Canada’s Most Widely Read Condominium Magazine
25 THINGS YOU SHOULD KNOW ABOUT BILL 106 A primer on the proposed Protecting Condominium Owners Act
July 2015 • Vol. 30 #4
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Contents FOCUS ON: ASSET LIFECYLE
16 24
Windows of opportunity By Jack Albert
20
10
Ask the expert
42
Smart Ideas
Why regularly scheduled exterior care matters By Cathy Doherty
FEATURES
12
IN EVERY ISSUE
DEPARTMENTS The great condo glut of 2015 that wasn’t By Shaun Hildebrand Better know Bill 106 By Michelle Ervin
28
Governance Comment: Consider the long-term costs of lowering maintenance fees By Megan Mackey
34
Maintenance Water-in, water-out By Dale Kempster
38
Design Case study: A brand new condo gets an amenity makeover By Anita Wiklém
THIS MONTH’S ONLINE EXCLUSIVES ALL THE BUZZ
Toronto puts energy reporting proposal on pause Odds are, an energy reporting requirement for large buildings is coming to Toronto. The question that remains is: Will it come from the city or from the province? Toronto’s parks and environment committee recently put a benchmarking bylaw proposal on pause while it waits on an anticipated announcement about a province-wide regulation.
In May, condo vacancies (completed units sitting empty) hit a record high in the GTA.
FROM THE GREEN BIN
City Builders back boulevard in Gardiner debate A group calling itself the City Builders, some of whose members own or control 51 hectares on the waterfront, urged Toronto City Council to support the boulevard (remove) option ahead of the Gardiner Expressway debate. Council voted 24-21 in favour of the hybrid (rebuild) option, but the divisive issue may not be over yet.
How to achieve energy efficiency in 2015 Achieving energy efficiency in multi-residential properties is the new normal. With the cost of utilities rising, apartment owners are constantly endeavoring to reduce their net operating costs while finding new and creative ways to market their buildings. Energy efficiency in multi-residential properties can be achieved through various measures.
A new report makes the case for a network of green space in Toronto, amid fears parks and open spaces aren’t expanding at the same rate as new developments.
EXPERT ADVICE
James (Lee) Senter, owner of Dryit.ca, shares how to minimize damage during building emergencies such as flooding.
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EDITOR'S LETTER
Associate Publisher Mitchell Saltzman Editor Michelle Ervin
Bill 106
At long last, proposed Condominium Act reforms have landed at Queen’s Park. More specifically, the Ontario government introduced the Protecting Condominium Owners Act in the provincial legislature, just days before breaking for the summer. The announcement comes about a year after it was originally expected, set back by the 2014 election. Given the amount of effort that has gone into the government’s 18-month Condominium Act review, the news was better late than never. Bill 106, as the Act is known, received a fairly rosy reception when the government unveiled its major features, which include a faster, cheaper means of dispute resolution and licensing for condo managers. No surprise, given that the major features echo the recommendations made through the course of the legislative review. Now industry stakeholders are poring over the 159-page bill to get a better sense of what the government is proposing. As promised, this issue takes a closer look at the details, highlighting 25 things you should know about the Protecting Condominium Owners Act in our cover story “Better know Bill 106.” Though many of the details will come in the regulations, there are plenty of important provisions that didn’t make the initial media reports. Through regulations, the proposed legislation is expected to define what constitutes an “adequate” reserve fund. In the meantime, however, condo boards are left to rely on the advice of prescribed reserve fund study providers. In this month’s Ask the Expert column, engineers weighed in with ways condo boards can assess whether their corporation’s reserve fund is adequate. Rounding out CondoBusiness’ coverage of asset lifecycle this month, Jack Albert sets out four questions to answer before embarking on a window replacement project and Cathy Doherty delves into the importance of sticking to a site maintenance schedule. And, Anita Wiklém presents a case study of a brand new condo that opted to redo some of its amenity spaces. Plus, Megan Mackey makes the case against lowering maintenance fees, on the heels of a controversial story about a local condo corporation that recently slashed its fees by 30 per cent. The proposed Protecting Condominium Owners Act could become law as early as the end of 2016, but there are a number of steps that need to occur before then. In May, the bill passed the first of three readings. Two more readings will occur, and in between the second and third reading, the committee may hold public hearings, which will present another opportunity for stakeholders to have their say. The proposed reforms mark a major step toward overhauling the existing legislation, but for now, the existing Condominium Act (1998) remains in force.
Advertising Sales Sean Foley, Robert Koven, Michelle Lumb, Stephanie Philbin Senior Designer Annette Carlucci Designer Jennifer Carter Production Manager Rachel Selbie Production Coordinator Karlee Roy Contributing Writers
Jack Albert, Cathy Doherty, Shaun Hildebrand, Dale Kempster, Megan Mackey, Anita Wiklém
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ASK THE EXPERT
What’s an ‘adequate’ reserve fund? The Condominium Act requires that
boards maintain on behalf of their corporations an “adequate” reserve to fund future major repairs and capital replacement. Though the board is expected to rely on a reserve fund
study provided by a prescribed expert, the term “adequate” offers scant guidance on how to gauge whether the fund is indeed adequate. The proposed Protecting Condominium Owners Act would define, in regulations, how to determine the adequacy of a reserve fund. In the meantime, boards are left to operate under the current regime. We asked engineers: What is one way for boards to gauge the adequacy of their corporation’s reserve fund?
Research providers, hire specialists The adequacy of the reserve fund is often directly related to the experience and knowledge of the specialist(s) performing the study. Seeking out references and asking for credentials or resumes of the individuals tasked with performing the study before retaining the firm can go a long way in pre-empting reserve fund shortcomings. Hiring multiple specialists (structure, building envelope, mechanical, electrical, life safety, elevator, etc.) will also greatly improve the accuracy of the reserve fund. Consider a building’s major components and commission seasoned professionals who specialize in one or more of these common elements. Remember, cost can mean value. Michael Pond, principal, Read Jones Christoffersen Ltd.
Do in-depth engineering reviews As large capital expenditures come closer to fruition, it is prudent to do in-depth engineering reviews of the capital projects in question, along with proforma studies. An engineering review provides budgets for the expenditures and helps determine scheduling, at a more detailed level than reserve fund studies can. This information can then be included in a proforma study, where only a financial update to existing reserve fund study tables is completed. Ideally, contractor quotes will also be included in the study. With a more detailed look at the expenditure’s impact on the reserve fund, the board can adjust funding and/or scheduling of capital expenditures accordingly. Paul Nasato, project manager, Coulter Building Consultants Ltd.
