GTA & Beyond

F O R B U I L D I N G O W N E R S , A S S E T A N D P R O P E R T Y M A N AG E R S

VOL. 25 NO. 3 • JULY/AUGUST 2018

UNDER CONSTRUCTION NEW GOVERNMENT QUIET ON FUTURE PLANNING POLICY

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TABLE OF CONTENTS

CONTENTS 04

09

COVER STORY

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A DEVELOPING SCENARIO Builders and urbanists ponder the future of Ontario's housing and planning policies

10 IN THIS ISSUE

09

DEVELOPERS DIGEST BUDGETING SURPRISE Anticipated property tax grant off the table for office tower projects in downtown Toronto

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NOT A CHOICE MARKET GTHA millennials covet ground-related homes, new research finds

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CONSERVATION MESSAGING RESET Strategic defence of CDM to emphasize paybacks and employ diplomacy

“THE QUESTION IS: WILL A RIPPING OF TAPE OR STREAMLINING OF APPROVALS BE TARGETED TOWARD BUILDING THE RIGHT SUPPLY IN THE RIGHT PLACES, OR WILL IT JUST BE BUILD EVERYTHING EVERYWHERE, AS MUCH AS WE CAN?” CHERISE BURDA EXECUTIVE DIRECTOR, RYERSON CITY BUILDING INSTITUTE

PLANNING & DEVELOPMENT

A DEVELOPING

SCENARIO Builders and urbanists ponder the future of Ontario's housing and planning policies

BY MICHELLE ERVIN

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JULY/AUGUST 2018

PLANNING & DEVELOPMENT

H

ow might Ontario’s development landscape shift as the Progressive Conservatives (PCs) take over the provincial policy levers from a 15-year-old Liberal government? That was the overriding question that the Urban Land Institute’s (ULI) Toronto chapter asked panellists including lawyers, planners and industry representatives to ponder one day in late June, on the eve of the swearing in of Premier Doug Ford and his cabinet.

Moderator John Matheson, Principal at Strategy Corp, observed that, other than talk of increasing the supply of affordable housing and vowing to preserve the Greenbelt (after initially saying he would loosen some of it for development), Premier Ford was quiet on land use on the campaign trail this spring. As Steve Clark, MPP for Leeds-Grenville, settles into his role as Minister of Municipal Affairs and Housing, there are some unknowns as to www.REMInetwork.com

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PLANNING & DEVELOPMENT

"IF I MAY MAKE A PREDICTION, I WOULD SAY THAT, CERTAINLY IN THE FIRST MANDATE, THAT A FORD GOVERNMENT WILL NOT TOUCH THE GREENBELT AND WILL LEAVE IT AS IS.” how a PC-led government might approach these issues differently from its Liberal predecessors. Among other things, Kathleen Wynne’s government expanded rent control, imposed a speculation tax on foreign home buyers and overhauled the appeal process for land-use planning disputes.

The rationale for Premier Ford’s abandoned plans to make some of the province’s protected lands available for development was to fuel the supply of affordable housing, as Matheson pointed out. Premier Ford could find other ways to fulfill this objective. Panellists zeroed in on his pledge to cut red tape, suggesting that he might aim his scissors at the cumbersome approval processes that can drag out how long it takes to bring homes to market.

But questions remain. Is redrawing the boundaries of the Greenbelt really off the table? Will the OMB-replacing Bill 139 be rolled back? Will the land transfer tax be lowered or scrapped? The answers, respectively, are yes, no and maybe, according to the predictions of some of the panellists at the recent ULI Toronto event dubbed Post Election: The New Development Landscape.

GREENBELT EXPECTED TO STAY BUCKLED Burkhard Mausberg, CEO of Grow Ontario Together, a collaboration of agricultural organizations, said he expects to see Premier Ford make good on his promise to preserve the Greenbelt — for now at least.

Premier Ford backtracked on plans to open up some of the protected lands to housing

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development in response to public outcry during the election campaign. Mausberg said doing another about-face on this issue would undercut Premier Ford’s claim of listening to the people.

