After closing for 51 days due to COVID-19, Manhattan will abate one quarter of the Manhattan Town Center’s annual rent.
Manhattan City Commissioners narrowly approved the abatement by 3 to 2 vote, though only one third of the abatement requested by mall ownership.
The nearly two months that businesses were mandated to shut their doors amid the pandemic caused substantial economic damage nationwide, not sparing Manhattan’s mall. Two of its businesses have gone under and despite MTC’s May 6 re-opening roughly half remain closed estimates Donna Jacobson, who represented the mall’s ownership company UrbanCal Manhattan Town Center, LLC.
According to Jacobson, rent collections had more than 85 percent delinquencies in April and May while expenses remained the same. MTC has recently invested $5 million in its facilities to reinvigorate the shopping center, even self-imposing additional sales tax through a Community Improvement District. She says tenants are “reeling” and on uncertain footing and mall ownership is “bleeding” cash on a monthly basis.
“There’s going to be a long-term recovery for the mall and for the tenants just from the impacts of COVID-19,” says Jacobson. “We’re certainly asking for the city to work with us in trying to continue to have Manhattan Town Center be a focal point, […] kind of the front door of the community, so that we can maintain it.”
While Manhattan Town Center is privately owned, the city owns the land it sits on and has leased it to mall ownership for 99 years. Under the current agreement, ownership pays the city $180,000 per year or $46,250 per quarter. Revenue from those payments are deposited into the city’s general fund.
According to city administration, MTC has paid one quarter of 2020’s rent. Ownership requested the remaining three quarters, or $138,750, be abated. Jacobson also noted the lease agreement has a provision for rent abatement during the period of closure.
Commissioners in general supported some level of abatement, but differed in what level to approve. Mayor Pro Tem Wynn Butler lead the way in proposing abating just one quarter of the mall’s annual rent obligation, which he says is more in line with the length the center was mandated to close.
“This would be like a nine month basic abatement and I think the government shut them all down for about two months,” Butler says. “So I’m not so sure I’m in favor of the full amount — but I think for the period the mall was closed, at least that, and that would maybe make sense.”
Mayor Usha Reddi concurred, questioning the equity of approving the request.
“Some of our businesses have shut down,” says Reddi. “And as a landlord for the mall, since that’s the hat we are wearing, our taxpayers have to pick up the [proposed]$138,000 and I think that’s not fair.”
Commissioner Mark Hatesohl, though, opposed the motion. He expressed mixed feelings about the item, noting the full requested abatement would be a .23 mill revenue loss in an already tough year and rejecting comparisons to the abatement given to the Manhattan Regional Airport due to offsetting FAA CARES Act money in that case. But he also accepted the situation the mall is in is not of its doing.
“While this is not going to make or break the mall, it would be a nice gesture on our part,” says Hatesohl. “I don’t like it because of the budget impact and the other stuff, but I understand it wasn’t their idea to close the place.”
He preferred giving two quarters of abatement rather than one. Commissioner Linda Morse joined him in opposition, though supported some level of relief for MTC.
“I may be convinced this time to do it, but I don’t see it in 2021,” says Morse. “My concern is the Wallstreet Journal says that it may take as long as 10 years for our economy to recover from this, it’s not just going to zoom back up by Christmas.”
Commissioner Aaron Estabrook supported the one quarter abatement, though expressed support for the abatement as requested. He says while it was not the city’s call to shut down businesses, government actions put companies like the mall in difficult positions and they share some of the responsibility.
“It’s not a great position to be in, but at the same time if we can help give any kind of consumer confidence and tenant confidence to maintain that mall,” says Estabrook. “It may be a small gesture on our part compared to what could be a much larger problem down the road if we have this empty mall — which nobody wants to see.”
Manhattan will soon issue permits to temporarily allow retail and food establishments to expand seating onto city sidewalks, alleys and potentially streets and parking lots.
City Commissioners Tuesday unanimously approved a resolution authorizing city administration to set up an expedited permitting program, an effort to promote physical distancing in businesses without significantly limiting customers.
With a permit, businesses could display wares and restaurants could seat customers outdoors adjacent to their property up until 11 p.m. Alcohol, though, would not be permitted. City Attorney Katie Jackson says permits can be suspended if issues arise or for other event or construction needs.
“What we would do is work with the permit holders, tell them what time we need them to remove their retail or their dining furniture from the sidewalk or from the street so we can do that work or that activity.”
The program and all authorized permits expire October 31, 2020, mainly due to weather making outdoor business less ideal. Once established, permits will be processed at no cost and are not limited to any specific business district — though Aggieville and Downtown officials have expressed interest in the program. Permits will be reviewed by Public Works, RCPD, MFD and Community Development staff for approval.
“It’s good for the community, and the vibe and the aesthetics of being a vibrant community, but it also increases consumer confidence,” Mayor Reddi says, noting a benefit is increased airflow around customers.
ADA compliance and appropriate distancing on sidewalks will still need to be maintained and proprietors will have to carry $500,000 liability coverage, clean up after their customers and play no amplified music.
Commissioner Mark Hatesohl proposed making the permits an annual thing if everything goes smoothly.
“If they want to go April onto October 31st so there’s always a limit on it — because the weather’s going to be the determining factor,” he says. “No one’s going to sit out there in 28 degrees and snow eating a steak […]”
Mayor Pro Tem Wynn Butler agreed, calling the plan “business-friendly.”
“I think it allows them to get creative and maybe help us get the economy going a little bit quicker.”
The resolution is effective immediately, businesses may apply for permits once city administration has a process in place.
Originally posted at https://1350kman.com/manhattan-abates-1-4-of-mall-rent-to-open-sidewalks-for-dining-retail-uses/
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