Kensington Market doughnut shop facing double the rent

A beloved doughnut shop in Kensington Market is facing a rent increase that will see rates almost double for the small business– and the local non-profit helping the store navigate the situation is criticizing the city for its actions.

Dipped Donuts, which opened on Baldwin Street in 2018, rents its spot from the Toronto Parking Authority, also known as Green P, which operates a lot above the shop.

Owner Jiten Grover says when he recently had to renew the business' lease with the city— he learned that the price would jump from 46 dollars per square foot, to 80 dollars.

In the current negotiations with the city, it has offered a staggered increase, but that would mean the business would pay close to $90 per square foot in a few years, due to a built in three per cent increase per year.

"It's a shock to a small business. Especially during this time when small businesses are suffering," he said.

Grover said even though Dipped Donuts is popular— that doesn't mean they can afford this kind of rent increase.

"When you open up a new business, you're not putting your own money into it. You're taking a loan out, so it's not successful right away," he said.

These kinds of rent increases will drive small businesses out of areas like Kensington Market, and change the quality and character of the neighbourhood, he said.

While Grover says negotiating with lower-level staff at the city has been helpful—  they are getting push-back from higher ups.

"It doesn't feel like the government is supporting small businesses," he said.

City law requires it charge market rent

The Kensington Market Community Land Trust, a non-profit that advocates for renters and small businesses in the neighbourhood, has been helping Dipped Donuts call for rent control to keep the store from being pushed out.

City public landlords need to be more fair, said Zack Bradley, the development manager with the non-profit.

"We're not saying they shouldn't increase the rent. We're saying to increase at a rate that keeps businesses here," he said.

In a statement, the city told CBC Toronto it is required to charge market rent under the City of Toronto Act. It confirmed it is currently in negotiations with Dipped Donuts and is looking at implementing a phased approach to the increase to "minimize the impact on tenants."

Under the Act, the city introduces a new lease to rental tenants every five years.

But that means every five years, a new business will be pushed out, said Bradley.

"This is displacement on behalf of the city. Because what they're doing is they're saying we want market rent. We don't care who's there," he said.

Rent control for small businesses needed: non-profit

Councillor Dianne Saxe, who represents University-Rosedale, said Dipped Donuts is an important part of the Kensington Market community— but the city is in "great financial difficulty" and can't hand out a subsidy to one business, versus others.

She said the city is required by law to charge market rents and they can't make an exception.

"We definitely want to keep the doughnut store in Kensington Market, but at the same time we've got to comply with the law," she said.

Bradley said the non-profit is calling on the city to revise its bylaw and look at implementing rent control that is three or five per cent through the entirety of a lease.

At the end of May, City Council approved a motion to ask Ontario to implement rent control for small, locally owned businesses on provincial land.

While the motion is great to see, the city needs to be applying those policies to their own rent as well, said Bradley.

"To be honest it's hypocritical of the city calling on the province saying 'hey Ontario, can you do this?' while at the same time they're raising rents by 74 per cent," he said.

The city owns six spaces on Baldwin Street, including the spot where Dipped Donuts is.

"These could be spaces for newcomers and immigrants to start new businesses. But I think if we keep that market ideology in our heads as a city…. then it's just going to become no different than any other spot," he said.

"That's such a lost opportunity, because this might be the future of how we preserve our small businesses in our neighbourhoods," he said.