Building August September 2012

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Contents

Features

The Price Ain’t Right / There is nothing wrong with the concept of “development charges” as a means of paying for growth-related infrastructure. But it’s the way they are structured that is the problem. By Pamela Blais | PAGE 14 Revitalizing from the Inside Out / The downtown redevelopment strategy of Saint John, New Brunswick provides a model for how small cities can position their communities for success through a strategic focus on smart growth and investment to promote quality of place and life.

By Cyndi Rottenberg-Walker and Mark Reid | PAGE 18

Greening Mies / A mid-century downtown Toronto icon gets a 21st century upgrade. By Peter Sobchak | PAGE 29

Departments

Editor’s Notes | PAGE 5 Upfront | PAGE 7 Mailbox | PAGE 9 Market Watch | PAGE 10 Legal | PAGE 12 Viewpoint | PAGE 30 Cover image: The Centre hospitalier de l’Université de Montréal (CHUM) is the largest P3 hospital venture in Canada’s history. The Collectif Santé Montréal, responsible for project design, construction, financing and maintenance, raised $1.37 billion through the sale of secured bonds for the new hospital’s construction. Image courtesy of Cannon Design.

A Prescription for Good Design / Healthcare institutions face numerous challenges today, including rising costs and growing demands for services. Two new hospitals are aiming to improve the patient experience through the use of evidence-based design. By Rhys Phillips | PAGE 22 www.building.ca

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Above image: Humber River Regional Hospital is designed as a neighborhood landmark, taking inspiration from the architecture of Toronto with clean rectilinear lines and using primarily glass, metal panel, precast concrete and masonry.

Image courtesy of HDR Architects.

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Life after the back cover…

what’s on BUILDING.ca Read

How to Arrive at the True Value Propositions of EIFS Ted Kesik, Ph.D., P.Eng. and a professor of Building Science at the University of Toronto, explores the value propositions of EIFS by defining a framework for fair valuation that can be used to determine EIFS benefits and limitations.

The Burden of Weight Increasingly tighter requirements on heat insulation by law and constantly increasing energy prices are driving forward the trend towards triple glazing thin glass technology to counter the associated increased weight of glass.

Back on Track Andrew Snook reports on how the Canada Green Building Council has implemented a variety of initiatives to eliminate the LEED Canada certification backlog.

“If a new project comes in, we aim to start the work on that project Explore within five business Take a look at the $30-million renovation and addition to days and we’ve the St. John’s Rehabilitation been doing that.”

Hospital and Ambulatory Care Centre in Toronto’s north end.

Mark Hutchinson, director of green building programs, CaGBC

Follow Attend Western Canadian Hotel & Resort Investment Conference / October 3-4 / Vancouver RealLeasing 2012 / October 4 / Toronto 2nd Annual Summit on Innovations in Public Consultation and Engagement / November 7-8 / Toronto QUEST – Quality Urban Energy Systems of Tomorrow / November 18-21 / Winnipeg 4 BUILDING August/September 2012

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Volume 62 Number 4 Editor Peter Sobchak Art Director Stephen Ferrie Legal Editor Jeffrey W. Lem Contributors Pamela Blais, Sheri Craig, Rhys Phillips, Mark Reid, Cyndi Rottenberg-Walker Circulation Manager Beata Olechnowicz Tel: (416) 442-5600 ext 3543 Reader Services Liz Callaghan Advertising Sales Greg Paliouras Tel: (416) 510-6808 Email: gpaliouras@Building.ca Senior Publisher Tom Arkell Vice President, Publishing Business Information Group (BIG) Alex Papanou President, Business Information Group (BIG) 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 (U.S. funds) Elsewhere: 1 year, $45.95 (U.S. funds).

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EditorsNotes.indd 5

HIPSTERS MAY SAVE US

I

t’s fun listening to the linguistic acrobatics those involved in improving the built environment often go through when discussing strategies for city building. Too often the language is muddled with buzzwords and corporate-speak – if I don’t see the word ‘placemaking,’ ‘vibrancy’ or the term ‘create a new narrative’ in my inbox again for a while, I won’t mind – and while words like ‘re-urbanization’ and ‘re-vitalization’ have their place, I sometimes get the impression that much of the time what they are really trying to do is avoid uttering “gentrification.”

Urban gentrification is a phenomenon that comes loaded with many meanings to many people. They often start in the popular imagination as pre-hipster neighbourhoods of working-class ethnic groups, drug dealers and violence and characterized by post-industrial vacancies of boarded-up factories, weed-choked lots, and fractured train tracks. Then come the artists, followed closely by the cafés and galleries that serve them. We all know what happens next: the conversion of these older districts -- where lower-income households and new immigrants could traditionally find affordable rental housing -- into neighbourhoods geared towards middle-income and high-income households.

For many people, “gentrification” is a dirty word. It raises images of an older, eclectic neighbourhood being uprooted by wealthier, more homogeneous locals, more Starbucks chains and less culture. But in fact, gentrification is a key driver in the rapid and, in some cases astonishing, transformation of the contemporary Canadian urban landscape, and often represents the enhancement and renewal of communities that would otherwise be in a period of decline, such as smaller cities like Saint John, N.B., as detailed in this issue’s feature by Cyndi Rottenberg-Walker and Mark Reid from Urban Strategies.

This is not to say that it is a seamless evolution. People like Tim Jones, president and CEO of Artscape, are quick to point out how gentrification has often displaced artists and cultural groups, which are frequently the reasons the neighbourhood was attractive in the first place.

A principled approach, he believes, would include ways to keep these residents and businesses in the neighbourhood, while also allowing for changes that come with gentrification. One oft-cited tactic is to incorporate housing geared to low- and middle-income individuals and families, while still having a neighbourhood that will attract higher-income residents, workers and consumers. Examples like the rebuilding of Regent Park in downtown Toronto show that it is possible to build elegant and interesting social housing that can be part of neighbourhood gentrification, and can allow residents from different social, cultural and economic backgrounds to be part of these new communities.

Taking this ethos one step further, positive gentrification of moribund neighbourhoods could also represent an exciting maturation of public/private partnerships. Downtown revivals such as those envisioned for Saint John necessitates planning and zoning that is more flexible and allows for a variety of market uses that could come to the site. Because if this was the case, private developers – who we know tend to be risk-adverse -- could become more entrepreneurial and creative, and be a bit more willing to take risks in purchasing land and beginning development projects in those areas, even if the municipality itself hasn’t ponied up for public improvements before the private sector starts construction.

Across Canada rates of urbanization are increasing, with 80 per cent of us already living in cities today. Add to that the fact that by 2030, net immigration will account for most if not all of Canada’s future growth. “Cities that are successful in attracting people will be successful in attracting future investment,” says Rottenberg-Walker, and those cities that work with the private sector to groom formerly faded precincts for smart growth will be well-situated to mine the rewards of those investments.

Peter Sobchak Editor

We welcome your feedback. Send your questions and comments to psobchak@building.ca August/September 2012 BUILDING 5

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UPFRONT OCPM stresses that Montréal should reassume development leadership of Griffintown

MONTRÉAL— The Office de consultation publique de Montréal has released a report with suggestions for a redevelopment plan of the Griffintown area, which is at the entrance to the central business district in the Sud-Ouest borough, and was an area used for industrial purposes in the 19th century before a progressive decline precipitated by the closing of the Lachine Canal in 1970.

The area has important heritage value and offers great repurposing and redevelopment potential. The commission believes that innovation and creativity have been part of Griffintown’s DNA since the 19th century, and should be the lead wires for the development vision for the area, in a spirit linking past and future. This involves innovation at all levels, including technological, social, urbanistic and environmental.

In the report, the commission identified five unifying development principles that should guide Montréal in drafting its integrated development plan for Griffintown: Montréal should capitalize on the added value of the heritage factor for its revitalization of the area; the redevelopment of Griffintown should aim to open up a mixed and multifunctional area, connected with the surrounding areas; the densification of the area should be seen as a tool serving the quality of life; the importance of creating green spaces; the planning should aim to make Griffintown a model of sustainable development.

The consultation began in an atmosphere of scepticism. Given the numerous real estate projects already authorized or under way, a very large number of participants fear that Montréal will be forced to react to rapidly multiplying private projects rather than exercising leadership so that the neighbourhood can develop coherently and in the general interest in the long term.

The commission believes that it is not too late to deflect certain trends, but www.building.ca

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that time is of the essence and that it is urgent to act. Notably, the commission recommends: that Montréal, in the short term, prepare the ground for a heritage protection and enhancement strategy for the area, including emblematic buildings and the street grid; and that it make the commitment to protect them and make them revitalization centres; that only projects respecting the height limits provided under existing by-laws be authorized, until the integrated urban development plan is adopted; that projects of great height by right be authorized only by requiring the integration of proportional green spaces, to lessen their street presence and allow the neighbourhood to breathe; that the Affordable Housing Inclusion Strategy continue to apply to all projects of 200 or more units, whether by right or not, and that the borough pursue its efforts with respect to projects of 200 units or less; that Montréal quickly set up the necessary land banks or rely on other means, notably regulatory tools, to reserve land for parks, public spaces and co-op housing for families; that it employ the appropriate means, including by-laws, to preserve artists’ studios; that a project office be duly established, bringing together the central city and the Sud-Ouest borough.

All Montréal departments concerned with the reconstruction of Griffintown should be represented there. The office should also have access to external resources; that a joint-action committee comprised of local players be established as quickly as possible. The project office should involve the committee in the various stages of the area’s development.

Lastly, the commission recommends that Montréal quickly establish a plan of the investments it expects to make over the next five years to develop a quality public environment. Some financing methods were also suggested.

