RHB Magazine Nov/Dec 2021

Vol. 14 No. 5 Nov/Dec 2021

Canada’s #1 most widely read publication for Apartment Owners, Managers and Association Executives

The official publication of:

RENTT: Financing CAPEX projects Rental housing owners and financing professionals discuss issues related to funding capital expenditures

Bob Dhillon

Randy Daiter

Brian Jessop

Paula Gasparro

The future lives here! 2021 FRPO MAC Awards

The association recognizes leaders in Ontario’s rental housing industry.

Evan Pawliuk

5 “temporary” tech tools built to last

These pandemic-driven technologies are likely to make a long-term impact on property management.

Energy efficiency and capital expenditure projects Rental property owners should focus on capital expenditures that reduce or eliminate waste.

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EDITOR’S NOTES Reaching the end of another year By the time you receive this issue, the year will be just about over. It’s been another year of financial difficulties, fluctuating infection rates, weather-related disasters, political strife, rising costs, and growing negativity (not without reason). Even with all the bad, there is always good, which we should try to appreciate.

All the problems we’ve faced this year won’t magically disappear in 2022. There will be new problems, on top of existing issues.

But there will also be good moments. And we can take the time to be good to each other, while appreciating what we have.

This issue of RHB Magazine features a RENTT discussion of financing CAPEX projects for rental properties. The article is divided into two discussions. First, we spoke to rental property owners about how they categorized different types of CAPEX projects, what projects they focused on to get the best ROI, considerations when deciding which projects to choose and finance, and how projects are financed. Then we spoke to financing professionals about CMHC’s funding rules, how rental housing providers are financing CAPEX projects, evaluating CAPEX projects, and the future of interest rates.

The first article focuses on energy efficiency and capital expenditure projects. It examines the importance of making the right investments, optimizing buildings for energy efficiency, controlling utility costs, and unlocking funding for projects. The second article discusses the 21st annual FRPO MAC Awards, which recognizes leaders and accomplishments in Ontario’s rental housing industry. The award show was held online this year, but will be returning in person for 2022.

Check out CFAA’s newsletter, National Outlook, as well as the Regional Association Voice. Yardi Canada writes about five technologies that can be useful to people working in the rental housing industry. Multi-Unit Review discusses drivers of the multi-family market into the fourth quarter of 2021.

As usual, we enjoy hearing from our readers and support twoway communication. If you have any comments or questions, send them to david@rentalhousingbusiness.ca. I look forward to hearing from you.

Co-founder, Publisher

Marc Côté marc@rentalhousingbusiness.ca

Associate Publisher Nishant Rai

Editorial

David Gargaro david@rentalhousingbusiness.ca

Contributing Editor

John Dickie, President CFAA jdickie@rentalhousingbusiness.ca

Creative Director / Designer Scott Clark

Office Manager Geeta Lokhram

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One year $49.99 Cdn Two years $79.99 Cdn Single copy sales $9.99 Cdn Opinions expressed in articles are those of the authors and do not necessarily reflect the views and opinions of the CFAA Board or management. CFAA and RHB Inc. accept no liability for information contained herein. All rights reserved. Contents may not be reproduced without the written permission from the publisher.

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David Gargaro Senior Editor

4 | Nov/Dec 2021

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CONTENTS

VOL.14 NO.5 2021

The future lives here!

2021 FRPO MAC Awards

The association recognizes leaders in Ontario’s rental housing industry.

RHB’s forum for rental housing associations to share news, events and industry information

RENTT: Financing CAPEX projects

Hot Topics: WRAMA provides an important update from the Landlord and Tenant Board, as well as information for potential association members. pg. 45 LPMA explains how to steer clear of conflict in snow removal conflicts, as well as how COVID-19 has changed property management. pg 49

RHB Magazine speaks with rental housing owners and financing professionals about issues related to funding capital expenditures.

HDAA discusses association issues, including the changes in presidency and Board of Directors, and the expansion of Hamilton’s urban boundary. pg. 53 EOLO discusses upcoming changes in the City of Ottawa’s curbside solid waste collection and the vacant unit tax. pg. 57

The Member Associations

Regional Association Voice RAV features the latest industry news from four member associations.

Energy efficiency and capital expenditure projects Rental property owners should focus on capital expenditures that reduce or eliminate waste.

6 | Nov/Dec 2021

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PRESIDENT’S CORNER This month’s issue of National Outlook provides insight on what the renewed federal Liberal government plans to do about housing, and rental housing in particular.

We welcome Ahmed Hussen’s re-appointment as the Minister of Housing, and provide some information about his background, and his views on portable housing benefits.

National Outlook continues with information about the federal government’s plans and programs concerning housing. Those plans include a new $4 billion Housing Accelerator Fund to support municipalities in approving development applications in a more timely manner, as well as the government plans to make the provision of federal infrastructure funding conditional on the provinces and municipalities having “good housing plans”.

What could possibly go wrong? See pages 38 to 39 to find out.

CFAA looks forward to hosting CFAA Rental Housing Conference from May 9 to 11, 2022, on an in-person basis. We will be meeting at the Hyatt Regency Hotel in downtown Toronto, for a building tour, two days of education and networking, and the annual CFAA Awards Dinner. Benjamin Tal has agreed to give his popular and entertaining Economic Update. We hope to see you there!

CFAA also hopes you will participate in the CFAA Rental Housing Awards Program 2022. CFAA’s volunteer judges evaluate rental housing providers, as well as employees, marketing programs, renovations, developments and industry suppliers. CFAA or the judges often split the awards categories by company size, exact job, renovation type or other characteristics, so that CFAA can recognize more worthy rental housing providers and suppliers in the CFAA Awards.

Plan to join the finalists and winners at the Awards Dinner on May 10!

8 | Nov/Dec 2021

The Home Depot remains a key CFAA Strategic Partner. By registering your membership in CFAA (either directly or through one of our 12 member associations) with Home Depot Pro, you benefit yourself and CFAA. The support of The Home Depot has helped CFAA weather the pandemic.

We look forward to a continued partnership benefitting every rental housing provider reading this magazine.

Yardi Systems is another a long-standing, key CFAA Strategic Partner. We look forward to working with Yardi to bring you informative panels, and the latest and best information on technology and marketing for rental housing providers, at CFAA RHC 2022.

Finally, CFAA wants to thank the many rental housing providers and leaders who support CFAA and advance the rental housing industry with the federal government, and across Canada.

John Dickie, CFAA President John Dickie, CFAA President

rentalhousingbusiness.ca | 9

In this issue of... NATIONAL OUTLOOK 35. Who is Canada’s current Housing Minister? What else is he responsible for? What is his background? What does he think about portable housing benefits for low-income tenants?

37. What did the Throne Speech tell us about the government’s plans on housing? What is the Housing Accelerator Fund? What could go wrong with it? What could go wrong with the federal infrastructure programs imposing a requirement for “good housing policies”?

39. What other issues remain important for rental housing providers and CFAA? What is the status of the Interest Deductibility Limitation (IDL) plan adopted in Budget 2021?

40. W hen will Canada’s rental housing industry meet for CFAA Rental Housing Conference 2022? Where? What categories are available in the CFAA Rental Housing Awards in 2022?

When and where will the winners be recognized?

To subscribe to CFAA’s e-Newsletter, please send your email address to communication@cfaa-fcapi.org.

The Canadian Federation of Apartment Associations represents the owners and managers of close to one million residential rental suites in Canada, through 12 apartment associations and direct landlord memberships across Canada.

CFAA is the sole national organization representing the interests of Canada’s $600 billion rental housing industry.

For more information about CFAA itself, see www.cfaa-fcapi.org or telephone 613-235-0101.

10 | Nov/Dec 2021

CFAA Member Associations Eastern Ontario Landlord Organization (EOLO) www.eolo.ca P: 613-235-9792 Federation of Rental-housing Providers of Ontario (FRPO) www.frpo.org P: 416-385-1100, 1-877-688-1960 Greater Toronto Apartment Association (GTAA) www.gtaaonline.com P: 416-385-3435 Hamilton & District Apartment Association (HDAA) www.hamiltonapartmentassociation.ca P: 905-632-4435 Investment Property Owners Association of Nova Scotia (IPOANS) www.ipoans.ns.ca P: 902-425-3572 LandlordBC www.landlordbc.ca P: 1-604-733-9440 Vancouver Office P: 604-733-9440 Victoria Office P: 250-382-6324 London Property Management Association (LPMA) www.lpma.ca P: 519-672-6999 Manufactured Home Park Owners Alliance of British Columbia (MHPOA) www.mhpo.com P: 1-877-222-4560 Professional Property Managers’ Association (of Manitoba) (PPMA) www.ppmamanitoba.com P: 204-957-1224 Saskatchewan Landlord Association Inc. (SKLA) www.skla.ca P: 306-653-7149 Waterloo Regional Apartment Management Association (WRAMA) www.wrama.com P: 519-748-0703

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RENTT:

Financing CAPEX projects

In this month’s issue, we asked our esteemed RENTT (Rental Executives National Think Tank) panellists to discuss financing of capital expenditure (CAPEX) projects. We took a slightly different approach with this RENTT feature. First, we spoke to rental property owners about how they categorized different types of CAPEX projects, what types of projects they focused on to get the best return on investment, considerations when deciding which projects to choose and finance, and how projects are financed. Then we spoke to financing professionals about changes in CMHC’s funding rules, how rental housing providers are financing different types of CAPEX projects, evaluating CAPEX projects for financing, the future of interest rates, and how rental housing providers can take advantage of today’s low rates.

14 | Nov/Dec 2021

By David Gargaro

Rental property owners

RENTT experts:

Bob Dhillon, Founder, President and CEO, Mainstreet Equity Corp.

Randy Daiter, Vice President, Residential Properties, M&R Holdings

RHB: Welcome to RHB Magazine’s RENTT panel. We appreciate the time and effort involved in participating in today’s discussion and sharing your experience. Our readers will benefit from your input and experience.

How would you categorize different types of CAPEX projects?

Bob Dhillon: First of all, you have to understand that the majority of buildings in Canada are aging, and aging rapidly. There are many types of renovations that we undertake. First, those which go to the “bones” of the building, the infrastructure: energy-efficient roofs, boilers, plumbing, mechanical, security features, etc.

Second, there are the “inside of the box” renovations: low VOC paint, upgraded kitchens, bathrooms, flooring, ceilings, lobbies, etc. Third, there are the energy-saving renovations that we do: double pane, energy-efficient windows,

Brian Jessop, Vice President, Operations, Killam Apartment REIT

water-saving showers and kitchen taps, Energy Star appliances, dual flush toilets, energy-efficient lights, etc. We have also started to do exterior wraps, depending on the building, such as upgraded balcony doors, railings and resurfacing, hardy board siding, metal cladding, insulation, and aesthetically pleasing finishes.

Randy Daiter: Energy-efficient capital projects

we have either considered implementing or have implemented include reviewing pumps and motors for efficiency levels, doing lighting retrofits, upgrading CO sensors, controls, and other equipment in parking garages, analyzing and optimizing chillers and cooling towers, and improving pool pump efficiency. To reduce natural gas consumption, we have tracked and measured usage, installed more efficient equipment, installed programmable thermostats and radiator heat deflectors, switched to more efficient laundry room dryers, and applied for government incentives. To address water usage,

rentalhousingbusiness.ca | 15

we’ve conducted water audits, installed high efficiency fixtures, transitioned to low water landscaping and removed irrigation systems, and implemented water maintenance programs. To deal with structural issues, we’ve done repairs and upgrades to balconies, roofs, and garages.

