Building April May 2013

real estate development

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construction

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architecture

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How Canadian cities are (or aren’t) preparing for climate change, extreme weather and urban flooding

Sink or Swim

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what’s on BUILDING.ca

FEATURES

14 > Here Comes the Rain /

The story of extreme weather, insurance and how climate change is already draining our pocket books and cities’ coffers. By Andrew Sobchak

READ > 2015 Market Outlook Paul Morassutti of CBRE Canada takes a hard look at 2015 during the Canadian Market Outlook Breakfast.

22 > Water Surge /

Modelling flood risk in Canada would be no easy task. Canadian insurers, however, can evaluate flood risk using new, open modelling platforms that provide insight into potential future losses from a wide range of scenarios.

By Karen Clark

READ > Using (Or Abusing?)

The Use Clause Monica Pak of Daoust Vukovich LLP discusses lease provisions that prescribe each tenant’s permitted use.

T

CONTENTS

14

24 > Before the Next One /

The interconnected nature of urban resilience planning and what this means for asset managers.

By Alexander H. Hay

26 > Bits and Bytes and Boxes / WATCH > Energy Efficiency in University Buildings IESO and Building hosted a roundtable to explore areas of energy savings in universitiy buildings.

Considerations for implementation and deployment of prefabricated data centres. By Wendy Torell

IN EVERY ISSUE

4 > Editor’s Notes 6 > Developments 10 > Market Watch ABOVE IMAGE:

12 > Legal 30 > Viewpoint

m

Downtown Calgary, June 22, 2013.

(Photo courtesy of The City of Calgary)

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Volume 65

04

02 Number

Thunderstruck

Editor / Peter Sobchak

Sporadic power outages are not new to city neighbourhoods. Dead limbs calve off of trees and block roads.

Water mains occasionally break and deluge street surfaces. These are just part of life in a city. But what happens when all the power goes out, the subways and other public transit shuts down, and key arterial roads or highways flood, all at once? In the short-term government agencies and companies execute emergency management plans. But when these emergencies become more and more common, short-term solutions become not really solutions at all. Just band-aids. What cities need is long-term climate change resilience planning, because what passes for “normal” weather appears to be changing for the worse, and we need to be ready both for what we are experiencing now as well as in the future.

As discussed throughout this issue, extreme weather events associated with changing climate can put into sharp relief the weaknesses and fracture points in a city’s physical as well as financial, economic, social and environmental infrastructures. In their latest report, the Intergovernmental Panel on Climate Change (IPCC) made clear that urban climate change risks are increasing, and with cities generating more than 80 per cent of global GDP and housing more than 50 per cent of the global population, the conclusions are undeniable: this density of people and assets increases the concentration of risk from climate change in cities, and without action, the economic costs of climate change are significant. One estimate quoted in a report titled Protecting Our Capital says that by 2030, “as much as $4 trillion in accumulated costs is at risk from climate change around the world.” On the local level, for example, the estimated City of Toronto and Toronto Region Conservation Authority storm-related expenditures and revenue loss from July 8, 2013 was just over $70 million. With respect to private property the Insurance Bureau of Canada reported just under $1 billion in insurance claims from that same storm.

Not every Canadian city is approaching this challenge the same way – sadly many not even at all. But those that are struggling to establish effective governance structures and policies that ensure public safety will ultimately prevail with improved resilience that will lead to greater protection of their physical, economic, natural and human capital. In fact, to savvy cities connected to the realities we face, enacting resilience to climate change and other stressors could become a strategic competitive advantage. As pointed out in a 2014 City of Toronto report titled Member of Resilient City, “from an economic development perspective, a recognized high level of resilience could become a factor in attracting and retaining investment and employment opportunities.”

A resilient city is one that, through an approach that sees resilience integrated into decision-making and co-ordination of city operations and services, is planning for and designing its infrastructure and services to reduce the impacts of extreme weather, thereby reducing vulnerability and exposure to hazards and setting itself up to quickly bounce back when extreme weather events occur. Put another way, resilience is such that when the next superstorm hits, we will still be able to turn on the lights, get to work and do our jobs.

Art Director / Roy Gaiot Legal Editor / Jeffrey W. Lem Contributors /

Karen Clark, Alexander H. Hay, Richard Joy, Andrew Sobchak, Wendy Torell

Circulation Manager / Beata Olechnowicz beata@building.ca Reader Services / Liz Callaghan Sales Manager / Faria Ahmed (416) 510-6808 fahmed@building.ca Senior Publisher / Tom Arkell President, Annex Newcom LP / Alex Papanou

Building magazine is published by Annex Newcom LP. 80 Valleybrook Dr. Toronto, ON M3B 2S9 Tel: (416) 510-6845 / Fax: (416) 510-5140 E-mail: info@building.ca Website: www.building.ca SUBSCRIPTION RATE: Canada: 1 year, $30.95; 2 years, $52.95; 3 years, $64.95 (plus H.S.T.) U.S.: 1 year, $38.95 US, Elsewhere: 1 year, $45.95 US. BACK ISSUES: Back copies are available for $8 for delivery in Canada, $10 US for delivery in U.S.A. and $15 US overseas.

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Peter Sobchak Editor We welcome your feedback. Send your questions and comments to psobchak@building.ca APRIL MAY 2015

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06

MENTS

DEVELOP-

TORONTO | Canadian construction expectations are falling with the drop in oil prices, according to the latest Royal Institution of Chartered Surveyors (RICS) Canadian Construction Survey, especially in the energy sector and energyintensive areas such as the Prairies.

Two-thirds of surveyors report the drop in oil prices has already led to cancellation of some projects in the energy, oil and gas sector, and fully 86 per cent expect workloads in that area to be negatively affected this year. And overall, construction is still projected to grow, but at a less robust pace: respondents expect workloads, employment and profit margins to all keep rising but more slowly than just one quarter earlier, according to the Q4 2014 survey.

Not surprisingly, the oil price drop has significantly affected expectations for future regional construction investment, with Ontario and the Prairies basically switching places in just one quarter. Only 18 per cent now expect the Prairies to experience the most growth over the next few years, versus about 60 per cent in recent previous quarters, while 47 per cent now expect Ontario to outperform expectations, versus a mere 23 per cent in Q3.

“Oil in Canada has a big impact on revenues for government, and if those are reduced, this will affect construction, particularly in regions like Alberta, where we’ve already seen some projects put on hold or cancelled as a result of the drop in oil revenue,” says Dominic Leadsom, director at Turner & Townsend in Toronto. “The uncertainty APRIL MAY 2015

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— Dominic Leadsom, director, Turner & Townsend

Oil price drop lowers Canadian construction expectations: RICS

“I can imagine treasuries are struggling with [the] issue right now: When will revenues from oil get back to the levels where they’ve been previously?”

News

comes from not knowing how long it will take for prices to rise again to something more normal.”

In other sectors, “in the private residential market, lending conditions are very tight with respect to what is and is not a pre-sale” in the Greater Toronto Area and Hamilton, says Charlie Ross, a partner with CB Ross Partners in Toronto. “In the private commercial market, there is a fair bit of new development in the suburbs, but this is being slowed due to price increases in soft costs… and in construction pricing due in part to demand increases from the U.S. and in part in certain trades… due to the demand for materials in large infrastructure projects.”

As for factors limiting construction activity, fully 70 per cent of respondents report financial constraints pose a challenge, with planning and regulation, competition, weather conditions, and staffing also significant issues. “Anecdotally, the lack of manpower in the professional ranks is necessitating extended work hours from those already in the business or longer deliverable periods for design work,” says Ross.

LEED Canada hits 2000th certified

project milestone

OTTAWA | In late 2014, the CaGBC certified its 2,000th LEED building, a milestone that occurred on the heels of the total number of registered projects hitting 5,000 on October 7.

Cumulative totals for LEED certified and registered projects in Canada now sit at 2,041 and 5,187, respectively. Much of this growth came in the fourth quarter (October 1 to December 31, 2014), with 102 registrations and 132 certifications, for a total of 538 certified and 501 registered projects in 2014. Of note in these numbers was the total of LEED Gold projects, which increased by 10.9 per cent over 2013.

Two projects in particular stand out among the list.

Purdy’s Wharf, managed by GWL Realty Advisors, became the first commercial property in Atlantic Canada to attain LEED EB: O&M when the CaGBC awarded the three-building, 694,000-sq.-ft. complex a Gold certification on December 1.

The results of Halsall Associates’ LEED EB implementation, retro-commissioning and outdoor air analysis included 34 per cent less energy consumed compared to the average commercial office building as benchmarked by Energy Star; no drinking water used for irrigation; and 75 per cent of waste diverted from landfill. In central Canada, Winnipeg’s

LEED CERTIFICATION TOTALS FOR 2014:

129 LEED Certified 188 LEED Silver 193 LEED Gold 28 LEED Platinum

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Purdy’s Warf

RioCan and Hudson’s Bay Company join forces in major new real estate venture

07

TORONTO | RioCan has struck a deal with Hudson’s Bay Company (HBC) that will provide the REIT with potential future redevelopment opportunities on existing HBC real estate assets, as well as identify new real estate acquisition and

Richardson International Airport became not only the first Canadian airport terminal to be LEED certified, but the first to achieve Silver, which is beyond the category initially targeted by Stantec Architecture. Looking abroad, Richardson is one of only 17 terminals in North America, and one of only 24 terminals worldwide to receive LEED certification for new construction.

redevelopment opportunities elsewhere. RioCan is paying $325 million for an eventual pro forma equity stake of 20.2 per cent, and the equity contribution will be comprised of three components: $144.3 million by way of the sale of a 50 per cent interest in two enclosed mall properties, Georgian Mall (the largest shopping centre in the Barrie-Huronia area) and Oakville Place; a $52.5 million capital commitment for tenant and capital improvements to certain properties in the joint venture; a capital commitment by RioCan by way of an equity contribution of $128.1 million to be funded over the next three years for future acquisitions to increase the value and diversify the tenant base of the joint venture.

Under the agreement, HBC will contribute 10 owned or ground-leased properties to the joint venture with an estimated 3.3 million square feet. The transaction values the HBC real estate contribution at approximately C$1.7 billion based on a capitalization rate of 5.08 per cent.

HBC PROPERTIES TO BE CONTRIBUTED TO THE JV ENTITY TOP 10

PROPERTY NAME

LOCATION

GLA (SQ. FT.)