Massive living wall unveiled at Edmonton International Airport

VANCOUVER— Passengers arriving in Edmonton will be greeted by a breath of fresh air produced by the largest living

wall inside any airport terminal in the world. Artist Mike Weinmaster, of the design firm Green over Grey, gained inspiration from high altitude cloud formations to create the artwork of the 1,420-sq.-ft. living wall (also referred to as a vertical garden, green wall, biowall or plant wall). For the upper walls,

Weinmaster based his designs on famous Canadian paintings by The Group of Seven and Emily Carr. The colours, patterns and textures were created using 8,000 individual plants, representing 32 unique species. Some of the larger species (such as Lacy-Tree Philodendrons, Staghorn Ferns and Octopus Trees) will be allowed to grow up to 10 feet out of the wall. Stantec were the architects and engineers responsible for incorporating the living wall into the design of the terminal.

Bird Construction scoops up $235 million worth of new contracts

TORONTO— Bird Construction has been awarded a number of construction contracts located across the country and totalling approximately $235 million.

They include: the Early Works Civil Program at the Voyageur Upgrader Project located north of Fort McMurray, Alta. Work on the project includes earthworks, concrete foundations and underground piping. The Voyageur Upgrader Project is operated by Suncor Energy and jointly owned by Suncor and Total E&P Canada Ltd. The Early Works Civil Program is expected to be completed by spring of 2013; construction of the residue storage area and dams at Vale Inco’s nickel processing plant located August/September 2012 BUILDING 7

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UPFRONT in Long Harbour, Nfld. Construction is expected to be completed in late 2012; the construction of two 160-bed, fourstorey residences at St. Francis Xavier University. The construction completion date is spring of 2013; the renovation of a facility used by Special Services for Children and Youth in Winnipeg.

Completion is expected by the spring of 2013; the expansion and renovation of an existing Wal-Mart store located in Winnipeg. Construction is underway with completion anticipated early in 2013; the construction and renovation of the Metropolitan Theatre facility owned

by Canad Inns in Winnipeg. Completion expected late this year; the construction of the Genesis Recreation Centre Phase III in Airdrie, Alta., including twin hockey rinks, stadium seating, change rooms and ancillary facilities. Construction is expected to be completed by the spring of 2013.

Farrow awarded complex care centre and campus of care in Mission, B.C.

TORONTO— Farrow Partnership Architects is part of the team selected to design a new complex care community residential centre and campus of care in Mission, British Columbia. Working with VanMar Constructors Inc., through a Design Build Competition, with Vancouver-based associate architects KMBR Architects, Farrow has created a design that evokes an “architecture of wellness” for the facilities, which will be located adjacent to the existing Mission Memorial Hospital in the Fraser Valley.

The building is seen to be the first of its type to be rolled out across British Columbia in the near future.

The campus of care for seniors will be approximately 12,000 square metres with 200 residential care beds for people with complex health care needs, as well as a day program for other adults. A community health centre on the campus will be approximately 2,500 square metres and will feature a range of programs such as primary care, a diabetes clinic, a seniors’ clinic, public health care, mental health and addiction care.

8 BUILDING August/September 2012

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The project, being constructed almost entirely of wood products and to LEED Gold standards, takes its design inspiration from the traditional west coast First Nation sun crest with a combination of threestorey radiating arms organized around the central courtyard sun figure and a pair of two-storey, L-shaped wings located to best integrate with the existing hospital and site conditions. The radiating residential wings follow this path to allow for increased views to the river valley beyond. This layout allows for more daylight to enter the bedrooms as the residential wings move farther apart at the outer edges.

and Suites under one roof. The project contains a south facing rooftop terrace with pool and fitness facilities, together with library and convention services and two levels of underground parking.

In the past 24 months, CMLC has signed land development deals with Vancouver-based Embassy Bosa Inc. and Ontario-based FRAM+SLOKKER for a combined 1.2 million square feet of new mixed-use development in East Village.

In March, the partners launched a coordinated residential sales program, via an 8,000-sq.-ft. destination-styled marketing centre called EV Experience Centre. With Hilton in the mix, there is now over $725 million of planned private investment to the area. Across eight eastern American states and three Canadian provinces, the Widewaters Group hospitality portfolio represents $1.16 billion of investment and over 2,500 hotel rooms.

The exterior central court is seen as the heart of the scheme and acts as both a social and organizing device for the public spaces within each residential unit. Common spaces and clinical areas are grouped together around this central court, allowing for the maximum amount of daylight to enter the public areas while providing sweeping views of a verdant green space for both users and staff and ensuring that the court acts as a wayfinding device so residents can orient themselves to the light and views.

BOMA Canada appoints new president and CEO

CMLC signs third major land deal for master-planned community

CALGARY— The Calgary Municipal Land Corporation (CMLC) has inked a land development deal with U.S.-based commercial real estate development firm Widewaters Group, who will build a 315-room, dual-branded Hilton Hotel along the commercial node of East Village in Calgary.

Situated at the corner of 7th Avenue and 4th Street SE, the proposed $75 million East Village Hilton project is a 208,000-sq.-ft., 14-storey, full service hotel which combines the brands of Hilton Garden Inn and Homewood Inn

TORONTO— David Judge, Chair of the Building Owners and Managers Association (BOMA) Canada Inc., is pleased to announce the appointment of Benjamin L. Shinewald as president and CEO. Prior to joining BOMA Canada, Shinewald served as the Chief Executive Officer of the Canadian Jewish Congress. He has also served as a Senior Analyst with the Privy Council Office in Ottawa and practiced law at Torys LLP. Shinewald earned a J.D. from the University of Toronto, an M.Sc. from the London School of Economics and a B.A. Hons. from the University of Manitoba.

He was named “one of Canada’s best and brightest emerging leaders” by Action Canada and a “young, promising leader” by the European Union.

Brookfield Office Properties makes some management changes

NEW YORK, NY— Brookfield Office Properties Inc. announced a series of changes and promotions to its executive management team: Ric Clark will become chairman of the board of the corporation; Dennis Friedrich will become chief executive www.building.ca

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UPFRONT officer of Brookfield Office Properties; Tom Farley will become sole president of Brookfield Office Properties and continue in his role as global chief operating officer, overseeing asset management, leasing, and property operating initiatives; and Mark Brown will assume Friedrich’s role as global chief investment officer of Brookfield Office Properties, responsible for global growth strategy and overseeing acquisition and financing activities throughout the company’s operating and target markets.

These changes are consistent with the recent announcement

by Brookfield Asset Management of its intention to publicly Ric Clark list its real estate business as Brookfield Property Partners Inc. Ric Clark will become chief executive officer of this entity, relinquishing his role as chief executive officer of Brookfield Office Properties. Brookfield Property Partners will hold Brookfield Asset Management’s interest in Brookfield Office Properties, among other investments.

Chartwell Seniors Housing acquires Allegro Retirement portfolio

MONTRÉAL— Chartwell Seniors Housing REIT, in partnership with Health Care REIT, Inc., has acquired 42 Allegro retirement residences from five Maestro Retirement funds. The homes are located in Ontario, Québec, British Columbia and Alberta with 45 per cent of all homes located in Québec where ChartwellQuébec already has a strong presence.

For example, this transaction includes homes in the Québec cities of Boucherville, Chicoutimi, Drummondville, Gatineau, Jonquiere, Laval, Longueuil, Montréal, Québec City, Sherbrooke, St-Jérôme, Trois-Rivières, and Victoriaville.

With over 186 homes in Canada, Chartwell has become the largest provider of seniors housing in the country, serving over 26,000 residents.

Health Care REIT is the third largest healthcare real estate trust in the United States and this is their first entry into the Canadian market.

Stonebridge Financial closes first infrastructure debt fund

TORONTO— Stonebridge Financial Corporation has closed the Stonebridge Infrastructure Debt Fund I LP and begun

operations, providing private debt loans for the construction and operation of infrastructure and energy assets.

The Fund is a closed-end fund developed in close co-operation with PBI Actuarial Consultants Ltd., and with the support of PPP Canada Inc., and comprised primarily of Canadian pension funds as well as the Business Development Bank of Canada (BDC).

Initial capital commitments for the Fund total approximately $150 million. A subsequent and final closing is planned for the latter part of 2012 to accommodate additional investor interest. “This new fund addresses the shortage of private sector financing available for smaller infrastructure projects,” said Yvon Jeghers, vice president of corporate financing at BDC.

MAILBOX LEED needs a northern standard I was reading your article on the Churchill Northern Studies Centre (Building, April/ May 2012) and found we had a lot of experiences in common with the new facilities we just constructed for Shell Canada. We are in the final stages of a new 34,800-sq.-ft. office facility in Fort St John in the gasfields of Northern British Columbia. The new Fort St John hospital is a LEED Gold building and ours is the first LEED Silver building in this area and both will be ready for occupancy about the same time.

This is the first LEED building we constructed and discovered LEED is not designed for the north. As much as they think everyone should build to their standards, their thinking is not correct for all geographic areas in Canada or the world for that matter. Fort St John sits on some of the largest natural gas deposits in North America, and Shell, being a good corporate citizen, had requested a LEED Silver building to house their new operations in the Peace River District. The challenges and cost for some of these LEED points didn’t always make sense.

We are in the development permit stage of the 65,000-sq.-ft. LEED Gold building for the new Core Storage facility and offices for the Oil and Gas Commission of British Columbia. This will be in our new business park on the fringe of Fort St John on the Airport road leading into the city. We are not connected to City services with gives us a LEED point for onsite sewage waste management. That is about the only easy LEED point we get for being in the North!

There must be a new northern standard for LEED. If our Shell building was constructed in Vancouver we would easily have been designated LEED Gold and possibly Platinum for the same cost as we paid for LEED Silver. LEED is built for cites but if a corporation wants to build a sustainable building where their projects are there should be another tier to LEED, like LEED for Resource Development areas. LEED is excluding the north yet the north is usually where all the new development is taking place.

Bruce Reid, president, WL Construction Ltd.

Domaine des Trembles, Gatineau www.building.ca

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MARKET WATCH Canada’s haute couture streets are a bargain for top-end retailers TORONTO and VANCOUVER— As high-end retailers around the world are reaching deeper into their pockets to pay rent for their prime-location shops, Canada’s top retail strips continue to lease at bargain rates according to Colliers International’s 2012 Global Retail Report.

