Canadian Property Management - July 2012 Edition

THE B.C./ALBERTA EDITION

Volume 20 No. 2

CANADIAN PROPERTY MANAGEMENT MAGAZINE

July 2012

green buildings awards

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OMA BC’s 2012 Green Buildings Gala Awards was held May 17 at the Fairmont Waterfront Hotel in downtown Vancouver. The event drew more than 200 industry members to honour outstanding environmentally friendly design and management.

Receiving the Earth Award was Library Square Tower managed by SNC Lavalin O&M. This year included the inaugural Energy Champion award which went to Chancery Place managed by Morguard Investments. The award recognizes a building that has reduced its energy consumption the most as a result of implementing energy efficiency upgrades and programs in 2011 with the help of the BOMA energy manager. Seven recently BOMA BESt certified buildings were also recognized at the Gala.

BOMA Earth Awards was added to the BOMA award program in 1995 to recognize environmentally conscious and efficient buildings. Now handed out across North America, it reflects the commitment by the commercial real estate industry to improving the built environment. v THE B.C./ALBERTA EDITION

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July 2012

From The editor

green options

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This issue also includes a look at green buildings, where best practices and policies continue to evolve. One of the most significant opportunities to make an impact on energy savings is retrofits to the existing building stock. Whole building retrofit programs represent a holistic approach that promises better efficiency and financial paybacks. On the new building front, green office design has changed dramatically and so has green cleaning practices. Read about it all in our green building section.

nterest in the environmental impact of buildings continues to grow. From single family homes to commercial properties, green options are being evaluated and implemented on personal and professional levels.

In the commercial real estate sector, BOMA BC has long been recognized as a leader in setting the standards for energy efficiency in buildings. The association also celebrates annually those buildings that incorporate best practices when it comes to environmental responsibility.

This year’s BOMA BC green buildings gala honoured two outstanding buildings. The Library Square Tower won the Earth Award while the Chancery Place was the inaugural winner of the Energy Champion award. Both are showcased in this issue along with recently certified BOMA BESt buildings.

We’ve expanded this annual awards issue to encompass articles focusing on issues of interest to BOMA BC members. Always a hot topic is property taxes plus learn how BOMA BC is supporting the commercial real estate industry in implementing energy conservation and sustainability practices.

Cheryl Mah Managing Editor

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CANADIAN PROPERTY MANAGEMENT MAGAZINE

Vol. 20 No.2

July 2012

Publisher Dan Gnocato dang@mediaedge.ca Managing Editor Cheryl mah Graphic Design TANG CREATIVE INC.

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British Columbia/Alberta Sales DAN GNOCATO Tel: 604.549.4521 ext. 223 Contributing Writers Teresa Coady Evan Cooke Lorina Keery Daniel Klemky Mike Sawchuk Paul Sullivan

President KEVIN BROWN Published and printed (four times yearly as follows: April, June/July, Sept/Oct., Dec./Jan.)

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IN THIS ISSUE...

BOMA BC Awards.............................................................................. 1 BOMA BC ......................................................................................... 6 Green Buildings................................................................................ 10 Legal................................................................................................ 15 In the Headlines................................................................................ 16 2

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boma bc awards

EARTH AWARD Library Square Tower managed by SNC Lavalin O&M

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esigned as part of the Library Square Project in downtown Vancouver, the Library Square Tower anchors the corner at Georgia Street and rises 20 storeys above the street level plaza. Constructed in 1995, it is one of the crown jewels of the Public Works portfolio and has been at the forefront of green building maintenance practices and energy conservation.

The tower houses 13 different federal tenants all with different operations and different security requirements. Implementing energy conservation projects is challenging because of all the security requirements.

Upgrades include the replacement of old ballasts with electronic ballasts, incandescent lamps with CFLs and spotlights in lobby with LED lights. The run time for the HVAC equipment as well as the light schedule have been fully optimized.

To reduce water consumption, low flow flush values have been installed along with electronic water meters for monitoring.

A green purchasing policy is in place in all departments and ongoing controls ensure there are no PCBs, CFCs or asbestos products used in the building.

Two future projects include a free cooling unit to reduce the run time of the large A/C unit and the installation of a small cooling tower to be used in the off season (instead of running the large cooling tower).

