Building February March 2014

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Can real estate be crowd funded ?

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64 01

CONTENTS

what’s on BUILDING.ca

FEATURES

14 > Mass Appeal /

Canadian regulators are moving to legalize equity-based crowdfunding, which means it could migrate out of the basements of indie filmmakers and rock bands and onto the desks of developers. By Peter Sobchak

18 > From Collection to Connection /

Far from anachronisms, public libraries need to be the civic backbone of the Information Age. New examples across Canada are fulfilling this purpose, by making connections between people and information and between people and people. By Rhys Phillips

READ > Ancient Wisdom and Modern Knowhow Robert Maxwell considers the notion of ‘doubt’ encountered by modern architects.

18

25 > A Beacon Rises /

The Canadian Museum for Human Rights (CMHR) has broken new ground as the first large-scale project in Canada to use 3D modelling in a virtual design and construction (VDC) approach across all consultant and contractor groups. By Sean Barners and Scott Stirton

READ > Grand Harwood Place Founder of Windcorp Developments explains plans for downtown Ajax.

28 > Time Really is Money /

Delays in site plan application approvals could be costing Ontarians $650 million per year. By Andrew Sobchak

WATCH > Calgary East Village CMLC’s new 3D rendering of East Village’s development

ABOVE IMAGE:

IN EVERY ISSUE

5 > Editor’s Notes 6 > Developments 10 > Market Watch 12 > Legal 30 > Viewpoint

The roof and walls of the 15,000-sq.-ft.

Jasper Place Library (a joint venture between HCMA and Dub Architects) are all part of a single, undulating 12-inch thick slab of concrete with no pillars to intrude upon the interior space. Photo

by Gerry Kopelow.

building.ca

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Volume 64

01 Number Editor / Peter Sobchak Art Director / Roy Gaiot Legal Editor / Jeffrey W. Lem Contributors /

Sean Barners, Megan J. Lem, Rhys Phillips, Andrew Sobchak, Scott Stirton, Danny SC Tseng

Five years a page

Whenever I am asked that common get-to-know-you question “What was the best job you’ve ever had?” my answer is always this: library page.

My five-year stint during high school occurred at one of the small neighbourhood branches of the Toronto Public Library, and in many ways – good pay, no back-breaking labour, aligned with my interests and temperament -- it really was the best part-time job I could have asked for. As a result I have a warm spot in my heart for libraries, which is why I was gladdened to read about the positive trends occurring in new library buildings that Rhys Phillips discusses in this issue (From Collection to Connection).

Libraries may suffer a bit from sour cultural stereotypes (think dusty mausoleums presided over by puritanical, punitive bibliognosts) but the best ones — like the one I worked at — really are the backbones of a social and intellectual exchange.

In addition to literacy and cultural programs that were common in my branch, as with many other branches around the TPL, another thing I remember doing can best be called “topical curating.” My colleagues and I would regularly create a display of books and other media based on a topic or personality that was in the headlines. But care was put into which books to display, with preference given to those that carried scholarly sources or provocative thinking. The goal was simple: to expose our patrons to ideas they may otherwise not be exposed to.

This type of intellectual stewardship that libraries have long been good at is needed now more than ever. And in my opinion, we can blame the Internet for that. Do you know what was on the “front page” of Yahoo today? No, because everybody’s page is different from everyone else’s. What was originally supposed to unite everyone has instead decided the best business model is to serve up personalized content. Now, people’s news feeds on their phones and tablets are populated by content that is just regurgitated based on what we’ve clicked on in the past.

This “micro-targeting” of reading habits may seem like no big deal — Amazon has done very well telling you “You just bought X, you may like Y” — except for the fact that a third of adults get their “news” (more likely, opinions) from stuff their friends have posted on Facebook. This will get worse with the new Facebook app Paper (ironic name if ever there was one), that Mark Zuckerberg calls “the best personalized newspaper in the world.” How? By tracking what you read and giving you more of the same. Never a divergent idea or important issue that falls outside your sphere of interest.

Newspapers and libraries were among the first predicted information species to go extinct after the Digital Age meteor hit, and here is what would be lost with them: they are trying to tell you what is important, not just what is “trending.” I remember part of my job as a page was to help young elementary school students learn how to conduct research in a library in order to answer an assigned essay question. This was an exercise that ultimately taught how to reach an “informed” conclusion. I’m not so naïve as to think enlightenment can come through osmosis, and just by standing in a library we will become smarter. Informed thinking takes work, but at least libraries are a starting point, and by “rising above the everyday into a quiet, respectful world of knowledge,” as Rhys says, they expose people to information and ideas, something Facebook will never be interested in doing.

Circulation Manager / Beata Olechnowicz beata@building.ca Reader Services / Liz Callaghan Advertising Sales / Faria Ahmed (416) 510-6808 fahmed@building.ca Senior Publisher / Tom Arkell Vice President, Publishing Business Information Group / Alex Papanou President, Business Information Group / Bruce Creighton Building magazine is published by BIG Magazines LP, a division of Glacier BIG Holdings Company Ltd. 80 Valleybrook Dr. Toronto, ON M3B 2S9 Tel: (416) 510-6845 / Fax: (416) 510-5140 E-mail: info@building.ca Website: www.building.ca SUBSCRIPTION RATE: Canada: 1 year, $30.95; 2 years, $52.95; 3 years, $64.95 (plus H.S.T.) U.S.: 1 year, $38.95 US, Elsewhere: 1 year, $45.95 US. BACK ISSUES: Back copies are available for $8 for delivery in Canada, $10 US for delivery in U.S.A. and $15 US overseas.

Please send prepayment to Building, 80 Valleybrook Dr. Toronto, ON M3B 2S9 or order online at www.building.ca Subscription and back issues inquiries please call 416-442-5600, ext. 3543, e-mail: circulation@building.ca or go to www.building.ca Please send changes of address to Circulation Department, Building magazine or e-mail to addresses@building.ca NEWSSTAND: Information on Building on newsstands in Canada, call 905-619-6565 Building is indexed in the Canadian Magazine Index by Micromedia ProQuest Company, Toronto (www.micromedia.com) and National Archive Publishing Company, Ann Arbor, Michigan (www.napubco.com).

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MENTS

DEVELOP-

News The Riff pedestrian area, East Village

Ottawa’s downtown vacancy rates set to rise

CMCL reveals vision for East

Village in 2014 OTTAWA | In its most recent Real Estate Market Study, Newmark Knight Frank Devencore reports that combined Class CALGARY | Since 2009, when Calgary Municipal Land Cor“A,” “B” and “C” vacancy rates in the greater downtown poration (CMLC) first unveiled the master plan for East Ottawa market, including Centretown, the downtown core Village, several tangible achievements have been made, and the Byward Market, are currently running in the 4.7 per including infrastructure upgrades; heritage building rescent range, with just over 900,000 square feet vacant. The torations; public art installations; the 4th Street Underdowntown Class “A” and “B” availability rate — which inpass and two of the RiverWalk’s four kilometres; deals to cludes space soon to be vacated but currently occupied — turn the King Eddie into the National Music Centre and the stands near the seven per cent mark.

Simmons Building into a foodie desIn addition, two major office developments underway in tination; plans for a New Central Lidowntown Ottawa, combined with sluggish economic conditions and office space brary (NCL); built deals with Embassy demand, will in all likelihood contribute to a significant increase in Class “A” vacancy BOSA and Fram + Slokker Developrates over the next 12 to 18 months. Morguard’s Performance Court at 150 Elgin is ments that will open the door to nearnearing completion. In addition, the Lorne Building redevelopment at 90 Elgin Street, ly 1,300 new residential units; and which is being carried out by Public Works and Government Services Canada, is collaborated with RioCan to establish well underway. These buildings will augment the existing downtown office space a 300,000-sq.-ft. urban shopping ceninventory by almost 1 million square feet. If this inventory were on the market today, tre in East Village. overall vacancy rates in the downtown core would rise to over nine per cent.

More than 70 per cent of CMLC’s In the Kanata and west-end submarket, where the combined Class “A” and available development parcels are Class “B” vacancy rate currently stands at 13.4 per cent, acquisition and consolinow sold, and CMLC has outlined dation events continue to exert a significant impact. A case in point is Blackberry, their goals for East Village moving which completed a new building within the past year and is now shedding space forward. They include: divestment of a at some of its other locations. The future of the former Nortel Networks campus parcel of land for East Village’s first has also been the subject of speculation. The Department of National Defence new rental apartment complex; anhas been slated to consolidate at this 2.3 million square foot campus, but nouncement of the neighbourhood’s the advisability of that move is now reportedly being re-examined in light of the first multi-family project by a local dediscovery of electronic bugging developer (Spring 2014); grand opening vices and the cost overruns that their Ottawa of the new St. Patrick’s Island Bridge removal may cause.

(Fall 2014); site work and encapsulaIn the rest of Canada, combined Class tion of the LRT tracks, which will pass “A” and Class “B” vacancy rates spaces under the NCL; public unveiling of the have climbed only slightly through 2013, final and approved schematic design from 4.5 per cent to 4.9 per cent, reflectfor the NCL (Fall 2014); construction ing a relatively flat economy. At the same start of the new 300-room Hilton Hotime, it should be noted that the countel (Spring 2014); anticipated sale of try’s total inventory of built office space 300 residential units (following the has increased considerably over the past sale of 230 in 2013); advancement of two years, from approximately 207.7 milthe construction program called the lion square feet in mid-2011 to 210.9 milCrossroads; a landscaping program lion square feet today.

