99: What the Next Year Holds for Kelowna Real Estate & Infrastructure with City of Kelowna's Ryan Smith

Taylor Atkinson: Welcome back to the cloned real estate podcast. I'm your mortgage broker host, Taylor Atkinson.

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

Taylor Atkinson: Hey, SUNS out, man. Is it ever going for a

Matt Glen: walk this morning freaking gorgeous man? Yeah.

Taylor Atkinson: It kinda started me thinking about, like, what's gonna happen in the city? You know? I know last summer, it was so sleepy with Airbnb and Yeah. Economically, just people probably not traveling. Yep.
That'd be interesting to see what happens. But, I mean, speaking about the city, our guests today, Brian Smith, two time guess. He's awesome to talk to you.

Matt Glen: I love having Ryan on.

Taylor Atkinson: Yeah, man. He's gotta know, like, all the inner secrets of

Matt Glen: He doesn't just got to know it. He does know it. Yeah. He asked him the questions. He was just like, on the ball.
I love him and him on as a guest.

Taylor Atkinson: Yeah. So we had him on the day that Airbnb legislation was announced that basically, like, provincial restrictions were coming out.

Matt Glen: And it was in a morning episode, so we only heard that, like, an hour before Ryan shows up. We didn't really have our Doug's in a row to ask many questions. So that was kinda funny.

Taylor Atkinson: Well, it was a great episode. Yeah. I mean, kudos to him. It was really nice for him just to be open and transparent and just, you know, trying to talk about where we were at at that time.

Matt Glen: Because that was the day that the province announced, it wasn't city cloned at that, like, his announcement.

Ryan Smith: Yeah. He just had

Matt Glen: to deal with it, like, all of us.

Taylor Atkinson: So so since then, the city has made more strict guidelines than the province, and then they've just, like, reversed those essentially this spring. You did say in this show, you know, potentially in a year from now, we'll see what CMHC vacancy does. They'll have to kinda revisit it again. But, I guess, the takeaway there is, you know, the City of Kelowna doesn't want this, like, up and down volatility of decisions. Right?
Which is fair.

Matt Glen: And he said that he's like, we don't want a yoyo Oh, yeah. Rules for a year. Like, how are you supposed to apply anything like that?

Ryan Smith: Yeah. So

Taylor Atkinson: But speaking of Airbnb stuff, so our neighbors a little bit south in Penthiceton, they went to counsel on April first for the property that's being built, SoKana. We've had people on for SoKana before. Yeah. And I'm personally invested in SoKana, so this makes me kinda happy. They voted three to one in favor of allowing it to be Airbnb or what they called this like a Strata hotel complex.
Yep. So that's a huge positive. I mean, not just where I'm standing, but I think, like

Matt Glen: So just think about all the people that bought there, you included the roller coaster you buy in there, expecting to be Airbnb. They get shut down. And you're, like, explaining to yourself and all the people that bought in there, like, oh, you're not familiar with Airbnb. The rental market's down. And now let's back on

Ryan Smith: all this. Like, you're on

Matt Glen: a roller coaster tied in where you can't do anything but just enjoy the ride.

Taylor Atkinson: I love roller coasters. I do not love this. Right? So phase one down there is a ninety six unit complex. I think their argument to council was like, hey, we did this as a performer that these were gonna be Airbnb allowable.
And we sold them like that, and now we can't market it that way. And, like, it it just doesn't pencil anymore. So what do you want us to do with the project? Anyways, it seems like City of Conticton is, like, yeah, pushing behind in the right way. So, hopefully, we'll see that.

Ryan Smith: Do you look at that project?

Matt Glen: Like, it is in a perfect place to be an Airbnb. Like, right at the center of Columbia, like, the channel there, right at the beach, right in the commercial district. It's kinda perfect for Airbnb there.

