REBNY recognized the importance of protecting tenants from harassment, they are concerned “how Intro 1914 will affect the conversations that are already happening between tenants and owners organically that could lead to solutions on rent relief.” REBNY also questioned “what constitutes a COVID-19 impacted business,” calling to question the clarity and lengths of the statute. Regarding the sidewalk café bill, Intro 1916, REBNY supported it, calling it “commonsense legislation.” Per Intro 1932, the personal liability bill, REBNY opposed the proposed law for legal and practical reasons. In REBNY’s view the legislation would unilaterally amend existing contracts and should instead “focus on solutions that would benefit everyone including collaborative support for business interruption support, rent relief and commercial mortgage forbearance from Congress.”
Background
According to the Committee Report, the City’s restaurant sales are expected to drop by a staggering 80 percent and real estate and retail sales are expected to decline by 20 percent. According to the New York State Restaurant Association, sales declined 79 percent and restaurants are expected to lose approximately $3.6 billion in sales revenue in just April alone. Also, according to the New York State Restaurant authority, just 51 percent of all restaurants were able to move their operations online, with unemployment rates of 80 percent in the sector.
The Committee Report also states there are approximately 1,400 sidewalk cafes in the City, representing an annual revenue of between $11 million to $12 million. Most restaurants pay in four installments but given the losses, some restaurants have not been able to cover any remaining payments. Since March 2020, the Department of Consumer and Worker Protections has not collected the sidewalk café consent fees.
Small Business Support
Small businesses in New York City may apply for federal and local aid. The federal Small Business Administration is providing the Paycheck Protection Program, the Economic Injury Disaster Loan and Advance, and the SBA Express Bridge Loans and Debt relief programs. The State currently has a 90-day moratorium on commercial and residential evictions but is not administering any specific fiscal relief programs for small businesses. Although, the State is offering pro bono legal advice for those applying for the federal aid programs.
The City is providing aid to small businesses through the Department for Small Business Services’ loan and grant programs, and the Department of Consumer and Worker Protections is reducing regulatory burdens and fees. To learn more or apply for Small Business Service’s grant and loan programs visit their portal here. To reach out to the Department of Consumer and Worker protections for guidance or help with licenses or fees, click here.
The committee also discussed a package of bills seeking to limit the charges and commissions by third party food delivery services. CityLand will be covering those bills in a future article. All bills were laid over by the Committee.
For New York City-specific COVID-19 updates, the City has established an information site with updates from all major administrative agencies. Agencies include the Department of Buildings, City Planning, Citywide Administrative Services, the Department of Finance and the Department of Transportation among others. You can find that page here.
By: Jason Rogovich (Jason Rogovich is the CityLaw Fellow and New York Law School Graduate, Class of 2019)