Is rent relief for business owners really on the way?
Owners fear neighbourhoods could go dark as aid program takes away their control
Christopher Hudspeth is wondering just how much longer he’s going to be able to pay the monthly rent on his bar, closed to the public due to COVID-19.
Hudspeth, the owner of Pegasus in Toronto’s Church-Wellesley Village, is one of hundreds of business owners raising the alarm over the growing inability by business owners to pay full rent during the pandemic, and the lack of help from governments.
“I think all small businesses are struggling to find ways to pay all of these hard costs, rent being one of the largest,” said Hudspeth, who bought the bar in 2013 after working at the establishment for a decade.
He’s had to blow through reserve funds to continue paying the rent and is looking at pulling from retirement savings, with no clear timeline for when he’ll be back in business.
One of the biggest problems, Hudspeth said, is that the commercial rent assistance program funded by the federal and provincial governments is reliant on the landlord applying for it. Under the Canada Emergency Commercial Rent Assistance program (CECRA), property owners would receive forgivable loans to cover 50 per cent of the rent for April, May and June — the loans are forgiven if the owner agrees to lower the rent by at least 75 per cent. The tenant business would pay the remaining 25 per cent.
Hudspeth, who also chairs the ChurchWellesley Village Business Improvement Area, said his landlord has informed him he won’t be applying, and that he has yet to hear from another business in the BIA with a landlord who has shown a willingness to do so.
At the very least, business owners need direct access to the rental assistance program’s funds so they can pay the rent themselves, Hudspeth said. Or there should be a provincial ban on commercial evictions — similar to what the province has done with residential evictions — or a rent freeze, he said.
The CECRA program is not yet fully operational, with details on how to apply coming soon, according to the Canada Mortgage and Housing Corporation’s website. Information on eligibility criteria on the website also clarifies confusion around whether a property owner needs to have a mortgage on the property to apply. The site says for owners who do not have a mortgage, an “alternative mechanism” will be implemented, with details to follow.
According to results from a Canadian
Federation of Independent Business survey published this week, 80 per cent of small businesses say relief from the rental assistance program should go directly to the commercial tenants if the landlord does not want to apply, and 88 per cent say governments should put in place temporary eviction protection for commercial tenants.
“I’m really unhappy with the Ford government for not offering, at minimum, eviction protection for small businesses,” said Dan Kelly, president and CEO of the CFIB.
“We have a growing list of small businesses who have always paid their rent, but have not been able to when their doors were shut as a result of the pandemic, and are now being kicked out of their properties because they haven’t paid the rent. I think it’s outrageous that that has been allowed to happen,” Kelly says.
A spokesperson for Ontario’s Ministry of Finance did not respond directly to the Star’s questions as to whether the government was looking into a commercial rent freeze and/or eviction moratorium, pointing instead to the rental assistance program, which should be operational by mid-May.
“We urge tenants to speak with their landlords and work together to find solutions that work for everyone,” said ministry spokesperson Scott Blodgett. “The federal government and provincial and territorial governments urge property owners to provide flexibility to tenants facing hardship in this uncertain time.”
Anita Agrawal, CEO of Best Bargains Jewellery, finds herself in a similar situation. She’s been told that the landlords at her two locations will not be applying for the program.
She said there’s a lack of clarity and understanding around the rental assistance program, and that these issues have highlighted the need for a complete overhaul of the rules around commercial renting in Ontario.
“Rent has gone haywire for most of our small businesses, so this is a pre-existing problem,” Agrawal said. “COVID has taken all of the problems that already existed for small businesses and blown them up.”
Her business continues to fill out online orders but has seen its revenues greatly reduced.
The only way she’s been able to continue paying her rent is with the federal government’s $40,000 loan for small businesses, she said.
Better help is urgently needed from the government, as it was government that mandated many businesses to close, said Oliver Geddes, a member of the Entertainment District BIA’s board of directors and co-owner of The Fifth entertainment complex downtown.
The Fifth is also a member of the #SaveHospitalityCA coalition of mainly Toronto hospitality establishments, which says nearly 80,000 hospitality workers have been laid off. It’s urging the government for a pause on rent payments among other measures.
“We’re the little guys and we can’t control any facet of our own destiny, and this is causing an unbelievable amount of anxiety, stress and fear for business owners and their staff,” Geddes said.
Hudspeth at Pegasus said he worries what neighbourhoods across Toronto will look like in the coming months if more businesses are forced to close for good.
He pointed out that under Ontario’s commercial tenancy rules, businesses that have yet to pay their May rent risk being kicked out and having the locks changed as of 12:01 a.m. on May 16 — this Saturday.
“If there isn’t help with rent relief, there’s going to be a number of places that will be missing from the street,” Hudspeth said of the Village.
“I think it’s going to be tough for a long time.”