As a world-renowned tourist destination, COVID-19 has hit the Simcoe-Grey region particularly hard and local officials are looking to the upper-tier governments to do more in the way of rent relief for both commercial landlords and small businesses.
“We are blessed in Simcoe-Grey to have – usually – a very strong tourism industry,” said Terry Dowdall, member of parliament for Simcoe-Grey during a special committee on the COVID-19 pandemic held at the House of Commons Chamber on May 20. “Andrew Siegwart, who is the president of the Blue Mountains Village Association, has told me that he believes that not one single tenant is going to benefit from this rent relief.”
The Canada Emergency Commercial Rent Assistance program is a joint initiative between the federal and provincial governments, which was established to provide relief for small businesses experiencing financial hardship due to COVID-19.
The program offers unsecured, forgivable loans to commercial property owners to reduce the rent owed by their impacted small business tenants.
The loans will be forgiven if the mortgaged property owner agrees to reduce the eligible small business tenants’ rent by at least 75 per cent for April to June, which will include a term not to evict the tenant while the agreement is in place.
The small business tenant would have to pay 25 per cent of the regular rent fee and the government would provide the forgivable loan for 50 per cent of the rent, leaving the landlord short 25 per cent of the rent.
So, if a tenant business was paying $400 in rent, the government's rent assistance program would require the tenant to pay $100 to the landlord, the government would provide $200 to the landlord, and the landlord would not be able to recover (now or post-pandemic) the remaining $100.
Dowdall said the program asks too much of commercial landlords, as many cannot afford the 25 per cent cut in rental income.
Today, I asked the minister directly if the government will provide direct support to tenants.
— Terry Dowdall (@TerryDowdall) May 20, 2020
Small businesses and the #tourism sector in Simcoe-Grey are hurting and need support now #cndpoli pic.twitter.com/1SYC5Wr4j2
“Their margins just don’t allow for it,” he said. “Tourism operators are calling for direct support to tenants as the present system still has too many cracks.”
Siegwart, who heads Blue Mountain Village, a four-season destination that consists of 40 small business tenants, said the way the commercial rental assistance program is currently structured has resulted in very little uptake and the program is not going to do enough for tenants or commercial property operators in the coming months.
“The amounts that landlords have to forgive are not possible given financing terms and obligations they have, as such the requirement for landlord participation is leaving tenants without access to the program,” Siegwart explained.
He says he would like to see a direct relief program established between tenants and the government.
“Give the 50 per cent contribution directly to tenants,” said Siegwart. “This will give businesses cash flow to properly prepare for safe operations and recovery and will ensure they can maintain their leased spaces.”
The Town of the Blue Mountains (TBM) town councillor and member of the town’s COVID-19 Community Recovery Task Force, Peter Bordignon said the current rent relief program is far too convoluted with too many steps, which has rendered it ineffective.
“This program will not be effective at all. In my honest opinion, less than 10 per cent of landlords will take advantage of this program,” he said, adding that if the landlord chooses not to opt-in, tenants are still on the hook for 100 per cent of the rent payment.
“To be fair, this program provides zero incentive for a landlord to participate,” said Bordignon, adding that small businesses are the backbone of TBM’s economy and its merchants are feeling the pinch harder than most.
“Businesses in TBM are directly affected, more than most, as we do not have malls or big box retailers. Our merchants are local and the fabric of our community,” Bordignon said. “I have already been told about two significant local businesses that will not re-open because of financial reasons directly related to rental expense.”
He adds the government has been quick to act when it has come to the financial needs of many Canadians, giving a nod to the Canada Emergency Benefit program, wage subsidies and additional payments for seniors and students.
He echos Siegwart’s call for the government to provide direct relief to the tenants and to leave the landlords out of the equation.
“There is not a need to include the landlord,” said Bordignon. “A true 50 per cent rent relief program would be tremendous. It is what the government is willing to help with anyway, but just directly to the tenant.”
In response to Dowdall’s ask for the government to provide direct support to tenants, Mona Fortier, minister of middle-class prosperity and associate minister of finance, said that the ministry would be, “monitoring the program closely and that the portal will be available starting May 25.”
However, Dowdall, Bordingnon and Siegwart all say that is not good enough and are calling on both the federal and provincial government to improve the program - for the benefit of both the commercial landlords and small businesses - before another rent payment comes due.
“With June rent payments fast approaching, a change needs to come sooner than later otherwise our residents and future visitors may see a completely different retail landscape as we move forward,” Bordignon said.
