“We've kind of forgotten the housing system we had up until the early 90s. Canada had a decent housing system by international standards. Not fantastic, but not terrible.”
So begins my conversation with Jim Dunn, director of the Canadian Housing Evidence Collaborative, and Nick Gefucia, SVP Affordable Housing at EllisDon. I’ve asked these housing sector leaders to discuss how good policies are made and what reforms we need to see if we are to stimulate developments at the scale Canada’s crisis demands.
Jim goes on… “Then of course, federal and provincial spending ended and, while governments continue their long-term commitments, we are now digging out of a 30-plus year hole.”
The data support this notion. Since the turn of the century, 90% of the 2.7 million homes built have been for home ownership. Less than 2% have been for non-profit and co-op housing. There is a 500,000-unit gap between the accommodation we are building each year and what we need.
Jim and his colleagues have dedicated significant time to extracting from sometimes rather opaque reporting the information required to advise policy makers.
Communicating the Challenge
“Steve Pomeroy [Jim’s colleague and Industry Professor, Health, Aging & Society at McMaster University] is fond of saying good policy and good politics are not necessarily the same thing.
Jim Dunn & Nick Gefucia
"Getting people to do the things that are politically saleable and also can solve the crisis and reform the system is not easy. We have to help people understand the crisis.
“One thing we emphasize when we talk to governments is that we’re not going to be able to turn things around quickly, but they have an opportunity to reform the system—to do some things that make sure we don't perpetuate the problem; some things that are longer-term solutions; and some things that are shorter-term solutions.”
Nick asks Jim how he brought stakeholders to the table when developing the award-winning Housing Sustainability & Investment Roadmap (HSIR) project for the City of Hamilton: “HSIR seems a good example. The City was struggling with projects and was committed to CMHC programs. How did you present the challenge and achieve buy-in for reforms?”
“We were honest about the problems and shared compelling data,” Jim explains.
“We said, ‘the bad news is that you have to keep doing a bunch of challenging things, but we have collected data and devised a strategic plan with a long runway for implementation.’”
For instance, Jim’s team calculated that, for every new unit constructed under a federal program between 2011 and 2021, Hamilton lost 23 units that rented for less than $750 a month. He characterizes this as “putting these little drops in a bucket that has a big hole in its bottom,” while stressing that this sort of information is invaluable. It’s about explaining today’s challenges to counsellors, helping them understand that we can no longer rely on private developers to deliver housing at modest and intermediate rents; that while governments have an average lifespan of 3-4 years, housing works on a much, much longer time frame.
Jim suggests “… The question then becomes ‘how do you get the things done that are going to have impact long-term and within a political cycle.’”
A Patient Investment Model
“We recommend a patient investment model on the non-market housing side. We're not going back to the days where government writes a big cheque and operates large public housing. But, if you start now and you think about a 10-year time horizon, build non-market housing rented out at 125% of average market rent and operate it on a cost recovery basis as a nonprofit would, in 10 years that housing is going to be below average market rent. You can do that with the support of federal programmes, with some municipal investment, and it would provide a patient investment model and allow us to slowly reform the system.
“If we had every municipality in the country over, say, 100,000 people engaged in something like that, then we might be able to get to a much greater percentage of the population receiving their housing from the social sector. I think that is a good target. Getting to the OECD average for non-market housing would be a good place to start. When we get there, or we get close, then we increase the target.”
Nick is clearly enthusiastic about new ideas might scale delivery to meet demands nationwide: “Yes, this is a repeatable exercise, which was actually the precursor for me getting interested in housing. Back in 2018 I was still a lawyer supporting projects that were part of infrastructural strategic initiatives across Canada. The crisis, the National Housing Strategy and housing as a human right were big topics. And while I could see that the programs being delivered were well-intentioned, the dissonance for me was that they didn’t appear to use delivery models that could come close to meeting the supply gap.”
“I remember the first time we met,” says Jim. “I liked what you said about housing as infrastructure. It coincides with what my collaborator, Steve Pomeroy, says about the importance of making the sector more investable.
“I think you’ve said that, from a substantial delivery standpoint, we don’t need to look outside of our own experience for solutions, right?”
“Yes. With my perspective from private practice, Community Builders immediately became an advocate group because we were saying, ‘look, if you're serious about the scale and delivery that's required in Canada, there are some marks that are being missed here. And if you want the larger constructors to participate at the scale that is needed, you're going to have to adjust certain things.’ So, we got involved in a little bit more advocacy on policy than we intended to because we believed in advancing delivery models that Canada already uses to develop millions of square feet in social infrastructure successfully.
“I think if you get your delivery model right, everything follows from there. So, if you're looking at doubling the supply of non-market housing, really consider what that scale means. Scalability is undeniably the missing piece of the solution to affordable housing right now. All levels of government, and even non-profit organizations that typically work with relatively small unit counts, can consider aggregating projects to increase capacity, mobilize forces more efficiently, and attract competition in the private sector construction industry. With the right delivery models, you can advance a much more robust risk transfer to constructors and developers that are able to take that risk.
