IHM News, Volume 35, Fall 2008

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Volume 35, Fall 2008

Canadian Publications Mail Agreement # 40739009

ENHANCING THE KNOWLEDGE AND SKILLS OF PROPERTY MANAGEMENT PROFESSIONALS

Elevator Modernization Knowing when it’s time for an upgrade

Inside President’s Message

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IHM Historical Trivia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

Commercial Retail Leasing - A Game of Cat and Mouse . .3

New IHM Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

IHM Dialogues with Russia and China! . . . . . . . . . . . . . . . .4

IHM Certificate in Property Management Recipients Course Completions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

Elevator Modernization - Knowing when it’s time for an upgrade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 President’s Commentary: Stress & Time Management . . .6

Current Rules Regarding Propane Barbeques on Apartment Balconies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8

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P r e s i d e n t ’s M e s s a g e Hello Members, The new 2008/09 IHM Board of Directors has been busy working behind the scenes, in our efforts to develop IHM as outlined in the 76/26 Blue Print for the Future. The blueprint outlines key focus areas that will ensure a progressive path of continuous improvement and ongoing success.

Focus areas include: • Strengthening Partnerships • Succession Planning • Membership Retention & Enhancement • Environment Scan • International Outreach • Sound Governance/Good Management • Entrenching our Mandate • Commitment A comprehensive progress report of each area will be provided at the next Annual General Meeting to be held at the 2009 IHM Conference in Hamilton. We want to meet the expectations of our members and welcome your comments and suggestions.

Leave us a message at (416) 493-7382 (Toll Free: 1-866-212-4377) Or email: ihm@taylorenterprises.com We look forward to hearing from you.

Deborah Filice, AIHM, R.S.S.W IHM President

2008-2009 Board of Directors PRESIDENT:

SECRETARY/TREASURER:

Deborah Filice, AIHM, R.S.S.W CityHousing Hamilton Community Services City of Hamilton 55 Hess Street South, 23rd Floor P.O. Box 2500 Hamilton, ON L8N 4E5 Tel: (905) 546-2424 Ext. 7817 Fax: (905) 546-2762 Email: dfilice@hamilton.ca

Harry Popiluk, FIHM Victoria Park Community Homes 155 Queen St. N., Hamilton, ON L8R 2V7 Tel: (905) 527-0221 Ext.215 Fax: (905) 527-3181 Email: hpopiluk@vpch.com

VICE-PRESIDENT Kevin O’Hara, AIHM Communications Chair Region of Waterloo Waterloo Region Housing #202-385 Fairway Road South Kitchener, ON N2C 2N9 Tel: (519) 575-4800, ext. 1218 Fax: (519) 893-8447 Email: kevino@region.waterloo.on.ca

IHM OFFICE:

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David Chambers, AIHM Membership Chair; Conference Chair CityHousing Hamilton 2255 Barton Street East Hamilton ON L8H 7T4 Tel: (905) 523-8496 ext 7897 Fax: (905) 546-2256 Email: dchamber@hamilton.ca

PAST-PRESIDENT: Greg Grange, FIHM Public Relations Officer Director, Dept. of Community & Family Services, City of Kingston 362 Montreal Street Kingston, ON K7K 3H5 Tel: (613) 546-2695 Ext. 4957 Fax: (613) 546-9658 Email: ggrange@cityofkingston.ca

Terry McErlean, FIHM Education Chair Regional Municipality of York Housing Services 1091 Gorham Street, Unit #107 Newmarket, ON L3Y 8X7 Tel: (905) 898-1007, ext. 2718 Fax: (905) 895-5724 Email: terry.mcerlean@york.ca

DIRECTORS:

Deborah Parker, AIHM Marketing Chair Girl Guides of Canada 50 Merton Street Toronto, ON M4S 1A3 Tel: (416) 487-5281, ext. 209 Fax: (416) 487-5570 Email: parkerd@girlguides.ca

CANDIDATE REPRESENTATIVE

Lynn Alexander, AIHM Communications Committee Region of Durham Housing Services P.O. Box 623, Whitby, ON L1N 6A3 Tel: (905) 666-6222 Fax: (905) 666-6225 Email: lynn.alexander@region.durham.on.ca

