CANADA’S NATIONAL PUBLICATION FOR APARTMENT OWNERS AND MANAGERS
VOLUME 13 / NUMBER 1 / MARCH 2016
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The Energy Issue Facts on cogeneration Audits and incentives New technologies
ENERGIZED
FOR SAVINGS
PA R T O F T H E
CAPREIT’s Dan Rames shares proven conservation strategies
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Editor’s Note
Cutting back, investing more
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For property owners and managers, spring is a magical time of year. That moment the crusted snow melts away to reveal nature’s first buds is one to be cherished…because nothing transforms a drab, grey property like a lush lawn or a tree-trimmed garden. And better yet, those pleasant spring temperatures sure can have a positive effect on utility bills. Speaking of bills, this issue is all about cutting costs and conserving energy in the face of rising utilities. From simple behaviour switches to complex alternative solutions, we’ve put our contributors to work digging up and reporting back on what’s relevant to the industry today. One word that seems to have bubbled up out of nowhere is “Cogeneration.” The technology once reserved for large-scale institutions has entered the multi-residential space with a bang, and all eyes are on where it will lead us. We get to the bottom of the CHP craze on page 16, and I can promise you, if you haven’t considered this as an energy savings measure—or if you’ve dismissed it as too costly or complicated for your property—you may be pleasantly surprised. CAPREIT’s Dan Rames is our issue’s industry influencer. Heading up the firm’s reputable energy management department, Dan knows a thing or two about the current techniques and technologies that can lead to optimum results. Don’t miss our oneon-one conversation with Dan on page 20 and find out what has his attention in this continually evolving area. LED lights, rooftop gardens, insulation, energy audits, government incentives, analytics-based building automation platforms…we really could go on and on about the many ways to save. Enjoy reading the information-packed issue, and please reach out if you have any energy-related story ideas you’d like to share. We’re always happy to hear from you.
Sincerely, Erin Ruddy @ehruddy
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President Kevin Brown Group Publisher Melissa Valentini Copyright 2016 Canada Post Canadian Publications Mail Sales Product Agreement No. 40063056 ISSN 1712-140X Circulation ext. 234 Subscription Rates: Canada: 1 year, $50*, 2 years, $90*, US $75 International $100, Single Copy Sales: Canada: $12* * Plus applicable taxes Requests for permission to reprint any portion of this magazine should be sent to Melissa Valentini
Authors: Canadian Apartment Magazine accepts unsolicited query letters and article suggestions. Manufacturers: Those wishing to have their products reviewed should contact the publisher or send information to the attention of the editor. The opinions expressed are those of the authors of articles and do not necessarily reflect the views of Canadian Apartment Magazine. This information is general and is not a substitute for legal advice. Sworn Statement of Circulation: Available from the publisher upon written request. Although Canadian Apartment Magazine makes every effort to ensure the accuracy of the information published, we cannot be held liable for any errors or omissions, however caused. Printed in Canada.
COGENERATION
YOUR ENERGY SAVINGS SOLUTION More building owners today are turning to Combined Heat and Power (CHP) as a way to save energy and reduce electricity costs
Efficiency Savings Revenue
Energy Costs Co2 emissions Contact DBS to learn about CHP technology, incentives and benefits. Other DBS Services:
HVAC • Boilers • Building Automation • Electrical • CWB Welding • Energy Management • Sustainability Planning • Government Incentive Support • Project Financing • IAQ • Metal Fabrication
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POWER AND ENERGY info@dbsair.com • 416.255.7370
CONTENTS COVER STORY
FEATURES
20 Industry Influencer
16
Off the Grid, On the Money
28
Emerging Energy Trends
42
Lighting the Way
CAPREIT’s Dan Rames shares new and proven strategies for conserving energy in apartment buildings. By Erin Ruddy
COLUMNS 10
Transactions Q1 Market Update By Erin Ruddy
12
CMHC Getting a Boost on Savings By Paula Gasparro
32
Portfolio Global and National Market Trends By Derek Lobo
36 Newsworthy Eye on the Industry 32
Management From Bottom to Top By Jessica Green
40 Insurance The Changing Workplace By Andy Schwartze 44 Legal Keeping up with Residential Tenancy Laws By Erin Ruddy
DEPARTMENTS
COLUMNISTS Paula Gasparro, Jessica Green, Derek Lobo, Andy Schwartze
4
Editor’s Note
34
Ask the Expert
46
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THIS MONTH’S ONLINE EXCLUSIVES ALL THE BUZZ
Saskatoon offers upside investment potential Newer purpose-built apartments appear to have gained the competitive edge in Saskatoon’s slumping rental housing market. However, industry analysts suggest the current surge in vacancies presents landlords with an opportunity to reposition their properties for the return of better economic times.
GTA home resales soared 21.1 per cent, year over year, in February.
FROM THE GREEN BIN
Toronto’s debut sixstorey wood-frame development Heartwood the Beach Condos is poised to become Toronto’s debut six-storey wood-frame development. The collection of 40 luxury suites, set to rise on the northeast corner of Queen Street and Woodbine Avenue, is scheduled to enter construction this spring.
Intensification impacts on millennial consumers Millennials are on the cusp of becoming the largest group of home buyers and renters, and they are entering a wildly different real estate market than their parents did. The Consumers Council of Canada struck an expert panel that studied this changed terrain, culminating in a report released last month containing 24 recommendations concerning consumer education, planning policies and more.
PortsToronto recently unveiled its first sustainability report.
EXPERT ADVICE
Lawyer Cynthia Sefton illuminates the implications of the ‘swing stage case.’
CONNECT WITH US ON:
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Transactions
Q1 Market Update Investor Demand for Purpose-Built Multi-Suite Residential Rental Properties Remains Strong
With the first quarter of 2016 still underway, we checked in with Keith Reading, Director of Research at Morguard, for some advance insights on commercial real estate market conditions. Earlier this year, Morguard released its 2016 Canadian Economic Outlook and Market Fundamentals Report, in which it predicted a fifth consecutive year of positive results for Canada’s commercial property sector. Reading, who was at the helm of the research, is feeling optimistic that 2016 will bring favourable results for the sector. “There is lots of capital from mostly private sources, pension funds, institutions and some public entities chasing a limited number of assets for sale,” Reading notes. “The low Canadian dollar is a draw for foreign capital as their purchasing power has increased.” During periods of economic weakness such as the current climate, Reading explains that investors look to place capital in stable and secure investment vehicles. Over various periods of economic softness the sector has exhibited significant levels of resilience with regard to capital retention and income growth. “When the economy is weak, people put off purchasing to some degree, which bolsters rental demand,” he says. “The consistently healthy migration to Canada from other countries also has stabilized demand for rental accommodation.”
Notable Q1 transactions from across Canada:
10 www.canadianapartmentmagazine.ca
Akelius acquired a 415-unit portfolio in Montreal for $120.5 million (or $290,361 per unit)
2016 Predictions According to the 2016 Canadian Economic Outlook and Market Fundamentals Report, investors will continue to achieve attractive portfolio returns, finishing the year close to (or slightly below) 2015. Performance will be essentially income-driven, with property values holding at 2015 levels. There will be modest erosion of property values in specific asset categories in Alberta, as the ongoing oil crisis results in rental market softness through at least the first half of 2016. Investment fundamentals will be largely positive, against a backdrop of elevated global economic and financial risk. A range of investment groups will continue to scour the Canadian market for opportunity. However, supply will fall short of healthy demand supported by low interest rates and relatively stable property market investment performance. Despite weakness in regions that are dependent on the oil and broader energy sector, the 2016 outlook for Canada’s commercial property investment market is largely positive. You can read the complete report online: http://www.morguard. com/news-knowledge/research
Skyline REIT acquired 5400 Clover Road in Edmonton for $46.1 million (or $221,679 per unit)
An undisclosed buyer bought a 327-unit Quebec City portfolio from OMERS for $22.2 million (or 67,890 per unit)
Transactions
New & Notable Transaction
New Purpose-Built Rental Property: 66 Isabella, Toronto
160 Chapel Street, Ottawa In February, 2016, Morguard North American Residential REIT purchased 160 Chapel in Ottawa for $67 million. The 21-storey, 370-suite property was the first Canadian acquisition for the Trust since its IPO in 2012. The property features furnished and unfurnished suites with a mix of bachelors and one- and two-bedroom floor plans. It has a prime location in an existing multi-suite residential neighbourhood with stable occupancy. There are four commercial units located on the ground floor comprising of 7,010 square feet of retail. The acquisition was financed by cash and a mortgage in the principal amount of $38.6 million for a term of ten years, bearing interest at 2.88% per annum.