In 1999, the Library Square Tower received a BOMA BC TOBY award. In 2009, it received 2009 BOMA Go Green certification and in 2011 it achieved BOMA BESt Level 3 certification. v

EARTH AWARD FINALISTS Douglas Jung Building 401 West Georgia Sinclair Centre THE B.C./ALBERTA EDITION

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July 2012

boma bc awards

boma energy champion Chancery Place managed by Morguard Investments

Seven recently BOMA BESt certified buildings were recognized at the Gala (in alphabetical order): 580 Hornby, West Pender Property Management Ltd. 890 West Pender, West Pender Property Management Ltd Fraser Health Authority, Wesgroup Properties Kamloops Government Of Canada Building, SNC-Lavalin O&M Inc. New Federal Building, SNC-Lavalin O&M Inc. Northwoods Business Park, GWL Realty Advisors Inc. Spruceland Shopping Centre, Bentall Kennedy (Canada) LP Companies that participated in BOMA BESt during 2011: Bentall Kennedy (Canada) LP The Cadillac Fairview Corporation Dodwell Realty Ltd. Dundee Realty Management (BC) Corp.

Gateway Property Management Corporation GWL Realty Advisors Inc. Hunter McLeod Realty Corp.

Jawl Properties Ltd. Morguard Investments Limited Oxford Properties Group Redcliff Realty Management (BC) Inc. Simon Fraser University SNC-Lavalin O&M Inc. Tonko Realty Advisors (BC) Ltd. Wesgroup Properties WorkSafe BC

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he inaugural BOMA Energy Champion recognition was open to buildings that participated in BOMA BC’s Energy Management Program last year. It goes to the building that has reduced its energy consumption the most as a result of implementing energy efficiency upgrades and programs in 2011 with the help of the BOMA energy manager.

Located in downtown Vancouver, Chancery Place implemented a buildingwide lighting retrofit which resulted in 63,000 kilowatt hours of actual energy savings, an overall four per cent reduction in electricity use. This is the equivalent to powering approximately six homes in B.C. for an entire year. v

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BOMA BC

Efficient Buildings, Efficient Business

By Lorina Keery and Daniel Klemky

“We do not inherit the earth from our ancestors; we borrow it from our children.”

— Native American proverb.

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nefficient buildings have negative impacts on the environment, building owners and managers, and tenants. They may have uncontrolled operating costs, energy use, and GHG emissions, or an uncomfortable work environment. Now more than ever there is an increased focus on optimizing the performance of buildings and reducing its overall energy consumption.

At BOMA BC, we recognized early on the importance of energy efficiency and optimal performance of commercial buildings. In 2003, we developed the BOMA Go Green standard which outlined best practices property managers and owners can adopt to better manage

July 2012

and improve performance of their buildings. Since then, the program has been adopted nationally under the BOMA BESt brand and today there are more than 1,400 buildings certified across Canada. We also recognized that education and knowledge of building operations staff can greatly affect the overall performance of a building. The BOMA e-Energy training program was then developed which is designed to teach building operations staff how to identify and implement energy savings measures in their buildings. It too is now a national program that is delivered by other BOMA locals across Canada.

Despite our efforts with BOMA BESt and e-Energy training, it became 6

apparent to us that small and medium sized buildings were still not engaged in energy efficiency or sustainability practices. How were these companies going to improve their buildings efficiencies if they didn’t have the capacity or budget to hire an energy manager for their facility? We decided to start providing our small to medium sized members the opportunity to work with an energy manger or business energy advisor through the BOMA EMP (Energy Management Program). The program’s key purpose is to support the commercial real-estate industry in implementing energy conservation and sustainability practices through education, awareness and direct assistance. To date THE B.C./ALBERTA EDITION

BOMA BC the BOMA EMP has helped members receive more than $500,000 in incentives for energy efficiency upgrades.

In addition to this, the energy cost savings associated with these measures are proposed to be around $300,000 for 2012. Energy efficiency projects that were implemented include: numerous lighting retrofits, installation of occupancy sensors that control HVAC and lighting, and installation of variable speed drives on cooling tower fans and major air handling units. The main benefit of having access to the BOMA EMP is that you have a dedicated person helping you identify and implement energy efficient projects.

We will help BOMA members understand their current energy consumption, provide guidance on what projects you can do, when to do them, how much the projects will cost, and most importantly how much energy and money can be saved.

We sought out support from BC Hydro and LiveSmart BC to help establish the BOMA EMP. All three organizations see the value of having the energy manager and business energy advisor roles within the association and strongly believe in the work that is being done to reduce energy consumption. By having the program run through the association, businesses that do not have the capability to hire an energy manager are now able to utilize one at minimal cost and effectively implement energy efficiency projects. Because of this BOMA members are seeing reductions in their energy bills and overall operating costs, building environment is more comfortable, and members can promote their sustainability practices because of their commitment to energy reduction.

