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INSTI-NEWS FALL/WINTER 2021

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PROPERTY ASSESSMENT AND THE ONTARIO GOVERNMENT’S FALL ECONOMIC STATEMENT Greg Martino, M.I.M.A.

ESTABLISHING FAIR ASSESSMENTS FOR SPECIAL PURPOSE PROPERTIES Steven Thair, B.A., LL.B., AAC

WHAT TO DO WITH A SLIGHTLY USED OFFICE BUILDING Randell Wyton, AACI, P.App.

PRESIDENT’S REPORT Caterina Chiarandini, M.I.M.A.

EXECUTIVE DIRECTOR’S UPDATE Tyler Callaghan, MBA

THAT’S A WRAP - 2021 FALL VIRTUAL SYMPOSIUM RECAP

AN INTERVIEW WITH HAMZA KHAN – KEYNOTE SPEAKER FROM THE 2021 FALL VIRTUAL SYMPOSIUM

ONTARIO HERITAGE ACT AMENDMENTS NOW IN FORCE: WHAT YOU NEED TO KNOW Adrianna Pilkington

MEMBER ELEVATIONS

LIFE MEMBERSHIP CEREMONY

IN MEMORIAM

IMA ANNOUNCEMENTS

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FALL/WINTER 2021 ISSUE Insti-News is published by the Institute of Municipal Assessors with assistance from the Communications Services Committee. Chaired by: Gina Stone, A.I.M.A.

Any opinions or recommendations expressed in this issue are those of the contributors and do not necessarily reflect the views of the IMA.

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PRESIDENT’S REPORT At the time of my last report, the IMA had just completed our 1st ever virtual AGM. Four months later, virtual events continue to go strong! The IMA recently wrapped up the 2nd Annual 2021 Fall Virtual Symposium. The event was hosted for a second year by TK Events over a day-and-a-half on November 1st and 2nd, 2021. Turnout was phenomenal with over 300 delegates in attendance. Feedback has been great following the event - with honourable mention to the Cross-Canada Assessment and Ontario Case Law panels. A huge thanks to our Executive Director, Tyler Callaghan and IMA staff for their efforts behind the scenes and executing this event in real time. I also acknowledge everyone who participated as panelists, moderators and speakers. With over 1200 members, the IMA relies so much on the work of our volunteers. Thank you all for your commitment and dedication to the assessment profession in Canada. Over the Fall of 2021, the IMA began hosting a new webinar series with record high attendance. These webinars will continue into the spring of 2022 as we start to return to in-person events. Mark your calendars! I am thrilled to announce the IMA’s 2022 Annual Conference is scheduled for June 5th to 7th, 2022 at the White Oaks Conference Resort in Niagara-on-the-Lake. Plans are already in motion for an engaging Conference, including interactive breakouts and off-site sessions. As recently posted on the IMA’s website, our goal is to reconnect and return safely to in-person events, while protecting the health and safety of our members and the community at large. Stay tuned for more updates as conference details are finalized. I had the pleasure of attending the CPTA’s 2021 Annual Conference this year on behalf of the IMA. The event took place in Quebec City at Fairmont Le Château Frontenac from October 24th to 27th, 2021. It was a memorable in-person event with excellent speakers, panels and cross-Canada assessment content. Provincial health and safety protocols were in place by both the hotel venue and the event organizers to ensure a safe and successful event. The IMA continues to advance the 2020-2023 Strategic Plan by strengthening existing partnerships and forging new alliances. The AAA-IMA working group had its first meeting on September 1, 2021. We had a very productive discussion surrounding increased collaborations and mutual goals. I expect much success will be achieved for both organizations through this enhanced partnership and working group. Review of the IMA’s commissioned IPTI research paper is now complete. An action plan is under way to implement recommendations as a result of member, stakeholder and cross-Canada feedback. The IMA’s Strategic Growth and Partnerships Committee has also been formed. Guidance will be sought from the Committee as needed while the IMA continues the work of its 3-year action plan. As we approach the end of the Autumn and the start of Winter, I pause to think about the many challenges and many successes of the last year. The IMA continues to grow tremendously as an organization and I look forward to what lies ahead in 2022. I want to wish everyone the very best for the holiday season, health, happiness and much success for the New Year.

Caterina Chiarandini, M.I.M.A. President

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EXECUTIVE DIRECTOR’S UPDATE Thank you to everyone who attended the IMA’s 2nd Fall Virtual Symposium on November 1st and 2nd, 2021. While we are all very much looking forward to the return of in-person events, the virtual meeting space kept the IMA community engaged and connected when it was needed most! As off ices continue to refine return-to-work policies, we were incredibly fortunate to bring together over 325 delegates from across Canada over the day-and-a-half event. As we approach the final weeks of 2021, I look back on the year with mixed emotions. While the pandemic continued to impact our daily lives, it also provided important perspective and forced us to reconsider our priorities. As an organization, it allowed us to reassess the way we deliver member value and explore how we can evolve to meet changing needs. The IMA staff , Executive, Board of Directors, and entire membership showed incredible resilience and adaptability during another challenging year. Over the summer months, the IMA Board of Directors commissioned an external, independent paper to research, identify, scope, and offer guidance on two primary organizational objectives: 1. 2.

Growth across Canada by serving new member bases and forging strong strategic partnerships. Developing and launching a Senior-level specialist designation that meets the needs of service providers across Canada.

After receiving proposals from three service providers, the project was awarded to the International Property Tax Institute (ITPI), who delivered their findings in October 2021. Results were presented to the membership at the 2021 Fall Virtual Symposium to exceptionally positive feedback. The Board of Directors will be taking next steps to action the paper’s findings in early 2022. While new and exciting growth initiatives are sure to emerge, the statements of Vision, Mission, and Values remain our “north star” as we proceed into year two of the 2020-23 Strategic Plan. I look ahead to 2022 with great optimism. The Institute will be announcing several new and exciting initiatives early in the new year. In addition to the new projects, we plan to reintroduce in-person activities in 2022 in accordance with our “Reconnecting and Returning Safely to In-Person Events” policy. With member safety remaining top priority, we look forward to hosting the first in-person conference in three years from June 5-7, 2022, in Niagara-on-the-Lake. Thank you to our fantastic members for their unwavering support over the past year. Wishing you and your families a safe and happy holiday season! I look forward to finally meeting in person in 2022. Stay safe!

