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Toronto Star Investigates “Shady” Ontario Green Building Industry

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In a two-part series that was published last weekend, Diana Zlomislic of the Toronto Star reviews the green building landscape in Ontario and concludes that although “[s]hoddy building is not unique to the green sector . . . with governments aggressively promoting green construction and green building still an emerging practice, consumers who opt for more eco-friendly homes and renovations are more vulnerable.” Zlomislic specifically identifies the over $1 billion in financial incentives that have been distributed to date by Canada’s provincial and local governments as having “few quality-control standards to protect consumers from incompetent ‘eco experts’ looking to cash in on the booming [green building] industry.”

For example, Zlomislic tracked down 26 homeowners who paid over $600,000 in deposits to a now bankrupt geothermal contractor. Several of these homeowners saw their energy bills double after the geothermal system was installed, while many others never even received a completely operational system. Among other things, Zlomislic points to the contractor’s rush to sign up customers and capitalize on a $10,000 provincial and federal rebate for qualifying HVAC replacement systems as a basis for the contractor’s misrepresentations.

Of particular interest to us here at GRELJ, Part 1 also identifies a pending lawsuit in the Ontario courts against a developer who converted a century-old building in downtown Toronto into a 4-unit, mixed-use building that was touted as one of the city’s top green building projects in 2006 by Now magazine. In a litigation that alleges fraud, the purchasers of the units seek over $900,000 in damages from the developer for the project’s failure to satisfy certain Ontario building codes, including those for its geothermal system – a highly publicized green selling point for the project.

Part 2 of the series starts out by concluding that Canadian governments “have created what some describe as a ‘Wild West’-like situation by urging homeowners to go green when they renovate or build from scratch. Green government grants and other incentives have boosted the building sector but few guidelines or quality-control standards exist, and those that do are not policed.” In support of her conclusions, Zlomislic profiles a Toronto-area couple who retained an architect that drastically overstated her green building design expertise, recommended a “green builder” for their 2200-square-foot renovation project, and left the couple with a house that’s only 60 percent complete and still contains over 60 individual building code violations.

What I found so interesting about these two articles is that they suggest a different type of risk growing out of government activity, while simultaneously shedding light on how that that activity has created an opaque regulatory structure on both sides of the border. The articles also build on many of the green building-related insurance claims which Frank Musica reported almost 3 years ago at the 2007 AIA National Convention in San Antonio. I also think that the Toronto fraud litigation is a major shot across the bow for owners and other marketing professionals who fail to accurately represent a project’s green features; this is one specific area of green real estate risk which continues to be insufficiently addressed by many industry professionals.

In any event, Zlomislic’s two pieces are must-reads and demonstrate practical applications of the many theoretical green building risk issues which have been discussed here at GRELJ and elsewhere over the past few years. Part one is here; part two is here.

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One Response to Toronto Star Investigates “Shady” Ontario Green Building Industry

  1. Ted Kantrowitz May 20, 2010 at 11:19 am #

    Hi Stephen,

    Seeing your email / blog post just now, I thought I should share our response to the Toronto Star on this story below.

    The accuracy and the fact that in my opinion the journalist entirely missed the real story here, concern us. The real story is about the province’s ability to inspect and enforce the regulations that do in many cases actually / already exist. In this case as well there are several facts missing that we’d be happy to comment on in some depth.

    Thanks.

    Ted

    ————-
    To: publiceditor@thestar.com
    Cc: lettertotheed@thestar.com
    Date: Monday May 17 2010

    Sir / Madam:
    Regarding the article written by Diana Zlomislic in Saturday’s Star, “The shady side of the green building industry,” found at http://www.thestar.com/news/investigations/article/809835–the-shady-side-of-the-green-building-industry?bn=1, we feel the article unfairly characterizes our work and attitude at the Canadian GeoExchange Coalition, as well as the majority of contractors and designers at work in our industry.

    Most of these are issues of the Ontario-wide building and HVAC inspection system issues rather than ‘green’ energy or geothermal per se.

    There are in addition a number of errors in the article, as outlined below.

    Though we would like a detailed correction published by the editors, we would also be willing to write a commentary or op-ed in response, for a similar placement next weekend.

    [snipped for brevity here]

    I would appreciate your thoughts and / or early response if possible. Thank you for your time and consideration.

    Ted Kantrowitz

    Summary of Issues

    First, our name has no hyphen in it as stated in the article and is consistently misspelled. This leads us to wonder whether the article was fact checked.

    More importantly, the CGC is not a federally funded industry group. The CGC runs on a $2 million dollar annual budget which is entirely self-generated with projects and industry activities. Second, although Mr. Preston did take one of our courses, he never applied for the CGC Installer Accreditation. Mr. Preston was therefore never accredited by us. All he has is a training certificate. This is not a certification nor is it CGC accreditation.

    About the company, Max Air was briefly listed (a few weeks in the Fall of 2008) as a CGC Qualified Company on our website. This was done on the basis that the company had two fully CGC-Accredited professionals on staff: one for installation and another one for design. The installer was an Ontario licensed refrigeration technician, and the designer also had his Ontario-issued building design credentials. We received our first complaint against Mr. Preston late in 2008 and his company was immediately delisted from the website.

    Over the course of the following year, while various authorities (including the police and provincial ministries) told us there was nothing they could do, the CGC decided to help a number of Max-Air customers.

    Although all the geothermal systems done by Max-Air were completed outside of the CGC Global Quality GeoExchange Program (i.e. that is before Max-Air got their company qualified), the CGC conducted, at its own expenses, a number of site audits. Many thousands dollars later, as a result, we certified a number of systems, and reassured customers that their systems were working just fine. We also helped them apply for and obtain their grants from the federal and provincial governments.

    None of this is mentioned in the article.

    It is true that anybody can install a system tomorrow morning and nobody will question it. This was the case well before the CGC came into play. What we did however is engage the industry and government officials in a market transformation initiative which will eventually bring regulatory changes.

    We have also at our own behest [about two years ago] begun a relationship with the Ministry of Municipal Affairs and Housing, to help take further proactive steps to protect consumers.

    In the meantime, we are doing our best to educate the public and to emphasize that as with any contractor relationship and any large purchase, the buyer needs to exercise appropriate caution. Our Buyer’s Guide for Residential Heat Pump Systems, available on our website at http://www.geoexchange.ca is a good example.

    We would be happy to elaborate.

    ————————————
    Ted Kantrowitz
    Vice President / Vice-président
    Canadian GeoExchange Coalition
    Coalition canadienne de l’énergie géothermique
    1030, rue Cherrier, Bureau 405
    Montreal, (Québec) H2L 1H9
    Téléphone: 514 807.7559 x34
    Télé / fax: 514 807 8221
    ted.kantrowitz@geoexchange.ca
    http://www.geoexchange.ca
    ————————————

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