HomeMy WebLinkAboutDSD-20-067 - Extended Financial and Economic Recovery Supports for Businesses and ResidentsREPORT TO:Special Council
DATE OF MEETING:Monday, May 11, 2020
SUBMITTED BY:Cory Bluhm, Executive Director, Economic Development,
519-741-2200 ext. 7065
PREPARED BY:Saleh Saleh, Director, Revenue, 519-741-2200 ext. 7346
Cory Bluhm, Executive Director, Economic Development,
519-741-2200 ext. 7065
WARD (S) INVOLVED:All
DATE OF REPORT:May 4, 2020
REPORT NO.:DSD-20-067
SUBJECT:ExtendedFinancial and Economic Recovery Supports for Residents
and Businesses
_________________________________________________________________________________________
RECOMMENDATION:
1)That the City extend immediate short-term measures to provide support to residents
and businesses for an additional 30 days by:
a.Waiving penalties and interest on property taxes for the month of June2020;
b.Waiving late payment charges on utility bills and miscellaneous receivable
invoices for the month of June 2020; and,
c.Waiving Non Sufficient Fund (NSF) fees charged by the City on customer
accountsfor the month of June2020.
2)That the City provide additional relief and support to residents and businesses,as
outlined in report DSD-20-067by:
a.Developingan application-based property tax deferralprogram to extend 2020
property tax final bill due dates by 60 days for residents and businesses;
b.Suspending utility disconnection and collection activities until August 31, 2020;
c.Waivingtemporary sign permit fees until December 31, 2020to aid businesses
in their promotion efforts during the recovery phase; and,
d.That the City Treasurer be authorized to provide additional rent relief, such as
deferral of rent, for lease tenants of City facilities, where tenants can
***This information is available in accessible formats upon request. ***
Please call 519-741-2345 or TTY 1-866-969-9994for assistance.
4 - 1
demonstrate significant financial loss or operating impacts as a result of
COVID-19.
3)That City Council receive, for information, an overview of the Small Business
RecoveryOutreach Program, as described in report DSD-20-067.
4)That any necessary by-laws be enactedto implement the economic and financial
recovery supports for residents and businesses.
EXECUTIVE SUMMARY:
On March 24, 2020 Council approved report DSD-20-
measures for residents and businesses that had been financially impacted by the COVID-19
pandemic.
It was recognized that these were initial measures that would not only provide immediate
support for those impacted but would also give the City additional time to evaluate what
economic relief was being provided at both the Federal and Provincial level, and what
additional measures may be still be needed to support the local community.
This report is a follow-up to thoseinitial measures approved by Council and includes a
proposal for further economic relief. If these additional measuresare approved,the City
will be providing an estimatedtotal of $2 million inunbudgetedeconomicand financial
supportsto residents and businesses in the community.Initially it was important to
respond quickly with broad measures to ensure that immediate relief was provided. This next
level of support builds on earlier measures but also is more targeted to ensure that relief is
provided to those who truly need it.
Highlights Include:
Additional economic supports for residents and businesses:
Ώ Waivingpenalties and interest on property taxes for the month of June 2020.
Ώ Waiving late payment charges on utility bills and miscellaneous receivable
invoices for the month of June 2020.
Ώ Waiving Non Sufficient Fund (NSF) fees charged by the City on customer
accounts for the month of June 2020.
Ώ Developing an application-based property tax deferral program to extend 2020
property tax final bill due dates by 60 days for residents and businesses.
Ώ Waiving temporary sign permit fees until December 31, 2020 to aid businesses in
their promotion efforts during the recovery phase.
4 - 2
Ώ Providing additional rent relief, such as deferral of rent, for lease tenants of City
facilities.
These economic relief measures are significant and represent $2 millionindirect
supportby the City of Kitchener
businesses and the community as a whole.
Some customers (6% Property Tax, 17% Utility) have taken advantage of the initial
property tax and utility measures that were implemented, but the majority of customers
did not require the support. Although it is an indication that some residents and
businesses may be struggling, it also highlights that the majority of customers still have
the ability to pay.
Cash flow isbeing monitored on a daily basis with current projections indicating that
extended due dates and deferred payments may cause the city toexhaust available
cash balances. This would necessitateextraordinary measures such as resorting to
short-term borrowing and other strategiesto mitigate cash flow concerns.
