Reducing Red Tape & Using The Right Contractors

[00:00:00] Welcome to The Canadian Real Estate Investor, where hosts Daniel Foch and Nick Hill navigate the market and provide the tools and insights to build your real estate portfolio.

[00:00:12] Have you ever wondered what the people who regulate our industry think about what is happening in our world right now?

[00:00:20] Well, you don't have to wonder anymore.

[00:00:23] Because we ask them what they think, and much, much more.

[00:00:26] Welcome back to another episode of The Canadian Real Estate Investor Podcast. My name is Nick Hill. I'm joined today and every Tuesday and Friday by Mr. Daniel Foch.

[00:00:37] Today we have a special episode for you. We have a few more interviews from our time at the OHBA conference, which was in Niagara Falls.

[00:00:44] And we were lucky enough to go there to conduct all of these interviews with the support of Sherwin Williams, a friend of the show and our meetup sponsor.

[00:00:52] Yeah, Dan, we had a really great time there. Met a lot of amazing people and had some really insightful conversations.

[00:01:02] And today you're going to hear three of those conversations. If you get a chance, I'd highly advise you to listen to the first half of these conversations as well, which is an episode we put out in October, November.

[00:01:13] Nick chats with Wendy Moyer and Dave Depensier. Wendy is the chief executive officer and registrar at the HCRA.

[00:01:23] The Home Construction Regulatory Authority, or HCRA, regulates new home builders and vendors in the province.

[00:01:30] We protect the public interest through a fair, safe, and informed marketplace that supports the goal of a continuously improved home building industry in Canada, according to their website.

[00:01:39] And Dave Depensier of Depensier Builders is past president of the OHBA.

[00:01:45] Then Dan jumps in and conducts a really great interview with the new OHBA president and another home builder, Mr. Mark Memi, along with Miyoko Oikawa, who is a senior manager at OHBA, as well as an energy analyst who works in a lot of multifamily projects,

[00:02:05] doing the energy efficiency modeling for MLI select projects.

[00:02:09] And we finish off with another great conversation with Scott Anderson, who has a background in both the public and private sector in real estate and is currently the CEO or chief executive officer at the OHBA itself, which stands for the Ontario Home Builders Association.

[00:02:25] So Dan, enough of just the two of us for today. Let's switch over to these interviews.

[00:02:30] Before we do that, make sure you check out realist.ca, join our online community, join our in-person community for meetups across the country and share this with your friends and leave us a review. Thank you.

[00:02:41] Okay, we are back with two more amazing people from different organizations.

[00:02:47] Wendy Moore and Dave Depensier from OHBA and HCRA respectively.

[00:02:57] Can we start off with a quick introduction?

[00:02:59] Wendy, we'll start with you.

[00:03:00] Who are you and what are you doing here?

[00:03:03] And then Dave will jump over to you.

[00:03:04] And I know that you guys have recently started working together from an organizational perspective.

[00:03:08] I'm really curious as to why that is and what goals you're trying to accomplish together.

[00:03:14] Wendy.

[00:03:15] Great. Thank you, Nick.

[00:03:16] Yes, I'm Wendy Moyer and I'm the CEO and registrar of the Home Construction Regulatory Authority or HCRA for short.

[00:03:23] And we regulate and license builders and sellers of new homes for the protection of consumers in Ontario.

[00:03:32] Wow. Okay, that sounds like an honorable thing to be doing.

[00:03:36] OHBA over to you, Dave.

[00:03:38] Tell us about yourself and OHBA and I'd love to hear, again, working together and the two organizations coming together.

[00:03:45] Sure. So I'm Dave Depensier of actually Depensier Builders.

[00:03:49] I'm a custom home builder.

[00:03:51] I develop land as well from Dresden, Ontario.

[00:03:54] So I'm part of Chatham-Kent.

[00:03:55] I'm currently, as of today, the past president of the Ontario Home Builders Association, but I will still stay on the board.

[00:04:04] So one of the things about us is we represent over 28 locals, over 4,000 members of the home building industry, including renovators, developers, trade suppliers.

[00:04:15] And it's important for us to interact with companies like HCRA because we're a large stakeholder and they need our input on how our industry works and how can our industry be better.

[00:04:31] And not only from a protection of our industry standpoint, but also ultimately the protection of our consumers.

[00:04:39] Wonderful. I appreciate both of what you guys are doing.

[00:04:43] I think both those organizations are more needed now than maybe ever before.

[00:04:48] You know, I know we're here to talk about a few things.

[00:04:51] Red tape being one of them, right?

[00:04:52] We've got guerrilla tape, duct tape.

[00:04:54] Those are useful.

[00:04:55] Red tape is not useful.

[00:04:58] Give me what, provide me an example or maybe a definition of what red tape means to each one of you in prospectively in your industries.

[00:05:07] And how it's restricting what, or has been restricting what it is you're trying to accomplish.

[00:05:12] Well, that's a great question because the HCRA as a regulator and I actually regulate OHBA members.

[00:05:21] So they are the regulator party.

[00:05:23] So you're kind of Dave's boss?

[00:05:25] Not really.

[00:05:27] Dave's company is actually regulated and licensed by the HCRA.

[00:05:30] But the important, so we could actually be accused of making that red tape happen because we are a regulator.

[00:05:38] We, you know, administer legislation and regulations.

[00:05:42] So one of the reasons why it's so important that we talk to the regulated folks, the licensed builders that Dave's organization are members of,

[00:05:54] is to make sure that what we're doing makes sense.

[00:05:57] It's not going to hinder, you know, the really important construction of new homes in the province.

[00:06:04] But at the same time, we've got to balance so that when homes are being built, they're being built legally,

[00:06:12] they're being built by competent and ethical builders, and for the protection of consumers, as Dave mentioned.

[00:06:21] So we've got to find that balance.

[00:06:22] So it's not red tape.

[00:06:24] Every time you put a regulation in place doesn't mean it's red tape.

[00:06:27] Red tape's the bad stuff.

[00:06:28] Good regulation is what we're after.