While saving BOMA members money on their energy bills is a top priority, we are also very passionate about reducing our GHG emissions and helping members become more sustainable. We feel that keeping this at the core of our program will help it be successful for years to come.

It is not only about how much money is saved, it is also about being responsible and accountable for our actions and impact on our environment. v

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Lorina Keery is energy and environmental manager and Daniel Klemky is business energy advisor at BOMA BC. They both deliver the BOMA EMP. Lorina assists building owners and managers while Daniel assists small business owners and tenants.

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July 2012

boma bc

property taxes Your Biggest Real Estate Expense By Paul Sullivan

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he property tax bill on your property is by far the highest expense. Often the property tax is equal to all of the other operating costs combined. The amount of your property tax bill is impacted by political forces, as well as market forces.

funded through property taxation. Clearly, the variability in the other revenue sources will have an impact on a council’s agenda as the increase in the property taxes must be kept at a reasonable level. So clearly, the first major political influence on the property tax bill is the size of the municipal budget.

The second political influence is the amount paid by the residential property classes versus the commercial property classes. In B.C., this is known as the “Fixed Levy” approach to tax distribution. In 2012, the City of Vancouver shifted 0.3 per cent of the tax budget from the business classes to the residential classes. The “Fixed Levy” distribution is now at a level where residential property types are paying 53.3 per cent of the tax budget and commercial properties are paying 46.7 per cent of the property tax budget. Sadly, only 7 per cent of the properties in the City of Vancouver are commercial properties, and consume less than 24 per cent of services provided. Effectively, this means that commercial

Political Influences Each year, city council in any given city makes two major decisions with regard to how large your property tax bill will be. The first decision is the size of the municipal budget. Keep in mind that under the Provincial Legislation municipalities are required to run a balanced budget.

There are a number of revenue sources for municipalities such as permit fees, licensing fees, parking charges, ticketing, water charges, etc., however, with any one of these items declining in a given year, the shortfall automatically is recovered through property taxation. With this in mind, approximately 60 — 65 per cent of a municipal budget is July 2012

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boma bc properties are paying at least $2 per every dollar of services consumed. To further aggravate this problem, the relative number of residential properties to commercial properties is growing every year. With this growth comes higher costs being borne by relatively fewer and fewer commercial properties. Clearly, this is not a sustainable way to fund a municipality.

Market Forces

so as to not over recover based upon the growth in assessed values. But, if the average property changed 20 per cent and your individual property increase in value by 30 per cent, you will automatically receive a tax increase of some 10 per cent, being the amount of value change in excess of the average for the class.

The only caveat to the above is the impact of land averaging and changing land values on your taxable value. This is for the City of Vancouver and a very long conversation, given how complicated the averaging policy is.

property taxes need to be reviewed on an annual basis to ensure that your assessed value is both fair and equitable.

In B.C., we have a system of ad valorem taxation, which means the assessed value of your property determines the amount of taxes to be paid. Properties are assessed based upon their value at July 1 st every year. Either tenants or owners can appeal their assessments and argue for the lesser of market value, or comparable assessments (equity). B.C. has an efficient and effective appeals system and appeals with merit can generally be solved by March 15th in the taxation year.

The change in your assessed value does not automatically translate into a change in property tax. Assuming for the minute that the municipal budget did not change, if all commercial properties increase in value by some 20 per cent, then mill rates (tax rates) would be reduced by 20 per cent

Conclusion

Given the magnitude of this cost, property taxes need to be reviewed on an annual basis to ensure that your assessed value is both fair and equitable. Business owners do not vote, hence, it is important to make your views known to both Mayor and council in your municipality that you have concern about the level of business property taxation and the sustainability of the tax distribution model in your communities. v Paul Sullivan is a partner at Burgess, Cawley, Sullivan & Associates Ltd. He is also BOMA BC chair of the taxation committee.

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July 2012

green buildings

whole building retrofits

By Cheryl mah

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he majority of the aging commercial building stock in Vancouver is more than 30 years old and in need of upgrades and replacements if they are to continue to perform efficiently.

Building owners have traditionally pursued energy efficiency retrofits in piecemeal fashion but whole building retrofit programs represent a holistic approach that promises better efficiency and financial paybacks.

