Check, please: California bill would give restaurants leverage to renegotiate leases

Restaurants could terminate their lease if their landlord doesn’t agree to terms

Scott Wiener, Lena Gonzalez
Scott Wiener, Lena Gonzalez

Restaurant lease renegotiations will soon be on the menu if the California State Senate passed a new bill.

Senate Bill 939 would give hospitality businesses significantly more leeway to renegotiate leases to reflect coronavirus-related loss of capacity, according to Eater. It would also allow tenants to single-handedly terminate a lease when they and their landlords fail to agree on new terms.

The bill is targeted at small businesses and specifically excludes publicly traded companies and affiliates. State senators Lena Gonzalez and Scott Wiener authored the bill. Wiener is expected to propose a new housing bill this year.

The lease options would be available to “eating or drinking establishments, places of entertainment, or performance venues,” and the tenant would have to prove their business “meets specified financial criteria” to qualify, including a decline in revenue after shelter-in-place orders came into effect.

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The bill would also institute a statewide moratorium on commercial evictions and evictions of nonprofit organizations for the duration of any state of emergency.

Most restaurants in the state closed their dining rooms in March, prompting mass layoffs. Los Angeles restaurants have been closed since March 16.

The state is allowing restaurants to re-open at lower capacity based on local infection rates and other data points. Live venues like concert halls and sports arenas are set to be the last businesses to re-open and many independent venue operators say they worry they won’t hold out long enough to re-open.

Retailers nationally, including restaurants, saw a record decline in sales in March. That record was broken in April with an even worse month. Restaurants nationally lost half their business. [Eater]Dennis Lynch