Mike Kozakowski, founder of Citified Media, chats with Ross Marshall on the topic of provincial mandates for communities on housing delivery, and how that will impact municipalities tasked with committing to results. Citified.ca
Q&A with Citified's Mike Kozakowski on BC's new housing policies and overcoming supply roadblocks
Ten on the 10th
Published April 10, 2023
Citified's Ten on the 10th is a monthly question-and-answer segment connecting our readers with the insight and knowledge of Victoria's top real-estate and business professionals.
Ten on the Tenth's April, 2023 segment features Mike Kozakowski, founder of Victoria-based Citified Media, the company behind Citified and VibrantVictoria, and real-estate industry consulting services. Mike, who oversees the operations of Citified Media, discusses in a long-form interview the development landscape today, provincial housing measures, and necessary municipal reforms to address a significant shortage of housing on southern Vancouver Island.
Asking the questions is Ross Marshall, Senior Vice President of the Victoria offices of commercial real-estate brokerage CBRE. As a leader in facilitating large-scale commercial real-estate transactions throughout the Capital Region – which include apartment complexes, industrial retail and office properties, and land/development opportunities – Ross and his team are at the forefront of market-leading real-estate transactions on Vancouver Island.
Would you like to be featured as part of a future Ten on the 10th Q&A? We'd like to hear from you.
You’re a well known figure in the development world and various industry circles of Victoria, but for those who may not be familiar with you or your company, please tell us who you are, and how you came to run Citified Media.
I was raised in Victoria, and graduated from the University of Victoria’s School of Health Information Science in 2006.
During my time at UVic, I developed an interest in real-estate and civic issues, and launched an online platform that would eventually become VibrantVictoria. After graduation, I focused on the VibrantVictoria concept (primarily a forum covering a wide range of topics, and following a wide range of real-estate projects), which had taken off as a place for people to come together and share information on development proposals and municipal matters. In the early 2000s when the original phase of the website was launched, there was no Facebook or Twitter, so connections with like-minded citizens and information sharing was not as streamlined as it is today.
My education segued into other IT applications, which in my case was real-estate data. In 2007, I partnered in a start-up known as a go-to source for large-scale international development data (think skyscrapers and landmark structures from around the world), while VibrantVictoria prospered, and exposed me directly to the local development community with whom I have great relationships with, and work with, to this day. In 2015 Citified was launched, as a marriage between my professional work at the time and my civic interests. Citified was borne out of a need to centralize Victoria’s regional development activity and make it readily available to consumers and professionals alike, and to provide a core foundation for the wide range of services I now provide to clients.
You do a lot more than what may be obvious through Citified’s website. Specifically for the real-estate industry, you’re like an in-house data and market intelligence department for your clients, is that right?
Citified.ca as a website displays only a portion of the information and data we track, and can offer to clients. The publicly accessible data, and the breaking-news articles are what gives the website a public exposure that has gained it notoriety. The goal with the website is to always be ahead of the curve with data and articles, and to lead the news cycle. It is also a fantastic marketing portal for the development community, promoting their projects and services directly to receptive audiences.
Behind the scenes, I work as a market intelligence and data consultant, assisting a broad spectrum of clients, in real-estate and well beyond, who require market insight and market data to better understand the local political and development or general market landscape.
My services add to clients’ acquisition and development strategies, and I can assist their teams as they navigate towards approvals and development permits. As you mention, clients do consider Citified’s services as their on-call data and research team, that can parse what’s relevant to their needs, and do so through the lens of a life-long Victoria resident that has been engaged in Victoria’s civic matters since the early 2000s.
In terms of your audience, how many people are exposed to Citified Media’s content?
Every month over half a million people will consume our content, whether through Citified’s breaking news articles, as visitors to VibrantVictoria’s online forum, and through our diverse network of social media channels. Chances are, by the time mainstream media picks up on a real-estate development story or a major retail story, it will have already been covered on our network, making Citified a must-follow resource among local real-estate professionals.
I am also honoured and grateful to have a weekly appearance on CFAX 1070, Victoria’s talk radio station, where morning host Adam Stirling and I discuss civic or political matters and development issues on Friday mornings at 9:30. CFAX’s Ryan Price, the afternoon host, is also a big supporter of Citified, and I am grateful for the opportunity join him on a regular basis to discuss the big development stories of the week, and to provide an industry context on development headlines to help fill in the gaps for CFAX listeners.