Taylor Atkinson: Yeah. Some of these just make sense, and there's a lot of those in Kelowna as well. Hopefully, we'll see that come out. Absolutely. Yeah.
And what

Matt Glen: about inflation announcement? Yeah. So one point seven inflation, like, that kinda caught me off guard. I was not expecting Like, it dropped like a lot. Yeah.
Kind of unexpected to see that. I guess, with tariffs, maybe not having the effect yet. So inflation could go up again. But yeah.

Taylor Atkinson: I feel like there's gotta be a bit of a lag there, but we'll see.

Matt Glen: He feels like we've been talking to about tariffs for months, though. I know it's gonna come on. So, like, could we see a drop in interest rates coming up maybe sometime?

Taylor Atkinson: Yeah. I mean, I think we're still predicting, like, half a point rate cut by the end of twenty twenty five. But, again, like, not to dive too much into this. But the issue there is now lenders are, like, shrinking their discount on prime. So Yeah.
Does it change, like, borrowing capacity or payments a lot? Not really, but it probably provides more optimism in the market.

Matt Glen: Yeah. Seems like it's a stuff in the right direction. Yeah. Lisa. Yeah.
We wanna get to

Taylor Atkinson: the show, awesome one with Ryan Smith, City of Kelowna, and enjoy it, guys.

Matt Glen: Yeah. And this episode, like, every episode, sponsored by Century twenty one Assurance Realty, Best Brokerage in town. Our head office is in Kelowna, but we've got offices in Casa Garg family of We're around. So if you're an agent looking for a switch or a buyer seller looking for an agent, it was a show. Join the show.

Taylor Atkinson: Okay. Welcome back to the show, Ryan Smith, today, Kelowna. How's it going, man?

Ryan Smith: Great, guys. How are you?

Matt Glen: Doing well. Glad to have you back your fan favorite for sure.

Ryan Smith: Have a place for inviting me back fan favorite or, like, Super Villan over short term rentals?

Taylor Atkinson: Not a fan favorite, I think.

Matt Glen: Although, yeah, I guess the sort of rental thing does stick in people, but definitely a bad favor.

Taylor Atkinson: You know what? Love it or hate it. That was one of our, like, most downloaded shows. So, you know, kudos to you.

Ryan Smith: Yeah. I mean, I think that you guys were probably in terms of, like, who I'd talked to publicly about that, probably, like, the first ones and so Yeah.

Matt Glen: Well, it happened, like, that morning. Yeah? Yeah. Yeah. So that was

Ryan Smith: Yeah. That's what

Matt Glen: I was saying.

Ryan Smith: Yeah. Fresh off the bat.

Matt Glen: So Taylor didn't have time. We all worked up about it before you got through.

Taylor Atkinson: So Yeah. Doesn't take too long to get worked up. Yeah.

Ryan Smith: Was it their personal? There aren't many. Yeah.

Matt Glen: Yeah. Yeah. Yeah.

Taylor Atkinson: So, I mean, speaking about that, that was, what, just over a year ago now, I guess, when we had our first recording with you. You wanna give, like, a quick recap on where we're at with that legislation. Cities made some recent changes, but

Ryan Smith: Mhmm. When the provincial legislation came in, we took that and we actually added another layer and made it even a little bit stricter. Yep. And at the time, we did that because of the vacancy rate numbers that we were seeing in Kelowna, which were, you know, at the time, about, you know, less than a percent. It was, like, zero point seven percent vacancy rate.
Yep. And we sent the cancel, like, there's a, I guess, serious issue here. And it's having, like, lots of economic impacts in the community. And so that really limited to about, you know, four hundred and fifty or five hundred, the number of, like, existing licenses that could be used. We said at the time, we'll review it for next year.
Yep. And we don't know, like, there's lots of rental housing under construction. This may be overkill. And by November of last year, when CMHC released the rental vacancy rate early, we saw that it had jumped up about three and a half percent. I think it was three point eight which was where we were hoping he was going.
And we thought, okay. That interim measure of being extra strict was no longer necessary. And so we kept our word and that review and we went back to counsel and said, hey, you know, the extra bit of Kelowna specific regulation was overkill. Let's just align ourselves with the province for now. Yep.
And so that's where we sit now aligned with the province. I should point out that at the time, there was all sorts of accusations about tourism being done just because of the short term rental.