A panel of industry experts discussed the opportunities and challenges of whole building retrofits at a breakfast seminar presented by Light House and BOMA BC. Lorina Keery, energy and environmental manager, BOMA BC moderated the seminar held at the Four Seasons Hotel in downtown Vancouver. She set the stage for the discussion by providing an overview of the aging building infrastructure in Vancouver and how upgrades to original systems have been commonly deferred.

Aging buildings combined with aggressive provincial greenhouse gas emission (GHG) targets mean “demand side management programs are increasingly more important in retrofitting buildings,” she said.

Ledcor’s Bryce Conacher explained that new buildings only make up 1.5 per cent of the market across North America so the “real opportunity out there is in the existing buildings” to achieve significant energy savings.

As director of business development of Ledcor Renew (a division that focuses on deep retrofits), he discussed the potential in the market and outlined their approach to retrofit projects. Some target goals include energy efficiency, IAQ, emissions reductions, space optimization and tenant productivity.

“In our approach, we look for optimization opportunities… How can that building be re-commissioned in such a way that it’s better utilized?” he said.

“We measure, monitor, report and verify results.”

What is different in Ledcor’s approach, noted Conacher, is “we’re asking the

Oxford Properties utilized a variety of strategies at the Guinness Tower to improve the building performance.

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green buildings owner to tolerate a 10 year horizon on financing” with a commitment to deliver an IRR (internal rate of return) of 9 per cent or better.

“We look at aggregating a number of projects into a single project upfront and help owners to figure out how to finance that to deliver on that promise,” he said, adding optimization as an investment can result in a better annual return than some traditional types of investments such as small cap stocks. “What we’re trying to do is present one process, one build, one team and manage that effort on behalf of the owner.”

He cited a case study of a building in Toronto that is undergoing a $20 million retrofit where the IRR will be around 17 per cent. “Instead of trying to improve your bottom line through acquisition as many of the larger portfolio holders are doing, we’re trying to show that you don’t need to take your money into another building. Instead there are opportunities to mine your existing assets,” said Conacher.

Opportunities available in existing buildings were also emphasize by Jim MacKenzie, vice president of facility services, Colliers International.

He pointed out that building retrofit and paybacks need to be planned with investment horizon in mind so it’s important to first understand an owner’s investment strategy for a property. Is it for future redevelopment, short term or long term?

“The real key to understanding that is so we don’t want to be going in proposing very costly, major capital upgrades to someone who is on a short term financing plan for the building and… won’t necessarily see that return,” he advised, adding upgrades need to be balanced within existing capital budget and amortization schedules.

Colliers represents about 125 different owners in Metro Vancouver and found that owners are interested (through a survey) in reduced vacancy, reduced operating costs and energy efficiency.

“They want a total asset management plan so that they can manage and reduce their capital outplay,” said MacKenzie, adding landlords are commonly recovering the capital costs of upgrades.

He also discussed various challenges which include cradle to grave (technology becoming obsolete early), variable frequency drives (failures), low flush toilets (increased maintenance) and tenant leases (tenants benefit from cost savings).

“Tenant engagement is huge…making sure they are educated in advance of a project is quite important for success,” he added.

With a number of new office building towers about to start, he’s noticing a trend in Vancouver.

“As those towers come online, they’re going to be energy efficient, they’re going to be sustainable and they’re not going to have a lot of amortized capital in their operating costs versus existing stock that is. So that becomes a bit of a detractor in trying to attract and retain tenants. Something we need to watch for,” he said.

In his presentation property manager Steve Patrick discussed Oxford Properties’ Sustainable Intelligence program which set a goal (in 2008) of reducing GHG emissions from properties directly owned and managed, on a per square foot basis, by 20 per cent by the year 2012. That goal was achieved ahead of schedule, he said.

Patrick went on to highlight various strategies and projects undertaken by Oxford to improve the building performance of the Guinness Tower, located at West Hastings and Burrard Street. Projects included chiller replacement, high efficiency motor program and occupancy sensors.

Submetering as a strategy was discussed but the panels acknowledged that retrofitting an existing building with submetering equipment, although ideal, is prohibitively expensive.

Finally, Paul Gogan, principal of B+H Bunting Coady, provided an architectural perspective by focusing on the recent re-cladding of First Canadian Place, the tallest office building in Canada located in Toronto. The project addressed a number of issues including liability. A marble slab that fell from the building’s 50th storey prompted the recladding project. The tower’s 45,000 marble panels were replaced with new ones in glass with no disruption to tenants.