FEBRUARY MARCH 2014

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9 out of 1 families’ apartmen unafforda unsafe, overcrow insecure, bad cond

Source: a report by

which integrates RiverWalk with the base of the new St. Patrick’s Island Bridge.

The East Village redevelopment program is made possible by a financing model called Community Revitalization Levy (CRL). The CRL is similar to ‘tax incremental financing’ and is a mechanism by which property tax revenues from new development are accessed by the corporation, to put approved infrastructure improvements in place. The CRL catchment area considers the Rivers District area of Calgary, a 309-acre region in Calgary’s east end, of which the East Village community is 49 acres.

To date, CMLC has committed $260 million of improvements (which includes a commitment of $70 million to the New Central Library project) in the area and has attracted nearly $1.6 billion of new development in the community. This number is expected to grow as the remaining development parcels are sold and activated.

Inadequate housing and risk of homelessness for families in Toronto’s rental high-rise 11%

adequate housing

No problems

9 out of 10 families’ apartments are unaffordable, unsafe, overcrowded, insecure, or in bad condition

56% inadequate housing Problems in 1 or 2 areas

30% at risk of homelessness

whether their homes were affordable, of suitable size, in decent condition, safe and secure. In 89 per cent of cases, housing for the families failed to meet at least one of these basic standards. The findings have broad ramifications for Toronto, since buildings of this type accommodate about half of Toronto’s renter households.

The survey found: fully half of all families in the study were living in overcrowded conditions, and almost half were in buildings with serious repair problems or persistent infestations; one-third were paying more than half of their monthly income on rent; one-quarter were in apartments that required extensive repairs, or did not feel safe in their homes; about one in five were at immediate risk of eviction because of arrears in rent; nine out of 10 families had at least one of these problems; about half had major problems in one or two areas of housing adequacy, while one-third had multiple problems in three or more areas.

In this context, a family crisis or widespread economic changes can easily lead to a family losing their housing.

“These findings reveal a housing crisis for low-income families in Toronto. The more housing problems a family is facing, the higher their risk of homelessness,” said Emily Paradis, the lead investigator on the study. “Family shelter use is increasing in Toronto and other cities across Canada, but this statistic only shows the tip of the iceberg.”

07

Legislation

Problems in 3 or 4 areas

3%

at critical risk of homelessness Problems in 5 or 6 areas

Source: a report by Emily Paradis, Ruth Wilson and Jennifer Logan

Families in Toronto’s aging rental high-rise buildings at risk of homelessness TORONTO | New research from the University of Toronto’s Factor-Inwentash Faculty of Social Work has found that nine out of 10 families living in Toronto’s aging high-rise rental apartments are in inadequate housing that may place them at risk of homelessness. The study, based on a survey with more than 1,500 families with children living in rental high-rises built between 1950 and 1979, looked at

Ontario proposing new long-term infrastructure legislation TORONTO | Glen Murray, Minister of Infrastructure and Min-

istry of Transportation, has announced a proposal to strengthen long-term strategic infrastructure planning in Ontario. If passed, the proposed Infrastructure for Jobs and Prosperity Act would require the first long-term infrastructure plan to be tabled in the legislature within three years, with following plans tabled every five years. The proposed act also includes guiding principles to help planning align with demographic and economic trends to maximize the value of provincial infrastructure investments and promote innovation, competitiveness, and job creation and training.

Recognizing the province’s need for skilled trade workers, the proposed legislation would also require the government to involve apprentices in the construction of certain provincial infrastructure projects. “The proposed legislation provides an important framework for the implementation of thoughtful and well-designed infrastructure across the building.ca

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CAC opposes proposed

amendments to the National Building Code

OTTAWA | The Cement Association of

"Any building should be built once, built right and built to last.

Building codes are minimum codes and surely Canadians deserve more than this. Canadians should demand the gold standard in Canada's National Building Code.

The safety of Canadians must be the top priority."

Canada (CAC), which represents the Canadian cement industry, is demanding that changes proposed for the next edition of the National Building Code of Canada (NBCC) “be significantly improved to provide better safety for all Canadians.” During the last quarter of 2013, the Canadian Commission on Building and Fire Codes (CCBFC) conducted a public review of proposed changes to the 2010 NBCC, and the — Michael change that worries the CAC is an inMcSweeney, crease in the maximum wood building president and CEO, height to six storeys, from the current Cement Association limit of four storeys. “If these taller of Canada wood frame buildings are included in the Code, Canada could see an increase in fires and put vulnerable Canadians at risk,” said Michael McSweeney, CAC president and CEO. The CAC is recommending a number of additional provisions be implemented to the proposal, including non-combustible stairwells and elevator shafts; non-combustible cladding and non-combustible roofing; non-combustible two-hour firewalls along with the installation of sprinkler protection during the construction phase.

Caption

Building Certification LEED v4 is out…finally PHILADELPHIA, PA | After some false starts, the U.S. Green Building Council (USGBC) officially released LEED v4, and al-

ready, 122 beta projects from around the world are using it.

Highlights include: new market sector adaptations for LEED including data centers, warehouses and distribution centers, hospitality, existing schools, existing retail and mid-rise residential projects; simplified LEED credit submittal require-

ments, descriptive step-by-step reference guide materials with videos and tutorials, and a more intuitive technology platform; building performance management focused on outcomes so that building owners have a better understanding of how to manage their buildings to meet full performance potential; and new impact categories such as climate change, human health, water resources, biodiversity, green economy, community and natural resources.

09

Upgraded building certification could challenge LEED TORONTO | New upgrades to a building certification program may very well lure developers and building owners who are thinking of obtaining a green certification for their projects away from LEED. ECD Energy and Environment Canada have released significant upgrades to the Green Globes for New Construction Canada program, originally introduced in 2004. The new version is based on a Canadian adaptation of ANSI standard ANSI / GBI 01-2010: Green Building Assessment Protocol for Commercial Buildings, as well as other recognized standards.

In addition to being a certification, Green Globes also offers guidance for design teams to carry out the integrated design process from goal setting to construction documents. According to the web-based program, it is a user-friendly and affordable alternative certification to LEED because it can be done largely “in-house” by the design team, and uses a streamlined verification process based on a review of actual working documents such as drawings, specifications, plans and calculations. Certification occurs at two stages: at the Design stage and Post Construction.

Energy requirements are for 30 to 50 per cent savings over the ANSI/ASHRAE/ ISNEA standard 90.1 and the Model National Energy Code for Buildings. Bonus points have been introduced for buildings that obtain the highest levels of energy performance, such as zero net energy or 51 per cent reduction in CO2e emissions.

The Materials & Resources section addresses the selection of products and offers a choice of paths that includes full life cycle assessment, multi-attribute certifications, and third-party certified Environmental Product Declarations (EPDs). b — David Charles Stewart, Nova Scotia energy consultant

province,” said Michael McClelland of Toronto-based ERA Architects. “The proposed integration of infrastructure planning and delivery with issues of ecology, city building, architectural excellence, conserving heritage architecture, cultural landscapes, user experience and community health lays the foundation for Ontario meeting the global challenges of sustainability, resiliency and prosperity in the years to come.”

“If you want to put a building on a carbon diet, Green Globes is the way to do it.”

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MARKE T and for the space in existing buildings that is being vacated in favour of the new towers. The hope is that a growing economy will ultimately produce demand for a wide range of office space in the future.”

Toronto is also at the forefront as Canada continues to experience an influx of foreign retailers and significant retail construction. Toronto ranked in the top tier of cities in terms of its attractiveness to foreign retailers in 2013. Expectations are that this appeal will be maintained in 2014. With high-end U.S. retailers like Nordstrom and Saks Fifth Avenue setting up shop in the next few years, big-anchor indoor mall concepts continue to garner significant attention from prospective tenants and investors alike.

“Never before in Canadian retail history has the department store segment been the subject of so much focus or been so heavily contested — Toronto is at the forefront of this activity,” says Tom Balkos, senior vice president and a Canadian Director of the Retail Services Group. “The level of demand and investment in building out retail properties indicates that despite significant growth in online shopping, bricks and mortar retail will endure and likely flourish.”

2014 could be a dynamic and telling Around the world, all levels of government are discussyear for commercial real estate across ing the need to maintain and improve infrastructure, inthe country cluding public transportation. In the year ahead, Toronto is going to increasingly feel the impact of large infrastructure investments, including the revitalization of Union Station.

This project will improve the flow of people in and out of the core, which will support economic growth and demand for new office space that will be delivered in the years ahead.

According to CBRE Limited, Toronto can be seen as a mi“The trend of office tenants moving downtown has been crocosm for many of the emerging trends that are shapunderway for some time. Projects like an improved Union ing commercial real estate across Canada and around the Station, along with other public transportation enhanceworld. With seven new downtown office towers under conments, could entice U.S. companies, which are suburban struction and 50 per cent of all retail space being built nationtenants traditionally, to move downtown,” said O’Toole. ally located in Toronto, there is no doubt that Toronto remains Many important decisions still need to be made in terms the epicentre of commercial real estate in this country. of public transportation, and all eyes will be on Metrolinx in “People are paying close attention to events in our city.

