The Portola Valley Town Council voted 4-1 at its April 15 meeting to approve an urgency ordinance enacting an eviction moratorium for small businesses that cannot pay rent due to the coronavirus crisis. Councilman Craig Hughes cast the dissenting vote.
The ordinance effectively mirrors one passed by the San Mateo County Board of Supervisors on April 7, which places a temporary moratorium on evictions for nonpayment of rent by small businesses in unincorporated areas, provided that they can document an inability to pay rent due to the current economic climate caused by the pandemic.
Like the county's ordinance, Portola Valley's moratorium will remain in place until May 31 unless extended by the council. It defines a small business as a commercial tenant that brings in less than $2.5 million in gross receipts annually. A tenant will have up to 180 days after the moratorium expires to pay the full amount of rent payments missed.
The council had discussed the possibility of a small business eviction moratorium at its April 8 meeting, but ultimately "expressed a preference that landlords and tenants try to work these types of issues out amongst themselves," said Town Attorney Cara Silver at the April 15 meeting. "The council thought that they would give the landlords and tenants in town another week to have those types of serious conversations, and if those conversations were fruitful and tenants didn't feel a need for a regulatory solution then the council would forgo adopting an ordinance," she said.
Councilwoman Ann Wengert said she had talked to seven or eight tenants and the biggest landlords in town and found that while some had fruitful conversations amongst themselves, that wasn't always the case.
"In looking at this moratorium, it would be only a short-term backstop for the most difficult situations, and they do exist," she said. "There's clearly not a universal commentary that I would give you to say, 'Gee everybody's talking to one another and things are progressing.' No, I think it's a very mixed bag, there are a number of places where that isn't happening in an effective way right now and I wouldn't expect that to change based on the communications I received."
She added that she doesn't expect more than a couple of businesses will use the ordinance, and that those that do will only exercise it "if they're faced with no other alternative."
Wengert emphasized that even with a temporary eviction moratorium in place, it only serves as a stopgap.
"There are enough individual situations in town already where I think we will have fallout whether this (ordinance) is in place or not," she said. "I think it's important to prepare the community for that, and it's not going to be because the landlords created that or caused that ... it's just a very, very dire situation for many."
Lisa Green, who owns Pacific THERx Physical Therapy & Fitness in Portola Valley, called on the council to pass the ordinance during the public comment portion of the virtual meeting.
"I'm looking at a year out trying to survive, and trying to see if we can even survive to get through the year," she said. "I'm lucky: My landlords, we're talking and they've always been great so I have that in my favor. But I think there isn't any business in town that is going to want to use a moratorium to screw their landlord. We're all just trying to survive, and I think for some people who aren't as fortunate as I am that I've talked to, this moratorium would be very helpful to them."
In voting against the ordinance, Hughes said he would have considered supporting it if the turnaround time to pay rent after the moratorium expires was shorter. He added that he is concerned the move could have "dramatic unintended consequences, like a lot of the commercial properties in town end up being owned by banks."
"Protecting tenants from landlords without protecting landlords from banks as this ordinance does is something that just cuts against the grain of every experience I've had in 20-plus years of running small businesses," he said. "I'd much rather see them (landlords and tenants) work out some agreement if they can between themselves without putting our thumb firmly on the side of the tenants by enacting this ordinance."
Other council notes
• The council agreed with a recommendation from the town's Cultural Arts Committee to cancel the annual Summer Concert Series and a new, all-day music festival called PV Palooza. Cities and organizations throughout the Bay Area have begun cancelling events planned for this summer due to the coronavirus pandemic and shelter-at-home order.
"The council agreed with this recommendation, albeit reluctantly -- not because it's not the right thing to do, but rather because a summer without music in Portola Valley is unthinkable," Mayor Jeff Aalfs said in an email to residents.
• The town is in the process of analyzing the fiscal impact of the pandemic, with current estimates indicating a revenue loss of $200,000 to $300,000, according to Town Manager Jeremy Dennis.
The fiscal analysis will be reviewed by a council subcommittee before staff bring it to the full council at its April 29 meeting. The 2020-21 fiscal year budget process will also be discussed then. Town staff is developing a provisional budget that the council would need to adopt by the end of the fiscal year in June, after which staff would work on a revised budget that will include more up-to-date revenue projections, Dennis said. The revised budget would be presented to the council in September or October, barring new coronavirus impacts.
Staff is also preparing a document to guide the reactivation of town facilities and services, including facility rentals and recreational opportunities that have been prohibited since the shelter-at-home order was implemented. The council will discuss this process April 29, but there is no current timetable for reopenings, according to the town.