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BMO Breaking Down Barriers to Affordable Housing

 

BMO is committed to boldly growing the good in business and life for a sustainable future, for a thriving economy, and for an inclusive society. And with this, BMO Financial Group just announced a $12 Billion financing commitment towards affordable housing in Canada. BMO General Counsel and Executive Committee Lead for Sustainability, Sharon Haward-Laird, and Jonathan Hackett, Managing Director and Head of Sustainable Finance, hosted a panel with leading Canadian experts to discuss how affordable housing and infrastructure increase access to housing and promote economic development. 


Listen to the full discussion

Sustainability Leaders podcast is live on all major channels including AppleGoogle and Spotify.


Participants include:

  • Sharon Haward-Laird, BMO General Counsel and Executive Committee Lead for Sustainability

  • Jonathan Hackett, Managing Director and Head of Sustainable Finance

  • Romy Bowers, President and CEO of Canada Mortgage and Housing Corporation (CMHC) 

  • Chief R. Don Maracle, Tyendinaga Mohawk Council, Mohawks of the Bay of Quinte 

  • Mike McGahan, CEO,  InterRent REIT


Financing Affordable Housing for all Canadians

The Canada Mortgage and Housing Corporation’s (CMHC) ambition to build a nation where, by 2030, all Canadians have a home they can afford and that meets their needs, is a complex one that will require broad-based action from private and public stakeholders.

That was the over-arching conclusion of an expert panel hosted by BMO Financial Group to mark the bank’s announcement on Aug. 5 of a $12 billion commitment to finance affordable housing over a ten-year period in support of CMHC’s aspirations.

“The supply of affordable housing in Canada, in communities of all sizes and all geographies, is a pressing issue for a number of stakeholders, including government, NGOs, and for us at BMO, as a purpose-driven, financial services company that calls nearly every community in Canada home,” Sharon Haward-Laird, General Counsel and Executive Committee Lead for Sustainability, BMO Financial Group, said in opening the panel.

Speaking on the panel were CMHC President and CEO Romy Bowers, Tyendinaga Mohawk Council Chief R. Don Maracle, Mohawks of the Bay of Quinte, and Mike McGahan, CEO, InterRent REIT. The panel was hosted by BMO Managing Director and Head of Sustainable Finance, Jonathan Hackett, and explored how the public and private sectors can work together to provide affordable housing for all and promote economic development, in particular for Indigenous Peoples.

“As we all know, affordable housing is a key determinant for good health as well as economic and social well being,” said Bowers. “I believe, and CMHC believes, that affordable housing is absolutely essential for creating a Canada that is truly equitable, and a place where everybody can fulfill their potential and really, really prosper.”

The challenges will be substantial, however, and occur in the context of record immigration and in the face of climate change, especially in more northern Indigenous communities.

Supply is the Big Issue

Panelists from across the board agreed that supply is a key factor impacting affordability.

“Supply is the big, big issue,” said McGahan, whose Ottawa-based InterRent REIT specializes in residential real estate. It also manages non-profit housing. 

“All supply is good because it will basically end up trickling down, which will make it more affordable for everybody,” he said, saying government and the private sector can work together to help cut back on bureaucracy and red tape and get buildings built faster, especially in transit-oriented areas of municipalities.

Immigration

Between now and 2040, the Conference Board of Canada says that the country’s population could rise to 45 million from 37 million today, with nearly all those gains coming from newcomers. “We’re looking at a record amount of immigration coming into Canada,” said McGahan. “We really need to align that immigration with housing.”

Bowers agrees. Most immigrants, she says, initially rent when they arrive in Canada, but there comes a time when they want to buy. The problem? There’s not enough supply to go around, especially in a city like Toronto, which is a favoured destination among newcomers. Cities need to think carefully about why there’s such a lack of supply and how to address that problem, Bowers said.

“We need to really think about why there is so much demand, and why is the supply response so slow,” she said. “There's no one single reason, but we need to really look at what those reasons are. How can we actually incorporate more dense housing into existing neighborhoods, so that we can create opportunities where all kinds of different people can live.”

Indigenous Peoples

For Canada’s Indigenous people, the need for affordable housing is urgent, according to Chief Maracle, who described a housing crisis due to lack of supply, affordability and the cost impacts of the COVID-19 pandemic. 

According to Chief Maracle, over the next five years, Canada must invest billions of dollars into affordable housing in First Nations communities. He said that, in Ontario alone, First Nations communities need $4.4 billion to meet their housing needs, including the cost of building housing units and dollars associated with providing infrastructure, water, sewer hookups and more. About a third of Indigenous households on reserve are living in very overcrowded conditions, while 25% of the housing on reserves requires major repairs, according to Bowers.

“Core housing need is much higher for Indigenous people,” she said, recognizing that past CMHC policies have not been effective. “When you compare them to the rest of the Canadian population, Indigenous people are 10 times more likely to become homeless, while there's about a 15% differential between home ownership rates between Indigenous families and other Canadian families.”

Bowers said the CMHC is committed to working closely with Indigenous housing providers to develop and support programs that meet the unique cultural needs of Indigenous communities.

Systemic Racism

There are still barriers to creating inexpensive housing, says Chief Maracle, including legacy issues like systemic racism by lenders. 

