Ontario Construction News staff writer
The Canadian Federation of Independent Business (CFIB) is pleading with municipal governments to help mitigate the impacts of lengthy construction projects on small- and medium-sized businesses.
An online petition aimed at business owners calls on government to:
- Bring in a “no surprise” rule for upcoming construction projects.
- Use a “dig once” approach to project timing.
- Introduce an improved contracting process and a bonus/penalty system for early/late project completion.
- Have a liaison officer on site to keep the community informed on the latest project developments.
Recognizing that major infrastructure projects are essential for urban development, the CFIB highlighted how work is “highly disruptive” to small businesses. CFIB’s report, Paving a Smoother Road, shows that from 2012 and 2017, 41 per cent of Canadian small businesses were disrupted by local construction projects. Of those, 65,000 small businesses were forced to borrow money, relocate, or close.
More recent CFIB data indicates that 72 per cent of small businesses across Canada report they have been impacted by disruptions from local construction projects over the last five years. and 32 per cent of the businesses impacted say they were not given any notice prior to the start of construction projects.
Also, just 24 per cent of small businesses were officially notified by government officials and only 39 per cent received direct communication from the construction project team. The rest found out about upcoming construction through street signs, local media, word of mouth, and social media.
Small business owners report several common issues during local construction projects, from traffic and noise to dust and debris. Operations are disrupted by challenges with courier deliveries and accessibility for customers and staff due to limited parking.
“Often, disruptions result in significantly decreased sales. In fact, it is estimated that Canadian businesses lost 22 per cent of revenues in the last five years and had to spend nearly $53,000 per business on additional expenses (e.g., property damage, cleaning, increased insurance premiums, temporary relocation costs, etc.), due to public construction projects,” Keyli Loeppky, Director, Interprovincial Affairs at CFIB wrote in an open letter to Mayors ahead of the Federation of Canadian Municipalities (FCM) meeting last weekend in Calgary. “It is therefore not surprising that 68 per cent of small businesses believe they should be financially compensated when a lengthy public construction project significantly affects their operations.”
“While the concept of construction mitigation is not new, there have been few programs implemented across the country. However, several municipalities are leaders in this area and their programs should serve as models for other municipalities to follow.”
The City of Montreal’s construction mitigation program offers direct financial compensation to small businesses and the city recently announced that in addition to the up to $40,000 per year already provided, $5,000 grants will be available for businesses with disruptions lasting six months or longer. These grants are available from the start of a project without any requirement to demonstrate revenue losses.
Quebec City has a similar program, offering financial relief for major construction disruptions. Businesses can claim up to $30,000 per year if they are able to show a significant loss of sales.
The City of Calgary recently introduced a construction mitigation pilot providing eligible businesses in two communities with $5,000 to help mitigate the financial impacts of construction on businesses. Additionally, liaisons are also being put in place to ensure better communication with the business communities. While this is a great start, there is still more work to be done to ensure this pilot becomes permanent and is applicable to all parts of the City.
“If direct compensation is not feasible, municipalities should consider offering tax holidays (i.e. temporarily waive property taxes for affected businesses). Property taxes can be particularly harmful for small businesses in times of lower sales because they are profit insensitive, wrote. “Even businesses with significantly decreased revenues due to public infrastructure projects are required to pay them.
“Additionally, municipalities should strive for better planning and communication with the local businesses ahead of construction projects. Business liaison officers should be available to inform businesses before a project starts through to completion,” said “Town halls and face-to-face drop-ins would help address changes to street and business access, concerns about movement and parking of heavy equipment, properly notifying businesses about utility and other service disruptions, and responsibly removing equipment and debris.
“Finally, it is important projects are completed within a strict timeline, with penalties in place for construction work that goes beyond its expected end date. Far too often, roads remain torn up and storefronts inaccessible long past planned completion dates, prolonging the period of disruption for small businesses.
“Municipalities should award/penalize contractors for the early/late completion of projects.
The CFIB letter urges mayors to consider implementing similar construction mitigation programs to support small businesses.
“If direct compensation is not feasible, municipalities should consider offering tax holidays (i.e. temporarily waive property taxes for affected businesses). Additionally, municipalities should strive for better planning and communication with the local businesses ahead of construction projects. Finally, it is important projects are completed within a strict timeline, with penalties in place for construction work that goes beyond its expected end date.”