[00:06:31] And we work with OHBA to get their perspective on what we're doing and whether it makes sense from their perspective.

[00:06:38] Yeah, that's a great answer.

[00:06:40] Dave, anything to add to that?

[00:06:41] What does red tape mean for OHBA?

[00:06:43] So not only with working with stakeholders like HCRA, there is, you know, what we could maybe call red tape that has to do with, you know, the process.

[00:06:52] But there's also the red tape from a building and developing side of things where, you know, we look at things like getting subdivision plan approvals and getting building permits and getting all types of those items that require,

[00:07:06] that we are required to have to get projects and get homes built and get underway.

[00:07:11] Sometimes we see a lot of overlapping and the duplication of items that are required, which in turn, you know, it's red tape that needs to be more streamlined.

[00:07:21] So it's, again, consulting with stakeholders, municipalities, government officials at times to try and find that happy balance.

[00:07:32] We all need things, right, in our industries.

[00:07:35] And it's how can we discuss these things and make our process better?

[00:07:40] And, again, I go back to the consumer.

[00:07:42] It's all about protection of our consumers.

[00:07:45] Yeah, it's really interesting.

[00:07:46] And now, speaking of the protecting of the consumers, Wendy, you mentioned something earlier, illegal building.

[00:07:53] Now, that's not a term I think that a lot of people are familiar with.

[00:07:56] We know a lot of, you know, crime and you associate illegalities with criminal activity.

[00:08:02] What does it mean to be an illegal builder or illegal building?

[00:08:05] Well, from the perspective of the HCRA and what we do, illegal building means that you're building a home.

[00:08:14] You're not licensed by the HCRA.

[00:08:16] You have not established those competencies.

[00:08:18] And or you've not made sure that there was warranty in place.

[00:08:24] And the warranty is really another important licensing and warranty are really two important parts because you've got to be competent to build a home, get the license.

[00:08:33] And you've also got to make sure that you put warranty on there so that if there is a problem, if there are defects with the home, it's backed up with the builder's warranty.

[00:08:43] If you don't have either of those two things, the HCRA has enforcement mechanisms to make sure that you do.

[00:08:51] What would an enforcement mechanism look like and what kind of consequences would there be for people that are participating in illegal building activities?

[00:09:00] Well, if you're an unlicensed builder, there's a number of things we could fine you.

[00:09:07] We could also prosecute.

[00:09:09] In fact, just recently we did prosecute an unlicensed builder, 124 charges for unlicensed building.

[00:09:17] Is this something that you've seen on the rise in the last couple of years with the housing crisis that we're in and maybe some of these bad actors getting into the market?

[00:09:28] And, you know, maybe being less regulated because we need housing so much?

[00:09:32] Is it overlooked or what's happening now?

[00:09:34] Is it different than it has been?

[00:09:36] Honestly, I think it's been a problem for a long time.

[00:09:38] And we are looking for solutions along with the government who has committed to consultation on this issue.

[00:09:45] And we've talked to stakeholders, a particular OHBA, about some of the solutions for that.

[00:09:53] So there are some loopholes that need to be plugged.

[00:09:55] Certainly, I don't know if the economy has a part in that.

[00:09:58] We've certainly licensed more builders than we ever have as well.

[00:10:02] But, you know, we're definitely seeing it out there.

[00:10:05] Interesting.

[00:10:08] Dave, over to you.

[00:10:08] What do you feel the industry needs to do to isolate some of these bad actors and, you know, essentially put a stop to what Wendy's talking about?

[00:10:17] So to comment on a little bit about how long has this been a problem?

[00:10:22] This has been a problem for a long time.

[00:10:24] And to be honest with you, it's something that we need to stop.

[00:10:28] So when we look at homes that need to be built, you know, 1.5 plus in the next 10 years, that's just Ontario.

[00:10:36] So that's only going to, that's not going to help the matter any.

[00:10:39] Some of it is absolutely people that are building homes illegally.

[00:10:44] There's also cases where homeowners are building their own homes and they're actually really unaware of potentially the consequences.

[00:10:51] And there's also, believe it or not, there are companies in areas that don't even really know what home warranty is, to be perfectly honest with you.

[00:11:01] And it sounds weird, but they're just, they're not completely understanding how the process works.

[00:11:08] But I think by us putting in and speaking with our stakeholders and the government and finding a common process that works for everyone.

[00:11:17] And even going as far as if someone wants to build their own home, just understanding the repercussions of that so that you understand.

[00:11:26] But I think making it very clear and having, you know, our industry, our stakeholders and the government all on the same page.

[00:11:35] I think it's a very simple process that will only help the consumers in the end.

[00:11:40] And that's really what it's about.

[00:11:42] I mean, we want our industry protected.

[00:11:44] Don't get me wrong.

[00:11:44] I mean, we have, our membership is made up of the best builders in Ontario.

[00:11:49] But there's also other pieces and bad actors that you use that word earlier that are giving our industry a bad name.

[00:11:56] And it's, we need to stop that as well because we build great homes in Ontario.

[00:12:03] I'm proud to say that.

[00:12:04] But we do need to crack down on this.

[00:12:07] And it's a low-hanging fruit item, I believe, that can be fixed.

[00:12:12] And we just got to stay forward on it.

[00:12:14] And I believe we're going to make this happen.

[00:12:16] I really do.

[00:12:17] So maybe one final question for both of you is how?

[00:12:22] How do we do that?

[00:12:24] What kind of rules and regulations can we put in place to, you know, tackle some of this?

[00:12:29] Because I'm not sure if it's people doing it willingly or there's an element of ignorance to this and people just don't know, you know.

[00:12:36] So in an industry that's, you know, hard to regulate and big and growing and ever-changing,

[00:12:43] what are some suggestions or some things that you are both separately and now together working on to try to tackle this issue?

[00:12:50] Well, I'm going to let Wendy talk a little bit about this.

[00:12:53] But I will say I believe it starts at the permit process, right at the application.

[00:12:58] And there's different ways we've discussed that.

[00:13:00] But, you know, that's where I believe it needs to start, which is a very, as a builder, it's the easiest place to start.