Banks, he said, have historically avoided loaning money to First Nations people, forcing them to borrow from other lenders at extremely high interest rates. As a result, many houses go unfinished. He said local reserve policies have made it difficult to get more land for Indigenous people to build homes on. 

“The reserve policy (must be) more efficient and have shorter timeframes – there's too much red tape,” he said. “Acquiring new lands continues to be a problem due to the lack of capital and the outdated claims policy.”

Working Together

All these issues will need to be addressed if CMHC is to meet its 2030 goal of ensuring everyone living in Canada has a home they can afford and that meets their needs. 

For these pieces to come together, however, and to create an adequate supply of affordable housing that is sustainable in the face of climate change, and which accommodates an annual influx of new Canadians, the public and private sectors will need to work more closely together.

“We recognize that the housing system is very complex, with many actors and stakeholders, and it's for this reason that it's absolutely critical for the private sector to step up and make a difference in their communities,” said Bowers. “Governments alone cannot solve the challenges associated with housing affordability, and today's announcement is so exciting for us at CMHC, because it demonstrates how partnerships can change the lives of so many people in need of safe and affordable housing. So, thank you so much, BMO, for this commitment.”

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Michael Torrance:

Welcome to Sustainability Leaders. I'm Michael Torrance, chief sustainability officer with BMO Financial Group. On this show, we will talk with leading sustainability practitioners from the corporate, investor, academic and NGO communities. To explore how this rapidly evolving field of sustainability is impacting global investment, business practices and our world.

Speaker 2:

The views expressed here are those other participants and not those of Bank of Montreal, its affiliates or subsidiaries.

Jonathan Hackett:

Welcome everyone. Thank you for joining us. As we gather here today, I acknowledge that I am greeting you from Toronto. This land has for many millennia been in the traditional territory of indigenous nations, including the Huron-Wendat, the Haudenosaunee, Anishnabeg and most recently the Mississaugas of the credit. I want to recognize that our teams across North America today are on the traditional territories of many indigenous nations. We honor and recognize the first people of our territories in the ongoing contributions of first nations in Inuit and Metis peoples to the vibrancy of our communities today. As part of the most purpose, to boldly grow the good in business in life and our commitment to build an inclusive society. As a bank, we have a unique opportunity to address one of the most pervasive barriers to economic and social inclusion in Canada, the supply of affordable housing. I'm excited to introduce Sharon Haward-Laird, BMO general council, the executive committee leader for sustainability at BMO Financial Group, who will walk us through today's announcement. Her remarks will be followed by a discussion with some very special guests, which I'm honored to moderate. Sharon.

Sharon Haward-Laird:

Thank you, Jonathan and welcome all. As Jonathan said, the supply of affordable housing in Canada, really in communities of all sizes in all geographies is a pressing issue for a number of stakeholders, including government, NGOs, and for us at BMO as a purpose driven financial services company that calls nearly every community in Canada home. And of course, no one is more deeply affected by this issue than Canadians who struggled to afford housing and newcomers who arrive every year. It's a complex issue requiring focused and broad based solutions, and everyone needs to be at the table. It's also an issue where we as bankers have a role to play in driving solutions.

Sharon Haward:

Today, we are taking a step forward. BMO today announced a $12 billion commitment to finance affordable housing over a 10 year period in supportive of the Canada Mortgage and Housing Corporations, National Housing Strategy, and the goal that all Canadians have an affordable home by 2030. BMO funding will be mobilized towards the development or of housing that meets accredited affordable housing definitions in regions across Canada. Financing will support the purchase, development, renovation and maintenance of affordable housing, social housing, community housing, shelters, and housing for vulnerable populations.

Sharon Haward:

Part of the funding will go toward financing affordable housing options and infrastructure projects that increase access to housing and promote economic development for indigenous people both on and off reserve. BMO has had a leading presence for more than 30 years in supporting long-term sustainable economic growth for indigenous communities. We are committed to deepening that trust, respect, and the partnerships we have built. Today's announcement helps us to further that commitment too. So what does this funding, this partnership with CMHC really mean for Canadians who are struggling to find affordable housing?

Sharon Haward:

It includes financing projects that build permanent multi-use affordable housing units for vulnerable populations, funding renovations, and retrofits that preserve existing affordable housing units while enhancing energy efficiency, and providing financing that supports indigenous communities to support housing infrastructure projects and economic development. We are proud to support CMHC vision while aligning strongly with BMO purpose to grow the good by committing $12 billion in financing to economic and social inclusion through affordable housing. Investing in housing for all Canadians means removing barriers that exclude so many from a better life. In short, it's about creating a more inclusive society for all Canadians. And with that, I'll hand it back to Jonathan.

Jonathan Hackett:

Thank you, Sharon. Let's shift to a discussion with a very special panel of guests to unpack the barriers Canadians face when it comes to housing, the impact to today's announcement and why it matters today. We have with us Romy Bowers, President and CEO of Canada Mortgage and Housing Corporation. Chief R. Donald Maracle, Mohawks council, Mohawks of the Bay Quinte and Mike McGinn, CEO of [Interent Lead 00:05:25]. Thank you again for joining us for this very important discussion today. We encourage audience members to submit questions via the chat box. We'll do our best to address these questions after the panel discussion. Let's get right to our questions for the panel. Romy, over to you first. What is your initial reaction to BMO affordable housing announcement and importantly, how do you think it will impact Canadians and the communities in which we work and live?

