Vol. 11 No. 3 Jul/Aug 2018
Canada’s #1 most widely read publication for Apartment Owners, Managers and Association Executives
The official publication of:
What can landlords expect from the new Ford government?
RENTT Canadian apartment owners share their opinion on carbon pricing policy.
One important government goal is to improve housing affordability and availability, in areas where they are under challenge, and especially in the Greater Toronto Area.
A closer look at poverty in canada The Angus Reid Institute conducted a study that examined the state of poverty in Canada based on lived experiences, rather than income, and found some surprising results.
“Carbon tax reduces the amount we can spend on repair and maintenance, which stifles those programs.” – Paul Sander p. 16
Fundamentals tighten in Ontario’s
Read about how the City
For–profit rental providers can
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Editor’s notes Summer’s here… and it’s almost over It’s been a few months since the last issue. Where did the time go? Summer wasn't even here yet when I finished editing the last issue, and now summer is half over. It’s been really hot here, which I really like, but when it has rained, it’s come down in figurative buckets. I feel like I have to squeeze in some fun in August, as my daughter is already complaining that school is almost here. There’s still more than a month for that, but the stores are really pushing back to school and fall clothes, so I know what she means. I’ll make sure to enjoy the rest of the summer while I can. This issue of RHB Magazine features a RENTT panel on carbon pricing. It’s a hot topic (and not just due to the weather) as there is a lot of debate on the effectiveness of imposing a carbon tax on reducing energy usage and greenhouse gases. While the carbon policy comes from federal legislation, the provinces can implement their own policies. The panelists discuss the impact of carbon policy on their business, how it affects the capex process, and what is going on at the provincial level. We also ask panelists about what they would like the federal and provincial governments to do to help rental housing providers. RHB takes a closer look at poverty in Canada. The Angus Reid Institute conducted a two-part study on the state of poverty in Canada based on lived experiences. The article combs through data to pull out interesting results, as well as examine how some findings affect the rental housing industry. Another article discusses what landlords can expect from the new Ford government in Ontario, covering topics such as housing affordability and availability, rent control and various landlord issues. And at the end of the magazine, CBRE takes a closer look at the outlook and data for multifamily assets in the Greater Golden Horseshoe. As usual, have a read through CFAA’s newsletter, National Outlook, as well as the Regional Association Voice. We enjoy hearing from our readers and support two-way communication. If you have any comments or questions, send them to email@example.com. I look forward to hearing from you.
Enjoy the issue! David Gargaro Senior Editor
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Marc Côté firstname.lastname@example.org
Juan Malvestitti email@example.com
David Gargaro firstname.lastname@example.org
John Dickie, President CFAA email@example.com
Director of National Sales Nishant Rai
Regional Sales Executive (RAV) Ranjna Bhardwaj
Office Manager 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
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VOL.11 NO.3 2018
contents The new Ford government What’s coming Newly elected Ontario Premier Doug Ford has selected his cabinet, including the various major candidates who ran against him in the campaign.
RENTT: Carbon pricing and government involvement In this month’s issue, we asked our esteemed RENTT (Rental Executives National Think Tank) panelists to share their experiences with government legislation and initiatives that affect the rental housing industry.
Regional Association Voice Regional Association Voice features the latest industry news from four member associations.
A closer look at poverty in Canada It’s easy to identify people who fall into the bottom half of the poverty range, but less easy to make clear statements about the top half.
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Suite Count Greater Golden Horseshoe (GGH) demands for multifamily assets remain strong.
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president’s corner Across Canada, as housing prices continue to climb, rental housing providers are now facing more challenges and opportunities than they have in recent years. A little over a year ago, the Ontario government imposed rent control on recent rental construction and tightened many of the rules which apply to ending tenancies for personal use and raising rents. Now, a new government may take a different approach. In BC, the NDP was elected. It too has limited landlords’ rights, and is looking at making more changes. Both Vancouver and Toronto face rising house prices and rents, due in large part to government restrictions on new housing supply. The rental industry wants to build where demand is strong, but is hamstrung by rental replacement requirements, long delays and uncertainty in obtaining planning approvals, and municipal government extortion (in the form of Section 37 impositions in Toronto, and community amenity contributions in Vancouver).
existing cash flow. In effect, in exchange for enabling community supports and integration, rental providers are being given the opportunity for rent lift for up to 70% of their units. For more details, see page 35. National Outlook also provides a report on CFAA’s very successful Rental Housing Conference 2018, held in Vancouver, along with the 3rd Annual CFAA Rental Housing Awards Dinner and presentation. See photos of the 2019 winners on page 39. CFAA Rental Housing Conference 2019 will be held in downtown Toronto from May 13 to 15. To receive updates on the conference and on federal opportunities for rental providers from CFAA, email email@example.com.
At the federal level, tax relief for rental housing is still a dream, and in fact, small corporations have been hit with new restrictions, as explained on page 40. Federal housing policy offers some good news. The new National Housing Strategy includes support for repairs and renovations, for new construction and for better financial support for low-income renters. Provided the new construction subsidies are focused on high demand areas, all of those measures are good for rental providers. The repair program can be thought of as an updated version of Rental RRAP. While the new program includes more “social inclusion” requirements that Rental RRAP used to include, the new program’s affordability requirements are more modest. Just as Rental RRAP did, the Co-investment Fund - Repair and Renewal Stream may work well for properties which require substantial upgrades to preserve their
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In this issue of... National Outlook CFAA Member Associations 35. A new and different “rental RRAP program” For–profit rental providers can apply NOW to two new programs to obtain financial assistance for repairs and retrofits, or for new construction.
38. CFAA Rental Housing Conference 2018: The Future of Rental Housing From May 14-16, CFAA held Rental Housing Conference 2018 in Vancouver. Over 3 days, the Conference explored the question, “What is the Future of Rental Housing?”
40. The Canada Housing Benefit – why and how? To make the new Canada Housing Benefit help create mixed income, inclusive communities, two possible uses of the program need to be reconciled. That is the current challenge facing landlords.
To subscribe to CFAA’s e-Newsletter, please send your email address to email@example.com.
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.
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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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Carbon pricing and government involvement
In this monthâ&#x20AC;&#x2122;s issue, we asked our esteemed RENTT (Rental Executives National Think Tank) panelists to share their experiences with government legislation and initiatives that affect the rental housing industry. We focused on the carbon pricing system (refer to Spin Cycle on page 22 for more information), and discussed what members of the rental housing industry would like the government to do to help their industry. We also asked questions specific to our panelistsâ&#x20AC;&#x2122; regions (BC, Ontario and New Brunswick).
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Paul Sander, Director, Hollyburn Properties
Willy Scholten, CFO, Colpitts Developments
Adam Krehm, President and Treasurer, Oâ&#x20AC;&#x2122;Shanter Development Company Ltd.
Brent Merrill, President and CEO, MetCap Living
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RHB: Welcome, everyone, to RHB Magazine’s RENTT panel. Thank you for taking the time to participate and share your insights and experience. We are sure that our readers will learn a lot from your responses. Today we’d like to begin with a discussion of the federal carbon pricing policy. To begin, how will the federal carbon pricing plan affect your business in your area? Paul Sander: It is an additional tax that negatively impacts our business. Carbon tax reduces the amount we can spend on repair and maintenance, which stifles those programs. This tax will detrimentally affect the owner who wants to update their boilers and spend money to improve their building’s efficiency. It will do the opposite of what it is intended to do. Willy Scholten: We really have not heard much about the carbon tax application in New Brunswick. I believe as of right now New Brunswick has not signed on to do a carbon tax but it is up for discussion and likely will be an election issue for the election this September. My thoughts are businesses in New Brunswick are feeling overwhelmed
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with the taxes currently in place and having another tax added on would not be supported by us. If this is put into place and we need to plan for additional taxes, this will impact cash flow and reduce the amount of work we can do in our properties. Adam Krehm: The carbon tax will make natural gas more costly. This additional cost under current rent control legislation cannot be passed on to our tenants by way of increased rents. Brent Merrill: This carbon tax business adds about $70 a unit to the average gas bill. In a 100-unit apartment it's about $7000, or maybe 20 per cent cost increase. We can't pass it on to our customers. Imagine the cost to administer this system. Is the purpose of imposing a carbon tax not to get the consumer to adjust their usage habits? If the tenant does not pay this increase, what habits will change? While the cost of consumption is not passed on to the tenant, the cost of replacing aging heating equipment could be, at least in Ontario, with an above guideline increase for the cost of replacing a boiler. So the tenant might pay some cost here… at least on the capital side.