10 CONDOBUSINESS | www.condobusiness.ca
ASK THE EXPERT Analyze different reserve fund strategies One step boards can and should take is to get involved. Select reserve fund study providers that know how long things last, how much they cost and the ramifications of postponing or accelerating repairs. Request presentation formats that are easy for board members to understand, even if they aren’t engineers. The board should be able to see where and when future expenditures are expected; ask questions when something seems out of touch with reality. Go through draft analyses and review different strategies with the corporation’s provider to work towards a study that can simply be implemented by the board as its reserve fund plan. Don’t look for one thing or an easy rule of thumb! Tim Beattie, principal, Brown & Beattie Ltd.
Review each line item in the reserve fund study All boards should ensure that they have an up-to-date reserve fund study that was conducted by a qualified professional. They should take the time to review each line item of the study, and meet with the reserve fund preparer to ask questions to ensure that they fully understand the methodology followed in preparing the study and to ensure there are no major errors or omissions in the report in advance of having it finalized. This will result in a well-funded study in which each building component is identified and funded. Martin Gerskup, principal, BEST Consultants Martin Gerskup Architect Inc.
Fully implement contribution increases within three years If the corporation’s reserve fund study calls for an increase to contributions, get the increase fully implemented to achieve the “inflation-matched” contribution level within three years (before the corporation’s next study kicks in). This allows some phase-in to ease the pain for current owners, but not excessive deferral to future owners. Longer phase-in periods look innocuous, but every update tends to find new costs to be included, so the required increases can compound and leave the corporation very short on funds. This matters, because money generally underpins all angst in condos. Sally Thompson, principal, Synergy Partners
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FEATURE
The great condo glut of 2015 that wasn’t Fo u r y e a r s a g o , t h e y e a r 2015 loomed la rge for Toronto
BY SHAUN HILDEBRAND
condo market obser vers. Serious discussions about the extraordinarily high new condo sales volumes being reported in 2011
occurred internally at Canada Mortgage and Housing Corporation (CMHC) and externally with the developer community.
12 CONDOBUSINESS | www.condobusiness.ca
FEATURE
26%
The share of condo units on the Multiple Listing Service (MLS) system that were rented out last year
21,000
94,000
The number of condos completed in the 12 months leading up to March 2015
The record-high net immigration total for the Toronto Census Metropolitan Area, reached in 2011
2.4%
The 30-year high in population growth in 20 to 34-year-olds in Toronto, reached in 2012
1.3%
The vacancy rate for condos as of last year, representing a decrease and return to its 2012 level
Toronto market by the numbers Leading up to then, sales had recovered nicely in 2 010 and the market was back to its previous peak, reached in 20 0 8. Then suddenly, the volume of new projects brought onto the market exploded. Between Q2-2011 and Q1-2012 more than 3 0,0 0 0 units launched for pre construction sales — a level that was 5 0 per cent higher than in 2010 and twice as high as annual totals averaged in the previous 10 years. A nd they were were selling extremely fast — by the end of March 2012 the 125 new projects launched in the previous 12 months generated 20,000 sales (66 per cent absorption). The concern was that the amount of new supply introduced in such a short period of time would lead to a spike in inventor y under construction and
eventually a glut of newly built units. Although developers heavily pre -sold the units, the common view was that most of the buyers were investors, who could flood the market with condos flipped for resale. O b se r ve r s s aw a l ow a m o u nt of shor t-term speculative investing, which seemed to mitigate the risk , but conditions could change and the economic outlook was even more uncertain than it is today. With development timelines averaging four to five years, the countdown to 2015 had begun. Fast-for ward to today and the construction scenario has been playing out as expected. The number of condos under construction peaked at close to 6 0,0 0 0 units in mid -2013, which has since led to the highest number
of completions the market has ever witnessed. In the 18 months to March 2015, roughly 31,5 0 0 units finished construction, with 21,0 0 0 completed in the past 12 months. All the while, market conditions have remained very stable. In fact, resale price growth is actually starting to accelerate. So what happened to the glut? So far, the condo market has benefited from two key factors: investors having the intent and wherewithal to hold onto their units and, perhaps more importantly, near perfect timing. Ur b anation’s track ing of tur nover on the Multiple Listing Service (MLS) system shows that just two per cent of new units registered in the past year have been resold, while 26 per cent were rented out. When including means of renting outside the MLS, the share July 2015 13
FEATURE
The total number of condos used as rentals has
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of new units rented was likely closer to 40 per cent. These figures align with CMHC’s latest rental market sur vey showing that the total number of condos used as rentals has grown by an average of about 20 per cent in each of the past t wo years, to total more than 9 0,0 0 0 units — about 3 0 per cent of the entire condo stock. Meanwhile, the purpose-built rental stock has remained stagnant, with 92 per cent of units now more than 35 years old. At the same time that condo rental supply has swelled, so has pent- up demand for new rental supply, as shown by the record volume of leases transacted. Looking at the demographic data from the past few years, it’s not hard to see why. Although it was unknown in 2011, due to lags in data reporting, net immigration totals for the Toronto Census Metropolitan A rea reached a record high of 9 4,0 0 0 persons that year. This led to a severe shor tage of rental housing, which saw purpose-built vacancy rates fall to 10 -year lows. What’s more, in 2012, the millennial generation drove population grow th in the 20 to 3 4 - year- old age segment — the largest source of rental demand — to a 30 -year high, of 2.4 per cent. The convergence of these demographic trends pushed condo vacancy rates even lower. So the anticipated supply arrived in 2014 at the most opportune time, as the market was yearning for new rental product. And even though demographic suppor t has waned somewhat over the past two years, steady job grow th and migration to the core continue to maintain high levels of rental demand. In fact, vacancy rates for condos even fell back to their 2012 level — 1.3 per cent — last year. Investo r s h ave als o b enefite d fro m mortgage rates declining again to historic lows, making it easier for them to hold their units. And while supply growth will remain strong this year as completions s t a y h i g h , t h e G TA re n t a l m a r ke t i s also expected to benefit from a rise in migration to the region as population flows are redirected away from western Canada. If timing is everything, it has certainly spared the Toronto condo market from the previously predicted glut. 1 S h a u n H i l d e b ra n d i s th e s e n i o r vi c e president of Urbanation Inc.
