Supervisors clarify COVID-era lease termination for small commercial tenants, send ordinance to full Board

SAN FRANCISCO — The Land Use and Transportation Committee on May 10 voted 3–0 to amend the city Administrative Code to clarify the rights of certain small commercial tenants who terminate leases because of COVID-19 impacts and to forward the ordinance to the full Board of Supervisors with a positive recommendation.

Supervisor Aaron Peskin, the ordinance’s author, told the committee the change is intended to protect “Tier 1” commercial tenants — those with fewer than 10 full-time equivalent employees as of Nov. 1, 2020 — by making clear that a unilateral lease termination by an eligible tenant “would have the effect of relieving the small business of the obligation to continue paying rent under the remaining term of their lease.” Peskin said the clarification implements the council’s earlier, unanimously passed COVID-era legislation and helps businesses in neighborhood commercial districts such as Chinatown and Japantown.

Peskin characterized the amendment as narrow and technical. He asked that language on page 2, lines 22–23 be revised to strike the phrase “any actual damages that may result from” and to replace it with the word “a,” reasoning the phrasing was redundant given remedies available under state law. Peskin said his office consulted Deputy City Attorney Manu Pradhan on the drafting change and emphasized that landlords retain the ability to seek damages under state law but are required to mitigate damages by attempting to stabilize affected tenants.

The supervisor credited outside groups and staff for shaping the measure, naming API Legal Outreach, Alan Lowe at Perkins Coie, the Bar Association of San Francisco’s conflict intervention services, his staffer Lee Hepner, and the Lower Polk tenant-landlord clinic for assistance and recommendations. Peskin said his office and the Mayor’s Office of Housing will continue to work on administrative guidance to implement the law where appropriate.

There were no public callers for the item. After the public comment period closed, the committee adopted Peskin’s drafting amendment by roll call and then voted to send the ordinance, as amended, to the full Board with a positive recommendation. The clerk noted items acted on by the committee are expected to appear on the Board of Supervisors agenda on May 18 unless otherwise stated.

The committee adjourned after completing today’s business.