The Housing Puzzle: Creating & Conserving Affordable, Sustainable Homes

0:10

good morning everyone my name is Taran seula and I'm the senior manager of member engagement

0:17

here at the Toronto region Board of Trade thank you for joining us this morning for our valued member van city's

0:23

workshop on the housing puzzle creating and conserving affordable sustainable

0:28

homes today's enlightening webinar will offer the knowledge and insights necessary to make a lasting impact on

0:35

sustainable affordable housing initiatives within our communities by way of an expert panel that will debate

0:42

diverse perspectives on the challenges and opportunities that may arise offering you the opportunity to shape

0:48

the creation of Housing Solutions in your communities before we begin I'd like to

0:54

acknowledge this land on which we are meeting is home to diverse First Nations Inuit and M People though you could be

1:01

joining us or watching from anywhere the board's offices are located on the traditional territory of many indigenous

1:07

Nations they share with us a sense of responsibility for intergenerational Equity the well-being of today and

1:15

tomorrow and now without further Ado I'll pass the mic over to Eric to get things

1:20

started thank you very much Taran um I will share my screen and get right into

1:28

it if I can figure it out there we

1:41

go all right so thanks very much everyone for joining us today um like Taran said we're here to discuss uh how

1:48

to create conserve affordable and sustainable homes um across Toronto and the

1:54

GTA um with us today we have a very diverse panel of guests and uh expert

2:01

speakers um I'll pass it along in order that you see them on the screen uh Julia would you start uh and introduce

2:07

yourself please hi good morning uh I'm Julia Langer I'm the CEO of the

2:12

atmospheric fund which is H an agency created by the city of Toronto in 1991

2:19

before climate change was really headline news to address um this big Global problem of climate change but

2:26

what do we do about it locally and we are now endowed also by province of Ontario and government of Canada to uh

2:33

to advance that Mandate of lowc carbon Solutions throughout the greater tronto Hamilton

2:41

area uh Mitch hi I'm Mitch Gillan uh I'm with

2:46

Hallmark we are a privately held uh developer owner and manager of uh real

2:55

estate across the city primarily the city of Toronto um across asset class so

3:00

office retail industrial and um housing as

3:06

well right than Eric hello B qu everyone my

3:11

name is Ray Sullivan I'm coming to you from gonan initi Big territory in Ottawa and I work for the Canadian housing and

3:17

renewal Association we are the National voice of the community housing sector and happy to be joining you this

3:24

morning all right and uh I of course I'm Eric Visser director of commercial real estate at Van City Community Investment

3:30

Bank I work with a team of account managers and oversee um a portfolio of

3:36

social purpose real estate uh loans so we'll get right into it here uh

3:43

just a very brief overview on um housing in Toronto and a bit of a primer on what we're about to discuss today so as we

3:50

all know uh rents are increasing uh depending on who you ask or who you how you measure or what you're measuring um

3:57

the rate of these increases varies you know cmhc see uh their latest um publicly available data I think cited

4:03

about a 6% annual increase in rents year-over-year as of October 2022 um new report obviously coming soon

4:12

and uh you know you can compare that with the Toronto region real estate board uh reporting on condo rents

4:17

increasing about 10% year-over-year as of Q2 2023 and so you know I think we

4:24

all have anecdotal stories and evidence um you know I work with like I said a team of young account managers and many

4:30

of them are getting their first or second apartments in the city of Toronto and the rents that they are paying are

4:35

you know somewhat staggering frankly um so it'll be very interesting to see uh

4:41

updated cmhc data come out soon um but I think we can all just generally acknowledge that rents are increasing uh

4:48

rapidly in Toronto it's becoming an issue um you know that also is compared with home prices increasing you know

4:55

there's been maybe a little bit of relief in terms of absolute home prices recently if you're looking to get into

5:02

the market however that's being offset by you know financing costs with rising

5:07

Rising interest rates and so affordability on the ownership side of the equation is also uh deteriorating

5:14

and not looking um like there's much hope on the horizon for some people at least that's the uh the general feedback

5:21

that I get from some people um anecdotally you know that all leads to

5:26

of course shelter needs increasing and so you know I think it can be a little

5:32

bit heartbreaking to drive around the city of Toronto or the greater Toronto area and see so many people um

5:38

experiencing homelessness and just generally being in need of proper housing um city of Toronto um their uh

5:46

shelter support and housing Administration sites in their 2022 annual report that they provided uh

5:53

support to over 20,700 individuals um that's after adding 1500 beds in 2022 um

6:01

you know that just I think is a quick bullet point to demonstrate the massive need for more housing and a specifically

6:07

affordable housing in torona um it's not all doom and gloom uh the SSH was able

6:13

to transition about 4,500 people into permanent housing in 2022 um you know

6:20

the other uh part that we can't forget to mention specifically on this panel is that of course emissions from buildings

6:26

and construction are increasing um United Nations report in uh 2020 or 2022

6:32

cited 2020 data which showed that emissions from building and construction um have hit an all-time high in 2020

6:40

that's despite increasing efficiencies in the way that we build and operate our buildings and so really it's just the

6:46

increasing floor area out there is outpacing increases and efficiencies that we're

6:51

finding it's not all doom and gloom there are uh a multiple a multitude of

6:57

programs and grants out there from various levels of government various organizations so you have you know the

7:02

feds um you know with programs like the codes acceleration funds the Deep

7:07

retrofit accelerator initiative um green neighborhoods pilot um they created the Canadian infrastructure bank and they

7:14

they're doing a lot of great work on a on a pretty large scale um and most recently the federal government removed

7:20

GST from uh purpose built rental construction and I know that that's already got a number of projects off the

