disruptive technologies · disruptive technologies, this page, looks at how our fear of change...

A PEEK INSIDE ...

October 2019

October 2019

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FROM THE EDITOR ……. Later this month we elect a new national government. If history is any guide, we will screw this up by voting based on promises that won’t be kept using money we don’t have. We’ll pay for this with higher taxes a few years later. Voting in condo elections is surprisingly similar. We fail to recall broken promises of the past or educate ourselves on the current reality. We’re surprised and upset when forced to pay for these mistakes in judgement. Who will YOU Vote for (page 2) and Federal - and Condo – Election Voting Strategy (page 23) both suggest a different approach to electing more competent leadership in place of those who have failed to deliver on past promises. Disruptive Technologies, this page, looks at how our fear of change prevents us from adopting technologies offering proven benefits to our communities.

Who will YOU Vote for Page 2 Elevator Behaviour Page 8 Winter Snowbirding Page 9 Games Directors Play 1 Make the Most of Limited Living Space Page 12 Condos as Rental Properties Page 13 Fallout from Hoarding Page 14 Burglars Bypass Enterphone Security Page 15 Energy Retrofits - Value and Financing Page 16 Improving on Mother Nature - HVAC Systems Page 18 Explaining the Condo Budget Page 22 Federal - and Condo – Election Voting Strategy Page 23

DISRUPTIVE TECHNOLOGIES

Condo communities are in need of disruptive technologies. Technology has transformed our society at a rapid pace. Internet, smartphones, iPads, wireless communications and social media have all become commonplace in a very short period of time. It won’t be long until we add driverless vehicles to the mix. Yet condo communities have surprisingly little technology. Paper is

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October 2019

This year the federal election occurs in the middle of annual general meeting season when many communities elect directors to serve on their condo boards. How you vote in both elections will have an impact on the comfort, safety, security and cost of your home. Each month Toronto Condo News receives questions and comments from readers; we respond privately to each and every one, providing general information and advice. A common theme of condo dweller concerns is disagreement with how the board operates and makes decisions, particularly in the aftermath of board elections. In this is a similarity to the aftermath of government elections when voters become disillusioned by those they vote into office. Elected candidates often fail to perform as expected or promised. Unreasonable expectations and misunderstanding of responsibilities by those governed by the elected are common sources of disputes. Many of our laws are based on common sense and practicality. The same applies to condo governance. Two basic tenets of condo corporations are: 1. Condo governing documents follow a hierarchy where no lower

level can conflict with a higher level. In practice this means condo rules must not conflict with, or supersede, the declaration, by-laws or Condo Act.

2. Terms of a condo purchase are negotiated between buyer and

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WHO WILL YOU VOTE FOR

October 2019

ELECTIONS & MEETINGS

seller. The condo board has no authority to retroactively change these terms or to influence future sales by intervening on these matters. As this relates to condo rules, the board does not have authority to prohibit what is currently allowed without consent of owners. The board can enact reasonable rules to promote the safety, security or welfare of owners and property of the corporation. Rules can be enacted to prevent unreasonable interference with the use and enjoyment of common elements, units or other assets of the corporation.

Problems tend to arise when individuals attempt changes to the above. As we go to the polls later this month to elect another federal government, demand that your representative acknowledge where condominium management and higher levels of government currently conflict and make specific commitments to resolving conflict. Following are some of the more contentious conflicts where clear and unambiguous resolution is desirable.

Short-Term Rentals Elected officials seem incapable of making practical and timely decisions with regard to short-term rentals. Laws to be enacted more than a year ago unexpectedly became a matter for appeal at the Local Planning Appeal Tribunal (LPAT). Proceedings were delayed for more than a year without any apparent explanation and then resumed last month. As of this writing no decision has been made with regard to implementation of these laws. While condo corporations have been anxiously awaiting implementation of short-term rental laws, in reality every condo community has a clear direction regarding short-term rentals. The corporation's declaration or by-laws make it clear whether or not short-term rentals are allowed. While owners can vote to change this in their governing documents, some boards may desire to make such a change while avoiding the time, cost and conflict of an owner vote. They may choose to implement a rule and believe it is enforceable if not disputed at the time. This approach conflicts with purchase agreements and other governing documents.