“What he recognized was — as he said, the people had spoken — is that the Greenbelt is near and dear to Ontarians,” said Mausberg, “so if I may make a prediction, I would say that, certainly in the first mandate, that a Ford government will not touch the Greenbelt and will leave it as is.”

With loosening the Greenbelt seemingly shelved as an option for stimulating the supply of affordable housing in the short term, Premier Ford could alternatively look at greasing the development pipeline by finding ways to expedite the approvals process for planning applications.

“We all know that the longer it’s going to take you to get through an approvals process, the more challenging it’s going to be for you to follow through with that project if you’re trying to build affordable housing or that missingmiddle piece,” said Emma West, Partner at the community planning firm Bousfields Inc. This is one area where Premier Ford will have an opportunity to deliver on his vow to cut red tape.

“On the intensification front, partly what he and others have been talking about is this red tape challenge — it’s cutting the red tape, getting the supply in more quickly,” observed Marcy Burchfield, Executive Director of Neptis Foundation, which conducts non-partisan research on urban regions. “Part of doing that is really the pre-approvals — pre-zoning — of certain densities that fit within the current policies, that would cut some of the appeals process perhaps and streamline some of the housing to come on board more quickly.”

OMB DEEMED PAST REVIVING Before the outgoing Liberal government was defeated in the provincial election, it set in motion plans to replace the Ontario Municipal Board (OMB). The Building Better Communities and Conserving Watersheds

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PLANNING & DEVELOPMENT Act paved the way for the establishment of the Local Planning Appeal Tribunal, among other things, when the legislation was passed late last year.

The overhaul of the appeal process was branded as one that would empower communities, in an apparent response to the criticisms levelled against the OMB that it frequently favoured developers and overturned local decisions made by elected representatives.

“I think there are a lot of people who are hopeful that the Conservatives will roll back Bill 139,” said Mark Noskiewicz, Partner at Goodmans LLP. “I just don’t see that happening. First of all, it’s too early to tell whether the changes introduced by Bill 139 will be as catastrophic as some think.”

“I think people generally believe Bill 139 has swung the pendulum, giving municipalities more leverage in the approvals process than developers have,” he added, “but interestingly, the province has really retained all of its powers under the Planning Act.” For one, he said, the province has approval authority over the conformity exercises whereby municipalities align their official plans with provincial plans and for which there are no rights of appeal under Bill 139 as long as

a decision is made within a set timeframe. He cited an amendment proposed for midtown Toronto as something the province could potentially alter if it so chose.

“As an example, in the Yonge-Eglinton area, there are concerns that the city has kept densities around major transit station areas too low, so it will be interesting to see what the province does with that,” said Noskiewicz.

HOUSING SUPPLY SHOULD TAKE PRIORITY David Wilkes, President and CEO of BILD, said the building industry and land development association will be drawing the PC government’s attention to issues such as the red tape that ties up housing supply and the fees and taxes faced by home buyers, citing the recent finding of an Altus Group study that government charges account for close to onequarter of the cost of a new home.

Cherise Burda, Executive Director of Ryerson City Building Institute, predicted that Premier Ford is likelier to lower the provincial land transfer tax and/or rescind the right of municipalities to levy a land transfer tax than he is to abolish the speculation tax imposed on foreign home buyers by the previous government. She pointed out that since Premier Ford floated the idea of nixing the 15%

surcharge earlier this year, a poll has shown that a majority of Ontario voters support the speculation tax.

“I do think on the supply side that the new government will listen to the strong lobby to get more supply in the market,” said Burda.

“The question is: Will a ripping of tape or streamlining of approvals or other policies be targeted toward building the right supply in the right places, or will it just be build everything everywhere, as much as we can?”

Burda indicated that one measure of this will be whether the policies improve the costeffectiveness of building medium-density options that are proximate to jobs, schools and transit and have the potential to bridge the current gap between housing type and location preferences.

