July 22, 2020 at 12:14 pm PDT | by Brody Levesque
Second LA shutdown would doom many businesses

Santa Monica Boulevard is quiet on a recent Saturday night. (Photo Brody Leveque)

Los Angeles Mayor Eric Garcetti, in an interview Sunday with CNN’s Jake Tapper, conceded that the resurgence of new COVID-19 pandemic cases and hospitalizations has pushed him to likely rolling the city back into a more restrictive environment with a variant of the previous mandatory stay-at-home order.

Sources with the Los Angeles County government told the Blade Tuesday that the County Board of Supervisors is eyeing a similar measure, but stressed those discussions were still ongoing as of July 22.

Los Angeles County has led the state of California in the rates of new confirmed positive cases and hospitalizations since March when the pandemic became critical. This week the Los Angeles Department of Public Health identified 161,673 positive cases of COVID-19 across all areas of LA County with a total of 4,154 deaths so far.

There are 2,218 confirmed cases currently hospitalized, 26% of these people are confirmed cases in the ICU and 18% are confirmed cases on ventilators. Tuesday marked the third consecutive day of over 2,000 hospitalizations per day.

For the business community in the greater LA Metroplex, already battered by the first stay-at-home orders issued in April and coupled with the Black Lives Matter protests last month, set-off by the murder of George Floyd by Minneapolis Police, the threat of a second round of shut-downs has created fear in the commercial sector that another rollback will permanently put many small commercial ventures out of business.

The signs of distress are highly visible, especially in retail zones in West LA’s The Grove, and the famed Beverly Center, which in the words of one tenant, ‘is a ghost town.’

Businesses along Santa Monica Boulevard, Third Street, Melrose Avenue, the Sunset Strip and in other shopping districts across Los Angeles including the City of Santa Monica’s famed Third Street Promenade are filled with ‘closed’ signs. Prior to this current environment, many were boarded up for the civil unrest in June and as shops opened up, some remained boarded up or had closed signs hanging in their entryways.

COVID-19 related eviction moratoriums had been instituted by LA County, the City of West Hollywood, and the City of Los Angeles and are getting ready to expire adding further strain. Some jurisdictions are now discussing extending those moratoriums to assist businesses.

This past week, West Hollywood City staff prepared a memo for the City Council recommending that the city extend its rent eviction moratoriums. In the memo staff noted, “While financial impacts may have been difficult to document at the beginning of the pandemic, tenants now have months of financial information that could be utilized to justify reliance on the eviction protection moving forward.” On Tuesday, July 21 WeHo’s City Council in a unanimous vote approved the city’s WeHo moratorium extension.

A spokesperson for the West Hollywood Chamber of Commerce acknowledged to the Blade that the Weho City government had contracted the Chamber to offer mediation services to negotiate deals between commercial landlords and tenants unable to pay their rent.

A source in the WeHo government told the Blade that commercial tenants have been urged to make partial payments for those businesses that cannot afford to pay the full amount due.

Another option the official noted was to utilize rent security deposits to make partial payments. This solution had been approved with the caveat though that a deposit must be repaid when the moratorium expires. Once Weho’s moratorium expires, the commercial tenants are granted six months to pay back rent.

The City of West Hollywood is heavily dependent on revenues from taxation most of which is derived from the hospitality industry, especially bars, hotels, and restaurants. Multiple sources in WeHo government have told the Blade that the cash reserves, which pre-pandemic topped $140 million, have dropped significantly as the revenue stream has all but dried up especially with bars and night spots re-shuttered due to a statewide order by California Gov. Gavin Newsom last week.

Foot traffic is a major factor. For the City of Weho, closure of the bars, nightspots, and last week’s ordering that dine-in patronage of restaurants ceased by modifications of the stay-at-home orders by Newsom and LA County’s Public Health Director Dr. Barbara Ferrer has seen foot traffic dramatically decrease across the Southland.

Another by-product of the health orders is the ban on large gatherings and groups of people. One West Hollywood business owner, who asked to not be identified, told the Blade that cancellation of LA Pride meant a revenue loss of nearly 45 percent of his annual income. He also acknowledged that the downward spiral in foot traffic has meant that even with the federal stimulus relief, with a drop off of walk-in customers he has let go all but one employee and now faces permanent closure.

The City of West Hollywood has also taken something of a blow with the los of LA Pride as one source estimated that nearly $3-5 million in revenue vanished with no immediate solution to make up for that loss, though WeHo did provide funding in the form of services that were nearly an equivalent expense.

Speaking to the Chambers of Commerce in West Hollywood, Los Angeles, as well as other chambers across the greater LA County metropolitan area, the Blade learned that a key component to the demise of business traffic is termed the “Amazon effect.”

The financial website Investopedia defines this as the “impact created by the online, e-commerce or digital marketplace on the traditional brick and mortar business model due to the change in shopping patterns, customer expectations, and a new competitive landscape.”

As Angelenos prep for another potential scaling back of the re-opening efforts, business leaders are fearful that a good deal of especially the Metroplex’s small business community will forever close unable to generate income, pay rent, or pay taxes, which are likely to rise as jurisdictions look to find new revenue streams.

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