We had an opportunity to connect with Don Iveson, former mayor of Edmonton and co-chair of the Taskforce on Climate and Housing. He shares his thought leadership on Canada’s colliding crises, the housing crisis and the climate crisis, and shows a positive way forward.
You co-chair the Taskforce on Climate and Housing with Lisa Raitt. Can you tell me about its mandate and desired outcomes?
It is wonderful to be part of this important national discussion on climate and housing, with a brilliant team and co-chairing with Lisa Raitt, who brings her deep knowledge and expertise. It helps to have cross-partisan diversity on a project like this too.
We are tackling a very ambitious set of questions in months—what might typically be the scope of a five year Royal Commission. We can do this because we are drawing on existing work that resides in various silos — in housing, climate, infrastructure, fiscal and construction. We’ve brought all of these disciplines together around this interdisciplinary task force table with expert research support. And what we realized very quickly is that when you slam all of this existing work together, a whole bunch of things become clear about what works and what doesn’t.
What we’ve already been able to demonstrate is the enormous difference between growth with weak climate policies compared to growth with strong climate policies. If you build with greater density and apply modernized building codes with greater building efficiency, our modelling shows we can reduce our carbon footprint by about 100 megatones per year by 2030.
The changing weather is forcing us to contend with building better now and will continue to force some reckoning around where and how housing is built. So, let’s avoid these climate risks by building smarter now. That in itself will contribute enormously to housing affordability over time.
I’m looking forward to the task force’s final recommendations to each order of government in the New Year.
What are some of the challenges and new approaches to solving the housing crisis while adapting to climate change?
There are many challenges — aging infrastructure, fiscal challenges, accelerated growth, an inflationary environment, costs rising faster than the means at cities’ disposal, and, of course, deteriorating climate risks. It was a perfect storm before the housing crisis. It’s not all about money, but a lot is about money. I’ll get to that.
First and foremost, it is about responsible planning, responsible construction and leveraging existing infrastructure in the ground. A recently released Federation of Canadian Municipalities report has determined that the average cost of infrastructure serving each existing dwelling is $107,000. If we choose to build housing in a high-density urban format, this average infrastructure cost will come down. If we decide to develop in a low-density suburban format, this cost will create further fiscal drag on municipalities and residents and lock in more GHGs.
Planning at a regional scale is critical. There is no point in a centre city making good decisions that are cancelled out by poor decisions on the part of surrounding suburbs. You have to look at infrastructure systems, whether they be water and wastewater or roads and transit, at the regional scale, and how to create long term fiscal efficiencies for all. I’ve been doing some work with the U of T School of Cities on the need for a stronger Metropolitan Mindset in Canada. Some provincial governments like BC actively require this type of low GHG growth, some are being less active, and some are not prioritizing smart growth at all. Look at the uncertainty in the Greater Toronto Area caused by provincial policies.
This type of regional, systems-based planning is long-term work. In the meantime, we need to grow in a way that doesn’t make things worse, fiscally or environmentally.
What about climate adaptation?
Climate adaptation is about water risk — too much when you don’t want it or too little water when you need it. So, water issues are central to climate adaptation. A lot of attention is paid to flooding, but drought and/or fire are chronic risks for some communities. I work as an executive advisor on climate resilience for The Cooperators. As an insurer, we are working with an Alberta community on its water pressure for firefighting. Achieving firefighting water pressure and ‘fire smarting’ vulnerable properties (removing wooden decks and brush on the property) may not eliminate the risk of wildfires. Still, it will reduce losses, buy time to put out the fire, or at least buy more time to evacuate. So, for this community, we are working to model the avoided loss ROI of having more water to fight fires with. But it should also contribute to quality of life and peace of mind, on top of insurance affordability and availability. Stay tuned for more on that.
The economic levers towards investing in adaptation and resiliency will be strengthened through brute force when it starts to hit a household’s ability to access insurance and mortgage financing. Increasingly, banks and other financial institutions will be required to disclose where their loans are exposed to climate risks. The economic consequences for property values, investment patterns and access to capital over time will have a direct impact on the housing market. That’s where investing in water management investments — whether they be in dykes, berms or improved fire suppression — to protect your community home values will pay off.
