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Global Public Policy

California: Governor authorizes cities to stop evictions

March 19, 2020

On March 16 Governor Gavin Newsom released an Executive Order that “authorizes local governments to halt evictions, slow foreclosures, and protect against utility shut-offs.”  The order applies to both residential and commercial property. 

The order does not waive the rent obligation of tenants but does allow local governments to defer action until May 31, 2020.

ICSC’s GPP staff participated in a California Business Properties Association (CBPA) call earlier this week along with representatives from NAIOP, BOMA, and many other commercial real estate groups. The primary outcome of the CBPA call was to encourage our industry to stand with the state of California during this COVID-19 crisis while encouraging a statewide solution regarding the interpretation and ultimate enforcement of the Governor’s Executive Order.

ICSC, CBPA and other industry groups firmly believe a statewide solution is the best course of action. Conversely, it is going to be very confusing and chaotic for landlords with properties in multiple cities if each local jurisdiction creates different levels of enforcement; which is why a statewide solution is critical.

This is a very fluid situation. Government mandated closures are obviously placing retailers in a precarious financial situation. Our interdependent relationship between consumer facing tenants, retail real estate owners and lenders must be preserved. A retailer collects sales receipts and pays rent; the owner collects the rent and pays the lender; the lender pays investors. Any break in this cash flow by mandatory rent abatement creates a cascading bankruptcy chain that threatens all real estate. Lenders, landlords and retailers all have an interest in working together to sort out a fair and responsible accommodation due to this unprecedented disruption.

ICSC will continue to monitor the developments with the Governor’s Office and CA Legislative Leadership.  If you have any questions please don’t hesitate to contact Herb Tyson (htyson@icsc.com) or Pete Jacobson (pjacobson@icsc.com) with the GPP team.