Speaking of filling in the gaps and market insight, let’s pivot now, and cover some ground in a long-form format that I know our readers will want your perspective on.
The number of crises and issues facing our society appears to be at an all-time high, be it affordability challenges, to housing supply shortfalls, to emerging zoning changes to the cost and complexity of delivering new housing. What remains as roadblocks to making headway on solutions, when it would appear we’re finally at an all-hands-on-deck moment?
The present day is the first time that I have seen this much political will and support for housing. Historically, the issue of building homes has been contentious, with political careers made on its micro-management.
For decades, alarm bells had been ringing about social impacts like the baby boomer generation retiring (and the weight that would place on desirable retirement communities, healthcare, housing, jobs and taxation) or the growing role cities would play as populations in small communities receded. To see policy makers only now reacting to what were long ago forecasted issues, suggests necessary policy changes that we talked about in the 90s or earlier never happened, or were inadequately implemented. For example, the City of Victoria says it is 7,000 housing units in arrears. Saanich says it is under-building housing by over 600 units per year. We already knew this, long ago. 20 years ago the development community inferred to politicians and bureaucrats the challenges that were coming if the status quo on housing was maintained, so today’s problems are not merely symptoms of short-term indecisions. Rather, they are the outcomes of systemic, long-term failures.
Now that we’re under pressure, governments are looking to the development community for solutions, but it’s not going to be an easy fix when we’re so many years behind on housing supply, and we’re mobilizing on that supply at a time when unprecedented demand stems from strong in-migration (a big portion of which is via baby boomers choosing to retire to southwest BC) and immigration, both at modern era peaks. It’s like deciding to prepare for a flood, as the dam is bursting.
Furthermore, as governments align on housing supply, developers are confronting a new interest rate environment impeding land acquisitions and stretching budgets with high carrying costs. Then there are escalating construction costs, and building code changes are coming this year with additional changes in future years that will make the delivery of housing much more complex and expensive. Another factor is municipalities are acutely aware of their responsibilities, and have pledged to approve more housing, but struggle to make good on their own goals because of conflicts with other city hall policies or bylaws.
We’ve even heard in recent days how the provincial government’s own targets of delivering 114,000 units of new-build, below-market homes over a decade is falling short, with data showing fewer than 20,000 units built to-date, five years in. It’s not easy to build housing even if you’re the province.
It sounds like you’re saying municipalities finally understand how critical their part is in delivering solutions, but the old way of doing business, and entrenched policies like various bylaws and out of sync official community plan targets, could get tangled up with what needs doing?
Yes, we have a clear directive from the provincial and federal governments to get moving on housing and to prepare for large population increases. To do this, municipalities must radically change how they handle development applications, and conform their desired style of development for a given area or community to real-world expectations. That is much easier said than done.
We recently saw in the City of Victoria how Starlight Developments nearly walked away from a 1,500-unit, five-tower rental proposal after council arbitrarily voted in mid-February at a public hearing to suppress the project’s allotted parking supply to a level that would be unworkable from a needs perspective, albeit one that politically satisfied council’s agenda of reducing cars in the downtown core. And we have to remember, that the City of Victoria is one of the most progressive local governments on the housing file, so for that municipality to misjudge the viability of a project to that extreme, goes to show how precarious the approvals process can be during what the City itself calls a housing crisis, and with housing as the number one issue among its elected officials. Fortunately, on April 6th, the City agreed on a compromise, and Starlight will commence construction later this year.
The Starlight situation sent a shock wave across the nation, as developers reacted to a local government dramatically altering a project at a public hearing. I had heard from several clients and colleagues, that had Starlight walked away from its proposal, their own development plans would have been placed on hold as they assessed the risks if their proposal failed to meet a new council’s expectations, even after long-term planning with the municipality.
Meanwhile, political changes in the City of Langford (long considered the breadbasket of housing on the south Island) have put into question whether Langford’s progressive policies on housing development and densification under former mayor Stew Young still resonate. The municipality has seen a significant drop in development application activity since a new council was elected on a largely anti-development agenda, and developers are, for the first time in 30 years, walking away from land acquisition opportunities in Langford out of concern their proposals won’t meet council’s vision.
