RHB Magazine Nov 2018

Page 1

Vol. 11 No. 5 November 2018

Canada’s #1 most widely read publication for Apartment Owners, Managers and Association Executives

The official publication of:



Canadian lenders discuss financing options in the rental housing industry.

Associations’ views on recent elections Members of landlord associations across Canada weigh in on the results of recently concluded municipal and provincial elections.

Cannabis and the workplace Recreational cannabis use is now legal. Does your workplace have a policy that covers drug use and abuse?











Canada’s new poverty reduction strategy The new Official Poverty Line addresses various living costs in different areas, which are largely due to differences in rents.


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EDITOR’S NOTES What’s your obsession? About a month ago, I attended Scriptus, which is Toronto’s annual pen and writing show. It features vendors of fountain pens and other writing instruments, notebooks, inks, paper goods, and many other writing-related goodies. I did not know such an event existed just three years ago, and now I make sure to attend every year. I have a thing for fountain pens – a relatively new interest / obsession. I could not spend as much time there as I wanted, but I did get to buy some ink, and learned that a lot of other people are really into fountain pens. So I’m definitely not alone on this front. This month’s issue of RHB Magazine includes a fascinating RENTT panel on financing for the rental housing industry. We brought together lending experts to discuss the criteria for providing loans for rental housing construction, how lending for rental housing differs from lending for condominium or office developments, innovative financing options, the impact of increases in interest rates, and comparing different lending options to governmentbacked lending options.

Co-founder, Publisher

Marc Côté marc@rentalhousingbusiness.ca

Co-founder, Director

Juan Malvestitti juan@rentalhousingbuisness.ca


David Gargaro david@rentalhousingbusiness.ca

Contributing Editor

John Dickie, President CFAA jdickie@rentalhousingbusiness.ca

Senior Graphic Designer Kyu Shim

A previous issue covered the topic of legalizing recreational cannabis in Canada. This issue looks into the importance of having a policy that covers legal and illegal drug use and abuse in the workplace. We also talk to landlord associations across Canada to get their views on various municipal and provincial elections that took place over the last month or two.

Director of National Sales

Make sure to read to the end of the magazine, where you’ll find CBRE’s Toronto market overview. And, of course, check out CFAA’s newsletter, National Outlook, as well as the Regional Association Voice.

Office Manager

RHB Magazine would like to welcome a new member to the family – Kyu Shim, Senior Graphic Designer. Kyu is an accomplished artist, as you can see by the wonderfully hand-drawn cover and spread. And if you have any comments or questions, send them to david@rentalhousingbusiness.ca. I look forward to hearing from you. Enjoy the issue! David Gargaro

Enjoy the issue! David Gargaro Senior Editor

4 | November 2018

Nishant Rai

Regional Sales Executive (RAV) Ranjna Bhardwaj

Geeta Lokhram


One year $49.99 Cdn Two years $79.99 Cdn Single copy sales $9.99 Cdn Opinions expressed in articles are those of the authors and do not necessarily reflect the views and opinions of the CFAA Board or management. CFAA and RHB Inc. accept no liability for information contained herein. All rights reserved. Contents may not be reproduced without the written permission from the publisher. P.O. Box 696, Maple, ON L6A 1S7 416-236-7473 Produced in Canada All contents copyright © RHB Inc. Canadian Publications Mail Product Sales Agreement No. 42652516







Visit our website for complete warranty details

rentalhousingbusiness.ca | 5

VOL.11 NO.5 2018

CONTENTS Cannabis and the workplace Recreational cannabis use is now legal in Canada. If an employee comes to work impaired, does your HR department have a policy in place to deal with this issue?

RENTT: Financing in the rental housing industry

In this month’s issue, we asked our esteemed RENTT (Rental

Executives National Think Tank) panelists to provide their views and experiences with financing for the rental housing industry.

Associations’ views on recent elections

RHB’s forum for rental housing associations to share news, events and industry information

Hot Topics: EOLO provides brief bios on the new members of the City of Ottawa’s council following the municipal election, and lists key EOLO issues. pg. 45 HDAA talks about recent events, including the October Education seminar, Board elections, toy drive, welcoming the new president of FRPO, and licencing. pg. 49 LPMA provides tips on preparing for winter, and discusses how London Hydro helps LPMA members to reduce their carbon footprint. pg. 53 WRAMA gives its feedback on the municipal elections and discusses secondary suites. pg. 57

The Member Associations

Regional Association Voice Regional Association Voice features the latest industry news from four member associations.

Hans Brouillette, Director of Public Affairs, Associations’ views on recent Several provinces recently concluded municipal CORPIQ elections, while New Brunswick and Quebec had elections Willy Scholten, President, New Brunswick provincial elections. While incumbents ruled the

Owners Association (NBAOA) Members Apartment of landlord associations Britishprovide Columbia across Canada their thoughts on the results of have recently completed RHB: Do you any comments about the candidates who won the key positions? municipal and provincial elections.

day in some areas, huge changes swept through various levels of government, putting new people in power. What does this mean for landlords and the rental housing industry? RHB Magazine spoke to a number of landlord associations across Canada to get their views on the results. Association Respondents: David Hutniak, CEO, LandlordBC Daryl Chong, President and CEO, Greater Toronto Apartment Association (GTAA) Arun Pathak, President, Hamilton District

6 | November 2018

David (LandlordBC): The recent election financing reforms reduced the financial threshold needed to support a candidacy, which meant that a significantly larger number of candidates could run for both mayor and council. This was especially apparent in Vancouver where there

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PRESIDENT’S CORNER On November 6, 2018, the Poverty Reduction Act was introduced in the House of Commons. Since renters make up the bulk of people living in poverty, this Act is sure to help low-income tenants. It should also make life easier for the rental providers who provide their housing. Released in October, Canada’s First Poverty Reduction Strategy, “Opportunity for All”, aims to reduce the poverty rate from its 2015 level by 20 per cent by 2020, and by 50 per cent by 2030, using the pillars of Dignity, Opportunity and Inclusion, and Resilience and Security. The Poverty Reduction Act will create an Official Poverty Line, which Canada does not yet have. The Official Poverty Line will be calculated using the estimated cost of a basket of essential goods and services. Critically, it will recognize the different costs of living in different locations. CFAA made a submission about poverty reduction strategies to the Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities in March of 2017. CFAA advocates the use of portable housing benefits to help reduce poverty, since they address the different costs of living in different locations. See page 35 for more information.

CFAA Rental Housing Conference 2019 will be held at the Hyatt Regency hotel in downtown Toronto from Monday, May 13, to Wednesday, May 15. Please save the dates, and e-mail events@cfaafcapi.org for updates. To find out more about the keynote speakers that CFAA has secured, please see page 39. CFAA will be launching our 4th annual CFAA Rental Housing Awards in the new year. This program celebrates the achievements of some of the best and brightest in the rental housing industry. The Rental Housing Awards Dinner will take place on May 14, 2019, as part of CFAA Rental Housing Conference 2019. For more information, email awards@cfaa-fcapi. org.

The CFAA Board has launched an enhanced direct membership program in order to fund an expansion of CFAA’s lobbying work and member services, and to engage directly with Canada’s major rental providers. Under the National Housing Strategy, there is $22 billion in total spending open to for-profit rental providers in Canada over the next 9 years. That is an average of close to $6,000 per rental unit. CFAA wants to make that money work well for all rental providers. For more information about the direct membership program, please see page 38. To join CFAA, or to receive updates on federal opportunities for rental providers from CFAA, email admin@cfaa-fcapi.org.

8 | November 2018

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In this issue of... NATIONAL OUTLOOK 35. The New Federal Poverty Reduction Act On November 6, 2018, the Poverty Reduction Act was introduced in the House of Commons. The new Act creates an Official Poverty Line, a first in Canada. The Act is a positive move towards reducing poverty in Canada, especially among renters. 39. CFAA Rental Housing Conference 2019 CFAA-RHC 2019 will take place from May 13-15 in downtown Toronto. CFAA has secured three accomplished figures in the rental housing industry as keynote speakers. Check out page 39 to find out who.

41. CFAA Rental Housing Awards 2019 CFAA’s 4th Annual Rental Housing Awards are set to launch in the new year. Learn more about applying to the program or how to become a judge.

To subscribe to CFAA’s e-Newsletter, please send your email address to communication@cfaa-fcapi.org.

The Canadian Federation of Apartment Associations represents the owners and managers of close to one million residential rental suites in Canada, through 11 apartment associations and direct landlord memberships across Canada. CFAA is the sole national organization representing the interests of Canada’s $480 billion rental housing industry. For more information about CFAA itself, see www.cfaa-fcapi.org or telephone 613-235-0101.

10 | November 2018

CFAA Member Associations Eastern Ontario Landlord Organization (EOLO) www.eolo.ca P: 613-235-9792 Federation of Rental-housing Providers of Ontario (FRPO) www.frpo.org P: 416-385-1100, 1-877-688-1960 Greater Toronto Apartment Association (GTAA) www.gtaaonline.com P: 416-385-3435 Hamilton & District Apartment Association (HDAA) www.hamiltonapartmentassociation.ca P: 905-632-4435 Investment Property Owners Association of Nova Scotia (IPOANS) www.ipoans.ns.ca P: 902-425-3572 LandlordBC www.landlordbc.ca P: 1-604-733-9440 Vancouver Office P: 604-733-9440 Victoria Office P: 250-382-6324 London Property Management Association (LPMA) www.lpma.ca P: 519-672-6999 Manufactured Home Park Owners Alliance of British Columbia (MHPOA) www.mhpo.com P: 1-877-222-4560 Professional Property Managers’ Association (of Manitoba) (PPMA) www.ppmamanitoba.com P: 204-957-1224 Saskatchewan Landlord Association Inc. (SKLA) www.skla.ca P: 306-653-7149 Waterloo Regional Apartment Management Association (WRAMA) www.wrama.com P: 519-748-0703


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Quebec: 3.4% Average vacancy rate in

Total Rental Households in


145,527 Average 2 bedroom in




12 | November 2018



of the Canadian apartment market is 200+ units

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RENTT: Financing in the rental housing industry

This issue brings together the RENTT (Rental Executives National Think Tank) panel to discuss financing in the rental housing industry. Topics include criteria for providing loans for rental housing construction, how lending for rental housing differs from lending for condominium or office developments, innovative financing options, the impact of increases in interest rates, and comparing other lending options to government-backed lending options.

