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COVID ECONOMICS


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#41 Victoria Watcher

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Posted 24 April 2020 - 03:49 AM

Prime Minister Justin Trudeau is expected to announce today significant rent relief to help businesses that can't afford to pay their landlords at a time when their operations are shut down due to the COVID-19 pandemic.

 

The federal help is expected to be provided in partnership with the provinces and territories, which have jurisdiction over rents.

 

Small- and medium-sized businesses, most of them shuttered since mid-March, have been clamouring for relief as the May 1 deadline for their next rent payments looms.

______________

 

Kelly said 70 per cent of the CFIB's 30,000 members pay monthly rent for their business premises and, of those, 55 per cent report that they can't afford to pay their rent next month.

 

https://www.ctvnews....demic-1.4909909


Edited by Victoria Watcher, 24 April 2020 - 03:49 AM.


#42 spanky123

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Posted 24 April 2020 - 06:56 AM

^ He announced the program a week ago. Like most of his other programs though details have been few and far between.


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#43 Mike K.

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Posted 24 April 2020 - 07:00 AM

Note the word “rent.” It’s not rent, it’s a lease, always has been referred to as a lease, and the parlance is a “lease rate.” In addition to that “lease rate” are fees like property taxes, maintenance fees and any other costs agreed to during the lease signing period to be payable by the commercial tenant, if the lease is a “NNN” type of lease. Other leases can be gross, which include all additional costs as one “lease rate,” but it isn’t “rent.”
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#44 Victoria Watcher

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Posted 24 April 2020 - 08:06 AM

Rent relief coming to help businesses through pandemic: PM

 

An agreement with provinces and territories to lower rent by 75 per cent for small and medium-sized businesses for April, May, and June has been reached, Prime Minister Justin Trudeau announced, Friday. The support will help businesses that have been struggling amid the pandemic due to closures and/or reduced revenue.

 

 

 

The Canada Emergency Commercial Rent Assistance for small businesses will provide forgivable loans to qualifying commercial property owners to cover 50 per cent of three monthly rent payments payable by eligible small business tenants experiencing financial hardship during April, May and June.

 

The loans will be forgiven if the mortgaged property owner agrees to reduce the eligible small business tenants' rent by at least 75 per cent for the three corresponding months under a rent forgiveness agreement, which will include a pledge not to evict the tenant while the agreement is in place.

 

The small business tenant would cover the remainder, up to 25 per cent of the rent.

 

Affected small business tenants are those paying less than $50,000 per month in rent and who have temporarily ceased operations, or have experienced at least a 70-per-cent drop in pre-COVID-19 revenues.


Edited by Victoria Watcher, 24 April 2020 - 08:09 AM.


#45 Victoria Watcher

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Posted 24 April 2020 - 08:11 AM

so if i read that right the business gets 50% from the government.  they get 25% from the commercial tenant.  then they eat 25%.



#46 Awaiting Juno

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Posted 24 April 2020 - 09:45 AM

so if i read that right the business gets 50% from the government.  they get 25% from the commercial tenant.  then they eat 25%.

 

Not quite right - the landlord takes the loan, the tenant pays 25% and the landlord eats 25%, government forgives 50% of the loan.  Tenants must have seen revenues decline by 70% or more (so a lot of hard hit businesses won't see relief despite having substantial losses), and it's also at the mercy of the landlord to agree to reduce the rent rate by 75%.  So again, this might not be as helpful as it appears.  

 

I'd say I'm surprised, but it appears that in politics, appearing to help is far more important than actually helping.  As an economist, I'm not seeing this ending well at ALL.  The help has been too much and not enough at the same time, with the policy equivalent of a shotgun being used instead of a guided missile.  A large number of SME's aren't going to survive, and the government hasn't really mitigated that to the degree that many people think.  Further, for those accessing the CERB/Rent relief, again, this is likely far less than what would be needed to actually maintain obligations, and many are going to face real challenges once their temporary layoff becomes permanent because the SME they worked for didn't survive.  Then the knock on effects of provincial/municipal budget challenges will begin, and austerity measures will need to be taken.  

 

All - in the context of a crisis that is likely to continue to wash over our healthcare system and the economy in repeated waves for 12 to 18 months.  The risk of deflation is truly unprecedented - and will have its own set of challenges as peoples expectations on prices adapt, and we cannot get people to spend today what they could delay until tomorrow.  Further, until and unless childcare is available again in some sustainable format - a large chunk of the workforce is going to be forced to substantially sit on the sidelines.  


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#47 Victoria Watcher

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Posted 24 April 2020 - 09:54 AM

Not quite right - the landlord takes the loan, the tenant pays 25% and the landlord eats 25%, government forgives 50% of the loan.  Tenants must have seen revenues decline by 70% or more (so a lot of hard hit businesses won't see relief despite having substantial losses), and it's also at the mercy of the landlord to agree to reduce the rent rate by 75%.  So again, this might not be as helpful as it appears.   

 

i take a contrary view.

 

if a business asks for it and the landlord refuses - and the business decides to stay on - then they did not need the help.

 

if a business asks for it and the landlord refuses - and the business decides to leave - then that's the risk the landlord took.  he doesn't need the rent.

 

if a business asks and the landlord accepts - then it's maybe a good deal for both.

 

like any negotiation it might take some brinkmanship on both sides to get a deal.  that's business.



#48 Mike K.

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Posted 24 April 2020 - 10:25 AM

So who does the landlord turn to when it’s their turn to pay the mortgage?

