By Thomas K. Pendergast

To slow the spread of small business failures during the pandemic, the San Francisco Board of Supervisors has expanded and extended a moratorium on evicting commercial tenants who cannot pay rent because of COVID-19.

If commercial tenants are registered to do business in San Francisco, had gross receipts of less than $25 million in the tax year 2019, have missed a rent payment since March 17 and can prove that it was because of the virus’s impact on their business, they cannot be evicted as long as they tried to work with the landlord to pay what they could manage. 

That emergency ordinance previously did not cover formula retail and was set to expire on Nov. 30. However, in a unanimous vote last month the Board extended this moratorium to March 31, 2021. San Francisco Mayor London Breed has issued a statement that she intends to sign it into law.

The new ordinance would clarify that it now includes subtenants and formula retail as well. It will also narrow its scope by excluding for-profit tenants and subtenants who are occupying space zoned or approved for office use in the Planning Code, as well as commercial tenants or subtenants of the City. 

It also stipulates that commercial tenants with nine employees or fewer will have 24 months after the end of the moratorium to make up for any missed rent payments before they could be evicted for non-payment. Those with 10-24 employees will have 18 months after the end of the moratorium; those with 25-49 employees will have 12 months. Those with 50 employees or more will have until the end of the moratorium period and interest could not begin to accrue until after the payment deadlines. 

Landlords and tenants would be allowed to enter into written repayment plans to modify these deadlines. Additionally, a landlord could proceed with an eviction for non-payment before the deadline if the landlord owns less than 25,000 square feet of gross floor area in the City and can demonstrate that being unable to evict the tenant would create a significant financial hardship for the landlord.

“This is an extraordinary measure for an extraordinary time,” District 3 Supervisor Aaron Peskin told the Board. “And time really is not our friend. Time is of the essence. Businesses are permanently closing down and we all know that. And this is the remedy for that.”

Khaled Ramadan runs the Sunrise Deli at 2115 Irving St. in the Sunset District. He had a second location downtown on Second Street, but the pandemic hit his business so hard that he had to give up that location. 

“This has been a huge emotional loss for me and my family; my parents are in their 60s and I was hoping they can retire with dignity in the next coming years and now that just seems like a far-fetched dream,” Ramadan said. “We don’t know what our future will look like after this pandemic, but we hope this ordinance will help the many San Francisco small businesses that find themselves in our situation.”

Ramadan said they initially closed the downtown location last March, with the expectation that they would be opening it back up within a couple of weeks. As the pandemic dragged into April and May, however, it became clear to him that business was not coming back in that area any time soon.

He said they did try using apps and the Internet to keep their business going, even offering free delivery, but it wasn’t enough. 

“Frankly, there was just nobody down there; nobody working, nobody in the area. So that didn’t work out for us, as opposed to, for example, on Irving Street,” he said. “There were still folks there. There were residents there. There were people trying to get groceries. The takeout and delivery, in fact, worked over there.

“Obviously, we lost business, of course. We were not doing the same numbers as we were doing pre-pandemic but it at least allowed us pay our employees and pay some of the rent and pay some of the bills.”

Ramadan said another key difference was how much the two landlords he was dealing with were willing to work with him. 

“The folks out in the Sunset on Irving Street were quite responsive,” he said. “From day one they saw how difficult the problem was.”

His other landlord for the downtown deli, on the other hand, was still demanding rent even though that location was shuttered. 

“It was really impossible for me to come up with that considering there was no business at all.”

Ramadan called the new ordinance extending the moratorium “vital.”

“It’s very, very important because it’s protecting businesses from being evicted for non-payment during the moratorium period. A lot of folks, particularly the smaller-type businesses … this is their livelihood,” he said. “This is all they have. They have poured all their money and energy and time into this. If landlords are allowed to evict these folks for non-payment then they would lose everything.

“Without it we might see a collapse of all the small businesses and all those family-run places that have made San Francisco what it is.” 

David Heller, president of the Greater Geary Boulevard Merchants and Property Owners Association and co-owner of a beauty supply store, said he sees the business fallout from the pandemic restrictions constantly. He views the new ordinance as somewhat of a mixed blessing. 

“Places are closing up like there is no tomorrow,” Heller said. “It’s great to give you more time. But if people and the economy are going to be locked in and not going to go out, it’s just going to put us merchants in more liability.”