The immediate appeal of the Gentle Density Leaders’ Summit was connecting with others who are building small-scale multi-unit housing. I self-identified as a developer even though I’ve never developed a property in British Columbia or anywhere else in the last 15 years. Developing real estate became a recent aspiration for me with the new small-scale multi-unit housing that was brought about by the Province.
The event started with a land acknowledgement and some First Nation people sharing some of their song and dances. This was more than a few words recognizing the absence of a treaty and identifying as a settler which has occurred in so many others that I’ve witnessed. The conference organizers incorporated the First Nation’s participation in a non-trivial way. That was the most meaningful land acknowledgement I’ve seen.
Now, for an in-depth on the first three sessions, and my own take on the break-out table discussion after lunch
The First Gentle Density Panel: Who Should Pay DCCs
The Development Cost Charges (DCC) are a feature of nearly any development. The debate on the topic was quite animated. And rightly so, who pays for infrastructure is a critical question. Should the developer of a new project that will increase the demand for sewer, storm, and water pay for the new pipes that would be required immediately, or required in the future? Or should the community pay? Who benefits? Who benefits more?
There was a poll at the beginning of the session. “Does growth pay for growth”? In other words, should the development cost charges be borne by the developers, and ultimately passed on to the buyers? Or should the community as a whole pay for the pipes to handle increased capacity? The vote was 29% developer pays, and 71% community pays. I voted “no”, with the majority.
Point
Then Gentle Density’s first panel discussion/debate began: a solid 45 minutes. The Mayor of Langley (Eric Woodward) had a compelling reason for the developer pays. The value of each affected property rises when the DCC costs are paid by the community. The buyer doesn’t get any discount, and the cost savings go in the seller’s pocket. That changed my mind.
Counter Point
But it also brought to light another question: can you (The Mayor) substantiate that claim? How do you know that the value of the lot-to-be-developed will rise? The Mayor’s claim was soon countered by The Professor (Tom Davidoff, Sauder School of Business, UBC). The social benefit of more capacity in the pipes is greater than the social cost – taxes paying for the growth. He buffed that response with a reminder to not allocate overhead costs. My mind changed again.
Finally, the Mayor expressed the opinion that single family homes should be taxed more. They’re inelastic since there is no room for substantial growth of that commodity. There were many more exchanges and comments. Five panelists contributed many thought provoking ideas. The Mayor changed my mind first, but The Professor changed my mind back.
The Panel Panel
The next panel discussion was much less contentious. Build housing off-site, and transport the panels to the site for assembly. Two builders and heads of two professional associations appeared on this panel. One manufacturer of off-site fabrication claimed a 12-person crew could assemble a house in 5 days. The other boasted 15 projects completed in 15 months. Both are much better than the speed of on-site construction.
Officials from the Manufacturer’s Housing Association of BC and the Building Officials’ Association of BC dominated the conversation on applicable building standards. Standards for modular homes are different than standards for mobile homes.
The Labour Factor
The most significant take-away from this panel was the labour for on-site vs off-site. There are a few key factors that favours off-site construction, labour-wise. First, and possibly most significant, is the available labour pool. On-site construction includes 5% women. Women make up 40% of off-site construction workers. A larger labour pool is available to draw upon when the pool of available workers is nearly doubled.
Second, the location is more stable and generally nicer. Off-site: punch in at the same place every day. Work in a dry warehouse, and eat lunch indoors while sitting in a chair at a table. Contrast that with going to a different site each month, or even each week. Maybe it’s 10 minutes away. Maybe, it’s 45 minutes away. You can never be sure what the next week’s commute will be. Onsite construction work involves working in the rain, wind, and snow. Working in a manufacturing facility avoids all that.
An off-site manufacturing facility can be located where there is a healthy supply of labour. Currently, developers build new housing the finished home is most expensive. This the construction occurs in high rent districts. Consequently, the on-site labour pool needs to pay higher rent than those working in a manufacturing facility located in a less land-speculative area.
