ALBERTA
CONDO
connections
Why solar panel installation is typically the best choice for multi-unit condos
Winter
2023
How residential buildings can prepare for the rise of electric vehicles in Alberta Essential information every condo owner should know
COF Membership,
JOIN US! Enjoy access to a range of member benefits and support an organization whose mission is networking condo owners throughout the province of Alberta.
Membership includes newsletters and updates, advocacy reports, access to Condo Owners Forum, articles, and member prices for educational opportunities, webcasts, and seminars. This is all available for a low annual membership fee. COF advocates for better, fair, and transparent condominium legislation to all levels of government and stakeholders. The more of you there are, the stronger your/our voice is!
For more information please email
membership@cofsab.ca or check us out at www.cofsab.ca/membership-account/membership-levels/
ALBERTA CONDO CONNECTIONS
3
ALBERTA
CONDO
inside
connections
6 Greetings from the president of COF
8 COF Alberta is looking out for the best interest of condo owners 9 Major projects and the greening of Alberta condos: A concept which time has come
Alltron Systems (1990) Ltd.......................... 30 Astoria Asset Management Ltd..................... 5 BFL Canada................................................. 15 Bylaw Consultants....................................... 31
10 Q&A with COF administrator Lee Ann Bartley
Custom Sweep Ltd....................................... 19
12 A partnership between engineering companies and condominium boards:
DS Security Solutions Inc.............................27 Edmonton Eviction Services Inc................... 15
“How close is close?”
14 Upgrading your condominium: What is capital improvement, and why it matters
Encor by Epcor............................................. 5 Entuitive.....................................................32 Field Law................................................... 23
16 Solar panels on condominium roofs, what to do?
Fort Sands Construction............................... 3
18 A guide to installing EV infrastructure in Alberta’s multi-unit residential
JRS Engineering............................................7
buildings: How to prepare for an electric vehicle future
20 So I own a condo -- now what?
Lydale Group.............................................. 34 Morrison Hershfield...................................... 3 New Concept Management Inc..................... 17
23 Project management for condominium corporations: Tips for success
Parterre Property Services Inc..................... 11
26 Using a BECA to build a better Reserve Fund Study
Reliance Asset Consulting........................... 13
28 Can condos deal with the coming reserve fund shock?
Scott Venturo Rudakoff LLP.......................... 5
31 To fund or not to fund -- You need to ask the right questions 33 Choosing the right engineer for your restoration construction project
ALBERTA
CONDO
connections is published by DEL Communications Inc. Suite 300, 6 Roslyn Road Winnipeg, Manitoba, Canada R3L 0G5 PRESIDENT & CEO David Langstaff MANAGING EDITOR Kelsey James kelsey@delcommunications.com ADVERTISING SALES MANAGER Dayna Oulion dayna@delcommunications.com
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ACCOUNT REPRESENTATIVES Brent Astrope | Gary Barrington Mic Paterson | Gary Seamans PRODUCTION SERVICES S.G. Bennett Marketing Services CREATIVE DIRECTOR / LAYOUT & DESIGN Kathleen Cable CONTRIBUTING WRITERS Martin Bankey | David Cumming Phil Wilson | Jason Wang Dana Bouwman | Maurice Perrault Stacey Mcdougall | Erin M. Berney Sally Thompson | Justin Tudor Nancy Longueira | Stephanie Robinson Stefan Nespoli
Reggin Technical Services Ltd..................... 19
Todd Brand Consulting.................................22 Tribe Property Technolgies....................... OBC Wade Consulting......................................... 21 ©DEL Communications Inc. – All rights reserved. Contents may not be reproducedby any means, in whole or in part, without the prior written permission of the publisher. Publications mail agreement #40934510 Return undeliverable address to: DEL Communications Inc. Suite 300, 6 Roslyn Road, Winnipeg, MB R3L 0G5 COF does not specifically endorse the editorial, products or services contained within this magazine. These products and services are presented here as an indication of the various possibilities in the Marketplace. COF does not make or imply any warranties as to the suitability of any of these products or services for any specific situation. Furthermore, the opinions expressed in this magazine’s editorial content may not necessarily reflect the opinions of COF. While every effort has been made to ensure the accuracy of the information contained herein and the reliability of the source, the publisher in no way guarantees nor warrants- the informationand is not responsible- for errors, omissions or statements made by advertisers. Opinions and recommendations made by contributors or advertisers are not necessarily those of the publisher, its directors, officers or employees. PRINTED IN CANADA 10/2023
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ALBERTA CONDO CONNECTIONS
5
Greetings from the president of COF, Terry Gibson
Facing condo challenges In condo life, we all play the “Ain’t It Awful?” mind game, complaining about our condo boards, maintenance staff, neighbours, the government, and industry – without doing anything about it. It may make us feel good in the short term and make for excellent activity on social media, but it accomplishes nothing. What is the sense of complaining about issues we cannot control? We may not be able to control every issue, but we can influence them if we are prepared to. At COF, we are actively addressing Alberta condo issues and making progress. It takes energy, patience, and perseverance, and we are slowly seeing improvement. Why not join or volunteer with us, learn more about condo living, and support advances in the Alberta condo world? To improve Alberta condo living, we focus on the following: • Networking: Connecting condo owners • Education: Providing opportunities for learning • Governance: Improving condos organization (the foundation of management) • Advocacy: Working with government and industry to improve the law, regulation, and business practices One of the shortcomings of condo living is that we frequently live very
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ALBERTA CONDO CONNECTIONS
close to others, and our activities
modules are being developed and will
may negatively impact each other.
be offered starting this fall.
Alberta condominium owners need a better way than going to court to solve minor issues and not allow matters to escalate. In our experience, the courts
We hope you subscribe to our newsletter mailing list (free) and our website: www.cofsab.ca.
are slow and expensive and may be
Please consider joining and
inappropriate for minor issues. We
volunteering with us. Let’s stop the
are actively working with government
unproductive game of “Ain’t It Awful.”
and industry to establish a dispute
We can and are positively improving
resolution tribunal, learning from
Alberta condo living.
similar agencies in British Columbia, Ontario, and Nova Scotia. The Hon. Dale Nally, Minister of Service Alberta and the Reduction of Red Tape, has prioritized a dispute resolution tribunal in response to intense pressure by COF and others. Thank you, Minister Nally.
Did you know there are over 9,000 Alberta condo corporations, with an average of less than 12 units? Most are self-managed! We estimate that Alberta condos are valued at more than $100B! This is serious business! Most Alberta condo owners believe we need
We also need the government to
better management of these valuable
treat condo owners consistently on
assets.
electrical energy rebates. The current Alberta program precludes condos with only one meter. We are working with the Hon. Nate Neudorf, Minister of Affordability and Utilities, and his team to remedy this oversight. It is a problematic issue for the government, but they are working on it.
Often, our condominium homes are our most significant personal investments. We need to recognize that the volunteers we elect to boards, while well-intentioned, may need to gain the skills or experience to govern their complex. Remember, it is not what you know that gets you in trouble or what
Other issues that concern us include
you know you don’t know, but what you
improving the clarity of government
don’t know, you don’t know! Sadly, many
regulation and enhancing the quality
do not take the opportunity to learn
of condo management, finance, and
more about their responsibilities, and
banking practices.
condo governance and management
COF continues to offer one to two “Condo Chats” each month, featuring condo specialists on issues ranging from the law to engineering to management. A series of education
suffer. Ontario has required directors to take online training courses. We do not believe government regulation is the answer for Alberta. Boards of larger condos need to hire
professionals and delegate more work
However, RECA’s requirements are
the government you deserve.” Condo
to their condominium managers to
minimums. Are minimums good
owners deserve better!
enable boards to focus on important
enough for your condo? Condominium
issues and avoid volunteer burnout.
management is a complex business;
We must treat managers as
professionalism.
managing valuable assets requires
professionals, hold them accountable, AND be prepared to pay them more.
Owners must take responsibility. Don’t be passive in operating your largest
Too many condos hire the cheapest manager rather than the best manager for the job. The lowest cost option is
family asset. Learn more about how your condo is managed. Take courses! Participate! Every little bit helps. Why
rarely the best.
not offer to sit on a condo committee,
In the last 18 months, RECA, the
plant some flowers, or be responsible
Real Estate Council of Alberta,
for a welcoming committee for new
has established licencing and
occupants?
minimum education and competency
A condo is a form of government.
requirements for condominium
Many call it the fourth level of
managers. COF was pleased to see
government, after the federal,
the requirement for licensing and
provincial, and municipal government.
happy to be consulted on manager
Remember, as Thomas Jefferson
qualifications.
said, “The government you elect is
Terry Gibson, a resident of Calgary, is co-founder and current president of COF. He is a public consultation professional with extensive real estate/ housing experience. In his career, he has financed condos, overseen the construction of two large condo projects, and has lived in condos for over 25 years. Contact him at terry@cofsab.ca. Terry has facilitated many workshops on board governance throughout the province of Alberta for non-profit societies and condos and has authored many information and education bulletins for condo stakeholders. Terry holds a Bachelor of Arts, Economics and Commerce degree from SFU and a Diploma in Urban Land Economics from UBC. n
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ALBERTA CONDO CONNECTIONS
7
COF Alberta is looking out for the best interest of condo owners By Dale Nally, Minister of Service Alberta and Red Tape Reduction
W
henever we need help improving
I know there’s another issue in the condominium
our condominium legislation in
sector that you want to hear more about:
Alberta, we open our “go-to” list.
establishing a system for resolving disputes
The Condo Owners Forum Society
between condo boards and owners.
of Alberta is always on that list. We know that when we’re working with your
resolution system has been ongoing for several
organization, we’re working with a group that is
years. We’re continuing to look for opportunities
looking out for the best interests of condominium
to address how condominium owners and boards
owners across Alberta.
can resolve disputes outside the court system.
