Jump Start Investment: How can we accelerate housing-enabling infrastructure?

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 events@canurb.org with “transcription” in the subject line.

Mary W Rowe Hi everybody, it’s Mary Rowe from CityTalk. Glad to see everybody online for such an exciting topic. I was just teasing, in the green room … I was just teasing our participants that our goal today is to make infrastructure sexy, and I think we’re doing pretty well because we have a lot of interest in this particular report and its positioning as a jumpstart to how we actually build more housing and different kinds of housing across the country. I’m Mary Rowe with the Canadian Urban Institute. I happen to be in Toronto today, which is the traditional territory of a number of First Nations, Inuit and Métis peoples. We always invite people to come into the chat and indicate where you’re coming in from. We always have listeners from all over the place. We use this chat in a really animated way. Feel free to post your comments and your questions there. We’ll try to address them. And of course, lots of opportunity for you to exchange ideas and views with each other, which, I always joke the chat on CityTalk has a life of its own. People put resources up there and we publish both the recording and we publish the chat. So, as they say, it’s not like Vegas when … Things don’t stay in Vegas, they actually go public. So, put everything there. Just know that we’ll all be reading with great interest. Toronto is the traditional territory, as I said, of a number of different First Nations. But particularly I want us to think a little bit this morning about, unsettled territories, of which we have many in Canada. And so we have treaties that are in place in some places and other places and how we navigate that ongoing relationship with traditional ancestors who actually have territorial precedents here. And how does that look? And when we talk about infrastructure and we talk about placemaking, I know that our participants today wrestle with that, wrestle with how we do this equitably, how we do it in ways that are respectful, but also recognizing patterns of exclusion. And how do we overcome that? And housing has become, I think, a kind of proxy for the way in which people have been excluded and continue to be excluded from full engagement and attachment to places. So let’s think thoughtfully about that, and respectfully about that. And we look forward to ongoing conversations, not just today, but, going forward on CityTalk about that. I’m going to invite our panelists to join in and expose their screens so you can see them and you’ll see who’s joining us today. And I’m going to start with Mike Fenn who is the author of Jumpstart, to try to put a context for us, Mike, if you can about why this matters, why you’ve written this report, what the Canadian Infrastructure Bank’s interest is in actually undertaking this research that we supported you on. And then we’re going to ask the others to give us some perspective on the ground in terms of what the challenges are. So it’s kind of the topic of the day … housing, housing, housing, all the time. But, Mike, your report makes it pretty clear that it can’t only be about housing and, as I was saying, it’s not just housing + … it’s kind of + housing. So let’s go to you first. Give us a bit of the high points of the report. And then on the chat, folks, you’ll find out how you can get a copy of the report, how you can read it, how you can engage with it and provide us feedback. So, Mike, over to you. Welcome to CityTalk.

Michael Fenn Well, thank you, Mary, and thank you everyone that’s dialed in on this. As Mary says, some of us are quite enthused about infrastructure, but it’s not everybody’s cup of tea. And we’re going to try and make this interesting and relevant for everybody involved. I was asked to do this work, really flowing from some work that the Canada Mortgage and Housing Corporation did. When the discussion turned to how did we find ourselves in a situation where the Canadian housing market is not providing an adequate range of, of housing in terms of affordability and, and accessibility and, and, and, type and they looked at what would be a good year when the market was in balance between supply and demand. And they selected the year 2004 and they projected forward and said, well, if 2004 was a reasonable balance year, what would it mean if we were going to achieve that same level of balance? And the conclusion they came to was that while we produced something over 2.3 million new households over the next seven years or so, that won’t meet the need at all. The real need is probably in the area of 5.8 million, which is, you know, basically a half a million additional units each year above and beyond what the existing production forecast would be. And that’s, that’s a major Canadian city every year. So it’s a big task. And the other question related to that is, well, if that’s true, and since every household requires infrastructure from washing hands and flushing toilets through to schools and recreation centers, what would that price tag be? And we looked at some work that the Federation of Canadian Municipalities did which says on average and everything’s an average, I suppose, it’s something in the order of 107,000 per residential unit. We did some work looking at studies that municipalities have done across Canada, particularly in the metropolitan areas, looked at a range of infrastructure. There’s really probably more than two dozen types of infrastructure that really support housing. And we came to a conclusion that it was in the area of 104,000. So it very much confirms what FCM did, although our methodology was somewhat different, somewhat more expensive for peripheral marginal development, somewhat less expensive for intensification and infill housing, but an additional cost of significance regardless of what type of housing we’re talking about. The result of that … Everybody can do that math. If we need that many more new housing units produced every year and over the next seven years, and if the average cost is over 100,000, per unit for the infrastructure involved, that’s a pretty big number. And it might be daunting in some respects, but we think there’s ways in which it can be approached. But it is certainly beyond the current financial capacity and beyond what’s on offer in terms of capital supports from governments, from the industry and so on. So we’re looking at ways in which we might make this progress steadier and look at new ways of doing things, new ways to finance municipal infrastructure, new ways to try to meet the challenge that the growth of housing that we need is going to place on our infrastructure budgets and our infrastructure portfolios. The report, I’m not going to try and force into the next five minutes, a 100 page report – and, Mary, you wouldn’t want me to do that. So I’ll highlight the four things that we really are recommending. First is – there’s a tradition of growth pace for growth, across the municipal sector, across Canada, in some jurisdictions that involves development charges and prepayment and other jurisdictions, you know, it’s amortized over more time. But it … The idea that new development should pay its way is certainly a well-established principle. And what we concluded is we need to move away from prepayment on infrastructure to one that amortizes its cost over its useful life and allows the cost to be spread over all those who are affected by it and over the useful life of that infrastructure. The people at the front end shouldn’t be paying the whole cost of infrastructure that is the last decades. And the second thing, the point that we came to is everyone benefits from infrastructure, and everybody who benefits should make a financial contribution. That should be the development industry, certainly, but also those people who make use of the infrastructure. Infrastructure often creates a significant uplift in the value of adjacent properties. So the public has a right to, look to those windfall gains to be shared to help pay for the infrastructure that made them possible and so on. So we think there’s an opportunity there and we think that there are ways in which that could be structured usefully in part because municipalities, while they are … and inevitably cautious about their financial position because of their fiscal circumstances. They do have good credit and they have a significant debt capacity that could be deployed if, in fact, we could, reduce the risk profile and maintain a reasonable pattern of matching the cost of infrastructure with the revenues that it generates. The third thing is we think that there are a variety of risks facing municipalities, and there not all financial. Some of them are, are, related to the decision making that’s associated with infrastructure. But bottom line is municipalities face risks. They’re in situations where projects are delayed or there are cost overruns. There are mismatches between projected revenues and projected expenditures and patterns of growth. There are issues related to technology, particularly employing technology or new technology. And we think that there are institutional and private investors who are much better positioned to cushion that risk or share that risk than municipalities doing it entirely on their own. Admittedly, municipalities can borrow money at a lower rate, but they need to insulate themselves from the costs associated with the risks that I just enumerated. And we think there are very practical ways to do that. Jonathan’s going to speak to one of them a little later. Finally, there are 3500 municipalities across Canada and all ranges of different circumstances. Many are small and rural and remote and many mid-sized municipalities face similar infrastructure issues. Although, to be fair, the major metropolitan areas are the ones where the housing crisis is really having its biggest effect and where inevitably the infrastructure investment is going to be most significant. But we think there are, moving beyond those major municipalities, we think there are ways in which we can help smaller municipalities access capital more easily financed with smaller projects and provide infrastructure financing in a way that is less costly, have fewer legal and financial complications associated with them, and ideally identify ways in which they can share the risks that they inevitably face when they’re building infrastructure. So that’s a quick, breathless recap Mary. And I’d be delighted to hear what other people have to say about some of those ideas, some of which I think are provocative, some of which people will take the view are straightforward.