2014. The direction set by this provincial agency will have Major trends like new workplace strategies and the evolution implications for all types of commercial real estate, but it of the retail market are playing out in Toronto on a larger scale will be especially relevant to the industrial market. Metrothan anywhere else in the country,” said John O’Toole, CBRE linx will have the single largest impact on the way the GTA executive vice president and executive managing director, in functions as it creates more routes for the transportation of the 2014 Canadian Market Outlook for commercial real esgoods. In the meantime, the industrial market in the Greater tate report. “In 2014, we could get a better idea of how these Toronto Area is expected to have low vacancy and increasing trends are going to manifest themselves in the years ahead.” demand in 2014 as a result of an improving U.S. economy.

In particular, office tenants are increasingly turning to O’Toole concluded: “Commercial real estate is a cyclicnew workplace strategies and technologies to optimize al industry, but Toronto is certainly in one of the more dytheir real estate and improve employee performance. This namic periods in recent memory. 2014 is going to provide is one of the reasons why 174,958 square feet of downtown us with a better idea of how different property types will office space was returned to the market in 2013. While tenfare in the years ahead as emerging trends become more ants are pursuing quality office space by preleasing 54.1 per established. Look for Toronto to point the way for commercent of the 5.1 million square feet of new downtown office cial real estate elsewhere in Canada.” b space under construction, many tenants are also reducing their footprint as a result of newfound efficiencies.

“This is not a Toronto phenomenon; however, the city is in the midst of a significant construction cycle so we are going to be living through these changes at a unique moment in time,” noted O’Toole. “The push for floor plate efficiency will have implications for both the office towers being built

Toronto a bellwether for commercial real estate trends in 2014

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Great White North vs. The Big Smoke

11

Comparing two sets of office market statistics.

Canada: Office 2012

2013

2014F

6.1% $25.28 2.47 2.43 9.22

7.8% $25.68 (3.20) 0.88 14.05

8.4% $26.73 2.60 4.48 11.12

11.4% $17.68 1.74 3.23 8.72

12.1% $17.37 1.53 3.31 7.40

13.1% $17.77 1.03 3.46 5.11

8.4% $20.80 4.22 5.65 17.94

9.7% $21.00 (1.68) 4.19 21.45

10.8% $21.75 3.63 7.94 16.24

2012

2013

2014F

5.0% $27.03 0.22 0.21 3.54

6.1% $27.09 (0.17) 0.74 5.06

7.3% $28.18 0.54 1.59 3.47

12.2% $16.91 0.03 0.85 0.92

13.1% $16.56 (0.15) 0.61 1.65

15.7% $17.23 (1.38) 0.55 1.10

8.3% $20.58 0.26 1.06 4.46

9.4% $20.51 (0.32) 1.35 6.70

11.1% $21.26 (0.84) 2.14 4.57

YoY

DOWNTOWN

Vacancy Rate Class A Net Rental Rate (psf) Absorption (SF in millions) New Supply (SF in millions) Under Construction (SF in millions) SUBURBAN

Vacancy Rate Class A Net Rental Rate (psf) Absorption (SF in millions) New Supply (SF in millions) Under Construction (SF in millions) OVERALL

Vacancy Rate Class A Net Rental Rate (psf) Absorption (SF in millions) New Supply (SF in millions) Under Construction (SF in millions)

Toronto: Office YoY

DOWNTOWN

Vacancy Rate Class A Net Rental Rate (psf) Absorption (SF in millions) New Supply (SF in millions) Under Construction (SF in millions) SUBURBAN

Vacancy Rate Class A Net Rental Rate (psf) Absorption (SF in millions) New Supply (SF in millions) Under Construction (SF in millions) OVERALL

Vacancy Rate Class A Net Rental Rate (psf) Absorption (SF in millions) New Supply (SF in millions) Under Construction (SF in millions)

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LEGAL excess of $1 million). The underlying legislative principle is that prospectus-like disclosure is not needed for large investments or investments made by so-called “whale” investors.

Almost by definition, crowdfunding involves the exact opposite. Crowdfunding at its core contemplates very small capital investments from a very large number of investors, most of whom will not likely be accredited investors — the very antithesis of the prospectus exemptions that are usually available to raise real estate financing capital. Therein, of course, lies the rub for crowdfunding. There is nothing about it that is illegal per se, but under current Canadian and U.S securities regulation laws, a prospectus is needed in order to raise money by crowdfunding, and the requirement to issue a formal prospectus to potential crowdfunders Securities laws have yet to catch up to the before receiving a dime pretty much decrowdfunding craze, as evidenced by the fact that stroys the very economy, flexibility, crowdfunding for securities without a prospectus informality, and speed-to-market that crowdfunding is supposed to bring to is still technically illegal. small and medium sized enterprises.

The United States is in the process of

by Megan J. Lem legalizing crowdfunding without a prospectus. In October, 2013, the Securities Exchange Commission issued draft rules that would permit a company to Crowd·fund·ing (' kroudfendiNG/) noun crowdfund without a prospectus as part 1. the practice of funding a project or venture by raising small amounts of the Jumpstart Our Business Startups of money from a large number of people, predominantly from the Internet.

Act (the JOBS Act). Greatly paraphrased, American companies will be able to raise up to US$1 million through crowdSome observers, in a misguided attempt at being social media savvy, refer to funding offerings in any given year, this phenomenon as "cloud-funding" or “cloud financing” (an homage to its with investors permitted to invest up online roots), but, really, that is all crowdfunding really is — a credit card or to a maximum of 10 per cent of their anbank account, access to the web, and the willingness to click enough buttons nual income or net worth, whichever is to transfer some of that wealth towards a cause, an event, a product, or in this greater, to a maximum of US$100,000 case, an investment.

Some pundits suggest that crowdfunding, far from being a fad, is in the na(with special limitations applicable to A store on West of becoming a serious source of start-up capital for various types of scent stages investors whose annual income or net Street in Goderich, businesses, including real estate financing.

But is crowdfunding actually a legitiworth is less than US$100,000).

Ont.’s historic downtown before the estate financing or simply a flash-in-the-pan hype more suited mate form of real Canada is somewhat behind the tornado hit (above), to raising modest amounts of money quickly for quirky causes? That question is Americans in this process. Canadian sethe damage (right), explored more curities regulation remains a hodgeand in August 2013 fully in the following article titled Mass Appeal (pg. 16), however an (below) after the town’s question right now within our country's legeslative realm is equally-pertinent podge of provincial regimes, with only rebuilding efforts. whether crowdfunding is even legal for the types of real estate projects that occur Saskatchewan having legalized crowdin Canada, especially in light of Canada’s current securities regulation laws. funding without a prospectus — so far.

Greatly paraphrased, securities regulation laws in Canada and the United States Ontario, the largest investment jurisstart off with the broad premise that it is generally illegal for anyone to sell a secudiction in Canada, has proposed its own rity to any investor without formal detailed disclosures in a prescribed form (ususet of rules for crowdfunding without a ally a formal prospectus). From this first principle, the legislation then provides for prospectus for Canadian companies. exemptions to the general prospectus disclosure requirement for a security if: (a) Somewhat paraphrased, under the Onthe investment is big enough that investors would be highly incentivized to caretario proposals there would be a C$1.5 fully evaluate the investment before cutting the cheque (typically, a $150,000 and million cap on the absolute amount up ante); and/or (b) the investment is being made by an investor who is so rich that that a Canadian company could raise he will be able to endure the loss if the investment goes south (the so-called “accredthrough crowdfunding in a single year, ited investor,” typically with a family annual income over $300,000 or net wealth in and crowdfund investors would be lim-

Crowdfunding for Real Estate Development: Is it Even Legal?

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ited to a maximum C$2,500 crowdfunding investment in a single company, and an aggregate C$10,000 in all crowdfunding investments, during the course of any given year.

Although the whole point of introducing crowdfunding exemptions into our securities regulation legislation is to allow companies to avoid the cost and hassle of a full prospectus, Ontario is nonetheless proposing some disclosure compliance obligations, including the need to: (i) issue a standardized “information statement” at the point of sale describing risks and providing information about the offering, the company, the funding portal and any other relevant parties; (ii) provide one year’s worth of audited financial statements; and (iii) obtain a “risk acknowledgment form” from all crowdfund investors (although, in this Internet age, that might not be much more than the obligatory boxchecking protocol at the funding portal website).

Although still in the formative stage, there is every indication that Ontario will soon (as early as the end of 2014) join Saskatchewan in allowing Canadian companies to crowdfund without a prospectus. Presuming that the JOBS Act rules get implemented soon, and the other provinces will follow Ontario and Saskatchewan, crowdfunding for securities without a prospectus may well be a legal reality this year.

The biggest legal drawback for crowdfunding as a legitimate source of real estate financing will be the limitations on the amount that can be raised. The expectation that crowdfunding could raise the entire enterprise value of a modern real estate project (i.e. including that spectrum of the project usually occupied by mortgage financing) seems unrealistic, but even if crowdfunding is only ever intended as a source of some of the equity or mezzanine portions of a typical real estate project, a US$1 million or C$1.5 million per year maximum is probably too paltry to give crowdfunding any serious mainstream traction.

It is also not clear whether companies thinking of raising capital through crowdfunding have actually given enough thought to some of the long term administrative costs of having so many investors, each with small investments. Even if

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crowdfunding can avoid the high costs of prospectus-like disclosure up front, there will be the unusually high backend costs in simply dealing with and administering so many small investors.

Megan J. Lem Even simple tasks like mailing circuis a student in the lars, distributing cheques, and holding Faculty of Law annual meetings may become unwieldy at the University at best and nightmarish at worst (just of Western Ontario. for fun, ask the back room operations of any widely-held REIT how much fun that process can be, and multiply that response ten-fold!).