City Staff and Council will continue to receive feedback from the community and various
working groups such as BESTWR (Business and Economic Support Team in Waterloo
Region) to support residents andbusinesses by deploying economic development
programs and advocating for further economic support from the Federal and Provincial
levels.
In partnership with the Small Business Centre, the City will launch an outreach program
for the balance of May to connect directly with impacted businesses. Staff will connect
businesses with resources, programming, webinars, etc., to assist them as they prepare
for reopening and recovery.
BACKGROUND:
On March 24, 2020, Council approved a number of financial supports for residents and
businesses. The economic relief provided included:
1.Support related to waiving ofpenaltiesand interest on property tax and utility bills for 60
days up to May 31, 2020.
2.Mobilization of working groups to identify interventions to support specific sectorsof the
localeconomy.
4 - 3
3.Development of a community financial support andrecovery plan for residents and
businesses.
In addition to these measures, immediate relief for residents and businesses also included
concessions for; parking, business licences and lease related obligations. Refunds have also
been provided to residentsas a result of cancellations of programs andevents.
At that time, it was understood that these were short-term relief measures. Implementation of
these immediate measures were consistent with local relief provided by other Ontario
municipalities. They are supplementary to the substantialeconomic relief programs announced
by other levels of government, which have considerable fiscal capacity and the mandate for
income support and business subsidies.
During the pandemic, regional economic development, business and industry partners have
coordinated response efforts through BESTWR (Business andEconomic Support Team in
Waterloo Region). BESTWR has enabled a collaborative effort to support matters such as i)
advocacy for Federal and Provincial supports; ii) coordinatedsupports to our local workforce;
and, iii) bringing industry sectors together to proactively respond to needs within each industry.
REPORT:
Over the past few weeks, staff have received feedback from economic support working groups,
residents, businesses and council members.Implementation of immediate measuresapproved
on March 24, 2020,were in response to the economic impact of the COVID-19 pandemic and
were consistent with local relief provided by other Ontario municipalities. The COVID-19
pandemic is an unprecedented event and it is recognized that area municipalities are positioned
to support residents and businesses, albeit on a different scale, and in different ways, than
Provincial and Federal governments.
Staff have developed additional proposed economic supports for residents and businesses
based on a review of next level supports provided by other municipalities and based on a
discussion with various stakeholders. The recommended measures are based on two main
elements:
1.Extending immediate short-term measures.
2.Providing additional reliefand supportfor residents and businesses who need it.
Staff believe that the proposed additional measures strike the right balance between the need
to continue to provide financial relief for residents and businesses, while at the same time, taking
fiscal capacity and cash flowrealities.
It isalsoimportant to note that the City should limit itssupport toareas where it has jurisdiction.
Further, the City should continue to lobby other levels of government to provide support through
4 - 4
broader programs (example; rent subsidy) where they have jurisdiction and the financial means
to do so.
The following table summarizes economic measures already announced by various levels of
government:
Level of FederalProvincialMunicipal
Government
Financial
Wage Subsidy &Social ServiceProperty Tax Payment
Aid
CERBReliefDeferrals
Measures
GST/HST TaxChildcare SupportsUtility Payment Deferrals
Deferrals
Employer HealthUser Fee
Business Credit /Tax ExemptionReductions/Exemptions
Loans
Deferral ofLease Payment Waivers
Commercial RentEducation Taxes
Small Business Services
Assistance
Eviction Restrictions
Free Transit
Interest Rate Cuts
Off-Peak Hydro
Mortgage DeferralRates
Payments
will take the form of a methodical and staged reopening of businesses. It is expected that
businesses will not immediately return to normal operations and will be required to implement
ongoing physicaldistancing measures. This could include, for example, limiting capacities in
stores, restaurants, offices, etc., and continued implementation of sanitization measures. As a
result, it is expected that many businesses and residents will continue to experience financial
challenges even as the economy reopens.