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#49 Victoria Watcher

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Posted 24 April 2020 - 10:28 AM

So who does the landlord turn to when it’s their turn to pay the mortgage?

 

they ask for a deferral from their mortgage lender.  it's all a big circle really.  



#50 Victoria Watcher

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Posted 24 April 2020 - 10:36 AM

trudeau is such a little piece of work.  

 

watch this non-answer.  typical.

 

video:  https://twitter.com/...730613703479299

 

screenshot-twitter.com-2020.04.24-14_32_50.png

 

background:

 

https://www.cbc.ca/n...demic-1.5542193

Employees don't want to go back to work

 

Premier Blaine Higgs says he's heard from some business owners who want to reopen but have workers who don't want to return because they get more money from the federal government staying home.

 

He suggested all the ramifications of the federal CERB program may not have been thought through, creating a problem for business owners.

 

But he said employers can't just keep jobs open for people who aren't ready to work yet.

 

"The employer doesn't have an obligation to hold a position because someone chooses not to return back to work because they've got a federal program that helps them stay home."

 

If an employer can provide a workplace and conditions that meet Public Health's standards, then employees have to return to work if they want to keep their jobs.

 

Employees who are concerned about safety can express that, and WorkSafeNB will investigate.

 

Higgs said the federal funding is a short-term fix for everyone. But it's important for New Brunswickers who can return to work, to do so and rebuild the economy.

 

"There are jobs coming and we need your help," Higgs said. 


Edited by Victoria Watcher, 24 April 2020 - 10:38 AM.


#51 spanky123

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Posted 24 April 2020 - 11:32 AM

^ Of course that is exactly what we said would happen. Look what happens next month. The CERB beneficiaries will get an extra $1,000 from BC if they stay at home and students will start getting an extra $1,500 a month. Best time in decades to be a young worker, you can get paid a small fortune as long as you agree not to work (or at least earn < $1,000 a month).



#52 Greg

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Posted 24 April 2020 - 12:03 PM

small fortune?


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#53 Victoria Watcher

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Posted 24 April 2020 - 12:08 PM

small fortune?

 

$2250/mo. take home is pretty good for doing nothing.  doing nothing usually only pays $700 to $900 or so (welfare).



#54 Matt R.

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Posted 24 April 2020 - 12:19 PM

Rent relief coming to help businesses through pandemic: PM

The loans will be forgiven if the mortgaged property owner. <—




This is the part that worries me.

Matt.

Edited by Matt R., 24 April 2020 - 12:20 PM.


#55 Redd42

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Posted 24 April 2020 - 01:11 PM

Which part? The part about it being up to the property owner? Or that it is assumed the property owner has a mortgage?

 

The residential rent relief depends on the landlord replying to the govt e-mail. I can imagine many situations where that is going to be difficult to obtain.



#56 Victoria Watcher

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Posted 24 April 2020 - 01:18 PM

The residential rent relief depends on the landlord replying to the govt e-mail. I can imagine many situations where that is going to be difficult to obtain.

 

you mean like situations where the landlord has no interest in the government learning he's a landlord collecting rental income?



#57 Redd42

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Posted 24 April 2020 - 01:26 PM

Well there is that. I know someone who told their tenant to just take $300 off the rent instead of applying for the rent relief.

 

But lots of landlords are hard to get a hold of directly. The landlord might not be in the country, you might be dealing with an agent (not the actual landlord), not all landlords are that computer savvy (I will be helping a friend of mine when that govt e-mail does get received). What about people who rent from huge companies? Who is getting all those individual applications?


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#58 Victoria Watcher

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Posted 24 April 2020 - 01:36 PM

But lots of landlords are hard to get a hold of directly. The landlord might not be in the country, you might be dealing with an agent (not the actual landlord), not all landlords are that computer savvy (I will be helping a friend of mine when that govt e-mail does get received). What about people who rent from huge companies? Who is getting all those individual applications?

 

somehow i think landlords are slightly more savvy than you might think.  somehow they managed to own property but they can not fathom finding a single e-mail sent to them?  i think huge companies have a handle on this too.  



#59 Redd42

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Posted 24 April 2020 - 01:48 PM

somehow i think landlords are slightly more savvy than you might think. 

 

But I just told you of one person I'm going to have to help. Probably lots more out there. My own landlady is an elderly Japanese lady who is difficult to communicate with. I'm anticipating an issue with her.

 

An e-mail can easily go astray - your e-mail client decides its junk and puts it in your spam folder. The person receiving it thinks its spam and deletes it. 

 

The e-mail will require the landlord to provide the provincial govt with direct deposit info. Lots of folks might resist that or be paranoid about it.



#60 spanky123

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Posted 24 April 2020 - 01:53 PM

Well there is that. I know someone who told their tenant to just take $300 off the rent instead of applying for the rent relief.

 

But lots of landlords are hard to get a hold of directly. The landlord might not be in the country, you might be dealing with an agent (not the actual landlord), not all landlords are that computer savvy (I will be helping a friend of mine when that govt e-mail does get received). What about people who rent from huge companies? Who is getting all those individual applications?

 

For the tenant / landlord to qualify under Trudeau's new program revenue has to have dropped 70%+ and even then the landlord has to write off 25% and the tenant has to come up with 25%. So if a restaurant or retailer moved to take-out or delivery then they may not qualify if they did not have a 70% drop in revenue. If they went to zero then they probably don't have money to pay the 25%. 


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