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West Don Lands

On your mark, get set for Pan Am Games

Ryan Starr – Yourhome.ca

Amid the hoopla surrounding Toronto’s winning of the 2015 Pan Am Games last November, it’s safe to assume few people were as jazzed as John Campbell, Waterfront Toronto’s chief executive.

After all, winning the Games bid is a major catalyst for his group’s plans for redevelopment of the West Don Lands, a 32-hectare post-industrial site that runs from Parliament St. in the west to the Don River, and from King St. down to the rail corridor.

“The Pan Am Games provides a huge acceleration of development for the area,” says Campbell. “It will move the whole thing forward.”

In terms of real estate, the Games win means that construction of 6,000 condominiums and townhomes in the West Don Lands will now be put on a fast track.

The community will be the future site of a new $1 billion athletes’ village, to be built adjacent to the Don River along an extension of Front St. The village, a mix of midrise buildings and townhomes, will consist of 2,100 residential units to house the 8,500 competitors, coaches and officials expected to descend on Toronto in July 2015.

Following the Games, these residential units will be converted into one-, two- and three-bedroom condos, as well as mixed-income apartments, providing accommodation for approximately 4,000 people.

If not for the Games, Campbell says, the pace of redevelopment at the West Don Lands would have been dependent on market conditions and, as such, considerably slower.

“We were limited by the rate of absorption of new units,” he explains, estimating that in an average year the Toronto real estate market can absorb about 12,000 residential units, approximately 30% of which would be in the downtown Toronto area.

In the case of the waterfront, this works out to around 300 to 500 homes a year, figures Campbell, a former executive with Brookfield Properties.

“At that rate, the West Don Lands would have taken us 10 to 12 years to do,” he says.

Critics have suggested the acceleration of these redevelopment plans could have negative consequences, with quality of construction sacrificed for the sake of expediency.

Campbell dismisses this notion, pointing out his group already has a head start at the West Don Lands.

Zoning is in place and site preparation is underway, including soil and groundwater remediation, as well as work on infrastructure such as roads and sewers. Construction is also in progress on a $60-million berm to protect the area from flooding.

“The beauty of having the athletes’ village in the West Don Lands is that we’re not starting from scratch – we’re already at year three,” says Campbell.

“I think that was one of the strengths of our bid down in Guadalajara (Mexico, site of the Pan Am Games host city selection),. When the evaluation committee came up here in August they saw we were underway.

“Plus, we’re not changing the design (of the West Don Lands),” he adds. “We have a plan that the community has embraced, that council has approved, and that’s what is going to get built.

“So rather than build a village for athletes and figure out what to do with it afterward, we’re building a village for the city and we’re going to use it temporarily for the athletes.”

West Don Lands

West Don Lands


Affordable housing

In the wake of Toronto’s Pan Am Games win, considerable attention was paid to the affordable housing that will be built in the West Don Lands.

The waterfront redevelopment master plan calls for 20% of the housing there to be affordable rental, or what’s known as rent-geared-to-income housing, where a tenant’s rent does not exceed 30% of his or her income.

Another 5% of the stock is to be low-end-of-market housing; homes that are purchased from developers and priced at the lower end of the spectrum.

Of the 6,000 condominiums and townhouses that will ultimately be built in the West Don Lands, around 1,250 units will be some form of affordable or subsidized housing.

Waterfront Toronto has also partnered with Toronto Community Housing Corp. to develop a 250-unit affordable housing project at the corner of St. Lawrence and King Sts.

The idea of “affordable” housing has made for plenty of feel-good news reports, but what does it actually mean?

Waterfront Toronto defines affordable as housing that is 100% of average rents in the city as calculated by Canada Mortgage and Housing Corp. (CMHC).

In October 2009, the average monthly rent for a one-bedroom rental condominium apartment in the centre of Toronto was $1,296; a two-bedroom unit averaged $1,789 a month, according to the latest CMHC Rental Market Report.

“We’re building a community where everyone has a chance to live, as opposed to having to commute from 50 miles away to go work in the city, which, in the long term, is not sustainable,” Campbell says.

“We’re trying to avoid what happens on a lot of waterfronts, where you get narrow demographic enclaves of certain age groups and certain income groups.”

Still, it’s not clear whether the inclusion of affordable/subsidized housing will have a negative impact on sales of market-rate condos at the West Don Lands.

David Wex, the developer of River City – the first residential community to be built in the area – says the buzz surrounding the Pan Am Games has certainly boosted interest from buyers in his project.