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ASSET LIFECYCLE
Windows of opportunity Residential windows have an anticipated service life in the range
BY JACK ALBERT
of 35 to 45 years but may require replacement in half of that time if problems develop. The timeframe is the same for new windows or
windows installed 20 years ago, and depends on the quality of the design, fabrication, and installation.
16 CONDOBUSINESS | www.condobusiness.ca
ASSET LIFECYCLE
A window replacement program can be an expensive endeavour that involves a s i g n i f i c a nt a m o u nt of w o r k a n d disturbance within owners’ units. To ensure a successful project and avoid p otential pit falls, the b o ard should answer the following four questions at the outset:
wood. Vinyl window frames typically have a better U-value (how well the windows insulate a building, preventing heat loss in the winter and heat gain in the summer) than aluminum, but aluminum is generally considered more durable. Many window products are tailored to MJW_halfPage_island_V2_BLEEDS.pdf specific markets, be it low-rise townhouses or 10 -storey brick buildings, and these
products may not be interchangeable. Vinyl windows are most commonly used for low-rise residential buildings and smaller window sizes. The entire frame is made of vinyl, which is great at resisting heat flow (low U-value, high R-value). However, vinyl windows can only be made so bigPM because of their 1 2015-03-12 12:02 flexibility.
1. Why are the windows being replaced? T here are a num b er of re asons to replace windows, including ongoing leaks, interior comfort, energy use, and aesthetics, to name a few. However, it is important to understand the reason for replacement to ensure that the work will address the problem. For example, leaks could be occurring within the window system, or at the window perimeters (or both). Window replacement won’t necessarily address leaks at the perimeters, as the leak may be more related to a deficiency in the surrounding cladding than the window itself. Even if the water is showing up at the window sill, it may be originating at the surrounding cladding and leaking through the window joinery. Therefore, C it is important to understand the cause and pathway(s) of the water infiltration Mto ensure the success of the repair strategy. Y Improvements to interior comfor t CM and energy per formance go hand in MY hand, and are common reasons for window replacement projects. This CYis particularly so in 19 60s or 1970s- era CMY buildings that have single glazing (one K pane of glass), non -thermally broken frames, and drafty windows. W ind ow replacement c an reduce heating and cooling energy use by as much as 10 to 20 per cent, depending on a building’s mechanical systems, glazing ratios, and surrounding wall construction. Improvements in comfort can be substantial, including window surfaces that are not cold to the touch in the winter; however, drafts can still occur with new operable windows and especially with sliders. 2. Vinyl or aluminum windows? M o dern window frames are most commonly constructed of vinyl or aluminum but can also be constructed of fibreglass or July 2015 17
ASSET LIFECYCLE
popular for mid to high-rise residential buildings. In addition to good structural/ strength proper ties that allow large s p ans , the m ater i al is dur a b le an d maintains a good appearance with time.
Wh e n u s e d i n n o n - c o m b u s t i b l e construction, vinyl windows may also be restricted by building code limits on the maximum wall area and allowable sp acing b et ween w ind ows. If vinyl w ind ows are to re p l a c e something other than vinyl windows, the designer should review their configuration to ensure the application is appropriate. Aluminum -framed windows are
3. What standards should the windows meet? For wholesale window replacement, new windows must comply with the
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current building code. In Ontario, that’s the 2012 Ontario Building Code (OBC). In particular, the windows will need to meet the new w ind ow st and ard A A M A / W D M A / C S A 101/ I.S . 2 /A 4 4 0, NAFS – North American Fenestration Standard / Specification for W indows, D oors, and Sk ylights, including the C a n a d i a n su p p l e m e nt . N A F S s et s requirements for the testing and labelling of the window products. Each window receives a label describing its performance rating; windows that do not have the label do not meet the building code. Windows that are located less than 1,070 millimetres above the interior finished floor may need to act as guards that protect people from falling out of the windows. Non- operable windows need to withstand guard loads that are outlined in Par t 4 and Par t 9 of the OBC. Essentially, windows cannot break if someone is leaning on them w here there is the p os sib ilit y th at the person could fall through. Plus, operable windows require limiters to keep them from opening all the way. The energy ef ficiency of windows has come a long way, but windows still typically have the worst thermal resistance (R - value) of the building ex terior. T he building code outlines thermal performance requirements for different areas (windows in nor thern O nt a r i o m u s t h a ve b et te r t h e r m a l performance than windows in southern Ontario). In general, window R -values are in the range of R 2. 3 to R3, depending on the geographic location. By comparison, the rest of the wall i s a r o u n d R 2 0 . To m e e t t h e s e requirements, windows need to be constructed with two panes of glass, have a non-metallic or thermally broken spacer, have a good thermal break in the frame, and have a low emissivity coating. However, be aware that not all spacers or coatings are created equal; the rush to develop new products has also pushed some less proven products onto the market. Don’t be shy to ask for project references where the product has been used before.
ASSET LIFECYCLE
4. How much interior disruption should residents expect? Window replacement can be disruptive for anyone in the unit during the work, but each window is typically completed before the end of the work day and the unit is handed back watertight. Finish painting or drywall repairs may require return visits. Furniture must be moved away from the windows and protected with drop clothes. It will speed up the work if residents can move the furniture before the contractor gets there, and then the contractor will install the protection. In many cases, the board will decide to engage security staff to be present during the work. Unlike repairs in the mechanical room or garage, window replacement work occurs in the personal space of each resident, which can be inconvenient and intrusive. It is important to have c o n t r a c to r s t h a t a r e f a m i l i a r w i t h working in occupied spaces that can return clean, completed units each day. In sum, it’s impor tant to establish the reason for undertaking a window re p l a c e m e nt p ro je c t to e nsu re t h e project fulfills its goals. Also important are selecting the right replacement product and ensuring the product and i t s ins t a ll at i o n m e et b u il d in g c o d e and other required standards. Finally, preparing residents for what can be an intrusive project is another critical step before getting started. A nswering these above questions will help start a window replacement project in the right direction and ensure that the windows selected will provide ef fective per formance over the full anticipated service life. 1 Jack Albert, P.Eng., is a project engineer with Read Jones Christoffersen Ltd (RJC). Jack is a member of the Ontario Building Envelope Council, RCI, CAGBC, and, as well, is an accredited Green R o of Professi o n al (G R P) and LEED Accredited Professional. Over the past decade, Jack has completed numerous projects involving window and roofing replacement, building envelope testing, a n d th e rm a l m o d e l i n g o f b u i l d i n g envelope assemblies.
