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Regulatory Directions & Detours POST KYOTO STRATEGY2012 ENERGY TRENDS POLICING OFFSHORE CORRUPTION INCOME DECLARATION RULES RENTS & INFLATIONARY FEAR SPACE TO RECHARGE
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editor’snote BaCKing out of a promise almost always looks bad and invariably disappoints someone. Even if the UN Framework Convention on Climate Change (UNFCCC) is a flawed process interminably mired in bickering, that doesn’t account for the significant shortfall in Canada’s performance. In keeping with what the UNFCCC’s newly forged Durban Platform for Enhanced Action euphemistically calls an “ambition gap,” Canada has withdrawn from the next phase of the Kyoto Protocol, scheduled to begin in January 2013. In large part that’s because, as a country, we are so off-target in meeting the carbon emissions reduction pledge established for the first five-year phase that comes to an end on December 31. Well, that’s the thing about promises. It’s best to be sincere and realistic when you make them. Critics accurately note that the current government has thus far implemented few measures that would help to curb carbon emissions as promised. However, the government that initially signed the Kyoto agreement also proved to be something of a poseur projecting a contrived image to its world audience. Regulatory Update may seem a somewhat ironic label for this issue’s feature story on Canada’s post-Kyoto path. Federally, emitters still haven’t received much detailed direction about how they will contribute to the newly ascribed national goal of reducing greenhouse gas (GHG) emissions to 17% below 2005 levels by 2020. However, some provincial regulations – notably, a newly adopted cap-and-trade regulation in Quebec – are in place. Nor has Canada bailed entirely on the overarching UNFCCC agenda. Although we’re on the sidelines for the 2013-17 round of Kyoto – the period when binding targets will be invoked – Canadian negotiators did help forge the new Durban platform, and Canada remains among the 194 national signatories that have agreed to at least keep talking about a reduction strategy that could take force in 2020. Meanwhile, Kyoto sets a precedent as the first time Canada has withdrawn from an international agreement it had previously signed. “To do what we did, after we actively sat at the negotiation table as a member in Durban, is quite shocking,” asserts Laura Zizzo, a Partner in Zizzo Allan Climate Law LLP. Yet, perhaps such behaviour merely reflects a pattern of artifice from the beginning. Elsewhere, Regulatory Update looks at the potential consequences of running afoul of one the commitments Canada continues to keep – the United Nations Convention Against Corruption. As Paul Sharp reports, a Canadian company recently convicted under the Corruption of Foreign Public Officials Act received a penalty 50 times greater than the crime. Namely, a $9.5-million fine for proffering a bribe worth $190,000. The cost of public officials making promises that they have little appetite to keep? It might take a couple more generations to tally that one. Barbara Carss barbc@mediaedge.ca
VOL. 26 NO. 8
JANUARY 2012
Editor-in-Chief
Barbara Carss barbc@mediaedge.ca
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TEL: (416) 512-8186 • FAX: (416) 512-8344 Published and printed (eight times yearly as follows: Feb./ Mar., April, May, June/July, Sept., Oct., Nov., Dec/Jan.) by MediaEdge Communications Inc. 5255 Yonge St., Suite 1000, Toronto, Ontario M2N 6P4 (416) 512-8186 Fax: (416) 512-8344 e-mail: circulation@mediaedge.ca Subscription Rates: Canada: 1 year, $55*; 2 years, $100* Single Copy Sales: Canada: $12* Outside Canada: US 1 year, $80 International $105 *Plus applicable taxes Reprints: Requests for permission to reprint any portion of this magazine should be sent to info@mediaedge.ca. Copyright 2012 Canada Post Canadian Publications Mail Sales Product Agreement No. 40063056 ISSN 0834-3357 Authors: Canadian Property Management Magazine accepts unsolicited query letters and article suggestions. Manufacturers: Those wishing to have their products reviewed should contact the publisher or send information to the attention of the editor. Sworn Statement of Circulation: Available from the publisher upon written request. Although Canadian Property Management makes every effort to ensure the accuracy of the information published, we cannot be held liable for any errors or omissions, however caused. Printed in Canada
4 January 2012 | Canadian Property Management
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contents
MC10
Focus: Regulatory Update 8 Carbon Reduction Targets: Canada’s withdrawal from the Kyoto Protocol does not negate its commitment to the UN Framework Convention on Climate Change. 12 Revised Tax Rules: Finance Department rescinds tax deferral flexibility for the partners of a corporate partnership or joint venture. 14 Bribery Penalties: Canadian and extraterritorial laws come into play for companies conducting business abroad. 28 Restrictions on Rent Increases: Unexpected regulation sets a 2.5% upper limit for rent increases in Ontario’s rental housing.
Articles: 17 Accommodating Electric Vehicles: Charging units can be easily installed in most existing garages. 18 Key Management: Tags and software track control key access, while monitoring time and place of use. 20 Instantaneous Hot Water Heating: Technology reduces energy consumption for production and storage. 22 Building Profile Among Peers: Industry communication forums provide tools for networking and gaining recognition. 26 Energy Management Forecast: Rising costs and growing awareness will drive investment in efficiency in 2012.