Extending immediate short-term measures
The COVID-19 pandemic has created economic uncertainty and a financial strain on our
While the initial short-term measures,which were
approved by Council in Marchoffered immediate relief, which resulted in an estimated 17% of
utility customers taking more time to paytheir utility bills and 6% of property tax customers who
have not yet paid their May 1st installment. These are lower percentages than expected and
although it is an indication that some residents and businesses may be struggling, it also
highlights that the majority of customers still have the ability to pay.
Therefore, itis recommended that Council approve theextension of the following immediate
short-term measures as it relates to property taxes and utilities:
1.Waivepenalties and interest on property taxes for the month of June 2020.
4 - 5
2.Waivelate payment charges on utility bills and miscellaneous receivable invoices for the
month of June 2020.
3.Waive Non Sufficient Fund (NSF) fees charged by the City on customer accounts for the
month of June 2020.
The extension of these immediate measures have been discussed between the area
municipalities and with the Regional Pandemic Control Group. There is support to take a
consistent approach. The proposed immediate short-term measures provide a total of 90 days
ofrelief related to property tax and utility bills for all residents and businesses who need it. This
general timeframe also aligns with other programs announced at the Federal and Provincial
levels related to COVID-19 that extend out until the end of June.
Providing additional relief and support for residents and businesses
The City recognizes that additionalrelief and support is required for residents and businesses
who have been financially impacted by COVID-19. Tconsisted
of broad-based relieflargely because the extent of COVID-19 impacts were not yet well
understood and there was a need to implement it quickly. With the benefit of more time to plan,
coupled with the insights gained from the first phase of measures, it is now possible to target the
next level of support to the people who need it.
Staff are proposing the next level of economic support in the following areas:
1.Additional measures related to property taxes.
2.Additional measures related to utility accounts.
3.Waiver of fees related to Temporary Sign Permits.
4.Rent Relief for Tenants of City-Owned Buildings.
5.Additional support for businesses through the Small Business Recovery Outreach
Program.
2020 Final Installment Tax DeferralProgram
Property taxes are billed twice a year (interim and final) with four installment due dates. Final
tax bills are expected to be sent out in mid June with due dates of July 2, 2020 and September
1, 2020 for residential customersand September 1, 2020and October 1, 2020for non-residential
customers.
4 - 6
Staff are recommending that asimpleapplication-based property tax deferral programbe
developedto extend 2020 property tax final bill due dates by 60 days.
This program would beavailable as an additional measure for those who may still be struggling
financially as a result of COVID-19. It is intended to give residents and businesses extra time to
pay their final tax bills if needed by extending final due dates by 60 days. The program is
available to both residential and non-residential customers. The proposedeligibility criteria is
outlinedbelow:
Must have experienced financial hardship directly related to the COVID-19
pandemic due toone of the following reasons: loss of employment, temporary
suspension/reduction of pay, business loss revenue or temporary business
closure.
All property taxes must have beenpaid in full up to and including the March 2020
Interim Installment(i.e. tax payments were in good standing prior to localized
impacts resulting from COVID-19).
The applicant has not receivedcompensation from Business Interruption
Insurance due to COVID-19 pandemic for the payment ofproperty taxes.
The applicant has not receivedProvincial or Federal assistance due to COVID-19
pandemic specifically for the payment of property taxes.
The recommended program hasa number of benefits for residents, businesses and the City.
These benefits include:
Provides relief that is targeted to the current economic challenges related to
COVID-19.
Providesvaluable statistics at the local level to help develop future economic
recovery plans.
The application form will berelatively simple for customers to understand and
complete. Further, the processing of applications by the City can be managed
efficiently by staff.
Does not overlap with other relief programs in place by the Federal and Provincial
governments.
Limits the financial losses the City is currently projecting.
The proposed property tax deferral program hasbeen discussed with the areamunicipalities
and there is general support in taking a consistent approach. The Township of North Dumfries
and the Township of Wellesley will not be implementing a property tax deferral program at this
time as their final property tax due dates are later (September and November) in the year in
comparison to other area municipalities. The City has also requested support from the Region
of Waterloo to shift levy payments because of impacts directly related to the recommended
property tax deferral program.
4 - 7
Although it is recognized that there are residents and businesses who will need this level of
support, there are many customers who areable to pay their property taxes by the original due
dates. The City continues to encourage residents and businesses who have the ability to do so,
to make payments for their property taxes as this is also the main source of revenue to the City
to fund operations, including critical services for the community.