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COVER STORY
BETTER KNO
COVER STORY
OW BILL 106 BY MICHELLE ERVIN
Bill 106, also known as the Protecting Condominium Owners Act, passed the first of three readings in the provincial legislature on May 27. If it becomes law, the proposed legislation would overhaul the Condominium Act and introduce the Condominium Management Services Act. The major changes, already widely reported, include a cheaper, faster means of dispute resolution than the courts and condo manager licensing. As industry experts continue to pore over the 159-page bill, we highlight 25 details, broken into the five major areas of reform. July 2015 21
COVER STORY
Note: Bill 106 may change as it progresses through the provincial legislature. And for now, the current Condominium Act (1998) remains in force.
2.
3.
4.
5.
Consumer protection 1. New unit owners often don’t fully understand what they’ve bought into — that there are community rules and monthly fees, as examples. The proposed Act would see the province create a condo guide which would educate buyers on their rights and obligations. Regulations would simplify and, to some extent, standardize disclosure statements and declarations. These documents contain important information but typically lack readability. The proposed Act would require developers to disclose any circumstances they know of or should know of that could lead to year two increases in common expenses, along with the amount of the expected increase. Plans change, but developers are obligated to disclose defined “material changes” to buyers. If a developer fails to meet this obligation, the proposed Act would give purchasers recourse to the courts, which could order the developer to comply and pay costs, damages and up to $10,000. The proposed Act would prohibit the increasingly common practice of developers leasing back or selling building components, such as party rooms, that would normally form the common elements. Exceptions might include energyefficiency equipment.
Dispute resolution 6. The Condominium Act Review identified the need for a cheaper, faster means of dispute resolution compared to the courts. The proposed Act would establish a Condo Authority Tribunal, which would mainly hear disputes between owners and corporations. 7. Regulations would set out what types of disputes could be referred to the Tribunal, but may include cases concerning access to records; enforcement of declarations, bylaws and rules; procurement processes and procedures for requesting an owners meeting. 8. Applications to the Tribunal would need to be made within two years of the dispute in question, unless the Tribunal granted an extension. The Tribunal could also reject or dismiss applications it deemed frivolous or vexatious. 9. Tribunal proceedings could occur in person, in writing, by phone, email or video conference; parties to a proceeding could be directed to alternative dispute resolution such as mediation. 10. The Tribunal could issue orders to comply, issue orders to pay another party’s costs, prohibit or require an action and award damages of up to $25,000. The only grounds to appeal Tribunal decisions to Divisional Court would be on questions of law.
EARLY INSIGHTS Condo lawyer Armand Conant, partner, Shibley Righton LLP, shares some early insights into the Protecting Condominium Owners Act, including what’s new and what the government may have missed.
Last-minute addition The proposed Act would prevent declarations, bylaws or agreements from restricting a corporation’s claims against a declarant without sign-off from the board elected after turnover. It’s a provision that came at the last minute, says Conant, in response to a recent Court of Appeal decision. The decision essentially lets a developer off the hook for civil claims for common element construction deficiencies by limiting his liability to only what’s covered by Tarion. The reasoning behind the decision was that, technically, the developer had disclosed this to buyers in the disclosure statement.
Missed recommendation The expert panel recommended getting rid of the owner-occupied board position, but it remains in the proposed Act (although modified to a certain degree). The position was designed to address the concern that
developers who retained possession of a majority of units had the voting power to stack condo boards. In practice, Conant doesn’t see developers stacking boards. In his view, the position creates an administrative headache at annual general meetings. But he concedes that it’s not a big game-changer either way.
( p aya b le by the c o nd o c o r p o ratio n), says C onant, but it wouldn’t only be funded by this fee. The authority would also be funded by user fees, which he says should help to discourage frivolous dispute - resolution applications. A lso, the m e d i a in c o r re c tl y re p o r te d th at developers will be contributing to the costs. This is not the case.
Potential pitfalls One question Conant has is: Who will be appointed to the Tribunal? The proposed Act would empower the Tribunal to make binding decisions for a broader range of disputes than contemplated by the expert panel, which, therefore, will require that appointees be adequately trained to make these kinds of decisions.
Common misconceptions Yes, the Condo Authority will be funded by a fee of about $1 per unit per month
22 CONDOBUSINESS | www.condobusiness.ca
What’s next The Canadian Condominium Institute Toronto Chapter's (along with the other Ontario chapters) and the Association of Condominium Managers of Ontario’s joint legislative committee will meet before the proposed Act goes to second reading in the early fall. If the committee identifies any serious issues, says Conant, it will make submissions to the government and appear and speak at the standing committee hearings.
COVER STORY
Finances 11. The proposed Act would require corporations to prepare an annual budget covering the operating and reserve fund accounts 30 days before the end of its fiscal year. 12. The proposed Act would require corporations to notify owners of annual budgets in a standardized form, along with a copy of the budget. Regulations would set a threshold and timeframe for boards to report off-budget spending to owners. 13. The proposed Act would allow boards to alter, improve or add to the corporation’s assets, common elements or services without notice to owners if they are complying with laws and regulations or shared facilities agreements. 14. The proposed Act would clarify the difference between “maintenance” and “repairs,” as well as who is responsible for them. Corporations would be responsible for maintaining and repairing their assets and common elements; owners would responsible for maintaining and repairing their units. 15. Regulations would set out how to determine the adequacy of reserve funds. A board would be required to consult an outside expert on whether it needs a new study before its next regularly scheduled study if its reserve fund level dipped below the regulated level. Governance 16. The proposed Act would make it easier to attain quorum (the percentage of unit owners who must be represented in person or by proxy to conduct business at owners meetings). The current 25-per-cent threshold would drop to 15 per cent on a corporation’s third attempt to hold a meeting. 17. The proposed Act would standardize proxy forms; it would also permit corporations to pass bylaws allowing voting by computer, email, fax or phone. 18. The proposed Act would standardize the form for requisitioning an owners meeting. Boards would have to respond in writing within 10 days of receiving a requisition. If a board rejected a requisition, it would have to specify why it believed the requisition did not meet the legislated requirements. 19. Regulations would set out a process for requesting and responding to requests for records. The Tribunal could order a corporation to pay a penalty of up to $5,000 for refusing, without reasonable excuse, access to records to a person who is entitled to it. 20. Responding to concerns about kickbacks, the proposed Act would prohibit a corporation from entering procurement contracts without carrying out a sealed-bid process. Management 21. The condo management industry is unregulated, meaning anyone can call themselves a condo manager. The proposed Act would establish the Condominium Management Services Act, which would require both condominium managers and condominium management providers to hold licenses. 22. The Condominium Management Services Act would require licensees to have a written contract to provide condominium management services to a client. 23. The Condominium Management Services Act would establish a registrar to handle complaints about licensees. The registrar could issue a written warning, require a licensee to take further educational courses and revoke or suspend a licence.