TYPE

1

DOWNTOWN VANCOUVER

674 GRANVILLE STREET, VANCOUVER, BC

636,828

FREEHOLD

2

DOWNTOWN MONTREAL

585 STE-CATHERINE ST. W, MONTREAL, QC

655’396

FREEHOLD

3

DOWNTOWN CALGARY

200-8TH AVANUE S.W., CALGARY, AB

488,834

FREEHOLD

4

DOWNTOWN OTTAWA

73 RIDEAU STREET, OTTAWA, ON

335,305

FREEHOLD

5

YORKDALE SHOPPING CENTRE

3401 DUFFERIN STREET, TORONTO, ON

303,438

LEASEHOLD

6

SCARBOROUGH TOWN CENTRE

300 BOURGH DRIVE, TORONTO, ON

231,759

LEASEHOLD

7

CARREFOUR LAVAL

3045 BOULEVARD LE CARREFOUR, LAVAL, QC

177,022

LEASEHOLD

8

PROMENADES ST. BRUNO

BOULEVARD DES PROMENADES, ST.BRUNO, QC

131,808

LEASEHOLD

9

SQUARE ONE SHOPPING CENTRE

100 CITY CENTRE DRIVE, MISSISSAUGA, ON

200,729

LEASEHOLD

DEVONSHIRE MALL

3030 HOWARD AVENUE, WINDSOR, ON

165,584

FREEHOLD

10

New network formed of North American architectural and interior design firms PHILADELPHIA | Historically, national and international

corporations with a need for architectural and interior design services in different cities had two options: hire different small firms in each market and oversee multiple individual projects, or go with one large firm with the resources but limited local insight, talent and accountability. But now, 17 independent corporate architectural and interiors firms in the United States, Canada, and Mexico are attempting to change that approach with a new concept for corporate clients who retain architectural and interiors services. Conceptualized by Norm Liedtke, CEO of Philadelphia-based Meyer, and Ron Carlson, principal with Partners by Design in Chicago, ONE Global Design offers a new solution for cor-

3,286,703

porations with multiple projects across the three countries that tap into the knowledge, experience, and local expertise of 17 firms each considered best-in-class in their respective markets. The Canadian member firms currently include Calgary-based klr design group, Toronto-based figure3 and Vancouver-based SSDG Interiors.

The network approach allows corporations to work with an architecture firm that’s familiar with their brand, vision, and company culture in partnership with a firm that understands the nuances of the community where their project is

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DEVELOP08

COLLECTIVELY, ONE GLOBAL DESIGN RANKS AS THE SIXTH LARGEST FIRM IN THE U.S. WITH 17 OFFICES AND MORE THAN 500 PROFESSIONALS located. So far, members’ clients include Coca Cola, Samsung, Wells Fargo, Audi, and Google, among others. With more than 500 architecture and interiors professionals among its members, ONE Global Design would collectively rank as the sixth largest architecture and design firm in the U.S., according to Interior Design 2014 rankings. Organizers anticipate adding new member firms to further extend the depth and reach of the network.

New Projects Stantec designs Canada’s home in the heart of London

the Chancery to the adjacent building at 2-4 Cockspur Street.

As a result, for the first time in 50 years, Canadian High Commission staff is under one roof. While maintaining the original Neo-Classical form, the renewal includes highlighting Canadian trademarks, such as the use of hemlock and maple in the public lobby and staff amenity spaces, and solid oak and walnut used as flooring and door materials across both buildings.

Key design features include the “cas­cading” staircase within The Queen Elizabeth Atrium, a space untouched since the 1980s; the addition of a rooftop terrace with both a green roof and a green wall; and the restoration of the original library, which was abandoned and filled in during the 1980s. Throughout the building, meeting spaces and ceremonial rooms are named for each of Canada’s provinces, territories and oceans, and embody the design themes of those climates and geographies through the use of art, furniture and custom-made carpets sourced from Canadian artisans.

EDMONTON | Overlooking Trafalgar Square in London, Can-

ada House, the home of the Canadian High Commission in the United Kingdom, has re-opened its doors after a massive rejuvenation by lead-designer Stantec Architecture. The project not only renews the 200-year-old building, it connects

Canada House’ Queen Elizabeth Atrium

APRIL MAY 2015

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“ Ontario architects continue to produce a level of work that is recognized for its design excellence; intelligently designed buildings that contribute significantly to the development of healthy, vibrant and diverse communities. From sustainability, to community development and heritage preservation, the scope of an architect’s role in society is wideranging.”

— Toon Dreessen, president, OAA

People in the News Toon Dreessen new OAA president TORONTO | As president of the Ontario Association of Architects (OAA), Toon Dreessen, partner at Ottawa-based Farrow Dreessen Architects Inc., hopes to engage people across the province in conversations about the value of architecture to society. He will also continue to advocate with, and on behalf of, OAA members to promote and regulate the practice of architecture in Ontario.

With a focus on building strong communication bridges, Dreessen is committed to developing the OAA’s relationships with other organizations as well as cultivating an engaging dialogue with the public. This includes giving OAA members a platform and the tools to advocate on the organization’s behalf, as well as developing a strong relationship with the future generation of Ontario architects, from grad­ uates and intern architects, to schools of architecture across the province. b

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10

MARKE T Foreign Investment

CrossBorder Shopping

The U.S. is by far the largest destination for Canadian global capital. Of the US$22 billion that Canada invested outside of its borders in 2014, 44 per cent went to the U.S. The next highest shares—17 per cent and 14 per cent—went to Australia and the U.K., respectively. It should be noted that the U.S. market share of Canadian global investment dropped below its 2007-14 average of 48 per cent in 2014.

“While we have seen rapidly rising Chinese global investment and oil-rich countries in the Middle East or Norway increasing their allocations to global real estate, Canadian buyers continue to dominate foreign investment in the U.S. and While Canadians should remain on the radar screens of American investors and owners of U.S. dominate U.S. real estate real estate,” said Chris Ludeman, Global President, CBRE Capital Markets. “Capurchases, representing the nadians, other global investors and Americans share the same challenge—findworld’s third largest crossing attractive opportunities with reasonable pricing that can produce a favorable border capital flow, Asian risk-adjusted return. That said, we expect the investment climate to remain brisk property investment – both and U.S. volumes will continue rising in 2015.” outbound and inbound – is Canadian investment is more geographically widespread across the U.S. than set to boom this year. other global capital. This should not be surprising given the magnitude of Canadian investment, its high degree of familiarity with U.S. markets beyond the gateway cities, and the relatively low cost and time commitment for Canadian investment professionals to travel to U.S. markets.

For all property types combined, as with total global capital flows into the U.S., New York is the leading destination for Canada is the unrivaled global investor in United States Canadian real estate capital, followed by Boston and Broward real estate with nearly US$10 billion in direct investments County in Florida, which made the list due to a significant hoin 2014—ahead of Norway, China, Japan and Germany— tel acquisition. Seattle is somewhat unusual for global capiaccording to research from CBRE. Foreign direct investment tal, but not unusual for Canadian capital given its proximity in U.S. real estate totaled US$41 billion in 2014, and Canato Vancouver. dian investors accounted for 26 per cent of it last year. CaInbound investment into Asian nadian investors have already transacted a significant US$2.75 real estate set to double in 2015 billion in U.S. real estate as of mid-January 2015.

All that capital flow isn’t just happening in the Western Canadian real estate investment in the U.S. was one of the Hemisphere, however. Of course Asian investors are looklargest cross-border capital flows in the world in 2014. The ing for opportunities abroad, and the flow of outbound capCanada-to-U.S. real estate capital flow was the third largest, ital from Asia will accelerate this year, but inbound capafter U.S.-to-U.K. and Hong Kong-to-China capital flows. Norital investments in Asian real estate is expected to take way was the second largest global investor in U.S. real estate a “quantum leap” in 2015, according to a new whitepaper in 2014 at US$4.4 billion, or 11 per cent— less than half that from Colliers International. of Canada. China and Japan reached total investment levels “Inbound investment into real estate in the region will in the U.S. of US$3.8 and US$3.5 billion, respectively, each increase by 102 per cent this calendar year. More than three representing nine per cent of the global total. German buytimes the rate of growth in 2014,” predicts Terence Tang, ers transacted US$2.9 billion in U.S. real estate, representing managing director of Capital Markets & Investment Serviseven per cent of global real estate investment in the U.S. ces, Asia. “The office market Asia-wide is at a stage in the “Canadian investors find U.S. real estate attractive for many cycle where new supply will rise 152 per cent to about 100 of the same reasons that other countries do. The U.S. offers million square feet, presenting significantly more opporopportunities for value creation, healthy cash flows and favortunities. Shanghai, Hong Kong and Singapore remain the able risk-adjusted returns,” said Ross Moore, CBRE’s Director best target destinations, but structural change in markets of Research for Canada. “The level of Canadian investment is such as India is making them more attractive.” highly correlated with the health of the American economy and Outbound flows into real estate will increase 61 per cent exchange rates, but the overriding motivation is that Canadian in 2015 from a record US$46 billion last year, Colliers preinstitutional investors need to look beyond their borders to dicts, thanks to continued appetite from traditional infind product and achieve greater diversification.”

APRIL MAY 2015

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Seattle

481

Top countries for foreign investment in U.S. commercial real estate, 2014

South Korea 2 %

Hong Kong 3 %

Singapore 5%

Switzerland 5%

Germany 7%

Japan 9 %

China 10 %

Norway 11%

Canada 26 %

280

Boston

2,241

Other 21%

Chicago

Phoenix

364

Leading Metros for Canadian Investment in $ millions

Manhattan

3,346

Atlanta

337

Broward

565

Dallas

394

Houston

339

Source: Real Capital Analytics, CBRE Research, 2014. RCA data cover transactions of $2.5 million+. Entity-level purchases not included. Totals in U.S. dollars.

vestors and relaxation measures on the policy front. For instance, China has streamlined the approval process for mainland companies that are investing outside the mainland. In Japan, the US$1.1 trillion Government Pension Investment Fund is considering allocating three to five per cent of funds to global real estate, which would make it the world’s largest real-estate allocation.

In terms of volume, mainland China (31.0 per cent), Singapore (27.2 per cent) and Hong Kong (12.9 per cent) have been the top three sources of outbound real estate capital, accounting for 71.1 per cent of the total outbound capital the region invested in 2014.

“Prime gateway cities such as New York, London, Sydney and Melbourne continue to be the preferred destinations for outbound Asian investors. But with existing income-producing assets being gradually snapped up and increased competition from local players, some overseas investors are turning to fringe locations in those markets where better returns are available,” says Simon Lo, executive director of Asia Research and Advisory.

The Colliers capital-markets team, in its investor whitepaper The Winners in Asia’s Tug of War, notes that the secondary locations of gateway cities such as Los Angeles and Frankfurt offer the prospect of better returns, albeit with marginally more risk. That should encourage investors to expand their focus beyond New York and London, the perennial favourites in North America and Europe. Any downside to the Los Angeles office market should be limited by

the low entry point, with prices in the range of US$200 to US$275 per square foot for suburban buildings. That is a level that is lower than their replacement cost.

In Frankfurt, the case for decentralized office space is also compelling. The market is very liquid, and the German business hub set to benefit from its position as a major clearing centre for the Chinese yuan. In Paris, off-plan office space in core locations offers plenty of promise, since yields are low for prime commercial space, and major local developers are looking at teaming up with equity partners for their projects using “Vente en état futur d’achèvement” (VEFA) contracts.

