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EPISODE DESCRIPTION
Episode 103: Matt and Taylor are joined by Anne McMullin. Anne is the President & CEO at the Urban Development Institute (UDI), a non-profit, non-partisan association of the development industry and its related professions, who has long advocated for transformational change. Her career has spanned over 35 years as a business leader, communications executive, and journalist. As an active voice and known thought-leader, the industry has seen the most significant change in housing policy in more than a generation through Anne's leadership.
With over 850 corporate members, the Urban Development Institute represents thousands of individuals involved in all facets of land development and planning, including: developers, property managers, financial lenders, lawyers, engineers, planners, architects, appraisers, real estate professionals, First Nations, local governments and government agencies.
Anne is here to discuss: → What the UDI does, how developers are struggling right now, and the decreased development's impact on affordability. → The crash of the housing industry, not the market, and if it can all turn around, current government policies affecting affordability, how government policy isn't always practical, and one policy change Anne would make right now. → Upcoming changes to DCC fees, if BC needs to have property transfer tax, the flaws in the new "no GST for first-time buyers" policy, and how the foreign-buyers ban is actually hurting the housing market.
Urban Development Institute Website: www.udi.org
Urban Development Institute LinkedIn: @UrbanDevelopmentInstitute
Anne McMullin's LinkedIn: @AnneMcMullin
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Welcome back to the Colonial RealEstate Podcast.
(00:01):
I'm your mortgage broker host,Taylor Atkinson.
And I'm your real estate agenthost, Matt Glenn.
What's cooking today, Taylor?Oh, cooking.
Yeah, we went to Lake House lastnight for a little cooking class.
It was incredible, man.
Really cool spot.
Your Instagram was popping off.
It looked awesome.
Yeah.
I mean, you walk out of there with
tons of confidence.
We cooked paella.
Oh, yeah.
You know, so you're like, oh, I
(00:21):
could definitely cook this athome.
But they do a bunch of the prepwork and coach you through it.
It was awesome.
I think Emily and I were the only
ones that didn't walk away withleftovers.
We ate it all.
Such a cool experience and
beautiful venue.
Like if anyone hasn't been there,
book a class.
It is a little bit more expensive.
But when you think about like.
the cost of that kitchen and the
chef and the ingredients andeverything, it's well worth it.
(00:42):
There's good value there.
Yeah, Chef Travis Pye runs a good
ship there.
runs a good ship there.
He's doing good things.
That's just one of the fun
activities we've done this summerlocally.
Nice.
We want to jump into talking about
the show.
It was an awesome show today, Anne
McMullen.
She is the president and CEO of
UDI, so Urban DevelopmentInstitute.
If you're part of... their programor have listened to them or seen
(01:03):
her on LinkedIn, like just anawesome organization.
Basically, they're like the voiceof, you know, mostly a group of
developers and professionals inthe industry.
Pretty big group of developers,though, like most of them.
Yeah, there's 850 members and theyadvocate, you know, at like a BC
provincial level with the housingminister and EB and like she's
really.
just like a great voice and hard
to be in like a balancing act inthat position, right?
(01:26):
Like most of us just sit here andkind of complain about
legislation.
She's actually providing like
solutions at a government level.
Well, she's talking to everyone
that's affected by all theseswinging rule changes and not very
well conceived rules and laws thatcome out.
Yeah.
We go into quite a few different
ones in this episode and she laysout the reasons pretty well.
Yeah.
(01:46):
I mean, one that like I thought
was, hilarious in like a badpolicy she highlighted that
developments in vancouver have tohave a million dollar allocation
to artwork for a building which isjust humorous if we're talking
about affordability and puttingunits out there.
And like, I love Vancouver, likethe artwork around those buildings
is incredible.
(02:07):
And now it kind of makes sense.
You're forcing a developer tospend a million dollars on art.
It just goes down to the endconsumer.
You know, let's say like a 50 unitbuilding, that's 20 grand a pop.
Like if someone is out therebuying, would you rather have like
20 grand off your purchase priceor like a really cool statue when
you walk into the lobby?into the lobby?
I don't know.
Well, it's funny.
(02:27):
Like the art idea is a good idea,but then you're also talking about
affordability.
It's like, okay, well, where can
we cut costs?The other one that she highlights
here is a 20 % social housingaspect and the new buildings.
And then we went into quite a bitof detail in the pod about this.
And then I heard the story aboutCurve, the big building in
Vancouver that just went intobasically foreclosing and
receivership now.
And then you read the stories and
(02:49):
like...
Just check this out.
The project was approved by Cityin Vancouver in 2022, but has yet
to reach the construction stage.
Earlier this year, the developers
secured approval to cut theplanned social housing units in
exchange for a $55 million cash inlieu payment.
So they had to pay $55 million tothe city to not have social
housing, like a luxury buildingright in probably the richest part
in Vancouver.
And then now it's a receivership.
Wonder why.
(03:09):
That is insane.
is insane.
Like that is just kind of the
theme of this show is like oneperson's not speaking to the other
person.
You know, like we need to build
units.
We need developers to like be part
of this solution.
And they're just being handcuffed
with like crazy policy.
That is so crazy.
(03:29):
Like $55 billion.
So that ups the price of all those
units.
On one hand, you're going to bitch
that the units are too expensive,but then you're also going to up
them all by, what is that?How many?
I don't even know how many unitsare in that project, but it's got
to be three or $400 ,000 a unitjust to pay for that.
pay for that.
But then where does that money go?
It gets allocated to socialhousing elsewhere in the city.
(03:49):
Yeah, I know.
I'm not sure about that.
That was a tug -of -cheek.
But now that the economy is
getting tighter and things aregetting squeezed, we get to hear
all these crazy stories and payattention to them.
And it's just like, wow.
Another funny thing about this
curve is it was just vacant lotsbefore.
It wasn't like they kicked anyoneout.
It was just a vacant house.
They're putting more housing in.
And government, in this case, thecity of Vancouver, says 55 million
bucks to not have social housingwhere it doesn't really fit in
(04:10):
anyway.
I wonder how they came up with
that number.
Yeah, honestly.
50 was two rounds, so just tack onanother five.
After a couple of beers, After acouple of beers, like, just double
it, man.
Yeah, the other point, you know,
we kind of spoke about, whichyou've spoken about, you know,
fairly passionately a bunch, isthe foreign buyer ban.
It does not make any sense.
It does not make any sense.
(04:32):
Like, especially, I understandmaybe back when, I guess, Chinese
people were buying all theexpensive houses and keeping them
vacant.
But now we have a vacant house tax
and a foreign buyer ban.
Like, just think about this
foreign buyer ban.
Like, A, what's going down in the
U .S.?We have basically an opportunity
to brain drain so much of the USso they can come to Canada, but
they can't buy a house when theyget here.
Thanks for that.
Also, she said it in the show, but
it is kind of racist to sayChinese or Asians can't buy houses
(04:54):
in Canada.
If you just look at a map, look
how big our country is.
And can't buy a house here unless
you live here.
Like what?
Yeah.
And she highlighted like it's kind
of geographical.
So, you know, in certain parts of
greater Vancouver is really whereit's being affected most.
But one, like, you know, who caresif they're buying pre
-construction development?Like that's great.
It's investment to our economy,which we need.
(05:17):
And then the other fact would be,you know, luxury homes in like
North Vancouver or something,which is like, again, who cares?
You're pumping cash into theeconomy.
cash into the economy.
Why are we just saying no to that
money?Even if it's like 100 transactions
a year, it's absolutely a drop inthe bucket.
But it's not even just like thecapital being invested in the
economy, it's the confidence.
(05:37):
Like who internationally was even
interested in investing inanything in Canada right now, let
alone housing, if like we'rerestricting them to.
So it was a really cool show.
it was a really cool show.
Okay, let's just stick on thesepre -sales.
Agreed.
So like we talk about this, like
the pre -sales, like how they getoff the ground.
We've talked about it on the show,like many episodes, developers
(05:57):
have to hit a certain amount ofsales before they can even get the
financing to build these projects.
So like when you're buying a pre
-sale, you're basically payingmoney to finance a project to put
more units on.
Right.
So when you just make it hard aspossible to do this, we need more
housing.
We need more housing.
Everyone says it.
Everyone knows it.
The path should be cleared for youto do this and not just roadblock
(06:17):
after roadblock after roadblock toget these projects off the ground.
It just does not make any sense.
Yeah.
There was also a post.
I mean, there's a bunch of
different municipalities acrossCanada, but I think Vancouver,
like new single family home saleswere down like 58 % from last
year.
It's like.
no one is building homes becauseno one's buying these homes
because they just cannot affordlike DCC fees or like artwork or
like any of these policies.
(06:37):
So anyways, I guess like, you
know, Anne's kind of in the weeds.
Speaking to developers, speaking
to government, she's kind of themiddle person, you know, trying to
find a middle ground that works.
Yeah, a lot of great stuff in this
show.
So I think you guys are going to
enjoy it.
All right.
This episode, like every episode,sponsored by Century 21 Insurance
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(06:59):
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It's a good one.
Okay.
Anne, welcome to the show.
So grateful to have you here
(07:19):
today.
Pleasure to be here.
Thank you.
First of all, can you just kind of
give us a real high level who youare and what you do?
Yes.
My name is Anne McMullen and I'm
the president and CEO of the UrbanDevelopment Institute.
which is an organization thatrepresents the commercial,
(07:40):
residential and industrialdevelopers in British Columbia.
And we advocate on behalf of theindustry and also provide
opportunities for networking andeducation for our membership.
Our membership is about 850companies.
You join UDI as a company, not asan individual.
And we represent what is thedevelopment industry.
So it'd be all the majordevelopers in British Columbia, as
well as architectural firms,engineering firms, accounting
firms.
company that is related to the
process of development.
(08:00):
Yeah, we represent literally
hundreds of thousands of peoplethroughout British Columbia.
Awesome.
Well, so yeah, you guys are
obviously have, what do you callthem?
Like an event, like in Kelowna,you're based in Kelowna,
Vancouver, where else in BC?And Victoria.
And Victoria?We have an office in Victoria, And
Victoria.
And Victoria?
We have an office in Victoria, anoffice, as you said, in Kelowna,
(08:23):
our main office, I guess, or ourhead office, downtown Vancouver.
I didn't know that you guys wereso intertwined at a government
level, advocating and givingfeedback.
And that communication line is sowell open.
