B.C.'s commercial rent controls debated

Small-business owners want B.C.s new Christy Clark government to intervene in the marketplace and limit rent increases on commercial properties.

The proposed changes to the provinces Commercial Tenancy Act would kick in when leases for small-business owners expire and would be aimed at providing property rent stability for independent businesses.

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The idea of rent control, however, has plenty of critics because it flies in the face of free enterprise.

There are reasons to regulate commercial leases, said Mary Brookes, who owns Sophies Pet Palace on Commercial Drive. One is to protect small businesses who employ locally, use local suppliers and create jobs, which has spinoff benefits.

Vancouver Island University geography professor Don Alexander, who has co-written papers on the concept of commercial rent control, agreed.

Small businesses contribute an enormous amount to the local economy because the money circulates more than if it goes to a chain store, he said.

Small businesses are a benefit to social well-being and possibly to environmental well-being, so theres a rationale in not allowing these guys to be as scarce as hens teeth.

Rent control on commercial property is rare in North America and falls primarily under civic government authority.

New York City Council is currently considering a requirement for mandatory arbitration if a commercial tenant and landlord cant agree on a market rent when a lease expires. Berkeley City Council in California had commercial rent control until 1988, when the state government banned cities from implementing such civic bylaws.

Sacha Thompson, who owns Flowerbox on Charles Street near Commercial Drive, said the situation her neighbour Mary Macintyre finds herself in is reason enough for the province to regulate commercial rate hikes when a lease expires.

Macintyres Little Nest coffee shop is closing July 21 because she cant afford to pay the $6,500 per month that her landlord recently imposed when her lease

expired.

In 2007, Macintyres monthly rent was $2,900, less than half of what it is now.

There was an arbitration clause in the lease but going through that [to determine a fair market rent] would cost too much for a business of my size, she said. Id have to hire a lawyer. Realtors told me that arbitration could go on for a long time so I just couldnt afford it.

Thompson, who shares the building with Little Nest, said her landlord was reasonable when she last negotiated a lease for Flowerbox and that her rent has not doubled, as Little Nests has.

Shouldnt there be a standard for which the [lease and] building is held, just like with a residence? Thompson said. I was able to negotiate a gradual rent increase. Why was that OK for me to do and not for my neighbour?

But not all small-business owners believe regulation is the answer.

Ed Des Roches, co-owner of clothing company Plum, said business owners should vigorously negotiate a suitable lease when they initially take space. That lease should include a renewal option and arbitration if no agreement can be reached on a future lease rate at expiry.

Neither Housing Minister Rich Coleman nor Minister of State for Small Business Naomi Yamamoto responded to interview requests by press time.

gkorstrom@biv.com

twitter/GlenKorstrom

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