Good evening, Mr. Chair. I'm pleased to have the opportunity to address the standing committee as it continues its study of federal housing investments.

My name is David Horwood. I'm a principal at Effort Real Estate Corporation and the Effort Trust group of companies based in Hamilton, Ontario. Our group is active in the management and development of rental housing properties across Ontario. We are a third-generation family business that is proud to serve customers across the rental housing spectrum, and we take our responsibility as housing professionals and tenant advocates very seriously. We're active members of numerous industry associations that advocate for sensible housing policy at the municipal, provincial and federal levels.

As has been shared with this committee in the recent past, purpose-built rental housing plays a critical role in Canada's housing continuum, with more than 10 million Canadians living in private-market rental housing.

In the 1960s and 1970s, our business, like countless others across the country, was engaged in the development of rental buildings that served the demand among people who both chose and needed the flexibility that professionally managed rentals, as opposed to formal home or condominium ownership, could provide. However, due to a variety of factors—the most impactful being legislative changes federally and provincially that serve to impede, restrict, complicate or increase the cost of development—our business, like countless others, stopped building rental housing. Simply put, we could no longer advance projects for which we had no reasonable prospect of earning a modest return, let alone ones that justified the major risks inherent in projects of this financial and engineering complexity.

Although we have continued to manage and reinvest in our existing portfolio of rental properties, we avoided all new construction projects until very recently. The introduction and subsequent refinement of CMHC programs to foster new rental housing construction have been of critical importance in allowing us to return to the new-construction business. The program formerly known as RCFI—now called the apartment construction loan program—whereby federal funds are loaned to developers at below-market interest rates and subject to very strict qualifying criteria, has been one such vital initiative.

The MLI select program, another offering of CMHC, has been very useful for many developers—including us—trying to de-risk and reduce the cost of new rental construction projects.

The rebate of GST on new rental construction and the corresponding PST rebates in many provinces also serve to make new rental projects more viable by reducing a major cost item. I commend the current government for finally taking this step after years of deliberation. However, the regulations around this rebate remain incomplete. This will only delay new projects from starting, further delaying the vital increase in the supply it is intended and should create.

I strongly encourage you to consider a few simple adjustments to existing programs and further revisions to the legislation around rental housing.

Firstly, the apartment construction loan program was revised in April to require that applications be virtually ready to start, or be “shovel-ready”, as is said in the industry. Although I understand CMHC would like to consider projects that are ready for construction, I can tell you that, as a proponent of such applications, it is nearly impossible to commit to a final building design with all required supporting studies and reports until one has actually been approved for the program. It's a classic chicken-versus-egg problem: We won't finalize until we are approved, but we can't even apply until we are finalized. The process is serving as a major disincentive to new applications.

Secondly, just last week, changes to CMHC's MLI select program were introduced, and they have already been widely criticized by the development industry. One major change has the consequence of reducing the potential rental revenue that can be charged. The result is—clearly—a roadblock to projects being financially viable. The outcome will be dire. Far fewer buildings using this previously advantageous financing program will be contemplated.

Lastly, the HST rebate is planned to apply strictly to projects that started on September 14, 2023 or later—the date of the announcement. Developers who started rental projects earlier in 2023 or in 2022 that won't be finished until this year or next do not qualify for this critically important incentive.

I suggest that consideration be given to allow projects that started before this arbitrary date to qualify under the strict condition that any incentive be mandated to apply on an incremental, additional rental project.

What would happen? We will see experienced, proven builders be incentivized to build more buildings, resulting in more supply and more choice for rental households quickly.

I'm mindful of the time and would love to talk further about taxation of new projects and the MURB program that would lead to far more construction very quickly, but I will limit my remarks.

I thank you for the opportunity to share my comments. Like you, I'm eager to work together to achieve a measurable improvement in the housing market during what we would all agree is a period of crisis in affordability, in supply and in stability.