So I guess is that one of yourmain jobs is to take feedback from
developers and provide a backup.
a government level and vice versa,
(08:43):
you know, when you hear policycoming down the pipeline, like
provide that to developers?Yeah, that's exactly what we do.
You know, I have a large board,but then we have a tighter
executive committee made up ofnine people and we meet monthly.
In fact, we probably meet and talkalmost every day, many of them.
That is our job is to advocate onbehalf of the industry.
And we work with all three levelsof government at the municipal
level, the provincial level andthe federal level.
And we work both with electedofficials.
(09:05):
and the regulators, thebureaucracy.
And it's just exactly as you say,whether it's policy that is being
developed by government or moreoften, we've got recommendations
of how to improve policy.
And so that is a huge part of what
we do.
And we have very strong working
relationships with all levels ofgovernment and with bureaucracy.
We've been at it a long time andour information is always factual,
data -driven, and we come up withsolid solutions.
(09:26):
And so really...
Our job is to advocate on behalf
of the industry, but also to helpthe government as well.
But also really, it's aboutcreating great communities.
Yeah.
I mean, one of your most recent
posts, it's a little bit, I don'twant to say depressing, but there
are obviously a lot of developersbeing vocal about having layoffs
and struggling right now.
Do you want to try and summarize
that post a little bit?Yes.
And I think that's the crux of theissue that we have right now is
(09:51):
the cost of building.
homes is more expensive than the
average person in British Columbiacan afford.
And as a result, we're seeing Lessprojects launching.
We're seeing less starts, lessapplications.
And as a result, we're going tostart seeing layoffs, which we've
already started to see.
So we've had enormous pressures,
of course.
We've seen rising interest rates,
although they've come down a bit.
We've had escalation in
construction costs.
And of course, labor costs always
(10:12):
go up due to inflation and cost ofliving increases.
And we can't do anything aboutthose.
But what government can play arole in is production of policies
and taxation and fees and charges.
And so now in some cases, it's
fees, taxes, charges, and evensort of cost of waiting for
processing can add up to 30 % ofthe cost of building a new home.
And when median incomes in thisprovince, household incomes are
(10:34):
about $100 ,000, when you get upto a certain price point, the
buyer can't afford it.
And we've been warning all levels
of government that we're gettingto that point.
You can't keep adding fees andcharges and costs and all these
things.
We're going to hit the ceiling.
And we've hit that ceiling for 80% of the population can only
afford up to about $850 ,000.
(10:55):
So that's why we're seeing a real
slowdown.
And the repercussions of that are
just starting to be felt becausethese things, unfortunately, take
time.
If a developer puts an application
in or maybe slows down on aproject.
or got a building permit butdoesn't go ahead with that
project, then the people that wereworking on it, you know, is the
potential of layoffs.
(11:15):
So we have seen layoffs at West
Group, at Rennie, and at othercompanies.
And I know that engineering firmsand architectural firms are all
waiting and wondering when is thisgoing to fall.
And the industry really isn't in astate of crises, but it's that
cost of how much it costs to buildand what people can afford.
So it's complicated, but in a way,it's just simple arithmetic.
(11:36):
It's just simple math.
When you're producing something
that people want but can't afford.
It doesn't get sold, so then you
don't build it.
They don't make it.
The government's been receptive toany of your suggestions or
anything?Yes, but this isn't a criticism of
government, and I don't want tocome across it, but government is
very slow.
They've got many competing
interests.
And the latest announcement, which
(11:57):
was paying the majority of thedevelopment cost charges at
occupancy rather than a buildingpermit, you're saving the interest
on that money over that three orfour year period.
You know, we've been working onthat.
We had to demonstrate it from afinancial viability perspective.
The government need to figure out,you know, what's it going to cost
the government or not going tocost the government.
And then it's got to go tocabinet.
You know, so these things justtake time.
And so it's unfortunate.
because it took time to get here
(12:17):
and not take time to unwind.
But there is receptivity.
Yes, very much so.
And some municipalities are better
than others.
And the provincial government is
not receptive to it because theydon't want to see layoffs.
But now we've got to go back tothe drawing board.
Okay, how do we do this?How do we unwind that?
You know, what are the unintendedconsequences?
So it's, well, frustrating, Iguess, because I don't like the
(12:38):
phrase, but I do feel a littlebit, we told you so, but here we
are.
So the DCC is being paid at
occupancy.
DCC is being paid at occupancy.
That's not in Kelowna.
Is that a Vancouver thing?
No, it's a British Columbia thing.
I think it starts January, 2026.
So you can pay 25 % of your DCC atbuilding permit, and then you can
hold off 75 % of the rest of itfor four years or at occupancy,
whichever comes first.
(12:59):
The developer has to take out a
surety bond to guarantee that thatmoney is paid.
So the municipalities are leftwhole.
So it's no cost to municipalitiesbecause they also have the
guarantee that it will get paid.
For the developer, what it is, is
it's saving.
the interest on that money that
they would have to borrow to payfor the DCC because they don't get
paid for the building, in a sense,until you occupy.
When you close, then you as abuyer pay.
So the development cost charge, itcould be like $30 or $40 million.
(13:22):
So you're saving, let's say, 4 .5% on $30 million or $40 million.
It all adds up.
Will this get things moving?
It might for some.
But there's been so many fees,
charges, taxes, policies that havebeen layered on over the last
number of years.
We need to change about 15 things
to really make a difference.
I mean, we've brought this up a
few times over the last two years,probably like, yeah, let's delay
DCCs until occupancy.
Seems like a no -brainer.
I guess my only question inregards to that is, is the DCC, is
(13:48):
it locked in at the time of theapplication?
Like, that's how much you pay?Or is it, you know, let's say...
They pay 25 % of the DCCs now, andthen in three years, they have
occupancy.
Is it based on the new DCC fees in
like 2028?That's right.
right.
It will depend on the
municipality, right?So, you know, like Surrey, for
instance, said they're not raisingtheir DCC fees.
(14:08):
So it will depend on themunicipality.
Have you been dealing with thisnew GST for some home buyers?
That is a rebate and not anexemption.
It's confusing because I had abuyer walk out of a deal recently
because they just didn't have thecash to pay for it to get the
rebate in the future.
Almost seems it's not really
helping the right people.
Do you have any thoughts on that?
(14:29):
I agree.
You know, governments have often
well -intentioned policies, but inpractice, so it depends, you know,
the ability of a developer too, tosay, okay, well, we'll pay it.
There's a way of almost loaning itto the buyer.
So sort of creative solutions inthat regard, because yeah, you've
got to come up with the money.
Can you go to your bank and borrow
it through a line of credit?But often as first -time
(14:49):
homebuyers, they're using theirvery last penny.
Like, I don't even have any moneyto give you so that you can give
me back.
Like, I don't have the five bucks,
I don't have the five bucks,right?
If you have the money, you don'tneed to help.
Yeah, it's like, can you loan mefive bucks?
you don't need to help.
Yeah, it's like, can you loan me
(15:10):
five bucks?I don't have five bucks to loan
you.
So even if you're going to give it
back to me, I don't have it.
But yeah, so there are sort of
creative ways of looking at, canthe developer help the first -time
homebuyer?And so once they close, you know,
then it's deducted.
So even if you're going to give it
back to me, I don't it.
So there's creative ways.
But it's a huge amount of money.
So it's you and me that are
(15:32):
ultimately paying for it throughour taxes.
But, you know, we have lobbiedfor... that it be a GST rebate on
all new homes under a milliondollars.
Because for the first time homebuyer, it's one thing, but it's
like to say you've got two peopleor two apartments and they've come
together.
Well, they're not first time home
buyers now, but they want to buysomething bigger and it doesn't
allow them to move out of or moveout their housing continuum.
Taylor and I have been talking alot about it.
It should be for all principalresidences under a million.
(15:52):
It makes sense to GST investors, Iguess, but like... I agree.
It Yeah.
I mean, can you give us some
insight on some of theconversations you're having at
government level?Like what suggestions or solutions
are you guys discussing with themor urging?
Well, there's a number, both atthe municipal level and at the
provincial level.
So one of the ones that is a
really big one is in building,you're required to have a certain
percentage.
In fact, it's 20 % of below market
rental units in a building.
So the new renter is subsidizing
essentially 20 % of inclusionaryzoning in a building.
And at this stage, when thebuilder can't even afford to build
at what the going rents are.
to lower that.
We can even lower it to 5%.
(16:12):
And it sounds like a great idea,
but when the cost of delivering aunit is more than what the average
person can pay in rent, and thenyou've got to further add more
costs because you've got to nowsubsidize 20%.
So that's a big one.
You know, I don't want to put any
sort of subjectivity on.
Sir, inclusionary zoning sounds
great.
Let's have all the high rent
people pay for the low rentpeople.
Great.
But if the money's not there,
again, if you don't have the $5 toloan, then we're not going to get
(16:33):
anything built.
And so the next thing I want to
just talk about is the rapidlyadvancing green building
standards.
Again, I'm not putting any
subjectivity to it, but it adds anenormous amount of cost.
So we're talking to the provincialgovernment about that extensively.
So when you look at green buildinginitiatives or what they call the
step code three, the new buildingcode, it's adding upwards.
(16:54):
$50 ,000 to $60 ,000 a door.
And the savings to the home buyer
or the homeowner is about $5 ,000to $10 a month.
Now, you could argue that it'ssaving things and embodied carbon
and those sort of things.
But we say, look, we need to do a
cost -benefit analysis.
What is this costing?
And what is the benefit?And as a society, that's what
we're calling for.
(17:14):
Well, then there's got to be
offsets, whether it's the autoindustry or other industries,
whether it's government subsidiesor tax -free.
You keep adding and adding andadding, you know, whether it's
triple glazing the windows and itsort of goes on and on are the
building requirements that are inplace now.
The buildings that were around,you know, that built 15 years ago
don't have those.
you could have those.
So are they less safe or are theyless green?
(17:34):
You know, so I think that when webring in these initiatives, we
really need to be mindful of whatthe costs are.
So we're adding $100 ,000 a door.
What benefit are we getting?
So the provincial government andthe environment minister have
agreed, yes, let's look at this.
Let's examine this, what is really
required and where can we perhapslower the cost.
You know, it's the mandatoryelectrification buildings, no use
of natural gas, you know, EVcharging stations, saving existing
(17:56):
trees.
So then we have to change the
routing of the parking lot or thedriveway and all that.