14 | November 2018






RENTT panelists:


Murray Wood, President and Principal Broker, Foundry Mortgage Capital Corp.



Paula Gasparro, Vice President, Real Estate Finance, CMLS Financial

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Dennis Dineen, Senior Vice President and Regional Manager, BC, Peoples Trust

st u r T Community Investment Bank

ples o e P ust Tr

Jay-Ann Gilfoy, CEO, Vancity Community Investment Bank

rentalhousingbusiness.ca | 15

RHB: Welcome to RHB Magazine’s RENTT panel. Thank you for participating in today’s discussion on financing for the rental housing industry. We believe that our readers will get a lot of value from your knowledge and experience. What are the key criteria that you use to evaluate whether to provide loans for rental housing construction? Murray Wood: The application process starts with the borrower’s expectations as to the capital required for a rental construction loan, or, if required, a long-term loan upon completion. The applicant will provide development experience, borrowing and credit history, personal net worth together with at least two years of financial statements, and what traditional methods of financing have been used to complete past projects. We then establish the “capital stack” required, whether it be a traditional institutional first mortgage with “A” funds (low loan to cost), higher leveraged second mortgage “B” funds, or, to maximize the highest leverage, a “participating equity” facility. We then establish a “source of funds” available to the borrower and start the analysis with the following information provided: location, the construction loan to cost and current “as is” and “upon completion” values of the development, whether the site is “site plan approved” or requires extensive rezoning, expected time to bring the development to market, absorption analysis and timelines to reach critical cash flows necessary to discharge the shortterm loan facilities with a takeout term loan after completion. Paula Gasparro: We look at the market to ensure that the conditions are good and support the project. We look for a developer with experience in building, owning and operating like-kind

16 | November 2018

properties, with examples of construction that have been completed on time and on budget. Then we dive into the projected pro forma and ensure the project makes sense from a financial viability standpoint with strong debt coverage and realistic projections for both income and expenses. Dennis Dineen: It’s no different than any other construction loan proposal. We look at sponsor experience, location and design of building, market conditions, pro forma estimates and project profitability, loan to cost, loan to value, debt coverage ratio and repayment source. On the latter, we apply a CMHC underwriting model to see what the pro forma rental structure would support as a long-term refinance. Jay-Ann Gilfoy: We would consider all the usual criteria, including the experience of the borrower, the location of the project, and market conditions in that area. However, as an “impact” lender, we also favour projects that provide affordable housing, or are built to high environmental and energy efficiency standards or are a restoration of a heritage property, maybe in a rougher part of town. RHB: How is lending for rental housing construction different from lending for condos or office developments? Murray Wood: For both residential and office rentals, the maximum loan is determined on an income and expense analysis as to the ability of the loan to service debt after completion with a typical debt service coverage of 1.20x. For offices, the analysis would include the loan to value ratio, quality and duration of the commercial leases, whether the majority of the leases are turning over within the term of the loan, age, depreciation, capital improvements and/or deferred maintenance, location of the building, and all of the above borrower/developer criteria as outlined previously. Condo lending is different from rental because this type of lending requires the developer to reach a very high level of presales needed to obtain a commitment to finance the development. Paula Gasparro: For condos, there are typically significant presale requirements, usually anywhere from 70 to 75 per cent presold prior to


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breaking ground. The deposits are then used for the first 25 per cent of equity into the project. It is a much shorter timeframe than with rental, as once the developer has completed construction and the units are sold, they move on to the next project. With rentals, a greater degree of foresight is required in terms of underwriting. Lease up risk is something we pay attention to, especially when insuring with CMHC. The rents projected need to be realistic and achievable, especially in markets with rent controls. For both types of construction, we require a knowledgeable, experienced developer with a strong contingency plan, as well as a strong market that can support the project and lease up or sell out quickly. Dennis Dineen: In a condo project, we will typically look to have a certain percentage of presales in place before funding of the loan, really as a test of the marketability of the project. For a residential rental, you cannot “prelease units” to test the market, so we rely on appraisal estimates of rents in the underwriting. Given our extensive CMHC experience with lending on apartment buildings, we have a pretty good idea of what is achievable in our respective markets. Jay-Ann Gilfoy: Typically, for a condo, the loan is for the duration of the construction. For a rental, we would also need to be comfortable holding the mortgage on the property once the construction is complete. That means we need to be assured that there is a rental demand. Typically, for affordable units, this is not an issue. RHB: Is your company looking at any innovative financing options, such as shared appreciation mortgages or other new types of loans? Do you know of others in the lending business who are looking at any innovative financing options? What are they considering? Murray Wood: Our brokerage is not in the business of providing innovative financing options. We’re mostly in the construction development arena, so single family loans for which “shared appreciation mortgages” are sometimes used would not be part of our

18 | November 2018

lending programs. The alternative/private lenders are playing a major role in the A-B financing structures. I’m not aware of any non-compliant lending practices that are in the market at this time, nor do we access this type of capital on behalf of our clients. Paula Gasparro: CMLS has sources of funds for almost all asset classes and across the risk spectrum. We are able to finance anything from dirt to construction, to student housing and so on. CMLS won the mandate from CMHC to service the Rental Construction Financing Initiative, which is the direct loan available from the Federal Government to facilitate the construction of new affordable rental housing. In addition to that, our deep CMHC expertise allows us to educate our clients about all sources of funds available, such as the Innovation Fund, the RCFI program, and the CMHC-run National Co-Investment Fund. The ability to navigate through all of the available programs, as well as funds available within the conventional market, is a definite value add. Dennis Dineen: Given where we are in the real estate cycle in Canada, now is not the time to be looking to unusual financing options, unless they are government guaranteed. Jay-Ann Gilfoy: We’ve worked with partners who have provided shared appreciation mortgages to end users.

RHB: What effect do you expect the forecast increases in interest rates to have on your lending for rental housing construction projects? Murray Wood: For construction, the interest carry during the time of development isn’t really going to impact on the overall construction costs of the build out. Where it may have an effect will be on the long-term takeout financing needed to discharge the construction loan. We have seen a real increase in the rental rates, so the debt service coverage shouldn’t be problem unless we reach the high interest days of the late 80s early 90s, which is highly unlikely. At this time, we CONTINUED ON PAGE 22

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Financed rental housing projects Peoples Trust – CMHC Affordable Rental Housing Program Amount: $27 million Location: North Vancouver, BC A proposed six-storey, 87-unit building includes nine affordable rental units, as mandated by the City of North Vancouver. The loan to cost is 78 per cent and the loan to value is 68 per cent. There is a housing agreement registered on title with the City of North Vancouver that ensures the nine units remain as affordable units for a period of 10 years, a condition that automatically qualified the project as “affordable” under the CMHC program.

Peoples Trust – CMHC Affordable Rental Housing Program Amount: $36 million Location: East Vancouver, BC The loan commitment will assist in the construction of a six-storey, 98-unit affordable rental project approved under the City of Vancouver’s Rental 100 Program. The building includes a main level of seven retail units to be leased out. The loan to cost is 69 per cent and the loan to value is 74 per cent. Given it was approved under the Rental 100 program, the project qualified automatically under the Affordable Housing program with CMHC.

20 | November 2018

Foundry Mortgage Capital Corp. Amount: $4.9 million Location: Kitchener, ON First mortgage financing is being provided for a 27-unit stacked townhouse condominium project, with 20 one-bedroom units and 7 two-bedroom units. The property is located near a shopping centre and a mall, with various amenities in close proximity to the site. Advances will be provided on a cost to complete basis by way of monthly draws, and the term is 24 months. The loan to cost is 81 per cent and the loan to value is 50 per cent.

CMLS Financial – CMHC Affordable Flex New Construction Amount: $22 million Location: Edmonton, AB The CMHC Certificate of Insurance approved under the CMHC Mortgage Loan Insurance Affordable program (Option A) will assist with the construction and take-out financing of a 5-storey wood framed, mid-rise, 108-unit residential apartment building with one level of underground parking. The loan to cost is 92 per cent and the loan to value was 96 per cent.