Tyler Callaghan, MBA

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PROPERTY ASSESSMENT AND THE ONTARIO GOVERNMENT’S FALL ECONOMIC STATEMENT

Greg Martino, M.I.M.A. Vice President and Chief Valuation & Standards Officer Municipal Property Assessment Corporation On November 4, the Ontario Minister of Finance presented the Ontario Economic Outlook and Fiscal Review: Build Ontario, which included details around the continued postponement of the assessment update. The further postponement of the update in Ontario means property assessments for the 2022 and 2023 property tax years will continue to be based on January 1, 2016 values. Property assessments will remain the same for the 2021 tax year unless there have been changes to the property. This announcement does not change the work that the Municipal Property Assessment Corporation (MPAC) is doing to maintain our extensive property database, collect data, capture new assessment growth across municipalities and provide insights and analysis to support the province, municipalities, businesses and property owners. As we’ve learned throughout the pandemic, managing the unknown can be difficult at times, but we have risen to the challenge and will continue to demonstrate our ability to adapt and deliver value to our stakeholders. MPAC will continue to conduct market analysis, complete tax applications, and manage requests for reconsideration and appeals. As an organization, we will also take this opportunity to strengthen our operations and improve some of our products, services and systems in order to continue to produce quality, traceable assessments. Our focus remains unchanged – we are committed to maintaining our business operations while continuing to collaborate with our stakeholders to gather information and insight to ensure we remain in a strong position to deliver Ontario’s next provincewide assessment update, whenever directed. For more information about Ontario’s assessment cycle, please visit mpac.ca.

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THAT’S A WRAP 2021 FALL VIRTUAL SYMPOSIUM RECAP On November 1st and 2nd, 2021, over 325 delegates from across Canada took part in the IMA’s Fall Virtual Symposium. A series of six carefully curated sessions explore the latest developments in the field of property assessment over the day anda-half event:

1 2 3 4 5 6 07

The Burnout Gamble: Achieve More by Beating Burnout & Building Resilience Hamza Khan Assessment in a (Post?) Pandemic World – Exploring a ‘New Normal’ Moderator: Paul Sanderson JP LLB (Hons) FRICS

Panelists: Lisa Dionne, CRA, P. App Jason Grant, AACI, RI Eddie Lee, AACI, AMAA Greg Martino, M.I.M.A.

Up, Up & Away: Innovations in Aerial Inspections Steven Thair, BA, AACI, LL.B. Paul Obara, A.I.M.A. The Future of Education and Professional Associations within Property Assessment Tyler Callaghan, MBA Carlos Resendes, M.I.M.A. Unconscious Bias and Challenges to Fair Estimation Professor Maydianne Andrade

Assessment Case Law: New Cases Melissa VanBerkum, C.S. Karey Lunau, B.A. LL.B. LL.M, C.S. Amboka Wameyo, MA, BA Land Econ, M.I.M.A., AACI, P. App. Dan Rosman, Barrister and Solicitor

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This year’s Symposium used live interaction technology to engage the audience in polls, Q&As, word clouds, etc. What Did Attendees Have to Say? As the Institute’s membership continues to grow and diversify, both geographically and by sector composition, event programming becomes increasingly complicated. The goal for the 2021 Symposium was to offer delegates a balanced, diverse, relevant schedule of sessions. The feedback was very positive, with some excellent suggestions to improve future offerings.

“The Symposium was informative and relevant. Virtual accessibility was flawless. Well done!” “Loved hearing the different assessment jurisdictions discuss how they have handled day to day activities with the pandemic.” “Great conference under difficult COVID times.” “Great event! Excellent value for the money and best of all, no travel. I look forward to next year!”

While delegates thoroughly enjoyed the virtual format, the post-event survey reaffirmed a yearning for the return of in-person events and reconnecting with colleagues. Thank you to all delegates who shared their feedback to help make the 2022 offerings even stronger!

Thank You!

Thank you to all Symposium presenters, sponsors, volunteers, and delegates for helping make the 2nd Fall Virtual Symposium a great success! While our world has certainly changed, our dedication to serving the evolving needs of our members is unwavering.

Reconnecting and Returning Safely to In-Person Events A key pillar of our member services is to facilitate connections among our members through professional events. Over the course of the pandemic, the IMA shifted rapidly to virtual event offerings to continue education and relationship building among professional peers, while protecting the health and safety of our members and the community at large. With the gradual reopening of provincial jurisdictions underway, we are currently planning to host our next in-person event, the IMA’s 64th Annual Conference, from June 5-7, 2022, at Niagara-on-the-Lake. As the pandemic situation continues to evolve, we closely monitor public health restrictions on an ongoing basis. We will adhere to all required health and safety protocols when planning future in-person events. This includes any requirements pertaining to masks, physical distancing and proof of vaccine if required. In the event of any changes to public health restrictions, we will adapt and ensure all provincial requirements are followed. It was a pleasure to virtually see you at our 2021 Fall Virtual Symposium and we hope for the opportunity to all reconnect in person next year.

