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NATIONAL OUTLOOK

RHB EDITION

a vital new part of RHB Magazine By David Gargaro National Outlook, the newsletter for the Canadian Federation of Apartment Associations (CFAA), is becoming a regular component of Rental Housing Business Magazine (RHB). Since late 2011, CFAA has partnered with RHB to publish news, profiles, features and information of interest to members of the rental housing industry. Incorporating National Outlook into RHB Magazine further solidifies this partnership and provides readers of the magazine with additional news and insights to members of the rental housing industry. I sat down with John Dickie, President of CFAA, to learn more about National Outlook and discuss the ramifications of marrying these two publications. RHB: What is National Outlook, and what will it become? JD: National Outlook is the official newsletter of the CFAA. Until now, National Outlook has been published quarterly, and distributed electronically to members of CFAA member associations across Canada. Going forward, National Outlook will become a regular component of RHB Magazine (rather like a supplement), and will be published six times per year. It will be sent by mail to readers of the magazine, including many members of the rental housing industry who do not currently receive National Outlook. CFAA will also publish an electronic version of National Outlook six times per year, which will provide information that adds to what is published in the printed version. continued on page 3

Inside this edition Housing allowances being expanded into new areas In National Outlook (electronic edition) Available at www.cfaa-fcapi.org

CMHC lending status Population changes affect rental demand Up-coming provincial elections New BC apartment association leaders

CFAA leads new coalition for energy retrofit tax reform CFAA’s key political goal is to achieve tax reform for the rental housing industry. We are seeking tax deferral on sale and reinvestment, an end to the tax bias in favour of homeowners, HST reform, and other measures to improve the tax position of rental housing. On some of those issues we have allies in the real estate sector, and allies certainly help since many politicians do not see measures that help landlords as great vote getters. Recently CFAA turned its attention to the tax treatment of major energy efficiency retrofits. According to the income tax rules, improvements in a building need to be added to the building’s capital cost, and claimed through capital cost allowances (CCA). At a maximum CCA rate of 4%, that is a much less positive tax treatment than claiming repairs as operating costs. continued on page 6

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NATIONAL OUTLOOK

RHB: What types of articles will be included in National Outlook? JD: National Outlook covers political developments and policy issues that are important to rental housing providers, landlords and investors in rental properties. For example, National Outlook includes commentary on reforms proposed for CMHC, and articles on how tax reforms in the rental housing industry can help the economy. National Outlook also publishes key news about apartment association activities across Canada. RHB: How will National Outlook differ from the rest of RHB? JD: National Outlook and RHB could cover some of the same topics. However, National Outlook will delve more deeply into political and policy issues, and matters that have a long-term effect on the rental housing industry. For example, the current CMHC mandate review will not have a shortterm impact on rental housing providers, but it will likely have significant long-term implications, and National Outlook will discuss those impacts at length. National Outlook will also report on the national implications of provincial or regional events and issues. RHB: Why is National Outlook a good fit for RHB Magazine? JD: National Outlook will provide useful, in-depth content on issues that property owners, property managers and investors in rental housing need to know about. National Outlook’s mandate is to provide readers with information that is good for them and their business. RHB’s mandate is to provide readers with information that they want to read. RHB is the steak and french fries; National Outlook is the broccoli and baked potatoes. RHB: What benefits does National Outlook offer to readers of RHB? JD: National Outlook focuses on upcoming issues that impact the rental housing industry, and provide details on how CFAA is working to amend regulations to benefit people working in the industry. It also reports on regulatory amendments and changes that help or hinder landlords. For example, many landlords and property managers want to reduce their buildings’ energy usage, so they’ll install energy-efficient boilers and energy control systems. However, they are often limited by their buildings’ structure, especially when the buildings were built 40 or 50 years ago. Due to high retrofit costs, it might not be economically feasible to install the most energy efficient equipment, so they need to be able to install boilers with