Like many things in life, time will tell. Crowdfunding has certainly proven effective in raising capital for some endeavours (e.g. raising the cash needed to buy a video recording of a certain Ontario mayor allegedly smoking crack cocaine!) and with the legal hurdles limiting crowdfunding in the context of securities are now set to be materially lowered (but not eliminated altogether), there is growing excitement for the possibilities of crowdfunding. That said, fears persist about whether there are still practical limitations to crowdfunding that will prevent it from taking a place on the podium alongside more traditional capitalraising options. b

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It

By Peter Sobchak

FEBRUARY MARCH 2014

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Canadian regulators are moving to legalize equitybased crowdfunding, which means it could evolve out of the basements of indie filmmakers and rock bands and onto the desks of developers.

may currently be the domain of garage bands, indie starlets like Zach Braff, and tech start-ups with a cool idea for a tablet app or watch gizmo, but that will all change. And probably sooner than we think.

In its simplest form, crowdfunding is the aggregation of small amounts of capital from a large group of people, predominately over the Internet. And we can thank the Internet for the explosive growth and popularity crowdfunding has experienced in such a short amount of time, due to the increased ease and security it provides to move money online. Need proof? The approximately 800 global crowdfunding platforms (over 80 of which are in Canada) raised US$2.7 billion and successfully funded more than one million campaigns in 2012, according to research firm MasSolutions.org.

While there is an increasing granularization of global capital flows, crowdfunding is not seen as a form of moving capital – at least not yet. For the most part, it is still perceived as a typically altruistic endeavour, and this is because the overwhelming number of crowdfunding transactions fall into one group: donations and rewards. As the name indicates, the first is understood as classic donation-based fundraising where the return is a non-tangible feeling of simply doing building.ca

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Canadian Crowdfunding Directory

SK > 1.1%

Distribution of Portals & Service Providers (as of 01.15. 2014)

15

AB > 10.2% portal

equity

service

1

2

9

2

15

AB

6

BC

13

MB

1

1

NB

1

1

NL

1

1

NS

3

3

ON

29

QC

14

SK

1

TOTAL

69

3

QC > 18.2%

total

9

41

2

16

BC > 17%

% total

1 15

ON > 46.6%

88

good. The rewards-based model is similar, however there are typically non-monetary rewards given to donators, and the quality of the “rewards” escalate with different levels of donations, for example a small donation gets that person’s name in the credits of a movie, whereas a gigantic donation could get them a walk-on part (a now-famous example of this came from the funding campaign launched by the producers of the Veronica Mars film on the massively-popular website Kickstarter, where pledges of US$10,000 or more got you a speaking role in the movie).

But donations and rewards are just half of the crowdfunding universe, albeit the much larger half. The other includes two types known as lending and equity, which give an economic return to the crowdfunder either by receiving money or some kind of an ownership stake in the venture. While this model sounds far more familiar to most business people, it is also far harder to fit into the crowdfunding ethos, because anything that grants a financial return is typically tightly governed by securities regulation.

The security of Securities As Megan J. Lem discussed in the previous article (Is it Even Legal?), equity-based crowdfunding is currently illegal in most of Canada. That is because securities are provincially regulated, and “regulators are by nature reactive and cautious, in order to safeguard the interests of the public and make a stable investment landscape,” explains Christopher Charlesworth, co-founder of Toronto-based consultancy HiveWire. They may be cautious, but provincial regulators also keep in touch with international bodies, which is good because crowdfunding is more and more taking place in a

Source: Craig Asano

4

NS > 3.4% NL > 1.1% NB > 1.1% MB > 1.1%

global context. Australia, the U.K. and Denmark have all had equity-based crowdfunding rules in place for several years, and Italy passed legislation last year. But one day in particular really caught Canadian regulators’ attention.

On April 5, 2012, U.S. President Obama signed the Jumpstart Our Business Startups Act (JOBS) into law, which creates an explicit exemption for crowdfunding from previous U.S. securities laws. “The Jobs Act was a major catalyst on crowdfunding, and made Canadian securities regulators sit up and take notice that their American counterparts were making it real,” says Charlesworth. With actual regulations being drafted in the United States, Canadian regulators are now exploring how we can do the same thing here.

“Most securities regulators here and abroad were pretty skeptical of equity crowdfunding when it became a topic of discussion, but now it feels like they are competing with each other to be the first to allow it,” says Pascal de Guise, a partner in the Montréal office of Borden Ladner Gervais. The first out of the gate was Saskatchewan. On December 6, 2013 it passed a regulatory scheme for equity-based crowdfunding that, through the Financial and Consumer Affairs Authority (FCAA), will allow small businesses and start-ups in Saskatchewan to sell stakes in their companies over the Internet to residents of the province through the Saskatchewan building.ca

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Equity Crowdfunding Exemption. But it comes with caps: only Saskatchewan-registered businesses can issue securities to Saskatchewan retailer investors; companies are allowed to raise $150,000 twice per year; and investors are limited to risking $1,500 per offering.

While the paint still dries on Saskatchewan’s scheme, the Ontario Securities Commission (OSC) is questioning new capital raising prospectus exemptions in a recently released public consultation paper (45-710), which specifically reviews potential crowdfunding exemptions. “We expect the OSC and other regulatory bodies to come out, probably in 2014, with some kind of high-level guidance or policy recommendations on how to roll out equity crowdfunding in Canada, followed by a commentary period, public consultation and feedback from the market,” says de Guise. “Next, some of these portals will have to be registered with the regulatory authority.” The question then becomes: do they want to put up with that? “If the requirements are too heavy they may not want to bother — or try to do it illegally,” says de Guise. “They will be judging how burdensome the regulations are and if they want to occupy the space.”

But will it work for real estate?

Obviously there is no shortage of funding for big profitable projects. They can find the money on their own, so won’t need crowdfunding. But communities or governments that are strapped for cash and can’t fund that community centre could look to the “feel-good” resources of crowdfunding.

After all, “crowdfunding is fundamentally based on the

Veni, vidi, FiDi

Historically speaking, iconic structures that grace the skylines of major cities around the world have always had something in common: they were financed by rich individuals. The Eiffel Tower was financed by Gustave Eiffel, the Empire State Building by John J. Raskob and Pierre S. du Pont, and the Burj Khalifa by Sheik Mohammed Bin Rashid Al Maktoum, to name but three. Yet one project in a part of the world not typically known for innovations in either real estate or finance is sending ripples around the world, and may change the old paradigm.

The BD Bacatá Downtown is unique for several reasons: it is the first skyscraper in Bogotá, Colombia to be constructed in more than 30 years, and when complete will be the country’s

MONTH MONTH 2014

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philosophy of ‘local supporting local,’ something more traditional capital-raising has lost sight of,” says Charlesworth.

“The numbers floating around right now on the caps of equity fundraising through current crowdfunding mechanisms help understand the potential scope of the projects and therefore the types of projects most likely to use it,” says de Guise. Using the Saskatchewan model as an example shows that most early adopters will be small-niche, local projects, such as community-based initiatives. “There is certainly opportunity for things that are ‘public goods’ to be ‘publically funded,’” says Charlesworth. Innovation hubs are a great example, such as CSI Annex in Toronto (itself funded through a City-backed loan guarantee of a community bond). Another popular example of crowdfunding’s potential in the built environment is the Luchtsingel footbridge in Rotterdam: each of the 17,000 individual wooden planks needed to build it bears the name of a person who helped pay for it via a crowdfunding campaign.

One Toronto-based online crowdsourcing platform pursuing this very same philosophy is Projexity. Created by a group of architects, landscape architects and urban designers who always saw traditional city planning and design as an impediment to neighbourhood development, the goal of Projexity is to “engage in urban improvement by initiating a project, contributing funds, volunteering skills or submitting designs or professional studies.” Funding is based on a “tipping point-style system” where the tipping point is the least amount of funding needed to get the ball rolling.

Because their system is based on the donations/rewards

tallest, at 66 stories with 1.2 million square feet that will include office and retail space, apartments and a hotel. But what people are really talking about is how the tower is (according to its developers) “the first skyscraper built by famous common people.” And by common people, the developers mean the more than 3,500 Colombian investors that have invested more than $200 million for the construction of the project, through an intriguing investment vehicle called FiDis. An acronym which roughly translates to “fiduciary duty,” a FiDi is a product similar to a trust that allows small investors to participate in large-scale real estate projects, without the pesky limitations of large capital. A crowdfunding campaign that plastered the city in billboards (led by Prodigy Network, a Bogotá firm specializing in real estate sales and marketing) encouraged investors to commit $20,000 over two years, with a down payment of 10 per cent, and as reported in Fast Company, “[i]nvestors receive monthly payments reflecting the building’s profitability, projected to be 10 per cent annually.” Already underway, the tower is expected to be complete sometime in 2015. By then, expect more to be following in its financial footsteps.

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Hurdles from a promoter’s perspective: > How to structure the products, i.e. what are you selling to investors (shares in a company, units in a limited partnership? Tax implications that go with all of these). > The more complicated the structures, the more

costly it will be to set them up. > The risk is running all these costs without a market that is deep enough to make it worthwhile. > Bottom line: is it worth the complications? First to market may be great, or you may end up being a cautionary tale to others.

Hurdles from an investor’s perspective: > Are there adequate investor protection rights? > Most of these projects will be longshots, so do you trust the promoter? > Basic risk management of one’s portfolio is needed for any investor.

