In late April, the Ontario provincial government announced that it had partnered with the federal government to implement measures with the goal of assisting small businesses and landlords throughout the COVID-19 pandemic. More than $240 million is being put towards the Ontario-Canada Emergency Commercial Rent Assistance Program (OCECRA), providing forgivable loans to commercial property owners who are experiencing rent shortfalls during the crisis. The problem? Due to a variety of messaging problems and a lack of emphasis on benefits for landlords, Toronto’s commercial landlords haven’t been applying for the subsidy.
The Ontario-Canada Emergency Commercial Rent Assistance Program
The Ontario-Canada Emergency Commercial Rent Assistance Program (OCECRA) was announced by the Ontario government on April 24, 2020, providing millions in emergency relief for small businesses and landlords affected by the ongoing COVID-19 pandemic. The provincial-federal program was launched with the goal of ensuring that small businesses are ready to reopen once emergency measures have been lifted throughout the province.
The program provides forgivable loans to commercial property owners who have experienced rent shortfalls due to small business tenants being impacted by the COVID-19 quarantine and social distancing measures. The province of Ontario has committed $241 million in funding to provide a smoother reopening process for its small businesses. The subsidy covers up to 50% of a tenant’s rent for a three month period, under the agreement that landlords waive 25% of the rent owed by tenants.
In order to qualify for OCECRA, tenants must be able to prove that they have experienced a decline in revenue of at least 70%. According to the provincial government, eligible property owners must reduce rental costs for small business tenants from April to June 2020 by a minimum of 75% while also committing to a moratorium on evictions for three months.
Why aren’t Toronto landlords applying for OCECRA?
In early May, it was revealed that the majority of Toronto commercial landlords have refused to apply for the provincial government subsidy. The decision by Toronto landlords not to apply for OCECRA has left some small businesses in a position where they are responsible for large rent payments despite having been forced to close to the public. Toronto mayor John Tory criticized the decision by commercial landlords, saying that landlords should “step up and do whatever they can to help these businesses survive just a while longer.” This sentiment was echoed later in May by Ontario Premier Doug Ford as the trend seemed to continue.
While no definitive reason has been given for landlords not applying for the subsidy, it’s worth noting that there is a general feeling of uncertainty surrounding the program. Messaging about OCECRA has been inconsistent and at times confusing, making it difficult for Toronto landlords to communicate with their tenants about the program, and blurring any potential benefits to commercial landlords. This, combined with the fact that landlords would be forced to take a 25% hit on rent by accepting the subsidy, has seemingly resulted in a complete lack of interest in the relief program.
The requirement for tenants to have experienced a drop in revenue by at least 70% has also been seen as a barrier to some. With options like curbside pickup, delivery, takeout, and online shopping available to make up for the lack of on-site shopping in the interim, some Toronto businesses are being disqualified despite still experiencing a significant revenue drop. Landlords and tenants alike are calling for the program to be expanded in order to help those in need. Until concerns about OCECRA are addressed, it’s likely that interest in the subsidy will continue to remain low.
HighGate Properties specializes in Toronto property management for residential and commercial properties, as well as real estate investment. For information about the property management and realty services offered by our experienced team, contact HighGate Properties today.