[00:13:08] Here's the permit application, right?

[00:13:10] And so, you know, I'll let Wendy discuss maybe some of the ideas that we've collaborated on.

[00:13:15] Great.

[00:13:15] Sure, yeah.

[00:13:16] As Dave said, we have been talking also to building officials and municipalities to see if there's a way that we can work together

[00:13:24] and share information to make sure that people are getting building permits that are also licensed and have warranty in place.

[00:13:34] Or that they have, you know, an applicable exemption, like a legitimate exemption.

[00:13:38] Because we are seeing people, and it's interesting you say, people are either doing it on purpose or they just don't know.

[00:13:44] And I think both of those things are true.

[00:13:46] I mean, you said at the beginning, I've never even heard of a legal building.

[00:13:50] And, you know, you're in the majority.

[00:13:51] A lot of people haven't.

[00:13:52] They don't even really realize that if they want to build a home for themselves, there might be rules involved.

[00:13:59] They might not even understand the building process.

[00:14:02] And they might not understand that if you build a home for yourself and then you sell it right after,

[00:14:07] you've actually just become an illegal builder.

[00:14:10] So there's ways we can work with the municipalities on the permitting.

[00:14:14] But also, I think, general awareness.

[00:14:19] And consumers need to know the kind of liability that they're getting into if they build a home for themselves,

[00:14:26] but also if they are engaging with a builder that's not licensed, right?

[00:14:31] It's such a complex system, both the selling and the buying and the building,

[00:14:40] that we're working on doing more to really help consumers understand what they're getting into

[00:14:47] when they invest in, you know, the biggest purchase of their life.

[00:14:51] Totally.

[00:14:52] I want to thank you both for your time.

[00:14:54] Wendy, Dave, is there anything you'd like to leave our audience with?

[00:14:57] Any major takeaways that we should be aware of, what you're doing, or, you know,

[00:15:03] if they are engaging with the builder or if they have people that are trying to build their own homes?

[00:15:07] What are some final thoughts from both of you?

[00:15:11] Well, I think, obviously, educating the consumers on, you know, what is right and what is wrong.

[00:15:17] And it's not just the consumers as well.

[00:15:18] It's, you know, people are, there are people that are building homes and selling them illegally,

[00:15:24] and they're not educated on the building of the home.

[00:15:27] And to be a builder in Ontario, you need to be licensed to do that.

[00:15:31] And Wendy mentioned a very good point.

[00:15:33] It is the biggest investment of anyone's life.

[00:15:36] Why would you not want to have a warranty attached to that?

[00:15:40] It doesn't make any sense to me.

[00:15:41] And it costs millions of dollars a year to our industry to repair some of these homes.

[00:15:46] And people are, it's sad to see.

[00:15:49] And it's an easy fix.

[00:15:52] It's going to require collaboration between ourselves, stakeholders, and government.

[00:15:57] But I believe it can be done.

[00:15:58] I absolutely can believe it can be done.

[00:16:00] And it is a mission for our OHPA moving forward immediately.

[00:16:04] I mean, we've been working on it for years.

[00:16:06] But the last year and moving into this year, we've made some really good headway.

[00:16:09] And I firmly believe that we're going to tackle this one.

[00:16:12] Yeah, I love to hear.

[00:16:13] I think we're in good hands.

[00:16:14] Wendy, any final thoughts?

[00:16:15] Yeah, it's exciting.

[00:16:16] It's exciting times.

[00:16:17] I think I feel very positive that we are making good headway.

[00:16:22] But everybody should check the Ontario Builder Directory on our website, hcraontario.ca.

[00:16:29] If you're going to build a home, make sure that your builder is licensed.

[00:16:33] Check out the registry.

[00:16:35] Wonderful.

[00:16:35] Thank you so much to both of you.

[00:16:37] Hope you enjoy the rest of the conference.

[00:16:38] Thank you.

[00:16:40] Hi.

[00:16:41] Yeah, I'm Mike.

[00:16:42] I'm from Niagara.

[00:16:43] I'm with a local home building company called Mountain View Homes.

[00:16:46] We've been building in Niagara for almost 50 years.

[00:16:50] And just last night, I stepped up as chair of the Ontario Home Builders Association.

[00:16:56] Amazing.

[00:16:56] Congratulations.

[00:16:57] Thank you.

[00:16:57] I'm volunteering for probably 20 years, mostly involved in code issues and tarry on issues.

[00:17:03] I'm Yoko Aikawa, OHBA's Senior Technical Manager.

[00:17:07] So I handle any files that are technical in nature.

[00:17:10] It's mostly around building code, building code development.

[00:17:13] So you both mentioned building code.

[00:17:15] And I'm glad we have the technical expert here because it tends to be a very technical thing.

[00:17:20] And because our audience is a lot of real estate investors, especially, we found that like sort of this phase of real estate investment where we're all actively trying to solve the housing crisis.

[00:17:31] And what that means in a lot of cases is people are bumping up against the building code more and more.

[00:17:36] Before it was like you would buy a house, you would rent it out, and the tenant would be there and you'd just be providing housing for them in a long-term capacity.

[00:17:43] In today's environment, in order for an investor to maximize their returns but also to be part of the solution, we often have to add units or build ground-up development.

[00:17:52] And so we're bumping up against the building code more and more.

[00:17:55] From 30,000 feet, what is the advice that you could give to someone who owns property or wants to own property about how to kind of get through that really, really challenging and technical component of being a real estate investor?

[00:18:09] And we'll start with Mike, and then Miyoko can kind of break it down for us.

[00:18:13] Yeah, when you say 30,000-foot view for the real estate investor who may get involved in perhaps doing modifications to a unit, expanding a unit, looking at a secondary suite.

[00:18:27] The one thing I do tell people, and I guess as chair of OHBA, it's going to sound like a plug, but this is great advice.

[00:18:37] When you're looking for a renovator, there are renovator members of OHBA.

[00:18:41] You just go to your local's website.

[00:18:43] They'll list who the renovators are.

