Why landlords fear state bill to renegotiate commercial tenants' rent obligations may lead to financial collapse

According to Senate bill 939, small business owners financially hurt by the pandemic would be allowed to renegotiate rent more easily based on how much money they are taking in under the limited coronavirus limitations. Evan Symons in California Globe explores the downsides from the landlords' perspective.

“Rob Lapsley, president of the business lobbying group California Business Roundtable (CBR) said the CBR would sue the state in court to block SB 939 should it pass and be signed into law by the governor. Other business groups came forward with similar support and plans.”

“‘It could cause a financial collapse,’ warned California Business Properties Association (CBPA) Vice President of government relations Matthew Hargrove.”

“Senator Wiener has argued that SB 939 would allow buildings to keep tenants and allow at least some cash flow to continue but emphasized putting the tenant ahead of the landlord in such decisions.”

“‘That seemingly makes sense, but our models account for full rent, not half-rent,’ said Southern California strip mall owner John Caldwell. ‘We reduce rent for, say, half of everybody, that’s a 25% reduction in rent coming in. Ballpark. That’s not where our profit margins are at. We lose money on this if SB 939 is passed...We have people who rely on us for work. You know, janitors, security,  and maintenance staff. There’s also other businesses like pest control and other things we may skimp on, so they’re hurt too.’”

Read the whole thing here.

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