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RHB: How does the federal carbon policy affect your decision making on capex projects? Willy Scholten: Building costs are already rising with the tariff uncertainty right now and to add another element that will increase costs would mean less projects and major repairs for us. Paul Sander: It won’t affect my decision making. If you take the average apartment building with 20 to 30 suites, where you might spend about $200,000 to upgrade the boiler room, the carbon tax will cost an extra $150 per suite per year. Therefore, there is no financial motivation to make the upgrade. Carbon tax robs rental owners of desperately needed funds to improve the efficiency of their buildings. There is no way to recover environmental upgrade projects or carbon tax in a rent-controlled environment. Why would the government think that carbon tax would motivate the landlord to upgrade their old buildings? It's laughable. Adam Krehm: Our firm has for many years used a rough rule of thumb that an investment in a capital expenditure should have a simple payback of not more than three or three and a half years to be a worthwhile investment. The advent of cap and trade may cause our firm to consider long simple payback periods. Brent Merrill: We might change aging boilers or controllers quicker. That’s about it. RHB: What do you want your federal government to do to help you and other rental housing providers? Willy Scholten: Many of our tenants are seniors on fixed incomes. The federal government could help more with energy efficiency grants for new and to be renovated projects, which would give them lower costs for their homes. The Bank of Canada could also stop increasing interest rates. They seem to believe that the economy is doing so well that rates can be increased. We have two more years of uncertainty with President Trump. Being overly optimistic on the economy could add a lot of
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problems for rental housing construction while we are already dealing with increased costs from the tariff issues. Paul Sander: The government should put together a committee of market rental housing providers – not social housing providers or independent living providers. Pair people who build, manage or maintain market rental housing with a government facilitator, along with energy and other repair and maintenance consultants, so that they can work together to find real ways to reduce energy usage in rental properties. Apply the money collected from the carbon tax to fund the committee and their proposals, such as implementing a smart thermostat program, doing energy benchmarking, and servicing and cleaning boilers and digital submetering, especially for heat. Then they can share the data collected and determine best practices with other landlords, so everyone benefits. Brent Merrill: Provide further tax incentives for investing in our aging rental stock. Come up with a nationwide social security system that provides rent supplements rather than programs geared to income. This would incentivize people to work part- or full-time, as they could apply some of their wages. Force the provinces to equalize condo and apartment realty taxes faster to lessen the incentive to build condos and increase it to build apartments. Also, force provinces to reduce bureaucracy and red tape to build accommodations, especially apartments. Adam Krehm: Federal legislation, as I understand it, has very little impact on how we conduct our day-to-day business. RHB: Paul, how is the carbon tax system either better or worse than cap and trade for rental housing providers in BC? Paul Sander: The carbon tax system and cap and trade, as currently implemented, are essentially the same, as far as rental properties go. You need more than 5,000 suites on a single gas meter to meet the cap and trade consumption standard. Hospitals, large factories and similar large facilities can participate in cap and trade. Everyone else is just paying a straight carbon tax. CONTINUED ON PAGE 22
A closer look at carbon pricing The purpose of a carbon pricing system is to help reduce greenhouse gas (GHG) emissions that contribute to climate change. It does so by charging companies that emitÂ GHGsÂ for their emissions. Its goal is to help change consumer behaviour by increasing the cost of products and services that are more GHG-intensive (and making things that are less GHG-intensive less expensive). There are two types of carbon pricing systems that will be used in Canada. Direct pricing systems apply a fixed price on emissions, such as a tax or levy on fossil fuels based on the amount of GHG content in each fuel. The quantity of emission reductions is not certain. Cap and trade systems set a limit on the quantity of emissions allowed within a sector over a period of time. The market determines the price of a unit of emissions, as the availability of emission allowance credits will change over time. Canada is developing its own carbon pricing policy under the Greenhouse Gas Pollution Pricing Act. The legislation would require provinces and territories to either apply their own carbon pricing system by JanuaryÂ 1, 2019, or adopt the federally administered carbon pricing system (the backstop). The backstop starts at $20 per tonne in 2019 and increases to $50 per tonne in 2022. The federal government will impose the backstop on any province or territory that does not adopt a carbon pricing system, or if their pricing system fails to meet federal
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standards, by the given date. This is to ensure that the whole country meets the minimum carbon pricing commitments, while also encouraging emission reductions. How the federal government uses its backstop revenues will help to determine the success of implementing a Canada-wide carbon pricing plan. According to the pending federal legislation, the government must return any money collected through the federal backstop to the collecting province or territory. Any provincial or territorial government that requested the backstop instead of setting up their own carbon pricing policy will receive those revenues to spend as they see fit. If a province or territory does not comply with the carbon policy, the federal government can decide where to spend that money. This could involve sending refund cheques directly to taxpayers, investing in federal priorities within that province or territory, or providing grants to municipalities. Saskatchewan and Ontario are currently non-compliant, and both provinces could lose out on a lot of funding (or the option to spend the funding where they see fit). Revenue from applying the backstop in Saskatchewan could surpass $500 million in 2019. Last year, Ontario collected $2.4 billion from permit auctions, and the federal backstop could produce the same amount next year with the new provincial government abandoning its cap and trade program.
rentalhousingbusiness.ca | 21
“This situation will increase the incentive to reduce fuel consumption in our apartment buildings.” – Adam Krehm
RHB: A number of organizations in BC made suggestions collected by the Rental Housing Task Force. What changes would you like to see put into force, or not put into force, and why? Paul Sander: While there are many things that we would like to see happen, such as the elimination of rent controls, we must be realistic. Our hope is that there are no major changes made to the Residential Tenancies Act that make things worse. For example, leave the Annual Allowable Increase at the Consumer Price Index, or CPI, plus two per cent. We would also like to keep rent controls tied to the tenant, not the unit, so that the landlord can negotiate a new tenancy upon tenant turnover based on the market rate and the actual cost to deliver safe, secure rental housing. RHB: Adam and Brent, with the new government scrapping cap and trade, as well as energy efficient incentives, how will this affect current and future capex projects? Adam Krehm: This situation will increase the incentive to reduce fuel consumption in our apartment buildings. Brent Merrill: In my opinion, there won’t be much impact, as no one understands it yet. RHB: What do you want the new provincial government to do to help you and other rental housing providers? Adam Krehm: Rescind the legislation that forbids the conversion of bulk metered electrically heated buildings to “tenant pay“ individually metered apartment suites. It is a well-documented fact that when tenants pay their own electrical bills the consumption is reduced 30 per cent or more. We would also like the government to phase out rent controls.
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Brent Merrill: Ontario could increase building by a ton and reduce the pressure on tight rental markets by scrapping rent control. It would create a little pain for long-term gain and a more balanced rental market. They could also provide incentives or fast track apartment builds – both new builds and infill. RHB: Willy, what do rental property owners want to see with respect to property tax reform in the province? Willy Scholten: The property tax rate in New Brunswick is 194% higher than the rest of Atlantic Canada and 254% higher than the rest of Canada. The reason for this is that New Brunswick has a dual tax system, where non-owner occupied properties get charged both a municipal tax and a provincial tax. Owner-occupied properties are only charged the municipal rate. Housing, whether owned or rented, should not be taxed differently. We want New Brunswick to eliminate their portion of the property tax, which will make us more comparable to other provinces. RHB: What do you want your provincial government to do to help you and other rental housing providers? Willy Scholten: The property tax rates are the main issue. We want them to fix this. Many of our tenants are seniors on fixed incomes. The province could help more with energy efficiency grants for new and to be renovated projects, which would give them lower costs for their homes. RHB: Thank you all for your insight and experience.
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A closer look at poverty in Canada What does poverty look like in Canada? Poverty exists over a range of economic realities. It is relatively easy to identify people who fall into the bottom half of that range, but less easy to make clear statements about those in the top half. Many tenants fall somewhere within that range. However, it’s not always obvious. The Angus Reid Institute (ARI) conducted a two-part study that examined the state of poverty in Canada based on lived experiences, rather than income, and found some surprising results.
The big picture Rather than defining poverty (there is no official definition in Canada), ARI used various income-based measures to compare Canadians across different cities, regions and provinces, as well as to people in other countries. The survey used self-reported personal experiences to quantify economic struggles and illustrate how easy or difficult it is for Canadians to make ends meet. Note: Since the study was done online, people living in extreme poverty (without access to the Internet or smartphones) were underrepresented. Therefore, the findings are low-end estimates of people’s experiences and attitudes.