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Changing condo rules is simpler, faster and easier. It works until someone chooses to dispute the legality of the change in court at which time an entire community can pay the cost. Marijuana and Smoking Our government, in its wisdom or perhaps as a way to increase taxes, has chosen to legalize marijuana with no apparent concern for the risks and problems created. Communal living is challenged in that it is impossible to seal off units where smoking occurs from other units and common areas. Each condo community must decide if they will allow smoking and be prepared to deal with the ramifications of that decision. Prohibiting something that was originally allowed is generally recognized as requiring an owner vote. Some condo boards argue exceptions regarding short-term rentals and marijuana use, as do some lawyers. While disputes regarding these issues are likely to continue until some are prepared to bring actions to court, common sense suggests the basic tenets presented here will likely prevail at great expense to those who argue otherwise. When a board unilaterally changes the rules instead of obtaining owner support, owners are usually unaware of the likely future cost and impact. Condo Act in Limbo Government actions impact long after they have lost an election. The last provincial government implemented changes to the Condo Act widely regarded as overdue. At that time they chose to create a Condominium Authority of Ontario funded by condo owners paying a monthly tax (added to their monthly condo fees and paid to the province by the corporation). The current provincial government has chosen to maintain this burden on condo owners while failing to complete implementation of revisions to the Condo Act. As

reported previously in Toronto Condo News, the Condominium Authority of Ontario has added to the financial obligations of condo owners without providing much in the way of value. Balanced Budgets Only in condo government are budgets required to be balanced. Any shortfall must be addressed by increasing condo fees, reducing expenditures or implementing a special assessment all of which becomes directly payable by owners. Other levels of government operate as if deficits don’t matter which is just another way of requiring everyone to pay even more at a later date. Of course, deficits do matter. Perhaps politicians care less about deficits because current voters like getting something they perceive as free. This allows politicians to spend freely and fail to control costs. Recent data shows that more than 30 percent of every dollar spent is borrowed. This is money to be paid back with interest rather than being used for other purposes. Re-electing any government failing to balance their budget leads to further mismanagement by voter mandate. When voting for government at any level including condo board the best protection is educated voters. Understand the most important issues and vote for candidates supporting your views and interests. Candidates and parties failing to uphold their promises should not be re-elected. This is the only way to obtain a responsive government.

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October 2019

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CATEGORY ???

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still distributed door-to-door and notices physically posted throughout a building. Even communities with condo management software to manage communications frequently fail to make full use of it. In this era of electronic communication and digitization our condo communities are dinosaurs. Residents have and utilize the latest technologies and the fastest internet access. Much of their days are spent utilizing social media or other internet services. Condo corporations plod along refusing to embrace these same technologies despite clear evidence of their value. Management software, electronic voting, suite metering, energy efficiency systems and building automation all offer enhancements, efficiencies and financial savings to those in our communities. In the coming years artificial intelligence technologies are likely to add even greater value. Condo residents suffer the consequences for this failure to adopt popular technologies. They pay this

cost in additional manpower, printing and other expenditures as part of their monthly condo fees. Condo corporations have been behind the technology adoption curve since the inception of computers. For some reason, those making decisions in our communities are not comfortable with change. The status quo, even at considerable cost, seems preferable to the perceived risk of change. Our communities have much to gain from doing things differently. Unlike for-profit businesses, condo corporations frequently choose not to adopt technologies that can improve efficiency, enhance communications, reduce costs and generally enhance condo living. It is too easy for our not-for-profit corporations to cover their higher operating costs and inefficiencies by increasing condo fees. Embracing technology requires a receptive condo board. They should be making technology adoption a priority.

BUILDING MANAGEMENT DISRUPTIVE TECHNOLOGIES… CONTINUED FROM PAGE 1

Package Handling

Package handling is one area where disruptive technology offers immediate benefits. Package delivery is fraught with problems. Carrier tracking systems may show “lost” packages as delivered. A growing mountain of packages in back rooms, storage areas, hallways and offices is a costly problem. At an estimated cost of $20,000 to $50,000 per year, reducing the number of times a package has to be handled, and eliminating management or concierge involvement, offers immediate benefits. Canadian company Snaile Inc. offers a practical solution being implemented by communities concerned with package handling. A bank of automated parcel lockers, smart lockers, of various sizes is set up in a designated area. On delivery each package is scanned by the delivery person, a compartment size is selected then a door in the bank of smart lockers opens for package placement. An electronic message is automatically sent to the recipient along with a one-time use PIN for retrieval. For security 24/7 video is taken of the delivery person placing a package in a locker and the individual retrieving it. Concierge staff and building management are relieved of the responsibility to accept, store and retrieve packages for residents, or inform when packages have arrived. Finding physical space to store packages, and dealing with misplaced packages, is no longer a burden.

