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Editorial: Local businesses need rent relief

It felt like receiving news of a death in the family. Love’s Bakery, a fixture of Hawaii’s business community for 170 years, will close for good at the end of the month. And for the 231 employees who will lose their jobs, the mourning is more than sentimental or nostalgic; it’s genuine and painful.

That would be bad enough just by itself, but the real fear among advocates for businesses, which fuel the local economy and put food on the table for so many isle families, is that this is just the first of many dominoes that will fall. And that concern is what must guide decision-makers as they plot a course out of the current pandemic-induced recession.

So far, it does appear that leaders are clear on that concept. On Tuesday, Gov. David Ige signed a law to grant relief to businesses from what otherwise would have been a steep increase in the unemployment insurance contribution, a tax that’s designed to replenish the benefits fund, which has been severely tapped.

The bill was passed in record time, which signified the awareness of problems faced by those hanging on for dear life.

In addition, measures are advancing in both chambers that are designed to establish a grants fund for commercial landlords, similar to the program developed as an assist to residential landlords whose rent payments are in arrears.

The grants would be backed by federal funds expected to materialize in the proposed coronavirus relief package moving through Congress. Other aid for businesses have been part of the government response to the COVID-19 pandemic, most notably the Paycheck Protection Program aimed at keeping workers employed.

Love’s Bakery, like so many other companies, secured one of the initial PPP forgivable loans but not a second round, since that stage favored smaller businesses missed in Round 1.

Further, PPP did not take care of one major expenses: paying the rent. So Senate Bill 946 and House Bill 1324 were among the measures legislators introduced in an effort to address this critical issue.

Both bills would establish a “commercial rent relief grant program” awarding lost rental revenue to landlords directly. The exact configuration of the program is still to be hammered out — the Department of Business, Economic Development and Tourism (DBEDT) as well as the Department of Taxation have been discussed as lead agencies — but the basic concept has backers.

This should be the case. Yes, there are hopeful signs that economic recovery could be healthier than at first predicted. For example, DBEDT this week revised its calculation of the drop in the gross domestic product, finding that it was not as deep as initially thought. And it projects a 2.7% rise in GDP this year, rosier than what it forecast three months ago.

But nothing is certain; in fact the University of Hawaii Economic Research Organization anticipates a slower recovery. So it is prudent for the state to reinforce supports for its businesses in the near term.

So many of them are linked in some way to the state’s bedrock tourism industry. The loss of sales with many shuttered hotels and restaurants was a big part of Love’s 20% revenue decline, according to company statements, but officials also acknowledged that various inefficiencies and increasing competition, pre-pandemic, also were factors.

Another point of concern: The high cost of doing business in Hawaii continues to challenge the capacity of local food production and manufacturing, and the rental assistance won’t solve those.

But enacting the rent-aid program can provide a new lease on future life for Hawaii’s struggling companies, once the economy begins its climb out of the cellar.

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