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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. 24 NO. 6 â&#x20AC;¢ NOVEMBER/DECEMBER 2017

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TABLE OF CONTENTS

CONTENTS 42

COVER STORY

TORONTO JOSTLES FOR TOP CITY STATUS

Ten contenders are tagged to unsettle the 'big seven' global real estate markets

CDM INCENTIVE QUASHED Fossil fuels fail to make the cut for combined heat and power

CONDO AUTHORITY OF ONTARIO BUILDS ITS BRAND

Office buildings introduce creative programming

TAX GAP NARROWS SLOWLY

YORKVILLE'S NEWEST LUXURY ADDRESS

IN THIS ISSUE

CHANGE TO SURVIVE

Toronto's commercial-to-residential ratio still far from target

Environmental Review Tribunal issues ruling

DARK STORE MAINTENANCE

BROWNFIELD REBORN

CARBON PRICING PRIMER

Investors embrace upscale purposebuilt rental

Registration and program rollout now underway

AHEAD OF THE STORMS Best practices for flood-resilient greenfield development

WIND FARM APPROVAL REVOKED

Coordinated contingencies for nonoperational retail space

York Recreation Centre was 20 years in the making

Canada's GHG reduction target figures in energy supply and demand

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ENERGY MANAGEMENT

CDM INCENTIVE

QUASHED Fossil fuels fail to make the cut for combined heat and power BY BARBARA CARSS

ne of Ontario's most lucrative incentives for conservation and demand management (CDM) will be terminated next summer, about two years after the rules were revised to make it more appealing to multi-residential landlords and condominium corporations. The newly released provincial Long Term Energy Plan (LTEP), now updated to replace the 2013 version, rescinds favoured status for combined heat and power (CHP) systems that rely on fossil fuels. The move reflects the Ontario government's agenda to integrate the Conservation First Framework — programs and incentives aimed at achieving a province-wide target of 7 terawatt-hours (7 billion kilowatt-hours) of energy savings by 2020 — with the provincial Climate Change

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Action Plan and Ontario's commitment, as part of the pan-Canadian alliance, to work toward reducing national greenhouse gas (GHG) emissions to 30% below 2005 levels by 2030. The Green Ontario Fund, launched last August, is now promoted as a "coordinated, one-window approach" for obtaining incentives, financing and services for low-carbon technologies, while the demand management aspect of longer standing CDM programs appears to have slipped in priority. "Under current conservation programs, combined heat and power projects that use supplied fossil fuels to generate electricity on-site are eligible for incentives because they can significantly reduce demand on the electricity grid," the 2017

LTEP acknowledges. "To help meet the Province's climate change goals, these projects will no longer be eligible to apply for incentives under the Conservation First Framework and the Industrial Accelerator Program, starting July 1, 2018." This doesn't rule out systems that recover energy from waste, or use renewable fuels directly or in combination with energy storage. "North Bay hospital has a CHP that has a wood chip option, so this is not uncommon," reports Linda Varangu, Executive Director of the Canadian Coalition for Green Health Care. SAVINGS, LOAD-SHIFTING, RESILIENCE For smaller landlords, however, it's likely to be more of an obstacle. As the name

ENERGY MANAGEMENT

suggests, combined heat and power systems generate electricity â&#x20AC;&#x201D; typically via on-site reciprocating engines or gas turbines â&#x20AC;&#x201D; and recover the waste heat to use for space heating, cooling and/ or domestic hot water. The vast majority of commercial, institutional and multiresidential applications use it as a supplementary source to offset the costs of natural gas boilers and grid-connected electricity supply. Beyond the energy efficiency and cost savings of redeploying waste heat for other useful purposes, CHP allows building operators to shift load off the grid during times of peak demand. That flexibility could have a big payoff for consumers large enough to qualify for the

Industrial Conservation Initiative, which prorates participants' Global Adjustment charges to their demand during the five hours of the year with the highest overall system demand. Depending on the system size, CHP can also provide emergency power in lieu of diesel or natural gas backup generators. Health care providers, commercial real estate operators and condominium corporations are all considering that aspect of the technology with growing interest as they look to strengthen resilience to climate change and prepare for possible prolonged power outages. "Traditional backup generators do not always perform during emergencies," says JJ Knott of Healthcare Energy Leaders

of Ontario. "CHP plants have operated continuously during natural disasters like Hurricane Sandy in New York." Rule changes introduced with the most recent iteration of Ontario's Save On Energy incentives further improved the economics for multi-residential and MUSH (municipal, universities/colleges, schools and health care) customers by allowing them to offload much of the risk to thirdparty contractors, who would continue to own and maintain the equipment within their clients' buildings. "A lot of multi-res buildings are having this conversation," Jennifer Grado, Toronto Hydro's lead on CDM Business Development told SpringFest seminar attendees in April 2016. INVESTMENT OPTIONS Termination of the incentive caught few industry insiders off-guard, but it does complicate the business case for a bigticket expenditure. An incentive worth up to 40% of the capital cost of the equipment and $0.20 per kilowatt-hour (kWh) of ensuing savings helped shrink the payback period to the range that budget officers typically prefer. Now, energy management specialists foresee a different scale of investment, focused more exclusively on energy savings rather than climate change adaptation. "Many people in the industry are not shocked by the cancellation of incentives www.REMInetwork.com

ENERGY MANAGEMENT

“CHP UNITS WILL BE MUCH SMALLER. THEY WILL PROBABLY BE SIZED MORE TO MEET THE DOMESTIC HOT WATER LOAD AND, AS SUCH, WILL NOT BE ABLE TO PROVIDE ANY RESILIENCE." for [fossil fuel] CHP because the program seemed contradictory to the policy of reducing GHGs," observes Rob Detta Colli, Manager of Energy and Sustainability

with Crossbridge Condominium Services. "Without incentives, I think projects will look to lower capital costs. CHP units will be much smaller. They will probably

be sized more to meet the domestic hot water load and, as such, will not be able to provide any resilience." Technologies funded through the new Green Ontario Fund won't necessarily be the most popular alternative option. It could be diesel. "We still have a lot buildings that use diesel generators for backup power. If renewable technologies aren't economically or technically feasible, the next best solution becomes cogen, which also provides buildings with a great deal of resilience," submits Bala Gnanam, Director of Sustainable Building Operations and Strategic Partnerships for the Building Owners and Managers Association (BOMA) of Greater Toronto. "One of the chapters in the Long Term Energy Plan is actually entitled: Responding to the Challenge of Climate Change. In that respect, resilience is responding to climate change." Farther afield, energy specialists in Europe's health care sector are actively exploring the potential of coupling CHP with renewable fuels — in part with the prompt of the European Union's promised 1 million euro (CAD $1.5 million) prize for a hospital that installs a CHP relying on 100% renewable energy sources. "In a few years, we should have a very interesting operating model from Europe on how this could be done, if someone in Ontario does not do it first," Varangu predicts. "There is still a vast array of solutions that will help all consumers both reduce energy cost and their carbon footprint," concurs Andrew Pride, a consultant specializing in energy management and strategic conservation planning. "It will be exciting to see how the Green Ontario Fund might enhance the opportunities offered by the current suite of electricity and gas programs." ■ ______________________________________________

THE COMPLETE TEXT OF THE LONG TERM ENERGY PLAN CAN BE FOUND AT WWW.ONTARIO.CA/DOCUMENT/2017-LONGTERM-ENERGY-PLAN

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mention of the commercial sector. However, industry associations like the Building Owners and Managers Association (BOMA) of Greater Toronto have been approached to discuss the Global Adjustment. "They are genuinely interested in coming up with a creative, fair way to address this because we all know, right now, the Class B customers are carrying much of the cost load," reports Bala Gnanam, BOMA Toronto's Director of Sustainable Building Operations and Strategic Partnerships. "If it's going to be fair, we need to look at it more holistically." "Many condominiums are surprised to learn they fit into the Class B designation. While a condominium is clearly a residence, these particular condominiums do not enjoy the same price protections given to single family homes," adds Rob Detta Colli, Manager of Energy and Sustainability with Crossbridge Condominium Services. N/A "The Global Adjustment remains the elephant in the room," Cyan Magenta Yellow Black says Scott Rouse, Managing Partner of the consulting firm, Energy@Work, who calls for more transparency of the various components now lumped into the GA's bucket of costs. N/A On the plus side, he N/A commends the LTEP pledge to address how the GA has been applied to energy storage. "It's good that they are removing obstacles, including the possibility of offsetting Social:the requirement to pay StudioGlobal Manager:Adjustment for charging storage during off-peak periods," he notes. COATING

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The newly released 2017 update of Ontario's Long Term Energy Plan (LTEP) hints at future relief for commercial electricity customers currently carrying a disproportionate share of Global Adjustment costs. Nothing will happen before promised "consultations", however. "The government and the Ontario Energy Board are considering changes to the way the Global Adjustment is charged to mid-sized commercial and industrial consumers, otherwise known as non-RPP Class B consumers," the LTEP states. "For these consumers, the GA is a fixed charge that is the same regardless of the time that they consume electricity." The document, which is subtitled, Delivering Fairness and Choice, does not address the structure of the Global Adjustment allocation across all non-RPP ratepayers. Class A — now open to commercial customers an average peak Client: with G&L energy demand of at least 1 megawatt and manufacturers with File Name: GNL 34888 DS Print Ad an average peak energy demand of at least 500 kilowatts — Finished Size: 7.125" x 4.75" is granted the opportunity to significantly reduce GA costs Flat Size: Conservation Initiative, through participation in the Industrial Output Scale: to 100% while its avoided costs are redistributed Class B consumers who do not qualify for the program. Medium: Print Perhaps telling of the Ontario government's priorities, the backgrounder accompanyingWriter: the LTEP's OctoberDesigner 26 release Date: November10,201710:15AM discusses residential and industrial electricity rates, but makes no