Departments 4 Editor’s note
6 January 2012 | Canadian Property Management
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regulatoryupdate
Practicality Outpa Protracted Diplom
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paces omacy
Emissions Reductions Still in Sync with Real Estate Interests By Barbara Carss
Canada’s withdrawal from the Kyoto Protocol is tantamount to a struggling student dropping a course she is destined to fail. With about one year left in the first commitment period, nationwide carbon dioxide (CO 2 ) emissions reductions are far from the pledged target of 6% below 1990 levels, which would equate to 2,792 megatonnes (Mt) in the fiveyear period between January 1, 2008 and December 31, 2012. Federal projections released in May 2011 pegged Canada’s likely output at about 805 Mt above that mark. A c c o r d i n g l y, M i n i s t e r o f t h e Environment Peter Kent has cited the $14-billion price tag to purchase the necessary carbon offsets to make up that deficit among the justifications for Canada’s exit. N ev e r t h e l e s s , g r e e n bu i l d i n g proponents foresee little impact on the real estate sector’s energy efficiency and emissions reducing efforts since Ky o t o h a s a lwa y s b e e n l a rg e l y symbolic and peripheral in owners’ and managers’ decision making process. Industry insiders point to the market and other levels of government as more significant influences. “Most of the action is in the provinces in terms of their regulatory powers, and with the regulatory powers of their agencies like the Ontario Energy Board. That’s where most of the regulatory traction and l e a d e r s h i p h a s b e e n ,” o b s e r ve s
Michael Brooks, Chief Executive Officer of the Real Property Association of Canada (REALpac). “I think real estate is very much in the mainstream where all the m o m e n t u m i s h a p p e n i n g n ow,” maintains Ian Jarvis, President of the energy management firm, Enerlife Consulting, and a past chair of the Canada Green Building Council. “It’s driven as much by cost savings and the other levels of government and some of the large corporations that are taking a leadership role as by the threat or reality of national regulations. It all just adds to the mix.” N o t a b l y, B r i t i s h C o l u m b i a introduced a carbon tax in 2010. Rates are currently $25 per tonne of CO2 equivalent and slated to increase to $30 per tonne on July 1, 2012. B.C. is also one of four Canadian provinces – along with Quebec, Ontario and Manitoba – collaborating with California in the Western Climate Initiative, a plan to implement a regional emissions-and-offsets trading program. In December 2011, Quebec became the first Canadian province to adopt a cap-and-trade regulation, which requires large-scale emitters of greenhouse gases (GHGs) to report and reduce CO 2 output and conveys the flexibility to buy and sell carbon credits on the market. Meanwhile, Ontario’s Green Energy and Green Economy Act is intended to promote
conservation and renewable energy production, which should bring about emission reductions. Even so, outsiders unfamiliar with Canada’s constitutional division of powers are likely to focus on the bigger picture. “It shows the federal government’s lack of a plan in dealing with climate change,” asserts Laura Zizzo, a Partner with Zizzo Allan Climate Law LLP. “For our clients, I think there’s also a concern about lack of certainty and consistency from jurisdiction to jurisdiction.” “The lack of leadership troubles me,” Brooks concurs. “There is so much we could be doing as a country.” SIDELINED, NOT OUT Canada now departs the remaining group of 35 countries committed to binding emissions reduction targets for the period beginning January 1, 2013. However, Canada remains party to the UN Framework Convention on Climate Change (UNFCCC) and is among the 194 signatories to the new Durban Platform for Enhanced Action, which aims to negotiate a reduction strategy to take force in 2020. “Whether or not Canada is a party to the Kyoto Protocol, it has a legal obligation under the Convention to reduce its emissions, and a moral obligation to itself and future generations to lead in the global effort,” Christiana Figueres, Executive
Canadian Property Management | January 2012 9
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regulatoryupdate
The Canadian government is now focused on the goal of reducing GHGs to 17% below 2005 levels by 2020.
KEENERS COEXIST WITH BACK HALF OF BELL CURVE
Commercial real estate might be typified as a keener among Canada’s business sectors even though it will not be in the first round of emitters targeted in the federal government’s proposed sector-by-sector approach to reducing greenhouse gas (GHG) emissions. Whereas emissions are invariably tied to production in many industrial sectors, particularly oil and gas, real estate operators are more likely to realize cost savings and possibly gain the ability to command higher rents as they implement strategies to reduce emissions. These differing market factors undeniably shape the various industries’ interests and willingness to change. Beyond the economic incentive, however, green building specialists point to a shifting mindset about how savings and performance improvements are prioritized, accomplished and sustained. “Until 2005, energy intensity across all buildings in Canada was relentlessly going up. Now it’s going down,” reports Ian Jarvis, President of Enerlife Consulting and a past chair of the Canada Green Building Council. He credits programs like the Real Property Association of Canada’s (REALpac) 20 x ’15 campaign and supporting energy use normalization methodology for replacing vague, high-level targets with a consistent, accessible scale for measuring and comparing performance. In addition to setting and promoting the goal – to reduce consumption in commercial office buildings to no more than 20 equivalent kilowatt-hours per square foot per year by 2015 – a network of related interests are providing and increasingly building resources the industry can draw on. For example, Toronto’s recently launched Race to Reduce program brings together commercial building owners, managers, tenants and their service providers in an effort to decrease energy consumption by 10% over a four-year period. The program was developed by Greening Greater Toronto, an offshoot of the Greater Toronto CivicAction Alliance, a coalition of the region’s business, labour, community based, academic and government sectors, which will mark its 10th anniversary this year. “When CivicAction was first established it didn’t even have an environmental element to it,” Jarvis recalls. “Now it’s an important part of the momentum, and certainly those who are immersed in this can feel that it’s really taking off. What they are doing with Greening Greater Toronto is absolutely world-beating. Does it matter that the federal government isn’t at the table? I don’t think so” “But all these things do influence each other,” he adds. “It becomes easier and easier for governments to act when the world is already moving in that direction.” Alternatively, governments and regulations come into play for those emitters who aren’t on the “world-beating” side of the equation. “How do we bring up the back half of the bell curve?” muses Michael Brooks, REALpac’s Chief Executive Officer. “That’s what we all struggle with.” More information about Greening Greater Toronto can be found at www. civicaction.ca/greening-greater-toronto. More information about REALpac’s energy benchmarking and normalization methodology can be found at www. realpac.ca/?page=RPEBP1Intro.