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forecast into the construction budgets a higher interest payments to mitigate any unforeseen Bank of Canada rate hikes and protect the borrower against any cost overruns on this line item in the budget. Paula Gasparro: At CMLS, we underwrite using a ceiling rate, which includes a buffer in it to factor in possible interest rate increases. We also perform stress tests on the interest rate at higher rates. It is important to do so, especially when dealing with CMHC applications, as there is a sweet spot with the appropriate rate, which helps to ensure that the project maintains financial viability. This has also increased the ask for possible escrow funding sources, as developers remain very aware of what increased rates would do at the time of take-out. Dennis Dineen: Higher interest rates decrease the amount of leverage you can obtain on a project as all rental projects are underwritten based on their debt servicing capability. It doesn’t change the underwriting – only the end number you can come up with on calculating the loan amount. Higher rates will decrease the number of projects, as developers will be further hindered in obtaining acceptable rates of return on their capital. Jay-Ann Gilfoy: Higher rates mean higher debt service costs for the borrower. There can often be a time lag before those costs can be passed on to tenants. That means we’d look more carefully at the revenue of the property, and run some scenario analysis, to make sure the borrower will still be able to cover its obligations if rates rise. RHB: Why would a company or individual looking to finance their rental construction project choose your type of lending option over CMHC’s direct lending programs like the Rental Construction Financing initiative, or any other government backed options? What benefits or advantages are there to the borrower? Murray Wood: We advise borrowers, unless there is very specific affordable housing loan required, to use conventional construction financing rather than CMHC’s initiatives. There are far too many conditions attached to their loan insurance programs, not to mention the onerous draw process during construction. We suggest the use of conventional construction lending with the leverage of “B” funds, and then access for leverage the standard CMHC mortgage insurance option to finance the long-term take-out, as that fits far better within their lending guidelines,

22 | November 2018

and the mortgage insurance will not be tied to a specific CMHC lending program. Dennis Dineen: We understand that the direct lending program has a very stringent underwriting process, which puts a lot of borrowers off from using this program. CMHC even seems more amenable to doing loans under the Affordable Flex program instead, which is an insurance product and not a direct lending channel. The latter is an easier route to go for borrowers. Jay-Ann Gilfoy: We’ve worked with a number of borrowers that use unconventional structuring to make their units more affordable. I think they have appreciated the time and effort we took to understand their business model. At the end of the day, it’s about the service we can provide to the client. RHB: What are the features and benefits of CMHC’s direct lending programs like the Rental Construction Financing Initiative, and why would a for profit company choose this type of program? Paula Gasparro: Rental Construction Financing Initiative provides low-cost loans encouraging construction of rental housing across Canada where the need is clearly demonstrated. The loan offers a 10-year term and a fixed interest rate locked in at first advance for certainty during the riskiest periods of development, and up to a 50-year amortization period. All projects must have at least five rental units, a loan size of at least $1 million, respond to a need for rental supply, have zoning in place, a site plan in process with municipality and a building permit available. The first construction draw must be within six months of the date of the executed loan agreement, and meet minimum financial viability and social outcome requirements. Typically, proponents can enjoy significant rate savings upward of 1 per cent, longer amortizations than conventional lending, and higher loan to value ratios or loan to costs than conventional. In exchange for paying a premium, there are many benefits to explore. The CMHC Affordable Flex program offers flexibility to developers without the energy efficiency or the accessibility components. At the end of the day, developers should be looking at the options available to them through CMHC, be it the RCFI, Affordable Flex or the Standard Mortgage Loan Insurance product. RHB: Thank you for your time and input.

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Associations’ views on recent elections

Several provinces recently concluded municipal

elections, while New Brunswick and Quebec had provincial elections. While incumbents ruled the day in some areas, huge changes swept through various levels of government, putting new people in power. What does this mean for landlords and the rental housing industry? RHB Magazine spoke to a number of landlord associations across Canada to get their views on the results. Association Respondents: David Hutniak, CEO, LandlordBC Daryl Chong, President and CEO, Greater Toronto Apartment Association (GTAA) Arun Pathak, President, Hamilton District Apartment Association (HDAA) Lisa Smith, President, London Property Management Association (LPMA) Andrew Macallum, President, Waterloo Regional Apartment Management Association (WRAMA) David Lyman, Vice President, Eastern Ontario Landlord Organization (EOLO)

24 | November 2018

Hans Brouillette, Director of Public Affairs, CORPIQ Willy Scholten, President, New Brunswick Apartment Owners Association (NBAOA)

British Columbia RHB: Do you have any comments about the candidates who won the key positions? David (LandlordBC): The recent election financing reforms reduced the financial threshold needed to support a candidacy, which meant that a significantly larger number of candidates could run for both mayor and council. This was especially apparent in Vancouver where there were 158 mayoral, council and school board trustee candidates. The result was a former NDP Member of Parliament becoming the Mayor (Kennedy Stewart) and the council effectively split 50/50 with right of centre and left of centre candidates elected. It will be incumbent upon the new mayor to coordinate the group if we are to see any meaningful progress on housing, and

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rental housing in particular, the number one issue leading up to the election. We wish the Mayor well and have offered him LandlordBC’s support. RHB: Compared with the past incumbent or the other choices, do you think the winner will be favourable to landlords? Why? David (LandlordBC): Virtually every municipality is focused on increasing the supply of affordable rental housing. LandlordBC will continue our advocacy for measures to address the challenges to building purpose-built rental housing, including implementation of well-considered rental pre-zoning, parking relaxation, reduction of development fees, elimination of community amenity contributions, expedited processing of applications and standing up to NIMBYism. We will also require our provincial government to provide a legislative environment that is conducive to operating and building rental housing.


RHB: Do you have any comments about the candidates who won the key positions? Daryl (GTAA): As most Ontarians know, the new Toronto City Council is about half the size of the previous Council. For the most part, two previous wards were rolled into one. That meant that the left-centre-right balance of Council did not change much. Etobicoke and other areas continued to return councillors leaning to the right, while the downtown wards returned councillors leaning to the left. Other areas returned councillors with a mix of political leanings, including centrists. Arun (HDAA): Fred Isenburge has been reelected as the Mayor of Hamilton. We hope he will continue doing the great work with the poverty reduction strategy. We have met with him on various occasions and issues with a positive outcome, and we look forward to continuing that relationship. Andrew (WRAMA): Each candidate running for office in Waterloo Region cited housing as a significant platform issue. WRAMA is looking forward to working with representatives across the region in Cambridge, Kitchener, Waterloo and the Townships.

26 | November 2018

Lisa (LPMA): Ed Holder was the successful candidate for Mayor of London. His platform was focused on his plans to improve London’s transit system. David (EOLO): Mayor Jim Watson won re-election with 71 per cent of the vote, winning every ward in the City. He supports a number of positions that are in alignment with the needs of the residential landlord community. Landlords are relieved with his return to office, and with the strength of his victory. However, City Council moved slightly to the left. Two centrist councillors were replaced by new councillors who appear to be left leaning. Five other councillors are new, out of a Council of 24 members, counting the Mayor, but they appear to be Liberal or Conservative supporters. RHB: Compared with the past incumbent or the other choices, do you think the winner will be favourable to landlords? Arun (HDAA): On a municipal level there were some changes in council but we don’t feel there will be a huge impact on council’s attitude toward housing providers. During the election there was not a platform against housing providers, but rather a strong concern about the lack of affordable housing. We feel this is a good indication that housing providers will not be targeted and instead Council will look to increase supply to find a solution to the housing crisis. Andrew (WRAMA): Regardless of who has won the leadership races across the province, they must reconcile the role for small landlords with the insatiable demand for housing and the multiple layers of contradictory government policy that exists. Lisa (LPMA): Mr. Holder has attended many LPMA functions in the past and supports both landlords and tenants. He would like to work with developers about affordable housing as well. RHB: Will your approach to that government change? Daryl (GTAA): One change is to be the creation of a new standing committee on Housing. Once Council meets and determines the committee memberships, rental providers will have a better idea of the political environment in which I and

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GTAA will need to work for the next four years. Arun (HDAA): We will continue to work with the City and improve relationships with Councillors new and old. Andrew (WRAMA): I spent a considerable amount of time speaking with candidates who were running for positions in the City of Waterloo. My takeaway from the conversations is that there is substantial misunderstanding about the City of Waterloo residential license program, the Residential Tenancies Act, Building Code, existing municipal by-laws, and how these rules relate to each other through the lens of affordable housing and the affordability of housing. Lisa (LPMA): No, we can expect the City Council members to be a great support for LPMA, as we continue to communicate any concerns from landlords in London. David (EOLO): No, I expect a few more fireworks, but little change in the results EOLO achieves at City Council. RHB: Are there issues coming up that you want the election winner to take a new approach on? Arun (HDAA): The only item on our agenda at the moment is the fight against licencing. We are expecting the planning committee to make a decision on the proposed pilot licencing program for wards 1 and 8 in the near future. We would like them to read our report and realize we are right. Andrew (WRAMA): Yes. WRAMA continues to build relationships and its offer to work with City of Waterloo Mayor Dave Jaworsky and Council on its misguided rental licensing bylaw. Lisa (LPMA): We would like to re-open the doors again to discuss the current rental licensing program in London and possible changes to the process and costs associated with it.

Quebec RHB: What issues would you like the new CAQ government to address? Hans (CORPIQ): During the last Liberal mandate,

28 | November 2018

wait times for a first hearing at the rental board got longer for unpaid rent and rent setting, although they became shorter for urgent and general cases. The average total wait time for processing (from submission to ruling) went from 7.0 to 8.4 months. Despite damning reports from the Québec Ombudsman and the Auditor General, and several campaigns by CORPIQ, the Liberal Government had not adopted any legal measures to improve the processing delays at the rental board. CORPIQ hopes that the CAQ government will improve and speed up the process. RHB: What will the new government do about rent fixing? Hans (CORPIQ): For many years CORPIQ has sought improvement in the process for raising rents, but with little success. The CAQ’s Mario Laframboise agreed that building owners must be allowed to recover their investment in the time that their mortgage lasts (rather than 40 years). RHB: What are the issues with housing policy, and what do you see happening going forward? Hans (CORPIQ): Quebec’s housing assistance budget is mainly spent on two programs. AccèsLogis builds social housing at an average production cost of approximately $200,000 per unit. Under Supplément au loyer, tenants pay 25 per cent of their income on rent, and the municipal housing office pays the difference directly to the building owner, including those in apartments on the private market. The CAQ does not oppose the AccèsLogis program, but it did question the Government on the benefit of building social housing in cities with a high vacancy rate, when the Supplément au loyer program could meet the needs of low-income families at a much lower cost. CAQ’s Mario Laframboise stated that all new policies must include the private sector, and that excluding the private sector is an approach that’s destined to fail. The past statements make us optimistic that the new government will be more positive toward landlords than the past government.

