Changes to the Fire Code Will Affect YOU!
REMI - By Barbara Carss
A second Fire Code violation will push Ontario property owners, managers, corporate officers and directors into a steeper fine bracket under proposed amendments to the Fire Protection and Prevention Act. New legislation tucked into the 2019 Budget Measures Act introduces a distinct slate of penalties for “a subsequent offence” and clarifies that any conviction under the Act or its regulations will count as a first offence.
Fire departments will also have more time to prosecute infractions with the addition of a new section to authorize action within one year of implicating evidence coming to light. Until now, the Act has been silent on timelines for prosecution so fire officials have had to default to the parameters of the Provincial Offences Act, which gives them just six months from the time an incident occurs.
"First time fines could be as high as $50,000. "
“That timing was extremely problematic for us,” says Jim Jessop, deputy chief with Toronto Fire Services. “These amendments will absolutely increase our ability to enforce the Ontario Fire Code and to deal with and mitigate other safety hazards not addressed in the Fire Code.”
For example, complicated investigations in the aftermath of a fire can take months to uncover all the contributing factors and related safety inadequacies. “Because of the timing, we were not able to move forward with dozens of prosecutions in cases where building owners had failed to comply,” Jessop advises.
The extended period for prosecutions, more stringent fines and additional flexibility for the province and municipalities to recover costs from property owners are set to come into force 30 days after the Ontario legislature adopts the Budget Measures Act, but there has been little formal communication of the government’s intentions. They were revealed in the final chapter of the provincial budget — entitled Details of Tax Measures — in a list with nine other planned legislative initiatives, and have received scant attention.
Monetary penalties will jump significantly for the new subsequent offence category. Notably, corporations are currently subject to fines of up $100,000 for contravening the Act or any of its regulations. That cap will rise to $500,000 for a first offence and to $1.5 million for a subsequent offence.
For individuals, conviction for any offence under the Act, not just those related to the Fire Code, will come with a first-time fine of up to $50,000. Subsequent offences will trigger fines of up to $100,000. The same increments apply for fines imposed on directors or officers of a corporation who are aware that the corporation has violated the Fire Code, or who knowingly commit an offence under the Act or any of its regulations.
“We were not consulted,” reports Tony Irwin, president and chief executive officer of the Federation of Rental-housing Providers of Ontario (FRPO).
“Nobody has really picked up that this is in the works. Even our (life-safety) service providers weren’t really aware that this is happening,” concurs Randy Daiter, vice president, residential properties, with M&R Property Management. “There seems to be a growing trend to adopt an enforcement approach that’s geared toward generating revenue for government agencies.”
The Fire Code’s oversight of existing buildings makes it a more common compliance challenge for landlords and their property managers than the Building Code’s more scoped application to new construction and major renovations. That’s particularly true in the residential sector where tenants can inadvertently or purposely compromise life-safety protections — propping open fire doors, disabling smoke detectors in their own units or even vandalizing equipment. Industry insiders predict the new fine regime will come with a hefty cost hit.
“That first offence could be something like a door closer not working properly and now it puts you in line for a substantial fine,” Daiter notes.
“Landlords are often held responsible for tenants’ actions simply because it’s easier to charge and fine a landlord than it is a tenant. Similarly, under the current rules, many landlords would plead guilty and pay the fine, largely because it’s easier to do that than to go to court to try to defend against the charge,” Irwin says. “This is really going to change how they approach these types of matters.”
Reputable landlords and property managers endorse fire departments’ efforts to deal with what Jessop terms “a minority of owners who are wanton and reckless, and are endangering tenants, occupants and responding firefighters”. However, Irwin and Daiter reiterate that tenants and service providers also play a role in fire safety.
Q1-2019 GTA Apartment Trends
CFR - The Apartment Group
The market in the GTA continues to move upwards in terms of values despite the pause or slowdown in other sectors. While not much happens in any given quarter, comparing quarters to quarters can give some important insights into market directions. In Q1-19 there were 13 sales which is down from 17 the year before but equal to 2017. In Q1-19 the sales totaled over $295MM which was much higher than the 2018 number of $180MM and $170MM in 2017.
The bulk of the purchases were completed by Starlight which did three deal totaling over $185MM in the first quarter. The bulk of the remaining sales were mainly much smaller deals done by individuals or small corporations. In past Digests we have highlight the major or most interesting sales of the month and this issue is no different.
The average price per suite in Q1-19 was $271,200 which is up 11.8% for 2018 and 42.7% higher than that in 2017 or an average of 21% per year. Not a bad ROI considering that since 2017 interest have gone up but have come down a bit since then. Many investors too were cautious about the global economy and trade war with the US but this did not stop apartment demand. Why? Rents.....
Much has been said about purpose built rentals coming on the market. They are but not fast enough. The condo market or shadow rental market has had little effect on the older purpose built rental market and this has historically been the case. Always standing at about 35% of the market for rent condo's are a different animal. They are more expensive, smaller, higher rent and less secure from a tenant perspective (ie. owner can move in any time, each year rents can increase to whatever in cases....).
The older purpose built stock now has seen many units renovated to high quality and they are much larger units. These buildings are also more tenant friendly. Also given that condo prices are now booming, affordability is now even more of a concern. Hence MORE renters and more immigration coming in mean MORE renters. In the past a $200-250 per month lift on renovation and turnover was huge, we are now looking at double or more that in the 416. This trend will continue and hence the further compression of cap rates.