San Francisco becomes a popular destination for Asian buyers and Colliers believes residential development sites downtown represent the best investment strategy.

In Asia, Shanghai will remain the top target for inbound and intra-regional flows. Colliers recommends office space in Pudong as the best investment play, yielding 4.0 to 5.5 per cent thanks to sustained end-user demand and potential rental growth. The low yields in Hong Kong mean a passive “buy-and-hold” strategy is no longer attractive.

The stronger U.S. dollar also translates to higher prices for outside investors thanks to the Hong Kong dollar peg. Colliers recommends value-add opportunities for long-term capital growth. Like San Francisco, Singapore is an outlier where residential presents the best opportunity, in particular high-end luxury apartments. As inventory rises, asking prices have softened and the gap between buyers and sellers is narrowing. b building.ca

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12

LEGAL Cashing-in on Common Element Conversions How making units out of common elements can be a great source of cash, but not without its share of legal twists.

By Jeffrey W. Lem

The aging of Ontario’s condominium stock is beginning to manifest itself in a number of ways. Condominium legislation has been available in Ontario for decades, and has gone through at least one massive, top-to-bottom overhaul in 1998, and is about to go through another massive overhaul any day now after an exhaustive public consultation and review process which began in fall 2012 and ended in January 2014. The Ontario government’s goal was to have residents and business experts work together to identify issues and develop recommendations to modernize the Condominium Act, 1998, and by all accounts, this collaboration has been a smashing success – the real estate community is now waiting with bated breath to see how the government will convert this extensive public input into exciting new condominium legislation.

A store West Theoncontinuing evolution of the condominium world, especially in Ontario, Street in Goderich, can be seen in other ways as well. Many condominiums have seen a change in Ont.’s historic downtown before the the use of common elements since the inception of their buildings. So, for intornado hit (above), stance, some condominiums with large common element parking structures the damage (right), or automobile-centric infrastructure are finding that, especially in urban andother in August 2013 (below) after the town’s environments served by public transit, the demand for such automobile-cenrebuilding efforts.

tric facilities has been eclipsed by other needs (say, for instance, the need for extra locker space). Sometimes, the evolution goes the other way – outdoor and underground spaces formerly dedicated to recreational uses (such as, for instance, a tennis court complex which seemed like a good idea at the time) goes unused when residents are, instead, clamoring to buy outdoor parking spaces situated near the building. In other examples yet, outdoor common elements, whether exclusive use or not, are often better utilized when added to the units themselves. So, for instance, common element backyards and balconies might better serve the residents if they are closed-off and added to the adjoining units themselves.

Underlying many of these decisions, is the financial desire to raise some much needed cash. While some common elements go chronically underutilized, comAPRIL MAY 2015

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mon expenses are chronically going up, especially for some older buildings using older technologies or simply facing the reality of years of deferred capital spending. For many of these older condominiums, it is not simply a matter of utilizing common element space in a way that better suits residents’ needs, it is instead a desperately needed source of cash (whether it is to topup reserve funds or to spend immediately to alleviate pending increases in common expenses or, worse, the dreaded special assessments).

While condominium corporations have care and control of all common elements for the benefit of the unit owners, the directors of these condominium corporations, even if they are unanimous, cannot themselves convert common elements into saleable units simply by passing a resolution.

This type of major amendment requires a supermajority vote by unit owners. For instance (and greatly paraphrased) Section 107 of the Condomium Act, 1998 requires a 90 per cent vote of unit owners for such a major amendment, no simple task in almost any condominium corporation these days, let alone in the case of some of the really big condominium corporations that exist now in excess of a thousand units! Similar legislation exists in all other jurisdictions that have statutory condominium ownership, and rightly so – changing common elements into saleable units can be a drastic change to the character, value and use of a building, and it is one of those major decisions that does seem to cry out for unit holder super majority buy-in.

Although amendments to declarations to convert underutilized common elements into saleable units are steadily increasing, they are not without some legal intricacies. In some jurisdictions, common elements are owned by the condominium corporation itself. This is not technically the case in Ontario. While it is fair to say that the condominium corporation has care

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and control of the common elements for the benefit of the unit owners, the common elements are actually owned, for all other intents and purposes, by the unit owners collectively, each in accordance with their respective percentages.

So, in a hypothetical condominium of 100 units, all of which are the exact same size and each of which contributes 1/100th to the common expenses, the common elements are technically owned by all of the unit owners, as co-owners, each as to an undivided 1/100th interest! Moreover, even after the residents have gone through the hassle of getting 90 per cent vote on the conversion, at least in Ontario, immediately after the condominium common elements are converted from common element to saleable units, those resulting saleable units are then owned in the same way that they were owned immediately before the conversion – in other words, by all of the unit owners, as co-owners, each as to an undivided 1/100th interest!

While a vote of 90 per cent of unit holders is extraordinary enough as is, getting 100 per cent of the owners to do anything is almost impossible, even in fairly small condominiums.

At the very least, there is always the owner that never seems to be around.

To sell the converted common elements, all 100 such owners will then have to sign a deed! Step back and consider the logistical hurdles that this resulting legal construct creates.

Jeffrey W. Lem is While a vote of 90 per cent of unit Editor-in-Chief of the holders is extraordinary enough as is, Real Property Reports getting 100 per cent of the owners to and the Director of Titles do anything is almost impossible, for the Province of even in fairly small condominiums.

Ontario. The opinions At the very least, there is always the expressed in this article owner that never seems to be around are personal to the – either he/she is an offshore investor, author and not spends most of his her/time in Floriattributable or referable da, or simply refuses to sign anything. to the government of More nefariously, there are those the Province of Ontario. owner(s) who realize that they are the “last man standing” and might want to be somehow “compensated” for the premium that the “last man standing” will often be entitled to as a matter of Machiavellian economics! For whatever reason, it makes selling these resulting units practically all but impossible.

Of course, this quirk of real estate law should not and has not deterred condominiums from converting such underutilized common elements into unit space. There are a number of legal “fixes,” but the most elegant and perhaps the cheapest such legal “fix” is for the condominium corporation to apply to the courts for a vesting order confirming that the title to the newly formed units be owned by the condominium corporation itself, and not the unit owners collectively as co-tenants. From a policy perspective, there is no reason why a court should not confirm the conversion and allow the condominium corporation to own the new units until they can be sold off to buyers (or sometimes the court order will put the title directly into the names of the new buyers, with the proceeds payable to the condominium corporation, in those cases where the buyers are already ascertained) since this type of vesting order would merely make practical what the legislation seems clearly to have intended in theory.

Even with such logistical hurdles to go through, the frequency of such condominium common element conversions continues to rise, a testament to the changing demographics and demands of unit owners, and proof of the adage that “over time, everything changes.” b

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N The story of extreme weather, insurance and how climate change is already draining our pocket books and cities’ coffers.

oward Levitt drove into a flood. He was late, he was trying to catch a flight out of Toronto’s Billy Bishop Airport and the growing pool under the Lower Simcoe Street underpass must have appeared fordable for his Ferrari California – retail, $198,000. The photo taken moments later of the silver sports car stranded and abandoned in door handle-deep floodwater went viral and returned as an emblem of the city’s July 8, 2013, extreme weather event. With a price tag of $1.6 billion – $65 million paid by the City of Toronto, $850 million in property and casualty

By Andrew Sobchak APRIL MAY 2015

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insurance claims and $685 million in uninsured losses for private property owners – “the Great Toronto Flood of 2013” ranks on Public Safety Canada’s Disaster Database as the nation’s third costliest flood and fourth costliest natural disaster. The top three floods all occurring within the past five years.

Spectacle aside, the Ferrari story plays as a metaphor of sorts for Canada’s increasingly costly relationship with climate change. Our existing urban stormwater infrastructure is inadequate to control runoff from the more frequent and more intense storms which climate change is helping generate, and the cost of each resulting flood is escalating because of the increased wealth we put near or in harm’s way.

The cost of urban flooding is rising, rapidly depleting our personal pocketbooks and city’s coffers. Some municipalities are assuming strong leadership roles on the national stage with respect to climate change adaptation planning, but as a group, Canadian municipalities are considered by many to be far behind international peers. A vicious circle of climate change apathy by elected officials in all levels of government, media and the general public inhibits the implementation today of straightforward, cost-saving solutions.

FLOODS ARE THE NEW FIRES

In the not-too-distant past, property damage due to flooding occurred so in­ frequently in Canada, there were not enough cases over which insurers could distribute the risk to make coverage affordable. Canada remains to this day the only G8 country without overland flood insurance. “It has only been in the past 15 years or so that overland flooding has become problematic,” says Dr. Blair Feltmate, Intact Chair of Climate Change Adaptation at the University

of Waterloo. “Now, the largest payout in claims by the property and casualty insurance sector is due to basement flooding, whereas 15 years ago, and further back, the largest payouts were due to claims related to fire damage.

Thus, ‘flood is the new fire’.”

In a report released earlier this year by the Insurance Bureau of Canada, the costs of natural catastrophes, and flooding specifically, were shown to have been increasing steadily for decades, doubling every five to 10 years since the 1980s. In fact, 2014 was the sixth consecutive year where insurance payouts were near or above $1 billion, when on only four occasions in the prior 25 years did the total even break $500 million. The record year, 2013, presented insurance companies a bill of $3.4 billion with combined claims from the July 8 event in Toronto and the Southern Alberta floods which occurred 18 days earlier and had a total cost of $5 billion. As the floodwaters coursed through Calgary, High River and Toronto in 2013, Dr. Kevin Hanna and his team were quietly calling 481 local governments across the country.

Hanna, Associate Professor of Sustainability at the University of British Columbia, and his research colleagues initiated the National Municipal Adaptation Project to assess the state of climate change adaptation and resiliency planning in Canadian municipalities.

The study results released in 2014 found hot spots of progressive planning in British Columbia and Ontario, and all major cities were engaged in some level of adaptation planning, many at an advanced stage. But in many smaller communities with populations less than 5,000, planning lag­ged significantly. “We thought, given the vulnerability of small communities there would be greater awareness and concern,” says Hanna. “We also thought that those that had experienced severe weather events recently would be more engaged in the issue. That is not the case.” When asked how he feels the adap­tation planning of Canadian mu­

nicipalities on the whole stacks up against others around the world, Hanna replies, “We are very far behind.”

“When we look broadly at the EU, we see how far we have to go. At a very basic level, governments in Germany, Sweden, the U.K. and The Netherlands, for example, have made clear policy connections between climate change and weather impacts and this is being reflected in infrastructure planning.

Hamburg, for example, is way ahead of any North American city.” In Canada, Hanna doesn’t see the same direction or level of commitment from the Harper government which would propagate adaptation planning and mitigation efforts at the municipal level. “The federal infrastructure program does not adequately address adaptation, and we don’t have a climate change strategy to deal with the costs and impacts. This lack of planning will cost us a great deal of money and trouble.”