According to the 2021 Census, about 18 per cent of
This work is complex. Any system we set up
Alberta households live in condominiums across
needs to be accessible and affordable, with the
the province. That’s why we appreciate your
appropriate authority, skills, and experience to
input and the work you’ve done to help us shape
provide effective dispute resolution.
condominium legislation. As you know, a lot of work has been done, but there is a lot more to do.
We want to do it right. Thank you for your continued patience as we find the right way.
In fall 2022, we introduced Bill 19 to amend the
We’re committed to ensuring that Alberta’s
Condominium Property Act. Bill 19 would have
condominium legislation meets the needs of
changed condominium voting and damage
condominium owners.
chargebacks, and made some other clarifying amendments.
I look forward to working with your organization as we explore opportunities to promote better,
These were changes Albertans who live and work
more efficient, and more affordable services that
in the condominium sector asked for, and even
position Alberta for longstanding success and
though Bill 19 didn’t pass in 2022, we haven’t
prosperity.
forgotten about those changes. When I received my mandate letter from Premier Danielle Smith recently, I was instructed to pass and implement amendments to the Condominium Property Act as previously directed by Cabinet, which I will follow through on.
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As you know, the journey for setting up a dispute
ALBERTA CONDO CONNECTIONS
Albertans are counting on us, and we will work hard to build a stronger and more prosperous Alberta. n
Major projects and the greening of Alberta condos:
A concept which time has come By Phil Rosenzweig, COF Builder and Volunteer
A
fter a year of unprecedented wildfires and other natural disasters throughout Alberta and around the country, this
their homes by spending money on
installing EV infrastructure in Alberta’s
projects without input and approval
multi-unit residential buildings. This
by the owners; it’s like anything else
edition of Alberta Condo Connections
in budgeting condo expenses – simply
provides additional references for those
edition of the Alberta Condo Connections
funding the requirements of keeping
wishing to take a “deeper dive” into green
concentrates on major condominium
up with your reserve fund plan is often
solutions. Please check out the links to
a frightening scenario, as seen in the
our reference guide to this edition.
projects and reserve funds, working with professionals such as David Cumming in his article, “Upgrading your condominium,” and Martin Bankey in his article, “A partnership between engineering companies and condominium boards: ‘How close is close?’” We will be focusing on how all this impacts what your condo board can and should be doing in both maintaining your homes and adding value to your property. As well, it might be time to advocate for the “greening” of the
article from our friends at the Condo Manager Association of Ontario, “Can condos deal with the upcoming reserve fund shock?” One of the real questions is: when is maintenance avoidance or upgrading and improving of condominium infrastructure less expensive than dealing with the fallout of having to mitigate potential disasters when components fail? It is also time to look at improving the
Finally, we must look at advocacy with different levels of government to support green initiatives in multiunit buildings and condominium communities. Condominiums provide Albertans with an opportunity to own affordable homes in an economy of scale conducive to a greener experience. The question to ask our various levels of government would be: are you willing to
condominium community in Alberta as a
carbon footprint of the condominium
concept that is much more top of mind
community. What about our common
and has much more support in terms of
mantra that living in condominiums
education, accessibility of technology
should be more efficient and be less
and programs, and support for potential
expensive because a larger group of
funding in the province.
people are working together to maintain
Resource guide:
and improve their homes?
https://www.pembina.org/reports/ installing-ev-chargers-in-alberta-multiunit-buildings.pdf
I feel this edition has much in the way of practical articles on working with
Green initiatives abound in Alberta if
professionals in assessing your major
there is a willingness of your condo
projects and looking at the possibility
ownership to participate, as evidenced
of not only maintaining but improving
by Phil Wilson’s article, “Solar panels
your homes and properties. I’m not
on Condominium roofs,” and the work
suggesting that condo boards have the
of the Pembina Institute and Jason
right to make investments in improving
Wang in their recently released guide to
walk the talk and add impetus through funding to these projects for multi-unit family buildings that can not afford a greener option on their own?
https://solaralberta.ca/go-solar/ https://ama.ab.ca/community/care/ protecting-environment/electric-vehicles https://cofsab.ca/alberta-green-condoguide/ n ALBERTA CONDO CONNECTIONS
9
GET TO KNOW US
Q&A with COF administrator LEE ANN BARTLEY The Condo Owners Forum Society of Alberta (COFSAB) has been providing a voice for Alberta condo owners since 2015. The society is a resource for more than 300,000 Alberta condo owners and it allows owners and occupants with the opportunity for networking, education, and advocacy. The COFSAB is made up of a board of condo owners around the province and in each issue of Alberta Condo Connections we profile a member of the board so you can learn more about who we are and why we are so passionate about the industry. We are happy to introduce our administrator, Lee Ann Bartley, who also sits on our board of directors and currently holds the position of secretary. Having moved to Airdrie a year ago, Lee Ann and her husband moved here from Victoria, B.C. after living there for 40 years and, prior to that, in Calgary and Yorkton, Sask. Lee Ann’s professional life began in finance and bookkeeping. While working as the executive director for a non-profit childcare society, she sat on several executive and advisory boards for numerous non-profits and a hospital. Over the years, while working and raising a family, being a part of the Strata Council in Victoria was hugely important to Lee Ann. Having been a part of three different Stratas, she has held every position, finally settling on the secretary/treasurer before heading back to Alberta. Q: W hat was it that made you consider purchasing a condominium, rather than a single-family home? Lee Ann: If you’ve lived in Victoria, real estate is tight and expensive, so we chose what worked best for our lifestyle and budget. Our intent in Airdrie was to buy something smaller and with no stairs, with the market as it was, we ended up in a townhouse. We are now talking about the next step, which will be a condo so we can do more travelling and have less maintenance to worry about. We want to do all the things in retirement we didn’t have time to do while working. Q: W hat do you perceive as the benefits of owning a condo versus a single-family home? Lee Ann: Besides sharing costs and maintenance, I’ve been blessed over the years to have lived in complexes where the owners treated each other like family.
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ALBERTA CONDO CONNECTIONS
Q: Are there any downsides to condo living? Lee Ann: There can be, but that’s up to you. Educating yourself about what is expected of you as an owner and what you can expect of your condo corporation and condo board is paramount. It’s been a big adjustment for us moving from B.C. to Alberta and the differences that we are finding in condo legislation and owners’ attitudes. Part of the reason I joined COF was so that I could learn about Alberta’s legislation and grow from it while using what I had learned and experienced in B.C. to share with COF board and volunteers. The Alberta Government is so far behind on treating their condo owners as “people that matter.” This is something that we, as owners, need to band together and make the government accountable for. Before purchasing a condo, do your homework and ask questions… if your realtor brushes you off, don’t let them; they are selling you one of the most important investments you will ever make, so keep asking those questions. Talk to the people at COF. A little knowledge can make your life so much easier.
boards. Your board should be open to answering questions, providing explanations and complete transparency. The phrase “because we said so” should never be a part of any conversation with any owner. Condo boards need help; generally, it’s the same few bodies that are part of the board year after year. It’s not a huge time commitment and if more of us offer an hour a month, that enables others to free up their time as well. Q: Would you recommend condo ownership to others?
Lee Ann: For 30-plus years in Victoria and Airdrie.
Lee Ann: Depending on what your wants and needs are, yes. Not everyone is cut out for condo life, so do your homework before you buy. It can be a very rewarding experience.
Q: What do you perceive as the biggest challenges facing condo owners?
Q: How has your membership in COF benefitted you as a condo owner?
Lee Ann: Knowledge and support, which will hopefully come from your condo board or property manager, if you have one. Use them and ask questions. If they don’t have answers, be persistent. Not having answers can end up resulting in bad decisions which can cost you money. Like everything in life, there are good boards and there are not so great
Lee Ann: Networking and education are my two biggest takeaways. I still have a lot to learn about the different laws here in Alberta, however, my network at COF is always ready to help with their experiences and answers. I can’t thank them enough and I hope that in the future I do the same for others. n
Q: How long have you owned a condo?
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11
A partnership between engineering companies and condominium boards:
“How close is close?”