[00:18:46] I'm very hesitant to recommend anybody for renovation who's not a member of the Ontario Home Builders Association.

[00:18:54] I can actually attest to that.

[00:18:56] I mean, we've spoken with dozens and dozens of renovators and builders who are members of the OHBA, and their knowledge and understanding of the issues, not just the surface-level issues, but the ongoing issues and ongoing changes is unparalleled.

[00:19:10] I've never met anybody who knows it, and I couldn't imagine having somebody working on a house.

[00:19:15] And we're doing a handful of projects ourselves, adding units.

[00:19:19] I'm doing two basement apartments this year.

[00:19:20] And I probably, before I came here, honestly for this, I probably would have been one of the people who didn't use that.

[00:19:27] And now I'm like, I completely agree with you.

[00:19:29] I would, like a friend or family member, I would never recommend someone who wasn't a member.

[00:19:36] And for those recommendations I've made where I've heard feedback after the fact, always been positive.

[00:19:41] I think it's even like the small nuances, like there are mistakes that could be made if you don't know the fire code, don't know the building code, don't know the STC ratings, etc.,

[00:19:53] which do seem to be changing so often and or shouldn't be changing or shouldn't be subject to certain scrutinies from municipalities.

[00:20:00] Like you need somebody who really understands that and can execute on the framework properly.

[00:20:05] And often it's a teamwork challenge.

[00:20:08] So you'll have the renovators.

[00:20:10] These will be the hands-on people, boots to the ground, doing the work.

[00:20:14] What are the plans going to look like that you're going to submit?

[00:20:16] And how do you find someone who's the right architect or someone with a BCIN number?

[00:20:23] They're not designing a new library or a 50-story building.

[00:20:29] They're ideal for a basement permit application at an affordable price.

[00:20:33] Yes. So finding that BCIN holder that's used to doing basements, knows what to look for,

[00:20:41] can just tell by looking at a wall if there's going to be a post that should not be removed.

[00:20:47] I'm not sure the best way to get there.

[00:20:50] I know I'm from Niagara and in the Niagara Home Builders Association,

[00:20:53] we have a couple design companies that are excellent at doing these smaller projects.

[00:20:59] You need to find the right hammer for the nail.

[00:21:02] Yeah. Yeah. Fair enough.

[00:21:04] I would say it's all about the qualified professionals.

[00:21:07] Like, you need to make sure it's kind of like speaking different languages.

[00:21:11] And especially for someone that may be looking to comply with a program like CMHC, MLI Select.

[00:21:16] I now need to be well-versed in the National Building Code and the Ontario Building Code.

[00:21:21] And I need to make sure that I'm providing the right documentation for that.

[00:21:25] I'm meeting the expectations of both of those.

[00:21:27] So I think you want to make sure that the person has up-to-date credentials,

[00:21:31] especially now that we're in a transition period between the old code and the incoming 2020 OBC.

[00:21:39] And you can do so also by doing your due diligence on like a background check of who those people are.

[00:21:45] Yeah.

[00:21:45] Are they active within an association?

[00:21:47] Are they a Renomark member?

[00:21:50] Or, you know, what are their other projects?

[00:21:53] If this is something that you're going to do, it's going to be a focus of your career, your investment strategy.

[00:22:02] You've got to build a team.

[00:22:03] And a key part of that team will be the renovators that you partner with and the designers that are helping you get an excellent permit application where you're going to look professional.

[00:22:13] And the billing department's not going to be looking for red flags.

[00:22:18] And, you know, the one thing is if you find that person, that designer, you'll probably want to stick with them.

[00:22:24] And that could just bring so much opportunity.

[00:22:27] It can give you an advantage over others that are looking to do the same thing.

[00:22:31] The city likes to see your applications.

[00:22:34] They recognize the name that's on the application.

[00:22:37] You're not going to spend money on things where they made a mistake.

[00:22:40] You know, it's so silly.

[00:22:41] You can try to save $100 on getting a permit application right.

[00:22:45] It could cost you $1,000 because something was missed or not dealt with appropriately on that application.

[00:22:51] Yeah, it's interesting.

[00:22:52] You know, the phrase time is money comes to mind as well.

[00:22:56] Like you mentioned MLI Select.

[00:22:57] And so I think now this conversation encompasses two of the three things that I would say are the biggest time delays in an investor's life.

[00:23:07] One would be the Landlord and Tenant Board, which is, you know, known to present some challenges as a result of waits alone.

[00:23:14] Like I think it's pretty fair otherwise.

[00:23:16] The next would be building codes and then I think financing from especially from the CMHC perspective.

[00:23:21] And I think, you know, drawing the parallels to the Landlord and Tenant Board.

[00:23:25] A lot of rental property owners end up getting hung up or running into issues simply because they're not actually a compliant business person.

[00:23:31] And they don't think, OK, I'm running a business here.

[00:23:35] And as long as I follow the rules properly, then I should be able to do that in an efficient way.

[00:23:39] OK, what is it? And maybe we can start on the MLI Select side of things like what can be done to to make sure that you're following the rules properly, getting through the process as efficiently as possible.

[00:23:51] I don't know if you want to start with the CMHC side and then we can kind of go back into the smaller stuff.

[00:23:55] Yeah, I agree with what Mike had said before.

[00:23:58] It's about finding your team and making a template and working with people that have gone through that process before for a few different reasons.

[00:24:05] Like one is to make sure that you will have that checklist of like, is all of my documentation in order?

[00:24:11] The second is that those strong relationships with municipalities are at least understanding like I'm going to have this issue in this municipality or this issue in another municipality.

[00:24:19] So that, you know, I know that they need a certain form filled out in a particular way, like the amount of time and money that would be saved to have that pushed through in the appropriate amount of time.

[00:24:32] Like that happens on, Mike, I'm assuming production sites to have this money.

[00:24:36] Yeah, and it's a partnership.

[00:24:39] You can look at the city plans approval people as the enemy, but it's so much easier when they're your partners.

[00:24:48] When they see your name on the application or your designer's name and they're used to working with you and they trust you, it means a lot.