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MAP IT

The summer of 2013 was also an exclamation mark in a concerning narrative for Canadian insurance companies, who acknowledges Canada’s tardy response to climate change. “Canada is well behind other nations when it comes to managing the risk associated with overland flooding,” said Rob Wesseling, executive vice-president at the Guelph, Ont.-based insurance coop­ erative, The Co-operators. “While the challenge of water-related disasters is

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2015 Energy Efficiency in University Buildings

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Sponsor’s Message

The Bottom Line on Conservation In many respects, Ontario’s businesses have led the way in creating a culture of conservation in the province. Companies, both large and small and across all sectors, are investing in energy saving and seeing the results in their bottom line. In 2014 alone, business conservation efforts through the IESO’s saveONenergy programs resulted in almost 600 GWh of energy savings.

The business case for conservation is pretty clear – it cuts costs. But conservation also delivers broader benefits for all Ontarians – reducing the need to build new infrastructure and lowering the wholesale price of electricity. We are helping to make our province more competitive for business while also contributing to a cleaner environment.

That’s why the province has moved to new a framework that puts conservation first before all other supply options. This opens up a myriad of opportunities for businesses that are able to shift or reduce their demand for electricity. Through the IESO’s saveONenergy programs, there are numerous opportunities for businesses to reduce their overhead costs through retrofits, energy audits, lighting and equipment upgrades and participating in demand response.

This success, however, is only possible by business, industry, associations and public agencies working together to use their collective strengths to increase our conservation and business competitiveness.

We need this collaboration to continue. Over the past four years, we have seen businesses step up their conservation efforts – not only to capture cost savings but also capture the strategic value that conservation can offer their organizations.

Now we need to push further. The province has set new conservation targets – ones that are more ambitious than in previous years. Our research shows that there remain more than enough opportunities for us to work with businesses to achieve these results. We need to develop more comprehensive solutions – including embedding sound energy management practices within the very core of business decisions.

This publication aims to further this conversation. There are many dedicated individuals with great ideas about how to enhance our province’s conservation capability – you will learn their stories here.

To find out what conservation can do for your business, visit saveonenergy.ca/getstarted.

Terry Young Vice-President, Conservation and Corporate Relations Independent Electricity System Operator

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(L-R) Barry Sampson, partner, Baird Sampson Neuert Architects; Paul Leitch, Director, Sustainability Operations and Services, University of Toronto; Sean O’Leary, president, Energreen Technologies; Peter Sobchak, Editor, Building magazine; Mark Cammisuli, Energy Solutions Consultant, Enbridge Gas Distribution; John Maiorano, OISE / School of the Environment, University of Toronto; Mary Quintana, Energy & Water Projects, Facilities Management, Western University; Mike Williams, Rowan Williams Davies & Irwin Inc.; Mike Szabo, principal, Diamond Schmitt Architects (photos by David Lasker).

The Energy-Efficient University A powerful primer for institutes of higher learning

If sufficient towns, let’s look at a few facts. Take any major here is any doubt that universities are akin to self-

post-secondary institution in Ontario, and when the population of students, faculty and staff are combined it is often in the tens of thousands, equal to that of a small urban centre.

Scores of buildings dot their campuses, varying in purpose from office and student accommodation to classrooms and libraries, sports and theatre facilities, museums and research labs, even ancillary restaurants and shops. The age of these buildings varies too, depending on the school: some are brand new; some can date back to the school’s founding in the 1800s; and then, of course, many are renovated hybrids.

A whole lot of energy is required to run these little “towns.” According to a 2003 National Resources Canada report, universities across Canada that year “consumed a total of nearly 37 million gigajoules, an amount equal to the annual average consumption of approximately 320,000 Canadian households, or of all the private dwellings in the metropolitan area of Québec.”

The numbers surely have risen in the ensuing years – and that was the crux of a roundtable held in early March to discuss energy efficiency in university buildings. Made possible by Independent Electricity System Operator (IESO), at the table were experts from a spectrum of industries including university administration, utility providers, architects, researchers, equipment vendors and more, debating questions such as how do we keep consumption figures from rising further, and what it

A powerful primer for institutes of higher learning

by Leslie C. Smith

Presented by

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It definitely affects our competitiveness, how we are able to manage our energy costs. And they are becoming so significant that I think the best example of it is that so many universities have turned into generators themselves to manage the energy costs.

QUINTANA:

would take to get them to flat-line or even drop? Solving these questions would mean enormous cost savings for the universities themselves, and greater ecological good for our society.

Yet barriers to achieving the answers are many and complex.

SAMPSON:

Arrested Development

Most universities are moving to a budget model where basically the divisions are given an allocation and they budget everything.

And so, they will become responsible for their utilities.

Campuses that have electronic meters at each building 13 11 9 7 5 3 1

2009 2013

Source: Council of Ontario Universities

Number of universities that generate renewable energy Wind Solar electric (photovoltaic) Solar thermal 2013 Geothermal 2009 0 1 2

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A good way to start saving energy is by picking off low-hanging fruit. Easy fixes, such as improved lighting, daylighting upgrades and fine-tuning operational schedules can rein in overspending. Paul Leitch, the University of Toronto’s director of sustainability operations and services on the St. George Campus, recalls one such example: “I was looking at the schedules for a building not that long ago [and found] that we had them flipped day for night … The PM and the AM had gotten mixed up somehow. We fixed that and figure we’re saving on that air-handling unit alone $18,000 a year.”

Of course, one has to measure energy usage before any corrections can be implemented. For example, in a report prepared in July 2014 by the Council of Ontario Universities titled Growing Greener Campuses at Ontario Universities, of 22 campuses canvassed across Ontario only 13 actually had installed energy meters in their buildings.

And, once such fruit has been plucked, things begin to grow more problematic. U of T is large enough to have dedicated staff and executives such as Leitch sussing out ways to improve efficiency, but others may find their human resources don’t stretch that far. A 2013 report, Barriers to Energy Efficiency, co-authored by grad student John Maiorano and Dr. Beth Savan, of U of T’s School of the Environment, found that only 60 per cent of Canadian universities interviewed employ an energy manager, and only 40 per cent have formed a committee to consider energyrelated issues. This study also discovered that, despite energy being considered seventh on the list of key issues facing universities over the next decade, “11 of 15 universities interviewed do not have an energy policy, and the process toward implementing energy efficiency projects at universities is generally considered on a case-by-case basis.” One anonymous director outlined the process as follows: “When I have time to do them, I will do the economic analysis and approach administration for funding.”

Studies show that because of their unique requirements, such as needing high air-exchange levels for labs and classrooms, universities are 60 per cent more energy-intensive than commercial offices and more than twice as energyintensive as manufacturing premises. Concern about energy

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Power Up: Tools to spark energy efficiency projects issues therefore tends to rise exponentially when external pricing starts squeezing university budgets. But those budgets themselves can prove major stumbling blocks to saving.

Barry Sampson, principal with Toronto’s Baird Sampson Neuert Architects, puts it this way: “The whole Canadian model of financing public sector infrastructure is a two-silo model. There’s the capital silo – and it’s always fixed; it’s never flexible – and then there’s the operating silo, and they do not cross-communicate. So you can’t, for example, transfer extra capital costs for LED lighting into the operational silo because they don’t communicate. Universities have all got huge deferred maintenance bills. They’re basically scotch-taping together buildings to keep things operating. There’s no capacity in that silo to finance components in the capital silo that would improve their energy efficiency.”

Adequate access to capital remains a constant worry to university administrators. Internal budgeting procedures aside, they may find their funding coming up short. They may not want or even be able to raise additional funds through borrowing. They are rightly concerned about hidden energy reconfiguration costs, such as reduced service quality, safety and working conditions, extra maintenance, and staff training.

And they may be hampered by an administrative rulebook that dictates return on investment over a too-short period of time. LED lights, for instance, are triple the cost of regular lighting, yet will more than make up for that over their eightyear lifespan. Many administrations, however, demand proof of ROI within a five- or even three-year cycle, effectively removing these lights from consideration.

Game Changers

Government policies can establish new ground rules that would push or oblige universities to remediate the status quo.

These could be incremental in approach, such as Ontario’s new Green Energy Act, which requires all public agencies to publish energy consumption reports online. Or they could involve actual regulation, such as Toronto’s new Green Standards, which mandate energy- and ozone-saving baselines.

Prestigious international projects like Architecture2030 and special industry certification, including BOMA BESt and LEED Gold, give designers and clients alike ambitious targets to aim for.

But all these apply only to new builds. Impetus for change to current building stock could indeed come from above, driven either by a university’s administration or some government agency. Yet that’s not so likely to happen, said Presented by

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here are many reasons to focus on upgrading or modernizing systems for energy efficiency, ranging from reduced operating cost, increased sales, improved employee comfort and effectiveness. There are incentives, rebates, tools and resources available to ensure your business takes advantage of these opportunities to improve competiveness. In Ontario, saveONenergy funding is available through a variety of programs, such as: Funding for Energy Audits and Engineering Studies Often a first step for a business, these are used to identify opportunities for improvements and provide business cases including: energy savings by potential projects; identify potential non-energy related improvements by project including productivity, safety, yield, sales, and so on; identify the capital cost of the projects; summarize the return on investment for each project and prioritize the projects based on capital cost, lifecycle cost savings and non-energy related financial benefits, then uses this to provide return on investment, savings to investment ratio, payback periods, and so on.

•

saveONenergy covers up to 50 per cent of audits, and once opportunities are identified in the audits, more detailed engineering studies can define what exactly is required and provide more accuracy on the potential savings and costs.

100 per cent of the cost of engineering studies is covered by saveONenergy.

Funding for Retrofits Once a business is ready to upgrade to high-efficiency systems like lighting, HVAC systems, pumps, motors, fans and other plant equipment, funding is available through saveONenergy. Companies can receive up to 50 per cent of their project costs through the program.

Funding for Energy Managers Free energy manager resources may be available through local utilities’ Roving Energy Manager Program.

Incentives worth up to 80 per cent of the salary of hiring a full time energy manager may also be available.

Funding For Energy Management Training Receive a rebate worth up to half the cost of certified Energy Manager, Commissioning Agent and Measurement & Verification training.

Find out more at saveONenergy.ca/business or get your local electric utility to contact you at saveONenergy.ca/get-started

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We’re lucky if we get to think of an ROI that includes anything down the pipe. Where all the buildings here are, in theory, going to be here for another 100 years, you’d think that we would do a little bit more lifecycle cost analysis, and we don’t really.

LEITCH:

WILLIAMS:

I think if we’re going to get to sustainability, zero-energy buildings, we’re going to have to move away from having it be 21°, 60 per cent relative humidity all the time. And so I think we need to redefine expectations of clients.

Mike Williams, technical director at Rowan Williams Davies & Irwin Inc., a Canadian firm of consulting engineers and scientists: “I got to study in Europe and there it’s very top-down. They have policies and they force people to do it.

When I came back here, I found it’s very grassroots and bottom-up.”

