Thursday, December 29, 2011

Equity's head office location

The following question arose during the recent dues referendum:

Can you please explain why we are renting an office in expensive downtown Toronto. Surely there are cheaper places to rent.

I admit, this issue kind of snuck up on me. The assumption seems to be that, due to our location, we must be paying a frivolously high amount of rent. I don't know how widespread the concern is (according to some, everyone is always talking about it), but it's certainly worth a look.

To start with, the location of the head office is set out in the Constitution, so the Toronto part is a given. However, where in Toronto is not specified. For members not familiar with our address, we are in the heart of downtown, one street off the main drag.

The decision to move to Victoria St. goes back to 1996.We used to have offices not too far away on Richmond St. We needed more space and ended our lease to take advantage of the fact there was a glut of downtown office space at the time. Because the landlord was keen to rent, we were able to secure a very favourable price on a ten year lease for our current offices. 
We have renewed the lease once since then, again for another 10 years, and this time were even able to secure some needed renovations as part of the renewal negotiations.

Council policy requires staff to consider all options for decisions of this magnitude. Upon renewing the lease, staff reported that the new terms were competitive with other suitable locations, both downtown and in outlying areas. They also took into account the high cost of relocation and needed renovations. (Commercial spaces typically lease "as is". At the class of office space we can afford, generally very as-is.)

Yes, the amount of rent is large (about $300K per year to cover both offices), but commercial office space is no cheaper than any other real estate. Still, our rent is way below the typical market rates for the downtown. Our building is rated Class C (the lowest grade), which is described by one commercial real estate source as: "older buildings […] in need of extensive renovation. Architecturally, these buildings are the least desirable and building infrastructure and technology is out-dated. As a result, Class C buildings have the lowest rental rates, take the longest time to lease, and are often targeted as re-development opportunities."

Since posting this originally, I've received a copy of the quarterly office report put out by Colliers International, a major commercial real estate firm. I can confirm that our rent is well below typical for all buildings in the financial core (about 90% are buildings in Classes AAA to B), and about 20% below average for the Class C buildings in the area. Looking from Bayview to Dufferin (the greater downtown area), we are about 35% below average for our class.

OK, so does it have to be downtown? Well, we think it is desirable to be somewhere near the theatre district and where our members live and work, or at least within a reasonable subway ride. Looking at the rest of the GTA, we'd have to travel out to the fringes to get a rental rate that would make the relocation and renovation costs worthwhile. We'll always review the situation again when the lease is up for renewal, but Victoria St. remains a good deal for the moment.

Still not convinced? Do a bit of math. Consider what you would pay for a modest 500sf 1-bedroom apartment, then multiply that by 12 months, then multiply that 14 (we need 7000sf), then add CAM and occupancy costs* sufficient to run an office of 20 people. At this point, you will be well over $200K, which is what we pay for the Toronto office.

*Leasing agreements for commercial office space work differently than residential leases do. They're typically split into two components: leasing of the physical space (net rent), and the common area maintenance (CAM) and occupancy costs. CAM and occupancy includes a tenant's share of heating, electricity, water, property taxes, interior and exterior building repair, office cleaning, window cleaning, snow shovelling, building insurance, waste disposal, security, etc.

Friday, December 23, 2011

Combining CAEA and AFBS insurance

This column is based on a question from Facebook: "Could someone PLEASE explain to me why ACTRA and Equity have been unable to combine their insurance policies?"

The easy answer: it's not that easy.

Our two plans work in very different ways, and with different guiding principles. CAEA and AFBS have certainly talked about amalgamation from time to time, but have not been able to come up with a mutually agreeable solution so far.

OK, so what about picking one or the other? Actually, this is a great way to illustrate the disconnect that any amalgamation has to overcome. Let's explore the idea of simply dropping the Equity plan and adopting AFBS's. The Bronze plan is their most affordable, so we'll look at that one.

Challenge #1: affordability.

Bronze AFBS coverage costs somewhere between $500-600 per year. The actual figure is somewhat higher than that, but AFBS has a variable subsidy system that covers part of the cost, so let's use $550 as a typical amount.

The median number of work weeks for an Equity member is somewhere around 10 per year. This also varies, but the figure is accurate enough to use as a ballpark example. This means that a notionally "average" member pays approximately $150/yr for their existing Equity insurance. Conversion to the Bronze plan could be managed by either paying a top-up of $400, or by raising the insurance premium from $16/wk to $50/wk.

