With just a few days left until May rent is due, federal officials unveiled new guidelines Wednesday for property owners so they can access taxpayer funds to reduce their distressed tenants’ rent by at least 75 per cent.
The Canada Mortgage and Housing Corp. (CMHC), which will administer the program, defined what qualifies as rent and outlined several requirements for small businesses and landlords. Many tenants and property owners have said they were confused after the Canada Emergency Commercial Rent Assistance plan was announced last Friday.
Under the program, forgivable loans to property owners funded by Ottawa and the provinces and territories would cover half of a distressed tenant’s rent for April, May and June. The CMHC now says the tenant would be required to pay up to one-quarter of the total rent, and the landlord would need to cover no less than one-quarter.
The guidelines also say the monthly rent maximum of $50,000 applies to gross rent, which includes shared costs such as maintenance, and that property owners without a mortgage also qualify.
But even with the clarifications, some tenants say they’ve been told they won’t get help.
Paul Drysdale, who co-owns a waterbed and futon store in Brampton, Ont., said his property owner does not want to participate in the rent relief program. Mr. Drysdale said sales at his GTA Furniture Central store plunged to about $3,000 in April from about $25,000 in March.
"As soon as I found out it wasn’t mandatory, I knew we were in trouble,” said Mr. Drysdale. He sent his property manager a cheque for one-quarter of his gross rent for April, but was told that the landlord expected the full payment. Now, Mr. Drysdale is worried the property manager will change the locks on his store this Friday.
Ottawa’s previous guidelines stated that both the tenant and the landlord were required to contribute one-quarter of the rent. Some large property owners had pushed for more flexibility because many of their retail tenants’ revenues have gone to zero and those stores may not have funds for even one-quarter of the rent.
The increased flexibility would allow landlords to access taxpayer funds even if their tenants paid no rent. (To qualify, a tenant must have lost a minimum of 70 per cent of its revenue due to coronavirus shutdowns.)
As well, Ottawa now says the monthly rent cap applies per location and not across all outlets of a chain—so long as the parent company does not generate more than $20-million in gross annual revenues. That means chains of gyms, stores or restaurants could qualify.
“I am thrilled. This will allow for more support,” said Scott Wildeman, senior vice-president at GYMVMT, which operates more than a dozen gyms in Alberta, and president of the Fitness Industry Council of Canada.
But Andrew Oliver, president of the Oliver & Bonacini hospitality group, which has restaurants across the country, and who had hoped to particulate in the program, said the clarified rules mean he is no longer eligible because of the size of his business.
For Renata Snidr, director of corporate and legal affairs at Narat, a Toronto-based tour operator and travel agency, there is no relief, either. Her landlords told her they wouldn’t apply for the federal benefit because the process was too onerous – putting her in what she called a “hostage” situation in which she has no choices.
Ms. Snidr said her landlord has offered a rent deferral. “That is better than nothing, but it’s not the same as paying 25 per cent of the rent,” she said.
Chrissy Ronalds runs a commercial kitchen and catering service from an industrial building in Hamilton. Her landlords also told her that they wouldn’t participate, instead offering a rent deferral plan with an April 30 deadline to agree. Ms. Ronalds declined to sign it.
“I opted not to lock myself in to the deferral, hoping there would be adjustments to the program,” she said. She forwarded the newest federal rent relief details to her landlords on Wednesday, hoping they change their minds. But she said the new rules don’t address the biggest structural issue: “If there’s no requirement to participate, are they going to?”
A spokesperson for Small Business Minister Mary Ng said she “strongly encourages all eligible commercial property owners to participate in this program to take advantage of our forgivable loans," which guarantees more immediate income than if the landlord simply deferred rent payments.
Many of the largest corporate owners of malls and shopping centres, such as Cadillac Fairview and RioCan REIT, have offered rent deferrals to their hardest-hit small tenants. But many big tenants, such as GoodLife Fitness and Staples, as well as smaller ones, simply withheld April rent or were not able to pay.
The Globe and Mail
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