Post date: Jun 12, 2020
The Port of Pasco recognizes that COVID-19 has significantly impacted many of the businesses that lease property from the Port. The Port has developed this Rent Deferral Program (“the Program”) to provide qualified tenants with a form of rent relief that will assist them in weathering the economic impacts of COVID-19, while maintaining the long-term viability of the Port.
In order to be considered for the Program, each tenant shall submit a completed Rent Deferral Application documenting their need for COVID-related rent deferral, following the guidelines as set forth herein. Each request shall be considered on a case-by-case basis by the Executive Team at the Port of Pasco with final approval decided by the Executive Director. There is no guarantee of approval for a tenant’s request for rent deferral under the Program.
To apply for the Program:
- Tenant shall submit written application for rent deferral for their existing lease agreement with Port.
- Tenant must first exhaust all other avenues of help and assistance. Proof of requests and denial from those institutions (i.e. State, Federal, and Financial Institutions etc.) is required.
- If not clearly specified on the application, tenant will need provide a written plan addressing the following issues:
- The specific economic condition(s) that is driving the request/problem
- The measures needed to resolve or provide solution/relief to the problem
- The steps tenant is prepared to implement for business to become viable and stable
- The expected timeline for recovery
- Income Statement and Balance Sheets for prior 3 months
- Bank Statements for prior 3 months
- Tax Return for prior year
- Excise Tax Report for prior year
- Proof of asset(s) ownership if personal guarantee is required for rent relief
The Port’s Executive Team comprised of the Port’s Executive Director, Finance Director, and either the Properties Director, Airport Director, or Director of Economic Development, will analyze the information submitted by tenant, and make a recommendation on the action to be taken. Final action rests with the Executive Director.
The following criteria will be used to evaluate each application:
- Availability of other assistance programs for tenant
- Financial impact to tenant
- Potential job losses to tenant
- Potential job losses in community
- Impact of tenant business loss to community.
- Tenant plan for business recovery
- Actions taken by tenant to maintain business continuity
- Timeframe for recovery compared to time frame for repayment of deferred rent
- Long term viability and creditworthiness of tenant
- Risk vs. return to Port
- Port vacancy rates
- Tenant’s payment history
- Other factors that align with the Port’s economic development and fiduciary duties
Rent Deferral Terms and Lease Amendment Guidelines
If a tenant is approved for rent deferral, the appropriate staff will draft a lease amendment to cover the terms of the deferral. The amendment must be approved and signed by the tenant and executed by the Port Executive Director.
The following items will serve as the guidelines for all lease amendments if rent deferral is approved:
- The tenant must remain current on their leasehold excise taxes, utility charges, and common area maintenance (CAM) charges, as those are direct costs to the Port if unpaid. The Port is unable to negotiate payment extensions on those taxes and charges. The remaining rental payments constitute the "Deferred Rent."
- April, May, June, July, August, and September 2020 shall be considered the "Rent Deferral Period." Billing for the Rent Deferral Period will continue to show base rent, leasehold tax, CAM, and utility charges, if applicable. Tenants shall pay the leasehold taxes and CAM and utility charges as indicated on their statements. The balance for the Rent Deferral Period will continue to accrue on their account until the Deferred Rent payments are made. Beginning in the month following their rent deferral period, tenants shall pay their full monthly amount due.
- So long as tenants pay the accrued balance of Deferred Rent in full by March 31, 2021, all late fees and interest that would have normally accrued on such balance will be forgiven. If tenants have an account balance from the Rent Deferral Period remaining as of April 1, 2021, tenants shall be responsible to pay interest at the rate of 1.5% per month on the Deferred Rent as though no deferral had been granted and any applicable late fees as set forth in the tenant's original lease and/or Port policies, unless otherwise agreed to by the Port in writing.
- The Port will apply consumer price index ("CPI") or other rent adjustments that normally would have taken effect in the Rent Deferral Period. The payment of the rent adjustment will be included in the Deferred Rent.
- Tenants will need to sign a rent deferral lease amendment with the Port agreeing to these terms.
- Month-to-month tenants may participate in the Program for the Rent Deferral Period so long as they sign a lease amendment stating that they agree to pay the accrued balance in full by the earlier of the termination of the month-to-month lease, including any holdover period, or March 31, 2021.
- After signing the rent deferral lease amendment, tenants are not required to postpone rent payments or may choose to postpone less than the entire Rent Deferral Period.
- Tenants may choose how they wish to pay back the deferred rent prior to the March 31, 2021 repayment date. For example, they may choose to pay an equal portion every month until it is paid off, or they may choose to pay it all off at one time at the earlier of March 31, 2021 or the end of their lease term. This arrangement shall be specified in the Lease Amendment.
The Executive Director will provide to the Commission an ongoing list of Port tenants who have been approved for the rent deferral program and have signed lease amendments covering the terms of the rent deferral. All executed lease amendments will be reported to the Port Commission at their next regularly scheduled meeting.