[00:24:55] They don't want you making their lives more difficult.

[00:24:58] It should be a collaborative process.

[00:25:02] I have enough experience in the space to kind of know the role of like, let's call it like a prime consultant, like somebody who sort of is the project manager, let's call it.

[00:25:09] But maybe for our audience, like something that I think would be valuable for the people who aren't necessarily at the point where you mentioned Miyoko, where they can build a team and then hope to scale and do one of these every single year.

[00:25:20] But they're just trying to get one done.

[00:25:22] Who would be the best person for them to approach?

[00:25:24] Like from my perspective, OHP has been incredibly valuable for us from just purely a network perspective.

[00:25:29] Like how could they and who should they meet to try and execute that if it's just one project and they don't really think about or care about the future scale?

[00:25:39] But how do we get a team like almost a pre-made team, right?

[00:25:43] You know, I actually think it might be fairly easy.

[00:25:47] The city that you're building in, you contact the local home builders association and ask them which of their members are regularly submitting plans to building departments for basement renovations or additions to units.

[00:26:02] There'll probably be two, three or four that are doing this regularly that are members.

[00:26:07] And you get three quotes.

[00:26:09] It's the same old game.

[00:26:10] But that resource, you're not going to find this online easily.

[00:26:14] I don't know if it's through a Google search.

[00:26:16] I think it's just quite easy.

[00:26:17] You go to a local home building association site and find out who the people are generating the plans that are doing this already.

[00:26:24] You call that office.

[00:26:26] There's an executive officer at each of the locals.

[00:26:29] If it's not easily found on their website, this person will put you in contact with people.

[00:26:34] And then it's the whole question of finding a renovator that you can trust, which I said it right at the hop.

[00:26:39] I only trust those who are members of the Ontario Home Builders and preferably rental market.

[00:26:44] I can actually hear municipalities like breathing a sigh of relief when they get somebody who's already been through the door to solve a problem.

[00:26:50] Right.

[00:26:50] Like my brother works in landscape architecture space and he's working on like replicated or replicated projects.

[00:26:56] And it's just, oh, hey, we already did this before.

[00:26:58] Let's just do it the exact same way and even avoid the hiccups.

[00:27:01] So probably the next people through the door actually get a greater level of efficiency than the ones where the learning took place.

[00:27:06] It sounds like he's read the e-myth book.

[00:27:09] And if you're going to maximize profits, you have to have a system at some point.

[00:27:14] Like there's a big one-off hit.

[00:27:15] But, you know, lots of people buy lottery tickets and try to get lucky.

[00:27:18] But if you're actually going to make a go of this in an efficient way that's longstanding and would have the best rewards at the end,

[00:27:24] you've got to start with every step, put thought into it and put that team in place.

[00:27:29] Yeah.

[00:27:30] If you find a good architect or engineer, they likely will have people that they have worked with before that haven't had issues and will make a recommendation.

[00:27:39] Ideally, it would be an architect that has a preferred mechanical engineer who has an energy modeler.

[00:27:46] And they all work together collectively to ensure that the drawings are consistent with the mechanical design,

[00:27:54] which is consistent with the energy modeling.

[00:27:56] And that makes your application, like both for permit or for CMHC, like ready for approval.

[00:28:02] And Miyoko, you just hit a nerve for me on the whole mechanical side.

[00:28:06] I hadn't thought about as the questions came in.

[00:28:09] And we've got a huge problem that many of the mechanical trades are not up to speed on the latest requirements to do an ideal, efficient, affordable duct design.

[00:28:23] And I get people calling me all the time saying that the furnace is too big.

[00:28:27] And they're quite irate because the sub-trade that they brought in is saying it's too big.

[00:28:31] And if you do a duct design, it might be or the furnace is too small.

[00:28:36] And if you do a duct design, they're saying it needs to be twice as the contractor saying it needs to be twice as large as what's actually required.

[00:28:44] Where do you find that mechanical contractor or designer for part nine that is going to give you the best advice?

[00:28:54] Because there's a lot of terrible advice out there right now.

[00:28:59] Companies that just haven't kept up with the latest way of making a system efficient, especially in these new energy efficient homes.

[00:29:08] That was a long question.

[00:29:09] I'm sorry about it.

[00:29:10] Do you know of any resources?

[00:29:11] I'm the one asking the questions.

[00:29:13] Sorry, this is our interview now.

[00:29:16] There's other people in the room that will know the answer to that question.

[00:29:18] I don't know if you've got it, but it would be good to pull that back to the team here.

[00:29:21] No, it's a really good question, honestly, especially because there's so much retrofit application in what we do.

[00:29:26] Do you know the answer?

[00:29:27] There is a Canadian association for those working in mechanical design, and a lot of those people are doing really great work.

[00:29:37] Some of the leaders of that as well are working with organizations like Enercan to deliver tools and training to help get everyone up to speed and do some capacity building.

[00:29:47] I know that HRAI is also looking to develop training specifically for installers to help that side of the equation get up to speed.

[00:29:56] So I think it would be like, again, asking questions and doing your due diligence to see like, are you active in an association, like looking at other projects that they have done, talking to anyone that might know them, talking to like another member of that project team if you've got that network?

[00:30:12] I think those that might be at the leading edge would be energy evaluators more so than many of the mechanical contractors.

[00:30:19] Would it be reasonable for someone who's doing a major renovation, doubling the size of the house to talk to an energy evaluator about the mechanicals?

[00:30:26] I wouldn't. I would go to a qualified mechanical designer, and then I would have the mechanical designer work with the energy evaluator and have everyone stay in their lane, but work together on the solution.

[00:30:37] My bad. I'm just spoiled because our energy evaluator has a mechanical design in the same in-house, and so that makes it quite convenient for me.

[00:30:46] That's excellent. I'm glad you're here to help keep us on track.

[00:30:49] That's important. It was a good discussion anyways.

[00:30:53] So I guess maybe the last question before we sign off here, taking a look at the entire sphere, so you talked about MLI Select, we talked about retrofit applications, even new build.