ARI sorted Canadians into four groups, as shown in the graph to the right, based on 12 specific money-related scenarios. These situations include forgoing common luxuries like movies and dining out, having to use a food bank, and being unable to purchase winter clothes.
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Four types of Canadians based on experience with economic hardship
Struggling - 16% On the Edge - 11% Recently Comfortable - 36% Always Comfortable - 37%
People in the Struggling group are struggling financially. They have dealt with at least four of the 12 items on the list, and most have been experiencing at least one regularly throughout their lives. People in the On the Edge group have experienced at least three of the 12 items, but have only begun facing these economic challenges. These people are on the edge of serious financial difficulty. People in the Recently Comfortable group have experienced at least one of the 12 items, but most faced deprivation long ago and the situations have not recurred. They know what it’s like for money to be tight, although they are not facing issues right now. People in the Always Comfortable group are mostly untouched by the 12 scenarios, and most have never experienced any issues in their lives. Some have limited exposure to financial difficulty, such as occasionally having to pass up a dinner or movie.
CONTINUED ON PAGE 26
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Percentage who have ever Experienced these challenges in their lives Segment Struggling (16%)
On the Edge (11%)
Recently Comfortable (36%)
Always Comfortable (37%)
Don’t have the money to go to a movie or similar outing
Can’t afford good quality groceries, have to buy what is cheap
Not able to afford to go for dental care
Not able to buy new clothes when you need them
Live in a place that doesn’t meet your needs (too small, too far etc.)
Have to borrow money for essential things like groceries or transportation
Not able to pay a utility bill (such as hydro, water, phone, etc.)
Late paying rent or mortgage
Not able to afford warm enough winter clothing (coat/boots)
Use a food bank or some service providing free food
Use a “pay day loan” type service that offers access to cash but at higher interest rates
Can’t afford to go out for dinner for a special occasion
Source: Angus Reid
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CONTINUED ON PAGE 28
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HOusehold income within each segment 62%
Less than $50K $50,000 â&#x20AC;&#x201C; $99,999 $100,000 or more
On the Edge
Canadian adults who fall into the Struggling group tend to fit the traditional characteristics of poverty in Canada. This group includes disproportionate numbers of Indigenous people, visible minorities, people with disabilities, LGBTQ people, women, and people with (or less than) a high school education. There is a high correlation between people in this group and household income. However, people with a personal history of financial struggles donâ&#x20AC;&#x2122;t slot neatly into the low-, middle- and highincome categories. The above graph shows the distribution of income in each group. It illustrates that one out of every five people (22 per cent) in the Struggling group lives in a household that earns $50,000 to $100,000 per year. That income is well above the low-income cut-off for an individual ($24,949) or even a family of four ($46,362). (Source: Government of Canada website) Most people in the Struggling group (85 per cent) are under age 55, while there are more people aged 55 and over in the
Putting faces to the numbers
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Always Comfortable group. This distinguishes people in this group from people in groups based solely on income, as older people typically have lower incomes. Although many people live on fixed incomes in retirement (besides the Old Age Security and Guaranteed Income Supplement that rise with inflation), those surveyed said that they were still able to make ends meet because their expenses are lower. Conversely, about one third (34 per cent) of people aged 18 to 34 and 35 to 54 are either Struggling or On the Edge.
Bringing the numbers home According to ARI, 27 per cent of Canadian adults have lived in a place that is too small, too far away from work or school, or does not meet their needs. One in seven Canadian adults (or about 14 per cent) currently face these struggles, or have faced this problem regularly over their lives. You can correlate these numbers to tenants who are (or were) not happy with where they lived. Their dissatisfaction with their living conditions can also have a negative impact on other tenants, property managers and building owners.
A key indicator of poverty is an individual’s ability to pay their rent or mortgage, as well as key living expenses. Looking more closely at the living experience, 18 per cent of respondents were late paying their rent or mortgage, and 24 per cent were at times unable to pay their utility bills. The percentage of Canadians currently experiencing these situations (or who face these issues on a chronic basis) due to lack of money is lower, at 6 per cent and 7 per cent, respectively. This illustrates that many people move in and out of income shortfalls compared to their expenses. What happens when tenants cannot afford to pay their rent or utilities? They often have to borrow money to cover these expenses. ARI found that 11 per cent of Canadians have had to use a pay day loan service to cover essential expenses, which put them further behind in their finances. About 4 per cent of respondents are facing this issue right now. Self-perception tells another interesting story. While 3 out of 10 Canadians view themselves as
“have nots,” this number jumps to 52 per cent of those On the Edge, and 65 per cent in the Struggling group. Of all the people who say that they are a “have not,” 38 per cent say that the housing costs in their neighbourhood are too high, while the same percentage believe that their wages are too low. More than two out of every five people who are either Struggling or On the Edge believe that those housing costs have a negative impact on their financial situation.
Conclusion Poverty is more than an economic measure of income, and how much one spends on the daily necessities. More than one quarter of Canadians experience notable financial hardship, which includes being unable to afford dental care or quality groceries. Many people (including renters) have issues paying their housing costs. The numbers tell a compelling story, and bring to light another view of the realities of poverty in Canada. By David Gargaro
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“He who is not courageous enough to take risks will accomplish nothing in life.” – Muhammad Ali
What can landlords expect from the new Ford government? Newly elected Ontario Premier Doug Ford has selected a strong cabinet, including the various major candidates who ran against him in the campaign to become party leader. By the time you read this, the political staff of the new government will have grown from 10 to about 500, as cabinet ministers and MPPs select their chiefs of staff, and in turn their other political staff. Various lobby groups, including apartment associations such as the Federation of Rental-Housing Providers of Ontario (FRPO), have sent letters of congratulations to the re-elected members and new members of all parties. The purpose is to make sure the rental housing industry is on the MPPsâ&#x20AC;&#x2122; radar as interest groups they should consult. Landlord groups will coordinate our asks and frame our issues according to how they can serve the governmentâ&#x20AC;&#x2122;s goals and needs. Housing affordability and availability Since it was an important election issue, one important government goal is to improve housing affordability and availability, in areas where they are under challenge, and especially in the Greater Toronto Area. That issue provides the entry point for suggestions about the rules governing new housing developments, and especially new rental developments. The outgoing government recently enacted reforms to the Ontario Municipal Board. Unfortunately, the new Local Planning Appeal Tribunal processes have not been fully implemented or seen the test of experience. It is unclear whether they will speed up development approvals, or reduce the number of approvals. It is clear that taking a new route (or
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even reinstating the old system) will be slower than what we would have had if the outgoing government had not made the changes. The new government needs to find a way to make development approvals faster and more certain. Rent control Another key area affecting housing affordability and availability is the provincial rules on rent control. Mr. Fordâ&#x20AC;&#x2122;s campaign promise was that he would not take away rent control from anyone who has it [when he made the statement]. From that, we cannot expect the restoration of the exemption for sitting tenants in post-1991 buildings. However, the promise leaves open several reforms that would be helpful, both for improved balance for rental supply and demand, and for rental providers. The new government could certainly bring in a new exemption for post-2018 buildings, whether that is set up to be permanent or it is for a certain time period such as 10 or 20 years. The latter would be called a rolling exemption. An important step for the future, with little or no political cost now, would be for the new government to lift the 2.5% cap on guideline rent increases. Another step that would help with rental availability would be to raise the guideline rent increase, by adding either 1 per cent or 2 per cent to the guideline. BC currently has a guideline of inflation (CPI) plus 2 per cent. By allowing modest rent increases over inflation, rents can respond to excess demand, and higher rents manage excess demand by encouraging tenants to economize on their rental demand, by doubling up, moving to a smaller unit or moving out of
the rental market to home ownership (or back to their parentsâ&#x20AC;&#x2122; basements). That makes more rental housing available to other people who lack those choices. The result can even be a lower housing cost for many people as each tenant consumes less housing in response to modest rent increases. Other landlord issues The new government could speed up processes at the Landlord and Tenant Board by shortening the timelines for various notices, or the time delays in enforcing evictions. For landlords and tenants in the Toronto area, an important reform would be to allow private bailiffs to enforce eviction orders.
regulate us and everyone else. Doug Ford received the support of Hazel McCallion, the long-time Mayor of Mississauga and a strong proponent of municipal powers, and she and others would be quick to condemn any reeling in of the municipalities. Taking everything into account, watch for some bold moves, especially over the next six to nine months. And expect some major battles! By John Dickie, Dickie & Lyman Lawyers LLP
The new government might be asked to empower landlords to ban the growing or smoking of cannabis in rental units. That is a hot current concern. The new government could also ensure that landlord licensing does not spread (or is rolled back). The provincial government controls the legislation and regulations under which some municipalities have licensed rental housing or created a registry for rental housing. Interaction with the municipalities As landlords, we have to be realistic about what the provincial government will do for us. Due to the deficit and the promises to cut taxes, we cannot expect new measures that will cost much money. As landlords, we would like the provincial government to limit municipalitiesâ&#x20AC;&#x2122; ability to raise revenue from us or to regulate us, but the municipalities are strong interest groups â&#x20AC;&#x201D; especially if there are provincial cuts to the flow of money to them. The municipalities will fight cuts to their ability to raise revenue, and restrictions on their ability to
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A new and different “rental RRAP program” By John Dickie, CFAA President For–profit rental providers can apply NOW to two new programs to obtain financial assistance for repairs and retrofits, or for new construction. The affordability requirement is relatively modest. However, to receive funding, rental providers probably need to designate some units to address one or more social purposes, or to arrange for some social agency services to assist tenants with special needs.