Mary W Rowe Thanks, Michael. As you say, it’s a Gordian knot, this thing … I think as I said in my introduction, I think the important thing to remember is that you can’t just do one thing. I think that’s the dilemma. You can’t just … And the dilemma we’ve got now is it’s all in the media, and it’s in everybody’s consciousness that we have this housing crisis. But along with the housing crisis we have all these other investments that need to be made. So I’m going to go next to Mayor Savage because you are in, arguably, I know a number of municipalities are claiming this, but you’ve been saying for some time that HRN is the fastest growing municipality in the country, and you’ve got to do something with these people. Where’s everybody going to live? And you also are right smack dab in the dilemma of who pays for things. So I’m going to come to you first, and I’m going to go Davinder and then to Jonathan, and we’ll get their perspectives on the report and on the issues. But to you first, Mike, tell me your perspective as the mayor of a growing city, mid-sized city, and also the key regional city. How does this discussion play out for you?

Mike Savage Well, it’s obviously a very, you know, critical discussion for us. You know, it was not lost on anybody that we had FCM in Calgary last week, and I arrived Wednesday, Thursday morning, went up for an early morning walk, came back to the hotel, had a shower, jumped out of the shower at about 6:20 and got an emergency alert that there was a water main break in the city of Calgary. And everybody was encouraged to use less water. And so some people thought maybe that municipalities had arranged this as a way of making a point about infrastructure. So first of all, let me say hi to everybody. And I see, our old pal Eric, who’s now with Caledon, who was in Halifax, is with us as well. So, Eric, nice to see former planners surviving outside the city of Halifax. It’s a big issue for us clearly. You know, and I’ve always said that I’m not the first to say that a crisis is a terrible thing to waste. So we need to build housing. And there’s a lot of factors that go into that. But we want to make sure that we build housing that makes sense, that we build housing that’s sustainable, that has some degree of equity to it, with its water and green space and transit and all those things. And that cost money. The simple fact of life for us is that as soon as somebody moves to Halifax, and we have been a pretty fast growing city, they start paying sales tax immediately to the provincial government. They start paying income tax to the provincial and the federal government. And I remember this conversation I had with our CAO in the budget process. You know, when does this growth of the municipality, when do we see that dividend, when do we start seeing money, i.e. from property tax? And the simple fact is we may never because the costs of sustaining that growth will probably be higher than what we will get in property tax. And so provincial governments have seen pretty good growth revenue since the end of Covid. The federal government has seen pretty good revenue growth since the pandemic. But municipalities aren’t getting a share of that. And as you know, Mary, FCM has put forward a strong push for a new municipal growth framework where we’re not saying raise taxes. What we’re saying is, let’s more fairly distribute the taxation. It’s a different kind of fiscal imbalance than the one that that sort of dominated Parliament my first year as a member of Parliament, which was the fiscal imbalance largely brought forward by the province of Quebec. We now have growth that’s coming to cities, which is fueling the growth … Including the growth of revenue of other orders of government. And we’re simply not seeing it. And it’s a major challenge. And so we really appreciate support from the federal government in terms of infrastructure, whether it’s transit or water and wastewater, green infrastructure, even social infrastructure in the form of housing and some of the investments that some provinces have made. But it’s a real challenge for us. And, you know, we can take on some capital debt, but we can’t, you know, we can’t deficit finance our way through growth. So it’s a real challenge for us. I know we’re going to be hearing from Jonathan at the Canada Infrastructure Bank. For the first time, the city of Halifax, at our last council meeting, authorized the CAO to go have a look and see what we can do with the Canada Infrastructure Bank. We’re optimistic. We haven’t … A lot of municipalities have kind of said “we’re a little nervous about that”. You know, we’d rather have grants, or that these are large projects, but we see some opportunity there. So we have to be creative. We are growing. The simple fact is, people are coming here. How are we going to sustain it? And how are we going to make sure that we have cities and provinces that are both sustainable and equitable? And that’s the challenge that we face.