For the building envelope, we’ve added roof insulation, weather stripping, new windows, and balcony doors. We’ve also looked at elevator modifications, exterior parking lots, common area corridors, and lobby refurbishments.

Brian Jessop: We look at CAPEX projects

similarly. However, we break the categories into building envelope, maintenance, energy, curb appeal, commercial, insurance, appliances, and repositions.

RHB: Aside from mandatory CAPEX projects, such as building repairs, what types of CAPEX projects do you focus on, as they have the best ROI for increasing rents and revenues?

Bob Dhillon: CAPEX that creates the greatest

increase in rental rates has to focus on the largest percentage of renters, the Millennials and Gen-Z in our case. Let’s take Millennials’ preferred locations out of the equation for now; we’ll focus just on what it is they want from a building. Often, they are looking for more minimalistic kitchens with updated appliances including dishwashers and microwaves. They also love technology, which is why we’re piloting things like the Telus SmartHome system currently installed in units at our Sunalta 1913 property in Calgary. These tastes evolve, and so should your CAPEX expectations.

We focus on our audience, our customers, and their requirements, excluding the geographic locations, because that is our most important criteria in deciding which CAPEX has priority.

Randy Daiter: For hydro, sub-meters save

approximately $50 to $76 per month in electric bills per suite, and provide tenants with tools to save and manage their electricity bills. Variable frequency drives provide both electricity and gas savings when installed in fans, domestic water and HVAC pumps, make-up air units and air handling units. Lighting retrofits switch old T12 and T8 lights to LEDs in different areas, including exit lights, exterior lighting, corridors, stairwells, lane lighting, and more. Radiator heat reflectors produce 28 to 33 per cent savings in heating costs.

Ultra-low-flow toilets provide simple payback in less than three years. Water maintenance programs that include monitoring consumption, checking for leaks, and doing regular toilet and shower head inspections also produce significant savings.

16 | Nov/Dec 2021

Brian Jessop: Our highest ROI comes from

projects in energy and repositions. Energy projects result in savings in operating costs, and repositions provide rental lift opportunities.

RHB: What are the major considerations for each type of CAPEX project that get the most weight?

Bob Dhillon: The most important consideration

is knowing our audience, our customers; you have to know who you’re serving to know what they want. We cater our brand and our projects to those customer requirements. Environmental, social, and corporate governance (ESG) plays a very important role in these variables, especially the inclusivity aspect. We are working hard on finding environmental efficiencies beyond those mentioned previously, to further reduce our carbon footprint, but pushing the importance of diversity and inclusivity has been crucial to every aspect of our business. This even extends to CAPEX decisions, where community stakeholder feedback and collaboration helps us address issues in innovative ways, which sometimes avoids spending on CAPEX. This inclusivity makes our tenant base more willing to work with us when it is time for a project, though, because we don’t just know how to communicate with them; we are them. You would be hard-pressed to find a more diverse and inclusive team in this industry.

Randy Daiter: We take both quantitative and

qualitative considerations into the analysis.

Typically, projects with a one- to three-year payback or that increase the overall comfort, aesthetics of curb appeal or suites take priority.

For example, we have replaced windows at many buildings. Key benefits of these projects include improvement in building aesthetics and better curb appeal, improved tenant retention and referrals, increased resident comfort through warmer suites and significantly reduced traffic noise, cost savings through both energy savings and reduced maintenance costs, increase in overall building value, and reduced ambient noise, air, and water infiltration. The ability to recover costs in an AGI are also taken into consideration.

Brian Jessop: Considerations for support of

different categories is savings or ROI, protection of asset, such as leaking roofs and water damage, tenant comfort, such as leaking windows or air infiltration, curb appeal, and the professional appearance of our buildings. We also consider stewardship or long-term protection of the asset.

ESG is important but many times this comes out of projects that have other positive returns. continued on page 20

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Delivered to you by Important reminders about using CMHC-insured

By John Dickie, CFAA President financing These reminders apply to CMHC-insured borrowing on buildings with five or more rental units.

Funding CAPEX Prior to May 2020, CMHC had few rules about the use of funds secured by CMHC-insured mortgages.

From that time, funds from CMHC-insured financing and upward re-financing (“borrowing”) cannot be used to take out equity.

If you intend to finance CAPEX by CMHC-borrowing, you need to check with your lender, and make sure the timing of the borrowing is acceptable to CMHC. Lenders may enforce the rules in varying ways.

The timing of the financing in conjunction with the CAPEX payment is critical. To make matters more complicated, CAPEX work often takes many months, or even several years, and the engineers and contractors issue progress invoices and expect each invoice to be paid in a timely manner.

According to CMHC’s information to CFAA, a rental housing provider is not allowed to pay for CAPEX from funds on hand, or from equity, and then take out the equity from the next CMHC-insured borrowing.

CFAA understands that money can be borrowed in advance of the need to pay invoices for CAPEX, and then used to pay for the CAPEX invoices as they come in. Or money can be borrowed temporarily and refinanced with insured funds once the CAPEX project is finished.

Rental housing providers with a portfolio of properties may have a better solution, since funds secured on one property can be used to pay for CAPEX on a different property. When the rules came out, CFAA obtained clarification that lenders can enforce the use of funds rule by verifying that, across a portfolio, as much CAPEX is being performed as the amount of insured borrowing.

Make sure your plan for borrowing and paying CAPEX is acceptable to your lender before contracting for and paying for CAPEX. Your lender is responsible for enforcing CMHC’s use of funds rules.

Other uses of CMHC-insured financing There are other occasions in which rental housing providers used equity temporarily, and then took it out from CMHC-insured borrowing. One was buying a property. Most equity take-out is prohibited, even when it is replacing a temporary equity injection. On the other hand, replacing other borrowings is acceptable. The solution may be to use bridge financing or temporary financing until the whole CMHCinsured borrowing can be secured and advanced. That temporary financing can be secured on a different property.

Understandably, any acceptable uses of funds must be for a property within Canada, but they can be anywhere within Canada.

New construction or major additions Equity take-out is still acceptable on new construction or on a major addition to a property. CMHC recognizes that lenders who provide construction financing often demand some equity to keep their money safe during the construction period. In addition to loans secured on other assets, developers can use equity to temporarily pay for new construction or major additions. That equity can be taken out in the first CMHC-insured financing on a rental housing project in Canada.

Restoring leverage Restoring leverage is not an acceptable use of CMHC-insured borrowings. When principal payments have reduced leverage, the leverage cannot be replaced by new or increased CMHC-insured borrowings.

Likewise, when a property has risen in value, CMHC-insured borrowings cannot necessarily be used to restore leverage. CMHC-insured borrowings can be obtained using the increased security provided by a property if the funds will be used for an approved purpose on other rental housing properties in Canada, such as a new purchase or CAPEX.

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continued from page 16

RHB: In financing CAPEX, what major considerations do you pay the most attention to?

Bob Dhillon: We have been very fortunate

over this last while, as we have enjoyed long periods of low interest rates. Conditions like this make some building renovations feasible that may not be at other times. We have an annual spend of approximately $40 million on combined maintenance improvements and major capital improvements. Our financing charges have been at all-time lows, around 2 per cent. Our rate of return has only had to exceed a very low hurdle; this has really helped us to expand our ability to provide quality affordable homes.

Randy Daiter: Cash-flow and the cost of

financing are major considerations. Grants and incentives are also taken into account in evaluating payback periods or ROI.

Financing professionals

RENTT experts:

Evan Pawliuk, Assistant Vice President, Commercial Lending, First National

Brian Jessop: Our priorities would be the

comfort and safety of tenants, long-term protection of the asset, curb appeal, and payback. This is the reason we have multiple categories, each with a defined budget amount, so that we support each category and stay disciplined to all versus investing in one category over the demise of another.

RHB: How do you finance different types of CAPEX projects?

Bob Dhillon: We finance in a variety of ways,

depending on market conditions and the nature of the project, among other considerations. Our methods include using free cash flow, obtaining low-cost debt financing or retained earnings. We also use bank facilities / lines of credit, utilizing whatever is most appropriate for the project.

Randy Daiter: We have participated in financing through the City of Toronto’s High-Rise Retrofit Improvement support (HI-RIS program). We used this in replacing windows at two high-rise apartment complexes. Overall, we thought it was a very interesting program and there were a lot of benefits to it, including no need to register a mortgage on the property, which meant not encumbering the property’s title. It was also quicker, cheaper, and easier than obtaining traditional financing.

Brian Jessop: We finance our capital program through our earnings.

20 | Nov/Dec 2021

Paula Gasparro, Vice President, Real Estate Financing, CMLS Capital

RHB: Welcome to RHB Magazine’s RENTT panel. We appreciate the time and effort involved in participating in today’s discussion and sharing your experience. Our readers will benefit from your input and experience.

Since CMHC changed its use of funds rules in May 2020, what changes have occurred in how rental housing providers are planning or financing CAPEX projects?

Paula Gasparro: CAPEX must be spent after

the CMHC insured financing takes place in order to satisfy the new rules. If the CAPEX was done prior to the insured financing, it cannot be a use of funds under CMHC’s changes. As a result, some rental housing providers may be delaying CAPEX projects until after refinance has occurred.

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Evan Pawliuk: With CMHC’s equity takeout

requirements, this has made rental housing providers plan their capital expenditures around their financing events, such as a maturity of an existing loan. In the past, rental housing providers may have gone ahead and spent on their capital expenditures out of cash on hand or through cash flow from the properties and then repatriated the funds through a CMHC loan. That is no longer possible. We have been engaging with our clients to discuss their plans for their portfolios to ensure the proper planning is put in place. There are other solutions available to groups to allow for the capital expenditures to go ahead without delays, but planning with your lender is very important.

RHB: In your experience, how do rental housing providers tend to finance different types of CAPEX projects?

Paula Gasparro: Most rental housing providers have strategies as to which CAPEX projects they work on in a calendar year. Generally, these are funded via equity or accumulating reserves from NOI.

Evan Pawliuk: Depending on the size of the

rental housing provider, some would do this through financing or cash on hand that has been earned off the cash flow from their portfolio. One area that CMHC’s equity takeout rules provide some flexibility is that the financing from one building can be spent across the rental housing provider’s portfolio versus toward the building that was financed.

RHB: How do you evaluate different types of CAPEX projects with respect to approving financing? What criteria do you use for different financing situations?

Paula Gasparro: Any capital improvement to a multi-family building that involves spending dollars to complete is considered CAPEX. At CMLS Capital, we require the borrower to provide us with invoices for work completed and it would be helpful to have before and after photos.

Evan Pawliuk: The criteria for an allowable

capital expenditure is quite simple. If the capital expenditure is related toward an improvement that is not recurring on an annual basis, then we would accept that as an allowable capital expenditure.

RHB: Where do you expect interest rates to go in the short term?