Affordability For a minimum of 20 years, applicants must keep rents for a minimum of 30% of units below 80% of the Median Market Rental rate (as described in the most recent CMHC Rental Market Survey for the market and unit type in question). That means 70% of the units are not subject to a limit on their rents, other than any provincial rent control regime that applies.
In the ten year National Housing Strategy (NHS), CFAA achieved commitments for government spending of:
Partnerships A project must include a provincial or municipal funding contribution, which can presumably be a contribution for providing energy savings or accessibility. CFAA will investigate whether the subsidies from a provincial rent supplement program are sufficient to qualify. (In Ontario, that would be a City rent supplement program.) If not, we will likely suggest that the rules be changed so that those subsidies do qualify, at least in the right circumstances.
$5.7B for major repairs or retrofits $7.4B for new rental construction.
Both pools of money are open to private market (for-profit) affordable housing, as well as community housing (i.e. social housing). Both are administered through the new National Housing CoInvestment Fund. Both seek to create or sustain mixed income, inclusive communities. Repair and Renewal Stream The Repair and Renewal Stream is making available $3.46 billion in loans and $2.26 billion in capital contributions over 10 years. To be eligible, the federal investment needs to be at least $250,000. Criteria To be eligible, properties must have a least 5 units, be primarily residential, and meet minimum requirements for partnerships, financial viability, affordability, energy efficiency, and accessibility.
Social purpose or social services To choose among possible projects, and determine the depth of assistance (and how much is a capital contribution as opposed to a loan), CMHC will use a scoring grid that takes into account: • • • • •
Greater depth or breadth of affordability Partnerships with other governments beyond funding contributions Proximity to community services, stores and work opportunities Presence of integrated supports and service for tenants on site Targeting priority populations.
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NATIONAL OUTLOOK Priority populations include women and children fleeing family violence, seniors, Indigenous peoples, people with physical or developmental disabilities, those dealing with mental health and addiction issues, veterans, newcomers and the chronically homeless. CFAA notes that many rental providers already assist those groups by providing units for placements for qualified people within their rental communities. To apply for the repair funding, rental providers will need to plan how to achieve the provincial or municipal funding contribution, and the social purpose or social services. Rental providers will need to work with social agencies to obtain a good score on the scoring grid. The comparison with Rental RRAP While the new program includes more “social inclusion” requirements than Rental RRAP used to include, the new program’s affordability requirements are more modest. Rental RRAP funding was provided by CMHC for many years until about ten years ago. The program was largely abandoned when CMHC bundled the money with other program streams, and devolved the choice of how to spend the money to the provinces. In its day, Rental RRAP was heavily over-subscribed. Owners could receive up to $24,000 per unit in forgivable loans for structural repairs, heating, electrical or plumbing retrofits or fire safety work. In exchange, the owner committed not to raise the rents above the guideline in rent-controlled provinces, or the Consumer Price Index in other provinces. Due to the building conditions before
the work, the rents were invariably below the average market rent, and the owner agreed to keep all the rents that way. Just as Rental RRAP did, the Co-investment Fund - Repair and Renewal Stream may work well for properties which require substantial upgrades to preserve their existing cash flow. However, the Repair and Renewal Stream places more emphasis on populations with special needs and on creating mixed income communities. In effect, in exchange for enabling community supports and integration, rental providers are being given the opportunity for rent lift for up to 70% of their units. For social housing providers who apply, the issues will be to include enough market rent units at high enough rents to ensure the projects’ financial viability. Including market rent units will also reduce the concentration of poverty, thus creating more inclusive communities. Social housing providers also gain points on the scoring grid for partnerships with for-profit housing providers or with other businesses, again with a view to fostering viable, whole communities with job opportunities and social diversity.
NEW CONSTRUCTION STREAM The New Construction Stream is making available $5.19 billion in low-interest loans and $2.26 billion in capital contributions over 10 years. The New Construction Stream has requirements similar to the Repair and Renewal Stream, but the minimum federal contribution is set at $1,000,000. The loans will be interest–only, for a 10 year term, renewable for a further 10 years with an interest rate reset. The amortization can be for up to 50 years. For private sector applicants, capital contributions are available
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 email@example.com to start receiving National Outlook today!
rentalhousingbusiness.ca | 37
July/August 2018 for exceeding minimum requirements for affordability, energy efficiency or accessibility. At a minimum, new construction needs to achieve a 25% decrease in energy consumption and greenhouse gas emissions relative to the most recent national building and energy codes. We understand that many or most new projects meet that minimum.
Welcome Reception The Future of Rental Housing relies on the connections between those in the industry. The Rental Housing Conference wants to help create connections, and strengthen existing connections, among landlords, apartment associations, and industry suppliers.
Numerous leading rental providers and apartment associations advocate for government support for new rental construction for the “missing middle” in communities which need it, such as Toronto and Vancouver. However, governments have trouble justifying subsidies for pure market oriented construction, even when it is needed. The New Construction Stream strikes a compromise by allowing up to 70% of units to be rented at market rents for new rental product, while insisting on some affordable units, to justify the support, and to create the mixed income communities, which are seen as the most desirable form of housing.
The Building Innovations Tour took delegates to two innovative rental developments in Vancouver (The Duke by Edgar Development and Woodbourne Capital, and Bridgewater by Hollyburn). After becoming acquainted at the buildings, delegates were invited to attend the Welcome Reception, to meet new people before the education sessions began.
Conclusion Under both streams of the National Housing Co-Investment Fund, the federal government is challenging the private sector to create whole, inclusive communities, while it challenges the social housing sector to do the same. For more information about either stream, or to offer comments or suggestions, please contact CFAA at firstname.lastname@example.org.
CFAA Rental Housing Conference 2018: The Future of Rental Housing By Jeremy Newman, CFAA Director of External Relations From May 14 to 16, CFAA held Rental Housing Conference 2018 at the Coast Coal Harbour Hotel in Vancouver. Over 3 days, 21 sessions, and with over 60 speakers, the Conference explored the question, “What is the Future of Rental Housing?” A highlight was the CFAA Rental Housing Awards Dinner, honouring some of the leading people, developments and renovations in the rental housing industry. For the full list of winners, please see the sidebar on page 39.
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Education Sessions Rental Development Issues Rental development issues were top of mind for the Executive Roundtable and for the BC Roundtable, as well as for Benjamin Tal and Derek Ballantyne, the new Chair of the Board for CMHC, who addressed the conference. As well as addressing the various streams of programming which will flow under the new National Housing Strategy, and how private rental providers can access most of them, Mr. Ballantyne urged CFAA and delegates to continue to lobby for portable housing benefits. New this year, CFAA presented a panel on Rental Development Issues across Canada, with two developers and two planners from the city-side of the issues. The panel addressed the economies of rental development, the barriers, and the issues cities face in approving rental developments. Delegates applauded “the proactive discussion from all sides to discuss possible solutions to move forward”. The session on new marijuana rules was delivered by Grant Haddock of Haddock & Co and Emma Sims of Cohen Highley. They answered questions on the minds of delegates, such as where tenants will be able to smoke, the impact of no-smoking rules, homegrowing, and accommodations that need to be made for medical marijuana users.