In Q1-19 the average cap rate was around 3.25% and this is down slightly from 3.35% in 2018 and far below the 3.85% reported in 2017. We are seeing strong demand in areas considered "C" in the 416. Areas were good turnover can be created.
In the coming months and years, more emphasis will be placed on building turnover and 5 and 10 year residual valuation and less focus on cap rate. Demand for buildings is still strong especially for the entry level and mid tier product say anything under 80 suites. Demand for the larger projects is strong as well but the players in that sand box are not as many as people think. Interest rates too are a factor as the economy heats up and employment and wage gains move up.
On a personal note, 2018 was a great year for us. The start or 2019 seems to be another one where we have closed deals already, have two conditionally sold and two more under contract. We will report back soon.
780 New Apartments to Be Built in Kingston
Canadian Apartment Magazine
Secure Capital Partners Inc. of Toronto, Blue Vista Capital Management of Chicago, and Podium Development Corp. of Toronto, announced that they have partnered with a major Ontario-based pension fund to build a new apartment development in Kingston, ON.
The new apartment development will include three multi-res buildings comprised of 788 units and over 600,000 square feet of total area, including 26,000 square feet of retail space.
According to David Ogden, a Managing Partner of Secure Capital: “This three phased build-to-core multi-family development is truly unique in the Canadian landscape. New core multi-family assets are in very short supply and are arguably the most sought after commercial real estate asset. We are a firm believer that developing to core in this market is a sound strategy that will create solid long-term returns. These modern assets will outperform older, existing buildings and achieve higher occupancies and rents.”
The first building, located at 333 University Ave., will be completed in May 2021 with the two subsequent buildings expected to be completed in the spring of 2022 and 2023, respectively. Located along Princess St. near University Ave., the buildings have immediate proximity to Queen’s University and Downtown Kingston.
“We’re delighted to have outstanding partners on this portfolio of luxury apartments that will fill the tremendous demand for rental accommodations in Kingston and to provide our investors with long-term, stable and recession-resistant income,” said Brent Chapman, a Managing Partner of Secure Capital.
“There is no better residential market than Kingston for our latest development because of its high barriers of entry and exceptional demand for quality apartments,” added Patrick Flaherty, Blue Vista Senior Vice President, Student Housing. “We are pleased to collaborate with experienced partners who understand the landscape and share our vision of innovation in this sector.”
“These projects were carefully assembled and planned over several years and will include best in class amenities, technology and design,” said Bernard Luttmer, Podium Developments Managing Director. “We look forward to delivering these excellent housing options to the Kingston community”.
RECENT APARTMENT SALES
26 Maynard Avenue – Toronto – SOLD $2,375,000 / $158,300 per unit / 3.75% Cap Rate
This property is located in downtown west Toronto in Parkdale. It is a 2.5 storey house form building containing 15 small self contained apartment suites. The building had been recently updated and much was spent on capital work in the project. Rents were below market and owner was an investor in small apartment projects. The property was fully marketed and exposed and was purchased by a private investor.
24-26 Lasalle Court – Oshawa – SOLD $1,750,000 / $143,800 per unit
This property is located in central Oshawa and comprises 12 rental apartments on a large site being almost half an acre. The building was in good condition and comprised of 8 one bedrooms and 4 two bedrooms. The property was fully marketed and exposed and was purchased by a private investor.
Tichester & Bathurst – Toronto – SOLD $66,000,000 / $294,600 per unit
This is a sale of a collection of walk up apartments located along the northeast corner of Bathurst Street and Tichester Road. In total there are 224 apartment suites in seven buildings. The seller has owned these buildings for over 30 years and is a large apartment owner in the city - Trivest Developments Corp. The motivation of the sale is unknown but the property was fully marketed and exposed and was purchased by Starlight Investments Ltd.
1320-1340 Danforth Road – Scarborough – SOLD $27,630,000 / $240,300 per unit
This is a sale of a two 4 storey apartment investments located near a complex of buildings already owned by the buyer. In total there are 115 apartment suites. The seller has owned these buildings for over 30 years and is a large apartment owner in the city - Monterey Park Inc. The motivation of the sale is unknown but the property was fully marketed and exposed and was purchased by Starlight Investments Ltd.
THE APARTMENT GROUP
Together the team has completed over 1,000 transaction and has sold over $5 billion in apartments and development land. Put us to work for you and see the results. NO ONE has sold more buildings then your group. Experience, knowledge and professionalism will insure you get the right deal or the highest price if you are selling.
The Apartment Group is a dedicated team of professionals specializing in the sale of multi-residential investment properties. With over 40 years of combined experience, the team brings together their strengths including strong negotiation and sales skills along with highly technical market analysis and appraisal methods.
We are a boutique Brokerage but have the capabilities of the larger houses without the overhead. We have: an internal database of over 10,500 active apartment and land Buyers; a list of all apartment building owners in the Greater Toronto Area; our web site gets over 50,000 hits a month; we highlight properties for sale through our newsletter which reaches 10,000 investors monthly.
President & Owner,
LORENZO DIGIANFELICE, AACI
Broker of Record, Owner