[00:31:02] Where do you see the biggest opportunities being to make change, make money, make impact in the space right now for somebody who wants to do something, wants to put their capital to work in the real estate development or real estate investment space?

[00:31:17] Oh, I wasn't ready for that one.

[00:31:19] So I'm a new home builder, right? And sales are really slow across the province right now.

[00:31:26] The numbers aren't working well, so I will selfishly say that you should look at new because you're not going to have to spend any additional money on maintaining that unit for years if you pick the right builder and put the right options into it.

[00:31:40] Beyond that, I've not spent much time thinking about that.

[00:31:42] I spend all my time just thinking about how to get a product to market at a price that someone could afford.

[00:31:47] Right. But I think that that's actually a really important distinction because I think a lot of builders are trying to do that right now.

[00:31:53] And I think that this whole conference is around all stakeholders trying to do that.

[00:31:58] And I think it's going to happen. I honestly think that it will happen.

[00:32:00] And if the spread to resale market has been pretty resilient, if the spread to resale comes down to a normal level where you're paying a premium because it's an undepreciated product,

[00:32:09] not because somebody is trying to bake in the speculative value of it, then I think I totally agree with you.

[00:32:14] I think maybe not exactly today from my perspective in the markets that I'm in, but I think in your market and in a lot of markets near here,

[00:32:22] we are getting very close to a point where buying new makes a lot of sense.

[00:32:25] And it seems like the government's aligned with that, with the extended amortization.

[00:32:28] They want to see investor capital moved into new builds where it belongs.

[00:32:31] It's not taking homes away from the resale market.

[00:32:33] It's actually being used to create new housing.

[00:32:37] And, you know, traditionally, the new house prices are what sets the market rate.

[00:32:42] All boats rise with the tide.

[00:32:44] There's been a lot of movement in the market over the last few years, up and down.

[00:32:48] So things have gotten a little out of whack.

[00:32:50] It will come back to that where the new home prices are going to set the going rate for house prices across the province.

[00:32:57] The, you know, the one piece of advice I would get and a big problem that we've seen in some of the houses that we've been selling.

[00:33:05] If you buy that new home and you are going to finish the basement, you need to address the amount of capital that you have to put down on closing

[00:33:16] and how it's going to look to an appraiser and how it's going to look to your financer.

[00:33:19] Because we have seen perhaps an epidemic of people finishing basements, spending $70,000 to $100,000 and not realizing that appraisers don't put that much value on that finished basement,

[00:33:31] even though the income it can generate could be quite substantial.

[00:33:34] But you will probably have to have the cash for that finished basement on closing.

[00:33:38] And the whole deal can fall apart if you're not aware of that and prepared for that.

[00:33:43] That's an excellent point.

[00:33:44] I think I'm glad you mentioned the tide because, you know, we've been talking a lot about the tide, but it's more in the bad way.

[00:33:51] The tide's out right now and we're having a swimming naked moment.

[00:33:53] But when it comes back in, it should lift all the boats.

[00:33:56] Milko, did you want to take a stab at that question?

[00:33:58] Kind of the best opportunity that you see in the market right now and then we'll wrap up.

[00:34:00] More from like a new housing side.

[00:34:02] And in Niagara, like we are seeing a couple of members of OHBA in a downturn look to innovate.

[00:34:08] So there's like Pinewood is doing the multi-generational housing type.

[00:34:12] So that's interesting.

[00:34:13] I think people are looking at unique ways of having like basement rental or separating the main floor and second floor to look at renting that out while living in it.

[00:34:24] People looking more closely at ADUs.

[00:34:26] I think that's also we're having those conversations with the ministry to look at regulation around that.

[00:34:34] How do we do that safer?

[00:34:35] What are some constraints?

[00:34:36] How can we have increased density within a single family home?

[00:34:41] I think as we see like investor capital flow out of the condo space, maybe I would call that speculator capital even a little bit.

[00:34:46] You're starting to see a lot of interest in what you're describing, like these more innovative ground based concepts where somebody says, OK, can I buy a row of three townhouses that each have two units and put CMHC financing?

[00:34:58] So all of these worlds are kind of coming together.

[00:35:00] And, you know, it's really like makes me think that necessity is the mother of invention in a lot of these cases.

[00:35:04] And it's good to see the market responding to try and solve the problems.

[00:35:07] I think we kind of took a year off where everyone was trying to figure out what was going on.

[00:35:10] And now it's like, OK, we all have a job to do.

[00:35:12] It's to make houses, make money, you know, make create housing for the for the market.

[00:35:16] And it seems like we're actually progressing towards doing that now.

[00:35:19] And as I'm listening to what you're saying, and I'm taking a long term view of this for someone who's got a long term view on their investment, perhaps 20 years down the road.

[00:35:28] We are I believe we're going to see more intensification.

[00:35:31] We're going to see more stacked townhouses the way the market is right now.

[00:35:34] This the next six months may be the best time in your investment career over the next 20 years to buy that low rise townhouse with a patch of grass in the backyard,

[00:35:47] because as a percentage of the available housing types, there may be less and less of those.

[00:35:52] And, you know, if interest rates come down, I worry that house prices could see some movement upwards.

[00:36:00] I hope that that's not the case.

[00:36:02] But as a long term play, you want to buy what there's going to be less of that may hold the value the best.

[00:36:10] For sure. No, I couldn't agree more. Amazing.

[00:36:12] Thank you so much. Really appreciate your time.

[00:36:14] Yeah, no problem.

[00:36:15] I'm here with Scott Anderson, the OHBA CEO.

[00:36:20] Wow, that's a hell of an acronym right there.

[00:36:22] It really is. You should see my business card.

[00:36:25] Scott, thank you so much for joining us today and thank you for having us.

[00:36:29] It's been an incredible event over the last couple of days.

[00:36:32] We're here to talk about red tape, everyone's least favorite tape.

[00:36:38] But before we do that, I'd like to have you introduce yourself.

[00:36:42] Speak a little bit to what it means to be the CEO of an organization such as OHBA.

