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HomeMy WebLinkAboutReso 37-21 Covid Deferred Rent Payback ProgramRESOLUTION NO. 37-21 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MORRO BAY, CALIFORNIA AUTHORIZING A PAST -DUE RENT PAYBACK PROGRAM FOR TIDELANDS TRUST MASTER TENANTS WITH RENTS DEFERRED DUE TO THE COVID-19 PANDEMIC THE CITY COUNCIL City of Morro Bay, California WHEREAS, the City of Morro Bay has 30 Master Leases on the Morro Bay Waterfront that it oversees and collects revenues from in order to provide public access, infrastructure, public safety and other services to the Morro Bay waterfront, bay and beaches; and WHEREAS, 2020 saw unprecedented social and economic effects due to the worldwide COVID-19 pandemic that caused a significant downturn in Master Lease revenues in some cases; and WHEREAS, due to those effects the City Council approved deferral of Master Lease rents due the City for the months of March, April, May and June, 2021 without penalties or late fees, in addition to waiving the annual CPI Master Lease rent adjustments normally effective on July 1; and WHEREAS, several Master Tenants continue to carry deferred Master Lease rent amounts on their books as the COVID-19 pandemic business restrictions and closures have eased and the signs of a speedy economic recovery are present. NOW, THEREFORE, BE IT RESOLVED the City Council of the City of Morro Bay, California hereby: S ECTION 1. Extends, in arrears, the deferral of Master Lease rent payments authorized by Resolution No. 39-20 for the months of July, 2020 through July 2021, inclusive, without penalties or late fees being assessed. S ECTION 2. Approves the COVID-Related Deferred Master Lease Rent Payback Program as illustrated in the attached policy document. PASSED AND ADOPTED by the City Council of the City of Morro Bay at a regular meeting thereof held on the 22nd day of June, 2021 on the following vote: AYES. Headding, Addis, Barton, Davis, Heller N OES* None ABSENT: None John ,'-ad•�•, Mayor ATTEST: trefr Ow-Sev-- Dana Swanson, City Clerk 01181.0024/722710.1 COVID-Related Deferred Master Lease Rent Payback Program Adopted by the Morro Bay City Council on June 22, 2021 This payback program applies to all Master Tenants holding a Master Lease, as defined in the City of Morro Bay's Harbor Department Lease Management Policy, for payback of any rents deferred due to the COVID-19 pandemic of 2020-2021. A. Master Tenants who can demonstrate, with hard, confirmable data, their gross revenues were down 25% or more in calendar 2020 compared to the three-year average of calendar 2017-2018-2019 can qualify as an "economic hardship' by the following metrics: 1. Revenues to calculate the 25% shall include businesses owned/operated by the Master Tenant, rents received from subtenants and any other leases or rents. 2. Subtenants/renters will be contacted by staff to confirm data provided by the Master Tenants. 3. Master Tenants shall make their books and necessary records available to confirm revenues. 4. Master Tenants must demonstrate that any rent deferral or relief they availed themselves to was/will be provided their subtenants 5. Master Tenants must demonstrate the economic necessity of why they deferred the rents they did, and the deferred rents were used for reasons directly related and beneficial to their lease site, or if not for their lease site, for some other compelling reason related to protection of health and safety or some other legal obligation that takes precedence over the obligation to pay the City rent. Master Tenant qualifying as an "economic hardship," past -due rents may be paid as -follows. Any deferred amount paid before August 1, 2021, will receive an additional 10% credit toward the deferred amount owed. 2. Any deferred amount paid on August 1 through October 31, 2021, will receive an additional 5% credit. 3. No additional credit will be given for the deferred amounts paid after October 31, 2021; and all deferred amounts have to be paid in full before December 31, 2021, with interest and penalties applying after that date per the applicable lease agreement. C. Master Tenants taking advantage of any "economic hardship" payback reduction must demonstrate that a similar reduction is being provided to their subtenants or other lessees or renters, if any D. Any Master Tenant with outstanding deferred rent that does not qualify as a `hardship" must pay back their deferred rent in full by August 1, 2021, with interest and penalties applying after that date per the applicable lease agreement. B. For a back 1.