Then that adds more carbon fromconcrete and things.
So then we've got to pay for thatbecause we've added more carbon,
but it's because of a requirementto save one tree.
So again, I don't have to saywhether these things are good or
bad.
(18:16):
My job is to say whether the
impact and the cost it has onhousing and that delivery of
housing.
It's their job to figure out
whether this is necessary for theenvironment or not.
And if it is, at what cost?If it's costing so much that we're
not getting housing built, that'swhat we need to think about.
And the new building code as wellis requiring the 20 % of units be
(18:37):
adaptable.
Again, that adds cost.
And often they don't get rented orpurchased.
So then you're holding them forwhen somebody may or may not.
want those units.
So when you have an adaptable
unit, it has to be bigger.
There's all the changes to it that
you can imagine that go into that.
And when 20 % of them have to be,
you're adding costs.
Those are the three sort of big
ones that we're talking about.
I could rattle up a whole bunch
(18:57):
more.
Like in the city of Vancouver,
there's a public art fee of amillion dollars a building.
I saw that in one of your emails.
What is the public art fee?
You pay a million dollars to thecity towards public art, or you
can put... A million dollar artinstallation in your building, one
or the other.
Most developers will choose to do
it themselves just because, Idon't know, I want to have some
(19:19):
control.
Like affordable housing, 20 % of
these places have to be underrent, but you need to pay a
million dollars for a statue.
Yeah.
What's going on with that?Yeah, who came up with that?
Like, when was that implemented?Like, I don't understand.
It's got to get passed, right?Quite a while ago.
a while ago.
Yeah.
You know, and then saying, OK,well, we're going to reduce
parking, but you have to now giveeverybody a bus path.
Well, if they're going to go intothis building, then they probably
(19:41):
don't have a car.
So why is it our responsibility to
give them a bus path?At like the developer level, like
is there feedback?You know what?
Like we're just going to putthings on pause or are they
leaving to Alberta or the states?Like what are developers doing
right now if it just doesn'tpencil?
Well, of the above.
So pre -sale projects, wood frame,
concrete townhomes are trackingwell below pace of sales, which is
needed to get to the 70 % pre-sale threshold.
(20:02):
And some projects are just onpause.
Many projects are on pause.
In Kelowna, most are on pause.
I don't know if there's any newones coming for sale.
It's a tough one right now for thepre -sales.
Building permits in MetroVancouver and I think around the
province have dropped by about10%.
Some of them have actuallyexperienced declines of 40 % and
even as high as 85%.
permits in Metro Vancouver and I
think around the province havedropped by about 10%.
Some of them have actuallyexperienced declines of 40 % and
(20:23):
even as high as 85%.
In your opinion, do you think this
is going to actually raise pricesin the next five years because of
all this slowdown?That's the sad part.
the sad part.
There's only 20 % of the people
that can afford it.
And if there's less supply, so
then that 20 % will then becompeting for that short supply.
So then the prices will go up.
And then you're creating a bigger
delta between what's available andwhat's for sale.
Yeah.
(20:43):
I mean, you cure it frequently
from a small amount of thepopulation that's... probably
hoping that the market's going tocrash, but they're like, you know,
it's not sustainable.
These prices aren't affordable.
Like it's going to crash.
And you're like, yeah, I see where
you're coming from.
However, like supply and demand
would argue that point.
Well, I think that it's not going
to crash.
What is crashing is our ability to
build.
So it's not that the prices are
going to come way, way downbecause the cost of delivery
(21:03):
hasn't come way, way down.
So you're not going to flood the
market and lose money.
Why would you do that?
Why would you build a bunch ofbuildings when it's costing you $1
,000 a square foot to build, butpeople can only afford $1 ,850 a
square foot?So it doesn't make sense.
It's not the market's crashing,the industry's crashing.
So are prices going to come off alittle bit?
Sure.
Because with rent, the prices are
(21:24):
coming off for sure becausebuildings got built and they need
to be rented.
And so developers or builders are
renting at a loss.
And over time, the value of that
building will go up and the equityin it will be paid down.
And rents will go up a little biteach year.
So over time, if you're building abuilding and you need to collect
$5 or $6 a square foot for rent tocover your costs, you're not doing
that very often.
Rents is sort of as a $3 .50 to $4
.50 a square foot.
I mean, it's obvious people would
pay less than that, but you'regetting up there at that price.
(21:45):
If you think it's $5 a square footand you're living in a thousand
per feet, you're paying $5 ,000.
But they can't come down that
much.
And it's so much based on income.
Like I said, when there was roomin the market, when you could
build for $350 a square foot andincomes were at that $100 ,000
level, there was a room.
And so governments just kept
adding costs.
And frankly, in a way, seeing the
(22:07):
industry like an ATM just kepttaking and taking.
And we said, there's a limit here.
There's a limit.
We've reached the limit.
Oh, no, you haven't.
You keep on building.
You say that all the time.
I'm warning you.
There's a limit.
Here are the incomes.
Here are the costs.
Many of them are like, oh, I see.
OK, so how do we reduce costs?
(22:27):
Or governments lower income tax.
Interest rates can come down a bit
more, whether they will or not.
I don't know.
Income tax is going to come down.
I don't know.
PST going to come down.
I don't think so.
So unless you have more money inyour jeans or more money in the
bank or more money coming in everymonth, salaries are going to tick
(22:49):
up a little bit each year.
You know, the cost of living
allowance are going to go up 2 %per year, your salaries.
And can costs come off 2 % or 3%,3 % or 4 % over the next couple of
years?Then maybe there's some room for
some profit that you have todemonstrate to the banks that you
can realize a profit, then youwill get financing.
But you can't get financing fromthe bank unless you can
(23:12):
demonstrate that a project isgoing to be profitable.
Banks are not in the business oflosing your money or my money.
You know, they're not going toloan you that money if they think
that you're going to gounderwater.
The salary is an interesting oneto me because, yeah, it does make
more sense.
Like people do need to earn more
money compared to the expenses wehave.
But where does the salary comefrom?
Like, I feel like in Kelowna, wehave a lot of small businesses,
entrepreneurs.
So, you know, if a store down the
(23:34):
street needs to pay their employeefour bucks an hour more.
Well, who owns that store?You know, that's a direct expense
to them.
So we're just kind of like chasing
our tail in that scenario.
Well, that's how inflation...
Kind of works as everything getsmore expensive, then wages have to
go up, then things get moreexpensive, then wages go up.
And it's just kind of, yeah,exactly.
Or can you lower income tax?can you lower income tax?
But then that's less money for thegovernment.
(23:55):
And the government needs to lookat their spending and how they
spend.
And are they spending way more of
our money than they should be?Everything's connected.
Yeah, to me, that one is likestaring us right in the face.
Like the spending needs to beunder control a little bit.
Like that seems like the easiestpart of this.
But I guess when was the writingon the wall?
Like hindsight, what year was thiskind of developing where people
were like, okay, this is a seriousproblem.
(24:17):
Like it seems like we've beentalking about it forever.
Two years ago, years ago, two anda half years ago, when we started
saying, look, incomes are at thislevel and it's now costing us this
to build.
And it was two or three years ago
when projects had been launched orsales had been started and
construction costs during COVIDstarted to go up like this.
And those buildings, they sold atthis level, you know, 2021 level,
(24:38):
and they're building at 2023prices and it doesn't work.
And so we've seen foreclosures,seen companies go under.
You've probably heard about theforeclosures.
There's been buildings that aren'tgetting finished, buildings that
aren't going ahead, buildings thathave started, maybe digging a hole
and it's stopped.
And people say, oh, I see cranes
in the air.
Well, yeah, those were cranes of
projects that were sold, you know,three years ago, let's say.
And then they got their buildingpermit and then they started
construction.
And those projects may or may not
be underwater depending.
on what they sold for and what
(25:00):
contracts that they had in placefor construction costs.
So the ones that are midway, thebig companies are able to hold on.
One developer I know well,speaking with him last week, he
said 25 to 30 % of people are notclosing on the project.
So he's going to have 30 % of hisunits.
He's going to have to pay GST onthose.
You know, he's going to get thedeposit back, but the deposit's a
fraction of what it cost him.
And he's going to try to sell them
in this market.
(25:20):
And people just can't afford that
because interest rates went up.
They lost their job.
And so people are backing out ontheir purchases.
We're seeing that as well.
I guess, like, is there a light at
the end of the tunnel?I don't want to fully blame the
government.
I know that's not what we're doing
here.
But like, obviously, you know, we
kind of went through COVID.
We went through, like,
essentially.
Getting close to hyperinflation,
like, you know, some of the thingswere kind of out of their hands,
(25:42):
obviously, globally.
Are there some solutions that are
being implemented where it'salleviating some of this pain?
And, you know, you guys in yourorganization or developers are
going, yeah, if we hang tight forthe next couple of years, like we
feel there's some optimism at theend of this.
Well, I think what I would say isthat we are working extremely hard
over the next year, 18 months tomake substantial changes.
Am I optimistic?I have to be.
I have to be optimistic that wewill get change and that all of us
(26:07):
pulling together, that ourcompanies and our employees and
everybody is speaking with thegovernment, doing the research,
getting the information, sittingdown with regulators saying, this
is what we can do.
So yes, I think there will be, but
it's going to take time.
It's going to take a year to 18
months.
Like I said, the DCC change is not
(26:28):
going to be in effect right away.
It takes a bit of time for it to
be implemented.
So the light at the end of the...
tunnel is that we do get somesubstantial massive changes in
policy that income levels do go upby cost of living and that
interest rates perhaps come down abit.
That's the only thing that we'vegot.
(26:48):
That's probably two years beforethere's any substantial feeling of
relief for projects to say, okay,we got this.
It's going to take time.
But this is also a year of a
massive slowdown this year.
So then you've got to catch up.
And people say, well, where iseverybody living?
Well, they're living withroommates and in basement suites.
And there's couples living withother couples and people staying
at home, living at home longer,moving away from Vancouver, moving
away from BC.
Yeah, we're seeing a population
(27:09):
decline in BC, which is crazy.
And so when you have a population
decline, you have less peoplepaying income tax.
You're building less homes.
You've got less people paying
property tax.
Property transfer tax alone is, I
think, I'd have to go back andlook.
I should have had that stat.
But I think it was at one point as
high as $3 billion that they wouldreceive in property transfer tax.
