118: The Secret Sauce to Developing Net-Zero Homes While Staying Profitable with Highstreet's Scott Butler

00:00:00 Taylor Atkinson
Welcome back to the Kelowna Real Estate Podcast. I'm your mortgage broker host, Taylor Atkinson.


00:00:03 Matt Glen
And I'm your real estate agent host, Matt Glen. What's happening today, Taylor?


00:00:07 Taylor Atkinson
Man, we had Scott Butler on from High Street. Awesome guest. Awesome developer.


00:00:12 Matt Glen
developer.


00:00:13 Taylor Atkinson
Yeah, great developer in town. So High Street, you'll see a bunch of their projects around BC, Western Canada. I met with him for coffee a couple months ago. Great guy, super transparent, very authentic, like pretty down to earth. And that's kind of what this show was. You know, you ask him questions and... He just says it how it is. So yeah, I loved it.


00:00:32 Matt Glen
Yeah. And he like has systems and using them to full effect to keep the prices down, to keep the product high. Like in my industry, obviously talking realtors, realtor and buyers, like you kind of start to feel for reputations that certain buildings have and like how builders are looked at. And like, I have to say like high street and ascent. specifically. People like that. Yeah. I've heard nothing but good things about it. And listening to Scott on the podcast and talking to him, you kind of understand why it has such a good reputation.


00:00:53 Taylor Atkinson
Yeah. I've


00:00:59 Taylor Atkinson
Yeah. So Ascent is kind of upper mission area. Know the new Sabon. Really cool location. They've just finished phase two, I believe, working on phase three. Still have 50 units to sell. Some really cool stuff they're doing there to promote it is they've doubled the warranty.


00:01:12 Matt Glen
doubled the warranty. Yeah. Instead of a 2 -5 -10, it's a 4 -10 -20. Yeah.


00:01:18 Taylor Atkinson
which is crazy for somebody that like had that much confidence in their own product. They're step code four, so super efficient buildings. Obviously, you know, that's great for the environment, but reduces, you know, homeowner operations. Does that help with financing that it's going to cost less for utilities at all?


00:01:33 Matt Glen
going to cost less for utilities at all?


00:01:35 Taylor Atkinson
No, every lender kind of has like per square footage. This is just what we use for guidelines. Yeah,


00:01:41 Matt Glen
that's because they haven't learned enough to scope other properties.


00:01:43 Taylor Atkinson
Yeah. But for financing, if it is an insured mortgage, you would get 25 % of your CMHC insurance premium back because it means step code requirement. So, you know, if someone's buying it as owner occupied with less than 20 % down, yeah, they get a big chunk of money back.


00:01:59 Matt Glen
Do they give that to you in a cash or like a credit towards your mortgage?


00:02:02 Taylor Atkinson
Cash. Yeah. You apply for it and they send you a check a couple months later. Yeah. Which is wild. So basically like you're financing the CMHC and then you're getting that rebate. in cash crazy bit of a loophole he's doing a price guarantee which yeah that's crazy yeah the price guarantee is crazy and he is confident about it if you buy now and in five years it's less than the value it is now he's going to give you the money back of like i think there's more specific right it's like up to five percent or if it goes down more than five percent he'll get you to check for the difference or something gotta look at the details but either way he is very confident in that and after you talk to him you kind of understand why


00:02:25 Matt Glen
money back of like i think there's more specific right it's like up to five percent or if it goes down more than five percent he'll get you to check for the difference or something gotta look at the details but either way he is very confident in that and after you talk to him you kind of understand why


00:02:41 Taylor Atkinson
There's just very little risk to buy in that complex. And like, they're just great units and price starting at 284, I think.


00:02:48 Matt Glen
think. Yeah. So I think they're pretty, I don't have the price list in front of me. I think they're pretty competitively priced. And like I said, they have a great reputation. Matt, we sound like an infomercial right now. He's not paying us. I swear. We just, I know. Yeah, actually he should be. Scott, see us. Scott should be paying us, but no, he is not. This is just our honest opinion about what we've heard and how we're experiencing. And after talking to Scott, like it's. the real yeah we just get excited about good projects there's a ton of empty units being sold around cologne obviously so buyers are in the seat but yeah i think this is just good location good price good end user product and good developer so yeah enjoy the show at least this way you get to know kind of the guy with the vision beyond what he's building so yeah all right guys this show like every show sponsored by century 21 assurance realty we're here we're there we're everywhere where are we taylor we're in east