The financial adjustment itself would be easy enough to implement.

However, according to the insurance survey, the premium level affordable for the greatest number of Equity members was less than $15/wk. Unless the median number of work weeks miraculously triples, that's a serious affordability gap to have to bridge.

Challenge #2: universality.

All Equity members in good standing have extended insurance coverage for all weeks of work, and basic coverage year round. ACTRA members have similar basic coverage, but only about half of their members have extended coverage while working.  The rest have not worked enough to become eligible for insurance and/or cannot afford to top up their premium accounts. Equity members have current insurance for the work they are doing today; ACTRA members work today toward eligibility for insurance in the future.

In the insurance survey, about ⅓ of Equity members reported having active AFBS coverage, with half of those being at the Bronze level.  By combining incomes and premiums, there is no doubt that more Equity members would be able to afford at least Bronze coverage, and some members already at that level could move up to Silver or Gold.

We'd need bilateral income stats to nail down a precise number, but drawing on member-reported income data from our 2007 general survey, it's likely that roughly 50-60% of all Equity members would be able to afford some level of AFBS coverage if the premiums from both associations were combined.

However... The flip side is that somewhere around 40% of Equity members would almost certainly lose their existing coverage. Because those members would be (by definition) at the lower end of our income spectrum, their ability to top up their contributions to maintain coverage would be limited.

Challenge #3: coverage types and levels.

Trying to compare group insurance plans is like trying to compare apples and elephants, so I'll just highlight some of the items most mentioned by our members.

AFBS Bronze coverage differs from the our base plan in several areas we know to be of importance to Equity members. It does not offer disability coverage, nor orthotics, and coverage for massage and other physical therapies is roughly half of that under the CAEA plan. There is also nothing comparable to our Health and Wellness Benefit until members have over $4000 in their AFBS account. That said, the Bronze plan does offer year-round coverage, 50% dental coverage up to $400, a biannual eye examination allowance, and an option to purchase dependent coverage. In a combined plan, these differences would affect the 50% of Equity members likely to be covered at the Bronze level.

Whether the Bronze mix of coverages is "better", "worse", or "worth it" depends greatly on individual needs and income. However, Equity members wishing to retain all their current coverage after a shift to AFBS would need need to buy in at the Silver level, at the cost of an additional $350/yr, plus a separate disability premium.


There is no global conclusion to be drawn here, other than showing that combining the two plans would be no easy task. The AFBS plan was built to serve ACTRA members, their incomes, and their work circumstances; ours was built to serve our members, our incomes, and our work circumstances. Even opting to simply abandon one in favour of the other has some pretty significant ramifications, ranging from improved coverage through to total loss of coverage.

Does this mean it can't happen, or that there is no way to do it that doesn't have a significant downside? No. The results from our insurance survey have freed us up to explore a range of options that we did not have before. Also changes made by Equity in 2003, and AFBS in 2006, have created new flexibility in each system that might make combination more feasible.

Staff will be shopping around new plan options derived from the survey results and AFBS will certainly be approached. Who knows? This may turn out to be the last time the "why can't we" question ever needs to be asked or answered.

Sunday, December 4, 2011

Dance Representation Next Major Council Issue

Every November, Council puts together a work schedule containing a broad overview of its agenda plans for the coming year and beyond. Planning work in advance this way allows us to ensure that all the basic governance needs are covered on a cyclical basis, and that larger topics are given the time and resources to be explored in depth.

For each year's work plan we identify, among many other things, a major membership issue on which we anticipate focussing a great deal of time. In the past, these have included diversity issues, insurance plan renewal and the independent theatre review. Current multi-year topics include a reassessment of our joining process, and a review of how we respond to harassment complaints.

At its most recent meeting, Council determined that dance representation will be our next major topic under the microscope. Although Equity has long had a solid connection to the major ballet companies, our representation within the world of independent dance has lagged far behind. We'd like to remedy that. The Canadian Dance Policy was inaugurated in 2009, and we would plan to have our work complete in time for its reissue in 2014.

Council will be reaching out to our dance membership, and beyond, as part of this work. We encourage all members with experience or interest in independent dance to contribute when we begin this work in the new year. Please keep an eye out here and at EQUITYONLINE for details on how to participate.

If we are to serve you well, we need to hear from you.