State, city leaders still considering business rent assistance

A coalition representing Hawaii commercial landlords and tenants announced Tuesday that difficulty paying rent is subsiding as the state economy improves but that government aid is still sorely needed.

The group released results of its fourth quarterly survey of business owners, which shows 40% were behind on rent as of last month, compared with 49% at the end of last year.

Survey results also show that 36% of business owners expect to miss at least one full rent payment between April and June, down from 50% who said in the prior survey that they expected to miss at least one rent payment between January and June.

The surveys are being used to demonstrate that commercial tenants and their landlords need more financial relief.

“A second round of (federal Paycheck Protection Program) funding and other financial relief programs are helping severely affected businesses stay afloat, but many businesses still need to address up to 12 months of accumulated back rent while they operate at reduced capacity going forward due to physical distancing regulations,” Ryan Tanaka, the survey’s coordinator, said in a statement.

Tanaka, president of consulting firm Island Business Management and co-owner of Waikiki sports bar Giovanni Pastrami, said the survey shows 47% of respondents don’t expect to remain in business this year without rent relief from the government.

“The data is clear,” he said. “All four surveys show the need for targeted commercial rent relief to rescue disproportionately impacted local businesses and protect these local jobs.”

Coalition members include the Chamber of Commerce Hawaii, Hawaii Restaurant Association, Retail Merchants of Hawaii, Hawaii Lodging and Tourism Association, financial institutions and shopping center owners.

Tina Yamaki, president of Retail Merchants of Hawaii, said in a statement that the industry she represents has been one of the hardest-hit by fallout from COVID-19.

“Almost every day we see another store close, including iconic ones that have been around for decades,” she said. “The inability to pay their rent is often cited as the reason for shutting down. Unfortunately, without help in the form of commercial rent relief, we will soon see even more businesses closing their doors for good.”

The latest survey was based on responses from 790 businesses statewide, down from 1,126 in the prior survey.

Based on survey data, organizers estimate that the amount of unpaid commercial rent statewide at the end of March was $57 million, unchanged from the fourth quarter and down 8% from $62 million estimated in the third quarter.

The coalition has previously sought $100 million in federal coronavirus aid from the city, and also is backing a bill pending at the Legislature that would provide relief from the state.

Honolulu City Council members passed a resolution in September urging the administration then led by Mayor Kirk Caldwell and now led by Mayor Rick Blangiardi to give commercial property owners grants up to the value of their annual property tax bill.

At the Legislature, House Bill 1324 proposes to appropriate an unspecified amount of federal aid received by the state to commercial property owners under criteria that include renting property to small businesses that suffered a 40% revenue decline and providing such tenants rent relief equal to aid received. Grants under the bill would be limited to the lesser of three months’ worth of rent or 3% of the landlord’s rental income from the property in 2019.

Passing this bill will be up to House and Senate conference committee members agreeing on an amended final version of the measure.

Yuka Nawano, owner of four Eggs ’n Things restaurants on Oahu, said in written testimony late last month that COVID-19 impacts depressed company revenue last year by nearly 90%.

“Although our sales dropped significantly, our rent obligations remain the same, making it extremely difficult to emerge out of this pandemic financially,” she said.

Joe Ibarra, general manager of The Kahala Hotel &Resort, said in written testimony that the luxury hotel and several small business tenants would benefit from such grants.

“We believe the program will serve as an essential catalyst for small businesses and landlords to work together as we migrate into the new normal,” he said.