00:03:10 Taylor Atkinson
yeah we just get excited about good projects there's a ton of empty units being sold around cologne obviously so buyers are in the seat but yeah i think this is just good location good price good end user product and good developer so yeah enjoy the show at least this way you get to know kind of the guy with the vision beyond what he's building so yeah


00:03:28 Matt Glen
all right guys this show like every show sponsored by century 21 assurance realty we're here we're there we're everywhere where are we taylor we're in east We're at East Kootenays, like Creston. We're in West Kootenays, Castlegar. We're in Salmon Arm, Kamloops, Vernon, Kelowna, West Kelowna. We are pretty much most places in the interior of BC. So if you were looking for a realtor to buy or sell your house or property manager to manage your properties, or if you're an agent looking for a brokerage to hang your hat at, Century 21 Assurance Realty is probably the place to call. I'm there. I love it. So that's the place. Enjoy the show, you guys. It's a good one.


00:04:06 Taylor Atkinson
Okay, Scott Butler, welcome to the show. It's taken me a while to pressure you to come on here. Basically, I had to get Chris Grout to foul you at basketball too many times to force you this way. But yeah, welcome to the show. How's it going?


00:04:18 Scott Butler
Well, I don't know if Chris ever fouls me. It's probably the other way around. Yeah. I don't know if that's good or bad. I guess we'll find out.


00:04:21 Matt Glen
Yeah. I don't


00:04:24 Matt Glen
Well, Taylor and I only hang in the best circle, so it's got to be a good thing. Yeah.


00:04:29 Taylor Atkinson
Well, yeah, if you can tell us just a little bit about you, your company, where you came from, just kind of the elevator pitch, and we'll go from there.


00:04:35 Scott Butler
yeah for sure throughout victoria so kind of bc boy born and raised and i grew up around construction my parents had a construction company and for some reason since i remember this in grade four i decided i wanted to own a business and i think that's a pretty weird thing in grade four looking back on it but i decided that's what i was gonna do so i kind of set my life up to go towards that and I even took accounting courses because somebody told me I should if I was going to own a business and did that for a fair amount while I was going to university at UVic. I took an entrepreneurship specialty in commerce and was taking accounting courses on the side at Camosun. When I was done university, I didn't know what the heck I was going to do because I had this idea I was going to start a business. You know, I was completely broke and I was like, how does somebody start a business? i still didn't know most people still don't know pretty yeah i mean it was like some weird anyway so i ended up moving to calgary i landed a job at west jet had a great experience there saw kind of four entrepreneurs running this airline that it was a great experience that they had no background running an airline and four of them decided to do it so that was awesome i got to know don bell really well there i met my wife there which is the best thing that ever happened so that was awesome so kind of went through the mid -20s with a lot of big things happening you know bought our first house and and all that and then i was nearing 30 and i was worried that if i don't start now and we start having kids i'll never take the risk and start a business so left west jet and left calgary at the end of 2004 and then started evaluating what to do and i had this big list and yeah just kind of really liked the idea of creating something from nothing and having grown up in construction had that background but i really liked the idea of developing real estate and i was always into real estate i was always picking up all the real estate magazines looking at all that and then yeah i figured i could start doing something like that and just so happened my dad with a business partner had a piece of land in courtney on vancouver island that they couldn't get rid of for like 10 years which i really found out why after It's a nightmare. But being green and not knowing got into it. And the first project we dealt with a ton of hurdles and eventually got going. And our first one was condos on Vancouver Island. So that started the ball rolling and kind of went from there.


00:07:10 Taylor Atkinson
there. And so your company's High Street. So you guys primarily do, you know. stratified condos for resale right you do some purpose -built rentals as well but is that the main objective no not really we started out i guess our first project was a condo we did a hotel right after that tried that out got caught in the pit of the downturn in 08 and then really focused on rentals coming out of that so after 2008 big focus on rentals and we did a lot of rental apartments around alberta went up to yellow knife we ended up selling condos in yellow knife no


00:07:20 Scott Butler
not really we started out i guess our first project was a condo we did a hotel right after that tried that out got caught in the pit of the downturn in 08 and then really focused on rentals coming out of that so after 2008 big focus on rentals and we did a lot of rental apartments around alberta went up to yellow knife we ended up selling condos in yellow knife no 2011, 2012 timeframe. And we were just willing to go anywhere to make anything work. It was kind of that back against the wall and started a business and didn't want to see it fail. So we were going anywhere. But yeah, most of our history is rental apartments. So we've built about 6 ,000 homes and I don't know the current total, but off the top of my head, I'd bet there's probably 1 ,400 or 1 ,500 condos in there. So still the majority being rental.