“We have 100,000 condo units coming down the pipeline — it’s the most ever on record in the GTA — but the majority of them are one-bedrooms in high-rises and mostly sold to investors before the shovel hits the ground,” she said. “I know a lot of people still want to live in detached houses and those are being built in fewer amounts, but most of that is occurring farther and farther away in the greenfield, so it’s becoming more distant to get a home. It’s not where people want to live.” ■

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PLANNING & DEVELOPMENT

DEVELOPERS DIGEST BUDGETING SURPRISE Anticipated property tax grant off the table for office tower projects in downtown Toronto

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ffice tower developers have encountered unanticipated restrictive criteria for a property tax grant tied to Toronto’s economic development strategy. Toronto Council has rejected six applicants collectively investing more than $3.5 billion in the city’s financial district because property tax relief is not deemed critical to their projects’ viability.

Rules for the program have recently been updated, after the City conducted a review, including public consultation and insight from a stakeholders panel, of its Imagination, Manufacturing, Innovation and Technology (IMIT) property tax incentive program last year.

This made the timing less than ideal for eight development proponents awaiting a decision on their grants — assessed under the original program rules in place when their applications were submitted — which was made at the same July City Council meeting where the new program rules were formerly adopted.

Earlier in the month, representatives for at least one of the spurned developers questioned that scheduling. “Staff did not process the application in a timely manner and instead delayed the process by waiting for changes to be adopted by Council that were highly prejudicial,” submitted Joel Pearlman, Senior Vice President, Investments, with Menkes, in a letter to Toronto’s Economic Development Committee.

INCREASED ASSESSED VALUE The IMIT program was launched in 2008 to encourage redevelopment and upgrades or expansion of facilities that support employment.

Qualifying recipients get a property tax discount in diminishing increments over a 10 to 12-year period to recognize the additional tax revenue that the City will reap from property improvements and reward the investors who enable it.

As part of last year’s review, Hemson Consulting Ltd. summarized the gains from

the 31 grants issued through the program to that date. “These development projects are expected to total 11 million square feet and will accommodate the addition or retention of over 47,000 jobs. The financial benefits of these projects are substantial: it is estimated that the 31 approved projects will yield $889 million in new taxes over the 10- to 12-year grant payment period while they will be eligible to receive $566 million in grants. On an annual basis, the City can expect to receive an average of $29 million in net new tax revenue from these developments during the grant payment period. Following this, the developments will generate $79 million in annual new tax revenue (in 2016$),” the report states.

Newly adopted revised rules now outright disqualify most office development within newly expanded boundaries for the financial district.

This primarily stretches south of Front Street to encompass the burgeoning area known as the south core, but also includes more blocks between Queen Street and Front Street that are outside the traditional east and west boundaries of Yonge Street and University Avenue. Beyond the financial district, office development will have to meet the more stringent Tier 2 of the Toronto Green Standard in order to qualify.

Advocates for the commercial real estate industry weigh the new limitations against the possibility of losing the grants entirely. “We were pleased to see that the IMIT program was retained, though in a scaled-back form,” says Brooks Barnett, Manager, Government Relations and Policy, with REALPAC, who was one of the 11-member advisory panel the City established to provide input to the review.

RULE INTERPRETATION QUESTIONED However, applicants that found themselves still in the pipeline of the expiring system argued that they were inappropriately scrutinized.

Notably, the six rejected developments all failed what the City report terms as the “but for” test — meaning that the developers have a business case to proceed with projects even in the absence of the grants.

“Consistent with provincial regulations, the IMIT program is intended to operate under the general premise that ‘but for’ the grants, the investment would not occur. Hence, the grants are notionally being paid from tax revenue that the City would otherwise not receive,” explains accompanying analysis from Hemson Consulting.

Legal advisors for the developers suggest that’s revisionist history, especially since the enabling community improvement plan (CIP) bylaw does not refer to the site-specific ‘but for’ test that has been applied to evaluate their applications. “The City has never refused an application which meets all of the eligibility criteria under the applicable IMIT program bylaw,” noted Ian Andres of Goodmans LLP in a letter to the Economic Development Committee, on behalf of Brookfield Property Partners’ Bay Adelaide North project.

