Leading the Home Front

Early on in the public campaign to bring the Homes for People strategy to the people, Housing Minister Ravi Kahlon was confronted by a group of demonstrators who disrupted a press conference to demand equity for the plight of renters in Vancouver. The Minister was neither nonplussed nor unsympathetic. A seasoned politician—he was Minister of Jobs, Economic Recovery and Innovation, and before that served in Parliamentary Secretary roles—he’s developed a thick skin and keen ear. More importantly, in his current portfolio, he not only understands the heightened sensitives and competing priorities around an issue discussed more often than the weather, but they are baked into his ambitious strategy to reform and transform BC’s housing sector into a system that works for everyone, and possibly as a model for the rest of the country. Earlier this fall, the Minister sat down with FVREB to talk about his plan and his hopes—and warnings—for the future of housing in the province.

FVREB: The housing strategy has been in the works for some time now but I guess we could say the rubber hit the road earlier this year with the so-called “naughty” list reveal followed by successive announcements on target quotas, zoning reassignments, the transit strategy, etc.

RK: Full credit to Premier Eby, who basically said “we don’t have all the solutions—the solutions are in communities.” It has nothing to do with left wing, right wing. We just needed to get some good ideas on the table and take them on. Some people say [the targets] are not strong enough, some say they’re too aggressive. But the reality is if we don’t have goals in each community, how are we going to achieve results? And so what we said to the first ten communities—and there are another ten coming very soon—is: here’s the housing mix that you need in your communities; now go away and plan, update your community plans to reflect what kind of growth you want to see, engage your community. But when you have a plan, do it. Don’t just relitigate the decisions over and over again, because we can’t afford it.

FVREB: We need to increase supply by some 60,000 homes over the next ten years. Tied up in the issue of supply is the issue of affordability and one of the concerns with densification is that there will likely be a jump in land prices, which, together with development costs, could have a follow-on effect as the increased costs get passed onto the consumer. How do we make sure that’s contained?

RK: It’s certainly a challenge. We know that in housing there’s no one solution that will solve all the challenges we have, so you have to do multiple things all at once. Supply is a very important piece of the affordability solution and the challenge we’re seeing right now in communities is that we’re just not approving and building things at a pace that we need to keep up with our population increase. We’re bringing record numbers of immigrants into this province but we’re not building enough homes to meet the demand. The densification measures we’ve brought in will allow up to four or more units to be built on larger single family lots. When it happens in a small area, it’s true there may be a lift in prices, but if you do it across a large swath of the province and make the program easily accessible, the lift will be smaller than what you might see if it was isolated to a small region or small area. That’s why we believe this effort needs to happen on a province-wide scale.

FVREB: One way to expedite supply growth is to make it easier for builders and developers to move through the gauntlet of red tape and the approvals process. Can you talk about your plans on this front to create a digital portal to harmonize and automate permitting and zoning across the province?

RK: The initiative to digitize building permits is a major step forward. The technology is already out there; the challenge is getting everyone to come together and agree on how we’re going to adopt it. So, having 15 communities, including First Nations, come forward and say, let’s do this together is a big step. What this means for homebuilders, and perhaps realtors too, is that instead of each community having different sets of requirements for what a complete application looks like, the aim is to have a common list of requirements accessible digitally to allow people to submit online so that there is a clear checklist of what’s needed. This way, the city knows that when the submission comes through, it’s complete. It eliminates time spent fixing incomplete applications and makes sure that there is a consistency across local governments.

FVREB: What timing are you looking at?

RK: We’ll have a PDF version by the new year [2024] and then we’ll have a bill enabled by the year after, so that when a project is digitally designed, it can be checked automatically for completeness and building code compliance, which we’re also aiming to digitize. We’ve created an advisory group which includes folks from industry, the construction & building sector, architects, engineers, and local governments, and our goal is by spring to have the first phase in place and to continuously add to the digital tools over time. We’re the first jurisdiction in North America to move collectively to standardize processes. In fact, the National Research Council is very interested and engaged with us on this work, and I think once we start moving, the NRC is going to say, hey, let’s move this across the country.

FVREB: The federal government has announced plans to increase immigration targets in the coming years, nearly one and a half million by 2025. BC will likely be allotted a significant portion, which will place an added burden on the housing market. How does this align with the new housing quotas you recently announced and our preparedness to accommodate the influx?

RK: We welcomed 240,000 new immigrants to British Columbia over the last two years. Not only are these newcomers welcome, they’re essential to economic growth. The challenge for us at the provincial level is that the federal government controls immigration and temporary resident numbers while we are left to manage the infrastructure and housing needs. I’ve been calling on the federal government to work with us, to align their goals with ours. In fact, the challenge is not so much the immigration numbers per se – we can manage that because we can project it over time. It’s the temporary residents numbers that’s the bigger challenge. We have seen temporary resident numbers go up dramatically – 120,000 international students in British Columbia this year, 80,000 the year before that, 65,000 the year before that. But it’s not the fault of the students; they’re following the rules. The fact is, there are a lot of private institutions at which over ninety-five per cent of students are international students and yet they provide no housing, so the pressure gets passed on to the communities. We have to realign those things.

FVREB: Do we have the labour pool and skills to make that happen?