Timbercreek Asset Management acquired 300 Regina Street North in Waterloo, Ontario, for $84 million (or $203,883 per unit)
Minto acquired 205, 207 Morningside Avenue in Toronto for $27.5 million (or $128,505 per unit)
Park Property Management recently opened doors to tenants at 66Isabella, a new 23-storey residence located in Toronto’s Church and Wellesley neighbourhood. Offering an array of amenities— including a state-or-the-art fitness centre, a landscaped outdoor terrace with a barbecue area, a sun deck and gardening centre, a party room and a media and games lounge—66Isabella is also home to a dog wash/grooming station, an Alfred concierge system, and indoor and outdoor bike rooms. Each condo-quality suite is equipped with a front-loading washer/dryer combo, vinyl plank flooring, kitchens with a refrigerator, dishwasher, oven, built-in microwave hood and ceramic backsplash framed by designer chocolate-coloured kitchen cabinets. Sumptuous bathrooms feature a glass-enclosed shower stall and white finished bathtub. 66Isabella is approved under the Federation of Rental-Housing Providers of Ontario’s Certified Rental Building Program (CRBP). The CRBP designation provides a “quality assurance” benefit that helps potential tenants select high quality living conditions and first rate management. In addition, Park Property Management has embraced the CRBP’s newest initiative, Living GREEN Together, which is the first industry-developed environmental operating standards for multiresidential apartment buildings. March 2016 11
CMHC
Getting a Boost on Savings Features and Benefits of CMHC’s Energy Efficiency Loan for New and Existing Rental Properties By Paula Gasparro
Planning a new build or considering energy efficient upgrades to an existing rental property? CMHC offers mortgage loan insurance premium savings of up to 15 percent through a premium reduction or refund. In addition to potentially increasing the life span and value of the structure itself, building owners and tenants who invest in energy efficiencies may benefit from reduced operating costs. Whether the rental property is new or existing, a student housing complex, a retirement residence or a long-term care facility, eligible candidates may benefit from the following features: 10 percent premium reduction/refund to borrower on full premium due or paid (inclusive of surcharges) for qualifying new construction applications; up to 15 percent premium reduction/refund to 12 www.canadianapartmentmagazine.ca
borrower on the full premium due or paid (inclusive of surcharges) for qualifying existing building applications; recognition of estimated energy-savings in valuation of rental properties when calculating net operating income, including anticipated consumption savings for heat, hydro and water efficiency initiatives; and no minimum energy savings threshold for existing buildings.
Where applicable, a premium reduction can be received at time of origination, providing borrowers with instant premium savings. Borrowers are able to use a variety of documents to demonstrate a reduction in energy consumption, reducing the cost and time involved in obtaining energy reports. Based on when energy efficiency savings are demonstrated, borrowers
CMHC
have the option of either receiving an upfront premium reduction or a premium refund. During new construction, 10 percent premium reduction/refund to the total premium due or paid, including any surcharges, will be provided for all qualified new construction projects. For retrofits, a premium reduction/refund will be limited to the lesser of: i) the overall percentage reduction in energy consumption up to a maximum of 15 percent, or ii) the total eligible energy-efficient capital investment expenditures. Energy Efficient criteria For new construction, the building is required to be the higher of five percent more energy-efficient than if constructed to meet provincial/territorial requirements (where they exist) or five percent more energy-efficient than if constructed to meet the National Energy Code for Buildings (NECB). For existing buildings, there is no minimum threshold for the anticipated reduction in energy consumption. The reduction in energy consumption must be the result of the owner’s or builder’s capital investment in the structure. Documentation requirements The anticipated or actual reduction in energy consumption is required to be demonstrated to CMHC. This can be shown through a variety of documents, (see CMHC’s website for complete details) and must be signed by a Licensed Professional Engineer or a Certified Engineering Technologist. To demonstrate a reduction in annual energy consumption, the borrower may provide invoices/bills. These are to be provided for the 12-month period prior to the improvements and the 12-month period after the improvements have been completed, for comparison. For existing buildings, all requests must include at minimum, information on energy consumption volumes (costs for the various energy sources) and the costs related to energy-efficient improvements. The approved lender is responsible for submitting all the required documentation to CMHC no later than 15 months after
all the improvements have been completed. CMHC’s website offers a wealth of energy-saving information and ideas on
reducing energy and water consumption in multi-unit residential buildings. Check out CMHC’s website using search key words multi-unit energy savings.
For more information, or to take advantage of CMHC’s Mortgage Loan Insurance, contact Paula Gasparro, Manager, Business Development, Multi-Unit Mortgage Insurance at 416-250-2731 or via e-mail at pgasparr@cmhc.ca.
ARE YOU CONTEMPLATING THE SALE OF YOUR APARTMENT PROPERTY? Consider the following: • Who will represent your best interest? • Who will give your property maximum exposure? • Who will deliver the highest value for your property? With over 25 years experience, tens of thousands of units sold, and hundreds of clients represented, we have consistently delivered superior results. Through our local and national coverage, we create maximum exposure, ensuring maximum value for your property.
$52,300,000 (180 Suites - $290,555 p/s) 2770 Aquitaine Avenue Mississauga, ON
$50,250,000 (264 Suites - $190,349 p/s) 1485 Williamsport Drive & 3480 Havenwood Drive, Mississauga, ON
$46,000,000 (152 Suites - $302,632 p/s) 111 Lawton Boulevard Toronto, ON
$22,750,000 (105 Suites - $216,667 p/s) 5 Rittenhouse Road Kitchener, ON
David Montressor* | Executive Vice President 416.815.2332 | david.montressor@cbre.com CBRE Limited, Real Estate Brokerage
Please visit our website: www.cbre.ca/nag-toronto
* Sales Representative This disclaimer shall apply to CBRE Limited, Real Estate Brokerage, and to all other divisions of the Corporation; to include all employees and independent contractors (“CBRE”). The information set out herein, including, without limitation, any projections, images, opinions, assumptions and estimates obtained from third parties (the “Information”) has not been verified by CBRE, and CBRE does not represent, warrant or guarantee the accuracy, correctness and completeness of the Information. CBRE does not accept or assume any responsibility or liability, direct or consequential, for the Information or the recipient’s reliance upon the Information. The recipient of the Information should take such steps as the recipient may deem necessary to verify the Information prior to placing any reliance upon the Information. The Information may change and any property described in the Information may be withdrawn from the market at any time without notice or obligation to the recipient from CBRE. CBRE and the CBRE logo are the service marks of CBRE Limited and/or its affiliated or related companies in other countries. All other marks displayed on this document are the property of their respective owners. All Rights Reserved.
vertical-magazine-ad-design - de changes v2.indd 1 Untitled-4 1
March 2016 13
2/2/2016 10:38:00 AM 2016-02-08 9:04 AM
Affordable Housing Update
Feds Fund Affordable Rental Housing Repairs and Innovation The 2016 federal budget, released in March, promises to set aside $2.3 billion over two years for new and existing affordable rental housing, including doubling spending on a federal affordable housing program and adding $111.8 million to help 61 cities tackle the ongoing challenge of homelessness. From that amount, $200 million will go toward repairing and building affordable housing units for more than 5,000 low-income seniors and $739 million over the same time for housing for First Nations, Inuit and northern communities. In addition, the Government will provide ongoing support to 570,000 social housing units across Canada. Many of these units are older and urgently in need of repairs. To support the necessary retrofits and renovations, Budget 2016 proposes to provide $573.9 million over two years toward upgrades that would improve efficiency, reduce energy use and lower utility costs. By improving water and energy efficiency, this investment will also help the social housing sector contribute to Canada’s overall plan to reduce greenhouse gas emissions. MANN_CAM_March_2016_FINAL.pdf
ONEOP
ST OP y
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2016-03-29
9:22 AM
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1
Affordable Rental Housing Innovation Fund To encourage the construction of affordable rental housing, Budget 2016 proposes to invest $208.3 million over five years, starting in 2016–17, in an Affordable Rental Housing Innovation Fund, to be administered by the Canada Mortgage and Housing Corporation. Funding would be used to test innovative business approaches—such as housing models with a mix of rental and home ownership—to lower the costs and risks of financing affordable rental housing projects. This investment is expected to support the construction of up to 4,000 new affordable housing rental units over five years, and is being made over and above investments in affordable housing under the Government’s social infrastructure commitment. Going forward, CMHC will also consult with stakeholders on the design of an Affordable Rental Housing Financing Initiative to provide low-cost loans to municipalities and housing developers for the construction of new affordable rental housing projects. Up to $500 million in loans would be available each year for five years. This initiative would encourage the construction of affordable rental housing by making low-cost capital available to developers during the earliest, most risky phases of development. This initiative could support the construction of more than 10,000 new rental units over five years.
MORE ATTRACTIVE FOR RESIDENTS. MORE RELIABLE FOR YOU. Upgrading your laundry equipment with all new Huebsch® washers and dryers transforms your apartment building’s community laundry room from a simple convenience into an attractive amenity. Residents will enjoy user-friendly Quantum Controls, which offer many convenient cycles and payment options. They’ll love innovative features like WashAlert with Service Alert that allow them to access cycle status and machine availability online and receive email or text notifications when their wash or dry is complete. And while they’re enjoying the convenience of a Huebsch laundry room, you can bank on minimal operating costs, reduced downtime through features like automatic service notification, and the support network of knowledgeable laundry service providers. Create an amenity for residents and reduce utility costs — visit route.huebsch.com/SaveMoney.