By Martin Bankey, P.Eng., principal engineer, Tree of Knowledge (TOK) Engineering
E
very condominium building/complex, whether professionally managed or self-managed, must deal with the inevitable physical building problems that come along. When these problems are of a technical nature, the condominium board, with or without the assistance of a professional manager, might need to reach out to an engineering firm for assistance. The step-by-step process Although these building problems can vary in size and complexity, the basic solution process remains consistent. 1. Gather initial data: Gather as much initial data, drawings, photos, etc. as possible. 2. On-site inspection: Perform on-site inspection to take measurements, photos, and gain first-hand history from condo board rep or board member. 3. Scope of work: Prepare and present scope of work (SOW) proposal/quotation. 4. Investigation and analysis: Perform appropriate follow-up investigation and analysis. 5. Report and recommendations: Present report complete with conclusions and recommendations. Keys to success The overall success of any such assignment depends largely on two key factors: • Technical collaboration: The first being the technical side of things. Cooperate with the engineer in gathering the maximum amount of relevant data, measurements, drawings, etc. Let that individual then proceed to do their job based on
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ALBERTA CONDO CONNECTIONS
technical calculations/analysis as well as previous related experience. The second, and equally important factor, is communication and expectations between the condominium representative and engineer. • Effective communication: The final success of this job is based on effective communication between the condominium and engineering firm. It is incumbent upon the condo rep or board to get the initially required/requested information to the engineer as soon as reasonably possible. The job does not start until then. Similarly, when the engineer arrives, as necessary, on-site, it is important to have someone there to meet him/her and to have pre-arranged for any access to required locations. If not, delays inevitably occur. 1. U nderstanding time and costs The engineering company wants to complete the job at an agreed-upon price, time, in a practical and efficient manner. This means time spent on the job translates to costs. To achieve success, the partnership should aim to: • Provide the requested information promptly. • Ensure someone is available on-site to meet the engineer and provide necessary access. 2. Moving forward together At the end of the initial engineering inspection/investigation and report, complete with recommendations, some condo boards might seek additional help. This often leads into a “phase two” of the project. Collaboration and agreement between the two parties, the condo board, and engineering firm remain essential. Some reasons for needing additional assistance,
• Who do they turn to get the job done? • How much will it cost? 3. Creating tender documents Most engineering companies are well-positioned for creating what are known as “tender documents.” These are detailed documents outlining the requirements that a general contractor or sub-contractor must meet and follow according to the supplied report. By the same token, engineering firms can also recommend some suitably experienced and reputable contractors who can perform the work on behalf of the condominium. With the approval of the board, the engineering firm will compose the tender doc and approach various contractors to gauge their interest in bidding for the job. 4. Selecting a contractor • Arrange an on-site meeting to create a “level playing field” amongst contractors. • Set a deadline for bid submission. • The board then selects their successful candidate. 5. Ongoing oversight Finally, and only if desired by the condominium, the engineering company may be requested to oversee/manage the progress and quality/correctness of the construction to completion by additional on-site meetings and visits. 6. Customizing involvement
hinges on efficient use of time and clear, honest, and transparent communication between all parties involved. To summarize, dealing with condo issues is a team effort that requires both technical collaboration and effective communication between all parties. Martin Bankey has been practicing as a professional engineer in Alberta’s private sector for over 40 years. His early career was largely in the manufacturing and fabrication sectors and eventually in the province’s oilpatch. He moved on to manage one of Edmonton’s larger consulting engineering firms for almost a decade before starting his own business, Tree of Knowledge (TOK) Engineering, eight years ago. Martin is a family man with three children. n
SINCE 2000
RELIANCE A SS
Decide how much involvement the board wants from the engineering company. • Are follow-up meetings desired for the tender document review, or for guidance in the selection of the successful candidate? • Similarly, does the condo want an “additional set of eyes” on the progress of construction throughout or will a single post-completion visit suffice? This goes back to our original question: “How close is close?” If the level of comfort and confidence required by the board, on behalf of its members, justifies additional involvement, so be it. If the level of job complexity or size is deemed significant enough by the engineer to warrant additional inspections, so be it. 7. Success through communication Ultimately, the inevitable success of these projects technically, budget-wise, and in terms of client satisfaction
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ALBERTA CONDO CONNECTIONS
13
UPGRADING YOUR CONDOMINIUM:
What is capital improvement, and why it matters By David Cumming, McLeod Law LLP
M
ost condominium owners will know that the condominium corporation is required to maintain, repair, and replace the common property to a reasonable standard, but what happens if the corporation wants to upgrade the common property? What if the corporation wants to install solar panels on the roof, or replace the nylon carpet with a more expensive wool fabric? Though it is certainly possible for a board to upgrade its common property, you need to know what you are doing to avoid ending up in legal trouble. The key is to understand the difference between a repair/replacement and a capital improvement. So, what is a capital improvement? The Condominium Property Act (the “Act”) and the Condominium Property Regulation (the “Regulations”) don’t define it specifically, but it does tell us what it isn’t. According to the Act, a capital improvement is not replacement of obsolete property with a contemporary equivalent, nor is it replacement with a lower cost equivalent of the existing property. As a general rule, if you are replacing
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ALBERTA CONDO CONNECTIONS
property with something equivalent, you are not making a capital improvement. We don’t have much guidance from the courts as to the dividing line between a repair/replacement and a capital improvement. Adding a new amenity would certainly be a capital improvement. However, what about replacing cheap windows with better more energy efficient ones when the low-cost, less efficient alternative is available? That is a grey area that we don’t have clear guidance on. If the board wants to make an upgrade that may be a capital improvement, to do so it must comply with the legislation. The scheme in the Act and Regulations is to protect the owners against a board that might drain their reserve fund to make improvements and leave them underfunded. Unless the capital improvement is necessary to maintain basic building standards, to use reserve funds you must first pass a special resolution, which is approval from 75 per cent of the ownership representing 75 per cent of the unit factors. This is also the case in the event the board wishes to raise the funds by way of special levy.
As many board members will know, getting a special resolution on anything can be a very difficult task. There are a couple of ways around this. The first is to plan ahead and put the improvement in the reserve fund report. This gets you within the ambit of section 28 of the Regulations: Repairs, etc. not to be construed as capital improvement. For the purposes of this Part and section 38 of the Act, a repair to or replacement of depreciating property that is carried out by a corporation is not to be construed as a capital improvement if that repair or improvement is a matter that was included in the current reserve fund report that was prepared and submitted to the corporation. This specially refers to repair or replacement of existing property, so it cannot be used to add a new amenity. However, if the corporation wishes to upgrade its existing property (such as my above example about energy efficient windows), putting the upgrade in the reserve fund report will ensure that this upgrade will not be considered a capital improvement.
If the corporation truly wishes to move
As the above illustrates, there are
David Cumming is a lawyer in the
forward with adding or improving an
ways in which the board can move to
litigation and condominium groups. His
asset of the corporation, you might
upgrade their common property, but
practice includes commercial litigation,
wish to consider borrowing the funds
it certainly is not easy. Given that the
employment law, and trademark law.
provincial government is incentivizing
His experience in litigation and dispute
homeowners to add amenities to their
resolution includes judicial dispute
homes to make them more energy
resolution, mediation, and trials. David
efficient, such as installing heat pumps
has represented clients in countless
and solar panels, it would be wise to at
settlements and resolutions of all
least remove some of the roadblocks to
matters of litigation, large and small, for
allow condominium corporations to do
corporations and individuals through
the same. As it stands now, the largest
negotiation, arbitration, mediation,
condominium projects that can make
and court. In his condominium
the greatest impact in reducing energy
practice, David advises and represents
consumption are the ones that have
condominium corporations, homeowner
resolution. This means a resolution
the most difficulty in doing so. Whether
associations and their respective boards
passed by a majority of owners at a
you budget long-term or come up with
of directors, property managers, and
meeting, rather than 75 per cent of all
another solution, the improvements
owners on matters such as construction
owners, which is far more attainable
made will be worth the (not always
deficiency issues, governance, bylaw
for many projects.
easy) effort.
enforcement, and human rights. n
if payment out of operating or advance budgeting is not possible. This is a decision that can be made by the board unless you meet the financial threshold prescribed under Section 31.7 of the Regulations. According to this section, so long as the bylaws do not require a special resolution for borrowing, and the amount to be borrowed does not exceed 15 per cent of revenues, the borrowing of money can be approved by an ordinary (rather than special)
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ALBERTA CONDO CONNECTIONS
15
Solar panels on condominium roofs, what to do?
By Phil Wilson, president, Cascade on the Creek Condominiums, Canmore
T
here is a broad range of condominium styles, from multi-unit apartment-style buildings to small fourplexes.
