1. CONDOMINIUM SEMINAR Environmental Retrofits and Financing Options 1 AGENDA Environmental Retrofits and Financing Options Applicable to recently constructed and older condominiums 1.Intro-Lisa Kay- Why Are We Here? 2.Getting It Done: Within the Condo Act- Armand Conant, Financing Options – Lisa Kay 3.Summary and question period

2. CONDOMINIUM SEMINAR Environmental Retrofits and Financing Options 2 Getting It Done Lisa Kay, JCO & Associates Armand Conant, Heenan Blaikie LLP

3. CONDOMINIUM SEMINAR Environmental Retrofits and Financing Options 3 Getting It Done So you’ve established the following: 1.Retrofits provide economic benefits helped along by Government incentives and are good for the environment. 2.The energy audit concludes a compelling argument for a retrofit What are next steps before you can proceed with the work? 1.Work within the constraints of the Condominium Act, 1998 2.Decide on how to pay for the retrofit 3.Communicate, Communicate, Communicate! 4.Get support from the board and unit owners

4. CONDOMINIUM SEMINAR Environmental Retrofits and Financing Options 4 THE CONDOMINIUM ACT, 1998 Sources of funds for an environmental retrofit: 1.Reserve fund 2.Special Assessment 3.Loan 4.Supplier/Contractor funded (form of loan) 5.Grants, Incentives 6.Combination of above

5. CONDOMINIUM SEMINAR Environmental Retrofits and Financing Options 5 SOURCES OF FUNDS FOR AN ENVIRONMENTAL RETROFIT The Reserve Fund (Sec. 9) 1.Solely for major repairs and replacements of common elements & assets 2.Not for additions, alterations or improvements not contemplated by the Reserve Fund Study 3.Often allocated to pay for other planned major repairs and replacements (per the “Funding Plan”) 4.No approval or vote of owners needed

6. CONDOMINIUM SEMINAR Environmental Retrofits and Financing Options 6 SOURCES OF FUNDS FOR AN ENVIRONMENTAL RETROFIT Changes to Common Elements Section 97 – Condominium Act, 1998 Additions, alterations or improvements to common elements Change in assets Change in a service provided to owners What are these? Applies regardless of source of funds

7. CONDOMINIUM SEMINAR Environmental Retrofits and Financing Options 7 SOURCES OF FUNDS FOR AN ENVIRONMENTAL RETROFIT What are not changes Repair or maintenance using materials reasonably close in quality to original as appropriate in accordance with current construction standards Reserve Fund Items

8. CONDOMINIUM SEMINAR Environmental Retrofits and Financing Options 8 SOURCES OF FUNDS FOR AN ENVIRONMENTAL RETROFIT Changes without Notice to Owners Necessary to ensure safety or security people or prevent imminent damage to property and assets Estimated cost in any month is no more than greater of $1,000 and 1% of annual budgeted common expenses for current fiscal year

9. CONDOMINIUM SEMINAR Environmental Retrofits and Financing Options 9 SOURCES OF FUNDS FOR AN ENVIRONMENTAL RETROFIT Changes with Notice to Owners Depends of cost: (a) Not “Substantial” notice to owners and they have right to requisition an owners meeting with 30 days – I call and hold meeting then simple majority vote If owners do not requisition meeting then approved with no vote.

10. CONDOMINIUM SEMINAR Environmental Retrofits and Financing Options 10 SOURCES OF FUNDS FOR AN ENVIRONMENTAL RETROFIT Changes with Notice to Owners (b) “Substantial” Estimated total cost is greater than 10% of annual budgeted common expenses for current fiscal year Board can elect it to be substantial 66 2/3 vote of all units required

11. CONDOMINIUM SEMINAR Environmental Retrofits and Financing Options 11 SOURCES OF FUNDS FOR AN ENVIRONMENTAL RETROFIT The Special Assessment 1. May be used to finance both major repairs and replacements and additions, alterations and improvements 2. Additions, alterations and improvements still subject to Sec. 97 3. Unpopular source of funds

12. CONDOMINIUM SEMINAR Environmental Retrofits and Financing Options 12 SOURCES OF FUNDS FOR AN ENVIRONMENTAL RETROFIT Loans 1.Can finance anything, including: Major repairs and replacements (even if sufficient funds in reserve fund);l Additions, alterations and improvements 2.Energy Retrofit Savings can offset debt service, creating cash flow neutral or cash flow positive results 3.Requires a borrowing by-law approved by 50% plus 1 of all units (ss. 56 (3))

13. CONDOMINIUM SEMINAR Environmental Retrofits and Financing Options 13 CAN A CONDOMINIUM BORROW MONEY? Yes. 1.Condominiums subject to and following the Ontario Condominium Act, 1998 Audited, current, compliant financial statements 66, 67 Reserve fund study 94 (1) Funding plan 94 (8) Borrowing by-law 56 (3): 50% +1 unit owners in favour 2.Competent Management

14. CONDOMINIUM SEMINAR Environmental Retrofits and Financing Options 14 LOAN STRUCTURE - OPTIONS: 1)Single Disbursement Total amount of the loan is advanced allowing the corporation to have access to funds for their retrofit 2) Multiple Disbursement For longer and larger projects- several loans are made that contemplates the schedule of the retrofit project 3) Construction Advances Lump sum payments of approved invoices are advanced directly by lender to the supplier Interest-only accrues on the amount advanced until project/phase completion at which time a loan is fixed Provides a preventative measure against fraud

15. CONDOMINIUM SEMINAR Environmental Retrofits and Financing Options 15 LOAN STRUCTURE - TERMS Term – the period that the interest rate is fixed for 5 years Amortization – the period over which the payments are spread out 5 to 25 years

16. CONDOMINIUM SEMINAR Environmental Retrofits and Financing Options 16 LOAN STRUCTURE - TERMS Consider the following when structuring a loan for your energy retrofit: Life of the asset Saving estimates (payback period) Cash flow implications

17. CONDOMINIUM SEMINAR Environmental Retrofits and Financing Options 17 Loan Benefits Include: Energy retrofit savings can offset debt service, creating cash flow neutral or cash flow positive results Available energy incentives can further offset loan costs Allows a condo to afford and engage in energy measures now and reap benefits of energy savings upon loan completion Marketing advantage for units in high efficiency buildings Allows reserve fund to be allocated to other measures

18. CONDOMINIUM SEMINAR Environmental Retrofits and Financing Options 18 SELLING THE SOLUTIONS 1.Undertake an energy audit 2.Engage the team in the solution Board members, property manager, energy engineer, lender, lawyer, accountant 3.Create a solution plan that includes viable measures and financing solution 4.COMMUNICATE!- Educate the stakeholders Identify the influencers Educate the board Support owner information meeting 5.Win support 6.Execute the plan

19. CONDOMINIUM SEMINAR Environmental Retrofits and Financing Options 19 Your Presenters Lisa Kay, JCO & Associates lisakay@jcoandassociates.com Armand Conant, Heenan Blaikie LLP aconant@heenan.ca

20. CONDOMINIUM SEMINAR Environmental Retrofits and Financing Options 20 QUESTIONS?