Developing innovative approaches to create more housing for communities across Canada

Full Panel
Transcript

Note to readers: This video session was transcribed using auto-transcribing software.  Questions or concerns with the transcription can be directed to citytalk@canurb.org with “transcription” in the subject line.

CityTalk

Developing innovative approaches to create more housing for communities across Canada.

CityTalk, November 14^th, 2024

Mary W. Rowe Hi, everybody. Welcome to CityTalk. I’m Mary Rowe from the Canadian Urban Institute. I’m really pleased to have you all join what’s going to be a kind of CityTalk marathon that we’re going to have the next ten days. I’m happy to be in Toronto today, and I’m actually at my home, which means that the dog will interrupt us momentarily when she comes back from her walk, but I had to reroute myself to not go to the office this morning, and so here I am. And we have a terrific group of folks coming on to join us, which I’m pleased about, to talk about the topic of the hour, which is housing, housing, housing. And as many of you know, the Urban Institute is a national organization working across the country with staff across the country and associates, but I happened to be in Toronto today, which is the traditional territory of many First Nations, Inuit and Métis peoples, and we continue to live with the legacy of how ancestral lands and ancestral territories were occupied through colonialism and how that manifests repeatedly in how our cities and communities evolve and develop. And so, I feel like I always start these, I know we have land acknowledgments and people do them in different ways. Please, by all means sign in on the chat and tell us where you’re coming in from. But I think that this topic of reconciliation and truth, first, and then reconciliation, continues to be something that we have to try to find more concrete ways to actually be visibly addressing this, and with the death of Murray Sinclair and other ways in which we’ve been acknowledging Indigenous contributions over the last ten days, it’s just a poignant moment for us to remind ourselves of that. And this discussion, I’m sure that my guests are going to speak also about how housing needs to continue to double down on its efforts to achieve equity and accessibility for everyone across income spectrum, across race and ethnicity, and obviously, in terms of how First Nations, Inuit and Métis folks are finding their ways into more sustainable shelter and different kinds of options for living. So, thank you for joining us. A couple of calls, notes on CityTalk if you don’t know how we do it. There’s a really active chat. So, I hope you’ll come on. If you’re one of those lurkers who’s been enjoying this and maybe you’re sitting having a sandwich, or if you’re out west, you’re having a cup of coffee or tea, perhaps. We always encourage people to come into the chat and contribute because there’s a whole parallel universe that exists over there. People put questions in, they put resources in, they answer each other’s questions. It’s always a very respectful place with lots of creative energy, and I have over the years of doing almost two, I think we’ve done 265 CityTalks, so over the years I’ve gotten used to trying to engage both parts of my brain so that I can also keep track of the chat. So, if you have questions, you want to ask the panelists, my colleagues at CUI and me, we watch it and we’ll put it into the chat so that the panelists can respond to you as well, so we make this as interactive as we can. Just while I’m in the sort of housekeeping mode, on December 5th and 6^th we are gathering in the nation’s capital in Ottawa, and I hope, if you’re able to, that you’ll join us there. This is really a seminal moment in how we understand the quality of our places and what kind of public policy and private investment and community action, coordination and leadership do we need to make the best places for people to deliver the best outcomes economically, socially, culturally, environmentally. It’s all about place, and where did we see that more clearly than last week during the American election? If you look at the distribution of the electoral map, you will see it’s hard to not, see how much polarization is growing and it is rooted in places. My colleagues can probably pull up a map and put it in the chat of what the electoral map looks like in the U.S. And Canada’s electoral map looks different, but it has a similar kind of place-based kind of suggestion that we are not finding a kind of common path necessarily across places. And so that’s part of what we’re going to talk about on December 5 and 6. And we hope that you can be with us in Ottawa. It’s a really great agenda. If you can’t come, we’re sorry to not have you. We will tape all the sessions, obviously. But we really are keen to have as many people come in person as they can. So, I hope you’ll join us December 5, 6 National Arts Center on the fifth, and on the sixth across all sorts of different venues. And thank you in advance to all the partners across the country who are already coming, hosting a session, participating in a session. At the same time, the School of Cities at UofT issued a call for proposals for people to write essays about what the theme of the summit is, which is really infrastructure. Infrastructure very broadly defined. Social infrastructure, physical hard infrastructure, soft infrastructure. It’s one of those words, you know, I mean, I always joke we’re trying to make infrastructure sexy over here, but these are the enabling conditions that allow us to function in our communities, and we have a huge infrastructure deficit in Canada. Small communities, large communities, big neighborhoods, small neighborhoods. We are reaching the point where a lot of investments were made 50, 60, 70, 100 years ago, and now they need to be upgraded and we need to get really smart about how we’re going to find those resources and how we’re going to design infrastructure to deliver multiple benefits. So that’s what December five and six is about, and it’s going to be an interesting moment for us to take stock of that. The other thing, obviously, nobody needs to be reminded of, I just mentioned it about the U.S., is that we are in a time of extraordinary geopolitical changes, and so, next week we have CityTalks coming. All our CityTalks, from now until December 5/6 are going to speak to these priorities of infrastructure investment. And don’t worry, housing, guys, I haven’t forgotten you’re sitting there in the waiting room. This is your hour. I’m just sneaking a few minutes here. But on Monday, we are going to talk about with two of our American colleagues, Richard Florida and Bruce Katz, and two others, Zita Cobb or Jackie Wu. We’re going to talk about, are we looking at a moment for localism with a shift in the kind of geopolitical narrative that’s happening in, certainly the United States, and who knows where else. Is this a moment where we will be able to double down on local investment, local priorities, local problem solving? So, I hope you’ll join us Monday at noon, and then we have another one a week from today, also at noon. So all of that will go into the chat. There’ll be an email blast tomorrow about it. CityTalk is here for your benefit and your entertainment, and I hope you’ll continue to sign in with us always for these Chris Bauer. So, without further ado, thanks for indulging me. Can I ask Darlene and Jeanhy and Stéfan to join us? And we’re going to talk about housing. And I asked the guys to title today housing, housing, housing. Like, you know, I can’t remember who coined the phrase, somebody smart in the chat might remember, I think it might have been a Democrat strategist who said, it’s the economy, stupid. And, you know, we really are in a time of it’s about housing, stupid. Like this is the topic that is seizing people and that, you know, we can all be cynical about this. About how, you know, housing’s been an issue for decades and finally somebody is paying attention to it. But nevertheless, it is the topic that is talked about in coffee shops, on back stoops, in laneways, over dinner, over lunch. It’s an intergenerational thing. Lots of people are concerned about their children. There are lots of people who are inadequately housed, inappropriately housed. We don’t seem to have the supply. We don’t seem to have the range of choice. It’s as if suddenly this is a problem, but we know it’s not suddenly. So, we’ve got, CUI issued two reports today and they’ll put them in the chat, you can see them. We’re really trying to flag that there have to be multiple solutions, multiple paths to address the crisis we’re in, and that’s why we are really pleased to have Jenny, Darlene and Stéfan join us. So, I’m going to start with you, Stéfan, because you are part of an institution that is really looking at a kind of systemic change. And then I’m going to go to Jeanhy and Darlene to talk about their specific experiences and what they’re seeing as promising things. And as I said on the chat, ask away, we got we got the brain trust today, so this is your moment. Ask some tough questions that these three are going to tackle. But over to you, Stéfan, what’s your sense of it? You’ve been on the front lines for this for a while, not that you’re old, but you know what I mean. And what are you seeing now? I mean, it’s November 2024. You and I probably started talking about this a year and a half ago. A lot of stuff has been going on. Tell us … Give us your picture of where you see particular priorities going forward right this minute. Thanks.