Different condominium configurations with corresponding roof arrangements and electricity payment methods will play into any decision made by a board regarding the installation of a solar panel array. Electricity payments are typically either
16
special levy to finance the installation. For large multi-unit condos, a solar panel installation by the condominium corporation is typically the best approach. When individual condo units have a part of the common roof directly above the unit and electricity is billed directly to the unit, it is probably better to allow each unit owner to install panels as they wish, subject to agreed upon terms supported through legal
used in the decision-making. If most of the common electricity is used during low solar panel production hours, the benefit of the electricity generated would have less impact on the common electricity costs. There are also condo corporations and individual owner insurance implications resulting from a solar panel installation. If the installation is done by the condo corporation, their insurer(s) needs to
included in monthly condo fees, or
documentation.
individually billed by a utility company
The time of day and season (e.g.,
that any required changes to the condo
to a unit owner. A decision by a board
winter versus summer) when common
corporation’s insurance can be made. If
to install solar panels on the common
electricity is used by the condo
the installation is by individual owners,
roof will probably result in the need for a
corporation is also a factor that can be
then it is suggested that any loss and
ALBERTA CONDO CONNECTIONS
be notified about the installation so
damage resulting from the installation
must repair or replace the roof. If we
I understand that the idea of installing
is listed as a non-covered item in the
were composing the Special Resolution content again, we would have included
solar panels on condo roofs is new to
condo corporation’s insurance policy. This will ensure that the corporation
the requirement that the owners are
carries no liability for the installation.
responsible for all maintenance, repair,
Confirming that the individual owner is responsible for all costs, damage, liability, and loss resulting from
and operating costs associated with
many condo corporations. Why do I say that? A survey I did of about 20 condos in Canmore revealed that none of them
the solar panel array on their portion of
had solar panel installations. Maybe as
the roof.
time goes by condo corporations will give more consideration to them.
the installation of solar panels by
Two of the owners have completed their
the individual owner will require an
installations and are now online.
To wrap up, my system has generated
What motivated the owners to install
1279 kwhs between July 10 and May 16,
Our condominium’s experience
solar panels?
2023 (system activation). There are real
Our property has four side-by-side
I can only speak for myself on this.
savings along with carbon footprint
residential units on the second and
Basically, I believed it was just the right
reductions available. Think about it.
third floors, and two commercial units
thing to do to reduce the amount of
and four garages on the main floor.
electricity I have to buy from the grid,
There are six owners. Electricity is
thus reducing my carbon footprint. My
with extensive project and construction
billed individually to each unit owner
system has an estimated break-even
management experience. Time on the
and there is also common electricity
time of about 12 years, so recouping my
board of the Grandin Green Cooperative
paid for from the monthly condo fees.
investment was not a primary driver.
in Edmonton and presidency of a small
appropriate registration on the title.
Our common electricity is for internal (24/7) and external lighting and common hallway heating (used in months with low daylight hours and low solar energy production).
The Government of Canada’s Greener Homes Canada grant also provided some financial incentive. Lastly, I
Phil Wilson is a retired civil engineer
fourplex condo and Cascade on the Creek condo (12 years) in Canmore
believe that the value of my condo
rounds out his experience with
should increase because I have solar
condominiums. Contact him at
panels.
philipwilson69@gmail.com. n
The idea of installing solar panels on our condo was first discussed at our 2021 AGM. The discussion clarified that there was not a consensus among the owners to permit the condo to proceed with full solar panel installation. The special levy cost implications were also of concern to one of the owners, particularly since this was a discretionary project. Three of the owners wished to proceed with solar panels on their portion of the common roof located directly above their units. A Special Resolution was passed, allowing the three owners to install solar panels. The resolution required the owners to be responsible for the removal and reinstallation of the panels in the event the corporation
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ALBERTA CONDO CONNECTIONS
17
A guide to installing EV infrastructure in Alberta’s multi-unit residential buildings: How to prepare for an electric vehicle future By Jason Wang
T
here has been significant growth in electric vehicle (EVs) purchases in Alberta, as consumers capitalize
on the benefits of an EV’s lower fuel and maintenance costs. Consumers are increasingly eager to reduce carbon emissions and contribute to the community-wide health benefits of cleaner air that result from lower tailpipe emissions. Since 2017, sales of EVs in the province have increased almost ninefold, and they are predicted to grow even faster in the coming years. With EVs likely to reach price parity with conventional vehicles by the mid- to late-2020s – and the federal government set to introduce sales targets to increase domestic EV supply – zero-emission vehicles are poised to dominate Canadian automobile sales over the next decade.
18
ALBERTA CONDO CONNECTIONS
Access to EV charging will need to expand significantly to keep pace with growing demand. Residential EV chargers are the most common and convenient option for drivers and allow vehicles to be charged overnight. Currently, most people living in multiunit residential buildings (MURBs), such as condos and apartments, don’t have EV charging access at home. Installing chargers often entails extensive renovations to connect to electrical infrastructure and can be costly and complex; projects frequently require approval from multiple stakeholders. However, adding charging infrastructure increases the value of the building to residents as well as market value, which in turn contributes to the uptake in EV purchases – an increasingly desirable choice for Albertans and the skilled workers that the province is trying to attract.
This guide presents expedient ways to install chargers for electric vehicles and find efficiencies to help make the process smoother in both existing residential buildings and new builds. With the rapid transition from gasfueled to hybrids and all-electric cars, property owners and managers will need resources and advice on how to prepare for an EV future. Key takeaways: 1. S tart preparing for the future now. With the federal government set to require that 20 per cent of new passenger vehicle sales by suppliers be zero-emission by 2026, followed by 60 per cent of sales by 2030, and 100 per cent by 2035, an all-electric future is fast approaching. Electrical renovations can take considerable time to plan and implement and, in the case of new builds, charging
plans must be in place at the
•R equiring that EV-ready parking be a
Additional information: https://ama.
beginning of the project.
mandatory part of new construction
ab.ca/community/care/protecting-
2. M ake parking spaces “EV-ready.” EV chargers do not need to be the first
• I ntroducing rebate programs to cover
environment/electric-vehicles.
a portion of costs
Jason Wang is a senior analyst at the
Installing outlets or junction boxes
•E xploring financing mechanisms, rate
energy think tank headquartered in
adjacent to parking spaces allows
structures and other options to enable
Calgary, A.B. www.pembina.org. This
residents to easily connect to a
MURB owners and utilities to invest in
article was reprinted with permission
charger at some point in the future.
charging infrastructure.
from the Pembina Institute. n
step in making a building EV-friendly.
Pembina Institute, a non-profit clean
3. Use EV energy management systems (EVEMS) to reduce costs. EVEMS are a technology that controls the rate, or speed, of the charge, and the most efficient times to charge. This allows multiple chargers to share the same branch circuit (the wire from the
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electrical panel breaker to the outlet connecting the charger). 4. U nderstand the benefits of a comprehensive 100 per cent EVready approach. It can be tempting to electrify only a few parking spaces at a time, or to install a handful of chargers for drivers to share in common parking areas. As demand for charging grows,
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however, and more drivers want access to chargers in their dedicated parking spot, a piecemeal approach can quickly become unsustainable and expensive. If only a handful of parking spaces are electrified with little forward planning, those first few chargers could end up exhausting electrical capacity. 5. P olicymakers need to step up. While this guide is focused on the practical steps to installing EV infrastructure, decision-makers at all levels of government need to present policies and programs that support the installation of charging infrastructure in MURBs. The upfront cost is the most daunting obstacle.
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19
So I own a condo – now what? Essential information an owner should know By Maurice Perrault
S
o, you have just purchased your first condominium (commonly referred to as a condo) to downsize your home or as a first home purchase. Or maybe this is your second or third purchase of a condominium. Whatever it is, you now own a condo. Let’s start with the basics. Can you define the word “condominium”? Who said, and be honest, it is a multi-storied building that contains suites, rowhousing, or a bunch of homes built on one piece of property? Actually, the word condominium does not describe any type of building. The word condominium describes a form of ownership. The accepted definition is: “Condominium is an invented Latin word formed by adding the prefix con- ‘together’ to the word dominium, ‘dominion, ownership.’ Its meaning is, therefore, ‘joint dominion’ or ‘coownership.’” When you buy a condominium, you get full ownership of the “condominium unit” and shared ownership of the “common property.” How do you know what your condominium unit is? To answer this, you look at the condominium plan. The diagram on the right is a piece of a plan that shows unit #40. What is owned is inside of the heavy black lines. You will note that there is space between the heavy lines of adjoining
20
ALBERTA CONDO CONNECTIONS
units, this is common property. The “P” stands for patio, which is also common property to which the owner has been granted exclusive use.
size of the unit, the larger the unit, the more unit factors. Some corporations have the unit factors split evenly between all units.
The condominium plan is what creates a condominium. The developer registers the plan with Alberta Land Titles, and a number is assigned. This number will identify that condominium forever. For example, the condominium plan number for the unit on the right is 042 5568. The plan was registered in 2004; the 2 indicates Northern Alberta and the 5568 is the number.