Secretary of the UNFCCC, stated in response to Canada’s official pullout in early December. “Industrial countries, whose emissions have risen significantly since 1990, as is the case for Canada, remain in a weaker position to call on developing countries to limit their emissions.” Nationally, the Canadian government is now focused on the goal of reducing GHGs to 17% below 2005 levels by 2020. That would be an output of 607 Mt in 2020, which is 124 Mt less than the projected emissions for 2012. This target is to be accomplished through a sector-by-sector approach beginning with the highest-volume emitters, but there are still few details about potential associated regulatory measures. The commercial real estate sector’s status is equally vague. Although commercial/institutional buildings collectively contribute approximately 13% of national emissions, few would be captured in proposed cap-and-trade schemes. Similarly, Quebec’s newly adopted cap-and-trade regulation is geared to entities with annual emissions no less than 25,000 tonnes of CO 2 equivalent, which are primarily in the industrial and electricity sectors. On the flipside, potential for revenue generation from the sale of offsets may have stalled somewhat. Quebec’s regulation, which comes into force in January 2013, will initially apply to about 75 potential purchasers – hardly the makings of a flourishing market. The pool of potential participants in the Western Climate Initiative has also shrunk as six of the U.S. states that initially signed on in 2007 have now dropped out. “Canada could have achieved its target under Kyoto through a cap-andtrade system that would have opened up the opportunity to create and sell offsets in a compliance market,” Zizzo says. “One outcome of the withdrawal from Kyoto for commercial real estate owners is a missed opportunity to be engaged in the carbon market. A compliance market would be a lot more valuable than a voluntary market.” AMBITION GAP & STALEMATE The commercial real estate sector’s status as a prospective seller of offsets also sets it somewhat apart from those more primarily responsible for Kyoto’s so-called ambition gap – that is, the p l e d g e d ve r s u s a c t u a l e m i s s i o n s
10 January 2012 | Canadian Property Management
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regulatoryupdate reductions over the first commitment period. Canada has drawn criticism as a dropout, but it is certainly not the only underachiever. “The overall consensus both in Canada and around the world is that Kyoto has done very little to affect change and drive carbon reductions by individual nations toward a collective goal,” says Meirav Even-Har, Project Manager, Sustainability Initiatives, with the Building Owners and Managers Association of Canada and a delegate and panelist at last fall’s UNEP-SBCI (United Nations Environment Programme-Sustainable Buildings and Climate Initiative) Symposium on Sustainable Buildings. “It was anticipated that not much progress would occur in Durban and a s t a l e m a t e wo u l d b e r e a c h e d a s developed and developing countries point fingers at who should reduce and how much.” The emerging Durban Platform does mean that the discussion will at least continue. Ultimately, Canada may simply be a temporarily sidelined
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Canada has drawn criticism as a dropout, but it is certainly not the only underachiever.
participant, while other notable absentees from Kyoto such as the United States and large developing countries could be part of a more encompassing and enforceable agreement. Prospects for a timely solution seem slim, however, given the pace of progress since the UNFCCC was established in 1997. “The process survived in Durban. So that’s positive, because it could have died,” Zizzo reflects. “But I think the real action on climate change is going to be happening outside the UN.
That could be at the municipal level, the regional level or the national level, but it’s not going to be as easy as looking to the UN to plot the way forward.” zz For more information about the UN Framework Convention on Climate Change, see the web site at http://unfccc.int. Quebec’s regulation to enable a cap-andtrade system can be found at www.mddep. gouv.qc.ca/changements/carbone/ reglementPEDE-en.pdf.
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regulatoryupdate
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Corporate Partnerships Lose
Tax Deferral Option Differing Year-Ends Offer No Advantage By Armando Iannuzzi Traditionally, the separate partners in a corporate partnership have had some flexibility to defer tax. If the fiscal period for the partnership ended after individual partners’ fiscal years, the partners could then defer taxes on their share of the partnership’s earnings until their following fiscal year-end. New tax rules have now halted this practice. Effective for corporate taxation years ended after March 22, 2011, a partner (limited to those entitled to more than 10% of the partnership’s income or loss, or assets of the partnership upon its dissolution) must include current partnership income allocation and a so-called stub-period accrual in its taxable income for its fiscal year. The stub-period accrual represents a notional accrual of partnership income for the portion of the corporate partner’s taxation year that falls after that partnership’s last fiscal year-end. The amount is generally pro-rated for the number of days in the stub period. This can be determined formulaically or can be a designated arbitrary amount. During the first year of application, these new tax rules could result in significant incremental partnership income for some corporations, but transitional relief has been provided. In general, the partner will be allowed to spread the first stub period income accrual over five tax years: 0% in
2011; 15% in 2012; 20% in 2013 through 2015; and 25% in 2016. There will also be a one-time opportunity for the partnership to change its fiscal period to align it with that of its corporate partners. Intent to do so must be filed by the earliest tax filing deadline for the first tax year ending after March 22, 2011 for any corporation that is a member of the partnership. Transitional relief is also applicable to any incremental income realized due to a change in fiscal period. Nevertheless, this option may not be b e n e fi c i a l w h e r e t h e i n d iv i d u a l corporate partners have differing taxation year ends. The new rules also affect joint ventures. Taxpayers who have entered into joint venture arrangements will no longer be able to compute income as if the joint venture had a separate fiscal-period end. Given the potential issues that could arise with joint v e n t u r e s c o n s i s t i n g o f s ev e r a l participants with varying year ends, the Canada Revenue Agency has indicated that it will also issue an amended administrative position in the near future to potentially deal with such issues. zz Armando Iannuzzi is a Tax Manager with KRP Kestenberg, Rabinowicz Partners LLP. For more information, see the web site at www.krp.ca
12 January 2012 | Canadian Property Management
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regulatoryupdate
Investigators Scrutinize Business
Conduct Outside Canada
Domestic and Foreign Laws May Apply By Paul Sharp
International efforts have resulted in a number of major anti-corruption conventions, including: the Organization for Economic Cooperation and Development Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (OECD Anti-Bribery Convention), which requires ratifying countries to take concrete steps to combat bribery, including criminalizing the bribery of foreign officials; and the United Nations Convention Against Corruption (UNCAC), which came into force in December 2005. As part of Canada’s commitment under the OECD Anti-Bribery Convention, the federal government passed the Corruption of Foreign Public Officials Act, S.C. 1998, c. 34 (CFPOA). The CFPOA makes it illegal to bribe a foreign public official to obtain or retain an advantage in the course of business.