NATIONAL OUTLOOK British Columbia As CFAA-RHC 2018 was held in Vancouver, the future of the rental housing industry in British Columbia was addressed in numerous sessions, including the BC Roundtable, BC Building Sales, and Energy and Water Conservation in 2020. The BC Roundtable featured Jason Fawcett of Kelson Group Property Management; David Sander of Hollyburn Properties; David Hutniak of LandlordBC; and Al Kemp of MHPOA-BC. The speakers discussed the state of the BC rental market, the issues limiting rental development, provincial government incentives, and the steps the government has taken to protect renters. As one delegate remarked, this session handled issues “from trailer talk to high end technology to large landlords”. Ontario delegates also commented that it was an “interesting opportunity to learn about how BC landlords handle various issues compared to how we handle things in Ontario”. The session on BC Building Sales heard from Sandra Cawley of Burgess, Cawley, Sullivan and Associates; Cynthia Jagger of Goodman Report; and Greg Russell of CMLS. Delegates learned about the different values driven by development potential, existing income or upgrade potential. Greg added the issue of needing extra equity because of the way lenders view property upgrades, which applies across Canada. Conclusion One delegate described the conference as, “A very interesting forum where you can learn about many industry related topics, solutions to problems, new products on the market, see some new developments, and meet a lot of very interesting people from the industry, who are from many places across the country.” CFAA thanks all sponsors, speakers, moderators and attendees who made the conference such a success. We especially thank Yardi Canada Inc, the Conference Principal Partner.
SAVE THE DATE FOR 2019 We hope to see you at the CFAA-RHC 2019 from May 13 to 15, 2019, in downtown Toronto! Stay tuned for more details. To subscribe to updates about the conference, email email@example.com.
CFAA Rental Housing Awards 2018 Winners Cannabis Law Reform by Investment Property Owners Association of Nova Scotia Association Achievement of the Year
Gryd XR App by Gryd Pictured: Jordan Billinkoff and Josh Glow of Gryd New Product or Service of the Year
Caroline Armstrong of Devon Properties (second from the right) Property Manager of the Year
Jack Cabral of Sifton (centre) Off-Site Employee of the Year
Dhaljit Dharival of CAPREIT (centre) On-Site Employee of the Year
Jasper Heights – 10049 103 Street NW, Edmonton by Starlight Pictured: Andra Mihaiu, Trevor Potts and Joe Crupi of Starlight Renovation of the Year
Maple – 1583 Hollis St, Halifax, NS by Southwest Properties Pictured: Gordon Laing, President of Southwest Properties Rental Development of the Year
Congratulations to all finalists and winners! CFAA thanks the judges, and everyone who applied for the CFAA Awards Program this year.
rentalhousingbusiness.ca | 39
Corporate tax reforms enacted Parliament has enacted the watered-down corporate tax reforms announced during December 2017 and in Budget 2018. The reforms apply to Canadian-controlled private corporations (CCPCs), not to public companies, REITs or people who hold title in their own names. The changes also do not impact investors whose corporations earn only rental investment income, rather than active business income. Income splitting through CCPCs is now limited, but some exceptions apply. Most notably there are exemptions for business owners age 65 or older to split income with their spouses, and for family members who work or have worked an average of at least 20 hours per week in the business for a specific period of time. As well, earning passive investment income in a CCPC will limit access to the small business tax rate otherwise available for active business income. That change will affect real estate companies which employ more than five full–time employees, and are thus able to treat rental income as active business income. Companies with $150,000 or more of investment income will lose their access to the small business tax rate. However, they will not have to pay a super-tax of up to 73%, nor have to track second generation (and third generation) investment income, as was proposed in July 2017. If you believe you may be affected by these changes, contact your accountant to discuss
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the impacts and how best to proceed, going forward.
The Canada Housing Benefit – why and how? By John Dickie, CFAA President In the ten year National Housing Strategy (NHS), CFAA achieved commitments for government spending of $5.7B for major repairs or retrofits, and $7.4B for new rental construction. Both programs are open to private market (for-profit) affordable housing, as well as social housing. Both seek to create mixed income, inclusive communities. See the article on page 35 for more details. As another part of the drive to create or sustain mixed income, inclusive communities, while assisting those in the deepest need, the NHS includes a $4B commitment for a new Canada Housing Benefit. Most housing advocates, including CFAA, view housing benefits as being good for tenants, good for for-profit landlords, good for taxpayers and good for maintaining mixed income communities. As CFAA and our member associations say, portable housing benefits: • • • • •
allow tenants a wide choice of where to live avoid the stigma often associated with public housing allow the available funding to be spread more equitably among more low-income tenants allow tenants to keep their housing assistance if they move for personal reasons or to take a new job minimize administrative costs
NATIONAL OUTLOOK • • • •
preserve the normal tenant application process preserve the normal landlord-tenant relationship achieve income mixing without the cost of subsidizing middle income tenants can help many low-income tenants stay in areas that are gentrifying.
Many CMHC officials understand the advantages of portable housing benefits, but some are concerned that they may lead to rent increases. To us at CFAA, that view seems unrealistic in markets where vacancies are high or rents are stable. The concern is more sensibly directed at places like Toronto and Vancouver, where rents are already rising and housing benefits could fuel tenant demand, especially if they were poorly designed. As a result, the NHS presents the main intended use of housing benefits as supporting social housing tenants who have to move for re-developments, or supporting low-income tenants in market-rent units in social housing. In contrast, CFAA sees their best use as supporting tenants who have the most trouble affording their rents in the private sector.
urged CFAA and landlords to continue to advocate for portable housing benefits. He must be confident that a proper design can be found that will mean the Canada Housing Benefit will not drive up rents. As an industry, we need to promote the use of housing benefits for private market tenants. That can address the most severe housing need, which is experienced by tenants paying 50, 60 or 70 per cent of their incomes on their rents. CFAA is working with numerous other housing advocates to do that. Lobbying alongside advocates for low-income people is a good way to show CMHC, the government, and the media, that landlord support for housing benefits does not mean that they will be a boon to us, but rather that making more use of housing benefits will help people in need.
There is no doubt that rents are rising in Toronto and Vancouver, and they are rising across the whole spectrum of rent levels. That low-income tenants need help to pay the rising rents is one important argument for providing housing benefits in those places. CFAA believes the concern about fueling rising rents is misplaced. The governments of BC and Quebec have used housing benefits for over four decades, often in places and at times with high rental demand or increasing rental demand. Over that time, BC and Quebec have figured out how to design housing benefits so that they do not drive up rents. They pay only a percentage of a tenant’s actual rent, and they pay a percentage of that rent only up to a maximum. That means tenants have significant incentive to economize on the rent they pay. Tenants keep or find the economical units that exist even in rising markets. At CFAA Rental Housing Conference 2018, Derek Ballantyne, the new CMHC Board Chair,
rentalhousingbusiness.ca | 41
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RHBâ&#x20AC;&#x2122;s forum for rental housing associations to share news, events and industry information
Hot topics: LPMA provides key tips on dealing with potential summer problems and making them easier to handle. pg. 45 HDAA explains that no one is to blame for gentrification, which is often tied to homelessness, and looks at ways to alleviate the problems. pg. 49 Learn about Ottawaâ&#x20AC;&#x2122;s recent improvements to the municipal rent supplement program and how Ottawa landlords face a turbulent shift to paid visitor parking. pg. 53 WRAMA discusses some useful tasks to keep your building in tip-top shape for your tenants, and your neighbours. pg. 57
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President’s message — Teeing off in support of charities We are well into summer and feeling the heat! Let’s all take a moment to remember the 20-foot snowbanks and then appreciate the warmth of each day. With summer come the golf tournaments that bring us together in aid of several incredible charities. This year, the LPMA golf tournament will be held on September 10 with proceeds going to Merrymount Family Support and Crisis Centre. Merrymount serves 8,000 families each year and helps children by supporting their families in times of crisis. Their services include 24 hours of short-term continuous overnight care for children and 30 education and prevention programs for adults and children. Look for upcoming events focusing on the legalization of cannabis, its impact on landlords and steps we can take to protect our assets. LPMA will also be conducting one-on-one seminars to help members with the new standard lease. – Lisa Smith, President
Tips for dealing effectively with summer problems Summer is ideal for spending time outdoors, whether the activities involve barbecuing, playing ball with the kids or entertaining on balconies and patios. However, the realities of multi-residential living sometimes require landlords to run interference between tenants and smooth over problems exacerbated by the soaring mercury. Two LPMA members have outlined ways of making the summer months easier to handle. Garbage: Garbage collection changes weekly due to London’s eight-day garbage cycle. As a result, it’s common for townhome tenants to put out their garbage on the wrong day, says Theresa Lapensée, operations manager, London residential rentals for Sifton Properties, which owns 1,000 townhomes in London. “It’s harder for people to remember when garbage day is. It poses a challenge for us because, on holidays, that eight-day cycle becomes nine or 10 days and it becomes an even bigger mess,” she notes.