00:08:13 Taylor Atkinson
Sure. And so I guess the main question, like why I originally reached out to you, which honestly was probably two years ago and you just ignored me forever, but you know, I'm persistent was like, how do you stay profitable, right? Like in this current environment climate, like everyone is kind of the woe is me. It's the government's against us. There's truth behind that. Like it's not wrong. However, there are still people like yourself that are successfully putting out a good end product. And, you know, I'm not going to say like. making money but like obviously you're still surviving thriving in the current state you're still putting out like a good product and one of the things that like made me even more interested to talk to you was there was a linkedin post and somebody threw out something about you know per square footage just does not work and you know we should go modular homes and you were So analytical in your response, it was like, hey, this is how we do it. You know, we have this system in place and like our timelines are always met. So I guess the question is like, what's the secret sauce? How do you produce product that is good for the end consumer? And I don't want to say like affordable, but housing is a need in BC and you're providing a need that people can actually, you know, move into at a price that, well, yeah, I'll say affordable is affordable to them, you know?


00:09:27 Scott Butler
Yeah, yeah, for sure. Market affordable. Anyway, there's a lot of meat to chew on that bone there. First of all, sorry that you felt like growing for, I don't think it was two years. I mean,


00:09:37 Matt Glen
yeah, that's an exaggeration.


00:09:37 Scott Butler
that's an exaggeration. But, you know, I was like, what am I going to do on a podcast? So I'm finding it.


00:09:43 Matt Glen
finding it. I love that he asked you two years ago how you stayed profitable and then you waited two years where it just gets harder and harder. Yeah.


00:09:52 Scott Butler
Anyway, the big answer to that. There's a long answer that would take a half an hour. So I'm trying to figure out like, how do I summarize? I mean, I think fundamentally it starts with our vision that we want everyone in High Street's community to recommend their friends to work with us, live with us and invest with us. And what does that mean? It means we start with the focus on the people. So you want to create a great environment for people to work in. That involves everybody. I mean, I think that's not just the High Streeters, that's trades we work with and everybody else. So we've been focused on that. for a long time we met relative success through the years without being totally awesome at construction we didn't even start construction on our own until 2016 so until then it was all working with my brother's company train and not train does their own development as well so we started a construction company in 2016 we had an ambition to be nicer than everybody else and create a great environment but we didn't know how and it wasn't until 2022 we met a company out of phoenix that was doing lean construction implementation and so we got to know them in a hurry started using them to change how we deliver projects using this kind of lean production system that they developed over the years which was based on the toyota production system and as we adopted that we found that you know all of a sudden we're delivering every building on time based on the schedule we set out from when we started projects on or under budget. And that's all through a huge combination of the system, which really starts with respect for people and continuous improvement. Those are kind of the two main tenants of Lean. You start there, but then there's a whole bunch of systems that go along with it from just the transparency of it. See as a team, know as a team, act as a team. We talk about there's a tax schedule involved that gets into the SculpKid discussion around TAC time, everything else. the whole idea is to create flow so if you can create flow on the construction site it flows for everybody and then that makes the whole thing smooth and and you remove roadblocks ahead and you get the whole team engaged and i mean it's everything from morning huddles to the forum meeting and having the right agenda and there's a whole bunch of components to it that's certainly our biggest cost driver when it comes to developing and there's another component though too that shouldn't be overlooked is the design and the repeat design that we've been doing for the last few years, and the renewed focus on that a couple of years ago. So repeat design, an efficient design, and at the same time still spending money on areas that others may not, that people don't see. Talk about Step Code 4, and so we are the largest builder of Step Code 4 carbon -free buildings, we think in Canada. I know that sounds like a big claim, but pretty sure. Anyway, so you think about all the people involvement. I mean, we could segue that into this whole discussion that I could go on for another 10 minutes about, you know, the compensation philosophy and the involvement we have. Our people who are investors, like our employees who are investors, our trades who are investors. We have a bonus program. We do matching on that to make sure they invest. How does that all wrap together into being efficient and doing the right thing? Like it's, we care and we're owners. We have a good system, right? Like there's a lot to it.