Mary W Rowe Yeah. Where did this adage come from Mike – growth to pay for growth? It used to be bandied around all the time that somehow development charges were justified because it was somehow financing growth. But it feels as if that was false, like it wasn’t true really. We weren’t really fully paying for these things.

Speaker 4 Well, we’re a large municipality, Mary, as you know, you come here quite a bit. We’re physically large. We’re 5500 km². And like a lot of cities, we saw growth in the suburban areas and even to the rural areas of our municipality that wasn’t sustainable, but we didn’t get the growth paid for by the people who were who were growing. So a year ago last week was the fires of Halifax. And we … All of a sudden we had people trying to get out of, you know, subdivisions which had one egress point and many people inside. And these are things that should have been dealt with at the time. And we need to make sure they get fixed as we go forward, make sure that the infrastructure is not only built for today, but for tomorrow.

Mary W Rowe Right. And then there are all these other implications of things that you don’t even see, as you suggested, you had to have an evacuation route. But we’ve continued to … we don’t have great data, I suppose, to inform to us what are the future risks, whether it’s a water main breaking or you need a different egress route to be able to get out because of a flood or a fire or something. And how much of that has to be invested in this infrastructure? Davinder, I’m going to come to you next. You’re the person who carries the balance sheet there in the region. Talk to us about the practicality for you. You look at the balance sheet, and I don’t want to lose what the mayor just mentioned around debt and risk. We’ll come back to that. But just give us a picture for us about what’s your experience like this in Peel?

Davinder Valeri Yeah. And thank you for the invite as well. And I want to also say thanks for the report. I was just quickly going through it. And I like the four points that have been raised. And I’ll just maybe mention, you know, maybe a little bit on your sexy part about why infrastructure is sexy. To me it’s almost bringing sexy back to infrastructure. I just want to maybe make a point about, you know, as we’re moving deeper into the 21st century, that whole idea of infrastructure is shifting towards more of a positive message like, we need this, people need this, people need it for the planet as well. And I want to make reference to the fact that it’s giving us opportunity to be innovative, opportunity to get more excited about it. But also I think, you know, back to Mike’s point, it’s also some essential developments that are needed and those developments are needed to be more, I would say, deliberate. They need to think about sustainability. They need to think about the whole element of climate crisis. We need to be prepared for resilient infrastructure that’s going to consider floods or water main breaks. And I think that’s the whole opportunity here. When we think about infrastructure, we think about making it sexy again is how do we go into that new industrial revolution, past the industrial revolution, into the new technology era where infrastructure is much more resilient? If I bring it to Peel and as a CFO at Peel, I mean, we’ve got challenges and a lot of these challenges, a lot of folks in the room around the, I would say the country kind of know about these challenges. You know, the province has introduced these housing targets and those are significant targets. They’re aggressive and they’re aggressive already with the targets that we had in our plan. You know, it’s … for house enabling infrastructure, we’re looking at almost two and a half times what we put in our plan for a 2051 regional plan. And if I just look at historical trends, that’s five times what we are historically seeing as a growth. So just imagine that. I mean, it’s almost as if this curve is a very steep curve that we’re having to plan against, budget against, and at the same time recognizing that we need to accelerate. So we’re having to build more infrastructure in a shorter time line, and with more money that perhaps we are not budgeting for. And this means we need more water, wastewater water infrastructure to enable this growth that’s coming our way and it’s coming our way rather fast. And, you know, with that, you know, someone talked about debt. Yes. We need to borrow. But we need to borrow more than we’re planning for. And when we talk about these capital projects, you know, they’re long term projects as well. They typically take 5 to 7 years to complete. And then so that means some of the work that’s required, municipalities need to fund that work today. You talked about development charges a little bit here. So you know, municipalities are required to build that infrastructure before any revenue from DECs might be coming in. And that comes later, much later down the pipeline. I talked about five, seven years for the infrastructure to be built, but for water, wastewater, that might take 20 years to collect some of those revenues that are coming. So we’re having to kind of fund this pot upfront and that pot is bigger. And then that’s challenging me in terms of how much can I borrow. And then before I reach that limit of what is available to me to borrow. So there are many challenges that we have. And I would say these are exasperating some of our current challenges, and I’ll just maybe mention maybe a little bit about Peel itself. I mean, we don’t know where we are, we’re in a little bit of uncertain period. So our borrowing is also, you know, a little bit of a problem for us right now because Peel being under the microscope right now … We’re not being dissolved, but some of our services are still being looked at. And the question of how much, you know, will be still available to us. But the markets are closed to me right now as well, which is also problematic as we’re planning for growth as we go, you know, to borrow. We can’t because I can’t go to the markets. Right?

Mary W Rowe I just want to remind people just because something is complicated doesn’t mean and complex doesn’t mean we don’t have to tackle it. And to vendors just highlighted a whole bunch of them. But, I’m interested the positive approach you took there that there is actually when you started, that there is actually an opportunity to be innovative, that we to I think that’s part of what I’m going to come to the CIB next, because we need to be innovative in terms of how we finance things. That’s one of the challenges we’re facing here. We’ve got to get. Money and faster. And the municipal growth framework that, that the FCM has authored and put out is a very ambitious challenge to say the money is flowing in to the wrong, in the wrong directions. We’ve got to actually put more resources to the orders of government closest to the receiver of the service. So this is an overhauling thing. But we’ve got a what I think you’re suggesting is there’s actually a positive opportunity here. We could actually clean tech. There’s lots of ways to do this and to move money more quickly. I just want to recognize. As for people not from Ontario, what defender’s referring to is that there is a regional review going on here, and she’s working for an entity that is kind of in a stage of, limbo. Let’s just say we don’t quite know what’s going to happen, but we know it’s UI that regional governance of some description is really critical. Whether it’s a governmental or whether it’s a governance. And, Mike is mayor of a city that’s really a region. It is a region. So, that sort of larger lens, is so critical. However we get at it. So, Jonathan, let’s go to you now in terms of where the infrastructure bank sees itself playing some kind of a supportive role and innovative role to figure out how we get more resources in play, how do we do it more quickly. And then I want to come back and talk to our municipal folks about this notion of debt and risk. Go ahead, Jonathan.