Stéfan Déry Thank you. If you would have asked me this question about a month ago, no, I would say two months ago, not much has changed. A lot of effort has been put towards aligning government. You know, I’m at Canada land. We buy federal property, we redevelop them, we create neighborhoods. Right now, we have about a thousand acres under development across the country, but there’s a lot more potential. So, I think that the thinking has shifted. And the thinking is now saying, how can we use those parcels of land in the middle of town that have been built 50, 60 years ago when there was no density, and I’m thinking about post offices, you know, D and D, armories, one story buildings, two story buildings at the max. You see that everywhere, where all of these, you know, these parcels, or when they were built, they were in in the outskirts of town and now they’re in the middle of town. But they’re 50, 60 years old, 70 years old. So how can we use this? And you saw that the shift, the shift in thinking even in the federal government, you know, ten years ago, our federal government was declaring federal property as surplus. If they were strategic, it would come to us. Today, they’re thinking, okay, underused property, Canada Post, they’re thinking – what else could be right in the downtown of Toronto or any smaller city also, that could be used to build housing on top. You know, CMHC said we need 3.5 million more homes between 2021 and 2031. If we want to alleviate, a little bit, the housing crisis and if we want to see the affordability come back. Sorry if I’m saying that, but when they talk about affordability, they don’t say affordable housing will decrease in price, they will just stabilize in price. But if we want to see not an increase… We’re building approximately 230,000 homes a year in Canada We need 3.5, we need 5.8. It’s more than double what needs to be done. If there is not an effort from government to think about housing differently and to think about what I just talked about, parcels of land that are in the middle of the city with one story or two story buildings, how can we rehabilitate them for housing, affordable housing. You know, not only affordable housing, all kinds of housing, because we need all kinds of housing thinking that way. And, you know, pushing the boundary of what we’ve done in the past, expanding the city, expanding the city, expanding the services. You just mentioned, Mary, that there’s a major shortage of infrastructure. If I remember right, the Canadian Construction Association last year in a conference set about $54 billion of underfunding in the infrastructure. I may have that number wrong, I know it’s…

Mary W. Rowe It’s big!

Stéfan Déry But, you know, we have the infrastructure in the city, let’s build on that. Let’s start looking at what we have and what we can do with it. And that goes through a densification along our main streets, and in one of your reports that’s what it talks about, how can we densify main streets. So, I think we still have a lot of work to do. Another thing that’s interesting is the interest rates are coming down, the pro forma are starting to work. I’m not saying they’re working fantastically, but they are starting, more and more, to make sense for the developer, either private or non-for-profit developer. They’re starting to be a little bit more attainable. And we also have to look, and I’ve closed on that. We also have to look at different ways of creating ownership. Be Co-op, in B.C. there’s a program that’s quite interesting. I know there’s some part of Quebec where they’re doing that also – attainable housing. Where a second mortgage is held by the province, and the province thinks it’s going to be viable financially for them to do that. So maybe this could be, not a pilot, but this could be something that we look across the country as home prices will not come down. You know, they may stabilize, and they may raise not as fast, inflation is down. So how can we achieve the creation of 5.8 million home in the next ten years?

Mary W. Rowe You know, I mean, the numbers are kind of staggering. And when we started looking at the infrastructure numbers and why we’re focusing on it in Ottawa, you know, it’s not just a B word, it’s a T word. As in a trillion. Somebody can work out how many zeros that is, it’s a shitload of zeros. Just saying, sorry, common parlance, it’s a lot of zeros. And so, you know, we’ve got to find our way, though, to not be overwhelmed by this. There have to be tangible ways for us to be able to start tackling this. So maybe it’s useful. It scares us all into, holy crap, we better get cracking on this. But at the same time, as you just suggested, Stéfan, when you walk out your door, you know that thing where once you see it, you can’t not see it. We all see spaces, places. Maybe it’s a parking lot, maybe it’s a piece of derelict land, maybe it’s a piece of land that’s sitting next to an old industrial facility, that could be developed for housing. How do we move lots of us into this place? So, Dalia, I’m going to come to you next, because this is what Middle is getting at, is, there is a way to be really imaginative and creative about creating a certain mix of typology of housing. So, talk to us about Middle. Talk to us a little about the report and Jeanhy I’ll come to you after. So, Darlene, over to you. And I just have to say, you know, I’m on the chat and I’m really pleased to see Helen Cooper on the chat. Helen, former mayor of Kingston, I see you in the chat. I’m so glad you’re listening. I love how we have intergenerational participation and, as a number of our CityTalkers are identifying … We have people from across the country, we have people from the United States, we’ve got somebody from Scotland who’s getting ready to have a wee dram, I think. Thank you for joining us. This is a global conversation. So, Helen, I’m so glad to see you here. Okay. Darlene, over to you. Talk to us about Middle and what you’re seeing in Calgary.