Sifton provides a digital welcome package to new tenants, including a link to the City’s garbage schedule followed by regular emails about keeping the neighbourhood clean. The company also leaves reminder cards with boxes that staff check off to indicate a problem. If that approach isn’t effective, they follow up with an email and a letter. A significant number of residents are new to Canada. “A lot of them don’t understand the domino effect if they put out their garbage two or three days early,” Lapensée says.
Sifton is installing outdoor message boards in common outdoor areas with suggestions in English and Arabic for containing waste. Sean McNally, owner of MCI Properties, used to have a garbage bin for residents who live downtown in six apartments above businesses, but had to remove the bin when others began using it, causing it to overflow. Now, he asks tenants to keep their garbage in their units until the night before a curbside pick-up; however, some leave it in front of the mainfloor businesses if they miss the collection. In response, McNally issues a newsletter asking them to comply. In his townhouse community, he prefers that residents leave their garbage pails in the rear patios. Some start putting them at the front when they see others doing so. “It’s important to get on top of issues,” he says.
If odour is causing complaints, Sifton asks a staff member to visit the offending residents and give them a deadline to remove the garbage. If they don’t comply, staff remove it and charge them for their labour costs. Dog waste: Sifton has installed waste disposal boxes and bags in common outdoor areas. Their presence discourages townhome residents from allowing their dogs to use their patios. “We’ve received many positive comments from residents for the dog waste receptacles. They’re used regularly,” Lapensée says.
rentalhousingbusiness.ca | 45
McNally says dog waste is also a problem in his townhome complex. The site manager visits offending tenants and gives them a deadline for cleaning it up. If the situation hasn’t improved on the follow-up visit, an N5 notice of eviction is issued for interfering in the reasonable enjoyment of other residents. “It’s progressive discipline,” McNally says.
Late-night noise: Tensions can rise when residents stay out too late for their neighbours’ liking. “We get complaints when the kids are noisy and about people partying on their patios,” Lapensée says.
Sifton encourages neighbours to try to resolve problems on their own; otherwise, it appears to the offending tenants as if their neighbour is being heavy-handed by reporting them to Sifton. In rare cases when tenants can’t reach a resolution, Lapensée encourages them to come in and discuss the conflict with a staff member. Children: Sifton has nine playgrounds in London, which Lapensée believes have helped to discourage unwanted parking lot activity. Through quarterly newsletters, parents are reminded not to allow children to play in parking lots. The company also puts reminders on a digital sign to help keep children safe. Sifton contacts parents directly if the problem persists. “We explain why we’re concerned, that they could be hit by a car or they could cause damage,” says Lapensée.
McNally recalls a resident who erected a slide in shared green space and hooked up a hose she shouldn’t have been using. Following a respectful conversation, she took the slide down and didn’t use it anymore.
“There was a risk of people getting hurt,” McNally recalls.
Communication: McNally says it’s important to set expectations with tenants early and to deal with situations right away. As a small landlord herself, Lapensée says it’s common to feel overwhelmed when dealing with residents. “Listen to what the issues are (when tenants complain) and identify in whatever small way how you’ll fix them. Being open and communicative with them can resolve a lot of issues,” she says.
LPMA golf tournament supports critical children’s respite program When members tee off at the 15th annual LPMA golf tournament on September 10, they will be helping to provide a safe place for children who can’t stay with their own families due to an emergency or crisis. Funds raised at this year’s tournament will signal the first of a two-year commitment in support of the Crisis Residential/Respite Program at Merrymount Family Support and Crisis Centre. LPMA golf tournament chair Brenda Trineer says that, with the exception of the Special Olympics Canada 2010 Summer Games, this is the first time LPMA has made a multi-year pledge.
46 | july/august 2018
“We decided we could make a much bigger impact if we made a two-year commitment,” she explains.
Merrymount and LPMA forged a meaningful connection in 2016 when the tournament raised $14,000 in support of Merrymount’s Residential/ Respite Program. “Merrymount is a fantastic cause for us,” Trineer says. “It’s a natural fit between housing providers and a charity that provides a safe place for children to stay when their families are in crisis.”
Last year, LPMA raised $16,450 in support of Ronald McDonald House Charities Southwestern Ontario. Trineer explains that the tournament is a fun way for LPMA members and associate members to get to know one another. This year, registration sold out in only seven days. “This event is important to our sponsors and it’s important to us,” she adds.
The funds raised on the course during the next two years will make a real difference in the lives of families who turn to Merrymount. “It allows us to plan our service provision over a longer time,” says executive director Paul Howarth.
Founded as an orphanage in 1874, Merrymount has evolved into a leading provider of specialized prevention and early intervention programs and resources. It is the only centre in Canada to offer emergency overnight shelter with
specialized programs for children. Merrymount’s Residential/Respite Program offers 18 residential beds for children from birth to age 13. Only four of the residential beds are supported through government funding, with each bed costing $83,000 a year to keep open. In 2017, the program provided a safe haven for 2,556 children – an 11.13 per cent increase from the year before. The average stay is three nights. “We are experiencing an increase in families presenting with children’s mental health issues, housing and shelter issues, addiction issues, family breakdown, family violence, social isolation, adult mental and physical illness, and poverty challenges,” Howarth says.
Merrymount’s program offers a caring environment where children can develop coping strategies through programs tailored to their individual needs. “Knowing their children are safe and being cared for by our compassionate and skilled team allows parents to focus on addressing the issues facing their families,” Howarth says.
Trineer saw that care and compassion when she toured the centre in 2016. This year, members of LPMA’s board of directors also visited Merrymount. “Walking the halls and meeting some of the children makes a huge impact,” says Trineer.
With government funding covering only 67 per cent of Merrymount’s operating costs, community support is vital.
“Without the support of donors and organizations like LPMA, Merrymount could not run the programs and provide the services that we do,” says Howarth. “We cannot thank LPMA enough for helping us support the children and families we serve.”
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 Cassie Allison. Ph: 519-672-6999 Web: www.LPMA.ca
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Visit uniongas.com/affordablehousing to learn more.
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There is no “fault” in gentrification A recent article about homelessness in Hamilton has sparked the debate of whose fault it is and has suggested that we are OK with people living in the street. The article titled “Hamilton is missing the mark on homelessness” published in the Hamilton Spectator on June 25 suggested that gentrification is a major contributor to homelessness, stating, “The fault for this squarely sits on the shoulders of landlords, developers, and investors.” The article asks why we are not investing in affordable housing, why the industry is not putting social responsibility over profit and how our need to “squeeze” money out of every square foot is destroying communities. For the record, we share the frustration about homelessness in Hamilton and are not OK with people living on the street. The Hamilton and District Apartment Association (HDAA) wants to work with stakeholders to find solutions to improve the industry, avoid future issues and create a City where everyone has a safe, affordable home. Let’s look at this from a business perspective. Profit is not a four-letter word. Profit flows back to the government’s coffers through many streams, be it stores, restaurants, the arts, technology, charities, salaries, taxes, etc. The rental housing industry has contributed $18.30 billion to Ontario’s GDP, generated $8.30 billion of labour income in Ontario, created 146,534 jobs in Ontario, contributed $7 billion to government revenues and created total gross output of $34.93 billion in Ontario (as per the 2013 KPMG Report). All of this goes toward better social services for those who need it the most. It is true that housing providers want to make a profit, just like every other essential needs provider. We have universal healthcare,
but the doctors don’t work for free. We have grocery stores and shopping malls that provide all kinds of essential goods to the public, but no one is telling them they must “do the right thing” and run a business at a loss. Why, when it comes to housing providers, do we expect them not to make a profit? Without profit, there would be no ability to spend the money to help those in need. There is no “fault” in gentrification. It is easy to make housing providers, developers and investors the root of all evil, but there are just as many reasons for gentrification as there are for homelessness. Gentrification is the process of renovating and improving a house or district, something that is needed more in Hamilton than any other city. Hamilton has a high number of low income earners and has been depressed for many years. Hamilton is going through a revitalization by improving, renovating and creating new housing. This brings in new business, improves the health of the city and creates jobs. These opportunities create better pay for lower income residents. Basic economics says the more a city improves, the better lives the people in that city have. Being a Canadian is about paying taxes to enable governments to help those in need. The government provides support through cash to live, education to improve their lives, job prospects, medical services, mental health issues and other challenges these people face. Some of the money invested in new developments comes from pension funds, mutual funds, stock markets and banks. Pension funds and REITs have a duty to their investors to get the best return on investment. A good return on investment will pay the taxes that fund these social services that will help those most in need. Economics made it impossible for there to be any significant rental housing construction for a
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period of over 30 years. It is now very slowly starting to be feasible again. These investments in infrastructure are at the beginning stages and the economics to make it work barely make sense, so we need to tread softly to ensure it continues. Government-enforced fees, taxes and development charges factor into why building new rental housing is so precarious. It should be the top priority because today’s expensive new housing will provide affordable housing down the road. We understand that many feel new developments should have a percentage of affordable housing; however, making 10% affordable and making the other 90% subsidize the 10% is not the solution if it makes that 90% less affordable. Ensuring rents don’t go up further is one reason why HDAA has been fighting against licencing. This tenant tax will put a real and significant strain on affordable housing through loss of rental units. The most vulnerable people are currently renting basement apartments or similar low rent units. Many of these housing providers are renting out their basements because they need to pay their mortgage so that they can afford to live. Many rental units in Hamilton are owned by regular people who are just trying to secure their future. If there was no profit in being a housing provider, they would sell the property and there would be fewer rentals in Hamilton. Constructing more rental units, supporting portable housing benefits and reducing the multi-residential tax rate will start to alleviate some financial hardships for those struggling. The City of Hamilton has also committed to spending $50 million on a poverty reduction strategy and is one of the cities testing the “Ontario Basic Income Pilot Project.” These are all great, financially sound solutions to help reduce homelessness.