Jonathan Duguay-Arbesfeld For sure. That’s great. Thank you so much. And I, before going too far, I should say I’ve been financing infrastructure for many years now. I’ve never considered it that sexy, so I might not be able to help with that.

Mary W Rowe Never too late Jonathan, never too late.

Jonathan Duguay-Arbesfeld Never too late. But I think I can help with financing these projects. And I love the Mike summary. I love, what both Mike and Davinder alluded to, because I think a lot of the issues that were highlighted are things that we can ultimately help with. So we recently put in place a new program called our Infrastructure for Housing Initiative. And what fed that was speaking with people like yourselves. We spoke to a number of different municipalities to understand what the pain points were and to understand where we could ultimately come in and help, and some of the things that you’ve already all alluded to fall into that. So how do we help with risk? And that was obviously the concept of, you know, the build it and they will come risk with something that we really felt was an important one. And the way we try to address that is to structure a facility where we would come in, we would lend for this infrastructure and we would be repaid by the eventual housing, the eventual revenues that come. So we’re de-risking to … If the housing comes later, we get repaid later. So that was a way to ensure that we’re not creating a burden on the current rate payers or the current tax payers and so on. So that was one thing we were trying to identify. Another one that was really important for us, and there has been allusion to this as well, was – how do we help smaller municipalities, and how do we ensure that they’re able to borrow at rates that are comparable to some of their peers? And one of our objectives was to make sure that regardless of the municipality, we will structure something that will let them borrow at the same rate as the highest rated municipality in the region. So we’re ensuring that they can get at least what others can get in their area, to try to level the playing field. And then finally, and, the mayor alluded to the fact that sometimes these are smaller municipalities. One thing that was really important for us was to allow for a concept of bundling, to allow municipalities to band together to build bigger projects that would serve multiple regions. But also, importantly, we reduced our minimum size for this program. Traditionally, we’re looking to finance about 100 million is what our average is, whereas we lowered that to about 25 million for this program. And obviously it’s substantially lower still, if it’s something that allows us to again support indigenous communities, which is really an important facet for everything we do at CIB.

Mary W Rowe Thanks, Jonathan. I’m going to encourage us all to be in a group conversation now and open your mics guys, don’t feel … Unless you’ve got a barking dog or a crying baby behind you. Just open up your mic so that you can talk freely and we don’t have to remind each other to unmute ourselves. So I’ve got a couple of sort of basic questions. Basic, basic questions around – do we think we’ve got the political and public will to support infrastructure FIRST or infrastructure AND … Do people get it? The reason I’m asking is because I’m concerned that the pressure around housing units is so strong that we may put ourselves into a position where decisions are going to be made to site houses or units of dwelling, in places where the infrastructure is not in place and water main breaks ahead. Do we have the political public will to do this, or do we need to foster it? Thoughts?

Jonathan Duguay-Arbesfeld I can maybe start just from CIB’s perspective. Ultimately, we are an entity that is a government owned entity. This initiative was put in place because our shareholder/government has identified it as a key priority for us. So we’ve … In a very short period of time, put this initiative in place, had the conversations, structured something that we think will be helpful. So there is a recognition of the need – now whether or not addresses everything, I think colleagues on the panel are better suited … But clearly just the mere fact that we’re doing this is an indication that there’s a desire there.

Mary W Rowe It’s interesting, you know, we have a summit every year, and we’re doing it in December in Ottawa, and we’re making infrastructure and the infrastructure deficit, in our view, the priority. Infrastructure, very broadly defined, that it’s time to invest. What do you think, Mike? Do you think you’ve got the ears of all the right people? Do people understand why this is so critical?

Mike Savage Well, I … I would say this. I would say yes. People fully and completely understand the need for investments in infrastructure. They fully and completely do not understand the need to pay for it. But what we always hear from people is, you know, why you guys complaining about who pays for what? You know, it’s the same pair of pants, different pockets. So I would say yes, but one pocket has $1 billion in it. That’s us. One pocket has 16 billion, that’s the province, and one has 500 billion, that’s the federal government. The fiscal capacity of municipalities, is not per capita, what it is provincially and federally. And the provincial government here, this is not a criticism of the government, they have to invest in health care, but, you know, don’t forget we have to invest in fire and police and roads and transit and making sure there’s … I don’t think there was a single pothole in Halifax, last year. Actually there was. But, you know, so people kind of understand … Yeah, people know we need infrastructure, but nobody wants to pay for it. And whatever the municipality pays goes on the tax rate.

Mary W Rowe I guess this is the … I guess this is the dilemma is who pays for it? So if we all know, I mean, I feel like infrastructure is like air. We take it for granted. You know, the water goes on, the lights go on, the toilet flushes all these … The library is open, all those things. But I guess Mike Fenn … we’ve got two Mike’s … Mike Fenn you’re trying to raise questions about, are there other ways to access … FCM is saying, reallocate more resources into municipal government so they can get on with it first? Mike Fenn, you’re also suggesting there are other capital pools, and I think that’s what CIB is trying to leverage, that we should also be tackling, we should be amortizing our investment over a longer period of time. We should be taking on more debt. But more thoughts on that, Mike Fenn.

