Councillor calls on UCP to mimic Manitoba on grocery land restrictions

Alberta should follow Manitoba’s lead on ending restrictive covenants on former grocery store land, a city councillor says.

“These have been a bee in our bonnet for a long time,” said Ward papastew coun. Michael Janz. “…The fact that one landowner could sterilize a site and deny a community groceries in perpetuity is absolutely absurd.”

Edmonton, alongside just about every other municipality in Canada, has long been fighting with grocery chains over “restrictive covenants” — clauses included in private land sales which prevent competitors from moving in if the original occupants decide to vacate the properties. The practice has resulted in “grocery deserts,” forcing people to travel further for their essentials.

“It’s anti-competitive, it’s anti-capitalist and anti-democratic,” Janz added. “If somebody has a lease and wants to sell groceries, the only barrier to their business should be from the health inspectors, not the landlords.”

Janz put forward a notice of motion on Dec. 17 calling on Mayor Andrew Knack to advocate to the province for a law similar to the Property Controls for Grocery Stores and Supermarkets Act, which was passed in Manitoba in June. This law changes the land titles act to forbid grocery chains from creating restrictive covenants and voids existing ones. Premier Wab Kinew gave grocery companies six months to apply for an exception — of which 46 did so, though those requests are still under review.

Janz’s motion will be debated when council resumes in January.

Not a free market: Janz

While the new law came out of the NDP braintrust, Janz said restrictive covenants fly in the face of free markets and said it should be an easy choice for the business-oriented UCP government here in Alberta.

“The fact Manitoba has done it now sets a precedent,” he said. “Everybody knows grocery affordability is the top issue among Canadians. I’m under no illusions that this is going to suddenly make an enormous difference in the price of beef, but it’s a no-cost easy win for the Alberta government to show that they want to enable more competition.

“Canada has a broken, dysfunctional food system and the grocery duopoly is the symbol of it. For a couple of pen strokes, the UCP could unlock more sites and protect competition into the future. If you said to the average Albertan that a landlord should be able to say you’re not allowed to have a grocery store in your neighbourhood, most would say that’s antithetical to Alberta values. It’s absolutely ridiculous.”

He conceded he wasn’t sure how many properties in Edmonton are currently being held under a covenant other than one in his ward, but noted the issue has been ongoing for decades. When Sobeys bought out Safeway in 2019, plans to build a new store in Griesbach were scuttled, forcing residents to cross 16 lanes of traffic for groceries. But the city has been railing on this issue for much longer than that — before he was mayor, coun. Don Iveson put forward a motion to write the Competition Bureau about the issue in 2013. Even earlier, then-mayor Stephen Mandel wrote the Alberta government in 2007 asking for rules to prevent restrictive covenants. But the only response from the province to date has been the sound of crickets.

Janz pointed out the restrictions have compounding effects. If people have to travel further for groceries, they’re likely putting more wear and tear on roads, which costs the city money in repairs — potentially leading to property tax increases.

Covenants aren’t just a huge inconveniences for people trying to fill their fridges — they also stifle competition and have been thorns in the Competition Bureau’s side for some time. A 2023 report published by the agency found the “big three” — Loblaws, Sobeys and Metro — raked in over $3.6 billion in profits between them in 2022. The report concludes bringing in more competitors into the industry could reduce grocery prices.

Bureau associate deputy commissioner Bradley Callaghan said it was difficult to say how many grocery store properties have restrictive covenants on them because they’re usually worked into land title sale agreements. To find out if one is in place, you would have to look through the individual sale contract — or attempt to start a new grocery store there. Once a restrictive covenant is written into a land title, it stays there unless the current landowner decides to remove it.

He said while the bureau has some ability to take grocers to court, provinces have far more tools at their disposal to prevent restrictive covenants from impacting communities. He noted other countries, including New Zealand and the United Kingdom, have introduced legislation to stamp out the practice.

With cost of living continuing to be a serious problem for many Canadians, Callaghan the bureau was encouraging provinces to follow Manitoba’s lead.

“Our view is that market forces should determine what businesses are entering these spaces and how properties are used,” he said. “We need to be doing everything that we can to lower the barriers for entry so we can get more competition in grocery.

“That’s the only way we’re going to be able to offer the benefits of competition to Canadians — which is lower prices for groceries and better variety.”

ebowling@postmedia.com

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