Canadian Apartment Magazine * March/April 2020

Apartment CANADIAN

VOLUME 17 / NUMBER 2 / MARCH/APRIL 2020

FROM CRISIS TO RECOVERY NAVIGATING THE COVID-19 LANDSCAPE plus

SPRING MARKET OUTLOOK

INDUSTRY BEST PRACTICES PA R T O F T H E

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EDITOR’S NOTE>>

Apartment CANADIAN

A WHOLE NEW WORLD

/cammediaedge /cdnapartmentmag /mediaedgecam

When our last issue came out in February, not many of us could have predicted the unprecedented health crisis that has heavily impacted the world, forcing millions into financial distress while thousands daily fight for their lives. In print, numbers are no longer relevant; they simply change too fast. One day rolls into another, and the COVID-19 cases continue to surge. Physical distancing and other extreme measures have yet to flatten the curve, but we carry on in confinement, hoping that someday soon our efforts will bring much-needed relief to the medical world—our heroes on the frontlines.

Also fighting a difficult battle are property managers facing a plethora of unprecedented COVID-19-related challenges. To call these times “grim” is an understatement. The arrival of April was met with uncertainty on all sides. Not only were tenants suddenly unable to pay their rent, but the buildings themselves required constant cleaning, the consequences of the slightest oversight being potentially deadly. To get a sense of the widespread best practices and protocols enacted by the industry, please read our cover story on page 18.

Also in this issue we look at energy management strategies, market analytics and other important news that has impacted the industry since February. But for now, as we all hunker in and wait for greener days and the return of lost freedoms, it’s the well-being of our tenants, employees, families and friends that matters.

Stay safe, stay home...

Sincerely,

Editor

Erin Ruddy

Senior Designer

Annette Carlucci

Production Manager

Rachel Selbie

Contributing Writers

Barbara Carss Graeme Huycke Andy Schwartze Holly Welles

National Sales

Kelly Nicholls Melissa Valentini

Digital Media Director Steven Chester Circulation

Anthony Campbell For sales information call (416) 512-8186

Canadian Apartment Magazine is published six times a year by:

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President Kevin Brown Group Publisher Sean Foley Copyright 2020 Canada Post Canadian Publications Mail Sales Product Agreement No. 40063056 ISSN 1712-140X Circulation 416-516-8186 ext. 234 circulation@mediaedge.ca Subscription Rates: Canada: 1 year, $50*, 2 years, $90*, US $75 International $100, Single Copy Sales: Canada: $12* * Plus applicable taxes Requests for permission to reprint any portion of this magazine should be sent to Erin Ruddy.

Authors: Canadian Apartment Magazine accepts unsolicited query letters and article suggestions.

Erin Ruddy @cdnapartmentmag

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The opinions expressed are those of the authors of articles and do not necessarily reflect the views of Canadian Apartment Magazine. This information is general and is not a substitute for legal advice.

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Sworn Statement of Circulation: Available from the publisher upon written request. Although Canadian Apartment Magazine makes every effort to ensure the accuracy of the information published, we cannot be held liable for any errors or omissions, however caused. Printed in Canada.

PHYSICAL DISTANCING: It’s everyone’s responsibility to help flatten the curve

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Apartment CANADIAN

VOLUME 17 / NUMBER 2 / MARCH/APRIL 2020

FEATURE 14 E nergy Demand Load Shifts to Residential Base Significant GHG emissions reductions are projected

by Barbara Carss 24 I nvesting in your Rental Property Energy audits can provide long-term financial gains

by Holly Welles

COLUMNS 8 Transactions Apartment Market Outlook 10 CMHC Mortgage Payment Deferral Plan

by Graeme Huycke 16 From Rent Payment to Virtual Tours

CORPIQ addresses landlord concerns in

Canada’s hardest hit province 26 Insurance COVID-19 and your Insurance Policy

by Andy Schwartze 28 Newsworthy Industry Hot Topics 31 Provincial Update More Help Coming for BC renters and landlords

COVER STORY

DEPARTMENTS

18 Crisis to Recovery:

Navigating the COVID-19 landscape

by Erin Ruddy

4

Apartment CANADIAN

@cdnapartmentmag @REMINetwork

Montreal at sunrise.

Editor’s Note FROM CRISIS TO RECOVERY NAVIGATING THE COVID-19 LANDSCAPE

32 Smart Ideas

plus

SPRING MARKET OUTLOOK

INDUSTRY BEST PRACTICES PM#40063056

For daily industry news, please follow us on Twitter at:

ON THE COVER:

VOLUME 17 / NUMBER 2 / MARCH/APRIL 2020

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APARTMENT MARKET OUTLOOK COVID-19’s impact on the rental sector As Canada and the world continue to face unprecedented hardships imposed by the COVID-19 outbreak, it’s hard to fathom that just over a month ago, the rental housing industry was virtually untouched by the pressures now putting many small landlords (and other businesses) in financial distress.

With a large percentage of Canadians now out of work and unable to pay their rent without government support, the world is a very different place. On the investment side, not much is happening given the uncertainty of how deep and long this recession could go on. Apartment sales, like everything else, have stalled.

“Things will slow in the coming months as investors take stock of their broader investment portfolios to understand areas of concern,” said Keith Reading, Director of Research at Morguard. “By the summer I anticipate a slowdown in activity while this assessment is carried out. However, later in 2020, I believe activity will improve, as investors look to acquire properties in an asset class that has traditionally exhibited resilience and performed relatively well when compared to the other major real estate classes. After all, people need a place to live no matter what.”

Technical recession In terms of the broader economy, major forecasters in Canada are of the consensus that we’re headed for a technical recession, with some recovery in late fall but essentially no growth in real GDP for the year.

Altus Group’s latest housing report is forecasting that Canada’s economy will advance by 1.8% this year and accelerate modestly into 2021. And while last year’s job growth will likely not be repeated, best estimates indicate 8 | Canadian Apartment | Part of the REMI Network |

above average growth of 230,000 net new jobs this year and 190,000 for next.

