Cuomo’s Refusal To Cancel Rent Hurts Small Businesses And Small Landlords

For most people living in New York City, rent is the biggest recurring expense. Due to the financial impact of COVID-19, people can’t pay rent and are calling on the city to #CancelRent. A bill has been sitting in the State Senate that would cancel rent for individuals and small businesses for three months, yet Governor Andrew Cuomo refuses to budge.

The city has already lost $9 billion in tax revenue, and the Independent Budget Office predicted in May commercial rent tax revenue would decrease by 3.5% through 2020. Big commercial tenants, such as WeWork, GAP, and Bed Bath & Beyond have reportedly missed rent payments. Almost half of the large retail tenants across the country didn’t pay rent in May, according to a report by Datex Property Solutions. The impact on small businesses, who don’t have the same access to capital, liquidity, and negotiating power, has been far worse.

The Commercial Lease Assistance Program, a city-funded initiative providing free legal assistance to small businesses negotiating their lease agreements, has seen ten times the number of requests for help since mid-March and yet the city plans to gut the program.

If a commercial tenant couldn’t pay rent, had to negotiate rent payments, or decided to go on a rent strike, the impact would be distributed between small, medium and large landlords, according to a sample data analysis conducted for Forbes by Sam Raby, Data Lead and Engineer at Justfix.nyc, and Lucy Block, Research and Policy Associate at The Association for Neighborhood and Housing Development (ANHD).  

Raby and Block put together an analysis of landlords renting 92,095 commercial spaces in New York City, using 2018 public data from the Department of City Planning. They found that 14% landlords own only one building, making them a “mom and pop landlord;” 18% of landlords own between two and five buildings; 22% of landlords own between six and twenty buildings; 19% of landlords own between 21 and 60 buildings and 26% of landlords own more than 61 buildings.

The sample distribution illustrates the complex nature of the city’s real estate ecosystem. When a small business is unable to pay rent, it is also small landlords that suffer, not just large landlords. The need for rent relief extends to the landlords as well. The state plan to cancel rent also incorporates mortgage relief for landlords that would face “financial hardship as a result of being deprived rent payments.”

The Department of City Planning counted 453,747 commercial units in 2019, of which over 230,000 are small businesses. Thus, the sample analysis reflects only a fraction of the commercial real estate market. Raby and Block were able to filter public data from the Department of Housing Preservation and Development, which requires landlords to report the units of buildings they don’t live in, or that have more than two residential units. Raby and Block were able to filter commercial units in this dataset, and to match the units with common landlords.

Ithaca, NY has voted to cancel rent for the months of April, May, and June early this month and is waiting for Cuomo to use his executive power to approve their request. During the pandemic, Cuomo has barred local governments from issuing executive orders without first getting approval from the State Department of Health.

“We passed this legislation over three weeks ago, and the state still has not responded,” Ithaca Tenants Union co-founder Liel Sterling told NBC Chicago in a video posted yesterday.

Housing courts reopened last week in New York State, yet the eviction moratorium due to COVID-19 has been extended until August 20. Housing justice advocates and organizers have been vocal about the fact that Cuomo is just postponing the problem.

“He’s ignoring the real issue—that tenants can’t pay—and just postponing the date of when there will be mass evictions,” Housing Justice For All organizer Cea Weaver told NY Curbed.