00:13:11 Taylor Atkinson
there's a lot to it. Yeah. When we had coffee a while back there, one of the. takeaways for me was you were like, you know, it's a construction industry, but like the old story is, yeah, guys need to work overtime and work Saturday and work Sunday. And it's just like, you know, you're just grinding away and then you don't really have much of a personal family life, mental health, anything. And so, I mean, that was such a big takeaway to me is like, if you actually have authenticity around like supporting your employees so they can go home on time and pick up their kids and, you know, do whatever is a priority to them, they're going to be happier. They're going to be more efficient. They're going to work faster. And then the other part of that conversation, it was, you know, probably funny to both of us as we were talking about it, but when you were trying to sign, I guess the contract of like when you would complete on possession, you know, you wanted to put a specific date, right. And the selling team, the listing agent was like, well, we'll put like the winter or we'll put the spring. So like, that is so cool because no one's going to really put their money where their mouth is like developers don't. Right. You know, I financed one of your units of one of the first units up there. a while back for a client and that's when i first kind of saw step code and the home warranty and i was like wow this is like a very well -built product and then in addition to all that something cool that you ended up doing was you guys essentially run strata now there right and you took that on so can you tell us i guess why did you elect to do that because like running strata sounds like an absolute nightmare but yeah here we are


00:14:36 Scott Butler
Yeah, it can be. Our team is probably not happy with me right now for wanting to do that. But the whole idea was that we wanted to really have both the product side and the service side taken care of for the buyer. So historically, what would happen is, you know, you sell a condo and then the Strata Council gets formed and the Strata Manager is in charge. And the Strata Manager comes from a place of historically adversarial relationships with developers. And so then rather than just talk to us if something was wrong, we've had this happen over the years where on condos we'd sold. And rather than just let us know what's going on so we can come and fix it, they get all worked up and then they get the strata manager to write a letter or they'll notify the, you know, home warranty board. And next thing you know, we're getting a letter from home warranty and we're like, what? This is the first we heard about it. Like, we'll just go fix it. What's the problem? Like, just let us know. We'll go fix it. And so we thought removing that. barrier so that things just get taken care of as soon as we hear about them would be great and the second big part was also we wanted to create more community in the condo buildings we sold so on the rental side we have a big emphasis on creating community putting on events helping people get to know each other figuring out hey if there's you know six people that live here that like playing chess like maybe we can host a chess night and then they'll come out and do that and so We really wanted to give the condo buyers that same experience because I think we... you know as a society you get into an apartment building and i lived in one when i was younger and you know it was funny you get in the elevator nobody talks to each other and it's kind of like everybody looks down and i always found that weird and i thought well what's the the closer you get the more people ignore each other so i thought well how do we create community and make welcoming environments that people love living there and they create friendships and they you know create relationships that can last for a lifetime and so we wanted to bring both of those things to the experience and really improve the customer service side of owning a condo. It's a really long -term thought around building the brand. It obviously doesn't help us in the near term and it's not a financial reward at all. I mean, that's the funny thing.


00:16:49 Taylor Atkinson
You're subsidizing it at this point.


00:16:50 Scott Butler
Yeah. Yeah. We're not doing this to make money.


00:16:53 Taylor Atkinson
And at the end of the day, like Strata Council can still vote you out. As the managers, right? Yeah. So it's not like they're stuck with you if you're not doing a good job.


00:17:01 Scott Butler
I shouldn't say this, but I think the Ascent Council, there's talk of them voting us out like already. And we're going like, why? Because they think there's a conflict of interest. And it's like, oh, conflict of interest. We're just trying to do the right thing here. And so it's super frustrating. And the vision and the reasons we're doing it, because there's a lack of trust with developers, they think that, you know, we're cooking the books or something. It's like, man for the strata budget like come on why would we do a double warranty if we were trying to cook the books why would we do a retroactive price guarantee for everybody who's already bought if we're trying to skim a couple grand off the strata like okay so this is something we need to talk about is the price guarantee because i saw this it was like a couple weeks ago it piqued my interest i'm like oh my god this is like insurance but you're doing it retroactively for everyone that's purchased so far


00:17:43 Taylor Atkinson
so this is something we need to talk about is the price guarantee because i saw this it was like a couple weeks ago it piqued my interest i'm like oh my god this is like insurance but you're doing it retroactively for everyone that's purchased so far yeah we thought it was the only fair thing to do like we didn't want to come out with this then have everybody come after us although hey what about my guarantee so as soon as we started talking about it i said well there's no way we can do this without making it retroactive and so how does this look you buy a unit for 400 000 in five years it goes down in price


00:17:55 Scott Butler
we thought it was the only fair thing to do like we didn't want to come out with this then have everybody come after us although hey what about my guarantee so as soon as we started talking about it i said well there's no way we can do this without making it retroactive and


00:18:07 Taylor Atkinson
so how does this look you buy a unit for 400 000 in five years it goes down in price You're going to give them money back?