Specifically, section 3(1) of the CFPOA states: 3. (1) Every person commits an offence who, in order to obtain or retain an advantage in the course of business, directly or indirectly gives, offers or agrees to give or offer a loan, reward, advantage or benefit of any kind to a foreign public official or to any person for the benefit of a foreign public official (a) as consideration for an act or omission by the official in connection with the performance of the official’s duties or functions; or (b) to induce the official to use his or her position to influence any acts or decisions of the foreign state or public international organization for which the official performs duties or functions.
INVESTIGATIONS & COMPLIANCE As of October 2011, the Department of Foreign Affairs and International Trade has stated that there are 22 ongoing investigations under the CFPOA. Historically, Canada has only prosecuted three cases under the CFPOA, of which only one is currently before the courts. In the recent case involving Niko Resources Ltd., the defendant, through its subsidiary company in Bangladesh, had provided a luxury SUV valued at approximately $190,000 to the then Bangladeshi State Minister for Energy and Mineral Resources in order to influence his dealings with the local subsidiary. After pleading guilty to one count of bribery under section 3(1)(b) of the CFPOA, the defendant was fined $9,499,000 and placed under the supervision of the court for three years to ensure compliance with the CFPOA. Some critics have pointed to Canada’s perceived inaction in investigating corruption related offences, but recent Royal Canadian Mounted Police (RCMP) activity suggests that Canada is getting serious about prosecuting these types of offences. After Canada’s ratification of the UNCAC in October 2007, the RCMP Commercial Crime Program created two anti-corruption teams, based in Ottawa and Calgary, to deal with offences under the CFPOA. Accordingly, corporate compliance is necessary to prevent costly fines, possible imprisonment and bad press. While, historically, bribery and corruption may have been a commonplace aspect of business in some parts of the world, businesses that maintain this worldview are taking a significant risk. In order to effectively shield themselves from liability, Canadian businesses need to ensure that they are in constant compliance with the CFPOA and take active steps to ensure that their employees are aware of the CFPOA. Businesses should produce internal manuals and procedures for compliance with
14 January 2012 | Canadian Property Management
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regulatoryupdate PROCEDURES TO PREVENT BRIBERY KEY TO COMPLIANCE The U.K. Bribery Act is extraterritorial, meaning that, in addition to U.K. individuals and businesses, it will also apply to a non-U.K. entity that “carries on a business, or part of a business, in any part of the United Kingdom.” Guidance from the U.K. Ministry of Justice (MOJ) advises that the courts will ultimately interpret what it means to carry on business in the U.K., but it suggests that a London Stock Exchange listing by a foreign company would not in itself be a sufficient connection to constitute carrying on business in the U.K. Nor would having a U.K. subsidiary. However, while these factors by themselves may not constitute sufficient connections, it would be prudent to view these as relevant indicia that may form part of a larger fact-dependent inquiry. Under the Act, businesses can continue to offer corporate hospitality such as taking clients to sporting events, picking up dinner tabs and providing for reasonable travel and accommodation. With respect to public officials, the MOJ Guidance advises that businesses may also provide “reasonable” hospitality or promotional expenditure. There will clearly be a higher level of scrutiny applied when public officials are involved versus private clients (to whom the Act also applies). Relevant factors in assessing whether corporate hospitality is actually a covert bribe include: lavishness; connectivity of the expense to a legitimate business activity; and whether or not the hospitality or expenditure was concealed. Facilitation payments are unofficial payments made to public officials in order to secure or expedite the performance of a routine or necessary action. Such payments remain prohibited under the Act. This is an important contrast to the Canadian Corruption of Foreign Public Officials Act (CFPOA) and the U.S. Foreign Corrupt Practices Act (FCPA), which permit such payments. Under the Act, a business is liable for bribes made by “associated persons” which are intended to benefit the business. The MOJ
Guidance acknowledges that there may be a broad scope of persons who constitute associated persons, including contractors, suppliers and joint venturers. The degree of control that a business has over the associated person will likely be determinative of whether a person is an “associated person”. Additionally, the MOJ Guidance suggests that control will usually extend to contractual counterparties. It is unlikely that a business will be in a position to control persons in the supply chain beyond the counterparty; however, MOJ Guidance notes that businesses may request that counterparties impose similar anti-bribery measures on those down the supply chain. Under the Act, a business is strictly liable for failures to prevent bribery. However, a business will not be considered to have committed an offence if it can demonstrate that it implemented “adequate procedures” to prevent bribery. For small businesses that face few bribery risks, minimal procedures may be adequate. Conversely, for large businesses operating in regions or industries where bribery is common, the content of what constitutes “adequate” is likely to be much higher. The MOJ Guidance suggests six principles to help businesses assess their anti-bribery policies and procedures, including: proportionality; top-level commitment; risk assessment; due diligence; communication; and monitoring and review. Businesses that are subject to the CFPOA, the FCPA and the U.K. Act should consider implementing policies that comply with the stricter of these standards. Karim Mahmud (karim.mahmud@blakes.com) and Michael Kariya (michael.kariya@blakes.com) practice with Blake, Cassels & Graydon LLP’s Business Group in London, U.K. The preceding article is excerpted from Blakes Business Bulletin, May 2011. For more information, see www.blakes.com.