Feature
Off the Grid, On the Money New Micro CHP Systems Make Cogeneration a Viable Option for Apartment Owners By Erin Ruddy
Cogeneration in Canada is no longer just for hospitals and industrial facilities—multi-residential property owners are beginning to take note of this energy savings technology, too. Defined as “the simultaneous production of electrical and thermal energy from a single fuel source,” cogeneration is a reliable way to produce power while redirecting ‘waste heat’ back into the building as useful energy. Though Europe has been a widespread user of CHP (Combined Heat and Power) for decades, grid limitations and rising energy costs here in Canada are prompting residential building owners to expand their options and look at alternative energy savings solutions. According to Mike Mulqueen, Lead - CDM Business Development, Multi-Residential Sector at Toronto Hydro, CHP is emerging as a viable option. “We’ve been seeing a lot more interest in CHP lately,” he says, noting a recent meeting with a consultant who has completed over 300 assessments for interested multiresidential customers across southern Ontario. “Advancements in technology have made cogeneration more accessible for most properties. There are now small-scale solutions 16 www.canadianapartmentmagazine.ca
that can follow the thermal loads, meaning even buildings with as few as 50 suites could be suitable for a CHP system.” Right now in Canada, seven percent of electricity is produced using cogeneration. Alberta has the largest capacity, with the majority going to serve the oil and gas industry. Ontario is the second largest producer, serving a broader range of industries— from manufacturing, forest and hospitals to universities and entertainment complexes. But implementation continues to expand. Aside from increased efficiency, reduced greenhouse gas emissions (compared to traditional separate heat and power production), and significant cost savings for users, CHP also promises improved security of supply as it
reduces the risk of consumers being left without electricity during power outages. “Under normal operating conditions, a CHP plant generates electricity behind the meter, matching the thermal load of a facility drawing some power from the grid,” explains Mulqueen. “But during emergency situations when grid power is not available, a CHP system can operate as an electrical island to power essential requirements, like elevators, lighting, heating, ventilation, and hot and cold water distribution equipment.” Paul Ruth, president of DBS, a certified HVAC mechanical contractor and cogeneration supplier, is a huge advocate of CHP and believes the benefits greatly outnumber the risks. “It is a proven, reliable technology,” he says. “It can
Feature
be installed on your rooftop, in your garage or somewhere else on the property. Once the equipment is up and running, your building’s Net Present Value increases as your energy reduces. Systems have a long lifespan of 20 to 25 years, and thanks to predictive maintenance, the equipment is straightforward to operate.” Gaining favour in Ontario Ruth, whose team has been immersed in the CHP movement for the past three years, says the road to acceptance hasn’t been without its challenges. From determining equipment specifications and adapting standards for Canadian consumption, to educating policy-makers and getting utilities on side, the results of the group’s collective efforts are finally coming to fruition. “Our customers are about to realize some very substantial gains,” he says. “It’s still early days and the data is limited, but we know that systems can offer up to 90% energy efficiency. And now with incentives available to offset the cost of installment, it’s a solution many residential building owners will be seriously looking at.” One notable entity embracing CHP technology is Skyline Group of Companies, based in Guelph, Ontario. Since 2015, Skyline has been working closely with DBS to install micro CHP systems in a handful of its residential buildings—but the commitment won’t end there. With approximately 200 sites currently undergoing assessment, Skyline is primed to be an industry leader using cogeneration
technology to reduce both its energy usage, and its carbon footprint. “Skyline has assembled a team of about 12 specialists to determine the most effective way to incorporate CHP technology at our properties,” says Roy Jason Ashdown, Co-Founder & Chief Operating Officer, Skyline Group of Companies. “To date we have completed dozens of studies and the list of suitable sites continues to grow. We have installed several systems in St. Catharines and the real time data is being measured and verified by our engineers. The initial numbers look very promising.”
According to Ashdown, the driving force behind his company’s recent shift to cogeneration was the mounting cost of energy. “Reducing consumption at a property is the most effective way to hedge against rising energy costs,” he says. “But CHP offers a new solution that complements other energy conservation initiatives. It allows property owners to generate cost-effective, on-site power, and the by-product is hot water that is reclaimed and used for a multitude of heating purposes. The potential islanding if the grid goes down is also a bonus.”
Thermal Energy Metering: Rewards and Risks
Thermal energy (which includes district energy utilities, hydronic systems, geothermal and CHP), is becoming an increasingly popular way to heat and cool multi-tenant buildings. When implemented with sub-metering technology, it provides a way to accurately measure consumption and encourage conservation. One challenge these systems face is the ability to effectively measure and bill thermal energy consumption to end users. The Canadian market sees growing demand for sub-metering thermal energy and appears to be following recommendations from groups, such as The Pacific Institute for Climate Solutions, who have recommended thermal sub-metering as a means to achieve energy conservation and cost control. Challenges and risks There are challenges and potential risks for real estate developers, however, because of a lack of government standards for measuring thermal energy. Thermal energy is more complex to measure than other utilities and requires specialized equipment and expertise. Further, it is currently not regulated by Measurement Canada—although they have indicated their awareness and potential support for best practices adopted from Europe and elsewhere. Real estate developers need to be aware that best practices, technology, and expertise from Europe is available in Canada. If the right methodology is not adopted, developers run the risk of using technologies that won’t enable equitable cost allocation and billing practices for a user-pay system. To minimize potential risk in investments, here are four factors developers and other stakeholders must consider: 1. Will the measurement methodology selected meet current and future regulations within Canada? 2. Is the methodology utilized by more mature thermal energy markets, such as Europe? 3. Can the methodology stand up to scrutiny if an end-user (tenant) disputes their bill? What international standards or hardware can you direct them to that will ease their concerns? 4. Will the methodology be delivered by an appropriate provider who will correctly specify, deploy, manage, and bill from the system in the long-run? QMC, a leader in sub-metering solutions, recently published a White Paper examining the requirement and challenges for effectively measuring thermal energy consumption in Canada. Visit www.qmeters.com for more info. March 2016 17
Photo courtesy of DBS
Feature
Micro CHP system
The long and winding process Key benefits aside, the process of installing a cogeneration system requires many steps and the involvement of numerous outside parties. At the onset, interested consumers are required to do a pre-feasibility study through their local utility to confirm there is sufficient capacity on the distribution system to accommodate the new generation source. If the pre-feasibility study is positive, the next step is an engineering study. In total, the process can take up to six months to complete. “This has not been an easy process to work through,” notes Ashdown, “but we stuck with it and have built a strong team to help us administer and implement this technology. Like any new systems there are trials and tribulations along the way, and lots of education for everyone involved. You have to walk before you can run. The process can be a long one so the key is to get the right people involved.” Before CHP was a consideration, Skyline sought out and implemented other sustainability strategies, including the installation of over 60 roof top solar systems throughout its portfolio. But the founding partners have become so intrigued by CHP, they have created a new company called Anvil Crawler to work alongside DBS to help the multi-residential industry better navigate the process. “The plan is to specialize and stick-handle all of the elements of CHP so that it becomes more than just an idea, but a reality for those in the multi-residential industry,” says Ashdown. “Being 18 www.canadianapartmentmagazine.ca
active landlords for over 25 years, we believe we have a keen understanding of what landlords want and what landlords need, and how to effectively deliver it to them.” Funding and incentives Currently, incentives are available for funding of up to 100 percent of the engineering studies to enable a CHP project. Building owners may also qualify for up to 40 percent of the total project cost to implement a system. To be eligible, the CHP plant must produce a minimum of 100,000 kWh for on-site consumption annually while maintaining a minimum overall system efficiency of 65 percent (meaning 65 percent of the energy from the natural gas powering the CHP system is used as electricity or for heating). “Up until recently, the thinking was that a typical multi-residential project would be between 250 – 500 kW,” notes Mulqueen. “However, based on more recent discussions and new technologies coming into the market, we now believe the average project size is actually going to be less than 100 kWs because of smaller scale and modular solutions being offered that can ramp up and down to follow the thermal load throughout the year.” With provincial and federal governments now backing cogeneration and setting aggressive targets for reducing energy consumption and drawing from more decentralized sources, we look forward to following this smart technology and reporting back throughout the year.
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Industry Influencer
LEADING THE TH 20 www.canadianapartmentmagazine.ca
Industry Influencer
HE CHARGE CAPREIT’s Dan Rames shares new and proven strategies for boosting energy efficiency in apartment buildings By Erin Ruddy
March 2016 21
Industry Influencer
By now, every Canadian apartment building owner or property manager—whether environmentally conscientious or not— has embarked on some form of energy management journey. A decade ago that wasn’t entirely the case. When Dan Rames joined CAPREIT in 2008, energy management was already at the core of the company culture, but broad scale efforts to actively minimize energy consumption, curb wastage and seek out new technologies had really just begun.