Romy Bowers:

Well, hi Jonathan. First of all, thank you for inviting me to this very special event today. And I just wanted to say that I was so very pleased to hear that BMO was making this very meaningful commitment and investment in affordable housing. As Sharon mentioned, housing affordability is such a critical issue for so many Canadian families today. And as we all know, affordable housing is really a key determinant for good health, as well as economic and social wellbeing. And I believe and CMHC believes that affordable housing is absolutely essential for creating a Canada that is truly equitable and a place where everybody can fulfill their potential and really prosper.

Romy Bowers:

CMHC is focused on housing affordability for all Canadians. But we recognize that the housing system is very complex with many actors and stakeholders and it's for this reason that it's absolutely critical for the private sector to step up and make a difference in their communities. Governments alone cannot solve the challenges associated with housing affordability. And today's announcement is so exciting for us at CMHC because it demonstrates how partnerships can change the lives of so many people in need of safe and affordable housing. So thank you so much BMO for this commitment.

Jonathan Hackett:

Thank you, Romy and building on that, Mike, as a private sector actor, why is it important from your perspective that we build more affordable housing? What do you think the impact will be on Canadian communities?

Mike McGinn:

It's obviously very, very important issue. Really when I look at our communities, we want them to be healthy and obviously having housing is just a basic need that everybody has to have. So it's very important. I acknowledge what Romy just said, we really need to kind of work together. There's a lot of different pieces to it. Supply is the big, big, big issue. And what BMO's done, this is a fantastic announcement. That's amazing what BMO has put forth here. And I think this was great and it'll hopefully grease the wheels here as we can get more supply on board, especially with the amount of record. I think we're even looking at record amount of immigration coming into Canada, and we really need to align immigration with housing. So this is fantastic announcement.

Jonathan Hackett:

And so Mike, how do we encourage more supply of affordable housing?

Mike McGinn:

Again, kind of like I'll tell you, we really need to work together. It's all supply is good supply of basically, and it'll end up trickling down and which will make it more affordable for everybody. So the big things I see on the, I guess on the private side is we really need to cut the red tape. The red tape that we see that it takes so long to get buildings built. And when you've got like, we're really trying to concentrate on more on the transit oriented areas, because that's just better for the city's infrastructure. That to me it should be almost rushed through the potential permit obligations so we can get things built a lot quicker. And I think really to be frank with you is that what they should be doing is adding a little blup to give the private sector, the developer owners the ability to supply more affordable housing that you get more density.

Mike McGinn:

It comes down on the private side, it's really risk return. But it's so important affordable housing. Just for a note, my private company has been managing a nonprofit housing for the last 20 years in Ottawa close to 400 apartments. So I know the need, I know how important it is and we really need to work together. Government and obviously with the banks, which has fantastic again, what BMO has done, this is a really great announcement.

Jonathan Hackett:

And Chief Maracle, turning over to you. Could you describe for us some of the unique challenges that indigenous people face when it comes to housing?

Donald Maracle:

Well, first of all, I want you to say I'm very pleased with the announcement that the $12.3 billion from the bank over 10 years. The housing situation in all first nations, especially the largely populated first nations, there are five and the province of Ontario, Mohawks is going to be one of them. There's such a backlog in housing and suitable housing that it meets the affordability and also the accessibility of the people that are involved. We have 100 applications on file and I had my housing manager give me the income profile on those applications. A lot of them are under $50,000 a year, so they don't really meet the affordability for a mortgage. So there's a different type of housing needed for a lot of those folks.

Donald Maracle:

I think it's important to understand what the need is in Canada and also in Ontario, as it relates to housing in first nations. So a few years ago, Indigenous Services Canada partnered with AFN and they provided a million dollars to do a data gathering exercise across the country on how is it an infrastructure related issues. And I chair the chief's committee on how it's going to infrastructure for the Chiefs of Ontario. On reserve housing and related infrastructure needs technical report was completed in July of 2020. The data was collected in 2018 and 2019 nationally. I asked our Chris Hall [Ashurst 00:11:44], director there to sort out what the situation was in Ontario.

Donald Maracle:

So there was 102 first nations in Ontario, over 133 participated in this survey, 309 nationally. The first nations information governance center did the data warehousing. They have the privacy and security for the study. They consolidated the data and into a national data set, and they did this statistical analysis and interpretation of the information gathered. The Ontario first nations housing on reserve house and related infrastructure needs technical four it was completed in 2021. And the data from the same AFN survey completed in 2018 includes the 102 first nations who responded from first nations in Ontario. The respondents were housing managers 59.1%, infrastructure managers 16.8% and bad administrators, and nearly 40% of the community has conducted a formal housing assessment.

