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Adapted Commercial Eviction Moratorium Fails To Placate Landlords Or Tenants

New York state's ban on commercial evictions was reinstated this week alongside protections for residential tenants, with key changes lawmakers hope will make it fairer for property owners and guard against legal challenges.

But advocates for both small businesses and landlords say the new laws still fail to address a key problem: Rent is still not being paid, harming tenants and landlords alike.

An empty storefront in Manhattan. Landlords have been prevented from evicting nonpaying commercial tenants since 2020.

Legislators returned to Albany Wednesday after being called back by Gov. Kathy Hochul to pass laws to extend the expiring eviction moratoriums, which ban residential and commercial evictions and foreclosures until mid-January. Residential landlord group the Rent Stabilization Association immediately vowed to challenge the new rules.

On the commercial side, the moratorium applies to small businesses with fewer than 100 employees that demonstrate financial hardship. Tenants must submit a hardship declaration, or a document to explain the hardship. 

Crucially, following the U.S. Supreme Court’s decision to strike down part of the state's previous eviction ban, both new moratoriums now have a “due process mechanism” for landlords to challenge residential and commercial tenants' hardship declarations.

State Sen. Brian Kavanagh said the new rule is not just about guarding against future legal challenges, but making it fair all around.

“It's not just a matter of litigation avoidance, it's also a matter of getting the thing right," he said in an interview. "The advantage of these provisions, from my perspective, is that they address one of the main policy concerns that landlords and banks have had, which is that it’s just not fair that a tenant, or a homeowner or small-business owner can just certify their own hardship, and there's no opportunity to challenge that. So now that opportunity is in place it should rationalize the process from the perspective of landlords and banks that might think that they have been treated unfairly." 

Critics say pushing back the expiration dates is just procrastination, but Kavanagh said the health crisis made the extension imperative. He conceded keeping businesses in place is less urgent than making sure residents are not displaced from their homes — but argues it is still part of a solution to the coronavirus pandemic.

“People being displaced, and having to move their businesses out of these spaces is, in the view of many members of the legislature, disruptive of the businesses and disruptive of our efforts to have an economic recovery, and may expose people in a way that they wouldn't otherwise be exposed,” he said. “It is the judgment of the legislature that it is warranted, both from a public health perspective and from an economic and human perspective.”

New York state Sen. Brian Kavanagh

But Luise Barrack, the head of Rosenberg & Estis' litigation department, said while lawmakers did try and make it fairer on landlords by giving property owners the ability to challenge a hardship declaration, the way it is drafted it is still incumbent on the owner to prove the tenant is misusing the protections.

“Some owners have been waiting and waiting [for rent]. If people do not pay and they are not going to pay, and have not reached out to show me they will, there should be some remedy I have to take back my space,” she said. “That remedy has been removed.”

She said there is no clear guidance for judges to decide if a tenant really is suffering hardship, and expects there will be challenges to the law — so much so that the already backed-up courts will be flooded.

“The question is, where does the hardship stop?" she said. "By saying I have a hardship declaration, even if the party does have a hardship, who's to say the owner doesn't have a hardship ... It’s just passing it down the road to a party that is not culpable.”

Small-business owners aren’t exactly happy with the law changes either. NYC Hospitality Alliance Executive Director Andrew Rigie said in a statement that while the extension is a “positive development,” its protections are weaker.

“Considering the precarious state of the city’s essential and diverse hospitality sector, it’s critically important that Gov. Hochul and the legislature step up and offer our small businesses a lifeline by reinstating the popular alcohol to go policy and allow the State Liquor Authority to immediately issue temporary liquor licenses so new restaurants don’t have to wait half a year to open and fill vacant spaces and employ people,” he said in an emailed statement.

Shelley Worrell, the founder of caribBeing, a Brooklyn-based business that aims to amplify Caribbean talent and brands, and who runs a retail pop-up in a shipping container, said there will be a few sighs of relief from businesses on the cusp of eviction. She sees it as a short-term fix, however.

“It buys you more time and time is always helpful,” she said of the decision to extend the moratorium. “That said, we still need to look at the core issue [which is] sustainability. We need equitable funding. While we do see this as a small win, there are neighborhood businesses that are still struggling.”

Shelley Worrell, the founder of caribBeing

Back in April, LISC NYC, a community development nonprofit, ran a survey of minority-owned small businesses across the five boroughs and found three-quarters of those kinds of businesses fear they will be forced to close if they do not receive immediate financial relief.

“The continuation of the moratorium is helpful for anybody or entity in the marginalized communities that have suffered greatly during Covid,” LISC Executive Director Valerie White said. "That’s primarily communities made up of minority, Black and Brown people, Latinx and immigrant communities."

Programs like the Business Pandemic Recovery Initiative programs run by Empire State Development are welcome, she said, but many small-business operators struggle with navigating the processes and application paperwork.

While she applauds the moratorium extension, she believes it is crucial to face the fact that some city businesses, many of whom make up the fabric of the city, are falling deeper and deeper into rent debt.

“At some point, there'll be these exorbitant rent arrears that are due,” White said. “How are we working to prepare the small businesses to be able to pay back those arrears?”