SM Council Votes to Use Federal Stimulus for Rent Abatement for City's Commercial Tenants

Commercial tenants in city-owned properties who have been financially impacted by the pandemic will soon be getting some rent relief from their landlord.

At its Tuesday night's meeting, the Santa Monica City Council voted to direct staff to design a Rent Abatement Program for city tenants – which will be funded by a portion of the $29.3 million federal stimulus the city is receiving through American Rescue Plan. The motion also includes a rent freeze for all city tenants for fiscal year 2021-22.

According to city officials, the new program will provide nine-month rent abatement for nonprofit city tenants; six months for small business tenants on Pier, beach and other city properties; and three to six months abatement to Bergamot Station and Santa Monica Airport gallery tenants. 

The program will require evidence of financial hardship as well as enrollment in the El Camino College Small Business Development Center (SBDC) business support program, and will take into account whether tenants are able to access relief from other programs available from federal, state and county programs, city staff said in a report.

"We want to create certain incentives so that tenants don't leave us," said Councilmember Gleam Davis, approving the motion.

The abatement program was first discussed in March when the Council was considering extending the Rent Deferment Program.

More than two dozen tenants in Bergamot Station, the Santa Monica Pier and the Santa Monica Airport addressed the Council at its March 23 meeting, asking for rent forgiveness for the first 4 months of COVID-mandated closures and a 50% discount for the remainder of 2021.

They maintained that their business is down more than 40 percent and are struggling to pay their bills. While others – like the Ruskin Group Theatre in Santa Monica Airport – explained they have not been able to open yet due to Stay-at-Home orders and indoor occupancy requirements.

After hearing pleas for rent relief, some councilmembers mentioned the city should use a portion of its $29.3 federal stimulus for rent abatement for city tenants and directed staff to come back with report about redirecting at least 20% of the federal funds to the recovery of small businesses in Santa Monica.

The rent relief program was of many directives the Council issued Tuesday night on how to allocate Santa Monica's $29.3 million stimulus funds.

Council also directed stimulus monies to support community economic recovery as well as to address homelessness and provide community services, including reopening city facilities and services, when permitted by public health orders. 

"Your Council and your City administration are focused on how to leverage the most good for the most hurting members of our community with the limited funds available, even with this very welcome stimulus," said Mayor Sue Himmelrich. "We will use these funds to support our arts and culture organizations and small businesses in their recovery and will continue to focus limited resources on our three community priorities through the biennial budget."

Council allocated funds to the following areas aligned with the recently-adopted community priorities:

$5.86 million for equitable and inclusive economic recovery, including the rent abatement program; $237,700 for Pier Ambassadors and enhanced sweeping, trash, disinfection on the Pier and beach; and $255,000 for small business and events grants.

$6.6 million for addressing homelessness, including $6.35 million to support affordable housing, and $250,000 in one-time funds for seed funds to support efforts to pursue non-congregate shelter and behavioral health priorities.

$3.75 million to reopen city facilities and address community priorities, including $3 million in ongoing costs to reopen libraries, funding a language justice program, restoring staffing for code enforcement, homelessness, and parking revenue compliance; and $750,000 for enhanced federal lobbying support, a limited-term park planner, the fire academy and cybersecurity.

$5 million to support the Beach and Pier Funds due to severe revenue loss in FY 2020-21 and to cover new federally- and state-mandated costs in the General Fund.

City officials said the proposed Biennial Budget will be published on May 10 at finance.smgov.net before a study session on May 25.