Unit factors are used to determine how much you will pay for condo fees and any other levy that may occur. There is more than one formula used to calculate this. I use the following: From the current budget, total condominium fees divided by 10,000, multiplied by the unit’s unit factor, divided by 12. So, if total condo fees are $323,341.92, you divide by 10,000, which equals 32.334192 multiplied by the particular unit’s unit factor 95 equals the yearly figure of $3,071.7482 divided by 12, which equals the monthly figure of $255.97901 rounded to $255.99.
Along with a condominium unit are unit factors. The diagram on the right shows unit 40 with 51 Unit Factors (second column), which is 70.5 m2 (third column). The developer assigns unit factors, which are usually based on the
When you purchased your unit, your realtor gave you many documents to read and approve. One of the more important documents, in my opinion, is the bylaws. I have found that many people tend to disregard this document and some of the “laws” it contains because they feel they own their property and can do what they like on and in it. This is not the case. According to Section 32(67) of the Condominium Property Act, the bylaws are a contract between the corporation and the owners. This means the corporation can also enforce the bylaws as a contract, which adds to the corporation’s powers under the act.
It also means owners are considered to be bound by the bylaws from the time they become owners, regardless of whether or not they have read the bylaws. That’s how important bylaws are to condominium living. While the board or a committee may help write bylaws, it is only the owners that can approve them. Seventy-five per cent of owners must approve them, plus 75 per cent of unit factors. Sometimes, those percentages are difficult to achieve. Rules can supplement bylaws. The board can make rules, but they must be approved by owners at the next AGM. There can be no monetary sanctions for disobeying a rule. When a new rule is written, it comes into effect one month after it is made public to the owners. It must be presented to the owners at the next AGM, where the owners can change it by an Ordinary Resolution. The act, regulation, and bylaws all prevail over a rule. Naturally, when you are running a corporation, there will be meetings. There are Annual General Meetings, AGMs, there are Special General Meetings, and there are board meetings. The act requires that AGMs be held annually and within 15 months of the previous meeting. Owners are given a minimum 14-day notice of a pending AGM. Financials, Annual Reserve Fund Report and Budget, need to be in the AGM package and not distributed at the meeting. If you are unable to attend an AGM, you can assign strict voting rules to your proxy or allow them to vote as they see fit. Special General Meetings are topicspecific and can be called by the board or owners. If the owners call it, the
minimum requirement is a written request with 15 per cent of unit factors approval. The nature of the business must be included and in the form of a resolution to be voted on. The meeting must be convened within 30 days of receiving the request, and the 14-day notice applies. As an owner, you have rights. As an owner of a condominium, you do have the exclusive use of your unit. You can use common property to the extent the bylaws allow. Many condos have areas that are common property but for the exclusive use of an owner (for example, back patio areas). You can ask your board for information or clarity on any aspect of condo living that may apply to your particular complex (e.g. if you do not understand the wording of a certain bylaw). You can vote on any resolution put forward at an AGM or SGM. Only you can change bylaws. As an owner, you are eligible to put your name forward for election to the board. You can, by following certain
regulations, petition for a Special General Meeting. You can offer your unit for rent. Sections of the Condominium Property Act will apply as may bylaws. Along with rights come obligations. As an owner, you must abide by the act, bylaws, and rules. Pay your share of common expenses, often referred to as condo fees. There are legal consequences for not paying your condo fees. Do not interfere with other residents. This does not stop you from putting forward a bylaw complaint against your neighbour. Repair and maintain your unit. Check your bylaws to see what you are responsible to repair and maintain. Some corporations have made all windows and doors owners’ responsibility. Also, check your bylaws if you are planning a renovation. What is required? Allow unit access when required. This is usually in the event of some type that occurs on common property that can
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ALBERTA CONDO CONNECTIONS
21
only be accessed through your unit. Also, in the case of an emergency. If you are an absent landlord, you must advise the board of your address of service and keep that information current. Financials are one of the major responsibilities of a board. The board is responsible for developing and approving an annual budget unless the bylaws dictate otherwise. A copy must be given to owners 30 days prior to the new fiscal year and as part of the AGM package. Annual statements must be provided to owners in the AGM package. Audits are recommended but not mandatory. There are two main accounts the board is responsible for managing. The operating account, which looks after the day-to-day business of the corporation, and the reserve fund account. The two accounts must remain separate. Reserve fund accounts are formed as a result of following the recommendations of a reserve fund report. The report is written as a result
of a reserve fund study, which can only be done by certain classes of people. The recommendations in the report are just that: they are not cast in stone, and the board does not have to follow them. What happens if either the operating account or the reserve account has insufficient funds to do what is necessary? The board has the power to call for a special levy. That means they can demand that owners pay a certain amount of money by a certain time. Owners have no say in special levies. Condominium insurance is a very specialized topic. For our purposes, let’s just say that the condominium corporation is required to insure certain things. Along with insurance is the Standard Insurable Unit Description (SIUD). This is a registered document that states what the corporation’s insurance will cover in the event of a loss. A very simple example is flooring. Let’s assume that the SIUD states flooring in the living room is a certain weight of carpet and under pad. But you or a previous owner have installed imported hardwood that
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ALBERTA CONDO CONNECTIONS
costs four times that of carpet. The corporation’s insurance will install or allow you a certain amount of money for the carpet. You or your insurance must make up the difference for the cost of the imported hardwood. In the event of an insurable loss that can be attributed to you, the corporation’s insurance deductible will be charged to you to a maximum of $50,000. You should make sure your insurance covers this. What are some best practices for condominium living? • Be familiar with the bylaws, rules, and policies. • Meet your neighbours. • Get involved with activities. • Volunteer for a committee. • Serve on the board of directors. • Attend meetings of the condominium corporation. Remember, this is your community; you can help make it better. Maurice Perrault and his wife, Margarete, have lived in condominiums and stratas in British Columbia for over 23 years. During that time, Maurice became involved in the communities and volunteered to sit on the board. Wanting to learn as much as possible about condominiums and their running, he took the Condominium Management 100, 200, and 300 courses at the Canadian Condominium Institute (CCI), as well as numerous other related seminars. Because of his past real estate experience, Maurice started a small business reviewing condominium documents for buyers. This has developed into an almost full-time job. Maurice has presented seminars for CCI and the Strathcona County Condominium Association. n
Project management for condominium corporations: TIPS FOR SUCCESS By Erin M. Berney, partner, Field Law
W
hether the property is an 8-unit, bareland development, or an 800-unit, multi-building complex, all condominium corporations in Alberta are responsible for repairing and replacing a certain amount of common property (owned collectively by all the unit owners). No matter how well a property is maintained, all systems and components degrade over time and will eventually require repair or replacement. When that time comes, the board of directors and condominium manager (if any) need to know how to manage the ensuing project.
that they can or should take on any responsibility in this regard. It’s best to avoid blurring the boundaries between roles and avoid having directors wear too many hats. Consider that the corporation’s insurance may not provide coverage if a director is injured while inspecting a roof, or negligently certifying substandard work.
It is especially important to develop a clear plan for managing large projects, such as parkade rehabilitations, building envelope restorations, or mechanical system upgrades/ replacements. Such projects are often extremely technical and may even involve safety concerns or require municipal permits and approvals. For these types of projects, technical expertise, through professional architectural or engineering support and oversight, is typically required. The following are some general tips that condo boards and managers can employ to help better manage large repair/ replacement projects on their properties: 1. K now when to hire experts. The board doesn’t know what it doesn’t know, and directors can’t be expected to fulfil these roles. Sure, a director may volunteer to help out with some light landscaping or other small projects from time to time, but they should not be climbing scaffolding or swing stages to inspect proper window installation and workmanship. Board members are laypeople, and while some board members could have technical knowledge or experience that may be helpful on a particular project, don’t assume ALBERTA CONDO CONNECTIONS
23
2. T he condo manager is not necessarily the best project manager. The manager (if there is one) cannot be expected to manage every project for the corporation. Some managers have sufficient knowledge and experience and are eminently capable of managing and overseeing repairs for smaller matters. The management agreement may even provide for this, usually at an additional cost to the condo corporation (always check!). However, best practice dictates hiring an independent consultant or project manager, that is, someone who has no skin in the game and is not acting in another capacity such that there is potential for a conflict of interest developing. Even where the condominium manager is engaged in this role, a separate contract can and should be negotiated that sets out the parties’ mutual expectations, addresses fees, and clarifies insurance and indemnification requirements.
be done. In many cases, engineers are also required to prepare designs and drawings, to obtain municipal permits and approvals, and are experienced in estimating work schedules and timelines. They can also oversee tendering or soliciting quotes/proposals from qualified firms and contractors to determine the budget for the project. When engaging any contractor or engineer, request a proposal and references for similar projects they have done for other condominium corporations. Reach out to those references and talk to the directors to find out what their experience was like. Ask questions about both the positives and the negatives. This will help identify whether the contractor/ engineer is the right fit for your project. Clearly communicate the board’s expectations, including with respect to timelines, progress reports, site safety, inspecting the work, and minimizing disruption for residents.