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REGULATORY UPDATE

CONDOMINIUM AUTHORITY OF ONTARIO

BUILDS ITS BRAND Registration and program rollout now underway BY MICHELLE ERVIN

n its first month in operation, the Condominium Authority of Ontario (CAO) fielded 330 calls and 130 emails from condo directors, managers and owners, and registered 524 condo corporations. Registering the remainder of the province’s estimated 10,000 condo corporations before the end of the year is a focus for the new nonprofit organization as it works to increase awareness of its services, said Tom Wright, Chair of the CAO. In the days leading up to the official launch of its operations, a poll of 1,000 people found that only 14% of respondents had heard of the authority. The CAO was established under changes to Ontario’s condo laws aimed at improving consumer protection, which are being brought into effect in phases starting this fall. The authority began providing information services Sept. 1 and was scheduled to begin providing director education and dispute resolution services Nov. 1. “Right now, the most common issue we’re dealing with is the matter of how does a condo become registered, which is a requirement,” Wright reported in early October. Wright said the CAO has been hearing from representatives of condo corporations

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that were missed in its mail out of information packages. Identifying and tracking down accurate addresses for all of the province’s condo corporations has proven challenging in the absence of a public registry, which the first of what will become annual filings will help to create. The CAO is now calling on condo boards and managers to email info@ condoauthorityontario.ca to request the invitation codes required to register for condo corporations that have not received them. The authority needs to get corporations registered to collect the assessments that will support the CAO’s operations, which are expected to run on a projected annual budget of about $10 million. The assessment, to be paid by owners via common fees and remitted by condo corporations, works out to roughly $1 per unit per month. Due Dec. 31, the first assessment will capture the seven months spanning from the beginning of September through to the end of March. In addition to fielding inquiries about registration, the CAO has been receiving general questions about condo living, such as obligations to pay special assessments

and responsibilities for repairs and maintenance. Wright said the calls and emails the authority receives will inform new content as it builds out its website, which is intended to serve as a 24/7 resource for condo directors, owners and residents. DISPUTE RESOLUTION MECHANISM The CAO is also receiving questions about accessing condo corporation records, the first type of dispute that will be eligible to be heard by the Condominium Authority Tribunal (CAT). The CAO’s board recently named Ian Darling the first Chair of the CAT — a position which attracted a lot of interest, said Wright. He said Darling saw the role of the tribunal much the same way the authority did, being to resolve disputes versus to hand down rulings. “It would not be a traditional tribunal that is there basically to make decisions,” Wright said of what the CAO’s board envisioned. “That’s a last resort.” Conceived as a cheaper, faster alternative to taking condo disagreements to court, the tribunal will offer dispute resolution services in three stages, the last of which involves an adjudicator handing down a binding ruling. Before that, parties will have to attempt

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“ALTHOUGH IT’S BASED ON A SYSTEM THAT IS BEING USED IN THE PROVINCE OF QUEBEC, IT’S BEEN ADJUSTED TO THE ONTARIO SETTING.” to resolve their disagreements through guided negotiation and, failing that, assisted resolution with help from a tribunal member. The person who makes the application

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electronically as opposed to in-person, making it the province’s first online-only dispute resolution system. With demand for the tribunal’s services difficult to predict, starting out with a scope limited to disputes about access to records will allow the tribunal to focus on delivering the best possible service, said Wright. Once the system has been tested, the government is expected to amend the regulations to add other types of disputes to the list of issues that can be taken to the tribunal. “Although it’s based on a system that is being used in the province of Quebec, it’s been adjusted to the Ontario setting, so we wanted to make sure it’s working because the last thing we want is frustration on the part of people who want to use it,” he said. DIRECTOR TRAINING The CAO is currently testing training for condo directors, which will be available for free online and become mandatory to complete for directors elected from Nov. 1 onward. The four pilot modules cover the basics of condo living, the laws governing condos, director roles and responsibilities, and community leadership. Whether director training improves the governance of condo corporations is one way Wright will be measuring the success of the authority. How well used the tribunal is and how quickly disputes get resolved are other benchmarks he said he’ll be watching. “Bottom line: [The CAO] will be seen as the trusted source for information about condo living in Ontario,” said Wright. “That, to me, is the measure [of success].” Meanwhile, with each passing week, the authority is seeing its website traffic and call and email volumes grow as it works to raise its profile, said Wright. “We want people to be aware of the resources that are available to them, primarily through the website,” he said. “We’re also very interested in feedback in terms of: What is it that the CAO can do that will help you to make your condo community a better place to live?”. ■

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MARKET TRENDS

TORONTO JOSTLES FOR TOP CITY STATUS

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MARKET TRENDS

Ten contenders are tagged to unsettle the 'big seven' global real estate markets Toronto is gaining status as a global player. A recent report from JLL groups it with 10 “contenders” in a penultimate tier of successful world cities pushing up against the alpha “big seven” of London, New York, Paris, Singapore, Tokyo, Hong Kong and Seoul.

he rankings arise from an algorithmic analysis of 26 recognized leading indices that peg cities’ performance in areas such as knowledge industries and innovation, human and social capital, infrastructure and reputation, along with a broader overview of more than 300 indices that score and benchmark some aspect of urban life. Analysts also applied JLL’s own extensive research on investment transparency and commercial real estate markets in drawing their conclusions. “Increasingly, these indices have a bearing in how we understand city dynamics, guiding investors, businesses and workers as they make location choices and shaping the viewpoints of visitors, students and entrepreneurs,” the report’s executive summary maintains. “They cover an evermore diverse range of attributes that signal where cities are heading. They point to which cities have the ingredients for future success and help steer the real estate industry in its response to the rapidly changing urban landscape.” Data from all sources was used to assess cities’ ability to attract business, foster growth and provide for the needs of residents and visitors — categorized into 10 sometimes overlapping “imperatives for a successful city”. This underpins the designation of the 10 contenders, which also include Los Angeles, Shanghai, Beijing, Amsterdam, Chicago, San Francisco, Madrid, Sydney and Washington, DC. Contenders are benchmarked against seven core characteristics that the top echelon of cities possess. Including: • Corporate presence with a critical mass of corporate headquarters and global enterprises such as finance, professional services and media; • Gateway functions facilitating two-way movement of people, investment, trade, tourism and information;

• Scale and size of market and populations to support agglomeration, growth opportunities and capital investment; • Infrastructure platform to connect and support firms, workers and visitors; • Diverse and skilled talent pools; • Specialization and innovation to produce and commercialize knowledge, products and services; and • An attractive global brand and identity that projects the city’s core values. In highlighting some of the city’s qualifications as a contender, the JLL report states: “Toronto combines diverse business sectors with a very strong institutional presence, and the city may stand to benefit from potential immigration reforms in the U.S., especially with regards to attracting tech talent.” There are still challenges in quantifying data and making city-to-city comparisons for some of the attributes of urban success such as “thinking long-term” or “creating a well-run city” — metrics for how cities plan for growth, balance their fiscal responsibilities and tax loads, manage infrastructure debts and invest in resilience — while the 10th category “going global” specifically applies to emergent regions beyond North American and Europe. However, Toronto scores well on most of the more conventional business-oriented matrices that rank performance. This includes: third on the list of the world’s most transparent real estate markets; fourth for city brand and reputation; ninth for attracting and developing talent; and 14th for knowledge and innovation. The 19th for investing in infrastructure is the second highest placing for a North American city after New York in 9th and just ahead of San Francisco in 20th. As well, Toronto’s absence from the www.REMInetwork.com

MARKET TRENDS

TEN IMPERATIVES FOR URBAN SUCCESS

TORONTO’S ABSENCE FROM THE TOP-20 LIST FOR PRICIEST OFFICE SPACE COULD BE ANOTHER FACTOR IN LURING GLOBAL BUSINESS.

top-20 list for priciest office space could be another factor in luring global business. In the three year period from July 1, 2014, to June 30, 2017, Toronto saw US $2 billion of commercial real estate investment to tie with Atlanta as the 19th most active global market. This falls short of all but Beijing, Madrid and Amsterdam in the list of top 17 cities, and mirrors Toronto’s 14th place status in the overall rankings. Opportunities to advance may be found in major trends and influences that JLL identifies as city-shaping forces. Brexit and other geopolitical shifts have brought new uncertainties since the previous report on world cities was released two years ago, while housing affordability, socioeconomic inequality and air pollution are tagged as particular challenges for the big seven. “The threats of conflict, displacement, protectionism, populist domestic policies, slowdowns in productivity and tensions between the big cities and their nation states all alter perceptions about which cities appear to be ‘safe bets’ or present higher risks for investment,” the report observes. ■

