Two Retail-Focused Bills to Watch After Recent Action in Albany

Two bills that could affect New York City ground-floor retail space saw action in the New York State Legislature on April 7, 2026. One, S9823, would authorize New York City to impose a tax on certain vacant ground-floor commercial premises. The other, S1451A, would authorize New York City to create a property tax abatement program for landlords who enter into long-term leases with small retail tenants that limit rent increases.

At this point, neither bill is law. It is also unknown whether either bill will ultimately become law. We are monitoring both in the event they do.

S9823: Proposed Authority for a Commercial Vacancy Tax

S9823, sponsored by Senator Gianaris, was introduced on April 7, 2026, and referred to the Senate Investigations and Government Operations Committee. The bill would add a new section 1201-f to the Tax Law, titled “Commercial vacancy tax.” Similar bills were introduced in prior legislative sessions from 2021 through 2025, but those versions died in committee.

The bill would authorize any city with a population of one million or more to adopt a local law imposing a tax on vacant ground-floor commercial premises. In practice, that authorization would apply to New York City.

Under the bill, a local law could not impose the tax unless the premises had been vacant for at least six months. The bill would also cap the tax at no more than $2,000 per square foot annually. It would allow a local law to set different tax rates in different geographic areas of the city, and it would place liability for the tax on the owner of the premises.

Importantly, the bill would leave much of the program design to a future local law. That local law would define what counts as a “vacancy,” although the bill itself would require an exemption for premises or buildings for which construction documents have been filed with the Department of Buildings. The local law could also include additional exemptions or exclusions.

The bill also ties the proposed tax to a local vacancy registration requirement. It provides that a vacancy would not be deemed to have begun until at least 30 days after an owner was required to register the ground-floor commercial premises under a local law establishing that registration requirement.

As drafted, the bill addresses administration, collection, and enforcement, including review at the Tax Appeals Tribunal of the city and then through an Article 78 proceeding.

In its justification, the bill points to long-term storefront vacancies, high asking rents, and the effect of dark storefronts on neighborhood commercial corridors. Its stated purpose is to give the City authority to encourage owners to lease vacant space rather than leave ground-floor storefronts empty for extended periods.

S1451A: Proposed Authority for a Small Business Rent Increase Exemption

S1451A, sponsored by Senator Kavanagh, also saw action on April 7, 2026. On that date, the bill was amended and recommitted to the Senate Cities 1 Committee, and it was reprinted as S1451A. Similar bills have been introduced every year since 2018, but none has passed.

The bill would create what it calls the “Neighborhood Small Business Rent Increase Exemption.” Like S9823, it would not itself impose a New York City program. Instead, it would authorize the City to enact a local law creating a property tax abatement for certain landlords.

Under the proposal, eligible non-residential or mixed-use buildings that lease space to small retail businesses employing 50 or fewer people could receive a real property tax abatement for up to 10 years. The amount would be calculated using the small business tenant’s percentage share of the building’s total square footage, multiplied by an abatement base equal to the lesser of:

• $2.50 of tax liability per square foot, or
• 50% of the tax liability per square foot.

The bill also provides that the abatement could not exceed the tax liability allocable to the eligible business.

To qualify, the landlord would need to enter into a 10-year lease with the small business tenant and include a renewal clause limiting rent increases to no more than 3% annually. The bill states that New York City’s Department of Finance would administer any abatement program created through a local law enacted under this authorization.

The stated purpose of the bill is to support neighborhood small businesses by encouraging long-term leases with more predictable rent growth. In that sense, the proposal uses a tax incentive rather than a tax penalty.

Two Different Approaches to a Similar Issue

Although the bills take different approaches, both appear aimed at concerns surrounding storefront stability and neighborhood retail corridors.

S9823 would authorize a potential tax on certain vacant ground-floor commercial premises after a specified vacancy period. S1451A would authorize a potential tax abatement for landlords who lease to small retail businesses on long-term terms that limit annual rent increases.

Both bills share another feature as well: each would require further local action by New York City before any program could actually take effect. Even if either state bill were enacted, the details that matter most in practice would likely depend on whether the City adopts a local law and how that local law is written.

Bottom Line

For property owners, commercial landlords, small business tenants, and their advisors, these bills are worth watching because they reflect continued legislative interest in using the tax system to influence ground-floor retail occupancy and lease terms in New York City.

For now, however, the key point is straightforward: these are proposals, not enacted law. Their future is uncertain. We are monitoring them in the event that they become law, which is unknown at this time.