Retail, Mall Groups Ask Trump, Congress for Coronavirus Relief

shopping malls

The National Retail Federation and the International Council of Shopping Centers are asking the Trump administration and the federal government for relief for members who are being hard hit by the coronavirus crisis, much as are other industries such as airlines and hospitality.

The letters come in the context of widespread mandatory and voluntary shutdowns in retail as most of the population shelters in place. Simon Property Group, the country’s largest mall property owner, announced this week it has closed its locations at least through the end of March. The company owns 209 malls and premium outlets in the U.S.

“The health and safety of our shoppers, retailers and employees is of paramount importance, and we are taking this step to help reduce the spread of COVID-19 in our communities,” Simon Property Group president and CEO David Simon said in a release.

Among the 80+ retailers that have announced temporary store closures are Nike, Patagonia, Apple, Urban Outfitters and Abercrombie & Fitch, according to media reports, while Walmart has reduced store hours.

In a separate note today, NRF president and CEO Matthew Shay is asking President Trump for more clarity on closure protocols related to coronavirus, in order to give better direction to its members. This includes the closure of pet stores as nonessential in some locations, and some states shutting down highway rest areas used by truckers hailing goods for retailers and others.

“Unfortunately, there remains a need for clear national guidance to resolve questions caused by a number of conflicting state and local orders that are triggering consumer, worker and business confusion, leading to cascading negative impacts on communities across the country,” Shay said in his letter. “Our members report that towns, cities and counties are deviating from instructions offered by governors and state agencies.”

The NRF and the ICSC requests come as uncertainty grows over the duration of the coronavirus outbreak, especially how soon the U.S. and other nations can successfully “flatten the curve” of growth and watch it subside.

In an open letter to Trump, Treasury Secretary Steve Secretary Mnuchin and Congressional leaders, Shay said shutdowns and social distancing are having a dramatic impact on retailers as malls and stores sit idle and vacant while COVID-19 cases grow.

“Our members tell us that the most important support they can get from the federal government would be access to credit that can sustain them until consumers are back in the marketplace,” Shay said. “Labor and benefit obligations, rents, loan payments are all crippling burdens if no sales are being made for days or weeks at a time, and our members are suffering cumulative losses that amount to tens of billions of dollars a week.”

Shay applauded the administration’s move this week to delay tax filings and payments, adding liquidity. He then offered NRF’s economic relief wish list: allowing businesses to file amended tax returns to recoup 2017 overpayments based on what it says is an error in the qualified improvement property provision, returning an estimated $15 billion to the industry; reinstating the tax code’s net loss carryback provision, so retailers can monetize this year’s losses earlier than normally allowed; payroll cost assistance; and expanding the employee retention tax credit.

Shay also said a stay on mandatory defaults and foreclosures and/or rent abatement “might provide some needed relief for retailers faced with closure orders” in the midst of the coronavirus pandemic.

“With much uncertainty over the length of this crisis, however, a direct, government-backed loan program might be particularly helpful in achieving the goal of providing a bridge to the resumption of normal business operations,” he said.

Similarly, ICSC president and CEO Tom McGee said in a letter to Trump, Vice President Pence and Mnuchin that widespread mandatory and voluntary shutdowns due to coronavirus “are placing an insurmountable strain on our members, and we believe federal government action is urgently needed.”

“In the most immediate term, we believe the federal government should guarantee or directly pay for business interruption coverage for retailers, restaurants and other tenants as well as landlords,” McGee said. He noted that nearly 70% of mall tenants in ICSC membership are small businesses with less than 10 employees.

While allowing that some mall owners have third-party insurance, McGee said “the current crisis is not covered by these policies. (Government assistance) will allow these businesses to continue to pay their employees and suppliers. Most importantly, the nearly $400 billion of state and local taxes the shopping center industry generates to support local communities will continue.”

McGee noted that absent government supports, the repayment of up to $1 trillion of debt underlying the industry would be at risk, jeopardizing the economy, financial markets and jobs.

“As the ramifications of the crisis become clearer in the near term, the industry will require further federal support associated with outstanding debt obligations as well as tax and regulatory relief,” he said.