Well, they're not going to getthat.
They're going to get probably halfthat.
(27:29):
So that's a huge hole in thegovernment budget.
And then if there's a slowdown inconstruction, if construction's at
30 % in Kelowna or Vancouver orwherever, then those are job
losses.
And that's less income tax being
paid.
And that's less product being
paid.
And that's less people working.
It's a cascading.
I don't have to explain it to you
or your viewers.
We all know what happens.
We think, oh, well, thedevelopers, no, they're just not
(27:51):
getting rich.
That's not the point.
The developers will figure outwhere to go and build or they just
won't build.
But what does that mean to you and
me and our families and childrenand people with jobs in the
construction sector or engineeringor architects?
It's hard to turn it around.
Yeah.
With property transfer tax, I'mcurious, have you heard any
Rimbling?Like, do we need it in BC?
(28:13):
Obviously it's BC and Ontario, butlike - Two or $3 billion.
I know, but like, is that notsomething we can take away?
Well, I don't disagree with you.
However, it goes back to, can the
government reduce their costs by abillion dollars?
Maybe we wouldn't need theproperty transfer tax or maybe
that could be lowered, but theyrely on it.
It's a cash cow, right?You know, you get GST on new
homes.
There's a property transfer tax.
(28:34):
It's incredible the amount oftaxation that's put on housing.
Yeah.
And people don't see it because
people could afford something,right?
But now it's even hard to afford,you know, an 800 square foot condo
in Kelowna or Victoria and themarkets, you know, and the cost of
construction probably is moreexpensive in Kelowna than in the
lower mainland.
What about something like the
foreign buyer's ban?When I look at this and I think
(28:54):
about what the beefing right nowwith the U .S.
and what's happening, it feelslike it's a massive opportunity
for us to brain drain the USA, butthey're not allowed to come here
and buy a house.
It just doesn't make any sense to
me, at least from south of theborder.
I don't know about East or West,but what's your opinion on this?
We've been opposed to foreignbuyers tax since Christy Clark
brought it in all those years ago.
(29:14):
It doesn't do anything.
First of all, in our opinion, itwas a racist thing to do because
they were seeing certain peoplebuying up these big single family
homes on the West side ofVancouver.
Yeah.
It's ridiculous.
It didn't help.
In fact, it hindered.
None of these taxes helped.
We warned them.
You add on all these taxes,whether it's foreign buyers tax,
speculation tax, additional schooltax.
You can't tax your way toaffordability.
(29:35):
And we told them, you're justgoing to raise prices because it's
going to limit supply.
Yeah.
But with the foreign buyers tax orthe foreign buyers ban.
with the foreign buyers tax or theforeign buyers ban.
Yeah, Yeah, it's a ban.
It's not even a tax.
It's a ban.
It's access to equity.
access to equity.
Why are we banning equity in the
development of housing?It's a huge risk to develop.
we a tall building or a building,you know, you build a single
family home, it's a risk, butthink about the tens of millions
(29:59):
of dollars that go into amultifamily development.
And if we're only allowed to useCanadian money, and it's just
Canadian money swirling around,you know, we need to have an
influx of an investment in ourcountry, an investment in our
industries, you know, aninvestment, whether it's natural
gas or, you know, forestry ormining or whatever it is.
You know, the auto industry, thesteel industry, you need foreign
(30:19):
investment.
You need money to come to our
country.
You know, our leaders go on trade
missions to other countries toencourage them to invest in this
country.
Yeah, but don't buy a house.
Don't invest in the multi -billiondollar housing industry because
somehow that's wrong.
because somehow that's wrong.
I agree with you.
I honestly, I've tried to figure
it out and it just makes no senseat all.
And then politicians will say,well, it's popular.
(30:40):
You know, the public is supportiveof it.
Well, is that how we make policyin this country, in this world?
If we always went with what'spopular, maybe we wouldn't be
making decisions for theminorities or the least
advantaged.
Policy should not necessarily be
about what's popular.
And if it's the right thing to do,
and if that's what we need, weneed foreign capital in our
market.
I talked about all these policies
and regulations.
Access to capital is the biggest
(31:00):
stumbling block because if youcan't get your financing, you
can't get your project.
And you've got to sell a
multifamily building within 12 to18 months.
And if it's a large, tallbuilding, it's almost impossible
right now to sell 70 % or 80 % ofit.
And you have no other way toaccess capital.
Like it seems like in the last fewyears, everything's been purpose
-built rentals, MI Select.
that type of funding.
I guess two questions.
Do you feel that that's maybe been
a little oversaturated and they'vereally just focused on that?
(31:21):
Or is there asset class that theyare not focusing on that they
should be?Stratified condo properties,
single family homes.
There's no creative type funding
by the government to supportdevelopers on those asset classes.
Should there be?And is there anything coming down
the pipe on that?Yeah, I don't know if it's
oversaturated, the rental market,but, you know, took advantage of
it.
We hadn't built rental in this
country or in this province fordecades properly.
But, you know, now the MLA selectprogram has changed again.
And now the charges for thatinsurance have gone way, way up.
Something that program is done.
(31:43):
We've said that to the government,
you know, even if they'reinvestors.
So, you know, again, the investoris bad to buy a condo and sort of
profit from it.
was seen as bad.
Whereas you buy a condo and youput it into the rental pool and
you leave in the rental pool for20 years.
Yes, you made some money on it,but I don't see why we demonize
that.
So we said, okay, if you really
don't want people flipping, whatif investors could purchase?
(32:05):
And they would get the GST rebateas long as it stayed in the rental
pool for a certain number ofyears.
So we did get the GST rebate onpurpose -built rental, but only if
you're building it for a certainnumber of units.
But if you bought a couple ofunits and you're renting them out
and there's a small mom and popoperation, what's wrong with that?
But somehow we don't want that,but nor do we want the big REITs
(32:28):
or the big foreign investments.
So where's the money coming from?
So yes, there are ways we believethat you can.
incentivize all forms of housing.
A lot of it is getting the
policies, the layering andlayering of policies out of the
way.
You don't have so many of these
requirements.
You've got so many of these
requirements, like I said, whetherit's green building initiatives,
EV charging, when we don't evenhave access to the power.
we did Yeah.
I mean, that's been a topic in
(32:49):
Kelowna is like, are we going tohave enough power in the next
couple of years to fulfill any ofthese projects?
So yeah, EV charging may not benecessary.
may not be necessary.
And then soil relocation.
These things to the averageperson.
They just want a nice home with anice fixtures and things.
But these are the things that wehave to deal with is now we have
nowhere to dump soil because onthe agricultural land, it doesn't
(33:10):
meet the requirements, even thoughit's clean soil or we don't have
enough dumping sites.
So now you're having to truck
stuff for 30, 40 kilometers orthere's nowhere to dump it.
And how is that stating theenvironment?
And so we have had a meeting.
We did just have a meeting with
the minister last week.
It's OK.
We see the problem.
And, you know, we need to create
(33:31):
more dumping sites on Crown landor in other areas because that
adds costs.
You know, you've got to hire the
truck.
The truck is driving for literally
hours.
And then you've got to dump it
somewhere else in the Okanagan andsomeplace.
They don't have any dumping sites.
I mean, on the island, they're
having to truck it up and over theMalahat, you know, for a couple of
hours.
So those are sort of things like
(33:51):
it sounds like a really good idea.
Oh, yes.
Well, that soil doesn't match thatsoil or this.
So you can only dump soil on theagricultural land if it's.
soil fit for food production, eventhough the soil is actually
probably completely fine, but itmight be just 0 .01 % more
salinity that or something likethat.
There isn't that subjectivity.
Salinity levels, you know, the
soil can't go there.
Well, it just came from here.
Why can't I put it over there?Well, you know, so those are the
(34:12):
kind of rules that you're upagainst that you say, who came up
with these?You know, good intention, but not
looking at the cost.
And when there was, as I say, room
in the system, when there wasenough profit, I suppose, in the
system that could pay for thatstuff.
But those days are gone.
Yeah.
At the federal level andprovincial, you know, in the last
year, we've had new leadership,not new parties, but new
leadership.
Do you feel that that leadership
(34:32):
in their campaigns, like thepromises they've made are now
following through with thosepromises?
Like, is it still going in thedirection that?
people voted for?At the federal level, it's too
early to tell.
But the wheels and the machines of
government are going in thatdirection.
They're not huge changes, right?The GFT relaxation talked about,
you know, and then theinfrastructure sort of paying for
half of the DCC, half thedevelopment cost charge.
(34:53):
But the amount of money that wasearmarked in the federal budget
wouldn't pay for even half of whatthat is.
So at the provincial level, therewas a lot of really substantial
and good work that was done onchanges in legislation.
But then at the same time, youknow, interest rates went up.
And the cost of housing deliverywent up, as well as the new
building code that came in, whichis adding 10 to 15 percent.
Building step code three,increasing the DCCs at all levels.
(35:15):
There was some good work done.
But now in order to have that
legislation work, we need to takea lot of the costs out of the
system.
Provincial government is saying,
oh, we didn't realize.
I guess they were told that people
were still making money.
So how could it possibly be a
problem?And I said to once, the deputy
minister says, it's just math.
It's just money.
And I said, you know, if it costsmore to build than someone can
afford, it doesn't get built.
(35:36):
And they went, OK, OK, you know,
so people complicate housing.
You know, it's an answer to
homelessness.
It's the answer to adaptability.
It's the answer to the state andthe environment.
Now, we're just trying to gethousing built.
Let's make housing a priority andensure that it is safe, you know,
sustainable, accessible.
But if we're bringing the policies
to achieve those things and itcosts more to get it built.
then we need to look at that.
Then we need to rethink that.
(35:56):
So to answer your question, Ithink that there is a recognition
and I just have to be hopeful, butit's a lot of work.
I mean, I don't know if I've neverworked so hard or I've never
worked in such a frustrating,difficult environment in my
career.
It's hard.
It's really hard.
And you know what needs to be done
and that you know it's going totake time, you know, stuff to see
people lose money.
If you could just make...
One policy change, one rule,anything like a change that would
(36:18):
be implemented tomorrow, whetherthat's removing current
legislation policy or, you know,implementing something, what do
you think would be the biggestneedle mover?
Well, in the lower mainlandanyway, I think it would be
removing the requirement for 20 %inclusionary zoning, at least
until things turn around.
And I think that other big ones,
certainly in the Okanagan,Victoria, the costs are associated
with the new building code.
