Tired of losing customers because of major construction projects, Toronto shops are fighting back

Tired of losing customers because of major construction projects, Toronto shops are fighting back
Potential customers looking to get a little ink done at the Madd Art Tattoo Shop in the heart of midtown Toronto’s Little Jamaica have been having second thoughts since work began on the Eglinton Crosstown rail line.

“Nobody wants to drive up this way,” said Rhea, a tattoo artist at the Eglinton Avenue West studio.

Should they dare, would-be patrons are likely to encounter heavy equipment blocking vehicle and foot traffic amid a blanket of noise and dust. Many motorists access traffic apps that tell them to avoid the area.

“People just keep going,” she said. “They think we’re closed.”

The story’s similar for most of the small retail businesses along the Eglinton West strip. “The majority have been affected by the construction,” said Natty B, owner of reggae music shop Trea-Jah-Isle, who estimates he’s lost at least 50 per cent of his revenue since tunnelling began in 2013 on the $5.3 billion, 19-kilometre Metrolinx line running entirely along Eglinton.

In a bid to survive, many small businesses are beginning to fight back — banding together and demanding compensation from the crown agency and city for lost business due to construction that impedes or completely cuts off access to their customers.

Natty B said the LRT project threatens the ethnic character of businesses in the Little Jamaica shopping district between Keele Street and Allen Road, many of which are “holding on by a thread. As the small guys we’ve been left out here. It’s about survival.”

Several retail outlets have been forced to close between Mount Pleasant Road and Bathurst Street due to the LRT work, which involved tunnelling 10 kilometres underground along Eglinton between Keele Street and Laird Avenue, say business improvement area representatives.

Wendy Yu, who operates the Fit For Life eatery on Eglinton near Yonge Street, says her revenues have been hurt by the project — and the urban development it promises will only mean higher retail lease and rental costs.

Farther east, auto dealerships along the Golden Mile in Scarborough got together to take out newspaper ads at their own expense letting the public know they are still in business as road and parking restrictions kept pedestrians and vehicles at bay.

The Eglinton concerns today echo those generated along St. Clair Avenue West during construction of a streetcar right-of-way several years ago that led to a $100 million class-action lawsuit ultimately dismissed by the Ontario Court of Appeal.

“We’d be the first to say it’s been painful,” said Metrolinx spokesperson Anne Marie Aikins.

And while she calls the Eglinton LRT the largest infrastructure project in Canada, it is just one of many government-funded initiatives that create thousands of design and construction jobs — while exacting a heavy economic toll on businesses that try to remain open during the construction.

According to a report from the Canadian Federation of Independent Business (CFIB), 41 per cent of small businesses in Canada have been disrupted by construction projects since 2012, with five per cent or about 65,000 severely impacted.

“Huge economic costs have been unfairly off-loaded,” with the majority of affected businesses dissatisfied with the level of support from government, the report says. Municipalities, in charge of a large part of all major infrastructure projects, “need to do a better job” of mitigating the negative economic impacts.

And while Metrolinx says it has worked with city and other officials on a construction mitigation plan for businesses, the plan did not include financial compensation for shop owners.

“While Metrolinx does not compensate business owners or tenants in the form of tax breaks or operating subsidies for businesses that remain open during construction, Metrolinx makes every effort to ensure that businesses receive up-to-date information on construction activities and timing and where they are directly impacted, they are supported,” the agency said in a statement to in June.

“This involves significant outreach and public communication,” with Metrolinx teaming up with the city, local businesses and business improvement areas to launch a promotional campaign to attract visitors to Eglinton during construction. A new campaign is planned for November.

Toronto, meanwhile, does not typically compensate business owners directly for losses due to road or sidewalk construction, though compensation can be provided for structural damage due to construction or when land is expropriated.

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Lawyer Jeff Goldstein, who said he is representing some Eglinton West business owners, said the policy behind the lack of compensation for business losses in Toronto is partly based on the notion that the infrastructure work serves a greater public good.

Still, Toronto Mayor John Tory has said some sort of compensation to businesses hurt by construction could be considered. Meanwhile, cities such as Montreal and Quebec have already taken action, joining several jurisdictions abroad in offering payments for losses due to road construction and other work. (A spokesperson for Tory did not respond to a request for comment by press time.)

Montreal in 2018 introduced what it called the first program of its kind in Canada with businesses eligible to claim a maximum of $30,000 a year if they can prove they’ve suffered a significant drop in sales. The program is mostly aimed at small retailers such as restaurants and coffee shops that rely on walk-in trade.

The CFIB, which has long lobbied for compensation for losses due to construction, says the time is right to rachet up its communications with Ontario officials this fall asking them to not stand in the way if a city decides to write a cheque.

“We are turning to our leaders and asking them to stand with local business and take up CFIB’s challenge to adopt a compensation program for the worst cases,” said Simon Gaudreault, CFIB senior director of national research.

Robert Gibson, press secretary to Ontario Economic Development Minister Victor Fedeli, in an email said “our number one priority is ensuring Ontario is open for business and open for jobs, and that means creating conditions that allow businesses and the Ontario economy to grow and thrive.”

He did not say if the minister would support municipalities that wish to establish a compensation fund, but said the ministry engages with the CFIB regularly “to ensure small businesses have the tools and business environment necessary to succeed.”

Gaudreault suggested a number of models that the province and municipalities could consider, citing measures already in place around the world such as a scheme in Brussels where smaller merchants that must remain closed for at least one week because of public construction are entitled to a daily compensation of about $117.

Seattle has provided more than $15 million (U.S.) in mitigation funds to businesses affected by the construction of a new light-rail line and announced a new help fund in addition to taxes and fees deferrals for business impacted by a major local road construction project, the CFIB says.

“There are different approaches,” he said, adding that a municipal fund to assist small business hurt by construction doesn’t have to be based on payments from ratepayers. He gave as an example a system that would financially penalize contractors for projects that are extended beyond deadline, with funds dedicated to affected small businesses.

He also said construction work needs to be better co-ordinated to limit sidewalk and other closures that cut lifelines to retailers so that less business loss is incurred in the first place.

Natty B, of Trea-Jah-Isle, said he is hoping for some compensation after the Eglinton line is completed in 2021, perhaps including a payout from business losses filed on his tax return.
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