The Californer - San Francisco: SFO Launches Emergency Rent Relief Program for Airport Concession Tenants

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San Francisco, CA — Mayor London N. Breed has signed an ordinance authorizing the San Francisco International Airport (SFO) to launch a rent relief program for airport concession tenants, in which lease agreements will be modified to waive certain rent and fees. The value of the relief available to be granted under the COVID-19 Emergency Rent Relief Program is estimated at $21.3 million and will be supported through federal CARES Act funding.

SFO will join the San Francisco Port, San Francisco Municipal Transportation Agency, and the Recreation and Park Department in providing relief for commercial tenants impacted by COVID‑19.

"We know how hard this pandemic has hit our retailers and businesses, especially at the airport where traffic has been down significantly for months," said Mayor Breed. "The City has worked to provide relief to our tenants where we can, including deferring and waiving fees and rent to the City. As we work our way towards recovery and travel picks up again, we are going to need these businesses to serve our visitors and residents."

"Our entire SFO business community is critical to delivering the travel experience our passengers expect and deserve," said Airport Director Ivar C. Satero. "We appreciate the perseverance of our concession tenants and hope this Emergency Rent Relief Program will help them to continue operating and begin the process of recovering and rehiring."

SFO concession tenants pay the greater of a Minimum Annual Guarantee (MAG) or a percentage of Gross Receipts (Concession Fee) along with other cleaning and infrastructure fees. Each concession lease provides for a suspension of the MAG if passenger traffic declines severely for three consecutive months. Under this provision, MAGs were suspended effective June 1, 2020 and will resume after enplanements have recovered for a period of two months.

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Under the COVID-19 Emergency Rent Relief Program, the MAG will be waived for the months of March, April and May 2020. In addition, all fees will be waived for April and May 2020, and all cleaning and infrastructure fees will be waived from June through December 2020. Rental car tenants, whose lease structure differs slightly, will have space rent waived for March, April and May 2020, and utilities fee waived for April and May 2020. Concessions must meet eligibility requirements, which include payroll and rehiring requirements, which prioritize the hiring and/or re-hiring of laid-off and furloughed employees at SFO.

Additional City Tenant Relief Programs

Port of San Francisco

The Port of San Francisco has offered extensive rent-relief to waterfront businesses impacted by COVID-19 including rent deferral, repayment programs, and rent forgiveness. The Port's rent-deferral program offered tenants an opportunity to defer rents from March 2020 through December 2020. The repayment program is designed to meet tenants where they are and allow them to pay down their balance due on a schedule that works for their business. Similarly, the rent-forgiveness program is tailored to meet the needs of specific port tenants including percentage rent tenants (e.g. restaurants, retail, etc.), maritime, qualifying Local Business Enterprise and Civic Impact tenants (e.g. non-profits and artists). The Port estimates that it will forgive up to $13.65 million in rent. More information about the Port's rent-relief measure is available here: https://sfport.com/covidrelief

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"The Port stands with our tenants who have experienced unprecedented losses because of COVID-19," said Elaine Forbes, Executive Director of the Port of San Francisco. "Our tenants' success is our success. We are proud to offer rent relief programs and will continue to work with our tenants to the extent feasible to weather this storm and start the journey towards recovery."

San Francisco Municipal Transportation Agency

The SFMTA Rent Relief Program is providing rent forgiveness from March 2020 through June 2021 for approximately 25 small businesses who lease retail space at SFMTA garage locations. In addition, SFMTA is restructuring leases to ease tenant financial losses due the ongoing economic impacts of the pandemic. The estimated cost of these rent relief efforts to support SFMTA's small business partners and tenants and their recovery equates to $4 million from March 2020 through June 2021.

Recreation and Park Department

The Recreation and Park Department has provided approximately $1.4 million in rent relief since March 2020. From food cart venders to operators of park concessions such as bike and boat rentals, those working in San Francisco's park system would also find COVID-19 related financial relief under legislation currently being considered by the Board of Supervisors. If passed, the ordinance would authorize the Recreation and Park Department to waive rent and extend or modify leases of its tenants and concessionaires whose daily operations and bottom lines have suffered due to COVID-19-related shutdowns and health order regulations. The ordinance would not only help park businesses, but would allow the Recreation and Park Department to retain tenants and avoid the challenges of filling vacancies during an economic downturn.

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