Today, CAPREIT’s portfolio, consisting of over 47,000 residential units and land lease sites in eight provinces across Canada, has undergone major transformation. Rames, who is responsible for the energy management department, has been leading the firm’s conservation charge, helping seek out investment opportunities and energy savings initiatives spanning all areas of operations. “Through research and investment in various cutting edge technologies, alongside the more simple measures and maintenance practices, CAPREIT has been able to reduce the utility costs of our real estate portfolio while simultaneously lowering greenhouse gas emissions,” he says. “It is very satisfying, both professionally and personally, to continue the philosophy that our firm has long embraced. Whether through electricity reduction, finding natural gas efficiencies, increases in waste diversion, enhanced water conservation or recycling improvements, our energy management department is proving every day that what’s good for the environment is equally good for business.” Prior to joining CAPREIT in 2008, Rames was a senior member of the investment team at Giffels and RioCan Real Estate Investment Trust, working on acquisitions, asset repositioning and the disposition of large retail and industrial properties. Rames received his B.A. from the University of Western Ontario 22 www.canadianapartmentmagazine.ca
and holds an M.B.A from the Rochester Institute of Technology. “I’m especially keen on a number of technologies, both new and existing, that are demonstrating exciting potential for our industry,” he explains. “CHP (combined heat and power) is one that makes sense to look at more closely in today’s market. Load correcting transformer technology, electrically heated building automation, net metering, commodity procurement, heat recovery systems, low temperature radiators combined with condensing boiler plants, smart lighting technologies, water and heat submetering, internet connected compactors…these are all intriguing energy projects.” The right technology in the right application; that’s what matters to Rames— who also cites analytics-based building automation platforms as an important energy management resource. “A system that is able to address existing situations on a portfoliowide scale, as well as forecast and adjust building parameters in anticipation, and not just in reaction, is a huge asset to any property manager,” he says. Old buildings, new opportunities Despite the allure and excitement of new state-of-the art building designs, Rames asserts that the best opportunities for tackling energy efficiencies can be found
in existing building stock: “Greater than the popular focus on lowering automobile emissions, it is the investment in building retrofits and refurbishments that represents a great opportunity for forward-thinking and progressive asset managers.” Of course, with hundreds of buildings of all ages and sizes, CAPREIT certainly has its hands full of just such opportunities. A good portion of the firm’s portfolio—like most apartment building owners in Canada—were constructed long before energy efficiency was a consideration. “Though it’s impossible to resolve all inefficiencies overnight or in one fell swoop, energy management has become an integral part of our business process,” says Rames. “We are always looking for ways to upgrade our systems and processes for the betterment of our tenants and stakeholders.” That said, doing it alone isn’t an option. Pushing the envelope on new ways to improve efficiencies means partnering with like-minded vendors. “Our vendor-partners understand the multi-residential business model and bring with them the right tools to provide both comprehensive and easily communicable energy management strategies,” he says. “In our industry, we operate at the forefront of technological advancement, and while we are always open to new approaches and strategies, the business case and the project roadmap for incorporating emerging technology into our portfolio has to be clear.” Rames also notes that maintaining efficiency and optimizing technology is an ongoing, collaborative journey involving several parties, systems and cogs in the machine. In other words, it’s a team effort— and every little bit helps. “It really is our longstanding philosophy of working as a team that makes our projects so powerful to the bottom line,” he says. “We look at each major repair event as a potential opportunity to improve the underlying system. It is not unusual to see a single energy project exceed 50 percent IRR.”
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Industry Influencer
With 2016 well upon us, here are some tried and tested tools and opportunities Rames cites as important considerations for achieving energy efficiencies in apartment buildings: Life cycle costs “Understanding how a system functions and behaves throughout its life span involves compiling all relevant inputs and outputs. Life cycle assessments (LCAs) are ‘cradle to grave’ analyses that provide comprehensive evaluations of how a product or system performs, uses energy and impacts the environment over the course of its life.”
Maintenance “Constant upkeep of all property systems and features— structural, electrical, and plumbing—will only pay off in the long run. A poorly maintained building will be a drain on resources and will impair building use, whereas a well maintained building will function smoothly and represent an appreciating asset to its owners.”
Recommissioning “Recommissioning is a re-optimization process for existing buildings that improves a building’s overall performance by optimizing energyefficient design features and addressing equipment performance and system integration issues.”
Design “Designing with energy efficiency in mind is a top priority for today’s architects, engineers and builders. The goal is to build buildings that last longer, cost less to operate, create a better living environment for residents and reduce their environmental impact.”
Variance analysis “Variance analysis is a tool that helps maintain control over a project’s expenses by monitoring planned costs versus actual costs. Effective variance analysis can help a company spot trends, issues, opportunities and threats to short-term or longterm success.”
Real-time consumption data “Accessing real-time consumption data helps improve energy management and change behaviour, while also identifying problems. Monitoring energy consumption is a critical step for making future improvements.”
New technologies “Keeping an eye on emerging technologies and integrating these where possible is an investment in your asset that will help counter rising energy costs.”
Incentives “Applying for and using both local and national incentives will improve your investment returns. Keep an eye on these and use them to your advantage. Every little bit helps.”
24 www.canadianapartmentmagazine.ca
Making constant improvements “By making constant improvements over time, keeping up with new energy efficiency standards, renovating and retrofitting where and when possible, even older buildings on the market will remain competitive.”
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Industry Influencer
4000 Lawrence Avenue East: A Case Study
CAPREIT’s property at 4000 Lawrence Avenue East in Toronto is an example of how dedicated energy management can pay off in terms of utility efficiency. Leading over 200 other buildings in the GTA on the current City of Toronto Tower Renewal benchmark analysis, the 12-storey property has been benefitting from a variety of upgrades since 1999, including the installment of high quality mechanical equipment, efficient lighting, building controls and interval monitoring, which are all supported by a cohesive management philosophy.
Energy projects
Year completed
High efficiency boilers
1999
Building facts:
Building automation system
1999
Construction Year: 1967
Real time utility monitoring
2005
Heating & DHW Fuel Source: Natural Gas
Heat reflector panels
2009
Number of Units: 142
Net connected compactor
2009
Approx. Gross Floor Area: 23,870 m2
Ultra-low flow fixtures
2010
Lighting retrofit/sensors
2010
Electric sub-metering
2011
VFD booster pumps
2014
Boiler control upgrade
2015
TakeCover_CAM_August_2013_FINAL.pdf
Number of Floors: 12
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Results Since these upgrades were made, CAPREIT has seen vast improvements in building performance, tenant comfort, and quality maintenance, while consistently achieving lower operating costs. Initial savings reported by Enbridge were over 42,000 m3 per year in gas consumption—and when compared to the majority of buildings in the Tower Benchmark, 4000 Lawrence East uses about half the energy of the average building of the same size in Toronto. Where the median value for energy consumption is 342.9 ekWh/m2 per year, 4000 Lawrence uses 166.2 ekWh/m2 per year—a reduction of 176.6 ekWh/m2. At 23,870 m2 in size, this translates into annual savings of about $120,000 (assuming gas delivered at $0.30 per m3). And given that the initial systems upgrade was made over 15 years ago this is a cumulative savings of almost $2 million. Additional savings in maintenance and replacement costs would push that number well over the $2.5 million mark. CAPREIT’s culture of conservation 4000 Lawrence isn’t the only CAPREIT property benefiting from these system upgrades. With over 47,000 suites across Canada, the firm ensures every building it acquires or upgrades undergoes a retrofit and strategic review. 26 www.canadianapartmentmagazine.ca
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Feature
Emerging Energy Trends From Audits to Incentives, Strategies for Reducing Consumption and Saving Money Per Polderman, Mann Engineering
It’s no secret that utility costs are steadily rising. To counter the inevitable, building owners are increasingly looking for ways to reduce their overall consumption while educating tenants to do the same. The first step towards achieving savings? Understanding what’s on your electricity bill.
28 www.canadianapartmentmagazine.ca
Feature
Global adjustment Global adjustment is the difference between the spot price of electricity and the rates paid to various regulated and non-regulated generators across Ontario. This difference covers the costs for providing both adequate generating capacity and Conservation & Demand Management (CDM) programs, such as: non-utility generator contracts, regulated nuclear generation, Renewable Energy Standard Offer Programs (RESOP), Feed-In Tariff programs, Independent Electricity System contract adjustments and other programs. For many building owners, the global adjustment can be 30 to 60 percent of their total actual hydro bill, even though it is not based on monthly demand or consumption. In Ontario, it is actually determined by the IESO on random, spot measurements of your building in one year and then charged over the course of the next year in a calculated manner to recover the full amount. This means
that saving energy in a given month doesn’t actually lessen the global adjustment charge for that month. It takes a prolonged, methodical process to drive down the global adjustment. As the IESO attempts to reduce carbon emissions through diverse programs that come at a cost, this will drive up the global adjustment charge. The only thing consumers can do is reduce consumption by implementing energy saving measures. Carbon taxes and “Cap-and-Trade” A carbon tax is a tax based on greenhouse gas emissions (GHG) generated from burning fuels. It puts a price on each tonne of GHG emitted, sending a price signal that will, over time, elicit a powerful market response across the entire economy, reducing emissions as people adapt. Carbon taxes do not favour any one way of reducing emissions by means of
reducing fuel consumption, increasing fuel efficiency, using cleaner fuels and adopting new technology, businesses and individuals can reduce the amount they pay in carbon tax, or even offset it altogether. A cap-and-trade mechanism allows carbon credits to be exchanged. Participants that emit more GHG than allowed will be required to acquire available credits from participants that have aggregated credits because they perform better than the established cap. Over the next six to 12 months, the federal and provincial governments will agree on a carbon tax or cap-andtrade system to promote reductions in GHGs in order to meet the Paris 2015 commitments. We are a ways away from implementations, but it is clear that carbon taxes and/or a cap-and-trade system are on the horizon. Whatever system is put in place, it will mean that energy savings will be more important than ever. March 2016 29
Feature Lighting retrofits: the low hanging fruit LED bulbs have come a long way. They emit the same quality and colour of light as incandescent bulbs and they last far longer due to advanced technology. Customers have told us repeatedly that they have not changed a bulb in years, whereas previously a staff person would walk around weekly or monthly to change out burnt bulbs.