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October 2019

ELEVATOR BEHAVIOUR Elevator systems stop when safety mechanisms activate

BUILDING MANAGEMENT

Elevators are a constant source of complaint in high-rise communities. A non-functioning elevator can be out of service for weeks waiting for repair thus disrupting the activities of virtually all residents. Minimizing this inconvenience requires more than general maintenance. It requires that elevator users avoid actions that can cause elevator problems. Elevators are sensitive to movement, weight and balance. Capacity limits - weight and occupancy – should be observed. When travelling in an elevator stand in place. Avoid bouncing or other activities that can change the cab’s speed or balance and cause safety systems to activate. In February 2018 two CityPlace residents – father and daughter - became trapped in an elevator that stopped during transport. The father was hopping on one foot to occupy his daughter. This event, captured by surveillance video, caused safety mechanisms to properly engage when the hopping caused the elevator to bounce and change cab speed. The resident was charged $875 for the emergency service call caused by “user misuse”. When the fee was not paid a notice of lien was sent to ensure payment. An owner can be held financially responsible when a resident or guest action in an elevator causes it to stop working. Any such failure can cause them or others to be trapped in the elevator cab for hours. Video surveillance can document what was occurring in the elevator cab at the time of

failure. When it shows a failure or stoppage resulting from inappropriate movement by an occupant costs can be charged back to the appropriate unit owner. Costs incurred by a condominium corporation due to resident, tenant, guest or contractor actions can be charged back to a suite owner. Non-payment of costs can result in a lien being registered against the unit. In elevators these actions can include hopping, jumping, bouncing or dancing.

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Sudbury, Windsor, Barrie, Cornwall and other cities throughout Ontario have Airbnb collect a tax from Airbnb guests and remit it to the city. British Columbia and Quebec have this tax collected through the province. Mississauga charges a four percent Municipal Accommodation Tax (MAT) also known as a “hotel tax”. This amount is added to the fee paid by Airbnb guests and remitted to the city. According to Mayor Bonnie Crombie, Mississauga reinvests these funds “in an accountable, transparent and dedicated way toward undertaking important city-building initiatives to grow and diversify our local economy, strengthen our tourism industry and showcase our many celebrated attractions, festivals, heritage, culture and businesses." The tax was extended to apply to short-term rentals on October 1, 2018. The City signed an agreement with Airbnb which allows them to collect and remit this tax. This is one of an estimated 500 partnerships Airbnb has entered into with jurisdictions around the world. Airbnb’s Friendly Buildings Program offers a building-specific partnership for communities where short-term rentals are allowed.

CITIES WORKING WITH AIRBNB

RENTALS

More than 3.7 million Canadians visited Florida in 2016 according to Visit Florida. Many more went to Arizona, California, Hawaii and other warm weather states. Visiting the U.S. for short periods of time does not require much in the way of advance planning. Those away from Canada for more than six months, or those visiting the U.S. for more than six months, may be required to deal with certain residency issues. Staying in the U.S. for more than 182 days may qualify you as a resident in that country. Being outside of Ontario for more than 182 days may disqualify you for residency status or OHIP coverage. Owning property in Florida can be surprisingly expensive. Property tax for non-residents is high as is flood and hurricane insurance. Pest control is another large expense along with year round pool or lawn maintenance. For those with assets in the U.S. such as a home, there may be unexpected U.S. estate taxes upon death. Health insurance is an importance consideration. OHIP only covers a fraction of expenses to a maximum of $400 per day for emergency in-patient services. Illness requiring hospitalization will likely cost more. To save money on exchange rate and foreign transaction fees use a U.S. dollar credit card. A Canada - U.S. phone plan can keep mobile phone calling and data plan charges to a minimum.

WINTER SNOWBIRDING

October 2019

Toronto was hit with a winter ice storm and summer thunderstorm causing massive power disruptions throughout the city in 2014. While power disruptions have occurred before and since, this was the most severe in recent memory. With the likelihood of more power disruptions in the future, there is a need for communities to plan ahead or accept the consequences of future extended power outages. Voluntary guidelines of the time included providing enough power to evacuate a building, send elevators to the ground floor, operate fire suppression systems and provide limited lighting to hallways and stairwells. This required 15 minutes to a few hours of power. There was no consideration for having residents remain in their home. One community, Atrium II, sought a more sustainable solution. They desired a power generation system that would continue to deliver power when the city’s power system failed.