Complicating the decision, the City has earmarked the $364 million that the six proponents would collectively save on their property tax bills over the next 10 years for its SmartTrack initiative.

“Estimates of funding from tax increment revenues were premised on the proposed changes to the IMIT program, including the elimination of office eligibility from IMIT grants in the expanded TOcore Financial District,” the City staff report to the Economic Development Committee advised. “If Council approves IMIT grants for office in the Financial District, Council will be required to identify an alternative funding source for the SmartTrack Program and identify and incorporate the change in future budgetary plans.” ■ www.REMInetwork.com

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NOT A CHOICE

MARKET

GTHA millennials covet ground-related homes, new research finds

BY MICHELLE ERVIN

C

ondo living may just be a phase for millennials in the GTHA, new research from Ryerson University’s Centre for Urban Research and Land Development (CUR) suggests. And it’s a phase they’re expected to outgrow in the coming decade as many follow in the footsteps of their baby boomer parents, getting hitched, having kids and purchasing homes, albeit at later ages.

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Millennials in the Greater Toronto and Hamilton Area: A Generation Stuck in Apartments? found that young adults born between 1981 and 2001 reach major milestones later. They’re also leaving the childhood homes and progressing from renting to owning later. However, the Ontario Real Estate Association-sponsored report forecasts significant movement along this housing life cycle in the next 10 years as members

PLANNING & DEVELOPMENT of the demographic cohort finish school and see their employment stabilize and incomes increase.

The report also finds that millennials in the GTHA hope to own homes, and they covet ground-related homes in particular. Some millennials have already realized this aspiration, while others continue to live in apartments, either rented or owned.

Nevertheless, younger members of the demographic cohort may have an increasingly hard time securing ground-related homes as they decamp from their childhood homes in large numbers in the coming decade. The report notes that baby boomers are expected to remain in their homes during this time, while the development pipeline is poised to deliver more apartments than semis, detached and town homes.

All things the same, the report projects worsening affordability in the next 10 years, as millennials face the prospect of competing for 70,000 fewer newly built ground-related homes than will be sought by the demographic cohort.

“We’ve got these millennials, who are going to be the biggest force in the marketplace, who’ve got preferences as they age for ground-related forms of housing, and we’re not producing those housing units for them,” said Frank Clayton, co-researcher on the report and Senior Research Fellow at Ryerson’s CUR. “What we’re doing is producing apartments.”

VARIETY OF FORMATS Acknowledging the role of provincial planning policies in promoting this intensification, Clayton called for the construction of more townhomes than single-family homes. He said townhomes, which have stagnated over the last 20 years, would deliver a higher-density version of the ground-related homes millennials want within the confines of environmental restrictions aimed at preserving green space.

The report concludes that the risks of staying the current course are even higher house prices, more traffic congestion and possible brain drain. Amid worsening affordability, millennials intent on securing their preferred housing type will have two options: either move farther and farther into the suburbs or uproot for another city altogether.

“If they can’t find they housing they want, the kind of lifestyle they want, they have alternatives,” said Clayton. “If you’re a highly educated millennial, you don’t have to stay in Toronto.”

Speaking on a panel following the report’s release, Michelle German, Senior Manager of Policy and Partnerships at Evergreen, suggested that providing a variety of housing options, not just ground-related, will be key to retaining a healthy population in the GTHA. To that end, she advocated taking a broader view of the “missing middle,” which planners use as shorthand for low to mid-rise housing options.

LARGER UNITS “I actually think it’s about income level — so, talking about middleincome earners. It’s about unit size — so, getting beyond a oneplus-den and into a two- and three-bedroom territory that’s built for families, not just built for students or for investors. And it’s also about reimagining our housing typology, which includes mid-rise and stacked townhomes, as well as secondary suites such as laneway homes and granny flats,” she said.

Ben Myers, President and Owner of Bullpen Consulting, said he sees a role for larger condos units in the mix of the estimated 40,000 to 50,000 new homes that will be required every year to absorb millennialdriven population growth in the GTHA. Yet, there are barriers to building this type of product, including price per square foot, which is rising alongside land and construction costs.