Things to consider: 1) Operation hours - a light that is on 24/7 will have the biggest impact on energy savings. 2) The warranty – look for 5+ years. 3) Light quality 4) Bulb swap vs. fixture replacement – what is better suited for your application? 5) DLC / EnergyStar – make sure they are certified by globally recognized accreditation systems to be eligible for incentives. 6) ESA / CSA compliant – it is illegal and unsafe to install LEDs without these certifications, and the market has been flooded with these products.
The long and short of it is that an LED retrofit will save you energy and maintenance expenses, and should have been implemented yesterday— as a day using conventional lighting is a day that the hydro meter spins too fast.
The strategy for success: Make sure you have an up-to-date energy audit of your building. Incentives change every year and your energy audit will point the way to maximize the available government incentive programs. When you renovate your building, make sure you consider energy conservation as part of your retrofit goal – and you can dramatically reduce your energy consumption and operating costs every year. Your energy audit will recommend realistic targets for energy conservation and when you are ready to renovate, make sure you engage an energy conservation expert to review your design and assist with your incentive applications. Did we mention that you need an up to date energy audit of your building?
With a passion for energy conservation, Per Polderman, CEIT, serves as a senior account manager at Mann Engineering Ltd. For close to 30 years Mann Engineering is the leading energy management company. Mann Engineering specializes in comprehensive energy audits, engineering reviews, reserve fund studies, solar, geothermal, CHP, HVAC design/build and other energy retrofits. Per can be reached at 416-550-3275 or via ppolderman@mannengineering.com 905-887-9893 | allprofessionaltrades.com
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Portfolio
Global and National Market Trends By Derek Lobo
Derek Lobo, CEO of SVN Rock Advisors, Inc., attended the SVN annual brokerage conference in San Diego this February along with hundreds of industry professionals. Since 2015, Lobo has been responsible for growing the SVN Canadian franchise, joining more than 1,200 international brokers, advisors and staff across 200 markets. This year, the SVN conference featured two insightful keynote speakers—among them, Dr. Mark G. Dotzour, Chief Economist and Director of Research for the Real Estate Center at Texas A&M University. We asked Lobo to fill us in on the key trends and highlights he learned, and what the industry can expect from the North American real estate market today. CAM: Give us a quick overview of current market conditions and what you learned from attending the conference. LOBO: Dr. Mark Dotzour made a very interesting presentation focused on current economic conditions and how global and 32 www.canadianapartmentmagazine.ca
national trends are likely to impact residential and commercial real estate markets. The most important point I took away is that huge amounts of money are coming into the United States and Canada today—so much that it is driving up prices in gateway cities, forcing value investors to go to secondary and tertiary markets. Basically, the core holdings and the trophy properties are getting snapped up by sovereign wealth funds and institutions, and they’re paying top dollar for them. The amounts of money coming was a surprise to me, but it makes perfect sense from what I’ve seen in the market and in our own practice. The other thing I took away was how many Canadian investors are active in the United
States, especially in the smaller markets. I have always assumed that Canadian investors went to Phoenix, Texas, and Florida only, but that’s not the case. In fact, Canadian investors are significant investors in the United States, and they’re active everywhere and in all asset classes. CAM: How does technology fit with brokerages? LOBO: The future for smaller brokerages is keeping it simple by focusing on relationships, understanding what is important for the clients and bringing in that skill set. This is something we already do, and always strive to do better.
Portfolio Consistent use of a CRM (especially important in a team environment), and outsourcing of outside the box technologies leaves time for what is important – our clients. For example, there are places where brokers are routinely using drones to take photographs and really cool videos of properties for sale. Here’s another example: in the self-storage sector, the operating company will now go and pick up things at your home and put them into your storage locker, and they’ll also take photographs of everything so you can tell them you want this or that item out of your storage locker and they’ll deliver it to your home. I have to say, in my own brokerage we’ve always had a very strong database of people and now I realize that’s an area we excel in and other brokers don’t. However, what I learned at the conference is that when you look into the future you can see how we’re going to do the same things we are today, but we’re going to do those things so much more efficiently using technology. It’s so important to keep an open mind on how to work better, smarter, and more efficiently and pass on those efficiencies to the clients and the way you do business in general.
CAM: This is a good time for Canadians who own apartments in the United States to sell—but should Canadians buy in the United States given the strength of the US dollar? LOBO: Right now the Canadian dollar is low relative to the U.S. dollar and if someone with properties in the United States were thinking of selling, this would be an opportune time. Property prices are at their highest in the United States, cap rates are at their lowest, and the Canadian dollar is low—so someone could exit not just with their real estate profit but with a hefty currency profit (which may not be there in the future). I think for those people who are in a profit-taking mode, or who have reached the end of their funds or their cycle of ownership, it makes sense to sell their
apartment properties in the United States. I think it’s difficult for Canadians to buy right now because of the exchange rate, and because so many investors are coming to the United States from outside North America and pushing prices up. It is probably an opportunity for Canadians, though, to think of the value-add plays in secondary and tertiary markets. This works well for Canadian investors because they’re nearby, can fly down to monitor their assets, and can almost act like a local investor. To give you and idea of what I mean, the conference was held in San Diego but the people coming from the SVN head office in Boston had a longer flight than we had coming from Toronto. In general, I think Canadians should consider being less passive investors in the United States and become more engaged.
Derek Lobo is the founder and CEO of SVN Rock Advisors Inc., Brokerage and Derek A. Lobo & Associates (DALA). For over a quarter century, Derek has served Canada’s commercial real estate industry, bringing consulting and brokerage services to developers, owners, and investors in the rental apartment sector. Derek is a seasoned expert on new apartment construction and large apartment transactions.
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Ask the expert
Reshaping the Multifamily Space Sub-Metering Creates Enduring Value
Peter Mills, Co-CEO, Wyse Meter Solutions
Sub-metering is nothing new, but the benefits continue to increase as more building owners and managers opt to switch to this user-pay system. Since the technology was first introduced in 2000, sub-metering has been installed in more than 2,000 residential buildings throughout Canada. Both residents and landlords are realizing the financial implications of their utility consumption, resulting in reduced usage. To get the latest update on this technology and how it is reshaping the multifamily space, we spoke with Peter Mills, Co-CEO of Wyse Meter Solutions. What are the proven financial benefits of sub-metering? Across Canada, sub-metering creates enduring value and provides a hedge against future utility cost increases and rent cap erosion. For owners and managers, studies have shown that sub-metering increases their net operating income by approximately $600 per suite, per year. Billed rental suites reduce energy consumption by up to 48 percent, as compared to non-billed suites. Landlords report that residents billed for one utility will reduce usage across all utilities. There is no other energy management technology or service—deployable to a multi-unit building— that can generate greater savings. What are the proven environmental benefits? The environmental advantages of submetering are as significant as the financial savings and operational efficiencies. Our billing analysis indicates that each time a non-bill-payer is replaced with a bill-payer, monthly consumption drops by about 150 kWh per suite, on average. This consumption reduction is the equivalent savings of 1.25 metric tons of carbon dioxide put into the environment. It equals 32 trees grown for 10 years, for one suite. In Ontario alone, there are still about 750,000 rental residential suites yet to be sub-metered, representing a substantial opportunity to continue our industry’s world-changing contributions to greenhouse gas reductions. 34 www.canadianapartmentmagazine.ca
What are the main challenges and restrictions? There are some concerns from owners and managers in weaker rental markets that a building may not be as competitive, from a marketing perspective, with electricity and other utilities paid separately. However, most markets now have increased penetration of sub-metered buildings, reducing this concern. Certain provinces, such as Manitoba and Quebec, have restrictive regulatory environments that do not allow sub-metering to be easily implemented. Adaptable solutions are being developed for those jurisdictions. As well, landlords are under pressure to evaluate the various options available from sub-metering providers and ultimately ensure their residents receive the best possible billing and customer service. Despite the challenges, the delivery of submetering is increasing at a very rapid rate in most provinces across the country. Have there been any advancements in the technology associated with submetering? We are dedicated to continuous innovation. New, compact water sub-meters equipped with Wi-Fi enabled communication devices are allowing for much more economical metering. The advancements in new, compact multicustomer metering systems are facilitating the completion of comprehensive projects, previously deemed economically unfeasible. European based Thermal or BTU metering
is gaining traction in new construction and existing rental properties. Forward-thinking sub-metering providers are offering full integration between the sub-metering billing platform and the property management software, thereby automating new resident enrolment. In addition, some providers have advanced web portals for both residents and property management teams – delivering sophisticated amounts of information in easyto-use, simplified formats. What can we look forward to down the road? The sub-metering of in-suite heating and cooling loads is a new, expanding area. It is being driven by the development of less expensive technology to retrofit in-suite heating and cooling systems. In parallel, we are also enhancing abilities to retrofit existing high-rise buildings to meter water consumption. Owners and managers will increasingly seek out broader services including resident billing for ancillary costs like waste, insurance and taxes. This allows owners to focus on their core business of controlling costs. A key growth area is utility benchmarking and expense management for bulk bill payments. It will become commonplace for holistic sub-metering providers to efficiently handle and process utility expenses for clients, as well as deliver robust reporting and analysis tools. As for residents, they will have access to more innovative tools and mobile apps to control their in-suite energy usage.