3. Engage a lawyer. A lawyer should review any contracts for the corporation before they are signed, including contracts for project managers, engineers and/ or consultants, which may not always (and should not necessarily, depending on the project) be the same entity. Sometimes some separation is required, but in many cases the primary engineer can also act as the consultant, as long as there is a separate written agreement for this work in which roles, fees, and expectations are clearly established. A lawyer can help advise the corporation in this regard.
5. H ow will owners be affected? Consider the degree to which owners and occupants may be affected by the work and the cost. Will access to units be required? Will occupants lose access to amenities areas, parking stalls, storage lockers, or even their residences at any time during the project? Too much interference with occupants’ use and enjoyment of their residences may require some form of compensation, such as temporary alternate accommodation or parking. Factor this in when considering any potential cost savings obtained by doing the work all at once as opposed to spreading it out in phases.
4. U se experts to develop a scope of work. Engineers are extremely useful at the outset of a project to define what work needs or should
24
ALBERTA CONDO CONNECTIONS
6. W here is the money coming from? Sometimes the project is already accounted for in the corporation’s
annual operating budget, such as painting or carpet replacement. Or it may be in the corporation’s 5-year reserve fund plan. In either case, funds may already have been collected from unit owners, set aside, and be available for the project. But when unexpected issues arise, or project costs dramatically exceed estimates and available reserve funds, the board may have to consider alternate sources such as a special levy (a one-time additional payment, or several staggered payments over a fixed period) or even financing. Condominium financing has become fairly common in recent years and is a viable, and in many cases prudent alternative to imposing a large assessment on the owners. If the project is a capital improvement (adding something to the property that was not there previously), then a special resolution (a 75% vote of the owners) is necessary to approve either removal of funds from the reserve account or a special levy. Whatever the plan, ensure that the budget includes a contingency to cover changes, delays, and unexpected additional costs. Don’t sign any contracts until you know where the money is coming from. Once this is in place, the corporation can proceed with confidence that it will be able to make regular progress payments on the work. 7. Meet with the unit owners. The board needs to let owners know what’s coming. Take time to explain the project, why it’s important and necessary, and provide information on the estimated cost, timelines, impact, and funding options the board is considering. Invite the project manager, engineer, legal counsel, and other pertinent experts to attend these meetings as well so
owners will have an opportunity to hear from them and ask questions. Actively solicit the owners’ feedback and engage them in the decisionmaking process. Remember that condominium corporations are at their core democratic. The majority elect a board of directors to act in accordance with their directions and in the best interest of the corporation as a whole. The board is there to serve the corporation, not to dictate, but it is also tasked with discharging the corporation’s duty to repair and maintain the property. That said, depending on the size and cost of the project, owners may direct the board through resolution to investigate other options, such as dissolution and sale of the property as a whole. 8. Communication is key. If the project proceeds, making sure the owners are kept informed before and during the project will minimize the likelihood of owners complaining and/or suing the corporation for disruptions. Some projects can last for weeks, months or even years. Be prepared for this and help the owners be prepared for what they can reasonably expect. Many large projects also have unexpected issues. Once demolition begins, for example, there could be hidden conditions or defects that will change the scope, the price and the duration of the project. Ensure you have a process in place for handling owner complaints, directed through a single communication channel such as the condo manager. Make sure the messaging is consistent to all owners, so it doesn’t look like the board is prioritizing some owners over others. 9. N egotiate a proper contract for the work. Review proposals/bids with your project manager or consultant
to select the best 2 or 3, and then interview the bidders/proponents. The board can and should negotiate for the best price and have the corporation’s lawyer review any documents/contracts before they are signed. Even a simple email stating an intention to award the project to a particular contractor can have a binding effect. A lawyer can help negotiate more favourable contract terms, including conditions over and above the standard construction contracts (CCDC contracts). A lawyer will consider progress payments and holdbacks, requests for materials deposits, responsibility for reviewing work to ensure conformity with specifications (consultant or project manager), sub-contractor payments and performance, navigating disruption and accommodating occupants, ensuring the workplace is safe and compliant with local codes and requirements, prompt payment legislation requirements, insurance and indemnity issues, and termination provisions, among others. 10. Consider hiring an independent project manager/consultant. Alternatively, the board can designate an individual (board member or condominium manager) who will regularly meet with the contractor/consultant, be the point of contact and review the progress of the work. Either way, decide who will be responsible for these tasks in advance and clearly define this role. The benefits of hiring an independent project manager are numerous, however, and should be emphasized: • It’s their job, something for which they are trained and experienced. A project manager can free up the board and condo manager to attend to other day-
to-day matters and issues affecting the corporation. Project managers can also be the point of contact for owners, taking a lot of stress off the board and condo manager. •T hey can attend site meetings as well as address potential issues such as job site safety and cleanliness and arranging access to individual units when needed. The project manager can also act as the communication liaison between the board and contractor for changes in scope, such as change orders and change directives. •A n added layer of management responsibility helps reduce potential liability for both the condo corporation and directors as well as the condo manager. •T he project manager can review the completed work to ensure it is done well, providing a layer of quality assurance, such as taking note of deficiencies, ensuring the correct materials were used, addressing workmanship issues, site clean-up, and warranty items. Condominium projects can range from painting a few hallways and doors to enormous, multi-million dollar parkade rebuilds or building envelope restorations. These can be some of the biggest and most challenging issues that a condominium corporation ever faces. Where the board of directors establishes a clear plan, engages qualified experts where appropriate, and actively engages the unit owners in the process, the project is more likely to be successful. Completion of a successful capital project will ensure the condominium corporation continues to exist and thrive for the benefit and enjoyment of all unit owners for years to come. n ALBERTA CONDO CONNECTIONS
25
Using a BECA to build a better Reserve Fund Study By Stacey McDougall, RJC
W
hen developing a Reserve Fund Study, one of the more difficult tasks can be
in determining the life expectancy
opening locations may be chosen
of common property. The Reserve
based on comments from the client
Fund Study provider should also
or may be chosen at the provider’s
ask questions of the board, condo
discretion based on their experience
determining the life expectancy of
manager, and building operator (if
and judgement.
components. There are documents
available), review any reports or
available that provide average life
inspections for the common property,
expectancies, but there are so
and may review maintenance logs
many differences from one building
or ask questions of the building’s
to the next that averages are not
usual contractors. Reports from
always relevant. We can look at the
professionals and contractors can
performance of similar buildings in
be particularly useful in developing
• Water/leak testing
the same city, eliminating some of
the Reserve Fund Study. One type
the variables, but even within one city
of report that can be useful is
• Hygrothermal analysis
there are numerous microclimates
the Building Envelope Condition
• Resident surveys
that can significantly affect life
Assessment (BECA). BECAs are
cycles. In either case, we are always
usually completed by engineering or
• Frost point testing
looking backward, and building
architecture professionals.
The typical intent of a BECA is to
The building envelope includes those
identified, but it is also a useful
materials change over time. A material manufactured and installed in 1980 may have a significantly longer (or shorter) life expectancy than a material manufactured and installed in 2005, but the only way to know that
of the building from the exterior. This includes the roof, windows, doors, foundations, wall assemblies, and
BECA include: • Air leakage testing • Thermal imagery
investigate problems that have been tool for Reserve Fund Studies in the absence of known problems. There are a number of factors that may go into determining the life
balconies. A BECA can report on all the
expectancy of a building envelope
building envelope components or can
element. Take stucco cladding for
be limited to particular elements the
instance. The stucco itself may have
Reserve Fund Study providers are
board is concerned with. The BECA
a life expectancy of 40 to 80 years,
required to “complete an on-site visual
can be visual in nature, but again,
assuming it was mixed properly
inspection of all visible components
purely visual reviews are of limited
and installed in proper conditions.
of the depreciating property” per the
use. It may be appropriate to include
However, the waterproofing elements
Condominium Property Regulation.
test openings to review components
behind the stucco may not have
These reviews are of limited use
that are hidden from sight. Test
been installed according to best
is to wait and see how the newer item performs over time.
26
components that separate the interior
Other items that may be included in a
ALBERTA CONDO CONNECTIONS
practices. This would reduce the life
tool for obtaining and conveying this
of North America’s leading engineering
expectancy of the entire system. If
information.
firms. Throughout our 75-year history,
water were found to be entering behind the cladding and causing deterioration to the sheathing and framing, costs for replacement of the cladding would also increase significantly. The BECA may also identify areas where repair in the short term may increase or help achieve the average life expectancy of a
Stacey McDougall, P.Tech.(Eng.), LEED AP, NCSO, is a technologist with RJC Engineers. Specializing in building science and restoration, Stacey is a key member of RJC’s Reserve Fund Study practice and believes in the importance of collaboration and education.
we have demonstrated creative thinking, prompt service, and technical excellence. RJC’s engineers and technologists have diverse backgrounds, and many specialize in analyzing existing facilities. From the initial discussion
component.
