CONDOMINIUM SEMINAR Environmental Retrofits and Financing Options 1 AGENDA Environmental Retrofits and Financing Options Applicable to recently constructed

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


Getting It Done

Lisa Kay, JCO & Associates

Armand Conant, Heenan Blaikie LLP


Getting It DoneSo 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 retrofit3. Communicate, Communicate, Communicate!4. Get support from the board and unit owners


THE CONDOMINIUM ACT, 1998

Sources of funds for an environmental retrofit:

1. Reserve fund2. Special Assessment3. Loan4. Supplier/Contractor funded (form of loan)5. Grants, Incentives6. Combination of above


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



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



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



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



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.



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



The Special Assessment

1. May be used to finance both major repairs and replacements and

additions, alterations and improvements2. Additions, alterations and

improvements still subject to Sec. 973. Unpopular source of funds



Loans1. 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))


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


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


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


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


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


SELLING THE SOLUTIONS1. 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 support6. Execute the plan


Your Presenters

Lisa Kay, JCO & Associates [email protected]

Armand Conant, Heenan Blaikie [email protected]


QUESTIONS?

Documents

CONDOMINIUM SEMINAR Environmental Retrofits and Financing Options 1 AGENDA Environmental Retrofits and Financing Options Applicable to recently constructed