RK: It’s a really important question. We have to increase trades training seats, which we’re doing right now. We have to be able to recognize the skills and experience people who come from other jurisdictions bring with them so they can actually use them here. We’ve introduced legislation to address that piece. But then we also have to innovate. I mean, if we think we’re going to be able to solve this problem by just having more people come, it’s not going to be possible. You know, the productivity levels in our construction industry are way too low. We need to find ways to adopt more technology, build differently, use different materials. I say to builders and developers all the time, if you think it’s expensive now, wait five years and see how expensive it will be for you to have to learn and catch up. The big developers, they see it coming and they’re already moving in that direction.

FVREB: Regardless of interventions and programs, market dynamics play as large a role as any when it comes to affordability. As rents and housing prices continue to rise, things start to become unsustainable for a lot of folks, some of whom see no alternative but to move out. Do you see a way to stave off or at least minimize this impact?

RK: People come to me and ask, who is going to solve the housing affordability crisis? Is it the not-for-profits? The private sector? Government? My answer is: everyone! If you believe that the private sector can solve this problem alone, you’re wrong. If you think the not-for-profit sector can do it alone, you’re also wrong; they can’t, they don’t have the capacity. And so what it means is that there’s a segment of our population which the private sector will serve – those who can afford market rents or afford to buy a home. Then there’s the rest of our population, which is going to require the private sector, government and not-for-profits to work together. That’s workforce housing – those needing units that are thirty per cent, forty per cent below market. How do we do that? We use government loans. We use government financing. We partner with the private sector to sell those units. We’ve seen this challenge in the past when after war times we had to build housing quickly for large numbers of people, so we need to go back and take a lesson from history. It’s all part of a program we’re calling BC Builds, which we’re going to launch in the new year.

FVREB: A case often made for improving affordability is to change how the property transfer tax is administered to free up additional wealth. Have you considered revisiting the policy?

RK: I was in banking for eight years, on the lending side, and I remember these conversations well: ‘only if they lower the property transfer tax, it would enable more people to get into the market to buy.’ The problem is, when you have such a limited supply, do you want to put fuel on the fire and drive up more demand? It’s not that we don’t want to make it more affordable for people to be able to buy their first home. Rather, when you enact these kinds of policies in a supply-constrained environment it may actually see prices skyrocket up because all of a sudden more people can get in. I’m not against the idea over time, but our focus has been let’s get more housing of all types online and once the pool grows, then you can look at measures to support individuals to be able to buy their first home.

FVREB: What about the way intergenerational wealth transfer is treated?

RK: We’re not looking at any policies around that right now, to be honest. But that being said, it is a major challenge. The next generation will be the first generation to be worse off than every generation before it. That’s counter to what every parent wants. They want their kids to have a better life than them—I certainly do—in all respects: environment, housing, education. And it’s a scary proposition to think that our next generation is going to be more challenged. I had a guy in my community when I was knocking on doors who told me, “I like the idea of four units on single-family lots, but I have to tell you, I’ve lived in this community for 50 years and I love it; I don’t want it to change.” I said, but it has been changing. Maybe not the physical housing structure, but who can afford to live there has. Young families can’t afford to live there. The changes around single family lots can help families that want to see their kids grow up in the same neighborhood. One woman in my community tore her house down and built four units on the same parcel of land that she raised her kids on. She lives in one of the units and her kids, now grown, live in the others. They’re still close, but they have separation and people applauded it. And I said to my mayor, why can’t we do this for more people.

FVREB: One of the big questions around densification concerns having the necessary infrastructure in place to support it. How are we going to ensure that transit, sewers, power grid, schools, and other services will be there to support it?

RK: We need to support growing communities’ needs. We just gave local governments $1 billion. We didn’t say you have to apply for it or tell us what you want to build. We just said, ‘Here’s the money. Just go ahead and decide what you need.’ Some communities, like Langley City, are putting it into the ground because they know that infrastructure will enable housing. Some are using it for community amenities because they know they’re going to need that for the social infrastructure. We’ve invested in the Iona water facility for upgrades. We’ve invested $500 million in TransLink so that they can continue to expand—we’re expanding transit all the way to Langley and again in Vancouver. Talking to young families, the younger generation, you can see a shift happening. If there’s good transit available, they’re fine without a car. They use electric bikes or scooters to get where they need and are embracing the concept of 15-minute communities—wouldn’t you want a grocery store and transit and rec center near your neighborhood? The key is planning. We have too many communities whose OCPs are ten, fifteen, twenty years behind and we just can’t have that, so we’re going to be making some changes on that in the fall as well.

FVREB: You’ve characterized the Homes for People plan as one of the largest reforms this province has seen in the housing sector in decades. How do we ensure that all stakeholders, especially local governments, buy into the vision?

RK: We have got to do something or we lose. Our kids are leaving the province because they see it’s becoming too unaffordable for housing. We can’t sit by and watch that happen. That’s what drives me. We said we were going to reform, and we are. We’re allowing up to four units on single family lots. We’re reforming around transit-oriented development, making more housing available close to transit. We’re reforming financing so that when somebody goes to build a home, they know up front the costs associated with it from a local government and not something that gets negotiated later on. Finally, we need greater certainty around decision making; when a project goes forward a person should know the clear path of getting it from point A to point Z. We’ve introduced legislation that will require local governments to shift their planning process to an up-front framework and proactively zone land to meet their housing needs which will help to reduce processes. It will provide a more efficient and transparent development finance tool called an amenity cost charge (or ACC) to be used as part of the upfront planning process, giving builders and municipalities a better, clearer, and more transparent understanding of costs associated with a housing project from the start. The message is clear: if there was a magic switch, we would have flipped it a long time ago. This is going to take time and it’s going to take everyone working together, but we do have a pathway forward and we’re working on it.