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AN INTERVIEW WITH HAMZA KHAN – KEYNOTE SPEAKER FROM THE 2021 FALL VIRTUAL SYMPOSIUM After the 2021 Fall Virtual Symposium we sat down with Hamza Khan, a multi-award-winning marketer and bestselling author of ‘The Burnout Gamble’, and he shared his insights into burnout and how we can prevent it this holiday season. What is the difference between burnout and stress? Stress is the body’s reaction (either physical, mental, or emotional) to pressure from a certain event or situation. Burnout, on the other hand, is a syndrome which results from chronic workplace stress that hasn’t been successfully managed. Tell us a little more about why you decided to educate others on this topic? Earlier in my career, I got caught up in the toxic hustle culture glorified by growing start-ups. And one year, I’d routinely work through evenings, weekends, and didn’t take a single vacation. But I learned the hard way that by not making time for my wellness, I’d be forced to take time for my illness. After 11 consecutive months of working 12-hour days (or more), I experienced a debilitating panic attack followed by severe and prolonged illness. Doctors and psychiatrists informed me that I was severely burned out, and that I should feel lucky to have avoided injury or death. This traumatic episode inspired me to explore the existing research on burnout as a way to understand how to prevent it from happening again. But once I familiarized myself with burnout’s symptoms as well as upstream predictors, I realized that everyone around me—my friends, family, and colleagues—were at risk of burnout, and largely oblivious to the distinction between run-of-the-mill workplace stress versus occupational burnout. With a sense of urgency, I’ve since committed much of my time, energy, and attention toward educating others on this once unpopular topic. How can you spot burnout in others? Burnout is typically characterized by three dimensions: 1.

Feelings of energy depletion or exhaustion.

Increased mental distance from one’s job (or feelings of negativism or cynicism related to one’s job).

Reduced professional efficacy.

Does burnout only happen during tough or bad times? Both. The Yerkes-Dodson Law illustrates the relationship between pressure and performance. If pressure is too high (as is often the case during tough or bad times), then performance is low. And sustained, this leads to the “overwhelm” variety burnout. At the same time, if pressure is too low (as is often the case during easy or good times), then performance is also low. And sustained, this could lead to the “underwhelm” variety of burnout, referred to by some as “bore-out.”

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What is the best way to support a team member experiencing burnout? Supporting a team member experiencing burnout requires a multi-pronged approach. To start, check in with them often, and encourage them to reveal what factors inside and outside of work might be preventing them from being at their best. At the same time, share helpful resources with them such as books, articles, podcasts, etc. And last but not least, encourage them to disclose their symptoms to their manager and/or to their human resources department and request assistance. What are some of your top suggestions to overcome/prevent burnout? These are my top three: 1. Re-organize your workload so that it’s manageable within 50 hours a week. Research has shown time and again that the risk of burnout increases significantly if you work more than 50 hours a week. And beyond 60 hours a week, it becomes a matter of “when” and not “if” you’ll burnout. 2. Prioritize energy replenishment aka “self-care.” It helps to visualize your energy as four “buckets”—the physical bucket, the mental bucket, the emotional bucket, and the spiritual bucket. Make sure throughout the day that you’re replenishing these buckets. 3. Define the word “enough” for yourself. Ask: what does it mean to be “enough” both inside and outside of work. Remember that you’re not a “human doing,” but a human being—you’re not a mere means to an end, but an end unto yourself. When is it time to seek help from a professional? I typically advise people to seek help from a professional when they’ve started to deny their problems or have withdrawn from their social circles. Any tips to prevent holiday burnout? Don’t make the mistake of adding more to your calendar and to-do list. Scale back as much as you can and make some much needed time for yourself. The past 20 months have been overwhelming, to say the least. The Holmes & Rahe Stress index assigns a numeric value to a spectrum of life changes. For instance, the most stressful event (the death of a spouse), is at the top of the list, with a value of 100. If in a calendar year, you rack up more than 300 points, then you’re at severe risk of suffering illness or fatality. At minimum, you’re at 100/300 if nothing else has changed in your life other than the circumstances caused by the pandemic. So even the most composed of us are struggling below the surface. And so, my one and only tip to prevent holiday burnout is this: let’s treat the holiday season like one long holiday. We need it!

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ESTABLISHING FAIR ASSESSMENTS FOR SPECIAL PURPOSE PROPERTIES Special Note: This article is the first installment of a two-part series exploring the complexity and nuance associated with establishing fair assessments for special purpose properties. Part two, which will be featured in the next issue of Insti-News, will explore an alternative perspective to exemplify the intricacies involved in assessing these unique properties.

Steven Thair, B.A., LL.B., AACI, has worked in construction, mortgage lending, property assessment, fee appraisal and as a commercial lawyer. He was a certified lecturer for USPAP, CUSPAP, and chaired the national discipline committee of the Appraisal Institute of Canada for several years. He is employed at Brunsdon Lawrek & Associates. As individuals, our first understanding of a market may have come from our childhood experiences. We may have accompanied our family on a trip to a country fair or an urban market, looking wide-eyed at dozens of booths filled with produce and goods of one kind or another, each seller hawking the ir wares. As teens, we may have been sent to the market on our own and come to understand that prices are not etched in stone. Sometimes arriving early or late can mean a cheaper price because there are fewer buyers. As adults, many of us have put in an offer on a house, calculating our bid to give us the best price without encouraging the seller to look for other offers. Nothing in these experiences prepares us for the idea of a marketplace entirely empty except for one lone, solitary buyer. And now, imagine that sole buyer is standing in front of the only booth there is. Even more unusual, the vendor has only one kind of item, and only one of them. Can the sale of that item ever have a market value? It turns out appraisers and assessors have considered such a circumstance to be a market, and even for that asset to have a market value, thousands of times across North America. There may even be such a property nearby. The realists will be objecting at this point, reminding that while the lone buyer scene may be charming, it is not really a market—in the sense that economists and appraisers use the term market, and market value—because the usual definitions of market value require there be a competitive market, sometimes also called an open market. There is a direct path to correcting the shortcomings that have repeatedly arisen when estimating the market value for so-called special purpose properties. In the author’s view, part of the problem is political, and part is related to our communities’ values. This article is a summary of a paper first published in the Journal of Property Tax Assessment & Administration, Vol 8, Issue 2, Pages 5-16. The reader is referred to that publication for a more extensive discussion of the issues found below, including numerous legal citations. A copy may also be obtained from the author at steventhair@brunsdonlawrek.com.