Darlene Jehn Yeah, for sure. Thanks so much for having me here today. Yeah, you know, lots of things happening in the Calgary market and frankly, in cities across Canada, as you well know. Federal, provincial and municipal government are aligned for the first time in delivering housing. And so, in Calgary, we, my partner, Alkarim Devani and I recently started a company. It’s called mddl. We started in earnest, I want to say, around March 2023. That’s 20, oh my gosh what year is it? 2024. And, you know, we were kicked off by being a part of the CMHC Housing Supply challenge. So, we’re a finalist, we’re one of nine different finalists that are supporting innovative solutions in delivering middle housing. And so, some of the things that we’re doing as an organization is we’re focusing on really putting people and community at the center of building missing middle housing. And what I mean by that is, really what we’ve recognized over our years of land development experience is that, you know, the opportunity for middle housing really lies with the homeowner first and foremost. The people who have the opportunity to build are the people who have historically purchased properties. They have little mortgages or they’ve paid off their mortgages. Their homes have been built in the 1950s and they’re ready for redevelopment, and for the first time ever, our hope is that, instead of having to sell your property to a developer and a developer having to pay a premium on that land, and, you know, all of those costs end up being passed down to either the buyer or the renter of those properties. We’re saying that, you know, that that is an option, but that’s not the only option. You can also participate in land development yourself if you choose to. And it’s kind of exciting with lots of different government policies that are coming online that are supporting these types of initiatives. So firstly, many of you probably know about the CMHC MLI Select program, which provides favorable financing terms for people developing five plus units. There’s also a new, I want to call it a secondary suite. There’s not a title for it, but it’s a CMHC insurance program that allows people to add secondary suites onto their property. This launches in January. So that allows people to have up to four units on their property, again, with very favorable terms, which, you know, again, it’s breaking down barriers so that homeowners, entrepreneurial homeowners, first time developers, small scale builders can start to participate. And, you know, we get to unlock the single-family aging housing stock across Canada. I think the latest stat that I read was 85% of homes across Canada are single family. And so, when you look at that as a land basis, that’s an enormous opportunity for us to, you know, build in established communities. And then one more thing I’ll say is that what we’ve been noticing just as a shift is, people want to live in established communities now. There is a shift where people, not everybody wants to live in new growth communities. There will always be desire for it. Lots of people will continue to build and buy it, but there is a shift towards people who historically were new growth buyers that now want to live in the established communities due to proximities, due to transit becoming better, etc., etc.. So yeah, we’re honestly, lots of exciting stuff that we’re seeing and you can cut me off any time, Mary, but …

Mary W. Rowe No, no, you’re on a roll

Mary W. Rowe And I can see Al Kareem’s put the Middle website into the chat, which is great. I think one of the things that’s tremendously important about what you’re saying is that in essence, you and Stéfan are kind of two sides of the same coin because you’re both saying, let’s look at the assets we’ve got, whoever they are, and then figure out how we leverage them for a different kind of development, and we have to kind of do both end thinking, right. And I’m interested in the work that you’ve done and the ongoing inquiry that you’re having in Middle, how do you respond to people that are apprehensive about these kinds of things? They’re worried of what’s going on, I’m just looking at for instance, I look out my back window, I live in a back lane. People know this now. And there’s all sorts of opportunity for fourplexes and intensification, and I know that a lot of my neighbors are nervous about it. How have you guys been able to kind of overcome that, and how do you how do you sort of respond to people?

Darlene Jehn Yeah. I mean, a lot of the work that we’ve done over the years prior to citywide up-zoning happening. And so, you know, in the municipalities that we’re working with today, my goodness, Edmonton, Calgary, Regina and Kelowna, they already have four units as of right now. The work has been done, the Federal government’s pushing for it, the provincial governments pushing for it, municipal governments are pushing for it. And frankly, the number of people who are looking for homes are pushing for it. And so, I would say, you know, for us, the conversation has shifted a little bit from like whether or not this is acceptable, because I think there’s just general sentiment now that it is and it’s really needed. But just helping homeowners who have historically been afraid of this, to know that, you know, you’re at the center of your opportunity, you don’t have to build a fourplex on your lot, but you have the opportunity to, and I think that many people just hadn’t realized that. And so, a lot of people who had previously come, you know, in opposition to this are now recognizing, “Oh, you mean I can actually build a suite in my backyard for my parents to live in”. So, it’s been quite interesting conversations that have evolved over just the last few months that we’ve been operating.

Mary W. Rowe I’m a bit with Stéfan about this. I do think, Stéfan, when you said, you know, if you’d asked me two months ago, I do think even though this is a conversation lots of us have been having for a time, I do think the conditions are changing, I do think the public sentiment is changing. I can hear what you’re suggesting, Darlene, that more and more people see it and they think, wait a second. Okay, I get that. CUI released a second report today, which is about remaking Main Street. You all know that we focus a lot on main streets. And what we’re suggesting there is when a main street develops, which we, all of us have evidence of this, and you see a new development go in and it suddenly goes from two stories to six, and you can lose a lot of the affordable housing. And so, part of what we’re suggesting is, well, when we redevelop these or if we don’t, let’s think about maintaining the housing types and getting that to scale because you don’t just put density in through towers, which I guess is the point. Jeanhy that’s kind of your bag. Like that’s what you’re doing at the urban housing lab, is looking at lots and lots of choices. So, talk to us about what you’ve been observing and what do you think the what’s working and what’s not frame should be going forward. And I still have Stéfan’s number, you know, we build 230,000 a year and we’ve got to double it. Okay then, Jeanhy, that’s on you. Are you doubling it?

