Press release:
Some good news for the industry from Governor Ducey. Last week, he issued an executive order regarding commercial evictions, including lock-outs, notice to vacate, or any other attempt to inhibit the operations of a business.
Ducey said, “Arizona is grateful to the many landlords who are already working as good partners with small businesses during these challenging times. This order helps ensure no small business or nonprofit will face eviction due to COVID-19 and that landlords and small businesses work in partnership to make sure we get through this emergency together. There’s more work to do to ensure Arizona’s small businesses can make it through this public health emergency. As we continue to prioritize public health, we will continue to do everything in our power to support those in our small business and nonprofit communities serving us.”
Although the governor’s statement includes the words “no small business or nonprofit will face eviction,” the actual executive order uses words such as commercial landlords shall “consider deferring or adjusting rent” and “are encouraged to work with tenants.” Don’t let the headlines give you a false sense of security!
As we have advised in the past, we strongly recommend that you take the lead on this and provide your landlord full transparency of the impact of your business by performing the following actions:
- Notify your landlord in writing that you will require rent reduction or deferral of rent. If you have a NNN lease, we suggest you make best effort to pay full NNN’s/CAM’s during this period. These are actual expenses of the landlord for real estate taxes, property insurance, and common area maintenance.
- Include any available supporting documentation of your inability to pay rent. This may only need to be a history of sales from prior months. Show you have taken major steps in reducing operating cost by reducing labor and inventory control.
- If you receive any financial support from public programs (Paycheck Protection Program, SBA loans, grants, etc.), you will be required to allocate a portion of the eligible assistance to any past or currently due rents.
We remind you that this order only intends to delay rent and does not forgive it by releasing any renter from repayment in the future. Prudent landlords will require additional documentation to assure repayment of the deferred rent. If you would like to discuss some options addressing this with your landlord that we see taking place within the industry, please contact us.
Chuck Wells
Senior Vice President
602-513-5141
chuck.wells@kidder.com
Justin DiBiase
Restaurant Specialist
602-513-5143
justin.dibiase@kidder.com