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Fostering Innovation Pathways Different types of cities are achieving success in the "innovation economy" through distinct pathways – whether it is as a dynamic cluster of tech start-ups, a centre for corporate R&D or on the back of knowledge-intensive industries. Recognizing these varied innovation pathways is vital to responding successfully to the real estate opportunities in tech-rich cities. Uncovering Hidden Talents Access to talent is firmly at the top of the agenda of most corporations, but "talent" doesn’t just mean the proportion of citizens with academic degrees or the concentration of universities. It is also about the diversity of vocational skills, specialist skills, the social mix and inclusiveness. These aspects are now being recognized as a key driver in corporate location decision-making. Investing in Infrastructure It is now universally accepted that a city’s infrastructure platform is a critical determinant of how well cities can participate in the global economy. Yet, while hard infrastructure and network coverage is important, just as essential is the real-time frequency and reliability of public transit, considerations that are now being factored into city indices. Thinking Long-Term Cities are facing a range of longterm challenges, including pollution, environmental degradation and climate change. Likewise, real estate investors and businesses are beginning to incorporate city future-proofing considerations and resilience strategies into their location decision-making. Creating a Well-Run City Good governance is critical for cities managing their growth. Metropolitan-level governance, institutional accountability and e-government are now featuring in indices. Real estate markets are impacted by long-term visions, coordinated planning

and the ability of cities to act as stable partners. Evaluating the nuances of how cities are run will be crucial to identifying the next set of successful cities and real estate markets. Ensuring Transparency Transparency is important for an efficient and flexible real estate market – and this holds true in other sectors. Cities are increasingly being differentiated by their business environments, market openness and levels of risk. Being Smart ‘Smartness’ is one of the buzzwords in city development. Cities are forging ahead with long-term strategies and integrated interventions, which they hope will lead to new efficiency in city operations — from traffic to waste management. Keeping it Affordable The housing affordability crisis in major cities is a mounting concern. Thus, costs and affordability are being more closely tracked. This is prompting much debate about how to build more homes, how to ensure affordability, and the roles of the public and private sectors. Building Brand Interest in a city’s brand, appeal, identity, reputation and visibility is on the rise. Reputation is key in attracting businesses, talent and visitors. Cities are using innovative real estate and impressive skylines to project their brands and identities. Going Global New rankings are emerging from a diverse set of regions, from China and India, to Latin America and Sub-Saharan Africa. These attest to the expanding attention of international businesses and investors in the future of cities, and the value to be found in them. Source: JLL, Decoding City Performance, The Universe of City Indices 2017.

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MARKET TRENDS

CHANGE TO SURVIVE

Office buildings introduce creative programming

BY REBECCA MELNYK

reative programming can add value to properties in an increasingly competitive leasing environment, but such unique elements aren’t at the forefront of the office sector, which is predominately ruled by traditional concepts. Such is a mindset that has to evolve, according to a panel of industry insiders who spoke at the Real Estate Leasing & Strategy Conference in Toronto earlier this fall. “If office buildings don’t become facilitators of change, they will dry up,” said Dermot Sweeny, President of Sweeny & Co Architects. “Office buildings typically have a negative connotation. They look like they shut down at a certain time; we associate them with toil and with being late. But they could be the most powerful facilitators of positive change.” Developing unique buildings and attracting tenants with amenities were key topics posed by moderator Stephen Messinger, Partner at Minden Gross. The panel highlighted examples as they discussed how collaborative zones, common meeting rooms and areas, outdoor spaces, fitness centres and creative

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food courts can differentiate a property and be incorporated into underutilized spaces. DENSITY AND DEMOGRAPHICS For Evan Weinberg, Senior Property Manager at Cadillac Fairview, density and demographics are key themes when thinking about programming strategies to win over tenants. “The amount of people working per square foot has evolved over the past 10 years and will continue to rise,” he said. “There are expectations around the types of spaces we’re offering and opportunities for collaborative and engaging spaces that extend beyond the traditional office space. There are additional pressures and opportunities to capitalize on that.” In terms of demographics, employees working in the core of a downtown see the office as an extension of their live-work-play atmosphere. As a result, their expectations of what a work experience means include shareable moments that are experiential. The audience was reminded that millennials are the largest generation entering prime spending years on the brink of home purchases, marriage and families. They are also more educated than previous generations. “Better educated workers are a strong indicator of higher spending power,” said Messinger. “They demand customization, personalization and the real estate industry is responding by offering better places to eat and be entertained.” For Sweeny, millennials are pushing the commercial real estate community to understand that urbanism is better than suburbanism and life is more important than spending time on transit or in a car. “What the smartphone has done is it’s brought all kinds of experiential things to us during the day no matter what we’re doing — we’re relating to other people,” he said. “As this happens, we become more urban and want a higher quality of life.” During his first 15 years in the office sector, the conversation revolved around getting the leasable areas up. “Now, there is tremendous transformation in the office world where people are wanting more per square foot by having less square feet and doing things on the basis of what people want," he reported. "It’s all about that life experience. They want to be social, they want collaboration space, they want higher quality food accessible to them all the

time, better coffee — but, really, it’s about being social. We’re generally becoming far more urban.” ATTRACT PEOPLE OUTSIDE OF WORK HOURS Whether it’s a farmers' market or musicians coming in to perform for an hour or two, thinking beyond the square box pro forma is key for Brad Keast, Vice President of Development for Osmington Inc., the head lessee of Union Station’s revitalized retail landscape.

The transit hub has become more of a destination infused with creative programming. A food court with traditional tenants now features “amazing operators” who offer a new reason for people to be there. “At Union Station, we know commuters are there four hours a day, so for the other 20 hours, how do you bring people down there?” posed Keast. “What programming do you implement to attract people, but more specifically, attract the people who are

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“BETTER EDUCATED WORKERS ARE A STRONG INDICATOR OF HIGHER SPENDING POWER.” shopping in stores that the event is happening right in front of?” For a building manager in the office or retail sector looking to increase value with these collaborative zones, Keast suggests really understanding the property’s advantages and what type of tenancy it’s trying to attract. Ultimately, the programming will support the tenants. When building infrastructure around programming, instead of renting items all the time, build them into a property and treat the people coming — performers, musicians, farmers, etc. — with respect, and pay them accordingly. For example, Osmington dedicated 1,300 square feet of leasable space to build a secure green room for performers to use, just for the purpose of supporting the property’s programming, which will lead to TheRoofers_GTA_May_2017_FINAL.pdf more consumer traffic.

CMY

When Sweeny & Co Architects repositioned the BC Gas building in Vancouver, all the potential developers wanted to remove the raked theatre seating. The purchasing developer left it in and charged an hourly rate. Now, it’s used by performers at night, handed over to building tenants during the day and leased seven out of every ten hours, in turn, generating significant revenue.

MAKE IT NEW Madeleine Nicholls, Vice President of Retail for Dream Office REIT, expects to see more demand for creative programming. For future developments, she suggests engaging the community and asking them what they envision the development looking like, which will get them thinking about the property 2017-04-21 years ahead. 1:12 PM

She pointed to Dream’s existing projects, such as the 30,000-square-foot outdoor space at Adelaide Place that featured 12 food vendors, seven days a week and brought in thousands of people over the past summer, not only office tenants. Adding a unique feature like that for a short period of time creates anticipation and makes it “new.” It’s also low cost and adds the social aspect of interaction. “People are looking for a sense of community, social interaction and this big blending of work life and home life," she suggested. "People were picking up produce before they left for the evening as there are not a lot of grocery stores in downtown Toronto.” Similarly, after Dream purchased 135 properties, some with chronic vacancy issues, from Marin Group in the Netherlands, it introduced more common areas with cafes and lounges at the ground floor level. These are now fully occupied, with companies from surrounding buildings using the spaces for meetings. In the past, said Nicholls, people thought the leasable square footage had to be 95% behind the front door. Now it’s really swinging and could be 70% behind the front door and 30% in the lobby where they mix and mingle. “Cities are becoming more important,” Sweeney asserted. “Your first thing is your lobby: how it works, how it feels, that it’s not only integrated with the building, but more importantly, how it’s a part of the city — it’s a living room on the city.” “For years, people in real estate have always said ‘location, location, location,’ but it’s the buildings that change to become the location, which will be the most sought after in the future,” he added. He identified King and Bay as a desirable location, but asked the audience to ponder where exactly people want to be within that node. “It will come down to desire,” he said. “You’re going to start to see buildings facilitating change, and those that don’t, will die.” ■ ______________________________________________

REBECCA MELNYK IS ONLINE EDITOR OF THE REMI NETWORK AT WWW.REMINETWORK.COM.

