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Impacts of COVID-19 Pandemic on the Downtown Core of Canadian Cities

The Consider Canada City Alliance Inc. (CCCA) unites twelve of Canada’s largest Economic Development Agencies (EDAs) to promote investment around the world where upwards of 85% of all net new GDP growth is occurring in the major urban centres in Canada. The members stretch from the Atlantic coast in the East to the Pacific coast in the West and include Halifax, Quebec City, Montreal, Ottawa, Toronto, Waterloo Region, Hamilton, London, Winnipeg, Calgary, Edmonton, and Vancouver. The members strongly believe that metro regions/cities play an increasingly critical role in global economic flows and that downtown business districts are major contributors to Canada’s national identity and are key generators of economic wealth. Vibrant city centers are the hubs for a region’s economic, cultural and civic identity. A prosperous and sustainable downtown core that offers a high quality of life plays a significant role in attracting international investment not only as destinations to establish and grow a business but additionally as an attractive place to live and expand personal experiences. CCCA is unique in the world in its capability to have twelve regional/city level economic efforts and the national government collaborate and cooperate in presenting Canada’s value proposition to foreign investors. The recently announced partnership with Destination Canada will amplify CCCA’s ability profile Canada and its cities to international audiences. We believe that EDAs will play an important role in our economic recovery and future growth of our communities.

Issues and Anticipated Impacts

The corona virus (COVID-19) outbreak has, and will continue to have, a significant impact on the nation’s city centers. According to the World Economic Forum (WEF), “major cities are bearing the brunt of the pandemic’s human and economic costs”. The WEF also notes despite the availability of a vaccine in 2021, COVID-19 will continue to have a disruptive impact on cities. As we close in on a year of varying levels of lockdowns, social distancing and working from home, it is important to note that Canada is also facing a slowdown in the rollout of its vaccination strategy - with the vaccine not available to the broader public until at least August of this year - and the influx of new variants of the virus, it is unlikely that cities will see “business as usual” return to downtown cores earlier than Q4 of this year. All CCCA member cities are experiencing significant impacts on their downtown cores with the proportion of employees, typically working downtown, now working from home ranging from 40-90%. This is supported by ridership on public transit having dropped 40- 80%. This has resulted in an immediate impact on the hospitality and retail sectors. Some members have also seen an impact on residential real estate prices. Of grave concern was the rise in poverty, addictions and mental health challenges citing a lack of available public washrooms and safe places for vulnerable individuals. In the longer term, as commercial real estate vacancies rise, metro regions and cities anticipate a decline in property taxes and other revenue streams that will seriously compromise municipal governments’ ability to provide basic services. Companies have already signaled their intentions to change their business models allowing employees to continue to work from home and reduce their physical footprint in the business center. Further changes to the workplace, in terms of reducing density in the workplace, are also anticipated. While most members were not in a position to provide precise data on business closures as result of COVID-19 lockdowns, studies suggest a 10-20% decline in sectors such as retail and restaurants. This percentage is expected to rise as the country continues to negotiate its way through the pandemic. As an example, the Ottawa Coalition of Business Improvement Areas forecasts that up to 30% of local establishments could close as result of COVID lockdowns.

Current Risk Mitigation Activities

Almost all members have participated in the ShopHERE and Digital MainStreet programs helping local business to move their business online. Additionally, member municipalities are offering rate abatements, property tax deferrals, deferred development and planning fees, support for securing PPE, buy local campaigns, extended business hours as well as lane closures, shared street spaces and streamlining of patio and retail expansion programs. All pandemic recovery efforts should be shaped to support a strong, healthy, and environmentally sustainable Canada.

The following set of recommendations for consideration have been proposed by our membership:

1. Investment in Strategic Urban Locations

The pandemic has illustrated the need for a collaborative discussion among municipalities, provincial and federal governments to overhaul the model used to finance cities in Canada. Municipal leaders need to rethink their strategies to improve affordability, promote cleanliness, ensure stable supply chains, produce energy, and reduce congestion. Recommendations include:

a. Infrastructure – Infrastructure investments that have an impact on international investment attraction such as port, airport, convention centers etc.

b. Supply chain – Support supply chain localization initiatives.

c. Restore and regenerate downtown cores – Support for programs that increase residential growth downtown, as well as support for public transit, alternative transportation models and forward-thinking parking strategies.

2. Investment in Local Business

There is significant concern amongst members with regards to the long-term impact on the downtown core as a result of increased vacancies across the retail, restaurant and commercial office real estate sectors. Recommendations include:

a. Local business – Continued support for local businesses to mitigate the continued risks of the pandemic and pivot to digital presence and ecommerce solutions.

b. Business models – Support for businesses to transition to hybrid work models as well as provide support for businesses and realtors to rethink their planning decision to accommodate safe return and accommodation of employees.

c. Business retention – Support for EDAs to build and maintain strong business relationships with key employers in the region to ensure that they stay in the region; and support them in enhancing/expanding their mandate in the region.

3. Investment Attraction

Focus on maximum impact by attracting and retaining large corporations who will re-open with physical presence. Recommendations include:

a. Sustainable funding – EDAs require stable, proportionate funding to support programs that supports the attraction of new companies to metro regions and the downtown to fill vacancies.

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