Lynn Morrovat, Administrator Josee Lefebvre, Administrative Assistant

Doug Rollins Education Committee City of Toronto, Office of the General Manager, Shelter, Support & Housing Administration Metro Hall, 55 John Street, 6th Floor Toronto, ON M5V 3L6 Tel: (416) 392-8638 Fax: (416) 392-0548 Email: drollin@toronto.ca Kathi Zarfas, AIHM Education Committee Social Housing Services Corporation 390 Bay Street, 7th Floor Toronto, ON M5H 2Y2 Tel: (416) 594-9325 ext 215 Fax: (416) 594-9422 Email: kzarfas@shscorp.ca

Sennan Vandenberg Candidate Rep - Membership Committee Town Homes Kingston 37 Cassidy Street, Suite #222 Kingston, ON K7K 7B3 Tel: (613) 542-0443, ext. 106 Fax: (613) 542-6305 Email: svandenb@thk.ca

2175 Sheppard Ave. East, Suite 310, Toronto, ON M2J 1W8 Tel: (416) 493-7382 / 1-866-212-4377 • Fax: (416) 491-1670 • Email: ihm@taylorenterprises.com

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Feature

Commercial Retail Leasing – A Game of Cat and Mouse!

By Larry Krauss & Wayne Humphries

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o…you’ve had a multi-residential portfolio for years and now have just bought your first commercial retail property. You’ve acquired it at a price that you feel comfortable with, but it has a vacancy and some tenants coming up for renewal. If you could find that one perfect tenant and renew the existing tenants, it will provide a great return for many years to come. Immediately you launch into your first challenge. How do find that perfect tenant and renew those tenants coming up for renewal? You know you have a lot of experience with residential leasing, so you think those skills and practises are directly applicable to your new acquisition. For the vacancy, surely, it’s as simple as finding a prospective tenant, negotiating a lease and the tenant moves in. Voila! The tenant starts paying and you are off to the races! And for those tenants renewing, obviously that should be easy too.

If leasing were only so simple.

The fundamental differences between the residential tenant and the retail tenant primarily relate to the enhanced level of sophistication of the retail tenant and the retail lease. The retail lease may reflect a myriad of different types of rent payment terms such as gross, semi-gross and triple net rents whereby the latter two, the landlord has the ability to charge back to the tenant, all or a portion of the operating costs for the building.

In the real world of retail leasing, it has become an ever-changing and dynamic game of cat and mouse, where the land-

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lord never knows from one minute to the next whether he is the cat or the mouse. Today, the tenant is often very sophisticated with a long-range plan in place that outlines the markets where it wants to be and when it wants to be there. Tenants can be very aggressive and organized in sourcing locations and negotiating leases armed with a catalogue of terms and conditions that they have developed, for leases to position themselves competitively in the marketplace, sometimes to the detriment of the landlord. The tenant can be very adept in playing multiple landlords against one another in weaker markets, in order to negotiate the most favourable terms.

Today’s retail tenant, unlike the residential tenant, most often expects the landlord to provide some sort of inducement in the form of a combination of cash (tenant inducement), free rent periods, and exclusions from certain types of common area charge-backs, among others. And these concessions are in addition to the costs associated with work that the landlord will have to do to the property in order to provide a base

building for the tenant to occupy, such as demising the premises and providing utilities to the premises to be occupied by the tenant (often referred to as the “demised premises”).

The tenant has at his disposal a variety of tools to identify new locations and sites, including internal real estate staff.

However, more often than not in more recent times, tenants are using specialized firms to identify, source and negotiate deals for them. These firms have dedicated teams assigned to clients and make it as their business to know the market, source locations and zero in on the best prospects for their tenant / client. It’s in their best interests to be aggressive in sourcing new locations as their income is predicated on successfully opening stores in new locations.

So how does a new landlord with limited retail experience cope in the more sophisticated world of commercial leasing? You begin by asking some very fundamental questions about yourself and your property. continued…

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What are my objectives for this property? Do I plan to hold it for the long term or is it a short term play where I plan to sell? If the plan is to sell the property, it is in the best interests of the landlord to achieve the highest net rent possible.