“We see opportunities where we can learn from our past mistakes,” he concluded. v

…building retrofit and paybacks need to be planned with investment horizon in mind…

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July 2012

green buildings

green office design trends

By Teresa Coady

Ritchie Bros Auctioneers headquarters

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m2. We are also seeing buildings reducing their carbon emissions footprint by powering and cooling with green-power (from hydro or renewable sources) and by heating with closed systems that do not emit GHGs. Another interesting trend in energy system design is the introduction of district energy systems and fluid based energy storage which help to balance the peak daytime load of the office with the peak evening load of the residence. As well, buildings and the cities they operate in, are becoming “smart”, with systems set up to optimize the energy use and reduce the overall energy requirements — these are the next generation of the old DDC system.

Most systems these days are water based, and many are switching to the very efficient chilled beam system or radiant floors to moderate the temperature of the office building efficiently. These water based systems are coupled with very effective natural ventilation strategies, as air is used less for heating and cooling and more for ventilation only. When air is used for heating and cooling large volumes are required — in this case it is useful to investigate the earth tube which runs below the building and pre-tempers the air to 55 degrees. When air is only for ventilation, the trend is toward slim ventilation strips through the walls which allow air to enter at very low velocity over a pre-

he definition of “green” has undergone a transformation in the past decade. Originally, we looked mainly at whether a building was energy efficient and healthy to be in. While those are still important considerations today, we have progressed a great deal recently, and the developer now has to provide premises that are a generation improved from the designs of the late nineties. It is important to know what the key changes are, if buildings are to successfully compete on the increasingly international market.

The biggest shift is the focus on actual green — most cities now mandate green roofs and green space at the base of the building. Increasingly we are seeing the addition of green walls, including edible walls, community gardens at the plaza roof and intermittent floor levels, and balconies completely enclosed by vertical green screens. There is a lot of research that supports the notion that people are more productive and creative and quicker to heal when sick when exposed to vibrant gardens.

Buildings today have also shifted their focus from randomly gathering points relating to certification programs like LEED, to meeting rigorous performance targets around the absolute energy demand load of the building as expressed in KWhr/

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green buildings

Surrey District Education Centre

mended, but living walls with water flowing, and fountains are beginning to be introduced to make the spaces come alive.

There are many changes occurring on the social side of the office building design as well. More and more, people are beginning to see the place they work as their community, and amenities are a key component to a successful workplace. These include spaces for exercise, and for relaxation. As well, the design of the workplace needs to accommodate what is known as “multigenerational” design. This means that some spaces will be open and collaborative, some private, some team based.

Also, accommodation needs to be made for toddlers, as people bring children to work, and often expect their workplace to include access to daycare. People are working longer, and the modern office must accommodate those with limited range of motion, and reduced vision.

Green office design has evolved dramatically recently and new buildings being put up all over the world now are healthier, more efficient, and more attractive than ever before.

As the world moves toward greater urbanization, there will be increased demand for these high quality spaces to house the next generation. v

tempering coil. This natural cooled and ventilated system works well in the office building, and is being developed for the high rise. Air flow windows are a combined assembly system that does the same thing, without affecting the building envelope.

The modern office building is using a new generation of material, and is simplifying finishes to reduce or eliminate many traditional finishes like carpet, wall covering, tile, drywall, and acoustic ceiling. We are seeing the use of concrete and wood and steel exposed for durable and attractive interiors. This trend is reducing building cost, while making the buildings cleaner and healthier. The envelope systems of office buildings are changing with next generation curtainwall systems and triple glazing being the norm in many cities now. Fewer windows with better frames and larger sealed units are the trend of the future. Sunshades and tinted glass are no longer required as a result of the performance of much of the high performance glazing systems now available. Energy modeling has resulted in shifts in the building insulation levels. Combining this with the higher performance glazing, it is possible to be more efficient with space planning as everyone inside is comfortable even if they sit close to the glazing in the summer or the winter. In many buildings now the open planning and much quieter systems has led to a space that is uncomfortably quiet, and next generation acoustic controls are introduced to make the space seem “bright” enough. Artificial white sound is not recom-

The envelope systems of office buildings are changing with next generation curtainwall systems and triple glazing being the norm in many cities now.

THE B.C./ALBERTA EDITION

Teresa Coady is the president and founding partner of B+H BuntingCoady Architects, one of Canada’s leading sustainable architectural design practices.

