San Francisco Supervisor Dean Preston is introducing legislation Tuesday to cancel unpaid rent that small businesses accumulated while they were shut down because of public health orders over the past year, a proposal Preston’s office says is the first of its kind in the nation.
The proposal covers small businesses with annual gross revenues of $25 million or less, and excludes most offices. Small businesses forced to shut down because of coronavirus-related safety orders — such as bars, gyms and personal care services like nail or hair salons — could see their back rent erased if the proposal is approved by the Board of Supervisors.
Christin Evans, owner of the Booksmith bookstore and board member of the Haight-Ashbury Merchants Association, said:
“This is a game-changer. … For businesses facing five-, even six-figure back rent, this gives them a chance to make it through the pandemic. It’s the most important step the city can take to making sure more businesses aren’t forced to close their doors for good.”
San Francisco’s small businesses have collectively accrued as much as $44.9 million per month in unpaid rent, according to a March 2021 report from the city’s Budget and Legislative Analyst’s Office.
The proposal is based on state law that allows a small business to not fulfill a contract if their performance became impossible, a condition Preston argues was satisfied by many small businesses’ forced shutdown during the pandemic. The proposal does not override specific lease provisions that assign risk in the event of disaster like a pandemic.
Preston, who is also a former small business owner, said:
“We hear everyday from businesses facing crushing rent debt that piled up while they were forced to shut down.”
The supervisor added:
“We shouldn’t leave small businesses that complied with public health orders out to dry. If we’re going to meaningfully recover, we need small business rent debt forgiveness.”