While River City won’t be located adjacent to the athletes’ village – which will be built in the southern portion of the West Don Lands – “we’ve had a lot of questions about what the Games will mean for our purchasers,” says Wex, a partner with Urban Capital Property Group.

Waterfront Toronto’s plan calls for the affordable housing buildings to be mixed in with market-rate buildings. Campbell calls this “checker-boarding,” the idea being that if you didn’t know the subsidized units existed, you might not notice them.

“Once we explain it, buyers understand its place in the overall vision for the neighbourhood,” says Wex.

Waterfront Toronto intends for the affordable housing to be targeted at younger folks and seniors, as well as so-called “key workers” – municipal employees, nurses, firefighters and others seen as vital to the operation of the city but who might otherwise not be able to afford real estate in the West Don Lands.

Campbell notes that in some U.S. cities – Minneapolis, for example – there are laws that mandate a certain portion of affordable housing be included in new developments, with the subsidized units blended in with the market-rate stock

But he has doubts whether this type of approach would work at the West Don Lands.

“It would be a challenge,” Campbell says.

“I’m not sure how we’d mix them into the buildings. Because that’s not mandated legally (in Toronto), there are questions as to whether it would be acceptable in this marketplace.”

Regardless of how the affordable housing is ultimately incorporated into the West Don Lands buildings, though, Campbell says construction plans are on track and that his team will have everything completed in time to host the world in five years.

“We want to have the athletes’ village built by December 2014 or very early 2015,” he says.

“So we haven’t got bags of time left, but there’s time to make the right decisions and do things properly.”

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Contact the Jeffrey Team for more information  -  416-388-1960

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  • Toronto Church Loft Conversions

    Anna Sharrat writes on the next trend in Toronto real estate development, converting churches to condos

    From the Toronto magazine

    “It’s got 12-foot ceilings and the light is beautiful,” Sue Bailey assures me with the slick conviction of a bible-belt preacher. Bailey, a sales representative, is describing Roncesvalles Village’s newest loft development, High Park Lofts. Check out its marketing materials and you’ll find the interior atrium garden described as having a “cathedral-like” ambiance, and be able to peruse photos of uber-trendy Roncy. But this development isn’t just another Toronto loft project. High Park Lofts is the latest incarnation of the Anglican church formerly known as St. Jude’s.

    Across Toronto, churches are putting their buildings up for sale, and developers are swooping in with ecumenical zeal, converting century-old buildings into loft developments or reducing them to rubble: Riverdale Presbyterian, at Pape and Danforth avenues, is now the Glebe Lofts. The Anglican church of St. Mary the Virgin and St. Cyprian, at Westmoreland Avenue and Bloor Street, will be transmogrified as Westmoreland Lofts. Howard Park Pentecostal, at the corner of Sunnyside and Howard Park avenues, is now a 24-unit development called The Abbey. And Willoughby Baptist, at Indian Road and Annette Street, has been razed to make way for four townhouses.

    Not surprisingly, many of these churches had historical designations under the Ontario Heritage Act, which is intended to preserve such properties or at least their architecturally significant characteristics. But that doesn’t ensure a structure’s survival. After Heritage Preservation Services grants a historical designation, a new owner who is not interested in preserving a building can take his case to the Conservation Review Board, which can still approve a demolition. If that doesn’t succeed, he can appeal the decision with the Ontario Municipal Board.

    Gib Goodfellow, president of the West Toronto Junction Historical Society, believes the OMB’s panel of judges favours the developers and that a heritage designation merely “slows a developer down for six months while he consults with the community. They can do what they want with it after six months.”

    The OMB is well-acquainted with taking heat from residents’ groups — it has a reputation for approving condo projects despite neighbourhood opposition. This past January, for example, it gave the green light to three large condo and loft developments on trendy Queen Street West, a move that outraged locals who object to the buildings’ size and density. One of the projects, the Bohemian Embassy, will feature 345 suites in a 19-storey tower in the low-rise area of Queen Street and Dufferin Avenue.

    Joe Whitehead, advisor to Ali Arlani, the chief executive of the OMB, says the board is unfairly portrayed as being development-friendly. “Do developers have more money than some of the other groups? Certainly they do. But people have the right to attend hearings and present evidence. There’s an appeal option.”

    But Michael Walker, city councillor for St. Paul’s doesn’t buy that. The way to save heritage buildings is to create new laws, he says: ” We need heritage legislation that allows the municipality to make a decision that’s final: no appeal.” He says if a building is historically designated, a developer should be prohibited from demolishing the structure – case closed – without recourse to the OMB.