24. The Condominium Management Services Act would establish a discipline committee to hear cases concerning alleged code of ethics breaches. The committee would have the power to impose fines of up to $25,000. Licensees would have the recourse to an appeals committee. 25. Individuals found guilty of offences under the Condominium Services Management Act could be slapped with a fine of up to $50,000 and sentenced to up to two years less a day in jail. Management firms that committed offences under the Act could face a fine as high as $250,000. 1
ACMO TO CONSULT ITS MEMBERS Bill 106 would introduce the Condominium Management Services Act, which would regulate condo managers and management firms via licensing. We asked Catherine Murdock, president of the Association of Condominium Managers of Ontario (ACMO), for the association’s first impressions of the overall bill.
Listening mode Apart from welcoming the latest step towards manager licensing, a move the association has long advocated, ACMO is waiting to form an opinion on the proposed Protecting Condominium Owners Act. The reason, Murdock says, is that the association is in ‘listening mode.’ ACMO is asking its members to take a look at the proposed legislation and inviting them to attend a town hall meeting scheduled to occur on July 14 in Richmond Hill. Assuming the bill passes in its second reading this fall, the association will present what it has heard from its members at the committee hearings that follow.
Continuing role As proposed, the licensing of condominium managers and management firms would involve mandatory training. ACMO hopes to continue in its role as the educator for condominium managers, based on the program behind its Registered Condominium Manager (RCM) designation, “We’ve set the standard for 37 years in the industry, teaching people what they need to know to be a Registered Condominium Manager,” says Murdock. “I don’t want that to change.” That said, Murdock adds that ACMO will respect whatever the government decides to do, regardless of how it affects the association’s current role in the industry.
Looking ahead “[Condominium managers should] be prepared for fact that what they’re reading now may change,” says Murdock. The proposed legislation will be tightened up and the finer details will be filled in when the regulations are written. In the meantime, she says, “People should be thinking about what this means for their future.” Though the condominium manager’s job description is to manage the common elements, the job is much broader in reality, Murdock explains, and it’s important that managers are well-trained for the tasks they face. As an example, she points out that managers have to keep up with a flurry of changing legislation, such as the Accessibility for Ontarians with Disabilities Act — not just the Condominium Act.
July 2015 23
ASSET LIFECYCLE
Why regularly scheduled exterior care matters Most people k now t hat ca r
BY CATHY DOHERTY
ma intena nce is impor ta nt. T he mechanic reminds his customers when they ’re 2,0 0 0 kilometres late on their oil change. But what about the exterior care of townhome and high-rise condominium sites? Do boards and property managers know the lifecycle of paint and caulking and the value of meeting the maintenance timelines for those products? With all maintenance programs there is a three-fold benefit: First is identifying areas of possible deterioration early; second is reducing repair costs through early detection; and third is maintaining value. When a condominiums looks like it needs painting, or when interior leaks appear near its windows and doors, it’s probably too late; deterioration has already set in. Reserve fund studies are a great way for boards of directors and property managers to stay up to date on maintenance schedules. Done around every three years, the study reviews the corporation’s long-term projects, offering suggested timeframes for ongoing maintenance.
But what happens when an unexpected cost crops up? If investment interest in the site is strong, owners aren’t complaining and property values are holding, then the board may delay non-immediate maintenance such as repainting or caulking to keep costs down. Similarly to the reserve fund study, manufacturers suggest maintenance timelines. Each product, from paint to sealant, has a recommended life cycle; so does each substrate (see sidebar “Product lifecycle”). Paint serves two important functions: aesthetic appeal and physical protection. Most important to an exterior project is paint’s ability to act as a barrier to the elements while maintaining the real estate value. That thin skin of resin and pigment
24 CONDOBUSINESS | www.condobusiness.ca
protects an owner’s investment, shielding it from sun, wind, and rain. It’s not only the coating that provides protection of the substrates but the sealant as well. Caulking prevents cold drafts in the winter and bugs in the summer. What’s more, it helps keep moisture away from wood surfaces susceptible to rot or water damage, including mould from leaks. If a condominium’s maintenance program fails to consider the lifecycle of a coating, then minor issues can quickly bloom into major repairs. So what should a condominium corporation do if their current maintenance protocols don’t address peeling paint or deteriorating caulking before they become an issue? A contractor with a comprehensive
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ASSET LIFESTYLE
Product lifecycle Exterior painting Wrought iron – 2 to 3 years Wood – 5 to 7 years Stucco – 7 to 10 years High-rise – 10 to 20 years (depending on coating system) Exterior caulking – 15 to 20 years (depending on substrate and exposure) warranty program can help. Have the contractor complete regular paint inspections to identify areas that require repair. Then, using the contractor’s report, track changes in a year-over-year record of substrate conditions. Save money by designing the ‘touch-up’ maintenance program so defects such as corrosion are dealt with before extensive surface preparation and recoating work are needed. Skipping regularly scheduled repairs shortens the life cycle of a coating considerably. It takes more time, energy and money to make a damaged substrate presentable. Caulking inspections are just as important. Reserve fund studies generally include them
as a maintenance item, which again saves money in the long term. A condominium’s sealant may only amount to one per cent of the façade, but it’s integral in protecting 100 per cent of owners’ investments in a property. Condominium corporations spend billions of dollars on building envelope repair and replacement. Occasionally, paint and sealants fail prematurely. Many factors affect product longevity, including exposure to environmental elements, quality of workmanship, previous coatings, products used and methods of application. More often than not, rotten wood or rusting metal can be prevented by using