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PROPERTY TAX

TAX GAP NARROWS SLOWLY

Toronto's commercial-to-residential ratio still far from the targeted 2.5 to 1

he gap between Toronto’s commercial and residential property tax rates narrowed slightly in 2017, but there is still a lot of space to bridge to meet the City’s target for a commercial-to-residential tax ratio of 2.5 to 1 by 2023. For this tax year, the ratio stands at 3.81 to 1 — compared to 3.84 to 1 in 2016 — meaning the city’s commercial ratepayers still face one of the most divergent property tax regimes anywhere in Canada. Only Vancouver registered a more onerous split — with a commercial-to-residential ratio of 4.87 to 1 — among the 10 major Canadian cities surveyed in the 2017 Altus Group/ REALPAC report on property tax rates. Vancouver, Toronto and Montreal were the three cities with commercial-to-residential ratios above the national average of 2.85 to 1, while Saskatoon and Regina recorded the two lowest ratios of 1.72 to 1 and 1.75 to 1. This annual look at the apportionment of the tax burden, released in October, gives a more complete picture of the pressures on the commercial and multi-residential sectors

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than simply referencing tax rates. Notably, Vancouver’s 2017 commercial property tax rate was actually more than 10% lower than the 2016 rate, but that largely reflects the city’s soaring property values during a tax period when the residential rate also dropped a startling 19.29% from the previous year. “With the increase in property values, tax rates should trend lower as municipalities are able to collect the same amount of tax revenue given that the higher property values create a larger assessment base,” says Terry Bishop, President, Property Tax, Canada, with Altus Group. The reverse is true in Calgary and Edmonton. Commercial and residential property tax rates rose in 2017, reflecting a decrease in the value of the assessment base in those cities. Calgary’s commercial tax rate jumped 11.36% from 2016, equating to an extra $1.81 per $1,000 of assessed value. Edmonton’s commercial tax rate rose 8.54%, or an additional $1.63 per $1,000 of assessment.

Across the 10 cities, commercial property taxes range from $12.44 per $1,000 of assessed value in Vancouver to $37.23 per $1,000 of assessed value in Montreal. Rates in Montreal, Halifax, Ottawa, Toronto and Winnipeg are above the national average of $23.02 per $1,000 of assessment, while those in Edmonton, Calgary, Regina, Saskatoon and Vancouver are below. SOME PROGRESS Vancouver homeowners likewise pay the lowest amount per $1,000 of assessed value, at $2.55, while Winnipeg residential ratepayers top the scale, paying $12.15 per $1,000 of assessment. Toronto’s commercial tax rate dropped 4.53% compared to a 3.83% decline in the residential tax rate — thus translating into this year’s fractionally shrinking tax gap. Montreal also reversed a 10-year trend of apportioning an ever-increasing share of the tax burden to the commercial sector, as its commercial-to-residential tax ratio tightened

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PROPERTY TAX to 3.77 to 1 from last year’s 3.82 to 1. “While representing only a 1.21% decline in its ratio, this is a positive step toward bringing commercial taxes down to a level more in line with the rest of the country,” the report maintains. Ottawa was unique in lowering the commercial tax rate, which dropped by 0.38%, and increasing the residential tax, which rose 1.48%. This tightened the commercial-to-residential tax ratio to 2.67 to 1 from last year’s 2.72 to 1. Halifax did the opposite, raising the commercial tax rate by 0.82% and lowering the residential tax rate by 0.83%. That stretched the commercial-to-residential ratio to 2.77 to 1. Winnipeg’s residential rate increase — up 3.12% from 2016 — surpassed the increase in the commercial tax rate, which rose by 1.12%. However, the report suggests the commercial-to-residential tax ratio of 2.01 to 1 isn’t necessarily the complete picture. “Winnipeg’s business tax, which commercial owners consider to be a subset of the property tax, would push the City’s ratio closer to the [national] average,” it states. Commercial ratepayers in Regina and Saskatoon enjoyed the steepest decline in property tax rates. A 27.56% decrease in Regina pegged this year’s taxes at $16.16 per $1,000 of assessed value — a drop of $6.15% per $1,000 of assessment from 2016. Saskatoon’s commercial tax rate fell more than 21% from 2016, resulting in taxes of $14.57 per $1,000 of assessed value. Residential tax rates also dropped in the two cities — by 8.73% in Saskatoon and 7.59% in Regina. MULTI-RESIDENTIAL INEQUITIES Meanwhile, multi-residential ratepayers in the Ontario cities, Toronto and Ottawa, are taxed at a much higher rate than their peers elsewhere in the country. Toronto’s multiresidential levy is 2.21 times greater than the residential rate; Ottawa’s is 1.38 times greater. Residential landlords and their tenants pay property tax equivalent to $14.63 per $1,000 of assessed value in Toronto, while homeowners pay $6.62 per $1,000 of assessment. In Ottawa, the multi-residential tax rate is $14.70 per $1,000 of assessed value versus the residential rate of $10.68 per $1,000 of assessment. This is despite the fact the Ontario government froze multi-residential taxes

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for 2017, largely in response to the spikes in assessed value arising from the 2016 reassessment. There are also major tax anomalies within the multi-residential asset class itself since Toronto and Ottawa were early adopters of Ontario’s “new multiresidential” property tax class. This previously optional, but now mandatory tax class for newly constructed rental residential buildings ensures that new purpose-built rental properties are taxed on par with the residential property tax rate for

a period of up to 35 years. Although aimed at encouraging new rental housing supply, the policy also conveys an operating cost advantage to the further detriment of older competition. “The higher levels of taxation on older multi-residential buildings make it more challenging to direct funds to needed repairs, maintenance and building infrastructure upgrades,” the Altus/ REALPAC report states. ■

MUNICIPALITIES MANDATED TO HARMONIZE TAX RATES The Ontario government's move, earlier this year, to mandate the new multi-residential property tax class smoothes out a province-wide patchwork of application. Previously, under Ontario’s Assessment Act, municipalities could voluntarily pass an enabling bylaw to establish the property class. Qualifying properties — whether newly constructed or created from the conversion of non-residential buildings — would then be taxed at a distinct rate, set at the municipal council’s discretion, for a maximum of 35 years. Participating municipalities could also pass a by-law at any time to discontinue use of the property class. Toronto was among the first municipalities to take advantage of the new multiresidential class when the provincial government of the day opened up the possibility. At the time, a handful of discretionary property classes — including options for distinct classes for office buildings, shopping centres and parking lots/vacant land — were introduced largely to deal with the fallout from the 1998 province-wide reassessment and associated assessment reforms, but the new multi-residential class was also envisioned as a mechanism municipalities could use to support the development of purpose-built rental housing. In Toronto, the new multi-residential tax rate has mirrored the residential rate, while older rental apartment buildings, built prior to the city’s 2002 formal adoption of the class, are taxed at a rate approximately 2.2 times greater. Some other municipalities pegged the new multi-residential tax rate somewhere between the residential and multi-residential rates, and some municipalities offered no property tax breaks for new rental apartment development. “For example, Brantford has a program, but it’s not aligned with the single-family tax rate in that municipality. Oakville just doesn’t have a property class for new multi-res,” David Gibson, a property tax consultant with Yeoman & Company Paralegal Professional Corporation, explained when the Ontario government announced the new mandate last spring. “Now municipalities will be forced to adopt the class, which they should be.” He also advocates a broader definition of “new” to cover significant capital upgrades to the vast share of Ontario’s existing rental housing stock that’s now in the range of 50 years old. With a coalition of industry and municipal support, and drawing on his own experience proposing and steering regulatory tweaks through Ministerial processes, Gibson foresees the provincial government could be convinced to allow substantially renovated existing rental apartment buildings to qualify for the preferable property tax rate — perhaps by making the new property class status conditional on achieving LEED or some other comparable certification. “Right now, there’s no incentive for landlords to inject the amount of cash that’s often needed into these buildings,” Gibson maintains. Beyond improving the quality of their living conditions, he suggests rewarding renovated properties with a lower property tax rate could also benefit tenants by mitigating above-guideline rent increases for capital improvements.

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YORKVILLE'S NEWEST LUXURY ADDRESS Investors are embracing upscale purpose-built rental accommodations BY ERIN RUDDY

ising in Toronto’s opulent Yorkville neighbourhood is Two St. Thomas, a joint venture of the real estate companies, Bentall Kennedy and KingSett Capital. The $130-million, 26-storey tower made of glass, stone, wood and copper is the picture of modern sophistication, as first imagined four years ago by Hariri Pontarini Architects. With occupancy set for the end of this year, Gary Lee, Senior Vice President of Residential Services for Bentall Kennedy, suggests expectations are high, but demand is even higher. Quite simply, Canada needs more purpose-built rentals and Two St. Thomas is an example of the kind of modern accommodations successful young professionals and baby boomers are looking for. “We believe we are catering to an under-served market for discerning people who choose to rent. In our view, there is strong market demand for high-quality product that comes with professional management and security of tenure,” Lee says. “Yorkville hasn’t seen a purpose-built rental building in almost 15 years, but with this property, we will be delivering a level of luxury and service that residents will find exceptional for a building of this type.” STRONG LOCATION, STABLE RETURNS Given Toronto’s red-hot rental market, Bentall Kennedy, through its Prime Canadian Property Fund, and in partnership with KingSett Capital’s Income Fund, saw Two St. Thomas as an opportunity to develop high-quality, luxury apartments in one of the city’s most desirable neighbourhoods. Streets lined with cafés, museums, lavish hotels and high-end fashion boutiques make Yorkville a humming locale. The elegant high-rise was crafted to fit into this popular destination, while creating a core asset that would generate stable, consistent returns. “The development of purpose-built rental buildings has been a key area of focus for Bentall Kennedy for a number of years,” says Lee. “We’re developing thousands of units across major centres throughout North America. In Canada, we are in the midst of three other major projects that will continue to play to this strength.” Those projects include: Portfolio, a recently completed 26-storey, 210-unit development in the Beltline district of Calgary; a new 114unit project in Vancouver, set to begin construction before year-end; and a new mixed-use development featuring 34- and 25-storey towers, coming soon to Toronto’s Liberty Village. “These buildings will become centrepiece additions to the neighbourhoods where they will reside,” says Lee. “They’ll offer