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The Courts’ Decisions

When the courts have put their minds to this issue, they have reached the same conclusion as the realists, namely, that in order for there to even be a market and then a market value, there needs to be more than one potential buyer because by definition, a market is competitive. This is especially true when the assessing statute says so, by stating the requirement of a competitive market. But even without the statutory requirement, the plain meaning of the word, market, is always defined as having a multiplicity of buyers and sellers. When the case (Southam Inc. (Pacific Newspaper Group Inc.) v. British Columbia (Assessor of Area No. 14—Surrey/WhiteRock) [2004]) came before the British Columbia Court of Appeal, Justice Levine wrote:

The Board’s finding that the highest and best use was the current use where there was no evidence of a market for that use is contradictory and wrong in law. It seems to me that if the owner is to be considered a potential purchaser, there must be at least one other potential purchaser for the current use. Otherwise, there can be no competitive bidding and no market. Therefore, determining the market value of the property based on its current use inevitably leads to determining the value of the current use to the owner, and not market value. (para. 12, 15, and 22) (author’s emphasis).

The moral of the story, then, is that if there are not at least two potential buyers, a market has not been constituted. It is necessary to look at what is going wrong in this type of valuation because with disturbing regularity, so-called special purpose properties are being valued as if there is a competitive market where none exists.

Did the Assessor Err?

In the Southam case, the assessor had not used the income approach, nor the direct sales comparison approach, based on the rationale that there were no rents, no sales, and no way to develop a market derived capitalization rate. For the same reasons, there was also no way to estimate functional and economic obsolescence. But that did not deter implementation of a doomed-from-the start cost approach. With few exceptions, the courts in both Canada and the United States have observed that when the assessor relies on the designation of “special purpose,” or the use of a sort of cost approach in which all forms of obsolescence cannot be measured, the resulting estimate is a value of the current use, even though it’s called “a cost approach” to market value.

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Public Policy Considerations

Assessment decisions happen for a reason. How is it that the approach taken has been repeatedly to estimate the market value of properties that do not have a market for the chosen use? The general public policy consideration and the so-called “kitchen table logic” as well, is that everyone should pay their fair share of property taxes, however that is determined. It seems, therefore, unfair that an owner of a profitable business, say, in grain storage would have assessments of close to zero on the grain elevators because there are no other users (and thus no market value) for the property as elevators. In jurisdictions where the property assessment scheme is based on the ad valorem (“according to value”) principle and market value based assessments, the solution seems simple: either assess the property on its value in a truly competitive market, or else change the legislation to permit value-in-use assessments. This is exactly what happened as a result of the Newfoundland case, 3163083 Canada Limited [Labatt Brewing Company Ltd.] v. City of St. John’s (2005). The court of first instance decided that on the evidence, there was no market for the subject property as a brewery, and it was a highly profitable brewery. In law, it followed the Southam approach described earlier. The court ruled the assessment had to be based on a much less intensive use, such as, vacant land for redevelopment. Shortly thereafter, the Newfoundland and Labrador government amended the assessment legislation so that properties designated by the assessor as special purpose properties would be valued using the truncated cost approach. The public policy expectation that the brewery should pay taxes similar to other successful businesses was sort of achieved. At least, the assessment practice followed the new law. The assessment going forward was not based on market value. It was based on cost minus deterioration. And if there was any functional or economic obsolescence, the owner would simply have to pass the excess property taxes on to the consumer.

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Alternatives to Market Value

There are other solutions that maintain the integrity of the system and of the assessor. In Saskatchewan, for instance, grain elevators are assessed on usage, called throughput, not market value. Usage is one of the options, which does not meet the criteria of estimating market value, but nonetheless provides some conclusion on which to base the owner’s more or less fair share of property taxes. In British Columbia, by legislation, major industrial plants and other uncommon properties, such as, ski hills, are assessed on cost minus legislated amounts of physical and functional depreciation. While the resulting value is not market value, it provides an adequate basis for people to agree that these properties are paying “their fair share” of taxes. In jurisdictions where the property assessment scheme is ad valorem (“according to value”), the solution to improved integrity is simple: either stick to the rules and assess the property on its market value in a use where there are several potential buyers, or else change the legislation to permit value-in-use assessments. Legislation defining the line between regulated (legislation-based value) and nonregulated (market value based) assessments is not a new piece. A legislated line placing so-called special purpose properties in the regulated category would simply be one more such piece. As discussed, in many instances, the assessor is already doing this, in effect, by the use of the “special purpose” rhetoric, even though it breaks the rules of defined market value. The end result of these suggestions would be clearer rules, workable rules, and a return to the rule of law. Such legislative action is not necessarily retributive. Rather, in my view, it reflects the community value that everyone pay their fair share of funding for municipal services. In fact, many jurisdictions have a mixed system, providing for a market value assessment on common properties in the residential and commercial sectors, and productivity or cost-based assessments for commercial properties for which there is no market for the property alone. But many of these same jurisdictions use the rhetoric of “special purpose properties” to attempt to slide these properties, unfairly, into the unregulated group. Some business leaders and politicians talk like a market value assessment system is the be-all and end-all. It’s not. Unique properties end up getting a free ride or being over-assessed.

The Problem with Fairness

No answer will be perfect. There are still and will always be a few dark corners. They are inherent in any model that is intended to mimic but simplify the real world. For example, some may be left with the sense that owners or users of properties without a market are not paying their fair share. But by definition, fairness becomes less and less operative as our attention moves from commonality to uniqueness. In other words, unusual properties can’t be treated “fairly” because there aren’t enough of them to constitute a norm or create in our minds a notion of what is fair. This result is especially true of assessors’ results which not only treat like properties alike but treat unlike properties alike.

