Since the novel coronavirus was first detected in Canada, officials have been grappling with how to stem the spread of the pandemic, while also limiting the virus’ economic impact.
Last month the federal government announced it would be providing aid to small business owners struggling to pay rent amid the COVID-19 pandemic through the Canada Emergency Commercial Rent Assistance (CECRA) program.
But, many landlords have shared skepticism about CECRA, saying more details need to be made available before they would be willing to apply.
Here’s a look at what’s going on.
What is CECRA?
In late April, Prime Minister Justin Trudeau, announced the program, saying the federal government had reached an agreement with all provinces and territories to lower rent by 75 per cent for small businesses impacted by COVID-19.
He said for April, May and June, the federal and provincial governments will cost-share and cover 50 per cent of the rent, with the property owner covering the rest.
According to Trudeau, any business owner paying less than $50,000 a month would be eligible for the assistance, including non-profit and charitable organizations.
The Canada Mortgage and Housing Corporation (CMHC) has been tasked rolling out the program.
But, according to the CMHC, there are a number of eligibility requirements for the program, including that landlords must have a mortgage secured by the commercial property and that businesses need to prove they have seen at least a 70 per cent drop in revenue as a result of the pandemic.
‘Uncertainty’
Speaking at a meeting of the House of Commons government operations committee on Monday, Leah Anderson, assistant deputy minister of the financial sector policy branch at Finance Canada, said the program is expected to launch in mid-may, and that the CMHC is “working carefully on the program parameters.”
But, Laura Jones, executive vice-president and chief strategic officer of the Canadian Federation of Independent Business (CFIB), told Global News that landlords and business owners have expressed a lot of “uncertainty” about the program.
According to Jones, 40 per cent of CFIB landlord members have said that they will not be applying for CECRA.
“We’ve heard about a quarter of them plan to apply,” she said. “A third are unsure.“
She said with the application process not expected to open until mid-May, it could be weeks more before the money is made available.
Jones said there are still some “big outstanding question marks” about the CECRA program.
Namely, how the government intends to cover situations where the landlord does not have a mortgage tied to the property.
Liberal MP for Don Valley East, Yasmin Ratansi, raised this concern at the operations committee meeting on Monday.
She said many landlords in her riding don’t have a mortgage and therefore wouldn’t qualify for the assistance.
“They’re small landlords and they don’t have any mortgage, so they don’t think they should take advantage of this commercial rent relief so they don’t give relief to their tenants,” she said.
“What should we do about it? How do I convince my businesses to stay open or to take advantage when the landlord is probably not willing to take advantage of it?”
Anderson said that since the measure was first announced, officials have been working to develop alternatives for those who don’t have mortgages.
She said if a landlord does not have a mortgage, they should contact the CMHC.
“So we are working on an alternative mechanism for those who do not have mortgages and those that have mortgages but who wish to participate,” she explained.
According to the CMHC website, “further information will be outlined in the near future” regarding the “alternative mechanism.”
Eligibility issues
But, Jones said there are also other eligibility issues with CECRA.
She said the 70 per cent revenue loss threshold is “way too high,” and should be lowered.
She said CFIB has recommended that anyone who has experienced a 20 per cent drop in revenue due to COVID-19, who is not receiving other government aid, be eligible for the CECRA program.
Jones added another issue with the program is that it puts all of the power in the hands of landlords, because they are responsible for applying for the aid.
“Both landlords and tenants we’re hearing from are saying, ‘Why not just give the money straight to the tenant and let them negotiate directly with the landlord? Like, why is the government playing middleman here with this program, essentially?‘”
Jones said in many situations, landlords and tenants have already worked out an agreement.
The real problem arises when there are disagreements, Jones said.
“And so you have some landlords out there who are demanding full rent from tenants who have no revenue coming in. And clearly, that doesn’t seem reasonable to anyone,” she said.
Jones said this program would not be useful in these cases, because it is up to the landlord to apply for the program.
Instead, Jones said the federal government should consider giving the aid directly to tenants, instead of to the landlords.
And, she said provincial governments should protect all commercial tenants from being evicted amid the pandemic.
“That’s the real concern, is that they will be kicked to the curb,” she explained.
Anna Malazhavaya, a Canadian tax lawyer, echoed Jones’ remarks in a tweet on Tuesday, saying CECRA “helps landlords who choose to use it” but not small businesses who are “screaming for help.”
“The government should provide direct 50 per cent rent subsidies to struggling commercial tenants,” she wrote.
— With files from The Canadian Press
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