Unexpected renovation registrations

Unexpected renovation registrations
Curtis Mercer, CEO, Canadian Homebuilders Association-Newfoundland and Labrador

The residential construction rebate program offered as part of the COVID-19 response in Newfoundland and Labrador delivered some surprises for the Canadian Homebuilders Association-Newfoundland and Labrador (CHBA-NL).

As part of the pre-approval process for the rebate, the CHBA-NL reviewed program applications.

“Basically what we were looking for was to verify contractors had general liability insurance, they were up-to-date with workers compensation, they were up-to-date with all the government filings—basically that they were a legitimate business,” interim CHBA-NL chief executive officer Curtis Mercer told Atlantic Business Magazine.

In some cases, a general contractor was involved. In other cases, the application was for a smaller job, for a specific trade like a plumbing, electrical or carpentry company. By the fall, program applications involved 1,500 different companies.

For perspective, CHBA-NL has about 160 members, mostly in the St. John’s area. While the association knew it wasn’t all-encompassing, the expectation was no more than 300-400 contractors would participate in the rebate program.

“The fact that we’ve enrolled 1,500 contractors means that there is a big portion of the industry that aren’t members of our association,” Mercer said.

That’s not any indication of the underground economy. The businesses are legitimate. However, Mercer said it indicates a swath of the industry the association hasn’t picked up.

The CHBA-NL used to have a branch in Corner Brook, but Mercer estimated it closed about 15 years ago. The association has focused its attention on the capital city and surrounding area in recent years because that’s where the bulk of home construction has been happening. But the reno program is an eye opener.

“It gives us the opportunity to reach out and see who’s out there and what type of work that we’re doing and hopefully increase the voice of our association right across the province,” he said.

Just under 12,000 homeowner rebate applications were received for the program. More than half were filed as the deadline closed in. As of Nov. 20, there were 9,000 pre-approvals, with CHBA-NL and government working through the rest.

The suggestion’s been tossed around, but Finance Minister Siobhan Coady doesn’t believe the program is full of people who would have done the work without the rebate, but are happy enough to pocket a little extra government cash. “I truly believe that people were doing additional work because there was an incentive to do so and they did it in a timely and upfront manner, versus maybe spreading it out over a longer period of time,” she said, pleased with the response.

Timing was a key piece of the initiative—it was intended to add opportunities and get money moving in 2020, as megaprojects were being tabled and entire sectors shocked by the pandemic. It worked: the total value of residential construction permits in the province was up. According to Statistics Canada, for example, the total for July 2020 was 28.7 per cent higher than the same month in 2019.

The rebate program offered 25 per cent back on renovations to primary residences (up to $10,000 for a $40,000 project), or a $10,000 rebate on new home construction—provided the work was being completed by a licensed contractor. Coady said projects average about $3,000.

The many applications mean a higher total cost to government than expected. “It was $30 million, but it’s actually oversubscribed… [Because] people had their applications in by the deadline date, it’ll actually go up from there,” she said.

The final cost won’t be available until the latter part of 2021, when construction work is completed, paperwork filed and accounts closed, but Coady said anyone pre-approved and following the rules will get their cheque. •

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