In southern Alberta, communities are adapting to the long-term issue of drought. It is a chronic issue that Calgary and the province have been planning for, treating water as a scarce commodity through restricting new water permits, prohibiting interbasin transfers, and retaining water when it is abundant to recharge groundwater.
What is meant by ‘smart housing’?
The federal government is putting elements of smart housing policy in place. The next iteration of the federal building code will cascade into provincial building codes and local codes. By working with Cooperators and the task force, I’ve learned that the deployment of these building codes needs to accelerate if we are to succeed in building the housing needed in a climate-smart way. If we don’t do it right, that is, building in mitigation and adaptation to climate, we could worsen resiliency and GHG emissions several generations to come.
The same applies to urban planning and avoiding hazard zones. We need to build in the right locations with high building standards. Even just achieving anything like the supply of housing that CMHC has called for — five million housing units to return to 2004 housing prices — has to be delivered differently. This involves standardization, manufacturing and streamlined approvals. The whole municipal permitting process has to be modernized, and this has started already with digitizing the process.
It is also about how housing gets delivered. We are still building houses like we used to make cars — each one unique and customized. Henry Ford mechanized and standardized car manufacturing. We need the same revolution in housing manufacturing, automating manufacturing housing components in factories. It is the only way we will deliver housing at the velocity needed.
Sweden builds half of its housing using this technique. Canada needs to transition away from home building towards home manufacturing.
What about the elephant in the room — how and who should finance housing projects and the infrastructure and servicing needed to support them?
It’s important to distinguish between the market component of housing and the non-market component that is subsidized to create social and affordable housing. We need lots of both. The market component isn’t meant to be subsidized by the government, though it is sometimes. The non-market component requires some subsidies so the end product can be offered at below market rents.
I believe the only way we’ll break the back of the housing affordability crisis is through sizeable federal government intervention in non-market housing, favourable financing, donated land, and grants to bring the capital costs down to a point where enough housing is available for those who can’t afford the market. Plus, abundant market supply to correct supply and demand.
The dilemma for municipalities is: should non-market housing providers be exempt from development charges, property taxes and user fees? These are important sources of revenue for municipalities. If non-market housing doesn’t pay, should other ratepayers subsidize non-market housing? FCM is calling on a new municipal growth framework where the federal government will assist municipalities in paying for infrastructure to support both non-market and market housing delivery. There’s a lot of fine-tuning to do here.
Whether and to what extent the federal government should support market housing is a separate and important question, as is how a municipality covers its costs. A municipality can charge builders for all infrastructure upfront, so it’s built into the initial price, or it can recover it over time, amortizing the cost of pipes and plants over the life of asset using utility fees and charges. Or some of both.
I do think municipalities could use some assistance with the cost of infrastructure for market housing, provided its efficient and climate smart growth. It could be in the form of low interest rate loans, or grants. But grants should not subsidize the status quo. They should serve as an incentive to get to better, more efficient growth, which has some upfront costs like transit and district energy.
However you slice it, municipalities need support to build the necessary infrastructure to support the full spectrum of affordable housing.
I’ll add another item in terms of financing infrastructure to support housing. There is the question of resilience of those communities themselves, and how it will affect access to capital and growth in the future.
In the U.S., there is increasing awareness of the risk posed to individual properties. The First Street Foundation has done a property-by-property level climate risk assessment, which is being referred to when a property changes hands. So if you have invested in the resiliency of your property and/or your community, it could contribute to a revaluation of your home. In time, we might see risk ratings in neighbourhoods act like a bond rating for a community. It wouldn’t stop capital flows but could bend them by affecting risk premiums in borrowing costs. Canadians do not have access to this type of information yet, but they will before long. Canadian lenders are starting to think about this.
As risks are mitigated, this will be where capital flows. So, as we bring those risks down, markets will start to price that in and demand resilience.
Communities that are ahead of this change will do better in terms of economic development and valuation compared to those that don’t. Conversely, there will be a cost of inaction for those not ready for risks that are being priced into the market.