How to Solve the Small Business Crisis? Forget City Council Personalities, Reforming the Process is the Key

By MARNI HALASA

Currently, the issue of saving small businesses has emerged as the one of the most important local issues on the table, with the Democrats scrambling to organize town halls about a 'Vanishing New York,' City Hall rallies to save small businesses, and New York City Council members extending olive branches to groups (often at odds with them) to curry favor in the current City Council speaker's race.

The Halasa campaign team calculated that the committee to reëlect New York City Councilmember Corey Johnson (D-Chelsea) raised 70 per cent. of its donations from large donors, the second-highest such rate, exceeded only by Councilmember Robert Cornegy Jr., who raised 86 per cent. of all of his donations from large donors. Marni Halasa argues that New York City Councilmembers, who over-rely on campaign contributions from big money donors, particularly, from the real estate industry, may not be independent enough to stand up to real estate lobbyists. Large donations are campaign contributions made in amounts of $1,000 or more. The Halasa campaign team's calculations were confirmed by Progress Queens. Source : @CestVraiApp

The Halasa campaign team calculated that the committee to reëlect New York City Councilmember Corey Johnson (D-Chelsea) raised 70 per cent. of its donations from large donors, the second-highest such rate, exceeded only by Councilmember Robert Cornegy Jr., who raised 86 per cent. of all of his donations from large donors. Marni Halasa argues that New York City Councilmembers, who over-rely on campaign contributions from big money donors, particularly, from the real estate industry, may not be independent enough to stand up to real estate lobbyists. Large donations are campaign contributions made in amounts of $1,000 or more. The Halasa campaign team's calculations were confirmed by Progress Queens. Source : @CestVraiApp

Community activists have been hoping that the growing public outcry about the spree of closings of local businesses would put all City Council speaker candidates on notice and hold them accountable for their record. Legislation that could help save small businesses, the Small Business Jobs Survival Act (which expired on December 31st until submitted again), gives commercial tenants the right to renew a 10-year lease, renew with fair terms, and negotiate in the venue of arbitration, if necessary. Advocates for the SBJSA say that, currently, 1,000 businesses close with 8,000 jobs lost every month, leading the city into a small business crisis that has not improved under the administration of Mayor Bill de Blasio (D-New York City).

Insiders tell me my 2 month-long, small but fierce candidacy for City Council District 3 helped push the conversation. They say that the Dems closely watched my editorials that stated that, if elected, I would push for a motion to discharge, pressuring the bill's primary sponsor, Annabel Palma, and even the outgoing City Council speaker to bring the bill out of hibernation to a public hearing. Even Corey Johnson, my former opponent and the anticipated, next Council speaker, has adopted some of this language. But words ring hollow without real action. The City Council needs to mandate rights to small business owners, in short, fair lease negotiation and give it immediate attention.

But I'm not holding my breath.

Although it looked like things were headed in the right direction, with 6 of the 9 candidates for the speakership in support, that's not how things work. Before Wednesday's selection of the next City Council speaker, let’s look at who had been the two leading Council speaker candidates : Corey Johnson and Robert Cornegy, Jr. On one hand, Johnson has recently adopted language that appears to welcome the SBJSA, and, on the other, Cornegy has blocked, as a committee chair, any hearing or vote on the SBJSA. Although nominally better on SBJSA based on rhetoric, Johnson would have to betray all of his big money real estate donors in order to call for a hearing on the SBJSA and to demand its passage. The city’s developers and landlords view any regulation of rents as an unconstitutional taking of private property rights that they intend to fight, setting up an impossible no-win situation for Johnson, who is very reliant on real estate donors. By my campaign team’s calculations, 70% of Johnson’s nearly half a million campaign contributions were large donations of $1,000 or more.

More proof about how both of these leading Council speaker candidates were encumbered would involve looking at who they hired as their campaign consulting firms. The public is unaware of the powerful role that a campaign consulting firm can exert over a public official, because many campaign consulting firms also double as lobbying firms, including for the real estate industry. Johnson has hired Metropolitan Public Strategies and Stu Loeser.

Metropolitan represented a nonprofit lobbying group that fought for passage of mandatory inclusionary housing and the zoning for quality and affordability text amendments to New York City’s zoning laws, changes that many viewed as ushering in more gentrification. And Loeser represents a group of real estate developers seeking public funds to pay for a new streetcar service between the Brooklyn and Queens waterfronts, where there has been tremendous community opposition.

For his part, Cornegy was also problematic. In addition to receiving big money donations, 86% of his portfolio, he has nonetheless hired Mercury Public Affairs, a consulting firm that has, in the past, represented BFC Partners, a company that made a private purchase of the public assets of the New York City Housing Authority and is now embroiled in controversy over the development of the Bedford-Union Armory in Brooklyn, another project opposed by the community.

Believing that either Johnson or Cornegy would champion SBJSA for passage would involve having to believe that their big money donors and the lobbying firms that advise the City Council members would roll over and not fight back. But there are things that would help. To select a Council speaker, who would be independent enough to pass legislation demanded by the community, would require changing the process.

For example, if we prohibited campaign consulting firms from doubling as lobbying firms, we would eliminate the conflicts of interest inherent in the current speakership selection process. In addition, the talk about moving the enforcement of lobbying rules from the city clerk, a City Council appointee, to the Campaign Finance Board seems like a good move for more independent enforcement. But, as history has shown, the board often doesn’t enforce its own rules. A more effective approach would be to move lobbying rule enforcement to the city’s Department of Investigation.

Addressing the role of large donations in city elections is another important key to reform. Legally, the city cannot stop lobbyists from channeling other donors’ contributions directly to campaigns, an act known as bundling. But reformers could demand that the City Council and mayor prohibit bundling by passing bills that will eliminate public matching funds for bundled donations from anyone if their employer is doing business with the city.

In the 2017 election cycle, many Council speaker candidates made campaign donations to other City Council candidates in what was described in media reports as attempts to win votes for the Council speaker race. Johnson and other Council speaker candidates made donations to the campaign committees of other City Council members. In one media report, it was noted that Johnson made the maximum donation allowed to Debi Rose. (Other Council speaker candidates, who also made donations to Rose included Mark Levine, who likewise contributed the max the Rose, and Ydanis Rodriguez, who gave Rose $2,000.) The City Council member practice of donating money to each others' campaigns should also be prohibited. If city employees are banned from accepting gifts and tips, as well as free rides from subordinates without compensation, then the practice of financially ‘bribing’ a fellow colleague for a potential future vote should also be disallowed by the city’s Conflict of Interest Board, with penalty fines that are substantial.

Making these changes requires a leader, who is courageous enough to call together the city’s largest developers and landlords and the small business community in an open discussion about the importance of passing the SBJSA. It’s time for developers and landlords to ask themselves, “What kind of community do we want to create in New York City?” So long as developers and landlords only view commercial tenants as sources of income, they will be turning a blind eye to the high business failure rate caused by exorbitant rents. This is not a healthy model to create or sustain a vibrant city.

I'm hoping that Corey Johnson can be that leader, and at least bring the Small Business Jobs Survival Act to a public hearing, but, again, I'm not holding my breath. But in my wildest fantasies, I do hope he proves me wrong.

Marni Halasa was a third-party candidate to represent District 3 in the New York City Council in the general election of November 2017.