Human Resources Committee on Feb. 17th, 2023

[Paul Mason]

As we at CMHC have said in the past, we believe there's an affordability crisis within Canada that is driven primarily by supply. We feel that there are a lot of different aspects to housing in this country, but the one common denominator and underlying driver is supply. If there's one single thing we could do, it would be to increase the density and supply of housing in this country.

As you pointed out, our research suggests that we need to build 3.5 million more houses or homes before 2030. That won't be achieved through simply government funding. It will require the private sector and other orders of government and us to work together. I think the biggest gain we can make is by working together to try to solve this problem collectively.

[Scott Aitchison, Conservative, Parry Sound—Muskoka, ON]

Again, you may not have this right off the top of your head here, but would you be willing to provide us with some suggestions for things that we could be doing or provide comment on some of the ideas that some of us have come up with? For example, I think the federal lands initiative was a pretty small piece of the national housing strategy when you look at the overall strategy, but I think there's potential there. I think with the federal government, it's not always buildings, necessarily, because sometimes commercial buildings don't make sense to turn into residential buildings, but what about vacant land? When I was mayor of Huntsville, for example, we gave land away to Habitat for Humanity and to private developers with agreements that they would have a certain number of units within the complex that were affordable, based on the CMHC definition.

What other things should we be doing at the national level to put the feet to the fire of municipalities that are delaying rezoning processes and to pull out all the stops at the federal level so that we give up more land and make more land available? What other things would you suggest?

You have about 20 seconds to answer that.

[Paul Mason]

One program that we haven't talked about at all today is the innovation fund. It's one of those programs that are intended to drive innovations in the housing sector, whether it's construction or financing or any other. I think there's a great opportunity there. We just launched another stream of that. I think that's really important.

When you talk about working with municipalities and provinces, we feel that's really important. I would characterize it as working together and looking at ways that we can collectively...not just incent differences in municipalities but also how our programs can work together. There are provincial and municipal programs in housing as well. At CMHC we're constantly looking for ways to work with municipalities and provinces to better align the programs that we have.

[Scott Aitchison, Conservative, Parry Sound—Muskoka, ON]

Thanks very much.

[The Chair, Liberal, Bobby Morrissey]

We'll go to Mr. Collins, after which we'll end with three minutes for each party, as the clerk has identified.

Mr. Collins, you have five minutes.

[Chad Collins, Liberal, Hamilton East—Stoney Creek, ON]

Thanks, Mr. Chair.

I have a question around the whole issue of supply. I certainly understand, and most of your targets all reference supply, but I'm a little bit concerned that we're missing the word “affordable” with regard to supply.

You have affordability targets in many of the programs. We know, as was just referenced, that the private sector will take care of a lot of those supply issues by itself. We do need to provide some incentives for those things to happen, and maybe a lot quicker than they're happening now. How do we change your directive as it relates to the affordability issue?

I just find that with some of your responses today, we're missing the word affordability. We've seen some critiques and constructive criticism of some of the programs in the past in terms of building into those programs an element of affordability. How does that narrative change? Do you need a directive from the government that we have to do more from an affordability perspective and that it's beyond that 80% of AMR but something much lower than that? How does that happen?

Help me with that, please.

[Paul Mason]

I apologize if I haven't used “affordability” enough, because it's absolutely crucial. While supply overall is important at all levels, we can't lose our focus on affordability.

Each of our programs plays at a different...I would say along the housing continuum. Some, as you say, are more supply-driven. In fact, before the rental construction financing initiative, it had an impact on the increase to purpose-built rental. It's not only how much housing or the affordability but also the type of housing. Purpose-built rental has a really important role to play and not just building single-family homes or condominiums.

We operate within our authorities. When it comes to the depth of affordability, ultimately that's dependent on the amount of contributions that can be put into a program like the rapid housing initiative. It's the contributions that help housing providers provide affordable rents, because it minimizes the equity they have to put into the program.

I would say that would be the biggest thing. Other than just changing the definition or the requirement around affordability, it can be around the amount of contributions that we're putting into these programs.

[Chad Collins, Liberal, Hamilton East—Stoney Creek, ON]

Mr. Chair, that's the only question I have. I'm going to cede the rest of my time to my friend, Mike.

[The Chair, Liberal, Bobby Morrissey]

You have two minutes.

[Mike Morrice, Green, Kitchener Centre, ON]

Thanks, Mr. Collins.

I'll start by sharing that my frustration here today is based on the number of people experiencing homelessness in my community. It's tripled in the last three years to over 1,000 people. While that's not solely CMHC's fault, I have several local non-profit housing providers in my community telling me that CMHC is the single-largest challenge for them in getting more units built.