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PLANNING & DEVELOPMENT

residents the advantages of renting, combined with the luxuries, amenities and service levels typically reserved for condominium developments.” Given housing shortages in cities across Canada and demographic shifts in the marketplace, there’s a continued need for all types of purpose-built rental — from affordable to mid-level to luxury, contends Lee. But at the end of the day, for Bentall Kennedy, it all comes down to delivering that strong return on investment. “We believe multifamily assets, and in particular new-generation multifamily assets, can be a strong component of a well-diversified portfolio. Multifamily investments tend to provide a solid, stable return profile, which is an attractive investment characteristic for our investors.” Some of the key trends in the marketplace apply to two primary demographics: the baby boomers who are down-sizing from large family homes; and the millennials who want to live where they work and play. “Both segments seek good quality housing, in a convenient location wherein they can remain active and connected to the surrounding community,” says Lee. MEETING HIGH-END EXPECTATIONS Of course, when it comes to anyone’s living space, design is always important. Lee points to the shift in desire for higher quality finishes and technology-equipped suites — a trend that’s steadily gaining momentum. “At Two St Thomas, a great deal of attention has been invested in the quality of design, materials and luxury finishes by award-winning architects and designers. We have also incorporated simple, seamless technologies, like destination dispatch for the elevators, keyless entry to suites using smart phones and smart thermostats," he says. Hotel-style amenities are a well-established trend, and Lee believes that the value placed on these amenities factors heavily into the lifestyle choices residents today are making. “We have a large roof terrace with an outdoor lounge and fireplace on the 12th floor, two dining rooms with gourmet kitchens and a professionally appointed fitness studio,” he says. “There’s a luxurious lounge with a fireplace, an in-house pet spa and an automated parcel management system. Concierge service has become a staple of luxury condominiums, and Two St. Thomas will offer no less, with full-time concierge services

Photos by Ben Ehrensperger

and the building professionally managed by Bentall Kennedy Residential Services.” Another trend that’s been gaining momentum is occupant interest in the sustainability standards of the buildings themselves. “There is a growing public sentiment that expects the buildings we occupy to adhere to lofty sustainability standards, empowering us to make lifestyle choices that benefit the environment, too," Lee advises. "Two St. Thomas is targeting LEED Gold designation. Every fixture has been selected to meet these

demands, and every suite will have a central master-off switch for in-suite lighting and parking for electric cars.” As construction of Two St. Thomas comes to a close and Yorkville prepares to welcome its newest residents, Bentall Kennedy anticipates huge payoffs — in both customer satisfaction and investor returns. ■

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ERIN RUDDY IS THE EDITOR OF CANADIAN APARTMENT AT WWW.REMINETWORK.COM/ CANADIAN-APARTMENT-MAGAZINE. www.REMInetwork.com

PLANNING & DEVELOPMENT

AHEAD OF

THE STORMS Best practices for designing and deploying flood-resilient greenfield development BY NATALIA MOUDRAK AND BLAIR FELTMATE

Researchers at the University of Waterloo's Intact Centre on Climate Adaptation have identified 20 best practices for the design and infrastructure of new residential development that could bolster resilience to flooding. The Standards Council of Canada (SCC) funded the work, which draws on expertise from municipal stormwater management personnel, engineering consultants, developers, insurers and homebuilders, and makes the argument: There is no going back on climate change; Canada must adapt. The following excerpt from the resulting September 2017 report presents the context for a Canadian standard to guide flood-resilient communities and organizes 20 recommended best practices into six key categories that underpin greenfield development – Editor.

n an effort to “get ahead of storms,” newly built communities in Canada must incorporate best flood risk reduction practices into their design. Examples of the need to address current and future residential flood damages are many: • Financial and Mental Health Stress: Flooding is the most frequent and costliest natural disaster in Canada. Thousands of homeowners across the country experience property damages, loss of personal belongings and the consequent financial and emotional distress that follows floods. • Insurable Risk: In communities across Canada that experience repeated basement flooding, insurance premiums are increasing in concert with growing flood risk. In cases where risk is excessive, flood insurance coverage may be reduced or withdrawn altogether.

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• Mortgage Defaults: With limited flood insurance coverage, some homeowners in Canada may not be able to pay for flood damages. Due to limited liquidity to redress flooding, some homeowners may default on their mortgage (as homes with sewer water in the basement are generally uninhabitable). • Legal Risks: Homeowners, developers, municipalities, provinces and insurance companies are increasingly facing lawsuits for flood-related damages. • Municipal Credit Ratings: Credit rating agencies (e.g., DBRS, Moody’s and Standard & Poor’s) are beginning to examine the potential for communities to be impacted by substantial flood recovery costs which, in turn, could cause a municipality to default on a bond. If the probability of a weatherinduced default is material, the municipality may receive a downgraded credit rating.

The scope of the draft best practices is specific to greenfield community development only (i.e., not infill or redevelopment) and the following building types: detached homes; semi-detached homes; row houses (including stacked and back-to-back townhomes). The types of flood hazards considered include: riverine flooding; overland flooding; storm and sanitary sewer surcharge; drainage system failures; and groundwater seepage. Coastal flood hazards and unique flood hazards (e.g., dam failures) are not addressed. While the proposed best practices are expected to be relevant across Canada, their application may be limited in the areas with permafrost, such as Yukon, Northwest Territories and Nunavut, as well as in coastal areas of Canada, where sea level rise and storm surge pose additional flood risk. The following selection criteria were used to develop the draft best practices:

PLANNING & DEVELOPMENT

• National applicability: stakeholders from every province in Canada confirmed that best practices proposed in this report are generally relevant and applicable for community design and construction. However, since each community may have unique flood management challenges (e.g. a combination of impermeable soil, flat terrain and high water tables), best practices to address unique and area-specific challenges were not included in the report. • Effectiveness in reducing flood damages from severe rain events: the focus of the proposed best practices was on reducing flood damages from severe rain events (e.g. a month's worth of rain falling in a city within 24 hours). • Technical feasibility for implementation: best practices in the report reflect technology and skill sets that are broadly available in Canada. • Cost-effectiveness: the cost of implementing the proposed best practices over their lifecycle was comparable or better than alternative methods to address flood risk reduction.

20 BEST PRACTICES Design for Resilience 1. New homes should not be built in the floodway. New homes should also not be built in the flood fringe unless floodproofing addresses flood risks in the flood fringe. 2. Safety factors should be used in new community design to account for potentially more frequent and severe rainfalls and stormwater system failures. (e.g. locating buildings further distance away from the edge of the floodplain). 3. New development should not increase the risk of flooding for existing communities. 4. New development should be designed to minimize the risk of basement flooding from groundwater infiltration. 5. Heating, ventilation and air conditioning (HVAC), fuel and electrical systems should be well-elevated from the basement floor or located above grade. Storm Sewer Design 6. If the home foundation drainage system connects to a storm sewer, the water level in the storm sewer should stay at least 30 centimetres lower than the

foundation drainage system during a major design flood event (e.g.1-in-100 year flood event). A backwater valve should also be installed on the storm sewer lateral to prevent stormwater from backing up into the basement if the storm sewer is overloaded. This backwater valve should be accessible for maintenance. 7. If the home foundation drainage system does not connect to the storm sewer, sump pumps should be installed and equipped with one or more backup power systems. 8. Inlet control devices (ICDs) should be used to restrict the flow of stormwater from the street into storm sewers. Sanitary Sewer Design 9. Basements connected to sanitary sewers should have a backwater valve to mitigate sewage backup into the basement if the sanitary sewer is overloaded (e.g. during heavy rain). 10. Downspout, foundation drain and sump pump discharge should not be directed to the sanitary sewers. 11. Design of sanitary sewers should have a factor for “Normal” infiltration of rainwater during typical rain events and a higher “Safety Factor” for infiltration and inflow during extreme rain events. www.REMInetwork.com

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Street Design 12. Roads and public spaces should be designed to convey excess runoff so that it does not flow through homeowner property. 13. Road design and lot grading should be such that the water on the road remains at least 30 centimetres below the lowest building openings (e.g. basement windows) during design flood conditions. 14. Roads should be designed so that the maximum depth of water during the extreme design condition does not exceed 30 centimetres at the curb. 15. Driveways should be built to slope away from homes or garages (i.e. reverse-slope driveways should not be permitted). 16. Sanitary sewer manholes should not be located in low-lying areas. If sanitary sewer manholes need to be located in low-lying areas, manhole covers should be sealed to minimize inflow of accumulated runoff into the sanitary sewer. Wastewater Pumping Station Design 17. Wastewater pumping stations should be located in areas where they will remain fully operational and fully accessible during extreme rain events and riverine flood events. 18. Wastewater pumping stations should have backup power to allow for a minimum of 48 hours of uninterrupted service and an overflow in case of catastrophic failure. Preservation of Natural Features 19. New development should not encroach on riparian buffers (land and natural vegetation adjacent to water bodies), and sufficient setbacks should be maintained along water bodies to reduce the risk of flooding due to stream movement and bank erosion. 20. New development should aim to minimize runoff from impervious areas. ■