This would allow residents to remain in their home during power disruptions with access to elevators and other services that typically fail to function when power goes out. Their goal was to provide 80 percent of power to the building when city power goes out. Atrium II has since implemented a cogeneration system that simultaneously produces electric power and heat. With this system heat is reused to keep a

COGENERATION UPDATE – 2019

BUILDING MANAGEMENT


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One of the games played on some condo boards, and by residents seeking to influence a condo board, is known as the dead cat strategy. To obtain support for a cause or issue, individuals raise false or unrelated issues intended to discredit certain people or an entire board. The most common of these “issues” are unsubstantiated conflict of interest allegations. Believable lies and exaggerations can be effective at discrediting the efforts of an individual or group, working on behalf of a community, by those with a personal agenda or self-interest. The following fictional letter provides one example of how this is done. "We are pleased to report that a majority of directors have approved a transfer of funds from the reserve fund to reduce the operations budget and limit the increase in condo fees to 1.5 percent which is below the current rate of inflation. Director 2 and Director 3, in opposition, supported a 4.5

percent increase in condo fees.” Presented in this way it appears that a majority of directors support efforts to keep condo fee increases to a minimum. In fact, this is an improper use of reserve fund monies virtually certain to result in higher condo fees once current directors are no longer in office. Comparing any increase to the current rate of inflation suggests a relationship that does not exist thus unrelated to any increase in condo fees. Good directors following the law and representing the interests of the community are defamed and likely voted out of office at the first opportunity. Good condo directors do not disclose individual voting records in meeting minutes or other correspondence. Letters such as this are intended to mislead owners into supporting possibly illegal efforts or supporting certain individuals by creating discord.

GAMES DIRECTORS PLAY

CONDO BOARDS

building warm during cold months or to provide hot water without purchasing external power. Electricity created by the system can be used in place of electricity purchased from an electricity provider to power elevators and other equipment thus reducing electricity cost. The system went live in late 2017. It’s $1.6 million cost was mostly recovered through a combination

of government grants and sharing of future cost savings over a 12-year period. The cogeneration plant, Canada’s first for a condo building, has been a success. Sustainability has been achieved meaning the building now has 80 percent power when city power goes out. Along with this Atrium II achieved electricity and gas savings of about $70,000 per year.

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October 2019

Urban living often comes with limited living space. Finding ways to make better use of this space and making it more appealing is an ongoing challenge. Homes are used in different ways and by different people. Some homes are designed for living, others for partying and some for working. There may be children to consider or a pet. A room can be made to appear larger by using contrasting colours or lighting. A table lamp, in addition to ceiling lights, adds warmth to a space. Use light colours to take advantage of natural light. Mirrors and picture frames add warmth to a light-coloured room. Window treatments can change a room. Drapes from floor to ceiling make a room feel taller. Window shades serve multiple purposes. Screen shades allow more light in. Darker screen shades prevent a room from appearing too bright while making it appear larger. Furniture pieces should be in proportion to each other and the space. That small sofa in a showroom may look huge in your condo. A large piece of furniture in a

small space can look awkward. Furniture that serves a dual purpose can work well in limited space. An ottoman with storage can be a good location for magazines, newspapers, remote control and small electronic gadgets. Clutter is your enemy in any space. Unused CDs, books or throw pillows can likely be discarded without an impact on your lifestyle. Your goal is a cozy and comfortable space you are proud to call home.

MAKE THE MOST OF LIMITED LIVING SPACE

RENOVATIONS

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Today it is popular to purchase a condo as an investment, or second property, with the intention of turning it into a rental business. Renting out a condo property, like any business, requires a return on investment (ROI). This can only be achieved when revenues (rental income) exceed expenditures. Having a successful condo rental business requires a clear and complete understanding of revenues, known costs and anticipated costs. At a minimum, rental revenue must exceed known costs. Any surplus must be in excess of anticipated costs that occur if the owner is to financially benefit from being a landlord. Revenue Condo landlords would like to set their rental income so they earn more than their expenses. In practice this may not always be possible. The amount charged for rent can be restricted by what others charge for a comparable property with annual increases restricted by law. Known Costs Fixed costs are known and anticipated: √ Mortgage – Payments made on money

borrowed to purchase the property. √ Condo fees – Monthly payments made to the

condo corporation to pay for shared expenses. √ Property tax – Paid to the city or municipality. √ Insurance – Not required , highly

recommended. √ Utilities – May be responsibility of a tenant,

included in condo fees, or paid directly to utility

company. √ Management – Cost to administer the business

including collection of rent, accounting, obtaining tenants, credit checks and more.

√ Maintenance and repairs – Many aspects of home ownership require regular maintenance or periodic repairs.

√ Income taxes – Payable on earned income. √ Other taxes - Some regions charge additional

business-related taxes. Anticipated Costs Anticipated costs are to be expected: √ Vacancies – When a current tenant leaves there

will likely be a period when the property is unrented while a new tenant is sought. There will be costs incurred to obtain a new tenant, expenses in preparing a property for occupancy, and rental income not received.

