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After failing to receive the requisite votes in the Assembly, A. 255 is officially dead for this year. ICSC worked closely with the California Business Properties Association (CBPA) and a coalition of businesses to oppose this legislation, which would have enabled a business in a valid private contract to withhold payments for commercial rent until August of 2022. The measure would have effectively voided existing contracts, creating a conflict with contractual law and presenting a constitutional takings concern.
The New York Legislature adjourned for 2021 on June 11 without approving several contentious bills ICSC opposed:
A.6906/S.1129 - This legislation passed the New York Assembly on June 2 by a 102-46 margin. ICSC is pleased to report it was not brought up in the Senate. The lopsided proposal would have placed the burden on landlords to mitigate damages when commercial tenants vacate premises in violation of the terms of the lease. In 2019, the Housing Stability and Tenant Protection Act became law, creating a requirement for residential landlords to mitigate these damages. The bill sponsors attempted to replicate this duty for commercial landlords. ICSC argued that the differences between commercial leases and residential leases are profound, in terms of lease term, underlying economics, level of sophistication and ability to negotiate a lease and other distinctions.
S. 5144/A. 6539-B - While the state Senate approved the bill 40-23 on June 9, the legislation stalled at the committee level in the Assembly. ICSC had significant concerns about this measure as it would have banned enforcement of personal liability against guarantors in commercial contracts for a set period. This bill essentially took NYC Int. No. 1932-A and would apply it statewide on a temporary basis to provide relief to businesses impacted by COVID mandated closures. Currently the constitutionality of the underlying NYC law is under review by the Second Circuit Court of Appeals in Melendez v. The City of New York with a decision likely in the near future.
ICSC will continue to oppose state action such as those attempts described above that interfere with existing agreements between private parties and tread into established contract law. New York would have set an undesirable precedent fraught with constitutional and other legal questions.
Also in Albany, the legislature concluded without enacting a tax and recording of mezzanine debt and preferred equity. Removing these taxes from the annual state budget and preventing their consideration in the Legislature’s annual session is a significant victory for the commercial real estate industry.
Separate legislation enacting these taxes will remain live through 2022.
This concludes the first year of a two year legislative cycle so all bills remain live next year. ICSC anticipates the bills’ sponsors will try again in 2022. For more information, contact Jim Hill, VP of State and Local Government Relations, jhill@icsc.com.