Toronto’s Bloor Street, the most expensive location in the country, is the only Canadian retail corridor to appear in the top 50 global list, ranked 34th with an average lease rate of US$310 per square foot. While there was a 3.3 per cent increase from last year, the current lease rate is still only a fraction of the rates per square foot recorded on New York’s Fifth Avenue (US$2,633), Hong Kong’s Canton Road and Queen’s Road, Central (US$1,831), and London’s Old Bond Street. (US$1,602). These streets all experienced double digit growth in average lease rates over last year.

“The lease rates in Canada’s most sought-after retail locations say more about our cities than about the local or global economy,” says James Smerdon, director, Retail and Strategic Planning with Colliers International. “Canada’s economy weathered the recession much better than other developed countries and our luxury retail sector has never been stronger. The expansion of Holt Renfrew and the expected entrance of

Rank

1 2 3 4 5 6 7 8 9 10

Bloor Street West, looking east.

Photo by Henry Lin

high-end U.S. department store chains such as Nordstrom and Bloomingdales are testament to this. With high-buying power potential, some underserved markets and low leasing rates, Canada continues to be a very lucrative destination for retailers, developers and investors in the high-end retail niche.”

Canada’s Priciest Fashion Retail Corridors As somewhat expected, Toronto’s Bloor

City, Street

Average Lease Rate *

Toronto, Bloor St.

$310

Vancouver, Robson St.

$150

Vancouver, Alberni St.

$105

Montréal, Rue de la Montagne

$80

Halifax, Spring Garden Rd.

$70

Montréal, Greene Ave.

$60

Victoria, Government St.

$60

Calgary, Uptown 17th Ave.

$55

Vancouver, West Fourth Ave.

$48

Ottawa, Byward Market

$45 * rates are in USD per square foot

10 BUILDING August/September 2012

Market Watch.indd 10

Street retained its status as Canada’s most expensive shopping strip, thanks in large part to new leases and expansions by Louis Vuitton, D&G and Tiffany & Co. Vancouver’s Robson Street (US$150 PSF) ranked second, although it experienced the sharpest decline (25 per cent) in average rental rate over the past year, mainly due to transitions of large tenants. Vancouver’s Alberni Street (US$105 PSF), Montréal’s Rue de la Montagne (US$80 PSF) and Halifax’s Spring Garden Road (US$70 PSF) that saw a dramatic 27.3 per cent hike in lease rates, round out the “top five” Canadian list.

“Looking forward, Canada is developing a Western economic power base with resource-driven economic gains.

This drives both population growth and buying power in the Western provinces,” adds David Bell, senior associate, Planning and Retail Consulting with Colliers International. “As retail properties in these growth regions benefit from the economic prosperity and consumers’ higher incomes, the result will be higher sales productivities that will translate to higher lease rates and higher property values.” www.building.ca

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MARKET WATCH

$700.00 $600.00 $500.00 $400.00 Canada ($US/sf)

$300.00

US ($US/sf)

$200.00 $100.00

ing the productivity gap between the two markets. At the same time, the Canadian per capita retail spending rate is growing steadily, nearly matching U.S. levels hovering around US$12,000.

“The strong fundamentals of the Canadian economy and retail sector in particular have been well noticed by domestic and foreign players,” says Drew Keddy, vice president and national retail

CANADIAN PROVINCIAL PER CAPITA RETAIL SALES — 2011 Province

2011*

CDN Index

Alberta

$15,267

1.29

Saskatchewan

$13,141

1.11

Newfoundland & Labrador

$12,977

1.09

New Brunswick

$12,396

1.04

Nova Scotia

$12,129

1.02

British Columbia

$11,990

1.01

CANADA

$11,863

1.00

Manitoba

$11,778

0.99

Prince Edward Island

$11,379

0.96

Quebec

$11,213

0.95

Ontario

$11,075

0.93

* rates are in USD per square foot

www.building.ca

Market Watch.indd 11

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

$1998

VANCOUVER— Canada will continue to be a retail haven for large U.S. chains and developers from around the world.

According to Colliers International’s 2012 Spring Retail Report, Canada offers developers a stable marketplace with untapped growth potential. Strong mall productivity performance that significantly outpaces the U.S. and growing Canadian per capita retail spending are key factors that help lure global and U.S. investors looking for expansion opportunities north of the border.

The Colliers report notes that over the past year, Canadian shopping malls have been outperforming their U.S. counterparts by almost 50 per cent in sales per square foot. While the average mall performance in the U.S. was slightly above US$400 per square foot in 2011, Canadian malls yielded an average of nearly US$600 in sales per square foot, bouncing back faster and higher from the 2009 recession and further increas-

Canadian vs. U.S. Mall Performance (1997 to 2011)

1997

Canadian retail sector continues to attract foreign chains and developers

leader with Colliers International. “It is no surprise that emerging players from the development side such as Tanger Outlets, Simon Properties, Kimco and even London-based McArthurGlen are establishing a Canadian presence.”

According to Colliers’ analysis, retailers and developers looking for growth opportunities and an increased national presence would be wise to include Western Canada in their expansion plans. The provinces of Alberta, British Columbia and Saskatchewan led all provinces with average annual growth rates of 2.1 per cent, 1.4 per cent and 1.3 per cent, respectively, between the 2006 and 2011 Census years. Add to that, per capita retail sales well above the national average (particularly in Alberta and Saskatchewan, which lead the nation in spending levels) and strong support for further retail development and expansion potential become clear.

“The sheer size and steady growth of both Ontario and Québec will continue to generate the need for new retail supply.

Western Canada, however, represents a critical battle ground for Canadian market share, for both retail chains and developers,” adds David Bell, senior associate with Colliers International. “Strong economic and population growth rates, coupled with a shortage of appropriate space over the short-term ensures the competition for retail space and Canadians’ spending is going to intensify.”

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LEGAL

The Importance of Being Earnest

By Jeffrey W. Lem and Odysseas Papadimitriou

Builders should be wary of setting wildly unachievable closing dates.

T

he vagaries of new home construction mean that the potential for closing delays is almost inevitable in this business. In Ontario, uniform delayed closing rules are built into every new home agreement of purchase and sale entered into in the province, courtesy of the mandatory contract supplements required by the Tarion Warranty Corporation, the province’s new home warranty administrator.

These mandatory contract supplements, commonly referred to in the industry as the “Addenda,” provide a strict protocol on how long closings can be delayed, the mechanics for such delay, and when compensation needs to be paid for such delays.

While the Addenda has always required that a builder “construct without delay,” the Addenda has never explicitly required a builder to be realistic in setting closing dates in the first place, nor has the Addenda specified exactly how forthcoming a builder really needs to be with its customers about the builder’s actual timeline. Well, these questions have now been answered by the Ontario Superior Court of Justice in Jongazma v. Primont Homes (Heritage Hollow) Inc. In the Jongazma case, a homebuyer entered into a purchase agreement in August of 2001 for a new single-family home in Phase 1 of the builder’s new subdivision, with a closing date of May 31, 2002.

Unbeknownst to the homebuyer, just before entering into the purchase agreement with the homebuyer, the builder had acquired some additional adjoining lands, and had just submitted a revised draft plan of the subdivision to the municipality for the development of those adjoining lands concurrent with and as part of its Phase 1 subdivision.

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Every reader of Building understands the business rationale of sweeping these adjoining lands into the current Phase 1, but every reader of Building also realizes that the municipality would not likely permit development on any part of the combined site until the whole combined site was approved. Unfortunately, the builder did not advise the homebuyer that it had resubmitted the plan of subdivision, nor did the builder warn the homebuyer of the inevitable delays.

Greatly paraphrased, under the Addenda (as it then was), the builder was permitted to extend the closing date for a maximum of 240 days, after which the builder could terminate the purchase agreement if the home was still not constructed, so long as the builder took all reasonable steps to construct the home without delay.

In the Jongazma case, the builder waited until two months prior to the scheduled closing date before advising the homebuyer that the home would not be completed on schedule, but the builder did not disclose the reason for the delay.

The builder set a new closing date for

September 2002, even though the builder knew that the new home could still not possibly be ready, even by the extended closing date. On receiving the letter, the homebuyer contacted the builder’s representative and advised that the homebuyer intended to sell his current residence.

The builder’s representative did not warn the homebuyer of the risks of selling his existing home under the circumstances, probably because the builder’s representative did not want to disclose the impossibility of closing even under by revised closing date.

In July 2002, the builder again advised the homebuyer that the home would not be ready on time, even for the September 2002 closing date, and set a new closing date of January 2003. By this point, the homebuyer had already sold his existing home.

The builder did not get approval for the re-submitted plan of subdivision until December of 2002, which coincided with the end of the statutory maximum 240 day extension period. The builder terminated the agreement with the homebuyer, and then resold the same home to another purchaser for an extra $90,000 (some of which was additional upgrades, but most of which was just an appreciation in value over the course of the delays).

The homebuyer sued the builder, and the Court sided completely with the homebuyer, concluding that the builder knew or certainly ought to have known when it signed the purchase agreement that it could not possibly have delivered the home on time in light of the re-submitted plan of subdivision. According to the Court, the builder should have set a reasonable timeline for completion of the home and should have given fair warning www.building.ca

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LEGAL to the homebuyer of the likely delays. At the very least, the builder could have been truthful about what was happening and offered to deliver the house to the homebuyer at the original purchase price. The court found that the builder failed to act in good faith and: (i) stripped the builder of the additional profit; (ii) reimbursed the homebuyer for his additional costs; and (iii) in an extraordinary move, awarded the homebuyer an additional $50,000 in “punitive damages” against the builder as a punishment.

On July 1st, 2012 the Tarion Warranty Corporation introduced amendments to the Addenda that will become mandatory on October 1st, 2012. A key difference from the Addenda as it was at the time that the agreement was entered into in the Jongazma case is that the current Addenda has reversed the option to terminate at the end of the maximum extension period so that it is the homebuyer, not the builder, who gets a 30-day window in which to

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decide whether the purchase agreement gets terminated or not.

