City Creek mall merchants told they must pay rent during the coronavirus closure

(Trent Nelson | The Salt Lake Tribune) A pair of security guards walk through the closed City Creek Center in Salt Lake City on Monday, March 23, 2020.

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The operator of City Creek Center in downtown Salt Lake City has told the mall’s retail tenants they must pay rent even though the center remains closed due to the coronavirus.

In a March 25 letter to the shopping center’s 110 stores and restaurants, Taubman Centers said they “will be expected to meet their lease obligations” despite the site’s indefinite shutdown 10 days ago.

In the letter, Taubman wrote that it continues to face obligations “to pay its lenders, utility companies, insurance companies and the like, to ensure the safety and security of the building and maintain the appropriate level of operations.”

“The rental income that we receive from tenants is essential in order to meet these obligations,” it told the mall’s retailers.

Several City Creek tenants have reacted to the demand with alarm, noting that the mall’s March 20 closure and related government mandates for social distancing have pinched off the flow of customers and pushed them to the brink.

One tenant at City Creek Center, which opened in 2012, said Taubman’s approach reflected “one of the most tone-deaf business decisions I’ve seen, given what is happening in our community and to our economy.”

Thousands of Utah restaurants, taverns and retail outlets have been similarly left financially stranded in recent weeks by health-related closures, stay-at-home orders and calls for social distancing.

Many are seeking temporary relief from their landlords, while also looking to provisions in the newly passed $2.2 trillion federal stimulus bill, which calls for nearly $350 billion in loans to small businesses to help them weather the crisis.

Many of those commercial landlords, in turn, are also facing a financial emergency and seeking relief from their lenders.

Taubman operates and owns retail portions of the 23-acre City Creek Center in a joint venture with City Creek Reserve, a real estate arm of The Church of Jesus Christ of Latter-day Saints. Taubman, a publicly traded company, also owns and runs 17 other retail centers nationwide.

Officials with City Creek Reserve did not respond to a request for comment. A Tribune inquiry sent Monday to City Creek Reserve offices in Salt Lake City was forwarded to Taubman’s Bloomfield Hills, Mich., headquarters.

Taubman spokeswoman Maria Mainville said via email the company was “attempting to navigate through this situation in the best way we can, while being as flexible as we can with our tenants in light of our ongoing obligations.”

The letter, Mainville said, “does not replace our willingness to talk to each tenant about their respective challenges and help them chart an appropriate course for the future.”

She added that most of those tenants “fully understand our position as it is a challenging time for all involved,” referring to many chain retailers that operate outlets in several of Taubman’s shopping centers across the country.

“Naturally, the environment is much harder for smaller, less-established temporary occupants that may only be operating in one center,” Mainville said.

Michael Brooks, co-owner in Settebello, a chain of restaurants that includes Bocata Artisan Sandwich Shop in City Creek, wrote in an email that Taubman had “several options at its disposal to help their tenants deal with the closure of City Creek Center and the devastating impact it has had on our businesses.”

“Instead,” Brooks said, “they’ve chosen to send what amounts to a demand letter when we are deciding whether or not to even stay in business.”

Taubman’s letter also encourages retail tenants to pursue business-interruption claims with their insurers “to assist in making [them] whole.” But many Utah small businesses have discovered their insurance policies have clauses that exempt business-interruption coverage in a pandemic.

Robert S. Taubman, chairman of Taubman Centers, announced March 20 the chain was indefinitely ceasing operations at all but two of its shopping centers, after what he said were discussions with state and local officials.

Taubman called its move at the time the “right decision for our shoppers, retailers, employees and these communities,” citing “unprecedented times” due to COVID-19.

The announcement affected City Creek Center located near Temple Square along with Taubman-run centers in California, Colorado, Connecticut, Florida, Michigan, New Jersey, Puerto Rico, Tennessee and Virginia.