This sometimes is done by landlords “buying the lease”, whereby a large up front cash payment to the tenant is offset by a higher net rent.

Is my objective to improve cash flow or to enhance value? If it’s cash flow that the landlord is trying to achieve as the primary objective, then the landlord minimizes the upfront costs associated with a lease and will often provide no incentives, but sometimes at the sake of lower net rental rates.

What tenant mix do I want? Sophisticated landlords like to have tenants who complement each other. Complementary tenants include tenants who provide a draw to the property or become destinations in their own right. A large grocery tenant provides potential customers for the hair salon or for the dry cleaner.

Which tenant type has the best chance of succeeding at my location? The landlord needs to understand the local mar-

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ket especially in terms of demographics.

For example, if the incomes are lower and the population older, then a fitness center catering to younger, higher income individuals will have some difficulty succeeding. Consequently, the landlord may be facing the prospect of additional costs for a new tenant, much quicker than expected.

How much as a landlord can I afford to pay and what will the returns be on a lease by lease basis? Landlords need to understand the full costs associated with a new tenant, which factors in the rental rate, the costs associated with the remaining space vacancy, tenant improvement allowance, the cost of the landlord’s work as well as leasing commissions, legal costs and other related costs associated with placing a tenant.

What type of tenant covenant is the tenant providing? The landlord is making a significant investment in the lease. What happens if the tenant’s business fails?

The landlord must have some recourse to recover the investment.

Do I have any strategic advantages with my location that makes it particularly attractive for a tenant? Are you on a great

corner? What is the traffic count in front of your property? What sort of visibility does your tenant have? Are you on the right side of the street? These are all factors that can give the landlord a competitive advantage when negotiating with the tenant or the tenant’s representative.

At the end of the day, retail leasing often becomes a game of cat and mouse whereby the landlord and the tenant enter into a match of wits as who is in the best position to negotiate the best deal for themselves. The landlord can become the cat with foresight, planning, marketing and tact. Are you the cat or the mouse?

Larry Krauss, a commercial real estate lawyer by profession, is the Principal and CEO of Syndicat Management Inc., a Toronto based real estate development and management company with retail, multi-residential and commercial assets throughout Canada and in the US. Wayne Humphries, an Associate of the Institute of Housing Management, is the COO of Syndicat with responsibilities for day to day operations and acquisitions of the corporation. ■

IHM Dialogues with Russia and China!

Greg Grange, Public Relations Officer I am pleased to advise the Members that in my capacity as your Public Relations Officer I am now having preliminary discussions with the New Eurasia Foundation (NEF) and the Academy of Property Managers in Moscow which are interested in partnering with IHM to explore development of a Property Management Certificate and Accreditation Program based on our educational principles and training framework.

IHM was asked to present at the Eurasia Fall East Forum in Dubrovnik, Croatia on October 8-10. Unfortunately IHM has to decline this exciting opportunity to showcase our educational program. The opportunity may arise again at the Eurasia Spring Forum in Moscow.

The NEF partners with many Russian municipalities involved in management of housing stock. You can visit the NEF website at www.neweurasia.ru.

Some things move slowly on the international front but it is very apparent that property management is property management regardless of country or native tongue and the interest shown on the Russian front is quite intriguing.

I am also delighted because this outreach also forwards one of our objectives in our governance doctrine, “76/26 - A Blueprint from IHM” !

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Feature

Elevator Modernization Knowing when it’s time for an upgrade

By Michael Morgenstern

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he implication of “elevator modernization” is often associated with an aesthetic upgrade to the interior finishes of the elevator cab.

Although important, the aesthetic updating of the cab is only a modicum of the modernization process. Upgrades of the mechanical and control components form the substance of the same project,and are the focus of this discussion.

PREVENTIVE MAINTENANCE In principle, a “full service” maintenance contract should allow an owner to retain an elevator system continuously. Proper preventive maintenance and repair should protect an elevator from deterioration. However, factors such as obsolescence and code compliance do lead to major modernization projects. Although each scenario is independent and there are many variables to consider, major modernization infers the replacement of most control and mechanical systems, virtually everything in the machine room and hoistway.

