The economic pain caused by the unrelenting COVID-19 pandemic is bringing some local merchants dangerously close to a breaking point.
What residents may have accepted as the “new normal” for how small businesses are operating under pandemic conditions is proving to be unsustainable for some merchants, even for some longtime occupants of Wilton’s town center.
While they may serve customers with a smile, many of these businesses are in dire circumstances. Right now, they face an agonizing dilemma: should they bring awareness of their plight to residents they hope will rally in support of them, or risk creating customer doubt about their viability? Business owners fear that any such doubts might cause customers to consider alternatives they wouldn’t otherwise seek, if they are confident another business would serve them longer-term.
Not all small businesses are suffering. Wilton Hardware, for example, remained open as an essential business at the beginning of the pandemic. Other than adapting to new safety protocols and procedures in the early chaos of the pandemic, the store’s business has continued for the most part as usual, according to the owner.
But other businesses have faced more significant challenges. Shops and restaurants may come to mind first, but Wilton is also home to many other types of businesses that are facing obstacles beyond their control.
Six-foot social distance requirements, for example, or interior capacity limitations often mean a business can serve only a fraction of its usual customers. Steve DeMasco’s Shaolin Studios (SDSS), a martial arts school, must conduct classes with only a handful of students instead of its usual 20-25 class size. Even with outdoor space, SDSS, like neighboring business Happy Hands Art and Pottery studio, is strictly constrained by space.
As creatively as those businesses and other local merchants have pivoted, there is only so much they can do to make up their revenue shortfall. While most businesses can survive a short-term interruption, few would have imagined the pandemic would be hitting new, record-high levels as 2020’s year-end nears.
A group of Wilton small business owners recently invited GMW to listen to their stories.
While specific challenges were unique to each business, one issue is having an outsized impact on all of them.
Kimco Realty Corp. is a real estate investment trust (REIT) headquartered in New Hyde Park, NY, with one of the largest portfolios of community-based shopping centers in the country. Kimco owns Wilton River Park, the sprawling property anchored by Stop and Shop, as well as Wilton Campus (or Wilton Executive Campus), where Starbucks, The Prospector Theater, Wilton Hardware and several other merchants (and corporate offices) are located.
Kimco’s Wilton tenants include a wide range of smaller, independently-owned businesses: restaurants, gyms/studios, salons, boutiques and other retail shops, as well as service businesses ranging from tutoring to shipping. Several tenants spoke openly to GMW about the details of their dealings with Kimco, but were reluctant to be named in this article, out of concern that it would only increase the tension between the parties and even the fear that Kimco could be “vindictive”.
Kimco did offer some rent relief (deferment of payment) to tenants in the earliest months of the pandemic (April/May). However, repayment was scheduled to begin relatively quickly, as early as September. As the pandemic and many COVID restrictions continued into fall, many of these businesses were still unable to meet their mounting obligations.
According to several tenants, Kimco’s initial accommodations on the rent also came with significant strings attached, in effect a re-negotiation of other, unrelated terms of their leases (such as common area rights, or CAR’s). These new terms were costly or disadvantageous concessions the tenants had little choice but to make. (Some did refuse those terms.)
Tenants say Kimco has been utterly unresponsive to any recent requests to further extend repayment or reach any new arrangements.
At the same time, Kimco has proceeded with rent increases in some cases and, tenants say, also passed along higher-than-expected property taxes to the tenants. While it is not unusual for commercial leases to require tenants to pay a proportion of property taxes, the tenants were dismayed that Kimco would add to their burden at a time when Kimco was fully aware the tenants were already struggling to pay the baseline rent.
Not only do tenants say Kimco was unwilling to extend rent payment arrangements as the pandemic dragged on, it seems the landlord began to act even more aggressively, even as tenants continued their attempts to negotiate payment arrangements in good faith– ultimately going as far as serving orders to quit (vacate) to at least one tenant (and possibly others, although GMW was only shown the order sent to one tenant, and could not independently verify any other reports).
Is Kimco The Norm?
Some of the Wilton business owners who spoke to GMW also have locations in other towns, with other landlords. They say their experience with those other landlords has been very different from their experience with Kimco during the pandemic.
One owner, whose business has over a dozen locations, said his other landlords were offering rent forgiveness for April, May and June, or charging only half the rent as long as COVID restrictions were in place (and the subsequent three months).
Another owner with a Fairfield location said the landlord there was agreeable as long as at least 50% of the rent was paid every month, and also pushed back a scheduled rent increase for the foreseeable future. She noted that her Fairfield landlord is also a “big company” like Kimco.