Builders should take little comfort in the fact that the new Addenda still does not explicitly require a developer to provide bona fide closing date estimates, since the revised disclosure sections of the new Addenda imply the obligation to set realistic timelines for completion of a new home. More importantly, the Jongazma case tells the industry that, in addition to being honest in setting the closing dates in the first place, if the builder has knowledge of a potential delay in completion, it should inform its customers promptly and honestly of the nature of the delay. The threat of punitive damages, ushered in by the Jongazma case, for builders who ignore such obligations should be more than enough of a deterrent for such business tactics (remember that, in the Jongazma case, the homebuyer appeared to be a “one-off” situation – imagine, however, $50,000 in punitive damages per home

in a fully sold-out subdivision project!).

Nor is the Jongazma case applicable only in Ontario -- builders across the country should take heed since the case did not turn on the Ontario-specific Tarion rules.

Rather, the case was decided on general rules of contractual good faith which are generally applicable across the country -- a reminder of the importance of being earnest, anywhere in Canada!

Jeffrey W. Lem is a partner in the Toronto/Markham offices of Miller Thomson LLP, a national law firm with 11 offices across Canada. Jeffrey is Certified by the Law Society of Upper Canada as a Specialist in Real Estate and can be reached at jlem@millerthomson.com. Odysseas Papadimitriou is an Associate at Miller Thomson LLP, specializing in all aspects of condominium law, including document preparation, compliance issues, operations, and corporate governance.

August/September 2012 BUILDING 13

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≠ THE PRICE AIN’T RIGHT There is nothing wrong with the concept of “development charges” as a means of paying for growth-related infrastructure.

But it’s the way they are structured that is the problem.

M

By Pamela Blais

any cities and towns, having been subject to suburbanization, deindustrialization, or depopulation from falling household sizes, or competition from suburban big box stores, all too often find themselves trying to attract new development to their dwindling downtowns. This takes the form of mixed use buildings, retail and offices, low- or medium-rise apartments, all to return 14 BUILDING August/September 2012

Financial Mistakes.indd 14

people, bring back life, vitality and economic activity. Planning policies and urban design initiatives are aimed at revitalizing downtowns, and financial incentives are frequently put in place to attract new development.

Unfortunately, these well-intentioned initiatives are usually undermined by other powerful financial incentives that are in play in virtually every municipality. These misincentives are not immediately visible or obvious, in that they are buried within existing financial instruments. Nonetheless, they act in a way www.building.ca

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Development Charges

≠that undermines attracting new development to downtown locations, as well as having other negative consequences.

How does this occur? Using development charges as an example, a glance at the two developments in the illustrations begins to explain.

What do these two developments have in common? For one, they are both real developments located in the same municipality.

But more importantly, they both pay the same total development charges (DCs) -- about $5 million each, excluding education DCs. This $5 million is to cover the initial construction costs for infrastructure that will serve the developments.

Why the same fee? Because municipal development charges are typically based on the number of people per unit.

Infrastructure costs related to urban growth are tallied up, then divided by the expected population growth, to arrive at a per person cost. These are then adjusted based on typical occupancy to arrive at a DC “price� for apartments, town houses and single detached units. The two projects shown have the same number of residents, and so are subject to the same level of DCs. www.building.ca

Financial Mistakes.indd 15

But population is not the only factor that affects costs for new municipal infrastructure. Urban form factors such as density and lot size are highly significant in determining infrastructure costs. A hefty body of research has shown the benefits of moving from more dispersed, low density development patterns to more compact, denser, mixed use urban form. Across a wide range of studies, infrastructure costs savings in the range of 20 to 30 per cent have been shown to be associated with more compact development patterns. The effect of urban form is especially pronounced when it comes to network infrastructure costs, that is, construction costs for roads, sewer, water, transit, and storm water management (not to mention operating costs for network services, like road maintenance or snow plowing).

Denser development requires less linear infrastructure per unit. A detached house on a 30 foot lot, for example, requires less linear infrastructure than the same house on a 60 foot lot.

And the multi-unit building form means that infrastructure needs per unit are much reduced compared to grade-related August/September 2012 BUILDING 15

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Development Charges units. This is true for the off-site infrastructure that DCs usually pay for, as well as for local roads and services.

DC prices typically ignore the fact that infrastructure costs usually vary with location in the city as well. In contrast to accommodating growth in new suburbs where all infrastructure must be created from scratch, older downtowns often have existing infrastructure capacity in roads, parks, schools, transit service -- even water/sewer capacity can exist where there has been depopulation and/or deindustrialization. Adding population and jobs here is low cost, can support walking, cycling and transit service, and bring life back to the downtown.

So, the infrastructure costs for the apartment building in the illustration are likely to be significantly lower than those for the subdivision. These urban form effects are ignored in determining DC rates, with both projects charged the same total amount.

And yes, the development charge per apartment is typically already lower than that of the single detached house, because it is assumed that the latter has a higher number of people per unit on average, which it does. But, if urban form factors were properly integrated into the setting of DC levels, charges for apartments would be lower still, and for large lot singles, higher than at present. This would simply and accurately reflect the actual infrastructure costs associated with servicing the different types.

The result is that downtown development — which tends to consist of denser buildings and apartment forms, and is almost by definition on already-urbanized land — is financially disadvantaged courtesy of the development charge. Multi-unit buildings are systematically overcharged through a conventionally-structured DC. The same is true for development on already-urbanized land that makes use of existing infrastructure. In ignoring these considerations, a conventional DC overcharges these types of development.

Equally important is the fact that less efficient development and greenfield development is undercharged by the DC. This problem is inherent to DCs that use average costs per type of dwelling unit as their basis in setting charge levels, while ignoring urban form-related cost factors. The data in the accompanying chart shows what actual development costs would be for single detached units in one Ontario municipality if they were to adopt a zone-based system. In other words, it shows how the actual infrastructure costs covered by the DC vary by location within that municipality.

There are significant cost variations, not only between the already-urbanized Inner Zone versus suburban greenfield locations, but also between different suburban areas. The horizontal line shows the level a uniform city-wide charge for singles would be set at if the city were to adopt that approach instead. If the city did that, development in the older centre (Inner Zone) would be overcharged by about $5,000 per unit, while development in the suburbs would be undercharged by a range of about $1,000 to $10,000 per unit. This would result in distorted price signals that discount greenfield development and overcharge reurbanization.

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$30,000 $25,000 $20,000

Average cost-based city-wide charge

$15,000 $10,000 $5,000 0

Inner zone

Suburb 1

Suburb 2

Suburb 3

Suburb 4

It also creates a hidden cross-subsidy, as the subsidy for the more-expensive-than-average suburban development comes from the below-average cost Inner Zone development.

Through the DC, the efficient subsidizes the inefficient, similar to the Smart car buyer subsidizing the Hummer buyer.

Yet this is the case wherever prices like development charges are based on average costs, but actual costs vary with urban form factors like density and location.

The distorted price signals created by the DC have important implications on the supply side. Inaccurately equalizing DC costs across the city renders developers and builders indifferent to actual cost variations: why build downtown if the DC charge is the same as in the suburbs? An important natural incentive to downtown development that would exist with accurate DCs is lost. The same is true for the price signals to homebuyers, who are the ones who ultimately pay the DC as it is passed along in the sale price of their new home: why buy downtown when it’s not that much cheaper (thanks to inaccurate DCs)?

Due to the DC discounts, demand for inefficient development is greater than would be the case with accurate pricing, while demand for efficient development such as downtown development is less than what it would be. The result is an inflated level of suburban, greenfields and low density development. The total infrastructure bill to the municipality is higher as this inefficient development pattern is subsidized.

In short, by ignoring the impacts of density and location on urban form, DCs create inaccurate price signals that distort decision-making by developers and homebuyers alike. As currently (and typically inaccurately) structured, DCs act against downtown development.

Waiving DCs Many municipalities, having implemented various programs, incentives and planning policies aimed at revitalizing their downtowns, still find that they are meeting with limited success when development fails to materialize. A common response is to waive development charges in the downtown or within other areas where revitalization is desired.

But, as should be clear based on the above analysis, waiving www.building.ca

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DCs in the downtown only deals with one side of the equation.

With the typical uniform DC in place, suburban development continues to be subsidized through the DC itself. So waiving these charges in the downtown creates a situation in which now both forms of development are subsidized – suburban and downtown. For the downtown, it means simply foregoing a charge to cover a cost that didn’t exist in the first place. At best, these subsidies now cancel each other out. At worst, critical municipal revenue is being needlessly forfeited and accurate price signals to developers and homebuyers are obscured.

In fact, exemptions would not likely be needed if DCs were accurately set to begin with.

More Misincentives What’s more, DCs are just one example of the role that public sector financial instruments play in creating pricing distortions that undermine other public sector objectives, such as revitalizing downtowns. Based on assessment, property taxes bear no relationship to the cost of providing municipal services to different types of development in different locations. In this regard they tend to overcharge centrally located, smaller lots and multi-unit buildings. There are many others, including user fees such as for water, hydro distribution, or gas distribution and many homeownership incentives. The lack of charging for public parking spaces is another. Any financial instruments in which prices don’t reflect actual costs, as they vary with urban form and location, will distort price signals and the efficient operation of the market.

In short, the public sector -- and municipalities themselves -- plays a critical role in setting, regulating or influencing price signals around urban development. Unfortunately, when establishing prices such as development charges, property taxes or user fees, municipalities do not adequately consider the impacts on urban development patterns. As a result municipalities find themselves undermining their own planning and economic development objectives, like revitalizing downtowns.

Getting the Prices Right Fortunately, it’s not difficult to fix this issue, and to make public sector prices work in support of downtown revitalization rather than against it. There is nothing wrong with the concept of the development charge as a means of paying for growth-related infrastructure. Rather, it’s the way that DCs are typically structured that’s the problem. In avoiding mispricing and the creation of misincentives, one key principle needs to be applied when developing financial instruments: that prices, be they user fees, development charges, or others, reflect costs as they vary with density, location, or type of use.