Residentscan continue to make payments through a Pre-Authorized Payment Plan, online
banking, by mail or by the payment box located at the Young St. entrance at City Hall.
Additional Relief for Utility Customers
Utility bills are sent monthly to customers and are due 17 days from the bill issue date. The City
has approximately 89,668 utility accounts. Previously, Council approved a wavier of late
payment charges on utility accounts until May 31, 2020 as a short-term relief measure. With
short-term measures extended, this provides relief until June 30, 2020 (for a 90 day period).
In addition to the short-term measures, Staff are also recommending a suspension ofutility
disconnection and collection activities until August 31, 2020. The City will also work with utility
customers to make payment arrangements for up to three months for those that are impacted
by COVID-19.
Waiver of fees related to Temporary Sign Permits
There has been a significant decrease in permit applications for temporary/portable signs
because of the pandemic. This is likely due to the significant closures affecting the retail and
restaurant industries. As the economy reopens under restrictive operations, temporary signs
are one means of a business providing effective communication to its customers (example:
advising that they are reopening or advising of curbside pickup options, etc.).In order to support
business recovery, staff recommend waiving the collection of temporary sign permits, city-wide,
until December 31, 2020.
Rent Relief for Tenants and Community Groups of City-Owned Buildings
The City leases space to a small number of commercial tenants. To date, staff enabled rents to
be deferred, as part of the immediate relief measures contained in report DSD-20-064. As the
Federal Government has recently announced a commercial rent support program, the City will
be applying for this program, as a means of lessening the burden on our tenants. Under the
proposed program, the City would be required to cover 25% of the rent owed. The tenant is
required to cover 25% while the Federal Government will cover the remaining 50% through loan
forgiveness.
In addition, the City rents a number of spaces to community groups and organizations. Like
commercial tenants, staff have deferred rent payments where necessary. As greater detail
emerges on the Federal rent program, staff will assess the potential for these organizations to
be included.
4 - 8
Where certain City spaces,tenants or community groups are not eligible or successful, and
where legislation allows (ex: Community Improvement Plans), staffare seeking authorization for
the City Treasurer to reduce rent owed where the tenant can demonstrate financial hardship or
operational impacts as a result of COVID-19.
Small Business Recovery Outreach Program
It is widely acknowledged that small businesses (in particular, those within the service,
hospitality, restaurant and personal service industries) have been impacted the mostand face
the most significantrisk of closure. As many small businesses are not associated with corporate
infrastructure, many will not have access to best practices or a breadth of expertise common in
larger organizations.
While in true Waterloo Region entrepreneurial spirit, many small businesses have adapted
quickly,industry advocates have identified a need for these businesses to access resources and
advice to inform their future decisions. In addition, and if possible, there is a need to access
resources tailored to their unique circumstances.
As such, the City of Kitchener, in partnership with the Waterloo Region Small Business Centre,
will be launching a Small Business Recovery Outreach Program. For the balance of May, the
program will offer personalized, one-to-one support to businesses on an on-demand basis. City
and Small Business Centre staff will conduct assessments with interested businesses. Based
on the needs of each businesses, staff will provide business owners with suggestions on the
best resources to assist them with their recovery challenges. Depending on demand volumes,
City of Kitchener staff will proactively reach out to businesses, while Small Business Centre staff
will respond to inquiries from businesses outside of Kitchener.
At the end of May, and based on the commonality of needs among businesses contacted, staff
will produce a recovery toolkit available to all businesses in the region. This could include, for
example, a list of the best resources, webinars and financial aid programs available. Many of
these resources will be drawn from existing services offered by partners such as the Chambers
of Commerce.
In addition, the Small Business Centre will launch new programming, where possible, to address
any gaps in resources identified during the outreach. In anticipation of such needs, two new
programs are already in development:
1)Re-launching the Digital Main Street program to support businesses who wish to increase
their online presence, such as the development of an e-commerce platform; and,
2)The creation of a Peer-to-Peer network program, where likeminded businesses can
connect and share challenges, solutions and best practices with each other.