the CFPOA and any similar legislation of any foreign jurisdiction in which they conduct business. For example, both the American Foreign Corrupt Practices Act and the British Bribery Act (see side bar) have extraterritorial reach. A multinational corporation operating in different jurisdictions may have to be compliant with numerous, overlapping anti-bribery and corruption laws. Regardless of what particular laws may apply, it is crucial that employees know that the bribing of foreign officials is prohibited, and what types of behaviour would constitute an offence under the CFPOA. Employees should be required to report to senior management on any corruption encountered while conducting business, and businesses should get to know the people they work with on the ground in foreign jurisdictions. Finally, businesses should keep a record of any possible violations of the CFPOA discovered but not yet reported to the Canadian government. zz Paul Sharp practices with Borden Ladner Gervais LLP in Toronto. The preceding article is reprinted from BLG’s White Collar Crime Bulletin, December, 2011. For more information, see www.blg.com. Canadian Property Management | January 2012 15
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parkingretrofit
Charging into a Green Future Garages Adapt to Accommodate Electric Vehicles By Heather Van Slyke
Demand for electric vehicle charging stations is expected to grow as more electric cars hit the market and the streets. Proactive property and garage management firms are getting ready to respond. That means retrofitting existing garages and parkades to accommodate new green energy technologies. The first such installation in Canada is now in place in the underground garage of Toronto office building. The four new charging stations at 2345 Yonge Street can deliver a full-cycle charge to an electric vehicle within four to eight hours. For the building’s managers, it’s part of a larger package of retrofits and innovative green technology upgrades aimed at reducing energy costs and promoting sustainability. “Installing electric vehicle charging stations helps demonstrate our support for developing the electric vehicle market, our commitment to reducing the energy costs of our tenants and our commitment to a cleaner environment,” says Gerry Gotfrit, the President of Stockton & Bush. “It also allows us to continue to support the needs of our tenants and what their customers demand.” The retrofit project caused little disruption, requiring less than one day to complete. Typically, the wall mount or pedestal charging units can be installed in just a few hours. The units can be either hard-wired for a more permanent installation or simply plugged in for a more flexible installation. zz Heather Van Slyke is Marketing Manager, Canada, for GE Energy Industrial Solutions, suppliers of electrical vehicle charging technology. For more information, see the web site at www.geindustrial.ca. Canadian Property Management | November 2011 17
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security
They’re Where You Left Them
Controlling and Tracking Key Use By Rob Plume
Proximity cards are increasingly the business norm for identification and to gain access to areas ranging from the elevator to the server room. This kind of access control has CARMA_CondoBusiness_01-19-2009_CS2--F.pdf gained popularity for numerous reasons. It is secure, 2/3/09 it leaves5:41:35 an auditPMtrail and – because most solutions are now IP-based – deployment can be quick and efficient.
Keys can be more problematic. They are easily and frequently lost, which translates into added costs to re-key locks and potential liability when it can’t be determined who last had the missing key or when it was actually lost. In commercial and multi-residential properties time and resources must be devoted to monitoring and controlling key use – i.e. identifying a visitor, determining the reason for the visit, ensuring the keys are returned and maintaining records, all while the concierge service or front-of-house security team are busy with other responsibilities. Key management solutions can help ensure that only authorized users have access. Typically, keys are permanently tagged with a fob, which also provides an audit trail. Essentially, keys are held in an “intelligent” cabinet that releases the keys only to assigned personnel. This provides a permanent record of every key taken along with identification of keys not returned. Access can be gained via user-defined PIN codes, access control swipe cards or biometric recognition such as fingerprint, hand or face recognition. Associated software provides reporting and system configuration templates to control which personnel have access to various keys. Reports track which staff have each key and the length of time they have it. This can also provide other information that can be pertinent to operations such as, for example, the total time a vehicle was in use or how frequently the lift motor room was accessed for maintenance. A visitor management component allows the receptionist or concierge to identify pre-booked visitors and release the applicable key, or complete an auditable “booking wizard” to perform this function in real-time. zz Rob Plume specializes in integrated s e c u r i t y s o l u t i o n s w i t h G 4 S S e c u re S o l u t i o n s ( C a n a d a ) L t d . F o r m o re information, see the web site at www.ca.g4s.com.
18 January 2012 | Canadian Property Management 11002_Carma_2011.indd 1 11233_CPM_January_12.indd 18
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EnerC
What’s in a name? When the name is Stratacon, a lot! A reputation as a leading sub-metering solutions provider since 1997, with a dedication to technology, innovation and customer service.
Now the Stratacon name has changed – to EnerCare Connections*. And what’s in that name? A lot more! EnerCare brings together a variety of “intelligent energy solutions” including:
• Electricity, Water and BTU Sub-metering • Water Conservation • Rental HVAC
Our energy products and services combine the best practices in the industry with comprehensive programs that are flawlessly delivered. With our robust menu, we work together with property managers, multi-residential building owners, developers, condominium boards and residents to save energy, save money and help save the environment. For more information about EnerCare Connection’s intelligent energy solutions, please visit EnerCare.ca or contact us at 416-649-1900. *Stratacon Inc. and EnerCare Connections Inc., both wholly-owned subsidiaries of EnerCare Inc., have amalgamated and continue under the name EnerCare Connections Inc.
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energymanagement
One Tank, Double Duty
Innovations Make Old Technologies Newly Popular By Alain Gagnon Building type, age, configuration and existing technology all come into retrofit decisions and choices of heating sources. (See sidebar.) The equipment used to transform energy – whether derived from oil, gas, geothermic, electricity, solar or wind – is critical. Meanwhile, the challenge is almost always the same – to keep operating costs down, be as green as possible and avoid compromising the efficiency of the equipment. Popularity of some heating approaches such as electric heat and steam and water boilers has waned somewhat over the years, while new technologies such as radiant floor heating have emerged. Other innovations are also spurring building operators to reevaluate water heating systems. For example, technologies to produce instantaneous domestic hot water are delivering some impressive operating cost savings. An indirect water tank cuts down on the amount of energy traditionally needed to produce and store hot water.
Incoming boiler water at the top of the tank transfers thermal energy to a heat exchanger/coil in the tank. Fresh domestic is forced up through the coil system from the bottom of the tank, drawing energy from the ambient heat of the pre-heated tank water. Thus, domestic water can be heated from 4°C (40°F) to 60°C (140°F) in seven seconds or less. The counter flow motion of the fluids increases the efficiency of heat transfer and
helps prevent domestic hot water temperature swings. Incoming hot water can be produced by a boiler or any other source of production – i.e. the building’s heating source can do double duty providing domestic hot water. zz Alain Gagnon is with Thermo 2000, suppliers of instantaneous indirect water heaters. For more information, see the web site at www.thermo2000.com.