    St. Jude’s, named for the patron saint of lost causes, is a good example of how a property goes from church to condominium. A deconsecrated Anglican church whose membership fell off in the ’90s, it was sold to a developer short on cash who ended up renting the hall to impresario David Mirvish as a practice hall for musicals. Harry Stinson, the big-talking developer, learned the church was on the market from the person who held the mortgage to the church, and who had power of sale. So Stinson bought the property and the adjacent hall in 2000, and drew up a proposal for a condo conversion.

    Local residents welcomed the plan, a modest 30-unit development that preserved the church’s original structure. “Everyone thought, ‘Oh, wow, isn’t that beautiful,’” recalls Paula Snyder, a neighbour of St. Jude’s. “The next thing we knew, the building was torn down.”

    Local residents had lobbied for months to save the property, entreating city councillor Chris Korwin-Kuczynski to oppose Stinson’s second proposal for a much larger building that would require the demolition of the church. Snyder says Korwin-Kuczynski gave his reassurance the church was safe. But it wasn’t.

    Stinson dismisses the neighbourhood effort. “There was a silly attempt by a local councillor to designate it as historic. He was playing to the locals,” he says. Though Stinson’s first design incorporated the original building, “it was just too complicated. In the end, we said to hell with it.”

    Sylvia Watson, currently seeking the Liberal nomination in Parkdale High Park, says she’s dismayed by church demolitions like St. Jude’s. She points to The Abbey, a development just down the street from High Park Lofts, as a blueprint for how to preserve historic churches. But The Abbey‘s elaborate loft conversion was a tough sell – both in terms of construction and aesthetics.

    In its conversion of Howard Park Pentecostal, a neo-Gothic church, developer Abbey Inc. undertook a lengthy and costly process of preservation, right down to the stained-glass windows.

    Yes, it’s a win for the preservationists, but it’s an undeniable setback for the loft sales teams. Looking at The Abbey, it’s easy to understand why many developers aren’t keen to perform architectural back flips for the sake of preserving heritage features.

    For Watson, part of the solution is for historical groups and residents to act before developers enter the picture. “If we actually did a proactive review of designations of buildings, we wouldn’t be caught in a situation where we’re scrambling at the last minute to designate a building.” Currently, only 75 Toronto churches are listed under the Ontario Heritage Act.

    Her idea is good in theory. But heritage groups tend to consist of volunteers and do not have the resources to undertake preservation projects en masse. “It’s very hard to protect churches,” says Goodfellow.

    Still, rallying the committed is a good first step. A community effort saved St. Stephen’s-in-the-Fields in 2006 when the Anglican Church wanted to sell the imposing structure near College and Bathurst. A lengthy media blitz ensued and the sale was halted. Now, to meet its costs, St. Stephen’s rents itself out to community groups and runs city-funded out-of-the-cold programs. It’s a bid to survive at a time when cash-starved churches are increasingly closing their doors.

    It’s a sad fact that no amount of prayer can change; congregations across the GTA are increasingly declining. Anglicans and Presbyterians are particularly hard hit: Most often, it’s their churches that are on the chopping block, with the churches themselves blessing the sale.

    Jim Czegludi, associate secretary for evangelism and worship for the Presbyterian Church of Canada, says the challenge for churches is to connect with their communities. “Congregations are getting smaller and older, and churches need to reach out. Churches are born, they grow, they develop and sometimes they die. The question is: How do we resurrect these churches?”

    But it’s the resurrection of parishes – not the church structures themselves – that must take precedence. “The church is more than a building. Sometimes we have to sacrifice a building to maintain the church presence,” says Reverend

    Linda Saffrey of Emmanuel Howard Park United, on the corner of Wright and Roncesvalles avenues. That sentiment is echoed by Reverend Debra Schneider of Manor Road United (at Manor and Mount Pleasant roads) in Toronto’s north end. “It can be really good stewardship to let that building go and let the proceeds go to helping people who really need help.” She suggests using the money for projects like community housing.

    The key is resourcefulness, says Paul McLean, executive director of Potentials, a consulting firm that helps churches develop plans for sustainability. He says many parishes are turning to new income-generating opportunities, such as renting their spaces to day-care centres or other congregations.

    The trend has certainly spawned an interesting array of split personalities; Manor Road United is also Toronto Joosarang Church, a Korean Pentecostal congregation. Victoria Royce Presbyterian is Full Gospel Young Sun Church. Koreans have become major players in the church rental market, and they’re often buyers, as well. And it’s their dominance in Toronto’s religious life that may play an important part in the future of many historic buildings.