In terms of housing starts in 2020, Altus Group says Canada should match last year on the strength of Ontario, Alberta and Saskatchewan.

“While we recognize that the world has quickly changed, we feel it is important for our readers to understand that the solid fundamentals had put the housing sector on very solid ground before the recent shocks,” the report states. “In other words, the housing sector went into the current environment in as good a position as possible to be able to post a quick recovery once everyday life goes back to normal.”

February 2020: Before the pandemic In late March, Rentals.ca and Bullpen Research & Consulting released their monthly rental report, looking at rental statistics for February all across Canada. At that time, the national average rental rate dropped 3 per cent month over month and 3.4 per cent year over year. Average monthly rent was down (or flat) for one-bedroom and two-bedroom homes in most cities, but a few municipalities bucked the trend including Brampton, Kingston, Burnaby and Quebec City.

Toronto had the highest average monthly asking rent ($2,322) for rental apartments, with Vancouver close behind ($2,155), while Saskatoon had the lowest ($985).

On a provincial level, Ontario had the highest rental rates in February, with landlords seeking $2,212 per month on average

TRANSACTIONS >>

“Tenants adhering to social distancing and selfisolation practices are required to remain at home for the foreseeable future, indicating we won’t be seeing the usual shift between tenancies...”

for all property types. British Columbia had the second highest rental rate at $1,885 per month, while Newfoundland and Labrador had the lowest at $927. With the exception of Quebec, all provinces experienced a month-over-month decline in average rents between January and February.

But given the unprecedented events that impacted the economy in March, what will any new data look like?

“Following two years of high rent growth in Canada outside of the commoditydriven markets, rental rates have softened considerably in 2020,” said Ben Myers, president of Bullpen Research & Consulting.

“In the face of a global health crisis, the number of people making major life decisions, like moving or changing jobs, will be significantly reduced and landlords will have to decide to either lower rents, offer incentives, or simply wait and hope for some return to normalcy in a couple of months.”

Tenants adhering to social distancing and self-isolation practices are required to remain at home for the foreseeable future, indicating we won’t be seeing the usual shift between tenancies that the spring months typically bring.

Additionally, immigration will temporarily grind to a halt while the borders remain closed throughout the state of emergency.

Some young adults living at home, or who’d been planning a move for a job or school are now stuck, not knowing when school will resume and when, or if, their employment will start.

“We are going to see a drop-off of walkin showings for apartments across Canada during the Covid-19 pandemic,” said Matt Danison, CEO of Rentals.ca. “Landlords and property managers will need to embrace virtual leasing as much as possible to keep their staff and potential renters safe during this difficult time.”

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CMHC REPORT >>

CMHC’s Mortgage Payment Deferral Plan Guidelines for multifamily borrowers impacted by COVID-19 Ever since CMHC’s mortgage payment deferral plan was launched in mid-March, financial institutions have been bombarded with inquiries from multifamily borrowers seeking assistance as they attempt to navigate the financial uncertainties caused by the ongoing COVD-19 outbreak. For homeowners the plan is clearly outlined on CMHC’s website, but what about those landlords with multiple rental properties in their portfolios, or even a single investment property that isn’t their primary home?

T

o help apartment owners understand the payment deferral process and determine whether they are eligible, Riley Young, Associate Vice President, Capital Markets at Colliers International, walks us through the plan noting that not all applications will necessarily be met with approval. “It will be on a case-by-case basis,” he warns. “But small, medium and large-sized apartment properties are eligible.”

What does “payment deferral” mean?

Essentially, a mortgage payment deferral in times of difficulty allows borrowers to postpone their scheduled mortgage payments for a defined period of time (in this case, six months).

The payments that are deferred are added to the outstanding balance and will accrue interest.

10 | Canadian Apartment | Part of the REMI Network |

Following the payment deferral period, the lender may adjust the mortgage payment to reflect the increased outstanding mortgage amount at the end of the payment deferral period, or at renewal of the interest rate term.

“Tax components of monthly payments will not be eligible for deferral,” he says.

Who has final approval authority on a payment deferral request?

The reason for default and the lender’s assessment of the borrower’s financial capacity to repay the deferred payments will be noted in the lender’s loan file. The final determination for approval of the deferral is left to the lender based on specific guidelines provided by CMHC that all approved lenders must abide by.

Who makes the request to CMHC for the payment deferral?

A borrower must make the payment deferral request through their respective lender representative.

What information is required to request a deferral?

• A written request from the borrower with full justification for the need to have payments deferred, including the requested time frame. This should include the borrower’s plan on how to make up the deferred payments at the end of the deferral period.

• The most recent two months’ rent roll showing the occupancy history of the property, with explanation for missed rental payments on suites in which tenants are

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We are all in this together A note from Evan Siddall, CMHC The COVID-19 state of emergency is something none of us was prepared for. In response to the financial hardships so many Canadians are facing, Evan Siddall, President and CEO of Canada Mortgage and Housing Corporation issued the following statement to housing providers calling for compassion in these difficult times: These events remind us all how crucial it is to have a sanctuary. We believe that we all need a safe and affordable place to live.

The first defense for renters is income support measures.

We expect any housing provider who has received funding or mortgage loan insurance from Canada Mortgage and Housing Corporation, either directly or through the provinces or territories, to act compassionately and refrain from evicting their fellow Canadians.

We expect landlords to suspend evictions. We have also reached out to our clients to offer assistance with their financing tools and will deploy a range of solutions to help them, as well. This will give everyone the chance to shelter safely and provide the necessary time for emergency funds from the federal government to be dispersed to Canadians.

Landlords with CMHC-insured mortgages (and this is a very large segment of the market) who are facing financial difficulties have access to the same tools and relief measures as homeowners, such as mortgage deferrals. At the first sign of financial difficulty, they should call their lender’s default management department directly for details. This will give landlords the financial flexibility they need to show compassion and patience to their tenants in these extraordinary times.