7:26

ground um provincial governments you know Ontario specifically has a pretty

7:32

lofty goal of 1.5 million homes to build by 20 2031 um seems like most of their

7:39

initiatives at least with the current Administration are focused on um the bureaucratic process and finding efficiencies there there have been um

7:46

some efficiencies found and some other challenges I suppose uh experienced along long the way um but let's not

7:53

forget that the provincial government does offer a lot of subsidies um geared directly to affordable housing and

7:58

housing support reports and so um you know the the provincial government does do a lot and we see that at BCI and some

8:04

of the underwriting that we we perform on various affordable housing projects um Municipal supports those can you know

8:12

in terms of Toronto um you know we can look at Mira as a an amazing program

8:17

which you know I think we all just wish it was uh able to be deployed at a larger scale um VCI be very happy to uh

8:25

I think just a week or two uh help a nonprofit St Jude's Community Home acquire uh a property which they had

8:31

been releasing for years and was um about to be put up for sale and um you

8:36

know risk losing those affordable and supportive units um which otherwise were

8:42

being operated by a nonprofit the the Mira program was able to provide a straightup grant um to uh St jice the

8:49

nonprofit owner or future owner and operator and coupled with a bciv first mortgage we were able to preserve I

8:55

think about 30 units uh of housing um support of housing uh to be preserved

9:00

and perpetuating um cmhc I think many of us are familiar with the various programs

9:06

that they have to offer um they've got things like the co-investment fund so various granting and lending options

9:12

they've got the rapid Housing Initiative they have their mult uh mli select program which um it was such a great

9:19

program that they're now sitting at a substantial backlog in applications um you know to look at it optimistically

9:25

it's it's a good problem to have um that they offered such a great program um we also have private foundations you

9:33

know uh vcib has done a lot of work with groups that um you know such as Land Trust which are able to leverage private

9:38

Foundation Capital um not necessarily in the form of Grants sometimes it is in the form of Grants um but to use that

9:45

Capital um in a unique way to help acquire and preserve affordable housing and of course we can't forget to

9:52

mention uh Julia's organization the atmospheric fund which has various programs directed at not necessarily AFF

9:59

ability specifically uh but marrying uh sustainability a lot of the time with

10:05

affordability um just to touch on impact um vcib uh I think is a great case

10:11

example it might be a little biased um we are Canada's only 100% impact bank

10:17

and a lot of people have to ask what does that mean and it's totally understandable um the way I like to sum it up is that every dollar we land out

10:24

has to have a net positive impact on the community that it's going into and so um

10:29

you know what does that mean well it's got to be measurable and we do measure that on every single transaction that we do with an proprietary impact score card

10:37

um what that means is we have um various inputs which meas measure things like

10:43

Community um the community engagement is it serving uh underserved groups uh and to what degree um affordability and to

10:50

what degree is it affordable as well as the environment and so things like uh

10:55

building certif certif certifications um such as passive host various lead

11:01

certifications Bulma certifications the Tron green standard tier two and above

11:08

um but also retrofits um and how um these projects achieve Energy savings so

11:13

things like Geo exchange or solar inst installations rainwater collection those

11:18

kind of things um of course you can't uh when

11:24

you're trying to develop any form of affordable housing you are going to generally need Del layer grants

11:29

subsidies and debt financing um there's a lot of complexity surprising amount of

11:35

complexity that goes into some of this and so you need a lender that uh takes the time to understand these funding

11:41

agreements um and sometimes come up with unique um structure loan structures and funding structures um so really it's a

11:48

finding lender with uh the ability to be creative and flexible um of course that's where I like to think we come in

11:55

um so please feel free to reach out to me after the panel if you want to discuss anything um but with all that let's get uh right

12:02

to our discussion so um to lead it off

12:10

um first question where do you see the biggest opportunity to create new affordable and sustainable housing and

12:17

maybe this one I'll invite Ray to start yeah thanks Eric and you know you kind

12:22

of mentioned in your your opening comments that Ontario has set a goal of building one and a half million homes

12:28

between now in in 2031 but what we also know is that about almost 20% of

12:34

households in in the Toronto area can't afford Market rates for housing and if you look at renters it's like over 30%

12:40

who can't afford Market rents for housing so we have to look at that Target in terms of who was going to be

12:47

able to afford those homes you know where is the target for nonprofit Co-op and and community housing and that right

12:55

now about four or five% of the housing stock is is is community housing we need to actually double that you know just

13:01

just to get in in the range of of the oecd and G7 average when it comes to co-op and and nonprofit housing one of

13:09

the biggest opportunities is going to be government owned land you know the high cost of land is part of what drives up

13:16

the the cost of of development governments that I've talked to at all three orders of government if you been

13:22

telling me well we we don't have cash for for community housing yeah but you have land and land has value so how can

13:29

prioritize government-owned land from all three orders of government uh to

13:34

build community housing and and you know and I've I've worked in community housing for for almost 25 years now and

13:42

uh we've always been ready to to build at that that Leading Edge of of

13:47

environmental sustainability I used to live in a in a nonprofit town home that was built in 1981 the first

13:54

multi-residential r2000 home you know this is not this is not new stuff I was involved in building building the first

13:59

multi-residential passive home those opportunities are there but we need to take advantage of the land uh to help

14:06

bring the cost down yeah Ray I think like that does

14:11

tail into kind of I think you know the the traditional developer answer which is like it's all

14:17

Supply um and if we can increase the supply I think that it's going to create

14:23

more opportunities for Market housing naturally but also more opportunities for collaboration between private

14:29

developers um and you know not for nonprofit land trust and other um you

14:37

know affordable or social housing providers and that you know if we can

14:42

open up the floodgates of that land like we try and buy land often uh and find

14:49

these opportunities and it's candidly it's it's hard it's very difficult to Source those

