April 27 Update: OCECAP
The Federal and Provincial governments released preliminary details with respect to the Ontario-Canada Emergency Commercial Rent Assistance Program (OCECRA). The details of the OCECRA remain minimal such that there are unfortunately more questions than answers at this stage. We await further announcements from the respective governments and the CMHC in order to properly advise our clients. In the meantime, the preliminary details are as follows:
The OCECRA will provide forgivable loans to eligible commercial property owners with small business tenants that are heavily impacted by the COVID-19 pandemic. The loans will be administered by the Canada Mortgage and Housing Corporation (CMHC) and will be available from an estimated application date of mid-May until September 30, 2020. The loans will cover rental income for the months of April, May and June 2020 and can be applied for retroactively. The loans are contingent upon the commercial landlords signing a rent forgiveness agreement between themselves and the impacted tenants and would include a moratorium on evictions for the above noted three months.
The program is a cost share program between the Provincial and Federal governments as well as eligible landlords and eligible small business tenants. The goal of the program is to provide support for eligible landlords and eligible small businesses such that each bear 25% of the commercial rent obligation for the months of April, May and June 2020, with the provincial and federal governments bearing the remaining 50% of the monthly rental cost.
For example, an eligible small business incurring $10,000 of monthly rent will be responsible for $2,500 per month, the eligible landlord will forgo $2,500 per month and the Provincial and Federal governments will share the cost of the remaining $5,000 per month via a forgivable loan.
Eligible Commercial Landlord: Eligible applicants must be the following:
- The registered owner and landlord of the real estate property.
- The real estate property must be mortgaged (note that owners of non-mortgaged properties are encouraged to contact CMHC to discuss further program options).
- Mixed use properties must include at least a 30% commercial component.
- A commercial landlord with qualifying small business tenants.
Eligible Small Business Tenants: Qualifying small business tenants must be the following:
- Incur monthly rent of $50,000 or less; and is,
- A non-essential small business that is either temporarily closed, or who is experiencing a 70% decrease in pre-COVID-19 revenues in April, May or June (revenues are calculated on a similar basis as CEWS).
Please note that specifically excluded tenants are entities owned by individuals holding political office, entities that promote violence and hatred, and any entities in CMHC’s special accounts or restructuring group prior to March 1, 2020.