As a company responsible for commercial real-estate, we offered our public facing tenants a rent reduction under the CECRA program.
This program allowed the tenant to have their rent reduced by 75%. Therefore, the tenant would only have to pay for 25% of the rent for April, May and June [the qualifying period]. The federal government paid 25%, the provincial government paid 25% and the landlord forgave 25%.
I am going to write about my experience in moving through this program and the reasons why I probably won’t do it again.
Our tenants included a restaurant, a bookstore and a tenant that offered specialized services.
Other tenants we felt did not qualify or were already behind in rent so we were going to make a different decision for those.
Prior to CECRA we were working with these and other tenants offering various options from rent deferrals, abatement or forgiveness.
When the plan was announced, our tenants asked us to participate, but as the properties are owned in their entirety by an individual, and none of the four properties where financed by a financial institution, the company did not qualify.
When the CECRA was modified and the company did qualify, the process went like this:
1. Have the tenant complete an attestation swearing that they had a 70% drop income for each of the three months of March, April and May. Or, to add them all together for a quarterly reduction in revenue. This meant that they could have no revenue for March, some for April and were disqualified in June. But when added or averaged together, they would qualify.
2. The CECRA provides a package of documents. The tenant attestation is one of them. The other is a binding contract. By binding, I mean binding after the entire process has been approved. Property owners are invited to adjust the contract to suit their own circumstances [but this slows down the application because it now has to go to their legal team for approval].
We adjusted the contract to limit what we were going to forgive. For example: storage rooms and hydro or other extra costs. We would apply for the reduction based on revenue generated square feet.
After we modified the agreement, it was sent to the qualifying tenants for signature.
3. Once we received those two documents back we had to complete our own attestation swearing that the information we are providing was true, and that we had no reason to suspect the tenants were lying to us.
4. Each building has its own application process; and for each building we had to supply a separate attestation together with proof of ownership [property tax invoice], and copy of our bank statement with the bank account number. The rest of the information was redacted [it’s none of their business].
5. The application is done through a computer form. We uploaded the documents and then complete additional fields including more questions about the tenants. So, back to the tenants we go for this additional information.
6. Submit the application.
7. Get questions back about the application and correct any errors on the original submission. If you have less that five tenants in a building then a rent roll is not required.
8. Receive a notice that the application is pre-approved, but wait there’s more.
9. Upload a void cheque of the company so that it will match with the previously submitted bank statement. Also upload personal a copy of the applicants personal driver’s license and a copy of a cheque of a personal bank account. [Not sure why this was needed, but the application could not be completed without it.]
10. After all of this, you are pre-approved then on to step two.
Step two is simply to wait and check the online portal or your commercial bank to see if any money was deposited. In our case it was.
We had other tenants that qualified, but they either moved on, or we just forgave the entire 75% as the these tenants were leasing very small offices and the time to process each application was not worth the work.
If the private sector implemented the same processes that the government asks us to complete, I’m sure the private sector would be out of business.
If this were to be extended, I am not sure I would repeat this process.