DEDICATED FUNCTIONS BEST FIT FOR COMPLEX BUILDING When it came time to replace the aging boilers at Kootenay Lake Hospital, decision makers opted to replace two large boilers with six smaller models that provided more flexibility. This allowed for three separate sets of boilers, each which exclusively handles a key building function. “As a result, we had two for domestic hot water use, two for heating the building, and two steam boilers for process steam required in our laundry, operating rooms, sterilizing department, kitchen and laboratories,” explains Mario Campese, Chief Engineer at the British Columbia hospital. The smaller boilers heat up faster, adjust more rapidly to load changes, are less susceptible to heat and/or chemical loss and are safer to operate. They also have a smaller physical footprint, which frees up space in the hospital’s boiler room. Reprinted from Canadian Healthcare Facilities, Winter 2012
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professionaldevelopment
Proactive Profile Building Leverage Opportunities to Share Expertise By Carl Friesen
i n a d i f f i C u lt e c o n o m y, employers tend to play it safe. They prefer applicants who have demonstrated their commitment to the industry and to their careers. On the job searcher’s side, recognized thought-leaders are sought by recruiters and employers, and may be able to command higher salaries and negotiate their own compensation packages. Perhaps most important, they can choose work that will be interesting and help them build their careers. Yet, there must be substance to back up the image. Credibility comes with professional success to back up the claims on a resumé. Proactive steps can help to build an industry profile. Define an area of expertise and the likely audience for it. Consider where that audience is likely to be found – i.e. within an industry or branch of government, an occupational field or other circumstances. A stated goal – even one that seems highly ambitious – can make it easier to set out the incremental plan for accomplishing it. For example: “By 2015, I will have delivered at least one workshop or speech to a national conference, have published three articles in industry magazines, and have written one White Paper.” That’s quite an itinerary, but not unrealistic. Most workplaces involve a range of tools for carrying out responsibilities. In security, for example, that may include uniformed security personnel,
video surveillance, keycard systems and other aspects that, in total, make up a security system. Thought leadership should be viewed in much the same way. Chosen tools will reflect each aspirant’s skills and preferences, but should be even more closely in line with the preferences and habits of the people they want to reach. And, as with any tool, success comes not so much in having the tool available, but in knowing how to use it properly. WRITING & SPEAKING Articles in industry publications are a forum to share expertise, establish contacts and build a reputation. Consider the publication’s readership and the message to be shared since specialty publications for almost every sector – retail, healthcare, hospitality, high-rise residential – can be found. Present the idea to the editor in the form of an e-mailed query letter, which serves as a proposal or précis for the article. A good query letter should: • State the topic succinctly in one or two sentences; • Explain why readers would care about this topic; • Outline points to be covered in the article, expressed in three or four one-line bullets; and • Provide the writer’s qualifications, both academic and experiential, for addressing the topic.
Public speaking is an opportunity to demonstrate expertise and speak to attendees afterwards, some who could be potential employers and/or important contacts. A resumé that includes speaker experience can demonstrate to potential employers that the job candidate is confident and communicates well. Arranging speaking engagements is much like finding article-writing opportunities. Look for events in a target market and present organizers with a concept for a presentation. Good speaking skills are helpful, but content and expertise will likely take precedence. Having some published articles to show organizers may help them say “yes” to proposed presentations more readily. Prospective public speakers can find coaching and peer support through organizations like Toastmasters, a longstanding club with chapters throughout the Canada and the world. SOCIAL MEDIA PARTICIPATION Many business professionals have a profile on the business networking site LinkedIn, often described as “Facebook in a suit.” But many people fail to get the full benefit from this tool. LinkedIn consultant, Anita Windisma, ( w w w. o n e o fa k i n d p u b l i s h i n g . c o m ) calculates that 95% percent of corporate recruiters consult LinkedIn when conducting a search. So, it’s a good idea to have a profile that accurately reflects accomplishments and standing in the industry.
22 January 2012 | Canadian Property Management
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Wags
Prevention beats insurance every time
When leaking water reaches a depth of 3/4”, the supply of water and gas are shut down.
Every hot water tank ever built will eventually fail. And the first evidence of failure is all too often a very expensive and messy headache, but it doesn’t have to be. The addition of a Taco WAGS (water and gas safety shut-off valve) solves the problem before it happens. Installation only takes about 20 minutes and can make an additional 30- 40% profit on every water heater you install.
As Canadians pour more and more money into high-end finished basements, this guaranteed protection is a small price to pay. And the ‘WAGS’ is the only product on the market that shuts off both the water and gas – making it doubly essential.
TACO CANADA LTD. 8450 Lawson Road, Milton, ON L9T 0J8 Tel. 905-564-9422 Fax. 905-564-9436 www.floproteam.com
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professionaldevelopment Windisman suggests that many business professionals fail to use the right search terms on their profiles. So, think of the search terms that would be used by someone who would be trying to fill that sought after “dream” job, and make sure that those terms are in the profile. Many people also fail to benefit as much as they can from LinkedIn Groups. There are thousands of groups serving specific interests – and some of them will have members who are potential employers. Build a network of connections. Send new contacts a request to “connect”, and consequent connections from new contacts’ LinkedIn list can expand networks even further. This also increases the opportunity for exposure in potential employer organizations. Providing intelligent, insightful comment on questions and points raised by the members – and asking questions – is a way to become known. Provide links to news that will be of interest to the group’s members. Also, check out the “companies” function, which carries profiles of a wide range of organizations. Look for existing contacts working in those companies. zz Carl Friesen is Principal of Global Reach Communications Inc., which provides consultation for business professionals and organizations to build their professional profile. For more information, see the web site at www.showyourexpertise.com.