This principle can be adopted in practical ways. Where municipal costs, such as those covered by development charges, vary with location, the development charge should vary with location. This means identifying major zones of cost variation within a municipality. Most municipalities will, at a minimum, have two: those older urban areas with infrastructure in place www.building.ca

Financial Mistakes.indd 17

but that have been subject to population and job loss, such as struggling downtowns; and greenfields that require all new infrastructure.

And of course, infrastructure costs vary with density. So should the municipal prices that reflect these costs. For development charges, an easy way to do this is to charge network infrastructure costs on the basis of land area rather than unit type. This not only is a more accurate reflection of how these costs are generated, but it also builds in an incentive to densification -- the more you build on a given hectare, the more you can spread the cost per unit or per square metre of floor area.

Implementing this principle is not technically challenging and need not result in overly complex pricing strategies. The City of Markham, Ont., for example, has adopted an excellent example of a true-cost-based development charge system, with zone-based pricing, and network infrastructure costs-based on land area. Many additional examples of true cost based pricing exist in other municipalities, such as storm water management fees in Kitchener, Ont., to parking fees in Montréal or Vancouver.

Address the Whole Region An important implication of this analysis is that revitalizing downtowns is as much about suburban policy as it is about policy for the downtown itself. We’ve seen, above, that reducing development charges in downtowns is not enough, if suburban development continues to be subsidized.

Downtowns compete with suburbs for development. If public sector pricing means that development in downtowns is being overcharged, and development on greenfields is being undercharged through development charges or other prices, then it is not surprising that the success of downtown revitalization initiatives underwhelms. The failure to price parking across urban areas, including large suburban parking lots, is another key source of disadvantage for struggling downtowns.

Similarly, if easy development opportunities are available in suburbs, but cumbersome rezoning processes prevail in the downtown, there will be a strong disincentive to the former. Municipalities must continuously manufacture ready development opportunities that the market wants in the downtown, in the same way that most municipalities do for suburban development. That means proactively anticipating and planning for development in downtowns and, importantly, limiting opportunities for downtown-appropriate development in competing locations.

Exploiting the outstanding resource that our downtowns represent is key to creating financially and environmentally sustainable communities, and lively, livable places. Making sure that policies and prices are aligned to support this objective is vital to success.

Pamela Blais, PhD, MCIP, is principal of Metropole Consultants, and the author of Perverse Cities: Hidden Subsidies, Wonky Policy, and Urban Sprawl. More information on this topic is available at www.perversecities.ca August/September 2012 BUILDING 17

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REVITALIZING FROM THE INSIDE OUT The downtown redevelopment strategy of Saint John, New Brunswick provides a model for how small cities can position their communities for success through a strategic focus on smart growth and investment to promote quality of place and life.

By Cyndi Rottenberg-Walker and Mark Reid

W

hile urban planning is typically focused on managing growth, it is just as important that we know how to plan effectively in the absence of growth. Today, 80 per cent of Canadians live in cities and rates of urbanization are increasing. At the same time, about 25 per cent of Canada’s smaller cities lost population between 2001 and 2006, which is a pattern occurring in smaller cities such as Saint John, N.B. that are located in more isolated regions. It is clear that cities will be the future drivers of prosperity, and new urban planning models are therefore needed to ensure that Canada’s small cities will be well positioned for the future.

By 2030, net immigration will account for most if not all of Canada’s future growth. Cities that are successful in attracting people will be successful in attracting future investment. With many small cities like Saint John struggling with declining and aging populations, concentrated poverty in inner city areas, aging infrastructure in need of renewal, and expansive geographies, there are challenges to providing high quality of life while delivering services efficiently and remaining economically competitive.

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In January 2012, after a two-year process that engaged thousands of citizens, Saint John Common Council unanimously endorsed PlanSJ, the City’s first new official Municipal Plan in 40 years. PlanSJ sets a bold new vision for the future and an exciting new path towards a more sustainable and liveable city.

Saint John Common Council defined the new Municipal Plan as one of its key priorities and committed the necessary resources to recruit new City staff to lead the project and a consultant team led by Urban Strategies Inc. to collaborate with them in developing a leading-edge Plan.

It Starts At the Beginning Saint John is Canada’s oldest incorporated city and boasts a long history as a leader in urban planning. In 1922, the City was one of the first communities to adopt a “Town Planning Scheme” after New Brunswick led the nation enacting the country’s first Provincial Planning Act in 1912. In 1917, Thomas Adams, widely recognized as the founder of modern city planning, was quoted as saying “…in practical work, town planning has advanced further in the City of Saint John than any other City in Canada.” The City’s 1946 Master Plan also received international acclaim for its visionary urban www.building.ca

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Revitalizing Saint John

of the lowest population densities and the highest infrastructure costs across the country, it was clear this pattern of development was not sustainable. Saint John Common Council determined it was time to engage the community in a new conversation about their City’s future, advancing the practice of small city planning through a process of innovative community engagement designed to stimulate an uncomfortable but necessary dialogue about how the City should evolve. Saint John’s new Municipal Plan establishes a culture of integrated planning across the municipality and lays the groundwork for strategic delivery of city services and infrastructure to support the community’s vision to rejuvenate its Uptown, transform its urban heart and strengthen the City overall.

What’s the Plan?

policies and was selected to represent Canada at UNESCO’s conference held in Paris in 1946.

In the years that followed the City was amalgamated with surrounding municipalities and parishes and a relatively compact city of 36 square kilometers grew to an area of 316 square kilometers, almost 10 times as large. In response to this, the City`s next Municipal Plan, prepared in 1973, planned for aggressive growth based on the expectation that Saint John would become a nationally prominent industrial port.

This growth never materialized yet the City did not engage in another comprehensive planning exercise for almost 40 years, creating major mismatches between a growth-oriented Municipal Plan and actual population decline.

Today, Saint John is a beautiful but challenged city that has been shrinking in population for many decades while continuing to sprawl outward in an effort to compete with adjacent suburban communities for limited population, resulting in more and more municipal infrastructure without the population or revenue needed to sustain it. This pattern has had profound impacts on the City’s structure, leaving behind abandonment and disinvestment in the City’s urban core, while new development on the edges has placed significant fiscal pressures on the City. Faced with one www.building.ca

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PlanSJ challenges traditional notions of economic development and embraces a vision for Saint John to become a great small city where future development and investment is carefully planned to benefit the community as a whole. The Growth Strategy was honest about the levels of growth and change that could reasonably be expected so that the Plan could be focused on the real issues: halting new suburban and rural sprawl and strategically directing most future development and investment within a defined “Primary Development Area” in the Uptown and nearby inner city neighbourhoods.

PlanSJ represents a bold vision for Saint John rooted in a more sustainable and compact growth pattern which will see 95 per cent of future growth directed to a series of urban and suburban “intensification areas” where significant new development can overcome high levels of existing disinvestment, move the City toward more complete and efficient communities, and build upon significant investments the City has already made in municipal infrastructure and services. The Plan is urban focused with more than 45 per cent of future growth, including new employment growth, targeted towards the urban core to make more walkable communities out of Saint John’s Uptown and its socio-economically challenged Priority Neighbourhoods.

PlanSJ’s vision goes beyond traditional land use planning.

Importantly, it tackles fundamental quality of life issues such as the city’s structure and urban design; investment in the public realm as a kick-start for private development in the locations and forms the City is looking for; programming for arts, culture and recreation; linkages with transit and active transportation investment and improved environmental performance. Over the long term, these will be the keys to Saint John’s success.

Not only is Council committed to the plan, but the plan commits Council to a continued legacy of City building through a progressive and regular Plan monitoring program and ongoing neighbourhood-based planning. This “whole community” systems approach will involve strategic staging of investment in targeted neighbourhoods where planning permissions will be coordinated with focused municipal investment and service August/September 2012 BUILDING 19

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Revitalizing Saint John

The Primary Development Area (the bold green dotted line) shows red and orange Opportunity Areas that are appropriate for significant development. The yellow and white areas are places where slow, incremental change in keeping with the concept of complete communities is appropriate. Clockwise from lower left: 1) Before WWII, the development pattern was walkable, with high density mixed-use neighbourhoods such as along Prince William Street. 2) Post war, highways and the 1973 Plan encouraged outward growth and a suburban pattern of low density, singleuse areas with fewer streets and less housing choice. 3) New developments on the edge led to disinvestment and rising vacancies in challenged areas such as the North End. 4) A renewed focus on the downtown has already led to new development, such as Harbourfront Residences at Three Sisters, a new condo on the waterfront. Images

2

courtesy of Urban Strategies Inc. and City of Saint John.

delivery. Future investments will shift from extending new pipes and road infrastructure to such ``quality of life`` investments as renewal of urban parks and streetscapes, and establishing a focus on enhancing transit and active, sustainable transportation infrastructure in the core of the City.

The Plan also protects natural and rural areas, watersheds, parks and floodplains and moving forward, PlanSJ advocates the City take on a more active role in monitoring environmental performance, mitigating climate change and supporting local food production.

A Partnership with the Community One of the primary goals of the PlanSJ process was to follow a collaborative capacity building strategy designed to transfer skills from consultants to City staff, positioning the City team to successfully complete the Municipal Plan and carry forward the next generation of planning at the neighbourhood level.

Council sensed that PlanSJ’s transformative urban policy could represent a complete course-change for Saint John and that this would simply not have been possible without an inclusive, honest and innovative community outreach effort.

The dramatic changes to be achieved through the new Plan would need to derive from and be “owned” by Saint John`s citizens if the Plan is to have lasting success.