22 | Nov/Dec 2021

Paula Gasparro: We have been very fortunate

over the past few years to be in this very low interest rate environment. All good things usually come to an end. I see the Bank of Canada raising rates slowly starting in Q2 2022.

Evan Pawliuk: Unfortunately, this is a question no one really knows the answer to. In the recent past, there has been a lot of volatility within the bond market because of the uncertainty of the path of recovery of the economy going forward, and questions around the nature of the inflation that is being experienced currently.

I am an advocate of mitigating any risk within business where possible. Real estate is a cash flow business, and one of the biggest pieces of determining what your cash flow will be is understanding what your principal and interest costs are going to be. To help our clients remove this risk, we created an Early Rate Lock program to allow for rental housing providers to lock in their interest rate up to six months in advance of the funding date. We have seen a lot of take up in this product lately, given the rise in rates being experienced.

RHB: How are rental housing providers taking advantage of today’s low borrowing rates when financing their CAPEX projects?

Paula Gasparro: We are seeing borrower

select longer terms when financing their projects, ten-plus year terms when available. There has been a lot of refinancing. There have also been acquisitions and construction of new multi-family properties.

Evan Pawliuk: There are a couple of ways to

take advantage of the current rate environment if you do not have an upcoming mortgage maturity, or a property that is free of any debt. You could look to refinance one of your properties with a maturity date in the near future, or through a CMHC second mortgage. With the upcoming maturity option, I would recommend looking at the cost of borrowing by incorporating any prepayment costs to determine what the additional funds being borrowed will cost for that term, and compare toward what you could invest those funds into. With a CMHC second mortgage, there is a similar cost of borrowing as a CMHC first mortgage.

RHB: Thank you for your participation.

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Energy efficiency and capital expenditure projects

By David Gargaro

Rental property owners are being squeezed financially from multiple directions. Property taxes continue to rise and inflation is putting fiscal pressure on all other operational line items. Canada’s Energy Regulator states that electricity prices are rising faster than the rate of inflation. And according to Manitoba Hydro and other distributors, natural gas costs for large volume consumers (like rental property owners) are expected to rise by up to 18 per cent annually.

Rent increases have also been capped. Therefore, it is becoming even more crucial for rental property owners to focus on capital expenditures that reduce or eliminate energy waste. This will enable them to reduce utility costs and unlock energy dollars that can be re-invested into the building.

Make the right energy-efficient investments Upgrading to LED lighting and installing lowflow toilets and fixtures are many rental property owners’ first options to drive efficiency and utility savings. But there are other optimization measures that will help the building to operate at maximum efficiency and reduce operating costs.

However, these measures tend to be detailed, and many rental property owners lack the technical prowess to tackle these improvements. Therefore, they often fall back on recommendations from consultants who might oversize equipment to reduce their liability, or contractors who are biased toward a particular system or solution.

“Performing a comprehensive and unbiased energy efficiency review can help rental property owners understand what’s working and what’s not,” said Josh Lewis, Engineering Manager, NERVA Energy Group Inc. “Knowledge is power when it comes to energy. If you can’t measure it, you can’t manage it.”

Rental property owners should consider return on investment when pursuing CAPEX projects. The most obvious ones are those that improve curb

24 | Nov/Dec 2021

appeal, as nicer looking buildings and units attract tenants who are willing to pay more. Safety issues are also a priority, as tenants want and deserve to live in safer buildings.

“Consider CAPEX projects that affect tenant comfort, such as lobby and corridor upgrades, as well as suite renovations,” said Philip Sarvinis, P.Eng., Managing Principal, RJC Engineers.

“Cleaner, sharper, modern-looking buildings attract clientele who see why it costs more to live there. Also consider amenity areas that keep people in the building, such as gyms.”

Mechanical upgrades can be costly. Therefore, it is imperative to reduce the risks of your investments and make informed decisions that will provide quantifiable results. Before making any capital investments, do the following on a building-bybuilding basis: • Develop an inventory list of each building’s mechanical equipment, including age, size, current state, and efficiency • Review utility data to understand the building’s energy load

continued on page 26

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• Optimize mechanical equipment to meet each building’s true needs rather than assumptive needs or trends • Engage an energy expert who can identify deficiencies that are affecting performance and wasting energy, and provide “quick wins” and solutions based on unique conditions • Back up measurements with real-world financial performance data; request a performance guarantee to hold your energy partner accountable for results • Prioritize projects with the quickest payback to unlock energy savings that can be re-invested into the building • Consider the trends in regulations, including likely future regulations to require reduced carbon emissions • Ensure that there is a detailed roadmap in place for upgrades and replacements over the next 10-15 years

Optimize your buildings’ energy efficiency Traditionally, when rental property owners wanted to reduce their energy costs, they would replace mechanical equipment when it reached its endof-life, installing new equipment that is of similar design, function, and capacity. That approach is quickly falling out of favour. More rental property owners are realizing that the existing equipment is oversized, not optimized, and may not be in the right configuration or be the best type of technology to carry the building into the future.

Optimizing HVAC equipment (e.g., boilers, chillers, make-up air units, fan coils, heat pumps) is one of the better ways to reduce monthly utility costs, defer unnecessary repairs/maintenance, and extend the lifecycle of their mechanical equipment. Most buildings have oversized mechanical systems that have unnecessary redundancies, or that have not been optimized for maximum efficiency. These factors lead to unnecessary energy costs, increased maintenance fees, and premature replacement of expensive equipment. From a timeline perspective, optimization is usually quicker to implement than whole-scale replacements.

“The best way to manage costs and timelines for CAPEX projects is by means of a needs analysis,” said Sarvinis. “The property should be reviewed in detailed to determine the condition of each of the elements, what work needs to be done, and then to prioritize the needed works based on safety issues, aesthetics, energy and

26 | Nov/Dec 2021

environmental impact, and end of life. This will help to address deferred maintenance issues, reposition the building for sale, support refinancing, and attract new clientele.”

Before rental property owners decide to invest in energy efficiency, they must understand the specific needs of their different properties. All rental property owners should get intimately familiar with the operation and energy efficiency of their rental portfolio. Each building is unique and will require a different combination of measures to drive maximum efficiency.

“It seems that more and more multifamily rental property owners are getting a better understanding of what tenants like and dislike, what they want and what they need, and treating them as part of the team to get early buy-in for CAPEX projects,” said Sarvinis. “To get the project implemented, they also seem to be getting consultants involved earlier and more often, and not just going to the contractor for prices and to do the work.”

Control utility costs Rental property owners have a number of options to proactively control their utility costs and carbon emissions.

First, they can optimize the performance of the mechanical plant with real-time data to drive maximum efficiency. It is important to understand the size of the energy load required by the building at all times, rather than relying on outdoor temperature metrics. The mechanical plant will often produce excess heating or cooling, which forces the equipment to work harder and longer than it should, creating unnecessary energy waste. A proper building optimization program can provide multiple energy demand data points to ensure the plant knows exactly what the building is calling for to deliver optimal efficiency.

Second, rental property owners should examine tenant behaviour to identify and minimize energy abusers. A significant percentage of heating and cooling loads are due to tenant abuse. There are several strategies to minimize these losses.

Typical suites have standard thermostats that allow tenants to set low temperatures in the summer and high temperatures in the winter.

Limiting the available temperature setpoint range can reduce tenant abuse and lower energy usage without affecting comfort or satisfaction.

“Also, a building’s stack effect can cause occupants, especially on upper floors in the winter, to self-regulate their suites by opening windows and balcony doors,” said Lewis. continued on page 28

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“Window and door sensors, for example, can communicate directly with the suite thermostat and can help curb this type of behaviour, delivering countless operational and financial benefits.”

Third, rental property owners can control and deliver ventilation to the building. The make-up air system is one of the largest users of energy in rental properties. These systems are often overdesigned, so they deliver more air than required to satisfy the demand during most of the day. Also, these systems are often unbalanced, so they deliver more air to the floors closest to the equipment, rather than evenly spreading it across the building.

“To optimize the operation of the make-up air system, seal the ductwork, install intelligent time-of-day controls, rebalance the airflow, and implement energy recovery,” said Lewis. “This can lower energy usage and provide a healthier and more comfortable experience for the tenants.”

Unlock funding for CAPEX projects If rental property owners lack internal funds to invest in CAPEX projects, there has never been an easier time to access the financing required to move projects forward. There are options beyond incentives from utility companies that partially offset investments in measures to improve energy efficiency. In Ontario, the IESO SaveOnEnergy program and Enbridge Incentives & Conservation program provide these incentives.

Traditional financing typically involves either loans or leases from a financial institution or private capital. The prime interest rate in Canada has been below 2 per cent since 2008. Since the stock market is volatile, there are many investors seeking safe returns in the three to eight per cent range. This has provided many alternatives to traditional financing at reasonable rates. In most cases, the cost of financing is low enough to not significantly impact the payback period of most CAPEX projects.

“The specialized financing market has also grown, and it can provide even better value to the rental property owners,” said Lewis. “Savings-back arrangements, such as energy performance contracts or energy services agreements, allow rental property owners to de-risk CAPEX projects. They can include terms that guarantee a minimum amount of energy cost savings, or lock in a reasonable energy cost over time that is tied to service(s) within the building. While the financing rate may be higher for these types of agreements, it is counterbalanced by the benefit

28 | Nov/Dec 2021

of having performance guarantees locked in by the vendors.”

There has been an uptick in support from all levels of government for CAPEX projects, especially those that result in reducing fossil fuel usage and lowering greenhouse gas emissions. One funding program from the federal government is the Canada Infrastructure Bank (CIB) Commercial Building Retrofit, which is intended to fund decarbonization retrofits in privately-owned commercial, industrial, and multi-unit residential buildings. The program offers long-term loans at 3 per cent or better, and can be applied for by a building owner or companies offering energy services contracts. The CIB requires a $25 million minimum in any loan package, but is encouraging “aggregators” to bundle together portfolios of different owners to achieve that minimum. Other examples include the CMHC Energy Efficient Premium Refund, the Clean BC Building Innovation Fund, and the City of Edmonton Building Energy Retrofit Accelerator.

Looking into the future, based on U.S. examples, property-assessed clean energy (PACE) financing could potentially unlock private capital for building retrofits, resulting in energy and emissions reductions, more resilient buildings, economic development, and job creation. While this type of financing is in its earliest stages, PACE offers the opportunity to tie the financing to the property, and it is primarily paid back through property taxes. This means the financing can be off-balance sheet, and is easily transferred if the ownership of the property changes.

“Given the wide range of current methods to unlock funding for CAPEX projects, including traditional, specialized, and government, there is virtually no reason to delay investments and upgrades that reduce energy costs, as every year the missed opportunity grows larger,” said Lewis.

“Would you rather pay the utility companies an ever-increasing amount every year? Or would you rather save on your utility costs, and use the savings to offset the cost of financing on CAPEX projects that provide long-term value?”

Conclusion Energy costs will continue to rise, and it will be difficult to increase rents to keep up. Therefore, it makes financial sense to focus on energy efficiency when considering CAPEX projects.

Optimize your building’s equipment for energy efficiency, control your utility costs, and focus on making the right investments for your rental property. Then look for ways to unlock the funding needed to finance your CAPEX projects.

