Order Amending the Remission Order in Respect of Non-residential Leases and Licences of Occupation Under the Administration of the Parks Canada Agency: SI/2020-62
Canada Gazette, Part II, Volume 154, Number 18
SI/2020-62 September 2, 2020
FINANCIAL ADMINISTRATION ACT
P.C. 2020-587 August 23, 2020
Her Excellency the Governor General in Council, considering that it is in the public interest to do so, on the recommendation of the Treasury Board and the Minister of the Environment, pursuant to subsection 23(2.1) footnote a of the Financial Administration Act footnote b, makes the annexed Order Amending the Remission Order in Respect of Non-residential Leases and Licences of Occupation Under the Administration of the Parks Canada Agency.
Order Amending the Remission Order in Respect of Non-residential Leases and Licences of Occupation Under the Administration of the Parks Canada Agency
1 (1) The portion of subsection 1(1) of the Remission Order in Respect of Non-residential Leases and Licences of Occupation Under the Administration of the Parks Canada Agency footnote 1 before paragraph (a) is replaced by the following:
1 (1) Remission is granted to the persons referred to in subsection (3) of 75% of the following amounts paid or payable by them in respect of the period beginning on April 1, 2020 and ending on August 31, 2020:
(2) Subparagraph 1(3)(a)(ii) of the Order is replaced by the following:
- (ii) provides to the Parks Canada Agency, no later than September 14, 2020, a signed attestation supporting their eligibility;
Coming into Force
2 This Order comes into force on the day on which it is made.
(This note is not part of the Order.)
Pursuant to subsection 23(2.1) of the Financial Administration Act, this Order amends the Remission Order in Respect of Non-residential Leases and Licences of Occupation Under the Administration of the Parks Canada Agency (P.C. 2020-414) [the original Order] to extend the rent relief to August 2020. The original Order remits 75% of the rent and licence fees from April 1 to June 30, 2020, payable on commercial and municipal properties in national parks, national historic sites, and other program lands administered by the Parks Canada Agency (PCA).
In line with the Government of Canada’s broader strategy to support small businesses during the COVID-19 pandemic, the Order Amending the Remission Order in Respect of Non-residential Leases and Licences of Occupation Under the Administration of the Parks Canada Agency (the amending Order) extends the rent relief available to PCA’s commercial tenants through the original Order to August 2020. The extended rent relief aims to support small businesses that continue to experience financial hardship, as the economy gradually restarts, and also extends the application period to September 14, 2020.
Parks Canada Agency tenants
PCA’s real property portfolio is one of the largest and most complex among federal custodians. There are 766 commercial agreements and 2 municipal agreements (Town of Banff and Municipality of Jasper) who could potentially benefit from the amending Order. Less than 20 of these tenants are considered large corporations, such as major hotel chains and attraction providers (e.g. ski hills, mountain top attractions, skywalks, and other local attractions) who provide, disproportionately, employment and services to the largest numbers of people. The vast majority of PCA’s tenants are small businesses with a significant regional focus related to their location in the national park. The businesses range from convenience and grocery stores and professional services, to golf courses, small to medium-sized hotels, restaurants and more.
PCA has a long-standing and important relationship with the businesses that operate on its sites, as they provide the critical accommodation, food and services that, in many cases, people require to complete their visitor’s experience. In addition, in many remote and isolated areas, Parks Canada sites are the only source of visitor-generated revenue for these businesses.
Impact of COVID-19 pandemic on PCA tenants
The COVID-19 outbreak continues to have an adverse impact on tourism-related businesses across Canada. In the initial stages of the pandemic, the COVID-19-related restrictions that were imposed by multi-levels of government (e.g. social distancing requirements, closure of certain businesses) meant that normal visitor activities in national parks and historical sites were limited.
On June 1, 2020, some parks gradually reopened (e.g. the grounds of Bellevue House National Historic Site, Bruce Peninsula National Park and Fathom Five National Marine Park), but at a reduced capacity (i.e. access was provided to some trails, day-use areas, green spaces, and some recreational boating). On June 17, 2020, Parks Canada announced that visitors would be able to access some camping services at certain national parks (e.g. Gros Morne National Park, La Mauricie National Park, Point Pelee National Park). However, access to some facilities, like public toilets, change rooms, other visitor facilities and parking in some PCA sites across Canada remain closed or have restricted access (e.g. Georgian Bay Islands National Park, DayTripper boat transportation services, roofed accommodations, and the park administration office in Midland) and most of the revenue-generating programs (e.g. guided tours, exhibit space) remain limited.
