At least one Ottawa business owner says he’d like to see the city offer tax breaks to small businesses during lengthy construction projects that impact a business’s ability to operate.
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At least one Ottawa business owner says he’d like to see the city offer tax breaks to small businesses during lengthy construction projects that impact a business’s ability to operate.
Alex Milne is the owner of PrintersPlus, located just off of Bank Street south of Billings Bridge. The business has been in that location for 27 years, but Milne said the past five years in particular have been challenging when it comes to construction.
“My area is under constant construction,” he said. “Might be roadwork or extensions or highrises and things. There are always things going on. It really affected us in terms of our ability to get to work, and parking, and clients coming here.”
In Milne’s area, from Riverside Drive to Ohio Street, a major $50-million reconstruction project is underway to replace water mains and sewers. It will also include replacing traffic signals, street lighting and bus shelters, with plans to eventually widen sidewalks and add a raised cycle track.
The city has said the bulk of the underground work should be completed by the end of the year, meaning Milne and other nearby business owners could potentially be looking at more than eight months of construction.
While the end product could be worth the pain, Milne said businesses like his — and their pocketbooks — won’t be unscathed in the meantime.
“It’s efficiencies, right?” he said. “You manage your efficiencies so you can optimize your profits. If I have a technician that can do five or six service calls a day and they’re down to three or four during (construction), it’s a 20 to 25 per cent hit on their efficiency. It’s understandable short term, but if it’s a long-term issue, then that all of a sudden starts hitting the bottom line.”
Milne isn’t the only business owner concerned about the financial impacts of long-term construction projects.
The Canadian Federation of Independent Business (CFIB) sent an open letter to all Canadian mayors and councillors calling for municipalities to implement financial compensation or tax breaks to small businesses with operations disrupted by significant projects.
Julie Kwiecinski, CFIB’s director of provincial affairs for Ontario, said businesses have been raising concerns about the financial impact of construction for years. In 2018, CFIB even released a report studying how small businesses are impacted by infrastructure work.
“I’ve been with CFIB myself for almost eight years and I’ve been hearing about (this issue) constantly in all my time here,” she said. “Being in Canada, it’s a seasonal thing. This season, between April and September, it’s really disconcerting for businesses. When we surveyed them, we learned that, in most cases, it isn’t just one project, but multiple affecting the same business.”
Kwiecinski said the No. 1 problem for businesses is loss of revenue, which is a consequence of all the smaller disruptions that build up during a construction project.
When work is being done, she said, an area will see a decrease in vehicle and foot traffic, meaning fewer people going into stores. Customers may have difficulty finding entrances or accessing a building, an issue made worse for those with physical disabilities. Parking becomes more of a hassle. It’s also common, she said, for customers to think a business is closed when work is ongoing.
“I mean, the list is endless,” she said.
The CFIB is calling on cities to introduce construction mitigation relief policies that would help businesses offset their losses and cover any increased expenses they might have during infrastructure work.
According to Kwiecinski, similar programs have already been implemented in some cities. In Montreal, businesses can get up to $40,000 a year based on income losses, in addition to a $5,000 grant for disruptions lasting six months or longer. She added that Calgary and Edmonton are also working on relief programs.
“It is so important because they’re bleeding revenue,” she said. “We hear as high as 95 per cent loss of foot traffic. You can’t live off of that five per cent and pay all your bills.”
Another option would be for cities to offer a tax break for businesses during lengthy periods of construction.
“If you think about it, these businesses are paying the same taxes as everybody else,” she said. “They’re paying the same taxes as the businesses without construction, yet they’re not getting all the services because stuff is blocked off. At the same time, they’re bleeding revenue. This is a fairness issue.”
But offering financial compensation or tax breaks is easier said than done.
CFIB said multiple officials from cities across Ontario have raised concerns that Ontario’s Municipal Act would prevent them from introducing those types of measures. They’ve argued that direct funding to businesses and property tax breaks could be considered “granting of bonuses,” which is prohibited under section 106 of the act.
Kwiecinski said CFIB will be contacting the municipal affairs and housing minister to get clarification on the issue. If necessary, she said CFIB would like to see the act amended to allow municipalities to grant financial assistance.
While Milne is skeptical that a successful grant system could be introduced, he said he’s on board for efforts to introduce a tax break.
“If you’re a retail outlet and the city has work to do and the front of your outlet is blocked off, that’s lost all marketing potential, and the foot traffic and car traffic as well,” he said. “In those instances, where there are businesses that are so dramatically impacted, (there should be) some type of relief from taxation. The service level that you pay taxes on, you come to expect. That may be affected by construction. So if it’s a few months of construction, I think (a tax break) is fair.”