Michael Fenn Well, Mary, to your initial question, I guess I would explain it this way. Everybody can understand the need for infrastructure, and we have a quote in the report that quotes Mayor Savage saying that people expect a full range of infrastructure, not just pipes and not just the sidewalk. You know, they expect the full range of community infrastructure. And that’s an expensive proposition. But in order to do that you have to develop a portfolio that’s quite extensive. I guess my thinking on that is everybody understands the need for that infrastructure. But we are being fairly precise in terms of deciding who should be making financial contributions for it. And I think, frankly, we’ve been overly narrow. We should have growth pay for growth, admittedly. But that growth includes people whose property values are enhanced in commercial areas next to rapid transit lines, it includes people who are the next generation of users of water and wastewater services in places like Peel, it includes a variety of other mechanisms that Jonathan explained that mean that … you know, we wouldn’t suggest to everybody that they should pay cash for their house. But that’s what municipalities do with front-end financing for infrastructure, because they have to. And so if we can shift the discussion to saying, let’s pay for what we need, and we all know we need it, in a way that brings everybody to the table and everybody makes a financial contribution in accordance to their capacity and then make use of the capacity that we have. I mean, Davinder makes a good point about the pressures on the capital markets, but, frankly, Peel is a good … they are an example I’d site … They’ve got a credit rating that’s better than most provincial governments. They’ve got a lot of taxable assessment. The trick is to make it attributable to something that people consent to and are willing to pay for it on a reasonable basis over the useful life of the infrastructure that they’re all using and they know they’re using.

Mary W Rowe So this is back to my notion of what the other Mike was just saying about people not realizing they have to pay for it. You know, we invest in our communities, we invest in our families, we invest in our workplace, we invest in our community associations. We all invest in some way. And I guess the question is, can we make this more material that we’re investing in the future? So transit is an investment in the future. Intensification in neighborhoods is an investment in the future. Can we move people to that? And Davinder, your comment that … Is there an opportunity to see the economic potential for this? That we could actually be really good at this?

Davinder Valeri And I think back to that … I mean, can I bring innovation back into this and a different way of thinking, perhaps even … And traditionally, we know we have built communities a certain way. Traditionally we have single use homes. There was a certain purpose for it. But when you look at the growth projections, you know, we need to consider density and we need to consider how do we build? Municipalities don’t build homes, right? We definitely lay out the infrastructure, but I think in that lens, what you’re developing, what you’re designing to fill those homes … Housing crisis. Definitely, we have a housing crisis. But how do we build that house or how do we build those shelters? Because I also want to get into another issue that we’ve got on housing, but I think we need to be a bit more innovative and a bit more creative on the density conversation as well. Back to Mike’s comment about “we have a dollar”. It doesn’t matter whose pocket that dollar is coming out of. I believe we’re limited to how many dollars we have. So let’s be prudent. Let’s be smart. Let’s figure out the value for that dollar and make it stretch. So I think multi-use or high density is an opportunity here. And I don’t know if that’s being considered as part of the plan.

Mary W Rowe So I mean I want to go back to Mike Fenn. Mike, you came up with $100,000 number, which everybody’s getting jazzed about. Is that number different depending on where you invest it? If it’s a neighborhood that’s already built up and already has existing services versus a neighborhood where you have to lay it all down.

Michael Fenn Yeah, I mean, that’s a really good point Mary, I mean, it’s like that old adage about “if your head’s in the oven and your feet are in the fridge, you’re on average, okay”. The experience we’ve had is, in looking at this is, as Davinder says, there is reduced cost of infrastructure for infill or for intensified areas or trying to … and some of the work that CUI’s doing on main streets and transit oriented development. The one caution I’d have is there is a bottom limit to that. We can knock the $100,000 figure down a fair bit, but the need for infrastructure is driven by the number of housing units. And, as long as that’s true, you might get the number down to 70 or 80,000 if it’s a well-served area, but you’re not going to get it down to zero. And so there’s a temptation to say infrastructure is free, let’s just build. The caution that I have included in the report is, we can expedite housing approvals, but you shouldn’t assume that the hydrants are always going to have enough water for everybody, that’s not a reasonable assumption and we have to be careful about it.

Jonathan Duguay-Arbesfeld Mary, can I add something just on densification, if you don’t mind.

Mary W Rowe Yeah. And then I want to get Mike and Davinder to give some feedback to you Jonathan about what is it in the CIB program that needs to change for them to be taking better advantage of what you’re offering. But go ahead, Jonathan, speak about that.

Jonathan Duguay-Arbesfeld You know, our selection process, because we’re going to have to select which projects we support, and it’s all going to be based on the amount of CIB money towards housing enabled. So higher densification will lead to prioritization with us. It will lead to higher loan amounts from us. So that is something that works into our program as well.

Mary W Rowe Right. So can I hear from Mike and Davinder? What … Tell me what would the concerns be, either from a municipal government or a region? Assuming you weren’t in limbo anymore, Davinder. And you could … And the markets would talk to you again. What do you need CIB to do to be able to help you solve your problem?

Jonathan Duguay-Arbesfeld And you can’t just say free money because that’s just not something we can do.

Mary W Rowe Mike first and then Davinder.

Mike Savage Well, I would say free money. I can’t say that???