New Brunswick RHB: Do you have any comments about the results of the NB election?

Willy (NBAOA): The election resulted in an unclear minority government and creates a lot of uncertainly for New Brunswick. People were not happy with the status quo and their votes showed that change is needed. RHB: Will Kris Austin and the People’s Alliance support the Progressive Conservatives consistently? Willy (NBAOA): I believe that the People’s Alliance Party is more aligned with the PCs than they are with the Liberals but support is likely to be on an issue-by-issue basis. Part of the divide with this election appears to be based on French and English. Although the People’s Alliance is not advocating abolishing bilingualism in the province, they are advocating better business decisions on offering all government services in both official languages all the time. The PCs will have to tread lightly, as they will risk alienating some of their constituents if they go too far on language-related issues. RHB: What do you think the election will mean for your efforts to abolish the double tax on rental properties?

Willy (NBAOA): This is also uncertain. Although three of the four parties who won seats in the legislature agreed to work on eliminating the double tax, the minority situation may result in this issue being tabled. On the other hand, this election saw the double tax issue gain more traction than it has in the past, and it might be one to get consensus. Nobody really knows, as we in NB are not used to minority governments. RHB: Do you have any concerns or hopes about the increase in the influence of the Green Party? Willy (NBAOA): In New Brunswick, the Green Party, and especially its leader, is well respected. Mr. Coon seems to be a very levelheaded individual who will be good in a multiparty legislature, as he follows an issue-by-issue approach. The only concern we would have is with Greens’ support for the carbon tax, as we believe taxes are already out of control in NB and yet another tax would not be positive. RHB: Thank you for your time.

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Cannabis and the workplace Recreational cannabis use is now legal in Canada. However, people have been smoking marijuana for decades, and employees (and the rest of society) have had issues involving the abuse of alcohol, opioids, and other illegal drugs for as long as they have been around. If it hasn’t already happened, there is a chance an employee will come to work with some level of impairment due to cannabis use. What will your HR department do about it?

Update your existing policy Some companies already have policies on drug, alcohol, and illicit substance use and abuse in the workplace. A properly written policy will cover most issues that would apply to cannabis use, such as impairment, use of intoxicating substances while on the job, the health and safety of employees and customers, smoking in the workplace, and an employee’s requirement to advise the employer of drug use. Updating the policy would require adding recreational marijuana or cannabis to the list of banned workplace substances, ensuring that it covers the different ways that cannabis can be ingested or consumed. “We trust our employees, but without a policy clearly defining our limits there is no defined path of action if someone comes to work under the influence,” said Avrom Charach, Vice President, Kay Four Properties Inc. “There is always concern that someone may hurt themselves or others if they do not act appropriately and this policy helps cover that. It covers what we believe are the most likely situations, such as effects from legal use, effects from illegal use, effects from medically prescribed use and the possibility of abuse/ dependency issues.”

32 | November 2018

Many company policies recognize that people can have, or can develop, substance abuse issues. Cannabis can be consumed in many forms, for both medical and recreational purposes, and its effects (as with other drugs and intoxicating substances) will vary from person to person. Addiction is a serious concern, regardless of the substance involved. Amend your policy where necessary to help employees deal with addictionrelated issues. “We believe it important to assure employees that we will support them if they must take time off due to medical use or if someone who ends up with a dependency to ask us to find help and work with them through their issues,” said Charach. “A good employer will support an employee with a problem if they are up front about it.”

Create a new policy If your company does not have a substance use or abuse policy in place, then give serious consideration to creating one. One key reason, and associated benefit, is that it helps to ensure the safety of your employees in the workplace. This extends beyond cannabis, as alcohol is legal to purchase and consume (just like marijuana is now), and employees have used (and abused) alcohol on the job for as long as there have been workplaces. Whether employees operate heavy machinery or simply deal with the public, employers should focus on keeping everyone safe at all times. “With the new legislation in mind, safety was definitely the biggest motivating factor in updating our Substance Use policy to include cannabis,” said Melissa Caron, Director, Real Estate Management and Leasing, Old Oak Properties.

“We care a great deal about maintaining a safe and healthy work environment for our employees. Many of our employees operate motor vehicles and equipment, so public safety also played a significant role.” Having a policy in place serves to inform employees of your expectations for their behaviour and performance in the workplace. A well written policy can educate employees on the dangers of being under the influence of an intoxicating substance. Legal and illegal drugs and alcohol can have serious health consequences, and can create an unsafe workplace. A workplace policy on drug and alcohol use ensures that employees know what is required of them, which prevents excuses of being unaware when implementing a suspicion of impairment process and disciplinary action. Medical marijuana has been legal for some time, and it’s probably a good place to start when drafting a policy. Employers have a duty to accommodate all employees who use medically authorized marijuana and those who are addicted to marijuana (and any other drugs). Beyond

safety, it shows that you care about the health and welfare of your employees when they need help. “We also felt it valuable to be clear that we will support employees who have communicated a dependency issue and who wish to seek assistance with rehabilitative efforts,” said Caron. “Employees can feel safe seeking help, knowing that it won’t be held against them.”

Conclusion Recreational cannabis is now legal in Canada, although cannabis use is not a new issue. Employers should have a well-drafted policy in place governing the use of legal and illegal substances in the workplace. It’s essential for maintaining the health and safety of their employees, as well as setting expectations for workplace behaviour. A drug use policy will also help to protect employers when issues arise regarding impairment or employee discipline.

By David Gargaro, in collaboration with Avrom Charach and Melissa Caron

rentalhousingbusiness.ca | 33


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NOV-DEC 2018

THE NEW FEDERAL POVERTY REDUCTION ACT By John Dickie, CFAA President A bill to be known as the Poverty Reduction Act was introduced in the House of Commons on November 6, 2018. The bill makes the creation of a poverty reduction strategy mandatory, enacts the Official Poverty Line and poverty reduction targets, and creates the National Advisory Council on Poverty. Poverty Reduction Strategy In October, the government released Canada’s First Poverty Reduction Strategy, “Opportunity for All”. This strategy addresses the spending of $22 billion to support the social and economic well-being of Canadians, including several measures which have already been taken, such as the expansion of the Canada Child Benefit, the increase in the Guaranteed Income Supplement, and the new Canada Workers Benefit. The targets of the Poverty Reduction Strategy are to reduce the poverty rate from its 2015 level by 20 per cent by 2020, and by 50 per cent by 2030. According to the government, the Poverty Reduction Strategy is based on the following three pillars: •

Dignity: Lifting Canadians out of poverty by ensuring basic needs— such as safe and affordable housing, healthy food and health care—are met; Opportunity and Inclusion: Helping Canadians join the middle class by promoting full participation in society and equality of opportunity; and Resilience and Security: Supporting the middle class by protecting Canadians from falling into poverty and by supporting income security and resilience.

Official Poverty Line Until now Canada has not had an official poverty line. Instead, while insisting it is not a poverty line, Statistics Canada produced the Low Income Cut Off (LICO), which many advocates used as if it were a poverty line. LICO is the income threshold below which a family of a given size will likely devote a 20 per cent larger share of its income to food, shelter and clothing than the average family of that size. LICO was a measure of relative income, not a proper measure of poverty.

“The approach being taken is a major advance in fighting poverty among renters because the Official Poverty Line recognizes the different costs of living in different locations.” The Official Poverty Line will be calculated using the Market Basket Measure approach. This measure uses the combined costs of goods and services that households need to achieve a modest standard of living, such as: • • • • •

Healthy food Appropriate shelter Clothing and footwear Transportation Household maintenance

• The costs of the goods and services is also directly linked to prices in the community (in 50 different regions across Canada). If a household cannot afford the basket of goods and services they need in their community, they are considered to be living in poverty.

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NATIONAL OUTLOOK The Official Poverty Line will be reviewed on an ongoing basis to make sure it stays up-to-date with the basic standard of living. Renters make up the bulk of people living in poverty. The approach being taken is a major advance in fighting poverty among renters because the Official Poverty Line recognizes the different costs of living in different locations. CFAA’s Poverty Submission In March 2017, CFAA made a submission to the Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities on the topic of poverty reduction strategies. CFAA explained why a poverty reduction strategy needs to address housing costs. Deprivation (or real poverty) is a function of the relationship between a person’s (or a household’s) income, and the expenditures they need to make. In Canada, we have done a good job of addressing the costs of medical care, but by and large we have not addressed the huge differences in the housing costs that people need to pay. Those who make similar incomes, but live in different markets, can be worse off than one another. The reason is usually a conjunction of two facts: • •

Poor people usually need to spend a large portion of their income on their housing costs, and Housing costs vary a great deal between different markets across provinces and across Canada (and between the private market and the social housing sector – which provides rents-geared-to-income).

See Table 1 for examples of the differences in rents, and the corresponding differences in the Official Poverty Line.

