Landlord Relief Proposed by LA County Supervisors: From the Pasadena Strar-News: The Los Angeles County Board of Supervisors unanimously voted Tuesday in support of a motion that would establish some protections for small business owners and set a $10 million fund to compensate their landlords.
The motion, brought forward by Supervisors Holly Mitchell and Supervisor Hilda L. Solis, directs several Los Angeles County officials, including the Chief Executive Officer, the Chief Information Officer, the Director of the Department of Consumer and Business Affairs, the Director of the Los Angeles County Development Authority and County Counsel to report back in 45 days with the estimated number of commercial COVID-19 rental debt owed by small business tenants. The motion also calls County Counsel to report back with language options for an ordinance the county can adopt that would be aligned with existing protections under the eviction moratorium, which was earlier extended by supervisors through Sept. 30.
Supervisors acknowledged that the economic fallout of the pandemic could trigger the eviction and shutdown of small businesses, putting strain on entrepreneurs, who often had to dig into their personal savings to stay afloat during the pandemic. Over 93% of the businesses in Los Angeles County have 20 employees and fewer, according to county officials. And even as the county has been reopening, many mom-and-pop restaurants and businesses remain in dire situations. Government subsidies and programs often failed to provide sufficient help.
A recent report by the Los Angeles Economic Development Corporation said that support to small businesses during the last year has been flawed as larger companies with established lending relationships with banks were able to receive priority. As a result, many businesses now owe hundreds of thousands of dollars in rent debt — with companies in underrepresented communities being disproportionately impacted. In January, Small Business Majority released a report, saying that 52% of Latino, 55% of Asian Americans/ Pacific Islanders and 45% of Black entrepreneurs were struggling to pay rent or mortgages over the next six months.
The financial losses and debt have become a major source of tension between tenants and landlords with some landlords refusing to renegotiate the accumulated debt.
Within 60 days, the county will establish a COVID- 19 Small Business Rent Relief Program and find a program administrator who will work on identifying funding of at least $10 million to compensate landlords of qualified business owners, who meet certain criteria, including: Be a person or entity that operates or has operated in the past 24 months an independently owned and operated business that has its principal place of business in the County.
- Have an annual average number of nine or fewer full-time equivalent employees.
- Have annual total gross revenues of no more than $1 million.
- Demonstrate a gross revenue loss of at least 25% over a twelve-month period falling at least in part within the period of the County’s COVID-19 emergency order.
The priority will be given to smaller commercial landlords who are: The assessed value of all affected commercial rental property owned by that landlord.
Income of the landlord, as reported on tax filings. Equity considerations based on the geographical location of the affected small businesses. No reported violations of local, state or federal law and administrative procedure by the landlord.
But landlords disagree on themoratorium extension: A California landlords group said the economy has recovered enough that most of the state’s renters should be able to pay for their housing. The California Apartment Association on Tuesday pointed to a report prepared by independent research firm Beacon Economics. Renters’ finances have held up over the past year, employment is improving, and late payments and debt are declining, the group said.
Federal and state governments enacted laws last year to protect renters from eviction as Covid-19 lockdowns put millions of people out of work. California’s measure is set to expire at the end of the month — potentially ending a lifeline for Americans still under financial stress — unless it’s extended.
Governor Gavin Newsom, benefiting from an unprecedented budget surplus, has proposed spending $5.2 billion to help lowincome residents who are behind in rent, along with another $2 billion to cover overdue utility bills.
Tom Bannon, chief executive officer of the landlords’ group, said in a statement that those who truly can’t afford housing should receive government assistance. But the moratorium has meant that “too many tenants with the means to to pay have withheld their rent simply because they could do so without consequences,” he said.
Any extension of the moratorium should be for a short term, Bannon said.
While government assistance has helped ease the crisis from the height of the pandemic, millions of renters across the nation are still at risk of eviction, Diane Yentel, president and chief executive officer of the National Low Income Housing Coalition, said in an interview Tuesday. “There are still far too many that remain behind on rent,” Yentel said. “And if the moratorium were to expire before the emergency rental assistance were to reach these households, the country would face a historic wave of evictions this summer and fall.”
Christopher Thornberg, a founding partner of Beacon Economics and one of the authors of the report, said the economic recovery has been uneven. “There’s no doubt that some rental households, particularly in California, are still suffering,” Thornberg said in a webinar Tuesday. But in general, “things look remarkably strong for the nature of the economy. This suggests that worries about evictions in the state are largely overblown.”