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RESOLUTION 20-208 to Establish a Commercial Property Landlord-Tenant Real Property Tax Grant Program

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RESOLUTION 20-208 to Establish a Commercial Property Landlord-Tenant Real Property Tax Grant Program LETTER TEMPLATE [ Insert Your Personal or Business Letterhead ] September 9, 2020 Councilmember Ikaika Anderson, Chair Councilmember Ann Kobayashi, Vice Chair Councilmember Carol Fukunaga, Floor Leader Councilmember Ron Menor, Chair Emeritus Councilmember Brandon Elefante Councilmember Joey Manahan Councilmember Kymberly Pine Councilmember Heidi Tsuneyoshi Councilmember Tommy Waters Honolulu City Council Re: RESOLUTION 20-208 to Establish a Commercial Property Landlord-Tenant Real Property Tax Grant Program Dear Councilmembers, Thank you for the opportunity to submit testimony. WE/I STRONGLY SUPPORT the Commercial Property Landlord-Tenant Real Property Tax Grant Program. < introduce yourself > < insert letter content> SAMPLE CONTENT YOU CAN REVISE TO MAKE YOUR OWN. - We believe the Commercial Property Landlord-Tenant Real Property Tax Grant Program (the “Program”) will serve as an essential catalyst for small businesses and landlords to work together as we migrate into the new normal. - Without help, the burden of old lease rents (based on previous market conditions) during a post-coronavirus economic recovery are unbearable for small businesses. - The Program is designed to pass rent relief forward. Using federal CARES money, the County would allow landowners to apply for grants on behalf of their eligible business tenants. Grants would be spread out to tenants proportionally in an amount not to exceed the value of the annual real property tax for the subject properties. While the Program cannot require landowners to renegotiate leases, we believe a bi-product of the goodwill developed from the landlord- tenant dialogue is that landowners will be more inclined to set new and reasonable expectations going forward and to start renegotiating or at least amending leases in a sustainable manner. - In many cases, businesses, especially restaurants and entertainment venues are facing ½ to 2/3 reduced capacity in the new normal with the same or an even higher rent caused by rent deferral. Even if business capacity is not a factor, the deteriorating economic climate due to job losses and reduced visitor arrivals is causing significant decline in business revenue. This unbearable burden of back rent piling up along with an unrealistic future rent obligation is why so many businesses are closing. Thank you again for the opportunity to submit testimony and for all of your efforts to serve the people of Hawaii as our elected leaders. Thank you, Signature Line Name Title Business Email Address Optional: Phone Number Optional: Address Copy to Office of the Mayor: - Kirk Caldwell, Mayor ([email protected]) - Gary Kurokawa, Chief of Staff ([email protected]) - Roy Amemiya, Managing Director ([email protected]) - Georgette Deemer, Deputy Managing Director ([email protected]) - Ed Hawkins, Office of Economic Development ([email protected]) - Amy Asselbaye, Office of Economic Revitalization ([email protected]) CITY COUNCIL 20-208 CITY AND COUNTY OF HONOLULU No. HONOLULU, HAWAII RESOLUTION URGING THE CITY ADMINISTRATION TO ADOPT THE HONOLULU ECONOMIC RECOVERY AND EMPLOYMENT SUPPORT (H.E.R.E.S.) PACKAGE, INCLUDING THE FOLLOWING ELEMENTS: (1) SUPPORTING CITY PROJECTS TO PROMOTE JOB CREATION, ECONOMIC ACTIVITY, AND COMMUNITY SPENDING; (2) ESTABLISHING A COMMERCIAL LANDLORD-TENANT REAL PROPERTY TAX GRANT PROGRAM TO PROVIDE RENT FORGIVENESS AND RELIEF; AND (3) ALLOWING OUTDOOR DINING AND RETAIL ACTIVITIES IN CITY PARKING LOTS, YARDS, AND LANDSCAPE AREAS. WHEREAS, on March 4, 2020, Governor David Ige ("Governor") issued a Proclamation declaring the existence of a state of emergency in the State of Hawaii ("State") due to the COVID-19 outbreak and invoking his authority under the Hawaii Emergency Management Act, HRS Chapter 127A; and WHEREAS, on March 21, 2020, the Governor issued a Second Supplementary Proclamation requiring, subject to limited exceptions, all persons entering the State to be subject to a mandatory 14-day quarantine, effective March 26, 2020, which resulted in a dramatic reduction of visitors to the Hawaiian islands; and WHEREAS, on March 23, 2020, the Governor issued a Third Supplementary Proclamation directing individuals to stay at home unless performing essential activities and placing restrictions on non-essential businesses; and WHEREAS, these extraordinary measures have helped Hawaii to achieve among the lowest infection and death rates in the United States, but have also had a devastating impact on the local economy; and WHEREAS, despite the gradual lifting of restrictions on non-essential businesses and City and County of Honolulu ("City"), State, and Federal economic relief measures, the economic hardship for many Hawaii businesses due to the COVID-19 pandemic has been severe, and many such businesses have had difficulty paying their rents and are vulnerable to closure due to lost revenues; and WHEREAS, Hawaii has been reported as having the highest percentage of businesses in the country negatively affected by the