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Manitoba landlords say a federal commercial-rent assistance program that has had little uptake during the COVID-19 recovery was not designed for the Prairies.
"It’s hard to work with a program that is not overly well-designed," said Avrom Charach, a vice-president at Kay Four Properties, which has 14 commercial tenants.
"You have a program that’s designed nationally, but every province is different."
Loren Remillard, head of the Winnipeg Chamber of Commerce, said the biggest threat to the city’s small businesses surviving COVID-19 is their rental payments.
“These are beloved places of business, and if we can’t get our minds wrapped around this issue quickly, we will continue to see those places (…) close their doors permanently,” said Remillard, who was optimistic the federal government can find a solution.
Polling two weeks ago of members of the WCC and Manitoba Chambers of Commerce showed 21 per cent of Winnipeg businesses rank facilities costs as one of their top two challenges. Cashflow is the top problem, while rent, travel restrictions and debt repayments are tied for second place.
The federal Liberals’ various supports are all intended to prop up the economy as it gradually recovers from a coma, instead of creating a domino-effect recession where stores close, landlords default and companies stop hiring.
Ron Penner, vice-president of Globe Property Management, said problems with CECRA prevent landlords from having the cashflow to keep tradespeople employed.
“They’re asking us to administer a program where we take a 25 per cent cut, but we have our own costs,” he said.
— Dylan Robertson
Under the Canada Emergency Commercial Rent Assistance, the federal and provincial governments cover half the rent for a small business. The business must pay 25 per cent and the landlord agrees to forgo the remaining quarter.
The benefit only applied to firms that have lost at least 70 per cent of revenue. Local businesses have said they’re struggling to pay the rent as Manitoba recovers. Many say they don’t qualify for the benefit, but don’t make enough to sustain their businesses.
Landlords have been reluctant to go public with their own complaints about the program, but share the same concerns.
"By the time the program came, it was one-size-fits-all," said Ron Penner, vice-president of Globe Property Management, which has about 30 commercial tenants.
Applications opened on May 25, three weeks after Manitoba businesses started reopening. Penner’s firm considered applying, but didn’t pursue it, mostly because it had already cut deals with tenants at that point.
Businesses in Ontario and Quebec have recovered much slower. "Maybe (the program) works in Montreal better than Manitoba," Penner said.
He and Avrom said the program is confusing. Some tenants assume they now only have to pay 25 per cent of their rent, even if the landlord hasn’t applied for the benefit.
Applying for it is cumbersome, landlords say, as they have to estimate revenue during an uncertain recovery. The Canada Mortgage and Housing Corp. requests data that are sorted differently to how businesses report financials to the province.
The program is unclear on whether landlords who signed agreements with tenants can pursue them for non-payment. It also appears to apply to rent but not utility costs that landlords share with tenants, outside of formal rent payments.
"CMHC rolled it out late; the instructions weren’t very clear on it," Avrom said.
Winnipeg Conservative MP Raquel Dancho said scores of small-scale landlords and businesses in her riding were thrilled when the program was announced.
Since then, they’ve been panicking because the terms that are restrictive in a province that was already starting to reopen. "The program is seriously flawed; it’s not having any significant uptake in Manitoba that I’ve heard," Dancho said.
"There is a theme with the government of announcing things that sound great, but the follow-through is very weak," said Dancho.
The federal government could not say how many Manitoba businesses have applied to the program or how many have been approved.
Business tenants have asked for direct support, while landlords said a government-run "rent bank" for tenants could solve the problem.
Colliers International vice-president Darren Klassen said the program would make more sense for different regions if it operated on a sliding scale, pegged to each province’s reopening rules.
Klassen stressed Ottawa is responding to an emergency and adapting programs on the fly, but says he relies on third-party law firms to publish analyses on the programs’ ever-changing process.
"We’re finding it challenging that changes are made but there’s no communication mechanism to the industry," said Klassen, advocacy head for the Building Owners and Managers Association.
Klassen said Ottawa appears to not have consulted widely with both commercial landlords and tenants, including his group.
"For some, it’s a lifeline, and we need to understand the challenges they’re facing."
Premier Brian Pallister said last week he’s working with Ottawa to try to rejig the program.
Asked whether she’d overhaul the program, Mary Ng, the minister responsible for small business, did not directly answer.
"Some of the western provinces are looking at it," Ng said.
"We need to keep working with our provincial counterparts and with businesses and with the landlords to make sure that small businesses actually get the help they need during this difficult time."
Updated on Monday, June 15, 2020 at 10:41 AM CDT: Corrects that the benefit only applied to firms that have lost at least 70 per cent of revenue
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