Scott Mollen, former chair of New York’s Rent Guidelines Board, says commercial rent control has too many unintended consequences

September 24, 2021 – Media Mention
New York Business Journal

Herrick partner Scott E. Mollen spoke to New York Business Journal about commercial rent control efforts proposed by members of the New York City Council. Scott, who formerly served as Chair of the Rent Guidelines Board, shared his concerns, stating, "This legislation will bring a host of unintended consequences" and that "[t]he sad irony in this legislation is that the people who are supposed to be protected the most by it will be the most negatively impacted."

The article stated that Scott expressed, "businesses will be disincentivized from improving their operations if they know that the landlord will be forced to cap off rent increases, or worse, automatically renew their lease... it also serves as a disincentive to landlords to provide a chance for the first-time small-business owner as it elevates the cost of taking such a risk."

Scott explained, "Landlord clients of mine are almost certain to be much more guarded in the past about taking a chance on a first-time business owner," adding, "Under this new law, taking a chance on a tenant could mean that you’re stuck with them forever or at least a very long time."

Scott proposed eliminating the commercial rent tax and speeding up the permitting process so businesses can open their doors more quickly, elaborating, "Both of these alternatives will ensure a win-win situation for commercial landlords and tenants[.]"

He concluded, "I’m almost certain if this measure passes that many in the real estate industry, including the New York Real Estate Board, would take this matter to the courts," noting, "They’ve litigated over similar issues in the past and could be expected to do the same again."

Read the full piece in New York Business Journal here. Access may require a subscription.