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slightly lower energy efficiency so that the whole project is also cost effective. However, the federal government imposes restrictions on types of boilers that can be used, and can require higher energy efficiency even though the needed retrofit makes the project less cost effective as a whole. National Outlook reports on what CFAA is doing to address such issues and protect landlords’ interests. In contrast, RHB will report on the program changes once they have been made. RHB: What are your goals for National Outlook and RHB? JD: CFAA wants to reach out to more landlords and rental housing suppliers than the current readership of National Outlook. We want RHB (and now RHB – National Outlook) to be the only recognized national trade magazine for the rental housing industry. National Outlook will be a valuable component of the magazine by providing landlords and members of the rental housing industry with valuable information about issues that will affect their future, thereby improving their ability to engage in long-term planning. We want to address housing policy issues and federal policy changes that affect all landlords. We also want to get landlords involved, challenge their thinking and get input from them on topics of concern to the industry. RHB: Why should rental property owners and managers read National Outlook? JD: Besides addressing the issues that will affect them over the long term, rental owners and managers should educate themselves on what the government is doing that will affect their businesses. Rental properties provide housing for 8 million Canadians, a good portion of whom fall into the lower half of the income spectrum. Rental housing is an important service that does not get the same respect as other essential services. Property owners and managers should be aware of the issues so that they can become a part of the growing chorus of voices demanding respect for the rental housing industry. RHB: Why should industry suppliers advertise in the National Outlook section of RHB? JD: Forward-thinking rental housing owners will read National Outlook, and they will consistently look for ways to improve their business in areas of operations, financing, investments and supplies. They will make changes to their business when there is room to improve, and that includes finding new suppliers who can help them to achieve their goals. RHB readership is increasing with every issue, and so being part of a well read and sourced section of the magazine is good business.


NATIONAL OUTLOOK

RHB: What does CFAA offer through National Outlook? JD: CFAA provides greater insight into how the federal government affects the rental housing industry. Many people are unaware of how much influence the federal government has on our industry. Besides the onerous federal income taxes, all provinces except Quebec use the federal income tax rules to levy their income taxes. The federal government controls CMHC, which is of vital importance to the rental housing industry. The federal government determines national housing policy, and how housing money can be used. Its housing program agreements with the provinces often drive or limit their decisions. Until recently, the federal government directed housing funding to the construction of subsidized housing instead of direct assistance to tenants. CFAA succeeded in getting the rule changed to enable the provinces to use federal money to assist low-income tenants directly. That supports or underpins the private rental market, whereas funding new subsidized rental construction reduces the demand for private rental housing, and undercuts the private market. CFAA will use National Outlook, and RHB, to address other major issues that arise in the future. National Outlook and RHB will help CFAA to reach a larger audience. Getting more people in the industry involved and educated about the necessary messaging will enable the rental industry and

CFAA ALLIED MEMBERS: Gold Gottarent.com My Ideal Home Network RHB Magazine

Rogers Communications Yardi Systems

Silver Cohen Highley LLP Excel Collection Services Noble Building Maintenance Supplies

Pattison OneStop Places4Students.com Visa

Bronze Bentall Kennedy (Canada) LP H&S Building Supplies Rent Check Credit Bureau

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CFAA to influence the federal government to make policies that are better for rental housing. RHB: Why did CFAA partner with RHB? JD: RHB provided CFAA with the opportunity to get our message out to the broader landlord community. RHB reaches nonmembers, suppliers to the rental housing industry and members of CFAA (and other associations) who do not necessarily pay enough attention to the new developments affecting the industry. RHB Magazine is now the one definitive national trade magazine the industry needs and has always wanted. RHB: What does the partnership between RHB and CFAA mean to the rental housing industry? JD: This partnership allows for much better communication between CFAA and landlords, as well as other members of the rental housing industry. We believe RHB will become the one national forum for landlords as the magazine grows and adds new content and features. For example, we want to include news of people moving between provinces and companies in the industry. We plan to invite landlords and other interested members of the industry to write letters to the editor and express their views. RHB: Why should members of the rental housing industry join CFAA? JD: People involved in the rental housing industry who care about national issues, such as the impact of changes to CMHC and income taxes, should join CFAA. By increasing CFAA’s membership, the rental industry will be able to grow its voice and have a greater influence on the government. In turn, that will help to achieve policy and tax reform favourable to the rental industry. A larger membership will mean more resources to lobby the federal government, which will result in a better regulatory, tax and operating climate for members of the rental housing industry. As president of CFAA, I have found that we have had the greatest impact on moving the government to more favourable decisions when the government has already started making reforms that affect the rental housing industry. For the future, CFAA wants to be able to influence the government to address policies that they have not already decided to reform. Growing our membership and strengthening our voice will improve our ability to communicate our members’ needs and change government policy. When landlords approach the government individually, their messages are often in conflict and can easily be ignored. To achieve real and positive change, there must be one national voice representing the rental housing industry at the national level.