Donald Maracle:

Over two thirds, 68.2% do not have asset management systems for housing, about three quarters 76.8% do not have asset management systems for housing and related infrastructure. About 41.4% have a capital plan to address their current housing needs and infrastructure needs. So in Ontario, there were 25,215 housing units were reported by the respondents across the province of Ontario. 16.5% of the total housing units are currently Section 95 CMHC agreement housing. 36.4% of the housing units are band owned including rent to own. And 59.9% are privately owned. The condition and replacement issue. 50.4% of the 25,215 housing units are under 25 years old, 38.7 are 25 to 50 years old and 16.8 are 50 years or older.

Donald Maracle:

19.2% of the housing units need replacing. 33.1% of the individual housing need minor repairs, 33.2% need major repairs. An average of 71.7 additional servicing lots are needed for each person community. The average cost of servicing a lot is $43,649. The estimated total cost for servicing the lots to meet current need for across all communities is $478,872,198. Meeting the housing needs. The total number of housing units required to meet the current housing needs across county is 8,645. The average number of additional housing needs to meet the community's current housing is 75.7% on an average, new units per year.

Donald Maracle:

Considering the population growth, the estimated total number of housing units to meet the required housing need in the next five years is 7,659 units. The average number of additional housing was needed to meet the community's housing unit in five years is 68.4. The cost. At an estimated cost of $250,000 per housing unit, which could be more because of the impact. The total amount needed to meet first nations housing needs in Ontario is approximately $2.1 billion. At $250,000 a housing unit, the total amount needed to meet first nations housing in the next five years is $1.9 billion, but that's for a five-year period.

Donald Maracle:

The cost for servicing the lots with infrastructure, water, sewer housing, but what happens in a municipality is $478,872,198. The total cost for addressing the future and current housing and related infrastructure needs for first nations in Ontario is $4.4 billion. So that's sort of the challenges that first nations are facing in terms of fixing the houses and building new houses, building places that are suitable for people, both in terms of affordability and barrier free to repair the units. There's a number of businesses in the community that have that build houses on and off reserve. They employ our members. And so there is a huge economic impact. We have a number of business in the community that also benefits the community they employees and the trades, and also contractors in the general area that knew the water and sewer and that type of infrastructure.

Donald Maracle:

So currently I guess the first question that I was to ask is, can you describe some of the unique challenges that indigenous people face when it comes to housing? Well, first of all, racism is still an issue in this country. And when I was a boy, no Indian could borrow money from the bank for anything. For a car or a house or any bank, anywhere. So members were forced to go to companies like Beneficial and Agra Financing and [AVCO 00:17:46] that were around at the time to take a high interest loans and try and compress these loans to pay them back in five years. So you had houses that were never finished. The department at that time provided a house that was 20 feet by 24 subsidy. That was never enough to go around. There were always huge wait lists. Accessing housing was very political in terms of, they'd lobby the chief and the council for a house. And whoever carried out the best lobby oftentimes got the unit when it was a grant system.

Donald Maracle:

So the challenges are the lack of space to build new homes. The addition to reserves policy is lengthy, it's cumbersome. It takes years, and this creates an impediment to the land to build houses on and to develop the infrastructure. So the financial institutions in Canada need to put pressure on Mark Miller and Carolyn Bennett to make this addition to reserve policy more efficient and shorter timeframes. There's too much red tape. Acquiring new lands continues to be a problem due to the lack of capital and the outdated claims policy and municipal and provincial governments are involved in that kind of there's a lot of delay that can be creative there to get addition to reserve, to have the space to build houses on.

Donald Maracle:

So there's a lot of first nations are short of land. This would be like six nations. [inaudible 00:19:21] would be near large urban centers. This would be a very pressing issue for them. The status of the reserve land is governed by the Indian Act. And we do not hold the land in peace simple and accordingly, we cannot pledge that land for security for debt. So the bank then looks to other guarantors of loans, which usually is the first nations are sometimes a ministerial loan guarantee. And so all of that has to be in fee simple for this program to work.

Donald Maracle:

The option of converting the reserved planned to fee simple in it can happen in some rare instances, but it's a non-starter for many of those first nations communities, because it presents to greater risk of losing the reserve land for good. And if there's a default on the loan, and then the first nationwide up losing a part of its territory. The lack of infrastructure assessments. Funding is needed to ensure that there are sufficient service lots to build new houses. And this is a particularly pressing in large first nations communities. And this has been a common thing that has been expressed by the delegates who participate in the chief's committee on housing and infrastructure.

Donald Maracle:

The price for servicing lots due to COVID-19 has gone up from 80,000 to 120,000 for water and sewer type extensions and road and hydro and that sort of thing. Funding is also needed for a survey and soil sampling and environmental assessments in some cases. So you have the lot, it's already to build and develop because you have to go through the species at risk to get federal funding. The lack of a capacity for proposals to design shovel-ready projects, many first nations lack that capacity but forward housing proposals. These committees often don't receive their fair share of housing funding leading to further inequality among first nations.

Donald Maracle:

Funding is also needed for first nations to prepare shovel-ready projects, to advance and qualify for funding opportunities as they arise. And we see this in the CMHC Rapid Building Housing Program, because CMHC and Indigenous Services Canada are not operating in Canada but in the sync. There's a shortage of housing inspectors. So a few years ago, the Chiefs of Ontario had the housing inspector unit. And that was kiboshed. And there were first nations inspectors that you could call from there, they'd come out and inspect your houses. They were close by. That system were much better than the way it's working now.