[00:36:48] Great. Yes.

[00:36:48] So I've been in this role for about five months now.

[00:36:51] And then the CEO of this organization is really the one that's leading the organization on representing home construction industry and renovators in Ontario.

[00:37:00] So one of the mandates or the main mandate I was given by the board coming in was to modernize OHBA's approach in dealing with government and dealing with rolling out member services.

[00:37:11] The types of events we're pushing out, such as the conference we're at here over the last few days.

[00:37:17] And then also on training and training is really evolving and needing to be more responsive than it has been before.

[00:37:23] So I have this great job of being able to synthesize all of that together and try and bring that into a new modern agenda.

[00:37:32] So I've just brought on a great new team.

[00:37:35] I've gone from a small staff group up to over 10 now where we're focusing on how we're approaching government relations,

[00:37:41] how we're approaching training and representing what this industry means and the economic clout that it has in the province.

[00:37:47] So I would describe me as having the greatest job that I could ever have.

[00:37:51] Wow. I love that. If only others were so lucky.

[00:37:55] Okay. So back to what we're here to discuss today, which is red tape.

[00:38:00] And I've already made these bad jokes about duct tape and gorilla tape and red tape being the worst of them all.

[00:38:06] But, you know, red tape means different things to different people.

[00:38:11] What is it before we get into how to overcome it or some changes or how to reduce it?

[00:38:16] What does red tape mean to you?

[00:38:19] To me and to the industry, red tape is just literally a barrier that is preventing getting a shovel into the ground.

[00:38:26] We hear governments at all levels, federal, provincial, municipal, talking about the importance of housing.

[00:38:31] We've never seen this as a priority at all three levels before.

[00:38:34] So this is a really unique window that we need to figure out how we capitalize on to be able to deliver.

[00:38:40] When we think red tape, we think federal level.

[00:38:43] They have a bit of a rule in housing.

[00:38:46] It's mostly about transfer payments and putting money into that.

[00:38:49] They're not involved in the direct delivery of housing solutions other than really putting money in.

[00:38:55] Except we've seen in the last few months this particular government looking for ways to encroach on that provincial space.

[00:39:02] So the domain for housing policy, how municipalities have the tools that they have really sits at the provincial level.

[00:39:10] Municipalities are a creature of the province.

[00:39:12] So when municipalities are taking direction from the province, they're trying to interpret what that provincial direction, that strategy is.

[00:39:21] Sometimes the province is pretty good at defining what that strategy is.

[00:39:25] Other times they're really, really vague and it's open to interpretation.

[00:39:29] So this is where we're really seeing the red tape at the local level because municipalities have an opportunity to, when you can drive a truck through the holes left in a policy, you can kind of take it whichever direction you want.

[00:39:42] And some of them have.

[00:39:43] So when, you know, use an example like Ontario Building Code, which was covered in the sessions this morning.

[00:39:49] Building Code really sets a standard on what municipalities are supposed to be using to evaluate site plan applications.

[00:39:55] So when a builder puts an application in and says, this is what we want to do.

[00:40:00] This is the type of homes, where we want to build them, what these homes will look like, the size of them and so forth.

[00:40:06] Municipality looks at that and is supposed to evaluate it at the level of the Ontario Building Code.

[00:40:11] To quote our Minister of Municipal Affairs and Housing, he's made it really clear in his delivery, code is king.

[00:40:17] And any municipality that tries to evaluate an application beyond that standard is doing so against the direction provided by the province.

[00:40:27] They have been very clear on this.

[00:40:29] Unfortunately, municipalities, City of Toronto was one of them, that takes it in a different direction.

[00:40:34] Now, that being said, we have members that build as a business model, have set their direction that they're building above the code.

[00:40:42] That's their choice because they have a market that can sustain that.

[00:40:45] And we are very supportive of members that do that.

[00:40:48] They're building to what's called green development standards.

[00:40:51] And those are meant to be voluntary.

[00:40:53] What we're seeing, though, is municipalities are setting green development standards as their bare minimum of how they evaluate an application.

[00:41:01] That's how we're defining red tape.

[00:41:04] Element of red tape is where a municipality is just not clear or continues to change on what they're asking for and when they're asking it for.

[00:41:12] In working with the provincial government, we're trying to get their support in helping to clarify this, to clamp down on this.

[00:41:18] If you're building in Richmond Hill and then you're building in Stouffville and then you're building in Durham, it should be a very similar process.

[00:41:26] And right now, it is anything but.

[00:41:27] But it's different in terms of timelines that are required.

[00:41:31] It's also very different in many cases of the fees that are being charged for these applications.

[00:41:37] So when you are a builder trying to navigate three or more processes on how to get a site plan approved, that's a big problem.

[00:41:45] Yeah.

[00:41:46] Yeah.

[00:41:46] You know, it's fascinating.

[00:41:47] In the midst of the worst housing crisis Canada has ever seen and experienced, something that's so obvious at this point, you'd think that would, you know, the trickle down or trickle up effect of municipality all the way up to the federal level of government would be doing anything they could to get these shovels in the ground, whether it be in any of the municipalities or towns or cities that you mentioned.

[00:42:10] And, you know, knowing that one in four Canadians lives in the GTHA, it's just I just don't understand why there's this extreme lack of communication between these municipalities.

[00:42:23] And like, what is the difference between building in Markham or Stouffville?

[00:42:26] Right.

[00:42:27] They're literally 10 kilometers from each other.

[00:42:29] They butt up against each other.

[00:42:31] Can you can you speak to what that difference may be and why we're in that issue?

[00:42:37] Like, why did like why does that exist?

[00:42:39] And and I know you guys are doing great work to try to overcome it.

[00:42:42] So walk me through maybe how we got here and and how we're going to get through it.

[00:42:48] So I think the the heart of the problem here is just a lack of clarity between those levels.

[00:42:53] You're making reference to how could that be possible when all three levels of government are wanting more homes to be built.

[00:42:59] That's the message that we hear.

[00:43:01] But when you look at the practice, so the federal government trying to, as I said, encroach in this space, but they're bringing money with it.