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Multi-Unit Review Market Analysis and Investment Trends

Kyle Church, Broker

Drivers of the multi-family market in Q4 of 2021 It comes as no surprise that the multi-family investment market has continued to be strong throughout 2021, and will finish off the year at record valuations.

Across the country, the residential housing market (both single- and multi-family) has seen substantial gains throughout the pandemic and has put pressure on housing affordability in all major and mid-market cities. While governments at all levels struggle with providing solutions to solve the housing shortage, rents and house prices continue to climb as supply simply cannot keep up with demand. Housing affordability is not an issue that will be solved in a short period of time, which has led to increased investment in the multi-family asset class.

While owners have been satisfied with the increased values they have seen throughout 2021, investors on the sidelines holding cash are kept up at night by the fear of inflation. The Consumer Price Index increased to 4.4 per cent in September, further proving that inflation is here with no sign of this concern disappearing soon. While the cost of borrowing still remains low, buyers are even further motivated to find an asset to get their cash invested before inflation devalues their capital and interest rates rise to combat inflation.

It is fair to say that 2021 has also been a great year for institutional landlords who have been able to expand their portfolios across the country. REITs have grown their portfolios significantly by buying smaller portfolios held by smaller groups and families that have decided to exit the market.

Canada’s major markets of Toronto, Vancouver, and Montreal are seeing exceptional competition for Class A assets, which has led to many private funds adjusting their acquisition targets onto smaller mid-market buildings in hopes of finding better opportunities. This has led to smaller regional markets outside of the major cities seeing significant gains and competitive bids.

Looking forward to 2022, it is anticipated that the market will remain imbalanced between supply and demand for multi-family opportunities. If inflation continues to rise, this could limit the number of sellers divesting of their properties unless they have plans to reinvest their proceeds from a sale. The past year has also seen a lot of new rental construction projects started, which will be completed in the year ahead. While we know the demand is there for these new rental units, it will be interesting to see if this creates some mobility in the market of longer-term tenants in older apartment buildings.

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The future lives here!

2021 FRPO MAC Awards

By David Gargaro This year’s FRPO MAC Awards presentation took place on Friday, December 3, 2021. The event was held virtually, and was open only to members of the Federation of Rental-housing Providers of Ontario (FRPO). In addition to celebrating the awards, attendees of the event were able to network with industry members, suppliers, vendors, and more in the virtual event room. All the proceeds from the registration fees were donated to Interval House on behalf of the membership.

This year marked the 21st anniversary of the MAC Awards. It is FRPO’s most important annual event for members, as it recognizes the leaders in Ontario’s rental housing industry. It is regularly well attended by more than 1,200 rental housing providers, ranging from hands-on owners and managers to third party management and REITs, making it the largest event of its kind in Canada.

The awards highlight excellence in a number of categories, including customer service, construction, sustainability, marketing, and personnel.

“For 21 years, the MAC Awards program has recognized excellence and leadership in Ontario’s vibrant rental housing industry,” said Lynzi Michal, Director of Membership and Marketing, FRPO. “It’s important that we acknowledge the contributions that our members have made to the rental housing landscape in our province. Our members consistently demonstrate their dedication and commitment to providing high quality rental accommodations. The MAC Awards also provide an opportunity for organizations to highlight their innovation and creativity while inspiring others.”

32 | Nov/Dec 2021

The MAC Award goes to those who “lead, innovate, and continue to raise the bar in Ontario’s rental housing sector.” It represents commitment to high standards of service, enabling consumers to choose the best service providers while supporting the growth and development of strong communities. Winners of the awards will be published in the next issue.

This year’s award categories included: • Social Media Excellence • Best Advertising Campaign • Best Property Management Website • Best Suite Renovation  Under $25,000

 Over $25,000

• Best Lobby Renovation • Best Curb Appeal • Best Amenities  Renovated or Existing

 New Development

• Best Rental Development  200 Units or Less

 Over 200 Units

• Environmental Excellence • CRB Member of the Year • Leasing Manager of the Year • Property Manager of the Year • Resident Manager(s) of the Year • Community Service Award of Excellence  Supplier Members

 Rental Housing Providers

• Customer Service Award of Excellence • Company Culture Award of Excellence • NEW! Impact Award “We are pleased to bring back our full complement of award categories this year, as well as the introduction of the Impact Award,” said Michal. “This category recognizes a rental housing provider that has achieved extraordinary social outcomes related to one project or initiative in Ontario. We have also updated the Rental Development and Amenities categories to better reflect the current development environment and market offerings.”

The awards were open to companies of all sizes.

The judging panels included professionals with expertise across different areas. They narrowed the field to three finalists per category. Finalists for all award categories were revealed on November 12, with the winners announced at the event. While a number of past winners have been nominated for this year’s MAC Awards, there were also many first-time finalists for a number

of categories, which demonstrates growing interest in, and commitment to, the rental housing industry.

“Each year we see new projects, fresh ideas, and housing providers that continue to raise the bar,” said Michal. “This year was a particularly competitive one with a 25 per cent increase in submissions. It’s always great to see new organizations and high levels of participation in the awards program. Our members are very invested in providing best-of-class rental housing, and the MAC Awards are a fantastic vehicle to showcase their efforts.”

A number of companies involved in the rental housing industry sponsored the MAC Awards.

Yardi Canada Ltd. was the exclusive event sponsor. Primary event sponsors included

Coinamatic Canada, Rogers Communications, and Wyse Meter Solutions. FRPO was proud to partner with RHBTV, its media partner, to showcase sponsor highlights, award nominee introductions, and other show segments.

Next year’s MAC Awards will return to being in person, and will be held in conjunction with the Buildings Show.

“We are really looking forward to celebrating together live and in-person for the 2022 event,” said Michal. “This will be one you will not want to miss.”

For more information, visit FRPOMACAwards.com, and stay tuned for upcoming episodes of RHBTV for award winner highlights.

About FRPO FRPO has been the voice of Ontario’s rental housing industry and an advocate for quality rental housing since 1985. It is the largest association in Ontario that represents people and businesses that own, manage, build, finance, service, and supply residential rental homes. FRPO offers public advocacy, representation and promotion, industry research, standards and best practices, education and training, in addition to hosting the MAC Awards and other industry events.

FRPO’s membership ranges from single-unit and single-property property owners up to large property management firms and institutional owners. It represents more than 2,200 members who own or manage over 350,000 households across Ontario. It also represents service providers, suppliers, and industry consultants.

FRPO’s objective is to promote a balanced and healthy housing market with a vital rental-housing industry, choice for consumers, adequate government assistance for low-income households, and private sector solutions to rental-housing needs.

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NOV/DEC 2021

CFAA welcomes Ahmed Hussen as the reappointed Minister of Housing

By John Dickie, CFAA President

Ahmed Hussen has been re-appointed the Minister responsible for Housing. However, his role has changed in the sense that he is now primarily focused on housing, while the new Minister of Families, Children, and Social Development, Karina Gould, has inherited other large files (including child care) formerly under Minister Hussen’s responsibility.

Minister Hussen’s new title is the Minister of Housing and Diversity and Inclusion. He is responsible for Ahmend Hussen advancing the Liberal Government’s housing platform from the 2021 federal election, as well as for CMHC, homelessness programs and diversity and inclusion issues.

Born in 1976, Minister Hussen left Somalia with his parents and older siblings to escape its civil war when he was 14, emigrating to Canada at age 16 to live with one of his brothers. Minister Hussen’s background includes organizing the social housing tenants in Toronto’s Regent Park, leading the Canadian Somali Congress, and acting as a lawyer in human rights law, immigration law and criminal law. Mr. Hussen was elected to Parliament in 2015, and represents YorkSouth-Weston in Toronto.

Continued federal support for portable housing benefits Contrary to the concerns of some in the rental industry, Minister Hussen says he supports expanding the Canada Housing Benefit. At a recent meeting with CFAA and other housing advocacy groups, Minister Hussen said: “I support the expansion of portable housing benefits. The Federal government is willing to expand the Canada Housing Benefit, but needs provincial buy-in for their 50% [cost share].”

In some locations, municipal money would presumably serve. For example, the City of Ottawa now funds over 1,000 housing benefits itself (with 100% municipal dollars), and is adding about 200 more each year. CFAA’s Ottawa affiliate, the Eastern Ontario Landlord Organization, may want to lobby for the City of Ottawa to tie its money to the federal money, to pay for 300 to 400 more PHBs in Ottawa each year.

Each provincial or City-based association could see if they want to advocate for more PHBs from their province using 50 cent dollars, and tying in with the federal program. CFAA is happy to assist with that work, providing material, and support for submissions, or lobbying on that issue.

The new Liberal interest in housing affordability Before the 2021 election, the federal Liberals had focused on the housing needs of low-income households. It was said (accurately) that the National Housing Strategy was really a low-income housing strategy. The Liberals spoke about housing affordability more broadly, but they had few policies to address the broader issues.

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NATIONAL OUTLOOK In the Summer of 2021, the heightened national attention placed on housing affordability for the middle class led the Liberals to decide that they need policies which address that issue, as well as low-income housing. Within the middle class, the people most affected are young people who have not yet achieved home ownership and want to. The Liberals are also concerned about home ownership for new immigrants and other disadvantaged groups who do not have access to intergenerational wealth to afford to buy a home.

Obviously, the Liberals want policies which will be popular, but they also want to be seen to be trying to make good policies and to be able to show some success. The issues of concern for CFAA’s members have expanded, both because new market rental housing serves the middle class and those seeking to join it, and because there is more pressure for government to be seen to be making effective use of the money and regulatory power it can apply to housing issues.

The Throne Speech The Throne Speech was delivered by Governor General Simon on November 23. At a high level, the Throne Speech states the priorities of the government. Along with child-care, housing was positioned as a key element in responding to the rising cost of living, and a centrepiece of the newly elected Liberal Government’s agenda.

(Pharma-care is not on the government’s current agenda.) Through the Governor General, the government said: “Whether it is building more units per year, increasing affordable housing, or ending chronic homelessness, the Government is committed to working with its partners to get real results.

For example, the Housing Accelerator Fund will help municipalities build more and better, faster.

Mary Simon

The Government will also help families buy their first home sooner with a more flexible First-Time Home Buyer’s Incentive, a new Rent-to-Own program, and by reducing the closing costs for first-time buyers”.

The focus is on helping more people buy their first home sooner than they can now, by: • supporting saving for the down-payment (or providing a substitute through the First-Time Home Buyer’s Incentive), • providing a greater ability to carry the cost of a home through a lower mortgage payment, and • making more new homes available to buy.

There will soon be one new federal program and one set of programs which are key to federal efforts to make more homes available for people to buy: the Housing Accelerator Fund and the federal infrastructure programs. Each will be discussed below.

The Housing Accelerator Fund In its 2021 election platform, the federal Liberal Party promised the following: “Help Cities Accelerate Housing Construction Overly complex, backlogged, and under-resourced municipal zoning and permitting systems are slowing the pace of building much-needed homes.