Jeanhy Shim Yep. Yeah.

Mary W. Rowe We’re there on it.

Jeanhy Shim And so hi, everyone. Thank you for the opportunity to be part of this panel. It’s kind of interesting hearing Darlene and Stéfan, because I think we land in the middle. So, I come from my perspective as a practitioner. I’ve been working over 30 years in real estate development, kind of in large in the greater Toronto, Hamilton, Southern Ontario area. And my pivot over the last few years towards becoming a developer myself and setting up as a nonprofit, affordable rental housing developer. Because, building affordable housing, whether you’re building affordable housing or for-profit condos, 95% of it’s the same. It’s actually more difficult to do affordable housing because you don’t have as much ease of access to funding and all those other financial resources. So really, I kind of come to this from that perspective of really knowing on the ground what it takes to get housing built and specifically kind of, you know, medium and high-density type of housing. And now applying that knowledge with my team at Crosswalk Communities to figure out how do we apply that towards getting affordable rental housing built. So that’s who we are. So, I wear many hats, so I have Housing Lab Toronto, my for profit consulting firm, because I have to pay my bills, because these startups don’t pay your bills, at least not yet. So that’s kind of, like I said, you can look me up on LinkedIn. And so quite a bit of experience on the development sides. Like I said, Crosswalk Communities, we set it up as a nonprofit three years ago. We’re looking to do a pilot project next year, so we’ve been working the last three years in trying to figure out a new kind of a new approach. You know, the title of this session is developing innovative approaches, so, together with my team, we decided we wanted to focus on low income working Canadians. So, these are people that the private sector, who also build affordable housing, whether they’re required to or for zoning or other purposes, they typically, nobody’s really addressing the needs of these low income working Canadians making less than $25 an hour. And they’re the ones which increasingly, we know that in Toronto, the daily food bank just put up there and you will who’s hungry numbers.

Mary W. Rowe I saw it, $48,000

Jeanhy Shim We see people increasingly turning to food banks because, you know, 100% of their income is going towards housing. So that’s the group that we decided as Crosswalk Communities, that we want to focus on. Where? Small, medium, large, XL. We’ve come up with a scalable, replicable business model that can fit in the smallest communities that haven’t seen housing built in decades, to the large cities. And we set ourselves a challenge of how do we come up with a business model where we reduce our reliance on government funding? Because the reality is, is the government has a lot of competing priorities. We’re an aging society. We have infrastructure, you’ve got health care issues. So, you know, I’ve seen too many projects where the project is killed because of government funding didn’t come through. We were not interested in joining that train, you know, getting in line for that. So, we realize that there’s a lot of potential financial resources outside of government, social impact investors, foundations, there’s philanthropists. But right now, there isn’t a financial vehicle. So, if you are a social impact investor, you’re not going to write a check to the government. You’re not going to write a check to CMHC and you’re probably not going to write a check to a private developer, even if they’re going to be building some affordable housing. So, we’ve come up with this innovative kind of financing and development platform. Again, leveraging our knowledge of, we still have to play within the rules of the game, of the system, where even as a nonprofit developer, when we go to the banks to borrow money, were treated the same as a for profit developer. But we got a lot more hoops. We don’t have financial covenants, there’s like a ton of things we don’t have. So again, we’ve been working the last three years and coming up with this model, we’re ready to launch. We’re looking quite actively in several different sized communities in southern Ontario, including some tiny ones, ones as small as having 1200 people officially as their population, but there’s a need to kind of do a pilot project to really demonstrate. And it’s interesting, this title is about developing innovative approaches. When I thought about this, there are a lot of innovative approaches and ideas out there. Darlene is just one of them, Stéfan and what Canada Lands is trying to do. But what’s really interesting is that it’s a lack of, or not enough courage to try and execute these new ideas. We keep being told, it’s too risky. Well, has anybody ever thought that if you don’t do anything, that risk is even bigger? And we’re seeing that just growing and growing and growing. So, it’s kind of interesting that, you know, you have new players like Darlene, ourselves, Crosswalk Communities. We talked to CMHC and they look at our team, each of us, the four co-founders, we each have over 30 year’s experience. They’re like, Wow, that’s great. But as a legal entity, Crosswalk Communities, we don’t have three years of audited financial statements. We were incorporated three years as a nonprofit, but we’ve done nothing because we’ve been thinking and so, it’s kind of interesting, the systemic barriers that are out there so …

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Mary W. Rowe There is a chicken and egg thing. You know, we all, immigrants talk about it all the time. Where’s your Canadian experience? How do you get Canadian experience? Same thing. Where’s your trust, your credit, trustworthiness? Well, you haven’t done a project yet. Can I get all three of you to turn your mikes on? And then I’m going to ask Wendy to do a full screen so that we can see all of you at once. And I’m just going to give a heads up to people in the chat, as per usual, the CUI chat is fascinating. Can I just ask all of you to make sure that you’re sending your comments not just to host and panelists? Not that we’re not thrilled to hear from you. We are. But I would love you to be sending messages to everyone. I’m going to demonstrate like this, and you’ll see what I’m about to do. You’re all going to see it come through. I’m going to write you a note that says to everyone. So that if you’ve gone and only done to host and panelists, go back and send it to everyone. So otherwise, not everybody benefits from what you’re saying. So, gang, again, if we could, for some reason Stéfan the camera’s glued on you, but I’d like it to be on all of us so we have speaker views, or is that my setting, could be. Either way, here’s a question I’ve got about tolerance for risk, which is what Jeanhy just got at. If we’re going to scale this solution in a major way, if we’re going to find a way to let more than a thousand flowers bloom. In fact, I guess we got to do 500,000 flowers blooming. Don’t we have to try to get accelerated approaches to approvals on every level, financing and everything. And, how do we insulate investors that are sensitive to risk? How do we match that gap? Maybe you start, Stéfan. I don’t know how you move Canada Lands to have a higher risk tolerance. But I hear what Jeanhy’s saying, maybe we forget public funding, but you start Stéfan. And let’s think about that, because part of what I’m hearing from you guys is everybody needs to get into the housing business, basically everybody. And if everybody is going to get in, how do we create the enabling conditions for people to give it a shot. Stéfan you start. Risk. How do we address risk?