√ Unexpected maintenance costs – Appliances stop working, pipes fail, water leaks cause damage, and HVAC systems fail.

√ Evictions – Some tenants fail to abide by terms of a lease. Evicting a tenant can take months.

√ Tenants who don’t pay – Some tenants fail to pay rent. While cause for eviction, this is a period where the landlord fails to receive income to cover ongoing expenses.

√ Special assessments to cover any financial shortfall of the condo corporation.

Some condo landlords are less concerned about ongoing profitability. They anticipate future appreciation of their home will cover short-term losses.

CONDOS AS RENTAL PROPERTIES

RENTALS

October 2019

A single hoarder can create a nightmare scenario for any community.

Extreme clutter increases the risk of fire. Rubbish provides food and moisture that becomes a breeding ground for mould, pests and bacteria. Rubbish may contain bedbugs or other pests. For these and other reasons it becomes necessary for condo management to deal with a hoarding situation as quickly as possible to avoid future problems that likely include costly and intrusive efforts to return to a state of safety and cleanliness. Carpets and floors damaged beyond repair, windows that no longer open or close, unusable appliances, smells that are difficult to source and eliminate, plugged drains, faucets that don’t close and water damage are just some of the problems

found in a poorly maintained home. RespondPlus Services returns badly damaged multi-residential buildings to pre-loss condition. Lee Hopwood, General Manager, explains the ongoing problems resulting from severe hoarding. “In a condo community, the cost of a poorly maintained home can be unknowingly paid by all condo owners until such time as a problem is identified and addressed. Lingering odours may remain long after cleaning because of mould hidden behind walls or in ceilings. Mould and bedbugs can spread from a hoarder suite to others in the building thus requiring a more extensive cleanup area.” Restoring a hoarded suite to a safe living environment is a proactive goal. Restoring other affected suites is a far more intensive, costly and intrusive reactive goal to be avoided.

FALLOUT FROM HOARDING

BUILDING HEALTH

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Technology, used properly, offers condo residents enhanced security at a reasonable cost. Enterphones have proven to be both effective and popular in high-rise communities. They provide residents with security and convenience. A visitor in a building lobby calling a suite can be granted entry when the resident enters a code on their phone. The intent is that residents only grant access to known or expected individuals. When installed, enterphones have a default four-digit passcode that will open the door. Upon installation this passcode should be changed so that it is only known to a limited number of individuals. The passcode should periodically be changed to ensure security. Enterphones with an unchanged passcode can be

circumvented by individuals with access to original installation manuals or past employees. Some default passcodes are available on the internet. One community that failed to update its enterphone passcode was subject to a series of break-ins over a four month period. Resident mail was stolen and vehicles broken into.

BURGLARS BYPASS ENTERPHONE SECURITY

SECURITY, SAFETY & FRAUD

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October 2019

Condo corporations are under continuous pressure to keep from raising fees while the cost of energy and maintenance demands increase. The way to succeed is by improving building efficiency. Improved building efficiency provides benefits that include reduced energy and maintenance costs. Less considered are lifestyle enhancements that include improved air quality and more comfortable internal temperatures. Another consideration should be making a condo building, and its suites, more appealing for potential buyers. While the benefit of reducing energy consumption is clear, condo corporations are confused by the myriad of options, cost and funding considerations. When confusion reigns, the most common result is to do nothing. Communities generally choose to live with their current and known costs, and continuously raise fees, rather than undertake a concerted effort to become more efficient, improve lifestyles and reduce expenditures. Data from energy retrofit projects intended to reduce energy consumption generally result in savings of 15 to 30 percent. To achieve these savings, communities may need to invest hundreds of thousands of dollars. A mid-level figure may be in the range of $300,000 and a high-level figure in the millions of dollars. While these amounts may seem daunting savings add up quickly and may only require three to seven years before payback is achieved. Post payback, the community including all residents financially benefit

from these savings. One way to fund a major energy retrofit project is to utilize prior year surpluses. Another is to increase fees for a period of time and set aside this money to fund these retrofits. Since energy retrofit projects can take years to complete, a small increase in monthly fees may be sufficient. A third option is to obtain external financing to be repaid over a ten-year period. Savings from energy retrofits should reduce corporation costs by more than the cost of financing thus keeping fees lower than they otherwise would have been. During the payback period, residents benefit from these initiatives. Better lighting, more comfortable internal temperatures and improved air quality are all worthy goals. Depending on the current status of your building infrastructure programmable thermostats, air sealing and weather stripping, updated heating or cooling systems, or a new hot water boiler may be important considerations. Among the most beneficial energy retrofits for many communities are a new building automation system, improved lighting and myriad changes to control voltage and/or water pressure. The best way to determine which energy retrofits can be most impactful for a community is to undertake an energy audit utilizing engineers experienced in this area.

