Hawaii’s moratorium on residential evictions, in place for 10 months now, is expected to continue for at least a few months. Also in the works are plans to distribute another $200 million allocated to the state for residential rental assistance through the latest Congress-issued stimulus package.
Both are essential, and will surely help thousands of residents here struggling to make rent and mortgage payments, and pay utility bills.
While commercial tenants have received federal COVID-19 relief funds through other channels, such as the Paycheck Protection Program (PPP) — a loan initiative that helps small businesses and nonprofits retain and pay their employees — Hawaii has so far not shielded this set from eviction. Senate Bill 563, which is advancing at the state Capitol, aims to change that.
Under the bill, commercial landlords would be prohibited from pursuing eviction or collecting unpaid rent from commercial tenants who have been adversely impacted by economic fallout tied to the pandemic. It also would block landlords from trying to collect back rent from tenants for 12 months after expiration of the state’s last pandemic-related emergency proclamation.
While government should provide some form of relief for businesses flailing through no fault of their own — in particular, those entirely shuttered by local COVID-19 restrictions, such as bars and nightclubs — the bill’s provisions seem overly one-sided, favoring tenants.
In addition to the lengthy 12-month grace period for paying back rent, SB 563 includes a requirement allowing commercial tenants to terminate leases without penalty if negotiations with landlords to amend contract terms are unsuccessful. That appears to clear the way for a tenant driving a hard bargain to pull up stakes without obligation to cover any back rent, which seems unfair.
Addressing the issue of commercial tenants during a Tuesday news briefing, Gov. David Ige said: “The concern is about how to provide a level playing field that would encourage negotiations and restructuring of lease payments without unfairly advantaging one side over the other.” Also, he pointed to the federal PPP as the “best program that we can see to provide direct support for small businesses.”
In a welcome move, the U.S. Small Business Administration launched the third round of PPP funding last month, starting with an outreach to banks and lenders that provide funding for businesses in underserved communities. Also, while most eligible businesses may get a loan equal to 2.5 times their average monthly payroll expenses, restaurants and lodging operations may now secure loans equal to 3.5 times monthly payrolls — with no loan exceeding $2 million.
There’s no doubt that PPP is continuing to serve as a lifeline in the islands. According to a survey released in late December, in the absence of a significant boost in tourism — or gap-bridging relief funds — more than half of Hawaii’s restaurants may be forced to close for good by April.
Supporters of SB 563 contend that its provisions are necessary for mom-and-pop business survival, and point out that there are now one-third fewer businesses open here compared with pre-pandemic counts, according to the University of Hawaii Economic Research Organization’s data. However, it’s not clear how many businesses have permanently closed.
Enacting SB 563 into law could bolster one of the largest sectors of our economy. But given the aim of stabilization amid mixed signals on economic recovery, Ige should consider following the lead of various other states by opting for a more flexible and fair fix: include commercial tenants in the state’s eviction moratorium — through which a ban is in place for a few months, with extensions if necessary.