Queen's Park

Real estate industry tags Ontario election issues

Transit and energy are key topics of concern
Tuesday, May 13, 2014
By Barbara Carss

A sudden election call has sidelined proposed legislation in Ontario, prompting varying responses of disappointment, relief and uncertainty from the real estate sector.

The abruptly shelved 2014 provincial budget included promises to update the Condominium Act and adjust electricity cost structures, but industry advocates were perhaps more heartened with what was missing — a threatened levy on parking spaces to help finance public transit infrastructure in the Greater Toronto and Hamilton Area (GTHA).

“We were happy to see that the recommendation from the Golden Report (the provincially appointed Transit Investment Strategy Advisory Panel) for a $1-per-day-per-space parking levy was not part of the funding plan outlined in the budget,” says Brooks Barnett, manager of government relations and policy with the Real Property Association of Canada (REALpac). “We would like to see some form of transit funding that is broadly based and evenly distributed to multiple sectors of the economy.”

As candidates launch campaigns, industry organizations are now attempting to pin down all political parties’ future intentions.

“There are two areas in particular that our membership needs to know about,” affirms Chris Conway, president and chief staff officer of the Building Owners and Managers Association (BOMA) of Greater Toronto. “One is the whole issue around transit and transit funding and the other is energy.”

Several associations — including REALpac, BOMA Toronto, NAIOP Greater Toronto chapter, the International Council of Shopping Centers (ICSC), the Building Industry and Land Development Association (BILD) and the Toronto Financial District BIA — joined forces last year to oppose a parking space levy, while also voicing their support for transit and a strategic transit investment plan. Having seemingly gained the government’s attention on that issue, Conway maintains they should similarly exert influence in energy related matters.

“The seat of government is literally surrounded by commercial real estate and it’s like we’re invisible from a policy perspective,” he observes. “We’re saying: please think about us when we represent 30 to 50 per cent of the target in the long-term energy plan.”

The 2014 budget document promised to eliminate the debt retirement charge from residential electricity bills beginning in 2016. This monthly surcharge to help pay down the former Ontario Hydro’s stranded debt has been added to all electricity bills since May 1, 2002, and currently amounts to an estimated $70 annually on typical single-family residential accounts.

More immediately, a wider scope of industrial electricity ratepayers will gain eligibility for an existing program that gives them flexibility to reduce the global adjustment surcharge on their bills through strategic electricity load reductions during the five hours of the year when overall system demand is highest. Currently, qualifying consumers, known as Class A, must have a monthly average peak demand of five megawatts (MW).

New rules will lower the entry criteria to 3 MW in categories that largely exclude commercial properties, except potentially those housing data centres. As defined in the Ministry of Energy’s background information, “the manufacturing, mining, quarrying, oil/gas extraction, greenhouse, refrigerated warehousing and data processing sectors” can participate.

“Dropping the threshold for Class A from 5 to 3 MW would benefit some of our members, if they qualify,” Conway says.

The budget document also included a pledge to fund conservation and demand programs for another six years — a commitment he urges any potential successor government to honour.

“We have a lot of buy-in from our sector,” he reports “We want to see these programs remain in place.”

Others predict the debt retirement charge will be taken off residential customers’ bills regardless of election results. As proposed in the budget document, non-residential customers would continue to pay the charge until at least the end of 2018, when the debt is projected to be retired. (The budget pegs it at $3.9 billion as of March 31, 2013, including annual interest of about $1.5 billion.)

“At least one of the other political parties has also made a commitment to eliminate the debt retirement charge so we do expect the charge to be eliminated,” says Mike Chopowick, vice-president of government and industry relations at the Federation of Rental-housing Providers of Ontario (FRPO). “However, this commitment for the elimination of the debt charge is scheduled to begin at the same the Clean Energy Benefit expires, which is a 10 per cent discount off the (residential) bill. So we are actually looking at a net increase.”

Meanwhile, the election halts a proposed amendment to the Residential Tenancies Act that would have made rental housing units constructed after 1998 subject to Ontario’s rent increase guidelines.

“It was a private member’s bill, but, of course, in a minority parliament, a lot of private member’s bills have a good chance of passing,” Chopowick says. “That’s a bill that we, as an industry, vigorously opposed. We are thankful to see the bill die on the order paper.”

Responding to purported Condominium Act amendments presents more of a challenge for affected groups in that sector since they have neither seen a draft statute, nor had the opportunity to hear the opposition’s perspective on it.

However, industry insiders have had fairly broad hints of the stalled legislation’s contents through ongoing consultation with policy advisors and drafters in the Ministry of Consumer Services. The 2014 budget document likewise refers to a new Act that would “establish mandatory qualifications for condominium managers and create a modern dispute resolution system.”

The incoming government may choose to move forward with this version of the Act, revise it further before introducing it or simply retain the existing circa-1998 legislation. In any event, legal experts suggest the election hiatus and possible associated scheduling adjustments can be used constructively.

“Given the importance of the statute, I would like to see the government take this extra time to draft the bill carefully so that it closely addresses the interests of the various stakeholders,” says Christopher Jaglowitz, a condominium law specialist and partner at Gardiner Miller Arnold LLP. “As for the campaign ahead, it will be interesting to see how the political parties respond to questions asked by CCI (Canadian Condominium Institute) and ACMO (Association of Condominium Managers of Ontario) about their respective positions on condo law reform and manager licensing. The condo-owning voters will be watching.”

Barbara Carss is the editor-in-chief of Canadian Property Management.

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