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July 2012

green buildings

green cleaning practices

By Mike Sawchuk

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gram is in place. This helps reduce waste, improves storage, cuts inventory carrying costs, and reduces cleaning errors, such as when a cleaning chemical is used for the wrong purpose. And with proper green cleaning practices, the ultimate goal of a green cleaning is possible: to operate facilities that are clean, safe, and healthy at the lowest possible costs.

t one time, the belief among many facility managers and building owners was that green — whether it be green cleaning, green design, or another environmentally friendly undertaking — usually meant added costs. And it must be admitted that a decade or more ago, it did cost more to build and operate a green facility.

However, according to Bill Balek, director of environmental services for ISSA, the worldwide cleaning association, there is documented evidence from a variety of sources that significant financial benefits can be realized when green cleaning and related programs are in place. Among these are savings on energy, water, chemicals, and waste generation and removal, as well as reduced illness and injury to both building users and the custodial staff.

Balek uses the University of Georgia (US) as an example of the potential savings. Serving more than 35,000 students and with a campus that includes nearly 400 buildings, the university typically spent more than $1.3 billion on cleaning chemicals alone. But with a green cleaning program in place, “the University of Georgia spends about $200,000 for cleaning chemicals,” says Balek. “In addition, it has reduced the number of cleaning chemicals [it uses] from more than 15 to only three.”

Other benefits Balek identified that facility managers may appreciate is that green buildings tend to have lower vacancy rates than non-green buildings — apparently tenants and prospective tenants identify green buildings as more efficiently operated. Further, commercial facilities that are LEED certified have an average rental premium of 4.5 percent when compared to non-certified buildings.

Some studies also indicate student performance goes up in green-cleaned schools, absenteeism of students and staff goes down, and overall worker morale improves. Suffice it to say, green cleaning has proven its benefits in several ways. Nevertheless, facility managers may want more insight and clarification regarding the following green cleaning issues: • What practices are key to a green cleaning program?

•W hat new green cleaning innovations and technologies are emerging?

•H ow can facility managers select a green cleaning service provider?

Green Cleaning Innovations It is believed that the next step in green cleaning is the use of bio-based products, especially bioenzymatic products. These cleaning chemicals are typically made of agricultural byproducts, making them very sustainable. Bioenzymatic cleaners contain specific enzymes and “good” bacteria, which actually digest soils. These have been found to be very effective for eliminating odours because they essentially eat odour-causing contaminants.

We should note that bio-based products are not new. The first bioenzymatic product was patented in 1932. Bio-based products historically have been used in a variety of cleaning tasks, from washing laundry to cleaning contact lenses, from the early 1970s. However, what is new is that advanced technologies have made them far more effective and cost effective, and some are now green certified.

Selecting a Green Cleaning Service Provider Selecting a green cleaning contractor has become considerably easier in recent years with the development of the Cleaning Industry Management Standard (CIMS) certification program developed by ISSA. Cleaning contractors that have been CIMS certified are taught, among other things, to deliver consistent quality services. However, the CIMS program also includes a green component. Not only are contractors instructed on green cleaning practices and how to use green cleaning products, certification ensures that contractors provide their customers with what they need to secure points under the LEED for Existing Buildings: Operations and Maintenance (LEED-EBOM) green building rating System, while helping to green the facility in related building operations as well.

Future Directions The professional cleaning industry in North America is expected to become greener and more sustainable in years to come. Conventional cleaning products and the old ways of doing things are simply no longer what you, the industry’s end customers, want. While there may not be a specific tipping point as to when this change occurs, it is now well established as the direction both the professional cleaning industry and facility management are moving. v

Green Cleaning Practices When first introduced, many managers and service providers believed that green cleaning simply meant using proven-green (certified) cleaning chemicals. However, green cleaning is far more than this. It involves using vacuum cleaners with advanced air filtration systems, low-moisture carpet extractors and floor machines, microfiber, as well as highly concentrated green cleaning chemicals. Concentrated products go further, last longer, and cut down on packaging and transport, helping to make them more sustainable and cost effective.

Additionally, and as highlighted with the University of Georgia example, many facilities find they can reduce the number of cleaning products they use overall when a green cleaning proJuly 2012

Mike Sawchuk has been involved with the green and professional cleaning industries for more than 20 years. He is vice president and general manager of Enviro-Solutions, a leading manufacturer of proven-green cleaning chemicals based in Ontario, Canada. www. enviro-solution.com 14

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Legal

Avoiding Misrepresentation By evan cooke

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sentation and truth should be relatively clear where facts are concerned, although problems may arise when a factual statement subsequently becomes untrue. However, as long as the agent had a rational basis for making the statement, as well as an honest belief in its truth at the time it was made, a finding of negligent misrepresentation should not result from a change in circumstances. Most importantly though, if important factors change in the middle of negotiations, it is crucial that the potential tenant be notified before they sign a lease in reliance on incorrect information.

n the current economic climate, many landlords are having difficulty attracting and retaining good commercial tenants, but landlords and agents must be careful not to “oversell”. Property owners and their agents may attract liability if they overstate the benefits of the premises on offer, or the complex at large. The line between truthful representation and negligent (or even fraudulent) misrepresentation can be blurry, so caution and access to the most current information are essential to a landlord avoiding liability.