As a result, PlanSJ was shaped by numerous milestone community events that marked an inclusive, creative and collaborative community engagement campaign championed

by Council and a citizen-led Advisory Committee that invited fellow Saint Johners to take an active role in shaping PlanSJ. A PlanSJ Storefront in Uptown Saint John served as the hub of the project to bolster community engagement and reach out in creative ways to the community during six key stages of the process that established the foundations of the new Municipal Plan: the Public Launch; Opportunities and Directions; Choices for Growth & Change; Saint John’s Growth Strategy; Putting the Plan on Paper; and “Up for Review: A New Municipal Plan.”

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Implementing PlanSJ PlanSJ has become a guiding document for the City’s entire public service and will be a key tool enabling Council to make choices that are in the long term best interest in the City. All future documents introduced by City staff will correspond to the directions set out in PlanSJ, which is already being actively translated into action. The City’s 2012 Operating budget, service-based planning framework and Capital budgets were established through the lens of PlanSJ. For the first time in the City’s history, the Commissioner of Planning led the City’s Capital Budget effort. An Intergovernmental Affairs Plan is under development to support ongoing coordinated planning between the City, adjacent municipalities, the Province and the federal government to achieve the goals of PlanSJ including new legislative tools to support the City’s re-urbanization efforts. Common Council has launched a review of its Zoning Bylaw to fully implement the vision in PlanSJ and a framework to prioritize neighbourhood plans is due to be presented to Council later this year. More detailed neighbourhood planning will follow, connecting land use planning goals with careful urban design, capital planning and fiscal incentives designed to secure the urban forms of development called for in PlanSJ.

3

Capturing a City’s Imagination and Re-establishing Its Sense of Self PlanSJ has captured the imagination of Saint Johners, instilling renewed optimism and confidence in a community that has so many assets but has long struggled with decline. It demonstrates the power of a Plan in positioning a city for transformative and positive change. Recent census data released by Statistics Canada revealed that the trend towards urbanization is beginning in Saint John. Between 2006 and 2011 the data tracks the first positive growth in population since the 1960s. PlanSJ is a bold community-driven plan that will position Saint John to maximize the benefits of these trends and ensure future growth strengthens the entire community, for generations.

Cyndi Rottenberg-Walker, MScPl, MCIP, RPP is an urban planner and Partner at Urban Strategies.

She has been working in Saint John for over a decade and directed the PlanSJ consultant team. crottenbergwalker@urbanstrategies.com.

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Mark Reid, B.L.Arch, OALA, CSLA, APA is a landscape architect, urban designer and Partner at Urban Strategies. He directs multi-disciplinary teams on a range of projects across North America, such as transit-oriented development, waterfront, downtown and institutional redevelopment, and brownfield and community planning assignments. mreid@urbanstrategies.com August/September 2012 BUILDING 21

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A PRESCRIPTION for GOOD DESIGN

Healthcare institutions face numerous challenges today, including rising costs and growing demands for services. Two new hospitals are aiming to improve the patient experience through the use of evidence-based design.

F

By Rhys Phillips

ew days go by in Canada without a media news story, op-ed piece or editorial about healthcare agonizing over its current bottlenecks, its future viability and, inevitably, its escalating cost. What gets less attention is the significant capital investment across Canada in healthcare facilities taking place. In January, the infrastructure magazine ReNew Canada reported that investments in such projects had 22 BUILDING August/September 2012

Hospitals.indd 22

almost tripled from $6.2 billion in 2009 to $15.4 billion in 2012.

In an earlier Building article (April/May, 2010), we reported that the sector was rapidly and radically transforming its development model. This involved the emergence of alternative funding arrangements or “private public partnerships� (P3s) involving large infrastructure companies as the core of private consortiums that assumed the task of planning, funding, designing, constructing and providing long-term maintenance. www.building.ca

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New Healthcare Facilities

the public healthcare system in Canada is very different from that of the United States, the implications of costs are not. As a result, healthcare facility design in both countries is embracing a patient-centred approach mediated by evidence-based design.

The latter is first directed at what design elements are proven to affect most positively the healing process and second, which ones improve organizational efficiency.

Canada’s two largest healthcare facilities currently under development, Toronto’s Humber River Regional Hospital and Montréal’s Centre hospitalier de l’Université de Montréal (CHUM) are prime examples, not only of P3 development arrangements, but also as progressive examples of hospital design’s paradigm shift.

Alternative Financing Arrangements Take Command

The new 1.6 million square foot Humber River Regional Hospital will be the largest acute care hospital in the GTA and the first in North America to automate all of its operational processes. Construction completion is expected in 2015. Images courtesy of HDR Architects.

It is a trend that has only intensified over the last two years. Of 25 P3 projects in the list of the top 100 Canadian infrastructure projects in 2012, 12 were in healthcare and only the hydro and all-transit sectors (all but one transit project being nonalternative funding arrangements) exceeded the sector for dollars invested.

The robust outlook for healthcare infrastructure investment is in part a function of aging facilities coupled with an aging population; but, it also reflects an aggressive response to an equally radical redefining of how healthcare is provided. Over the last three decades, says architects Richard Miller, Earl Swensson and Todd Robinson in their recently released third edition of Hospital Healthcare Facility Design, there has been a major paradigm shift generated by demographics, technology and most importantly the refocus from a care-provider to a consumer-oriented system. Much of the latter has grown out of the crisis in escalating costs on bottom lines and the failure of such responses as managed care to reverse this trend. While www.building.ca

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In its 2011 report, Breaking New Ground: P3 Hospitals In Canada, The Canadian Council For Public-Private Partnerships indicates there are more than 50 P3 hospitals in operation or development across Canada. The new-build Humber River Regional Hospital, at approximately 1.8 million square feet, will be the largest acute care hospital in the Greater Toronto Area when it opens in November 2015. At a fixed cost of $1.75 billion, it ranks 16th in the top 100 list and second for P3 hospitals. Under Plenary Healthcare Partnership the project has been designed and financed with construction underway.

On completion, the infrastructure consortium will maintain the facility for 30 years although ownership and operation remains public. The partnership includes Plenary Health with HCP Social Infrastructure/Innisfree, PCL Constructors, HDR Architect Associates Inc., Johnson Controls for facilities management and RBC Capital Markets. The Australian-based Plenary Group, which entered Canada only in 2005, now has over $5 billion in infrastructure projects including the almostcompleted Niagara Health Complex. An estimate prepared for Infrastructure Ontario by PricewaterhouseCoopers maintains that the P3 approach at Humber saves $469 million or 19.1 per cent against the traditional delivery model.

Similarly, the downtown and very urban CHUM is a largely new-build complex of approximately 2.4 million square feet. It will continue CHUM’s status as the largest French-language teaching hospital in North America as well as being the centrepiece in Montréal’s emerging health district. The fixed costs for the H-shaped acute care building, the ambulatory/ office tower/ stand-alone auditorium building as well as the 30-year maintenance contract will be $1.97 billion. This makes it Canada’s biggest healthcare infrastructure project and 10th overall. The P3 partnership responsible for the project is Collectif Santé Montréal comprising Innisfree Canada Ltd., Obrascón Huarte Lain S.A., and Laing O’Rourke Corporation Ltd. with Cannon Design and DCYSA as architects and Dalkia Canada Inc. responsible for CHUM’s 30-year maintenance.

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New Healthcare Facilities

Like Plenary, the Spain-based Obrascón Huarte Lain S.A. originates from a P3 pioneer country.

Unique to the project has been its financing. Working with the Royal Bank, the Collectif financed $1.37 billion through the sale of secured bonds. This successful float scored both a North American Project Bond Deal of the Year Award and the Overall North America Project Finance Deal of the Year Award in 2011 from Project Finance Magazine.

Hospitals and the New Healthcare Paradigm As important as these two projects are to the evolution of P3 healthcare initiatives, they are equally significant as state-of-theart paradigm shifts in the design and delivery of health care. While part of an emerging international trend, their inspiration can be traced back to the remarkable triple-punch at the “old paradigm” initiated by Hamilton’s McMaster Medical Centre in 1972.

Designed by Craig, Zeidler & Strong, the futuristic, horizontally organized building centred around four elevator cores employing a long-span, space-frame structure with interstitial space sandwiched between healthcare floors that ensured flexibility and the ability to adapt to emerging plugin/plug-out technologies.

The design also included welcoming atriums with natural light, accessible open courtyards, bright colours, a robust way-finding system and even retail shops. This attention to the possible benefits of a better environmental experience of being in the hospital signalled a second revolutionary shift, the move toward a patientcentred system. The patient was to be considered as a whole person not just a specific illness or injury. “The patient’s psychological welfare was given equal importance with his physical welfare and each patient was to be treated as a VIP,” states the centre’s web page. The physical and organizational environment created

by Zeidler was intended to facilitate collaborative medicine, an approach assisted by the medical school’s internationally imitated problem-based learning curriculum and student selection based not just on marks but also on an ability to work co-operatively and demonstrate empathy with patients.

The third punch came in the 1980s when a McMaster research group led by David Sackett and Gordon Guyatt outlined the methodologies used in what Guyatt would call evidence-based medicine (EBM). In 1996, Sackett defined EBM as “the conscientious, explicit and judicious use of current best evidence in making decisions about the care of the individual patient. It means integrating individual clinical expertise with the best available external clinical evidence from systematic research.” Critics argued, however, that this “objective” approach to treatment tended to marginalize the patients in his or her treatment. Even as late as March 2011, Guyatt and Victor Montori engaged in a public debate at McMaster on the former’s over-prioritization of experimental evidence over the patient’s ability to contribute to the healing process.

It is clear, however, that EBM is now well-past this dichotomy. If EBM, as M. Gupta recently wrote, focuses on www.building.ca

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CSA’S NEW “OUNCE OF PREVENTION” STANDARD CSA Standards has launched the Health Care Facilities Standard, the first comprehensive national standard in Canada to address the complex nature of planning, design, and construction of hospitals and health care facilities from coast to coast. “[This] is the standard for health care facilities of the future – it’s a prescription for improving the health of Canadian patients through efficient design of new hospitals and health care facilities and new additions to existing institutions,” says Bonnie Rose, president, CSA Standards. “Benefits of the standard include greater cost effectiveness, better management of both accessibility and risk to patients, staff, and the public, and the responsible integration of environmental concerns into the design and construction process.”