Stéfan Déry I think we’re at the point that we’re ready to take more risks as a company. We’re ready to take more risk. We’re ready to favor. You know, we’re talking now. We used to, all of our property, we used to sell them. So big cash up front, so you can’t leverage. Now we’re looking at leasing them on the longer term. Obviously, we invest money in those properties, so they’ll be a rent. But we’re looking at the longer term to avoid the high capital upfront that the company, a not-for-profit, has to put forward. We’re looking also at getting into partnership. Now assuming some of that risk, to say, okay, we’ll provide the land and infrastructure that we have put on and then we’ll join in a joint venture, in a partnership with the developer in order to help them to start building. The other thing that’s helping is the interest rates are coming down. I’m thinking also, you were talking about cities, and I really like what you said, Jeanhy. You’re trying to start, but the government, the government and their program, are not really for you. You have to prove before that you can do it for three years and then they’ll consider you. So, it doesn’t bring new players. It doesn’t bring not-for-profits to start to help them, to say, okay, yes, we have a few projects under our belt, and here’s the proof, right? So, you kind of have to be a for profit before you’re a non-for-profit in order to have something behind. So, how can we help and how can the government help? I think, you know, you own a parcel of land or you’re going to a joint venture with a not-for-profit and a parcel of land, and you sit on that parcel of land for seven years to get your city approval. During that time, you’re paying tax. During that time, you’re spending money and you get nowhere and the bills keep creeping.

Mary W. Rowe I just want to say Stéfan, that, it’s not always, sometimes the owner of that land is choosing to do that.

Stéfan Déry Yes, absolutely.

Mary W. Rowe And I think that’s a problem. We all saw the article in the Globe and Mail a few weeks ago about a particular city in the country where there is a developer sitting on land. And so, I hear you about, you have to wait for approvals and there are various delays. But part of what we need to do is unjam all these impacts.

Stéfan Déry Exactly. We have to get faster at approvals. Some cities across the country are a lot faster. Darlene is in Calgary, and Calgary is fairly fast for approval. You know, they were also the first one to do conversion of a building at a larger scale, office to housing. That’s another solution.

Mary W. Rowe Yup. And I think there are pockets of examples. I’ve encouraged people to put them in the chat. There are examples where some particular community, just like what Middle’s doing. There are developers across the country, small scale developers, maybe in the not-for-profit side, who have done some interesting things. And the more that we can create and amplify these prototypes, then people start to say, oh it is doable. Here’s how we did the work around; you know what I mean? Otherwise, we’re just furthering that sinister doom loop. It’s too difficult. It’s never going to happen, because we have gazillions of examples. So again, blow the chat up, guys. Start telling us all the examples of things that, see, I told you, and they’re doing it. They are working, and we should create the platforms to share those successes. The interesting thing is it’s often quite modest, what can happen with a smaller developer on a piece of land. But we shouldn’t underestimate the value of that. I guess that’s what you’re saying, Darlene, is that you chose a particular niche market and now you’re able to do it. You’re getting it more and more, right?

Darlene Jehn Yeah. You know, the reason why we chose it was because it has the largest opportunity in our opinion. And the other reason why we did it was because we understood how complex and nuanced and unscalable it was. So that was really like our thesis, that that we could make it more simple. We could make it so that my sister and husband or my parents, who are unsophisticated homeowners, could pursue land development themselves if they wanted to. And so, I’ll tell you a little bit about our business, which is honestly, the entire business model is based on reducing risk. So, it’s a three-prong solution. The first part is it’s top down. We work with municipalities, so we work with municipalities to unlock their policies. And, you know, great that you have four units as of right, but do you have the conditions in your regulation that actually let people build four units? Because sometimes, you know, parking becomes an impediment, like the height isn’t conducive, etc., etc.. And then once we create this conducive environment. For policy. We then move on to what we call the fast track program. So, here’s where we work with local architects to develop a building permit ready design on standardized lot sizes. And for instance, in Kelowna, where we did this, they can apply for their building permit and they’ll get their building permit within ten business days, which is incredible. And so, we’re doing yeah, we’re doing the same program in Calgary and in Edmonton as well. And in the future will be opening this up so that different lot sizes, different lot conditions could accommodate different kinds of designs so you’re not just the same design across the city.

Mary W. Rowe Let me just interrupt you and say that I want the folks in the chat to pay attention to what you’re suggesting, which is that in smaller communities, of which many of you are residing, you can often pilot these things and get that kind of accelerated process. So be kind to yourself and say, let’s work in a community where the machinery is more accessible and where they can take some risks and try some things. I’m a big, big advocate for this. And we have mid-sized cities across the country growing exponentially. So, it’s not like they’re without stress and pressure. They’ve got to accommodate that. But listen, you smaller community folks, get cracking on trying some stuff. You can accelerate your decision making. You can take some risks and then the larger cities will start to follow your path. Wouldn’t be the first time that they would look to smaller communities to see what’s working. Sorry, Darlene, you’re on a roll. What’s your next point?