00:18:16 Scott Butler
Yeah, it's based on a citywide index. So it's based on the real PAC. They send out a report every month. You can go to an online website. It's a well -known benchmark index. They get reported on once a month in the news media. And it's a benchmark of house prices in Kelowna. So it'll take all house prices. And the idea, when I say benchmark or an index. It'll take that same house and then, you know, what it sold for a few years ago and then index it to what it sold for recently. So they have enough of a database of it. It's actually same versus same. It's not like comparing because, you know, averages can skew, whereas a benchmark is going to compare same to same. So the idea is that it's got this whole kind of Kelowna area index. And we know what that index was in January. So January was the retroactive date for everybody who'd already bought. And yeah, if the index is 5 % lower five years from now, we're cutting checks.


00:19:13 Taylor Atkinson
That is awesome. I mean, it just shows the confidence you have, well, in the product, but in the Kelowna market as well.


00:19:19 Scott Butler
Yeah, it's really a Kelowna market bet, which I just know fundamentally, like it's so hard to get the cost down. And so as long as there's growth, as long as there's more population here five years from now, which is a pretty safe bet. And the cost of build that isn't going to be, you know. it can be significantly lower it's just so hard to get the cost down we know and so it's a bet that there's more population and that cost of delivering that home five years from now is more than likely going to be higher just because of inflation you know it seems like a fairly safe bet and if it turns out to be wrong well i guess that'll be nice I'll be writing a lot of checks.


00:19:59 Taylor Atkinson
People will also love you either way. Like if their house goes up, they're like, awesome. If it goes down, they're like, oh my God, this guy's sending me money to live here. Like, yeah,


00:20:07 Scott Butler
they have to live there too. You know, and it's the same person. So there'll be an element of people who just move on and that's okay. So, you know, it's not a hundred percent bad on everybody. We know that not everybody stays in the same place for five years. So there's a bit of protection there. The idea was we knew that there was so much resistance in the market. People didn't know where the bottom is going to be. And if they're trying to time the market, well, here, let's take that fear away and get them off the fence. And it has resulted in quite a few sales since we did this. So I think it was a lot of people just kind of thinking about it and humming and hawing. And I don't know the exact number. I've just talked to our sales manager this morning, but I think at least 10 since we put out the price guarantee. You know, all of a sudden, the big uptick in volume there.


00:20:51 Taylor Atkinson
I mean, it's just such a good incentive. Like, out of all the incentives we've seen over the last couple of years, this just seems to make sense.


00:20:58 Matt Glen
Scott, you said something interesting, like, it's not going to get cheaper to build. And can it ever get cheaper to build? Like, when Taylor and I talk about this, it's like, wages aren't coming down, materials not coming down. I don't really understand how it even is possible to come down to be cheaper to build in the future. Well,


00:21:14 Scott Butler
you never say never. I mean, I think... If you take a longer scope of history, the times when we've had decline in production prices, it could be a massive recession. So I wouldn't wish that on anybody, but that is the one thing that could drive prices down. It's funny, real estate has a mild oversupply situation right now, and we see prices going down. But if you take any other industry, there can be massive adjustments. I think some industries are probably better able to... handle those fluctuations. But ultimately, what's going to take wages to go down? A whole bunch of unemployment. And we don't want to see that. And I'm not even sure the governments are willing to let us have unemployment at a higher rate anymore. I mean, if you think about the last couple of downturns, I'm really on a rant here now, but all the governments learned in 2008 and in COVID was like, we can just print money. And so print money and nothing comes home to roost. Everything's fine. You ride through those downturns and increase the debt massively. And then when things are good again, you don't even have to go back to the balanced budget. You just keep the debt high and nothing ever happens. Yeah,


00:22:23 Matt Glen
I guess we'll see how long that goes. We'll see how long, exactly. Yeah, until when. It doesn't happen until it happens. And I don't want to be around when that,


00:22:24 Scott Butler
We'll see how long, exactly. Yeah, until when. It doesn't happen until it happens. And I don't


00:22:29 Matt Glen
want to be around when that,


00:22:30 Taylor Atkinson
especially not five years from now when you're writing checks. Well, maybe. I mean, with inflation, money would be worth much less then.


00:22:37 Matt Glen
Yeah, good point. Good point.


00:22:38 Taylor Atkinson
So I just, I want to highlight like for listeners, we obviously know where Ascent is and what the product is like, but it's Upper Mission. It's near the new Savon up there. You guys are still actively under construction. So, right? There are still units being finished?


00:22:52 Scott Butler
Yeah, we're nearly there. We just got occupancy on the last building two weeks ago. So we're ready to move people into that last building now.


00:22:59 Taylor Atkinson
What's the home warranty on it too? It's super long, isn't it?