ENERGY RETROFITS VALUE AND FINANCING

BUILDING MANAGEMENT

Toronto is becoming more bike-friendly as fewer choose to own automobiles. Adelaide St., Richmond St., Sherbourne St. and Bloor St. all have dedicated bike lanes. An increasing number of Bike Share stations make it easy to “rent” a bike for commuting, tourists and recreation. There is even talk about closing King St. to vehicular traffic. In the north part of the city, there are plans to replace some lanes on Yonge St. with bike lanes. The process is nearing completion along and near Bathurst St. north of Steeles Ave. These dedicated travel spaces are being used by those on bicycles, motorized bicycles or ebikes, scooters and even assistive scooters used by individuals with mobility issues. Acceptance of this changing trend is sporadic among condo communities. Some provide ample space for parking and storing bicycles and other non-automobile transportation. Other buildings don’t allow residents to bring bikes to their suites yet fail to provide a safe and secure location for their storage. For residents of less bike-friendly buildings, Bike Share stations located both near their building and place of work offers a viable alternative. The current city requirement, a minimum of one bike space per unit, is inadequate for a family with multiple bikes. Some communities prohibit bikes from being transported on elevators and through hallways for fear of damage. Storing them on balconies can be a safety concern and may detract from the value of

properties. Some communities require bikes to be stored outside or in an area without security cameras. Fortunately, more communities are catering to the growing demand for bicycle amenities. Some builders provide access to Bike Share which is a growing bike sharing service throughout the city. Others are providing better and more secure places to park or store bikes. Unused car parking spaces may be replaced with bicycle racks or bicycle storage lockers. In the past developers have treated bicycles as an afterthought and squeezed bike spaces into unused areas. Fieldgate Urban is a condo building proposal near Church and Wellesley that wants to include at least one bike parking space per unit and none for cars. Another development near Blue Jays Way and King Street West wants to include 2.5 bike spaces per unit and no car parking. A 360-unit bike-friendly building under construction at Wellesley St. and Sherbourne St. will have parking for 80 cars and an individual bike locker for each unit. Toronto is evolving into a more bike-friendly city with the help of developers and condo corporations seeking to meet the needs of its residents.

BIKE-FRIENDLY CONDOS Accommodating bicycles, ebikes and scooters

URBAN TRANSPORTATION

October 2019

Mother Nature has no concern for the comfort of humans. We rely on HVAC systems to ensure our home is comfortable and safe regardless of what Mother Nature has planned. HVAC refers to systems that provide air, both warm and cool, to condo homes and common areas. These are large scale systems in terms of space required, cost and energy usage. Keeping these systems continuously operating in good condition and properly maintained is an ongoing process. Failure to do so can substantially eat into the annual condo budget or reserve fund.

Renewable energy sources such as solar panels and wind towers, while possibly beneficial, should rarely be considered before relatively simple improvements are identified in an energy audit. Air duct cleaning prevents vents from becoming clogged, transferring less air and using more energy. Opening window blinds during daytime hours can reduce the need for having lights on. Radiators can be more efficient by including reflective jackets that reduce the amount of heat escaping through windows that may not be properly sealed and caulked. Turning off appliances is

IMPROVING ON MOTHER NATURE HVAC Systems

BUILDING HEALTH


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preferable to allowing them to operate in standby mode which continues to use electricity. This includes electronics from phone chargers to computer systems, televisions, cable boxes and microwaves. Older and improperly maintained buildings and HVAC systems can be more expensive to operate for both the corporation and its residents. Buildings that provide too many ways for air to escape or drafts are costlier to maintain. Older equipment may not be as energy efficient. Smaller boilers can provide more heat while using less energy. Many improvements can have relatively short payback periods. Operating building equipment including chillers and boilers beyond their expected life can

come at a high cost. These systems often require greater maintenance and more energy than newer systems. Savings are “lost” when more frequent upgrades are avoided. Once newer systems are in place, regular maintenance can help maximize energy savings by reducing energy consumption from five to 20 percent. A Building Automation System (BAS) is essential to gather data about building systems and identify where problems exist. Sensors and software programming combine to manage air flow, temperature control, water temperature and other factors to provide comfort while minimizing building resources, optimizing energy use and reducing cost.