A re-elected Liberal government will: Invest $4 billion in a new Housing Accelerator Fund which will grow the annual housing supply in the country’s largest cities every year, creating a target of 100,000 new middle-class homes by 2024-25. This application-based fund will offer support to municipalities that: • grow housing supply faster than their historical average; • increase densification; speed-up approval times; • tackle NIMBYism and establish inclusionary zoning bylaws; and • encourage public transit-oriented development.

rentalhousingbusiness.ca | 37

NOV/DEC 2021

This fund will support a wide range of eligible municipal investments, including red tape reduction efforts, and reward cities and communities that build more homes, faster.

• Help speed up the time it takes to build more homes by investing in e-permitting technology and help communities streamline the planning process.

• Work with municipalities to identify vacant or underused property that should be converted to housing on the principle of use it or lose it.”

The idea for the Accelerator Fund apparently came largely from the Canada-BC Expert Panel on the Future of Housing Supply and Affordability, which issued its final report on June 17, 2021. CMHC provided the Secretariat service for that Panel.

The Expert Panel was of the view that some municipalities are unwilling to approve much new development, since they are dominated by anti-growth views or NIMBYism. The Panel made recommendations for approaches a province can use to encourage or mandate more approvals and more timely approvals.

However, in addition, the Expert Panel considered that many municipalities would approve more development more quickly than they are doing now, but they lack the resources or the systems to do that.

The Panel recommended steps be taken to assist municipalities with resources. Those resources could include funding for consultants’ work on red tape reduction, more or better technology, staff training, staff re-allocation, better project management, better implementation plans, and other steps, to make the approval processes for new housing proceed more quickly, both in the short term and in the long term.

Possible issues with the Accelerator Fund Notice that the Fund is directed at market housing. Faster approvals would also help social and community housing development, but they are not the targets of the Fund. However, CFAA already sees signs that non-profit advocacy groups will try to target the Fund to provide extra help or priority for their projects, even though there are many other programs to support those projects.

Notice also the frequent use of the word “homes”. There is a consistent preference in much Canada’s housing policy toward encouraging home ownership, rather than renting. That was not the view of the Expert Panel (which considered rental housing development every bit as important as other housing development), but the rental industry will need to work to keep the Fund “tenure neutral” and to keep improving the processing of applications for rental developments as a key goal of the Fund.

Another source of trouble might be the “tip of the hat” to inclusionary zoning (IZ). Unless it is done really well, IZ can easily be the final straw that makes rental development uneconomic even in today’s lowinterest rate environment.

One way to make IZ work is for government to provide offsets to the increased costs IZ imposes. The Housing Accelerator Fund could potentially be used to pay for those offsets, or it could be used to fund the waiver or reduction of development charges, community amenity charges or similar charges.

The Liberal Party fiscal plan called for the spending of $750M in federal fiscal year 2022-23, and $1.625B in 2023-24 and 2024-25 respectively, making a total of $4B available for the Accelerator Fund over those three years. Half of that could offset municipal charges of $50,000 per home for 40,000 homes, whether for rental or for owner-occupation.

CFAA is working on those issues.

The Federal Infrastructure Programs – “Good housing policies”

Each year the federal government contributes billions of dollars to provinces and municipalities to fund new infrastructure such as transit lines, roads and bridges. Minister Hussen and others have made it clear that, from now on, the federal government will make the provision of federal infrastructure funding conditional on the provinces and municipalities having “good housing policies.”

38 | Nov/Dec 2021

NATIONAL OUTLOOK While that sounds good in principle, what makes a good housing policy depends largely on the views of the person assessing the policy. At this point, the government means housing plans that encourage growth in housing development: more housing, denser housing and faster housing. Most people are in favour of high density around transit stations, and indeed, market forces tend to deliver that, provided the municipalities do not block it.

However, CFAA is concerned that housing advocates who do not support the delivery of housing by the free market will seek to change what is meant by “good housing policies” to what we in the rental industry would call bad housing policies. For example, it would be a disaster if the definition of a “good housing policy” included tight rent control. As an industry, we need to push back hard against that or similar changes.

Other tensions will arise in policy areas like Inclusionary Zoning. Housing experts are divided on the value of Inclusionary Zoning, but the majority view now seems to be that IZ can work if it is designed correctly, but it is counter-productive if it is designed badly.

There is agreement that if IZ reduces development, then few affordable units are produced, along with few market rent units, which is counter-productive for making housing more affordable. To avoid reducing development, IZ needs to be imposed only when ample density is available or is added as compensation for the IZ requirement, and the IZ requirement needs to be modest, both in the amount of rent (or price) reduction, and in the proportion of affordable units which must be provided.

CFAA, and all of Canada’s apartment associations, need to be alert to all governments’ decisions about what constitutes “good housing policy”.

Other policy areas affecting rental housing

Despite the flurry of new activity on housing issues, other issues remain important for rental housing providers and CFAA.

Energy Energy issues are at the forefront of public policy, including suggestions that homeowners and rental housing providers be forced to reduce greenhouse gas (GHG) emissions by changing from heating buildings with fuel oil or natural gas, to heating with electricity instead.

Heat pumps are generally a more efficient electrical heating method than baseboards using resistance heat, because heat pumps move heat into homes, rather than generating heat. There are two kinds: • Air source heat pumps, which draw heat from the air, and • Ground source heat pumps, which draw heat from the ground.

Ground source heat pumps are sometimes referred to as geo-exchange or geothermal heat pumps. They have a high capital cost because pipes need to be installed underground. They also need land under which to install the pipes; and so, they may not be feasible in dense urban settings, where many rental buildings are located.

Heat pumps tend to produce a lower temperature heat than burning fossil fuels, or resistance heating, and therefore they don’t heat a building as quickly. That means to use a heat pump, a building needs to be

WANT TO STAY UP TO DATE WITH NATIONAL OUTLOOK? Sign-up for CFAA’s National Outlook e-newsletter to receive up-to-date news on what is happening across Canada, as well as industry insights and insider information on CFAA happenings. Email communication@cfaa-fcapi.org to start receiving CFAA’s e-Newsletter today!

rentalhousingbusiness.ca | 39

rentalhousingbusiness.ca | |39 39 rentalhousingbusiness.ca

NOV/DEC 2021 airtight and well insulated to keep the heat from escaping, and to reduce the “heating load”. That is a major factor in the cost of deep retrofits to make the use of heat pumps practical in Canada’s colder areas.

CFAA is increasing our efforts to minimize the negative impact of energy moves at the federal level, including seeking to increase access to incentives for rental housing providers. Provincial and municipal policies and rules are generally issues for the various provincial and regional associations, but CFAA seeks to facilitate information exchange on such nation-wide issues, for the benefit of rental housing providers across Canada.

Interest Deductibility Limitation (IDL) The 2021 Budget included a provision that there will be a limitation on the interest that can be deducted by many businesses in Canada, based on 30 per cent of their earnings before interest, taxes, depreciation and amortization (EBITDA). However, the legislation to bring that into effect is still to be introduced.

The purpose of the new rule is to prevent “base erosion and tax shifting” (BETS) by which international corporate groups sometimes move income to jurisdictions with low tax rates.

There is expected to be an exemption for businesses with taxable capital of less than $15 million. As well, CFAA and other real estate associations are seeking an exemption for real estate, as there is in the United States. All real estate is capital intensive, and an interest deductibility limitation (IDL) would force a major revision to the ways real estate investment are financed, effectively raising the cost structure by effectively making owners substitute (high cost) equity for low-cost financing.

That would be detrimental to all real estate sectors. It would be particularly contrary to public policy if an IDL were applied to rental housing, since the government wants housing to become more affordable, and making housing more costly would tend to make it less affordable.

REGISTER NOW for CFAA Rental Housing Conference 2022 Early registration is open now for CFAA-RHC 2022, which will take place from May 9 to 11 at the Hyatt Regency Hotel at 370 King Street in downtown Toronto, where CFAA held its conference in 2019.

CFAA-RHC 2022 will feature two days of timely and relevant education sessions, Benjamin Tal’s informative and entertaining Economic Update, the Building Innovations Tour, CFAA’s 6th annual Rental Housing Awards Dinner, and more!

Don’t miss out on CFAA’s early bird pricing! For more information, or to register, visit www.CFAA-FCAPI. org, or email events@cfaa-fcapi.org.

CFAA Awards Program 2022 – Get ready to apply

CFAA is pleased to announce that the 7th annual CFAA Rental Housing Awards Program is open for applications. The awards winners will be announced at the CFAA Awards Dinner on May 10, 2022, at CFAARHC in Toronto. Winners will also be acknowledged through CFAA’s communications, website and Twitter, and a trophy.

Awards CFAA is offering 10 awards categories in 2022. CFAA Suppliers Council members, direct landlord members and landlord affiliate members (landlord members of one of CFAA’s 12 member associations) are invited to apply for these awards:

40 | Nov/Dec 2021

NATIONAL OUTLOOK FOR RENTAL HOUSING PROVIDERS • CFAA Rental Housing Provider of the Year • Property Manager of the Year • Off-Site Employee of the Year • On-Site Employee of the Year • Marketing Program Excellence of the Year • Renovation of the Year • Rental Development of the Year FOR RENTAL HOUSING SUPPLIERS • New Product or Service of the Year • CFAA Suppliers Council Member of the Year FOR MEMBER ASSOCIATIONS • Association Achievement of the Year As in past years, judging for a number of the awards categories will likely be split by company size, exact job, or other characteristics, so that CFAA can recognize more worthy rental housing providers and suppliers in the CFAA Awards.

Please plan to enter the CFAA Awards, or consider volunteering your time, or sponsoring components of the awards program. Help CFAA celebrate excellence in the rental housing industry!

For more information about membership, eligibility to apply for an award, or becoming a awards judge or sponsor, visit www.cfaa-fcapi.org or email admin@cfaa-fcapi.org.

CFAA Rental Housing Compensation Survey 2021 Canada’s only compensation and benefits survey specific to rental housing is now available for purchase.

For six regions or major cities covering Canada, find out the average and full range of compensation for nine building-based positions and 21 head office positions.

Find out about changes the rental housing industry is making in working-from-home policies, and the plans for removing COVID-19 incentives.

MOBILE FRIENDLY

Visit www.cfaa-fcapi.org for more information.

rentalhousingbusiness.ca | 41

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RHB’s forum for rental housing associations to share news, events and industry information

Hot Topics: WRAMA provides an important update from the Landlord and Tenant Board, as well as information for potential association members. pg. 45 LPMA explains how to steer clear of conflict in snow removal conflicts, as well as how COVID-19 has changed property management. pg 49 HDAA discusses association issues, including the changes in presidency and Board of Directors, and the expansion of Hamilton’s urban boundary. pg. 53 EOLO discusses upcoming changes in the City of Ottawa’s curbside solid waste collection and the vacant unit tax. pg. 57

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PRESIDENT’S MESSAGE Thank you to our members who attended our November event and a special thank you to John M. Dobrowolski, CEO and founder of Rentcheck for presenting.

As a small landlord in the 1970s, John encountered major problems with non-compliant and defaulting renters and found there were no outlets to report them to fellow housing providers.

This need in the industry prompted him to develop the concept of gathering, recording, and reporting authentic applicant selection data. That led in 1976 to his founding of the Canadian Tenant Network (CTN), the first rental history reporting service, to protect fellow landlords. CTN then became Rentcheck Credit Bureau. Rentcheck pre-dates both TransUnion and Equifax in the screening data sector in Canada.