00:23:01 Scott Butler
yeah we doubled the legislative warranty so we're only currently selling the first two buildings and the third and fourth building we turned into rental we just didn't want to fight the market it was going so slow so we still have about 50 condos left in the first two buildings out of 136 and yeah the double warranty so the traditional warranty is two five ten that's like two for mechanical electrical systems five for building envelope and ten for structural we doubled that and that's a high street guarantee so there's no requirement there's no ability to get you know a typical like new home warranty provider to give you that That's a high street guarantee over and above the legislative requirement, which is two, five, 10.


00:23:45 Taylor Atkinson
And then you have the guaranteed price, which we obviously spoke about. And then it's step code four.


00:23:51 Scott Butler
Yeah. Step code four was the highest level of step code for a multifamily apartment building.


00:23:57 Taylor Atkinson
When we were chatting, I was like, yeah, it's amazing that it's step code four. Originally I was like, man, this guy loves the environment, but like why step code four, like why go above and beyond you're selling a product. that is there much return on investment on the resale side or just financially like it just makes sense to do for sure on the resale side i don't think there's too much financial justification but on the rental side there is and because we like to keep it simple we're not going to change the design for the condo side than the rental side that's what allows us to be efficient and that was one of the things we didn't touch on earlier in terms of efficiency volume is a big deal like we currently have over 650


00:24:14 Scott Butler
sure on the resale side i don't think there's too much financial justification but on the rental side there is and because we like to keep it simple we're not going to change the design for the condo side than the rental side that's what allows us to be efficient and that was one of the things we didn't touch on earlier in terms of efficiency volume is a big deal like we currently have over 650 homes under construction. That's maybe a bit light for us. We're at a bit of a intermediary period. That'll be back over 800 soon. So when you're doing 800 a year, you can get some efficiency out of that.


00:24:45 Taylor Atkinson
I don't understand why you didn't have time to come on the podcast if you're only doing 800 homes a year.


00:24:50 Scott Butler
Well, I'm not building it. I've got an office. Everybody else is making it happen. No excuses there. Sorry. Okay. So look, I'm not out in a Zodiac going after oil tankers, throwing back a roll. Yeah. I'm not like a Greenpeace guy, but I've always thought, like since I was a kid, I was big into recycling. And when we built the hotel, I was asking questions. This was a long time ago. This was like when we were designing it in 2007, going, well, you know, okay, so a mid -efficient hot water tank is $8 ,000. Well, what's the highest efficiency hot water tank we can get? And, you know, they go, oh, you don't want to do that. Well, just how much? Then come back, oh, it's like $9 ,200. Okay. Well, then let's get the highest efficiency one. What's the problem? And so we did a bunch of stuff like that. We put in triple pane windows. We did a heat pump PTAC unit in the walls. So we were already thinking, kind of being conscious of energy usage at the time. And then I think over the years, we were doing more and more of it. We got to the point where we wanted to see if we could get a LEED certification. And we did that on one building and didn't want to do it again because there was so much BS involved in the paperwork. Then we got Build Green Gold. Then we started to stack up these Build Green awards. And what are we doing that for? And then the government came out with the step code. And we thought, well, let's see how far we are away from the highest level of step code. And this was back in, I think it was like 2018 or 2019. And one of the justifications always when building and holding rental apartments is like we get paid to save money on the operating cost of the apartment building. and that sounds funny but when you sell an apartment building you get paid based on the cash flow it produces so if you spend a hundred thousand and it saves eight thousand a year and you get paid basically at 20 times multiple in that cash flow that hundred thousand turns into 160 and you know 75 is finance who's not going to do that it just seems like the dumbest thing not to do stuff that we're doing so A lot of it just seemed completely obvious. I think that, you know, using oil and gas for heating and cooling buildings is not necessary. Let's save it for a higher use. You know, I'm not an anti -pipeline guy or anything like that. I think that the world is using energy and Alberta should provide it. I don't know if that's going to be controversial. You know, so practical, but let's be realistic and let's do things that we can do that save energy. and do things that make sense and to me it hasn't been that hard like i think we're maybe 15 bucks a square foot more to get to step code four but you know for all the other reasons we've talked about and more our cost of build is quite efficient and we can do that. But that 15 bucks a square foot pays for itself. It's not like we're just doing it because we, you know, want to save the planet on our own. We can't make enough of a dent for what we're doing to save the planet on our own. Is that the right thing to do? Absolutely. Is there a mathematical justification? Absolutely.