The grassroots level requires much more time to impact top decision-makers. Campuses, however, are a great place to find people who care about sustainability initiatives and to cultivate recruits to the cause. Several institutions, London’s Western University for one, have turned the process into a learning experience by publishing real-time energy consumption information on publicly accessed dashboards.

“Students, faculty, researchers – they can all go and see how much energy their building is using at that very time,” said Mary Quintana, the facilities management department’s compliance coordinator. “They can see how it compares to other buildings on campus based on the energy-use intensity.”

The flipside of that public face is all the behind-the-scenes monitoring and analysis Western’s freshly updated system allows: “We can detect leaks, we have alarms for backflows on the new meters. [It has] really helped Western manage energy and water. We’re still behind. We have so many buildings that we have to get to. But we have been able to establish targets for the next five years,” said Quintana.

Targets help. And education can build champions for change. Even so, in the here-and-now more is required. Some specialized consultants – mostly engineers and architects – have already stepped up to the plate, undertaking the research and development necessary to solve energy-use conundrums for buildings both new and old. Many suppliers as well now act as partners to large institutions, bringing a wealth of professional expertise to the table.

One such supplier-partner is Sean O’Leary, president of Energreen Technologies, a high-efficiency engineering group. His opinion is that professional partnerships work best when the focus is on the big picture: “From an actual services standpoint – payback analysis, measurement and verification – that’s one thing. But where we find it works the best is having a holistic approach, an overall analysis. We can work with a team and use our experiences at other places and say, ‘Look, here’s what’s working here. Here’s what’s working there.’

Incentive programs from corporate energy partners can also assist universities by offsetting certain financial constraints, said Mark Cammisuli, a consultant with Enbridge Gas Distribution: “The fundamental purpose for incentives, both Powered by

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Richard Thorne, conservation supervisor for Hydro Ottawa Limited, talks about partnering with regional post-secondary institutions to improve their energy efficiency: from the electric side and from the gas side, is to encourage activity above and beyond standard practices.” One example would be window replacement: “If you decided to upgrade from single- to double-pane windows, I can’t give you anything because if you’re going to replace those windows, you’re not going to put more single-pane windows in. We want to see you go with triple-pane, low-emissivity, argon-filled windows.”

This kind of incentivized solution offers a win-win for everybody. Or it would, if every Canadian university had the right fiscal structure in place. According to Leitch, however: “We are not allowed to carry off-book financing. It’s a debt to us. That’s the issue.... I’m going to meet a group today who wants to do all our lighting and they’ll pay for it and they’ll give us a three-year payback and they keep the money. It can’t happen. I have to tell them [that].”

So how can universities break the constraints that have been holding back true energy efficiency? The answer may well lie in an entity known as the green revolving fund.

This is a kind of a capital nest egg, a pool of money either raised or set aside solely to support energy-saving, ecologyfriendly projects. Cost savings are measured and go back into this self-supporting fund and the cycle repeats itself, over and over again. In his research, John Mariano found that revolving funds not only reduce energy consumption, waste generation and pollution levels, their rate of return often outperforms the market.

He also learned that: “While respondents agreed that green revolving funds are both an effective method to address capital funding constraints, and may be an effective method to implement energy conservation projects at their university, only two out of the 15 universities interviewed and seven out of the 98 universities in Canada currently make use of [them].” His conclusion is that the lack of adoption for green revolving funds indicates a general reluctance at Canadian universities to formalize and prioritize energy efficiency processes. Perhaps this echoes our society as a whole. As Mike Szabo, principal at Diamond Schmitt Architects, put it: “Why is it that people will go out and buy a big-screen TV [that] costs $2,000, $3000, and nobody really says that’s a ridiculous waste of money? But as soon as we talk about sustainability, the first thing that comes up is, ‘Well, will it pay for itself?’ ” Or, in Sampson’s words: “If one could stop talking about energy costs and talk more about energy balance – see this as a social project – I think we could have more sophisticated discussions about actions that need to be taken.”

“B

ecause we are a sales-based organization, we have been able to go to institutions that didn’t have the time and energy to apply for energy incentives and convert them to applicants.

“The University of Ottawa has been working with us for a long time. It’s a natural relationship for us. The institution’s mandate is to be as sustainable as possible.

They have dedicated staff to support that. Having us help them make everything as easy as possible has maximized the savings. Mainly through incentive programs, we’ve helped the U of O save more than $1 million in funding over the last four years. Not only have we done large projects for them, we’ve been able to hoover up all the small projects – hundreds of programs for lighting and motors and variable speed drives.

“They have also had a green revolving fund for years.

The University of Ottawa has expanded in size four times since the mid-70s, and they’ve not increased their energy footprint one bit.

“It’s been a longer journey with some other institutions.

They may have operations managers but sustainability is not their first mandate. We’ve been able to increase their participation from nothing, in Algonquin College’s case for example, to between $300,000 to $500,000, where they’d never have applied for anything without our assistance.

“What are we doing next? Proactive strategies involve a lot more work. For instance, when you do a large chiller project, replacing an inefficient chiller with a more efficient one, the M&V [measurement and verification] is relatively easy to attribute the savings to. The next level of savings that are more proactive are things like BAS [Building Automation Systems]. We might give them an incentive to run at certain hours. But the BAS can be changed.

How do you know six months down the road if the original settings are still in place? We offer a longer period of M&V – measured over a year – and we offer engineers who come in and help the customer determine the savings on a much more granular level.

“We are a highly regulated industry. We’re a monopoly.

And we’re here to help people. We don’t stop people from converting to natural gas because part of our mandate is to reduce peak demand. Every time I give someone an incentive, I’m theoretically shooting myself in the foot.

But our goal at the end of the day is conservation.”

Presented by Roundtable venue generously provided by

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When he reduced costs by 13% with a new RTU, he wasn’t just saving money.

He was setting a precedent.

Once your clients start seeing the benefits of our incentives for upgrading to high efficiency RTUs, they will want to look into making other parts of their building like ventilation, chiller and building automation systems more efficient too.

When they do, they’ll be joining thousands of organizations across Ontario who are already enjoying the savings that our programs deliver.

Take a look at their stories and our incentives at

saveonenergy.ca/business

Subject to additional terms and conditions found at saveonenergy.ca. Subject to change without notice.

OM Official Mark of the Independent Electricity System Operator.

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Environmental Abatement Council of Ontario Did you know that a designated substance assessment is required on all projects before they commence? – Do you want to make sure you understand where hazardous materials are before you start construction?

When you are considering your next environmental project, call EACO for assistance in developing your standards. EACO members are: trained, insured and experienced. Whenever abatement work is required, make sure you hire an EACO member.

The Environmental Abatement Council of Ontario (EACO) is a contractor based organization serving the environmental abatement industry. Our members represent our industry as a whole including contractors, consultants, engineers, suppliers, government officials and others with an interest in the environmental abatement industry.

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For more information on EACO please visit www.eacoontario.com or contact us at: Environmental Abatement Council of Ontario.

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Toronto & Alberta floods

Quebec icestorm

CATASTROPHIC LOSSES IN CANADA Loss + Loss Adjustment Expenses in 2014 dollars

$ 300,000,000 Alberta floods & Ontario wind/ rainstorm

Winnipeg flood

200,000,000

Estimated trend line

LIKE RAIN, IT STARTS FROM ABOVE

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not new in Canada, until recently, the scope of these disasters compared to the size of our economy has allowed the issue to fly under the radar.”

In the days that followed the Toronto flood, and in an effort to help accelerate the conversation from planning to implementation, The Co-operators com­ ­missioned Feltmate and colleague Dr. Jason Thistlethwaite to complete a three-phase study, which analyzed the viability of overland flood insurance in Canada; identified key solutions to making Canada more resilient to flooding; and assessed the preparedness of municipalities from coast to coast for climate change. In their Phase 2 report, Partners for Action: Priorities for Advancing Flood Resiliency in Canada, released in September 2014, Feltmate and Thistlethwaite recommend pursuing improved floodplain mapping and applying updated infrastructure design criteria to new build and retrofit projects as the most pressing priorities.

“Municipalities face various challenges with these,” says Feltmate, acknowledging that, for example, floodplain mapping is developed based on known, long-term climate data and that the full impacts of climate change are not yet known. “Also, floodplain maps must include riverine flooding for when rivers overflow their banks, but also urban flooding for when sewer systems become overwhelmed. It is very difficult to convince politicians and the public not to build in areas prone to these types of flooding.”

Where the National Municipal Adap­ tation Project (NMAP) investigation focused on the attitudes and resources municipalities are applying to adaptation planning, the final phase of Feltmate’s study examines how well muni-

APRIL MAY 2015

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cipalities are using certain tools to reduce the cost of urban flooding. “The [Phase 3] report focuses on a quantitative assessment of the flood preparedness of 15 Canadian cities relative to 16 parameters where flood preparedness should be proactively addressed to maintain a well-functioning city during times of high-intensity and long-duration precipitation events,” says Feltmate. The parameters include floodplain mapping, urban drainage maintenance, backwater valves, home adaptation au­ diting programs and others.

Results from Phase 3 are set for release in mid-2015, and with an eye to his company’s bottom line, Wesseling wants this research to help better equip municipalities for future flooding disasters. “My hope is that this research will prove to be an invaluable tool for Canadian municipalities and other levels of government as they prioritize infrastructure projects.”

As illustrated with the breadth and number of parameters in Feltmate’s study, there are a wide range of options available to municipalities when trying to wrestle urban flooding back under control. “In the past five to seven years, things have exploded and it’s hard to keep track of what is being talked about where,” says Dan Sandink, Manager of Resilient Communities and Research at the Institute for Catastrophic Loss Reduction.

In his book, Cities Adapt to Extreme Rainfall, released December 2014, San­dink and co-authors tell the implementation stories of 20 projects in 20 Canadian communities where local governments are trying to mitigate the risk of flooding. For Sandink, the state of climate change adaption in Canada seems to be stalled in conversationmode and needs to move more quickly into solving issues of implementation.

“The tools to address urban flooding are relatively well-known and technically sound,” says Sandink. “We would get more bang for our buck now by refining how they are applied.”

For Sandink, this refinement starts with improving stakeholder engagement. “Private property owners are not terribly willing to engage in risk reduction practices,” he notes, acknowledging there is certain expectation in Canada that municipal issues should

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be solved by the municipality. “If you ask a homeowner to build a rain garden because it helps reduce neighbourhood flooding, he probably won’t. If you encourage him to build one because it beautifies his property, the chances he will increase substantially.”

Sandink also believes the vacuum of leadership on adaptation from politicians at all levels and upper-tier governments is slowing down our reaction to climate change. Not only is allocation of funding to climate change-related causes more difficult without streamlined political support, but the absence of regional or national policy leaves municipal managers isolated. “As it stands now, municipal managers are being forced to make adaptation decisions such as adjusting design parameters for infrastructure,” he says. “But many are reluctant to do so because they don’t want to be out there on their own. They need to be able to defend themselves.”