Mass Appraisal and Community Values

As much as some may embrace an assessment system based on market value as the best, or the idea that assessment is mass appraisal, and therefore, immune to occasional “irregularities,” there will be points within the constellation where we need to let go of these values, reengage our dialogue with the community, and select solutions based on the emerging community values. Appraisers and assessors have a right and a stake in being part of those decisions. As appraisers and assessors, we come with a sophisticated perspective of these issues, worth being listened to by investors, lenders, legislators, and the community at large. There is a down-side to staying where we are. When the assessor engages in steal-from-the-rich, and give-to-the poor actions, complicitly supported by politicians and the public, it is detrimental to the integrity and wellbeing of all. It provides support for the old saying that the ends justify the means: if rules need to be sacrificed in the process, never-no-mind. In the end, the rightfully overriding public policy consideration is that there should be assessment legislation in place that is workable, and that is followed. In many communities, there is neither.

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ONTARIO HERITAGE ACT AMENDMENTS NOW IN FORCE: WHAT YOU NEED TO KNOW

Adrianna Pilkington (she/her/hers) is a partner in the Municipal, Planning & Environmental Law Group at Cassels. The long-awaited amendments to the Ontario Heritage Act (the OHA) together with implementation Regulation 385/21 (General) (the Regulation) came into force on July 1, 2021, finally bringing into play amendments made through Bill 108, the More Homes, More Choice Act, 2019 (Bill 108). Corresponding updates to the Ontario Heritage Toolkit are also underway. Bill 108, which received Royal Assent on June 6, 2019, sought to make it easier to build different types of housing as part of the province’s Housing Supply Action Plan, with the OHA amendments intended to improve processes and increase consistency in heritage designation, including providing for appeals to the Ontario Land Tribunal. Cassels had previously reported on the Bill here and here. Initially proposed to come into force January 1, 2021, implementation was subsequently delayed to allow for further consultation and to allow municipalities more time to respond to the amendments.

The OHA Amendments

The key additions to the OHA now in force include: • • • • •

Properties newly subject to a notice of intention to designate and applications to repeal a designation or alter a property made July 1, 2021 onwards now benefit from new appeals to and binding decisions from the Ontario Land Tribunal Owners whose properties are newly included in a heritage register will now get notice and may object, and where such objection is made, council must consider the objection in deciding whether to continue to list the property New applications for alteration or demolition are deemed approved should council not make a decision within specified time periods Municipalities have 90 days to issue a notice of intention to designate a property upon notice of a complete official plan amendment, zoning by-law amendment, or plan of subdivision application, subject to exceptions in the Regulation Designations must occur within 120 days of a notice of intention to designate, subject to exceptions in the Regulation

Note that not all OHA amendments were proclaimed on July 1, 2021. The proposed amendment to the definition of “alter” and to Section 42, demolition of heritage attributes in a Heritage Conservation District (HCD), are not being proclaimed at this time.

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The Regulation

The Regulation limits some of the broad enactments of Bill 108, but otherwise represents a step forward in streamlining Ontario’s heritage regulation process. The Regulation, which we previously reported on here and here includes the following: •

Mandatory standards for designation by-laws • Requirements for designation by-laws are: property identification information; one or more of a site plan, scale drawing, or written description of the property’s layout; the identification of which Ontario Regulation 9/06 (Criteria for Determining Cultural Heritage Value or Interest) criteria is met and how; and a description of how the heritage attributes contribute to the cultural heritage value or interest of the property

•

Prescribed exceptions to the 90-day timeline for issuing a notice of intention to designate • These are when the owner and council agree, in the case of a declared emergency, or where the applicable Planning Act application has been finally disposed of under that Act • For those who had been following the legislative amendments closely, note that the exceptions to the timeline related to the failure to consult the heritage committee and receipt of “new and relevant information” no longer extend this timeline

•

Prescribed exceptions to the 120-day timeline to pass a designation by-law after a notice of intention to designate has been issued • These are when the owner and council agree, in the case of a declared emergency, or where “new and relevant information” related to the property is received

•

The process of amending or repealing a designation by-law following a consent for demolition has been amended to require notification to property owners if no changes are made to the designation by-law

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Minimum requirements for complete applications for alteration, demolition or removal, of heritage properties, which include photographs, reasons for the proposal and potential impacts, and all technical cultural heritage studies that are relevant to the proposal

•

Transition provisions, which include: • As referenced above, July 1, 2021 is now the key date to determine whether a matter or proceeding will be dealt with under the OHA as it stood prior to July 1, 2021 or the OHA as amended and now in force •

Proceeding under the OHA as amended and in force are: 1. Notices of intention to designate, and notices to amend or repeal a designation by-law, where publication is made July 1, 2021 and going forward 2. Notices of clarifying or correcting amending by-laws, where notice is received by the owner July 1, 2021 and going forward 3. Designations of HCD study areas, designations of HCD, and adoption of a HCD plan, where such by-law is passed July 1, 2021 or subsequent 4. Applications made under the OHA which were received July 1, 2021 or later

•

Generally, notices published, by-laws passed, and applications made prior to July 1, 2021 proceed under the old OHA

•

In the cases of an outstanding notice of intention to designate, municipalities have until June 30, 2022 to pass the by-law, after which the notice is deemed withdrawn and any designation will be subject to the OHA as amended (though this deadline may be extended by agreement)

•

The prohibition on notices of intention to designate after 90 days of certain Planning Act applications does not apply if notice of the complete application was given prior to July 1, 2021

For those who followed the Regulation consultation process, note that the Regulation does not prescribe principles that council must consider in making certain decisions under the OHA. The Ministry of Heritage, Sport, Tourism and Culture Industrial has indicated that it will be monitoring implementation to determine if principles should be prescribed at a later time.

Ontario Heritage Toolkit

The province has released for consultation five draft guides which will form part of the updated Ontario Heritage Toolkit, which assists stakeholders in understanding the heritage conservation framework in Ontario. The five draft guides currently posted to the Environmental Registry, found here, are as follows: • Designating Heritage Properties • Heritage Conservation Districts • Heritage Property Evaluation • Your Community, Your Heritage, Your Committee • Heritage Places of Worship A sixth guide on Cultural Heritage Resources in the Land Use Planning Process is expected to be released soon. The current consultation closes today, July 2, 2021.

