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CRE Group Prepared To Sue To Block Bill Allowing Retailers Out Of Leases

California Business Roundtable President Rob Lapsley says the business lobby is prepared to sue to block SB 939, a bill that would allow hospitality tenants across the state to walk away from their lease agreements.

California State Capitol building in Sacramento

Sponsored by state Sens. Scott Wiener, a Democrat representing San Francisco, and Lena Gonzalez, a Democrat from Long Beach, SB 939 advanced after a 5-1 vote by the Senate Judiciary Committee on Friday.

Amended this month, it would allow hospitality tenants seeing substantial revenue drops or capacity constraints to terminate their lease agreement if renegotiations with their landlord come up empty, a proposal that stunned commercial landlord interests this month

"While CBRT is working hard to help all business sectors recover during this economic crisis, we are opposed to legislation like SB 939 that conveniently shifts the burden from one business sector to another, creating equally devastating consequences without solving the core problem," Lapsley said in a statement before the hearing last week.

The bill, which would also implement a commercial eviction moratorium for all tenants affected by the coronavirus pandemic, is simultaneously met with great support from hospitality interests, such as the Bay Area Hospitality Coalition Committee Member Gwyneth Borden, whose group has pushed for the bill. 

Wiener said last week that SB 939 is aimed to help prevent a hospitality and small business "extinction event."

"My business is down 70%, and this bill will allow me the ability to operate during a time where my capacity is severely slashed due to social distancing and the rent just no longer corresponds to my business model," Ariel Ford, owner of Bay Area frozen yogurt shop Easy Breezy, said last week.

The bill now heads to California's Senate Appropriations Committee, according to Wiener's office.