Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 163

The Liberals just announced that, if elected, they will form a new entity called Building Canada Homes (BCH) which will, "get the federal government back in the business of building homes." Broadly speaking, this new entity is proposed to have three key functions: it will build affordable housing at scale (including on public land), it will help to "catalyze" the private sector, and it will provide financing to affordable housing developers. There's a lot that is interesting in the policy teaser, but let's focus on function number one today: Do governments make good developers?

The outlined intent is that BCH will "act as a developer to build affordable housing" and "partner with builders for the construction phase of projects." So it sounds like they will not be constructors. The language they use also suggests that BCH will be an acquirer of land. Sometimes it will develop on already-owned public land, but in other cases it will go out and buy new land, sometimes offering it back to the market via land leases.

Acquiring new land will be challenge number one. As we have talked about many times before on this blog, land should be the residual claimant in a development pro forma. Meaning the value of land depends on what you can build on it. So if BCH is looking to build affordable housing and the rest of the market is looking to build some higher-and-better use, it will be very difficult for them to complete in the market. This is the same reason why, historically speaking, the City of Toronto has struggled to acquire new parkland with the funds it collects from developers. It can't compete.

On the flip side, it's very possible that in a downmarket, like the one we're in right now, BCH might be the only real buyer of development land. Affordable housing requires subsidies and if the subsidies BCH has access to result in both feasible projects and higher residual land values, well then they'll be able to win sites. But it will depend on the market conditions at the time. It also raises an important question: What is the right level of subsidy for the affordable housing that BCH intends to develop itself?

The second challenge is going to be execution. Development is a risky endeavor, but most of the time the private sector accepts these risks because they believe they will be compensated accordingly. And once they have taken on these risks, they become highly motivated to deliver for their investors and partners. Will the federal government be equally motivated? Perhaps. There are, of course, lots of examples of public housing developers in other parts of the world. But is it the most effective way to deliver new affordable housing? An alternative approach would be motivating the private sector to participate.

Getting the federal government "back in the business of building homes" may sound promising, but there's reason to be skeptical. There will be lots of details to figure out if it's actually going to be efficient and effective.

Cover photo by Eduardo Alvarado on Unsplash

Neat B and I were in Park City this past weekend for our last runs of the season. (Now it's time to pull out the impossibly tight spandex for road biking!) This is a trip we do often, but given the current geopolitical situation, we weren't exactly sure what to expect. But I will say that we were pleasantly surprised. When we picked up our rental car at SLC, the attendant, who was from Texas, immediately said that he was trying to figure out how to become the next Canadian province. He then proceeded to inquire about the quality of our brisket in a way that made it sound like a firm prerequisite. And virtually everyone we met on the mountain was extremely apologetic once they learned we were Canadians from Toronto. Frankly, they came across embarrassed, and they made it clear that they do not approve of what their government is doing right now. This made us happy to hear.

I still love you, Park City.

Cover photo by Alex Moliski on Unsplash

Sahil Bloom tweeted this out a few days ago:

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And it really resonated with me. I'm sure it does with a lot of you as well. I'm guilty of feeling this guilt. Because by definition, if you have a strong desire to do or to achieve something, then you're going to want to spend a lot time working toward it. And any time not spent working toward it, can feel like an unnecessary slowdown or delay.

But it's easy to let time melt away when you're in this headspace and I'm trying to be better at not letting this happen. For one thing, there are diminishing returns to work. We all need free time and rest. It makes us better at everything else we do in life.

It's also really easy to fill our lives with unnecessary bullshit. The same thing happens in our homes when we're not paying attention: we end up collecting unnecessary stuff. So as Paul Graham argues in this 2016 essay called "Life Is Short", it's important to "relentlessly prune bullshit." Focus on the things that matter, and don't wait.

When you're ambitious, I think it's easy to become focused on the future. I've been told I do this too much. Achieving something usually requires hard work and determination, and that likely means it won't happen today; it'll happen at some point in the future. So it can be easy to discount the present. But nobody knows how much healthy future we all have.

These are all things that I'm trying to be better at and so I'm writing them down here as a reminder. How do you manage your work-life balance?

Cover photo by Christopher Gower on Unsplash