Housing providers have an important role to play in preserving our economy. We are all in this together. The scope and scale of the Government of Canada’s fiscal package, in response to the COVID-19 outbreak, includes money to help our most vulnerable citizens pay their rent and put food on the table.

Please note that rental housing falls under provincial jurisdiction, under landlord-tenant legislation. You may wish to get in touch with the province for more specific information. Several provinces and territories, representing more than 80% of Canada’s population, have issued full or partial eviction bans.

Evan Siddall, President and CEO of Canada Mortgage and Housing Corporation

in arrears. For example, if a request for a deferral is made on April 5th, rent rolls for March and April would be required.

• Two months’ most recent bank statements for the building operating account to show monthly income received and monthly operating costs.

Young adds that additionally borrowers will need to provide confirmation that there are no other mortgages/charges registered against the property. If there are, details including amount, interest rate, payments and maturity, proof that payments are current, and details of any payment deferral arrangement granted by the applicable lender must be given.

With no end to the pandemic currently in sight, landlords can take some comfort in knowing that the COVID-19 Mortgage Payment Deferral program will be ongoing, meaning they can apply at any time during this outbreak if need be.

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Energy demand load shifts to residential base Significant GHG emissions reductions are projected

by Barbara Carss The energy demand load has shifted in sync with the vast majority of Ontario’s workforce from commercial to home offices, prompting the Ontario government to suspend time-of-use (TOU) pricing during the current COVID-19 related upheaval. Residential, small business and farm customers will be charged the off-peak rate of 10.1 cents per kilowatt-hour (kWh) throughout the entire day until at least early May, substantially reducing the cost of electricity consumption during the 12 hours from 7 a.m. to 7 p.m.

“Reduced peak from office buildings should compensate the increased load from the residential side,” notes Bala Gnanam, vice president, energy, environment and advocacy, with the Building Owners and Managers Association (BOMA) of Greater Toronto.

“Plus, other energy-based activities related to having kids and others home will increase the residential load. So it is only fair that the Ontario Energy Board suspends the TOU and extends the offpeak rate until this is over.”

14 | Canadian Apartment | Part of the REMI Network |

Alternatively, a significant reduction in greenhouse gas (GHG) emissions provides at least one bonus of these unprecedented times. Energy management specialists affirm that it won’t be a simple neutral shift from the commercial to the residential sector.

Rather, commercial reductions should far outweigh the uptick residential buildings might cause.

“There has been significant reduction in commercial natural gas use due to ventilation setbacks, but only marginally higher

FEATURE >>

“The primary focus should be for all of us to comply with requests for social distancing and minimize human interaction until concerns surrounding COVID-19 are lifted.” residential use due to slightly less setback than usual,” says Michael Lithgow, manager, energy and climate change, at Sunnybrook Health Sciences Centre. “The transportation GHG reduction will be huge, particularly when you factor in air traffic.”

However, Andrew Pride, an energy management specialist who also serves as chair of the standing committee on the National Energy Codes, adds a couple of potential qualifications.

“When it comes to heating, homes typically run more efficiently than commercial buildings, but the large volume of space being heated (at higher-than-usual daytime temperatures) in individual homes will be significantly more than a school or office building,” he says. “Transportation GHGs should be down a lot, although there will be an increase in home deliveries that may somewhat balance out those savings.”

Lithgow and Rob Detta Colli, manager, energy and sustainability, with Crossbridge Condominium Services Ltd., offer some tips for building operators who are now contending with fulltime occupancy in residential buildings or emptier than usual commercial and public facilities. In the multi-residential sector, Detta Colli advises some adjustments to ventilation controls will likely be required.

“I would consider resetting the variable speed drives on the makeup airs to the setting used during the typical occupied hours of the day,” he says. “Many buildings have programmed drives to take in less air during the middle of the night and in between meal times, and even that lesser amount is usually much more than is needed, but we’re in uncharted waters here.”

Otherwise, he doesn’t expect much extra pressure on building systems. “Many buildings deliver cold water with variable speed drives so, if the demand goes up during the day, they’ll just run at a higher horsepower,” Detta Colli explains.

There are still no firm numbers on residential water consumption itself, but he reports one industry consultant has told him to expect a “noticeable” increase. The hot water share of that extra usage will also have some flow-through added GHG emissions. “We may need to wait for the natural gas consumption data to know the GHG impact,” Detta Colli says.

Turning to the commercial and public facilities sectors, there is a plethora of recommended actions for buildings that are now emptier than is customary.

“Put all ventilation and temperature set-points in unoccupied mode, and consider a deeper setback. Power down all unused equipment, computers, printers and lighting. Given this is a longer-than-typical shuttering, look at additional equipment such as network devices, AV equipment, hot water heating and vending machines,” Lithgow instructs. “Consider shutting off the incoming domestic water to some or all of the facility, though the central plant may need to be left on.”

Many of these steps dovetail with the low-cost/no-cost measures that Toronto Hydro’s now cancelled OPSaver program was devised to entrench as common, reflexive operational procedures, notes Scott Rouse, managing partner with the consulting firm, Energy@ Work. He suggests facilities management staff could use some of this unexpected downtime to assess and consider ways to improve energy performance.

“With the facility empty, it could present an opportunity to identify the leaks and phantom power use, and squeeze the baseline down as much as possible,” Lithgow concurs.

Nevertheless, even energy efficiency champions are clear that it’s a secondary priority right now.

“The primary focus should be for all of us to comply with requests for social distancing and minimize human interaction until concerns surrounding COVID-19 are lifted,” Gnanam reiterates.

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| www.REMInetwork.com | March/April 2020 | 15

From Rent Payment to Virtual Tours CORPIQ addresses landlord concerns in Canada’s hardest hit province Quebec’s largest rental housing association will be surveying its membership in mid-April to get a fuller picture of the financial stress small apartment building owners are facing due to COVID-19. CORPIQ (Corporation des propriétaires immobiliers du Québec) has also released a flurry of messages on social media and through other channels to frame issues around rent payment for the public, the Quebec government and landlords themselves.