There has to be a financial
offset.
You can add 10 % to the cost of
building with governmentrequirements without compensation
(36:40):
or offset.
Well, honestly, this has been
awesome.
Yeah, I've really been looking
forward to this conversation.
And yeah, you did not disappoint.
So thank you so much for comingon.
Hopefully we'll see you next timeyou're up in Kelowna at one of the
meetings.
of the meetings.
Definitely.
We appreciate this.
And it was really a pleasure totalk with you too.
Welcome back to the Colonial RealEstate Podcast.
(00:01):
I'm your mortgage broker host,Taylor Atkinson.
And I'm your real estate agenthost, Matt Glenn.
What's cooking today, Taylor?Oh, cooking.
Yeah, we went to Lake House lastnight for a little cooking class.
It was incredible, man.
Really cool spot.
Your Instagram was popping off.
It looked awesome.
Yeah.
I mean, you walk out of there with
tons of confidence.
We cooked paella.
Oh, yeah.
You know, so you're like, oh, I
(00:21):
could definitely cook this athome.
But they do a bunch of the prepwork and coach you through it.
It was awesome.
I think Emily and I were the only
ones that didn't walk away withleftovers.
We ate it all.
Such a cool experience and
beautiful venue.
Like if anyone hasn't been there,
book a class.
It is a little bit more expensive.
But when you think about like.
the cost of that kitchen and the
chef and the ingredients andeverything, it's well worth it.
(00:42):
There's good value there.
Yeah, Chef Travis Pye runs a good
ship there.
runs a good ship there.
He's doing good things.
That's just one of the fun
activities we've done this summerlocally.
Nice.
We want to jump into talking about
the show.
It was an awesome show today, Anne
McMullen.
She is the president and CEO of
UDI, so Urban DevelopmentInstitute.
If you're part of... their programor have listened to them or seen
(01:03):
her on LinkedIn, like just anawesome organization.
Basically, they're like the voiceof, you know, mostly a group of
developers and professionals inthe industry.
Pretty big group of developers,though, like most of them.
Yeah, there's 850 members and theyadvocate, you know, at like a BC
provincial level with the housingminister and EB and like she's
really.
just like a great voice and hard
to be in like a balancing act inthat position, right?
(01:26):
Like most of us just sit here andkind of complain about
legislation.
She's actually providing like
solutions at a government level.
Well, she's talking to everyone
that's affected by all theseswinging rule changes and not very
well conceived rules and laws thatcome out.
Yeah.
We go into quite a few different
ones in this episode and she laysout the reasons pretty well.
Yeah.
(01:46):
I mean, one that like I thought
was, hilarious in like a badpolicy she highlighted that
developments in vancouver have tohave a million dollar allocation
to artwork for a building which isjust humorous if we're talking
about affordability and puttingunits out there.
And like, I love Vancouver, likethe artwork around those buildings
is incredible.
(02:07):
And now it kind of makes sense.
You're forcing a developer tospend a million dollars on art.
It just goes down to the endconsumer.
You know, let's say like a 50 unitbuilding, that's 20 grand a pop.
Like if someone is out therebuying, would you rather have like
20 grand off your purchase priceor like a really cool statue when
you walk into the lobby?into the lobby?
I don't know.
Well, it's funny.
(02:27):
Like the art idea is a good idea,but then you're also talking about
affordability.
It's like, okay, well, where can
we cut costs?The other one that she highlights
here is a 20 % social housingaspect and the new buildings.
And then we went into quite a bitof detail in the pod about this.
And then I heard the story aboutCurve, the big building in
Vancouver that just went intobasically foreclosing and
receivership now.
And then you read the stories and
(02:49):
like...
Just check this out.
The project was approved by Cityin Vancouver in 2022, but has yet
to reach the construction stage.
Earlier this year, the developers
secured approval to cut theplanned social housing units in
exchange for a $55 million cash inlieu payment.
So they had to pay $55 million tothe city to not have social
housing, like a luxury buildingright in probably the richest part
in Vancouver.
And then now it's a receivership.
Wonder why.
(03:09):
That is insane.
is insane.
Like that is just kind of the
theme of this show is like oneperson's not speaking to the other
person.
You know, like we need to build
units.
We need developers to like be part
of this solution.
And they're just being handcuffed
with like crazy policy.
That is so crazy.
(03:29):
Like $55 billion.
So that ups the price of all those
units.
On one hand, you're going to bitch
that the units are too expensive,but then you're also going to up
them all by, what is that?How many?
I don't even know how many unitsare in that project, but it's got
to be three or $400 ,000 a unitjust to pay for that.
pay for that.
But then where does that money go?
It gets allocated to socialhousing elsewhere in the city.
(03:49):
Yeah, I know.
I'm not sure about that.
That was a tug -of -cheek.
But now that the economy is
getting tighter and things aregetting squeezed, we get to hear
all these crazy stories and payattention to them.
And it's just like, wow.
Another funny thing about this
curve is it was just vacant lotsbefore.
It wasn't like they kicked anyoneout.
It was just a vacant house.
They're putting more housing in.
And government, in this case, thecity of Vancouver, says 55 million
bucks to not have social housingwhere it doesn't really fit in
(04:10):
anyway.
I wonder how they came up with
that number.
Yeah, honestly.
50 was two rounds, so just tack onanother five.
After a couple of beers, After acouple of beers, like, just double
it, man.
Yeah, the other point, you know,
we kind of spoke about, whichyou've spoken about, you know,
fairly passionately a bunch, isthe foreign buyer ban.
It does not make any sense.
It does not make any sense.
(04:32):
Like, especially, I understandmaybe back when, I guess, Chinese
people were buying all theexpensive houses and keeping them
vacant.
But now we have a vacant house tax
and a foreign buyer ban.
Like, just think about this
foreign buyer ban.
Like, A, what's going down in the
U .S.?We have basically an opportunity
to brain drain so much of the USso they can come to Canada, but
they can't buy a house when theyget here.
Thanks for that.
Also, she said it in the show, but
it is kind of racist to sayChinese or Asians can't buy houses
(04:54):
in Canada.
If you just look at a map, look
how big our country is.
And can't buy a house here unless
you live here.
Like what?
Yeah.
And she highlighted like it's kind
of geographical.
So, you know, in certain parts of
greater Vancouver is really whereit's being affected most.
But one, like, you know, who caresif they're buying pre
-construction development?Like that's great.
It's investment to our economy,which we need.
(05:17):
And then the other fact would be,you know, luxury homes in like
North Vancouver or something,which is like, again, who cares?
You're pumping cash into theeconomy.
cash into the economy.
Why are we just saying no to that
money?Even if it's like 100 transactions
a year, it's absolutely a drop inthe bucket.
But it's not even just like thecapital being invested in the
economy, it's the confidence.
(05:37):
Like who internationally was even
interested in investing inanything in Canada right now, let
alone housing, if like we'rerestricting them to.
So it was a really cool show.
it was a really cool show.
Okay, let's just stick on thesepre -sales.
Agreed.
So like we talk about this, like
the pre -sales, like how they getoff the ground.
We've talked about it on the show,like many episodes, developers
(05:57):
have to hit a certain amount ofsales before they can even get the
financing to build these projects.
So like when you're buying a pre
-sale, you're basically payingmoney to finance a project to put
more units on.
Right.
So when you just make it hard aspossible to do this, we need more
housing.
We need more housing.
Everyone says it.
Everyone knows it.
The path should be cleared for youto do this and not just roadblock
(06:17):
after roadblock after roadblock toget these projects off the ground.
It just does not make any sense.
Yeah.
There was also a post.
I mean, there's a bunch of
different municipalities acrossCanada, but I think Vancouver,
like new single family home saleswere down like 58 % from last
year.
It's like.
no one is building homes becauseno one's buying these homes
because they just cannot affordlike DCC fees or like artwork or
like any of these policies.
(06:37):
So anyways, I guess like, you
know, Anne's kind of in the weeds.
Speaking to developers, speaking
to government, she's kind of themiddle person, you know, trying to
find a middle ground that works.
Yeah, a lot of great stuff in this
show.
So I think you guys are going to
enjoy it.
All right.
This episode, like every episode,sponsored by Century 21 Insurance
Realty, the best brokerage in theinterior of BC.
(06:59):
We're growing.
We have property management,
sales, residential, andcommercial.
We're in it.
We are putting offices in
Salmonar, Vernon, Creston,Castlegar.
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So if you're a buyer or sellerlooking for an agent, give us a
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a brokerage, give us a call andenjoy the episode.
It's a good one.
Okay.
Anne, welcome to the show.
So grateful to have you here
(07:19):
today.
Pleasure to be here.
Thank you.
First of all, can you just kind of
give us a real high level who youare and what you do?
Yes.
My name is Anne McMullen and I'm
the president and CEO of the UrbanDevelopment Institute.
which is an organization thatrepresents the commercial,
(07:40):
residential and industrialdevelopers in British Columbia.
And we advocate on behalf of theindustry and also provide
opportunities for networking andeducation for our membership.
Our membership is about 850companies.
You join UDI as a company, not asan individual.
And we represent what is thedevelopment industry.
So it'd be all the majordevelopers in British Columbia, as
well as architectural firms,engineering firms, accounting
firms.
company that is related to the
process of development.
(08:00):
Yeah, we represent literally
hundreds of thousands of peoplethroughout British Columbia.
Awesome.
Well, so yeah, you guys are
obviously have, what do you callthem?
Like an event, like in Kelowna,you're based in Kelowna,
Vancouver, where else in BC?And Victoria.
And Victoria?We have an office in Victoria, And
Victoria.
And Victoria?
We have an office in Victoria, anoffice, as you said, in Kelowna,
(08:23):
our main office, I guess, or ourhead office, downtown Vancouver.
I didn't know that you guys wereso intertwined at a government
level, advocating and givingfeedback.
And that communication line is sowell open.
So I guess is that one of yourmain jobs is to take feedback from
developers and provide a backup.
a government level and vice versa,
(08:43):
you know, when you hear policycoming down the pipeline, like
provide that to developers?Yeah, that's exactly what we do.
You know, I have a large board,but then we have a tighter
executive committee made up ofnine people and we meet monthly.
In fact, we probably meet and talkalmost every day, many of them.
That is our job is to advocate onbehalf of the industry.
And we work with all three levelsof government at the municipal
level, the provincial level andthe federal level.
