As local municipalities work on rolling out their own relief programs for businesses shuttered by COVID-19, questions arise on whether a municipality can do things like provide loans.
In Collingwood, a proposal from town staff to council recommended setting aside $1 million to provide loans up to $10,000 to local businesses impacted by shutdowns. The proposal was voted down by council. Councillor Yvonne Hamlin questioned the legality of such a proposal, given the Municipal Act states municipalities may not lend money to businesses.
The matter came up at County Council on April 14 when Mayor Brian Saunderson proposed a motion to seek clarity from the province on the rules for municipalities providing relief to local businesses.
“As we get into this crisis, we’re seeing there are huge economic impacts,” said Saunderson. “Staff have been working hard with local businesses and industries on various federal and provincial programs, as well as looking at ways municipalities can assist.”
During his comments, Saunderson mentioned Collingwood’s economic support and recovery task force and how they’ve discussed section 106 (2) of the Municipal Act, which outlines that municipalities may not grant assistance to businesses by giving or lending any property of the municipality, including money. At their April 8 meeting, Collingwood council voted to refer their own loan program, matching grant proposal, and digital business portal plan back to staff for further clarification and input from the task force.
“I’m aware of opinions from various councils that fall on both sides of the fence, so it doesn’t seem to be a very clear-cut issue,” said Saunderson.
Saunderson concluded by asking county Warden George Cornell to write a letter to the province seeking clarification on the issue before making decisions. He also asked for the county’s economic development committee to report back to county council on ways the county can support local businesses during and after the pandemic.
Bradford Deputy Mayor James Leduc said Bradford West Gwillimbury tried to get out ahead of the requests from local businesses by green-lighting their own business relief grant packages at their April 7 council meeting. The $250,000 for the packages came out of Bradford West Gwillimbury’s reserves and was given to a local third-party organization to distribute. The application process was slated to open at the end of last week.
“We wanted to get these in place within the first month so they would stay afloat,” said Leduc. “The provincial and federal programs are going to be moving forward in the future. I was hoping we’d get something out of our economic development committee sooner.”
Midland Mayor Stewart Strathearn said he wanted to make sure if municipalities were giving money out, it would be distributed fairly and equally among residents.
“It’s fairly clear. Municipalities are not allowed to directly or indirectly provide funding to businesses and we are sticking to that policy,” said Strathearn. “The federal government has already put close to a fifth of $1 trillion to the economy to broadly support those residents with businesses.”
Committee of the whole voted to pass Saunderson’s motion, which will have to be ratified at the next regular meeting of council.
The county’s economic development committee will also discuss the issue at their next meeting and report back to county council on the issue.