Donald Maracle:

Training and employment programs, because obviously if you're going to build a house, you want to make sure that it needs the Canada Building Code so that the house will last a long time and without a lot of need for maintenance. So building it right is very, very important to the construction standards. The training and employment program, many first nations communities do not have enough training professionals to complete house builds using their own first nations labor. So there needs to be partnership with the labor, the entrepreneurship for young people to get them involved in carpentry. And so this will be done through maybe a partnership with community colleges, where it would lead to, they could get their carpenters license. We've done that before here at Mohawks of the Bay of Quinte. As matter of fact, some of them did go on to start their own business and they are very successful business.

Donald Maracle:

So training and employment programs for the youth they're under utilized because there's a lack of capital to build the houses. So to coordinate, there's a coordination role and all the players need to be in sync. So usually when one government has money, the other one doesn't. So it doesn't jive together. These programs are possible to address the lack of human capital and to stimulate first nations economy. The second question that I was asked to ask on, you've been working on the housing issue in your community for a very long time and made a lot of progress. What is the end goal when it comes to the issue of housing and how can banks and other private sector organizations help you advance that goal?

Donald Maracle:

So I thought I would sort of give you some stats on our own community. We have completed eight CMHC Section 95 housing units. We received $960,557 a year in rent to help pay those mortgages. And we currently have $4.7 million on the books with the CMHC Section 95 as of March 31st. And Romy can tell you that the Mohawks of the Bay Quinte have never defaulted on any of our loans. 25 years ago we started with the CMHC Section 95 and build the 25 unit elders lodge that was paid off. And in January of 2018 to 25 year mortgage, never a payment defaulted. And so we've got a very good track record.

Donald Maracle:

But also back in 1971 my cousin was Chief William J. Brand and then another uncle Chief Earl Hill was... They were chiefs at the time. And they started using the capital money allocated for the subsidy housing to create loans at 6%. So the fund would build and have a community fund to build houses because people could not borrow money. If you were an Indian on the reserve, you couldn't borrow money from a financial institution because the bankers thought Indians wouldn't pay their mortgage, but little did they realize a lot of people didn't when they built a house off, they didn't tell the banks they were Indians and they paid their mortgages off. So the bank never knew that they were already lending money to Indians and they were paying.

Donald Maracle:

So that program grew in with the capital infusion. And so that's one of the tools that we have in the community. We currently have 271 mortgages. Some of them were monetized by bank. The Bank of Montreal took them over because they could get a better interest rate on their loan at the bank than the 6%. So they monetized their mortgage. So there's 271 more of MBQ mortgages, 20 for a total outstanding of $22,108,704 and 37 cents as at the end of March this year. And so there are currently 23 though that are in a very scribble of 1.6 million and our staff work with the people that are in arrears. And overall of the 300 mortgages, we've only had a problem with maybe two or three that just didn't pay. But there's a very court process. It can cost $10,000 to evict somebody by the time you go through the court process. So there needs to be a better judicial system to deal with arrears and taking over property. And so there needs to be some work done with the attorney general and the court system on that.

Donald Maracle:

And so the Bank of Montreal Loan Guarantee Program. We started that about 15 years ago. We started that program with guaranteeing mortgages, and we said, "We'll try add a million dollars and see how it goes." Then we increased our debt to five as people started paying, we could see how it went and it went very well. So currently we have 107 Bank of Montreal mortgages for a total of $14,724,145 and 19 cents is owed at the end of March. And currently there are two arrears, about 3,583.08. And I would recommend that the bank send us a report when maybe on in the second month, if somebody is in default.

Donald Maracle:

The one person is about a half a payment behind, and the other one is a couple of payments behind. I don't know if that was COVID related or not. We'd like to know the reason why the people are arrears. Obviously you're a collection people, we'll work with those people. If you could just send keep us in the loop as to what is the reason they're in behind, because if their income was disrupted, that maybe there's some [inaudible 00:28:20] assistance we could provide to help them get caught up, if that's the reason. We'd get a statistical report monthly, but if there's arrears, we need to know the reason for it. So that's pretty much [crosstalk 00:28:35].

Jonathan Hackett:

Oh, perfect. I'm going to just appreciate it. And I think it's a good point around, I would say the ability to have that feedback loop. I think one thing that we believe is really important and working with communities like yours is how do we have open dialogue to make sure that we're providing the right support? And so appreciate that suggestion as part of it.

Donald Maracle:

So anyways-

Jonathan Hackett:

I also think [crosstalk 00:28:59], oh.

Donald Maracle:

The construction of longterm and sustainable housing and the provision to repairs for existing housing to meet the long-term needs of the communities, construction and provision of repairs must ensure that first nations have access to safe, appropriate to geographic and cultural needs and available where they reside, whether in the north, rural or remote community. So you need different types of housing in the north because of the permit frost. And we don't know how long we're going to have permit frost on this planet, but with climate change, but it looks like it's dissipating quickly. So there are effects of climate change and where people build with flooding and that sort of thing. It's not a good idea to finance mortgages when you know that there are people are rebuilding in a flood plain.