Myers projected condo prices to continue to rise as development charges double and the Ontario Municipal Board gets dismantled and replaced with local appeal tribunals intended to give communities greater power in planning decisions. As it is, he said that developers are having a hard time building in some of the areas tapped for intensification by the province due to either opposition from local residents or lack of infrastructure.

“We either have to continue to promote that supply and allow developers to move from acquisition to completion in a much quicker time, or make some of these suburban intensification areas easier to build as well,” said Myers, speaking on the panel following the report’s release.

TRADE-OFFS Even without these roadblocks, challenges remain in meeting the housing wants of millennials. Speaking on the panel following the report’s release, Brian DePratto, Senior Economist at TD, pointed out that the lands available for ground-related development are largely located on the fringes of the GTHA, which puts prospective buyers in the difficult position of deciding whether to sacrifice liveability for affordability as they weigh long commutes against lower prices.

“I think there needs to be a more holistic planning discussion — not just where the houses are going to be; how people get to work, how will services be delivered, where will childcare be, where will the employment lands be,” said DePratto. “Living downtown is great because everything’s right at hand, but again, [because of] the costs, we know people are going to shift out and that aspect needs to come into that 10, 15, 20-year planning.” ■

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MARKETMANAGEMENT ENERGY TRENDS

CONSERVATION MESSAGING RESET

Strategic defence of CDM to emphasize paybacks and employ diplomacy

BY BARBARA CARSS

E

nergy efficiency advocates are working to enlist broader support and leverage existing influential backers at a time when government commitment is becoming more uneven across North American jurisdictions. Efficiency Canada — formerly the Canadian Energy Efficiency Alliance — launched its new brand this spring with a heavy emphasis on the economic development opportunities arising from energy retrofits and the pursuit of Canada’s greenhouse gas (GHG) reduction targets.

Notably, economic modelling Efficiency Canada co-sponsored projects that energy efficiency measures identified in the national framework for addressing climate change could equate to a $356 billion boost to Canada’s GDP between 2017 and 2030. That’s pegged at $7 of GDP for every $1 invested in energy efficiency.

However, the largest provincial player in that pursuit has since reversed course, terminating its cap-and-trade system and, with it, the funding mechanism for various incentives to promote energy efficiency in commercial and residential buildings offered through the now-cancelled Green Ontario Fund. Efficiency Canada’s mission statement looks particularly ambitious in light of recent developments.

“Our goal is to make energy efficiency — through an economic lens — top of mind for policy makers,” affirms the not-for-profit association’s website. “To do that, we aim to make the complex, simple; the story, compelling; the stakeholders, heroes; the mundane, exciting.”

ADJUSTING TO A NEW TONE Last month’s joint statement from the Premiers of Ontario and Saskatchewan takes a different stance.

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“Carbon taxes make life unaffordable for families and put thousands of jobs at risk. This type of taxation does nothing for the environment and hits people in the wallet in order to fund big government initiatives,” Doug Ford and Scott Moe assert. “A climate change strategy is critical, but a carbon tax would increase the price of virtually every product and service people need on a daily basis.”

Disentangling energy efficiency from GHG reduction and renewable energy — at least on

the messaging level — may now be strategic for its preservation. Thus far, the new Ontario government has made no announcement related to its campaign pledge to transfer the funding mechanism for conservation and demand management (CDM) programs from hydro rates to the general tax base, but energy managers and prospective beneficiaries of CDM incentives are wary.

The government has moved quickly on other components of its promised scheme to cut electricity costs for ratepayers by 12%.

ONTARIO DOUBLE-CHECKS GRANT ELIGIBILITY Commercial building operators had to send their receipts to Ontario’s Ministry of Transportation before July 12 in order to confirm their eligibility for rebates that the former government approved for electric vehicle chargers. The instructions were outlined in a July 4 memo announcing the cancellation of the Workplace Electric Vehicle Charging Incentive Program (WEVCIP), which was funded with revenue from Ontario's now defunct cap-and-trade system.