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MEMBER ELEVATIONS AFFILIATE MEMBERS

NAME COMPANY Gordon Dearmo Canada Post Alexandre Gaulin MPAC Cornwall Nicole Henriques MPAC London Amber-Lea Hodgins City of London Sharla Knapton MPAC Thunder Bay James Lindsay Altus Group Halifax Moses Omaejalile MPAC Mississauga Tijana Roussety MPAC Mississauga Jeff Walsh Municipal Assessment Agency Karina Wong Nixon Poole Lackie LLP

A.I.M.A. MEMBERS NAME Jon Blahut Soonyoung Chae Lincoln De Freitas Dianne Dumalag Noah Ferras Rayna Geerts Melanie Giguere Nicole Lafrance Roz Macey Brandy Schiele Hyun Son Bertan Tanacar Daniel Wong Ge Zhou

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COMPANY MPAC North Bay Equitable Value Inc. MPAC Toronto MEquitable Value Inc. MPAC Ottawa MPAC London MPAC Pickering MPAC Owen Sound MPAC Kitchener Town of Milton MPAC Sarnia City of Hamilton MPAC Toronto MPAC Mississauga

THE IMA WOULD LIKE TO CONGRATULATE ITS RECENTLY ELEVATED AND NEWLY APPOINTED MEMBERS!

M.I.M.A. MEMBERS NAME Daniele Bruzzese Heather Choe Tong Li Tyler Nastich Ming Ming Niu Tracey Sceviour Amboka Wameyo

COMPANY MPAC Toronto MPAC Toronto MPAC Richmond Hill MPAC Toronto MPAC Toronto

Municipal Assessment Agency

City of Kitchener

WHAT TO DO WITH A SLIGHTLY USED OFFICE BUILDING

Randell Wyton, AACI, P.App., Randell has been involved in all facets of real estate valuation. After acquiring an AACI designation in 1990, Randell moved back to Edmonton and started Essex Appraisal. Reprinted with permission from the Appraisal Institute of Canada’s Canadian Property Valuation magazine, Volume 65, Book 2, 2021 It is 2021; vacancies in downtown office towers across even the strongest Canadian markets are experiencing vacancies of 20% or higher. In late February, a news reports stated Vancouver has 90 acres of vacant downtown office space. Office users are minimizing the size of their lease space to reduce costs as employees grow accustomed to working from home. It is a burgeoning reality that will eventually come to roost with the owners of these empty buildings. In the wake of Covid-19 and the new “work-from-home” lifestyle, owners and lenders are taking a long hard look at what is to become of the ubiquitous “10-storey B class building” on the periphery of downtown that is quickly falling out of favour. Buildings like this cannot compete with the upscale, “A” class buildings in the core that despite having the advantage of location and quality, are also struggling to maintain market share. Filling up current vacancies in the future looks like a daunting task given the negative absorption statistics showing up in all markets across the country. Attempting to improve the competitiveness of a “B” class building by spending good capital funds to maintain office rents of $1 per square monthly is increasingly looking like a bad idea. Despite the current outlook, there are options to explore. One of these options would be conversion to new uses. It would be worthwhile to explore opportunities to re-position properties into the residential market where rents are up to $2 to $3 per square foot. While the office sector of the real estate market struggles with vacancies, demand for multi-family housing of all types, affordable, rental, and seniors remains relatively robust. During this first year of pandemic economic contraction, residential market sectors apart from central core condos have fared quite well. To take advantage of the strong residential markets, the wide path future trend will be to target these conversion efforts with an end result for residential use. This is not a new or innovative idea, nor is it a rubber stamp to success, but it is an option worth considering that might bring some life, energy, and profitability back into a waning enterprise. There have been numerous examples of successful conversions in most major Canadian markets for the past few decades. Currently in Alberta, building owners are slightly ahead of the curve given the early onset of office vacancies with the contracting oil industry. Both Edmonton and Calgary have seen recent conversions move through the process all the way to occupancy. But in addition to office to apartment conversions, there are other versions of conversion such as warehouses to residential, retail buildings to churches, churches to offices or homes, hotels to senior’s housing, etc. In order to focus on the most prevalent form of conversion, this discussion will provide some guidance within the context of an office building converting to apartment housing, either condominium or rental. The following is a profile of some of the key factors that need to be addressed to start down the path to conversions.

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Property Suitability

Not all buildings are created equal. Coupled with that, office buildings have not been designed to accommodate housing and not necessarily located on sites suited to residential use. As such, a frank assessment must be made of the property’s assets and liabilities for conversion. This assessment not only deals with the structure, but equally thoughtful consideration should be paid to the location of the property and its surrounding environment. At the end of the conversion process, the goal is to create a place where people want to live and at the same time create a property capable of generating a viable return on the investment. There are several points to address in this assessment: • Location • Structure scale and shape • Structural assets • Zoning • Market

Location

As is the case with nearly all forms of real estate, location plays a key role in conversions. If people are going to live there, the location must meet the needs of residents. This might include parks, transportation, schools, shopping; any number of characteristics defining a neighbourhood. Many Canadian urban centres have older peripheral neighbourhoods with tree lined streets, parks, river valleys, ocean fronts, golf course, etc. And in these older peripheral areas are the B and C class buildings that form the most likely basis for conversions. By contrast, locations in suburban areas may not provide the cachet necessary to attract occupants. Corner lots tend to work best for conversion. These provide for at least two of the building’s exposures to have unobstructed outward view lines. In addition, corners provide for better exposure to street frontages and greater accessibility. Having larger expanses of exterior visibility makes it easier to “dress up” and building and change its perception from commercial use to an attractive residential impression.