They're letting me know that funding is not being provided at agreed-upon levels, that loan insurance for mortgages is three times as long as industry standards, and that the process to engage is far too long and expensive.

Your website—and as we've heard today—says, “We are driven by one goal: housing affordability for all.” In my community, that is not what non-profit providers are experiencing.

I'm very disappointed that your answer to Mr. Collins with respect to real estate investment trusts was not simply zero dollars. The fact that real estate investment trusts are receiving funds ahead of non-profit builders....

If I can get in two questions, the first is this: Why is any real estate investment trust receiving any money from CMHC ahead of a non-profit provider?

You have 15 seconds.

[Paul Mason]

Real estate investment trusts are not receiving funding in our national housing strategy programs at all, let alone ahead of not-for-profits.

[Mike Morrice, Green, Kitchener Centre, ON]

Okay, great. I think your answer to Mr. Collins earlier seemed to suggest differently.

My last question is simply, can I receive all documents that the committee is receiving, Mr. Chair? Is that possible?

[The Chair, Liberal, Bobby Morrissey]

Yes, I'm sure members would share their documents with you. They come to the committee, so ultimately, they're public.

As chair, I don't have a problem. It's the committee's prerogative, but I'm sure we can accommodate you, Mr. Morrice.

[Mike Morrice, Green, Kitchener Centre, ON]

I appreciate that. Thank you.

[The Chair, Liberal, Bobby Morrissey]

You had a short question. Is that it?

[Mike Morrice, Green, Kitchener Centre, ON]

I have one last one, then.

On the question earlier from Mr. Collins, why did CMHC decide to reduce the RHI amount per door? Why was that decision made?

[Paul Mason]

With the rapid housing, we're trying to achieve as many units as possible through the program. We allocated the money based on the total number of units we're trying to achieve.

[The Chair, Liberal, Bobby Morrissey]

Thank you, Mr. Morrice and Mr. Collins.

We'll have Mr. Aitchison for two and a half minutes. I've had to cut it back. That's what each of you will get.

[Scott Aitchison, Conservative, Parry Sound—Muskoka, ON]

Thank you, Mr. Chair.

I have a very specific question now about the process, which is obviously more in your department.

I've anecdotally heard examples of groups or organizations that have gotten through the painful process, gotten the funding agreement—it was a loan or whatever it might be. Then, of course, this year has been a difficult year for interest rates.

They got the approval at the beginning of the year. By the time they were able to get everything ready with shovels in the ground and the money starting to flow, the interest rate changed. CMHC committed the funds, but the interest rate was not committed at the time of commitment. The change in the interest rate at the beginning of the flowing of funds was enough of a change that the project didn't make sense any more.

It's a very specific example, but have you addressed that situation? I assume CMHC has some capacity to play with interest rates a little bit more than a bank might.

[Paul Mason]

The way that our lending works is we do Crown borrowing. We borrow from the government and then lend to our clients. We don't fix those interest rates. We borrow the funds.

There have been circumstances where we've borrowed those funds in advance in order to fix those interest rates, but that does carry some risk for both CMHC and the proponent if the deal doesn't happen.

Again, we've been in unprecedented—

[Scott Aitchison, Conservative, Parry Sound—Muskoka, ON]

I'm sorry to cut you off, Paul, but does it?

If that project doesn't happen, there have to be 10 more in the queue waiting. It's not like you're going to be left holding borrowed money that you can't loan, I'd have to think.

[Paul Mason]

I'm going to defer to Mr. Lahoud on this question, as he deals with this on a day-to-day basis.

[Simon Lahoud]

Absolutely. Thank you for the question.

I would say that between 2020 and early 2022 we had lots of cases where rates had gone up and made a lot of the projects unviable. We actually stepped up and provided more funding in terms of contributions to make those projects work.

That being said, we only fix the rate when we advance funds, because we're providing a 10-year loan. As soon as construction starts we fix the rates and start disbursing funds. If we fix them any time before, there is a risk that the project won't go through and that the non-profit would now be borrowing funds that they can't pay back. We actually wait until construction happens.

[Scott Aitchison, Conservative, Parry Sound—Muskoka, ON]

Okay, thank you. I think I'm out of time, but I will say, whoever does your polling and your analysis of satisfaction, I'd like to use them myself in my own career.

[The Chair, Liberal, Bobby Morrissey]

Thank you, Mr. Aitchison.

We have Mr. Collins for two and a half minutes.