14:56

opportunities um to you know own them and then start that process um and so

15:02

you know starting with that key like it's you know it's the the key ingredient um that you need is is that

15:08

land side um and there are various levels of government like you said right that have have access to that um and I

15:15

think it takes the collaboration between the private sector and public sector

15:21

groups to to unlock unlock that land um or retrofit buildings on that land you

15:27

know working with Julia um to unlock you know a different use potentially for it or something well there's a there's kind

15:35

of a an a a math that needs to be done in terms of what is affordability and

15:42

and it has to do uh obviously with the the first cost like the capital cost of

15:47

building you know the land and the materials and and all of that but then also the operation of those buildings

15:55

and then how do you what's your life like when you're in those buildings and

16:01

and so in that context in terms of your your question about we it's like wear matters like if we don't have location

16:08

efficient um construction then people are going to need a car which is super

16:14

expensive to get anywhere so if we're Transit accessible then your costs of

16:21

transportation and also your life your time you don't have to pay for more daycare because it takes you an hour to

16:28

get your kid after school you know so so we need to be thinking really broadly about what and where we're building in

16:35

order to achieve affordability for the end user and in that context like Size

16:43

Matters as well so it's like all the land all the labor all the materials

16:48

that go into each square foot contribute to the cost so if we're not thinking

16:53

about like the amount of you know like the size of you know what you you're

16:59

where you're living then it's automatically potentially not affordable you know this is where you know the the

17:05

the 1.5 million homes well we have to think about like what's up and where and

17:12

and in that sense you know one of the things we've talked about like there's been a lot of talk about the missing

17:17

middle like the not just new land like it's that infill and so Toronto's um for

17:23

Plex as of right I think is going to revolutionize some of this thinking but also so we started talking about the

17:30

missing little like um auxiliary Suites like you know the granny suits the

17:35

garden suets the secondary sweets that kind of thing like that land already exists it's already

17:41

serviced and and like if you add that up it's a lot of potential homes and it

17:47

also from an affordability perspective will help people who maybe are suffering

17:53

right now with high interest rates so will'll help them pay mortgages you know so think we need to think really big

17:59

like wider about what is Affordable think you're absolutely right Julia too that you know that that where

18:05

matters as as much as what and I I want to give a plug to a fantastic resource uh from the housing assessment resource

18:12

tools group at a UBC hr. ubc.ca uh they've actually done an

18:17

inventory in Toronto and Peele in a number of different Municipal areas of government own land and scored it

18:22

according to those exactly exactly those kinds of factors you know proximity to transit to amenities to toow grocery in

18:28

retail and those sorts of things it's a perfect starting point when when looking at those those opportunities and and

18:34

Mitch yeah I mean I I think really to get the kind of scale that we need in terms of Supply in terms of both private

18:41

market and non-market Supply we need to work together the the private and the nonprofit sector great organizations

18:46

like woodgreen in the Toronto area and many others that are doing exactly that and I hope we can continue talking about

18:51

it yeah I like that full like it's across the Spectrum right is where we have we have to go big big sites and

18:59

Julie to your point that those big sites take a long time like just regardless of what we do and in the interm you know

19:05

these the missing what the missing little I think that's fantastic um I sto

19:11

that from Shere ber she's she yeah that like that that can be

19:16

delivered just factually it can be delivered more quickly um so I think that's really you know it's a good with

19:22

multiple benefits for affordability right so the people who are having trouble affording their existing home

19:28

homes maybe get some help with with that and so there's there's that that sort of

19:33

multiple layers of of benefit and affordability um support yeah I I'm glad Julie that you

19:40

brought up uh the Lan way granny Suite uh housing concept it's something that we're working on at bcib because um the

19:47

feedback we've got from the market is that um you know many of the traditional Banks don't yet fully understand or appreciate

19:56

um the value of a lean we have house it's a bit of a novel concept still to this point um there's about I think the

20:03

last bit of research I found was there's something like 38,000 eligible lots for laneway house in Toronto and that was

20:10

before the granny Suite or garden Suite um uh concept was permitted so a lot of

20:16

opportunity there and totally agree that the missing little is something that can't be forgotten here um moving on to

20:23

the next part of the discussion here um you know we talked a lot about where we

20:28

want to build um and some challenges that Mitch even touched on um but my question is what is standing in the way

20:35

of creating more affordable and sustainable housing today I I'll give the um you know I'm

20:42

I'm the developer so I have to I have to be I have to play my role and I'll say you know it's it's the red tape that's

20:50

holding this up it it takes a very long time when you do have a site to get it

20:56

through the municipal approval process the way like what what I say is in Toronto each housing project

21:05

it's like they're making a custom suit so you go in you have the land and then you go and you talk about everything

21:10

really specific to the land and if you believe we have a h in crisis you're not

21:16

you don't need a custom to you need off the rack you need vintage we need all

21:22

different Ty types of Supply to come in but we can't we can't be perect

21:28

we have to understand we're not going to be perfect we have to try we have to create a landscape a legislative

21:36

landscape that allows to unlock that Supply um from a zoning perspective um

21:43

you know to standardize the situations um like with laneway housing boom you get it's automatically approved

21:50

your garden Suite you're entitled to it where's that in the in the middle where's that in midrise we had a

21:56

mid-rise project the zoning we hit Toronto's midline midrise guidelines

22:02

like to a t it still took us three years to get it approved you know that's that's very challenging um so I I think

22:10

there are and then the next thing is the construction trades to build it that's that's the next challenge once we figure

22:16

out the zoning our our one of our fears is we're you know we're going to start making this leap on the zoning as you