Kevin Hanna’s NMAP research already shows the location of hot spots in progressive planning are directly related to stronger provincial policies and guidance. Municipalities in B.C. and Ontario are leading the way, in part, because of the support they receive from their provinces.

Prior to the floods in 2013, there was not a lot of awareness in this country regarding climate change-related impacts or domestic urban flooding in general. Now there is something to point to. Despite the high price tag (including unfortunate loss of life), those events have helped elevate the issues in our public consciousness and discourse. The polarizing effect of these events could help align political, governmental and public perception and accelerate regional responses to climate change.

$10 TO $200,000

The costs of flooding and climate change can be controlled, but to do so requires immediate and decisive action. “Early research on the Intact Climate Change Adaptation Project has indicated that for every $1 invested in adaptation, we realize a $4 to $34 return on investment,” says Blair Feltmate. The suggestion is by spending $1 today, we can save spending in the future anywhere from $4 to $34 dollars in the form of flood-damage restoration. “We need politicians and the public to understand climate change cannot be cheated. We can pay a small amount now and embrace adaptation, or we can spend fantastic amounts in the future to repair damaged infrastructure that will continue to break down until we build within the framework of adaptation.”

Ten months after Toronto’s historic 2013 flood, Toronto Water reported to the Toronto Star a specific cause of the flooding on Lower Simcoe Street which caused significant damage, including the life of that Italian sports car: four missing bolts. After watching surveillance video footage of the underpass, they determined four bolts which would normally hold a sewer maintenance cover in place broke or were missing, allowing escaping combined sewage to flood the area. Imagine: a $10 investment in infrastructure could have saved $200,000 in Ferrari. b

Andrew Sobchak, P.Eng., is the Stormwater Innovations and Research Manager for Stantec Consulting Ltd., based in Kitchener, Ont.

Remembering History

19

As legend tells it, The Great Chicago Fire of 1871 started with a cow kicking over a lantern on October 8, but most of the damage happened the next day: 250 dead, 17,000 buildings incinerated and eight square kilometers of what at the time was the United States’ fifth largest city were in ashes. It was a catastrophe of generational proportions.

The Great Chicago Fire is so named not only for the scale of destruction it inflicted but also for the legacy it inspired. 40 years after the fire, as stories of heroism, bravery and loss were still being spun, the International Fire Marshals Association transformed the informal annual commemoration into an binational event which would inform the public about the importance of fire prevention. The event grew, and in 1920 President Woodrow Wilson proclaimed the first National Fire Prevention Day. In 1922, the first Fire Prevention Week was observed during the Sunday-throughSaturday period which enveloped October 9. In every year since 1925, every sitting President has proclaimed the week, making it the longest running public health and safety observance on record. In 2014, the week’s theme was “Smoke Alarms Save Lives.” The Great Chicago Fire changed the way we think about fire.

That being said, if floods are the new fires and the “Great Toronto Flood of 2013” has altered our perceptions of them, stealing a page from fire prevention’s handbook to limit future property and life loss to flooding seems like a reasonable approach. Backwater valves are like smoke alarms: relatively inexpensive, low-tech devices that require minor maintenance but can be employed ubiquitously to help save billions in catastrophic losses annually.

According to Dan Sandink, appropriate stakeholder engagement may be a key to adaptive planning and establishing urban resilience.

LEFT: The Elbow river flows through Calgary’s Mission neighbourhood after the city experienced record flooding in June 2013.

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LEFT: HafenCity concept plan. BELOW: New housing estates with office buildings at the edge of the harbor adjacent to the Marco Polo Terraces.

How to Survive a Flood: Hamburg’s watertight HafenCity

H

amburg is a river city. Built on an estuary of the River Elbe 110 kilometres inland from Germany’s North Sea shore, its residents have battled to keep river and tidal flooding out of their streets and cellars since the ninth century. In 2000, staring down climate change, the resulting prospect of rising sea levels and increasingly frequent flooding, they gave up and welcomed in the water – an urban development strategy which appears to be working.

The 127-ha HafenCity project is redeveloping a low-lying harbour area of Germany’s second largest city into a thriving urban neighbourhood immune but not impervious to flooding. Simultaneously billed as Europe’s largest inner-city re-development, a ‘blueprint’ for waterfront integration and an urban planner’s ‘wonderland,’ the idea has been incubating since the fall of the Berlin Wall but only received masterplan approval in 2000. At a cost of $13 billion, mainly borne by developers, HafenCity is now serving as a model for municipal flood adaptation and resiliency planning.

A Hamburgers historic approach to flood abatement was to build walls: the city has over 100 kilometres of dykes and walls protecting the main city. In the case of HafenCity, dykes around the district’s perimeter were not ideal as planners wanted to preserve the low-lying island’s river connection and waterfront character. Building flood walls would also have been a monumental upfront investment of public capital requiring years to complete, delaying the first developer from punching shovel into ground and the city realizing any return on investment.

The solution was to welcome the flood water into the development and build waterproofed structures which poked out above the anticipated flood elevations. Buildings were constructed on 8- to 9-m. plinths made of compacted dirt – warften, in German – with promenade-facing lower levels employing aquarium-grade glass and watertight windows and doors. Flood waters, which usually invade a couple times every winter, could course through the development, but damage to health or property was kept to a minimum if it occurred at all. Flood-proofing remains a critical precondition for building development in HafenCity. Transportation corridors, including roads, bikeways and walkways, were all built at the same elevation: eight to nine metres above sea level and anticipated flooding elevations. This allowed the district to operate without significant impediment during times of high water.

Since flood-proofing is being incorporated directly into the structures, the costs of flood-proofing the district are distributed and being born entirely by the developer, meaning development can proceed at a reasonable rate without the lagging influence of politics or public budget debates. “Adaptation and resilience are being built [directly] into new developments,” says University of British Columbia Associate Professor of Sustainability Kevin Hanna, whose research has mapped climate change adaptation and resilience planning in municipalities across Canada. “Regeneration planning for the harbour areas incorporates features that will help them survive flood events, such as elevated foot bridges that allow people living in the areas to walk above flood waters,

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but also act as visually attractive features regardless of the season. Flood doors are inconspicuous and can be shut quickly to protect retail space located along the promenade areas close to the water.”

Hamburg’s HafenCity project demonstrates that with innovative planning, good design and attentive municipal operation, cities can effectively manage the risk of, if not peacefully coexist with climate change-related flooding. A Hanna dryly points out, “This is a far cry from the sandbag and diversion canal approach we see here in Canada.”

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By Karen Clark

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Water surge Modelling flood risk in Canada would be no easy task. Flood perils have not yet been covered by the catastrophe models because of several unique complexities.

Canadian insurers, however, can evaluate flood risk using new, open modelling platforms that provide insight into potential future losses from a wide range of scenarios.

looding is one of the most frequent and costly natural perils in Canada, but to date, the catastrophe modelling companies have not developed flood models for the country.

The flood peril is very challenging to model using the standard catastrophe modelling approach. Relative to perils such as hurricanes and earthquakes, flood models require higher resolution data and have several unique complexities.

The catastrophe models have four primary components: 1)) a n event catalogue defining where, how severe and how frequent future events are likely to occur; 2)) s cientific formulas to estimate the event intensity at each impacted location; 3)) v ulnerability curves to estimate the damages for different types of buildings and their contents based on the intensities; and 4)) a financial module to translate the damages to insured losses, accounting for policy conditions such as deductibles and limits.

While the financial module does not change significantly, the first three components are unique to each peril region. Ideally, these components are built using historical data and other scientific information, and the more data that is available, the more credible the model will be. Where data are scarce, expert judgment is used to develop the model components and assumptions.

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DEFINING THE PERIL The first complication with modelling floods is defining the peril. Separate and very different models are required to cover the various types of floods, such as the following: 0 storm surge from hurricanes; 0 inland precipitation caused by tropical cyclones; 0 tsunamis generated by earthquakes; 0 river flooding resulting from heavy rains and excessive snowmelt; and 0 flash floods from heavy precipitation over a short period of time.

Storm surge flooding is the most straightforward to model because the driving events are hurricanes, and the hurricane models are well-developed and based on a wealth of historical data and scientific information. The event catalogue can be the same as the hurricane catalogue.

The intensity formulas will also utilize many of the same parameters used to estimate the hurricane wind intensities.

The minimum central pressure in a hurricane determines, to a large extent, the peak wind speeds and the peak surge heights. The peak surge will also be influenced by the coastal bathymetry, tides and the presence of inlets and bays.

High-resolution coastline data is required to capture the storm surge footprint along the coast and high-resolution elevation data is used to calculate the water depths inland data that are generally available from scientific and government organizations. Studies on the flooding induced from storm surge, along with data on past events, inform the vulnerability curves for damage estimation.

Hurricane Katrina and Superstorm Sandy are two recent events with significant losses from storm surge. Along the U.S. coastline, Tampa is the most vulnerable to storm surge flooding. For example, the surge footprint of a 1,000-year hurricane - a strong Category 4 storm - could lead to a loss of more than US$100 billion.

TSUNAMI RISK IN CANADA Storm surge flooding does not pose a significant threat to Canada, but coastal areas such as Vancouver Island, could be inundated by tsunamis. A tsunami is a series of waves in the ocean caused by the displacement of a large volume of water. The wavelengths are much longer than ocean waves associated with storm surge, and whereas a strong hurricane is not likely to cause storm surge heights greater than about 10 metres, a large-magnitude earthquake can generate a tsunami wave tens of metres high at the coast.

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Image credit: Massive Flooding in Calgary, Canada - 1D/2D Models, Inundation Mapping and Reality by Peter Onyshko, P.Eng., CFM, Government of Alberta; Bryce Haimila, CFM, Government of Alberta Association of State Floodplain Managers Annual Conference, 2014

1

2 1 Flood footprint for Alberta flood in 2013. 2 100-year flood footprint for Alberta

Many types of underwater disturbances can cause a tsunami, but the most destructive tsunamis in Canada will most likely result from large-magnitude earthquakes, particularly those generated on thrust faults associated with major plate boundaries. These types of events create more vertical displacement and, therefore, generate larger waves.

The Atlantic, Arctic and Pacific coasts of Canada are all susceptible to inundation from tsunamis, but the risk is highest on the west coast. Large-magnitude earthquakes generated by the Cascadia Subduction Zone where the Juan de Fuca plate subducts beneath the North American Plate pose the biggest threat.

A recent report from the Canadian Geological Survey, A Preliminary Tsunami Hazard Assessment of the Canadian Coastline, suggests that there is a 10 per cent chance over the next 50 years of a megathrust event in this region. To estimate the inundation area and damages from such an event, many of the same parameters used in a storm surge model apply.

For example, high-resolution elevation and bathymetry information are used to estimate the peak wave height at the coast and the water heights inland. Tsunamis travel at much greater speed and, therefore, will impact coastal properties with much greater force and will cause flooding inundation further inland. The scientific formulas underlying the intensity calculations and the vulnerability curves can be refined to account for these impacts.