CONSULTATION PROCESS One of the greatest obstacles faced by an owner or property manager concerning a modernization project is creating the initial plan outlining what can stay and what needs be replaced. With certain types of equipment, especially gearless hoist machines, major components are often retained and refurbished rather than replaced. Proper advice is crucial at this stage and will certainly play a role in the total cost of the project, as well as the goals that will be achieved in the end.

At the time when an elevator system begins to break down at an increasing

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rate, questions should be initially directed to the maintenance contractor, not the equipment. In many cases, a major readjustment of the equipment by a qualified service technician will improve operation to a point that several additional years of reliable service can be achieved. Readjustment of equipment is typically included in a “full service” contract and should be completed at no additional cost to the owner.

Elevator contractors commonly cite elevator obsolescence as a reason for modernization. This may not always be the case as the main problem with older systems is that they are more labour intensive to maintain for the service contractor, leading to less profitability. It is advisable to seek a second or third opinion or the advice of an independent professional consultant so any claims as to the availability of replacement parts can be either confirmed or refuted. This may aid an owner in saving hundreds of thousands of dollars on an unnecessary upgrade.

COST AND SAVINGS Long-term financial savings are rarely achieved in the lowering of maintenance service premiums after the completion of the modernization. In fact, monthly charges often increase after an elevator modernization despite the reduction in labour to the service contractor. The consumption of energy is where savings can materialize. Studies have illustrated a reduction in energy costs by as much as 30% and more after modernization.

These energy savings are realized by newer technology drive systems that utilize less operating energy and at the same time emit less heat, thus reducing machine room cooling costs.

SYSTEM CONSIDERATIONS There are literally hundreds of types of systems and every building has a different amount of traffic, so only with a physical inspection of the elevator system by qualified individuals with years of experience can a modernization plan be developed. As complete elevator modernizations cost from $85,000 to $175,000 (per elevator depending on the type of system), a long-term plan is absolutely crucial to prepare for this capital expenditure.

In today’s market the competitive industry of real estate has a significant effect on modernization as owners of older buildings strive to compete with newer complexes. In these circumstances, the reason for modernization is mostly performance. Although an existing system may be fully operational, advances in technology allow for improved dispatching which can provide as much as a 25% decrease in waiting times without increasing elevator speed. For this type of an improvement, the modernization project may be limited to an “overlay” system that addresses the dispatching area of elevator control. Again, the pros and cons of this type of partial upgrade should be considered and evaluated against a complete modernization.

Depending on the extent of a modernization project, with proper planning the elevators should provide the same level of service and ride quality as any brand new elevator.

Michael Morgenstern is a partner at National Elevator Consulting Limited. www.elevatorconsultant.com info@elevatorconsultant.com ■

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P r e s i d e n t ’s C o m m e n t a r y

Stress and Time Management

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career in property management offers a multitude of personal and professional rewards, but it can also have a significant impact on an individual’s general health and that of his/her family. Have you taken some vacation this year - time with family time with friends - time for yourself?

It is imperative that each us practice selfcare and acknowledge that if we don’t manage the work stress, we could succumb to the pressures of the situation.

The workplace brings increasing challenges in management, some of which include deadline pressures, instantaneous communication, staffing problems, resident complaints, mechanical failures, difficult decisions, after-hours work, long and sometimes unpredictable hours that may lead to long term detrimental effects to our general health. It has been clearly documented that high stress is a significant contributing factor to high blood pressure, cardiovascular diseases and mental health. So how do we stay in control?

It is a case of one size does not fit all.

Each of us must develop our own toolkit in managing work stress. For some it is eating a balanced diet, decreasing muscle tension with a good dose of daily exercise, and getting enough sleep and physical rest. Most of us can manage periods of high stress but in an environment where negative work stress is constant we may not be operating effectively and efficiently. A healthier workplace environment can reduce job stress.

This environment would include:

agement training, mental health days and regular job evaluation).

With pagers, cell phones, Blackberries, voicemail, how can you escape the office. It is not unusual to see staff working through their lunch break, snacking at their desks and working into the evening. But each of us needs to stay in control and determine what are realistic expectations? Re-learn how to shut down, turn off, and re-connect with yourself and relaxation. We also need to ask ourselves if we are working efficiently, or are we increasing our stress level by performing unnecessary and non-essential tasks that add to our workload?