Today, Rentcheck maintains histories of more than 4.7 million renters, comprising more than 11 million leases. This unique database represents more than 368 million months of tenancy ratings and has become Canada’s leading applicant inquiry source. Rentcheck remains unique in the industry for offering authentic tenancy history reports on landlord-relevant resident data.

For more than seven years, John advocated as an Ontario paralegal for landlords in landlord-tenant issues and was instrumental in removing information barriers from the Ontario court system.

Born in Hericourt, France, John’s family immigrated to Niagara Falls, Ontario when he was two years old. John is a graduate of the Niagara College of Applied Arts and Technology and attended the University of Ottawa. He lives in Toronto, Ontario.

For those who missed the event, John presented on important information for landlords when it comes to reading and interpreting credit reports generated by TransUnion and Equifax and highlighted key areas for property managers and landlords to pay attention to.

John Dobrowolski

You can learn more about Rentcheck by visiting their website at www.rentcheckcorp.com.

Happy holidays!

We at WRAMA wish you and your family a Merry Christmas, Happy New Year, and all the best this holiday season. We will see you in the new year at our next member event.

- James Craig, WRAMA President president@wrama.com

Board elections – Postponed Typically, WRAMA holds its annual Board of Directors elections in November. This year, however, due to unforeseen circumstances, we have had to delay our elections. We anticipate an announcement and further information about the upcoming BOD elections to be made in the new year.

If you are a member of WRAMA and are interested in becoming a member of our Board of Directors, please send an email to president@wrama.com where we can discuss the opportunity further.

In-person events – To be announced As we progress through the pandemic and the Ontario government continues to make changes to COVID-19 restrictions, we will be keeping a watchful eye on the potential of hosting in-person member events.

Before we begin, we also intend to send out a survey to get member feedback about what they like or don’t live about virtual vs. in-person events.

We value or members’ opinions and preferences and, as such, will consider all options as we move forward.

rentalhousingbusiness.ca | 45

Important updates from the Ontario Landlord and Tenant Board On November 19, the Ontario Landlord and Tenant Board (LTB) announced how they will continue to schedule pending applications: • Landlord and tenant merits hearings are being scheduled in blocks. A moderator and two adjudicators are assigned to each block to work as a team. This approach will also continue with the L1/L9 and L2 blocks.

• Dispute Resolution Officers (DROs) will continue to be available at L1/L9 and L2 hearing blocks, but not for landlord and tenant merits hearings. However, DROs are available for routine mediation upon request. You can make a request for routine mediation by emailing the applicable regional office.

• Case management and merits hearings for Above Guideline Increase applications are now being held by videoconference and have been added to the hearing schedule.

• The LTB will hold hearings until December 23, 2021. Hearings will resume on January 4, 2022.

On December 8, the LTB announced that it is now using a new case management system for most new files – the Tribunals Ontario Portal.

Landlords and tenants are required to use the portal to: • Submit L1, L2, T2 and T6 applications (including combined L1/L2 and T2/T6 applications) • Pay application fees • Upload evidence directly On an optional basis, the portal can be used to: • View and exchange documents with other parties • Use the dispute resolution tool to communicate with other parties • Ask for assistance from an LTB Dispute Resolution Officer You are no longer able to file L1, L2, T2 or T6 applications by email; instead, you must use the new portal to file them, or file them by mail, courier or in person at a ServiceOntario office.

Online dispute resolution Parties will be able to use the dispute resolution tool in the Tribunals Ontario Portal to communicate with other parties, or to ask for assistance from an LTB Dispute Resolution Officer (DRO) to implement an agreement the parties reach.

At the end of two weeks after filing on the portal, if the parties have not reached an agreement, the application will be added to the scheduling queue based on the application type and filing date, and the LTB will schedule the hearing. Negotiation or mediation can also happen later in the process without delaying the hearing date.

Dispute Resolution Officers will continue to be available at the L1/L9 and L2 hearings blocks for same-day mediation.

Filing other applications and evidence Applicants can continue to file all other application types by email, other than AGI applications and co-operative housing applications (co-ops), and to pay for those filings online.

AGI applications must continue to be filed by courier or mail, or through a ServiceOntario office.

Co-operative housing applications need to be paid for online through the LTB’s payment portal. A copy of the payment receipt must accompany the co-op application when filed by email at Co-opprocessingLTB@ontario.ca.

The LTB’s evidence email address (LTB.Evidence@ontario.ca) and all regional email addresses will be limited to use for applications other than new L1, L2, T2, and T6 applications being processed in the Tribunals Ontario Portal.

46 | Nov/Dec 2021

Not yet a member?

Opportunities to contribute

The Waterloo Regional Apartment Management Association is the result of the demand for landlord advocacy in Waterloo Region. We were formed to provide information and support to owners and managers of residential rental properties all over the Kitchener, Waterloo, Cambridge, Guelph, and surrounding areas.

Our key objectives are to advocate for our members, provide benefits including networking and presentation opportunities, provide up-todate, important, and engaging information and industry knowledge, and connect our members with leaders in the industry of rental housing.

Opportunities to grow We offer a wide range of high-quality events and networking opportunities, and are committed to ensuring our members receive the best digital and face-to-face networking opportunities and up-todate information. We keep it relevant by engaging industry leaders and innovators who support best practices in rental housing provision.

Opportunities to become an industry leader Discover best practices from local industry professionals. The nature of our industry is its constant state of change. WRAMA is always looking for members to step forward and take on leadership roles, to enjoy the reward of seeing a project, committee, or the industry itself move forward thanks to your efforts.

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See your contributions grow the rental housing industry and advance your fellow members.

There is something in it for you too! By getting involved and contributing, you will gain hands-on experience and watch your contributions shape the future of our industry, and see the positive impact of your work on your investments.

Regular communication to guide you Our communications services are here to lend you support for all aspects of your professional practice including operations, marketing, and other strategies.

Membership rewards and benefits Membership does have its privileges. Exclusive to our members is access to a hand-picked group of vendors, suppliers, and experts to help you accelerate the growth and bottom line of your business.

Networking opportunities It really is who you know. Our veteran members tell us all the time that the most valuable member benefit is the network of peers they have developed over the duration of their membership.

This benefit is timeless.

To become a member, visit www.wrama.com today!

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PRESIDENT’S MESSAGE LPMA closes out 2021 in style The year may be winding down, but we still have exciting events planned — thanks to the education committee for their creative scheduling. Watch our website for more details. Now is the time to participate in LPMA activities and obtain the knowledge you need.

Our annual Christmas party is back! This year’s event will be hosted at Bellamere Winery and Event Centre on December 14. The venue has an indoor and outdoor space where we can finally bring back in-person cheer.

Our revamped website is on track for launching before year’s end. Exciting features like a member login portal with increased functionality will be rolled out in the next few months.

Shane Haskell

As always, we welcome your feedback. We’re here to bring you the most value for your membership. By referring a new member, you can earn a $50 gift card. Membership has its advantages.

Until next time…

- Shane Haskell, President, LPMA

S T E E R I N G C L E A R O F C O N F L I C T I N S N OW R E M OVA L C O N T R AC T S Before signing a snow removal contract, small landlords should create a mental checklist of potential problems, from how to deal with cars that can’t be moved to where to push huge piles of snow.

Determining their needs in advance can keep landlords from alienating their contractor — the person they need to get them and tenants safely through winter.

Smaller rental properties have space constrictions that can make snow removal tricky. London lawyer Joe Hoffer said landlords need to discuss with contractors whether it will be the landlord’s responsibility to ensure tenants move their cars before snow plowing takes place or whether the contractor will need to clear between vehicles.

Landlords need to specify where the snow can be piled once it has been removed. They should point out play equipment, for example, so it isn’t buried beneath snow or pushed to the back of the yard.

“One key thing that seems to be in conflict a lot is, ‘Where are you going to put the snow?’” Hoffer said. “It’s important for the contractor, the landlord, and the tenants to be aware of those kinds of things.”

Lisa Smith, senior property manager for Norquay

Property Management, said landlords should ensure contractors position the snow so it drains into a rainwater catch basin as it melts.

“If not, you’re going to have a puddle that turns into ice overnight,” she said.

Determining risk In a basic monthly contract, the obligation is on the contractor to clear the driveway, sidewalks, and parking areas if the snow exceeds a specific depth. Most landlords choose a monthly contract so they know what the service will cost, Hoffer said.

Joe Hoffer

Another type of contract bases payment on the number of times the contractor visits a property.

There is risk involved because there is no way of predicting the number of snowfalls in a month and, therefore, the number of times the contractor needs to visit the property.

“There’s a lack of certainty. There’s a question of how much risk does a landlord want to assume,” Hoffer said.

rentalhousingbusiness.ca | 49

Regardless of the type of contract, Hoffer recommends incorporating a general clause to ensure the grounds will be safe for those who want to access their vehicles, and enter and exit the property.

It’s important for contracts to state that snow will be cleared by a specific time, such as 7 a.m., so workers won’t be delayed because they can’t exit the parking area, Smith said. It’s not unusual for tenants to threaten to withhold rent if they can’t get to work.

She advises landlords to include removal of snow and ice from a canopy, awning or overhang above a door. When tenants exit their home, snow can slide down the overhang and onto the individual. Contractors should also remove icicles that could injure tenants.

Because it’s common for snow plows to damage sod or to hit a sign or fence, Smith suggests contractors agree in the con0tract to repair any damage they cause.

Fixed price service versus extras Landlords can choose between a fixed price service with a monthly payment and no extras, or charges for extras, such as salt or additional visits beyond the specified number. Hoffer recommends asking the contractor what the extras involve. A few years ago, it was popular to overuse salt because it represented additional revenue.

Smith advises landlords to include salt in their monthly payment to prevent overuse. Insurance companies may give landlords consideration on their premium if salt is included.

Once the parties have come to an agreement, the contract will feature an outline of the contractor’s responsibilities, followed by the scope of services and the fees. The scope of services describes the work that will take place, including sanding, salting, and ice removal.

The contractor — not the landlord — should implement the contract and make decisions. That arrangement avoids conflicting potential liability, Hoffer said. If a tenant slipped and fell, the contractor could claim the landlord gave instructions that led to the individual’s mishap and the accident could have been avoided had the landlord not interfered.

Landlords should leave the choice of materials to contractors. If a deicing product was inadequate, and an individual slipped and fell, the principal liability would rest with the contractor and not the landlord, Hoffer said.

Liability insurance Because it’s common to sue landlords for slips and falls, it’s critical that contractors have liability insurance. The contract typically requires the contractor to produce a clearance certificate from the Workplace Safety and Insurance Board to show employees have coverage. Landlords should request a certificate from the liability insurance company to confirm the insurance is in place and in good standing.

In the event of a slip and fall, the landlord and contractor would be sued and the insurance companies would work out where the liability lay. Hoffer said there should be a clause in the contract in which the landlord will be indemnified, or compensated, by the contractor if it is determined the contractor is to blame; however, a settlement may require partial payment of damages by the landlord (or their insurer). It’s also prudent to include a requirement the contractor maintain a log as proof of the work carried out.