Hurdles from an portal’s perspective: > Standardizing the products so investors can compare apples to apples.

crowdfunding model, they have been able to get projects moving, such as building a public patio beside Market 707, an open air market built out of refurbished shipping containers in downtown Toronto.

Feel-good initiatives aside, right now, crowdfunding appeals mainly to ventures that are less capital intensive. Traditional real estate requires a lot of capital, and funding any project through crowdfunding appears so cumbersome it would likely end up as a last resort – and when seen in this light, is often not a good sign to investors.

Or is it? “Crowdfunding is simply another channel of raising capital that will compete with traditional real estate financing. Competition is good and we believe we can do it cost-effectively by leveraging the Internet and modern technology,” says Tim McKillican, president of Kitchener, Ont.-based Open Avenue, a new online fundraising portal that is just itching for the OSC to lift crowdfunding restrictions so they can pursue investors for new real estate projects.

He believes that because traditional real estate financing requires heavy capital, it limits the commercial real estate investment market significantly. “This deep capital requirement traditionally pushes out the vast majority of investors who are interested in real estate investment but aren't capable of privately financing an entire project,” says McKillican. “We believe we can leverage crowdfunding and technology to bring real estate investment opportunities to the masses and significantly and cost-effectively expand the investment pool while providing institutional-grade real estate investments to all types of investors.”

The people will speak Crowdfunding is not a wet squib. Quite the opposite: those adept at seeing opportunity will see we are on the cusp of a new paradigm that represents enormous potential. Beyond monetary potential, crowdfunding represents a high-level tool set to engage with the public that moves beyond traditional ideas of “return” and into places of removing informational asymmetry. It not only gives people a chance to connect with a project, but also on-ramps for customer engagement (the likes of which you can’t get through advertising) that gives developers a chance to build an ongoing relationship with customers. “When people have a stake in a project, that changes the nature of their relationship with it,” says Charlesworth, and crowdfunding can be a powerful new way to facilitate that. In fact, if done smartly, the crowd can become brand advocates for a builder or developer.

Admittedly, yes, for the short- to medium-term, equity-based crowdfunding will not radically change the landscape of the real estate industry. Big projects will unlikely be funded through equity crowdfunding, as it would take too big a crowd to make it realistic. But looked at another way, any industry that requires capital could eventually benefit from crowdfunding (think lower cost of capital, huge marketing bang-for-buck by expanding brand exposure, and so on). Ultimately, crowdfunding stands to be “enormously disruptive,” believes Charlesworth, “as it will allow funding to flow to disruptive ideas, ideas that typically would fall outside the box.” b

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Come Fly With Me

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As we have seen countless times, social media has helped break down the barriers that have historically created information asymmetry.

A perfect example of this is in the travel industry.

And how the travel industry responded to crowdsourcing and social media could be a harbinger for the real estate industry: they originally resisted it, but the explosion of sites based on peer reviews like Hotels.com and TripAdvisor changed the landscape. “This is likely the model we’ll see happen in real estate,” says Pascal de Guise. “Using social media to see who the lead investor is, the track record of a promoter of a project, or their backgrounds and reputation on LinkedIn, could really help calm micro-investors.

Weeding out the “bad actors” is a main concern for regulators, but the social media tools we have would help with that.”

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From Collection to Connection

By Rhys Phillips

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Far from anachronisms, public libraries need to be the civic backbone of the Information Age. New examples across Canada are fulfilling this purpose, by making connections between people and information and between people and people.

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ehind the standard economic and business stories in the media lurks a much more fundamental shift in how economies operate. Whether under the rubric of the Third Industrial Revolution or the creative, triple helix or maker economies, how we make and share those things necessary for our quality of life is undergoing a radical change engendered by the digital revolution. But in the Information Age, with the digitization of everything, what will be the role of perhaps the most enduring

institution for democratic access to knowledge and information: the storied public library?

There are those who argue that in the digital age, with increasingly broad public access to the Internet, Google, Wi-Fi and unlimited cloud storage, the library is at best a prohibitively costly

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book museum. University of British Columbia ( UBC) librarian Teresa Goff recently lamented, “In a time of economic contraction, this perception has translated into extensive cuts to library funding and programs.” However, many new or extensively renovated stand-alone libraries are opening across the country. Not only does this indicate that many city governments believe libraries have a vital future, the architectural quality of these projects suggests the role of public libraries extends beyond being mere repositories of knowledge in one form or another.

THE EVOLVING ROLE OF THE LIBRARY

PREVIOUS PAGE

Jasper Place’s curving profile is influenced by snowplough-created prairie snowbanks, while a voluminous, two-storey space spreads out under a dramatic, columnless concrete ceiling. Right: Voids in the bulbous yet protective northern façade allow northern light penetration.

AND ABOVE:

Libraries have never been static institutions, but it was in the mid-19th century that free access libraries in public buildings began, facilitated in North America by Andrew Carnegie’s famous largesse.

While library architecture frequently acted as an urban icon, their interiors signaled a rising above the everyday into a quiet, respectful world of knowledge. By the 1980s, predictions were common that branches would increasingly migrate into the semi-public consumer space of the suburban mall. Anne Bailey, Director of Branch Libraries for the Toronto Public Library points out that two of the city’s busiest branches are indeed located in malls. Today, however, a healthier trend is to integrate branches into other mixed-use but public structures such as archiFEBRUARY MARCH 2014

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tecturally striking cultural/sports complexes. Two such complexes will come on stream this year in Edmonton: the Meadow Community Recreation Centre and Library (Group2- Architecture Engineering, Shore Tilbe Perkins + Will), and the Clearview Community Recreation Centre and Library (Perkins + Will). Both will also include innovative education completion centres. A third, the Mill Woods Library (HCMA and Dub Architects), incorporates both a multicultural centre and a seniors’ complex.

However some new libraries explicitly continue the traditional role of the library as a strong urban marker while incorporating changes demanded by the digital age. A number of Canadian cities are using new, architecturally significant central libraries as a major defining civic element. Bing Thom’s Surrey Library (2011) is part of that B.C.

Source:

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suburb’s efforts to establish a true urban center. Halifax will soon open a new central library, the result of an international competition won by Danish architects Schmidt Hammer Lassen (with Fowler Bauld & Mitchell) and already dubbed a top 10 must see new building by CNN. The library will go a long way in supporting efforts to encourage city living in a core not known for lively, quality modern architecture.

Calgary selected the edgy Norwegian firm Snøhetta last November, along with the Canadian firm DIALOG, to design a $245-million library beside its City Hall. This constitutes the city’s single largest investment in cultural facilities since the 1988 Winter Olympics.

LIBRARY BRANCHES AS PHYSICAL AND

Source:

INFORMATION FOCAL POINTS

Knud Schul of Denmark’s Aarhus Library, who has influenced many Canadian librarians, argues three roles are paramount: place, space and relation.

The first is a defining element in the public morphology of the city, a function that extends down to the community or neighbourhood level. The second captures the library’s increasingly important physical focus point for public social interaction, be it discussion, debate, meetings or a widening range of cultural events. He extends this role to include the individual experience by providing comfy chairs, unstructured social interaction, experience of great architecture inside and out, a welcoming café and other such amenities.

The third and increasingly important role is to organize, present and

facilitate the presentation of information in collaboration with a broad range of actors within civil society. For example, the beautiful library in Helsinki’s bio-technology focused “urban village” of Viikki operates as a single service point for students in the University of Helsinki’s bio-technology departments, for emerging businesses focused on bio-technology and for all local residents of the broader community.

As Maija Berndston, ex-director of the Helsinki City Library, told the International Federation of Library Associations and Institutions (IFLA) world conference in 2013, “the service has moved from collection to connection and from preservation to communication which means that libraries have become more living places than earlier.” She goes on to provide a spirited argument for the role of libraries in “place making,” not simply in terms of ensuring a strong physical reference for the city but “looking at, and asking questions of the people who live, work and play in a particular space to discover their needs and aspirations. This information is then used to create a common vision for that place.”

Citing examples from the American Library Association’s 60 Ways to Use Your Library Card, Goff believes that the core value of the free public library is the “lending of information resources and the empowerment of information literacy.” The last seems particularly relevant in an age of information and mega-data whose mastery, not incidentally, is closely linked to future economic prosperity. Like Viikki, UBC’s library services both enhance community engagement and knowledge while supporting the emerging new economy. Its Irving K. Barber Learning Centre, for example, not only hosts free art exhibitions and public lectures, it provides access to the Small Business accelerator that makes secondary market research, education and business support available to B.C. businesses.

Some of the new branches reviewed below are even introducing 3D printers, laser cutters and robotic resources along with digital literacy classes and workshops, all components of the newly emerging creative and maker economies.

Physical libraries, says Bailey, are community connectors that build community capacity while acting as the “essential component of 21st century public space.” Thus, libraries must be visionary, dynamic and inviting in order to promote community togetherness. She sees the term community living room, a term often cited by architects, as too limiting. Instead, she prefers “community home,” which suggests the more realistic complexity of today’s library as society’s “third place” along with home and work.

Of course the digital revolution — and it is a revolution for it changes fundamentally how we communicate, use information and manage our economic lives – requires significant changes to the physical library. Some would argue that traditional books are no longer required, for example the BiblioTech in San Antonio, Texas becoming the U.S.’s first bookless public library. Bailey agrees and disagrees.

