Small Businesses Need Help - We need to cancel their rents, too
By Erika Hernandez
The COVID-19 crisis has forced us to look more closely at the systemic failures and inequalities in our society. As we’ve written before, the increasingly high cost of living and the failure of governments to provide individuals with a living wage or universal basic income has made it almost impossible for people to maintain savings accounts or any sort of financial safety net. At least 30 million people have lost their jobs over the last six weeks and, as has been well reported, many of these individuals are not financially prepared to endure that loss.
Municipalities across the country are considering policies to prevent evictions during their respective quarantine periods and some are even considering mortgage payment relief ordinances. This is a good start, but these band aid policies only delay the payment of debts and do nothing to support property owners and tenants when they ultimately start making their deferred payments. Additionally, these policies focus primarily on residential tenants and offer weaker support for commercial tenants and owners. Our team is adamantly advocating for the cancelation of residential rent payments, and we are also calling for the cancelation of commercial rent and mortgage payments.
Our governments must take a holistic approach when creating policies that support the wellbeing of those most affected by the current crisis. Residential tenants who are business owners are also sometimes commercial tenants, which means they are struggling with eviction concerns on two fronts. If commercial rent is not canceled many of these small business owners with commercial leases will have no businesses to return to, further allowing corporations to gobble up commercial corridors and gentrify neighborhoods.
I have spoken with multiple Semi’a Fund clients who are concerned about their ability to pay for both their housing and business costs. These entrepreneurs have had to choose between restocking their stores, paying their commercial rent, and paying for personal basic necessities. In making these survival-based decisions, entrepreneurs have asked us to help them better understand how City emergency ordinances affect them as commercial tenants. Our clients’ commercial lease concerns prompted our team to seek partnerships and gain commercial lease knowledge so we can better support them. We have helped clients negotiate new lease or payment agreements to ease their “back rent debt” burden. To support these ends, we have also connected clients to outside, pro bono legal resources through Public Counsel and Gibson Dunn LLP.
I recently attended a “Protecting and Empowering Commercial Tenants in the Age of Coronavirus” zoom workshop hosted by the Sustainable Economies Law Center and the Lawyers’ Committee for Civil Rights of the San Francisco Bay Area. Moderators gave guidance about what commercial tenants should say when writing to their landlords. For example, tenants should explicitly mention:
COVID-19;
Governor Newsom’s business closure order;
How their businesses have been impacted by COVID-19;
Why this impact has prevented them from being able to pay their rent in full; and
Their plans to re-open their businesses as soon as possible.
The workshop also included different strategies for negotiating rent payments, like postponing rent due, reducing rent payments for a period, or offering to give landlords a percentage of net revenue after expenses. More notably and in true “not me, us” fashion, however, were the reminders of our interdependence. Business owners who rent from small landlords were encouraged to empathize with their landlord’s financial struggles and express their willingness to advocate for a mortgage freeze.
The COVID-19 Crisis presents us with an opportunity to exercise radical solidarity. Landlords, tenants, and homeowners should unite on a local and national level to #cancelrent and mortgage payments. In thinking about the future, tenants should also use this time to consider purchasing their buildings together as part of land trusts. Communities should push their local governments to implement more land value return policies and use these funds to offset housing costs and develop properties that can then be stewarded by community land trusts. So much can be accomplished if renters and property owners acknowledge their interconnectedness and use their collective power to restructure how property ownership works.
As Professor Zachary Levenson recently wrote, we are living in an “uncannily contradictory moment — a moment in which darkness is a constant, but in which glimpses of light seem to be more recurrent than we’re used to.”
Canceling commercial and residential rent and mortgage payments is just the beginning.
Photocredit: ETIENNE LAURENT/EPA-EFE