Off-site manufacturing seems so much better. Why isn’t it happening more often despite 6-7 companies in BC providing a pre-manufactured product.
Financing Gentle Density Developments
Financing is foremost on many people’s minds in the real estate industry. A panel of three discussed the ins-n-outs of financing projects, particularly missing middle projects. The panel featured a “developer’s accelerator group”, as well as a conventional lender through a credit union and a private investment group.
The representative of the private investment group, Alicia Medina of Sacha Investments, gave a perspective that really piqued my interest. She said that her group was not intent on maximizing profits at any costs. They wanted a balance of social responsibility and profitability. That resonated with me. This type of financing fits in with Gentle Density.
Twenty and thirty years ago, I would say that “we are a part of the earth, not apart from it.” Sacha Investments puts forward the idea that “We are not separate from nature, but rather a part of it.” Those two sentiments align quite well. The three qualities that Sacha Investments looks for when evaluating opportunities are (1) past performance of the experts, (2) the value and the math, and (3) the security of title.
Alkarim Devani represented mddl, a developer that is apparently operating across Canada that also sponsors a “developer accelerator”. I’ll be finding out what that’s all about in the coming weeks.
The mutual consensus among panelists was that the Trade Wars is bringing a lot of uncertainty into the financial arena.
Big Ideas: Tabletop Discussion
This was a fun exercise. The Gentle Density conference organizers asked for ideas for table discussions. Maybe a dozen ideas surfaced. I contributed “Get rid of Form & Character permits”. I counted 15 people around this table. Someone from the conference sat and took notes on a whiteboard for delivery to the greater conference-wide group.
Dismiss Form & Character Permits
The reasons for getting rid of Form & Character permits are many-fold in the residential domain. First, let the market decide what the building looks like from the street, rather than the neighbours.
Second, every bit of community feedback results in a more expensive structure. From gables to depth changes to accents. It all looks prettier from the neighbour’s home, but the neighbours aren’t paying for it. Let’s prioritize affordability over aesthetics
Third, simpler designs are more energy efficient. Every corner (inside or outside) in the exterior wall is a thermal bridge. When the Passive House consultant models the energy balance, everyone can clearly see the proportion of heat loss through thermal bridges. Every transition from one exterior wall surface to another exterior wall surface. Each gable adds more structural material and higher thermal conductivity. Every window that is not there for a reason is a conductor of heat to the outside.
Other Safeguards
That doesn’t mean we completely dismiss aesthetics. It means the market, by way of the buyers, dictate aesthetics. Every form and character accent costs money when it’s built and loses energy (and money) when it’s lived in.
Now, the strongest counter to my claim was from a City planner. The City needs to retain funds to make sure, for example, the landscaping is finished. This is to ensure it’s not an eyesore in the neighbourhood. I countered with the example of a four-plex. There will be four buyers and four lawyers representing those buyers who will make sure the front yard doesn’t remain a mud pit. We simply don’t need that redundancy.
At least one of those lawyers will demand money be held back in escrow if the landscaping is not completed upon purchase. The City doesn’t need to babysit developers. The buyers have the same interests as the neighbours, and their lawyers will look out for those interests.
Getting rid of Form & Character permits makes the project less expensive to build. Makes it more energy efficient. And puts those decisions in the hands of the new owners, not the neighbours.
Highly Technical
The last two panels were very technical: mechanical systems, and the electrical grid by way of Technical Safety BC. Very good information, but quite dry as well.
On the Whole
I’m very glad I went to this Gentle Density developer conference. Oddly enough, when we stood up by profession, I thought I was the only one standing when “developers” were called. There were lots of architects, but I think the most represented demographic was city staff. I wonder how many municipalities sent a representative. Now, one last thing. To the staff member of the Small Housing non-profit, SSMUH is not pronounced with an “a” at the end. Why is there such distain for the Province’s acronym that represents small-scale multi-unit residential development, aka missing middle, aka, gentle density. Personally, I think SSMUH is much more eye-catching
