1. (1) In the Act and in this Regulation, “capital expenditure” means an expenditure on a major renovation, repair, replacement or new addition, the expected benefit of which extends for at least five years which may include an expenditure with respect to a leased asset if the lease qualifies under subsection (2); (“dépense en immobilisations”) “clerical error or omission” means a clerical error or omission by the Director or Registrar or a rent officer, inspector or other employee of the Ministry of Housing; (“erreur d’écriture ou omission”) “incurred” means, in relation to a capital expenditure, (a) the payment in full of the amount of the capital expenditure, other than a holdback withheld under the Construction Lien Act, or (b) if the expenditure relates to a lease, the assumption, when the lease commences, of the obligations under it; (“engager”) “operating costs”, for a residential complex, (a) in relation to heating, (i) includes, during the life of a contract the landlord enters into for the purposes of conserving energy for heating, any amount paid by the landlord under the contract but only to the extent that such amounts plus the landlord’s actual operating costs for heating do not exceed the actual operating costs for heating that would have been incurred had the contract not been performed, (ii) does not include, during the life of a contract the landlord enters into for the purposes of switching from heating by hydro to heating by another form of energy, any amount by which the actual operating costs for heating (other than by hydro) exceed the actual operating costs for heating (other than by hydro) that would have been incurred had the contract not been performed, (b) in relation to hydro, (i) includes, during the life of a contract the landlord enters into for the purposes of conserving hydro, any amount paid by the landlord under the contract but only to the extent that such amounts plus the landlord’s actual operating costs for hydro do not exceed the actual operating costs for hydro that would have been incurred had the contract not been performed, (ii) includes, during the life of a contract the landlord enters into for the purposes of switching from heating by hydro to heating by another form of energy, any amount paid by the landlord under the contract and any amount by which the actual operating costs for heating (other than by hydro) exceed the actual operating costs for heating (other than by hydro) that would have been incurred had the contract not been performed but only to the extent that such amounts plus the actual operating costs for hydro do not exceed the actual operating costs for hydro that would have been incurred had the contract not been performed, (c) in relation to water includes, during the life of a contract the landlord enters into for the purposes of conserving water, any amount paid by the landlord under the contract but only to the extent that such amounts plus the landlord’s actual operating costs for water do not exceed the actual operating costs for water that would have been incurred had the contract not been performed; (“frais d’exploitation”) “physical integrity” means the integrity of all parts of a structure, including the foundation, that support loads or that provide a weather envelope and includes, without restricting the generality of the foregoing, the integrity of, (a) the roof, exterior walls, exterior doors and exterior windows, (b) elements contiguous with the structure that contribute to the weather envelope of the structure, and (c) columns, walls and floors that support loads; (“intégrité physique”) “replacement of an item” includes the replacement of part of an item or replacement by an item that performs a similar function; (“remplacement d’un élément”) “services for a rental unit” includes a service that is provided outside the rental unit only if the service is for the exclusive use of the tenants of the unit. (“services fournis à l’égard d’un logement locatif”) (2) For the purposes of the definition of “capital expenditure” in subsection (1), a lease qualifies if substantially all the risks and benefits associated with the leased asset are passed to the lessee and, when the lease commences, any one or more of the following is satisfied: 1. The lease provides that the ownership of the asset passes to the lessee at or before the end of the term of the lease. 2. The lease provides that the lessee has an option to purchase the asset at the end of term of the lease at a price that is less than what the market value of the asset will be at that time. 3. The term of the lease is at least 75 per cent of the useful life of the asset as determined in accordance with section 17. 4. The net present value of the minimum lease payments is at least 90 per cent of the asset’s fair market value at the commencement of the lease. The net present value shall be determined using the interest rate prescribed under section 18 for the month in which the lease commences. (3) A definition in subsection (1) of a word or phrase also applies to the French equivalent of the word or phrase. O. Reg. 375/92, s. 1.