Structure Scale and Shape

After location, the structure’s size and configuration are the likely down fall for most conversion candidates. Floorplates are a crucial element in the design consideration. In developing residential space, window space is the key. If the floorplates are square and have too much floor area mass in the interior of the structure removed from windows, the opportunity for conversion is limited. Floorplates should be configured in such a way that at least 15 to 20 feet of window space can be provided into a one-bedroom space of roughly 600 square feet. This allows for living room and bedroom windows. With two bedrooms or 800 to 1,000 square feet, there may be a need to have at least three window exposures needing up to 30 feet of exterior exposure. Both of these scenarios would mean floor space up to 30 feet deep away from the windows. Even at that distance, lighting must address the potential for shaded areas. If floorplates do not allow for this type of configuration, conversion potential may suffer. Ideally there should be windows on all sides of the building allowing for a residential floor plan that fills the suite with light and gives the resident some sense of exposure to the outside world. A rectangular shape is likely ideal. This allows for a central corridor through the floorplate with suites flanking to both sides using the windows along the long exposures of the building. South facing windows are the prime exposure. The size and shape of the floorplates is of some importance as well. Elevator corridors should be centralized to allow suites to be developed around the core. Centralized access cores result in limited common area space. Conversions costs can be lessened, and revenues increased significantly with less interior common area space to finish. Elevators are an important consideration as well. Usually, office buildings are equipped with more elevator capacity than a traditional apartment building. This might mean one elevator shaft can be used for servicing. One downside to office building elevators is they are often smaller than residential elevators. If existing elevators are too small to handle couches and beds when residents move, then other alternatives must be considered.

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Structural Assets

This would deal with a close and technical consideration of the physical elements of the building such as HVAC suitability, floor heights, structural construction elements (concrete versus steel), location of supporting members, foundation and underground parking, outdoor common area space, plumbing and electrical, lobby sizes and layouts, building setbacks, and exterior style to name a few. Essentially this is an exercise to look at what elements of the current building could be used in the conversion and what elements need to be changed, and at what cost. One of the keys to this asset assessment might be parking. Up until recently, municipalities were keen to make sure suites had dedicated stalls. However, there are now market and planning forces in play suggesting that parking requirements may no longer be addressed by municipal regulation but rather dictated by the market. Recently Edmonton’s city council abandoned all parking requirements for its residential occupancies. This was done to lower restrictions on core developments and to place the responsibility on developers to ensure they have the parking they need for any given development. At any rate, conversion buildings in core locations may have limited parking on-site and the conversion may not need large parking facilities.

Zoning

After a full assessment concludes that a conversion is physically viable, the next step is to proceed through the municipal approvals. Although municipalities are becoming much more flexible with their planning processes, especially in high density urban areas, zoning may prove to be the biggest challenge for many conversions. In all likelihood, the current zoning for most of these old office buildings will not be suitably fit for residential use. The best answer might be a site-specific Direct Control zoning that would see a municipality approve a specific plan for the property in question. Often Direct Control zonings are the best way to handle situations where an existing building with long term viability issues can have its reinvention dovetailed into a community. Working in favour for these conversions is that they are generally located in urban cores where most jurisdictions are seeking ways to increase population density to make use of existing infrastructure. Generally speaking, there is an overarching mindset and desire by cities to bring more population to the urban core, coupled with a need to find uses for older Class B office buildings that are struggling with economic viability. Rebuilding and stabilizing the property tax base will also be a primary driver for cities to find ways get these conversions through the planning and permitting steps.

Market

At the end of the day, these conversions need to result in a property type that has a stronger economic viability than its predecessor office use. In the housing sector, the convertor can consider several options and balance those options against the cost and the local market demand. Given the costs involved in conversion, most convertors will opt for market housing and likely gravitate to higher ends of the market using preferred urban core peripheral locations. That being said, there are some equally attractive sectors to consider such as senior’s housing, student housing, or affordable housing. The latter sector of the market is in high demand and responding to that demand is the federal government through the National Housing Strategy initiative. The government has committed $55 Billion in a 10-year plan in an attempt to bring 125,000 new homes to market. Accessing government programs of this nature requires addressing specific criteria and may not suit all buildings and situations, but this may be a viable use for many conversions.

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Senior’s housing is an excellent conversion use of office buildings. With 17% of Canada’s population over 65 years of age, demand in this sector is secure and growing. Office buildings present a good structural opportunity to meet senior’s needs with main level common areas, closed HVAC systems, the diminished need for balconies, and a different locational consideration. In the 1990’s a building in Edmonton known as Rosedale Manor was born out of an out-of date office building and this property still thrives today. Student housing has a very similar format to senior’s housing in terms of communal areas and smaller suite sizes. Obviously housing for students must address the location requirements in terms of access to education.

Must Haves

In order for a conversion to compete on the market with traditional apartment buildings, there are some minimum requirements these buildings need to address. Balconies head this list. Private outdoor space is a must have in most residential applications, but especially so for conversion buildings that typically appeal to slightly higher price point rentals. That being said, these are often a challenge in retro-fits. The obvious answer to the problem is to simply add them, but there is a myriad of considerations from a structural and building envelope perspective. This is where a clear understanding of the building’s physical assets can help to identify a pathway to a solution. Not only do balconies serve to provide private outdoor space making the suites more attractive, but they work well to alter the exterior profile and enhance the architectural appeal.

Common area amenity space would also be high on the list of “must- haves”. This would include outdoor patio or lounge areas, fitness rooms, meeting rooms, and games rooms. Essentially, the conversion needs to address the same lifestyle elements as a traditional apartment complex to compete in the same market. Working in the conversion building’s favour is the likelihood of a large amount of ground floor space that may not be suitable for rentable suite use. Ground floors in conversions tend to lack the window space needed for suite use and may better lend itself to amenity areas that do not require windows. Another benefit may be large flat roof areas being put to use as outdoor patios and lounges with impressive view potential.

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Exterior renovations are a minimum requirement to move a building from the traditional austere commercial presentation to an upscale and visually inviting exterior infusing a sense of pride and home. As mentioned previously, the addition of balconies goes a long way towards changing the perception of a building along with some creative colour treatments. Addressing the front entrance with focus grabbing elements such as awnings and signage can also draw attention. The building shown in this example is a conversion project in Calgary that has capitalized on its corner location using new window treatments and an enhanced colour scheme to transform a rather bland exterior into an appealing place to live.