And we work both with electedofficials.
(09:05):
and the regulators, thebureaucracy.
And it's just exactly as you say,whether it's policy that is being
developed by government or moreoften, we've got recommendations
of how to improve policy.
And so that is a huge part of what
we do.
And we have very strong working
relationships with all levels ofgovernment and with bureaucracy.
We've been at it a long time andour information is always factual,
data -driven, and we come up withsolid solutions.
(09:26):
And so really...
Our job is to advocate on behalf
of the industry, but also to helpthe government as well.
But also really, it's aboutcreating great communities.
Yeah.
I mean, one of your most recent
posts, it's a little bit, I don'twant to say depressing, but there
are obviously a lot of developersbeing vocal about having layoffs
and struggling right now.
Do you want to try and summarize
that post a little bit?Yes.
And I think that's the crux of theissue that we have right now is
(09:51):
the cost of building.
homes is more expensive than the
average person in British Columbiacan afford.
And as a result, we're seeing Lessprojects launching.
We're seeing less starts, lessapplications.
And as a result, we're going tostart seeing layoffs, which we've
already started to see.
So we've had enormous pressures,
of course.
We've seen rising interest rates,
although they've come down a bit.
We've had escalation in
construction costs.
And of course, labor costs always
(10:12):
go up due to inflation and cost ofliving increases.
And we can't do anything aboutthose.
But what government can play arole in is production of policies
and taxation and fees and charges.
And so now in some cases, it's
fees, taxes, charges, and evensort of cost of waiting for
processing can add up to 30 % ofthe cost of building a new home.
And when median incomes in thisprovince, household incomes are
(10:34):
about $100 ,000, when you get upto a certain price point, the
buyer can't afford it.
And we've been warning all levels
of government that we're gettingto that point.
You can't keep adding fees andcharges and costs and all these
things.
We're going to hit the ceiling.
And we've hit that ceiling for 80% of the population can only
afford up to about $850 ,000.
(10:55):
So that's why we're seeing a real
slowdown.
And the repercussions of that are
just starting to be felt becausethese things, unfortunately, take
time.
If a developer puts an application
in or maybe slows down on aproject.
or got a building permit butdoesn't go ahead with that
project, then the people that wereworking on it, you know, is the
potential of layoffs.
(11:15):
So we have seen layoffs at West
Group, at Rennie, and at othercompanies.
And I know that engineering firmsand architectural firms are all
waiting and wondering when is thisgoing to fall.
And the industry really isn't in astate of crises, but it's that
cost of how much it costs to buildand what people can afford.
So it's complicated, but in a way,it's just simple arithmetic.
(11:36):
It's just simple math.
When you're producing something
that people want but can't afford.
It doesn't get sold, so then you
don't build it.
They don't make it.
The government's been receptive toany of your suggestions or
anything?Yes, but this isn't a criticism of
government, and I don't want tocome across it, but government is
very slow.
They've got many competing
interests.
And the latest announcement, which
(11:57):
was paying the majority of thedevelopment cost charges at
occupancy rather than a buildingpermit, you're saving the interest
on that money over that three orfour year period.
You know, we've been working onthat.
We had to demonstrate it from afinancial viability perspective.
The government need to figure out,you know, what's it going to cost
the government or not going tocost the government.
And then it's got to go tocabinet.
You know, so these things justtake time.
And so it's unfortunate.
because it took time to get here
(12:17):
and not take time to unwind.
But there is receptivity.
Yes, very much so.
And some municipalities are better
than others.
And the provincial government is
not receptive to it because theydon't want to see layoffs.
But now we've got to go back tothe drawing board.
Okay, how do we do this?How do we unwind that?
You know, what are the unintendedconsequences?
So it's, well, frustrating, Iguess, because I don't like the
(12:38):
phrase, but I do feel a littlebit, we told you so, but here we
are.
So the DCC is being paid at
occupancy.
DCC is being paid at occupancy.
That's not in Kelowna.
Is that a Vancouver thing?
No, it's a British Columbia thing.
I think it starts January, 2026.
So you can pay 25 % of your DCC atbuilding permit, and then you can
hold off 75 % of the rest of itfor four years or at occupancy,
whichever comes first.
(12:59):
The developer has to take out a
surety bond to guarantee that thatmoney is paid.
So the municipalities are leftwhole.
So it's no cost to municipalitiesbecause they also have the
guarantee that it will get paid.
For the developer, what it is, is
it's saving.
the interest on that money that
they would have to borrow to payfor the DCC because they don't get
paid for the building, in a sense,until you occupy.
When you close, then you as abuyer pay.
So the development cost charge, itcould be like $30 or $40 million.
(13:22):
So you're saving, let's say, 4 .5% on $30 million or $40 million.
It all adds up.
Will this get things moving?
It might for some.
But there's been so many fees,
charges, taxes, policies that havebeen layered on over the last
number of years.
We need to change about 15 things
to really make a difference.
I mean, we've brought this up a
few times over the last two years,probably like, yeah, let's delay
DCCs until occupancy.
Seems like a no -brainer.
I guess my only question inregards to that is, is the DCC, is
(13:48):
it locked in at the time of theapplication?
Like, that's how much you pay?Or is it, you know, let's say...
They pay 25 % of the DCCs now, andthen in three years, they have
occupancy.
Is it based on the new DCC fees in
like 2028?That's right.
right.
It will depend on the
municipality, right?So, you know, like Surrey, for
instance, said they're not raisingtheir DCC fees.
(14:08):
So it will depend on themunicipality.
Have you been dealing with thisnew GST for some home buyers?
That is a rebate and not anexemption.
It's confusing because I had abuyer walk out of a deal recently
because they just didn't have thecash to pay for it to get the
rebate in the future.
Almost seems it's not really
helping the right people.
Do you have any thoughts on that?
(14:29):
I agree.
You know, governments have often
well -intentioned policies, but inpractice, so it depends, you know,
the ability of a developer too, tosay, okay, well, we'll pay it.
There's a way of almost loaning itto the buyer.
So sort of creative solutions inthat regard, because yeah, you've
got to come up with the money.
Can you go to your bank and borrow
it through a line of credit?But often as first -time
(14:49):
homebuyers, they're using theirvery last penny.
Like, I don't even have any moneyto give you so that you can give
me back.
Like, I don't have the five bucks,
I don't have the five bucks,right?
If you have the money, you don'tneed to help.
Yeah, it's like, can you loan mefive bucks?
you don't need to help.
Yeah, it's like, can you loan me
(15:10):
five bucks?I don't have five bucks to loan
you.
So even if you're going to give it
back to me, I don't have it.
But yeah, so there are sort of
creative ways of looking at, canthe developer help the first -time
homebuyer?And so once they close, you know,
then it's deducted.
So even if you're going to give it
back to me, I don't it.
So there's creative ways.
But it's a huge amount of money.
So it's you and me that are
(15:32):
ultimately paying for it throughour taxes.
But, you know, we have lobbiedfor... that it be a GST rebate on
all new homes under a milliondollars.
Because for the first time homebuyer, it's one thing, but it's
like to say you've got two peopleor two apartments and they've come
together.
Well, they're not first time home
buyers now, but they want to buysomething bigger and it doesn't
allow them to move out of or moveout their housing continuum.
Taylor and I have been talking alot about it.
It should be for all principalresidences under a million.
(15:52):
It makes sense to GST investors, Iguess, but like... I agree.
It Yeah.
I mean, can you give us some
insight on some of theconversations you're having at
government level?Like what suggestions or solutions
are you guys discussing with themor urging?
Well, there's a number, both atthe municipal level and at the
provincial level.
So one of the ones that is a
really big one is in building,you're required to have a certain
percentage.
In fact, it's 20 % of below market
rental units in a building.
So the new renter is subsidizing
essentially 20 % of inclusionaryzoning in a building.
And at this stage, when thebuilder can't even afford to build
at what the going rents are.
to lower that.
We can even lower it to 5%.
(16:12):
And it sounds like a great idea,
but when the cost of delivering aunit is more than what the average
person can pay in rent, and thenyou've got to further add more
costs because you've got to nowsubsidize 20%.
So that's a big one.
You know, I don't want to put any
sort of subjectivity on.
Sir, inclusionary zoning sounds
great.
Let's have all the high rent
people pay for the low rentpeople.
Great.
But if the money's not there,
again, if you don't have the $5 toloan, then we're not going to get
(16:33):
anything built.
And so the next thing I want to
just talk about is the rapidlyadvancing green building
standards.
Again, I'm not putting any
subjectivity to it, but it adds anenormous amount of cost.
So we're talking to the provincialgovernment about that extensively.
So when you look at green buildinginitiatives or what they call the
step code three, the new buildingcode, it's adding upwards.
(16:54):
$50 ,000 to $60 ,000 a door.
And the savings to the home buyer
or the homeowner is about $5 ,000to $10 a month.
Now, you could argue that it'ssaving things and embodied carbon
and those sort of things.
But we say, look, we need to do a
cost -benefit analysis.
What is this costing?
And what is the benefit?And as a society, that's what
we're calling for.
(17:14):
Well, then there's got to be
offsets, whether it's the autoindustry or other industries,
whether it's government subsidiesor tax -free.
You keep adding and adding andadding, you know, whether it's
triple glazing the windows and itsort of goes on and on are the
building requirements that are inplace now.
The buildings that were around,you know, that built 15 years ago
don't have those.
you could have those.
So are they less safe or are theyless green?
(17:34):
You know, so I think that when webring in these initiatives, we
really need to be mindful of whatthe costs are.
So we're adding $100 ,000 a door.
What benefit are we getting?
So the provincial government andthe environment minister have
agreed, yes, let's look at this.
Let's examine this, what is really
required and where can we perhapslower the cost.
You know, it's the mandatoryelectrification buildings, no use
of natural gas, you know, EVcharging stations, saving existing
(17:56):
trees.
So then we have to change the
routing of the parking lot or thedriveway and all that.
Then that adds more carbon fromconcrete and things.
So then we've got to pay for thatbecause we've added more carbon,
but it's because of a requirementto save one tree.
So again, I don't have to saywhether these things are good or
bad.
(18:16):
My job is to say whether the
impact and the cost it has onhousing and that delivery of
housing.
It's their job to figure out
whether this is necessary for theenvironment or not.
And if it is, at what cost?If it's costing so much that we're
not getting housing built, that'swhat we need to think about.
