MINNEAPOLIS (WCCO) — In addition to transportation, hotels and restaurants around Minnesota are also making a desperate plea for help.
More than 50% of hospitality businesses report they’ll have to close in two months if things don’t get better. Industry leaders say they have a plan but they need the state to help.
Typically this would be the start of Minnesota’s four-month tourism season, but nothing about this year is typical.
“It’s unprecedented. We went from an industry who could not find enough people to in a weeks time, you’ve seen the unemployment totals. It’s just huge,” said Liz Rammer, president of Hospitality Minnesota
So restaurant owners, hotel owners and brewery owners are coming together to campaign for change and they are starting by aiming for the heart with these video testimonials.
“Survived World War Two, 911, not sure we are gonna survive this,” says the business owner of Jax Café, a 4th generation business in Northeast Minneapolis.
“It has turned our life upside down and inside out and we don’t see the light at the end of the tunnel,” explained the owner of the Best Western in Monticello.
And owner of the Gunflint Lodge says, “we need you take full action to save Minnesota’s small resorts and do so immediately.”
Here’s how they want the state to do that: expand state loans to 120 million so that businesses get more cash and businesses other than restaurants are included, like hotels, campgrounds and caterers.
They also want to suspend rent for businesses for 90 days with a rent abatement. And to suspend licensing costs for the rest of 2020.
“Our industry is resilient and innovative and scrappy but there’s only so much time left, this is a complete disaster for our state,” explains Rammer.
Hospitality Minnesota says businesses plan to prioritize safety and change procedures but they want to reopen as soon as possible. They are also asking the federal government to extend the time period for PPP loans.
Here are details on what they are asking of the state:
ECONOMIC RELIEF PLAN.
In light of the current crisis conditions and looming economic disaster, the Hospitality Coalition will continue our advocacy for swift positive action on the following six-point plan with the Governor, MN State Legislature and the U.S. Congress:
§ The federal government must fix the PPP and provide additional funding to the State of Minnesota to support small businesses. We ask the Minnesota delegation to support fixes in the PPP program that extend the “covered period” beyond June 30 and relax the forgiveness provisions to help small hospitality businesses. We also ask the delegation to support additional federal funding to the State targeted to support hospitality businesses on the verge of collapse. Such funding could be directed to help support the following proposed state initiatives.
§ Expand the Small Business Emergency Loan program through the Minnesota Department of Employment & Economic Development by $120 Million. The governor announced $30 million of funding for these zero interest loans (50% forgivable) on March 23. The program requires significant expansion for hospitality:
1. Immediately expand the funding for this program by $120 million, a figure representing less than 5% of the state reserves. If there was ever a time to smartly utilize the “rainy day fund,” clearly it is now. Frankly, the State can’t afford not to invest in saving this industry or it risks further economic pain and deficits. The proposed support represents an investment that will help provide long-term economic recovery for our state.
2. Expand the program to include all hospitality and service industry businesses being crushed by the current economic conditions, including hotels, motels, resorts and campgrounds. Currently, only businesses listed in executive order 20-04 (such as restaurants) are eligible, even though many others are impacted (i.e. shutdown or severely limited) by the “stay-at-home” order and resulting market conditions.
3. Raise the maximum loan value from $35,000 to $75,000. Businesses have now been shut down or severely limited for 50 days and projecting (optimistically) limited summer revenue at 50% if they are allowed to return to operation.
- Waive sales tax payments for hospitality businesses through October. Given the economic circumstances currently facing hospitality businesses, we believe it is appropriate at this time to waive or significantly reduce all sales tax remittance payments. This relief will help with short-term cash flow as these businesses attempt to survive the next six months. While this policy will lead to a short-term revenue loss for the state, the goal is to help these companies remain in businesses so that they will be long-term generators of revenue for the State. Hospitality businesses generate 18% of the State’s sales tax. They cannot play this important economic role if they are permanently put out of business.
- Delay May 15 property tax payments for businesses impacted by the pandemic. Given the current economic crisis, many businesses will be unable, or significantly challenged, to pay the May 15 property tax that is due. A 90-day delay (or more) would assist these businesses with short-term cash flow and other financial obligations. We understand that the Department of Revenue has been consulting with county officials about a potential delay of these payments. Leadership from the executive branch on this issue can help to ensure uniformity across Minnesota’s 87 counties (we are pleased that some counties have now moved to delay the May 15 payment as we have advocated). We also believe it is prudent for the state and counties to explore allowing hospitality businesses injured by the current crisis to forbear their 2020 property tax obligations (including the October payment) over a longer term into 2021 and with potential reductions.
- Establish a 90-day forbearance and rent abatement program. We ask that the state institute a 90-day prohibition on landlords from terminating or evicting commercial tenants subjected to economic injury due to the pandemic (similar to the protections for residential tenants). We ask that rent payments be abated during this time, with an opportunity to renegotiate the terms of occupancy and/or repayment structure once we get to the other side of the current crisis. In turn, we suggest that the state work with the federal government to direct mortgage lenders to work with commercial property owners impacted by the crisis so that they are afforded appropriate forbearance options. In the long-term this will benefit all parties.
- Suspend all regulatory fees through December 2020. The State should suspend all regulatory and licensing fees for hospitality businesses through the end of the year and direct or encourage local governments to do the same.