Darlene Jehn Yeah. No, no, not a problem. Yeah. And so, you know, we’ve seen a lot of success, and the reason why streamlined approvals are so important is because you reduce time, which reduces cost, which reduces risk. So, all of a sudden, somebody who’s, for the first time, wanting to apply for something now has a guaranteed approval for their property, and that’s…

Mary W. Rowe So again, this is like the fast lane. This is like the express lane. Jeanhy, we’re getting a question in the chat, which I think is a really important one, and we talk about this at CUI all the time, that urbanism is for everyone. I’m saying let’s all get into the housing business and somebody is saying, wait a second, how can a regular person, a person who’s early in their career or like me, later in their career, and we don’t have tons of money kicking around, ready to throw into housing, how can regular people get involved in housing creation? Have you done some thinking about that, has the Lab started to think a little bit about this? Is it about the choices we make? Tell me, have you thought at all about this? Regular people? How can we how can we get involved.

Jeanhy Shim I mean, part of our thinking when we thought about where some other sources of funding apart from the government. You think about crowdsourcing and, you know, all that stuff, you know, is there an opportunity? The reality is, is if you’re doing $100 million twenty story, you know, rental building in downtown Toronto, you’re not going to be crowdfunding the whole thing. But there are individuals who say, hey, have $1,000 and that’s where we’ve seen the rise of community bonds as one vehicle potentially, there’s land trust, there’s opportunity, those are vehicles by which individuals can participate, which is great. And what Darlene’s talking about is important. It’s the individual who has a home, who has land, that’s their financial covenant, and guarantee against borrowing to build, you know, a fourplex or build a nanny suite. And that’s important. But if we’re talking about the scale and the numbers that Stéfan had talked about, we also need to be addressing other issues so everyone can play a role. Whether you’re a homeowner, you have some money you can put into a community bond. But again, we need to also be supporting new players beyond your, all the big developers who are already out there, who are focused on their business, which is making it a 20% profit building market housing for sale, for which there is a need. So that’s why I think that, you know, when you think about how can individuals participate, that’s why we’ve put a lot of energy into thinking about how can a social impact investor who will take a 5% return, get a social rate of return, how can they leverage their money? How can foundations who have to invest money, and going back to your question about de-risking, approvals is a tactic, a tactic so that when you go to the banks to borrow the money for construction financing, you can say, yup, you know, we’ve de-risked the project because the zoning in place, we de-risk the project because we’ve done our environmentals. Those are all important tactics. But at the end of the day, Mary, the elephant in the room is still, when you want to build housing at a larger scale, you know more than just the you know…

Jeanhy Shim The elephant in the room is, how do you access the money? You know, I don’t think, like I said, there’s not a lack of innovative ideas. And even, there’s money out there, there’s billionaires. But it’s a question of who has access to that money and what is their motivation. And I think the untapped opportunity is for nonprofit organizations, whether you’re a nonprofit developer or even any other nonprofits. There’s already more of a values alignment to want to deliver social impact. So, we need to somehow build up and support that nonprofit sector,  who is already disadvantaged when it comes to getting financing for a project. And I hate to bring it all down to the financing, but that’s a big thing that nobody talks about.

Jeanhy Shim I can make a proforma that looks great. Yup, perfect, you have your … but the needle’s going to scratch the record when it comes down to like, even CMHC. Great project, we love to lend you the 30 million. Where’s your $30 million in financial guarantees? And, you don’t have it corporately. You can give personal covenants. Like what personal covenants?

Mary W. Rowe Exactly. I mean, let me get your midstream there and just say that that I am interested back to the regular person, another way to do it. And we have some folks in the chat that are part of this is for all of us to imagine different forms of living in housing. So co-living. People have been co-living for years really. Many of us did co-living in our 20s. People are now doing co-living in their 50s and 60s. You know, we have lots and lots of folks, lots on this call who are probably over-housed. They are living in a house. Their kids have grown, off the gone. They would love to move somewhere else. They don’t have many choices. We have to get really imaginative. I am old enough to remember when the strata of condos was created, and it was created to de-risk large scale engagements, so that when you buy a condo, you put money down, the developer then has liquidity. So that didn’t, you know, that hasn’t always existed. For those of you that think condos always existed. Not the case. It was a model that was created to address the need for upfront capital. So come on, brain trust, let’s come up with some new models. I see Toboggan Flats this year. Robert will be in Ottawa to talk about it in a couple of weeks. There are new models for this and new approaches. Stéfan, back to you for a second. You’re in the big belly of a big institutional beast. Are there ways for you to partner, or can you in your seat, influence how we make money smaller? Because you and CMHC are getting invoked all the time and we know that you have elaborate rules and you write big checks. How do we get the disaggregation of money into smaller denominations? Have you thought about that.

Stéfan Déry Well, you know, I’ll give you an idea. We just launch in August, September five parcels across Canada that we’re going to be leasing at nominal value. You know, we are funded, part of that, from CMHC. But my objective would be, and I’m taking an example, it’s a high rise, unfortunately, but I’m taking an example that happened in Ottawa, where there’s 40% affordable housing that will be built in that tower. But it took six months for a large developer to get the financing and work out the numbers together. Now, our idea, and we’re working on this with our colleague at CMHC is, how can we package some of our parcels of land to go to market, to say that if you buy this parcel of land, you get this funding, this funding, this funding, this funding and this funding, including, in some cases, the municipality. I’ve got an example here; we’re going to be signing an MOU with the city of Toronto to build affordable housing where they’re going to cut development charges. They’re going to also provide not necessarily financial, but they’re going to cut your costs by absorbing development charge and all of this. So how can we work with the institution in place.

Mary W. Rowe Right

Stéfan Déry To de-risk the project for non-for-profits and also bring financing to the table? Is it going to be all wrapped in a bow by Christmas? I don’t think so.

Mary W. Rowe We’re on it. But, you know, your sector, I mean, CUI works in a bunch of different sectors, although we always say it’s all about housing, housing, housing, housing. But we also work in economic development and we work in climate and one of the things that your sector has perfected is this notion of stacking. And I think that we need to think about the layers, part of our main street work is creating these maps of layers. And that’s what we need. We need capital stacks and access, and it makes the project more resilient because if one stack evaporates, you’ve got four other stacks to work with. So how do we Jeanhy, going forward, if we were to say the priorities need to be, and again this is a moving target, I appreciate that. What do you see in your work? Maybe through  Crosswalk, particularly what do you see as the priorities that people should be doubling down on?