“It is important to talk to your tenants to inquire about their health, their family context and to show empathy, while at the same time reminding them about their obligations,” a recent communique to CORPIQ members advises. “Ask them if they are registered for government assistance, and don’t hesitate to provide them with information about the types of programs they are eligible for. Many people are simply afraid of this situation and want to keep some money to maintain a safety cushion. This is why it is important to reassure them to this effect and to be well aware of the assistance available to them.”

The association has developed a series of letters that landlords can deliver to tenants who have failed to pay rent — offering options defined as a “range from a conciliatory approach to more firm communication, depending on the context”. It’s also preparing an instructional video on payment agreements, which set out conditions for tenants to defer rent and a schedule for full payment.

For landlords with apartments to let, CORPIQ suggests virtual tours, which can be enabled through various apps for smartphones or tablets, rather than conventional on-site visits from 16 | Canadian Apartment | Part of the REMI Network |

prospective renters. “Visits are still permitted.

They are, however, not recommended,” a communique on the association’s website states.

In cases where a prospective tenant would be visiting a unit that the outgoing tenant is still occupying, landlords are urged to heed sitting tenants’ wishes if they do not want apartment seekers entering their living space. If on-site visits do proceed, CORPIQ recommends landlords strictly limit the number of people in attendance and the duration of the viewing. Visitors must first wash or sanitize their hands and be instructed not to touch anything in the unit and to keep an appropriate distance from others. Visits must not be allowed if either apartment seekers or current unit occupants are experiencing any symptoms of COVID-19.

CORPIQ also outlines the permitted steps for signing leases remotely: 1. The landlord sends the completed lease without his/her signature to the tenant via email 2. The tenant signs this lease by hand 3. The tenant scans the lease and returns it to the landlord by email.

4. The landlord adds his/her handwritten signature

5. Then returns a copy of the lease, signed by both parties, to the tenant.

Behind the surge In late March, cases of COVID-19 seemed to surge throughout Quebec with Premier François Legault attributing the spike to a change in testing procedures, as well as the province’s earlier spring break.

Among the most affected regions are Montreal, Laval and several towns in the Eastern Townships, including Granby where reportedly citizens were seen hanging red cloths in their windows signalling the need for help. Meanwhile, several seniors’ homes throughout Quebec have experienced infections, including a residence in Sherbrooke where a dozen new cases put the facility in lock-down.

The Quebec government has enacted several measures to help mitigate the spread of the disease since declaring a state of emergency on March 13th, including: the closure of schools, public spaces and non-essential businesses; mandatory quarantine for all returning travellers; the prohibition of all indoor and outdoor gatherings; and most recently, calls for the police force to be “less tolerant” for those who disobey public health directives.

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| www.REMInetwork.com | March/April 2020 | 17

CRISIS TO REC Navigating the way in a COVID-19 world

COVER STORY >>

ECOVERY

By Erin Ruddy

The rapid spread of the COVID-19 virus that shuttered most of the world in March, closing borders and businesses and causing unparalleled hardship for the majority of Canadians, continues to create upheaval on the economy. As worldwide state of emergencies persist, and extraordinary measures are enacted by governments to keep businesses afloat while striving to “flatten the curve�, the future at this juncture remains uncertain.

| www.REMInetwork.com | March/April 2020 | 19

COVER STORY >>

What is clear, however, is that apartment owners and managers have been impacted in unique ways given apartment residents are confined to their homes. Along with a heightened risk of exposure to the virus, threats of building-wide quarantines, and enhanced, hyper-vigilant cleaning measures, calls for rent freezes in late-March by tenant advocacy groups had (and still have) many landlords fearing the worst.

Robert Gentile, President of Quinte Region Landlords Association, said he worried about what would happen if tenants, landlords and policy-makers didn’t work collaboratively to ensure financial safety nets were put in place so that rents get paid throughout the crisis.

“Small landlords rely on their rents to pay their bills, the largest ones being mortgages, taxes, and utilities,” he said. “While some landlords, but not all, may be granted deferrals on some bills, they will still have to be paid in the end. So it is not realistic for rents to simply be waived without government financial assistance.”

Making matters worse, tenant groups launched a campaign in the lead up to April 1st to dissuade renters from paying their rent, calling for “rent breaks” and other measures to protect the renting public. Since several provinces had placed a moratorium on evictions, the ramifications of this loss of income had some smaller landlords fearing bankruptcy.

Fortunately, some positive news was issued on March 25th when the federal government introduced the Canada Emergency Response Benefit (CERB). Intended to quickly direct income support payments to Canadians whose incomes had been lost or severely reduced because of COVID-19, qualifying individuals could receive monthly payments of $2,000 for the duration of the crisis.

20 | Canadian Apartment | Part of the REMI Network |

Joe Hoffer, Partner, Cohen Highley LLP Lawyers said he was optimistic about the program and its potential to provide some financial relief: “It means that many of the rent defaults landlords may experience on their April rent rolls could be resolved before the end of April and could stay resolved for at least four months.”

Since the crisis began, Hoffer’s advice to landlords has been to work with tenants facing COVID-related income loss to come up with repayment plans unique to them. “Landlords are entitled to see some verification from tenants to support the claim of loss of income and its connection to COVID-19,” he said. “If the landlord is satisfied with that verification, then there is a good chance that the CERB program will supply funds to meet the tenant’s housing needs and avoid ongoing rent defaults.”

He also advised landlords to “get really familiar” with CERB and other government assistance programs, recommending that they work with eligible tenants to incorporate the funds sourced from these programs into tenant repayment agreements. Of course, not all tenants would be willing to cooperate—in which case Hoffer said landlords should issue the N4 and follow up with an eviction application as leverage to recover a judgment or repayment of arrears.