    For Doug Hain, who’s managed Victoria-Royce Presbyterian in the West End for most of his career, it’s too late. He fears for the church, at the corner of Annette Avenue and Medland Street, which was sold to Triumph Developments in April for close to $2-million. He’s witnessed what happened to nearby Willoughby Baptist Church, which, despite a well-organized residents’ protest, was demolished by a developer mere minutes before he was served with a historical designation.

    “It’s kind of sad, my grandparents were there in 1885,” he says, a time when Victoria-Royce’s congregation boasted 2,000 people. Over the years, the congregation died off, while maintenance and heating bills rose to more than $30,000 a year. “It’s the role of the community to keep things going.”

    On a windy summer evening in June, the baby-blue paint is peeling off the wooden front steps of Victoria-Royce, the organ has been sold and six Koreans sit solemnly inside the massive church, waiting for the rest of their congregation to arrive from the far reaches of Toronto. “I hope the stained-glass windows can be saved,” says Hain, noting that they’re among the finest in Toronto.

    But he doesn’t hold out a great deal of hope. He knows that when it comes to churches, there are rarely resurrections.

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    Contact the Jeffrey Team for more information – 416-388-1960


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  • Rental Income Properties and Real Estate

    A Great Long Term Investment

    Sacha Gera, Ivey School of Business

    Growing up, I watched my father accumulate rental income properties.  He would spend many hours renting out his units and maintaining his properties while remaining on the outlook for his next acquisition.  I always found my father’s real estate activities fascinating – it was like watching a good game of monopoly.

    As soon my wife and I accumulated enough wealth, we leaped into the rental income game – we purchased a three bedroom town home in a western Ottawa suburb called Kanata.  Kanata was home to a large concentration of high tech firms and the prices were mighty attractive following the high tech bust in the early 2000′s.

    The rental market in Ottawa had always been rock solid with its large concentration of government and high tech workers, high household incomes, low unemployment, rampant population and employment growth – they say it’s about location, location, location and we felt that Kanata/Ottawa was a sound place to be.

    Why rental income properties make a sound investment?

    There are a number of reasons of why real estate and rental income properties specifically make a good investment, but here are few basic reasons:

    i) You are leveraging and using OPM (Other People’s Money)

    The beauty about rental income properties is that you are making money using OPM: the bank’s money (i.e. via a mortgage loan), and via your renter’s rent money (i.e. the person paying the mortgages and property bills on your behalf).  Obtaining a mortgage from a bank is a fairly simple process and bank’s love to loan out money especially when it comes to real estate – I can’t think of another investment whereby a bank will spot you up to 80% or more of the total investment amount so easily (typically banks require 20% down payment for a rental income property).

    Further, the rent on a good rental income property should cover all or most of the expenses related to your property including mortgage payments, property taxes, and insurance.  As long as you can keep your place rented, and as long the property is in a good area you are likely to profit handsomely over the long term while leveraging OPM.

    ii) Real estate is generally a sound/stable investment over the long term and good way to diversify

    Most Canadian cities have provided solid real estate returns over the last decades.  Sure, we do encounter declines in some centres as cyclical recessions hit, but over the long term real estate has been a sound investment.  Ottawa for example has returned 5.5% over the last 54 years and has only had four minor down years during that period.  Other centres such as Toronto and Calgary have witnessed rapid appreciation and depreciation over certain time frames, but have both offered significant upside over the long term.  In addition, real estate offers an opportunity to diversify one’s portfolio beyond equities and the stock market.

    iii) There are favourable tax advantages in owning rental income properties

    Most investors are familiar with the two points above, however many are not aware of the favourable tax advantages involved with owning rental income properties.  Unlike one’s own primary residence, an investor in a rental income property can make a number of allowable tax deductions to offset income including the interest on your rental income mortgage or associated loan, maintenance and management expenses, advertising expenses, insurance expenses, property taxes, and utilities amongst others.

    The key item in this list is that the interest you pay on your mortgage is tax deductible just like it is for home owners in the U.S.! This expense alone will likely offset most of your rental income in a year allowing you to escape having to pay income tax on the rental income.