Mike Savage Look, our concern with the Canada Infrastructure Bank since its inception was the two that I mentioned earlier. Number one, you know, we got to pay it back. All right. So we’d rather have grants. Let’s face that. We didn’t know initially when this government, federal government came in, there was a lot of money in infrastructure. We applied for it. We used it. That was good. And so we were, you know, a little concerned about that. Plus, initially these are large, large projects, but we’re now … We’re now at a place where we think we can use some of the support of the Canada Infrastructure Bank, we have to buy fleets of electric busses, we have to make major investments, and we believe that we can do that through the Canada Infrastructure Bank. I want to … I know you want to hear from Davinder on that, but I just want to make this other point about … As you know, Mary, we have in Halifax … Have a very aggressive and ambitious climate plan called Halifact. And as part of that, we said, if you’re going to have a climate plan, you can’t just have a plan and not budget. So starting two years ago, we bought forward a 3% property tax on every property tax payer, commercial, residential. Everybody pays a 3% levy, which goes into our Climate Action Fund to buy things like that. And as I’ve often said, it was unanimously endorsed, but only by some of the people. Nobody wants to pay … Nobody wants to pay property tax, right? And even though our debt is pretty low, you know, the average Haligonian pays, I think 34,000, owes $34,000 in national debt, around $18,000 in provincial and around $1600 in municipal. But because of the size of our budget, we have to be a little bit careful. So we do think, our CAO and I both, we think that there is an opportunity now with the Canada Infrastructure Bank at 1% or whatever the rate is, that it can in fact help us build infrastructure that we’re absolutely going to need. So we’re optimistic about that.

Mary W Rowe So let’s talk a little bit about that, because I guess the question is … I hear you … You don’t want to owe more. I mean, you already don’t have enough dough. That’s what the FCM is saying. Not enough money sits with you. So, Mike, are you averse to using private capital markets differently and thinking differently then, about who’s money gets invested in infrastructure, or is this just too risky a thought for you?

Mike Savage How much of your personal capital are you offering us, Mary?

Mary W Rowe Yeah, I’m rolling in, I know. Well, I mean, listen, I’m an Ontario girl, I remember Walkerton, so I know what happens. I know what the risk is of … and what people’s concerns are around privatizing and safety. Public safety. I know, I hear that, but I mean is there a … we have public/private partnership models. We build bridges together, we build roads together. Are there other ways to do it that take advantage of institutional capital and institutional investors? I’m looking to see if any of them are in the chat. They obviously … they don’t often …

Mike Savage I’ll just quickly answer that because I know you want to get to Davinder, but I think most municipalities have traditionally been probably somewhat risk averse. But more and more they’ve been looking at, you know, everything from TIFFS to everything else that you could imagine that will take things off our books, because the stuff that we pay for is important. It is now. And we traditionally I think, even developers will tell you quite often that they’re prepared to pay for, you know, splash pads and pump tracks and all the things that people want, as long as they have the certainty in knowing when it’s going to come back. But we have not charged enough in, I don’t think, in development.

Mary W Rowe In the first place …

Mike Savage And when we’re catching up. You can’t go back now to a developer who built a community 35 years ago, and say now you gotta pay, you know, for the extra egress. But you said you didn’t need a library. Now you want a library, you want transit, you want recreation. So we just have to be really careful going forward. And to Michael’s point, I’m glad that his study sort of confirmed the FCM report, that it said $107,000 average per unit of municipal infrastructure. My first house didn’t cost $107,000. And I’m younger than you, Mary, by quite a bit. So that’s not that long ago. But that’s how much … That’s how things cost. And you cannot build a community if you don’t have the amenities that people want, that they need. And they don’t just need a place to live, they need a way to get to work, and they need a place for their kids to play. And they deserve to have some wild spaces not far away from them. Those are the kind of communities that we need to build.

Mary W Rowe Yeah, complete communities, I know. And Davinder, it’s so interesting to hear your perspective from Peel, because just saying, it’s not like Mississauga was the poster child for intensification and sustainable development, but you are not just single handedly, I know you have many, many colleagues and friends in the Mississauga and in the Peel Region that are trying to come to terms with the decisions that were made and maybe the lack of investment that existed at that point. Can we advance this in a way that is productive and equitable and sustainable? Is it in the realm of possibility, or are we just going to end up with more bad sprawl?

Davinder Valeri Well, I think there’s, you know, back to a notion of collaboration and integration and some form of systems thinking. Like we all have to kind of work together in this. It’s not a one size fits all, and it’s not going to be done by one municipality. I think collectively, regions, municipalities, governments at all levels, like you said, need to work together as well as maybe some private lenders as well. But I think, back to the notion of how CIB can help. I think what we face is this funding gap sometimes, right? Where we need to build up front, we need to build today to satisfy the growth for tomorrow, and we can’t keep up with that. So the demand on the dollar is significant. And there isn’t enough dollars. I think this is where, CIB can help and others can help is give us more dollars. And then let’s put a plan together and how that dollar is repaid, whether it’s repaid by the municipality, by future growth or by the partners that I just talked about in that collaboration, because we all have, I would say, you know, we have skin in this game, right? And that’s what I would be looking for. And one other thing is, and I think one of the Mikes had mentioned in the beginning, is this financial risk that municipalities face. We have a borrowing limit, but we have a significant financial risk as well because we might lay pipe today, but we do not control when and who will build around that pipe for the home. I mean that piece also needs to fit nicely. We all need to work in tandem, but we face that risk. So we’ll invest the dollars today to put that pipe down with the hopes that the revenue will come with development will happen around that pipe as well. So we need to work together. And this is where CIB can help us, is help bridge that that funding gap or maybe take some of that risk away from us, in ways that they could, you know, it’s called, you know, gapping or whatever, ways that they can burden that burden for us, until the dollars do come. If we all put our faith in development, I think that is where we are. We are seeing that. We recognize that that’s a steep, steep climb. But even if it doesn’t come to the full steep, even if it goes halfway, we’ve still got a significant growth ahead of us. But I think that’s one of the areas of where I would be looking for help from anybody on, is to help us on this initial upfront funding, bear some of the risk with us, and then work with us as we, you know, build everything together.