The summer tourism season is the high point of almost every park and site, and for most of the small and medium businesses that operate on PCA sites, this is when they generate a majority of their revenue (except for a few businesses that are able to generate more revenue in the winter, such as ski hills). The temporary closure of PCA sites in the first quarter of the year, and the gradual reopening announced in June 2020, have had an adverse financial impact on these businesses annual revenues; and, this decline in tourism is projected to persist throughout the year.
The businesses located within national parks and historic sites are of significant economic importance to a number of rural and remote communities across the country. They have been particularly hard hit due to the following factors: (a) their revenue generation takes place primarily between May and September; (b) they are located in areas of low population density, but scaled to provide services to their level of visitation (they carry higher structural and fixed costs); and (c) international visitation, which is also another revenue driver, is not likely to restart anytime soon.
Unlike businesses that have a formal production function or have an output that can physically be measured, tourism and hospitality businesses experience an unrecoverable operating loss every day that goes by without significant revenue.
Government of Canada rent relief measures
On March 27, 2020, the Minister of the Environment and Climate Change announced that rent and fee payments owed by Parks Canada’s commercial tenants, and due on or after April 1, could be deferred without interest until September 1, 2020.
On April 16, 2020, the Government of Canada announced the Canada Emergency Commercial Rent Assistance (CECRA) program for small businesses. The program seeks to provide loans, including forgivable loans, to commercial property owners, who in turn will lower or forgo the rent of small businesses for the months of April (retroactive), May, and June 2020. Applicants had until August 31, 2020, to apply for the CECRA program for these three months. However, small businesses located in parks or historic sites are not eligible for the CECRA program because they pay rent to PCA and not to commercial property owners with mortgages.
To address this, and pursuant to the original Order, which was published in the Canada Gazette, Part II, on June 10, 2020, the Minister of the Environment and Climate Change announced that eligible PCA tenants could apply for rent relief under the original Order. Eligible PCA tenants will receive a reduction in their invoiced annual rent and fees amounts for 2020–2021. The rent relief provided by the original Order was aligned with the CECRA program in that the eligibility requirements are the same and it applies for the months of April, May and June 2020.
On June 30, 2020, the Government of Canada announced an extension of the CECRA program for one month, until July 31, 2020, to continue to support small businesses and property owners, as the Canadian economy gradually reopens. On July 31, the Government announced another extension of the CECRA program for one month, until August 31, 2020, to continue providing Canadian small businesses most impacted by the shutdown with an extended bridge to recovery. The deadline to apply for the CECRA extension (for the months of July and August) is September 14, 2020.
Given PCA’s unique real property environment, and the uniqueness of its operations within the national park system, a customized rent relief solution is considered both necessary and warranted. Unlike many other commercial rent agreements, PCA tenants separately bear the costs associated with constructing and equipping the land for use, including the building cost itself and related fit-up required, which usually results in a separate mortgage or financing arrangement that is paid to another third party.
The amending Order extends the reduction of a portion of the annual rents and fees due to PCA to the month of August 2020 and provides for an extension to the original application deadline from August 31 to September 14, 2020. If a tenant has already submitted its application for the period covering April to June, it is automatically eligible for the July and August extension. However, if a tenant has not yet submitted an application, he would have until September 14 to submit its application for all five months.
It is estimated that up to $3.8 million could be remitted as a result of the amending Order. In line with the original Order, the financial relief provided by the amending Order would continue to extend the same financial relief as provided for under CECRA, to eligible businesses operating in more than 150 national parks and national historic sites and other Parks Canada sites across the country, as well as two municipalities (Jasper and Banff).
The amending Order will continue to help small businesses mitigate some of the financial pressures caused by the COVID-19 pandemic and it is considered in the public interest because it would help to support the longer-term maintenance of economic and tourism activities at PCA sites.
No formal consultations were undertaken on the amending Order. However, stakeholders (e.g. business owners, chambers of commerce and local tourism officials) continue to proactively engage the Government of Canada to express that their financial viability is at risk. The extension of the rent relief provided through the amending Order continues to respond to these concerns and is aligned with the CECRA program. Accordingly, it is anticipated that stakeholders will be supportive of it.
Policy, Legislative and Cabinet Affairs
Parks Canada Agency