00:27:53 Taylor Atkinson
Yeah. Well, something else that adds to the resale side of it, like if it's an insured mortgage, so less than 20 % down, if it meets step code. Since I think 2018, buyers get 25 % of their insurance back. So let's just say, you know, the insurance costs them $10 ,000. It gets added to the mortgage balance, which obviously that just happens with insured mortgages. the customer will then get 2 ,500 bucks back. They just apply through CMHC or Sagen, whoever they got their insurance from. So like there are these programs, again, that adds, like if someone's buying your product at Ascent, one, they're getting like awesome efficiency. Their, you know, energy bills are going to be lower. They're getting 25 % of their insurance back. They have the extended warranty. They have the price guarantee. It will add value in multiple ways, you know, so.


00:28:41 Scott Butler
Yeah, the way you send that, like, I don't know who wouldn't want to buy at Ascent.


00:28:45 Taylor Atkinson
I know I'm taking Matt's job.


00:28:46 Matt Glen
taking Matt's job. How many units are left Scott?


00:28:50 Matt Glen
units are left Scott? Is there quite a few left us for sale?


00:28:53 Scott Butler
Yeah, about 50. Okay. Nice.


00:28:55 Taylor Atkinson
Nice. When we've had developers on in the past, what I like about speaking to you guys a little bit of envy, obviously I like, I would love to be a developer. It sounds like there's zero stress and just tons of fun, but like pulling back the curtain and actually learning about developers and learning like what they're passionate about and like. it seems like the ones that are successful, like to go full circle, the back to, Hey, how have you been able to sustain profitability is just doing what's right. You know, and especially in this time in the market, like when people are buying pre -construction, it's really tough now just to go in blind, like, you know, five years ago, yeah, you were lucky to get anything under contract, but you know, as soon as something hit the market, it was sold out. Now people have their choice to kind of walk around and suss it out. And it's not just all about the location and you know, the court style, hardwood, whatever. It's like, Hey, who's actually behind this? You know, are we going to be stuck with, you know, a lemon in five years from now? Or are we with someone that like wants to, to produce something well? So I love what you're doing, I guess to kind of wrap up a bit of the show, like what's next in the next five years for you at high street. And like, maybe can you give us some predictions in terms of like BC real estate, Kelowna real estate, obviously we know you think the market's going to go up, but do you think there's going to be still purpose -built rentals, condo stratified units, single family homes. Like what's an asset class that you think is kind of maybe overlooked in the last little bit?


00:30:18 Scott Butler
Oh man, trying to figure that out myself. I don't know if there is an open asset class right now in BC. Every developer is trying to figure out what to do. It's funny. And despite the price guarantee, I don't know how bullish I am on the future. I just know that we're willing to cut a check if it goes south. So here's part of the thought process. And I don't know how many buyers are going to hear this, but if it takes... a twenty thousand dollar drop today to get somebody to buy i'd rather pay that twenty thousand dollars in five years than today we don't want a discount for the people who've already bought right so that's the other thing it's like we want to sell since i mean we want to sell the last 50 there in the first phase And to do that, if this helps get them sold, if the only other alternative is to drop price and then everybody else is going to suffer from that, I don't want to do that. So we're doing everything we can to maintain value for everybody who's already bought. And like I say, if that means five years from now, which seems like a good bet, but it's still a bet, I could still be wrong. But there's reasons to do it that I think makes sense rather than trying to force it in a market that's tough. so that is a really good point because when you do see certain projects go out in phases in phase one you're generally thinking hey if i get in here early like i'm at the bottom and the developer is going to slowly increase the price we have seen it like just you know in kelowna where phase two phase three has come out sat there and then all of a sudden like a big discount comes out


00:31:24 Taylor Atkinson
is a really good point because when you do see certain projects go out in phases in phase one you're generally thinking hey if i get in here early like i'm at the bottom and the developer is going to slowly increase the price we have seen it like just you know in kelowna where phase two phase three has come out sat there and then all of a sudden like a big discount comes out I've thought about it. I'm like, if I was that first buyer, I'd be gutted.


00:31:48 Matt Glen
It's more than that, Taylor, because like you think about, say there's three phases and then phase one sells hot and then phase two, you lower the price. The rest of the buyers in phase two are like, are they going to lower the price again after I buy? It kind of kills the sense of urgency for everybody when you start doing that.


00:32:01 Scott Butler
Like I say, it's a calculated bet.


00:32:03 Taylor Atkinson
Yeah, like High Street, are you guys get back up to 800 homes? Do you want to continue to build in Kelowna? especially Alberta. I know you got Vancouver Island in the portfolio. Yeah. Is there anything exciting to you right now that's going on?