Contractors should be insured for $2 million, which is adequate for a smaller property with fewer tenants and therefore lower liability, Hoffer said.

Finally, if the landlord breaches the payment obligation of the contract, the contractor’s services will likely be withdrawn. The landlord will have no protection if an individual slips and falls because

50 | Nov/Dec 2021

the snow and ice are not being removed, Hoffer said.

the pandemic, an additional 500 residents were paying rent online.

COV I D - 1 9 S PA R K S A N E VO LU T I O N I N PROPERTY MANAGEMENT PRACTICES

Registration for pre-authorized payments also increased. Staff are saving time not having to pursue tenants for late payments and payments are being processed more efficiently.

Property managers never used to think twice about travelling multiple times a month to check on apartment buildings in other cities. Just 18 months later, they are using technology to work remotely — without adding the pressure of travel time to their day.

That’s one example of how the pandemic has caused the property management industry to evolve, said Theresa Lapensée, senior operations manager for Sifton Properties. Administrative staff are able to work offsite, and they’re doing their jobs faster and more efficiently.

Theresa Lapensée

“COVID-19 forced us to evolve and it’s remarkable for our industry to see how quickly we were able to. Five to 10 years ago, most companies that make up this industry would not have envisioned people working from home,” Lapensée said.

LPMA held an open-forum meeting in November in which members discussed their experiences with virtual practices. Past president Shirley Criger moderated and LPMA board members Lapensée and Robert Dobbin, regional director of Skyline Living, responded to questions.

Rent payments The transition from live to virtual services is particularly noticeable with rent payments, Lapensée said. Despite encouragement to pay online, many of Sifton’s tenants still paid rent in person. That changed when the pandemic occurred and the company’s offices closed to the public. As a result, online payments increased more than 50 per cent by April 2020. In the first few months of

The same is true of maintenance requests, which residents used to submit in person. Now, 90 per cent come to Sifton by email or online.

Working remotely Although the operational parts of companies require employees to work together, Lapensée expects more flexible options will be here to stay.

For example, if a company owner bought buildings in another city, property managers could visit those buildings once a month, supplemented with Zoom meetings or video calls, instead of travelling there three or four times monthly.

The ability to access networks and web-based software is another innovation that allows many employees to do their jobs remotely. In addition, a digital process for approving invoices gives Sifton’s employees the flexibility to work on a computer or mobile device. Work can be done more quickly and the company is able to pay its vendors efficiently.

“It’s a massive time saver compared to what we used to do five or six years ago,” Lapensée said.

Digital communications and events Instead of posting notices on bulletin boards, employees are using email templates that can be updated and sent to residents. Sifton uses Facebook and Instagram to share videos and reminders with tenants.

“We already valued email communications and digital platforms, but we just have really enhanced them and increased the pace of communication during the pandemic,” Lapensée said.

Property management companies are also holding digital events and smaller, physically distanced community events.

“And those are positive things,” she noted.

London Property Management Association (LPMA) is a non-profit organization, located in London, Ontario, Canada, that provides information and education to landlords.

LPMA represents the interests of both large and small property owners. The association has more than 400 landlord members representing approximately 35,000 rental units.

Membership is open to landlords and property management professionals who own or manage one or more residential rental units.

Sign up online or call Tina Potter.

Ph: 519-672-6999 Web: www.LPMA.ca

rentalhousingbusiness.ca | 51

CFAA Rental Housing Conference 2022 The Canadian Federation of Apartment Associations invites you to join us at Canada’s Rental Housing Conference in Toronto, May 9 to 11, 2022.

Building Innovations Tour 25 Education Sessions Rental Housing Awards Dinner See the full conference schedule, and register now!

www.CFAA-FCAPI.org

CFAA Rental Housing Awards Program 2022 Deadline to apply: March 10, 2022 Recognizing excellence and achievements by Canada’s Rental Housing Providers, Suppliers and Associations.

Thanks to the principal sponsors:

Thanks to the supporting associations:

PRESIDENT’S MESSAGE The holiday season and new year are quickly approaching. The HDAA sends our best wishes to everyone for the holiday season and hopes everyone has a great new year. We are excited about what is in store for the HDAA in the new year and are anticipating the start of in-person events again, beginning with the January dinner meeting. The HDAA will also see changes with some fresh faces on the Board and a change in presidency. We hope the new year brings positive news about the pandemic as we look forward to normal running of the HDAA and to be able to see our members in person again.

- Arun Pathak, President, HDAA

2020/2021

HDAA Board of Directors

The past couple of years have been challenging for everyone, financially, personally, and socially.

We are very thankful for the engagement and support from our members and fellow associations. We have persevered as an industry due to the support and encouragement for one another. The HDAA would not be able to run as an association without this support and are incredibly thankful to our membership. We are looking forward to the new year and being able to provide our members with ongoing educational opportunities, advocacy, and networking opportunities as well.

The HDAA is excited to soon announce our new Board of Directors, which will see some fresh faces. The Board plays an integral role in the guidance of the association and is responsible for the association’s initiatives, events, education, and lobbying efforts. Without our very helpful Board, the association would not be able to run as smoothly. Although the HDAA will see some new faces on the Board, we will unfortunately lose a couple of Board members who have been integral to the association. We look forward to sharing this announcement and who our new Board members will be in the next issue.

HDAA presidency

Hamilton urban boundary expansion

The HDAA has seen a recent change in presidency with Arun Pathak taking on the role again in an interim capacity. Arun had been very involved with the HDAA as past president and we welcome him Arun Pathak back as the face of the association again, if only for a little while. We are excited to have Arun back in this role and are ever appreciative of his hard work and dedication to the association.

His involvement over the past two decades has played a huge role in shaping the association and his advocacy for rental property owners has created positive impacts in the rental housing industry.

Over the past few months, the City of Hamilton has been discussing the expansion of Hamilton’s urban boundary, with the options to either allow for urban expansion or to have the boundary frozen to prevent it. The City distributed a survey to residents for their thoughts, which showed the vast majority of respondents were opposed to urban boundary expansion, preferring to prevent urban expansion and limit environmental impacts.

A Nanos survey was also distributed and showed different results. The majority of the respondents to that survey preferred to expand the urban boundary versus intensification. Of note was that the vast majority, 3 out of 4 respondents, said they would consider moving if they were unable to find their preferred housing at an affordable

rentalhousingbusiness.ca | 53

cost. Lastly, 8 of out 10 respondents don’t recall receiving the City of Hamilton survey.

Although the majority of respondents to the City survey were against the expansion of the Hamilton boundary, many residents didn’t provide their thoughts. The survey may not be the most comprehensive view of the thoughts of Hamilton residents on urban expansion and may not reflect the opinion of many.

After piles of reports, months of debate, thousands of public submissions from advocacy groups and residents, and more than 20 hours of discussion over the course of two council meetings, the council voted 13-3 to freeze the urban boundary. By doing this, the council has rejected urban expansion into roughly 3,200 acres of prime farmland, which would have accommodated a forecasted population boom over the next 30 years, and instead will focus all future growth within the existing urban footprint. This may be challenging as the Province forecasts the City’s population will spike by 236,000 people, reaching 820,000 by 2051. This means approximately 110,320 more residential units would be required.

The Ontario government does not seem to be in favour of this decision, which may result in a “shortage” of housing and may not meet expected market demands for the next three decades.

The Ministry of Municipal Affairs and Housing worries this will worsen an already bad situation with housing in the GTHA, stating that accommodating population growth through infill and intensification is “not feasible.”

This decision also goes against the recommendations of City staff who preferred an “ambitious density” option that would call for phased urban expansion into 3,240 acres of rural land, coupled with an average intensification rate, through infill development, of 60 per cent over 30 years. Freezing the urban boundary, on the other hand, would require an intensification rate of about 80 per cent. This is argued to be unrealistic and would not satisfy Ontario’s market-based land-needs policy, which City staff, consultants, and provincial officials also believe.

The intensification required with freezing the urban boundary will cause apartment-heavy density targets, drive up costs of single-family dwellings, and send would-be buyers of single-family housing away from the City, further exacerbating the housing crisis. The Province is aware of the housing crisis and wants this fully realized by municipalities as well, and is encouraging city councils, including Hamilton’s, to put a plan in place to address the issue of housing affordability. By freezing the urban boundary, Hamilton is unfortunately doing the opposite.

City of Hamilton Mayor Fred Eisenberger advised this is not a “forever decision” but one that seems right for the moment. He argues that, in the short term, it would maximize the potential of the LRT and encourage developers to look at infill opportunities within the existing urban boundary. The City would then measure how that impacts future supply and pricing. The issue with this mentality is that infilling old lots comes with a heavy cost to developers and these expenses often won’t support family-style homes but instead high-rise housing. Single-family housing would become more expensive and drive many would-be buyers out of the City and into surrounding areas.

54 | Nov/Dec 2021

The idea that this is not a forever decision is also concerning as any decision now would take years to reverse should the City decide to change its mind and proceed with urban land growth in the future. Redevelopment applications can take over five to ten years to be processed; this delay would mean we would be too late to stop any issues with housing shortages, which is already an issue.

The decision to freeze the urban boundary is quite controversial, particularly because it does not coincide with provincial recommendations or concerns and does not help with current housing shortages and affordability issues. Although the City has made its decision, it may not be a done deal, as the Ford government could veto the decision and require the City of Hamilton to move in a different direction. The provincial government does not seem in favour of the decision, so it would certainly not be surprising if it does decide to veto this decision.

Past events October 20 – RTA & LTB Changes Webinar The HDAA welcomed Mark Melchers from Cohen Highley for a free members-only webinar. The webinar focused on the newest RTA and LTB changes that took effect on September 1.

Some significant changes came into effect with the last round of changes from Bill 184. Rental property owners can recover damages, unpaid utilities, and other expenses from former tenants and can do this through the Landlord and Tenant Board versus the Small Claims Court. The L2 has been updated accordingly and a new L10 form can be found on the LTB website for these claims. This new change only applies to tenants who moved out on or after September 1, 2021.

Tenancies terminated before that time have to go through the Small Claims Court process.

Another significant change comes in place to help with concerns over improper eviction for personal use and renovations. In any new N12 or N13 applications, rental property owners will now be required to disclose any N12s and N13s they have served for any rental property over the past two years. The compensation to tenants for improper eviction has also increased to up to one full year’s rent, plus other expenses that can be awarded, plus the difference between their old and new rental amount. Additionally, fines for improper eviction have increased to a maximum of $50,000 for individuals and $250,000 for corporations.

Other changes were mostly administrative, including updates to interpretation guidelines.

These changes should mark the last changes brought about by Bill 184. While the changes related to N12s and N13a are meant to protect tenants, many changes in Bill 184 are quite positive for landlords and will hopefully be helpful to many struggling landlords.

Upcoming events January 12, 2022 – Dinner Meeting The HDAA is very excited with the anticipation of once again holding in-person dinner meetings and being able to meet with members again.

The HDAA will be hosting an in-person dinner on January 12, 2022 at the Waterfront Centre to kick off the new year. The program will include introducing our new Board members and discussing other updates within the HDAA, as well as our plans for the new year. We will be providing more details in the next few weeks but encourage our members to hold the date in their calendars.

