Lord Mayor calls for rate, rent cuts to pandemic-hit businesses

Lord Mayor Sandy Verschoor wants to slash rates for city hotels and function centres and halve the rent for Central Market traders and council tenants to help the city rebound from COVID-19 – but some Adelaide City councillors have questioned whether the move is equitable.

Jun 23, 2020, updated Jun 23, 2020
The city council is considering again cutting rent for Central Market traders. Photo: Tony Lewis/InDaily

The city council is considering again cutting rent for Central Market traders. Photo: Tony Lewis/InDaily

In an email to elected members on Friday – seen by InDaily – Verschoor wrote that the city was currently attracting only about 60 per cent of its normal people flow, with many workers and students still studying or working from home.

She wrote that “ongoing support” over the next four months was warranted for Central Market traders and tenants of council-owned buildings, who have already received free rent since March as part of a $4 million support package.

“Rather than go back to full rent I would like us to consider a 50 per cent reduction for the next quarter (QF1 20/21), thereby giving traders some relief for the next quarter,” Verschoor wrote in the email. 

“Further, I would like members to consider some targeted rates relief that will be significantly impacted for five months or more.

“These would include function centres, backpacker accommodation, hotels with and without accommodation and motels.

“If we could consider a 50 per cent rebate (or waiver) for QF1 20/21?”  

Verschoor wrote that the council’s administration would model the financial impact of her proposal and present the data to councillors “so that we may properly consider and understand the impact to budget”.

She told InDaily this morning that the council’s March decision to waive rent for all its commercial tenants, including Central Market traders, until July 1 had been well-received.  

“(Traders) have indicated that while business conditions continue to improve, a further reduction in rent fees would assist as business returns to normal levels,” she said. 

“I believe a 50 per cent reduction in rent is therefore a worthwhile measure to help bridge the gap.”

She said council advice showed that the accommodation and function centre sectors were valued at $1.375 million per quarter in rates, meaning a 50 per cent rates reduction would see the council lose $687,000 in revenue.

A council analysis of the impact of COVID-19 restrictions on different sectors shows function venues and backpacker accommodation would be affected for the longest period of time – up to six months.

Hotels with accommodation are set to be impacted by restrictions for five months, while hotels without accommodation could be affected for four months.

Health studios, serviced apartments, shops and showrooms are estimated to be impacted for the least amount of time, at three months.

Rates revenue and estimated restriction impacts on city businesses. Information: Adelaide City Council

Deputy Lord Mayor Alexander Hyde said the council “definitely” needed to provide rates relief to businesses in the city, but he warned against the repercussions of “picking winners and losers”.

“Absolutely accommodation in particular has been quite hard-hit and so we need to be providing relief to them, but at the same time you can’t just give relief to one sector,” he said.

“We need to be applying a principles-based test to all businesses that pay rates in the city.”

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Hyde said he supported Verschoor’s call to extend rent relief to Central Market traders and tenants of council-owned buildings for the next financial quarter to help those businesses recover from the economic hit of COVID-19.

“There are lots of landlords out there doing the right thing – working with their tenants and coming to quite equitable arrangements – and the City of Adelaide likes to be a leader in a lot of things and this matter is no different,” he said.

But north ward councillor Phil Martin said Verschoor’s proposal was not equitable and would leave many businesses in the city “green with envy”.

“Council is required to consider the plights of its tenants, just as I would expect any landlord in the city would consider their economic circumstances,” he said.

“However, many, many businesses in this city are on the verge of collapse.

“We either adopt an equitable approach of allowing a rate waiver for all small businesses, or Council is presented with an evidence-based proposal for assisting particular businesses.

“Right now I cannot see why we would offer a rate waiver to hotels, who warrant such a waiver, but then ignore bars, gyms and other businesses which have had to endure long-term closures equally as damaging they have been for hotels.”

InDaily contacted Australian Hotels Association state branch general manager Ian Horne for comment.

Area councillor Robert Simms said the council needed to increase support for residential ratepayers who were experiencing financial hardship.

“There’s a huge number of people who have lost jobs at the moment and there’s going to be lots of people experiencing financial hardship – in September in particular, once the Government stops the increase in JobSeeker – so I’d like to look at rates waivers for them, or some rate exemptions,” he said.

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