Good morning, Mr. Chair and honourable members.
My name is Wing Li, CEO of Windsor-based property developer Horizons Group. We are an eco-friendly developer in the Windsor and Essex County market, building sustainable homes at attainable prices.
Today, Canada has about 40 million people living in 15 million homes. Our homes contribute 17% towards the nation's total greenhouse gas emissions. By 2050, the population will probably double if we continue to welcome overseas immigrants at current rates. To achieve the federal government's 2050 net-zero vision, we must keep the carbon footprint of future homes as low as possible while encouraging existing homeowners to slash their household energy consumption with retrofit improvements.
Over the past 20 years, attempts have been made to induce people to buy energy-efficient homes accredited by Energy Star, EnerGuide or R-2000. Unfortunately, there has been little success, mainly because the higher price tags deter both builders and buyers from making an environmentally sound decision.
To ensure we can weather the global warming challenge, governments at federal, provincial and municipal levels; developers; homeowners; and investors—all stakeholders—must come up with a viable business model that could help all stakeholders pay a fair share of financial contributions that would eventually benefit them in the long run. That is what we call a “win-win-win” strategy to face the climate change challenge.
Horizons Group has a corporate vision of producing energy-efficient homes like the net-zero homes Natural Resources Canada has been advocating. By definition, net-zero homes are 80% more energy-efficient than those built under current building codes. To be more specific, the most important feature is that these homes use renewable energy to cover all or most of what they consume. In other words, their utility bills are always kept low, at, say, $30 to $50 per month year-round.
Our group does not mind being a first mover. We always walk the talk. Last October, we announced we would market 52 net-zero homes in Colchester in the town of Essex, which MP Chris Lewis represents. These homes feature geothermal and solar energy generation systems on the property. We have ICF walls, an airtight envelope and a metal roof. Finally, we will install a level 2 EV charger in the garage to encourage residents to switch to electric vehicles. In sum, we are creating a subdivision that would not put a burden on the town's power infrastructure. As a matter of fact, the engineer at Hydro One was amazed by what we told her when she asked us about the power demand for the new subdivision. I said there was very little.
We are finalizing the building costs for each home. The extra costs for the eco-friendly features are almost 20% of the total construction budget. While realtors and buyers love our eco-homes and the long-term benefits, they don't like the higher prices paid up front. As a good corporate citizen, we don't mind lowering our profit margin for a lofty social cause. However, we cannot price the homes beyond affordability or the prospective buyer's purchasing power.
That is where governments at different tiers must step in to make net-zero homes a real option. They must offer incentives to the builders and homeowners. The federal government announced, in the last budget, an investment tax credit of up to 30% for geothermal initiatives taken by new home builders or owners. No details have been announced yet, but I think this is a giant step in the right direction.
At the provincial level, we recommend the government waive the land transfer tax for buyers of accredited net-zero homes. At the municipal level, a city or town can choose to waive the builder's development charges or permit application fees so that we can keep our home prices low. The best incentive is to give the owners a tax credit on the home's property tax.
These combined government efforts will be a critical success factor in determining the destiny of net-zero homes.
Another positive development in the financing of green infrastructure is the participation of institutional money in renewable energy assets, such as those in which we are investing in Colchester.
Private investors have approached us. They said they are willing to pay us a buyout allowance for the geothermal and solar energy systems assets in return for a 25-year “energy as a service” contract with the homeowners to recoup their investment and make a profit.
If the monthly energy service fees are lower than the otherwise normal utility bills, we believe owners would likely accept the offer. They will then enjoy unlimited renewable energy without worrying about escalating utility costs or maintenance expenses for the next 25 years.