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Christine Bower doesn’t understand why rent relief for her business should depend on who her landlord is. Bower is co-owner of the Wooden Monkey restaurants, with locations in downtown Halifax and at Alderney Landing in Dartmouth.
Under the terms of the federal government’s Canada Emergency Commercial Rent Assistance (CECRA) program for small business, the government gives property owners a forgivable loan in exchange for a 75% rent reduction for April, May, and June, 2020. Tenants pay a quarter of the rent, landlords another 25%, and the government kicks in the remaining 50%.
Landlords can apply for the money retroactively — so even if they did not apply for April or haven’t for May, they still can, until August 31, 2020.
The trouble is, not all landlords are eligible for CECRA. And even if they are, they have to make the decision on whether or not to apply for themselves. If they don’t, their tenants have to look elsewhere for relief.
For instance, one of the criteria is that the landlord has to be carrying a mortgage. Bower understands that landlords are facing a crunch too, and she said she doesn’t blame them for trying to collect rent on buildings they own. But what she doesn’t understand is having them apply for CECRA. To her, it makes a lot more sense to base eligibility criteria on the commercial tenant than the property owner.
That way, rather than the landlord applying, “We would have to be eligible. What do I care if they have a mortgage? We’ve been here in Halifax for 11 years. We’ve probably paid the equivalent of what the mortgage was, so now we’re going to be penalized because we’ve paid down the mortgage?” she said. “The thing is, if this program was specifically designed to help the tenant it should be directly given to the tenant that’s eligible.”
The Wooden Monkey’s Halifax location opened this week for takeout, as an experiment. The Dartmouth location is closed. It’s in the same building as the ferry terminal, up an elevator with no street-front location.
There was desperation in Bower’s voice as she described what she was up against, with little hope that revenues can recover for at least a year. “Even takeout options, you have 100 seats normally in your restaurant. You can’t do that much through takeout. It’s not going to happen. You can try to cover some of the costs.”
Under public health orders, some businesses have been forced to close. You can’t go see the dentist unless it’s an emergency, and don’t expect to be getting your hair cut anytime soon. But there are a slew of businesses that have de facto been forced to close. That’s because, even if they’re legally allowed to be open, operating safely and with proper distancing in place is simply not possible.
Take Ametora Supply, a vintage shop in Lunenburg owned and run by Alex Pearson and Margaret Kelly Pearson. Their rent is not huge, “$740 and change a month,” Alex Pearson said. “But most businesses in Lunenburg are running on fumes” this time of year.
Pearson said he’s been described as “the denim whisperer” both for his ability to source vintage denim items and fit them well to customers. (He has a tattoo of a pair of jeans and the words “denim whisperer” on his right arm.) And because some of the clothes at Ametora Supply can date back decades, you can’t tell if they’ll fit by reading the sizing on the label. “Normally, if people need assistance trying to figure out their measurements, we can help them figure that out,” Kelly Pearson said. “Now, with social distancing, that’s really difficult.”
“It’s impossible,” Alex Pearson interjected. “And if someone tries on the nicest sweater we have in the store and they don’t like the way it looks, then we have to remove that from our inventory for 72 hours.”
“It’s a lot of tracking, a lot of steps,” Kelly Pearson said. “If you look at the number of different fabrics we have pieces of clothing made out of, it’s really difficult for us to say OK, this is safe now. We can demand that people wear masks, but we don’t know if they are going to wear the mask in the dressing room.”
The Pearsons forwarded a letter they said is from their property manager, on behalf of the landlord, with name and contact information redacted. Addressed to Alex, it says, in part:
It is now May 4, 2020, and I have not received rent for the month of April and May… I am aware of the circumstances due to the COVID-19 virus and its impact on all of us, however this doesn’t make you exempt from rents payable…
The letter adds that the property owner may apply for CECRA, once details are known, but:
For now, I expect to promptly receive the rents due for Ametora Supply for the leased commercial premises of 194A Lincoln Street.
Lunenburg Board of Trade president Jamie Myra has lived in the town his whole life. He remembers “a time when if you had a vacant storefront you could wait a long time to fill it.” Over the last decade, things have changed. Tourism is up, new businesses have thrived, and the town has more of a buzz about it.
With the good times, a lot of money has come into Lunenburg, and while that’s a good thing, Myra said, it’s led to an unintended consequence: property owners who can’t access rent relief for their tenants, because they don’t have mortgages. “Due to the success of Lunenburg, a lot of people who have bought buildings didn’t have to go to the bank, but they still have overhead and they are expecting something in return.”
Myra is a retail shop owner himself. His clothing business, Stan’s Dad and Lad, has been closed since March 19. And while his business wasn’t legally required to close, he said, “Once you make a state of emergency and say ‘stay the blazes home’ — which I agree with — you are essentially closing us.” He owns the building the shop is in though, so doesn’t have to worry about the possibility of losing his space. Others may not be so lucky.
Speaking as an individual, and not in his capacity as Board of Trade president, Myra said, “My hope was all landlords could work with tenants to make some kind of arrangement for when things go back to the new normal. I hear that’s not happening with some, and I’m disappointed is all I’ll say… I was hoping nobody would be evicted or forced to move due to COVID-19. I wish if they were able financially to work with their tenants that they would.”