Rick Tomasetti is a Wilton resident who also owns commercial property in town, with 11 tenants (a mix of retail, restaurant and other businesses). Tomasetti views his landlord role as “doing business with people as neighbors” and as the owner of an architecture firm, he identifies with small business owners. “We’re just like our tenants,” he said. “We’re small. We know what it’s like to pay rent, pay taxes, [etc].”
Tomasetti feels the hometown connection is critical to the relationship with his tenants. “When tenants struggle, we struggle. As the landlord, we need to be close to our tenants and understand their businesses.” That includes offering business advice, at times.
It also includes gaining respect for the owners personally. “You get an appreciation for how hard people are working. We recognize how much these business owners have really been helping the community [during COVID],” said Tomasetti, praising several of his tenants individually by name.
But, Tomasetti says, “[The pandemic] hasn’t been easy.” While he feels he has been fair with rent issues and worked with tenants on a one-to-one basis, “We have obligations, too,” he said. “At some point… it can’t go on forever. Some will survive, most will, I think, and some perhaps won’t. There are times when you have to hold firm… But this is different. This is a once in a lifetime pandemic. This isn’t a normal health scare or typical recession.”
For Tomasetti, the approach is simple: “You have to work together.”
While rent is a hefty line item for these merchants, so are other costs, like utilities. But not all companies took the same hard-line approach as Kimco did with Wilton merchants. Eversource, for example, took action during the early peak of the pandemic to assist small businesses experiencing financial hardship.
Calling those businesses “the backbone of our communities,” Eversource announced back in March, “In addition to postponing customer disconnections for non-payment and assisting customers with financial programs to help pay their bill, Eversource is also providing extended payment arrangements for small business customers.” Anticipating the protracted effects of the pandemic, Eversource offered a 12-month payment arrangement with no payment due before June 1, 2020.
Most of the Wilton small businesses who spoke with GMW felt Kimco’s business model is simply not geared to small businesses, since Kimco’s other shopping centers are comprised almost exclusively of large chains and big box stores.
As one tenant of well over five years said, “The experience that these [Kimco] people don’t have with small business, it’s obvious in the every day [interactions] that we have, that they don’t understand what our means are, what our priorities are, and how they can help to maintain the longevity of these businesses, and for their own benefit. So it’s been a frustrating experience.”
The merchants feel Kimco is indifferent to the unique dynamics of Wilton’s town center, particularly when it comes to the “synergy” or interdependence the businesses feel among each other. As one merchant said, “Obviously we all need each other to bring the [customer] traffic, and make sure that this place is a viable place.”
GMW reached out to Kimco’s representatives for their perspective on the accounts given by the tenants.
Jennifer Maisch, vice president of media relations at Kimco, responded at length, but began by saying, “We are sympathetic to the impact recent events have had on our tenants’ businesses, customers, employees, and families. While we cannot comment on specific tenant discussions, we remain committed to the long-term success of their businesses, and it has been our goal to work with them to navigate our way through this together.”
As one example of Kimco’s effort, Maisch pointed to the company’s Tenant Assistance Program (TAP), which offered tenants legal services (paid by Kimco) to assist them in procuring economic relief funds (like the federal PPP program). Maisch says TAP was available to all small business tenants.
Indeed, the Wilton business owners who spoke to GMW were familiar with TAP, though some say they were required by Kimco to report any assistance they received, and pressured to use those funds for their rent obligations. Maisch denied any pressure was applied by Kimco when tenants received aid through TAP assistance.
Maisch also cited other efforts Kimco made to assist Wilton businesses during the pandemic, such as helping restaurant tenants to expedite outdoor seating, providing resources through a COVID-19 response webpage, and “dedicated marketing support” for Wilton’s shopping center, which she said “focused on getting the word out to the community about each tenant’s hours and initiatives during this time.”
When asked if Kimco’s approach to struggling small business tenants was modified in any way from its dealings with larger chains, Maisch said, “Kimco has been vocal in calling on those with access to capital and large balance sheets to pay their rent, so that we can focus our resources on helping the mom and pop business owners weather the storm.”
Kimco is “hopeful” that additional government relief funding might become available to assist small businesses as the pandemic continues to affect them.
What Is The Town Doing?
First Selectwoman Lynne Vanderslice acknowledged her awareness of the difficulties some merchants are experiencing with Kimco. However, for a variety of reasons, she said it was “inappropriate” for the town to be involved in communications between the parties. (The town has its own dispute with Kimco; the company has taken legal action to appeal its property tax assessment. Vanderslice won’t comment on any pending litigation.)
