The Beverly Hills City Council stopped short of amending its COVID-19-related Urgency Ordinance for a fifth time on May 19 following a robust Study Session discussion. The Council is expected to adopt a new replacement Urgency Ordinance which will focus on commercial eviction protections in June.
“What we’ve really done is we’ve shifted the playing field where it’s uneven for the tenant,” Mayor Lester Friedman said, noting that “some tenants have been taking advantage” of the ordinance to not pay rent when they are capable of doing so. “It was not our intention to have landlords be banks.”
The Council was originally slated to vote on the revised ordinance during the formal City Council meeting later that evening. However, the item was subsequently pulled from the agenda in order to allow City Attorney Larry Wiener to incorporate changes before the Council moves to adopt a new ordinance.
“What this ordinance should be doing… is ensuring that those who needed the help got the help and were not thrown out,” clarified Mayor Friedman. Both the mayor and Councilwoman Lili Bosse underscored that the ordinance was never intended to leave landlords in the position of “serving as banks.”
Specifically how the revised ordinance pertains to the different categories of commercial tenants (office, retail, restaurants) is expected to be among a number of changes Wiener is tasked with making. Other provisions expected to be included in the revised ordinance include the length of time tenants will have to repay the forborne rent sans penalties as well as specific steps that must be taken prior to a landlord attempting to recoup losses in court.
“The number one goal is to protect the tenants…we don’t want people to get evicted,” Bosse said. “Anybody who owns property right now is affected. And I don’t think it’s our intention to allow landlords to be banks.”
The original ordinance adopted on March 16, No. 20-O-2805, defined emergency regulations related to residential and commercial tenant evictions, in addition to mandating measures to strengthen the City’s response to the outbreak of COVID-19, including closure of certain establishments.
Since passing the ordinance, the Council has worked to finesse the relationship between commercial landlords and tenants. On March 31, the first replacement Urgency Ordinance, No. 20-O-2806, changed the notice a tenant provides to the landlord should they be unable to pay rent from 30 days to 7 days after the rent is due and established a moratorium on rent increases, in addition to other measures. The current ordinance, No. 20-O-2809, which on May 5 repealed and replaced its predecessor, Urgency Ordinance No. 20-O-2808, made modifications to what commercial tenants the ordinance applies to when allowing for the forbearance of paying rent should a person lack the funds as a result of COVID-19.
The Council has fielded significant pressure from landlords following passage of the ordinance, which currently allows residential and commercial tenants up to a year after the pandemic crisis ends to pay back missed rent payments sans interest.
Former Beverly Hills Mayor Tom Levyn, a real estate attorney, used public comment to voice his frustration with the Urgency Ordinance, which he characterized as unfairly disadvantaging landlords.
“Which commercial tenants does the City want to protect?” he queried at the beginning of the Study Session on Tuesday. Levyn advocated that the City Council exempt the office category from the ordinance and let the landlord and tenant work out a deal. “My answer would be [protect] those in need of help.”
Directly following Levyn, Beverly Hills attorney and resident Steve Mayer offered a contrasting view, stating that the process appeared to be “too influenced by one group: New York Stock Exchange listed landlords.”
“Please go back to the simple Urgency Ordinance,” he asked.
In the wake of the Council enacting the Urgency Ordinance, Douglas Emmett CEO Jordan Kaplan estimated that one-third of his office tenants were delinquent in rent payments. Many of those tenants, he said, were high net worth tenants taking advantage of the ordinance to withhold rent.
“We’re going into a market that’s going to be very tough on landlords. Today we have 3,000 tenants and we have not signed a single deal with a tenant,” Emmett told the Council, noting that “all of them” have essentially taken a free loan by not paying rent. “Tenants just walk away when you try to make a deal because they already have the best you can get, which is zero.”
Councilman Julian Gold questioned the logic of mandating rent forbearance given that courts are not allowing the eviction process to proceed. The ordinance currently in place allows tenants the opportunity to cure the default before they would face eviction proceedings.
“I want that the ordinance requires landlords and tenants to come to a deal,” Gold said. “I think we have to force that and not assume that it’s happening.”
Both Bosse and Councilman John Mirisch advocated lowering the amount of time tenants have to repay the forborne rent to between three to six months after the emergency ends.
“Large corporations that are able to afford to pay rent (now) should,” Mirisch said. “We don’t want to get caught between commercial landlords and tenants.”