But, as April unfolds into May, just how many tenants are making use of CERB and other government programs to fulfill their rent obligations? This is something we’ll be looking into and reporting back on at REMInetwork.ca. Hoffer’s hope, in the meantime, is that that the program will provide a lifeline for tenants and relief for landlords struggling to maintain operations throughout this very challenging time.

COVER STORY >>

“At Greenwin, we care deeply about our employees, our communities and our residents, and take the COVID-19 situation very seriously.”

— Kris Boyce

Sanitation, communication and preparedness With the COVID-19 crisis well underway, it goes without saying that maintaining a clean, sanitized building will only help to reduce the spread of this highly communicable disease. But this applies to all germs and not just the novel coronavirus.

Common areas, communal surfaces, lobby door handles and elevator buttons should be cleaned regularly with hypervigilance to prevent the transmission of illness.

In mid-March, we reached out to Kris Boyce, CEO of Greenwin, about the importance of sanitation, communication and preparedness during these exceptional times.

“At Greenwin, we care deeply about our employees, our communities and our residents, and take the COVID-19

situation very seriously,” she said. “Right now, our focus is on ensuring they have the information, resources and support they need to stay healthy and safe. At this point we are fortunate in that there has not yet been a confirmed case of COVID-19 in any of our buildings, but in the event that this happens we are confident in our level of preparedness.”

In addition to bolstering its cleaning protocols, Boyce said Greenwin promptly enacted several measures to limit exposure, including the distribution of first-line-of-defense health tips, the temporary closure of amenity spaces, restricting access to management and leasing offices, and deferring all non-essential maintenance across all of its properties.

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COVER STORY >>

As we navigate the way forward in these uncertain times, we are CONFIDENT Canada’s rental housing community is taking the best steps it can to ensure the health and safety of residents and employees.

“From the onset of the outbreak, we’ve strived to be proactive and flexible with our response,” she said. “With circumstances changing on a day-to-day basis, we are committed to closely monitoring the situation and putting protocols in place that align to the best practices recommended by Canadian health authorities.”

For its part, the Federation of Rental Housing Providers of Ontario (FRPO) maintained regular communication with its members, offering continued updates and valuable best practices for reducing the spread of the disease. The association’s advice to landlords was—and continues to be—to keep tenants well-apprised and informed as part of their crisis management, advising that all notices be posted at building entrances, on tenant notification boards and in common areas as promptly as possible.

FRPO also offered important tips on what to do if (and when) COVID-19 infiltrates a rental property, instructing management to contact local public health authorities and follow their medical directions with due diligence. But given strict privacy laws, it also warned landlords not to identify by name anyone in the building who’s been infected, reminding housing providers that it’s the role of public health authorities to reach out to any other tenants who may have come into contact with that individual.

Informing stakeholders; staff In the wake of the state of emergency announcement, most property managers issued special statements outlining the

22 | Canadian Apartment | Part of the REMI Network |

action steps they’d taken in response to the COVID-19 pandemic, Killam Apartment REIT being among them.

For residents, Killam’s plan included: an increase in frequency and thoroughness of cleaning practices throughout all properties; the closure of amenity spaces to assist with social distancing; a ban on evictions for residents unable to make payments due to financial hardship caused by COVID-19; and a commitment to working with those tenants facing financial hardship to find flexible payment solutions on a case-by-case basis.

In addition, Killam said it would be waiving the collection of recent rental increases and would suspend collection of further rental increases during the state of emergency, beginning with the April 1, 2020 rent payment.

In terms of action steps aimed at protecting and supporting employees, Killam said it is providing continued assistance in a variety of ways, including limiting site staff to reduce exposure, and offering paid time-off for any employee required to selfisolate or who becomes ill.

A progressing story Here at Canadian Apartment, our goal is to keep readers up to date with timely, relevant news specific to the rental housing industry. As we navigate the way forward in these uncertain times, we are confident Canada’s rental housing community is taking the best steps it can to ensure the health and safety of residents and employees. For ongoing, daily coverage of the industry’s response to COVID-19, please follow us at: www.REMInetwork.com

FEATURE >>

Investing in your Rental Property Energy audits can provide long-term financial gains

by Holly Welles

Utilities are expensive, especially during winter months, when tenants rely on energy the most. In light of Canada’s recent carbon emission tax, electricity will only become more costly with time. Additionally, the uptick in energy consumption adds to the global warming crisis with each passing day. Leased spaces account for 490 million metric tonnes of carbon emissions annually. That’s the air volume equivalent of 245,000 Empire State Buildings.

Energy’s impact on the environment — and consumer wallets — has led many property owners to consider conducting audits. These allow them to determine how much their tenants pay for power compared to competing properties. It also enables owners to see why their systems and facilities are losing efficiency and what they might do to fix it.

Often, solutions include a renovation and an updated electrical system, resulting in happier tenants and more money in the pockets of property renters.

What Do Energy Audits Tell Building Owners?

The first step to a comprehensive savings plan is an energy audit. Depending on what kind of review a landowner has, the inspection can include an assessment of the building envelope and heating and cooling systems, as well as upgrade recommendations and data analysis of utility bills and costs.

24 | Canadian Apartment | Part of the REMI Network |

If an owner hires a professional auditor, the level of audit chosen will determine what information they receive. A level one audit is the most affordable and focuses on energy conservation measures that an individual might take at little or no cost.

The inspection includes a walk-through of the buildings and an examination of the past year’s utility bills.

This type of review can be a good starting point, but a level one audit is typically not extensive for a large apartment complex. A level two, then, may better serve a property owner’s needs as it also identifies energyusing systems and quantifies their power use.

The most detailed, however, is a level three audit. This kind will provide the above information as well as specific details concerning a property’s electricity use and an in-depth analysis of each system’s energy use. This level of audit may be best for larger

facilities and property owners with more money to invest in upgrades or improvements.