22:23

know some levels of government are saying okay here we that Transit we found the wear now we're going to say

22:29

you you know we need the density there then we need the skill trade to build it so it's it's it's a layer of problems I

22:35

I view it standing in the way um and we need a we need a fully focused coordinated effort to to to bring this

22:42

to to fruition I don't know Ray or Julia how do you you know what am I

22:48

missing I I I think one of the missing pieces is the public um that you know

22:55

that that there has been a lot of um sort of reporting about the nimi you

23:00

know like people are opposing this uh you know like densification in their neighborhoods Etc and and that is you

23:09

know so and then that is part of your um you know red tape because the role of

23:15

the municipality is to you know to both get some get facilitate uh construction

23:23

but also look after their citizens and their you know their rights so I think there has to be a lot that you know

23:30

what's in in the way is really not a common understanding of where our Ci's

23:36

going um and so people need information they need they need some certainty they

23:41

need to know that they're um that their perspectives and and you know that their

23:48

real estate values or whatever are going to be actually taken care of and not undermined so so I think that there's

23:54

you know that that that becomes like oh you have to do something well no we all have to do something we have to actually

24:01

have uh you know a com a sort of perspective a common understanding from

24:06

the developers from the municipality from the citizens you know from you know supported by nonprofits or to to see

24:14

where we're going why we're going there what the value proposition is so I I think you know just too easily gets

24:21

blamed on red tape I think you're right Julie and I and I think that that idea of certainty

24:27

or predictability is a big part of it I actually think we're reaching like like a Tipping Point on on nimi there's a

24:33

much larger yimi voices particularly in in in urban centers calling for more

24:38

density more neighbors more more more development and it's great to see you know through with a little bit of

24:45

pushing in fact from the federal government under the housing accelerator fund that municipality by municipality is starting to allow four stories or

24:52

four units as of right you know across across urban areas and that's the kind of predict stability and certainty that

24:59

I think will facilitate a lot more a lot more housing construction and hopefully even more density you know along main

25:05

streets and areas the recommendations we made about how to use the housing

25:10

accelerator fund and and how to actually in fact it was about how to get most points for your application was really a

25:17

way to include that Community engagement in the application for housing

25:23

accelerator fund money because then that will streamline your time to you know

25:29

from concept to development and you just building that in and uh and showing as

25:35

it's the value that we are all going to get from this exactly and I want I want to pick up on something that Mitch has

25:41

said great great analogy about about buying a suit Mitch you know and it's so true like so much of our housing is is a

25:47

bespoke development you know a custom tailored architecturally and and constructionwise for every for every

25:54

individual side and that does drive up construction cost there's a number number of groups who are doing really

25:59

interesting stuff around around panelization and and off-site construction I think part of the next

26:04

step is to actually have um prefabricated parts and elements that an

26:09

architect can design toward you know rather than just having those bespoke parts built off site a Lego set for

26:17

example of of of housing elements the Ikea flat pack of of housing construction that can drive down those

26:23

construction costs and make it a lot easier you know 20 20 30 years ago uh 10 to 20% of housing starts were were

26:31

Co-op and and nonprofit housing construction costs and borrowing costs are so much higher now it's almost

26:37

impossible to achieve those kinds of numbers the kinds of you know great successes like like the St Lawrence

26:42

Market neighborhood in in downtown Toronto and we need to see that again and part of that is is is is Private

26:48

Industry and the nonprofit sector working together to to figure out ways of building this at good quality at

26:56

lower cost I'm surprised that you didn't talk about you know just cost overall because we're

27:02

certainly um in in the retrofit space um and certainly hearing about that in the

27:08

new construction area saying you know seeing that obviously um interest rates and and just like the the overall cost

27:15

of Labor overall cost of materials is really you know just like increasing the cost of everything and and you know so

27:24

you know I don't know what people are waiting for like are we waiting for everybody to sort of realize that costs

27:30

are going to be higher going forward or like hoping that they go down you know so I think that there's maybe a bit of a

27:37

kind of pause or you know just like not sure where to go and um you so I I don't

27:44

have the crystal ball about like The Meta Eon economic situation but you I

27:49

think that's certainly at play you know just psychologically and technically

27:54

right it it oh go ahead r I was going to say you know when I think of the idea of of doubling the pace of

28:01

housing production where we're already getting constraints and pressure on on labor Supply and on on construction

28:07

materials increasing is going to put even more pressure on those and might actually drive up the embedded cost of

28:13

construction have to rethink the way that we're doing it as well yeah I you know to the cost perspective I think

28:20

we've seen you know the market you know as of today let's you know look at it on on Market unit basis and the city of

28:28

Toronto um if you want to sell New Market housing the you know the market

28:34

has been very strong for a number of years it's it's not there right now you

28:40

you know if you're launching a condominium in the first you know say six months of marketing it more groups

28:46

are not reaching the pre pre-sale threshold they need to get Bank financing to start the project so even

28:53

if you are selling you might not be able to sell enough units to start so so that's that's challenging and on the

28:59

rental housing side um you know we have a project for example where from our

29:05

land acquisition to now the amount of equity we need to invest and that was

29:11

about two or three years amount of equity we need to invest to start the project and then borrow the money has

29:17

doubled um and these are you know these are projects in the hundreds of millions

29:23

and that you know so you're going to put up a portion of that as your Equity so you know this a the GST change helps

29:31

it's a start there's still a lot of changes and and you know in many instan you can't start the project because

29:37

quite frankly you have to go and find the money and that might be from it

29:42

could be from you know a market investor it could be from another sponsor or collaborating group so there's a lot you

29:49

know there seems to be a Hold Up In This Moment In Time on new Supply probably when we need it

29:54

most so I think what I'm hearing is there is a lot of concerns that are shared between both the for-profit and

