A bill that would provide rent relief for commercial landlords and tenants — similar to that for residential properties — is making progress in the waning days of this year’s legislative session.
An amended version of House Bill 1324 was returned from the Senate this week; a mutually acceptable version will have to be hashed out with House and Senate conferees.
There should be no doubt that some help is needed, even as Hawaii enters what we hope are the end stages of a pandemic that has locked us down, putting so many workers out of work and businesses out of business.
Commercial properties have been hit especially hard. Colliers International reported a surge in additional vacant space — about 329,000 square from January to March, about triple the number from all of 2020. Those numbers are expected to increase in the near term.
Meanwhile, those businesses that remain continue to struggle, in part because of government-imposed restrictions such as physical distancing requirements that limited the number of their customers.
Island Business Management Hawaii, which helped draft HB 1324, said its most recent quarterly survey of 790 business owners found that 36% of businesses expected to miss at least one full rent payment between April and June 2021. The survey also found that 47% of businesses would need government assistance to survive 2021.
There is some hope in those numbers, which are an improvement over the previous quarter’s survey that ended in December 2020. It’s evidence that the economy is slowly getting back on its feet.
Still, the burden of repaying months of back rent could hobble businesses, delaying their recovery. And the ripple effect on employment could prolong the agony for the service workers most hurt by the economic downturn. A large proportion of the affected businesses are in the retail, restaurant and entertainment trade, sectors hit hard by the loss of tourism.
Which brings us back to HB 1324. The bill would direct an as-yet-unspecified amount of federally funded grants to commercial property owners to cover unpaid rent.
The aid would be somewhat restricted. It would apply mainly to small, locally owned businesses with a physical presence in Hawaii that demonstrated a more than 40% decline in taxable revenue. The total amount of grant money would be capped.
The Senate added a proviso restricting the ability of participating property owners to evict tenants for nonpayment of rent.
It’s not clear how much money would be spent, and how much relief the bill would ultimately provide. But the benefits of keeping businesses alive, so they can recover as the economy does, can’t be denied. It’s worth making the effort.