    Rental properties can make for good real estate investments

    Rental properties can make for good real estate investments


    How do you make money off of rental income properties?


    i) The renter pays off your mortgage over time

    A good rental income property will bring in enough rent to cover all or most of the mortgage bill, which is comprised of a principal and interest portion.  Over time, the rent will pay off more and more of the mortgage principal adding to the investor’s equity and adding to the investment’s returns.

    ii) The property appreciates

    A property in a good location will typically appreciate over time. As the property appreciates, so does the investor’s equity and return.

    iii) The multiplier affect

    As time goes by and the investor’s equity grows as per points i) and ii) above, one can refinance the property with the bank and use a percentage of the the gained equity to make an additional rental income investment (i.e. pull out a percentage of the equity from the investment based on the bank’s minimum requirements).  I call this the ‘multiplier affect’ – in essence the returns earned from one rental income properties can be used to purchase another property allowing one to add to his/her real estate portfolio and allowing one to grow their returns exponentially.  It’s like a fruit tree bearing more and more fruit over time.

    Perhaps an example will best sum up how rental income properties can be used to make a solid investment return over the long term:

    An investor, let’s call her Susan, buys a 2 bedroom condo in downtown Toronto for $300,000 in the year 2009.  The condo fees are $300/month, the property tax is $2,400/yearly and the property insurance expense is $40/monthly.  Susan has made a down payment of 20%, or $60,000 as per her bank’s requirement on a rental income property.  The bank has granted a mortgage of $240,000 amortized over 25 years on a 5 year fixed, closed rate mortgage of 4.25%/annually.  To make things simple we’ll say that the condo is rented for all 12 months of the year at $1,890/month + utilities (i.e. renter pays for utilities).

    Monthly Expenses: $1,890, Monthly Rental Income: $1890
    Mortgage (including principal and interest): $1295/month
    Condo Fees: $300/month
    Property Taxes: $200/month
    Insurance: $40/month
    Maintenance: $55/monthly

    In the first year, the property appreciates in value by 2.0% or $6,000 and about $5,500 of the mortgage principal is paid off based on 12 monthly mortgages payments made using the rental income.  Total investor’s equity has increased by $6,000 + $5,500 = $11,500 in one year!  What is Susan’s first year return?

    Total investment made by Susan: $60,000 for down payment
    Total gain in equity in year one: $11,500
    Total return (ROIC): $11,500/$60,000 = 19.1%

    Wow – Susan was able to use $240,000 of the banks money + rental income to make a handsome 19.1% return on her investment!  Okay – this example perhaps makes it seem all too easy but really there isn’t much more to the rental income investment story then what was described!

    So how did Susan fair after five years?  Well – her 2 bedroom condo appreciated on average by 2.0% over 5 years and was worth about $330,000 in the year 2014.  Her apartment was rented for all 60 months because her property was in a highly desirable location near the financial district; home to thousands of jobs.  Only $210,000 was left on her mortgage after 5 years and after 60 monthly payments had been made from the rental income.

    Susan now had $120,000 of equity ($330,000 – $210,000) in the property!  It was now time to refinance/renew her 5 year mortgage, so she talked to her banker who told her that she only needed to leave $66,000 or 20% equity in the condo after she refinanced/renewed her mortgage. Susan therefore withdrew $54,000 from the investment property ($120,000 – $66,000) and used it as a down payment on a second rental income property, which the bank was happy to finance considering her success on the first property.

    Susan now owns two rental income properties in just five years.  Her gains in the following five years are likely to be double of the first five years now that she has twice the properties – the ‘multiplier affect’. Good job Susan! I wonder how many properties Susan will own at this pace in 25 years, and how much wealth she would have accumulated?

    What are the risks involved with rental income properties?

    Of course there are risks involved with any investment and rental income properties rarely work out as rosy as Susan’s example above.  Here are some common risks to be aware of:

    i) Buying at the peak of a market, which is followed by a bust and falling real estate prices

    There are plenty of such investors at the moment in Phoenix, Las Vegas, and perhaps even Calgary.  Buying at the peak and encountering falling real estate prices can dramatically affect your long run returns.  The key is to pickup properties at the right times.

    ii) Excess maintenance

    Older properties generally require more yearly maintenance and therefore erode your profits.  An investor must do a thorough job in assessing the key maintenance components of a property including the furnace, air conditioning, electrical systems, and plumbing.  The last thing you want is for your property to become a money pit, although maintenance is tax deductible on rental income properties.

    iii) Vacancy

    When a rental income property is vacant, it is money out of your own pocket – not fun!  Remember location, location, location!  The more desirable a location, the less likely you’ll encounter vacancy and the higher the rent you’ll likely command.  Of course, some vacancy is always expected and it is fairly common to expect one or more months of vacancy per year.

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    Contact the Jeffrey Team for more information  -  416-388-1960

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