Certainly, she argues there is a need for flexibility to permit easy transition to and between more and more “platforms of continuous knowledge.” Toronto’s world respected Library Services has the highest use of eBooks in the world. But, despite a “robust demand across various platforms with one format often creating demands for other formats,” she is quick to add, electronic books only constitute seven per cent of usage. The circulation of physical books remains very strong. The tactile experience of reading a physical book cannot be ignored.

At the same time, the days of libraries being defined by book stacks with sitting, reading and research areas as leftover spaces are long gone. Darryl Condon, HCMA design architect of Edmonton’s Jasper Place Library refers to the book

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stacks – not disrespectfully — as “residual space.” Bailey talks of the need to zone spaces that may even fluctuate through the day. Flexible meeting rooms, multimedia services, informal collaboration areas, comfortable sitting for reading physical or eBooks and doing research or information gathering as well as quality transitional spaces to simply be seen and to mingle all play a role in new library design. Overriding, however, is the need for branches to respond to its community’s own unique requirements and sense of place.

EDMONTON’S COMMUNITY-DEFINING LIBRARIES

Don Iverson, the 34-year-old mayor of Edmonton elected last year represents less a shift in direction than a consolidation of retiring Mayor Stephen Martel’s vision for a dynamic, 21st century urban centre based on transit, sustainability and a diversified economy. Progress has been slow on Manasc Isaac Architects’ 2009 proposal to turn the city’s main Stanley A. Milner Library, an aging 40 year-old Brutalist box, into a more colourful and urban friendly component of the city’s civic quarter. But the new mayor has inherited a bevy of smart new neighbourhood defining library branches.

Jasper Place Branch (HCMA/Dub Architects) provides an older suburban community a missing social and civic focus that will eventual connect to a planned LRT line along Meadowlark Street. Its architectural form is boldly distinctive, tapping intuitively into contextual clues found in the northern prairie FEBRUARY MARCH 2014

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horizon, says Condon. While he eschews “metaphor,” he admits that the library’s curving profile is heavily influenced by snowplough-created snowbanks of his Saskatchewan youth. This is most evident on the protective northern façade where hollows in the bulbous “snowbank” open to wonderful northern light. In contrast, the southern, more social side along Meadowlark carefully protects existing mature trees but tucks large glazed planes (and a softer wood volume) under an undulating roof that shields against summer heat gain.

The library’s interior is a voluminous, two-storey space spreading out under the dramatic, columnless concrete ceiling. Using a cast-in-place German process from Schöck that mitigates thermal bridging, the architects provide the kind of flexible, fluid space new libraries require. A cascading stair against the glass southern façade rises to the second storey mezzanine level overlooking a bold landscape. It also serves as an informal gathering space from which to see and be seen. Where the ceiling dips to its lowest, the resulting, more compressed and modestly scaled space is program- med for children.

“More and more,” says Condon, “usage studies show library use is increasing but with a shift from collections, study and research to a broader social role where people gather and interact, in part to combat the relative isolation of the digital.” A library’s floor plate must not be an idealized layout for collections but able to change rapidly as provided by Jasper Park’s free span. Perhaps challenging Bailey, Condon argues a time will come when there will be no

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books, with reference sections the first to go as articles and technical information is increasingly digitalized. Wi-Fi capability and interactive technology capacity will be increasingly important while the old standby — electrical plugs — will remain key for some time to come. The most stubborn holdout, he concedes, will be children’s books.

If Jasper Place provides a community with its communal “snowbank,” the under-construction Highland Branch (Schmidt Hammer Lassen/ Marshall Tittmore Architects) will create a more abstracted prairie iceberg. Both Mayor Martel and library CEO Carol Belanger, says MTA principle-in-charge Gordon Frankland, wanted new libraries to have strong but diverse architectural expression. Thus Highland’s two storeys are angled geometric shapes clad in aluminum but with glazed voids intended to create “a lantern in a northern landscape.” Careful placement on a modest lot carves out a small public plaza abutting a busy, semi-commercial street in a 1930s community. Generous, first-storey walls of glass connects the library’s interior to the street while large glazed blocks on the second level project light into the long prairie winters.

Inside, the library at its roots is similar to Jasper Place but with its mezzanine reached by an open stair centering a two storey core with a sculpted rather than undulating ceiling.

The interior has ample daylight from all directions bathing flexible, multipurpose and programmable spaces designed to facilitate dialogue no matter the medium.

TORONTO PASSES ONE HUNDRED BRANCHES

CLOCKWISE FROM

Highland Branch’s interior has ample daylight from all directions bathing flexible, multipurpose and programmable spaces; the two storeys are angled geometric shapes clad in aluminum; the newly renovated Mount Dennis library is a first step to enhancing the public realm of the battered streetscape along Weston Road in the North Toronto neighbourhood; a new feature stair connects the main and lower levels.

FAR LEFT:

Toronto Public Library bills itself as the world’s busiest urban library system and is probably also one of the most respected. A new crop of branches illustrate how the city wants high quality library architecture that will contribute to strong civic place-making. Two new libraries under construction, the Fort York and the Scarborough Civic Centre Library Branch represent its 99th and 100th branches. A third, the recently re-opened Mount Dennis Branch (E.G. Bruce Stratton Architects), is the robust renovation of an older library that responds not only to the library’s evolving role but also to the unique conditions of its community as determined through extensive public consultations. “Always public consultations,” says Bailey, “to determine hopes and aspirations.”

Bruce Stratton identifies its location as “the battered streetscape of its north Toronto neighbourhood” where development over the last decades has been slow, rundown buildings dominates and the public realm remains weak. The

community’s demographics, Stratton and Bailey concur, dictate the role the branch must fill. As one of the 13 lowest income districts in the city, plagued by low literacy scores and faced with a high percentage of immigrant children, early literacy programs and success in attracting youth are key.

To this end, Stratton was concerned with first establishing an appropriate, architecturally robust street presence suitable to the community to help kickstart physical rejuvenation (something he says is already happening). Second, the library had to be physically and emotionally accessible from the street signalling “a public realm with a sense of comfort, a place of respite, an environment in which to relax, an urban living room capable of changing one’s mood.”

Finally, it had to be able to support a sense of community and facilitate social interaction. The library’s rejuvenated front façade, therefore, “is locked into the streetscape, welcoming and transparent to patrons.” Its exterior is a mix of both expressive and contextual neighbourhood materials such as refurbished brick, gritty weathered steel and clay tile. But most importantly, a two-storey

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ABOVE: The transparhorizontal glass “beacon” dominates the street, wraps around ency of the Fort York the corner entrance into a laneway and spills a welcoming branch structure enlight onto the sidewalk at night. This Pilkington glass system sures library users is transparent at the lower level ensuring a high level of transcontinually experience the nearby park. parency that seems de rigour in today’s libraries.

Bailey’s phrase-dislike notwithstanding, Stratton speaks of the interior as an “urban living room” (with a fireplace retained from the original library) for both casual reading and contemplation. Like the two Edmonton libraries, an open “feature stair” under clerestory windows connects the main and lower levels. The palette of materials used in the various open and overlapping zones is warm and inviting. Ash veneer, polished concrete floors, carpet tiles, brightly coloured back-painted glass and porcelain wall panels ensure rich haptic and visual texture. On one side, an outdoor reading garden, previously used for garbage bins, has been incorporated into the library by a glazed wall.

If ever the term “urban living room” was more appropriate it would be for Toronto’s new 1,500-sq.-ft. Fort York Branch (KPMB Architects) located smack in the heart of Toronto’s rapidly growing high-rise tower forest on the edge of the west harbour. In this dense urban environVisit building.ca to read about the ment, says design architect and partner-in-charge Shirley new Scarborough Blumberg, “people really need amenities given the average Civic Centre size of the units, and Fort York will be a gathering place, a Library Branch, which provides place to ‘hang’ for youth, students and newcomers.” open, flexible At only two storeys, the heavily glazed and thus transparcommunity space capable of ent trapezoidal box under a canted green roof provides a welfacilitating the come void among the towers. Its “other than” quality is emexchange of phasized by its integration with a significant urban park to information in the digital age. the north that also connects into a linear park along the railway line that cuts through the area to Union Station. The transparency of the structure ensures library users continually experience the park.

The humanely-scaled library and park also serve as a porous gateway opening into historic Fort York, a long-hidden but major historical artefact for the city. The building’s angularity, Blumberg says, reflects those of the fort’s ramparts. The site’s ecological history as once a forested shoreline is reflected in the building’s grand open stair rising through the two-storey atrium space, its structural beams and the ceiling, all in Douglas fir. Use of rough-hewn wood also references the foundation cribbing found on the site. Like most new libraries, social interactions as well as flexibility for both existing information platforms

Mississauga Updates T hree Classics FEBRUARY MARCH 2014

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and adaptability to whatever the future may bring was key to the design.

A ‘digital hub’ armed with a 3D printer (something appearing in more and more libraries) is prominent here. “The armatures of the public social spaces,” says Blumberg, “carry the identity of the branch, and functional spaces for book storage, study, reading, media, are all designed to be flexible.”

Working with renowned Toronto artist and friend Charles Pachter, Blumberg has incorporated perforated vertical steel fins inscribed with digitalized images of illustrations from Margaret Atwood’s poem “The Planters” included in The Journals of Susanna Moodie. Texts from the book will appear at grade.