Donald Maracle:

So the longterm sustainable funding at first nations led all barrier shelters, safe spaces, transitional homes, second stage housing and services for first nations who are homeless or near homeless, dealing with food insecurity and poverty, who are fleeing violence, or have been subject to sexualized violence and exploitation. Shelters, transitional housing, section stage housing and services are appropriate to meet cultural needs and available wherever first nations people reside. So these services are needed in the community. How can the banks help? Work with the communities to create solutions, to provide mortgages without requiring the land to be used as collateral. Provide a combination of grants and loans to income first nations, who would not otherwise be able to afford a home. Monthly payments need to be low in enough so that ODSP can afford it with minimal support from the first nations. Attend a meeting with the Chiefs of Ontario housing committee and infrastructure, to hear the feedback and develop a joint strategy in support of first nations. Those are the recommendations.

Jonathan Hackett:

Okay. Very much appreciate those recommendations, Chief. Maybe Romy, if I go back to you, given part of the most announcement includes increasing access to quality housing for indigenous peoples in Canada. Can you tell us about CMHC Indigenous Housing Strategy?

Romy Bowers:

Absolutely Jonathan. And I wanted to first thank Chief Maracle for his comments. I think he provided a lot of really great insights about the housing situation in his community. And I also want to thank him as an important partner of CMHC in terms of, I think the relationship between CMHC and his community go back quite a number of years. So I want to acknowledge that at the beginning. With respect to our indigenous housing strategy, as you know, our aspiration is that by 2030 that everyone living in Canada has a home that is affordable and that meets their needs. And we recognize that we can't achieve our aspiration if we don't address the urgent housing needs faced by indigenous peoples in our country. And Chief Maracle outlined some very important facts about his community, but maybe I can just supplement that with some more facts at a very sort of macro level.

Romy Bowers:

When we look at indigenous communities and just peoples across Canada, we know that about a third of indigenous households are living in very overcrowded conditions. And 25% of the housing on reserve need very major repairs. A core housing need is much, much higher for indigenous people when you compare them to the rest of the Canadian population. Indigenous people are 10 times more likely to become homeless. And there's about a 15% differential between home ownership rates between indigenous families and other Canadian families. So these are... It gives you a bit of a sense of the scope of the problem.

Romy Bowers:

CMHC is committed to working closely with indigenous housing providers to develop and to support programs that meet the very unique cultural needs of indigenous people. We recognize that CMHC that many past government housing policies have not worked. And Chief Maracle mentioned the level of bureaucracy that exists at CMHC and within government. And this is a serious issue that I'm committed to addressing as well. At CMHC, we are absolutely committed to supporting housing solutions that are developed by indigenous people, for indigenous people, because indigenous people understand what they need the most. And as a firm, we are committed to advancing reconciliation with indigenous people and providing better support to our indigenous partners.

Romy Bowers:

And to guard our efforts in this respect, we recently created a new indigenous advisory council composed of external housing experts. And we are following the guidance of this new council to really co-create a reconciliation action plan to guide our review of our existing housing programs, policies, and also business processes. And we hope that by doing this, that we will consider the unique needs of indigenous people and really address the barriers that exist within our own company to accessing our programs and services. So lots of work to do, but you have my commitment to really advance this as we go forward.

Jonathan Hackett:

And Romy, as we talk about the scale and the scope that we're working, Chief Maracle talked about the billions of dollars needed over the next five years in Ontario alone. What is your vision of how the private sector can best support this work and can best help bring affordable housing to life?

Romy Bowers:

Gosh, there's just so many things. I think providing access to financing as Chief Maracle mentioned is super important. There's there is systemic racism in our financing system and we have to do what we can to break down those centuries old legacy of racism and how we actually extend credit to indigenous communities. So that's one. Another one, and again, this is something that Chief Maracle mentioned as well. There's many developers, builders, traits people within indigenous communities. And I think it's great if the private sector can engage some of those folks because it's not only does it create affordable housing for indigenous peoples, but it also creates economic opportunities for those businesses to grow, as well.

Romy Bowers:

And we're going through sort of an unprecedented age in terms of the acceleration of climate change. And unfortunately, I believe that indigenous communities are going to be... Some of the Canadians are most impacted by climate change. And I think we need to have innovative ways of thinking about housing. And I think there are opportunities for innovators in the housing space to think about how we can build housing that is more climate resilient. So those are three possible ideas but I think the list is really endless.

Jonathan Hackett:

Thanks. I'm going to questions that we're getting in from the audience. One that I think all three of you touched on in different ways was the concept of red tape. And maybe Mike turning it back to you on that. Can you elaborate on these particular types and places that you're seeing this red tape and what you see as the best path forward to remove those restrictions in a way that would support increased affordable housing supply?

Mike McGinn:

Again, yeah, the red tape is really happening at the municipal level. Unfortunately, there's a lot of nimbyism. It's just unfortunate set of circumstances. So really the best way would be if you've got specific locations that you, like I'm looking at transit oriented, that's just a natural. And those transit oriented locations, if you could have a time limit that, I mean, that if somebody submits an application to build an apartment building or build whatever type of housing that it's got to be some densification. That there should be, you know what I mean? There should be a maximum amount of time that's dealt with at the municipal level. I mean, that's just a natural thing. And also I would say, to encourage affordable housing, if you supply affordable housing, maybe you get relief on development charges, or maybe some property taxes, just for a portion.

