We have summarized for NAIOP Greater Toronto members how the Canada Emergency Rent Subsidy (CERS) will be structured. Please note that the implementing legislation has not passed yet and some elements of this program may change.
• CERS will provide direct rent support to eligible tenants. It is structured as subsidy, not a forgivable loan like CECRA.
• It will be in effect from September 27 until June 2021. However, the government has the opportunity to make changes to the framework (eligibility, rates, etc.) after December 19, 2020.
• Eligible organizations will receive a percentage of their rent/expenses on a sliding scale. As shown below, the maximum base rate subsidy is 65% for organizations experiencing a 70%+ decline in revenues; the base rate then declines to 40% for those with a revenue drop of 50%-69%, and gradually reduces to 0%.
Revenue decline / Base subsidy rate calculation
70% or more / 65%
50% to 69% / 40% + (revenue drop – 50%) x 1.25
1% to 49% / Revenue drop x 0.8
• Tenants can claim up to a maximum of $75,000 in rent per location per qualifying period (approx. 1 month) and up to a maximum of $300,000 per qualifying period for all of its locations.
• There appears to be no restrictions on the size or type of business applying. If a tenant’s rent and expenses are more than the maximums outlined above, they will still be eligible to claim amounts up to these thresholds under CERS.
• Eligible expenses include commercial rent, property taxes (including school and municipal taxes), property insurance, and interest on commercial mortgages). Sales taxes are not an eligible expense.
• Tenants who have been forced to shut down for at least one week due to public health restrictions are eligible for an additional 25% top up (“Lockdown Support”). The calculation to determine the top-up subsidy amount a tenant is eligible for is: 25% x (# of days closed/# of days in the CERS coverage period).