Faneuil Hall merchants demand more rent relief

Shops have reopened but customers have not returned, says business association

MERCHANTS AT Faneuil Hall Marketplace, devastated by months with no income during the coronavirus shutdown and now seeing only a trickle of business return after their July 1 reopening, are lashing out at their New York landlord, saying many of them won’t survive without greater rent relief.

The marketplace is owned by the Boston Planning & Development Agency, but is managed by the Ashkenazy Acquisition Corporation (AAC), a real estate giant based in New York.

Under pressure from Mayor Marty Walsh, AAC agreed earlier in the spring to defer merchants’ rent payments for April, May, and June, but with the reopening of businesses this month, the company is demanding that merchants begin paying rent.

At a meeting in Boston last week, a representative from AAC offered to allow some businesses to pay only half of their monthly rent for July, according the Faneuil Hall merchants association. But leaders of the merchants’ group, in a letter on Friday to the CEO of the company, Ben Ashkenazy, say “this is not a plan to move forward.”

The merchants say sales for the first week of July were off by 85 percent compared to the same period a year ago. Without a more far-reaching restructuring of rent payments, said the letter from Linda DeMarco, the association president, vice president Gail Richman, and treasurer Sara Youngelson, “we are very concerned about the survivability of our small local businesses.”

“There was no sympathy, compassion or any sense of moral obligation to help what our small businesses are going through,” the letter to Ashkenazy said about last week’s meeting with Joe Press, senior vice president of AAC. “Mr. Press’s message was clear; AAC needs rent payments and wants it now.”

The leaders of the merchants’ group said when they told Press the latest offer from the company didn’t go far enough, “some merchants were told, ‘It would be cheaper for AAC to operate the property without them in it.’”

The merchants are proposing a new rent structure in which businesses would pay rent of 6 to 15 percent of their sales, based on merchant categories. They also asked for an “abatement” of rent for the three-month period of April through June. They further asked that restaurants be given the option of closing from November 2020 to February 2021 with no rent payments during those months, and that rent for all businesses be suspended if the marketplace is forced to shut down again at direction of state or local officials.

The merchants are proposing that the new rent structure based on sales volume remain in place until business returns to 90 percent of its 2019 levels.

They asked Ashkenazy to respond to the proposal by July 20.

The tensions bubbling over at Faneuil Hall, a major tourist destination during Boston’s usually strong summer visitor season, are playing out with commercial properties everywhere, with business tenants complaining they have little revenue to use to make rent payments while landlords say they have costs that don’t go away just because of customers have disappeared.

The situation at Faneuil Hall Marketplace, however, differs from convention commercial property dealings. Under the terms of a generous 99-year lease, AAC keeps all the rent paid by Marketplace tenants. The company pays the Boston Planning & Development Agency just $10 a year and makes an annual payment in lieu of taxes to the city, which this year amounts to $4.2 million.

In June, BPDA director Brian Golden wrote a strongly worded letter to AAC calling for the company to make commitments to deferring rent, helping merchants install outdoor seating, and meeting with them. “If AAC is unwilling or unable to make these commitments, we request that AAC meet with the BPDA to discuss returning the property to [the] public or facilitate a transfer of the property to a private [company] capable of making the investments necessary at the property,” Golden wrote.

The merchants accused Ashkenazy of failing to communicate with them on plans for the marketplace amid the pandemic, and they expressed concern over the lack of cleaning and security services at the market.

“Since March, there has been virtually no communication from you as to any long-term strategy, plan or vision to continue to operate the Marketplace due to COVID-19,” they wrote. “During this unprecedented time, we need a landlord that is a partner, leader and visionary. This historic property is world-renowned and yet you have not personally taken the time to reach out to us and share your plans for working with us.”

Ashkenazy did not immediately return emails and a voice mail message.

Golden, the BRA director, said he stands ready to continue to support the merchants.

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While praising AAC for deferring rent payments from the shutdown period until 2021, Golden told CommonWealth, “we understand the merchants are still facing significant challenges during this time and we will continue to strongly advocate that AAC work with and support these small businesses.”  

One marketplace merchant, who did not want to be identified for fear of retaliation, told CommonWealth, “It’s sad that we have to go through these terrible trials and tribulations. We’re just a bunch of small businesspeople who need help. Is that asking too much in these most difficult of times?”