In Saanich, active high density proposals are at risk of being pulled due to a municipal misalignment over housing needs and agendas like tree protection that turn developable sites in favourable locations for density into financial quagmires for developers stuck between navigating a planning process that applauds their plans, while infusing roadblocks with significant financial and construction-related obstacles.
This is all happening within the context of a housing crisis, and is a regional dilemma with varying degrees of conflict across 13 municipalities and communities overseen by the Capital Regional District.
What needs to change to align municipalities with what their stated housing goals are, and what they are actually doing that can impede rather than support new inventory?
Municipalities sidestep the elephant in the room, namely how their goals on housing can conflict with their parallel agendas and proclamations, and how their internal processes cause significant delays between a proposal being filed, and approvals being granted. In the examples from the question above, all three municipalities acknowledge the housing crisis, and are committed to solutions. But all three are faced with in-house pursuits that conflict with, or greatly hamper, the delivery of housing, and make it increasingly difficult to provide housing at attainable prices, let alone at below-market prices.
It is crucial for municipalities to make their planning processes more efficient and more transparent. In the City of Victoria, projects have infamously taken the better part of or even exceeded a decade before receiving approvals, and those are instances from recent years, during a period of heightened awareness of housing shortfalls. By contrast in Langford, the directive from the former mayor was to ensure applications were processed as quickly as possible out of fairness to the applicant. What would take months in Langford, took years in Victoria, suggesting that much of the efficiency differences between municipalities are bureaucratic or cultural.
The decisions councils make that can appear to be in isolation or which appear to be conducive to achieving a political goal, can negatively impact housing. Take Victoria’s affordable housing initiatives as they apply to condominium projects. The municipality’s policy requiring affordable housing measures from developers with projects of over 60 condominium units may have backfired, pushing the majority of condominium developers to build projects at below 60 units, or to focus on rentals (without the affordability component condominiums must include) rather than homeownership opportunities, or to pursue development sites elsewhere.
We touched on how the political situation in Langford has changed since the last election. Has it changed elsewhere in the CRD, for better or worse?
Housing was the number one issue in the October 15th municipal election, viewed either through the lens of an under-supply and a lack of affordability requiring more political solutions, or through the lens of residents feeling their municipality over-supplied housing, and with it came undesirable change that they’d like elected officials to halt or walk back. Either way, housing and real-estate development played a big part in how the south Island elected its governments for 2022 through 2026.
Langford saw the most obvious shift, driven by an electorate that voted for a development slow-down, essentially. The new council may ultimately adopt a more favourable outlook on development than they currently hold, so uncertainty for developers for the time being is the dominant theme. We’re currently seeing a drop-off in developers enquiring about opportunities in Langford following the election. The unintended consequence of this is now the City of Langford is faced with its highest-ever taxation increase as the municipality charts a path to financial health absent of development-generated revenues. Under Stew Young, development over 30 years kept property taxes low, like an average of 3% per year, by directly funding what was effectively a reserve fund council could tap to keep taxes low. Langford is now faced with a five-year outlook approaching 50% in taxation uplift.
Colwood substituted a pro-development mayor with a more moderate leader, suggesting the new council is not necessarily as pro-development as it once was, although it has become much more popular among developers over certainty dealing with an established council that has intimated a support for smart growth.
Sooke continues to grow well above the average rate of the CRD’s municipalities, and will continue to add more housing in a mix of forms, but its challenges remain tethered to infrastructure limitations like sewer capacity and roads, which it will have to address before substantial development can occur. Sooke is also facing a major shortfall in retail services and amenities, the absence of which places an unusually high demand on its road connectivity to Langford just to satisfy basic commercial needs.
We are watching View Royal under the direction of a new mayor after a long-term mayor was replaced. Esquimalt’s Mayor Barb Desjardins has overseen a lot of positive change in her municipality, and we expect that trend to continue.
Victoria and Saanich have committed to expediting more housing, faster. But again, how their parallel agendas impact the actual delivery of housing remains to be seen.
On the Saanich Peninsula, the high density node of Sidney has a less development focused council than in years prior, and North Saanich is struggling to balance desires of some residents to remain rural, as others want to see more density. Central Saanich is turning a corner and adapting to more density at several targeted growth areas.
Ultimately, all municipalities are now under the watchful eye of a provincial government that is looking for results from every jurisdiction as it saddles up for a large rise in in-migration and immigration.