RJC Engineers
about a potential problem, through
The more information a condominium
Specializing in structural engineering,
design to successful resolution,
board can give the Reserve Fund Study
building science, structural
we assign and engage a team
provider, the more accurate the study
restoration, structural glass and façade
that is competent in assessment,
will be, and the fewer surprises future
engineering, and parking facility design
maintenance, and restoration of
owners will have. A BECA is a useful
and restoration, RJC Engineers is one
structures and building enclosures. n
ALBERTA CONDO CONNECTIONS
27
Can condos deal with the coming reserve fund shock? By Sally Thompson, Synergy Partners Consulting Limited, Justin Tudor, Keller Engineering, Nancy Longueira, Morrison Hershfield Limited, Stephanie Robinson, WSP Canada Inc., and Stefan Nespoli, Edison Engineers Inc.
C
onstruction price inflation has been significantly higher than consumer price inflation over the last three years. Reserve fund study updates being done this year, and in 2024 and 2025, will have to reflect this significant increase in costs even for those projects that are in the distant future. The resulting increases in contributions will be very difficult for boards to implement and difficult for unit owners to accommodate, especially given other financial pressures related to consumer price inflation and increasing mortgage rates. Condominiums that were already behind on their reserve funding will find that this compounds their problems. Every condo is going to face a significant contribution increase, usually in the range of 30% to 50% at their next update, and the reality is that the new fees may not be affordable for all unit owners. Those condos that are currently well-funded will fare better than their under-funded peers. Those with very large projects in the near term, that cannot be deferred, may face even greater increases and special assessments. As reserve fund planners who work throughout the province,
we are very concerned with the distressing impact of these cost increases on our clients. Successful condos will face the new reality head-on, but this will not be easy. According to Statistics Canada, Construction Price Index for new residential construction has raced ahead of consumer price index per Table 1. This index is not a perfect match to the type of work planned in a reserve fund study, but it is more representative than Consumer Price Index.
Reserve fund study providers typically maintain their own database which includes the cost to waterproof and repair parking garages, replace windows, replace HVAC equipment, etc. These databases get updated using various sources, including recently tendered work, budget confirmation with contractors and/or suppliers and project costs at other condominiums. We are finding that the cost of window replacement, which is often the most expensive project in a reserve fund study, has increased by about 10-15%+ annually over the past three years. The cost of other construction materials such as wood,
Table 1: Comparison of Consumer Price Index and Construction Price Index Year
28
Consumer Price Index – Alberta
Construction Price Index – Calgary
Construction Price Index – Edmonton
2020
0.8%
8.0%
8.3%
2021
4.8%
33.2%
24.7%
2022
6.0%
14.1%
16.0%
ALBERTA CONDO CONNECTIONS
concrete repairs, roofing, sealants, coatings, and paving has surged by 50-100%, though it appears that the prices have stopped racing ahead in some areas, and a few have even fallen from their peak. HVAC equipment replacement cost has escalated significantly; however, many clients are deferring the work due to long delivery timelines, reducing the amount of data available to know where pricing is going. Contractors are routinely seeking extras, or a deposit related to supplier cost increases and material availability. Labour costs are also up, but not as much as material costs. A combination of factors is driving up pricing such as labour shortages due to retirement of baby boomers, global factors like the Ukraine war and climatic disasters that impact international material suppliers, political tensions, and more recently, the mandate by the provincial government to construct 1.5 million new residential homes in the next decade. All these factors are influencing contractors to build risk factors into their bids. There are some actions a corporation can take to minimize reserve fund spending: • Complete available energy-saving projects, both capital and operating. The resultant savings can go towards your reserve contribution. • Complete proactive maintenance for all building components. Fix leaks promptly to avoid more widespread deterioration. Seal cracks in pavement to reduce damage to the supporting fill, possibly allowing for deferral of pavement replacement by many years. Don’t cut corners on maintenance, especially not important programs like HVAC equipment servicing, chemical treatment of your heating loop and cooling tower, or washing your parking garage membrane regularly. • Collaborate with your consultant to defer what you can if it helps keep your contribution down, but don’t defer things you shouldn’t. For example, you might defer a major garage renewal by completing a smaller repair program in the near term; but don’t just defer the major renewal and ignore the garage, because this can result in accelerated structural deterioration. Similarly, you might be able to defer window replacement by retrofitting the windows; but don’t just ignore the windows, leaving owners with drafty and leaky windows that they can’t open. • Be careful about doing unnecessary work. For example, when changing your hot water piping you might be tempted to also replace the cold-water piping while you have the
walls open. While bundling projects together can sometimes save in the overall life of the building, money might be better spent investigating the condition of the cold pipes, as it is likely that their full replacement could be deferred until the next time the hot water pipes need to be replaced. • Don’t assume that the lowest cost engineering proposal is going to result in the lowest cost overall project. Designing simple, but expensive, projects is always going to take less effort than engineering more cost-effective, but detailed, smaller projects. For example, it is often easier to design for replacement of a component than it is to design for repairs – but the cost to repair is much less than the cost to replace. You may have saved a few dollars up front on your consulting costs, but you might overspend on the construction work as a result. You need a team you can trust. Most boards elect to phase-in a required increase. We recommend that any above-inflation increases be completed within three years, but no later than before the next update is required, that is, within five years. This allows the reserve fund to catch-up with market changes before the next study is completed. Long phase-in periods defer excessive contributions onto future owners, and this has been shown to result in financial failure and/or serious physical decline over time. We expect the large increases in the common expenses to create unrest amongst the owners, especially given that many owners are also renewing their mortgages at much higher interest rates. Some may be forced to sell. Requisitions to remove boards will occur. Boards have a duty to be proactive to help the owners understand what is happening and should warn owners that this industry-wide shift is coming. Explain that the issue is not isolated to your building. You might consider having your reserve fund study provider present at a townhall session so they can answer the unit owners’ questions directly. Once a board has received a study showing the significant increase, this information should be provided on status certificates. In the case of a large increase, a corporation might be wise to consult with their legal counsel about whether it is appropriate to wait for the study to be finalized before modifying the notice. Boards ask if we expect prices to fall back to levels seen before the pandemic. It is important to understand that this is a question of significant deflation, not just a reduced rate of inflation. Price deflation is possible for certain items ALBERTA CONDO CONNECTIONS
29
where severe supply-chain constraints have driven demand
Stephanie Robinson, P.Eng., is the Director of Eastern
far ahead of supply but should not be expected for most
Canada Building Sciences for WSP Canada Inc. Based
prices that flow into a reserve fund study.
in Ottawa, Ontario, she has over 15 years of experience
Governments are working hard to reduce inflation. Their primary focus is on consumer spending, but the same initiatives should help reduce the rate of inflation for construction projects going forward. Q2 construction price indexes for both Edmonton and Calgary are looking promising, with costs in Calgary only up 0.8% year to date, and costs in Edmonton down 1.2% year to date. We will all have to wait and watch to see if this horrendous inflation is finally under control – but we don’t have to wait to plan accordingly.
Nancy Longueira, P.Eng., Vice Presi dent, Building Science East, at Morrison Hershfield, has been delivering condominium reserve fund studies and building science services in Ontario since 1995. She is the Practice Lead for Facility Assessments where she collaborates with offices
construction review of building envelope components for new and existing construction. Stephanie specializes in replacement and renewal of cladding assemblies, reserve fund studies and capital planning advisory services; she leads technical decisions for project teams across the country. Stephanie currently sits on the Board of the International Institute of Building Enclosure Consultants (IIBEC). www.wsp.com
Sally Thompson is a professional engineer who has been working in the condominium industry since 1990. She is a Managing Principal at Synergy Partners Consulting Limited, where she helps condominiums with reserve fund studies and building restoration. In addition to her professional work, Sally is an active volunteer in the condominium industry. She volunteers with various organizations, including the
across North America on major and complex assessment
CCI. CAI, ACMO, Tarion, and Professional Engineers Ontario.
projects. She also volunteers with the CCI- Toronto Education
Sally has also served on various stakeholder panels for CAO
Committee. www.morrisonhershfield.com
and CMRAO and worked as a Policy Advisor to the Ministry
Stefan Nespoli, P.Eng., BSS, is a Principal and Shareholder with Edison Engineers Inc. Stefan’s passion is working with
30
in investigation, design, contract administration and
responsible for the Con- dominium Act for six months. www. synergypartners.ca
condominium boards, condominium managers, and owners
Justin Tudor, P.Eng. is the President and Senior Project
to navigate the rough waters found at the intersection
Manager at Keller Engineering, a multi-discipline engineering
of a reserve fund and major project planning. www.
firm providing restoration and maintenance consulting
edisonengineers.ca
services throughout Canada. www.kellerengineering.com. n
ALBERTA CONDO CONNECTIONS
To fund or not to fund –
You need to ask the right questions By Gary Caouette
F
What kind of resolution do you require to fund your special project? All special projects will usually require a resolution to be passed in order to spend the corporation’s (unit owners) money.
unding special projects requires forethought, budget A board resolution (majority vote of the board) is normally planning, and an understanding of the Condominium required to fund a capital repair or replacement project. Property Act so your corporation, your board, and A corporation resolution (special resolution of unit owner’s) is your unit owners do not find themselves out of time, normally required to approve a capital improvement project. out of money, or outside of the condominium property act. Bylaw Consultants: Items to incorporate into the ad. New Logo – M Who is responsible for the special projects that you fund? Every condominium corporation must spend money on replacing or repairing corporation property. The responsibility to ensure that you have the funds necessary to do this, and to manage the completion of these projects, is the board of directors of your condominium corporation.