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FOR MORE INFORMATION AND TO FIND THE COMPLETE TEXT OF PREVENTING DISASTER BEFORE IT STRIKES: DEVELOPING A CANADIAN STANDARD FOR FLOODRESILIENT RESIDENTIAL COMMUNITIES, SEE INTACT CENTRE ON CLIMATE CHANGE ADAPTATION WEBSITE AT WWW. INTACTCENTRECLIMATE ADAPTATION.CA

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LEGAL/ENERGY

WIND FARM

APPROVAL REVOKED

Environmental Review Tribunal affirms concerns related to human safety

BY JULIE ABOUCHAR, RICHARD BUTLER AND NICOLE PETERSEN

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NOVEMBER/DECEMBER 2017

LEGAL/ENERGY

n August 16, 2017 the Environmental Review Tribunal released its decision in Wiggins v Ontario (Environment and Climate Change), involving a challenge to the grant of a wind turbine farm approval. Seven parties including the Town of Collingwood, the Region of Simcoe and the Township of Clearview appealed the approval on the basis that the turbines were too close to the Collingwood Regional Airport (CRA) and the Clearview aerodrome and would cause loss of life. The Tribunal revoked wpd Fairview Wind Incorporated’s (wpd) approval. This case is the first instance of the Tribunal revoking a Renewable Energy Approval in Ontario on the grounds of likely harm to human health.

the obvious potential harm to pilots and passengers. CRA is a busy regional transport centre that hosts a large local community of light and ultralight aircraft, commercial jets and medevac aircraft, as well as two flight schools that train beginner pilots. Several other flight schools in southwestern Ontario use CRA as a stopping point for training flights. The aerodromes in question do not have air traffic control towers to assist pilots. The aerodromes are located in an area of unpredictable and changeable weather coming off Georgian Bay. Of particular importance, 90% of pilots in the area fly according to visual flight rules (VFR, i.e. pilots navigating primarily

the turbine’s fast-moving blades. It acts like moving vortices in the air — invisible, powerful and hazardous to planes. wpd did not provide turbulence data in its original REA application materials and turbulence was not considered by the MOECC when the REA was granted. wpd chose to file expert evidence at the Tribunal hearing that argued the likelihood of disturbance to the aerodromes was low. The appellants filed responding expert evidence about the increased risk posed by the turbine turbulence to aircraft during take-off and landings. In cross-examination, one of wpd’s experts confirmed that the turbulence generated by the proposed wind farm would negatively impact

IN CROSS-EXAMINATION, ONE OF wpd’S EXPERTS CONFIRMED THAT THE TURBULENCE GENERATED BY THE PROPOSED WIND FARM WOULD NEGATIVELY IMPACT TAKEOFFS AND LANDINGS AT BOTH AIRPORTS. In October 2016, the Tribunal had found that the renewable energy project will cause serious harm to human health arising from the proximity of proposed wind turbines to CRA and the Clearview aerodrome. In the recent decision, wpd was provided the opportunity to show measures to mitigate this potential harm. Tribunal held that wpd failed to do so. BACKGROUND On February 11, 2016, the Ministry of the Environment and Climate Change (MOECC) issued Renewable Energy Approval No. 3948-9RDLRF (REA) to wpd for an eight-turbine wind farm in Clearview, Ontario. The proposed wind farm would be less than a mile from the Clearview aerodrome and within the operating airspace for CRA. The appellants argued that the wind farm would cause serious and irreversible harm to the natural environment (dubbed the Environment Test) and serious harm to human health (the Human Health Test). Collingwood, Simcoe and Clearview are the first municipalities to appeal on human health grounds. They objected based on

visually). The Tribunal heard, as evidence, that VFR pilots are allowed to fly as low as 500 feet above the ground in order to stay clear of clouds. The proposed turbines would be just above 500 feet tall, skinny and white, and difficult to see against clouds or snow. Collingwood and Simcoe led expert evidence that the pilots who use CRA and the Clearview aerodrome would be put at risk by the presence of the 500-foot turbines within the operating airspace of each of the aerodromes. To impress upon the Tribunal panel the vulnerabilities associated with light aircraft, Collingwood organized a site visit to CRA, with each Tribunal member taken on an airborne tour. The flights included take-offs and landings from both runways (paved and grass), with the proposed location of each turbine set out on the ground with large orange markers. TURBULENCE CONCERNS Wind turbines are known to create air turbulence. Wake turbulence is generated by the differential air pressure moving across

takeoffs and landings at both airports, and in particular at the Clearview aerodrome. In its written submissions following the hearings, the MOECC withdrew its support for the locations of two of the proposed turbines on the basis that the turbulence posed an unacceptable additional risk to pilots. 2016 DECISION AND REMEDY HEARING In its October 7, 2016 hearing decision, the Tribunal found that the appellants satisfied both the Human Health Test and the Environment Test. The Tribunal went on to review the proponent’s proposed mitigation measures and determined that those measures could not ameliorate the Human Health or Environmental impacts. The Tribunal held that the appellants met their onus to establish that the Human Health Test in respect of the project’s effects on persons using both the Collingwood Regional Airport and Clearview aerodrome. The Tribunal further held that engaging in the project in accordance with the REA will cause serious and irreversible harm to animal life, plant life or the natural environment. www.REMInetwork.com

LEGAL/ENERGY

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As has become standard following the Ontario Court of Appeal’s ruling in Prince Edward County Field Naturalists v Ostrander Point GP Inc, the Tribunal provided an opportunity to wpd to present additional evidence on possible mitigation. This secondary hearing is called a remedy hearing. wpd presented additional evidence on mitigation of harm to endangered bat species at the remedy hearing. wpd proposed an amendment to the REA, supported by expert witness evidence, to curtail the movement of the blades in the evenings when bats are at their most active. Neither wpd nor MOECC led evidence on any possible mitigation for harm to human health arising from the proximity of the Project to the Collingwood Regional Airport and the Clearview aerodrome. REA REVOKED In its 39-page decision on the remedy hearing, the Tribunal revoked the REA, finding that: "… neither the Approval Holder nor the Director provided any additional evidence or mitigation proposals to address the Tribunal’s finding in its October 2016 Order of serious harm to human health. As the Tribunal has found that engaging in the Project in accordance with the REA will cause serious harm to human health, and 2:22 PM neither the Approval Holder nor the Director have proposed effective means to mitigate this harm, the Tribunal finds that it is in the public interest to revoke the REA under s. 145.2.1(4)(a).7 " The Environmental Review Tribunal found that the evidence about mitigation of harm to bats was sufficient; there was no reason to amend the REA because of the decision to revoke under the Human Health Test. In other words, while the REA can be amended to reduce the harm to bats, no steps were taken by wpd to mitigate the proven harm to humans. The proposed wind farm must be refused based on the likely harm to pilots. ■ ______________________________________________

JULIE ABOUCHAR IS A PARTNER AND CERTIFIED SPECIALIST IN ENVIRONMENTAL LAW AND INDIGENOUS LEGAL ISSUES, CORPORATE AND COMMERCIAL & RIGHTS AND GOVERNANCE WITH WILLMS & SHIER ENVIRONMENTAL LAW YERS LLP. RICHARD BUTLER IS A PARTNER AND NICOLE PETERSEN IS AN ASSOCIATE. THE PRECEDING ARTICLE IS REPRINTED FROM AN AUGUST 21 BULLETIN. FOR MORE INFORMATION, SEE THE WEBSITE AT WWW. WILLMSSHIER.COM.

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DARK STORE

MAINTENANCE Coordinated contingencies for non-operational retail space BY CHARISSE RUBIO

losures due to bankruptcies, newly merged companies unloading duplicate sites and fierce competition in a crowded market have fed a growing inventory of dark stores — the common term for nonoperational retail spaces. The Professional Retail Store Maintenance (PRSM) Association's 2016 benchmarking snapshot found that 63% of surveyed retailers had a dark store in the past three years, and nearly 36% reported the dark store duration was longer than one year. Other industry research delivers similar findings. An April 2017 research report from

the brokerage firm, Credit Suisse, projected more than 8,600 brick-and-mortar stores would cease business in United States this year, following more than 2,050 closures in 2016 and nearly 5,080 in 2015. Additionally, CoStar Group reported to Bloomberg that more than 10%, or nearly one billion square feet, of U.S. retail space “may need to be closed, converted to other uses or renegotiated for lower rent in coming years”. Cowen, Inc., a New York-based financial services firm, outlines some prominent reasons for poor mall traffic, including: an over-stored domestic market; faster than expected share

gains for e-commerce and Amazon; evolving millennial spending habits; the rise of off-price and outlet channels; and lack of game-changing fashion, while low-cost fast fashion alternatives have caused deflationary pricing. These pressures are seen to be undermining C and D class malls that account for about 30% of the sector, while owners are actively reinvesting in Class A malls to keep them competitive. IDLE BUT STILL VALUABLE Most industry experts agree that maintenance costs increase when properties are not properly www.REMInetwork.com