And the new building code as wellis requiring the 20 % of units be
(18:37):
adaptable.
Again, that adds cost.
And often they don't get rented orpurchased.
So then you're holding them forwhen somebody may or may not.
want those units.
So when you have an adaptable
unit, it has to be bigger.
There's all the changes to it that
you can imagine that go into that.
And when 20 % of them have to be,
you're adding costs.
Those are the three sort of big
ones that we're talking about.
I could rattle up a whole bunch
(18:57):
more.
Like in the city of Vancouver,
there's a public art fee of amillion dollars a building.
I saw that in one of your emails.
What is the public art fee?
You pay a million dollars to thecity towards public art, or you
can put... A million dollar artinstallation in your building, one
or the other.
Most developers will choose to do
it themselves just because, Idon't know, I want to have some
(19:19):
control.
Like affordable housing, 20 % of
these places have to be underrent, but you need to pay a
million dollars for a statue.
Yeah.
What's going on with that?Yeah, who came up with that?
Like, when was that implemented?Like, I don't understand.
It's got to get passed, right?Quite a while ago.
a while ago.
Yeah.
You know, and then saying, OK,well, we're going to reduce
parking, but you have to now giveeverybody a bus path.
Well, if they're going to go intothis building, then they probably
(19:41):
don't have a car.
So why is it our responsibility to
give them a bus path?At like the developer level, like
is there feedback?You know what?
Like we're just going to putthings on pause or are they
leaving to Alberta or the states?Like what are developers doing
right now if it just doesn'tpencil?
Well, of the above.
So pre -sale projects, wood frame,
concrete townhomes are trackingwell below pace of sales, which is
needed to get to the 70 % pre-sale threshold.
(20:02):
And some projects are just onpause.
Many projects are on pause.
In Kelowna, most are on pause.
I don't know if there's any newones coming for sale.
It's a tough one right now for thepre -sales.
Building permits in MetroVancouver and I think around the
province have dropped by about10%.
Some of them have actuallyexperienced declines of 40 % and
even as high as 85%.
permits in Metro Vancouver and I
think around the province havedropped by about 10%.
Some of them have actuallyexperienced declines of 40 % and
(20:23):
even as high as 85%.
In your opinion, do you think this
is going to actually raise pricesin the next five years because of
all this slowdown?That's the sad part.
the sad part.
There's only 20 % of the people
that can afford it.
And if there's less supply, so
then that 20 % will then becompeting for that short supply.
So then the prices will go up.
And then you're creating a bigger
delta between what's available andwhat's for sale.
Yeah.
(20:43):
I mean, you cure it frequently
from a small amount of thepopulation that's... probably
hoping that the market's going tocrash, but they're like, you know,
it's not sustainable.
These prices aren't affordable.
Like it's going to crash.
And you're like, yeah, I see where
you're coming from.
However, like supply and demand
would argue that point.
Well, I think that it's not going
to crash.
What is crashing is our ability to
build.
So it's not that the prices are
going to come way, way downbecause the cost of delivery
(21:03):
hasn't come way, way down.
So you're not going to flood the
market and lose money.
Why would you do that?
Why would you build a bunch ofbuildings when it's costing you $1
,000 a square foot to build, butpeople can only afford $1 ,850 a
square foot?So it doesn't make sense.
It's not the market's crashing,the industry's crashing.
So are prices going to come off alittle bit?
Sure.
Because with rent, the prices are
(21:24):
coming off for sure becausebuildings got built and they need
to be rented.
And so developers or builders are
renting at a loss.
And over time, the value of that
building will go up and the equityin it will be paid down.
And rents will go up a little biteach year.
So over time, if you're building abuilding and you need to collect
$5 or $6 a square foot for rent tocover your costs, you're not doing
that very often.
Rents is sort of as a $3 .50 to $4
.50 a square foot.
I mean, it's obvious people would
pay less than that, but you'regetting up there at that price.
(21:45):
If you think it's $5 a square footand you're living in a thousand
per feet, you're paying $5 ,000.
But they can't come down that
much.
And it's so much based on income.
Like I said, when there was roomin the market, when you could
build for $350 a square foot andincomes were at that $100 ,000
level, there was a room.
And so governments just kept
adding costs.
And frankly, in a way, seeing the
(22:07):
industry like an ATM just kepttaking and taking.
And we said, there's a limit here.
There's a limit.
We've reached the limit.
Oh, no, you haven't.
You keep on building.
You say that all the time.
I'm warning you.
There's a limit.
Here are the incomes.
Here are the costs.
Many of them are like, oh, I see.
OK, so how do we reduce costs?
(22:27):
Or governments lower income tax.
Interest rates can come down a bit
more, whether they will or not.
I don't know.
Income tax is going to come down.
I don't know.
PST going to come down.
I don't think so.
So unless you have more money inyour jeans or more money in the
bank or more money coming in everymonth, salaries are going to tick
(22:49):
up a little bit each year.
You know, the cost of living
allowance are going to go up 2 %per year, your salaries.
And can costs come off 2 % or 3%,3 % or 4 % over the next couple of
years?Then maybe there's some room for
some profit that you have todemonstrate to the banks that you
can realize a profit, then youwill get financing.
But you can't get financing fromthe bank unless you can
(23:12):
demonstrate that a project isgoing to be profitable.
Banks are not in the business oflosing your money or my money.
You know, they're not going toloan you that money if they think
that you're going to gounderwater.
The salary is an interesting oneto me because, yeah, it does make
more sense.
Like people do need to earn more
money compared to the expenses wehave.
But where does the salary comefrom?
Like, I feel like in Kelowna, wehave a lot of small businesses,
entrepreneurs.
So, you know, if a store down the
(23:34):
street needs to pay their employeefour bucks an hour more.
Well, who owns that store?You know, that's a direct expense
to them.
So we're just kind of like chasing
our tail in that scenario.
Well, that's how inflation...
Kind of works as everything getsmore expensive, then wages have to
go up, then things get moreexpensive, then wages go up.
And it's just kind of, yeah,exactly.
Or can you lower income tax?can you lower income tax?
But then that's less money for thegovernment.
(23:55):
And the government needs to lookat their spending and how they
spend.
And are they spending way more of
our money than they should be?Everything's connected.
Yeah, to me, that one is likestaring us right in the face.
Like the spending needs to beunder control a little bit.
Like that seems like the easiestpart of this.
But I guess when was the writingon the wall?
Like hindsight, what year was thiskind of developing where people
were like, okay, this is a seriousproblem.
(24:17):
Like it seems like we've beentalking about it forever.
Two years ago, years ago, two anda half years ago, when we started
saying, look, incomes are at thislevel and it's now costing us this
to build.
And it was two or three years ago
when projects had been launched orsales had been started and
construction costs during COVIDstarted to go up like this.
And those buildings, they sold atthis level, you know, 2021 level,
(24:38):
and they're building at 2023prices and it doesn't work.
And so we've seen foreclosures,seen companies go under.
You've probably heard about theforeclosures.
There's been buildings that aren'tgetting finished, buildings that
aren't going ahead, buildings thathave started, maybe digging a hole
and it's stopped.
And people say, oh, I see cranes
in the air.
Well, yeah, those were cranes of
projects that were sold, you know,three years ago, let's say.
And then they got their buildingpermit and then they started
construction.
And those projects may or may not
be underwater depending.
on what they sold for and what
(25:00):
contracts that they had in placefor construction costs.
So the ones that are midway, thebig companies are able to hold on.
One developer I know well,speaking with him last week, he
said 25 to 30 % of people are notclosing on the project.
So he's going to have 30 % of hisunits.
He's going to have to pay GST onthose.
You know, he's going to get thedeposit back, but the deposit's a
fraction of what it cost him.
And he's going to try to sell them
in this market.
(25:20):
And people just can't afford that
because interest rates went up.
They lost their job.
And so people are backing out ontheir purchases.
We're seeing that as well.
I guess, like, is there a light at
the end of the tunnel?I don't want to fully blame the
government.
I know that's not what we're doing
here.
But like, obviously, you know, we
kind of went through COVID.
We went through, like,
essentially.
Getting close to hyperinflation,
like, you know, some of the thingswere kind of out of their hands,
(25:42):
obviously, globally.
Are there some solutions that are
being implemented where it'salleviating some of this pain?
And, you know, you guys in yourorganization or developers are
going, yeah, if we hang tight forthe next couple of years, like we
feel there's some optimism at theend of this.
Well, I think what I would say isthat we are working extremely hard
over the next year, 18 months tomake substantial changes.
Am I optimistic?I have to be.
I have to be optimistic that wewill get change and that all of us
(26:07):
pulling together, that ourcompanies and our employees and
everybody is speaking with thegovernment, doing the research,
getting the information, sittingdown with regulators saying, this
is what we can do.
So yes, I think there will be, but
it's going to take time.
It's going to take a year to 18
months.
Like I said, the DCC change is not
(26:28):
going to be in effect right away.
It takes a bit of time for it to
be implemented.
So the light at the end of the...
tunnel is that we do get somesubstantial massive changes in
policy that income levels do go upby cost of living and that
interest rates perhaps come down abit.
That's the only thing that we'vegot.
(26:48):
That's probably two years beforethere's any substantial feeling of
relief for projects to say, okay,we got this.
It's going to take time.
But this is also a year of a
massive slowdown this year.
So then you've got to catch up.
And people say, well, where iseverybody living?
Well, they're living withroommates and in basement suites.
And there's couples living withother couples and people staying
at home, living at home longer,moving away from Vancouver, moving
away from BC.
Yeah, we're seeing a population
(27:09):
decline in BC, which is crazy.
And so when you have a population
decline, you have less peoplepaying income tax.
You're building less homes.
You've got less people paying
property tax.
Property transfer tax alone is, I
think, I'd have to go back andlook.
I should have had that stat.
But I think it was at one point as
high as $3 billion that they wouldreceive in property transfer tax.
Well, they're not going to getthat.
They're going to get probably halfthat.
(27:29):
So that's a huge hole in thegovernment budget.
And then if there's a slowdown inconstruction, if construction's at
30 % in Kelowna or Vancouver orwherever, then those are job
losses.
And that's less income tax being
paid.
And that's less product being
paid.
And that's less people working.
It's a cascading.
I don't have to explain it to you
or your viewers.
We all know what happens.
We think, oh, well, thedevelopers, no, they're just not
(27:51):
getting rich.
That's not the point.