Because the success of a commercial tenant’s business is heavily dependent on the complex in which the leased premise is located, statements about the complex’s condition, customer flow and other tenants are crucial to a potential tenant’s decision to enter into a lease. If a tenant’s business does not ultimately succeed, they may sue the landlord for misrepresenting the benefits of the complex, and for enticing the tenant to lease a premise that was not, in fact, suitable for their intended use.

A British Columbia case from a few years ago saw a tenant abandon a valuable long-term lease in a new complex (without penalty) and successfully sue the landlord for damages. That tenant established that the landlord’s agent had exaggerated the level of commitment of several key potential-tenants (who never ultimately signed leases) and had represented that certain common area improvements would be built, though they never were.

Because the property agent was deemed to be the landlord’s agent in law, his “negligent misrepresentations” resulted in liability to the property owner. Provided they are acting within their scope of authority an agent’s actions will bind their principal (the landlord in the leasing context). This allows an agent to enter into contracts for their principal, but also can make the principal vicariously liable for the agent’s bad actions.

Fraudulent Misrepresentation A less common form of pre-contractual misrepresentation is “fraudulent misrepresentation,” which involves dishonest intention on the part of the person making the representation, or a recklessness as to the truth. Findings of fraudulent misrepresentation are mercifully rare in legitimate business circles, but reckless statements (or the intentional omission of key details) can lead to embarrassing public accusations of fraudulent conduct.

To prove fraudulent misrepresentation in a British Columbia court action, a tenant would have to establish: • a representation of fact was made to the tenant, by the owner or agent; • the representation was false; • the agent or owner making the representation knew it to be false, or was reckless as to the truth of the statement; • the representation was material and induced the tenant to alter its position on the lease (or sign the lease); and • the tenant suffered loss.

Statements about a landlord’s specific future intentions (for example, for planned renovations) can result in findings of fraudulent misrepresentations, if the agent or owner did not actually have the specified intention when the statement was made.

Negligent Misrepresentation The most common form of pre-contractual misrepresentation is “negligent misrepresentation.” If a tenant abandoned a lease and was seeking to avoid paying damages to the landlord, or if the tenant wanted to claim damages from the landlord, it could allege that it was induced into signing the lease by negligent misrepresentations. In order to succeed in the courts of British Columbia, the tenant would have to prove that: • a “duty of care” existed between the tenant and the landlord (or the landlord’s agent), meaning the landlord owed the tenant an obligation to be accurate and truthful; • the representation was made and was untrue; • the landlord or agent acted negligently in making the misrepresentation; • the tenant relied on the negligent statement, and it was reasonable for them to do so; and • the reliance on the misrepresentation was detrimental to the tenant in the sense that damages resulted.

In order for a statement to constitute a negligent misrepresentation, it must be a factual statement. Statements of opinion or intention will not lead to legal consequences in the context of negligent misrepresentation. The line between misrepreTHE B.C./ALBERTA EDITION

Avoiding Risk To avoid claims of misrepresentation, landlords must ensure their agents are aware of the dangers of over-selling, and must ensure there is a rational basis for all representations made regarding the premises on offer. Further, landlords must ensure that their agents are sufficiently informed of the key property details so they may negotiate accurately and effectively — and within the limits of their actual authority.

Finally, a well drafted “entire agreement clause” in a lease will generally (not in every instance) ensure that any pre-contractual representations made by the landlord or its agent will not bind the landlord or support a claim of misrepresentation. While landlords and agents should not “over sell”, and should correct any misinformation provided to the tenant, they should also ensure that their form of lease expressly excludes the applicability of any pre-contractual representations, oral or written. v

Evan Cooke is a senior associate at Borden Ladner Gervais LLP in Vancouver. Kristen Balcom, a law student, helped draft this article. ecooke@blg.com 15

July 2012

in the headlines New Chair Brian McCauley has been appointed chair of the Urban Development Institute, succeeding Intracorp president Don Forsgren. McCauley is president and COO of Concert Properties. He has served on the UDI board for the past five years and has been involved in the urban development industry for more than 20 years. As new UDI chair, he intends to strengthen the organization and build on the strong legacy left by his predecessors.