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maintained and this trend tends to be heightened in dark stores. Although a dark store may be idle and not generating revenues, it is still a valuable investment. It must be maintained to comply with local ordinances, preserve its sellable or leasable condition, avoid declining real estate valuation and protect the company’s brand. Security is always a concern, but technology, industry standards and styles change so quickly that long-term dark stores can become obsolete. This makes it challenging and expensive to keep a dark store marketable, even when all routine major maintenance is being well managed. The spend for some upgrades will be on the low side, such as changing from wallpaper to paint. However, for others, the upgrade can be a huge expense, such as carving windows out of closed exteriors to create the open look buyers now prefer. One option is to take a hands-off approach and invest little or no money in the maintenance of a dark store. This is called "deliberate non-involvement" because the retailer makes the strategic decision to terminate all utilities and maintenance service once the liquidation is completed and the store is vacated. Another option is to take the very minimal effort and investment necessary to secure and protect the property and avoid violations. This is called "necessary involvement" because the basic utilities are retained as well as the most basic of facility services, which are generally performed on-demand in reaction to maintenance issues. Scheduled service may also be considered to ensure compliance with local ordinances like periodic grounds maintenance and/or basic cold-weather HVAC service to ensure heat is present in the building or to avoid sprinkler system pipe burst if in a freeze zone. The third approach covers interior, exterior and ground maintenance in a systematic program that will provide for the safety, security, and structural soundness of the vacant property. This approach is called “all-inclusive 1:41 PM involvement” because there is a fully developed program from the proper shutdown of a store until its final disposition. It includes periodic assessments to detect maintenance issues before they become problems (such as roof leaks, dumping, and vandalism) and routine service to maintain a safe, secure and compliant site. This approach recognizes the dark store as a valuable company asset and manages it to avoid any significant deterioration, while providing a positive cost/benefit ratio. Program costs would include demand services, scheduled maintenance and required repairs. It also considers interim use such as subleasing and repurposing a property until it can be sold or returned to the landlord. The biggest complaints about dark stores are the degradation of the property values and the increase in crime when a retailer vacates a property. Much of this negativity can be avoided by maintaining an appealing exterior that does not “advertise” that the property is unoccupied. A vacant property is more susceptible to property damage, criminal activity and insurance claims in many ways. As a result, most insurance policies contain a clause that automatically voids cover when a property is vacant for an extended period because it is more vulnerable. Therefore, it is essential to notify the company's insurer when a store goes dark. For this same reason, taking measures to secure a dark store is key to preventing damage and the associated costs from common threats like theft, arson, vandalism, trespassing and squatting. This is especially important in high risk areas. In these situations, it is best to partner with a security service provider who specializes in dark stores and can provide a combination of methods that will not only protect the site but will also help comply with insurance requirements.

MAINTENANCE & SECURITY

PLANNING AND MONITORING With a few exceptions, the same basic planning process applies whether the store is leased or owned, free-standing, strip centre or mall space. The most effective plan would contain an inventory of all dark stores in the company portfolio, including: • Site name • Address • Primary local contact • Whether the location is leased or owned • Store type • Local emergency number • Key holder with phone number • Contact information for the primary service provider or management company, as well as any remaining warranties or situations that warrant ongoing maintenance. Here are some additional points to keep in mind when preparing to close a retail store: • Take proactive measures to secure and protect the property, and provide site access as necessary. • If leased, review lease to: 1) Ensure store closure meets lease requirements and understand consequences if not; and 2) Determine requirements to comply with tenant responsibilities during lease surrender. • Plan for removal and liquidation, reuse or recycling of FFE (furniture, fixtures and equipment). • Conduct and record the results of initial site assessment. • Plan for the appropriate level of repairs and maintenance for the dark store.

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A good plan includes periodic assessments to provide up-to-date information about the status of site: grounds, exterior, security and interior. This will help to identify potential service issues before they become a maintenance nightmare (such as leaking roof, burst water pipe or vandalism), thus saving time and money. This inspection can be completed by staff or a trusted, qualified service provider. Assessing the condition of dark stores and critical components will identify actions that need to be taken to maintain the dark store at its established standard. Resulting information can be compared to the plan to determine whether any course corrections needed. Compiling a database of this information for all company dark stores supports a more comprehensive understanding of the dark store portfolio and informs capital funding decisions. It underpins a maintenance budget for dark stores that aligns with the company’s mission and goals. ■ _______________________________________________________________

CHARISSE RUBIO, RFMP, IS PRESIDENT AND FOUNDER OF THE FACILITIES MANAGEMENT FIRM, BLUE ACTION CONSULTING LLC AND HAS SERVED ON THE BOARD OF DIRECTORS OF THE PROFESSIONAL RETAIL STORE MAINTENANCE ASSOCIATION (PRSM). THE PRECEDING ARTICLE IS EXCERPTED FROM PRSM'S OCTOBER 2017 WHITEPAPER, DARK STORES: HOW TO CONQUER IMPORTANT MAINTENANCE CHALLENGES. FOR MORE INFORMATION, SEE THE WEBSITE AT WWW.PRSM.COM.

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COMMUNITY DEVELOPMENT

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BROWNFIELD REBORN York Recreation Centre was 20 years in the making BY MICHELLE ERVIN

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COMMUNITY DEVELOPMENT

FIT TO RESIST PATHOGENS Copper-alloy materials provide a less welcoming surface for bacteria, a new study published in the American Journal of Infection Control reports. Shannon Hinsa-Leasure, Associate Professor of biology at Grinnell College led the study, which scrutinized high-touch surfaces in the college's athletic centre over a period of 16 months. “Grip surfaces in athletic centres present an ideal environment for microbes to persist and spread,” she advised. “We have shown that copper alloy grips reduce bacterial numbers by 94% over control grips and thereby limit the spread of infectious microbes by reducing exposure to athletes.” High-touch surfaces throughout a gym can serve as reservoirs for pathogenic microorganisms, including antibiotic-resistant Staphylococcus aureus (MRSA). Though typically found in hospitals, outbreaks of MRSA infections have become more common in athletic centres. MRSA and other pathogens can survive from days to months on dry surfaces, but copper alloy kills a majority of bacteria within two hours. Copper compounds have been used for medicinal purposes for thousands of years, and copper alloys were just recently recognized by the U.S. Environmental Protection Agency as having antimicrobial effectiveness, driving the increased study and use of copper alloy surfaces. “We demonstrated that copper alloys excel at reducing bacteria in the athletic centre environment at rates similar to those found in hospital settings,” said Hinsa-Leasure. “And we found the most common type of bacteria on these surfaces are Staphylococcus.” – REMI Network

ith the development of the York Recreation Centre, the City of Toronto is serving a previously underserved community by using a previously underused site. The 70,000-squarefoot facility houses a fitness centre, dance studios, running and walking track, swimming pools and teaching kitchen, among other amenities. Produced by Perkins+Will, its park pavilion-inspired design responds to its surrounds of the Black Creek and Keelesdale North Park with a façade featuring composite metal panels and forest greencoloured glazing. The project, completed earlier this year at a construction cost of $27 million, dates back just before amalgamation of the municipalities that now make up Toronto. It was championed by Ward 11 York South-Weston Councillor Frances Nunziata, who was mayor of the City of York at the time, and Ward 12 York South-Weston Councillor Frank Di Giorgio. The City of Toronto evaluated three sites for the York Recreation Centre, eventually selecting a brownfield owned by Ontario’s Ministry of Transportation. “We [the City of Toronto] don’t have money to be buying land, so we were looking at some land that we could acquire relatively inexpensively,” said Doug Giles, Senior Project Coordinator for the City’s Parks, Forestry and Recreation division.

PICTURESQUE AND CHALLENGING A consultant identified the site where the facility would ultimately be built as the preferred option, despite some challenges. For one, it was a forgotten playing field-turned-repository for dumping fill, old concrete and telephone poles, so it required remediation. For another, portions of the site overlapped with the Black Creek flood plain, so the plans required approval from the Toronto and Region Conservation (TRCA) to proceed. “It’s kind of a picturesque site being so close to the Black Creek,” said Giles. “And because that site was governed by TRCA control and approval, everyone was trying to create something that was sympathetic to its natural environment.” He pointed to the way the architects camouflaged the rooftop mechanical systems by recessing the equipment below the plane of the inclined green roof as an example of this effort. The TRCAapproved plans involved fortifying the creek bank to prevent erosion and situating the facility outside the flood plain anticipated in the event of a worst-case-scenario storm. The community had an important hand in shaping the design and programming of the recreation centre, actively participating in focus groups and town halls. Public input prompted the architects to add www.REMInetwork.com

COMMUNITY DEVELOPMENT further program elements, including a running track and a mezzanine viewing gallery for the pool, and customize existing program elements. “The youth groups were very clear about a gym that didn’t feel like a high school gym that was much more open to the spaces around it,” recalled architect Duff Balmer, design principal, Perkins+Will. “There were issues around safety and visibility — both around the building and within the centre — that were of concern to this community and to these neighbourhoods.”