“You can also be less prescriptive with construction solutions. So, for example, EllisDon uses the same agnostic evaluation of every method to find the best fit for each community and its supply options. Sometimes a prefabrication method is most appropriate. A lot of the times, it's not. It's a separate discussion whether we want to build up the modular industry for the future benefit of the housing sector.
“That’s why I think the primary point to make to the policy makers is to consider delivery models for scalability; to use private sector experience to invigorate non-market housing and, as you say, Jim, make it more investable.”
An Investable Sector
While Canada has not committed to alternative delivery models for non-market housing, Jim and Nick’s respective teams have studied successful precedents.
“From a policy structure standpoint, the UK is a really interesting example,” says Jim. “Social housing has become a really important investable market. There is a whole financial ecosystem that revolves around investing in social housing and government has helped backstop that.
“One way they do it is with the housing benefit as a strong commitment and part of the revenues that go into a pro forma. Another way is to have a performance measurement system for nonprofits. Nonprofits are recognized, they do annual reports and then they get a rating for performance, which gives investors confidence.
“It strikes me that these things are adaptable and could bring a lot of investment to the sector in Canada. I think the National Housing Strategy would have benefited from looking farther afield to initiatives like this when conducting consultations for programs it was developing in 2016-2017. Especially as, at that time, the crisis had not hit the public consciousness.
“I just worry that we have not had a deliberate, systemic approach to assess things that we need to do, with consideration for place; for distant time horizons; for targeted supply strategies. In the last two, two and a half years, we've had two rounds where we have had this rapid scramble to inject a whole bunch of new things into the system and just not enough reflection.”
Given that Jim has worked for so long in academia and with public sector institutions, I’m interested to hear his take on the role of private corporations as investor and supplier to the non-market housing sector.
“That's a great question.
“Healthcare is a good example. It’s a single, public payer, with largely non-profit delivery (hospitals) and the whole population is entitled to the care they need. The private sector is involved in producing equipment, supplies, and hospital infrastructure – a line of business at EllisDon. The non-profit sector is a client for the private sector. Housing is a mixed private – non-profit – public system, but there’s an opportunity for private industry to see non-profit and public housing as a client, not a competitor. That concept – non-profit housing sector as client – comes from my collaborator Duncan MacLennan, Adjunct Professor at McMaster.”
Hope for the Future
While we remain clearly in a housing crisis, I hear plenty of positivity from Jim and Nick. I’m fascinated to end our conversation with thoughts about the future of housing in Canada—the potential for improvement, the initiatives that might work, and the people who will drive change into the future. I ask Nick to talk what has stood out for him since he launched Community Builders in 2018.
“I've been encouraged since we really started focusing on this problem by the commitment of individuals from different parts of the sector that are not elected. It’s not that I don't appreciate the elected officials who come in and create policy. It's that the commitment is outlasting political cycles and the solutions incrementally get better and better. The energy developed, for example, between the nonprofit organisations and private sector to figure out innovative models and ownership and project performance are impressive. I don't know if EllisDon would have considered an affordable housing-based design without confidence in this commitment.
“Look at organization, especially in the capital markets, for community bond innovations and such. It’s quite exciting.
“These solutions, while they seem bespoke, are part of a bigger back story. Added to government announcements, they tell an impressive story once you get into the nuts and bolts of it.
“My hope is that we avoid short-term strategies from a governmental perspective, whether it's federal or provincial. They are ambitious of course, but risk missing the mark in terms of considering past lessons. For us, particularly on the construction solution front, bursts of activity or ‘best attempts’ that perhaps don’t fully understanding the problem and potential solutions may not answer the challenge that Jim has identified so eloquently.”
“Right,” says Jim. “There's a huge opportunity there to just transform the mindset. Government and nonprofits are going to be involved in different kinds of investment in vehicles and, as Nick said, there's been a ton of innovation in that already. The private sector has an opportunity to make profit margins on all of the things that are related to housing delivery.”
This begs further questions about the types of housing we need, density levels, where we should locate it and related social determinants of quality of life. Those are questions that could—and hopefully will—fill another full-length article on the non-market housing sector. They are huge questions. I know Jim and his team are researching these questions, so I wonder how we build capacity for extensive research studies that will inform policy into the future. I ask him about McMaster’s new program for educating the next generation of advocates and sector experts.
“At the Canadian Housing Evidence Collaborative, we set goals for capacity building and one of the goals was human resource capacity building because we have very little research expertise and we have very little policy expertise in Canada. In part because there just weren't investments in the sector for the longest time. So I thought, well, how do we build a succession of new generations of housing expertise on the policy side of things and on the research side of things?
“At McMaster, we have an existing Master of Public Policy. It's a one-year, full-time online program. We were able to provide a portion of the curriculum that is specifically geared to housing. It's really exciting. We got approval for the full-time program in December of 2024 and took in our first class on May 1st of this year. It's a really wide array of different backgrounds that people are coming from, which makes it even more fascinating.
“One of the things that we're working on now is an executive education version of the program so that we can get people who are in the workforce and help them achieve this credential and develop their capacity in housing policy.”
We can all celebrate this initiative. Learn more about McMaster’s housing policy program on its website. And stay tuned to Community Builders’ Affordable Housing Insights for more sector intelligence from Jim Dunn and others!