30:01

nonprofit sector um you know concerns like labor costs costs in general financing costs um and really I'm

30:09

hearing a need for or a desire for at least uh some flexibility from the lenders um which is where maybe I can uh

30:19

help we we'll talk much um moving on to another question here um I think this is

30:26

probably best started with uh Julia um what's your view on the intersectionality of affordability and

30:34

sustainability well I guess I I probably sort of launched into that given that that's top of my thing but um I guess

30:42

just stepping back a bit the context to which I I come at this is that you know

30:48

we have multiple challenges maybe even crises we

30:54

have a climate crisis which you know that's the sort of the the main thing I I work on we have uh we've had a

31:00

pandemic so like a you know crisis we have an equity crisis we have uh you

31:07

know and we've got Rising interest rates and and you know the economic uh sort of

31:13

uncertainty and um and so in a you when you're trying to solve like these big

31:19

picture issues I I go back to a quote from Eisenhower don't like to quote the military but you know he said sometimes

31:26

if you've got a really big problem that's really hard to solve the only way to go at it is is to make it bigger and

31:34

so the the approach that that the atmospheric fund takes is like let's

31:39

multisol because carbon is not the only challenge that you know the world needs

31:45

to tackle um and people are probably in fact more worried about their economic

31:50

situation or you know their health or whatever and so if we can actually

31:55

multisolve our way through this then we'll we'll have more traction we'll

32:01

have actually more Capital because you know there's all you know there's there's different resources that go to

32:07

solve all these various problems and um and so we can we can layer and stack uh

32:14

the solutions so we need a low carbon housing we need healthy housing we need

32:20

resilient housing because climate change is getting worse we're seeing the impacts right here um and we need

32:27

affordable housing so so if we you like we should not talk about housing without

32:33

talking about all of these important objectives and finding ways to

32:40

and and and in fact what we're seeing in the retrofit space is that when we don't pay attention to these things at the

32:46

beginning they're even more expensive to deal with at the back end um it's

32:52

possible it's technically possible it's actually financially possible but it's more expensive ensive and the reality is

32:59

that if we don't build low carbon housing just speaking to the carbon side of things then uh we will never achieve

33:08

our uh climate objectives the municipal ones that many municipalities have set

33:15

the provincial ones um and the federal ones and then our contribution to the

33:20

international um Paris agreement so it's just impossible the math does not add up

33:27

um if you do not build low carbon housing so that's kind of the you know I think an agenda that we need to you and

33:35

and then you know then from the solution side like that's the problem side well it's totally possible you know I'm sure

33:41

you've seen case studies um there are organizations that specialize in this we

33:47

have documented how like healthier buildings are when you build them in a resilient and low carbon way and so then

33:55

that the the the Sol solution set has to be okay how do we pay for all of that because everybody says oh it's more

34:00

expensive well actually not really um but we have to be more creative and this

34:06

is why it's great to have a banker on the team um uh because it really is

34:11

about you know how to we stack up that money you mentioned that in your slide Eric um but even beyond that you know

34:19

something that we've been thinking about is like when we make healthier buildings in a publicly funded healthare system

34:25

that's avoided for OIP can I have some of that money now to prevent those

34:32

health challenges that will be caused by poor quality housing you know so we

34:37

don't actually we're so siloed and we have to again think bigger and and think

34:43

of like who are who all the players who need to collaborate in this agenda are

34:49

so that we can actually come out with good Solutions yeah I love that Julia essentially what I'm hearing is that the

34:56

intersection is not an intersection it's a 100% overlap um Mitch maybe I could

35:02

pass that question to you on the intersectionality of affordability and sustainability um I know I'm very

35:08

familiar with one of your projects that's uh taking a deep dive on uh sustainability and I know it's a focus

35:13

for Hallmark overall yeah thanks I was I I'm now listening to Julia I'm feeling more

35:21

inspired about it as as you know the initial thing that comes into you know

35:27

your mind is it's it's going to be more expensive and it's going to be inflationary and that you know

35:33

contradicts with delivering something that's affordable I think you know you

35:40

have to I like this think bigger or like think to the next level like you know that profit is at a point in time think

35:48

of it over a longer term you we know when we look at it it's the right

35:54

decision over the long run it's trying to you know make every decision with

36:00

that longer term view knowing that there's what's the payback period and sometimes the payback period like you

36:07

know it can be a long time and I will I'll commend you know there are

36:14

increasingly programs to help you finance that that's really what you know what developers need if they can Finance

36:21

it in a good way you know you can cover that initial it's typically an upfront Capital cost so so how can you know that

36:28

be better there's you know working with t on projects to figure that out the

36:33

Canadian infrastructure Bank you know they are and through their Partners able

36:39

to provide financing that lets you take that step further they're able to help you push further Beyond um you know what

36:48

you might normally in terms of a retrofit to get that but that this is all it's also very new and so we need

36:54

you know Partners such as yourself Eric and Julia to to help the private sector who you know will will be on you know

37:02

we'll we'll get on our Soap Box when it comes to zoning but we can be a bit one-dimensional in our thinking we need

37:08

to thinking bigger I love like I Julia that really like resonates with me we we

37:14

try and do it I think the sector you you try um but you know like I said nobody's

37:19

perfect with it you need collaborators to help you get there R if you if you don't mind I'm going to jump in with the one example which is like not new at all

37:27

in 2007 we started talking with um the condo developers because that's what was

37:35

popping up right like more and more and they were building to code not very

37:41

efficient and so we said how can we actually help you through and you know we're an investor staff is an endowment

37:47

we invest our endowment we look for a return on investment but it's like and but we look for the impact and for that