4 - 9
The programs above are in addition to programming already launched by the Small Business
Centre to respond to the pandemic, including the following:
a)sessions;
b)
c)Health & Wellness weekly sessions (tools for employers to support their staffin response
to increased stress and anxiety); and,
d)rom
their current employment) looking to start a new or side business.
Continue to Support BESTWR
a unified, collaborative model known as Business Excellence Support Team Waterloo Region
(BESTWR). Lead by Waterloo Economic Development Corporation, the two Chambers of
Commerce and Communitech, BESTWR has established broad industry engagement and
facilitated a range of supports and responses to the needs of localbusinesses. Two important
functions of BESTWR to date include: a) facilitating feedback to all levels of government,
including municipalities, on thechallenges facedby businesses and residents; and, b) providing
strong and united advocacy to the Provincial and Federal governments. As the economy begins
to shift to recovery mode, such partnerships and collaboration will play an important role to
ensure our economy remainsstrongand resilient.
Conclusion
The COVID-19 pandemic has had a severe economic impact on residents, businesses and the
City. As we move forward together through these challenging times, it is important to find a
balanced and targeted approach with respect to economic relief for all stakeholders.
ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN:
Together Kitchener builds an innovative, vibrant and caringcommunity. At a moment such as
this, it is imperative that the City of Kitchener leadswith care and compassion for its residents
and businesses. The proposed actions not only show care for our community, but enablesthe
City to support our residents and businesses in remainingvibrant and innovative.
roviding economic
relief and support programs to businesses, better enables our business community to weather
the impacts of COVID-19 and prepare for the reopening of the economy.
4 - 10
FINANCIAL IMPLICATIONS:
Impact of Recommendations
It is estimated that the budget shortfall associated with forgone penalty and interest revenue
will be an additional $350,000 for the month of June.There will also be an additional loss of
penalty and interest revenue estimated at $250,000related to taxpayers who qualify for the
application-based relief program.Further, the current and expected decrease in cash flow as a
result of COVID-19 economic relief measures will result in an additional $250,000 loss in
investment income.
The consolidated cost to the Cityof the economic relief measures approved by Council
on March 24, 2020 (immediate relief) and the economic relief measures recommended in
this report, is estimated to total$2M.The table bellow shows a detailed breakdown of the
estimated loss:
ABA+B
Dollar Impact of Dollar Impact of
Economic Relief Economic
Measures Relief Measures
Approved Proposed on Total Relief
March 23, 2020May 11, 2020Provided/Proposed
Waiver of Penalty and Interest$700,000$350,000$1,050,000
Adjustments to Lease related
obligations$10,000N/A$10,000
Business Licensing Fees$40,000N/A$40,000
Parking$250,000N/A$250,000
Property Tax Deferral ProgramN/A$250,000$250,000
Investment IncomeN/A$250,000$250,000
Rent Deferral & Relief*N/AUnknownUnknown
Temporary Sign Permit FeesN/A$150,000$150,000
Total Estimated Relief
Provided$1,000,000$1,000,000$2,000,000
* Total impact of rent relief will not be known until applications to the Federal aid program are
successful. Any successful applications would require the City to cover 25% of the rent.
This shortfall in revenue will be fundedfrom the appropriate ratestabilization reservesto cover
the projected year-end deficit for the City.Further, there may also be funding provided from the
Provincial and Federal levels to assist with costs related to this event
4 - 11
Cash Flow Considerations
The City currently has approximately $88Mof cash available to fund existing obligations. Based
on projections and assumptions including the recommendations outlined in this report, the City
is expected to have sufficient cash flow in the short term to meet its obligations. The graph
below depicts the current cash flow trends and forecast for the year including inflows from
property tax, utilities and registrations.
Although the City has enough cash to fund short-term obligations, the current economic
relief options to be considered will have a negative impact on cash flows. It is expected that if
required, the City will have access to short-term borrowing and will consider other options to
mitigate cash flow concerns.
COMMUNITY ENGAGEMENT:
INFORM
council / committee meeting.
CONSULT The financial relief measures contained in this report were shared with the
BESTWR leadership team for their feedback. Generally speaking, the leadership team is
supportive of the proposed approach.
ACKNOWLEDGED BY: Jonathan Lautenbach, CFO
Justin Readman,GM, Development Services
4 - 12