Recent events: June 19 Golf Tournament - What a fantastic golf day, with a SOLD OUT tournament! • • •
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Tournament winners - The Mark Loeffler Team Best hole sponsor - Skyview Realty Winner of 92 bottles of wine - Steven Ordanis CLV
June 28 Education Seminar - Tina Novak of Valery Properties did an amazing job of pointing out the important things to remember when the unexpected happens, such as how to handle death, fire and flooding in your building. She used case studies and talked about mistakes she has learned over the many years she has been in the industry. Here are a few tips from the seminar to remember: •
Establish a solid trusting relationship with an emergency service provider prior to the need to have one! Some projects last months and you want someone in your property that you trust for good quality workmanship, up-to-date equipment and is trusted by insurance to assist with estimation of damage.
Be in control of your emotions, the information flow and work that is being completed and by whom.
Ensure your full cooperation with authorities but also understand they don’t always know the rules that apply to the Act.
Have your documents in order at all time – Fire Log books and records will be reviewed.
Most importantly, be prepared for the potential for a disastrous situation; have numbers readily available for:
insurance (including policy number if possible) disaster/restoration contractor • victim services/crisis services • temporary shelter services (if required) •
June 29 Boat Cruise – It was a beautiful night on the Hamilton Harbour Queen Cruise. This is one of the best local attractions in the City of Hamilton. The award-winning tourist experience has been providing not only out-of-town guests, but local residents with a great summer experience. With musical entertainment, four-course meal and a unique view of Hamilton, it’s a great way to start the summer!
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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City of Ottawa dramatically improves rent supplement program By John Dickie, Chair, Eastern Ontario Landlord Organization For many years, EOLO has advocated the use of housing benefits and rent supplements as the most effective approaches to supporting low income tenants who have trouble affording the housing they need. Portable housing benefits are paid to qualified tenants, who rent rental units and pay their landlord. However, under the rent supplement program, the City enters into an agreement with landlords. The landlord and the City agree on the rent, the tenant pays a portion of the rent (based on their income), and the City pays the landlord the rest of the agreed rent. Portable housing benefits avoid the landlord take-up issue, but for the City to use rent supplements, landlords need to provide rental units to take up the rent supplements. Until now, there were problems with the program that led landlords to be reluctant to participate, or to want to withdraw units from the program. The maximum rents were too low. The administrative burden was too high. The City would not pay for any unit repairs. Landlords could not withdraw some units, while leaving others in the program; instead they had to cancel their entire rent supplement agreement. Over recent years, EOLO has repeatedly raised the key issues which prevented greater landlord take-up with City of Ottawa staff and City Councillors. Besides the 18,500 social housing units in the City, Ottawa now offers 3,300 rent supplement units provided by over 100 private landlords. The City has a significant need for more rent supplement units. To seek them, the City has addressed many landlords’ common concerns, and made major improvements in the rent supplement program. The key changes are:
Units can be placed in the program for the initial tenant only (i.e, one-time commitments). Under certain conditions, the City will pay
reasonable costs for undue damage caused to the unit.
The rents that can be charged have been increased dramatically.
The rents that can be charged now vary with household size, thereby mitigating higher utility usage and greater wear and tear.
Increased rents that vary with household size The previous and new maximum market rents are as shown in Table 1. Table 1: Approved average market rents (maximums allowed)
New maximums varying by number of occupants
New units need to be in good condition, and meet current industry standards, with normal turnover maintenance and repairs completed. Now, new rent supplement units (and existing units at turnover) are tested against other rents in a landlord’s building (or in the area) for units that are of similar age and condition and have recently turned over, not against a landlord’s rent roll as a whole. That means landlords can obtain the benefit of vacancy de-control when rent supplement units turn over. The rent the City will pay now varies with household size. Higher rents are often permissible for larger households, thereby
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mitigating higher utility usage and greater wear and tear. The higher rent stays in place if the family size falls, as long as the family remains in the unit.
Other improvements Since court judgments cannot be collected against social assistance payments, landlords could not sue tenants on Ontario Works or ODSP to recover repair costs for unit damage. Until recently, the City would not pay for that damage either. Now it will, under certain conditions. The City will pay reasonable costs for undue damage if the landlord has made every reasonable effort to collect the costs of repairing the damage from the tenant without success. However, the landlord does not need to sue social assistance recipients. In addition, for the City to pay for them, repairs need:
To restore the unit to its pre-damage nature and quality (rather than improve the unit) • To be pre-approved by the City • To be performed only after the City has inspected the unit to verify the damage •
Units can be placed in the program for the initial tenant only (i.e, one-time commitments). Thus, units can be moved in and out of the program without the need to cancel the entire rent supplement agreement.
Ongoing program conditions The Rent Supplement office refers eligible households to the landlord, up to two at a time, thereby eliminating the expense and resources required to market a vacant unit Up to two months’ rent will be paid by the City as compensation for vacancies between tenants that occur due to the program requirements. The rent subsidy is paid each month on a predictable basis. Landlords need to collect the tenant’s portion of the rent, but the rent is usually not more than 30% of the household income, and tenants are very keen to keep their units and the subsidy that goes with the unit. For questions, please contact Christine Amaro, Rent Supplement Coordinator, at the City Rent Supplement office at 613-580-2424 ext 27144.
Conclusion EOLO hopes that other cities consider making similar changes to their rent supplement programs, so that more low-income tenants in Ontario can receive the help they need in today’s rising rental markets. It would benefit the rental industry if more landlords provided more rent supplement units. The City has done its part by dramatically improving the program. EOLO urges Ottawa landlords to look again, or to look for the first time, at providing rent supplement units.
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Paid visitor parking at rental buildings Over the last few years, most large landlords in Ottawa have converted their visitor parking to a pay-as-you-park basis. Usually the parking rates are quite modest, such as $1.00 per hour with a $5.00 daily maximum. Yet in recent conversions, substantial opposition has arisen to the change. Tenants have contacted the media and their City Councillors, demanding they prohibit the practice. The trigger for the change has usually been the abuse of visitor parking, by non-visitors or by tenants of the buildings. In several areas of the City, parking has become harder to find, sometimes because the City has added bike lanes or widened sidewalks. When people coming to a neighbourhood cannot find street parking, they sometimes park in an apartment building, walk into entry and then walk out to do their business in the neighbourhood. In other buildings, tenants would park in visitor parking to unload their groceries, put the groceries away and then forget to move their car. Some tenants would drive their cars out of the tenant parking area, and then park in the visitor parking between trips because it was closer than their assigned tenant parking. Some landlords have found their parking revenue increased after the switchover. They are convinced that tenants were parking in the visitor parking, and then took and paid for a tenant space, since they could no longer park for free in visitor parking. Other landlords made the change because of the impact on their staff of trying to police
visitor parking. Some staff were threatened with vandalism to their cars if they called for parking control to issue tickets (or were deputized to issue tickets themselves). The most common reason for the change was that when it was free, there was not enough visitor parking. Legitimate visitors would come to the building and not find parking. Landlords argue that low-cost but available parking is better than free parking that visitors cannot access since it is not available. All over the City, parking is increasingly policed by means of charges for the parking, enforced by tickets for parking without paying in an area where a payment is required. Landlords feel their practice is legitimate, and they should be allowed to charge for parking as the hospitals and most businesses do, and as even the City itself does.
