RENT RELIEF FOR SMALL BUSINESS HAS GAPING HOLE
Some landlords refuse to enrol in program that gives tenants significant support
Another rent payment is coming due for small business owners like Alan Boyce and Pierre Marleau, even as sales have dried up because of the COVID-19 crisis.
A promising new federal rent relief program is designed to cover 75 per cent of their commercial rent bills for three months, with applications opening next week. It seems like a perfect fit.
Yet, just a few days before next month’s rent must be paid, business operators like Boyce and Marleau are stuck in limbo.
They’re not sure if their landlords will sign up for the program that would provide them significant rent assistance for the April-to-june period.
“We’re not getting a whole lot of traction from our landlords,” said Boyce, who along with his wife, Pennie, co-owns five Great Clips hair salons in southern Alberta.
“We are still pleading with the landlords ... will you please go on this plan, it’s the only way, basically, we are going to survive.”
Marleau’s company — Orange Frog Productions, which works in the entertainment sector providing lighting services — has been closed since mid-march.
The local company has paid its rent for the past two months, but the CEO still isn’t sure if his landlord will join the program.
“We have been talking with them since the beginning of the crisis and it keeps falling on deaf ears,” said Marleau.
“It’s frustrating that there’s money the government is willing to give, but because the landlord isn’t willing to come to the table ... we still have to cover the full amount.”
Under the Canada Emergency Commercial Rent Assistance program, federal and provincial governments will cover half of the monthly rent costs for eligible small businesses.
The commercial property owner will pick up 25 per cent, while the tenant pays the remainder. To be eligible, small businesses must have seen revenues drop by at least 70 per cent.
Landlords can start applying for the program on Monday.
The program’s heart is in the right place, but if landlords simply don’t want to apply, tenants are stuck without any lifeline.
Provincial governments know they have a problem on their hands.
Earlier this week, Ontario Premier Doug Ford said he would take steps to act if some “greedy” landlords don’t help commercial tenants with their rent.
In Alberta, Premier Jason Kenney didn’t use the same aggressive language when asked Wednesday about the program, but acknowledged similar issues.
“We’ve heard from a number of commercial tenants that ... some larger commercial landlords have chosen not to participate,” Kenney said.
Alberta is considering its own measures to help small and medium-sized businesses, he added, without providing details. Any fix must come soon. A Canadian Federation of Independent Business survey found half of small business operators in the country won’t be able to pay rent next month without government help.
In Alberta, 53 per cent say rent relief could make the difference between their company surviving or closing.
“There are a lot of tenants telling us their landlords don’t intend to apply for the program, and a lot of landlords who are saying it’s too complicated or they can’t afford it,” said Laura Jones, CFIB’S executive vice-president.
“Without rent relief, a lot of businesses are going to go down.”
The group believes tenants should be able to access the relief offered by governments, even if landlords won’t help.
Calgary Chamber of Commerce CEO Sandip Lalli recently wrote a letter to federal cabinet ministers, asking Ottawa to consider letting tenants apply directly for relief, or to change the program to ensure all renters can access it.
On Wednesday, Prime Minister Justin Trudeau maintained it is in the best interest of landlords to ensure their tenants survive the crisis or it will take longer for the entire economy to rebound.
Some landlords are already on board.
“Everyone has to come to the realization that they’re better off working with your smaller tenants ... to try to get them through this,” said Michael Evans, president of Atlas Development Corp., which owns or manages 41 commercial properties.
Not all tenants are in the same situation, Evans noted.
Some retailers have been closed for weeks and can’t afford to cover the 25 per cent payment. Other renters of office space haven’t been dramatically affected by a drop in business and can pay full rent.
“With the program, there are a lot of challenges,” said Lloyd Suchet, executive director of BOMA Calgary, which represents commercial building owners in the city.
“If they are seeing high levels of rent payment across that property, they are not going to be as keen on that across-the-board reduction in rent.”
On the other side, some small business owners believe the program needs other adjustments, such as an extension beyond three months.
Marc Hodgins, co-owner of Modern Eye optometry office, was grateful to hear Wednesday his landlord will apply for the program.
His business dropped by more than 90 per cent after it had to close in mid-march.
But it remains uncertain what revenues will look like in the coming weeks as the store has reopened to appointments.
“We may not know until June what level our business is going to be at and whether we hit that all-or-nothing threshold of being down 70 per cent,” he said.
NDP Leader Rachel Notley called Thursday for the provincial government to institute a ban on commercial property evictions for small businesses.
Provincial officials say they currently do not have any plans for a such a move, hoping tenants and landlords will sign on to the rent relief program.
All this uncertainty has left tenants like Boyce wondering what the future holds.
“We are down to nail-biting time,” he said of the landlords’ decisions.
“This could mean life or death. And it comes down to, do they want to do it or not?”