00:32:16 Scott Butler
Oh, there's a big opportunity for us in the lower mainland. Like we haven't done anything in the lower mainland. If you think about size of market, it's a huge area. And so anywhere from, you know, Chilliwack to White Rock to Langford or Port Moody, or there's a ton of areas that we can go into there. And we've made our 20 year history out of staying in secondary markets outside of the lower mainland and in alberta you really only have calgary and edmonton left and we can't make the math work in edmonton right now and calgary's in one of its cyclical downturns but that happens like they get an upturn for six months the downturn for eight years it's a tough market i love how transparent you are man oh yeah


00:32:56 Taylor Atkinson
love how transparent you are man oh


00:32:58 Scott Butler
yeah You know, right now oil is riding high.


00:33:01 Taylor Atkinson
Yeah, it is. It could go higher too.


00:33:02 Scott Butler
go higher too. Maybe Alberta's going to be back. That's a depressing topic. Anyway, so you got like two major markets. We played in some of the smaller markets years ago and we wouldn't go back like you're, you know. Grand Prairie, Fort McMurray, Red Deer. We tried a bunch of them and man, they can be cyclical. We just, we don't want to go back there.


00:33:22 Matt Glen
What about Kelowna? Like obviously right now it's tough in Kelowna, but. We're trying to just dabble in Kelowna right now.


00:33:24 Scott Butler
trying to just dabble in Kelowna right now. Like we got to finish off the land that we already have, but we're not eager to. go after more land in the central okanagan right now we have an obligation to keep our teams busy that's one of the things that i didn't mention years ago we decided to have overlapping projects in a given geographic region so that we can keep that team going and they can you know go home to their families or friends or whatever they want to do you know maybe they're part of a sports team they can count on being in that area long term and not travel around so yeah we feel obligated to keep that alive but it's like dabbling in it now after we finish the scent we've got a 39 home townhome project up on the hill there we bought a little parcel in peach land we're doing a little five -story 89 home rental building like that's little for high street so we're trying to pick apart like just little niches in the market that we can keep the teams busy while this slowdown happens because i think it is going to be a few years in Kelowna like it's a good two three years to get through the current inventory not necessarily on the single family home side when i'm not as familiar with the townhome side but certainly anything that's rental apartment or condo yeah that's a good backlog although i did read you know the other day if Kelowna can get out of the airbnb requirements something like 2200 condos that applied to convert to Airbnb that would kill the hotel industry but you think about doing a hotel and all of a sudden that seems like a bad idea but yeah well stay tuned we are having Dina Steele back on who um is from Keys to Kelowna so we're going to chat Airbnb here pretty shortly in the next couple weeks actually one of the previous guests we had on Brett Wilson he mentioned you among some others like Matt said but he was like yeah I've got 70 acres on ALR here like


00:34:53 Taylor Atkinson
well stay tuned we are having Dina Steele back on who um is from Keys to Kelowna so we're going to chat Airbnb here pretty shortly in the next couple weeks actually one of the previous guests we had on Brett Wilson he mentioned you among some others like Matt said but he was like yeah I've got 70 acres on ALR here like I would just give it to my friend Scott Butler and we've developed something. So yeah, you've had a couple of shout outs for sure.


00:35:16 Scott Butler
On credit, a good friend, Chris Wills, for that connection to Brett. We met years ago and we started talking about different things and different sites and we were talking about developing what he's got on Harvey there. And that was too big for us. We weren't about to get into doing towers and the timing's off on it anyway. But yeah, great.


00:35:35 Matt Glen
That's funny. Chris Wills gave me shit for when Brett mentioned you on our podcast and I didn't put this link together. So there you go, Chris. Your name is now. Yeah.


00:35:43 Scott Butler
Yeah.


00:35:45 Taylor Atkinson
If Chris is listening to the whole 40 minutes of the show, but yeah, tell him he's got a week till the end for his shout out.


00:35:48 Scott Butler
him he's got a week till the end for


00:35:50 Taylor Atkinson
his shout out. Yeah. Here's a little Easter egg. One last question to finish. I know in your notes, you also are coaching hockey. Would you be available to come coach Matt?


00:36:01 Scott Butler
So that's not me coaching hockey. I coached a lot of basketball. I didn't coach hockey. I was just suggesting that our schedule allows our team members to coach hockey if they so desire. Do not ask me to coach hockey. Then I max out about grade eight for basketball. So yeah,


00:36:16 Taylor Atkinson
I got cut in grade 10. Loved having you on the show. It was worth the wait. And yeah, I appreciate what you're doing with the projects. They just seem like great projects. So thanks, Scott. Appreciate it. So guys, take care. Have a good day.


00:36:27 Matt Glen
Thank you.