GAMING FUNDAMENTALS SUPPORT TRAINING AND EDUCATION By Daniel Burrus
Many of the greatest technological advances in business have come from the world of kids and games. Social media is a good example of this migration from kids and games to adults and business. At fi rst, young people were the predominant ones on social media sites such as Twitter and Facebook. Now, the business world has embraced it as a forum for brand management, marketing and collaboration. Some companies are creating their own internal versions of Twitter and Facebook. With game controllers like the Wii and Xbox Kinect giving people new ways of interacting with technology, the business world is currently on the threshold of being game-ifi ed. Software now allows users to control business software using just hand motions, keyboard or mouse. For example, to turn to the next page or scroll up or down, users sweep a hand across the screen without touching anything. The heart of the gameifi cation trend is using interactive gaming as a tool to transform training and education. Five core elements applied together can dramatically accelerate learning. • Self-diagnostic. A self-diagnostic component for business training would be interactive, competitive, matched to the user’s skill or knowledge level and able to progress accordingly. It would know where users left off and provide next steps from that point when they log back in. This is the best way to allow for individual training and learning. • Interactivity. Regardless of users’ inherent learning style, learning is much more effective when they are interacting with the material, not passively sitting there. Learning by gaming requires interacting with the information and concepts – moving things around, manipulating items and actually doing something. It’s no longer passive training. • Immersion. Video games now use interspatial 3D. Instead of images popping out at players, players go inside to them. This sort of technology gives an immersed effect, which engages people more. To apply this to business, for training salespeople on a particular manufacturing tool they need to sell, they could see the tool in 3D and actually virtually manipulate the tool. This added insight will make selling easier. • Competition. Humans are naturally competitive beings. Sitting passively in a classroom presents limited opportunity for competition since all students are there for the entire period whether they learn the materials in one hour or three. No one advances until the class is over. However, when competing, as in a game, there’s an adrenaline rush that keeps people engaged and focused on the task at hand. In an effort to “win,” people master concepts faster so they can be fi rst – and certainly not last. • Focus. Participants in a game are forced to focus. They have to do “A” in order for “B” to occur, and if they don’t do “A”, they won’t get far in the game. Focus is the result of interactivity, competition, immersion and self-diagnosis. When people focus, they can learn.
Daniel Burrus is the founder and CEO of Burrus Research, a consulting firm that monitors global advancements in technology driven trends. He is the author of six books, including Flash Foresight: How To See the Invisible and Do the Impossible and Technotrends. For more information, see the web site at www.burrus.com. 24 January 2012 | Canadian Property Management
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The 17th Annual Survey
of the Canadian Real Estate Industry’s Major Players & Portfolios
Who’s Who 2012
Here’s how to participate in the 17th annual Who’s Who in the Canadian Real Estate Industry survey. Please take a moment to complete this questionnaire and fax it back to (416) 512-8344 by February 17, 2012. Your participation ensures the accuracy and comprehensiveness of the list so don’t miss the opportunity. - Barbara Carss, Editor Note:
1. This survey pertains to Canadian properties only. Please do not report any properties outside of the country. 2. If your ownership interest in any property is diluted, i.e. by a partnership, joint venture or other structure, please report only your net interest. 3. Please print your responses clearly. 4. Please provide all estimates of space managed and/or owned in square feet. Manage Only
Own Only
Both Own and Manage
Total Sq. Ft.
1. Office Properties 2. Apartment Properties (square footage estimate per unit: 900)
3. Condominium Properties (square footage estimate per unit: 900)
4. Industrial Properties 5. Retail Properties 6. Other Properties (Government, Health Care, Hotel, Educational etc.)
Total The following information will not be released in the printed listing. It is, however, essential that you include this information should we need to confirm the accuracy of the estimates you are providing. Name: ____________________________________________________ Title: __________________________________________ Company: _________________________________________________Email: __________________________________________ Telephone: __________________________________________________Fax: __________________________________________ Please sign and date this form in the space provided to authorize this submission. ______________________________ Authorized Signature
________________________________ Date
If you have any questions, please contact Mary Hazel at 416-512-8186 ext.263 or 1-866-216-0860 ext.263 or by e-mail at maryh@mediaedge.ca
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energymanagement
Energy Trend Forecast Conservation Complements Cost Controls
By Stephen Koch Does Canada need more energy supply or more insulation? Almost one third of Canada's current energy consumption is used for heating and cooling buildings and homes. This number could be cut significantly with proper conservation initiatives. 2012 looks to be an active year for investment in energy efficiency. Here are some expected trends, safe bets and educated guesses for the coming year: PLUG LOAD IS UNEXPLORED FRONTIER FOR FORECASTERS A new report from the American Council for an Energy-Efficient Economy (ACEEE) sets out a scenario for a dramatic 60% reduction in energy use in the United States by 2050. The authors further argue that a realignment of investment away from power supply infrastructure and toward conservation measures could save $400 billion annually and create two million jobs. In the commercial/residential real estate sectors, projected savings could come from building shell improvements that would reduce current space heating and cooling needs. It’s estimated that 60% of existing buildings could be retrofitted for improved performance. Conversion to water or refrigerant-based distribution systems would cut energy loss from ducting or, alternatively, ducts could be placed within conditioned space so that losses would then contribute to heating and cooling. Advanced heating and cooling systems, advanced solid-state lighting and high-efficiency appliances also figure into savings projections. However, plug load remains something of an unknown. “Data on energy use and savings opportunities for this equipment are limited,” the report notes. “This area requires more attention in the future, since after heating, cooling, water heating and lighting loads are reduced, these miscellaneous loads can be the majority of building energy use.” Source: The Long Term Energy Efficiency Potential: What the Evidence Suggests. For more information, see the web site at www.aceee.org.
1. Rising energy costs will improve the payback period for installing insulation. Despite a slower new home construction market, there will be increased retrofit activity in the commercial, industrial and particularly the residential sector to upgrade the vast number of underinsulated existing homes. Similarly, there will a rise in small businesses doing customized installations of weatherization, insulation and caulking, representing an evolution of the local handyman. 2. More Canadian municipalities will follow the example of communities like Campbell River, British Columbia, in adopting requirements for "solar ready" new home construction. This should make future installation of solar hot water appliances easier and less expensive.