Mary W Rowe Yeah. I appreciate all these comments about all the different kinds of models and on the chat, as per usual, we have smart folks on the chat. Alison Ashcroft is in there talking about the way in which finance has been done with the First Nations community and in BC. Thanks, Al. You know, I think these different models, Mike, I’m interested whether or not, Mike Fenn, is the insurance industry engaged in this at all in terms of creating some kind of economic climate that encourages development in ways where the risk is being minimized?

Davinder Valeri Well, that’s not an area of my expertise … but there’s a couple things. They certainly are monitoring the kind of climate change impacts that Davinder was talking about. And so, they are aware of the fact that if municipal infrastructure isn’t upgraded to meet current standards, then they’re going to have all kinds of claims for flooding and sewer backups and all the rest of it. So from a business point of view, I’m sure they are engaged. The report talks about a couple of areas where you could have a greater level of insurance. I guess if you want to put it that way. Some of them are as Mayor Savage says, it’s just a question of being able to rely on overcoming the risks associated with this. Or maybe insurance is all about risk. So I think that’s another possibility. We mentioned, for example, the current municipal practice in much of the country of requiring letters of credit on and developers, which, you know, really interferes with their cash flow and their business, financial position. And it causes them to be sitting on the infrastructure that Davinder is talking about. If in fact, there were alternatives to letters of credit, and they were more like insurance products or bonds or things of that kind, we might liberate a little bit more of capacity in the homebuilding industry, and they might be willing to take some more of the risks associated with building homes, because the risk isn’t all municipal. I mean, in the current market, there are business risks associated with plunging ahead on housing …

Mary W Rowe I don’t want to go down this rabbit hole too far, because I know it’s not as interesting to everybody, but I am interested in debt. Back to Mike and Davinder. Do you think we should change … Should municipalities be more willing to take on more debt? Do you think that your councils would support that? Do you think the public would support that? Or do you like the constraints under which you have to operate, not being able to take on debt. Mike first.

Mike Savage I hate the constraints we’re under across the board. I think it’s bizarre and stupid and ridiculous and outdated. You know, the property tax model that we operate under in our cities goes back to before Confederation. It’s nuts. You know, as you heard me say, Mary, I hate saying this, but you’ve heard everything I ever said because you’re one of the few people that listen to me.

Mary W Rowe I listen to every word. I hang on every word.

Mike Savage Look, property tax is the best form of government in the world. Except for all the others. That’s a Winston Churchill paraphrase about democracy. But it is a shitty way to raise money, and it puts constraints on us that are ridiculous. So we have … The province of Quebec is now looking at different ways for municipalities to raise money, particularly around the issue of climate change and its impacts. To your question about insurance. Yes, I absolutely … I’m certain, I know, I’ve had conversations with some people in the insurance business – not only about things like municipal infrastructure, but something that will totally be alien to most people on this call. The Isthmus of Chignecto, which connects Nova Scotia and New Brunswick, which, if it gets washed away, would isolate Nova Scotia and affect port traffic and everything else. So I think insurance companies are looking at all of these things in a big way. I also just wanted, if I could Mary, just on the density piece, like, we have the opportunity to build complete communities all over the municipality. But if you’re a university city like Halifax, students are not going to live an hour away from school. So we have to, specifically … One of the things the Housing Accelerator Fund did that I think forced a conversation with a lot of municipalities was, say, if you’re a university city, you got to look at how you’re doing density. And so our city … very, I thought, courageously, not so much for me because I’m getting out of here in four months. But from the rest of the folks that have to go back to the polls. Our … We approved up to eight units per lot in university areas, and we increased height in corridors that get busses to universities. Because you got to … If we don’t do some of these things as municipalities, we have a saying out here, then the “arse is out of her” … it ain’t going to work. So we have to look at density, we have to look at infrastructure, we have to look at new ways of doing things. As you said, Mary, if we don’t, then we’re hoist on our own petard. We’re out of time. It’s not going to work. We have to look at new ways of doing things.

Mary W Rowe That’s all there is to it. Mike Fenn.

Michael Fenn I just want to make one quick point about debt. Nobody is proposing that the municipalities should be able to run current account deficits. The federal government and provincial government do a lot of that, and municipalities would be crazy to take on that responsibility under the property taxes … Mayor Savage says, just would never support that. And we see it in the states with municipalities that go into receivership. But debt for long term capital works makes a lot of sense. So we all take out a mortgage to buy a house rather than save up and pay cash, and the infrastructure’s the same way. And I remain convinced that a little bit more on a water bill, most people don’t even know what they pay for water and wastewater. A little bit more on that bill that’s spread over 30 years, will buy you a whole lot of good infrastructure, and we shouldn’t be afraid of taking on debt for that purpose. As Mayor Savage says, Quebec municipalities are looking at new forms of revenue, but one of the ways they have paved the way is they do use debt for infrastructure. Their infrastructure is as good as anybody else’s, and they don’t have a lot of development charges and that kind of thing that are pre-paying everything, which makes it less possible to build the infrastructure.

Mary W Rowe So it’s interesting, just the common themes here. And then I’m going to go around for each of you to just give a last word. But the idea that we’re moving to … positioning infrastructure as an investment, that it’s an investment in our quality of life and it’s an investment in our future, and, that it’s something that will last a long time and that we if we do it really well, then we can try some stuff. We can do it differently. We can create more opportunities for materials recycling. We can do more of a circular approach. We can … All those kinds of things that, you know, you quoted Churchill, Mike, and I’m going to quote Oliver Wendell Holmes, you know, “I’m happy to pay my taxes because they buy me civilization”. This idea that instead of being allergic to public investment, we start to embrace the idea that we’re actually investing in our common life together, and that that’s how we build economies, and it’s how we build communities. And infrastructure is one of the key enabling conditions for people to be able to have contented, happy, productive, creative lives. So I hope that we can move people’s perspective to that. It’s not just another ding, another tax, another something. So, Jonathan, I’m going to go to you first because you are part of an effort by government to create a different kind of capital pool and a series of different kinds of models to introduce new ways of providing this kind of way that the world works with infrastructure. So final thoughts from you. And then I’ll go around to everybody.