Cube: Before

Cube: After

Perhaps one the more challenging features to adopt into conversions is functional windows. Office buildings by their very nature have sealed window systems for climate control. A good climate control system may prove worthwhile in a conversion as well, but many residential occupants want a breath of fresh air occasionally. This introduces a myriad of issues in terms of how to introduce functional windows into an HVAC environment that may function best as a closed system. Balconies and patio doors will also serve to disrupt the balance. As such, convertors need to address air supply and control systems that work on an individual suite basis and bypass much of the HVAC systems in place for office use. As a broader point, the HVAC redeployment in conversion requires strong advice from experts in the field that will have ramifications throughout the conversion process.

Alternate Opportunities

In addition to the popular office to apartment conversion process, there are emerging other types of conversions demonstrating a much wider range of opportunities. Some end use options to explore would include: • • • • • • •

Educational Facilities Office Condominium Community Space Mixed Use Entertainment Restaurant Storage

Office buildings are not the only sector of the market to be negatively affected by current events. Hotel properties have taken a major hit in the past year with struggles foreseen for a few years to come. These properties also offer excellent opportunities for similar conversions and usually within the same market sectors. Retail properties will also see a shift as consumers are now much more adept and motivated to buy on-line leaving bricks and mortar stores with a need to re-develop or re-position.

Plan and Consult

Conversions are a significant enterprise with many moving parts. The conversion process will present owners with new challenges and the need for strong guidance. Consultations should be sought from experts in terms of market study, physical building evaluation, capital finance, legal, architectural, and end use operators. The place to start is with a feasibility study to address a property’s advantages and disadvantages along with an identification of the market sector best suited for the end product. With these elements properly identified, financial scenarios can be advanced with a goal to maximize return and create a long-term functional asset.

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WELCOME NEW M.I.M.A. (LIFE) MEMBERS!

Brian Moore

Sean Martin

The IMA is pleased two announce the Board of Directors has unanimously approved the following M.I.M.A. Life Membership nominations:

Sean Martin, M.I.M.A. (Life) Brian Moore, M.I.M.A. (Life) As detailed in IMA Bylaw 1, “Appointments to the status of Life Member shall be made by the Board of Directors. Only founding or Accredited members of the IMA who are fully and permanently retired from all occupation and employment in the field of property assessment and related taxation are eligible or appointment.” Congratulations Brian and Sean! We look forward to celebrating your careers and contributions at the 2022 Annual Conference.

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IN MEMORIAM The IMA would like to recognize the passing of an important member of our IMA community. It is with a heavy heart we share the passing of Connie Mesih. Over the years, Connie was a vital IMA contributor, presenting on behalf of the municipal sector at past conferences and webinars. Connie was a long-time employee of the City of Mississauga, where she enjoyed her work immensely. As expressed by the City, “Connie was one of the preeminent authorities on property tax and assessment in Ontario. Connie was close to her staff and made them all feel important and listened to. She was mentor to many who work in property tax and assessment and certainly admired and respected by all that she worked with, whether in the City of Mississauga, Region of Peel, the Province, MPAC and various associations. Connie will be missed by all who knew her.” Outside her work with the City of Mississauga, Connie was treasured by colleagues across the industry. As Maureen Zabiuk, A.I.M.A. (Past President of the Ontario Municipal Tax & Revenue Association) expressed, “Connie was the glue that held us together and was always there to support us in both personal and professional roles. Her wisdom and thoughtful feedback was always welcome and appreciated. We will all truly miss Connie’s wit and her invaluable contribution and dedication. Our thoughts and prayers go out to Connie’s family at this very difficult time. Connie will be sorely missed and remain forever in our hearts.” Connie was recognized as a trusted and respected professional across the field. As Diane Ross (Director of Assessment Policy and Legislation Branch for the Ministry of Finance) noted, “She contributed valuable insights and perspectives to every meeting and committee that she participated in thanks to her knowledgeable, thoughtful, and balanced approach to issues. She was the consummate voice of reason. Connie was also a warm, kind and caring person who will be dearly missed by all of us who had the privilege to work with her.” Connie made a huge impact on so many in our industry. We will carry her memory in our hearts.

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IMA ANNOUNCEMENTS GET INVOLVED WITH INSTI-NEWS! Want to help shape future issues of Insti-News? The Communication Services Committee has an immediate volunteer opportunity for you!

What’s Involved?

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Earn CPD credits by shaping future of Insti-News as a member of the Communications Services Committee! If you want to join our great team, please reach out to communications@theima.ca

CONTINUING PROFESSIONAL DEVELOPMENT (CPD) – CYCLE 4 REMINDERS

CPD Cycle 4 will conclude on March 31, 2022. A reminder to complete and/or log your hours before the deadline. Special Reminder: Navigating Ethical Dilemmas is a Cycle 4 requirement for all A.I.M.A. and M.I.M.A. Members will earn 3.0 Learning hours for this offering, which much be completed by the March 31, 2022 deadline. Please reach out to the IMA off ice at cpd@theima.ca if you have any questions.

SAVE THE DATE

The IMA is pleased to announce the dates for the 64th Annual In-Person Conference. Mark your calendars and join us from June 5 – 7, 2022 at the White Oaks Conference Resort in Niagara-on-the-Lake, Ontario. Program details will be released in the new year.

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HAPPY HOLIDAYS!

Please note the IMA office will be closing for the holidays on Friday December 24, 2021, at 12:00pm and will reopen on Monday January 3, 2022.

2021-22 IMA SPONSORS THANK YOU TO THE FOLLOWING SPONSORS, WHOSE GENEROUS DONATIONS SUPPORTED THE IMA SCHOLARSHIP FUND

DIAMOND

GOLD

PLATINUM

BRONZE PEGoulet, Property Tax Advisor

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INSTITUTE OF MUNICIPAL ASSESSORS | DECEMBER 2021