Stress can be motivating but it can also be detrimental. I know that there are changes I can make in my work habits.

I challenge you to join me, and make one change over the next two weeks that will reduce your work stress.

Hopefully that includes taking time for yourself, because, taking care of you will make your time spent in property management more productive and more successful.

Sincerely, Deborah Filice, AIHM, R.S.S.W IHM President ■

IHM Historical Trivia Greg Grange, Public Relations Officer IHM came into being at the discretion of Lieutenant Governor Pauline McGibbon of Ontario in 1976. Lieutenant Governor McGibbon issued Letters Patent under Section 4(1) of the Corporations Act. The Letters Patent issued a Charter to the founding members to create The Charted Institute of Housing Management. (The Charter has since been dropped for simplicity purposes.)

The founding members in 1976 were as follows: Harold Stimpson: Regional Municipality of Durham, Director of Operations for Ontario Housing Corporation David Alexander Doyle-Davidson: Borough of Etobicoke, Housing Operations Officer, Ontario Housing Corporation Jean Allen: City of Kitchener, Housing Manager Betty Jackson: City of Toronto, Metro Toronto Housing Authority, Housing Manager John Darcy; Regional Municipality of Durham, Housing Manager

Sufficient staff to manage the property management day-to-day operations

Patricia Rogers: Borough of Scarborough, Metro Toronto Housing Authority then Housing Manager

Recognition of employees’ work performance and a culture that values the individual worker

Ron Ruta: City of Windsor, General Manager of Windsor Housing Authority

Work policies that support good work practices (flexible work hours, career development opportunities, stress man-

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The Seal of Office was given by way of Sidney B. Handleman, Minister of Consumer and Commercial Relations, for the Province of Ontario.

Hence our beginning, which is our future!

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Welcome to Our New Members New Candidate Members Gurmeet Ahluwalia Josh Brown Kai Hong Fong Neville Hendricks

New Accredited Members

Nancy Lee Gusharean Singh Yisroel Weiser

Karen Archer Gary Bennett Nicoleta Cioci

IHM Certificate in Property Management - Course Completions Certificate In Property Mistry, Angeline R. Management Program Moldovan, Costinela Mulic, Edina Completions Pamela Duncan Danielle Lackie

Strategic and Financial Planning for Property Managers Bowness, Sue Mason, Claudette

Nelson, Bob Popescu, Andreea Pribicevic, Luka Seim, Sandra Skenderi, Kostaq Spiteri, Carmel J. Trevana, Stephanie Walker, Nathan Zacharis, Santhosh M.

Ravani, Parviz Reubeni, Ben Ruttan, Sheila Sarria-Freitas, Juliana Senka, Arben Spiteri, Carmel J. Stojanovic, Bogdanka Tandon, Tonney Todorov, Emil Turdiu, Dorian West, Lori Wong, Samuel

Property & Building Administration

Building Maintenance Human Relations for for Property Managers Property Managers

Alam, M.D. Badre Beharaj, Durim Black, Elizabeth Bolce, Tracy Bookbinder, Sharona Bunda, David Cabrera Munoz, Ana L. Chernoloz, Valentyna Clivet, Beatrice Dadson, Eugenia N. Ericksen, Deirdre Faragher, Dianne Flora, Raghbir Harutyunyan, Arthur Hutapea, Sondang Jansen, Dirk Kalendjian, Anjela Kanazirski, Ivan Kenic, Olivera Lopez, Josie Marinucci, Christine Matei, Dumitru Mir Mostafa, Vasilina

Armstrong, Patricia Arsene, Iulian Beatty, Nancy Bennett, Gary Besserer, Jennifer Cabrera Munoz, Ana L. Duncan, Pamela Hirboca, Diana Horea, Ioan Ionescu, Lucian Jansen, Dirk Lamcja, Habibe Li, Muhua Lu, Lihua Mason, Claudette Matei, Dumitru McLellan, Barbara Mollaj, Anila Parekh, Ravindra N. Peci, Luan Pop, Eniko Eva Popescu, Andreea Ramdharry, Michael

IHM News • Fall 2008

Upcoming Events

Batista, Jaime Burton, Christine Cabrera Munoz, Ana L. Ericksen, Deirdre Grange, Mitchell Jansen, Dirk Lamcja, Habibe Macakanja, Danijela Mammadova, Aytan Marett, Mary Ellen McCaulay, Rhonda Mir Mostafa, Vasilina Moldovan, Costinela Li, Muhua Nedyalkov, Rosen Pribicevic, Luka Ramdharry, Michael Sarria-Freitas, Juli Skenderi, Kostaq Shears DiDieu, Michele Tsoneva, Milena Turdiu, Dorian Zacharis, Santhosh M.

