Merchants at the Japan Center mall in Japantown have struggled to get the propety owners to negotiate on rent. (Kevin N. Hume/S.F. Examiner)

Merchants at the Japan Center mall in Japantown have struggled to get the propety owners to negotiate on rent. (Kevin N. Hume/S.F. Examiner)

Commercial eviction ban could be extended to March 31

Small businesses could have until March 2023 to repay back rent under changes made Monday to proposed legislation on commercial evictions.

Supervisor Aaron Peskin introduced new protections for small businesses to chart long-term plans as they negotiate rent with landlords. The legislation, originally introduced in September and brought back to the Land Use and Transportation Committee on Monday, would extend San Francisco’s commercial eviction ban to March 31 and give eligible tenants up to two years to repay missed payments.

“This may seem like an extraordinary measure but this is an extraordinary and unprecedented time,” Peskin said. “We cannot afford to delay this because if we do, we will wake up to communities like Chinatown that are decimated, with the unique cultural heritage that they represent today. If we want a full recovery, we are all going to have to share the pain.”

The City’s commercial eviction moratorium, issued and incrementally extended by Mayor London Breed, is set to expire at the end of November. Gov. Gavin Newsom in September allowed local governments to continue banning commercial evictions until March 31, which he could further extend.

Peskin said the legislation would build upon Breed’s executive abilities in extending long-term protections and adding further protections through the legislative process.

How much time businesses with less than $25 million in annual gross receipts have to repay rent depends on its size. Businesses with less than 10 employees have two years, businesses with less than 25 employees have 18 months, and businesses with less than 50 employees have one year.

Peskin’s legislation also allows businesses with less than 10 employees to end their leases prematurely without penalty, and bars landlords from charging interest or late fees for rent unpaid during the moratorium.

Landlords owning less than 25,000 square feet of property who can prove significant financial struggles are exempt. If the landlord and tenant reach an agreement on an altered lease, the landlord is not subject to the legislation, a provision mean to give an incentive to negotiate.

“To me, the biggest impact is that landlords like that are going to have to come to the table,” said Supervisor Dean Preston, a cosponsor of the legislation. “Yes, this will stop evictions. What it really does is it’ll change the dynamic that exists right now.”

Preston said that while there are many landlords that have worked with their tenants, owners like those at the Japan Center Mall have not. Peskin noted that many longstanding businesses in nearby Western Addition driven away by the redevelopment era did not come back, and many communities could face a similar fate due to the pandemic.

Supervisors Gordon Mar, Shamann Walton, and Ahsha Safai are also co-sponsors of the legislation.

The proposal drew strong support from public commenters on Monday, many of whom spoke of the need for a lifeline for small businesses and the need to preserve the cultural heritage of Japantown. Several also called for businesses to have longer than two years as they accrue debt amid a long-term economic downturn.

“We’ve cried over and over again,” said Chris Chin, owner of Matcha Cafe Maiko in the Japan Center. “It’s been a slow climb back. This ordinance will help us with a reasonable repayment plan.”

Changes to the legislation must wait a week before supervisors can vote on the ordinance. The Land Use and Transportation Committee will discuss the item again next Monday.

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