Bill “gives beloved small businesses and essential nonprofits a fighting chance”
Councilmember Lisa Herbold (District 1, West Seattle – South Park), Councilmember Tammy J. Morales (District 2, South Seattle and the CID) and their Council colleagues unanimously passed legislation that freezes storefront rent increases for some small businesses and nonprofits, and allows some small businesses and nonprofits the ability to negotiate a payment plan for their rents with their commercial landlords.
Council Bill 119766, sponsored by Herbold and Morales, enacts a moratorium on commercial property rent increases for small businesses and nonprofits while the City’s civil emergency is in place. The legislation also requires commercial property landlords to negotiate payment plans for overdue rent for small businesses and nonprofit tenants financially affected by the COVID-19 crisis.
The legislation applies to nonprofits, and to small businesses with 50 or fewer employees that have been closed due to public orders or that have seen at least a 30 percent drop in business.
“Small businesses are struggling to stay afloat, and those forced to shut down are worried they won’t be able to restart their businesses after the initial crisis is over. This legislation complements the city’s moratorium on small business evictions already in place, alleviates financial pressures such as rent increases, and gives certainty to small businesses and nonprofits. In the West Seattle Junction, I’ve heard reports that landlord communication has ranged from full abatement for some businesses to ‘sorry we need to pay our mortgage’ requiring 100% of the full rent due for other businesses,” said Councilmember Herbold.
“Small businesses tenants are some of those most vulnerable in our city since there are realistically very few rights for commercial tenants. Commercial rent control was necessary before this crisis and it is especially crucial now. Coupled with the ability to set up payment plans with landlords, this is a small lifeboat for local businesses to weather this storm. We must continue working to ensure our small businesses receive help. Without additional aid, Seattle faces the real threat of disaster gentrification with a great loss of important community spaces and services,” said Councilmember Morales.
Many small businesses have reached out to both Herbold and Morales’ offices saying even though a commercial eviction moratorium is in place, with lost revenues due to the stay home order, businesses won’t be able to cover back rent and will be forced to close.
This legislation requires landlords to work out payment plans with their small business and nonprofit tenants up to six months after the end of the civil emergency.
The repayment plans would need to meet the following conditions:
- The repayment schedule could not require the small business or nonprofit to pay more than 1/3 of late rent within any month or period;
- The repayment schedule must require that all late rent will be repaid within a year of the end of the civil emergency;
- No late fees, interest or other charges could be added to the late rent payments.
“Repayment plans allow small businesses and nonprofits to prioritize cash flow and remain in their storefronts during and after this crisis. We will need small businesses to be on the forefront driving the post-COVID19 economic recovery,” Herbold said. “The City must do everything it can to give beloved small businesses and essential nonprofits a fighting chance.”
According to data from the Washington State Employment Security Department, 95 percent of businesses in Seattle had 50 or fewer employees in 2017.