Prioritize Renovations Conducting an audit before beginning renovations is key to prioritizing remodels or improvement projects. Leveraging the data provided by the auditor will allow owners to make the smartest decision regarding what to fix first. Additionally, the choice will be based on necessity rather than aesthetics or intuition.

Ultimately, this will result in happier tenants and better savings for both them and their landlords. And once building owners have renovated to improve energy efficiency, they can move on to other improvements that aren’t as pressing.

Look for Incentives While planning renovations, it’s essential to search for incentives to minimize costs. Various

FEATURE >> federal, state and local utility incentives provide tax credits on renewable energy systems.

Grant and loan programs may also be available through government agencies.

Efficient power usage may not be as expensive as it seems — owners just have to know where to look for credits, discounts and incentives. And if they do find a program that applies, a new electrical system will likely pay for itself in no time.

Multifamily Audit Benefits Another reason to consider energyefficient system upgrades or installations is the Canadian carbon tax. Put into effect last year, the rule sees that Canadians pay at least $20 per ton of carbon they emit.

That dollar amount will likely rise in the coming years as policy-makers continue to urge the public to switch to energyefficient systems.

While the effects of the carbon tax will continue to be studied, it’s clear that homeowners and investors have financial incentives to switch to clean energy. However, renters may also be paying more attention to energy spending regardless of this new legislation.

For example, an energy audit can determine how much the tenants may spend on utilities each month. If the inspection reveals that the tenants are paying more than neighbouring properties, owners who aren’t mindful of upgrades may run the risk of losing residents.

The installation of new, energy-efficient systems may also attract more eco-friendly tenants. So, if landlords can commit to renewable or clean electricity, all the better.

Of course, both situations spell major financial gains for property owners who are always looking to fill vacancies.

Single-Family Audit Benefits Conducting an energy audit can also increase property value. Simply using the words “energy efficient” in listings can allow homes to sell for a considerable amount more. In the U.S., for example, a study of 66,000 homes found that those listed with these words sold for 6% more than other comparable houses without energyefficient systems.

This point is especially beneficial for real estate investors. Single-family investors potentially have the added benefit of attracting buyers who are willing to spend a bit more on green energy upfront. This

creates a significant financial advantage for investors working on fix-and-flips or simply looking to sell an upgraded rental property.

Energy audits have a measurable impact on real estate investments of any type. Ultimately, the investment is well worth the reward for owners, renters, buyers and sellers alike.

Switch to Clean Energy for Higher Monetary Gains The advantages of green electricity are abundant and can lead landowners to discover new ways of harnessing energy without the high cost. As renewables grow in popularity and accessibility, more people will join the movement and lower their maintenance costs.

Holly Welles is a freelance writer covering real estate trends for Rental Housing Journal, Apartment Guide and other web publications. More of her work can be found at www.therealestateupdate.com

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INSURANCE>>

COVID-19 and your Insurance Policy Does “viral damage” constitute “physical damage”?

by Andy Schwartze One of the terrible, and unalterable, realities of the insurance world is that economic activity and premium costs have an inverse relationship. Simply put, when the economy is doing well insurance costs remain low. When the economy tanks, insurance costs rise sharply. Why is that? Economic difficulties create financial hardships that require us all to look harder at where we can cut costs and generate income. Insurance policies provide potential sources for badly needed money. Efforts to press insurance companies to pay property damage claims ramp up sharply, and legal actions intended to test liability insurance policies also climb.

“Desperate measures for desperate times”, as the old saying goes.

So what does this mean to our readers who are primarily owners of residential revenue-producing properties? Do “all risk” property insurance policies view a virus as a form of direct “physical” damage?

The simple (and sensible) answer is no, but you can be sure this is going to be court-tested. On the same day as this article was written, a major Toronto law firm published the decision of an Ontario Superior Court of Justice in 2020 ONSC 1924. The Court has suggested that an 26 | Canadian Apartment | Part of the REMI Network |

all risk insurance policy could indeed include viral damage within the context of physical damage. The Court concluded by stating that the intent to provide “broad coverage” would be thwarted by restricting its definition to too limited a meaning. This case will, no doubt, be appealed and may even wind up in the Supreme Court of Canada one day. Needless to say, there will be many business owners who will insist that their claim be filed, with their insurer, in anticipation of a positive outcome.

INSURANCE >> The financial impact of an unfavourable ruling would be devastating to the Canadian insurance industry. It should be noted that a couple of U.S. states are considering legislation forcing insurers to pay claims, on the basis that the virus is a form of physical damage. It would be a surprising development as this is the kind of thing that would then spread like wildfire through the political worlds everywhere. In case you are wondering, the rental income loss coverage that apartment owners typically carry belongs in this category.

One of the other significant developments is, interestingly enough, in the directors’ and officers’ liability portion of the insurance world.

D&O insurance, which more and more private companies are insisting on to protect their top people, is fairly broad in that it is related to negligent decision making. As this virus story began to take shape, a lot of top corporate people will have wanted to remain positive and downplay the significant health-related developments. Accusing them of having endangered the wellbeing of employees, customers and perhaps visitors, is going to become the new “sport” of the legal community. We can certainly expect that some D&O insurers are already crying into their beer as they begin to wonder to what extent their policies will be attacked by litigants claiming damages, perhaps to their health, but many of them specifically to their financial situations. Anyone who can prove that being told “everything is fine” was deliberately misleading, will be on some pretty solid legal ground. Of course, it’s one thing to be able to prove the allegation; it’s always an additional challenge proving “quantum”—i.e. the amount of the loss suffered.