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the right product for each substrate, which is something a knowledgeable contractor can source. For example, high-rises require highmotility sealant that will weather the natural movement of the building. As another example, primer for galvanized metal is much different than primer for wrought iron. Using the wrong product will not only result in product failure but it will compromise the protection of the substrate, increasing the chances of higher repair costs. Other maintenance considerations include energy conservation and safety. The parking garage is typically the largest common element in a high-rise condominium and it is the primary entrance for most residents. Maintenance there should be a high priority. So why do parking garages typically look dark and dirty? White ceilings and walls will reflect light far better, providing a greater sense of safety for residents and reducing electrical lighting costs. Rusted and dripping pipes create additional costs for stain removal on walls and sometimes damage to cars. Further, many municipalities have regulations that require well-marked and maintained emergency exits and fire hose cabinets. A contractor can review these spaces to ensure a condominium meets changing safety standards. These types of improvements show residents and potential investors that a condominium has a well-run maintenance program. When developing a maintenance program, work with an advisor who provides a detailed proposal. The proposal should clearly outline a scope of work including surface preparation, surrounding area protection, specific product choices, and a warranty program for aftercare. This guidance can help boards and property managers save their corporations thousands of dollars down the road. Every board of directors and property manager wants to avoid premature deterioration of substrates. Keep up with a comprehensive maintenance schedule, including a ‘touch-up’ program, to extend the life of the coating and better protect the substrate. It will keep overall maintenance costs down, which in turn keeps property image and return on investment high. 1 Cathy Doherty is a member of Armourco S o l u t i o n s I n c: a p a i n t i n g a n d h i g h performance sealant firm based in Oakville, serving the GTA and Golden Horseshoe condominium marketplace for more than 2 0 ye ars. Fo r mo re info rm atio n, visit www.armourco.condos.
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GOVERNANCE
Comment: Consider the long-term costs of lowering maintenance fees
Maintenance fees are currently BY MEGAN MACKEY a hot topic of debate in condominium circles. On one side of the debate,
consumer advocates suggest that low maintenance fees are desirable because they increase property values and make condominium living more affordable. On the other side of the debate, industry professionals warn that artificially reducing maintenance fees could be catastrophic in the long run.
28 CONDOBUSINESS | www.condobusiness.ca
GOVERNANCE
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Consumer advocate groups pushing M for lower maintenance costs have Y begun publishing data about average CM maintenance costs across the GTA . Unfortunately, without a breakdown MY of fees, the share of maintenance CY fees put toward reser ve fund CMY contributions versus operating costs K remains unknown. Because each condominium is unique, a simple c alculation of maintenance costs per square foot says lit tle about a condominium’s l e v e l o f s e r v i c e s , e f f i c i e n c y, o r budgeting practices. Recent reports c r i ti c izin g hi g h m ainte n an c e fe e s have highlighted the shockingly high cost of p arking in condominiums. Parking in a temperature - controlled, well-lit, ventilated parking garage is signific antly more ex pensive than parking on an uncovered driveway at a house, where the resident has to shovel and scrape in the winter. As par t of their maintenance fees, condominium owners should expect to pay the cost of the services offered July 2015 29
GOVERNANCE
What has industry professionals concerned is the strategy of questioning
reserve fund studies line by line, and bringing engineers onside with “austerity.” in their building as well as the cost of maintaining the building. Recent news articles have p r o f i l e d t h e To y F a c t o r y L o f t s , a c ond ominium in d ow ntow n Toronto which recently cut maintenance fees by a virtually unheard of 30 per cent. T he p resi d ent of the b o ard c re d it s their low maintenance fees with increasing proper t y values at a rate which outpaces similar buildings. This suggestion makes perfect sense because, all other things being equal, most buyers would probably choose to own in a building with lower maintenance fees. Histor y suggests that those increases in market value may unfortunately not be sustainable.
H ow did the Toy F ac tor y L of t s condominium reduce its maintenance costs? Some of the reduction is due to well-thoughtout building adjustments, such as reducing hallway temperatures in the winter. Such cost saving initiatives should be applauded and encouraged as a way of keeping condominium living more affordable. W h a t h a s i n d u s t r y p rofe s s i o n a l s concerned is the strategy of questioning reserve fund studies line by line, and bringing engineers onside with “austerity." This suggests that boards are lowering reserve fund contributions by cajoling the engineer into reducing anticipated repair cost estimates. Although Miller Thomson has acted for many condominium corporations, it
has never encountered a condominium board complaining of surplus funds in its reser ve account, wishing past owners had paid lower fees. To the contrar y, the firm has helped many condominiums borrow money or sell assets to fund urgent repairs. Reserve funds should be funded conservatively. So what happens to a condominium with an under funded reser ve fund? When faced with large or unexpected repair bills, these condominiums m u s t f u n d re p a i r s t h ro u g h s p e c i a l as ses sment s . S o me c o n d o miniums c h o o s e to b o r ro w t h e m o n e y a n d have owners cover the monthly loan p ay ment s over a numb er of ye ars. Others levy the entire amount in a lump
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GOVERNANCE sum, leaving owners to finance the special assessment through their own resources. Some proponents of lower maintenance fees believe that paying repair costs through these t ypes of assessments is the way to go, and that condominium owners should expect to be assessed from time to time as repairs are needed. Miller Thomson disagrees with this proposal for several reasons. While some affluent condominium owners might be able to handle this financial u n c e r t a i n t y, m a n y c o n d o m i n i u m owners rely on their condominium’s budgeting and find unexpected special assessments dif ficult to c o p e w i t h . M o re w o r r y i n g l y, t h i s would permit board members to defer or ignore large repair projects, an d sell their uni t s b efo re othe r s re a lize t h e p re d i c a m e nt . I t wo u l d turn condominium ownership into a lottery, allowing some to benefit from low maintenance fees and artificially inflated market values at the expense of others who buy just before the building systems start to break down.