Before now there was no common national standard for the design and construction of hospitals and other health care facilities. Each health care facility building project undertaken in Canada has relied on the knowledge and resources available to the architects and consultants engaged. This standard sets out requirements and addresses concerns specific to health care facilities, beyond what is contained in building codes and guidelines.

Infection prevention and control is a major concern in health care facilities. According to researchers, Canadian provinces spend just over $3 billion on the 220,000 patients who become infected annually while being treated in hospitals – patients who remain in hospital longer, increasing the financial strain on the system and dependence on increasingly sophisticated and costly antibiotics. CSA’s Z8000 Health Care Facilities Standard aligns with best practice in the U.S. and Europe by requiring single patient rooms and other proven design principles that curb the spread of infectious disease.

The Standard covers inpatient areas, diagnostic and treatment areas, related services within a facility, and even technical and support services. It also provides specifications on everything from occupancy issues, furniture and equipment, to site and facility requirements.

Infection prevention and control, safety and security, and functional services such as food services, communications and maintenance are also addressed. It also applies to all facilities providing health care services regardless of type, size, location, or range of services, including acute care hospitals, inpatient continuing care hospitals, long-term care facilities, community-based providers, leased/rental suites in office buildings, ambulatory care clinics, and outpatient care (e.g. clinics, dentists’ offices, and doctors’ offices).

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what types of treatment ‘really work,’ its advocates now factor in ‘shared decision making’ in which rigorous clinical evidence plays a key role “but where patients, motivated by their own

driving hospital design in both countries and around the world.

The results, Miller et. al. outline in detail, are a myriad of trends in the design of both healthcare and its delivery facilities, not the least being the rise of evidence-based design.

The Evidence-based Design Hospital

Upon entering the hospital, the ability to easily access data and information enables users to connect from points such as kiosks situated throughout the hospital or on mobile devices anywhere in the building.

values, should have final decision-making authority.” Indeed, by 2002, Sackett had amended his definition adding “the patient brings to the encounter his or her own personal and unique concerns, expectations, and values.” This is not simply about mediating science with participatory ethics as, according to Jacquline Vishner and Jon Zeisel, “it has been demonstrated that the opportunity to participate in his or her own care increases the likelihood of a positive medical outcome.”

In the United States, the failure of managed care in the 1990s to stem rising costs led to the emergence of integrated delivery systems (IDS) that turned healthcare into a broader commodity, “an established brand name providing a recognized consumer product.” While the rise of HMOs, and especially doctor-run physician practice management (PPM) to exploit this growing market initially seemed to work, by the end of the decade, it had failed to relieve health care’s cost/income squeeze. What had changed dramatically, however, was a double shift from a care-provider to an insurer to a patient-consumer driven market. And the new consumer was increasingly unhappy with the services provided. An increasingly stressed healthcare profession operated in an aging physical infrastructure where Miller et. al. says, “sick men and women, accompanied by anxious and worried families, arrive at most hospitals only to be greeted by harsh lights, stark corridors, noisy equipment, acrid and unpleasant smells and a cold, soulless expanse of marble like hardness and stainless steel.”

Canada’s public healthcare regime, including hospital ownership, differs radically from that of the United States but many of the challenges do not. Rising costs, aging infrastructure, patientconsumer focus, hospital safety, constant technological advances and changing demographics are some of the key pressures that are 26 BUILDING August/September 2012

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Like evidence-based medicine, J. Stickler has defined evidencebased design as “the use of scientific method to guide design decisions based on empirical knowledge.” Similarly, the architect-founded Centre for Health Design, which has offered Evidence-Based Design Accreditation and Certification (EDAC) since 2009, defines EBD as “the process of basing decisions about the built environment on credible research to achieve the best possible outcomes.” Two central examples of how EBD works include assessing the implications of different configurations of nursing station designs to determine impact on patient time, distance of walking, and access to medications and equipment as well as how the positioning of hand washing facilities impacts on hand-washing behaviour to reduce nosocomial infections.

The authors of Designing to Heal in QJN Reports (2006) succinctly set down five core outcomes of EBD: improved patient outcomes; greater safety; higher patient satisfaction; better staff retention and greater service efficiency (controlled costs). Karen Kroll, writing in Health Care Facilities, pares this down to productivity, employee and patient morale and patient outcome. “A growing number of facility executives, architects and designers,” she explains, “are applying rigorous, peerreviewed studies of the facilities’ impact on patient outcomes (promotes healing, reduces medication errors and shortens the length of the average hospital stay), on the recruitment and retention of employees, and the reduction of operating costs.”

Although EBD hospitals have initial higher capital investments, simulations known as “Fable Hospital” carried out by the Center for Health Design found that savings compensated for the extra cost in only one year of operation.

Cynthia McCullough, is a VP at HDR Architects with a Masters of Nursing and is the senior healthcare consultant on the Humber River Hospital project. She is also the editor of and a contributor to the book, Evidence-Based Design for Healthcare Facilites. In her introductory article she champions the importance of collaboration as part of the EBD process. In a recent telephone interview she emphasized that the P3 process in Canada, with its inclusion of long term maintenance components, encourages infrastructure consortiums to think in long term costs. But it is vital that hospitals have well developed EBD parameters that are built into the tendered proposals to ensure bids reflect the upfront costs of cutting edge healthcare design.

According to McCullough, Humber spent 12 years honing its EBD requirements, including a major Lean Process analysis by GE Healthcare in which tools including simulations were used with extensive client input to develop the most efficient design options for decreasing staff travel distances based on known work www.building.ca

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New Healthcare Facilities

patterns, for responding to evolving community requirements and for incorporating rapidly developing technologies. The Lean Process Improvement process, says Humber project architect and HDR Health Care principal Jerry Jeter, “reduces duplication, decreases non-value-added effort and eliminates unnecessary variation to improve outcomes, throughput and staff satisfaction, all the while driving operational efficiency.”

A review of the expanding but (claim many experts) still not exhaustive EBD literature suggests a summary of five discrete but overlapping functionalities that have driven the design of these two major regional health complexes (the consolidation into such large scale operations is itself a tend). These include: The People Healing Function (patient and family members); The People Working Function (doctors, nurses and staff); The Safety Function; The Technology Function; and The Operational or Cost Function.

Most, of course, overlap. For example, moving from multiple-occupancy to single rooms for acute care has been one of the prime innovations in current EBD for hospitals. At Humber, 80 per cent of rooms are singles, CHUM 100 per cent. Privacy, noise reduction with significantly improved sleep, en suite washrooms and showers, access to natural light and views to the outside, lower stress levels, fewer moves and space to accommodate overnight stays by family care-givers have proven overwhelmingly to promote faster healing and reduce stay times. At the same time, says McCullough, single rooms dramatically improve safety by reducing nosocomial infections, a result supported by carefully situated in-room hand-cleaning stations separated from the patient’s washroom. Falls at night by patients are reduced while overhead lifts further reduce injuries.

As much as possible, the patient’s room becomes the centre for care delivery, a process that helps cut medication errors.

Many of these innovations also impact both the working and operational functions. Reductions in noise, of which single rooms are but one supporting innovation, are very important for both patient and staff satisfaction. Reduced levels of patient and family stress and lifts also improve working conditions. In addition, the creation of multiple care delivery centers (such as 10 nursing stations on each H-shaped acute care floor of CHUM) with localized medication storage, reduces walking distance, increases with-patient time and further reduces medication errors. All result in less staff turnover, fewer costly mistakes/infections and shorter in-hospital patient stays.

Andrew King, Cannon Design’s principal design architect for CHUM, says “the patient and to some degree the nurses are the primary drivers in current hospital design.”

Structurally, both hospitals are designed with flexible structural grids that reflect how technology is most efficiently distributed throughout the hospital. For example, says Jeter, Humber’s high load areas are placed near emergency care facilities as that is where equipment is most needed. King points out there now exits a considerable body of research on designing with the universal grid and creating highly flexible structural armatures and www.building.ca

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simplified circulation, all topics that Cannon, recognized as one of the world’s top hospital design firms, lecture on internationally.

By grouping clinical services in flexible modules around acute care rooms, the EBD principle of minimizing patient movement by bringing services to the patient is respected.

Within this structure, circulation and public spaces are important in the EBD hospital. First, there is a clear separation of functions so that acute care, emergency services, outpatient clinics, and so on, all has what McCullough calls “clearly defined portals of care, that are separate but internally linked allowing family and patients to move easily from one to the other as necessary.” Clearly understood adjacencies are reflected such as how an emergency patient may flow from one component to another. Legible way-finding within these large complexes, she adds, is one of the key components of EBD.

Humber River and The Digital Hospital Situated on a relatively tight 24-acre suburban Toronto site, Humber looks not unlike a sleek modern airport. A smartly detailed four-storey podium with a green roof stretches along Wilson Avenue, punctuated by a long, hard and soft plaza.

Portals for the emergency services and other outpatient clinics flow off this space. On the other side facing Highway 401, however, another long, elegant podium with various street entrances to the acute care lobby resembles an airports arrival and departure façade. This “portals of care model provide[s] efficient, curbside access to ambulatory services” says Humber communication specialist Sarah Quadri Magnotta. Spacious, heavily glazed linear lobbies are cheerful, filled with natural light, boast varied materials and have open staircases to second levels. Sandwiched between the pavilions is an airport-like hotel tower with 656 acute care beds.

This image is no accident. Like airports, there is an advantage to being welcoming, light-filled and planned with easy to

Green design is realized by maximizing daylighting opportunities, orienting the building to minimize heat gain, using sustainable materials and high-performance building systems, and incorporating green roofs on 50 per cent of the roofs throughout the campus.

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understand way-finding. There are even freestanding kiosks at which patients can check-in for their stay as well as obtain information and directions. As the check-in proceeds, patient records are automatically updated, television and telephone services in the patient’s assigned room are activated and the full care team is informed of the patient’s arrival. Bedside computer screens will allow patients or a family caregiver to control the room’s environment such as lighting, window shading and room temperature as well as allow food to be ordered. There will even be access to multi-language educational materials.