Unfortunately, there have been certain developments that the insurance world simply cannot deal with. In Ontario, where the Premier has suspended eviction rights, the extent to which tenants will take advantage of not being kicked out remains unknown. While April will be the first full month of the “stay at home” directives, there is little doubt that this viral mess will continue to impact us for some months to come. May, and then June, will tell an entirely different and more negative story. Certain industries will, inevitably, have seen the shutting down of businesses that may never re-open. Unemployment rates will spike and, at some point, tenant evictions will take place at a rate higher than normal. If a governmental authority decides to quarantine a building there is little relief that an owner can expect from the insurance world. This kind of incredible event is akin to having a country at war; it certainly meets all the criteria that history has taught us apply. Difficult political decisions, an inconvenienced populace, refocused industrial production and people dying are all part of a war; only this time we have the added challenge of an invisible enemy. We need to remember that the insurance industry is much smaller than its big brother in banking. There’s just not enough money to handle the demands of a huge number of claimants all at the same time. War like situations have never been “insurable”.

Finally, it is worth noting that laying off employees due to the virus, is to be handled with great care. Employers should consult their legal experts on how to do that properly. In addition, employee benefit insurers are making certain concessions with respect to how their plans will handle COVID19 cases. You should certainly check in with your advisor. If there are any questions, by all means send them in.

Andy Schwartze, BSc., MBA, CIP, is an insurance broker specializing in property management and real estate. He can be reached at andy@takecover.ca.

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NEWSWORTHY >>

Industry Hot Topics Toronto issues health & safety policies for residential buildings

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he City of Toronto released official health and safety policies for operators of large residential buildings to protect residents against the spread of COVID-19.

On March 29th, Mayor John Tory stressed the importance of practicing physical distancing in high rises—an often challenging feat.

Councillor Josh Matlow echoed the sentiment for the rental sector.

“It is impossible for renters to adopt lifesaving hygiene and social distancing practices if hand sanitizer isn’t accessible and elevators and common areas are crowded,” he said. “That’s why the City of Toronto is asking landlords to protect their tenants’ health by immediately implementing a COVID-19 action plan in their building.”

Guidelines include: • Alcohol-based hand sanitizer or a hand washing station with soap and water should be placed at all building entrances.

• Alcohol-based hand sanitizer should be available in all common areas that remain open, such as laundry rooms.

• Close non-essential common areas such as bathrooms, gyms, playrooms, playgrounds and other high traffic areas.

• Routine cleaning of frequently touched

surfaces in common areas, including doorknobs, elevator buttons, light switches, toilet handles, counters, hand rails, touch screen surfaces and keypads, with common household cleaners and disinfectants.

• Organize the building to accept deliveries of essential goods, like medications, for residents to avoid non-essential trips outside.

• Post signage limiting the number of residents allowed in common areas, including laundry rooms and elevators, to ensure that individuals are able to maintain a two-metre distance. Consider allowing a maximum of three residents at a time in elevators.

• When showing units or suites for sale or lease, practice physical distancing – keep a safe distance of two metres from the resident and wash hands with soap and water, and or use an alcohol-based hand sanitizer, before and after the visit.

The city’s website is updated daily with the latest health advice and information about City services, social supports, and economic recovery measures. Check toronto.ca/covid-19 for answers to common questions before contacting the Toronto Public Health COVID-19 Hotline or 311.

Schedules for property tax payments in flux

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ate penalties for Toronto property tax, water and solid waste utility bills have been suspended until mid-May. For property owners who make tax payments on the city’s regular three-installment schedule, the April 1 due was pushed to June 1. Taxpayers registered for the 11-installment pre-authorized payment plan will see the interim 2020 due dates pushed back 60 days.

Mississauga has added 90 days to the deadline for its two pending payment dates, pushing the April 2 installment date to July 2 and the May 7 due date to August 6. In other GTA cities, Oshawa is offering commercial, industrial and multi-residential ratepayers a grace period until June 30, waiving late fees and interest on payments coming due on April 27; Richmond Hill has waived penalties and interest on late property tax payments until further notice; and for now, Newmarket 28 | Canadian Apartment | Part of the REMI Network |

has suspended interest and late fees on all payments and has promised further details on potential tax deferral programs.

Ratepayers qualifying for Ottawa’s program will have until June 18 for interim tax payments and October 30 for final tax payments — an extension from the original March 19 and June 18 deadlines. In addition to meeting the CVA criteria, ratepayers must currently have paid up-to-date tax accounts to take advantage of the program.

Hamilton has thus far waived late penalties on property tax payments due April 30 for a 30 further days, but city staff is now reviewing other potential measures and will report to city council in early April. Other Ontario cities offering some form of property tax payment concessions include London, Kitchener, St. Catharines and Niagara Falls.

NEWSWORTHY >>

Mainstreet CEO joins new Alberta advisory council

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• Site “I was honoured to join other Albertans, including former Prime Minister Stephen Harper in being appointed to Premier Jason Kenney’s Economic Recovery Council,” Bob Dhillon commented via Twitter. “We face a challenging time, but we believe Alberta will pull through this stronger than before.”

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NEWSWORTHY >>

Rental management services now more limited

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Ontario scaling back residential construction

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ntario announced updates to its essential services list, stating that most residential construction in the province will be paused for now in order to enforce health and safety and flatten the COVID-19 curve. No new residential construction will be allowed to start, but those with a footing permit can continue.

“We are pleased by the government’s decision to keep certain residential construction going,” says Richard Lyall, president of RESCON. “As the Premier has rightly noted, there are many people who are waiting for their homes to be finished in the next few weeks. We already have a significant housing crisis in Ontario and most of these homeowners who have sold their homes are at risk of being left on the street without these measures.”

RESCON has and will continue to emphasize that companies must meet the Ministry of Labour, Training and Skills Development construction standards or simply not operate. Site safety is the builders’ responsibility and they must work with everyone on the construction site including sub-trades, labour unions and workers to ensure all workers and sites are safe.

“Safety has and always will be the industry’s top priority,” RESCON vice-president Andrew Pariser emphasizes. “The Occupational Health and Safety Act allows workers to refuse unsafe work, but also mandates Joint Health and Safety committees, an avenue for workers and management to address safety concerns at an early stage. Our goal is to address safety issues (COVID-19 related or not) through communication and teamwork before they become a hazard.”