Ontario rent increase guideline announced for 2019 The 2019 rent increase guideline is set at 1.8%, the same as it is in 2018. This applies to all rent increases between January 1, 2019 and December 31, 2019. The increase is based on the average increase in the Ontario Consumer Price Index (CPI) for the 12 months preceding June 2018. CPI is based on a “basket of goods and services” consumed by the average individual. The surge in the CPI to 2.2% in February to May 2018 was offset by the low increases experienced between June 2017 and October 2017 when the CPI increase averaged 1.3%. Full details on the guideline can be found on the LTB website.
BECOME AN EOLO MEMBER NOW! EOLO invites Ottawa area landlords to join the organization. Have your interests and concerns heard, and benefit from EOLO’s support. As an EOLO member, you will be able to: • Receive
prompt emails of relevant City rule changes
two networking receptions a year
two free education events a year
Receive all 6 annual issues of RHB Magazine with current developments, City and provincial funding programs, and landlord-tenant laws.
To apply for membership, go to www.eolo.ca, download the membership application form and send it to us at the contact info on that website.
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Vol. 11 No. 3 Jul/Aug 2018
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One important government goal is to improve housing affordability and availability, in areas where they are under challenge, and especially in the Greater Toronto Area.
What can landlords expect from the neW ford government?
Canadaâ&#x20AC;&#x2122;s #1 most widely read publication for Apartment Owners, Managers and Association Executives
RENTT Canadian apartment owners share their opinion on carbon pricing policy.
President’s message WRAMA is looking forward to our next event on Wednesday, September 12, 2018. Welcoming a panel of industry experts and hosting at The Tannery event centre in downtown Kitchener, we are looking forward to networking, welcoming new and existing members to what will surely be a first class event! More information can be found at www.wrama.com and on Twitter @WRAMAprez.
Caulking around windows, siding that has become dislodged from high winds and brick that has been over-exposed to water are all items that need attention in nice weather. Use the warmer temperatures to ensure repair work is done properly and products are able to cure (when applicable).
2. Pest control
With some of the nicest weather in recent memory, it is time to complete tasks that will help keep your rental property a nice place for people to live and neighbours to live next to. - Andrew Macallum, President
Top 10 summer tasks to complete at rental properties 1. Exterior inspections of roof, windows, siding and brick Canadian winters are extremely harsh on the exterior of homes. Take time to complete a visual inspection of your roofing system to prevent water issues. Valleys and curling shingles on sloped roofs, and seams and bare spots on flat roofs, can be flags asking for attention. According to local roofing company www.roofman.com: “Sometimes it’s possible to get your roof in tiptop shape with only a partial repair or re-roofing install. However, sometimes, a full replacement roof in Kitchener, Waterloo and Cambridge is the only option. Take the guesswork out of your repair; contact a professional roofing contractor for a full inspection to determine the extent of your need and how to best move forward.”
Time and energy spent proactively to deter squirrels and other rodents from getting into attics and crawl spaces will save both in the long run. Suggestions from www.orkincanada.ca include:
As with dealing with any pest, home maintenance is key. Ensure the shingles on your roof are replaced as often as needed.
Use tamper-resistant outdoor garbage cans and store them away from your home.
Where necessary, treat your lawn for grubs, or beetle larvae, as they can be a food source for skunks and raccoons.
Make it more difficult for raccoons and squirrels to get to your roof by keeping trees trimmed away from the house.
3. Exterior painting Eager to get that fresh coat of paint up - wait! Damp surfaces and ill-prepped surfaces will mean a shorter life for the new paint job. Seasoned painters will wait until a duration of dry, warm weather has passed to ensure prep-work and paint are enjoyed for years.
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4. Driveway work Heaving, cracking and pooling take their toll on vehicles. Having the parking lot and/or driveway sealed and repaired during the summer will help prevent larger, more costly projects down the road. 5. Landscaping/lawn care A regular grass cutting regimen makes for great curb appeal, and also puts neighbours at ease and provides a more enjoyable experience for tenants. It also helps manage unwanted pests and weeds. Smaller landlords who cut the lawn themselves will also find that maintaining a regular presence at the rental property demonstrates a level of care and engagement that will be appreciated by tenants. 6. Insurance/contract review Don’t just “set it and forget it” - take a look at the insurance held on a property, premiums that are paid and the endorsements that cover damages. With a product that is necessary but easy to forget about, it is important to understand exactly what you are covered for and keep your provider competitive. 7. Furnace/boiler check-up Having heating systems inspected during warmer weather will help ensure that tenants are kept warm during the colder months and mitigate the possibility of displacement, frozen pipes and further damage. Local HVAC company www.afterglow.ca suggests: “Regular maintenance on your furnace by experienced technicians will ensure you are protected against most breakdowns. It is also a safety and efficiency concern to ensure your furnace receives maintenance.” 8. Insulation check Keeping an eye on the level of insulation in the attic of a house or building will save money on utilities through all seasons. If you haven’t checked the attic since the home inspection you made upon purchase, now is the time. Despite the cancellation of some green initiatives by the new Ontario PC government, it is still worth investigating any incentives that may exist to keep the R-value high at your property.
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“If you own a building, you are responsible for ensuring it’s maintained in compliance with the Ontario Fire Code which can help prevent injuries and save structures.” – Kitchener F.D.
Rental properties owned through corporations will have different year ends, some that occur during summer months.
the Ontario Fire Code which can help prevent injuries and save structures.”
9. Annual fire inspections Hiring a firm to complete inspections of alarms, detectors and extinguishers provides a formal record of doing so, ensures safety response equipment is in good working order, holds the property to a standard and most importantly keeps people safe. Replacing batteries in alarms, checking the expiration date on alarms and ensuring the property is in compliance with fire regulations can save lives. According to the Kitchener Fire Department: “Whether it's a home, education facility, office building or event venue, fire safety saves lives. If you own a building, you are responsible for ensuring it's maintained in compliance with
10. Year-end corporate taxes Landlords who personally own a rental property likely follow a tax year that ends in December. Rental properties owned through corporations will have different year ends, some that occur during summer months. There is no escaping paying taxes and using the summer months to complete paperwork and submit payment to the CRA can help you to avoid missing deadlines and receiving penalties from non-payment.
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:
Suite Count RHB SIDEBAR Capital markets & national investment snapshot
National Apartment Group
Fundamentals tighten in ontario’s Secondary markets AVID BY: DAVID MONTRESSOR, Executive Vice President, CBRE - National Apartment Group
Demand for multifamily assets in the Greater Golden Horseshoe (GGH) remained strong through the first half of 2018. Investors continue to seek opportunities in markets surrounding Lake Ontario with pricing and demand rippling outward from the GTA. Regional transaction volume as of July is down slightly year-over-year following a landmark year in 2017 with rare portfolio offerings. Capitalization rates across southwestern Ontario have compressed and maintain similar levels in most markets, particularly for assets of scale and quality. Vacancy rates have dropped in secondary markets across the province: 2.3% in Hamilton (down from 3.6%), 1.9% in Kitchener-Cambridge-Waterloo (from 2.3%), 1.4% in St. Catharines (from 2.2%), and 1.8% in London (from 2.1%), while Guelph’s vacancy rate edged slightly higher from a recent low of 0.9% in 2016 to 1.2% last year. Relative affordability between housing substitutes is the principal factor driving demand for rentals, in addition to regional job growth and immigration. Notable market-specific trends include 29% job growth in Kitchener-Waterloo’s tech-sector over the last 5 years, as well as double-digit annual price increases in some single-family home and condominium markets. Several investors are pursuing opportunities with new construction in secondary markets. Merchant developers and institutional capital have found success through forward-sale strategies where demand is satisfied by a high-end rental product in both urban and suburban areas. The outlook for multifamily assets is very positive with broad desire from investors to increase exposure to markets in the GGH. A favourable growth trajectory is underpinned by a diverse economy, ambitious infrastructure projects and immigration, which will add further demand to rental markets across the region. Sources: Realnet, CMHC, CREA, and CBRE Research 4.50%
1.00% 0.50% 0.00%
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Kitchener / Waterloo