Speaking of the province, Premier Eby has made bold promises and says his government is committed to building more housing, faster. What does this mean, down on the ground?
It circles right back to municipalities and their ability to meet the expectations set out by the premier.
And we can’t necessarily fault them for struggling to process what the provincial directives mean. There are infrastructure concerns, there are population growth pressures and social concerns like public safety services and public programs that need to be funded and expanded. There are staffing limitations at each city hall, efficiency limitations in each department, and processing time restraints.
Then there are taxpayers who are against supporting the level of growth the CRD has experienced in recent years. Elected officials have to weigh their points of view, too, then balance the province’s agenda, and take into account residents faced with rising housing costs or affordability challenges, and accommodate needs of newcomers. That’s what makes politics so hard, the managing of everyone’s expectations, not solely siding with people who align with you, or who helped you get elected. It’s not a service I envy.
Do you think municipalities are going to have to rely on outside help, to meet the expectations set for them by the province?
We have to get over the hurdle of viewing the development industry as a foe, or as a political target. We all need the industry’s services and end-products. Elected officials, I hope, are acutely aware today, of what happens when new housing is restricted or political decisions erode or delay new inventory streams as a systemic reaction to proposals. It’s good and well to have agendas and social goals as part of a political platform, but passing decisions as a council in the absence of professional advice on how those decisions can impact the delivery of housing, cannot be business as normal. We have to view all of council’s decisions, when it comes to energy policies, social programs and infrastructure investments, in a much wider, comprehensive context to catch and address ‘unknowns’ before they catch us off guard.
My suggestion would be to move towards viewing development as a partnership role and not as conflict, so that the housing industry can focus on solutions instead of working to eventually supply housing our society requires, but not before spending significant time, human capital and resources on defending plans that in actuality are responding to a community’s own expressed needs.
And here’s something to ponder. According to Statistics Canada, the Capital Region is projected to grow to nearly 500,000 residents by 2041 under a high immigration scenario. At today’s dwelling occupancy rates, that growth will require in excess of 40,000 units of new-build housing, not including replacement and updating of ageing inventory. Addressing the housing needs of an incoming population, and making up for the shortages we are already dealing with, is going to be a monumental challenge that will require a sincere change from today’s way of doing business. Our growth target by 2041 is another example of us knowing exactly what’s coming, just like we knew we’d be in the situation we find ourselves in today. The question now is, will we politically and socially mobilize to address what's going to happen, and give future politicians the foundational tools they need to execute a workable plan in time?
That’s a staggering number, 500,000 people. To think Greater Victoria will have a population of half a million people in 20 years is head-turning. What does this mean for the industry, and for the region?
With growth come amazing opportunities, forward-thinking investments, more services, better job prospects and a thriving economy essential to our collective success. We are fortunate to live in such a desirable place, that is viewed so positively from across Canada and the world. This keeps us top-of-mind for investment capital.
While there are challenges that we need to address, challenges exist everywhere, in every city and every province. Here in southwest BC, we have the advantage of a mild climate, a strong economic horizon and a long list of privileges that we often take for granted, but the rest of the country and world recognize as advantageous even if we lose sight of them. And from what I can see, there is no shortage in organizations from across the continent looking specifically to Greater Victoria as a place to invest their capital as they see our region as a safe and desirable destination for the long-term.
I would like to reiterate, that despite the growing pains we’re dealing with, none of the challenges before us are insurmountable, and we will solve the problems. It’s more a matter of how quickly and efficiently we are able to transition to a new way of tackling our challenges, and agree as a cohesive region to learn from our mistakes.
I’d like to ask an 11th question, to gauge what you might ‘see’ through your crystal ball. What’s one thing you anticipate as we move towards the 2040s, and reach a population of 500,000 people?
I suspect amalgamation is going to be taken seriously. Our 13 municipalities are struggling, sometimes in unison over the same issues, other times independently as they enter different phases of their population growth, and administrative growth. I can see a sharing of services becoming a necessity, and eventually a political merger of select municipalities both as a cost savings for the taxpayer, and as a practical evolution to address social needs.
Ultimately, however, we also have to be careful not to lose what made Victoria desirable to us in the first place. If amalgamation were to occur, citizens will have to gain something substantial, in exchange for losing political independence. C
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