Toronto Condominiums Amalgamate
Toronto Condominiums Amalgamate
On June 26, 2014, with the registration of a new declaration, MTCC 1101 and 1120 ceased to exist and were reborn as TSCC 2388 -- the first amalgamated condominium corporation in the City of Toronto and one of perhaps only two in the GTA. Both sites, Courtyards of Concorde (MTCC 1101 & 1120) and Glenburn Forest (YRCC 962 and YRSCC 997) realized this achievement through the determination of their boards and the assistance of Brookfield.
Through the long, unfamiliar, and frustrating process, the boards and owners of the Courtyards had to show exceptional leadership and determination to build a community that could not be divided by the disruptive rivalries that often plague sister condominium corporations. We always hope that corporations that share the same parcel of land and the same amenities will find common purpose. We want to see durable partnerships, identical standards of maintenance and comparable financial strength. Boards may develop good working relationships, but they seldom survive indefinitely. Good intentions and a determination to work together can focus two or more boards on the common good. However, it only takes a personality conflict between two directors to shatter any sense of cooperation or shared purpose. Amalgamation helps ensure that the community becomes one and stays that way.
Why Do It?
1. Consistency in standards of maintenance and upkeep. One of the unique aspects of MTCC 1101 and 1120 is that they’re really one building. Most multi-corporation sites consist of two or more distinct towers linked only by a central pod housing the shared facilities. An expansive mid-rise -- the builder literally finished half the building and registered one corporation, kept on building the southern corridor of the structure and registered the second corporation. You used to be able to walk down a corridor at Courtyards and never know that you were passing from one corporation into another. What if one board saw the need to renovate corridors and the other didn’t? Or, if one replaced windows or made exterior repairs and the other made the repairs differently or not at all? Even if the corporations were separate towers or separate blocks of townhouses, any inconsistency in maintenance standards would affect property values and owner satisfaction, and would likely lead to disharmony in the community. The boards of the Courtyards saw the potential for division and decided to act preventatively to ensure that one standard would prevail.
2. Consistency in governance. In a multi-corporation site, a director may attend a grueling board meeting one night and then do the same the next night at a Shared Facilities meeting. At each meeting, some directors will be informed and others may not be. Some may faithfully state their board’s position, some may not. Some may be in a cooperative mood -- some may be in a combative mood. The process often leads to decision fatigue which can result not only in fast and careless decisions but even in decision avoidance, where no decision is made at all. We’ve all seen it. Directors want to get the job done, but they’re volunteers doing a challenging job in their own time after a long workday. A simpler, stream-lined decision-making process can only help attract the best candidates and simplify their roles as directors. One decision-making body instead of three or more will inherently lead to more consistent and cohesive decisions. At Glenburn Forest where amalgamation was achieved a year ago, residents agree that governance has never been better.
3. Cost savings. Although there are savings, they may not be the primary motive for amalgamation. In our two amalgamations, the paybacks have been estimated to be 4.5 and 6 years. As innovators, the corporations probably paid a premium to be the first to amalgamate. No one involved – the lawyers, the surveyors, the engineers, the OMB, the boards, the land registry and certainly not the city staff -- knew what to do. The inertia caused by ignorance lead to delay, more lawyers’ time and more expense. In Toronto and York Region at least, subsequent amalgamations ought to be simpler, faster and cheaper thanks to Courtyards and Glenburn Forest. Steve Merson, the president of MTCC 1101 at Courtyards, noted that it was clear that the province hadn’t provided any forwarding legislation or direction to the municipalities. Despite high level contacts at almost every City department, as well as pressure from the province, the city slowed the process to a crawl as departments from Water to Parks & Recreation figured out how they would deal with one new entity and a single municipal address instead of the old two.
What Did It Cost?
At Courtyards, the survey cost alone was $35,000. The total cost was close to $125,000 -- funded from a healthy contingency fund. With 252 suites the cost per suite amounted to just under $500. Glenburn Forest is a much smaller 36 unit luxury townhome property, so the $40,000 cost of amalgamation amounted to over $1,000 per unit. Despite the inflated cost, both of the new corporations will benefit financially and operationally. There’ll be one audit, one management report, one reserve fund study, one insurance policy (notably one Directors & Officers policy), one board meeting per month (instead of three), and one annual meeting. Meeting costs will drop. Even status certificates will be simplified.
What Approvals Were Required?
An excellent summary of the amalgamation process (unrelated to our corporations) is offered by CliftonKok LLP.
At Courtyards, the notable formal and informal approvals consisted of:
• Approval of the two boards
• An interim agreement between the corporations
• OMB approval (the quickest part of the process at 2 days)
• City approval (the slowest part of the process at 6 months)
• Provincial approval (provided by Section 120 of the Act)
• Written approval of 90% of the owners (within 90 days of the formal owners meeting – Courtyards reached the 90% threshold after a full 85 days)
• Election of the new board (within 60 days of registration of the new corporation)
The process was longer and more costly than expected. Nevertheless, all the people involved say they would do it again. They are convinced that their communities will have better, more efficient and less costly governance. John Oakes lead the initiative at Glenburn Forest (he’s a homeowner) and he advised the boards at Courtyards. Brian Horlick quarterbacked the legal effort at Courtyards. Steve Merson and Doug McLean lead the boards at Courtyards with determination and hard work. It took countless hours of going door to door and a deep reserve of patience to get the required approvals. Property manager, Elsa Ambo, was highly praised. Among many other things she’s had to develop a new budget and organize more board meetings and information meetings than she wants to count. Collectively they form a valuable knowledgebase for anyone contemplating amalgamation. Implementation will rely on our accounting team to set up the new corporation and transfer all the owner info. The production of accurate financial statements will be as seamless as possible. Once again, Brookfield’s expertise and partnership with our boards has contributed to better condominium governance.