In 2011, warnings about the “hidden dangers” of low maintenance fees began to sur face. The condominium at 4 0 Panorama Crt. in Etobicoke was featured in newspaper articles at the time, although its situation was not unique. That high-rise building suffered from years of neglect due to unreasonably low maintenance fees. Unit owners repor tedly bullied board members and blocked attempts to raise fees. Successive boards of directors postponed repairs for years until, in the words of one judge dealing with the fallout, “the inevitable day when the chickens came home to roost.” By 2011, the building was 32 years old and much of the building’s infrastructure was past its useful life. Upon taking over, an administrator levied millions of dollars in special assessments in an attempt to cope with an operating deficit of $670,000 and to repair parts of the building which had been deemed unsafe, including the parking garage and balconies. Before this, 40 Panorama Crt. had enjoyed better resale values, which may have been buoyed by artificially low
maintenance costs. When the building’s desperate state came to light, resale values began to fall. One owner reported paying $124,000 for her three-bedroom unit in 2000. By 2011, similar units were selling for $110,000. A current (April, 2015) MLS search showed nine units for sale in the building, with three-bedroom units listed at $68,000, $79,900, and $99,500. T hose pushing for deep cuts to maintenance fees at all costs should consider the children’s fable of the ant and the grasshopper. The ant spends his summer working hard to prepare for the winter, while the grasshopper spends his time singing and scoffs at the notion that he should spend his days preparing for the future. In the end, the grasshopper finds himself left out in the cold when the harsh winter comes. The Condominium Act is designed to protect condominium owners from becoming the grasshopper, and board members should not try to circumvent it for short term gain. 1 Megan Mackey is a partner at Miller Thomson LLP.
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MAINTENANCE
Water-in, water-out: A system for preventing leaks and mould in public showers Until recently, gang (public) showers such as those that may be
BY DALE KEMPSTER
found in condo gyms and spas have been difficult to build correctly. It is important to make the entire room waterproof and integrate the waterproofing with the drain(s) in the f loor so no moisture can escape the system.
Any leaks or penetration of moisture into wall or ceiling cavities can lead to very costly damage to adjoining spaces. If the waterproofing is not done properly and thoroughly, it can lead to mould growth, which can damage a building’s reputation and ultimately hurt unit values. It is also important to build public showers in a way that reduces the need for maintenance or repairs so the space is available for the ongoing enjoyment of owners and tenants. The principles of building these public showers are the same as for personal showers, but the environment is more demanding and the cost of error is greater. Facility showers generally cover more area, receive higher volumes of water, and are used more frequently than personal showers. These conditions mean facility showers have less time to dry out between uses, so the moisture management system must perform exceptionally well. Thanks to advances in technology, the tile industr y has in recent years adopted a modern method of moisture management summed up by the mantra “water-in, waterout.” Many proper t y owners are now refurbishing gang showers that were constructed with the traditional method. To bet ter understand why, here’s an over view of the traditional and modern methods: Traditional method The traditional method was to use a shower pan liner, which needed to be applied on the substrate and tied into a two-stage drain. The liner also had to be wrapped up the wall at least 75 millimetres (three inches) above the curb on all walls in the shower, and over the curb extending down to the outside floor.
34 CONDOBUSINESS | www.condobusiness.ca
If this install method is used, it is highly recommended that a drainage membrane be applied over the shower pan liner. The use of a membrane allows the shower water to easily flow out through the lower weep holes located on the bottom of a two-stage drain. Otherwise, the porous mortar bed on the shower floor can hold the water for long periods of time, depending on the frequency of shower use, and allow mould growth. Another key component is a pre-slope, traditionally made of mortar (mixture of four to five parts sand and one part Portland cement) below the shower pan liner, which helps direct the flow of water to the drain and out of the structure. The challenges of this method become even greater in a floor with multiple drains or where the waterproofing from adjacent shower areas needs to be tied together. The traditional method also requires a solid backing on the walls, typically a type of cementitious backer unit (CBU), which is not sensitive to moisture, but also not waterproof. The key par t of this installation is that a minimum sixmillimetre vapour retarder (polyethylene) needs to be applied behind the CBU so that any moisture that may have passed though the CBU is captured and returned to the shower pan below, to eventually drain out through the drain. Failure to apply a vapour retarder, especially in high-use gang showers such as those found in gyms or spas, is a recipe for disaster. (Over time it will cause moisture to become trapped within the wall cavity, causing deterioration of the studs and mould.)
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L-R: A worker installs building panels with waterproof facer on both sides; an integrated bonding flange allows the waterproof membrane to be directly connected to the drain; and a finished shower area.
Modern method In the last decade or so, there have been some important advances in technology in the tile industry. They include the advent of waterproof membranes (meeting ANSI A 118.10) that are applied as a sheet to make surfaces waterproof, integrated bonding flange drains that have the waterproofing material connected on top of the drain, linear drains, and waterproof building panels. The new design mantra for tile showers is “water-in – waterout,” especially now that the waterproofing layer (applied by trowel or sheet) can be bonded directly to the solid backing, as close to the finished surface as possible. When the
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waterproofing layer is immediately beneath the tile, moisture has practically nowhere to sit and will typically evaporate out of the bond coat or run down the surface of the tile to the drain grate. The arrival of the integrated bonding flange — initially on point drains (traditional four-inch diameter drains with a grate over top) and more recently on linear/line drains — allows the waterproofing membrane to be tied into the drain at the surface where the tile is located. It is impossible to make a proper waterproof connection at the top of a two -stage drain. The use of linear drains provides a completely new option for facility showers. It is now much easier to create showers that have no curb
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to step over, as floors can be built with sl o p e s in o n e d ire c ti o n , r at h e r t h a n multiple slopes that intersect at a point drain. T his reduces total floor height and allows larger tiles to be used on the shower floors. These universal designs allow ever yone to use the facility, and maintenance is easier to perform, all with a much more modern design aesthetic. Element boards, also known as building panels, are made out of high - densit y ex p a n d e d o r ex t r u d e d p o l y s t y r e n e , typically with some type of cementitious or waterproof facer on both sides of the board. With thicknesses that range from 4.5 to 50 millimetres, these boards are extremely light, weighing only 0.48 kilograms per square metre (0.1 pounds per square foot) to 3.4 kilograms per square metre (0.7 pounds per square foot), depending on the panel thickness. They are strong enough to be used as the solid backing and supporting structure for applications such as walls, benches, shower curbs, countertops, etc. Now all of the materials used to build these large shower areas are waterproof before even being installed. The result is a modular system which lowers install time and easily ties into the bonding flange of the point or linear drain, creating a completely waterproof room before the tiles are laid. With the latest install methods, gang showers can be functional and easy to build. The “water-in, water-out� system, when properly constructed, eliminates the risk of moisture and mould issues. It also eliminates downtime to make costly rep airs. S hower areas built this way have a much longer life cycle, are truly sustainable, and add value to the overall property. 1
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DESIGN
A new Hollywood Squares-inspired entertainment unit conceals storage and houses speakers.