ESTIMATING EVENT FREQUENCY, SIZE The more difficult and most challenging aspect of modelling tsunamis under the catastrophe model paradigm is estimating the frequencies and sizes of future events. Defining the event catalogue for tsunamis is more challenging than for storm surge, because while all hurricanes generate some storm surge, not all earthquakes generate tsunamis. And because there is more historical data for scientists to work with,

the estimated frequencies and severities of hurricanes are more robust than for earthquakes - particularly large-magnitude events.

The best that can be done currently is a scenario-type model that provides possible deterministic tsunami scenarios without specific probabilities. Tsunami scenarios have been created by the catastrophe modellers, and newer, open loss modelling platforms enable users to create their own events. These events can be superimposed on a book of business to estimate the resulting damages.

While not fully probabilistic, this method can still inform underwriting and risk management decisions. For example, an insurer can estimate how much property value they insure within a possible footprint and decide if that is too much. Insurers can evaluate specific locations within the footprint to make individual risk decisions.

This approach is also recommended for river and flash floods, which are the most frequent flood events in Canada, but also the most difficult for catastrophe modellers.

Because each event is so different in terms of severity, spatial extent and duration, Canadian insurers cannot expect to have a credible fully probabilistic model for inland flooding.

That said, high-resolution data can enable insurers to get robust scenario loss estimates.

For example, Image 1 shows the flood footprint for the Alberta floods of June 2013. This footprint can be superimposed on high-resolution elevation data available in the open loss modelling platforms. It can be “floated� along the river to see how losses are impacted by different scenarios.

Canadian government agencies have invested in creating high-resolution maps for different return period floods in significant floodplains. For example, Image 2 is a 100year flood footprint for Alberta, presented at the 2014 Association of State Floodplain Managers Annual Conference.

While not quite the methodology employed by the catastrophe models, insurers can leverage the detailed work that has been done.

Historically, flood perils have not been covered by the catastrophe models because of several unique complexities. Even though catastrophe modelling technology is expanding to cover new perils that require more complex and higher-resolution models, it will Karen Clark is president take a lot more time and scientific and CEO of the catasknowledge for the catastrophe modeltrophe risk management lers to create fully probabilistic models firm Karen Clark & covering all types of flooding in CanCompany. This article ada. In the meantime, Canadian insurpreviously appeared in ers can evaluate flood risk using new, the March 2015 issue of open modelling platforms that proCanadian Underwriter, vide insight into potential future lossand has been reprinted es from a wide range of scenarios. b with permission.

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The interconnected nature of urban resilience planning and what this means for asset managers

ur world is changing. Extreme events are becoming less predictable with greater consequences. Infrastructure hardening alone is proving both inadequate and unaffordable. Resilience is not about preventing change – change is inevitable – rather, it is about managing change and adapting, responding, and recovering from disruptive events. How we manage change will be defined by how we manage the risk context, using urban planning to reduce the consequence of shocks and stimulate the collective ability to respond and recover. By focusing on people and the community operations that support their lives as the essential purpose of resilience, we can focus our actions more effectively. Infrastructure is built to support a purpose. That purpose does not disappear during a shock. Therefore, we should plan and design infrastructure and services to support the continued delivery of that purpose.

When we define the relationships between infrastructure systems we can map the flow of consequence and from this build a “system of systems” approach to city operations and how infrastructure enables it. Cities are typically functioning more and more as clusters, which are collocations of resource demand. When these have a single source dependency, they are thought of as being dependency clusters. In a catastrophe, these dependency clusters can dominate a particular resource demand, becoming a critical dependency cluster, and potentially prevent a city from self-recovering.

When looking at urban resilience to climate change and the role and characteristics of building assets in that mix, we AUGUST SEPTEMBER 2013 AUGUST APRIL MAY SEPTEMBER 2015 2013

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need to look at how these assets connect to the urban system of systems and view climate change as an aspect of the all-hazards context, now and over the life of the property.

There are generally thought to be around a dozen trends affecting urban infrastructure, including income disparity; food deserts; health; and equity of access to services. However, in investigating the relationship between infrastructure within communities and the risk context, the trends most likely to change the value of real estate assets are concentration of value; market tolerance; hazard awareness; and insurance loss profile.

Concentration of Value Technological change in communications and information processing has undergone an accelerating evolution over the last three decades, bringing us to the verge of a revolution in how we communicate and conduct operations. This has concentrated operations, both increasing the value of the operation and the cost efficiency, emphasising income disparity as middle skill jobs disappear. The corollary is that the cost of loss or interruption is higher than ever. Secondly, it means that the cost of the property relative to the operation is reducing rapidly. The old paradigms of “one-third of operation value is personnel, one-third of personnel is infrastructure” is gone. It is only a matter of time before infrastructure becomes a rounding error in the operation value estimation. However, the consequence of an infrastructure failure is now far higher than ever before. Concentrating value also tends to be accompanied by singularity of function or clustering, creating single source dependencies.

Resilience is th changes in the quickly from a objects canno self-recover. It tions and ope

Market Tolerance 9/11 had a general market tolerance of business interruption of two weeks. By Hurricane Katrina that was reducing and in the Calgary flood of 2013 it was three to four days. We are generally advising clients to aim to start recovery by 8:00am the next working day. During the South Germany flooding, many

By Alexander H. Hay

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industries experienced very little tolerance of interruption: two hours for just-in-time suppliers, for example. Data exchanges, for example, have always had a no-interruption clause and are more of a special case. There is also an increasing expectation among tenants that the owner will not impede their resilience and business continuity requirements.

Some perceive a trend in property owners being challenged for impeding tenant continuity, reflected in nuisance cases. The demands and expectations of property owners and managers are growing while the relative value of the asset is reducing.

PROPORTION OF GLOBAL GDP GENERATED IN CITIES:

80%

can be designed out at the start of a build or renovation, raising assurance and making insurance of the residual risks once again viable.

PROPORTION OF These four trends will have a proCITIES REPORTING THAT CLIMATE found effect on the property industry CHANGE COULD over the next decade. Commercial propIMPACT BUSINESS: erty is tending towards similar value ratios found in industrial property, Hazard Awareness which is dealt with by common insurWe have seen media reports of a property owner or engineer ance standards that significantly exchallenged with a civil action (hiding behind the code may preESTIMATED VALUE ceed the building code. But a developvent criminal prosecution, but not civil) where the reasonable OF ASSETS AT RISK FROM CLIMATE ment in insurance standards and proman or the judge hearing the case is aware that the climate is CHANGE BY 2030: visions will not be enough, since the changing, that weather events are becoming more severe and consequences of operational interrupfrequent, and that the public infrastructure is increasingly tion or loss are becoming more signifistressed. Organizations sensitive to their customer demands cant and wide reaching. With property of continual service provision are acutely aware of the potenSource: Protecting Our Capital, by CDP/C40/AECOM location becoming a greater concern tial consequence of a failure or interruption, while not necesfor operations, the corollary of this is sarily understanding their whole risk profile. People know that municipalities will increasingly that the risk profile is changing and the consequences are have to accommodate these market debecoming more serious, but aren’t yet quite sure they understand it. They will. mands and collective assurances to atThe more engaged are asking realtors to conduct Location Risk Assessments. The tract the best businesses and individless so will be all the more inclined to seek recovery of losses from their landlords. uals. The Mayor of San Francisco, for example, is attributed to have said that Insurance and Risk his greatest fear is depopulation arisMany organizations are still working on a traditional risk management model of ing out of a lack of confidence that the compliance and financial treatment. Due to the trend in concentration of value city can cope with the next Cascadian and market tolerance, the proportion of risk that can be addressed by a traditionfault movement or other catastrophic event. The United Nations Interna­tional Strategy for Disaster Reduction (UNISDR) recently wrote that resilience is the enabler of sustainable economic development. But this isn’t new. Peter Drucker spoke repeatedly about the first function of business being to stay in business. We can no longer afford to ignore the changing risk context and must make the effort to understand it, knowing that it differs according to operation, location and situation. It is asset owners that will carry the greatest risk and the property managers must live it. We have the al approach is reducing. Operational risk was something tools to meet the challenges of climate change in a rapidly that was being managed by a variety of independent tools, changing context. It’s time to use them. b but it is now growing and without a holistic understanding of the operation’s risk context, capturing the nature of the risks is becoming Alexander H. Hay is a principal in Risk, Resilience & Security Planner at Southern more challenging. The insurance payHarbour, based in Toronto. He was previously the Resilience & Security practice outs in recent years are likely to tend toleader at DIALOG. Participating in projects around the world, he was the lead wards a withdrawal of certain types of protection designer in Northern Ireland, Iraq and the infrastructure protection planner coverage. Assurance of survival is refor the NATO estate in Afghanistan. He is an adjunct professor at the University ducing. It needn’t. We know that many of Toronto Centre for Resilience of Critical Infrastructure, where he focuses on of the operational and emerging risks operational resilience of communities.

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76%

$4TN

nce is the ability of a system to adapt to es in the environment and self-recover from a catastrophe. As such, inanimate s cannot be resilient because they can’t cover. It is systems, individuals, organizand operations that can be resilient.

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Bits and Bytes and Boxes Considerations for implementation and deployment of prefabricated data centres

By Wendy Torell

T APRIL MAY 2015

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oday’s digital environment has created new demands for the data centre. The skyrocketing growth of data – generated from social media updates, mobile purchases, connected devices and more – has driven a need for increased data centre storage and processing capacity. This, in turn, has led to a renewed focus on how these facilities can effectively and efficiently store and manage an ever-larger volume of data. 0 1 0 1 1 1 0 0 0 1 0 1 0 1 0 1 1 0 0 1 0 0 1 1 0 1 0 1 1 1 0 1 0 1 0 1 0 1 0 1 0 0 0 0 1 1 1 To ensure their data centre can scale to the needs of their business, many data centre facility managers have considered prefabricated architectures for their new builds or retrofits. This design concept enables them to easily ‘plug-in’ modules which provide additional cooling or power capacity and deliver benefits such as speed of deployment, predictability and lifecycle cost. But while the advantages of such an architectural system may be known, the process of deploying prefabricated data centre modules can differ greatly from that of a traditional build, and be less familiar to facility professionals. 0 1 0 0 1 1 0 0 0 1 0 1 0 1 0 0 1 1 0 1 0 0 1 1 1 0 1 0 1 0 1 building.ca

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Much of a prefabricated data centre module’s physical infrastructure is secured within it prior to delivery.