37:54

Financial Innovation so we came up with was something that basically we call the green condo loan which was basically we

38:01

provided the incremental cost of going 25% above code from an Energy Efficiency

38:09

perspective the loan was provided to the developer and then it was transferred

38:15

and it was a separate loan it was in the Declarations that there's this loan and you know it's like two or $3,000 more

38:21

per unit but in a very hot condo Market they'll buy the unit down the street if it's too or $3,000 more per unit so we

38:28

just wanted to get that out of the picture separate loan transferred to the condo Corporation upon closing they

38:35

repay taas because they're the beneficiaries of the savings so what you

38:41

and so there you go you've got what you know better Motors better lighting better installation better um uh you

38:49

like better Windows and you've got a Mor your operating cost as an owner are and

38:56

so um and then that helped the city put the trauma green standard in place

39:02

because they said oh look they can build better buildings and so they raised the bar so sometimes it's a financial

39:08

structure it's not you like it really is about creative financing yeah to do this and you know

39:15

another idea is that you can have thirdparty um energy developers so don't

39:22

put in like don't you pay for the HVAC system like the real to get a third

39:28

party to drill a bunch of holes and put in a geothermal system and then own and

39:33

operate that system it's not on your your Capital cost they own and operate

39:38

it and they're you know every and then the owners have a very affordable and efficient and low carbon system so I

39:45

think we're we're not sort of thinking up the whole picture of who can provide Capital who can actually you know we

39:52

were willing to wait eight years to be repaid on that loan you know the developer of third-party systems is

39:59

willing to go 20 years because or 30 years because that's the life of the system so you know that's the the

40:06

partnership and the and the financial structuring that can help move the dial

40:11

on this that's that's that's a brilliant model especially where it's harder to

40:16

find those Returns on investment in in in the condo Market they're easier in the rental market of course because you end up being the operative building I

40:23

want to just quickly share the story from uh several years ago I mentioned that the nonprofit that I used to work

40:28

at we were involved as a development consultant in in creating the first multi-residential passive house certified building here in Ottawa and uh

40:36

after a couple months of operation uh they got their first hydro bill and it came with Hydro inspectors because

40:41

Ottawa Hydro when they looked at the kilowatt consumption they thought the meter must be broken and we'd better

40:47

inspect it because it was just a couple of dollars for a 40 unit 40 unit building so yeah those possibilities are

40:52

there yeah and I think um that's a great way to illustr the you know sort of

40:58

wrapping up that that discussion is basically Mitch touched on taking a long-term view Julia touched on it's not

41:05

they're not two separate issues they are two issues that work in tandem um and then Ry you summing it up with that

41:11

example which is you know it might be a bit of a higher upfront cost but that Energy savings if you're operating with

41:18

affordability in mind those savings get passed directly to your tenants um you know if you're for a profit then that

41:24

gets you know hopefully right to uh your net operating income and you know it ends up with uh a higher value building

41:31

uh at the end of it and so um yeah multiple ways to attack it and Julia I I really like the um that sort of

41:37

off-balance sheet structure approach to um the geothermal it's something that bcib has done uh in the past and we

41:44

should definitely uh chat more offline about that on how we can work together better

41:49

um so I think we did have a few more prepared questions um but I think we've

41:55

covered a lot of the the discussion that um or or the topics that I was hoping to to to ask to our panelists and looking

42:01

at the clock here I'm realizing we're you know almost 15 minutes out um from wrapping up this panel so I do want to

42:07

make sure we get uh get time to um get to some audience questions and so um

42:13

just scanning through the chat here um I've got a question coming in um which reads most government uh Canadian

42:20

government real estate organizations like Canada lands infrastructure Ontario Etc have explicit legal requir to obtain

42:26

full open market value for those Government properties how can those Surplus government lands be allocated

42:32

for nonprofit affordable housing development if the nonprofits are forced to pay market value for the land um Ray

42:39

I saw you you touched on that in the chat there um but maybe you could uh elaborate for the the broader group yeah

42:45

so for example at the federal level there's there's a program called the federal lands initiative that allocates about 20 million dollar a year for the

42:52

federal government to pay itself for market value for all that Surplus Federal feral property right across the

42:57

country which is absurd right there's more than $20 million of that land a year available in Toronto alone let

43:03

alone across the whole country so we're working with the federal government to really change the thinking on that you

43:08

know sure if the accounting rules say that if you're disposing of the land you have to pay full market value don't dispose of the land lease it out to a

43:15

nonprofit or Co-op for a 99 year lease for a dollar you still retain the asset on your Valance sheet but you've

43:21

leveraged that to create the kind of affordable housing that is also your goal

43:28

great um another audience question coming in um is rather than selling

43:33

Government properties why not partner with uh pools of capital like pensions to co-own and operate these hosing

43:39

projects um you know it sort of also ties into something I wanted to touch on with uh with Mitch was about the um

43:46

potential for um Partnerships between the for-profit nonprofit sectors so um

43:52

Mitch do you have anything to to respond with to that question yeah you know I think it it you know really doves tailed

43:59

nicely into what ra just said like yeah land leas model is you know a very effective way if the Mandate is to

44:05

continue to own those you know those land you know equally the Partnerships

44:11

that could exist between the private sector and not for-profit or affordable housing providers are numerous and when

44:18

we see you know a lot of these they're coming out through requests for proposals and different offerings right

44:25

now across the city of Toronto pertaining to the Ontario line um you know there are opportunities to

44:31

collaborate uh with not for not for-profits or um you know other

44:36

providers and that's what the private sector you know should be doing I think the city you know has kind of been

44:43

thinking around we call it inclusionary zoning that means how much affordable housing is required like the answer to

44:49

that is you know yes there should be affordable housing and all these developments and like let's bring the

