Even as inflation, taxes and other worries occupy much of his head space, Minto Group CEO Michael Waters says he remains optimistic that industry and government can find solutions if they put their heads together.
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The City of Ottawa spent nearly three years searching for a new planning boss before hiring Marcia Wallace to fill the role last spring. Michael Waters thinks it was worth the wait.
The CEO of Minto Group says Wallace, who previously served as chief administrative officer of the Corporation of the County of Prince Edward, has “done a lot to re-engage” with Ottawa developers as the city tries to pick up the pace of new housing construction.
Waters, whose firm has built more than 100,000 homes since it was founded by the Greenberg family in 1955, has been in charge of Minto for a dozen years. After watching Wallace in action, he says he’s quickly come to appreciate how deftly she has navigated a department with a sprawling mandate that includes everything from approving major housing and commercial developments to overseeing massive infrastructure projects.
“It’s a big ship to turn,” Waters says. “I think she’s done a fantastic job.”
Wallace is Ottawa’s first permanent planning chief since Stephen Willis, who held the position from 2017 to August 2022. Two veteran City of Ottawa employees – Don Herweyer and Vivi Chi – filled the role on an interim basis until Wallace came on board following a lengthy search process.
The job is not for the faint of heart, as Waters knows well. Wallace took over at a critical juncture when governments at all levels were seeking ways to kickstart the homebuilding process and the city was in the midst of crafting a major zoning bylaw.
“Those (planning) folks, in terms of the day-to-day execution, are critical for us as an industry,” he explains. “It’s such a big mandate. If you have people even in acting roles, it’s not quite the same as having a permanent leader.”
From Waters’s perspective, that’s why it was vital for the city to hit the mark with one of its most important new hires in years. So far, he says, it’s a bull’s-eye.
Wallace, he explains, has “brought in a real focus on improving cross-departmental collaboration” during the development approval process, which often involves employees from nearly every corner of City Hall. “It really helped make it much more service-oriented and industry-friendly.”
Under Wallace’s leadership, Waters says, there is now a “much more predictable escalation process” for development applications. The new planning chief has sought input from industry leaders on simplifying approvals for housing developments and shortening timelines for getting shovels in the ground, he adds.
“While the overall staffing levels haven’t changed since her appointment, they’ve made some really important adjustments,” Waters says.
That includes implementing a housing accelerator plan announced last year by Mayor Mark Sutcliffe, who said the changes would make the nation’s capital the most housing-friendly city in Canada.
Council has since approved dozens of measures from the plan, including eliminating 13 studies that builders were previously required to submit with development applications, such as wind studies and shadow analyses, and narrowing the scope of others.
“In some cases, they were completely unnecessary,” Waters says of the studies that were scrapped. “That's really streamlined (the process).”
Also under the new housing acceleration plan, development charges that fund essential infrastructure such as roads and sewers are now deferred until homes are actually occupied, instead of when building permits are issued. In addition, community benefit charges, which help pay for parks and other neighbourhood amenities, have been reduced from four per cent to two per cent of land value and to one per cent for projects near major transit stations.
Waters praised the city for working with developers to find ways to help lower the cost of building new housing projects.
“We’re pleased with the direction they’re headed in,” he says.
Room for improvement
Still, Waters believes there’s room for improvement – and he hopes a new proposal from the federal and provincial governments helps pave the way for more fee cuts at the municipal level.
Ontario and the feds recently unveiled plans to offer a combined $8.8 billion over 10 years to fund municipal infrastructure, with most of the money going to municipalities that agree to cut development charges by 30 to 50 per cent for three years.
The two levels of government also pledged to eliminate the 13 per cent harmonized sales tax on new homes in Ontario worth up to $1 million in a bid to make new builds more affordable for buyers.
City staff say they’re still assessing the potential impact of the recent announcement. Noting that the federal government pegged the combined savings from the two measures at up to $200,000 per home, Waters is keen for municipal officials to act.
“I don’t know if the general public really appreciates how much tax is baked into new homes,” he says. “That’s a big number.”
As part of the housing accelerator program, council also approved a plan to waive cash-in-lieu of parkland fees for all office-to-residential conversion projects in Ottawa for 18 months to encourage developers to turn decaying commercial towers into housing.
While Waters likes the idea of repurposing obsolete offices for new uses in theory, he says it’s not so simple in practice.
“It’s certainly an area that we’ve studied very closely,” he says, noting it’s “quite challenging to take an office building with its floor plate, parking and other building services and convert it to a rental building.”
Looking out from his office at Minto Group’s headquarters on Kent Street, Waters can see one such project just a stone’s throw away at 360 Laurier Ave. W., where CLV Group is converting an 11-storey former office building into an apartment complex.
Waters is quick to give his competitor props for launching such a major undertaking. But he’s not ready to take the leap himself.
“They’re imperfect,” he says of conversions. “They are not without their challenges, as I’m sure CLV would tell you. They are intriguing, but I’d say it’s a very tiny subset of our office stock that would be suitable. It requires skill and risk tolerance.”
Minto has considered office-to-residential conversions at sites in Ottawa and Calgary, he adds, “but we’ve just not pulled the trigger on them because of the risk and the challenges to finding a good project.”
Meanwhile, Waters is keeping a wary eye on the war in Iran, which has disrupted a key oil transportation route in the Strait of Hormuz, causing petroleum prices to soar. On Tuesday, the International Monetary Fund warned the conflict could trigger a global recession if it continues to escalate and further drive up energy costs.
Noting that petroleum-based chemicals are key ingredients in asphalt, shingles and a host of other products found in housing projects, Waters worries about what’s to come for his industry if the war drags on.
“We haven’t really fully seen how this is going to impact the Canadian housing sector,” he says.
“Energy is a key input. It’s not just transportation. We’re waiting with bated breath to see how this shock to world oil prices is going to play out. It’s going to make everything less affordable. Anything that’s transported in a truck is going to be more expensive.”
Yet even as inflation, taxes and other worries occupy much of his head space, Waters says he remains optimistic that industry and government can find solutions if they put their heads together.
“Ultimately, I’m very bullish about housing,” he says. “I think the challenge is how do we deliver homes affordably. I think the realization of the impact of taxation has now reached policy-makers, and they're taking concrete action. I’m hoping that we might see some more creative solutions from policy-makers on how we fund infrastructure and (allay) the distortive impacts of taxes on new homes and how that impacts all Canadians, whether they rent or they buy.
“I think there’s a recognition of the impact these taxes have on the cost of housing. I’d like to be optimistic that we are aware of the problem and that we’re now at the solutioning stage.”