In the case of the Fort York Branch, the political debate over cost is moot. Its tab is being met through the Planning Act’s Section 37 that allows the city to grant developers additional height and density in exchange for community infrastructure. The city sold the site to Context Development whose Library District condo tower, also designed by KPMB, is linked to the library by similarly scaled amenities (including a canted roof) built for tenants. In contrast to the library’s all transparent skin, the latter is clad in a mix of glass and vertical striations of forest green and water blue.

VITAL INVESTMENT, NOT FOOLHARDY INDULGENCE

The number of significant and well-designed libraries appearing in Canada thankfully suggests that the false economy of not investing in cultural infrastructure in order to focus on “real” business may not prevail. The creative underpinnings of the new digital economy require as never before open, welcoming and in-depth public access to the exploding information characterizing the world we now inhabit. b

Images courtesy of: Hubert Kang (Jasper Place); Marshall Tittemore Architects (Highland); G. Bruce Stratton Architects (Mount Dennis); The Flat Side of Design, courtesy of KPMB Architects (Fort York).

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Visit building.ca to see a slideshow and read about three Mississauga, Ont. library branches, Lakeview, Port Credit and Lorne: modernist survivors of earlier radical changes to library architecture in the 1950s and early ‘60s, that have been recently renovated to enhance the democratization of both public space and access to library services.

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A BEACON RISES

Images courtesy of: Hubert Kang (Jasper Place); Marshall Tittemore Architects (Highland); G. Bruce Stratton Architects (Mount Dennis); The Flat Side of Design, courtesy of KPMB Architects (Fort York).

T

How the CMHR was built using virtual design and construction and other supportive technologies

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By Sean Barners and Scott Stirton

he $350-million Canadian Museum for Human Rights (CMHR) in Winnipeg has been steadily making headlines since its very inception. And deservedly so: when the doors open later in 2014, the space will be filled with exhibits and stories that aim to improve one’s understanding of human rights. After 18 months and three levels of increasingly detailed submissions, the contemporary design of architect Antoine Predock was selected over those of 61 other firms from 12 countries, in one of Canada’s largest-ever juried architectural competitions. Visitors will enter through the “tree roots,” travelling through nearly 47,000 square feet of exhibit space

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Virtual Design and Construction Integration Smith Carter Architects & Engineers Inc. Design Team

Yolles Structural Team

26 26

PCL Constructors Canada Inc. Construction Team

REVIT ARCHITECTURE

CATIA

REVIT CONSTRUCTION MODELS REVIT STRUCTURE NAVISWORKS COORDINATION MODEL VIEWER REVIT SAP2000

= Name of software used

and 2,300 feet of ramps. The average floor-to-ceiling height of each level is 17 feet, mirroring the sense of vastness and openness in the Canadian landscape. Central to the experience is the Garden of Contemplation with its still water pools, and the Tower of Hope, a 328-foot-high glass structure overlooking the Winnipeg prairie horizon.

All in all, the design is an inspiring showcase. But one of the less well-known features that have contributed to the Museum’s uniqueness is how it is one of the first large-scale, complex projects in Canada to use virtual design and construction (VDC) universally across all consultant and contractor teams. The true power of VDC is its ability to combine information from a multitude of software packages into one bi-directional integrated file. On the CMHR project, active teams from 40 different companies located in eight cities in Canada, the United States, and Germany all contributed to a centralized model database. This database encompassed the project’s 3D model, 2D drawings, 2D details, schedules, and specifications.

A risk associated with complex projects like the CMHR is that the design can get lost in translation during the progression from a 2D plan to a 3D structure. By optimizing the virtual construction process, the consulting team, led by Smith Carter and Yolles, was able to translate the form into coordinated constructible components that could be analyzed in real time. This perpetuated a design-assist culture between the consulting team, PCL, and the major subcontractors. This joint access improved understanding of the design intent, as all team members were able to view and discuss design elements in the actual model, or with screen shots, while the design team articulated the importance of the various elements.

Traditionally, project teams require clients to interpret their 3D buildings from 2D documents (e.g., plans, sections, elevations, renderings, and construction schedules). On the CMHR project, the project team sat with the client to review AUGUST SEPTEMBER FEBRUARY MARCH 2014 2013

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the museum in 3D, with live walk-throughs and renderings produced from vantage points of their choice. To help the client visualize and evaluate their options, the team even revised major structural components, such as curtain walls, right in front of their eyes.

The unconventional architectural form of the CMHR meant that hand sketches or traditional 2D AutoCAD could not be rationalized into a 3D model. Instead, the team started with a 3D model, set datum points and planes for the geometry, created hand sketches to determine the construction make-up, and then added the digital information to the model. As the complex geometry evolved and details were impacted, the team was able to continuously adjust the details to ensure the model was correct – and current – from a constructability, aesthetic, and technical perspective.

Preconstruction Planning and Estimating During the preconstruction planning phase, the project team embarked on extensive reviews of the VDC models to identify and address potential design issues, or clash detection, prior to starting construction. Early clash detection presented a business advantage to the client, consultants, and contractors, by saving the time and money associated with unnecessary rework.

Due to its complex building geometry, the CMHR project could not be fully dimensioned in 2D, making it almost unbiddable using standard quantity take-off methods (e.g., digitizers, scales). The increased potential for bidder risk would normally translate into higher project costs; however, by using the fully integrated, up-to-date 3D model to isolate and extract accurate construction-caliber quantities for specific trade scopes, more competitive pricing was achieved. For example, Smith Carter created DWFx (Design Web Format) models for the exterior limestone veneer, allowing bidders to pinpoint their scope of work and quantities, and easily relate the information back to the 2D drawings. Confidence in the accuracy of the quantities was

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Virtual Design and Construction Global Collaboration Winnipeg, MB Canadian Museum for Human Rights > PCL Constructors Canada Inc. > Smith Carter Architects and Engineers Inc.

•

•

Mongolia > TAK Int. Albuquerque, NM > Antoine Predock Architect PC

•

• •

Toronto ON > Yolles, a CHZM Hill Company > The Mitchell Partnership > Mulvey Banani Int. Inc.

•

Wurzburg, Germany > Gartner Steel and Glass

27

New York, NY > Ralph Appelbaum Ass.

demonstrated by the fact there was a less than two-per-cent difference among the top three bids. VDC also improved the preconstruction planning and coordination between the consulting and construction teams in North America, and the subcontractor who designed and manufactured the building’s exterior glazed façade in Europe.

Real-time Collaboration, Design Simulation and Analysis The project team overcame logistical challenges, such as bandwidth and server storage, by establishing a stable work platform in a virtual domain. By implementing remote desktop protocols during virtual meetings, team members were able to view, mark up, and take control of the model. Among the many benefits of this real-time collaboration were reduced travel time and costs, as well as improved communication and project coordination, thanks to increased meeting efficiency and expedited decision-making.

The virtual design model offered a complete package of the form, materials, structure, systems, and subsystems. It was so comprehensive that, long before final documents were complete, the project team was able to simulate building performance, evaluating the impact of wind and smoke flow, as well as structural loading and construction sequencing. The information was used to test, revise the model, and retest, until the unknowns and concerns were minimized.

To visualize, manage, and document this project, the project team adopted new technology (e.g. tablets, 3D mice, rapid prototyping or 3D printing, holograms and motion-capture technology) that even a few years ago was largely unknown.

The consulting team, which originally supported AutoCAD and three or four other programs as its primary production tools, adopted 24 software platforms to provide the vast range of data and input required for the CMHR. Likewise, PCL expanded its AutoCAD software suite to include a range of 3D modeling platforms by Autodesk. All project stakeholders, including the owner and museum staff, were able to access the model using Navisworks, a free Autodesk download.

Construction Management and Challenges The VDC model provided the project team with an opportunity to break down the building into small components, around which the team could plan construction sequencing

PROJECT TEAM DESIGN ARCHITECT:

Antoine Predock Architect PC and activities. In self-performing the EXECUTIVE concrete work, PCL needed to install ARCHITECT: Smith Carter a large quantity of concrete shoring Architects beams, or Efco super-studs, which diand Engineers Inc. CONSTRUCTION agonally supported the inside of the MANAGER: concrete walls and tied back to the floor PCL Constructors Canada Inc. slab. The location of these super-studs STRUCTURAL could not conflict with the structural ENGINEER: Yolles, A CH2M steel to be installed later. PCL overlaid HILL Company its 3D concrete wall shoring model on MECHANICAL ENGINEER: the 3D structural steel model produced The Mitchell

by Walters Inc., and then adjusted the Partnership ELECTRICAL super-stud locations in the model to ENGINEER: reduce potential conflicts in the field.

Mulvey Banani International Inc. This process positively impacted the EXHIBIT DESIGNER: project budget and schedule.

Ralph Applebaum Capitalizing on its in-house VDC Associate capabilities, PCL self-performed the CMHR’s cast-in-place structure. The design incorporated exposed-to-view, sloped, battered, and curved concrete walls, as well as a free-standing concrete wall with large openings. PCL developed a fully integrated 3D model for the formwork design and another for the reshore components, all from the issued-for-construction model provided by the design consulting team, which allowed PCL to fine-tune the scheduling process. In addition, information from the model was used to design formwork and to fabricate panels to meet the CMHR’s specific requirements, geometrically and dimensionally. Using VDC models for construction coordination paid big dividends. PCL was able to schedule the concrete structure work Sean Barners is vice with a high degree of accuracy — and president and district finish this scope of work 11 weeks manager for PCL ahead of schedule.