Table 1: Comparative poverty lines and rents Small town Toronto Winnipeg Quebec Official Poverty Line $40,595 $36,545 $32,870 (for a family of four) % of Toronto’s 90% 81% Difference in dollars $4,050 $7,725 Average 2 bedroom $1,404 $1,107 $613 rent % of Toronto’s 79% 44% Difference in dollars $3,564 $9,492 (for 12 months)

Portable Housing Benefits to reduce poverty CFAA and many social advocacy groups advocate an expanded use of portable housing benefits to address poverty in an efficient and cost-effective way. A Portable Housing Benefit (“PHB”) is a payment made by a government agency to a tenant to help the tenant pay for their rent, leaving other income to pay for the other necessities of life. Tenants can use the money to help stay where they are or to move to another rental home of their choice. Several provinces use PHB programs now, but those programs are all targeted at particular and limited groups of poor people, such as families with children, the disabled, victims of domestic violence, seniors or near seniors. The target groups vary by province, and in no province are all those groups included. As well, there are many people who are in deep poverty and deep core housing need, who are not eligible for the provincial programs in any province, and cannot access social housing because the amount of it falls far short of the demand for it. PHBs can deliver the most help to the people who are experiencing the deepest poverty. PHBs deliver help targeted to the people who need it the most. For example, in Toronto, a household with an income at

WANT TO STAY UP TO DATE WITH NATIONAL OUTLOOK? Sign-up for CFAA’s National Outlook e-newsletter to receive up-to-date news on what is happening across Canada, as well as industry insights and insider information on CFAA happenings. Email communication@cfaa-fcapi.org to start receiving National Outlook today!

rentalhousingbusiness.ca | 37

NOVEMBER - DECEMBER 2018 the poverty line is in much deeper need if they are paying a market rent rather than receiving a deep subsidy to their rent in social housing. Changing benefits does not address that difference unless one of the benefits is a housing benefit that responds to the household’s actual rent. Under the National Housing Strategy, the government has committed to bringing in a Canada Housing Benefit, but no decision has been made as to who will be eligible. CFAA advocates a broad eligibility, and an expansion of the funding for that program. Conclusion CFAA applauds the government’s move to issue a poverty reduction strategy, and to set an Official Poverty Line that is specific and regional, rather than general and abstract. As many people spend a large portion of their income on their rent, any effective poverty reduction strategy must take into account the divergent amounts of rent paid in different regions. The move to set an Official Poverty Line based on the housing costs in different regions should improve the government’s ability to help Canadians escape poverty, especially if the government follows up with a broad housing benefits program.

National Advisory Council on Poverty The Poverty Reduction Act will also create the National Advisory Council on Poverty. This Council will consist of eight to 10 members. Under the Act, the Council will: •

provide advice to the Minister on poverty reduction in Canada, including advice with respect to programs, funding and activities that support poverty reduction; undertake consultations with the public, including the academic community and other experts, Indigenous persons, and persons with lived experience in poverty; and within six months after the end of each fiscal year, submit a report to the Minister of Families, Children and Social Development on the progress being made in meeting the targets referred and the progress being made in poverty reduction measured by the Official Poverty Line and any other metrics the Minister adds.

38 | November 2018

CFAA’S DIRECT MEMBERSHIP DRIVE Since its inception in 1995, CFAA has raised its funding primarily through membership dues from landlord associations. Now we are reaching out directly to ask rental housing providers to join CFAA as direct members. Through the expansion of the direct membership program, CFAA expects to achieve more for Canada’s residential landlords by providing enhanced member services, and enabling CFAA to add substantially to our government relations work, thus improving the investment, development and operating environment for residential landlords. Alongside the direct membership program, association memberships in CFAA will continue, with CFAA member associations sending representatives to sit on the CFAA board, and continuing to receive what they and their members receive from CFAA now, and more. However, for those who join CFAA as direct members, CFAA will provide additional services and communications. The annual direct membership fee is $100 plus 50 cents per rental unit. To join CFAA as a direct member, e-mail admin@cfaa-fcapi.org, and we will send you the application form. Is this a choice between CFAA and other associations? Some directors from member associations have asked whether landlords might choose to join CFAA instead of their regional association. The answer is no. At CFAA, we urge landlords to support their own regional association, as well as CFAA. In addition, moves that affect landlords arise from all three levels of government, and to be protected, landlords need to be represented effectively at all three levels of government. In most provinces, the one, current association deals with both the provincial government and the large cities. However, in Ontario, the Federation of Rental-Housing Providers of Ontario (FRPO) deals with the provincial government, while some 15 cities each have a landlord association which deals with the municipal government and issues in their areas. As well, CFAA does not report comprehensively on municipal or provincial changes, nor do we hold

NATIONAL OUTLOOK eduction or social events at the municipal level. Across Canada, CFAA is the industry’s voice to the federal government and to CMHC. But every landlord still needs their regional association(s)! New membership services For direct members, CFAA plans to make available new privileges, such as:

• • • •

discounts on conferences, discounts on numerous education programs, discounts on recordings of CFAA’s conferences and education sessions, and access to additional webinars.

To implement those and other membership services improvements, CFAA wants and needs input from landlords across Canada. To provide your input, please email Jeremy Newman at jnewman@cfaa-fcapi.org. Expanded Political Action Over the last two years, CFAA played a major role in shaping the ten year National Housing Strategy (NHS). Within that strategy, CFAA achieved access for private rental providers to commitments for government spending open to for-profit rental providers of $22B, or close to $6,000 per rental unit in Canada on average. CFAA is working hard to make sure all rental providers can get their share of that money, and that the money is spent in a way which supports the rental housing industry across Canada. The CFAA Board of Directors plans to engage a national government relations firm (with long-standing, deep connections to government and politicians) to provide additional monitoring of federal initiatives, and to assist CFAA on the key federal issues.

CFAA RENTAL HOUSING CONFERENCE 2019 By Jeremy Newman, CFAA Director of External Relations For May 2019, CFAA is striving to hold our best conference ever. Our goal is to bring together the most useful information about rental housing operations, investment and development, along with wonderful opportunities to network with key players and move the rental housing industry forward. With input from a broad range of rental operators, owners and developers, we will present streams of topics addressing:

• • •

Current operational issues, Investment and development issues, and CFAA’s new actions to address today’s challenges.

Operational streams will address areas such as Marketing and Revenue Management, Technology, Utility Management, Building Science innovations and Human Resources. Investment plenaries will address the political environment for rental investment in this age of Populism; the world economy and its impact on Canada (with Benjamin Tal); and how economic and population pressures play out against the planning and development rules of major centres, including Toronto and Vancouver (with Financial Post commentators Murtaza Haider and Stephen Moranis).

For more information, please contact John Dickie at president@cfaa-fcapi.org.

Benjamin Tal is Deputy Chief Economist at CIBC World Markets. He has been described as one of Canada’s leading experts on the real estate market by the International Monetary Fund. Benjamin is a regular commentator on financial and economic trends in the Canadian and American media with regular appearances on CNBC, BNN, Bloomberg TV and Radio. Benjmain is also a regular plenary speaker at CFAA-Rental Housing Confences.

rentalhousingbusiness.ca | 39


Murtaza Haider and Stephen Moranis write the Haider-Moranis Bulletin, which is frequently featured in the Financial Post, and other newspapers under the Post Media banner. The Bulletin analyzes real estate market trends and real estate sales data from across Canada, including rental housing issues such as rent control, the supply of purpose-built rentals and the interplay of economic factors with government regulations. Murtaza Haider is an associate professor of real estate management at Ryerson University, an adjunct professor of engineering at McGill University, and a Director at Regionomics Inc, a data analytics consultancy. He has consulted for numerous government departments, including CMHC. Murtaza’s research made one of the first serious attempts to analyze the supply side of housing markets in housing construction. Stephen Moranis is a seasoned real estate professional and proven industry leader. He has amassed decades of experience in the real estate industry, in the private, public and non-profit sectors. Stephen holds an MBA from the University of Toronto and professional designations from the Real Estate Institute of Canada. He is a former president of the Toronto Real Estate Board.

Rental development and CFAA growth streams will address how rental development can be encouraged, why rental housing providers should want the government to encourage it, and what CFAA and others are doing to get the governments to encourage it. Whether you are a rental housing executive, department head, manager, developer or supplier, you should plan to attend CFAA - Rental Housing Conference 2019 in Toronto from May 13 to 15, 2019. Registration is now open at www.CFAA-RHC.ca.

CALL FOR PROPOSALS OR INPUT If you want to make a presentation, or suggest a session topic, please e-mail your idea to events@cfaafcapi.org.



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NATIONAL OUTLOOK CFAA RENTAL HOUSING AWARDS 2019 CFAA plans to launch the 4th annual CFAA Rental Housing Awards on January 21, 2019. The Rental Housing Awards program celebrates the excellence of some of the best employees, renovations, products and rental developments in the rental housing industry. Previous award categories have included:

• • • • • •

Rental Development of the Year Renovation of the Year Property Manager of the Year Off-Site Employee of the Year On-Site Employee of the Year New Product or Service of the Year

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RHB’s forum for rental housing associations to share news, events and industry information

Hot Topics: EOLO provides brief bios on the new members of the City of Ottawa’s council following the municipal election, and lists key EOLO issues. pg. 45 HDAA talks about recent events, including the October Education seminar, Board elections, toy drive, welcoming the new president of FRPO, and licencing. pg. 49 LPMA provides tips on preparing for winter, and discusses how London Hydro helps LPMA members to reduce their carbon footprint. pg. 53 WRAMA gives its feedback on the municipal elections and discusses secondary suites. pg. 57

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Working with Ottawa’s new City Council By John Dickie, EOLO Chair

The 2018 municipal election resulted in a number of changes to Ottawa City Council, which will impact residential landlords. Mayor Watson won re-election with 71 per cent of the vote. His closest challenger was former councillor Clive Doucet, who won 22 per cent of the vote. Mayor Watson won every ward across the City. Mayor Watson was formerly a provincial Liberal cabinet minister, but he has governed Ottawa as a fiscal conservative, delivering tax increases of slightly under 2 or 2.5 per cent. In this election, Mayor Watson promised to deliver a tax increase of not more than 3 per cent. His main motivation is probably the need to finance the City’s share of the expansion of the new Light Rail Transit (LRT). Mayor Watson supports a number of positions that are in alignment with the views of the residential landlord community, and we welcome his return to office. It is among the City Councillors that interesting changes have occurred. See Table 1. Table 1: Changes among the City Councillors Ward Orleans Innes Kanata North Stittsville Bay Capital Gloucester South - Nepean

Sought New Councillor Re-election? Bob Monette No Matthew Luloff Jody Mitic No Laura Dudas Marine Wilkinson No Jenna Sudds Shad Qadri Yes Glen Gower Mark Taylor No Theresa Kavanagh David Chernushenko Yes Shawn Menard Outgoing Councillor

Michael Qaqish


Carol Ann Meehan

Carol Ann Meehan – Gloucester South – Nepean Along with Max Keeping, Carol Ann Meehan was the face of the 6 o’clock news in Ottawa for 26 years, as well as a strong supporter of community events. According to The Ottawa Citizen, Carol Ann is a friend of Lisa MacLeod, the long-time MPP for Nepean who is now Minister of Children, Community and Social Services, and Minister Responsible for Women’s Issues, in Doug Ford’s provincial government. EOLO has a long and positive relationship with Lisa, and looks forward to building one with Carol Ann.