Hamilton & District Apartment Association Since 1960, the Hamilton & District Apartment Association has grown significantly. Our members manage over 30,000 units throughout Hamilton, Burlington, Brantford, Guelph, Mississauga, Oakville, St. Catharines and into the Niagara Peninsula. The association is a highly respected organization, sought out regularly by government, industry, media and the public.

Interested? Call us or join online!

Ph: 905-616-2058 Web: www.hamiltonapartmentassociation.ca

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Canada’s #1 most widely read publication for Apartment Owners, Managers and Association Executives

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RENTT: Financing CAPEX projects

Rental housing owners and financing professionals discuss issues related to funding capital expenditures

Bob Dhillon

Randy Daiter

Chair’s message The City of Ottawa has received court approval for its “set fines”, which allow by-law officers to issue tickets to those who fail to comply with the new Rental Housing Property Management By-law. Those fines range from $100 to $1,000, plus the victim surcharge. Not having the required systems, records or plans in place when a by-law officer requests them is liable to cost a landlord $1,125. See past issues of this magazine for what you need to do to comply.

As detailed below, EOLO is now turning to address the City’s new vacant unit tax, and new curbside waste collection plans. New requirements for bin collection from multi-res buildings will follow soon.

- John Dickie, EOLO Chair

Curbside solid waste collection changes in Ottawa The City of Ottawa is performing an extensive review of how it handles solid waste (residual garbage and recycling). Currently, the main goal is to reduce residual waste in order to extend the lifespan of the Trail Road Landfill. The main approach is to raise diversion through recycling.

City Councillors do not want to site another landfill, since that is very costly, and no Councillor wants to approve a new landfill in their ward.

The immediate issue is curbside solid waste collection. That applies to most smaller rental housing providers with low-rise buildings. Within the multi-res sector, curbside collection serves only to three types of properties, namely: • Townhouse communities with pad collection (rather than bin collection) • A few townhouse communities where tenants take their solid waste to the road • A few smaller buildings, mostly downtown, where there is no room for bin storage The curbside collection issues will NOT apply to most units operated by most EOLO members.

However, we want to protect our small members, and avoid bad precedents that could negatively affect multi-res owners under the reforms to the bin collection, which will be coming next. We also want to build unity within the rental housing community, including supporting members of the Ottawa Real Estate Investors Organization (OREIO) and the Ottawa Region Landlords Association (ORLA). EOLO has long worked very successfully in co-operation with ORLA and OREIO, and we all want that to continue.

The current regime For each household Curbside solid waste served by curbside collection takes place collection, the current weekly, but only organic limit is six items of recycling is picked up residual garbage weekly. One week also every two weeks. includes blue bin and Items can be garbage residual garbage pick-up, bags, garbage bins and the alternate week (both with some size includes black bin pick-up. and weight limits), or For most City residents, bulk items (such as the pick-up point is at mattresses or sofas). the end of their driveway.

City staff state freely However, in townhouse that the six-item complexes, it is often at a limit is not currently designated pad or pads. enforced. There is no limit on the quantity of recycling in the blue bin (glass and plastic), the black bin (newsprint, paper, and cardboard) or the green bin (organic recycling). There is no intention to impose any limit on the quantity of recycling.

On a City-wide basis under the current regime, City staff report that the average number of items of residual garbage set-out every two weeks is 4.18 items. As a further breakdown: • 85% of households set out 4 items or less every 2 weeks • 81% set out 3 items or less every 2 weeks • 71% set out 2 items or less every 2 weeks Ottawa’s diversion rate is now 58 per cent, and staff would like to see that increased as much as possible.

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Here is a summary of the three proposed options, with the staff estimate of the effectiveness of each option, based on what other Ontario municipalities see with the different regimes.

Partial pay-as-you-throw This option would see a lower limit, of say three or four items of residual garbage every two weeks, with an ability to buy a garbage tag to throw out additional residual garbage items (with no limit). The tag would probably cost about $3.

City staff report that system is used in Kingston (with one bag per week free), Niagara (two bags every two weeks free), Waterloo, Durham, some parts of Peel, Carleton Place, and Perth.

Presumably with a three-bag limit (every two weeks) on free residual garbage disposal, the diversion rate in Ottawa is expected to increase by 6 per cent, with a 28 per cent reduction in residual waste.

Firm item limit This option would see a lower limit, of say three or four items every two weeks, with no ability to buy a garbage tag to throw out additional residual garbage. (Presumably, some residents would “take up” their neighbours’ underusage of the limit. Tenants on pad collection would do that easily. Neighbours would have to do it on the sly or by agreement.)

That system is used in Hamilton, London, Guelph, Oakville, and Burlington. The diversion rate is expected to increase by 5 per cent with an 11 per cent reduction in residual garbage. (It is not clear why the reduction would be less than with partial pay-as-you-throw, but a four-bag limit every two weeks would account for that.)

Clear garbage bags with recycling and organics bans A clear garbage bag program would require households to use transparent bags for curbside garbage collection. The clear bag would allow collection contractors and enforcement staff to see if residents have put divertible material into their residual garbage, and then refuse the bag as residual garbage, or take other enforcement measures.

That system is used in Markham and other areas north of Toronto, and in Halifax. To address privacy concerns, Markham allows one small opaque bag in each large clear bag, while Halifax allows one opaque bag. In Markham, the diversion rate is now 81 per cent, which suggests an increase in Ottawa’s diversion rate could be achieved in the order of 20 per cent.

For landlords, the clear bag option seems like the worst option, in that clear bags with organic waste, newspapers, glass or cans are likely to be left at the pads every two weeks, leaving us to pay for the private disposal of those bags, or to separate the divertible material, putting out the residual garbage in clear bags.

Key issues City staff will gather more information from other municipalities. Staff appear to be open to refining the details of the options to achieve compliance with the least effort and risk to rental housing providers.

EOLO will seek to avoid rental housing providers being penalized for breaches by tenants, and to avoid increased cost in enforcing the garbage rules. We also want to avoid any bad precedents for the upcoming reforms to the bin collection system, which applies to apartment buildings.

As well as working with OREIO and ORLA, EOLO expects to work with City staff. Ideally, we will gain political points by supporting an option the staff and the Councillors are happy with (such as partial pay-as-you-throw), while obtaining any tweaks needed to minimize the negative impacts on rental housing providers.

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Vacant unit tax Several months ago, Ottawa City Council approved a proposed vacant unit tax (VUT) in principle. City staff are now consulting on the details. The City’s goals are to gain more rental housing supply, and to pressure owners to keep old properties in a better state of repair.

Certain key provisions are already determined: • By provincial law, the new tax will only apply to residential units (i.e., one to six units on a property, not 7+, which is multi-residential) • The standard test for a vacant unit will be nonoccupation for six months or more during a calendar year (which will trigger the VUT for the next year) • There will be a suite of exemptions, including an owner in hospital or long-term care, a property tied up in litigation, “snowbirds” whose return is delayed past six months, and others

Key issues outstanding While a tax rate of 1 per cent of assessed value was chosen when the VUT was approved in principle, there is now pressure to increase that rate. The ordinary total residential property tax rate is close to 1 per cent, so the total tax would double on vacant properties. In contrast,

Vancouver’s current VUT rate is 3 per cent, which increases the total tax by four or five times (since Vancouver’s standard tax rate is lower than Ottawa’s). EOLO opposes any increase in the VUT rate.

EOLO and the Greater Ottawa Home Builders’ Association (GOHBA) find it ironic and annoying that much of the vacancy during re-developments occurs due to delays in the City’s approval processes, and in the necessary applications at the Landlord and Tenant Board, and yet the City is putting pressure on developers to avoid vacancies.

Besides the exemptions listed above, which most Councillors favour, EOLO and GOHBA want to achieve exemption for many of the following: • Land assembly for re-development • Units where the owner is “actively moving forward to demolition or renovation” • Units where permits have been applied for or construction is taking place • Units deemed uninhabitable • Units on the market at market rent, but not rented • A situation approved by a designated City official (to cover one-off situations)

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Final Take Away

Brought to you by Yardi Canada Ltd

5 “temporary” tech tools built to last

By Peter Altobelli, Vice President, Yardi Canada Ltd.

While the pandemic broadly affected residential property management, the most important aspects of the business didn’t change at all, namely the obligation to execute business and resident service operations. Successfully tackling the unknown and the unexpected has been a tall challenge.

Initially, to minimize disruption, many residential property managers took measures to meet safety protocols, which included adopting touchless technology solutions. This rapid shift created a domino effect that influenced resident expectations, vendor retention, and competitiveness, among other areas.

Some of those tech adoptions appeared to be extraordinary measures for extraordinary times.

But how many of them have lasting power?

Based on my interactions with residential and asset managers across Canada, I see five pandemic-driven technologies that will likely remain on the forefront of property management for the long term.

1. Portals for paperless processing Timely management of transactions posed an immediate challenge for companies that used antiquated systems. But those leveraging online portals could seamlessly execute rent collection, invoice processing, maintenance requests, vendor payments, and work orders with little or no disruption. Such technologies—especially those integrated with your property management software—are the most cost and time effective.

2. Apps for online collaboration With in-person interactions drastically curtailed, property management teams turned to new platforms for videoconferencing, messaging, digital contracts, paperless banking, document management, and more. They continue to enjoy broad popularity among residential property owners, property managers, and vendors.

3. Websites for virtual leasing Virtual leasing and video touring technology, which was trending before 2020, assumed new importance during the pandemic due to its ability to facilitate the lead to lease cycle. As a result, many businesses launched or increased their online advertising strategies to maintain leasing activity. Similarly, CRM, texting, self-service applicant screening, and electronic signature

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capabilities helped many Canadians relocate during turbulent times while strengthening the customer experience. Integrated marketing and leasing technology has transformed the expectations about future rentals.

4. Cloud hosting for data management and security The rapid adoption of new technology among residential property managers and operators inspired many companies to learn and adopt best practices in data management. They learned that secure platforms hosted in the cloud offer vulnerability management protocols and multiple data centres. Companies have been saving money by outsourcing IT infrastructure responsibility along with updates, security, and maintenance.

5. eLearning for talent management Onboarding and training new team members became more challenging with distancing mandates and shutdowns. Elearning platforms helped sustain productivity and efficiency by enabling staff training in everything from software skills and compliance to company policies and career development. Property managers found they could significantly cut employee training costs by combining company-specific information and resources into off-the-shelf training courses.

Just as important, advanced training platforms incorporate evaluation of skills and feedback to improve understanding and boost employee confidence. Providing 24/7 access to videos and training tools is the future of talent management.

The pandemic was sudden, disruptive, and tragic, but Canadian property managers showed resourcefulness in finding new ways to keep their business operating efficiently. Openness to new technology was a key element of that success.

“The pandemic changed how people lease apartments. Online tours and processes are now preferable, and while some reversion to in-person tours may occur, we believe that online interaction will be acceptable in most cases. Reluctance to adopt technology is a key challenge, and COVID has been an opportunity to change that,” an apartment landlord said in Emerging Trends in Real Estate, a survey of real estate stakeholders in the U.S. and Canada.

To learn about contactless solutions for residential marketing, leasing, payments, invoice processing, and more, visit yardi.com.

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