The move was announced Monday by Ontario Premier Doug Ford as part of Phase 2 in reopening the province’s economy.
“Our small businesses are struggling right now,” Ford said. “I was clear with commercial landlords — you have to be fair.”
Ontario’s decision follows similar recent announcements by B.C., Alberta, Saskatchewan and Quebec. New Brunswick and Nova Scotia started their emergency lockdowns with eviction freezes of their own in March.
The bans are being ordered to spur more landlords to use CECRA, which provides forgivable loans to commercial property owners to cover 50 per cent of rent payments for April, May and June for small business tenants experiencing financial hardship because of COVID-19.
The loans are forgiven if the mortgaged property owner agrees to reduce the eligible tenants’ rent by at least 75 per cent
The program went into effect May 25, but in its first week of operation received applications for just 16,000 tenants. To put that in context, Canada has 1.2 million small and medium-sized businesses.
WATCH |Trudeau government announces rent relief for some businesses
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Small-business owners and advocates are expressing both relief and frustration over the bans while landlords are concerned about their leases being compromised.
Jon Shell, co founder of Save Small Business, an upstart advocacy group with nearly 50,000 members, said eviction bans were “inevitable.”
“It levels the playing field,” Shell said. “There had to be a mechanism to force landlords to take CECRA seriously.”
While Ford said that “I’ll always protect the little guy,” his action came after two months of advocacy by Shell’s group, the Canadian Federation of Independent Business, Restaurants Canada, the Retail Council of Canada and even Toronto Mayor John Tory.
Impact of eviction bans for tenants and landlords
Courtney Anderson, one of the “little guys” Ford wants to help, said he has put everything he has into Lucky’s Corner 2, a Caribbean restaurant in Ajax, Ont., east of Toronto.
His 30-seat restaurant is struggling badly after being closed, with takeout sales a fraction of what the place generated while open.
The ban on commercial evictions in Ontario will give Courtney Anderson, the owner of a Caribbean restaurant in Ajax, Ont., a chance to recover from being shut during the COVID-19 lockdown. (Submitted by Courtney Anderson)
While his landlord has applied for CECRA, Anderson had to borrow money from family to cover his 25 per cent of rent for April, May and June.
When it comes to rent for July and August, Anderson is up front: “I don’t know if I’m gonna make it. I’m trying.”
The ban on evictions over the summer may give him time for his nearly 18-month-old business to recover.
In Toronto, landlord Susan Chiu has five commercial properties and 30 tenants who qualify for the CECRA program.
She’s afraid of losing income and has already started the application process for 10 tenants.
But Chiu said she finds the eviction bans puzzling.
“For the government to come in and impose something else and like this, I don’t know,” she said.
“There’s no one to move in. It doesn’t make business sense for a landlord to evict a tenant.”
Toronto landlord Susan Chiu owns five commercial properties. She says it doesn’t make business sense for a landlord to evict a tenant. (Michal Garcia/Schiu Realty)
While that perspective rings true, small business advocates like Shell point out that “people have been evicted and lost their businesses,” and others have closed facing mounting arrears on rent.
Shell said he has reports of landlords who previously resisted applying for rent relief coming forward in B.C., the province to first pair an eviction ban with CECRA.
Landlord group likens bans to banana republic-style law
For Benjamin Shinewald, eviction bans are bad news.
“You do not force private parties to tear up contracts in Canada. That happens in banana republics,” said Shinewald, president and CEO of Building Owners and Managers of Canada, an organization of 3,100 members that includes building owners, managers, developers and brokers representing more than 2.1 billion square feet of office space.
Tearing up lease contracts is something that happens in ‘banana republics,’ says Benjamin Shinewald of Building Owners and Managers of Canada, an organization of building owners, managers, developers and brokers. (Submitted by Benjamin Shinewald)
Shinewald says governments across Canada have been doing a great job of managing the COVID-19 crisis but that eviction bans are wrong.
“It’s not just a cliché to say that we’re all in this together,” he said, because landlords and tenants are partners.
In his view, trying to force landlords into CECRA isn’t right.
“There’s no principled reason to say that this party deserves to take on the pain of another party … Let’s find a way to reduce the pain for us all.”
He said most landlords are supportive, and those who aren’t need to be “called out.”
For Shinewald, the best option would be to provide rent relief directly to tenants and let them negotiate with landlords to come to agreements together.
Everybody has to do the math
The big-picture estimate of how much the CECRA program will cost comes from the Parliamentary Budget Office.
The PBO’s report from last month pegs the cost of giving small businesses a break on rent at $520 million this fiscal year.
Tsur Somerville, a professor of real estate finance with the Sauder School of Business at the University of British Columbia in Vancouver, says even with support during the pandemic, small business owners need to ask themselves if it’s worthwhile to keep going. (martindeephotography.com)
Even with rent relief, small businesses need to crunch their own numbers and “take a hard look at whether or not continuing to operate makes sense,” said Tsur Somerville, a professor at the Sauder School of Business at the University of British Columbia in Vancouver.
While some businesses will be able to “muddle through a recession” caused by COVID-19, he said, for others “how long their business model is completely disrupted is unknown.”
“It’s hard to imagine a lot of small restaurants, retail stores where if they’re only doing half the business that they planned, they can make rent payments and make it work going forward.”
Somerville also said landlords need to accept that “there’s no rule of the world that says that when you own real estate, you’re guaranteed a fixed level of income from it.”
The dilemma for landlords is weighing whether a lower rent is better than a vacancy, he said.
While banks are bracing for the potential of eventual commercial mortgage losses, they do have the properties as assets.
Somerville questioned why they are not sharing in the pain already.
“In some sort of equitable setting. Everybody would take a haircut,” he said.
