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What to Know About New Rent Legislation for Restaurants (and Tenants)

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Here’s what’s in store for restaurants in terms of rent relief in the coming months due to the COVID-19 shutdowns

A dark restaurant space with chairs upturned on the bar and not a single person in the room
Restaurants across the city have to pay rent on April 1 despite a state-mandated shutdown on dining in
Gary He/Eater

For restaurants and bars across the city, and for tens of thousands of industry workers, April 1 means one big thing: Rent is due.

Restaurants in the city typically pay 10 percent or less of their gross sales toward rent, but most places saw a massive decline in revenue starting in the first week of March. The state-mandated shutdown that went into effect on March 16 only decimated the industry further — most restaurants have shuttered for the duration of the coronavirus pandemic, and even those trying to get by on delivery and takeout can’t make up for their previous earnings.

Though costs like labor and food have largely been eliminated, rent is a cost that doesn’t go away with a shutdown for most businesses or for apartment tenants who are now unemployed. But state and local officials have made some changes in hopes of helping, such as suspending evictions, and more laws are in the works. Here’s everything to know about what’s already been done — and what still needs to happen.

Will commercial tenants like restaurants and bars, or residential tenants like workers out of the job, be evicted if they don’t pay rent on April 1?

No, at least not until this summer. Earlier in March, Gov. Andrew Cuomo announced that evictions are suspended at least until June 20. This means that restaurants that don’t pay rent won’t lose their space, and anybody who can’t pay for their apartment can keep living there without fear of eviction notices.

But it doesn’t mean tenants — commercial or residential — can skip out on paying rent entirely. Come June 21, anybody that isn’t able to pay will have to fork out three months of rent at once, or potentially face the threat of their landlord taking them to court.

“The hope is that landlords recognize this is an economic and societal crisis and they need to do everything in their power to work with restaurants, and I’m sure many will,” Andrew Rigie, the director of the NYC Hospitality Alliance, a group that represents thousands of restaurants in the city, tells Eater. “But we cannot rely solely on the goodwill of landlords to keep small businesses in place. The government has to step up.”

What if I don’t think I’ll be able to pay three months worth of rent at once by then?

You’re not alone; many tenant and restaurant advocates don’t think they’ll be back on their feet financially by the summer. “Who knows how quickly consumers are going to come back and eat and drink at pre-pandemic levels,” says Rigie. “It would be unconscionable to force restaurants to pay rent.” Some restaurateurs also say they’ll be unlikely to hire back all the workers they’ve laid off, meaning many hospitality employees may still be without paychecks.

Cuomo feels the moratorium does enough for tenants and businesses, but there is legislation in the works to try and boost government aid. State Senator Michael Gianaris, who represents parts of Queens, has introduced a bill that would cancel rent payments for 90 days for individuals and small businesses that have lost income as a result of COVID-19. If enacted, it would provide significant relief to tenants. And as of now, the bill has 22 sponsors and is making its way through the state legislature. Gianiris’s bill also has the backing of New York City Council Speaker Corey Johnson, who says in a statement that the state should ensure that “tenants aren’t hit with exorbitant back rents they won’t be able to afford after this crisis is over.”

Still, it could take some time before it’s enacted into law.

So who’s footing the bill if the there’s rent forgiveness?

The bill also covers landlords and asks for mortgage payments to be canceled for 90 days. The burden to make those payments will eventually fall on banks, which should be better equipped to handle the crisis with federal payments.

But some landlords say this isn’t enough. A spokesperson for CHIP — a group that represents owners and operators of 400,000 rent-stabilized apartments in the city, many of which have commercial tenants — says it doesn’t cover lost rent. “The main costs are property taxes, insurance, and the salaries for maintenance crews,” the spokesperson tells Eater in a statement.

Will anything from $2 trillion federal stimulus package help with rent?

In theory, small restaurants can get “forgivable” loans with very low interest rates and can use that money to pay for utilities and rent. But the percentage of what is forgiven depends on how many people the restaurant can re-hire by the end of June. Many restaurateurs say meeting the deadline will be challenging if not impossible, and industry experts like Rigie say there’s no knowing when businesses will be able to return back to normal. “We will need another stimulus for restaurant-specific challenges,” he says. In addition, restaurants and businesses with up to 500 workers can apply for these loans, which raises concerns about smaller restaurants getting crowded out.

For any newly unemployed workers who are struggling to make rent payments, the stimulus package added more unemployment benefits. Read more about those, and the rest of the stimulus package, here.

What about those emergency relief grants I’m hearing about?

Restaurants can apply for grants of up to $10,000 as part of a larger loan application for disaster relief that can be used toward rent. These grants aren’t based on the number of people on payroll, but $10,000 in a city with sky-high rents likely won’t cut it for most commercial tenants.

Are there any outside organizations helping with rent costs?

While several restaurants are working to raise funds for the tens of thousands of people who have lost their jobs, fundraising efforts specifically targeting restaurant rents are few and far between. A new group called the Restaurant Network, which includes top NYC names like Stephen Starr and Bobby Flay, is working on a set of terms for rent payments that would be favorable to both restaurants and landlords alike. However, the terms are not yet public, so how much it will help is yet to be seen.

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