26 January 2012 | Canadian Property Management
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energymanagement 3. More real estate agents will recognize the benefits of learning about energy efficiency and passing the information on to their clients. Notably, the Calgary Real Estate Board has an on-line directory listing agents who have passed a series of courses to help inform consumers of choices and rebates offered by governments. 4. New Ontario Building Code requirements coming into effect in January 2012 mean that new homes will have to meet more s t r i n g e n t e n e r g y e ff i c i e n c y standards. Cost-effective insulation products will likely be a popular compliance option. Across Canada, more and more home builders will voluntarily adopt even higher standards of green building. 5. Energy-efficient practices will increasingly be in harmony with companies’ focus on cost controls.
e n e rg y - e ffi c i e n t h o m e s a n d buildings, and will offer incentives to help offset the upfront costs of retrofits and help provide more disposable income for the building or home owner. “Green” mortgages will become common.
Expect utilities and provincial governments to expand incentive programs for the commercial and industrial sectors, especially where they can be demonstrated to reduce peak period electricity load. 6. White or reflective roofs and green roofs (which have seen widespread use in warmer climates to reduce cooling costs) will be increasingly embraced across the country to combat summer cooling bills. 7. Te c h n o l o g i e s s u c h a s t h e programmable thermostat to remotely control temperature settings during peak demand periods will grow in prominence. The speed of adoption will depend on smart meter deployment and will be controlled by phone-based applications. 8. Banks and financial institutions will recognize the inherent value of
9. D i s c u s s i o n s a b o u t e n e r g y independence or energy security will become more prevalent at the community, provincial and national levels. Likewise, energy conservation will gain profile in the public policy debate. It will shift from a focus on thrift to how conservation can offset demand and reduce the need for investment in new generation and peak consumption. zz
Stephen Koch is Executive Director of NAIMA (North American Insulation Manufacturers Association) Canada. For more information, see the web site at www.naimacanada.ca.
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TO REACH ONE OF OUR AGENTS CALL 1-888-854-1111 Canadian Property Management | January 2012 27
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regulatoryupdate
B
P
At pri tha
Our
Ontario Places New Limits on Allowable Rent Increase
Co Ke frie Mi Mi rec Me
2.5% Cap Introduced Without Warning By Barbara Carss
Inflation could bring added budgeting woes for Ontario’s rental housing landlords beginning in 2013 when the annual allowable rent increase for sitting tenants will be capped at 2.5%. This arises from a new amendment to the Residential Tenancies Act that the recently re-elected provincial government introduced in December 2011, much to the surprise of rental housing industry advocates. “No one called for this [during the election campaign] and there was no call from the public,” observes Mike Chopowick, Director of Government Policy with the Federation of Rentalhousing Providers of Ontario (FRPO).
“What’s disappointing is that the government did this without any consultation or discussion with our industry. That’s one of the things we find most alarming.” Currently, the annual allowable rent increase in Ontario is pegged to the Consumer Price Index (CPI) for the 12 months ending May 31 of the p r ev i o u s y e a r. T h i s m e a n s t h e maximum rent increase can be no greater than the average retail price increase of approximately 600 goods and services that Statistics Canada monitors and weights according to their prominence in consumers’ overall spending.
“What’s disappointing is that the government did this without any consultation or discussion with our industry.” 28 January 2012 | Canadian Property Management
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regulatoryupdate
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“Most economists have been forecasting an inflation rate of 3% for the foreseeable future, so we do come out on the losing end.” Critics have argued that this formula is too broadly based since much of the CPI’s basket of goods has little direct bearing in rental housing operation, and badly timed since more than 18 months can elapse before landlords can account for some major inflationary hits. Notably, the 3.1% allowable rent increase that went into effect for January 2012 reflects the impact of additional harmonized sales tax (HST) that landlords have already been paying since July 1, 2010. The proposed new amendment sets upper and lower limits for allowable rent increases that disregard the CPI once it rises above 2.5% or falls below 1%. “Capping rent increases would provide greater certainty and reduce year-to-year volatility in housing costs so that Ontario families continue to have access to affordable housing,” the Minister of Municipal Affairs and Housing, Kathleen Wynne, stated when the legislation was introduced. “Ontario tenants already have some of the strongest rent control laws in Canada,” counters Allan Weinbaum, a Principal with WJ Properties currently serving as FRPO’s chair. “In 2011, rents were limited to a 0.7% increase – far less than what is needed for landlords to cover rising maintenance costs.” In comparison, the annual allowable rent increase in British Columbia is the CPI plus 2%, which translated into 2.3% for 2011. FRPO has called for a similar approach in Ontario to better address maintenance needs in what’s predominantly older housing stock. “It would allow landlords to cover inflation in operating costs and also allow additional dollars for capital repairs,” Chopowick says. A 2.5% cap will provide little budgeting room for that kind of discretionary spending, particularly when operating costs increase at a higher rate. Nor is there much consolation in the lower-end guarantee that the allowable increase will not drop below 1%. “Most economists have been forecasting an inflation rate of 3% for the foreseeable future,” Chopowick notes. “So we do come out on the losing end.” In future, the upper and lower caps could be adjusted since the amendment calls for a review at four-year intervals. Across Ontario’s major urban centres, Canada Mortgage and Housing Corporation’s most recent market survey recorded an availability rate of 3.8% in October 2011. The average rent for a two-bedroom apartment was $1,002, up from $980 in October 2010. This is lower than the average rents for two-bedroom units in Alberta ($1,044) and British Columbia ($1,050). Meanwhile, Saskatchewan experienced the greatest percentage gain of any province, at 4.6%, as the average rent for a two-bedroom unit rose from $872 to $913. zz
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VA L U E P R O P E R T I E S
REPORT TO INVESTORS
V I S U A L I Z E R E S U LT S
Property management
YARDI Investment Accounting ™
is just the beginning...
Automate and manage complex deal structures, consolidations and allocations
Cut costs, improve productivity,
YARDI PropertyVMF ™
and increase operational
Quickly perform accurate valuations, cash flow analysis, NPV and IRR calculations
efficiency by integrating these
YARDI Executive Dashboard ™
investment management solutions
Gain visibility to key performance metrics with out-of-the-box business intelligence
with your single, centralized
YARDI Portal ™
Yardi Voyager database.
Provide investors access to published reports, ownership information, and holdings
™
Ask us about our rapid implementation program. To learn more, call 888.569.2734 or visit www.yardi.com/cpm23
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