Mike McGinn:

And it's really about the risk return. And that's the biggest problem right now is getting supply on. It takes so long. And Chief mentioned it from his circumstance. It's just the whole red tape situation, it's really an issue. Now I have to say, I've read a couple of your interviews in that Romy. I know that you're really pushing supply. You know that's the answer. I think that everybody's starting to get their minds wrapped around it, but we really need to work like it's private, public. We all need to work together to get to where we want to be.

Jonathan Hackett:

And Romy, another question that we've gotten, and it touches on something Mike said earlier, is around the pace of immigration that we're expecting over the next few years and in particular, where we need to think about housing for those individuals. What do you think the impact of that immigration is on your strategy and the needs of the newcomers to Canada?

Romy Bowers:

Yeah, first of all, I think immigration is great for Canada. We've benefited so much from our very aggressive immigration policies. I live in Toronto, and when you think about what a great city Toronto, and just the multiculturalism of it, it's really built on that background of immigration. So I just wanted to state that right off the bat. But we realized that when immigrants come to Canada, they rent their first homes. And there's been a lag of the construction of purposeful rental in our country for many decades. And I think just supporting Mike's point, I think we need to really think, when there is so much demand, why is the supply response so slow?

Romy Bowers:

And really, and again, there's no one single reason, but we need to really look at what those reasons are. Many of them are at the municipal level, but again, it's not necessarily pointing fingers at municipal officials or the system. I think nimbyism is a big factor. I live in Toronto and it's very difficult to build proposal rental in certain neighborhoods. And I think we need to think about, how can we actually incorporate more dense housing into existing neighborhoods, so that we can create opportunities to create neighborhoods all kinds of different people can live. So that immigrants can settle in areas that in the heart of the city where they're going to work. And I think we need to really address that going forward as a country.

Jonathan Hackett:

Chief Maracle, a question that came in for you. In your view, what are the best ways for banks and other financial institutions to support access to key amenities in indigenous communities, such as medical facilities, quality education, food options, the things that support alongside housing quality of life?

Donald Maracle:

Well, first of all, I guess our experience has been that the ministry of health provided funding for the medical, affordable NRB, affordable type medical building here in our community, which provides a doctor three times a week and a registered practical nurse and other services. But there's the infrastructure costs of going there. They're usually they don't fund the foundation, they don't fund the water and sewer connection, the hydro connection, the infrastructures to run for the building. So there would be financing required for that. First nations will take advantage of grants because the indigenous services candidate do review our financial statements. And there is a healthy debt load that you're allowed to have and you get a score by the management of the department.

Donald Maracle:

And so they do pay attention to the debt load and how it's guaranteed and all that sort of thing to do. Your the [inaudible 00:41:40] of the community. So I think there has to be land claims settled quicker to generate the capital that's required to back up these loans. Obviously, first nations don't want to guarantee more than what they can afford to do a pay if called upon to do so. Chief's that are responsible managers will tend to be on the conservative side with debt guarantees. There's a number of first nations, so that are in third-party management. And so that will create a challenge in terms of taking on more debt. They just don't have the affordability to guaranteed loans, they're overextended. And so that would be a challenge. But also the for the infrastructure, some is subsidized by the department and in terms of growth in the community, like we have 10,215 members. A lot of those people want to build on the reserve.

Donald Maracle:

So usually the families keep the land and then they'll subdivide their property and give some to their grandchildren or their nieces and nephews or cousins, but on bigger blocks of family that sort of ado help because there isn't a lot. It's too difficult to get land added to the reserve, or it can take 10 to 20 years and people can't afford to wait that long. But yet if you want to surrender land and extinguish your title, that can be done in the stroke of a pen and a week. But if it's got to come back to the reserve, it can take 20 years or a decade and a lot of politics.

Donald Maracle:

The other thing is the level of service standards for development on the reserve have not been reviewed at Indian affairs and it needs to be updated very seriously. The lots have to be 30 meters because in large communities, people have built on family land. So sometimes that's hard to achieve that but there would be lot in filling as the families grow and develop and build houses along the existing roads, where there oftentimes would be water in three phase power and internet connection and all that people will want those services. So naturally they would want to buy land to build where those services are. It's common sense. But it's too hard to get capital projects approved. First nations are frustrated with the level of service standards that are not been updated in years. And also the cost reference manual for capital projects has not been updated in years.

Donald Maracle:

So really the banks could work with the federal government to update those tools. And I guess, is it necessary? Infrastructure Canada is much easier to work with in terms of... because we've had this experience with... We're heavily impacted with climate change of floods and droughts where there's water insecurity in the community. There were two communities got funded in Canada. One was Mohawks of the Bay of Quinte, our community and the another one in DC. And so because we're impacted with climate change. And so I lobbied the ministers during chief stays in the legislature a few years ago to say that Infrastructure Canada needed to be with indigenous communities because obviously the Ontario region had the highest number of boil water advisories in all of Canada, I think there were 60 or 70 at the time. I think it's down to 40 or so, now that communities on boil water advisories.