Jeanhy Shim Boy, who’s people, though?

Mary W. Rowe You can answer that …

Jeanhy Shim I think that at the government levels, there certainly are opportunities to look at, you know, like I said, deferring taxes, you know, eliminating development charges, there’s all of these things. We’re doing work with the Hamilton Housing Secretariat right now, and they seem to be quite ahead of the curve compared to some of the other municipalities we’ve been chatting with, and actually like putting on paper, you know, what they’re going to be offering and it’s great to hear that City of Toronto will be doing something similar. But, I think that at the government level, you need to start getting quite granular in terms of what are the things on your pro forma that will really make a difference. Are there things, is there a role for CMHC and governments to assist on the financial covenants and guarantees for non-profits, for example, with certain, you know, there has to be certain standards and bars and there’s an example, this is how the U.K. built up their nonprofit sector to a point where they now build thousands of affordable rentals every year. They’re originally, 20 years ago, they were a bunch of small, nonprofit societies, incredibly inefficient, a lot of overhead cost to run hundreds of nonprofits. The government came out with a program where they incentivize these nonprofits to come together, become more efficient in their operating costs, and also the government stepped up with an implicit financial guarantee so they can access money to actually get the wheels going. So, I think the government can play a role as a catalyst.

Mary W. Rowe What were the key things the U.K. did Jeanhy, what did they do?

Jeanhy Shim The government stepped up an implicit financial guarantee for nonprofit organizations. Not a nonprofit who wants to build five units. They had certain conditions regulating the nonprofit sector. They encouraged organic amalgamation, which again, creates efficiencies when you have.

Mary W. Rowe A better scale.

Jeanhy Shim If you have 100 nonprofits all getting money from the government, there’s a lot of over money wasted on overhead costs, replication. Whereas if you get that, you also get efficiencies and construction costs and operating costs. So, there’s a lot of benefit. I’m not saying we should all …

Mary W. Rowe But they sort of influence to kind of…

Jeanhy Shim The government could be a catalyst.

Mary W. Rowe … of the market to get it to a scale and then they backstopped the risk. What else did they do?

Jeanhy Shim Well, that was a big thing that enabled the nonprofits to build affordable rentals. They were able to build up their own portfolio to a point where naturally, they didn’t need the government guarantee anymore because it went to the banks. They had their own portfolio.

Mary W. Rowe They had enough heft … I don’t think Lisa’s on the call, but we know that Lisa Help at BC Builds is leading exactly this kind of aggregation exercise in B.C. and we need more and more of those models. Yeah.

Jeanhy Shim I think that’s something that the role for government is not necessarily cutting you a check. There’s other things they can do to be a catalyst, to look at the existing system and to provide the assistance where it makes a big difference.

Mary W. Rowe I want to make sure that our CityTalk audience of Canadians heard that, you know, we can’t just be looking to the government to cut us a cheque. I know we all do it. It’s part of our, it’s in our DNA, but government has all sorts of other levers it can pull. A couple final comments from each of you. Darlene from you. As Middle goes forward, you’re working in a number of cities. You’ve got lots of people on the chat who want more information about the model and what works and what doesn’t. Anything else that you would suggest in the next phase as you kind of take it to the next level?

Darlene Jehn Well, you know, I think, just to give you a little bit of context, in our programing, we’ve been holding what’s called middle schools. So, we’ve had three now where we walk people, it’s a full day course where we walk them through site acquisition, real estate process, buying your land approvals, design development, financing all the way through construction. And then after that, if people want more information, they can go to what’s called a developer forum group, where we would provide them with expert advice through their home owner redevelopment journey. And one thing, like no matter how much resources you provide, how many tools we create, people are still getting stuck at financing. And so, this is something that we’re very, very actively tackling through a covenant fund instrument for first time developers, through working with CMHC on different financing, through crowdsourcing platforms. It’s called Addy. We’re doing a pilot demonstration where we’re going to publish all the data of this pilot project so people can understand what that entire process looks like. So really for us moving forward, it’s just continuing to break down all of these barriers because it doesn’t matter if you just tackle approvals, like you’re still going to get stuck out financing. It doesn’t matter if you get stuck, get financing if you can’t get the right product that aligns with the market. So really for us, it’s a comprehensive tackling of all the different barriers that allows people like my mom and my dad, my sister and her husband to do this themselves.

Mary W. Rowe So maybe I shouldn’t say it’s about housing, stupid. It’s about money, stupid.

Darlene Jehn Without money you can’t build.

Mary W. Rowe I hear you. And I heard you say it, and Stéfan was nodding away. There’s lots of money in the system. The question is going to be, and this is what I… I don’t want people to be completely depressed on December 5/6 when we say, well, it’s in the trillions, you know, we can’t be in the handwringing place forever. So how are we going to unlock that money? And Stéfan, do you have a perspective on that? I know you work with your federal partners all the time. So, one of the things you’re doing is taking the land price out of the equation by leasing. That’s one solution, right?

Stéfan Déry Another solution is, but even we heard from developers, interest rates are coming down but we heard from the developer that free land is not enough right now with price of development charge, and I could share a list of how development charge went up in notable city. Development charge, construction costs, material, labor, lack of labor, all drive the price up. So, all of this makes it so that the pro forma doesn’t work. So how can we bring other leveraging? And what Jeanhy and Darlene says, leveraging our colleague, what other program can we bring to the table, you know, and taking out the GST on the federal, taking out the GST on rental, purpose rental, providing lower interest loans. This is not a cheque that they’re cutting you, but they’re helping you to get a lower interest loan. I mean, these are all things that could help a developer, a not-for-profit succeed. The other thing, and that’s something that is close to my heart, is pension funds. Where are they in this? I know they’re, most of the buildings in town are owned by pension funds. Should they invest a little bit more in the housing market and maybe in the not-for-profit market, would there be an interest there? You know, they’re not looking, normally, not with all their money, they’re not looking for 20% return. You know, they’d take some risk. But real estate housing is pretty secure and it brings a return. So why would that not come to the table on this? And now, if there’s pension fund people in the chat, please let me know if you’re willing, because I would love to offer a parcel of land backed by pension fund. That would be, I think, also… And there, there is trillions of dollars that are ready to be invested.