Refer to your specific bylaws in order confirm what is required as there may be some limitations or exceptions that are unique to your property.
What kind of special project can you fund? There are two very different kind of capital projects that you can fund, and you must identify which one you have so you can follow the proper procedures to fund. 1. A capital repair or replacement project: repairing or replacing the real and personal property of the corporation, common property, or managed property that currently exists. Be aware that you can not upgrade these items unless the old item is not available anymore or you need to get permission (a special resolution) from unit owners to do so. 2. A capital improvement project: adding something new to the real and personal property of the corporation, common property, or managed property. In either case you will be required to follow specific procedures from the condominium property act, its regulations, and your corporation bylaws in order to pass your resolution.
Condominium Pre-Purchase Document Reviews Reserve Funds – Finances – Bylaws – Governance Residential and Commercial Board Member Consulting Services Condominium for Managed and Self-Managed Boards Responsibilities – Reserve Funds – Finances Corporation Bylaws Bylaws – Sanctions – Meetings -– Rebuilds Documents Reviews - Updates Residential and Commercial Bylaws Reviews – Updates – Rebuilds
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Board Member Training Cell: 587-991-0959 for Managed and Email: bylawconsultants@gmail.com www.bylawconsultants.ca Self-Managed Boards
The Act - Responsibilities ALBERTA CONDO CONNECTIONS 31 Reserve Fund - Finances Bylaws - Enforcement
How will you fund your special project? The board may raise funds to complete a special project through saving money in the reserve fund, accessing a special levy, or by borrowing the money. Your reserve fund is set up to fund your capital repair or replacement projects. You need to use the information from your reserve fund study to make a reserve fund plan and build up your reserve fund. Expect the unexpected and plan for it. You might want to look at making a separate contingency fund that you may use for whatever you need to do given that all reserve funds have restrictions on what you can spend the money on. If you do not have the money in your reserve fund, you can assess a special levy to raise the funds. Consult your bylaws on how and when you can levy a special assessment, but remember a special assessment can be a substantial financial burden on some unit owners. You can minimize the financial burden by offering monthly payments instead of a lump sum payment if you are able to. You need to show that it is necessary to assess a special levy as there may be some situations in which owners can challenge your decision in court.
We deliver
uncompromising performance.
Condominium corporations can look at borrowing the money when you need to fund a special project completed right away and you do not have time to save up, or do not want to use a special levy. There are extra costs associated with borrowing money but in many situations the costs may be less than what you would pay if you waited years to save up the money as costs increase over time. There are a few lending institutions who specialize in this kind of borrowing and financial consultants who can assist your corporation through the process. You may want to combine multiple sources of funding depending on what your unit owners would like to do or what they are able to do. Whatever solution you use to get your project funded, be sure to utilize every resource available to you. If you have a unit owner with relevant experience, use them. Some projects will require hiring a consultant, a project manager, or an engineer to oversee your project. The money you spend on these experienced professionals will ensure you get the most value for your dollar. Gary Caouette is a consultant with Bylaw Consultants specializing in residential and commercial condominium corporation bylaws, as well as board member consulting services for managed and self-managed boards. He has 25 years of business experience and has completed or attended numerous condominium industry training and courses/ seminars. Gary has been a condo owner for 20 years and has a decade of condominium board experience as president, vicepresident, treasurer, and director. n
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Choosing the right engineer for your restoration construction project By Dana Bouwman, Key Condo Management
M
ajor condo construction projects involving intricate building systems demand an engineer’s insight. An engineer’s involvement guarantees condo corporation funds will be properly spent. When gearing up for a major construction project, the most crucial choice you’ll make is selecting the right engineer to oversee the project. In this article, we’ll walk you through the steps to choose the best engineer for your upcoming project.
During this conversation, you should
This article primarily focuses on building envelope projects for wood frame buildings, as Key Condo has worked on a lot of these projects. However, most of the suggestions in this article are still relevant for any restoration construction project that a condo corporation might need to complete, such as roadway regrading, parkade concrete assessment, below-grade posttensioned cable assessment, retaining wall installation or repair, replacing domestic hot water supply pipes, etc.
proposals a little low because they know
The first step in choosing an engineer is soliciting proposals to complete an assessment of the building system. We recommend collecting at least three proposals from different engineers. Once you have your proposals, it’s time to meet potential engineers. Plan to interview at least two of the engineers that provided proposals, either onsite or virtually; it is recommended that you interview the engineer onsite so you can point out different concerns. Allocate around 30 minutes for the interview.
focus on several critical points: Testing: Inquire about their destructive testing methods including how many areas will be tested and whether they can use non-destructive testing such as infrared testing. Additional investigation: Ask how often they recommend their clients complete additional investigation (at an extra cost) before completing their assessments. Some engineers are known to price their they can ask you to approve additional investigation at a later time. Budget and timeline: Discuss how they will present a budget for construction expenses and timelines in their assessment. Most engineers will always provide this information in their assessment, but not all. Also ask the
References and expertise: Request references for similar projects they’ve worked on. Ask them to explain why they’re the best fit for your condo construction project. It’s a good idea to ask if the engineer you are interviewing will actually be involved in the construction project from start to finish. During the onsite interview, ask the engineer what issues they can already spot and what they think might be good solutions for those issues. Keep in mind that most engineers will not provide design, tendering, or project management services on a restoration construction project without first doing an assessment. That’s why it’s so important to pick a good engineer to do the assessment because the engineer who does your assessment will likely be your consultant throughout the entire project.
engineer if they can incorporate a phased In some cases, condo corporations approach to completing the construction opt to hire two different engineering firms to each provide an assessment. work in their assessment because unit Condo boards that do this are usually owners may want the option to do the construction project in phases to make it concerned that the extent of damage could be severe, and they want a very easier to pay for. solid understanding of the total cost of Project management: Since most condo the construction project before the work corporations will hire the engineer who begins. completed the assessment to also One trick you might find useful is to complete the other three stages of the review your original construction construction project (design, tendering, drawings to see which engineer stamped and project management), use your your drawings, as they may be a good interview time to discuss how they candidate to assess the current state of intend to manage contractor timelines your condo building. and charge orders. A good engineer will manage the activities of the contractor to the benefit of the condo corporation.
One of the decisions you’ll face when picking your engineer is whether to opt ALBERTA CONDO CONNECTIONS
33
for a larger, well-known engineering
Alberta that unit owners are consulted
During the project management stage,
firm or a smaller, more personalized
prior to starting a major construction
the engineer’s role as your consultant
one. Larger firms offer the advantage of
project, but it is definitely recommended
becomes paramount. They ensure
well-defined designs, which can result
as major construction projects often
the contractor follows the design
in lower contractor costs due to reduced
lead to special assessments and
uncertainty. On the other hand, one-
disruptions to daily life at the condo
person engineering shops provide more
complex.
onsite interaction, with the engineer often attending the site weekly to meet with the contractor and review progress. Remember, whether you go with a larger firm for greater certainty or a smaller one for personalized attention, the ultimate goal is a smoothly executed project that ensures your condo owner investment is well maintained.
established in the assessment. Regular inspections, coordination
After the assessment stage, at the
with contractors, and addressing any
direction of the condo board, your
unforeseen challenges are all part
chosen engineer will proceed to
of your engineer’s responsibilities.
the design, tendering, and project
Your engineer is your advocate on the
management stages. Design involves
construction project.
creating a comprehensive restoration plan based on the assessment’s findings. Tendering refers to the process of seeking bids from contractors to carry out the project. While project
In conclusion, the right engineer will set the tone for the entire construction project. The assessment stage lays the groundwork for a successful construction project. Interviews help
After the assessment has been provided
management oversees the construction
by your chosen engineering firm, Key
process to ensure everything goes
evaluate the engineer’s compatibility
Condo recommends that the condo
according to plan. Generally, engineers
with your project’s needs. The
board call a special general meeting of
will charge hourly for the project
subsequent stages – design, tendering,
the owners to discuss the findings of the
management stage, but all other stages
and project management – are where
assessment. It is not a requirement in
are a fixed price.
their expertise truly shines. n
® Since 1978 Since 1978 SASKATCHEWAN ALBERTA CALGARY 403.571.1200 REGINA 306.751.4868 SASKATOON 306.934.6116 ALBERTA EDMONTON 780.822.1200 CALGARY 403.571.1200 EDMONTON 780.822.1200
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