Matthew Luloff – Orleans Matthew Luloff is a veteran of the Canadian Armed Forces, who served for eight months in Afghanistan. He won the race among 17 candidates, with 23.9 per cent of the vote. Prior to his election in Orleans Ward, Matthew worked for Liberal MPs on Parliament Hill. For almost two decades, Matthew has been a close friend of Councillor Stephen Blais, who represents Cumberland Ward. Matthew wants Orleans to become the top choice for young families looking for a safe, beautiful and vibrant community, with an arts culture. Laura Dudas – Innes Ward Laura Dudas is a former journalist who reported for newspapers in Cambridge and Stratford and for the Ottawa Sun, writing under her birth name Laura Czekaj. Laura states that her main objective is to represent the interests of Innes Ward. Presumably that includes improving roads, transit and economic development in Innes Ward, which includes Blackburn Hamlet and the south-west corner of the Orleans community. (Because of its population, the community of Orleans is divided among Orleans Ward, Innes Ward and Cumberland Ward.) Glen Gower – Stittsville Glen Gower won 58 per cent of the vote against the three term incumbent, Shad Qadri. Glen is very well known in Stittsville. He is a member of the Coalition for Landfill Accountability. While he does not think it is realistic to stop the Carp Road landfill expansion, he seeks a new environmental assessment, and to improve waste diversion rates. Glen ran on a platform of “healthier development,” by which he means safe streets, more sidewalks, better transit and approved accountability. Shawn Menard – Capital Ward Shawn Menard is a former successful student politician and community advocate who worked for the federal Justice Department and managed government relations for the Federation of Canadian Municipalities. Shawn noted that as the son of a single mother, who sometimes relied on social assistance, he knows first-hand the struggle that some people face to achieve a good life for themselves and their children.

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Shawn wants the City to slash OC Transpo fares, and to come down hard on commercial owners who leave buildings derelict or vacant. He thinks the City should take a stronger line on redevelopments that require the relocation of existing tenants. Theresa Kavanagh – Bay Ward Theresa Kavanagh has worked as a political staffer to NDP MPs. She is married to Alex Cullen, the former Liberal and then NDP MPP, and City Councillor. Theresa was endorsed by former Ottawa Mayor Jackie Holzman and former Liberal MP Marlene Catterall. Theresa emphasizes her independence and her reputation for open mindedness. Her top priorities are getting the LRT right in Bay Ward, supporting seniors living independently, and modernizing aging recreation infrastructure in Bay Ward. Jenna Sudds – Kanata North Jenna Sudds’ education is as an economist. She was formerly the President of the Kanata-North Business Association. Endorsed by outgoing Councillor Marianne Wilkinson, who retired at age 80, Jenna defeated two other strong candidates. Jenna wants to bring the LRT to Kanata as soon as possible. As well, she will work to protect green spaces and increase environmental leadership in Ottawa. She also hopes to bring more jobs to Kanata North. EOLO’s action and key issues EOLO welcomes the new Councillors, and looks forward to working with them. We also welcome back the returning Councillors, and look forward to continuing to work with them. As has been EOLO’s practice for decades, we will meet each of the new Councillors over the next month or two, to introduce our organization, and address some of the issues important to residential landlords and tenants. Property taxes One key EOLO message is who pays property taxes. While landlords send the tax money to the City, it is clear that tenants effectively pay the property taxes on the buildings they live in. Economists are in full agreement that tenants effectively pay the property taxes on their rental apartments. Landlords are in favour of property tax fairness for tenants and multiresidential properties because a lower cost structure will mean that landlords can rent more rental homes at a lower price. Lower property taxes, and therefore lower rents, mean fewer vacancies, reduced costs due to default, less hardship for low-income tenants and a better business climate for landlords. Lower property taxes also allow landlords to be more competitive with entry-level home ownership. Over the years, many academic and government studies have concluded that the property tax rates on tenants and rental properties should be the same as the rate on single family homes. In Ottawa 20 years ago, the multi-residential tax rate was 118 per cent higher than the rate on single family homes. Due to EOLO’s work, and the support of many landlords and tenants, Ottawa’s multiresidential tax rate has been reduced to 42 per cent higher than the rate on single family homes owners. We will be talking with all the Councillors about continuing the path to tax fairness. City housing policy Like the Canadian Federation of Apartment Associations and the Federation of Rental Housing Providers of Ontario, EOLO has long advocated a greater use of portable housing benefits as the

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best means of helping low-income tenants afford their housing. EOLO also advocates focusing any funding for social housing on supportive housing. We believe those measures are best for low-income tenants, taxpayers and rental providers.

build positive relationships with City staff, City Councillors, tenants, and community members to get the word out that professional property managers and responsible landlords of all sizes are doing a great job and helping to build the community.

For the same amount of public money, rent subsidies help more people than building new social housing units. At the same time, supportive housing is needed for people who cannot maintain their housing in the private market, even with supports.

New water charges to take effect soon

These are issues the City deals with because the bulk of federal and provincial housing money flows to the City, and much of it can be allocated as the City sees fit. Waste disposal issues An issue which is resurfacing as a priority is the recycling rate in multi-family buildings. For a variety of reasons, the recycling rate in apartment buildings is much lower than it is in single family homes. EOLO and landlords need to work with the City to improve that diversion rate, and narrow the discrepancy. Conclusion Both landlords and landlord associations need to

Ottawa landlords should get ready for the new water bills that will reflect a revised rate structure. Compared to the current billing, the new billing will apply a lower rate for water and sewer usage, but add a new fixed fee based on the size of the pipe serving a property. EOLO worked with the City in the development of the revised charges. At that time, our calculation showed that the new charges would be very similar to the existing charges for most buildings. If your bill changes significantly, you should check it carefully, and evaluate whether your water service pipe is larger than needed. If you want to change the pipe size at the intake into the building (i.e., at the meter), remember that backflow prevention devices are soon to be required on most rental buildings, so that changing the pipe and installing the backflow prevention device could best be done at the same time.

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President’s message HDAA supports the Province of Ontario’s move to exempt new buildings from the unfair rent control regime. This exemption will address a critical gap in Ontario’s housing strategy and will work to achieve the government’s housing supply objectives. We hope this is a start in a new direction of government to help housing providers and improve the supply issues that have such a direct impact on affordable housing. Unfortunately, the announcement also included plans to cancel the Development Charges Rebate Program. The program provided rebates on the development of rental housing. - Arun Pathak, President

November dinner meeting: Election, toy drive and welcoming new FRPO president

Election: The HDAA Board is responsible for all the association’s initiatives, events, education and lobbying efforts. The HDAA Board is a group of 10 volunteers who are elected for a threeyear term by the general membership to guide the association. This year, an election was held on November 14 to determine five of the Board positions for the 2019–21 period. We are excited to introduce the elected members and welcome back the returning Board for 2019: Elected:

October Education Seminar: The Landlord and Tenant Board Tina Novak – Valery Properties Tina Novak did a fantastic presentation about her tips to help members through the LTB proceedings. She focused on what forms to use, what mistakes to avoid and how to ensure a smooth experience at the LTB. She even provided sample letters to help inform tenants about the recent Cannabis legalization. The HDAA education seminars are great for both new and experienced housing providers. Make sure to attend the next “Tina’s Tips” education seminar – you won’t be disappointed!

Mary Ongaro – Absolute Ventilation

Dan Doyle – The Doyle Team

Pamela Cushman – Timbercreek Communities

Doug Smith – Apex Pest Control

Continuing directors: Lucie Brusse – Royal Le Page Ivan Murgic – Effort Trust Peter Altobelli – Yardi Canada Robert Fleet – First National Financial Corporation Dan Casuccio – Zebra Property Management

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HDAA toy drive: Many families in Hamilton live in poverty and are unable to celebrate the holiday season. A simple way to bring happiness to these children is to donate a new, unwrapped gift for children from newborn to 10 years old. We kicked off our toy drive at the November 14 dinner meeting and were overwhelmed by the mountain of toys that HDAA members brought in. We will be running our toy drive until December 14. Help make a difference for children in need this holiday season by contacting us at 289-208-5445 to make a donation.

HDAA welcomes Tony Irwin: HDAA was proud to have the new president of FRPO attend the November 14 dinner meeting. He spoke briefly with our members about his eagerness to work on improving the Rental Housing Industry for housing providers in Ontario. HDAA welcomed him at the dinner and we are looking forward to continuing to work closely with the FRPO on various issues that affect the Industry.