Jonathan Duguay-Arbesfeld So I’m actually going to use my final thoughts to address something that Davinder alluded to, and just to clarify our program, because I think that some of the things that she highlighted is what we can do. You know, we can finance … With our partners, we could finance 100% of the infrastructure needs. So that’s one thing that’s really important. You talked about the financing gap. And we could also structure a debt to be amortized or sculpted to be repaid over the useful life of the asset. So we can go quite far down the road. And I did … I was looking at the chat, someone did bring up – why aren’t we reusing and recycling and so on and so forth. And I did want to take just two seconds to mention – we also have a retrofit program, and we could fit this within that, which would allow us to retrofit existing buildings, to, again, enable new housing and the like. So thank you so much. Merci beaucoup tout le monde.

Mary W Rowe Thank you, Jonathan. Davinder … You’re muted Davinder … Come back, come back.

Michael Fenn I apologize. Yes, I know it’s that button! I just want to, maybe, I don’t know if this is my closing comments, but I mean, rapid growth and that whole commercial development has been the cornerstone of any economy that’s building. And Peel is no different from that as well. We are growing rapidly. I just want to say we service right now 1.5 million folks. And in our plan right now, we have 2.3 that we’re reaching towards 2.3 million. And that’s a huge, huge trajectory. And that does not relate to the growth that the province is anticipating for us. And that also does not take into consideration all the asylum seekers that are coming at our doorstep and the challenge that we have just on, on housing itself. So I think any opportunity here to get some infrastructure built, house enabling infrastructure for sure, is something that we’re up against. We borrow today. We issued debt on water, wastewater. That’s one of our models. We do it really well. We’re Triple-A rated by two rating agencies. That functions like a machine for us. We’ve been doing this seamlessly for the past 50 years, very quietly. And we would love to do more. I mean, that’s really … I feel like right now, our hands are tied and can’t move forward. But, yeah, we’re more than open to do more and try to work with the province and everybody to accelerate this house enabling infrastructure.

Mary W Rowe I mean, this is a problem lots of places would like to have, you know, people are moving here. Things are happening. People want to be here. We have to remind ourselves that it’s so easy to just get caught up in what we don’t have, as opposed to thinking about what we do have in Canadian communities. Mike Fenn to you. And then last word to the mayor. Go ahead, Mike Fenn. Muted Mike … You guys were perfect until just like the home stretch. Mike.

Michael Fenn Okay. Well, let me unmute and say I’ve had a lot to say. And there’s a lot in the report that I recommend people read, so I’m going to throw the ball back to you.

Mary W Rowe Great. Great read 100 pages. Nighttime reading. Mr. Mayor.

Mike Savage Yeah, thank you very much. This discussion of infrastructure is really important to us. From my own point of view, we need to make sure that we’re not letting other orders of government off the hook on infrastructure. So if we’re taking advantage of the Canada Infrastructure Bank, which we can, we need to make sure that we actually are not replacing something that other orders of government could support us on. But investing in, you know … And we can get a better rate, I’m told, through the Canada Infrastructure Bank than we can from the Nova Scotia Municipal Finance Corp.. So these are good things. And investing in infrastructure, investing in things that are future oriented, like infrastructure, like climate, to me, are things that are legitimate subjects of debt as opposed to the operational funding for police and fire and those things. So we have to be prepared to be, I think, strong and make the case that we’re going to make these investments … We’ll pay our share, I know municipalities will always pay their share. And, with one minute left, there’s probably not quite enough time to get into a full debate on property tax, so I’ll leave that for another day. But I look forward to discussions with the Canada Infrastructure Bank, and I thank Michael for the report that he’s done and Davinder and Mary, as always, it is a delight to see your quiet and understated face, and all the work that your organization does.

Mary W Rowe You know, sustainability in cities is not for the faint heart. And that’s what we’ve been all saying, is that we need everybody to engage in these conversations. And you can see from this session, we’ve got staff, we’ve got municipal staff, we’ve got Crown Corp staff, we’ve got consulting staff, and we have a mayor. So it’s going to take all of us. [Mary]. Yes. Go ahead. Mike.

Mike Savage Can I just say this … can I just do a big hurrah for municipal planning staff across the country who often get shit on but are doing unbelievable work. And accepting a lot more risks then sometimes …

Davinder Valeri Yea!!

Mike Savage So thank you to all planning staff who were part of this conversation as well.

Mary W Rowe Absolutely. And it’s a partnership amongst all of us. But I think the important thing and all of you in the chat, just remember this. That city building is for everyone and we all have to be engaged. We have to figure out how many pockets there are. Not just one, not just two, but many. And how do we engage in our collective life together, which is what we’re going to do … So mark your calendars, the 5th of December, to come and talk about infrastructure and how we need to invest in our future. I always want to just stop by saying that as the world around us is full of tension and conflict, and not a very positive, happy place at the moment, let’s just all appreciate that we live in communities that function. The water … still, let’s hope in Calgary the water will get restored and that we have to be anticipating what the future is. And we have that challenge across communities in Canada as we know. So we together are going to solve all this together and make better communities. So thanks for joining us at CityTalk, where we talk about what’s working, what’s not, and what’s next. We’ll be back in a couple of weeks to talk about another piece of infrastructure. Main streets. Main streets … It’s critical infrastructure. Thanks, Mike Fenn for the report. Nice to see you, Jonathan. Mayor Savage and Davinder, great to have you. Thanks for tuning in, everybody. Have a good one.