Owners/managers were asked to “provide evidence acceptable to the Ministry” of receipts or purchase orders made no later than July 3. Others lost the opportunity to receive WEVCIP funds if they had yet not obtained the equipment or signed a contract to authorize the investment.

The grants covered 80% of capital costs, to a maximum of $7,500 per charging space, for level 2 electric vehicle chargers installed for tenants’ use. Employers holding control of staff parking facilities were also eligible for the incentive. Vehicles can be recharged in four to six hours using a level 2 charger versus the eight to 12 hours needed to recharge with a level 1 charger.

Recipients must also install the chargers and submit a follow-up report no later than November 12, 2018. “If any of the above requirements are not met, you will no longer be eligible to receive WEVCIP funds despite your receipt of the Notification of Approval letter,” the Ministry of Transportation notice warns.

– REMI Network

McGregorAllsop_GTA_June_2016_FINAL.pdf

Within days of the throne speech reaffirmation to Ontarians to “lower your hydro bills”, the executive structure of Hydro One, which oversees the transmission of electricity, had been overhauled, and 758 renewable energy contracts — of which 748 were small scale generation, no greater than 500 kilowatts, under the feed-in tariff (FIT) program — were cancelled.

C “For 15 years, Ontario families and businesses M have been forced to pay inflated hydro prices so the government could spend on unnecessary Y and expensive energy schemes,” Ontario CM Energy Minister Greg Rickford said, July 13, as he MY scrapped the contracts for the projects. “Those CY days are over.”

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K AVOIDING COSTS AND RED TAPE Efficiency Canada’s goal to position energy efficiency as the “First Fuel” that governments, consumers, utilities and regulators recognize lines up with the concept of negawatts — or placing energy-use reduction on par with generating new supply. Yet, there is a significant distinction between the two since it is dramatically less costly to save than to generate. Ontario’s Independent Electricity System Operator (IESO) calculates that $1 invested in curbing consumption staves off $2 of required investment in new supply.

“It’s the easiest and most cost-effective alternative to new generation. Period,” Robert Edwards, the IESO’s private sector Business Manager, reiterated earlier this year at a seminar sponsored by the Building Owners and Managers Association (BOMA) of Greater Toronto.

“Conservation incentives are not a subsidy.

They are an investment,” stresses Scott Rouse, Managing Partner of the consulting firm, Energy@Work.

He also voices concern that moving CDM programs to the general tax base would upend the years of work and relationship building that have gone into existing programs deployed through Ontario’s local distribution companies. Nor would such a transition seem to align with the new government’s agenda to eliminate red tape.

“Are we going to have a new group of bureaucrats thrown in to try to figure out how to deliver incentives?” Rouse asks. “We already have to deal with a lot of people who don’t really understand incentives. Are we going to now layer more people on top of that? I would hope not.”

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ENERGY MANAGEMENT FINDING CONCILIATORY WORDS Efficiency Canada’s peer in the United States, the American Council for an Energy-Efficient Economy (ACEEE), is examining how to build consensus in what many see as an increasingly polarized society. The organization's summer conference includes a seminar exploring how terminology can unite or divide people with varying outlooks, and support or undermine their receptiveness to ideas. It draws from a 2017 survey and analysis from the Shelton Group, a marketing and communications firm specializing in energy and the environment.

Survey participants were selected to proportionately represent the U.S. population for geography, age, gender, education and race, with results calculated to have a 2.2% plus/minus margin of error. Findings show that the words “science”, “conservation” and “sustainability” generally resonate positively, with “conservation” and “sustainability” garnering an outright negative reaction from just 5% of respondents.

“Environmental stewardship”, “regulation” and “carbon footprint” were greeted much less enthusiastically. In particular, “carbon footprint” was the one tested term that elicited more outright negative response (33%) than positive endorsement (28%). Positive response was just 38% for “regulation” and 48% for “environmental stewardship”.