Licencing: On September 27, the Rental Housing Sub-Committee voted 7-4 to recommend a trial two-year licencing program in wards 1 & 8. If approved at the next Planning Committee meeting, it will go to a City Council vote. If passed, all housing providers with five units and less will have to pay $200 per unit, plus the additional hidden costs associated with inspections. The next Hamilton Planning Committee meeting is scheduled for December 11. They might have the trial licencing program on the agenda for that meeting. We are looking for help! Do you live in Hamilton? Are you willing to meet your Councillor to discuss why licencing is not good in your ward? Are you willing to be a delegate at the next Planning Committee meeting to help persuade the council that a trial rental housing licencing program is a bad idea? Please let us know you are interested in helping by contacting us at info@hamiltonapartmentassociation.ca.

Short-term rentals: The City of Hamilton is currently looking for feedback about short-term rentals in Hamilton. They are in the preliminary learning and gathering stage and are asking stakeholders for their insight on a proposed licencing program. HDAA feels that some of the proposed restrictions are an erosion of property owners’ rights.

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We will be attending the public consultation meetings to point out some red flags in the currently proposed program, including: •

$40 – $150 annual fee with inspections (and costs associated with inspections)

Restrictions on who can have a short-term rental (it is proposed that they will only be allowed in a person’s principle residence)

• The city-wide survey is still available until December 7, 2018 on the City website: http://www. hamilton.ca/shorttermrentals

FRPO seeks reform of the dispute resolution process

A timeline of 22 to 25 days is more consistent with the timelines in other Canadian provinces. Ontario’s long, drawn out process is bad for everyone involved: •

For a number of years, the Federation of Rentalhousing Providers of Ontario (FRPO) has been lobbying for improvements to Ontario’s dispute resolution process. Table 1 sets out the timelines for non-payment of rent. This should also be used in situations where tenants are substantially interfering with other tenants’ reasonable enjoyment of their rental homes.

Responsible tenants are unfairly disturbed for far too long.

• Allowing arrears to build up raises landlord costs, and increases the cost of rental housing. •

Allowing large arrears to build up is damaging to a tenant’s credit rating, and can prevent them from obtaining housing in rentgeared-to-income buildings.

Table 1: Dispute resolution timelines • The length of the process also Stage Current Proposed makes landlords very reluctant to Initial notice period 14 days 5 days give a chance to a tenant with a Service time (for mailing) 5 days 5 days bad history. Delay to hearing 30 - 60 days 5 - 7 days Universal grace period 11 days 0 days To learn more, do a web search of “FRPO” and Sheriff’s notice 7 - 90 days 7 days “Justice Delayed.” Total time 67 - 189 days 22 - 29 days Hamilton and District Landlords Since 1960, the Hamilton and District Apartment Association has grown significantly. Our members manage over of 30,000 units throughout Hamilton, Burlington, Brantford, Guelph, Mississauga, Oakville, St. Catharines and into the Niagara Peninsula. The association is a highly respected organization, sought out regularly by government, industry, media and the public.

Interested? Call us or join online! Ph: 289-208-5445 Web: www.hamiltonapartmentassociation.ca

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Comfy living for tenants. Comfy energy bills for you. We’ll cover up to 50% of the cost when you upgrade to high-efficiency equipment The Affordable Housing Conservation Program provides financial incentives for high-efficiency space and water heating equipment, heat recovery, building automation systems and more.

Visit uniongas.com/affordablehousing to learn more.

52 | November 2018

President’s message – Preparing for winter Are you ready for winter and have you taken steps to safeguard your properties? Here are some tips for preventing winter damage: • Winterize exterior taps to prevent water from freezing in the line, which could lead to flooding when the ice begins to thaw. • Keep furnace and dryer vents clear of snow. •

If tenants are away for the winter, remind them to turn off their water to minimize the damage if a toilet tank fails or a break occurs in the water line. If they can’t turn off the water, they should ask a friend or family member to visit their unit.

Ask tenants to review their insurance policy in case there are stipulations concerning the frequency with which the unit should be checked.

• Keep roadways clear and salted or sanded, and remove icicles where possible.

Stay safe and have a Happy Holiday! - Lisa Smith, President

London Hydro helps LPMA members reduce their carbon footprint

During the last year, London Hydro has quietly been helping LPMA members reduce their energy costs—one LED light bulb at a time. And it’s been doing that work in cities as far away as Toronto and Edmonton where members own apartment buildings. As if that wasn’t impressive enough, the project— which entails removing incandescent and CFL light bulbs from individual suites and replacing them with LEDs—is the largest of its kind in North America. “No one’s touched this,” said Hans Schreff, Manager, Conservation and Demand Management,

London Hydro. “London Hydro took the lead on this project but involved 30 other utilities, which made it efficient and economical, and we used economies of scale. That’s really the story for London Hydro, but also for the landlords.” The In-suite Lighting Retrofit Program is being offered to property managers in the jurisdictions of 30 partner utilities, which means landlords can have their entire portfolios included, regardless of where their buildings are located. That’s possible because London Hydro is able to operate in the jurisdictions of other utilities due to a provincewide reciprocal agreement among utilities. For example, one LPMA member owns buildings in 30 different jurisdictions and London Hydro provided one program for all of them. London Hydro, which is an LPMA member, was responsible for installing LED bulbs in 60,000 apartments in 650 buildings. It also provided $7 million in incentives to landlords to offset their investment in new light bulbs and generated enough annual energy savings to provide electricity to 13,000 homes. The project, which began in 2017, will continue until early 2019 and landlords can still apply by contacting London Hydro at (519) 661-5800, ext. 5014. “We’ve provided millions of dollars in incentives to LPMA members over the years,” said Schreff. “London Hydro has been a great partner and LPMA has been a great partner to us.” London Hydro implements SaveOnEnergy, a provincial program offered by every utility in Ontario through the Independent Electrical Systems Operator (IESO). SaveOnEnergy covers the costs of the work undertaken for private landlords and for the London and Middlesex Housing Corporation (LMHC). London Hydro converted 3,200 of the corporation’s units to LED lighting and the program is saving tenants and LMHC about $450,000 a year. For its work on the project, London Hydro was recognized with the Conservation Leadership Excellence Award from the Electricity Distributors Association.

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The project was launched out of Schreff’s desire to help defray LMHC’s costs by upgrading its insuite lighting. He then offered it to large private landlords in London, more than half of whom have participated. The utility managed the entire project, including assisting landlords with the technology, directing them to good suppliers, helping them to apply for the incentive money, and taking care of the paperwork for all of the landlords once a building was completed. “It’s a hand-holding exercise, and we take all the difficulty away from them,” said Schreff. “Most of it is in the administration and the paperwork of receiving the incentives.” London Hydro prepared a sample count of landlords’ buildings, based on different unit types, from bachelor to three-bedroom units. Using that count, the landlords’ staff then installed the bulbs in the suites, noting the number and type of bulbs that were removed. Counting them was critical to calculating the incentives that London Hydro provided from SaveOnEnergy. “London Hydro essentially removed all the barriers to participation in the programs for application processing, fast incentive payments and excellent value presentation,” said Schreff. “It was an easy business decision.” When landlords installed new LED bulbs, London Hydro provided an incentive cheque that was delivered within 10 days, instead of several months. If landlords undertook that work on their own, it would cost them millions of dollars. The provincial Ministry of Energy and IESO provide targets and budgets to London Hydro to remove a specific number of kilowatt hours from the electrical grid in exchange for replacing old technology with more energy-efficient products. In turn, the loads on the electrical grid are lowered. LED bulbs have life spans of 15,000 to 25,000 hours. The average light bulb in a home operates roughly 1,200 hours in a year. Schreff believes that providing incentives is the only way to reduce energy use. “The majority of the expenses were paid through the incentives,” he said. London Hydro also provides guidance on the best light bulbs for specific areas of rental suites, including range hoods, and creates and prints lobby signage and door hanger notifications for tenants. It also created Energy Cubes—custom-printed boxes with four LED light bulbs left for tenants’ personal lamps. Most tenants’ own lamps had incandescent bulbs, said Schreff. Tenants were directed to place them in special containers in the garbage room of their building. “From our counts and our investigations, we felt that four lamps (bulbs) left behind for the tenant was a great way to get the tenant involved,” said Schreff. “We were able to change the incandescents to LEDs, which was an even bigger (20 per cent) savings for the landlord, but also brought the tenant into the process.”

54 | November 2018

London Hydro’s odyssey began 12 years ago with the CFL for Incandescent Exchange program and a lighting fixture program. In 2009, London Hydro received the Energy Star Regional Utility of the Year award for both programs, which were aimed at multi-residential landlords. Although landlords embraced CFLs and the lighting fixtures that housed them, their investment didn’t discourage them from adopting the latest LED technology. “Once we explained to them the real value, landlords jumped on pretty quick,” said Schreff. Sifton Properties was one of the first companies to join the retrofit program. Theresa Lapensée, operations manager, London residential rentals, said that London Hydro saved Sifton considerable time by accurately estimating the number of bulbs that were required. Sifton then ordered 55,000 new bulbs from Electrozad Supply, which counted the old bulbs and collected them for recycling. Sifton replaced the bulbs in 2,400 units in its London, Brantford and Guelph properties and also gave bulbs to tenants for their own lamps. When the project was completed in 2017, London Hydro gave the company an incentive cheque for $300,000. “When London Hydro is willing to put their funding and their staff behind it to support landlords, it’s not like you’re taking this step alone as a landlord,” said Lapensée. “You’re partnering with London Hydro and they take you through the project.” Tenants pay for electricity in the bulk of Sifton’s portfolio, which makes the program particularly beneficial for them, said Lapensée. However, Sifton pays for the cost of electricity in most of its apartment buildings.