When implementing and deploy­ ing a prefabricated data centre module there are several considerations data centre facility professionals should make, including planning and design, site preparation, procurement and installation. 1 0 0 1 0 1 1 0 1 0 0 1 1 0 0 1

Planning and Design

While there have been major advances in modeling and analytics technology, the data centre planning process remains a major challenge. Communication challenges and difficulty securing stakeholder buy-in is just a couple of the hurdles managers can face within any data centre planning process. 011 However, once the initial project parameters – criticality, capacity, growth plan, efficiency, density, and budget – are determined, prefabricated data centre architecture can shorten the remaining steps. Reference designs depicting well-developed prefabricated data centre systems bring simplicity, efficiency and consistency to the planning and design process. These designs convey recommended and proven best practices and act as a starting point for the process, allowing data centre professionals to compare design scenarios and avoid common construction complications. 101101110110010

Site Preparation

Whether the data centre project is a retrofit or new greenfield facility, some degree of work –including applying for permits, readying the land and installing pipes and wires – will generally be necessary. In cases where prefabricated architectures are used, these steps and processes tend to be simpler. 1010110101001

Permits and inspection In general, the permitting process for prefabricated data centre deployments is similar to that of traditional builds. National and local codes and standards, including building codes, must be considered at the start of your project. However, because all necessary information is available directly from a single manufacturer, construction drawings for modular data centres are simpler, in turn enabling reviews and inspections to be completed more quickly. 000101001110101010101 Location: indoors vs. outdoors Designed to be weather-tight enclosures, most prefabricated data centre modules are well suited for outdoor installation. However, there are various reasons why a module may be installed indoors. These include: the module is skid-mounted; the module is an enclosure that is intended for indoor use; protection of personnel from inclement weather during operation and maintenance activities; and added security of critical systems. 110101010110100011010101101011000 For leased data centres, outdoor placement can result in cost savings, as rental fees for outdoor space is often much less than indoor square footage. Parking lots, parking structures, warehouses and open “green space” that have access to utilities, either from an existing building or directly from the utility, can be converted into a high-functioning data centre site. 0101010100010110011100010110101 Foundations for modules There are three common types of foundations used to support data centre modules: continuous concrete slabs, multiple concrete slabs and piers (or a combination thereof). The site’s physical properties, such as soil conditions, surface water drainage, the presence of frost, and seismic and wind loading requirements for the geographical location, are used to identify the appropriate type of foundation: 10 building.ca

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concrete slabs are the most common module foundation; provides a 360 degree walkable perimeter around the facility. 101101101 ■ M ultiple independent slabs are most often used when a module is surrounded by impervious cover and proper water drainage is difficult. 0101 ■ P iers and concrete columns are smaller than slabs and used to provide support to the module’s load bearing contact points in areas where leaching is used for drainage. 00110 ■ Continuous

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Underground wire and piping interconnections Many data centre modules can simply drop right over pre-installed underground electrical conduits, simplifying weather sealing, conductor terminations and the delivery of utilities to and from the module. Chilled water piping for cooling can be installed directly adjacent to the module, reducing or eliminating support hardware, and underground wire and piping interconnections can be completed with less complexity and lower cost materials. 01

Procurement

Because prefabricated modules are purchased from the vendor as a complete, integrated system rather than a collection of individual parts, the procurement process is considerably simpler and quicker than that of a traditional data centre. However, in order to ship and transport the modules, regulations outlining the dimensions and weight of the system must be met. Transportation of data centre modules to a site must adhere to prevailing local, provincial and federal transportation rules that regulate cargo weight, dimensions and the distribution of loads on a truck bed. These regulations are well communicated and well known within the transportation and logistics industry. 0 Because much of a prefabricated data centre’s physical infrastructure is secure within the modules prior to delivery, the need for extensive amounts of packaging is reduced. In the case of APRIL MAY 2015

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Example layout of fully prefabricated data centres. Modules should be placed away from trees, lamps, wires or other objects that can pose a hazard during a natural event, and free from obstruction.

the uninterruptible power supply, heavy batteries are removed after factory testing and prior to shipment to reduce potential damage. 10100010101100011001 Modules are readied for shipment at the factory, and protection from the elements and physical damage is a joint responsibility of the manufacturer and the manufacturer’s transportation company, removing all risk from the customer. 110

Site Installation

Well-designed prefabricated data centres facilitate a simpler, quicker installation process. Since the process of delivery, placement and connection can be executed very quickly, key considerations during the installation process include the timely execution of the delivery, handling and placement and integration plans that include the physical attachment (for wind and seismic resistance), electrical, mechanical and communications work. 0101010001010101010101011101010110101011

Positioning and orientation A module’s placement outdoors can have a significant impact on its delivery and operation. To achieve optimal reliability, efficiency, accessibility and maintainability, modules should be oriented so their shortest side faces the sun to minimize heat gain. Modules should be placed away from trees, lamps, wires or other objects that can pose a hazard during a natural event and the site layout should discourage potential vehicular collisions. Beyond this, modules should be free from obstruction and located in an area Wendy Torell is a Senior that allows proper water drainage. In some cases, modules Research Analyst at can be stacked. 001010010110100011010101011010001010 Schneider Electric’s Data Handling & Placement Data centre modules should arrive at the installation site the night prior to placement on their foundations. Many common material handling machines can be used to properly move modules as needed. With truck cranes several modules can be placed per hour; and modules built to International Standards Organization (ISO) dimensions generally provide the greatest flexibility with attachment and placement. Utilizing an experienced crane company, minimize contact between the crane’s lifting straps and the module.

Balancing the module so it does not tilt or sway when lifted can help prevent damage. 0 1 1 1 0 1 0 1 0 0 0 0 1 0 1 0 1 0 1 0 0 0 0 1

Center Science Center. In this role, she researches best practices in data centre design and operation and consults with clients to help them meet their data centre performance objectives.

She is an ASQ Certified Reliability Engineer and can be reached at wendy.torell@ schneider-electric.com

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Construction underway on Montreal’s only stand-alone, purpose-built data centre 00101001

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A brand new, highly secure next-generation data centre is under construction in downtown Montréal and is slated for occupancy by year-end. The project, valued at $70 million, is being built through a partnership between the Fonds immobilier de solidarité FTQ and Urbacon. Located in Montreal’s Financial District, an existing building on a 43,000-sq.-ft. lot at 544 Rue De Linspecteur will be converted into 19,000 square feet of leasable office space, while an adjacent 10-story building, built to green standards and to the highest security standards for server and data hosting, will add another 234,000 square feet. With the lack of a major carrier hotel, it is anticipated that the new facility will be the city’s largest, most secure mission critical facility. 11010101011101010101010110111000101010110 “Many companies have their data hosted in buildings outside the city that have been converted into data centres, offering a less than optimal or modern environment,” said Peter Russell, vice president of Urbacon. “By building from the ground up, the 544 project will provide a world-class facility meeting all relevant criteria in terms of structural aspects, security, mechanical equipment and electrical systems.”

Slated to have eight floors of white space with floorplates ranging from 20,000 to 28,000 square feet with a total of 16MVA and two floors dedicated to generators, the building also features on-site, underground fuel storage and offers users flexible data centre floor design options. DTZ’s Global Data Centre Solutions Group has been retained as the exclusive broker to represent Urbacon in the leasing process.

Once a module is placed in its intended location, it is important that it be fixed in place. This is often accomplished with anchor brackets which are fixed to the supporting structure by fasteners, particularly in geographies where seismic or wind events have re-

sulted in prescriptive requirements. Data centre manufacturers generally offer a seismic planning guide to all prospective customers. 0101010011011010101001 Implementation and deployment of prefabricated data centre modules is substantially different than that of a traditional data centre build. By recognizing and employing appropriate, and usually simpler, steps for planning and design, site preparation, and procurement and installation, facility managers can more fully realize the inherent benefits. 0 1 0 1 0 1 0 0 0 1 1 0 1 1 1 0 0 1 0 0 1 1 0 0 0 1 0 1 1 1 0 1 0 0 0 1 0 b building.ca

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30

V I E W Walk With Joy

ULI Toronto’s Executive Director explores the bones of a city that fewer and fewer are calling Steeltown.

By Richard Joy

Generation Y take note. A parallel universe is emerging down the lake from Toronto’s central condo land. Urbanity is on offer without the shoebox lifestyle. The GTHA’s oft-forgotten sister, Hamilton, is becoming the region’s most exciting story. It doesn’t matter that for years urbanists predicted that an artist-led exodus from Queen Street West would trigger a gentrification phenomenon, attracted to the city’s “great bones” of heritage architecture and cheap real estate. What matters is that what was predicted in now actually happening. And while what is happening is very exciting, it has also triggered a familiar tension that always shadows change.

Glen Norton, who leads the downtown revitalization file, led me around the city to see the commercial revitalization of the city core, driven by the city’s explosion of Millennials.

Evidence of the city’s revitalization is visible everywhere, from major landmark restorations to a wave of sophisticated residential projects. Exhibits might include the vibrant music scene, food truck culture and monthly art gallery crawls, including the annual Super Crawl, which began in 2009 and is now attracting approximately 150,000 people over two days (for a more detailed account of the projects that are helping Hamilton’s phoenix-like rebirth, read the Building June-July 2013 issue).

But the city’s interest in an old abandoned industrial building owned by Forum Equity Partners brought an curious perspective to this renaissance. Guided by the flashlight on my iPhone, Glen and I scrambled through the dusty darkness of the Cannon Knitting Mills. Located in a hard scrabble neighbourhood that reflects one’s vision of the old Hamilton, the Knitting Mills building screams urban renewal. As someone who had a hand in saving and repurposing Toronto’s Wychwood Barns streetcar repair facility, it was easy to see the possibilities of live-work artists’ studios, farmers markets, maker movement space, social service delivery programs, community amenity, and abundant private sector commercial and office opportunities.

But this may not be the Knitting Mills’s fate. Frustrated by years of a stagnated vision that has been slow to materiAPRIL MAY 2015

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Cannon Knitting Mills

alize, the forces of “Old Hamilton” are beginning to mobilize and question the value of preserving this old monolith. Demolition has become a valid option. From the outside it is easy to see that the future of the Knitting Mills is really symbolic of a larger debate that the city needs to resolve as it chooses its path forward. There is little doubt that the city’s number one economic development asset is its heritage architecture. This is not a chicken and egg scenario. Hamilton’s character as an older city with exquisite heritage architecture is doing for Hamilton what other 905 cities in the Toronto region Richard Joy is Executive cannot compete with: attracting young Director of ULI Toronto. residents seeking a vibrant, urban and Previously, he served as car free lifestyle. This is the demoVice President, Policy and graphic that pulls jobs and economic Government Relations at investment with them. And the leadthe Toronto Board of ing edge of all this, the world over, is Trade, and was the almost always artists.

Director of Municipal In this context there is a lot riding Affairs and Ontario on one humble old building. Its future (Provincial Affairs) at is Hamilton’s future. How the city navGlobal Public Affairs. igates the future of the Cannon KnitFollow him on Twitter ting Mills is a test for a city that has @RichardJoyTO or email come a long way, but still has a long at Richard.Joy@uli.org path ahead of it. “Old Hamilton” should be proud of the fact that the city it built is the city that new generations are seeking to protect. Indeed “New Hamilton” is not at odds with the city’s past.

It seeks to embrace it. b

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15-05-20 2:40 PM

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