Tallest Tower

New BOMA BC President

Century Group has unveiled plans for “3 Civic Plaza” — the tallest tower south of the Fraser and home to the first mixed-use hotel and residential project in Surrey City Centre.

Standing at 517 feet (50 storeys), the tower will be the fifth tallest in the Lower Mainland.

3 Civic Plaza is a partnership between Century Group and Surrey City Development Corporation (SCDC) and will further Surrey’s vision for the creation of a vibrant and lively transit-oriented City Centre. The project will feature a premium boutique hotel called the Civic Hotel. Surrey’s first new highrise hotel in two decades, Civic Hotel will feature 160 guest rooms and include meeting spaces. Approximately 330 residential units will be located above the hotel.

Derek Page, director, real estate management, Oxford Properties Group was elected the new president of BOMA BC for the 2012/2013 term. Joining him on the board are: Rob Kavanagh (1st vice president), vice president, asset management, BC region, GWL Realty Advisors Inc.; Susan Dodsworth (2nd VP & treasurer), regional director, Pacific, SNC-Lavalin O&M; Colin Murray (past president) vice president leasing, B.U.K. Investments Ltd.; and Paul LaBranche, executive vice president, BOMA BC.

Anchor Tenant British Columbia Investment Management Corporation (bcIMC) has announced that Golder Associates Ltd. has finalized a lease agreement to anchor its new LEED Gold office building at Broadway Tech Centre. Golder will take occupancy of three full floors, totaling 135,000 sq. ft. of office space, in January 2015. The new 196,000 sq. ft. fourstorey office building, the eighth building at Broadway Tech Centre at 2920 Virtual Way, is currently under construction.

Baker Appointed Brian Baker has been appointed president and chief operating officer of Melcor Developments Ltd. He will succeed Ralph Young, who will continue as chief executive officer. Baker will be responsible for Melcor’s growth, operating excellence and financial performance. He will continue to have direct responsibility for Melcor’s operating divisions: community development, property development, investment properties and recreation properties.

July 2012

Carbon Tax Impact

Firth Moves On

British Columbia’s carbon tax shift has lived up to expectations, reducing fuel use in the province by nearly 15 per cent, according to a report released by Sustainable Prosperity, a green economy think tank.

B.C. now has the lowest per capita fuel use of any province in Canada, passing Ontario, which was consistently ahead of B.C. for low fuel use before the introduction of the carbon tax, according to the study, titled British Columbia’s Carbon Tax Shift: Its Effects after Four Years. The report, which examines the impact of the policy as it marks its four year anniversary on July 1st, found that between 2008 and 2011, per capita use of petroleum products, such as gasoline and propane, dropped 15.1 per cent in B. C. During the same period, there was a 1.3 per cent increase in fuel use across the rest of the country.

Madison Pacific Properties president and CEO Alan Firth has tendered his resignation in order to pursue other interests. He will continue as acting president and chief executive officer until the company concludes a search for a qualified replacement to ensure a smooth transition.

Largest Single Development A proposal for a four million square foot site on 28 hectares of vacant former industrial land at Duck Island in Richmond would be the city’s largest single development ever. The plan submitted by Jingon International Development Group would include six high-end hotels, retail, entertainment and office space.

Up to $4 billion worth of new development is currently being proposed for Richmond, including 16 hotels totalling 2,500 rooms, 12,000 new residential units, 1.5 million square feet of office space and 2.5 million square feet of retail space.

16

New Name Triovest Realty Advisors Inc. represents a national, integrated, commercial real estate investment and management company with more than 56 million square feet of assets under management and a combined asset value of almost $10 billion.

Triovest is the new identity for the merger of Redcliff Realty Group and Tonko Realty Advisors Ltd. The two companies became unified last October when The Coril Group of Companies announced the acquisition of Redcliff; they had acquired Tonko in June 2011.

Allied to Buy Allied Properties REIT has entered into an agreement to purchase the Burns building in Calgary for $13.1 million. Located on the north side of the Stephen Avenue Mall, just west of Calgary City Hall, the Burns Building (237-8th Avenue S.E.) is comprised of 78,781 square feet of GLA, 66% of which is leased. Allied plans to release the property to tenants consistent in character and quality with its tenant base.

Given the strength of the Calgary office leasing market, Allied expects to complete the re-leasing within 15 months.

THE B.C./ALBERTA EDITION