“To reach the broadest possible audience, we need to speak using terms we know they understand and that reflect their shared values and beliefs,” Suzanne Shelton, the survey devisor and interpreter, said in an interview posted on the ACEEE’s website. “We need to be careful not to use words they don’t understand or are overly subject to interpretation and, above all, avoid terms that may polarize them and create a longer, harder walk between their beliefs and positive actions.”

From that perspective, sustainability advocates on this side of the border speculate energy efficiency messaging might have some inherent advantages. It can be explicitly linked to terms like “payback” and “return on investment”.

“It’s the big projects that save energy, but have a long payback, or the ones that have an upfront cost and are carbon-reducing in a way that people don’t tangibly experience — like carbon offsets, for example — that can be more challenging to implement than the classic ‘lowhanging fruit’ with a two-year ROI,” reflects Neil Pegram, Director of the Americas with GRESB, the sustainability benchmark guiding institutional investors in commercial real estate.

“Any time you are trying to change systems,

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there is a story you are trying to tell, and there is language associated with it that can divide or can open doors.”

He suggests terms like “building performance”, “resilience”, “innovation”, “efficiency” and “flexibility” can engage listeners, as does appealing to their desire to be “leaders not laggards” or their pride of place. “Focusing on leadership and not wasting Canadian resources is a good way of encouraging people,” he adds.

“It’s perhaps not too surprising that words can make or break the decisionmaking process,” observes Andrew Pride, a consultant on energy management and strategic conservation planning, including facilitating inter-agency and inter-provincial efforts. “In terms of common interests, some good words relating to energy efficiency are: “productivity”, “job creation”, “saving money”, “comfort” and “convenience”. ■

SUSTAINABILITY CHAMPIONS DECRY CAP-AND-TRADE CANCELLATION Several prominent business leaders and professionals predict cancellation of Ontario's cap-and-trade system will mean billions of dollars in direct losses and forgone economic development. A joint statement from 73 sustainability champions underscores the potential costs of losing the associated greenhouse gas (GHG) reduction programs funded with cap and trade revenues.

“Ontario committed to the cap and trade program with California and Quebec until 2020. Reneging on that agreement will have significant consequences that will be economically and environmentally harmful to Ontarians, and damaging to Ontario’s reputation as a reliable business partner,” assert the signatories, who are all recipients of the Clean50 award to recognize their outstanding contribution to clean capitalism.

Wary number crunchers foresee a direct financial hit to reimburse the nearly $3 billion that market participants have sunk into investments they will now be forced to abandon, as well as the required surrender of $420 million in federal funding upon Ontario’s withdrawal from the pan-Canadian framework to address climate change.

Indirect financial hurt is envisioned as incentive programs with job creation potential are cancelled and spending in the nascent green economy is stunted. Meanwhile, costs related to climate change could continue to climb.

The sustainability proponents lament the cancellation of programs to promote energy efficiency, renewable energy and related clean technologies that were underwritten with cap and trade revenues. These were promised in the former government’s circa 2016 Climate Action Plan and rolled out last year through the newly established Green Ontario Fund.

“Those incentives are already providing countless Ontarians with significant monthly energy savings while supporting thousands of good-paying jobs, such as solar energy installers and roles with clean tech manufacturers,” they observe.

Longer standing conservation programs under the Save on Energy banner remain in place as the Independent Electricity System Operator (IESO) and Ontario’s approximately 70 local distribution companies continue to push toward a target of 7 terawatt-hours (7 billion kilowatt-hours) of energy savings by 2020. Thus far, there have been no announcements related to that obligation, which is entrenched in the plan that has been guiding the provincial energy strategy.

“It makes a great deal of sense to continue or even increase the amount of these consumer-centric energy efficiency programs in the market,” maintains Andrew Pride, an engineer and consultant specializing in energy management and strategic conservation planning. “Save on Energy has been measurably delivering the most cost-effective energy to consumers for nearly a decade. At its current effective rate of two to four cents per kilowatt-hour, it keeps bills lower for all consumers.”

Nevertheless, conservation advocates are keenly aware of the new government’s recent campaign promise to reduce electricity rates, in part by transferring the cost of conservation programs to the general tax base.

– REMI Network

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