We’ll Be There…

2008 ONPHA Conference and Trade Show The 2008 show will take place on October 17th and October 18th, 2008 at the Crowne Plaza and Marriott hotels in Ottawa, Ontario.

Be sure to visit the IHM booth in the Trade Show area!

2008 PM Expo The dates are set for December 3rd through 5th at the Metro Toronto Convention Centre.

IHM is proud to be offering an Educational session at this year’s show on “The Importance of Preventative Maintenance in Buildings” presented by Vicken Aharonian For full details visit: www.pmexpo.com or follow the links at: www.ihm-canada.com

2009 IHM Annual Education Conference Mark your calendars now for the 2009 IHM Annual Educational Conference taking place at the Sheraton Hotel in Hamilton from April 22nd to 24th, 2009.

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BULLETIN August 26, 2008

Current Rules Regarding Propane Barbeques on Apartment Balconies In light of recent concerns raised by some members, members should note that there are currently no provincial laws prohibiting the use or storage of propane on balconies or transporting of propane in elevators. This bulletin outlines the current state of the law in Ontario and its relevance to this matter.

THE FIRE CODE The Ontario Fire Code, through Division B Article 2.1.2.2. (see below), may be used to address some specific hazards associated with barbeques on balconies, such as the accumulation of flammable gases or the presence of nearby combustibles. This Article however does not provide a general prohibition against barbeques on balconies. Article 2.1.2.2.is as follows: 2.1.2.2. Activities that create a hazard and that are not allowed for in the original design shall not be carried out in a building unless approved provisions are made to control the hazard.

THE TECHNICAL STANDARDS AND SAFETY ACT The Technical Standards and Safety Authority (TSSA) also has a regulation (O. Reg. 211/01) governing propane storage and handling under the Technical Standards and Safety Act that is also applicable.

Although this regulation prohibits propane barbeque use indoors and on enclosed balconies, it permits their use on unenclosed balconies. This regulation does contain some relevant restrictions regarding the safe use of propane barbeques, such as: • The balcony must be open (no closures or walls have been erected).

• Propane cylinders must be transported in a service elevator. When there are no service elevators, the person must use the passenger elevator alone to transport the cylinder.

• Cylinders must be kept outdoors.

• The barbecue must be clear of all combustible materials.

• The cylinder relief valve must be at least one metre horizontally from any building opening below it, and three metres from a building air intake.

As a minimum, property managers should ensure all of the above rules are followed.

LEASES FRPO’s standard lease contains a provision that prohibits the use of BBQ’s on balconies. However, the clause in the lease prohibiting BBQ's can only be enforced by way of an N5 whereby a landlord argues that by BBQ’ing, the tenant is seriously interfering with the landlord’s legal interest (breach of the lease and potential damage to property/other tenants). The problem is that the interference must be “serious” or “substantial” and in the absence of Fire Code provisions prohibiting propane BBQ's on balconies or TSSA provisions or by-laws, there is currently no basis for claiming the interference is substantial.

FRPO is in the process of recommending to the Province that amendments to legislation would be appropriate to restrict the use of propane BBQ's and any other kinds of BBQ’s on balconies. A legislative prohibition or specific rules under the TSSA are necessary in order to render the use and storage of propane barbeques on balconies an illegal act or impairment of safety. FRPO will keep all members notified of further developments on this matter.

For further information, please contact Mike Chopowick at 416-385-1100 x21.

This information was orginally circulated to FRPO members as an e-bulletin and is being reprinted with permission.

Editor’s Note: IHM recommends that all readers also check local by-laws and with local Fire Department officials in their own municipalities regarding propane use.