NATIONAL OUTLOOK

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Some green energy work can be included in CCA Class 43.2, and effectively be claimed against taxable income over four years. Gaining that tax treatment would be very good for rental housing providers, as well as for energy retrofit providers, and the environment. To seek that reform CFAA has brought together the Building Energy Efficiency Coalition (“BEEC”) which currently consists of the following groups: s #ANADIAN &EDERATION OF !PARTMENT !SSOCIATIONS s !SSOCIATION OF %NERGY %NGINEERS s #ANADIAN #ONSTRUCTION !SSOCIATION s #ANADIAN )NSTITUTE OF 0LUMBING AND (EATING s %NERGY 3ERVICES !SSOCIATION OF #ANADA s 2ENTAL 0ROPERTY !SSOCIATION OF #ANADA 2%!,PAC s 4HERMAL )NSULATION !SSOCIATION OF #ANADA More environmental and energy groups are expected to join the CFAA-led coalition shortly. CFAA is also seeking the involvement of several labour unions, since the reform would be good for job creation in the energy retrofit sector.

CFAA received critical assistance from the Toronto Atmospheric Fund (TAF) to prepare the detailed reform proposal and to bring together the coalition. As structured, the proposal should not reduce the government’s total tax revenue; the savings to landlords come from lower energy consumption and lower energy costs, which creates a win-win situation for the rental industry and the government. Revenue neutrality is a critical part of seeking tax reform in the current deficit-fighting environment. Moving forward, CFAA and other BEEC members will meet with officials in the Department of Finance and in Natural Resources Canada, as well as with Members of Parliament and the government’s key decision makers. For the full proposal, go to CFAA’s website at www.cfaafcapi.org. Click on the proposal under either “Recent news” or “Submissions to government”. CFAA will continue its advocacy for federal measures to help the rental housing industry to become more environmental friendly, more efficient, and better able to provide quality rental housing to Canadians, while increasing profitability.

Housing allowances being expanded into new area For many years, CFAA and most provincial apartment associations have advocated for government housing money to be spent on direct assistance to tenants, such as portable housing allowances. In our view, such assistance has many advantages over subsidizing rental units, and tying subsidies to the occupancy of the subsidized units. Advantages include s THE ABILITY TO HELP MORE TENANTS FOR THE SAME COST s mEXIBILITY s SPEED IN BEING ABLE TO PROVIDE ASSISTANCE s GREATER LABOUR MARKET ATTACHMENT AND MOBILITY s AVOIDING STIGMA s ACHIEVING INCOME MIXING AT MINIMAL COST Direct assistance to low-income tenants also supports the private rental market, rather than undercutting it. Thanks to CFAA’s advocacy work, many advocates and governments across Canada are now looking at direct assistance to tenants as the preferred policy approach for new housing subsidies. The focus of the new programs to reduce homelessness is “Housing First”, and with shortages of supportive housing, policy makers are moving to provide social service and metal

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health supports in private market rental housing supported by financial subsidies. It is positive that governments are waking up to the advantages of portable housing allowances in delivering financial support for housing. However, the new emphasis on housing allowances as a delivery mechanism for Housing First for the homeless carries risks. CFAA and provincial apartment associations focussed on portable housing allowances as the best way to delivery support for the vast majority of people in housing need, who just need financial support to meet their other needs and their obligations as tenants. The new programs are using housing allowances for people who need both financial support and mental health (or social service) supports. Advocates for portable housing allowances need to be clear that other issues are involved when recipients need mental health (or social service) supports. When significant supports are needed, congregated supportive housing may be the more effective approach. As these issues are worked out, CFAA will continue to advocate for housing policy that is beneficial for low-income tenants, for taxpayers and for the rental housing sector.


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