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SUSTAINABLE AND SENSITIVE Sweeping glazing, both interior and exterior, creates transparency between different spaces. This gives the gym, pool and track visibility from outside as well as opportunities for daylighting. In the case of the pool, motorized blinds and coloured clerestory glazing counteract glare, which could otherwise obscure the views of lifeguards, Balmer explained. The blinds and coloured glazing also support the passive dehumidification strategies employed in the pool area by lowering the load on the dehumidification system. Sized for four air changes per hour, the system helps pre-heat the pool with recovered heat, which cuts operating costs. Balmer said other considerations included selecting durable finishes and materials capable of withstanding the extra strain that comes with the energy-efficient conditioning of the space. The pool is served by two universal (non-gender-specific) change rooms with fully enclosed changing stalls, which allowed for the application of glazing to the walls separating the change room area from the corridor. This visibility discourages incidents such as theft of personal belongings by improving passive supervision, Giles explained, and the visibility of the showers from the pool deck signals that bathing suits are to be worn when rinsing off, Balmer added. Plus, 10:34 AM they said, the universal change rooms are easier to maintain, because staff of either gender can enter, and having two makes it possible to close one for cleaning or other upkeep. Balmer said Toronto is leading the way with this model, which the city first introduced at the Regent Park Aquatic Centre, but other municipalities appear poised to follow suit. Universal change rooms are the logical progression of the trend toward increasingly large family change rooms, he suggested. “It’s more inclusive for a lot of the ethnic groups that are using this facility,” Balmer observed. “It addresses a lot of the modesty concerns that have been coming up.” LRT IN SYNC Not only was the York Recreation Centre designed with the community it now serves in mind, but the revitalization of the brownfield coincided with broader transformation occurring in the area. Serendipitously, the staging of the tunnelling for the nearby Eglinton Crosstown light rapid transit (LRT) tunnel brought with it a bridge, said Balmer. Constructed across Black Creek by Metrolinx partway through the project, it connects Keelesdale South Park/Chris Tonks Arena to the recreation centre site, allowing improved vehicle access as well as the sharing of parking capacity. With this important link in place, York Recreation Centre has opened its doors after many years in the making. “It’s always very busy and well-used,” reported Giles. “I have to think the community is embracing it after such a long wait.” ■

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ENERGY MANAGEMENT

CARBON PRICING PRIMER Canada's GHG emissions reduction target will figure in energy supply and demand

To provide context for energy supply and demand projections to 2040, the National Energy Board's recently released Canada's Energy Future 2017 report includes a discussion of the rationale for and possible future implications of carbon pricing. The following is an excerpt — Editor.

he government of Canada announced the pan-Canadian carbon pollution pricing benchmark in October 2016 to ensure that carbon pricing applies to a broad set of emission sources throughout Canada in 2018 with increasing stringency over time. The benchmark provides provinces and territories with flexibility to implement their own carbon pollution pricing systems — either an explicit price-based system (a carbon tax such as the one in British Columbia, or a carbon levy and an output-based pricing system, such as in Alberta) or a cap-and-trade system (such as those in Quebec and Ontario). In the benchmark, the federal government also committed to implement a federal carbon pricing backstop system that will apply in any province or territory that does not have a carbon pricing system in place by 2018 that aligns with the benchmark. The government of Canada released a discussion paper in May 2017 outlining the proposed federal carbon pollution pricing backstop system. It is composed of two key elements:

• A carbon levy applied to fossil fuels starting at $10 per tonne of GHG emissions in 2018, rising $10 per year to $50 per tonne in 2022; and • An output-based pricing system for industrial facilities that emit above a certain threshold, with an opt-in capability for smaller facilities with emissions below the threshold. By pricing a portion of emissions and enabling emissions trading, this component incents innovation and emissions reductions but mitigates adverse impacts on competitiveness. ECONOMICALLY EFFICIENT STRATEGY Carbon pricing can have several outcomes. Pricing carbon raises the price of fuels that emit greenhouse gases (GHGs), causing a decrease in the use of those fuels. When carbon is priced, energy users more accurately account for the cost of releasing GHGs into the atmosphere in their decision making. Pricing carbon alters the relative prices of various fuels to better reflect their GHG content.

As a result, low- or no-emitting fuels become more attractive when carbon is priced than if it were not. For example, the carbon price per unit of energy for natural gas is lower than for gasoline, reflecting the lower carbon content of natural gas. A price on carbon can be a driver of innovation and investment in GHGemission reducing technologies. Creating an economic incentive for consumers and businesses to reduce their carbon costs strengthens the market for products and services that help reduce GHG emissions. Carbon pricing can be a source of revenue for governments. Revenues can be used for program spending, including support for the development of carbon-reducing technologies or rebates to consumers. Carbon pricing revenue can also be used to offset other types of taxes, such as personal or corporate income taxes. Economists generally consider carbon pricing to be an economically efficient means www.REMInetwork.com

ENERGY MANAGEMENT

ECONOMISTS GENERALLY CONSIDER CARBON PRICING TO BE AN ECONOMICALLY EFFICIENT MEANS OF REDUCING GHG EMISSIONS. of reducing GHG emissions. Economic theory suggests that energy producers, transporters and consumers who can reduce their GHG emissions at a cost less than the carbon tax will choose to do so. TAX vs. CAP-AND-TRADE Carbon pricing schemes usually fall into two main categories: a carbon tax or a cap-and-trade system. Under a carbon tax, a jurisdiction sets a price on carbon emissions consistent with its policy objectives, with a higher price translating into greater expected emission reductions. In a cap-and-trade system, a government sets a cap on the maximum allowable GHG emissions and then sets the number of emission permits available equal to that cap. Market participants must hold permits equal to the amount of GHGs they emit over a given period. Through trading between many participants, market forces determine an economy-wide price for GHG emissions. Carbon pricing policies can have drawbacks — especially for industrial sectors that are emissions-intensive and face competition in other jurisdictions — some of which can be dealt with through effective policy design. If one jurisdiction introduces a carbon price, trade-exposed industries may shift their operations to a region with less stringent carbon policies, resulting in no net reduction in global GHG emissions. This is often referred to as “carbon leakage” and is usually addressed by offering

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free emission permits to these types of industries. Wider adoption of climate policies around the world could also reduce this effect by removing the option for industries to move to another region in order to reduce carbon costs. A price on carbon can be regressive, meaning it could have a disproportionately negative impact on lower income individuals. The use of carbon price revenues to provide targeted rebates or other tax cuts can offset this impact. The federal government stated that the Pan-Canadian approach for pricing carbon pollution will be reviewed in 2022 to confirm the path forward. Following this review, the minimum price for carbon could change, particularly if other jurisdictions around the world take similar actions. Some provinces already are part of or may join cap-and-trade systems for carbon pricing. In these systems the future price of carbon will be determined by the supply and demand for emission permits. The outlook for this market price will be uncertain, similar to other market prices such as crude oil and natural gas. COMPETITIVENESS IMPACTS Implementing a carbon price that is significantly higher than in other countries can impact the competitiveness of some Canadian industries. Carbon pricing policies can be designed to offset this to an extent. Existing carbon pricing plans in various provinces have some measures in place to mitigate carbon leakage. However, carbon prices well above those in other countries could still have competitiveness impacts. The proposed approach for the federal carbon pricing ‘backstop’ system also includes an element to minimize competitiveness and carbon leakage risks, particularly for emissions intensive and trade exposed industries. This system provides an allowable level of emissions for large emitters, and facilities pay for the emissions above that level or receive credits for their emissions

below it. This system reduces the average carbon cost for these facilities, but maintains the incentive for emission reductions. Given the competitiveness impacts of higher carbon pricing, it is more likely that Canada would increase its carbon price if other nations do so as well. Action on climate in developed countries increases at a similar pace as in Canada. Developing nations increase the strength of their climate policies more gradually over the projection period. Governments in Canada and around the world have emphasized technological innovation as a key component to their plans to reduce GHG emissions. Technology’s influence on the energy system can be substantial, but which emerging technologies achieve widespread use is often difficult to predict. Likewise, the nature of future breakthroughs is unknown. The adoption rate of emerging technologies is a key uncertainty to the projections. Several provincial governments have programs to encourage innovation in energy technology. Examples include SaskPower, Institut de recherche d'Hydro-Québec, Ontario Centres of Excellence and Emissions Reduction Alberta. Some of these programs are funded from revenue generated by carbon pricing initiatives. Adoption of new technologies can be encouraged by climate policies, such as carbon pricing or other options, which improve the competitiveness of low or non-emitting technologies. Alternatively, a technology can sometimes become more popular when public or private sector research and development results in a lower emission technology that is equivalent, or better, than existing technology for reasons such as cost, convenience, quality or societal factors. ■ _________________________________________

THE COMPLETE TEXT OF CANADA'S ENERGY FUTURE 2017, ENERGY SUPPLY AND DEMAND PROJECTIONS TO 2040 CAN BE FOUND ON THE NATIONAL ENERGY BOARD WEBSITE AT WWW.NEB-ONE.GC.CA.

Expertise. Insight. Trust.

Having the technical expertise and insight to conduct retrofit projects in established buildings without affecting the day-to-day business of occupants is our specialty. It’s what sets us apart. The truth is, existing buildings are far more complex and challenging than new construction, and require a unique game plan every time. It’s why the process for delivering mechanical and electrical engineering solutions requires more than a cookie cutter approach – it demands that you have a deep insight into the building and how new systems can be integrated into existing systems seamlessly. All of our projects are reviewed by senior engineers, each with over 25 years of experience in their respective fields, ensuring that our clients always receive engineering services of the highest quality.

1 Concorde Gate, Suite 808, Box 65 Toronto, ON M3C 3N6 Telephone: 416-443-9499 Email: marketing@mcgregor-allsop.com mcgregor-allsop.com

Bill Powell, M.Sc., P.Eng., President & CEO

Peter LaForme, Executive Vice President

Andre Lebedev, P.Eng., Director of Electrical Engineering

Rob Niessl, P.Eng., Director of Engineering, Northern Region

Robert Borovina, P.Eng., Director of Mechanical Engineering