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Eye on the Industry
Notable Green News for Canadian Rental Property Managers No Green Retrofit Incentive for Quebec Landlords
Quebec’s newly announced RénoVert refundable tax credit is aligned with the provincial government’s stated goals to reduce residential greenhouse gas (GHG) emissions, stimulate economic growth through household spending, and spur the burgeoning green products and green renovation industries. Accordingly, Quebec’s largest rental housing association argues the program could be even more effective — with flow-through benefits for tenants — if apartment building owners were also eligible. “Currently, landlords have practically no return on investment if they make major repairs or renovations because of the lowest rate ever imposed by the rent control policy in Quebec,” says Hans Brouillette, director of public affairs with CORPIQ (Corporation des propriétaires immobiliers du Québec) which represents the owners of approximately 500,000 units of housing. “Nearly three-quarters of tenants pay their heating bills directly to the utility and they pay more for their heating because, generally speaking, these buildings are less efficient than others in the residential real estate sector. CORPIQ is asking the government of Quebec to extend RénoVert to rental apartments.” As Minister of Finance Carlos Leitão outlined in the 2016-2017 provincial budget, released last month, $174 million has been earmarked to subsidize energy efficiency improvements and/or upgrades to private septic systems contracted between March 18, 2016 and March 31, 2017. To qualify for the green retrofit incentive, homeowners must invest at least $2,500 and can then receive a 20 per cent rebate of eligible expenditures above that amount to a maximum $10,000 credit on an investment of at least $52,500. About 100,000 Quebecers are expected to tap into the program, underpinning nearly $1.2 billion of direct consumer spending. Government analysts also project positive spinoffs for Quebec-based manufacturers of high-performance HVAC equipment and systems, doors, windows, cladding and insulation. “We are going to help individuals improve the environmental performance of their residence, and this assistance will at the same time benefit the entire renovation sector,” Leitão said in his March 17 budget speech. Meanwhile, for 2016, Quebec’s Régie du logement has provided leeway for 0.4 per cent rent increases in units where tenants pay their heating costs directly to the electricity or gas supplier, and a 2.5 per cent ceiling to pass through required capital expenditures. Under this formula, CORPIQ calculates it would typically take 40 years to realize a payback on upgrades to enhance energy efficiency. “If RénoVert was extended to include rental units, investment would increase to support the economy, while providing better housing for tenants,” Brouillette asserts.
36 www.canadianapartmentmagazine.ca
BOMA T.O. Informs Future Energy Reporting Law
The province of Ontario hosted public hearings in late February regarding Bill 135, Energy Statute Law Amendment Act, which would amend the Green Energy Act to enable a future energy reporting and benchmarking law in Ontario. BOMA Toronto was in attendance and gave an oral deposition to the Standing Committee of General Government (at Ontario Legislature). After engaging with policy makers and its EWRB Task Force and Energy Committee, the association was able to influence the government to reconsider its original proposal. The proposed amendments would have enabled the government to require verification and disclosure of information and the development and publication of prepare conservation and demand management plans. The regulation would have also required electricity, natural gas and water utilities to make energy and water consumption data available to building owners so they are able to comply with the requirement. BOMA Toronto has stressed that energy reporting and benchmarking must be grounded in a fair comparison of properties that encourages continuous improvement. At the recent hearings, the association was able to encourage the province to reevaluate elements, such as building sizes and types, implementation timelines, extent of reporting and disclosure facts, verification and special exemptions. On February 25, MOE posted a revised draft to the Environmental Bill of Rights (EBR) Registry, which will be displayed for 45 days so stakeholders can provide additional feedback, before any legislation is finalized. The comment period ends on April 10, 2016
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World Green Building Trends: Slower Progress for High-Rise Residential Sector
High-rise dwellings will be a more modest share of global green construction projects for most of the rest of this decade. Recent survey results from development proponents and design practitioners in 69 countries reveal that 25 percent foresee work on green high-rise residential buildings within the next three years, compared to 46 percent with planned commercial projects. Higher tallies of new institutional buildings, existing building retrofits and low-rise housing are also expected. The global projection for new high-rise apartments, based on 1,026 total responses, strays farther from reality in several of the countries that the World Green Building Trends 2016 report examines in more detail. More than 40 percent of respondents from Brazil, Singapore, China and India report a pending green high-rise apartment project versus 20 percent in the United Kingdom and just 15 percent in the United States and Germany. “Most countries with a lot of green activity expected in the high-rise residential sector report relatively low activity compared with global averages in the low-rise residential sector,” the report observes. “The U.S. is notably weak in both sectors, as is Poland.” In Poland’s case, green construction efforts are predominantly weighted to commercial projects with only 6 percent of the country’s respondents planning a high-rise residential building. In the U.S., lack of enthusiasm for green highrise residential is partly attributed to the current spate of new apartment construction, which makes developers more reluctant to bring new multiresidential product of any calibre to market at this late stage of the cycle. Meanwhile, the U.K. illustrates the report’s theory in reverse with 40 percent of respondents expecting work on low-rise residential projects—well above the global average of 27 percent. This influx of green housing appears to be needed in a country where more than 80 percent of the residential stock has D to G status on the European Union’s mandatory A-to-G energy rating scale.
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Your social media starting point By Steven Chester Perhaps you’ve finally decided that “now’s the time” to get started on social, or maybe you’re cringing at the thought of logging in to your Twitter account that hasn’t been touched in months. If this is the place you’re in, it’s time to reassess what your social media goals are and get yourself to your social media starting point. Your goals could be just one or all of the below. In the case of the latter, take the time to rank the order of importance of each. • Building your brand: Are you looking to develop new relationships? Then it’s time to listen to what others are saying, craft messages designed to inform, entertain and captivate your audience. • Increasing website traffic: Have great content to share? Craft some meaningful messages to drive traffic to your content pages. • Customer support and outreach: Your customer demographic is changing, and so are their communication needs. You’ll need a space to answer questions and gather feedback for your company. • Sales leads: Yes, you can sell on social. In fact, if you’re not doing it, your competitor more than likely has the jump on you. LinkedIn, for example, is an incredible way to gather contacts and expand your reach through secondary connections. Next up, we’ll talk about outreach. Hint: You’re nowhere near ready to craft that first post.
Steven Chester is the Digital Media Director of MediaEdge Communications. With 15 years’ experience in cross-platform communications, Steven helps companies expand their reach through social media and other digital initiatives. To contact him directly, email gosocial@mediaedge.ca or call 416.512.8686 x224.
March 2016 37
Management
From Bottom to Top How to Stand out From the Competition By Jessica Green
Management
Energy efficiency is more than just buzz—it’s the future of the rental property industry. From older buildings getting retrofits to new builds being outfitted with the latest technologies, it’s either go green or get left behind. According to the David Suzuki Foundation, nearly 60 percent of the energy being consumed by Canadian homes is directly related to heat consumption. When the deep freeze sets in, our energy usage goes up. It can even be argued that air conditioning usage is catching up to heat, with our summers generally being warmer and lasting longer than years gone by. But let’s focus on that pesky little heat consumption figure, shall we? What it means Where Canadians get their heat from depends on what province they live in. Your electricity will either come from burning fossil fuels, hydro-electric dams or nuclear power plants, each with its own environmental consequences. Today’s savvy renter is looking for a property manager that takes these environmental issues into consideration when performing building upgrades or designing a new property. Outfitting your building with some of the latest, cutting-edge technologies will ensure you stand out in a competitive marketplace. Starting from scratch Energy efficiency starts from the ground-up, and recent studies have shown that insulating concrete forms, in fact an old technology (60 years old, to be precise), is being touted for its energy efficiency. A study by the Massachusetts Institute of Technology issued a report in late 2010 that said buildings made from insulated concrete forms saved 20 percent over the energy consumed by wood-frame buildings in cold climates, such as Chicago. Look up It’s not just the foundation of a building that can make a difference—it’s what’s on top. While many new properties include plans for green roofing, older properties can take on the same challenge. Rooftops that feature gardens and green spaces help insulate buildings in the winter and soak up storm water, reducing water pollution from urban runoff. According to How Stuff Works, “Building a green roof today, can be done on the cheap, for as little as $8 to $12 a square foot compared to the average $15.75 per square foot for conventional rooftops. And because the savings go into building a product that is itself protected from the sun with plants, the roofs last longer.” But you don’t have to just think green—you can also employ a white roof to help get the job done. Painting the roof of your building white is an easy way to reflect heat and help to reduce energy costs in the summer.