Breathing life into businesses key to restarting economy
With provinces moving to protect businesses from eviction, Shell says, Ottawa needs to move fast to make the application process quicker and easier for landlords.
Small-business advocates and landlords alike have complained that applying for CECRA is unnecessarily complicated.
Shell said Canada Mortgage and Housing Corp. must change its focus. “They should be working to prioritize ease of application over potential fraud, and they’ve done it the other way.”
Advocate groups further insist the action to support small businesses cannot stop.
Shell said the federal government signalled in March that there would be another element of rent relief.
“There was an expectation that there would be a secondary rent-relief program for medium sized businesses that had lost between 30 and 70 per cent of revenue.”
WATCH | Many small businesses question federal rent relief program
After barely scraping through May, thousands of small business owners now say June rent could break them because the government’s commercial rent relief program is too slow, and too reliant on landlords’ participation. 1:59
For Shell, there’s a critical final element to breathing life into businesses that will drive the restarting of the economy.
He said cash grants should be flowing as part of a reopening strategy for the businesses that have survived ‘”but still need a boost in order to just get over the hump of very slow recovery.”
Some provinces have already announced such grants.
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
Dollarama Inc.’s food aisles may have expanded far beyond sweet treats or piles of gum by the checkout counter in recent years, but its chief executive maintains his company is “not in the grocery business,” even if it’s keeping an eye on the sector.
“It’s just one small part of our store,” Neil Rossy told analysts on a Wednesday call, where he was questioned about the company’s food merchandise and rivals playing in the same space.
“We will keep an eye on all retailers — like all retailers keep an eye on us — to make sure that we’re competitive and we understand what’s out there.”
Over the last decade and as consumers have more recently sought deals, Dollarama’s food merchandise has expanded to include bread and pantry staples like cereal, rice and pasta sold at prices on par or below supermarkets.
However, the competition in the discount segment of the market Dollarama operates in intensified recently when the country’s biggest grocery chain began piloting a new ultra-discount store.
The No Name stores being tested by Loblaw Cos. Ltd. in Windsor, St. Catharines and Brockville, Ont., are billed as 20 per cent cheaper than discount retail competitors including No Frills. The grocery giant is able to offer such cost savings by relying on a smaller store footprint, fewer chilled products and a hearty range of No Name merchandise.
Though Rossy brushed off notions that his company is a supermarket challenger, grocers aren’t off his radar.
“All retailers in Canada are realistic about the fact that everyone is everyone’s competition on any given item or category,” he said.
Rossy declined to reveal how much of the chain’s sales would overlap with Loblaw or the food category, arguing the vast variety of items Dollarama sells is its strength rather than its grocery products alone.
“What makes Dollarama Dollarama is a very wide assortment of different departments that somewhat represent the old five-and-dime local convenience store,” he said.
The breadth of Dollarama’s offerings helped carry the company to a second-quarter profit of $285.9 million, up from $245.8 million in the same quarter last year as its sales rose 7.4 per cent.
The retailer said Wednesday the profit amounted to $1.02 per diluted share for the 13-week period ended July 28, up from 86 cents per diluted share a year earlier.
The period the quarter covers includes the start of summer, when Rossy said the weather was “terrible.”
“The weather got slightly better towards the end of the summer and our sales certainly increased, but not enough to make up for the season’s horrible start,” he said.
Sales totalled $1.56 billion for the quarter, up from $1.46 billion in the same quarter last year.
Comparable store sales, a key metric for retailers, increased 4.7 per cent, while the average transaction was down2.2 per cent and traffic was up seven per cent, RBC analyst Irene Nattel pointed out.
She told investors in a note that the numbers reflect “solid demand as cautious consumers focus on core consumables and everyday essentials.”
Analysts have attributed such behaviour to interest rates that have been slow to drop and high prices of key consumer goods, which are weighing on household budgets.
To cope, many Canadians have spent more time seeking deals, trading down to more affordable brands and forgoing small luxuries they would treat themselves to in better economic times.
“When people feel squeezed, they tend to shy away from discretionary, focus on the basics,” Rossy said. “When people are feeling good about their wallet, they tend to be more lax about the basics and more willing to spend on discretionary.”
The current economic situation has drawn in not just the average Canadian looking to save a buck or two, but also wealthier consumers.
“When the entire economy is feeling slightly squeezed, we get more consumers who might not have to or want to shop at a Dollarama generally or who enjoy shopping at a Dollarama but have the luxury of not having to worry about the price in some other store that they happen to be standing in that has those goods,” Rossy said.
“Well, when times are tougher, they’ll consider the extra five minutes to go to the store next door.”
This report by The Canadian Press was first published Sept. 11, 2024.
TORONTO – The U.S. Consumer Financial Protection Bureau has ordered TD Bank Group to pay US$28 million for repeatedly sharing inaccurate, negative information about its customers to consumer reporting companies.
The agency says TD has to pay US$7.76 million in total to tens of thousands of victims of its illegal actions, along with a US$20 million civil penalty.
It says TD shared information that contained systemic errors about credit card and bank deposit accounts to consumer reporting companies, which can include credit reports as well as screening reports for tenants and employees and other background checks.
CFPB director Rohit Chopra says in a statement that TD threatened the consumer reports of customers with fraudulent information then “barely lifted a finger to fix it,” and that regulators will need to “focus major attention” on TD Bank to change its course.
TD says in a statement it self-identified these issues and proactively worked to improve its practices, and that it is committed to delivering on its responsibilities to its customers.
The bank also faces scrutiny in the U.S. over its anti-money laundering program where it expects to pay more than US$3 billion in monetary penalties to resolve.
This report by The Canadian Press was first published Sept. 11, 2024.