Donald Maracle:

So you can't have healthy housing. And then with junk water and with cisterns, it's a confined workspace and probably the there are no technicians to sanitize them regularly. So the accessibility of safe drinking water is important to running a healthy home. It affects the value of the home if you have to sell it. So having infrastructure to service the homes and market-based housing is very, very important. To ensure the value is there, you have to take over that house and sell it. The person doesn't pay their mortgage which is what the guarantees about. So having proper infrastructure is very critical, but those are just some of my comments, but there's too much red tape on the Indigenous Services Canada.

Donald Maracle:

You don't experience the same thing working with Infrastructure Canada because we're for we're building water lines in our community and they trust your engineer. You have professionals, you just have to make sure you go through a public tendering process and a pre-furnished the license and the insurability, but there isn't the same degree of red tape working with them, the Indigenous Services Canada, it's too overly bureaucratic. And there shouldn't be two levels of engineering reviews done, one at the regional level and one at the headquarters level. That type of duplication I don't think is necessary. And all it does is stall the projects. And it's a way to managing the lack of capital budget that they don't have enough money. So they just throw money at a study or the headquarters takes a long time to review it, so that it gets deferred into another year.

Donald Maracle:

And all it does is the cost of the infrastructure just keeps increasing year by year with delay and there's growth pressures. Just this morning alone, I had a 31 year old personal diabetes had his leg amputated and he's in a third floor of a house in Bellville, and can't get up and down the stairs and is wanting to know what we could help with the chairlift. Of course this is off the reserve. So therefore the programs that we deliver are meant for unreserved and the same level of supports are not there for people who live off the reserve. And so there's these types of barriers to accessible housing. And the wait list in the county housing is five years and I have a lot of homeless people, mothers. Landlords now are giving tenants notice saying they're going to renovate and what's happening is they know because there's such a shortage of housing and they can get a higher rent for that house by not having indigenous people on social services renting from them.

Donald Maracle:

So it's intensifying the number of native people that are homeless. And over in Prince Edward County, they have a lot of tourism that comes from all over, come back to in Ontario there. The housing over there is being turned into Airbnbs. And so therefore even the restaurant worker they can't attract find restaurant workers because there's no place for them to live because they can make a bigger dollar on an Airbnb. And just to show you how what's happening with the rental market at first nation has experienced. And there's Toronto, which is a town. The rent start at $1,600 a month far more than what ODSP provides. And it's worse than how Ontario works.

Donald Maracle:

The shelter allowances are not kept up with what the costs really are. To rent in the town of Napanee, one landlord had such high interest in the rental units. He said, "Well, make me an offer." And so he was getting $2,900 a month rent. So it's going to the people that have a bigger income. And so the ones that really are on lower incomes are out of luck. So that's how bad the situation is out there.

Jonathan Hackett:

No, thank you for sharing that. I actually wanted to say, thank you to you and to all of our guests for joining us today. I think what I've taken away from this conversation is, one, the potential for action in this area. Certainly less hearing that the needs are far greater than what we're aligned against so far and the need to grow our work in this area is very significant. I think the second that I've heard is the need for a coordinated view around both what we can do working with different communities and responding directly on affordable housing, but what we can do to support that more broad need that goes with it, not just the housing, but the infrastructure or the other supports that go along with that to make a home versus a house.

Jonathan Hackett:

And then I think the third, and I feel like I'd be at risk if I didn't address the part of, like, on the policy side, the question of how do we do this faster and what can we do working with our different counterparts to make sure that we're increasing the supports that are there and finding new ways to make solutions come to market and to address this need in a timely way, as we talk about the growth that we see? It's certainly not a static problem. It's one where between immigration, between population growth between climate change, the needs are evolving, and we need to make sure that we're addressing not just the problem we have today, but the needs that we have in the future.

Jonathan Hackett:

But as I said before, very much appreciate your time and grateful that you were able to join us and provide your input and your guidance on this. Thank you as well to everyone that joined us to share the announcement into watch this panel today. We very much appreciate your taking the time to hear this discussion and to join us in this. And we're very much looking forward to being able to deliver on this commitment. And so thank you.

Michael Torrance:

Thanks for listening to Sustainability Leaders. This podcast is presented by BMO Financial Group. To access all the resources we discussed in today's episode, and to see our other podcasts, visit us at bmo.com/sustainabilityleaders. You can listen and subscribe free to our show on Apple Podcasts, we're your favorite podcast provider. And we'll greatly appreciate a rating and review and any feedback that you might have. Our show and resources are produced with support from BMO's marketing team and Puddle Creative. Until next time, I'm Michael Torrance. Have a great week.

Speaker 2:

The views expressed here are those of the participants and not those a Bank of Montreal, it's affiliates or subsidiaries. This is not intended to serve as a complete analysis of every material fact regarding any company, industry, strategy or security. This presentation may contain forward looking statements. Investors are cautioned not to place undue reliance on such statements as actual results could vary. This presentation is for general information purposes only, and does not constitute investment legal or tax advice. And is not intended as an endorsement of any specific investment product or service. Individual investors should consult with an investment tax and or legal professional about their personal situation. Past performance is not indicative of future result.

Sharon Haward-Laird General Counsel and Executive Committee Lead for Sustainability at BMO Financial Group
Jonathan Hackett Co-Head, BMO Energy Transition Group and Head, Sustainable Finance

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