East-end businesses fear rent issues will force them to close

Gaps in rent-relief program and landlords' reluctance to apply put them at risk of eviction, commercial tenants say

The federal government’s rent-relief program does not guarantee support for many small businesses, which may be evicted or forced to close, warn commercial tenants on Danforth Avenue and Queen Street East.

“Consumers will see papered up and boarded over storefronts when they return to main street — that’s my biggest fear,” Beaches-East York city councillor Brad Bradford said.

Bradford is pushing for a moratorium on commercial evictions, as many landlords have refused to apply for rent relief but prefer to seek full rents from their tenant businesses.

“The program design puts everything in the hand of the property owners,” said Dominic Cobran, coordinator of Leslieville BIA. “Many of them initially said they were not going to apply for it.”

Amanda Munday, owner of The Workaround childcare on Danforth, said her business is one that’s at risk of eviction.

“I worry every day that it’s possible,” she said. “It’s an incredible amount of stress for a business owner like me because I’ve put my life’s work and a ton of money into this.”

She said she is required to pay full rent for April and May as her landlords did not apply for a rent relief program. She also expects to receive a new bill in June.

“I know that rent is still due. That part to me is incredibly frustrating.”

According to the  Canada Emergency Commercial Rent Assistance program, landlords can receive forgivable loans for 50 per cent of the rent amount if they agree to charge their tenants only 25 per cent of the total rent. They also must promise to keep the businesses on the property.

Landlords will have to absorb the remaining 25 per cent of the lease amount, which is why some of them have been reluctant to apply for the program.

“There’s a 25 per cent gap that nobody pays,” said Colin Johnson, manager of the Danforth Mosaic BIA. “Convincing the landlord to take such a hit on rent is pretty difficult.

“Most landlords don’t want to do that, but it’s business owners who need it more than anyone.”

To qualify for CECRA, business owners must be paying no more than $ 50,000 per month for commercial rentals and have been obligated to shut down by provincial order. They must also have experienced a 70 per cent drop in sales due to COVID-19.

Jennifer Orenstein, treasurer of Leslieville BIA, said some landlords hesitate to apply for rent relief because their tenants cannot prove a 70 per cent revenue loss.

“Many landlords are very hesitant about taking part in it,” Orenstein said. “I never thought that this was an issue, but we’ve got some landlords who were questioning their tenants.”

Limited eligibility

The Commercial Rent Assistance Survey conducted on May 12 found 63 per cent of Toronto small businesses could not pay rent in May. More than 70 per cent feel they will not be able to afford June’s rent.

On top of that, about 30 per cent of employers are not eligible for rent relief, as they do not meet the program’s requirements.

Bradford said limited access to CECRA would leave many small businesses without help, which may lead to their closure in the near future.

“There’s going to be many small businesses that don’t qualify for the program, despite still needing the support,” he said.

“I can tell that even if you’ve lost 50 or 60 per cent of revenue, you’re still really struggling.”

Moratorium on evictions

Many property owners have been evicting their non-paying tenants, which is “socially and morally wrong” to do “on the back of a global pandemic,” Bradford said.

He said it happens because Ontario does not ensure commercial rent protection for business owners.

Bradford added that expelling commercial tenants during the pandemic might be also economically unprofitable for landlords.

“You open back up with a vacancy in a market that has fewer businesses and more vacant spaces,” he said.  “[Evicting tenants] is actually not a smart thing to do economically.”

To save small businesses, employers and some BIAs have been advocating for a temporary moratorium on commercial evictions.

“There’s been a shortcoming of the province for not enacting a commercial rent moratorium,” Bradford said. “Ontario should have stepped in and put this in place.”

Johnson said some landlords in the Danforth Mosaic area have already seized assets of their commercial tenants.

Munday, who is also on the BIA’s board of directors, calls for a moratorium as well. She says it will prevent many businesses from losing their spaces.

She said the authorities should cancel the rents of businesses that have remained shut down since March.

“What we need is to know that the government has our backs with extended rental subsidy programs,” Munday said.

But a moratorium on rent could also put landlords in a tough spot as they also have to pay for many expenses.

“Landlords have a property tax and utilities to pay, and many of them have mortgages on buildings that cannot defer their loans,” Orenstein said.

“We have to look at both sides. Both landlords and tenants are struggling.”

Many Leslieville landlords have small businesses as well and own commercial property to make a profit from the tenant’s lease. If they stop receiving money from the rent, they risk losing their main income.

“Many property owners reached out to me saying ‘I would love to do this; I would love to help them. But the truth is, I can’t because I need the money,'” Cobran said.


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Posted: Jun 4 2020 10:41 am
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