Constructors Canada Base building construction is priInc. and Scott Stirton marily complete, with exhibit installais CEO of Smith tion now under way. The Museum is to Carter Architects and officially open September 20, 2014. b Engineers Inc. building.ca

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Time Really is Money

28

I

By Andrew Sobchak

Delays in site plan application approvals n 2013, the Ontario Association of Architects (OAA) commissioned a could be costing study of the economic impacts of Ontarians $650 million site plan application approval delays on all stakeholders, analyz- per year

The study surveyed 146 architects, 18 developers and 10 municipal directors of planning from across the province, analyzing 477 recent site plan applications brought as case studies by OAA members. Despite the applications being relatively simple — those involving amendments to official plans and rezoning were excluded —35 per cent required over nine months for approval and 50 per cent needed three or more re-submissions, according to the architects. Additionally, the architects reported that the value added by these lengthy reviews was low, with only 17 per cent of the designs positively impacted by the process.

While the study stopped short of suggesting an ideal review time, Birdsell believes there are significant savings to be realized. “We suspect that times could be cut in half while maintaining the mandated levels of public engagement,” he says. For the OAA, a complete revamp of the site plan approvals process in Ontario is required to improve its timing, procedure and cost.

One of the major challenges of revamping is the collaborative nature of the process itself. Identifying the priority inefficiencies depends on who you ask. Of those surveyed, architects point at a lack of interdepartmental Estimated average costs to three stakeholder groups coordination within municipalities, for each month of site plan review while municipalities suggest incomplete applications to start and slow response to their comments from con$193,000 DEVELOPERS For a typical, 100-unit sultants are to blame. Developers, $2,375 HOMEBUYER townhouse caught in the middle, voiced general condominium $200,750 MUNICIPALITY frustration with the unpredictability of the associated costs of these delays. $113,000 DEVELOPERS For a typical The answer may lie with leadership, 50,000 sq. ft. $130,000 TENANTS commercial and the OAA is looking to the province building $10,050 MUNICIPALITY to step in with guidance.

FEBRUARY MARCH 2014

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Source: Bousfields Inc./Altus Group for the OAA

ing potential tax, financing and employment implications, as part of a wide range of factors. Released in October, the results suggest the cut to the developer’s bottom line is deep, but the hit to the pocketbooks of consumers and municipalities is no less significant.

“Based on the report’s estimate of $2,375 in costs per unit per month, and based on the average number of condominium apartments and condo townhouses built per year in Ontario, the cost to Ontarians per month is $48 million,” says Bill Birdsell, president of the Ontario Association of Architects. “For offices, based on the report’s estimate of $2.75 per square foot per month, and based on the average annual growth in office space over the past three years, the cost to Ontarians is $7 million per month.”

Time between submission and approval, based on development application type % OF APPLICATIONS 0%

10%

20%

30%

40%

APARTMENT BUILDING

MULTIPLE ATTACHED RESIDENTIAL

DEVELOPMENT APPLICATION TYPE

LARGE COMMERCIAL

MEDIUM COMMERCIAL

SMALL COMMERCIAL

LARGE INSTITUTIONAL

Source: Bousfields Inc./Altus Group for the OAA

MEDIUM INSTITUTIONAL

SMALL INSTITUTIONAL

OVERALL

LESS THAN 3 MONTHS

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3 TO 6 MONTHS

6 TO 9 MONTHS

OVER 9 MONTHS

Although the basic framework for site plan approval is generally consistent throughout the province, the study 50% found its implementation had a high rate of geographic variation. Each municipality had a slightly or grossly different approach to the pre-application process, public consultation and submission requirements. Even the definition of areas subject to site plan approval differed by municipality.

To smooth out these irregularities, the OAA wants the province to standardize the implementation of Section 41 of the Planning and Development Act throughout all municipalities; providing clarity of purpose and highlighting best practices such as having individual agents assigned to applications to help guide through interdepartmental and inter-agency review. Many of these suggested best practices are already in application, but the OAA claims their consistent application would help grease the system greatly. Developers agree, saying that improving the clarity of the process would help marshal expectations and costs, and improve overall efficiency.

Municipalities do recognize the need for improvement. Although the OAA FINGER study focused on the industry perspecPOINTING: tive (the directors of planning were not TOP THREE REASONS FOR asked for improvement suggestions, SITE PLAN nor did the study reconcile their differAPPROVAL ing opinions with architects on the DELAY length of reviews and sources of inefficiencies), seven of the 10 surveyed dirONTARIO ARCHITECTS: ectors indicated their municipality • Slow had recently or is currently conducting circulation a review of the site plan approval proof application cess. And Birdsell acknowledges the through municipal collaboration that will be required to departments make any improvements in the future • Slow/lack of stick. “Municipal participation would response from be the key to achieving this goal,” he municipal staff • Conflicting notes. “That is why we are recomcomments mending that the Province start by infrom different stituting a benchmark based on munimunicipal cipalities’ own data.” departments Birdsell and the OAA are also meetONTARIO ing with Linda Jeffrey, Minister of MUNICIPALITIES: Municipal Affairs and Housing, to explore the study recommendations.

“The site plan approval process is inefficient and this report clearly shows that the resulting costs are often passed along to end-users,” Birdsell says. “We are committed to moving this issue forward because it affects more than architects and other industry stakeholders. It affects most Ontarians.” b

29

• Slow/lack of response from applicants to suggested revisions • Incomplete applications • Slow circulation of application through municipal departments

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30

V I E W A Family Affair

By Danny SC Tseng “He always said you never learn anything by talking,” reminisces Steven of his late father Murray Menkes, who began as a small house builder in the 1950s. Murray, an opinionated risk-taking visionary, laid the foundation for his three sons: Alan, Steven, and Peter, who collectively elevated Menkes Developments Ltd. to new heights. Today, the Menkes empire is responsible for some of the greatest real estate developments in the Greater Toronto Area.

It was perhaps a symbiotic synergy the Menkes family had with each other that allowed them to bridge the seemingly contradictory notion of independence and collaboration. Even though day-to-day operations are run autonomously, the three sons thrive on each other in a cohesive way where the sum of the parts is greater than the whole.

With the belief that development flourishes along transit nodes, Menkes took a strategic position in 1979 on a property in downtown North York at Yonge Street and Sheppard Avenue. Its proximity to the subway and Highway 401 gave Menkes the confidence to pursue their first office tower. However, the 1982 recession began shortly after the project was zoned and approved. Alan recalled that when you sit through a recession and nobody calls for a year, it leaves a lasting impression. Luckily, a strong banker who believed in their vision supported Menkes without having any tenants signed. Incidentally, within 60 days of building, Proctor & Gamble leased the entire tower as their new headquarters, a feat that doesn’t often happen. To this day, P&G still occupies the structure.

“Have a good banker!” Peter joked when asked what advice he would give to young ambitious people. Yet, there’s certainly truth in that as Menkes has proven to be extraordinarily resilient in the face of recession. During the recession of the 90s, pension funds saw real estate as a good alternative asset class. With Menkes’ expertise as developers, Peter forged alliances with their financiers and to this day, the company still uses those on-going pension funds. Strong relationships will certainly get you far. Furthermore, Menkes was flexible in seeking out other opportunities. In 1994, Steven led the low-rise division, which accounted for 75 per cent of the company’s work at the time. As the “numbers guy” in FEBRUARY MARCH 2014

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LEFT TO RIGHT:

Steven, Alan and Peter Menkes, speaking at the 2014 ULI Toronto Fireside Chat at the Toronto Board of Trade on February 20.

the company, Steven knows a thing or two about mitigating risk when the market goes south. He could not stress enough the importance of relationship, communication, and honesty of the lenders. Steven tributes the credibility Menkes garnered through their successful developments (that were built before the recession) that gave bankers the confidence to offer their support.

“Excel in an area you feel comfortable in; let people know that you’re an expert and luck will go your way,” advised Alan.

Such was certainly the case with the Four Seasons, one of Menkes most celebrated accomplishments. The original Four Seasons in Toronto’s Yorkville area was a 1970s Brutalist fortress typology with low ceilings and had more hotel rooms than necessary. In a joint venture with Lifetime Developments, Four Seasons enlisted Menkes for their expertise in complex mixed-use projects for their new flagship location.

The market value couldn’t sustain the cost of a stand-alone hotel and the development was subsidized with the addition of residential suites. The hotel/condo mix was a first for Menkes and it was extremely challenging to reconcile the logistics for putting residential units above a five-star hotel.

However, the effort paid off. Completed in 2012, the Four Seasons is the quintessential hotel-lifestyle condominium with highly desirable amenities, services, and finishes.

When asked what the greatest challenges of the future is, Steven lamented that growth plans and policy will be the biggest issue for low-rise residential. Alan and Peter both see transit and infrastructure as hurdles, and a need for collaboration between provincial and municipal governments to solve the gridlock problem. In 25 years, the vision Menkes has is the “Manhattanization” of Toronto where density will continually be driven by immigration and supported Danny SC Tseng is an by lots of public transit. With four of Architectural Designer at Murray Menkes’ grandsons joining Quadrangle Architects the company in various sectors, the Ltd. and a member of ULI Menkes family will no doubt continue Toronto. Read an to be a major player in shaping the expanded version of this city’s skyline. b article at building.ca

Photo by Melanie Schwam

Speaking at ULI Toronto’s 6th Annual Fireside Chat, the Menkes brothers shared stories and lessons learned over the course of 37 years.

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