Financial Assistance Program for Businesses Impacted by Construction
As part of the 2018-2022 Economic Development Strategy, the Urban Agglomeration Council of Montréal implemented a $25 million subsidy program for businesses that have suffered economic loss due to major construction in designated areas. This program is part of a larger strategy to prepare for economic growth in the region and would benefit businesses within our city, similarly affected by ongoing construction.
The program was launched in January 2019 and was retroactive to 2016 for some types of construction. The program will continue until the funds are exhausted or by date set by ordinance.
Eligible impacted businesses submit an application, including financial documentation, that establishes a reduction of gross profit exceeding 15 percent per year. Each business is entitled to a maximum subsidy of $30,000 per year.
The program provides financial support through a subsidy to businesses located in areas affected by major infrastructure work and whose gross profits have decreased by more than 15 percent during a financial year coinciding with the major work.
The program intends to:
Reduce financial impacts for business owners located near a major construction site;
Help business owners remain in business during a major infrastructure construction project;
Support the commercial vitality of the city’s commercial thoroughfares that are impacted by worksites;
To encourage the retention of jobs in businesses affected by construction sites.
In June 2018, I put forward a motion to report on the pros and cons of implementing a program similar to the City of Montreal’s financial assistance program. At the time that motion was rejected 4-9. I felt it was important to revisit this and so I put forward a motion in 2019 to complete a review of how the Montréal program was going. The motion was approved and that report came back last week and to council this week. This gave me an opportunity to put forward a new motion that was approved in a 12-1 vote. That motion is as follows:
“That Administration prepare a draft financial assistance policy based on the City of Montréal Financial Assistance Policy, as described in the February 1, 2021, Office of the City Manager report CR_7806, and return to Executive Committee.”
This isn't a guarantee that the policy will be approved but it's a positive step forward on an issue that is critical to business owners. This policy is meant to focus on those operating the businesses and who are directly impacted.
In the Montréal program, an establishment’s lost profit is calculated by comparing the gross profit recorded in the fiscal year during which construction took place with the gross profit recorded during one or more comparable fiscal years prior to the beginning of construction.
For establishments located in the designated area at least two years prior to construction, the comparison is with the average gross profits of the last two fiscal years preceding the construction.
For establishments located in the designated area one year prior to construction, the comparison is with the gross profit of the last fiscal year preceding the construction.
For establishments located in the designated area for less than one year, the comparison is with the gross profits of the months preceding the construction extrapolated over 12 months
“Eligible fiscal year” is defined as a full fiscal year during which major infrastructure construction was undertaken and an establishment located in a designated area experienced a gross profit loss of 15 percent or more.
The program is for businesses with an establishment in areas affected by major construction work, not building owners. An “establishment” is defined as a unit in a building determined by ordinance where a business conducts its commercial activities. To be eligible for financial assistance under this program, businesses must operate in retail sales, product rental or consumer service delivery industries.
Two types of worksites are covered under Montréal’s financial assistance program:
Major underground infrastructure construction sites run by the City, including the reconstruction of water or aqueduct conduits for a projected or actual duration of at least 6 months.
Public infrastructure construction sites run by the City or by the Société de transport de Montréal (STM), that cause vehicular traffic hindrances for a projected or actual duration of at least 36 months.
The program was open for applications starting in January 2019 although subsidies were available retroactively to as early as January 1 2016 for city construction sites and September 21, 2017 for Société de transport de Montréal (transit authority) construction sites. To date they have received 102 applications and expected to receive more applications than that but it may be that impacted businesses have not yet gone through a full fiscal year in order to have the documentation needed to apply for some of the commercial sectors where the program is available.
Of the 102 applications received so far:
44 were accepted for subsidy, some of which go back to 2016
36 were denied, mostly because they did not meet the 15% threshold
22 are still in the process of being reviewed, mostly because the application was not complete or further information was needed
To February 13, 2020, the City of Montréal has provided $1.4 million in subsidies. Based on 44 accepted applications, this represents an average of approximately $32,000 per business.
When reviewing their program, I feel this would be a reasonable program to create in the City of Edmonton. At a time when businesses are struggling to keep their doors open, we must support them when building critical infrastructure in our city. The City of Montréal has shown us the path forward on this and I think Edmonton should become the second city in Canada to better support our local businesses when completing major projects that directly impact their day-to-day operations.