COVID-19 pandemic, as well as the highest share of small businesses operating in "high-risk industries," such as restaurants, hospitality, and tourism; and WHEREAS, this has also resulted in reductions of work hours, furloughs, or terminations for tens of thousands of workers; and 1 OCS2020-0794/8/18/2020 3:31 PM CITY COUNCIL 20-208 CITY AND COUNTY OF HONOLULU No. HONOLULU, HAWAII RESOLUTION WHEREAS, a coalition of local labor, business, and industry groups including: the Chamber of Commerce Hawaii, Hawaii Construction Alliance, Hawaii Food Industry Association, Hawaii Food Manufacturers Association, Hawaii Restaurant Association, Retail Merchants Association of Hawaii, the National Association of Industrial and Office Properties ("NAIOP") Hawaii Chapter, the Hawaii Lodging and Tourism Association, and many individual business owners and workers, has come together to develop the H.E.R.E.S. package of initiatives to support business and retain or generate new jobs to help the local economy recover; and WHEREAS, the City Council finds that implementation of this package of BE IT RESOLVED by the Council of the City and County of Honolulu that it urges the City Administration to adopt the Honolulu Economic Recovery and Employment Support package, including the following elements: 1. Supporting City projects to provide construction jobs, generate economic activity, and stimulate community spending; 2. Establishing a commercial property landlord-tenant real property tax grant program for properties classified as Commercial and Hotel and Resort conditioned upon landlords providing rent forgiveness to their tenants; and 3. Allowing outdoor dining and retail activities in City parking lots, yards, and landscape areas abutting parcels with restaurant or retail establishments; and BE IT FURTHER RESOLVED that the commercial property landlord-tenant real property tax grant program include the following elements: 1. Owners of properties classified as Commercial and Hotel and Resort shall be eligible to apply on behalf of their business tenants for a grant not to exceed the value of the annual real property tax for the subject properties, provided that: a. Applications may be subject to audit or investigation; and b. Fraudulent applications shall be subject to the applicable criminal and/or civil penalties; and 2 OCS2020-0794/8/18/2020 3:31 PM CITY COUNCIL 20-208 CITY AND COUNTY OF HONOLULU No. HONOLULU, HAWAII RESOLUTION 2. Eligibility for properties classified as Hotel and Resort shall be limited to that portion of the property leased to tenants operating a commercial business; and BE IT FINALLY RESOLVED that copies of this resolution be transmitted to the Mayor, the Managing Director, and the Director of Budget and Fiscal Services. INTRODUCED BY: DATE OF INTRODUCTION: AUG 18 2020 Honolulu, Hawaii Councilmembers 3 OCS2020-0794/8/18/2020 3:31 PM July 2020 Profile of Survey Respondents 1,234 total business respondents broken down into 18 primary industries. Nearly one-third (29.7%) are in the Food Services and Retail Trade industries. (N=1,234) Food Services 16.6% Retail Trade 13.1% Health Care and Social Assistance 12.6% Professional, Scientific, and Technical Services 10.1% Other Services 9.4% Real Estate Rental and Leasing 7.5% Art, Entertainment, and Recreation 5.0% Manufacturing 4.7% Construction 4.5% Finance and Insurance 4.1% Wholesale Trade 3.2% Educational Services 2.9% Transportation and Warehousing 1.9% Accommodation 1.2% Information 1.1% 1.1% Agriculture, Forestry, Fishing and Hunting 0.6% Management of Companies and Enterprises 0.4% 68.5% earned less than $1 million in estimated annual revenue in 2019. (N=1,145) 90.4% employed under 50 full-time equivalent employees as of the end of 2019. (N=1,191) 4 1 July 2020 Profile of Survey Respondents 1,234 total business respondents broken down into 18 primary industries.Mahalo to our partners for making this survey possible Nearly one-third (29.7%) are in the Food Services and Retail Trade industries. (N=1,234) Food Services 16.6% Retail Trade 13.1% Health Care and Social Assistance 12.6% Professional, Scientific, and Technical Services 10.1% Other Services 9.4% Real Estate Rental and Leasing 7.5% Art, Entertainment, and Recreation 5.0% Manufacturing 4.7% Construction 4.5% Finance and Insurance 4.1% Wholesale Trade 3.2% Educational Services 2.9% Transportation and Warehousing 1.9% Accommodation 1.2% Information 1.1% 1.1% Agriculture, Forestry, Fishing and Hunting 0.6% Management of Companies and Enterprises 0.4% 68.5% earned less than $1 million in estimated annual revenue in 2019. (N=1,145) 90.4% employed under 50 full-time equivalent employees as of the end of 2019. (N=1,191) 4 2 July 2020 Profile of Survey Respondents 1,234 total business respondents broken down into 18 primary industries. Nearly one-third (29.7%) are in the Food Services and Retail TradeAloha, industries. (N=1,234) Thanks to the wisdom of our government leaders to prioritiZe public health and our compliant citiZens, our Food Services 16.6% Retail Trade 13.1% curve among the lowestHealth in Care the and nation. Social Assistance 12.6% Professional, Scientific, and Technical Services 10.1% A lockdown was imposed to achieveOther this remarkableServices outcome.
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