Businesses

storefronts or restaurants.

Hundreds of businesses in Arizona have signed a petition asking Congress for eviction protection.

Gov. Doug Ducey on Tuesday issued an executive order preventing residential landlords from evicting renters who are out of work because of the coronavirus, or sick with it, and business owners like Stephanie Vasquez of Fair Trade Cafe in Phoenix said the same should be done for small businesses.

“In my opinion, I don’t see a huge difference,” said Vasquez, who tried to keep her cafe open initially by offering take-out only during the pandemic, but closed a few days ago, putting 19 employees out of work.

She said most small businesses just don’t have the cash reserves to keep paying their bills while maintaining a three-week shutdown, let along longer.

She started the petition asking the government for eviction protection, access to capital, a pause in utility shutoffs and a break from sales taxes. She’s shared the request with the Arizona Congressional delegation, state Legislature and governor, she said. As of Wednesday about 340 companies had signed.

Her petition is not the only call for such help. The National Institute for Local Self Reliance, proposes a similar plan, and Local First Arizona signed onto the request.

Ducey met with landlords

Ducey was scheduled to meet with commercial real estate owners Wednesday. Landlords likely would have concerns over such a request, as they can’t simply forgive rent payments without violating the terms of their own loans used to buy their retail centers, office complexes and other business centers, said Michael Pollack, the owner of dozens of Arizona retail centers

“It is absolutely, positively impossible,” Pollack said of the petition. “Landlords will just say, ‘I’m taking the keys and sending them to my bank.’ And banks are not equipped to run millions and millions of square footage of real estate right now.”

He said the federal government is going to have to come up with a high-dollar plan that helps tenants, landlords and banks weather the pandemic, and that the commercial real estate industry isn’t big enough to take the full economic impact of the crisis.

“Only the federal government has that ability,” he said. “Not city governments, state governments. Nobody else has that. I’m not thrilled we are going to have to increase substantially our national debt, not thrilled about that at all. But unprecedented times require unprecedented action.”

‘Take the needle off the record’

Chef Silvana Esparza, from Barrio Cafe in Phoenix, who herself is awaiting results from a coronavirus test, said that businesses and landlords need to “just take the needle off the record,” and accept that nobody is getting paid for a while.

Esparza might apply for a SBA loan to help keep her business afloat, she said, but that help isn’t available to all businesses and isn’t going to help them deal with bills they face today.

Esparza shut down her restaurant a week and a half ago out of concern for public health, and is glad she did because she began to feel ill and came down with a cough the next day.

“Not only are we closed, but we are closed at the height of our season,” she said. “If this was July, August, September, we’d be like, ‘ha,’ we’re not making that much money anyways. This is when we make our money to help us survive summer.”

She said she already helped one friend and fellow restaurant owner renegotiate with a landlord who was demanding rent this month despite the widespread closures.

Matt Anderson, a Phoenix attorney who represents a variety of businesses including restaurants, said he’s hopeful businesses can negotiate with landlords, suppliers and others while the emergency closures are in place.

“Where there is wiggle room would be private contacts with vendors, landlords and even insurance carriers,” Anderson said. “My hope is that parties in good faith will negotiate a forbearance, or what I’ve heard as an example, is taking the rent payment for April and delaying it and adding it to the end of a lease term.”

He said he’s seeing that with some clients.

“Nobody wants to pursue someone in bankruptcy,” he said.

Chris Osborn, a partner at MKJ Advisors commercial real estate brokerage and advisers, said landlords also don’t want to lose good tenants.

“If you have a good long-term tenant it is the smart play to work things out with them,” he said. “From a leasing perspective, it takes months to re-lease a space. Leasing demand has almost completely dried up for the foreseeable future, so it may take longer to lease a space than it did just two weeks ago.”

He said smart landlords will weigh the risk of rent abatement versus what it will cost to find a new tenant, if possible.

“Those costs include lost rent, legal fees, collection costs, leasing fees to brokers and tenant improvement allowances paid to a new tenant for that space,” he said.

Watching Congress closely

Some businesses are watching closely what comes from Congress and deciding whether they can pull through.

HumbleBrag Salon in Phoenix is still open — the state has not ordered salons and barbers to close — but the widespread concern over catching or spreading the coronavirus has slowed business to a trickle, co-owner Joey Paradise said.

The eight stylists at the salon are taking what few appointments they have, but not earning near what they would normally.

He just opened in November.

“If the stylists can’t go to work, I still have to pay the rent,” he said. “The salon may or may not survive. I’m more worried about the people inside of it.”

What would he need to make through this?

“The biggest thing for me — some sort of pause on rents, mortgages, billings,” he said. “That sort of thing is the biggest hit that everybody is going to take. But if people can’t pay their rents, you will have landlords who can’t pay their mortgages, and it’s something that can snowball very quickly. Nationwide that is going to be a thing.”

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