BUILDING HEALTH IMPROVING ON MOTHER NATURE… CONTINUED FROM PAGE 18

Excessive reliance on obtaining quotes before approving work leads to reliance on lower quality vendors. Obtaining quotes for larger projects makes sense when a condo building does not have reliable and trusted vendors. It allows corporations to compare pricing of their trusted and reliable vendors against others in the marketplace. That reliable and trusted vendor used by the corporation does not want to be providing quotes for small projects where the amount billed is insufficient to cover their time. This includes time providing written quotes for small in-suite projects for minor renovations, plumbing or electrical work.

HIDDEN COST OF OBTAINING

COMPETITIVE BIDS

October 2019

Condo living is based on the collective responsibility of condo owners to take upon themselves the management of their condo corporation. This includes not only paying condo fees and abiding by rules but also serving on committees and as directors of the corporation. There are laws and insurance to protect board members and owners against liabilities that typically do not exist for individual owners. Condo directors frequently employ a management company or condominium manager to handle many of the tasks of condo management. Both the board and management company need to be protected against liabilities and actions taken by the other. This is done by both parties agreeing to a management contract that includes an indemnification clause. Indemnity is a term meaning protection against injury, loss, damage, or related costs. In condo communities, board members require protection from owners who wish to make directors personally responsible for certain actions. Directors and condominium managers require protection against possible liabilities. Another concern is that a condo corporation should not be responsible for contractor errors. A contractor causing damage while working on corporation property should be held responsible. They may have insurance to

assure corporations they are capable of taking on this responsibility. Indemnity protects condo directors and management from being held responsible for this damage if a contractor does not fulfill this obligation. The Condo Act provides directors with indemnity. Neither the Condo Act nor indemnity clauses in contracts can prevent individuals from being sued and having to prove they acted properly. Condo corporations may maintain directors and officers insurance to provide directors with additional liability protection. Indemnification usually requires that parties have acted in good faith – honestly and fairly. An individual who has not acted in good faith may find they are not protected by either the Condo Act or directors and officers insurance.

CORPORATION, MANAGEMENT AND DIRECTOR INDEMNITY

The need for Directors and Officers Insurance

CONDO EDUCATION


It has been a great year. Mild weather, minimal damage and maintenance costs were less than expected. There is a budget surplus of $18,000 for the year. What to do with these funds? Upgrade common areas, have a community party, provide employee bonuses and donating to a worthy cause are just a few possibilities. Appealing as this may be, all are irresponsible expenditures that should never be considered by a condo board. Condo fees should never be spent in an arbitrary manner. Expenditures should be based on an approved budget provided to owners after consultations, review and finalization. Discretionary spending not in the budget is a lack of financial responsibility in managing funds for the community. This is owner money that should be used in a more responsible manner. Budgets are a declaration of spending intentions and priorities. They are based on prior years’ expenses, advice from management and consultants, and reflect community priorities. They are a statement on what spending should take place during the upcoming fiscal hear. If employee bonuses

or social events are important they should be included in the budget. Adhering to an approved budget, to the greatest extent possible, is expected of directors and management. This is the fiscally responsible approach expected by condo owners. Responsible options for using that $18,000 budget surplus include carrying it forward to protect against a future deficit, allocating for specific purposes in the next budget or transferring to the reserve fund. Lack of adherence to the budget is a failure to act in good faith and fairness, and opens the door to decision making for personal gain. It creates the impression, if not the reality, that financial decisions are not being made in the community’s best interest.

APPROPRIATE USE OF CONDO FEES

FINANCIAL MANAGEMENT


October 2019

Each year condo owners are provided with audited financial statements and a budget few understand. Great condo boards make an effort to explain this financial data. Best practice is to include a single page explaining key points in whatever financial data is being provided. Be clear and concise without expressing opinion or speculation. All residents have an interest in knowing certain information: Condo Fees – How they are changing from the prior year. Reserve Fund – How its’ balance has changed over the past year. Explain major expenditures over the prior year and anticipated major expenditures in the coming year.

Budget – Identify significant increases or decreases from the prior year and provide explanations. Common Areas and Activities – Identify recent or planned changes to amenities, common areas or social programming. Be transparent. Don’t spin the data or make inferences about the overall financial status of the corporation. Such statements are likely to meet with skepticism and can lead to future problems. Communicate the budget using all available communication methods. Make it as public as possible both electronically and in hard copy. Don’t force residents to hunt for this information.