It’s what’s inside that counts Don’t stop at just the common areas of your property. When renovating suites, think of some of the new technologies you can use to help curb excess energy usage. LG, in particular, recently launched a number of “smart” home appliances that aim to reduce environmental impacts. “The Smart Washing Machine with Wi-Fi Smart Diagnosis promises huge cost savings in energy use. Because it is smart-grid ready, it has the ability to operate during times of low electricity usage, “ says Samantha Murphy Kelly of Mashable. “For example, the washer has the capability to reserve its energy-intensive wash cycles for off-peak hours, when electricity can be cheaper. This will be possible once local utility companies begin enabling the smart-grid technology.” Smart thermostats are also making a big splash and allow tenants to really, truly control their energy usage. Brands like the Nest Learning Thermostat adjusts temperature based on the lifestyle and schedule of the user. According to Mashable’s Murphy Kelly, “Although the Nest is $249, the device can help to reduce the average U.S. energy bill of $1,000 each year by up to 30%, slowly paying for itself over time.” No more window plastic Finally, it’s common knowledge that most of the heat lost from an apartment is due to leaks in windows. Instead of the old stand-by of plastic covered windows (sure, it works, but how many tenants are happy with it being on their windows?), a new technology has emerged: Low-E Windows. Featuring a clear coating of metallic oxide, these windows keep the heat inside during the winter and outside during the summer. According to the NAHB Research Center, “Typically, this coating is used on external storm windows in houses that don’t have double-pane windows. Low-E windows cost between $60 and $110 each. That’s 10 to 15 percent more than clear glass storm windows, but they definitely have benefits: They can reduce heat flow through the glass by half, and that will help reduce heating costs by 10 to 20 percent.” With new technologies constantly becoming available, it’s easier than ever to give your property that green sheen.
Jessica Green is the founder of Cursive, a Toronto-based communications consulting firm that specializes in brand messaging with an emphasis on digital media strategy. March 2016 39
Insurance
The Changing Workplace How Work Attitudes Have Shifted the Way we do Business By Andy Schwartze
About two years ago, I was shocked when a major international company with offices in over 140 countries, had appointed an HR executive to become one of its CEOs. At the time it was hard to imagine the rationale behind this decision—that a human resources expert could best manage the massive sales-driven business. After all, have we not always been inclined to put engineers, marketers, sales people and other experienced money-making types into top positions? Of course we have. We want our businesses to be led by proactive achievers, those with the experience and know-how to drive the company to higher levels. But, given the swift rise in self- employment and contract work in recent years, it is clear that something has changed. And when we look at the generations that populate the workforce today, we do not need to look too far to see the three very different attitudes that prevail, each of which calls for a different management strategy. As someone who is active in advising on employee benefit plans and employment related risks, I find this topic fascinating. So what do these three very distinctly different kinds of work attitudes look like? The first is somewhat old fashioned and evident in the older worker, rooted in the belief that work is an essential priority in life. Work is good for you. Work comes first. The second worker type is the one who strives for “work/life balance.” This group accepts work 40 www.canadianapartmentmagazine.ca
as inevitable but places equal value on free time, insisting that life and family can be focused upon equally without needlessly sacrificing all valuable personal time. The third group is what some might call demanding. This worker considers it the employer’s obligation to look after numerous personal needs, provide extensive work flexibility, pay really well from the onset of employment, and guarantee regular promotion to ensure an interesting career. Just look at the big tech companies as shining examples of how this 3rd group is managed. The challenges that face today’s senior management as they navigate these three very different groups are as evident as they are complex. The days of traditional hardcore CEO management, while still evident in some
corporations, are slowly fading away as we move steadily towards a more HR-focused system. As is the case in certain European countries, tossing useless employees overboard has become increasingly difficult (read costly) and that explains why many young people complain about the difficulties of “finding a job.” It’s a natural result. Why hire when it’s tough to fire? With that observation, I leave all future workers with the following formula for success: First, you survive high school. That’s kind of key to the whole thing. Second, you build your post-secondary education into a knowledge base that becomes the foundation for your future job pursuits. Then, you add to that a college or graduate degree and a series of night school specialty courses that take your general
Insurance
Sharing Economy Expands Gen Y Liability Risks Lack of tenant insurance is endemic across all residential renter households, but risk management specialists caution that Generation Y could be particularly exposed—and oblivious—to liability. A recent white paper from Chubb Insurance focuses on the nearly 15 million Americans aged 34 to 23 who earn more than $100,000 annually and suggests they offer a largely untapped pool of prospective clients for financial advisors. “Affluent young professionals need coverage keyed to their circumstances: to the luxury city condo or rental apartment rather the suburban mansion; to the shared Mini Cooper rather than the owned Lexus SUV; to the lifetime income stream put at risk by an auto accident or a careless remark in an online forum,” it asserts. “To take part in the sharing economy, emerging wealthy professionals must insure that income stream against the risks of using Airbnb — and (the risk) of their roommates.” Social media and the burgeoning sharing economy expand the range of Gen Y liability risks beyond what young adults faced in earlier eras. The white paper warns that unseemly online comments can prompt defamation charges and/or arise to haunt the author at a time long after, while housing swap services increase the potential for property damage, property loss or liability due to injuries sustained on the property.
Although the stats aren’t categorized by age, the white paper cites U.S. Insurance Information Institute findings that only 40 per cent of residential renters carry occupants’ insurance. Given that approximately 72 percent of Gen Y households live in rental housing, it can be deduced that a significant portion are not insured. Coverage requirements for roommates can also be overlooked. Knowledge of state laws and paying attention to policy details are critical since rules applying to multiple roommates vary. The white paper advises that many of the approximately 36 per cent of young professionals still living in their parents’ homes should also have some form of tenant insurance. “Under most liability policies, children cease to be dependents and, therefore, cease to be covered when they turn 26,” the white paper reiterates. “Turning 26 is tantamount to moving out of the house.” Indeed, the white paper subtly notes that these earners could be urged to make that move literally as well as conceptually. “This group of young professionals should be educated about the burdens they impose on their parents by living with them. This may be particularly true in high-net-worth households where the stakes are much higher,” it states.
education and make it seriously specific to your career. As unfair as it may seem, only now you are (barely) ready to qualify for an entry level job. From here, it’s about networking and developing contacts who will help support your business goals. It’s about hard work and contributing to your field. It’s about commitment and determination, and climbing the corporate ladder. In the end, corporate labour relations will continue to be more challenging. However, those of us who have worked long and hard to enjoy rewarding careers have a duty to remind those who follow us that it’s not easy. Education, hard work and determination still count and will never go out of style.
Andy Schwartze, BSc., MBA, CIP, is an insurance broker specializing in property management and real estate. He is a former President of the Insurance Institute, has taught in the community college system and provides continuing education to other brokers. He can be reached at andy@ takecover.ca. For any comments, you can go to www.takecover.ca and post them on their new blog. March 2016 41
Industry Experience
Lighting the Way A Business Case for LED Lightbulbs By Chris Seepe
Whether lighting a single family home or the common areas of an investment property, the difference in electricity costs between LED, fluorescent and incandescent light bulbs is astounding. After a recent analysis undertaken at my own rental property, I discovered it costs potentially six times as much to operate an incandescent bulb as it does the equivalent illumination (lumens) of an LED bulb. (In my geographic area, a 60W incandescent lamp costs 15 cents to operate 24 hours while the equivalent LED bulb costs 2.5 cents.) Here is a detailed analysis of what happens when 30 lights are left on 24 hours per day for 20 years. While that is likely not a scenario that would exist in a home, the cost ratio between the two lighting technologies should remain similar. Conclusions Based on average lifespans, an incandescent bulb is replaced 29 times for every one LED bulb. Many municipalities, for example, have been replacing traffic signal lamps with LEDs. Incandescent bulbs convert a lot of their electrical energy to heat whereas LEDs produce very little heat. LEDs are also much more environmentally-friendly, containing no mercury and usually no lead. LED bulbs cost arguably three-to-six times more than incandescent bulbs, but this acquisition cost is insignificant compared to their lower energy consumption, maintenance costs and other factors. With electricity prices forecasted to rise significantly every year regardless of where you live, the business case for LED light bulbs just keeps glowing brighter. For your own analysis, a downloadable spreadsheet can be found at: http://www. aztechrealty.com/leds.xlsx. Just plug in your own numbers to determine your results.