The developers will figure outwhere to go and build or they just
won't build.
But what does that mean to you and
me and our families and childrenand people with jobs in the
construction sector or engineeringor architects?
It's hard to turn it around.
Yeah.
With property transfer tax, I'mcurious, have you heard any
Rimbling?Like, do we need it in BC?
(28:13):
Obviously it's BC and Ontario, butlike - Two or $3 billion.
I know, but like, is that notsomething we can take away?
Well, I don't disagree with you.
However, it goes back to, can the
government reduce their costs by abillion dollars?
Maybe we wouldn't need theproperty transfer tax or maybe
that could be lowered, but theyrely on it.
It's a cash cow, right?You know, you get GST on new
homes.
There's a property transfer tax.
(28:34):
It's incredible the amount oftaxation that's put on housing.
Yeah.
And people don't see it because
people could afford something,right?
But now it's even hard to afford,you know, an 800 square foot condo
in Kelowna or Victoria and themarkets, you know, and the cost of
construction probably is moreexpensive in Kelowna than in the
lower mainland.
What about something like the
foreign buyer's ban?When I look at this and I think
(28:54):
about what the beefing right nowwith the U .S.
and what's happening, it feelslike it's a massive opportunity
for us to brain drain the USA, butthey're not allowed to come here
and buy a house.
It just doesn't make any sense to
me, at least from south of theborder.
I don't know about East or West,but what's your opinion on this?
We've been opposed to foreignbuyers tax since Christy Clark
brought it in all those years ago.
(29:14):
It doesn't do anything.
First of all, in our opinion, itwas a racist thing to do because
they were seeing certain peoplebuying up these big single family
homes on the West side ofVancouver.
Yeah.
It's ridiculous.
It didn't help.
In fact, it hindered.
None of these taxes helped.
We warned them.
You add on all these taxes,whether it's foreign buyers tax,
speculation tax, additional schooltax.
You can't tax your way toaffordability.
(29:35):
And we told them, you're justgoing to raise prices because it's
going to limit supply.
Yeah.
But with the foreign buyers tax orthe foreign buyers ban.
with the foreign buyers tax or theforeign buyers ban.
Yeah, Yeah, it's a ban.
It's not even a tax.
It's a ban.
It's access to equity.
access to equity.
Why are we banning equity in the
development of housing?It's a huge risk to develop.
we a tall building or a building,you know, you build a single
family home, it's a risk, butthink about the tens of millions
(29:59):
of dollars that go into amultifamily development.
And if we're only allowed to useCanadian money, and it's just
Canadian money swirling around,you know, we need to have an
influx of an investment in ourcountry, an investment in our
industries, you know, aninvestment, whether it's natural
gas or, you know, forestry ormining or whatever it is.
You know, the auto industry, thesteel industry, you need foreign
(30:19):
investment.
You need money to come to our
country.
You know, our leaders go on trade
missions to other countries toencourage them to invest in this
country.
Yeah, but don't buy a house.
Don't invest in the multi -billiondollar housing industry because
somehow that's wrong.
because somehow that's wrong.
I agree with you.
I honestly, I've tried to figure
it out and it just makes no senseat all.
And then politicians will say,well, it's popular.
(30:40):
You know, the public is supportiveof it.
Well, is that how we make policyin this country, in this world?
If we always went with what'spopular, maybe we wouldn't be
making decisions for theminorities or the least
advantaged.
Policy should not necessarily be
about what's popular.
And if it's the right thing to do,
and if that's what we need, weneed foreign capital in our
market.
I talked about all these policies
and regulations.
Access to capital is the biggest
(31:00):
stumbling block because if youcan't get your financing, you
can't get your project.
And you've got to sell a
multifamily building within 12 to18 months.
And if it's a large, tallbuilding, it's almost impossible
right now to sell 70 % or 80 % ofit.
And you have no other way toaccess capital.
Like it seems like in the last fewyears, everything's been purpose
-built rentals, MI Select.
that type of funding.
I guess two questions.
Do you feel that that's maybe been
a little oversaturated and they'vereally just focused on that?
(31:21):
Or is there asset class that theyare not focusing on that they
should be?Stratified condo properties,
single family homes.
There's no creative type funding
by the government to supportdevelopers on those asset classes.
Should there be?And is there anything coming down
the pipe on that?Yeah, I don't know if it's
oversaturated, the rental market,but, you know, took advantage of
it.
We hadn't built rental in this
country or in this province fordecades properly.
But, you know, now the MLA selectprogram has changed again.
And now the charges for thatinsurance have gone way, way up.
Something that program is done.
(31:43):
We've said that to the government,
you know, even if they'reinvestors.
So, you know, again, the investoris bad to buy a condo and sort of
profit from it.
was seen as bad.
Whereas you buy a condo and youput it into the rental pool and
you leave in the rental pool for20 years.
Yes, you made some money on it,but I don't see why we demonize
that.
So we said, okay, if you really
don't want people flipping, whatif investors could purchase?
(32:05):
And they would get the GST rebateas long as it stayed in the rental
pool for a certain number ofyears.
So we did get the GST rebate onpurpose -built rental, but only if
you're building it for a certainnumber of units.
But if you bought a couple ofunits and you're renting them out
and there's a small mom and popoperation, what's wrong with that?
But somehow we don't want that,but nor do we want the big REITs
(32:28):
or the big foreign investments.
So where's the money coming from?
So yes, there are ways we believethat you can.
incentivize all forms of housing.
A lot of it is getting the
policies, the layering andlayering of policies out of the
way.
You don't have so many of these
requirements.
You've got so many of these
requirements, like I said, whetherit's green building initiatives,
EV charging, when we don't evenhave access to the power.
we did Yeah.
I mean, that's been a topic in
(32:49):
Kelowna is like, are we going tohave enough power in the next
couple of years to fulfill any ofthese projects?
So yeah, EV charging may not benecessary.
may not be necessary.
And then soil relocation.
These things to the averageperson.
They just want a nice home with anice fixtures and things.
But these are the things that wehave to deal with is now we have
nowhere to dump soil because onthe agricultural land, it doesn't
(33:10):
meet the requirements, even thoughit's clean soil or we don't have
enough dumping sites.
So now you're having to truck
stuff for 30, 40 kilometers orthere's nowhere to dump it.
And how is that stating theenvironment?
And so we have had a meeting.
We did just have a meeting with
the minister last week.
It's OK.
We see the problem.
And, you know, we need to create
(33:31):
more dumping sites on Crown landor in other areas because that
adds costs.
You know, you've got to hire the
truck.
The truck is driving for literally
hours.
And then you've got to dump it
somewhere else in the Okanagan andsomeplace.
They don't have any dumping sites.
I mean, on the island, they're
having to truck it up and over theMalahat, you know, for a couple of
hours.
So those are sort of things like
(33:51):
it sounds like a really good idea.
Oh, yes.
Well, that soil doesn't match thatsoil or this.
So you can only dump soil on theagricultural land if it's.
soil fit for food production, eventhough the soil is actually
probably completely fine, but itmight be just 0 .01 % more
salinity that or something likethat.
There isn't that subjectivity.
Salinity levels, you know, the
soil can't go there.
Well, it just came from here.
Why can't I put it over there?Well, you know, so those are the
(34:12):
kind of rules that you're upagainst that you say, who came up
with these?You know, good intention, but not
looking at the cost.
And when there was, as I say, room
in the system, when there wasenough profit, I suppose, in the
system that could pay for thatstuff.
But those days are gone.
Yeah.
At the federal level andprovincial, you know, in the last
year, we've had new leadership,not new parties, but new
leadership.
Do you feel that that leadership
(34:32):
in their campaigns, like thepromises they've made are now
following through with thosepromises?
Like, is it still going in thedirection that?
people voted for?At the federal level, it's too
early to tell.
But the wheels and the machines of
government are going in thatdirection.
They're not huge changes, right?The GFT relaxation talked about,
you know, and then theinfrastructure sort of paying for
half of the DCC, half thedevelopment cost charge.
(34:53):
But the amount of money that wasearmarked in the federal budget
wouldn't pay for even half of whatthat is.
So at the provincial level, therewas a lot of really substantial
and good work that was done onchanges in legislation.
But then at the same time, youknow, interest rates went up.
And the cost of housing deliverywent up, as well as the new
building code that came in, whichis adding 10 to 15 percent.
Building step code three,increasing the DCCs at all levels.
(35:15):
There was some good work done.
But now in order to have that
legislation work, we need to takea lot of the costs out of the
system.
Provincial government is saying,
oh, we didn't realize.
I guess they were told that people
were still making money.
So how could it possibly be a
problem?And I said to once, the deputy
minister says, it's just math.
It's just money.
And I said, you know, if it costsmore to build than someone can
afford, it doesn't get built.
(35:36):
And they went, OK, OK, you know,
so people complicate housing.
You know, it's an answer to
homelessness.
It's the answer to adaptability.
It's the answer to the state andthe environment.
Now, we're just trying to gethousing built.
Let's make housing a priority andensure that it is safe, you know,
sustainable, accessible.
But if we're bringing the policies
to achieve those things and itcosts more to get it built.
then we need to look at that.
Then we need to rethink that.
(35:56):
So to answer your question, Ithink that there is a recognition
and I just have to be hopeful, butit's a lot of work.
I mean, I don't know if I've neverworked so hard or I've never
worked in such a frustrating,difficult environment in my
career.
It's hard.
It's really hard.
And you know what needs to be done
and that you know it's going totake time, you know, stuff to see
people lose money.
If you could just make...
One policy change, one rule,anything like a change that would
(36:18):
be implemented tomorrow, whetherthat's removing current
legislation policy or, you know,implementing something, what do
you think would be the biggestneedle mover?
Well, in the lower mainlandanyway, I think it would be
removing the requirement for 20 %inclusionary zoning, at least
until things turn around.
And I think that other big ones,
certainly in the Okanagan,Victoria, the costs are associated
with the new building code.
There has to be a financial
offset.
You can add 10 % to the cost of
building with governmentrequirements without compensation
(36:40):
or offset.
Well, honestly, this has been
awesome.
Yeah, I've really been looking
forward to this conversation.
And yeah, you did not disappoint.
So thank you so much for comingon.
Hopefully we'll see you next timeyou're up in Kelowna at one of the
meetings.
of the meetings.
Definitely.
We appreciate this.
And it was really a pleasure totalk with you too.
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