EXPLAINING THE CONDO BUDGET

FINANCIAL MANAGEMENT


The way in which we elect political leadership and condo directors is surprisingly consistent. Both need to change if we desire meaningful improvement. The concept of limited resources is something most understand. Each of us has a limited amount of money to spend. Spending more than we have requires borrowing money for which we pay fees and interest until the amount is repaid. As debt increases so do interest payments. At some point spending on necessities is reduced to make required payments on borrowed money. This can create a cash shortage and legal problems unless we stop spending and focus on repayment of debt obligations. This concept is sometimes forgotten in condo communities. We want more security and amenities. We demand that our fees pay for more things. Electing those both competent and willing to manage our hard earned money is often secondary to electing friends or those making impractical promises. We’re then surprised and upset when, predictably a few years later, things go badly. During federal, provincial and municipal election campaigns the idea of limited spending disappears. As a society we have shown a preference for ignoring reasonable politicians and electing those least capable of managing the authority and money we entrust to them. We all have to make choices between our wants and

needs. What we need are condo directors and politicians willing to make these same choices rather than pretending we can have it all. We are fortunate that our form of government and taxation covers basic services for all regardless of ability to pay. This has, unfortunately, created debt obligations that need to be addressed. Similarly, some communities have become accustomed to living beyond their means by failing to ensure their building is properly maintained and establishing a fully-funded reserve fund. Failure is in recognizing the limits to what we can afford. Provincially we have seen recent opposition to spending cuts for autism therapy and medical treatments. Cutting of library services and larger class sizes have been opposed. Lacking in this

FEDERAL - AND CONDO – ELECTION VOTING STRATEGY



October 2019

opposition is any credible approach to reducing spending and willingness to stop overspending. When our politicians fail to control spending and avoid taxation to raise more money, they borrow more money and commit us to repaying this debt. Our elected governments have failed to live within their means. For decades our politicians have operated without spending limits. They have chosen to spend far more than they bring in. Our debt is growing which means more of each tax dollar is being used to pay interest on this debt. In Ontario interest on our debt, at $13 billion a year, is only exceeded by spending on healthcare, education and government services. Unless we begin to pay down the debt we will have no choice

but to cut back more drastically on essential services. Any elected party or politician trying to fix things is portrayed by others as being a bad thing. The one constant is that debt continues to grow as does the amount we pay to sustain it. We have to accept that cuts in spending will be made. Nonessential programs will be reduced or eliminated. We will have to pay for more of what we need and spend less on our wants. This acceptance comes with electing politicians, and condo directors, who lead by example by cutting budgets and expenses so they are in line with available revenues.

ELECTIONS & MEETINGS FEDERAL - AND CONDO – ELECTION VOTING STRATEGY… CONTINUED FROM PAGE 23

You rate the CAO and, in general, your reviews are fair BUT you say:

“Mandatory forms were viewed favourably despite poor communication and implementation. One year later it

was expected that deficiencies be resolved. Today, forms remain

inaccessible to most and unnecessarily difficult to complete.“

Though CAO could, and maybe should, advocate for and seek ‘user input’ on the forms it is not fair to blame them for their complexity. The Forms are created under the Regulations and are the responsibility of the Ministry of Government and Consumer Services. CAO is NOT responsible for the Forms. I was part of a group within CAI that commented at great length on the Forms when they first came out and some were revised – accepting many but not all of our suggestions. The Ministry has made no Form

revisions since the Doug Ford government was elected and emails to our contacts at the Ministry have gone unanswered. The Forms are hard to access; they are available along with all (?) other government Forms on their “Forms Website” – it is certainly not easy to access and extremely unfriendly but that problem affects ALL Ontario government forms (particularly the newer ones that have things like drop-down menus). A further problem with the Forms is that in some cases a clarification requires the underlying Regulation to be clarified and changes to Regulations require that they have a public comment period and that the Minister signs-off on them. D. Crawford Toronto Condo News’ response Toronto Condo News is addressing the system as it exists. The current system does not work nor does it appear accountable to those paying for it.

The former provincial government chose to establish CAO and have condo owners pay for it through a monthly tax on condo owners rather than through general revenues. Our opinion is that this approach should require CAO to be responsive to those who fund it and not a vehicle for political manipulation or obfuscation.

The current provincial government has chosen not to finish implementation of changes to the Condo Act and also retain the direct tax on condo owners. It appears they are comfortable with the current approach.

Your comments refer to form revisions and an artificial system that creates convoluted forms then does nothing about them. This could be addressed if there was a desire to do so. Furthermore, the choice of technology should not create confusion and difficulty if the intent is to make forms accessible and support those funding the system.

GOVERNANCE

Condominium Authority of Ontario Year Two Report Card, September 2019, was our most heavily read article this year. Here is

one reader’s comments.

Our Readers Comment - Condominium Authority of

Ontario Year Two Report Card

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