“I think that most people in the industry would agree that until tenants are on board with reducing energy, we’re not going to see true significant improvements in the province because most landlords are still paying for hydro,” said Lapensée. “It is difficult to control hydro costs in a building when tenants don’t pay for it.”

Two London Hydro employees are pictured with hundreds of bags of incandescent light bulbs that were removed from an apartment building.

Sifton created a “Go Green” campaign to involve tenants in reducing the company’s collective carbon footprint. Employees educated tenants through e-blasts, social media posts, resident events and a contest in which tenants posted the ways in which they were reducing their impact on the environment. Tenants volunteered to track their electricity expenses at the start of the campaign, “which speaks to the level of their engagement,” said Lapensée. “We were thrilled to see our tenants enthusiastic about reducing their energy usage,” she said. “That was the goal of our Go Green campaign—to educate people on how we can all make simple changes to help the environment.”

London Property Management Association (LPMA) is a non-profit organization, located in London, Ontario, Canada, that provides information and education to landlords. LPMA represents the interests of both large and small property owners. The association has more than 400 landlord members representing approximately 35,000 rental units. Membership is open to landlords and property management professionals who own or manage one or more residential rental units.

Sign up online or call Rebecca David. Ph: 519-672-6999 Web: www.LPMA.ca

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President’s message In planning for municipal elections, I reached out to every candidate running in the City of Waterloo with the hopes of learning their position on residential rental licenses. All candidates (including regional councillor candidates) had indicated affordable housing was a priority during their campaign. Many replied and shared their regrets for having conflicting events. Some who were unable to attend the WRAMA meeting on October 10, 2018 extended an invitation to have a coffee, which I gladly accepted! Sincere thanks to Royce Bodaly (Ward 2), Oliver Campbell (Ward 6), Devon McKenzie (Ward 7), Rainer Neufeld (Ward 1), Rob Parent (Ward 1), and Mark Whaley (Ward 5) for attending, and to Chris Kolednik (mayor), Dave Jaworsky (mayor), Kelly Steiss (mayor) and Jeff Henry (Ward 6) for the coffee and conversation. Sincere congratulations to the new councillors throughout the region.

Tenancies Act, Building Code, existing municipal by-laws and how these pieces relate to each other through the lens of affordable housing and the affordability of housing. A very special thanks to members of the WRAMA board of directors, Larry Smith and Peter Miller, for sharing their experience and expertise, and for presenting a history of rental licensing in the City of Waterloo.

Peter Miller (WRAMA director) describes a successful legal challenge labelling the City of Waterloo’s rental license program a “municipal charge and tax.”

WRAMA president had a front row seat at the candidate debate hosted by the Chamber of Commerce at RIM Park prior to election day. Larry Smith (WRAMA director) shares a history of rental licensing in the City of Waterloo.

WRAMA president met with Ray Goulet, President, Greater Sudbury Landlord Association (GSLA) and Shawn Leclaire, President, Kingston Rental Property Owners Association (KRPOA) during a conference presented by Ontario Landlords Watch on October 22, 2018.

My takeaways from the conversations I had leading up to the election date, and from those that were shared by candidates who spoke at the meeting, are that there is no shortage of confusion surrounding the City of Waterloo residential license program, its intention and the misunderstandings that exist among our representatives concerning the Residential

If you are a WRAMA member and do not own a rental in the City of Waterloo, you should consider the importance of being informed about the license program and the possibility of other city councils making it a part of the conversation. Once the new council has settled, I plan on presenting WRAMA’s position on the license program in early 2019. Stay tuned for more details! The next WRAMA meeting is taking place on Wednesday, January 9, 2019 with more information at www.wrama.com, WRAMA’s Facebook page and Twitter @WRAMAprez. On behalf of the entire board of directors, have a safe and happy holiday with best wishes for 2019! - Andrew Macallum, President

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Secondary suites For those who own a home in the Region of Waterloo that is valued at $403,635 or below, applications for a forgivable loan totalling $25,000 to create a secondary suite are due December 1, 2018. There are several stipulations around the funding, including controls over total rent that can be charged for the new rental unit, total gross income of prospective tenants and a 15-year commitment to these controls to realize complete forgiveness of the loan.

Image courtesy of www.lionsbay.ca

“Homeowners who are thinking of venturing into the business of rental housing provision are likely considering the risks and benefits that will confront them along the way.”

According to the application available on the Region’s website, “Ontario Renovates (O.R.) is a component of the Investment in Affordable Housing for Ontario program and is being delivered by the Region of Waterloo on behalf of the Federal and Provincial governments.”

Homeowners who are thinking of venturing into the business of rental housing provision are likely considering the risks and benefits that will confront them along the way. Questions about whether or not a secondary suite will increase or decrease the value of their home, and the impact it may have on their family life and neighbourhood are sure to be at the top of the list.

If you own a home and are considering building and renting out a secondary suite:

1 You are a landlord and subject to the expectations of the Residential

Tenancies Act and subsequently governed by the Landlord Tenant Board (LTB), a quasi-judicial arm of the Social Justice Tribunals Ontario. As a result of a shortage of adjudicators, the LTB has endeavoured on a hiring initiative. If you find yourself seeking support from the LTB, be prepared for a hearing date that is assigned months from the application date and an accumulation of legal costs. Tenants in Ontario are provided free legal counsel, while landlords are not.


As a landlord, you must use the Residential Tenancy Agreement form. If you do not provide the tenant with the standard lease form, the tenant can demand that the landlord do so. The “provincial lease” as it is commonly known is 14 pages long. Legal addendums in the “industry lease” (including items on damage from growing plants as well as the condition and care of the secondary suite) bring the total number of pages to 28.

58 | November 2018

3 If the address falls within the boundaries of the

City of Waterloo, the landlord is required to satisfy the residential rental housing licensing by-law (no. 2011-047). The cost varies (up to and beyond $70 per month, per secondary suite) and the licensing fees and mandatory charges levied by the City of Waterloo have been declared “municipal charges and taxes” as determined by the Landlord and Tenant Board, and affirmed by Divisional Court. Among the documents required for a rental license in the City of Waterloo is a police criminal record check.

5 You cannot force a tenant to leave the

secondary suite if you change your mind about being a rental housing provider. Additionally, the tenant can dictate whether or not they vacate the secondary suite if you decide to sell your home. Issues like this, as well as those surrounding pets, number of occupants (guests vs. partners vs. weekend parenting obligations), smoking (tobacco and marijuana, for example), and noise are all important and, in some cases, lifestyle-altering considerations.

Image courtesy of www.cbc.ca


Image courtesy of www.fruxhomes.com

4 The maximum amount of rent a tenant is

charged is determined by the Region of Waterloo and strictly controlled by the province, with increases in rent permitted once a year and capped at 2.5%. The allowable increase for 2018 and 2019 is 1.8%. Although rents can be changed to reflect market needs when a tenant moves, “secondary suites that have received funding through this program must have rents at or below the approved Average Market Rents” for 15 years.

The income you generate is reportable to the CRA and impacted by your applicable marginal tax rate. Rental housing provision and becoming a landlord is not for the faint of heart. The Waterloo Regional Apartment Management Association is working hard and strives to actively and positively develop and sustain the integrity of its members’ business – the provision of private residential rental accommodation – in the Golden Triangle. The way in which rental housing providers are viewed is changing, as the need for affordable private rental supply has become a viable part of the solution to Canada’s housing crisis. However, the need to understand the rental housing landscape is imperative for those hoping to enter the market and take advantage of the Region of Waterloo’s Secondary Suite Initiative.

Discover the benefits of being a member of our association The mission of the Waterloo Regional Apartment Association is to actively and positively develop and sustain the integrity of its members’ business – the provision of private residential rental accommodation – in Waterloo , Kitchener, Cambridge, Guelph and surrounding areas. To view the full range of valuable property managment resources we offer to our members, or to apply online go to http://wrama.com/, or contact WRAMA at 519-748-0703.

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Brought to you by:

RHB SIDEBAR Capital markets & national investment snapshot

National Apartment Group


DAVID MONTRESSOR, Executive Vice President, CBRE - National Apartment Group

2018 was a breakthrough year for multifamily investment in the Greater Toronto Area. Following unprecedented growth in rental rates, owners have realized substantial gains in value since the beginning of the year, while a significant increase in investment volume reflects a major momentum shift on the sell side of the market. Growing demand for multifamily assets has translated into new pricing benchmarks across the GTA. “Best-in-class” assets in centrally located neighbourhoods now transact close to $400,000 per suite, demonstrating considerable appreciation over prices seen in the first half of the year. An absence of apartment availabilities has squeezed rents higher. The corresponding effect on pricing has cascaded throughout the asset class where investments in peripheral submarkets now sustain values between $250,000 and $300,000 per suite. Despite a smaller number of transactions, total 2018 investment volume for the GTA is expected to close the year at over $2.1B, an increase of more than 50% over 2017. The change is characterized by the sale of larger assets in institutional-size deals and estate planning dispositions. Notable transactions included Blackstone’s entrance into Canadian multifamily, the sale of the Wynn Family portfolio, and major sales of institutionally-held assets. 2018’s increase in sales volume coincides with notable macroeconomic changes, including the Bank of Canada’s fifth rate hike in 18 months. While investor confidence in the GTA remains decidedly firm, this represents a fundamental pivot in portfolio and asset management strategies over the last two years, as private owners and institutional advisors look to realize profits within the context of broader cyclical pressures, suggesting a shift in the cycle and an opportunity going into next year. We anticipate this trend will continue into 2019 with larger transactions leading market activity and investors looking to capitalize on the GTA’s tight fundamentals.

60 | November 2018

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