When it comes to the town’s support for Wilton’s small businesses, Vanderslice pointed out, “Most small business aid has been through state programs, supported by federal funding. I am not aware of any specific upcoming programs, though I would expect more if and when new federal COVID funding is passed by Congress.”
Rather than aid per se, the town has offered Wilton small businesses guidance and suggestions for managing their businesses. Early in the pandemic, the town created an online small business resource page with information on everything from grants and small business loans to sourcing thermometers, PPE and plexiglass barriers.
Vanderslice also pointed to town programs like “Eat Local, Win Local” and “Shop Local, Win Local” that ran in April and May to incentivize patronage of Wilton eateries and shops with prize drawings. The “Shop Local, Win Local” promotion will run again from Dec. 7-20, and “Eat Local, Win Local” from Dec. 21-Jan 3. Details will be announced shortly.
Vanderslice added, “We are again decorating the [town] center with garland, bows, lights and snowflakes on the lampposts and lights on the evergreens in the chess park and the on the town green in an effort to make the Center inviting to shoppers.”
Vanderslice also highlighted more substantive town initiatives which she believes will help local merchants:
- Efforts by the Planning and Zoning Commission to implement zoning changes that would extend outdoor dining (though an executive order allowing for the extension by Governor Ned Lamont preempted that action)
- Town-sponsored COVID testing at Comstock, which Vanderslice believes will directly benefit local business owners. “We think, among other benefits, [the town’s COVID testing] should help save time for small business owners who need testing or for those seeking regular asymptomatic testing,” she said. Plans for testing beyond the Dec. 11 test date are still being worked out.
What about the EDC?
The Wilton Economic Development Commission (EDC), like many other town commissions, is a volunteer group that meets monthly. The EDC’s stated goals are to:
• assist current business owners with operating and expanding in Wilton
• increase present and future occupancy of available commercial space in Wilton
• expand Wilton’s commercial sector by promoting a “business-friendly” climate in Wilton
The EDC’s Sept. 9 meeting included a presentation by Amy Daniels, the leasing representative for Kimco’s Wilton properties, that “presented the various ways Kimco is stimulating business in Wilton town center in properties owned by them,” according to the meeting minutes.
Some of the Wilton business owners who spoke with GMW were aware of the EDC meeting with Daniels and were disappointed the commissioners had not sought their views as well. At least one business owner reached out to the EDC offering to meet but had not received a reply by the time he spoke with GMW.
In advance of the EDC’s Oct. 14 meeting, the Board of Selectmen requested the EDC explore COVID-related business impacts on Wilton merchants and to respond to the BoS with recommendations. At that meeting, the commission agreed to draft questions that would be asked in a canvas of Wilton’s businesses by members of the commission.
GMW reached out to EDC chair Prasad Iyer for comment and an update on the commission’s efforts, with no reply as of our publication. On Nov. 30, Vanderslice told GMW, “We did ask the EDC to survey [Wilton small] businesses to determine if and what non-financial things the Town could do to help them. They don’t appear to have done that yet.”
The minutes of the Nov. 4 EDC meeting indicated the commission would discuss the survey results at its next meeting, which is scheduled for Dec. 9. No agenda is available yet.
“We’re Not Looking For Free Rent”
“We’re not looking for free rent,” one tenant told GMW. “What we’re looking for is some compassion and a business perspective. If other landlords can understand that we need to weather the storm together as a community, [then] Kimco, a publicly-traded company, can handle [some] rent reduction, give a little break, understand, work with us. We’re not looking for free.”
They may not be looking for a handout, but they do wish they could share the burden. One owner said, “[Kimco is] going to get all their money at some point… They’re not looking to share in any of the pain that the rest of us are [having]. They’re pushing it down the road a little bit, but they’re not willing to share. And you know, across the country, for everybody to get through [this pandemic], people have to share the pain. Nobody’s going to be happy. You’ve got to share, and they’re not willing to do it.”
Another business owner reflected on how the problem impacts everyone in Wilton, not just Kimco tenants. “The difficulty is that they [Kimco] are not giving us any sort of assistance whatsoever. And what hurts me is that we are trying to be and we’ve become a big part of the community. We love this place. If this [shopping center] is empty, what’s it going to do to Wilton property values? If this place is empty, it’s not good for the town.”
One owner believed Wilton residents would take more action if they really understood the local businesses were in trouble, “At the end of the day… I’m sure the town cares, it’s a great town… [but] I don’t think people in town truly know how bad it is.”