44:55

right part Partners to those opportunities to deliver that housing together um could there be a better

45:02

structure of selection of those providers you know maybe that's something that could happen before the

45:07

RFP goes out hey we have we have this group we've identified their need in the area do this RFP business you're going

45:14

to collaborate with to bring those parties together um that would work equally as well as you know the private

45:20

sector going out and finding those um opportunities as well um but it's you

45:25

know those more groups is better because Partnerships work they take time uh and

45:33

they need you know I'll borrow what jwi said they need big thinking and Big Ideas that go beyond you know the near-

45:40

term and S sort of to look for the long term Ray do you have anything to oh

45:46

sorry Julia go ahead please I was just thinking about like that you know that sort of the the middle little you know

45:52

like the fourplex so you know the I think the the automatic thinking is that

45:58

oh this is going to be you know people who have you know their land and they can put up like I have a a two-car

46:05

garage don't need it want to put something up there okay um but you know maybe you know I don't want to be a

46:11

landlord or you know like is there a way even for individuals to partner with

46:17

nonprofits like the scattered housing kind of approach you know so so we just haven't really kind of you know fleshed

46:25

out the full spectrum of you know the the models and um and then what that

46:32

provides you know a you could end up with like a whole bunch of inefficient fourplexes all across the city so if you

46:39

actually had a more of a a model or a partner who you know was even overseeing

46:45

or helping individuals do that then you would get you know a certain standard of

46:51

of Energy Efficiency you know we need electrification um so we shouldn't be building you know we shouldn't have new

46:57

gas connections you know like people aren't necessarily thinking of that like you need some overall sort of support

47:05

like professional support because you know the individual homeowner is not a developer um so I that that thinking

47:14

about the collaboration needs to go right from Little to Big you know all the way through

47:20

absolutely to the financing side too you know D like that's like that is in in a

47:26

little way building a laneway suite you are obtaining construction financing

47:31

which is you know like that is complicated you people AR gonna do it right like you know what they're gonna

47:37

need a helper they need yeah and to everything from how it's built and how to do yeah couldn't agree more to to

47:43

access that and then manage it on the long term you're absolutely right yeah it's uh it's great that you bring that

47:48

up Julia um yeah vcib is fortunate to work with a few groups involved in scattered housing and operating them as

47:54

nonprofit and so um I know Mitch and I were talking before this call about one

47:59

group uh that bcib um is proud to call a client and that's the Parkdale Neighborhood Land Trust and they

48:05

acquired a scattered portfolio of um something like 200 units from uh the Tron community housing scattered

48:11

portfolio when that went up for sale um a few years ago they partnered with uh

48:17

YWCA to make sure that they could be you know operated efficiently and effectively and that's speaking exactly

48:22

Julia to what you're saying of it's hard to have oneoff individual landlords but then tap into you know SSH funding um in

48:30

order to provide rent gear to income to these sort of tenants that are you know facing some real challenges in their

48:35

lives um you know vcib fortunately was able to come to the table with a pretty creative solution but we did have to

48:41

leverage um some cmhc co-investment fund money to um provide some uh renovation

48:49

financing and so this is touching on everything that you just mentioned Julie which is acquiring these assets putting

48:55

them in uh the right hands with an efficient operator um and then putting the money aside to Green these and

49:00

operate them um cleanly and as efficiently as possible in the long term um and it kind of dovetails into a

49:08

question that just popped up in the chat which is about what's the most common combination for layering grants programs

49:15

and financing to build mid or high-rise housing how can we advise clients the most effective multifaceted solution

49:22

that lenders are comfortable and familiar with um as the lender here maybe I'll start um there's not one

49:29

single answer um I think that uh one lever that is increasingly common and I

49:35

think lenders have an easier time getting their heads around um is the waiver or deferral of development

49:41

charges and being able to TW treat that as a form of equity in your development Prof fora so it's a huge one that um if

49:49

if not deferring but maybe getting those charges waved outright can make a big difference um the and the banks I think

49:55

at least vcib can um quite easily get their heads around that um after that it

50:01

gets a bit challenging and nuanced based on which grants and from which level of governments those are coming in and so

50:07

you know I mentioned private foundations granting capital for affordable housing a straightup grant which would then just

50:13

be used in the form of equity is the easiest for a lender to get uh their heads around it's also the hardest type

50:21

of funding to access um from there you have various you know cmhc um

50:28

contributions and maybe it's grants maybe it's forgivable debt um and those ones can get fairly unique in terms of

50:34

you know the construction lender likes to see uh development Pro fora and um the cash flow projections where you know

50:41

we might provide a land advance but the um our our bore was going to provide all of their cash equity and upfront now

50:47

cmhc oftentimes is has staged funding so it's something like once you're above

50:52

ground we'll Advance a certain amount once you have have you know enclosed and topped off your building will advance a

50:58

certain amount that provides challenges to lenders and so feedback that we've got historically is that sometimes um

51:04

that has been a challenge for lenders to um yeah underwrite and assess the risk effectively um but really what it comes

51:11

down to in my mind at least is that lender doing you know a full and proper

51:17

level of due diligence on what those grants and funding applications are um

51:22

if cmhc is committed um and you've got an exp experienced um owner operator or developer behind the project you can be

51:29

fairly certain that that money is coming in and uh to my mind it can be drisk quite easily with maybe a tweak to the

51:35

structure of the loan um or maybe just simply taking that afternoon to read

51:40

through 300 pages of funding agreements um Ray do you have anything to add to

51:46

that Eric I just have a question about like how do you and because you're an impact investor and you know this is of

51:52

more in our space but what do you think about like the majority of blenders how

51:57

do they take into consideration the operating costs of the building you know because I think design is important you

