November 20, 2020
By Melody Simmons
Some Harborplace tenants who have fallen behind on rent payments in part because of Covid-19 face lease terminations and lawsuits, according to letters sent this fall by a court-appointed receiver.
The city’s 40-year-old Inner Harbor landmark continues to struggle amid vacancies, inconsistent management, lax city oversight and now the impact of the novel coronavirus pandemic. Baltimore Mayor-elect Brandon Scott and top business leaders are urging a renewed push to rejuvenate Harborplace with new ownership and more local businesses a year and a half into a court-ordered receivership.
Gail M. Stern, an attorney at Rosenberg Martin Greenberg, sent the letters to tenants in late September. The Baltimore law firm was hired by New Jersey-based receiver IVL Group in August to address “certain tenant matters,” court records show.
One letter, obtained by the Baltimore Business Journal from a tenant who wished to remain anonymous, demanded payment of thousands of dollars in back rent within 10 days in order to ward off a potential lease termination, as well as collection of attorney fees and court costs. It cited the impact of the virus but said tenants do not have any legal recourse under “force majeure,” a legal term often used in contracts to protect parties from liability due to extraordinary events or circumstances.
“It is not the landlord’s preference to follow such course of action, but it will be left with no choice if full compliance of the terms of the lease does not occur immediately,” said the letter dated Sept. 24. “We recognize that the current Covid-19 pandemic may impact tenant’s ability to operate, but we refer you to the provisions … of the lease that provides explicitly that tenant’s obligation to pay rental and additional rental is not excused due to any force majeure.”
Another tenant, Ben Saba, who owns Johnny Rockets in the Light Street pavilion, said he, too, had received a letter with the same demands.
The combination of the virus and vacancies at Harborplace have greatly impacted his business, and Saba said on Wednesday that his revenue had recently cratered to $150 a day. Saba, who said he has personally invested $450,000 in his business, has tried to reach out to the receiver to open a dialogue. A receiver’s report filed with the Circuit Court of Baltimore City this fall showed the restaurant owes $150,129 in back rent and fees.
“I say please do me a favor and evict me,” Saba said. “I have a lawyer and we are trying to talk with them.”
Stern did not respond to a request for comment.
Harborplace has now been in court-ordered receivership for a year and a half after a subsidiary of its former owner, Ashkenazy Acquisition Corp., defaulted on the mortgage loan. Since then, retailer Banana Republic moved out, followed by Ripley’s Believe It or Not! in May. Remaining tenants have been slammed by shutdowns mandated by Covid-19.
The September receiver’s report shows Harborplace was 48% vacant that month. Year-to-date rental revenues were also down in September by 56%, a total drop of $242,837 in budgeted monthly rental income.
The ongoing turmoil at the downtown landmark has been on city leaders’ radar for years. Scott, who will be sworn in as mayor in December, said Nov. 19 he plans to push for a renewal of local business tenants at Harborplace once he takes office.
“The key to revitalizing Harborplace is working in partnership with all stakeholders around a shared vision, making it feel like Baltimore and getting it in the hands of a Baltimorean,” Scott said.
Donald Fry, CEO of the Greater Baltimore Committee, said he is planning to reconvene a task force to focus on turning around the struggling marketplace. Fry said November 19 that he became frustrated with Harborplace’s struggles recently because “there seems to be very little public comment from city officials about the status of the receivership or plans for the near future.”
“For years it was a jewel for the city and was recognized internationally as its ‘calling card,'” Fry said. “To see this incredible asset of the city struggle and to have little or no direction from the city as to its future plans is unfathomable. We are far beyond the sit back and wait to see what happens phase of this bankruptcy litigation. That approach is no longer acceptable.”
He added: “It is difficult to foresee the future of the downtown without Harborplace being a major part of any discussion.”
To read the complete story, visit the Baltimore Business Journal website.
Source: Baltimore Business Journal