Jeanhy Shim What’s interesting, Stéfan, about … We’ve spoken to some institutional investors is, you know, they need an investment that’s hundreds of millions. So, when we go to them with a project saying, it’s a $30 million project, they’re like, you’re kind of too small for us. So yeah, there’s an opportunity to go with the consortium. And the real question, though, is will they take a 5% return? Will they take a 3 to 5% social rate of return? And I’m hoping, like you, that maybe on a portion of their investments they’re willing to take a lower rate of return. But yeah.

Stéfan Déry And I’m hoping the same thing, and that’s my next job, is discussing with some of them to see if there’s an openness to that. And we may have the large 100 million and $150 million potential investment in some of our projects, or, we lump them all together and we’ll have, you know, 49,000 homes between now and 2030 on our existing land. That’s a lot of money. So that could be a potential investment. And again, would they be open, as you say, to 5% return, right?

Jeanhy Shim We’ll be asking them. Yeah, when we have our projects …

Mary W. Rowe Let me just say that we have a CityTalk in a couple of weeks which will be announced in due course on the 28^th, and it’s all about where is the money to actually continue to spur on housing development, because some of the high end developers are actually saying the cash flow crisis is serious. We’ve got a problem with cash, we’ve got a problem with interest rates, we’ve got a problem with labor. And so even at the higher end, they’re being stalled. We all have anecdotes about it. We all know a crane in the sky that appears to not have moved for four months. So, there’s that. But let’s go back, if I could, to the notion of ROI and pension funds. We talk, CUI talks to pension fund guys all the time, and they always say, well, we have an obligation to our shareholders. It has to be the highest rate of return. They’ve got a zillion rules. Again, I think this is where, this kind of coalition of the willing has to continue to beat the drum to the point where eventually there will be so much pressure on those fund holders that they will, and that their beneficiaries will start to say, well, wait a second, I am prepared to take a lower return because I understand why we need, you know, the economy needs more housing. We need places for workers to live, I have children, etc.. So this is a tidal shift here. You heard it here first, just saying. And that we have to continue to beat this drum. So going forward, talk to me about if you had a magic wand, and you were looking at the political reality in North America. Just saying. And you were thinking about the Canadian economy, where would your energies? I’m going to ask you each for 30s on that. Stéfan, you first.

Stéfan Déry Sorry I’m on mute. Where would I put my energy? Approval. City approval, and working with the cities.

Mary W. Rowe Okay. You heard it here first. Jeanhy. What about you?

Jeanhy Shim Oh boy. I’d continue to put my energy in Crosswalk Communities. We’re going to go out, we need to get our pilot done. We need to demonstrate. We’re going to figure out a way to do it, to show that it can work. And then hopefully it’ll open up the floodgates. So, yeah, I’m going to continue to bet on … We need affordable rental housing for low income working Canadians. It just needs to be built.

Mary W. Rowe And we need a gazillion models and we need a gazillion tries right. You know that famous quote, fail better, fail faster. Like we just need a gazillion tries. So, Jeanhy, we want you and your innovative approaches to, everybody here on this call to start looking for the Jeanhys in the world who are trying to do these things at the local scale. Darlene, last word to you. What do you think is the focus for you and all your folks at Middle?

Darlene Jehn Yeah, for us, really just continuing to enable people, citizens, our community members to be able to participate, because I think that that’s where the greatest opportunity lies.

Mary W. Rowe Yeah, I mean, engagement, right? And again, it’s the old story about how do we mobilize many, many, many. What’s that expression? Many hands make light work. I had a mother who said that. You know, that’s really what we’re talking about, is many hands make light work. And if you travel, all of you, this weekend, if you have a moment, if you have a little bit of a break, get on your bike, or your skateboard, or however you get around or on transit and go out to a part of a city, of your city that you haven’t been to in a while. Go to one of the older parts of the city, not necessarily downtown, but some of the outer suburbs. Look at what that housing looks like. It’s modest. Much of it was self-built. Much of it has housed families for generations. Raising kids, going to school, playing hockey, whatever they’ve been doing. That is how we have built neighborhoods for generations here in Canada, and those communities are changing. And they were built by regular folk. Small builders, small developers who actually created those communities. So, it can be done. We have the capacity to do this kind of thing. And what an interesting moment we have, though, where everybody is kind of nodding their head. You don’t have to convince anybody that this is the crisis. It is. And it’s going to address climate and equity at the same time. So, thanks for joining us on CityTalk. I’ll just plug a few things as I said, and my gang will put it on the chat so you can see it. On Monday, basically, we’re going to talk about the changing geopolitical reality in the United States and how that’s going to affect localism. With Bruce Kat, Zita Cobb, Richard Florida and Jackie Wu. Really important session, lots of Americans will attend obviously. Please come, noon eastern on Monday. And then on Thursday we get a sneak peek at the U of T’s call for research proposals on why infrastructure matters, which they commissioned from academics across the country, which will inform the summit on December 5/6. And as if I didn’t mention it, oh yeah by the way, come to Ottawa December 5/6 and you will hear lots of these issues being repeated and delved into and you’ll have lots of people in the corridors you can chat to. So, it’s always about what’s working, what’s not and what’s next. There’s a lot. What’s next? Thanks for joining us for CityTalks Stéfan, great to seeTran you, Jeanhy. Nice to see you in this role. Fabulous to hear from you, and Darlene, all the great work that you’re doing at Middle. And read those reports, gang, one of which is about Middle. And we will see you next week on CityTalk. Thanks for joining.