30 | Canadian Apartment | Part of the REMI Network |

n April 3rd, the Ontario Government reduced the businesses it deems essential during the COVID-19 outbreak, meaning that more rental management services and businesses were ordered to close their doors by midnight on Saturday, April 4.

As for how these additional closures will impact the rental-housing sector, the Canadian Federation of Apartment Associations (CFAA) released the following comment: “The aspects of maintenance, repair and property management which are essential are those strictly necessary to manage and maintain the safety, security and essential operation of residential properties and buildings.

Therefore, rental management businesses are legally allowed to continue their operations and keep their offices open for those purposes.”

CFAA recommends that all businesses continue to minimize in-person contact by operating by telephone or remotely when possible. In addition, it says rental businesses should limit employee contact with building residents to the minimum necessary in order to perform urgent repairs and to maintain the essential operations of the buildings.

Aside from property management and critical maintenance, other essential services that will continue to support the sector include: supplies and delivery, packaging, processing, waste collection, building security, financial services related to banking and payroll, insurance and more.

Organizations and providers that deliver home care and personal support services to seniors and individuals with disability will also remain essential.

Digital Earth Day 2020

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arth Day activities have gone digital for 2020. Actions to mark this year’s 50th anniversary are already occurring, in homes and online, as organizers launched 22 days of daily challenges for promoting climate change resilience on April 1. All challenges align with Earth Day 50’s SAVE framework — an acronym for: Speak up; Act; Vote; Educate.

“The intrinsic connections between human health and planetary health sparked the first Earth Day in 1970 and, today, we must rise to meet these dual crises again,” reflects Kathleen Rogers, president of Earth Day Network. “Though we may be physically apart, we’re all in this together. Individual actions, when working together for a common good, can create a mass movement of change.”

Each day’s challenge is posted on the Earth Day Network’s social media platforms at @earthdaynetwork. In turn, participants are encouraged to share news of their efforts with the hashtags #EarthDay 2020 and #EARTHRISE. Daily actions will reflect key Earth Day themes such as: trash cleanup; dietary change to reduce individual greenhouse gas footprints; energy conservation; and looking to the power of science. Participants are urged to view digital Earth Day 2020 as an opportunity to become better informed and engaged in climate change issues and to communicate their learnings to others — from an appropriate distance. Organizers of online Earth Day events can also register them on the Earth Day Network website to reach out to prospective attendees worldwide.

“This 22-day series will allow people to connect through challenges to take action right now, and every day, for our planet,” Rogers asserts. “Because no matter where you are in the world, we are connected by a fierce and urgent determination to overcome our shared emergencies, be it coronavirus or climate change.”

PROVINCIAL UPDATE >>

More help coming for BC renters and landlords Province launches BC-Temporary Rental Supplement (BC-TRS) Program The BC Government has enacted a number of measures to reassure tenants and beleaguered landlords since the COVDI-19 crisis began.

Since March 25th, the Province has halted all evictions to support renters who are facing a temporary loss of income due to the pandemic, and in early April, BC Housing announced plans for a new Temporary Rental Supplement (TRS) of up to $500 a month.

According to the BC Housing website, TRS is intended to help renters pay at least part of their rents while ensuring landlords continue to receive some rental income until the health emergency is lifted.

“We are putting in place measures that complement the federal crisis measures to support our most vulnerable populations and ensure they do not fall deeper into poverty as a result of COVID-19,” said Shane Simpson, Minister of Social Development and Poverty Reduction. “This is a stressful time for everyone, but for those struggling to put food on the table at the best of times, it is important that we ensure there are no additional barriers to get what they need to keep themselves and their families safe and healthy.”

Support for renters and landlords: BC programs to date To support people and prevent the spread of COVID-19, the Province of BC is introducing a new temporary rental supplement, halting evictions for non-payment of rent, and freezing rent increases.

The new BC Temporary Rental Supplement, or BC-TRS, will be administered by BC Housing to assist eligible low- and moderate-income renters who are struggling to pay their rent as a result of income loss or income reduction due to COVID-19.

Once a tenant is deemed eligible, the benefit will be paid directly to the landlord, ensuring at least a portion of each month’s rent gets paid. At this time, the program will be in place for a three-month period.

Who is eligible?

The supplement is open to renters facing financial hardship as a result of the COVID-19 crisis, but that do not qualify for existing rental assistance programs. Currently the website states that tenants whose rent is subsidized by any level of government are not eligible, including those receiving Income Assistance or Disability Assistance, which already includes a shelter allowance.

Full details on eligibility for the program and information about the application process will be up on BC Housing’s website in mid-April. | www.REMInetwork.com | March/April 2020 | 31

Smart Ideas

PREVENTING FUTURE OUTBREAKS

Proptech’s critical role in mitigating the spread of disease

Though it’s only been around for a few short months, the coronavirus pandemic has profoundly altered people’s lives and the way businesses operate. With physical distancing requiring fewer face-to-face interactions, people are encouraged to stay home, touch surfaces less, and interact more via digital technology. New apps and devices are evolving at rapid speed, allowing people to open doors with their voices, faces, or phones to keep from contacting surfaces. Here’s a look at some of the innovative ways proptech is changing the future: Keyless entry systems used in homes, offices and elevators mean people will no longer have to touch potentially infected surfaces.

Blockchain technology that allows consumers to manage the supply chains of essential items via end-toend product traceability can help to prevent hoarding during a crisis.

Non-contact infrared thermometer screenings placed in building entryways can be activated during an outbreak to measure body temperature and restrict potentially symptomatic individuals from entering into a public space.

Co-working spaces designed into rental buildings can ensure people are equipped to work remotely, and that students can take part in virtual education.

Drones equipped with ultraviolet (UV) light and disinfectant sprays can be used to sterilize rooms containing infectious bacteria or viruses, meaning humans need not risk exposure.

Virtual reality allows rental spaces to be toured remotely in times of crisis, keeping building occupants safe from threat.

32 | Canadian Apartment | Part of the REMI Network |

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