CASE STUDY:
A brand new condo gets an amenity makeover Panorama, a condo building located in the heart of downtown
BY ANITA WIKLÉM
Toronto, was only a couple of years old when its board called in Wiklém Design Inc. The board — a young, urban,
social group — wanted to make more of their two-storey party room. They also wanted an entertainment space where people would meet, greet and celebrate.
Initially, the 7th floor was designated as a games area with massage chairs and a lounge area with fireplace. There was a cafeteria and a catering kitchen hidden behind the scenes. A spectacular black granite and glass staircase led guests up to the 8th floor, where they found a bar, pool tables, washrooms and a walkout to a deck with a hot tub. However, when residents rented out the party room, other residents were cut off from accessing these amenities. The board hired the design firm to create a new bar on the 7th floor and relocate the lounge to the 8th floor. That way, the 7th floor area could be used for party rentals and the residents could still enjoy the lounge and have access outside.
38 CONDOBUSINESS | www.condobusiness.ca
B e c ause the b uil d in g w as new, i t s ex istin g d esi g n treatments were modern and upscale. Throughout the party room spaces were nice, warm, wood tones on the wall paneling and columns. Between the columns, there was a heav y chain material, which was stripped down for an urban effect. The rich dark brown hardwood floor was lightly restored to its original lustre. When it came to designing the new bar, the trickiest part was that there was no existing water supply or drainage on the 7th floor. The only option was to get the needed drainage through the two-storey gym on the 5th floor, which required special scaffolding to access the ceiling.
DESIGN
Quarter rounds replaced square table tops, taking the dining area from cafeteria-like to slick and versatile
Once the “science” was solved, the design firm set to work on the “art”. The vision was to embellish what was already in place and create an inviting entertainment area. The firm’s strategy was to work backwards, so that new design components would look like they had always been there. The black galaxy granite on the staircase was a beautiful starting point. As well, the design team kept the blue and azure colour palette for continuity. Plus, it worked so well with the rest of the building and its locale (blue from the sky; blue from the lake). This palette features prominently on the 8th floor’s new TV area wall, which is outfitted with a built-in “Hollywood Squares” entertainment unit. Its fabric squares house the speaker system while laminate conceals storage. The use of existing furniture and carpeting clearly defined the space as the new, inviting place to be. It said: have a seat, relax and hang out with friends. With an entertainment space comes the expectation of ambience. The design team added a punch of contrast to the blues with bright yellow accent furnishings and lighting. The original lighting was configured on a single circuit, meaning the lights were either on or off. The design team re-wired the circuits to make key areas, such as the dining room, controllable with dimmers. The sound system was also rewired from the kitchen to the new bar area for more central access and better sound control. For drama and grandeur, a 1960s-inspired chandelier was suspended over the stairs from the 8th floor ceiling. The design team also did an inventory of the existing furniture. Because it was new and of high quality, much of it was refreshed with steam cleaning and incorporated in the new floor plan.
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DESIGN
A new bar wraps around two structural columns, making it feel like it was always part of the structure.
A case in point: the table bases in the eating area were salvaged. The square table tops were broken and replaced with quarter rounds, facilitating dining configurations ranging from round to halves to S-shapes. The design team redid the floor plan with different groups of furniture and discussed the feel and flow with the board, based on how it wanted to use the space for dinners and other entertaining. This led to the inclusion of a costeffective buffet ledge for the dining room, which tied in with the new table tops. The design team also inserted a modern, black, glass fireplace running through the dining room at eye level.
The design team wrapped the new bar around two of the structural columns. This treatment was critical to making it feel like it was always part of the structure because the existing space already had different levels of drop ceilings. However, the design team ran into an issue with floor around the bar area. Feeding the water line and drain to the bar left an unsightly cut-out in the hardwood floor. The design team opted to create an inlay granite collar at the base of the bar — the same black galaxy from the stairs — lending prominence to the bar area. Thanks to the new plumbing, the space got a wet bar. The bar area was also back lit to show off the beverage wall.
After the interior design project was completed in the fall of 2013, residents packed the new party area for its opening night. The board has fulfilled its project goal, with the room now being used more than ever. It wanted an entertainment space where people would meet, greet and celebrate, and in the redesigned party room they do. 1
Anita Wiklém is the creative director and founding partner at Wiklém Design Inc. She has extensive experience and expertise in condominium refurbishment design.
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The ‘Facebook of condos’ A new app debuting in a Burlington condo promises to connect neighbours before they move in, provide pre-occupancy updates and act as a paperless repository for condo documents Bazinga!, a new app billed as the ‘Facebook of condos,’ will debut at Adi Development Group’s LINK Condo and Lofts in Burlington next year. Pre-occupancy, the app will give buyers access to the developer for construction updates and to their neighbours, allowing them to bond before they move in. Post-occupancy, the app will serve as a go-to resource for all manner of condo information — from condo board meeting dates and minutes to how to book amenities, get an extra key cut and submit maintenance requests. Bazinga! emulates the Facebook wall with a common thread where neighbours can ask questions, organize events, receive and talk about community news. Like Facebook, it also offers a way to send private messages. Plus, the app stores condo documents and lets residents submit forms remotely. “We’re always looking for ways to stay ahead of the curve, so we’re introducing the future of condo ownership by bringing Bazinga to all of our projects,” said Tariq Adi, CEO of Adi Development Group. “It’s the future of a connected community. For everything from making sure our construction team is delivering the best quality suites, to our future residents having access to their pertinent warranty documents, and stay connected with their neighbours and property management.” Though it’s being introduced at an Adi Development Group project, Bazinga will be available to any community, at no cost to residents. For more information, visit http://mybazinga.com 42 CONDOBUSINESS | www.condobusiness.ca
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