52:03

know you get you know like oh here's my performa but it's like your performer could be a lot

52:08

better um and it could be a lot more affordable for the ultimate owner for

52:14

the resident you know if it did XYZ and you know these are the kinds of things that we do when we get applications for

52:21

financing and we help people like so we we're more the concierge kind of um service on the

52:28

retrofit side where we even write the grant applications we'll write the applications to cmhc because we're the

52:35

experts on this and I think that's what lenders are not necessarily doing um you

52:40

know and and uh help to help the clients actually access all of that but also to

52:47

push back on them to say this could be a better project you know and I would feel more comfortable um you know

52:54

underwriting it if were like this because you know a it goes and like all the banks are sort of taking you know

53:00

saying Net Zero commitments and they want to have low carbon portfolios so they're going to have to have some

53:06

criteria about what they're going to finance as well um and I and I would say

53:11

at the front end helping their clients access all of those great um uh

53:16

resources and the third-party ones and I have another good example that I forgot to to mention as well like that can

53:23

really help reduce costs um because parking is expensive there's

53:28

lots of great ideas about how to how to reduce parking a

53:34

lot so a lot to consider there but uh yeah Julia I think um vcib takes a

53:40

similar approach likely to Taff in that um uh when we're looking at an efficient

53:46

building and what its operating costs are going to look like going forward we can um leverage our internal experience

53:52

we have a climate Finance team um which you know they were a separate entity

53:58

before that we Acquired and they do a lot of very cool work on retrofits but also um have access to a lot of um third

54:05

parties uh data on hand and also just connections that we can leverage and tap into um when needed um The Challenge I

54:12

think or a challenge um becomes you know working with cmhc and they have their benchmarks that you need to underwrite

54:18

too and sort of like raise Ottawa Hydro example which was you know we are

54:25

Engineers might say your hydro bill is going to be0 um but cmhc might say um

54:31

well we have a benchmark of $400 per unit and you have to underwrite with that even if you're expecting a z um

54:38

hydro bill um I my figures might not be right uh exactly there but I think the

54:44

theme of flexibility is is very key um Ray do you have anything to to add on

54:49

that well and and the more complicated that that Capital stack becomes if there's multiple lenders and multiple

54:54

fun it's great that we can stack those things together but the nonprofit sector is often reliant on multiple multiple

55:00

partners that way and they don't always line up right and I don't know if anyone else is a fan of old Hollywood musicals

55:06

but Jinder Rogers was was Fred a star's dance partner and someone once asked her you know how does she feel about dancing

55:12

with the great Fred stair says I do every single step he does except also backwards and wearing high heels and

55:18

sometimes that's the way we feel in the nonprofit sector I I can't say I uh truly

55:24

understand the reference they fully appreciate it there right but uh I I do think it's accurate I mean even we had a

55:30

recent I'm wearing heels now ER we we had a recent success and I think I saw somewhere in the chat here

55:37

um Mike from the auto Community Land Trust is on and um that was a recent win

55:42

for for vcib in terms of our impact mandate where it was the journey had been about a year and I know Ray you

55:48

were involved at one point um and it basically went from we're starting a land trust how do we do this to to all

55:55

right we've got some Financial backers from uh Community investors from Anonymous donors um how do we find the

56:02

financing to a a hypothetical building that we're going to acquire um and that Capital stack kept changing based on you

56:08

know changing commitments from foundations changing commitments from individuals changing interest rates changing Market rental rates um a lot of

56:14

moving pieces and um you know it was a nearly year-long Journey but um very

56:20

happy that the land trust in Ottawa was able to finally acquire their first building preserve I think was um about

56:26

six to eight units um that's preserved as affordable and perpetuity and it shows the amount of hard work and

56:31

dedication that needs to go into um something as deeply impactful as that um

56:36

hey Ray I was wondering um I I read that and I'm cooperatives are not my sort of

56:42

forte on but you know super keen on on seeing where that there was like a $1.5

56:49

billion new co-op housing development program housing and I haven't seen anything sort of emanate from that like

56:55

it was announced in the budget that would seem to be you know a really solid piece of the puzzle you know I mean

57:01

obviously that's for right across Canada um how is that playing out and you know

57:06

is there sort of layering into that that that could be you know amped up definitely and we're all just waiting

57:13

on the edges of our seats for the government to announce the release of that program um with that I think uh we

57:20

should be wary of everyone's time and schedules um so we should start to uh come to a close here um to me the

57:28

session's been very interesting to see the overlaps between um the nonprofit and the for for-profit sector but also

57:35

the um attention that should be paid to incorporating um Energy Efficiency and

57:42

climate friendly Solutions into our built World um and maybe it's something that we need to even double down on and

57:48

and think even bigger um before we log off maybe I'll just go one by one to our panelists um it's something that a

57:55

colleague of mine introduced after for some other team building sessions and that is um one word how are you feeling

58:00

after leaving this session I'll start with you MCH I was two I had two words I was

58:08

gonna say cautiously optimistic like it H Ray similar vein

58:15

encouraged Julia can I have three words let's do projects together oh that's

58:21

four hey I'm there but the one word to answer is yes yeah um yeah I'm definitely feeling very

58:29

energized myself and so um yeah with that I want to say thank you very much

58:35

uh Mitch of Hallmark Ray of the Canadian housing renewal Association and Julia of

58:40

ta and of course to Toronto region Board of Trade our hosts um please do feel free to reach out to myself and I'll

58:48

volunteer uh all my panelists as well as uh being absolutely um all right thank you very

58:54

much everyone and uh looking forward to continuing this conversation and this very meaningful work great thank you

59:00

thanks so much take care appreciate

59:06

it