[00:43:08] Now, are the programs as as clear and open as they really should be?

[00:43:13] No.

[00:43:13] The main issue that they should be funding at the provincial and the federal government level is infrastructure.

[00:43:18] Full stop.

[00:43:20] Sewer, water.

[00:43:21] That's what they need to find.

[00:43:22] Is that where the kind of the bottleneck really seems to be like we can build the homes, but we can't we don't have the infrastructure to support them?

[00:43:29] That is certainly one of the things that's at the heart of it is when municipality wants to develop and then they they have a land that piece of land that's available.

[00:43:41] They're wanting to do that site plan and get that approved, but they may not have the infrastructure available to do it.

[00:43:46] So we're encouraged by hearing the Ministry of Municipal Affairs.

[00:43:50] The minister is saying we need to figure out a better way of doing it.

[00:43:54] He points to an example that's in York region where they put in 1999 a communal system in place, a communal wastewater system that is still operating today.

[00:44:04] They they they got it approved with a six thousand unit capacity.

[00:44:09] They only needed a thousand units at the time when they developed the golf course that is located on.

[00:44:15] And the municipality at the time was not overly in favor of the provincial government put it through.

[00:44:20] Now that remaining five thousand unit capacity is being used by the municipality for additional developments in that area.

[00:44:27] So it was one of our members that actually put this in place as a developer.

[00:44:32] And thankfully he did because it's provided five thousand more units that are now possible were possible under that plan by him thinking forward.

[00:44:41] So on that note, what else can be done in from the infrastructure side of things like, you know, going back to the Markham and the Stouffville examples kind of thing?

[00:44:53] It seems like we are getting closer to more shovels in the ground.

[00:44:58] The pendulum does seem to be swinging.

[00:44:59] There's there's a lot of buzz with the builders and the people here.

[00:45:04] But if it if it goes back to, OK, well, there's enough not enough water and sewer to to support these things.

[00:45:10] Like, how do we overcome that?

[00:45:13] So no matter what we're talking about, red tape, but as with any of these topics, money always features into it somewhere.

[00:45:20] So money is is the driver behind the infrastructure.

[00:45:23] So we had six cabinet ministers and a parliamentary assistant on stage yesterday talking about the cross government solutions that are needed.

[00:45:31] So it's no longer just one ministry that can solve these issues because they're so complex.

[00:45:35] But the Minister of Municipal Affairs and Housing made a really good reference yesterday.

[00:45:40] They got a bit of excitement going into the crowd talking about new sources of funding for water and wastewater, because right now they're raised on the development charges, which means that there's 100 unit development.

[00:45:52] Those 100 people are funding the expansion of water and wastewater infrastructure that's going to generally benefit larger to a scope larger than that development area.

[00:46:03] So it's being funded on the backs of a small group of people for the benefit of a much larger group of people.

[00:46:08] That model doesn't work.

[00:46:10] It used to be referred to as growth paying for growth.

[00:46:12] The world's changed.

[00:46:13] This is no longer acceptable or inachievable.

[00:46:17] But the minister made a reference yesterday to potentially opening up access to pension funds to be able to bring that type of funding into water and wastewater.

[00:46:26] Right now, they're statute barred.

[00:46:28] They're prevented by legislation for municipalities to take money from pension funds.

[00:46:32] Why?

[00:46:33] I don't know.

[00:46:33] You'd have to go back and look at that.

[00:46:34] But this is a great opportunity.

[00:46:36] Now we're encouraged that the minister is willing to look at that.

[00:46:40] But when we look, let's go back to the whole question of red tape.

[00:46:42] It really is about consistency.

[00:46:45] And the minister is echoing our words on this as well, which again is really encouraging.

[00:46:49] He thinks if you're building in one municipality, it should be a similar experience to the other.

[00:46:54] Now this is a daunting task.

[00:46:55] This is, we've got 444 municipalities.

[00:46:58] There's probably about 600 different ways of doing things because municipalities are not always consistent in their approach.

[00:47:04] But they're asking for study after study.

[00:47:07] The municipal benchmarking study that BUILD is putting out today is going to showcase how much it has changed in just the last couple of years.

[00:47:17] And there's a chart in there that talks about the number of reports.

[00:47:20] And one of the worst offenders in there is the town of Caledon, where it is asking for an upwards of 70-some reports just for one application.

[00:47:29] What does that signal to the marketplace?

[00:47:31] Caledon is not interested in actually having building growth taking place.

[00:47:35] But you see all of the announcements by the mayor.

[00:47:38] She's extremely interested in new development.

[00:47:40] Those things just do not match.

[00:47:42] You can't square those.

[00:47:44] So that inconsistency across municipalities is a big barrier.

[00:47:48] And that's like the first thing I go to when somebody says, well, what's the red tape barriers that you're experiencing?

[00:47:54] It's the inconsistency in municipalities.

[00:47:57] I really appreciate that insight, Scott.

[00:48:00] And Caledon, if you're listening, do better.

[00:48:02] Come on.

[00:48:03] That is ridiculous.

[00:48:04] I want to thank you for your time, Scott Aniston.

[00:48:06] Absolutely.

[00:48:08] OHBA's CEO.

[00:48:10] Thank you very much.

[00:48:11] Thank you.

[00:48:12] The content of this podcast is for educational and informational purposes only.

[00:48:16] It is not intended as financial, legal, or investment advice.

[00:48:18] Always consult a qualified professional for advice tailored to your unique circumstances.

[00:48:23] The views expressed are those of the hosts and guests and do not necessarily reflect the opinions of affiliated organizations.

[00:48:30] Daniel Foch is a real estate broker licensed with Valerie Real Estate Inc.

[00:48:35] Website is Valerie.ca, V-A-L-E-R-Y.ca.

[00:48:40] And a member of the Canadian Real Estate Association, the Ontario Real Estate Association, and the Toronto Real Estate Board.

[00:48:47] Nick Hill is a mortgage agent and partner at OWL Mortgage License Number 10317.

[00:48:54] Agent License M21004037.