LB State Senator Gonzalez Teams With SF State Senator Wiener On SB 939 To Let COVID-19 Impacted Small Commercial Tenants End Their Comm'l Property Leases Unless Their Landlords Negotiate New Mutually Agreeable Terms; Bill Includes Provisions For Restaurants, Bars, Enterainment And Performance Venues
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|(May 25 2020, 10:55 p.m.) -- LB area state Senator Lena Gonzalez (D, LB-SE LA County) has teamed with SF state Senator Scott Wiener (D, SF) to co-author SB 939, a bill that, as currently proposed, would enables small business commercial tenants to terminate their commercial property leases if their landlord doesn't renegotiate their lease on mutually agreeable terms..
As initially proposed, SB 939 included criminal penalties, but Senators Gonzalez and Wiener have changed it into a civil measure that effectively increases the negotiating power of small commercial tenants -- with specified terns applicable to restaurants, bars, entertainment or performances venues -- meeting certain criteria during the COVID-19 emergency.
SB 939 defines commercial tenants as those whose "primary business is a small business, or is an eating or drinking establishment, place of entertainment, or performance venue" that has "experienced a decline of 40 percent or more of monthly revenue as compared to two months either before a state or local government shelter-in-place order took effect or as compared to the same month in 2019 and, if an eating or drinking establishment, place of entertainment, or performance venue, a decline of 25 percent or more in capacity due to a social or physical distancing order or safety concerns; and is subject to regulations to prevent the spread of COVID-19 that will financially impair the business when compared to the period before the shelter-in-place order took effect."
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SB 939 specifies that a commercial tenant within those categories that wishes to modify its commercial lease "may engage in good faith negotiations with its landlord to modify any rent or economic requirement regardless of the term remaining on the lease." If the commercial tenant and landlord don't reach a "mutually satisfactory agreement within 30 days" then within 10 days thereafter "the commercial tenant may terminate the lease without any liability for future rent, fees, or costs that otherwise may have been due under the lease..."
(The commercial tenant remains obligated to pay "previously due rent in an amount no greater than the sum of the following: (1) a maximum of three months’ worth of the past due rent incurred during the civil authority and regulations related to COVID-19 (or a lesser sum as may be actually unpaid), and (2) all rent incurred and unpaid during a time unrelated to COVID-19 through the date of the termination notice" with payment due within 12 months of the tenant's termination notice.
If the commercial tenant and landlord do reach a mutually satisfactory agreement, the commercial tenant is precluded from subsequently terminating its lease under the bill at a later date. SB 939 also doesn't provide its leverage to "any publicly traded company or a company that is owned by or is affiliated with a publicly traded company."
The full text of SB 939 as most recently amended can be viewed at this link.
The Committee staff's Legislative Analysis of the bill noted that SB 939 is "sponsored by The Bay Area Hospitality Coalition. Support comes from small businesses, non-profit organizations, restaurants, entertainment venues, and other commercial tenants impacted by COVID-19. Opposition is from commercial landlords, who argue that the bill disrupts existing contracts and that financial protection is needed for commercial landlords as well as tenants."
SB 939 has sparked the ire of the CA Business Properties Ass'n whose website states (visible on May 25):
TAKE ACTION NOW!!! <[?PROTECT YOURSELF! CLICK HERE FOR A SAMPLE LETTER OPPOSING SB 939!
Amnesia file: On Jan. 1, 2019, LBREPORT.com reported that LB's Commercial Real Estate Council (website stated mission: to "advocate for commercial real estate investment, development, and the opportunity") announced that then-state Senate candidate Gonzalez would be its first speaker of 2019 for a "New Year Mixer." The group's then-president was Adam Carrillo, Ms. Gonzalez's then-significant other (now husband.)
LBCREC's Facebook page stated on Dec. 15, 2018: "She's supported over $4 billion Commercial Real Estate Investment and Development in the Downtown. As the only privately employed City Councilmember and expertise in technology & finance, we are excited to learn more about her campaign positions that support business and CRE investment for the greater Long Beach area."
However Gonzalez's candidacy announcement release struck a different tone in targeting the SE L.A. County district's working class/middle-class voters. .
,small>[Gonzalez campaign Dec. 14, 2018 release text]...[quote from candidate Gonzalez] "I am committed to a new vision for Long Beach & South East LA - tackling climate change, creating more opportunities for affordable housing and un-apologetically supporting working families..." Gonzalez...has championed issues such as creating a citywide Project Labor Agreement, banning Styrofoam containers and creating workplace protections for port truck drivers and hotel workers. Additionally, she fought to add more park space and programming in underserved communities, created more options for small businesses to participate in city contracts and created the City's first Digital Inclusion Roadmap, to ensure every Long Beach family has access to the Internet.....
In the April 2019 initial election, Gonzalez outpolled several Democrats from smaller cities and ended up in a June runoff against a Republican, Jack Guerrero, who earned a Stanford economics degree, a Harvard MBA and is today a CPA and an elected member of the Cudahy City Council.
The leadership of CA Republican Party and Long Beach Area Republicans failed to provide Mr. Guerrero's campaign with meaningful financial support or campaign resources. Likewise, LB's "business community" failed to provide Mr. Guerrero with meaningful financial support or supportive resources.
In June 2019, Councilwoman Gonzalez was elected to complete the unexpired term of former state Senate Ricardo Lara (now state Insurance Commissioner.) In 2020, no Republican or Democrat challenged Gonzalez when she sought a full four year term. She is now safely in the state Senate until the end of 2024.
On May 22, 2020 the state Senate Judiciary Committee held a hearing on SB 939; Committee staff raised multiple issues and suggested amendments; the authors accepted the amendments and the Committee voted to re-refer SB 939 to itself before deciding whether to advance it to the state Senate Appropriations Committee. The state Senate Judiciary Committee's May 22 vote was 5-1-3:
Yes: Durazo, Lena Gonzalez, Jackson, Monning, Wieckowski (all Dems)
The Committee's legislative analysis for the May 22 hearing listed SB 939's supporters and opponents as follows:
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