He added, “I feel really bad for those getting squeezed and I wish the government would work with them and say everyone is eligible if they have a mortgage or not. If they could qualify for the CECRA without a mortgage, most would apply. Why wouldn’t you?”
Liam Hennessey said revenue for his business, Applehead Studios, is “down 100 percent” since he shut his doors in March. Located on Barrington Street, in downtown Halifax, Applehead is a 15-year-old photography business that does studio portraits and wedding and event photography.
On Twitter, Hennessey has been very public about how he’s also stopped paying his commercial rent.
“In our business, we have wedding contracts,” he told the Examiner. “We’ve nullified all of those contracts and either cancelled them for people not going to get married or moving their weddings a year ahead… It’s bewildering to me that we nullify all of our contracts because it’s the right thing to do, but this landlord-tenant contract seems unbreakable.”
Hennessey’s building is owned by brothers Andrew and Nicholas Childs. He said communication with them “has been open.” His understanding is that the brothers are not planning on taking advantage of CECRA, but were willing to discuss rent deferral.
“They were willing to discuss some sort of deferment,” he said, “but I was told we had to provide our last three months of bank statements. I asked my lawyer and accountant if this was normal, and they said absolutely not.
Hennessey said his rent is $3,000 a month, and that he understands the property owners have costs related to the building, but “that’s irrelevant to me.” He said, “Their personal finances are none of my business. I honestly don’t care. My April loss was $30,000. Last April we made $30,000 and this year we made $0. From my perspective, I’m only asking them to take the loss of $9,000 over three months.”
The Childs brothers bought the building more than a decade ago. “We love the building. It’s got a lot of character, and we’ve got an interesting bunch of tenants in there we like a lot,” Andrew said. The brothers both have other jobs, and this is the only building they own.
Andrew said they haven’t decided yet if they are going to apply for CECRA, because the federal government still hasn’t outlined all the details of the plan. “As soon as we can see the program details for sure, we’ll see if we want to partake in it… And we probably will, but we have to see the details.”
In the meantime, he said he has offered rent deferrals to tenants, but only if they are willing to share their financials.
“There’s been a lot of sharp commentary from some small businesses on landlords, and I don’t think it’s deserved,” Childs said. “I think you’re going to see a lot of uptake… Not every business is affected the same, and there are some that are doing OK. It’s only reasonable if concessions are going to be made by government and landlords that we see the financials to back up the case.” He added, “If you can show us your decrease in revenue, we’ll go on a case-by-case basis and do a rent deferral at that time.”
While Hennessey isn’t paying his own commercial rent, he did help the Pearsons in Lunenburg with theirs. Tidehouse Brewing held an online fundraiser for Ametora Supply, asking people to top up their orders by $7.50. The money would go towards Ametora’s rent, and donors would get a drink on the house later. The fundraiser made its goal, covering rent owing for April and May. Hennessey donated $250, though he said when he first heard about the fundraiser, “I couldn’t believe it. That’s what we’ve become. We’re fundraising so we can give money to a landlord!”
Bower said she can’t discuss the terms of her commercial leases, including whether or not she’s been offered any rent deferral. But deferrals, she said, are not much of a solution when there is no money coming in. “Deferral is nothing to me,” she said. “It’s just another loan. A loan to the landlord. Relief is what we need to focus on.”
Bower recognized that the federal government has been rolling out programs quickly, with details to follow. “Some of these programs, their heart was in the right place. They had the right idea to have the landlord give us a break, to help their tenant out. And I agree with that. But if that’s not working and people are getting missed for whatever reason, I think they should re-evaluate,” she said.
Her own situation speaks to the confusion. Bower said she was told by MP Andy Fillmore that Wooden Monkey’s Alderney location is owned by the municipality, so it doesn’t qualify for CECRA. But on the CECRA application page, one of the checkboxes under “I am a…” says “municipality.”
Speaking for the city, Brynn Budden said, “Staff are still assessing eligibility under the CECRA program.” The municipality doesn’t qualify under the provincial rent deferral program though. Budden said HRM has 22 commercial tenants, excluding the four-pad arenas, and that they’ve suspended rent payments on businesses inside facilities ordered closed (such as rec centres). For the rest, Budden said, those “operating out of a property owned by the municipality that has remained open, but health orders have required them to close or experience a significant loss of business, the municipality is postponing the payment for May 1, 2020. This will continue until the earlier of August 31, 2020 or 30 calendar days after the current government restrictions have been lifted. There are six commercial tenants in this program, and repayments for the tenants impacted will be developed to recapture the rental income.”
Meanwhile, the Wooden Monkey’s Halifax landlord is still assessing whether or not it qualifies for CECRA, Bower said.
Speaking for the Canada Mortgage and Housing Corporation, which administers CECRA, Angelina Ritacco, said, “Further information will be outlined in the near future for those small business tenants who wish to access CECRA for small businesses and who operate out of government-owned buildings… Program details including how funds will be disbursed and how to apply are being finalized and will be available soon.”
Until then, many commercial tenants are going to have to wait and see whether their landlords will apply, so they can get some rent relief under the program.
“Every morning, I wake up and hope for the best,” Bower said.
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