LED
FLOURESCENT
INCANDESCENT
PURCHASE COST Lifespan (hours)
35,000
8,000
1,200
Number of hours in a year
8,766
8,766
8,766
No. bulbs/year to light one area
0.3
1.1
7.3
No. bulbs needed over 20 yrs
5.0
21.9
146.1
No bulbs needed vs LED
1.00
4.38
29.17
Cost/bulb
$6
$2
$1
Purchase cost/bulb for 20 yrs
$30
$44
$146
Bulbs (lit areas)/building
30
30
30
$901.65
$1,314.90
$4,383.00
Watts/bulb
10
14
60
kWh per bulb
0.010
0.014
0.060
kWh per bulb/24-hr day
0.240
0.336
1.440
Peak Cost/kWh
$0.16
$0.16
$0.16
% Peak hours
20%
20%
20%
Peak kWh/day
0.048
0.067
0.288
Purchase cost/building for 20 yrs ELECTRICITY COST
$0.008
$0.011
$0.046
Mid-peak Cost/kWh
$0.12
$0.12
$0.12
% Mid-peak hours
20%
20%
20%
Mid-peak kWh/day
0.048
0.067
0.288
$0.006
$0.008
$0.035
Off-peak Cost/kWh
$0.08
$0.08
$0.08
% Off-peak hours
60%
60%
60%
Off-peak kWh/day Cost to operate 1 bulb/24-hr day Operating cost/bulb/year Cost to operate 1 bulb for 20 years Bulbs (lit areas)/building
0.144
0.202
0.864
$0.012
$0.016
$0.069
$0.025
$0.035
$0.150
1.00
1.40
6.00
$9.12
$12.76
$54.70
$182.33
$255.27
$1,094.00
30
30
30
Cost to operate above bulbs for 20 years at 24/7/365
$5,469.98
$7,657.98
$32,819.90
Purchase cost/building for 20 yrs
$901.65
$1,314.90
$4,383.00
TOTAL COST
$6,371.63
$8,972.88
$37,202.90
1.00
1.41
5.84
Chris Seepe is a commercial real estate course instructor, broker and broker of record at Aztech Realty in Toronto, specializing in incomegenerating and multi-residential investment properties, retail plazas, science and technology related specialty uses and tenant mandates. (416) 525-1558 Email cseepe@aztechrealty.com; website: www.aztechrealty.com. 42 www.canadianapartmentmagazine.ca
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March 2016 43
Legal
Keeping up with Residential Tenancy Laws Joe Hoffer, Partner Cohen Highley LLP, offers timely advice for Canadian landlords By Erin Ruddy
As the Canadian rental industry grows and changes, so do residential By contrast, Hoffer notes that renting tenancy laws. Joe Hoffer, Partner Cohen Highley LLP, addresses to seniors may involve unique lifestyle considerations, which can successfully three significant areas of concern affecting all rental housing be navigated without offending any agerelated Human Rights Code restrictions. providers at this time.
1. Renting to “niche” demographics: students, new immigrants, seniors, empty nesters With the recent onslaught of refugees arriving in Canada and the influx of baby boomers turning to rental, apartment owners and managers need to be cognizant of the unique marketing, administrative and legal challenges that niche demographic groups present. “When renting to students, the landlord is often actually renting to the parent and the parent is concerned with safety, quality, and location,” says Hoffer. “When 44 www.canadianapartmentmagazine.ca
it comes to guaranteeing payment of rent, the usual “joint and several” liability rules in lease guarantees can be a deal breaker. Student guarantees can, however, be drafted so that liability for payment of rent is restricted to the guarantor’s own child (not extending to roommates) whereas liability damage to common areas (as opposed to the child’s own bedroom) is joint. There are also innovative legal strategies to deal with on-line leasing, lease termination clauses, and student/tenant turnover when roommates don’t get along.”
That said, it can attract Code liability when required to “accommodate” disabilities relating to mobility and personal care as tenants age in place. “Again, leasing strategies can help minimize risk to operators while providing for a financially and physically healthy living environment for tenants,” says Hoffer. New immigrants pose unique challenges when it comes to assessing financial risk as they are likely to lack the usual criteria used in assessing rental applications, namely: a credit history, employment history and banking/personal references. “The best approach is to follow standard assessment protocols, which come into play with any applicant that has minimal financial history (such as students or young people renting for the first time),” explains Hoffer. “Requesting a Guarantor is an acceptable practice in all jurisdictions and provides assurance that if the rent is not paid, the operator has recourse. The key for landlords and managers is to ensure the Guarantor is reliable. You should collect all usual financial and personal information and do a full credit check. It is also a good practice to have tenant orientation protocols and community connections in place to facilitate the integration of the new tenant into both their new home and the community. Follow-up unit inspections and customer satisfaction surveys can further strengthen the legal and customer relationship.”
Legal 2. Condo rentals and enforcing tenant compliance The rapid growthofcondo/strata development and the influx of owner investment into this form of housing has brought with it an exponential increase in legal proceedings in all jurisdictions in Canada. While each province has its own legal and administrative process and rules relative to the specific development and operations, the nature of the legal disputes is remarkably similar: owner disputes with boards; corporation disputes with developers; inter-corporate disputes over cost and facility sharing agreements; and of course, disputes involving tenant occupied units. “Most condo/strata documents permit leasing of units, but enforcement of rules and by-laws may be complicated by Residential Tenancy legislation,” notes Hoffer. “In Ontario, for example, a unit owner can potentially evict a tenant at the Landlord and Tenant Board quickly and at modest expense. However, if the unit owner fails to take proper action, the condo corporation can take the unit owner to court, force the unit owner to take
action and/or obtain an order requiring the occupant to leave—and pass all reasonable legal costs associated with the proceeding on to the unit owner. The options and outcomes are determined by the facts of each case, and for lawyers at least, condo litigation is robust and profitable but the price is exacted from condo boards and unit owners.” That said, Hoffer points out that skilled management teams can greatly reduce the corporation’s financial risk in securing good outcomes when condo/strata rentals go sideways. 3. Increasing Net Operating Income Today, many strategies are being deployed to increase the prospects for a healthy balance sheet of a rental housing operation. Capital expenditures to capture energy savings and implementation of electricity sub-metering are common ways to reduce operating expenses and risk. In some provinces (particularly Ontario and British Columbia) the capital investment can form the basis for above rent control guideline rent increases.
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“Ontario in particular has seen heavy investment in apartment building remediation and rehabilitation,” says Hoffer. “Low cap rates and vacancies have provided an incentive to undertake major capital investment. In addition, Ontario’s skyrocketing electricity costs have contributed to a boom in the electricity sub-metering business—shifting price and consumption risk to tenants while fostering positive and palpable electricity conservation outcomes.” Hoffer explains that the principal risk for operators lies in the failure to ensure the capital expenditures, much of which are directed in part to enhancing curb appeal, also meet the criteria which qualify for a capital expenditure allowance that can then be passed through in an above guideline rent increase application. “With some strategic planning in consultation with legal counsel and capital planners, rental building owners can realize a rental return and a much improved capital asset,” he concludes.
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2016-03-30 3:34 PM
Smart Ideas
HELP FOR OWNERS AND TENANTS With rising utility costs and energy in high demand, building owners and tenants are seeking ways to cut back and save. If you live in Ontario or B.C., here are two programs worth inquiring about:
B.C.’s Rental Apartment Efficiency Program More than 50 percent of the rental apartment buildings in B.C.’s Interior are older than 35 years and could stand some energy efficiency updates. Apartment rental building owners (or property managers acting on behalf of owners) should inquire about the Rental Apartment Efficiency Program, which is offered at no cost to qualifying candidates. Eligible buildings must be a purpose-built rental containing a minimum of nine units. They must receive electricity and/or natural gas from FortisBC or the municipality of Grand Forks, Summerland, Penticton or Nelson Hydro under a commercial rate class. They also must have central electric or natural gas water heating, not be slated for demolition or have had water-efficient shower heads and aerators previously installed. If your building meets the above criteria, you may be eligible to receive the following at no-charge: • a water-efficient shower head, a kitchen and bathroom faucet aerator and up to 10 LED bulbs1 directly installed in each unit • a building energy assessment to identify energy-efficiency improvements and upgrades • ongoing professional assistance to guide you through the process of making larger energy upgrades For more information, contact: apartmentrebates@fortisbc.com
The Ontario Electricity Support Program The Ontario Energy Board (OEB) has launched the Ontario Electricity Support Program (OESP) to provide a monthly on-bill credit for qualified households. The credit amount ranges from $30 to $50 and depends on how many people live in the home and their combined household income after tax. Households must have an account with an electricity distributor or supplier to be eligible for the program—meaning renters who pay for electricity directly, and are account holders, may be eligible for the program. Customers must apply to the program, and it takes about six to eight weeks to process applications. If you have tenants you believe could benefit from this program, encourage them to apply online at OntarioElectricitySupport.ca 46 www.canadianapartmentmagazine.ca
Ontario Property Management Group Inc. (OPMG), is honored to provide in-house legal services to all Landlords across the greater Toronto and surrounding areas. for Small Claims and Landlord and Tenant Board matters. OPMG’s legal rates are one of today’s lowest rates. OPMG provides quality legal services, without putting a dent in your pocket.
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Small Claims Court services available but not limited to the following: Negotiating/demand letters Preparation of defence Filing of defence Attending settlement conference and or trial
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