This is just part of Humber’s intent to be the first fully digital hospital in North America. “Smart beds,” explains Magnotta, “will constantly monitor a patient’s vital signs, activities and automatically upgrade their electronic healthcare record,” while the patient will be able to tap into his or her electronic health record to access test results, images and examination schedules. Doctors can update medical files onsite through voice recognition technology, a process that helps minimize mistakes, improves care and reduces the clerical load. Digital information technology coupled with as much automation as possible, says McCullough, significantly reduces both redundancies and risks. In line with the collaborative nature of evidence-based medicine, patients “can also collaborate with their care providers using social networking tools such as instant messaging and video conferencing,” says Magnotta, or stay in touch with family and friends.

Humber will also employ driverless Automated Guided Vehicles (AGVs) for the delivery of supplies including informing need-to-know staff when deliveries are made, along with a pneumatic chute system for garbage and dirty linen thus reducing staff travel by approximately 140 miles per day.

CHUM – Big, Beautiful and Urban CHUM intends to retain its status as an elite teaching and research hospital. And with its 100 per cent private acute care rooms incorporating evidence-based design principles including patient control technology, decentralized care stations, separate but connected care portal access and comfortable support spaces for patient families, achieving that goal seems likely. But Montréal is also arguably Canada’s most exciting urban design and public architecture city. The new facility, therefore, has an important civic role to play. While CHUM’s design may be patient-care driven, says King, “the hospital explicitly had architectural aspirations and we were given a mandate to ensure it provided value-added to the city.”

The first phase, to be completed in 2016, includes the 772 bed, 21-storey H-shaped acute care tower as well as 85 per cent of the separate but linked ambulatory wing to the north. The latter pushes its circulation out along its fully glazed eastern wall thus providing vista views of the city and, not incidentally, supporting orientation. Along Rue St. Denis, strong steps have been taken to mediate what is in fact a large object facing into a much more fine-grained community by breaking CHUM into four discrete 28 BUILDING August/September 2012

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One of two major hospital networks in Montréal, CHUM will have 770 single-patient rooms over 2.5 million square feet of space on three sites covering two city blocks. Phase one completion is expected in 2016. Image courtesy of Cannon Design.

and very differently conceived elements. The tower’s east wings embrace a very transparent, glass-box podium containing operating, diagnostic and therapeutic functions. Not incidentally, it also encases the rebuilt stone façade of Garth House (1871). In what King calls “a painterly exercise,” the tower boasts a lively skin of narrow, vertically striated panels of high performance metal, translucent fritted glass and opaque spandrel panels.

When phase two is completed in 2019, the recessed ambulatory wing will connect on the north to a similarly clad, narrow office wing. On its St. Denis end, this wing sits on a boldly expressed black granite block that will contain CHUM’s library.

The various elements are deftly composed into a unified urban focal point, an east facing U-shaped public plaza. In this agora sits the last and most expressive component of phase two, a striking, sculpted stand-alone auditorium clad in the city’s signature copper. “Not only is this material emblematic of the city,” says King, “its slow transformation to green speaks to a commitment over time, that architecture has life and a time relationship with the city.” The plaza also acts as the main entrance to the various care portals through a light-filled atrium.

Considerable care went into ensuring a circulation system that is clear, minimizes long trips and provides easy reference to the city yet separates the different services.

In a final quixotic gesture, the restored freestanding Gothic church tower of the demolished l’eglise Saint-Sauveur (1865) at the south corner acts as a bookend to the library on the north corner. “When one opens a hospital to culture,” says CHUM’s Director General Christian Paire, “one dedramatizes the place. We give back to the patient an identity that has been bruised by illness.”

While both hospitals exhibit unique individual qualities, both are excellent examples of how evidence-based design can go hand-in-hand with strong architecture and intelligent urban design. www.building.ca

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GREENING MIES A mid-century downtown Toronto icon gets a 21st century upgrade

By Peter Sobchak

L

udwig Mies van der Rohe’s aggressively urban masterwork, the Toronto-Dominion (TD) Centre, has long been both praised and panned for a strict adherence to tight geometry and machined materials that showed modernism’s dominance over nature. But now, it seems, nature has been able to reclaim at least part of the complex, because on the roof of the one-storey Banking Pavilion, built in 1968 at the corner of King and Bay Streets in the heart of Toronto’s financial district, TD Bank Group and Cadillac Fairview have installed a Living Roof.

But nature’s feral qualities have not been given free reign. Instead, the TD Living Roof system uses plant material growing in an aluminum structured grid specifically designed to keep the heritage aspect of the Miesian grid pattern seen on the ceiling of the inside of the pavilion, which serves as a TD branch. The Living Roof covers most of the 22,000-sq.-ft. roof and is made up of Creek Sedge Grass, an evergreen native plant species hardy enough to thrive in the Toronto climate and tolerant to the shade conditions of the Pavilion roof, which was in need of replacement. Upgrading to a living roof cost only 25 per cent more than a conventional roof, and it did not require any structural upgrades due to the original design and loading capacity of the existing roof.

Living Roof layers and additional insulation installed as part of the re-roofing doubles the R-value of the original roof to R-20.

While not open to the public, it is nevertheless visible to the approximately 10,000 people who work in the surrounding office towers, giving TD a nice bit of green marketing. The idea itself was inspired by TDC Green Council, the advisory group for occupant engagement and sustainability at Toronto-Dominion Centre.

“The Green Council is made up of tenant representatives who act as the advisory group for developing and driving TDC’s engagement program, acting as the catalyst for sustainability,” said David Hoffman, general manager of the Toronto-Dominion Centre.

“Since its establishment in February 2010, the Green Council has made it clear, through their commitment to action, that sustainability is a core value of TD Centre tenants.”

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VIEWPOINT

SHARPE THINKING

P

eter Sharpe’s career in real estate started one evening over a beer at the Victoria Hotel in Toronto.

Almost 40 years later, in December 2010, he retired as president and CEO of Cadillac Fairview Corp.

Ultimately, he says, “Real estate was a great fit for me.”

Born in Winnipeg and growing up in Toronto, Sharpe credits an early job as waterfront director at Camp Kilcoo, near Minden, Ont., as key in developing early leadership skills. Camp owner John Latimer and Sharpe’s father Len were major influences, “teaching me a lot about patience, calm and respect for people.”

After studying economics and business administration at Waterloo Lutheran University (now Wilfred Laurier University), he got involved in a training program with the Royal Bank. But the salary was low, and he was looking for more money and more opportunities. He joined a public relations/promotion firm responsible for the World Curling Championships and while that was fun, the firm was small and didn’t offer him much of a future.

He knew that ad agencies and promotion wasn’t where he wanted to be. So when he and an old friend who was working for Marathon Realty, the real estate division of CP Rail, met for a beer and his friend mentioned that the company was looking for a property representative, Sharpe asked what the job involved and how much they paid. $12,000 annually, Peter Sharpe he was told. “Well,” said Sharpe, “I can do that.”

He was hired to manage a building at 69 Yonge Street, in Toronto. But the company was growing and he moved up quickly, eventually managing the Ontario properties portfolio.

He then went to York Hanover, which was developing Maple Leaf Square in Niagara Falls, Ont. “That taught me different skills,” he says. “That’s when I really learned to appreciate the tie between building something, renting it and getting income and paying salaries. And if that wasn’t working, it was really hard to deal with the bank.”

Sharpe left York Hanover in 1979 to work briefly for Prime Minister Joe Clark in Ottawa (an extension of his volunteering during the 1970s for Conservative candidates including Bill Davis, Robert Stanfield, Clark and Brian Mulroney). While short, the job resulted in contacts that “kept popping up all through my business career.”

He joined Fidinam Realty to manage Toronto’s Hudson Bay Centre, becoming vice-president operations before being 30 BUILDING August/September 2012

Viewpoint.indd 30

Peter Sharpe, former president and CEO of Cadillac Fairview, never intended to get into the real estate business. But after almost 40 years, he says it was a great fit. By Sheri Craig

recruited by Cadillac Fairview (CF) in 1984 as vice-president of operations for the company’s office portfolio. CF was then in the process of unloading its residential holdings to concentrate on North American office buildings and shopping centres, and was going through a financial restructuring with the Bronfman family through its holding company, Cemp Investments, selling its interest.

The 1980s were boom times. “We were all building shopping centres, office buildings. [But] then the bubble burst. We saw it first in retail because retail responds more quickly to a downturn,” says Sharpe. “Those were tough times. We were dealing with individuals whose whole lives were tied up in their businesses. [It taught me] about being honest and open and frank but also about listening to people. Down the road, a lot of those people came back to do business with us.”

Markets began to improve in 1997, and the company went public again until 1999 when negotiations began with the Ontario Teachers’ Pension Plan, of which CF became a whollyowned subsidiary in 2000. At the same time, Sharpe was name president and CEO. “We kept running ourselves as a private company. They were extremely hands off,” he says. “Of course, the company did well. If it had been tougher times, it might have been different.”

CF now develops and manages office properties and regional shopping centres in Canada and the U.S.as well as international investments, real estate companies and investment funds. The company and its affiliates own and manage about 48 million square feet of leasable space at 85 properties across North America -- a portfolio worth more than $20 billion.

It has partnered with Multiplan, a major shopping centre developer in Brazil, and invested in the U.K. “We were very interested in South Africa but outbid there, looked at India and Mexico but weren’t comfortable,” Sharpe says, adding that he’s a great believer in the need to achieve a level of confidence and trust. “There needs to be some chemistry.”

When asked what advice he would give young people coming into the business, he says, “It’s a relationship business. You’re dealing with people whether in your company or in other companies. And you have to be open and honest in all your dealings.

At the end of the day, all you’ve got is your reputation and if integrity is part of that relationship, it will all work out.” www.building.ca

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