Matt Glen: I was gonna ask you, like, what you thought brought that up.

Ryan Smith: Well, we were like, okay. Well, let's step up and take a look at it. And is there a direct correlation? And we couldn't find, like, a smoking gun of data saying, Now, hotel vacancy prices were a little bit. So we went to destination, to tourism to get data on that, you know, destination, BC, tourism data.
We went to I talked to tourism in Kelowna, you know, we were hearing from lots of businesses the tourism is down. But there was also, you know, fires the year before that, bad press over, you know, wide rate, kind of, great growing troubles, and all these things that, I think, come in for a perfect storm. So It wasn't any one thing, but certainly, I would say, it's some model contributing factor. There's probably eight or nine things that have an impact. And Kelowna is so complicated like any city that not just one thing when you see something acute with that going on is to blind.

Matt Glen: So are you gonna review this again next year? Or is this just the way it is gonna be

Ryan Smith: Yeah. It really gets segue. If our vacancy rate remains above three percent when CMHC reports it again next year, our council could choose to opt out of the province's regulations. So they'll have that opportunity so they can do a resolution and send that to the province.

Matt Glen: That would be for, like, condos, like, Buffalo and stuff like that?

Ryan Smith: Yeah. That'd be Aqua, you know, all the buildings. Condos. So Yeah. In in any buildings, we could open it back, why open for short term rentals?
What would that look like? I don't exactly know. But if that vacancy rate remains above three percent, which given the number of rental housing units still under construction and occupying, like, almost every week another rental building is not declining right now. Yeah. I'd say there's a pretty good chance that it's gonna be above three percent.
So we'll report back to cancel. It will probably be like a January ish report January, February, and have a discussion with counsel about where they wanna go with this? Do they wanna opt out? If so, do they wanna opt out with any special rules? What's the staff recommendation?
And what we don't wanna end up in is a situation, though, where we allow it. And then two years after that. We're going back the other way again. You're you're you're you're you're over.

Matt Glen: Yeah. Yeah.

Ryan Smith: Yeah. Yeah. And everybody who's making like, you guys are making, like, thirty year clients. You guys are making real estate decisions about this. Yes.
Like, how do you do business in that atmosphere? Yeah. So there needs to be some consistency over time, and that's what we recommend to counsel. If we're going to remove some restrictions, maybe there's a bit of a hybrid for some of those investor properties maybe we open some of those up. Like, it does I think some of the things we'll think about and talk to the provincial government about too.
Yeah. Those things that's gonna dog us for a few years for sure. Yeah. Yeah.

Taylor Atkinson: I mean, in terms of, I guess, vacancy, do we wanna, like, jump right into kinda development and building stats? Like, you know, it's pretty interesting right now, but maybe you have obviously the data that we'd love to kinda dissect. What's going on in terms of building applications and stuff like that in the city? How are you guys looking?

Ryan Smith: If you drive around Colorado right now, there's cranes everywhere, construction going on everywhere. And you're like, we're in a boom. Like, we don't have a problem with housing. And maybe right this second, we don't have a problem with housing. But we take a long view approach to housing, and there's a lot of rental housing under construction because we had a lot of incentives in place between us, the provincial government and federal government Yes.
To help that happen. You don't see a lot of is comic market condos under construction. You got the Aqua being built. You've got Mojala,

Matt Glen: the ones that started a long time ago.

Ryan Smith: But they started a long time ago.

Matt Glen: Yeah. Yeah.

Ryan Smith: And what we haven't seen though is anything new permitted that's going into construction that'll be done three years from now.

Matt Glen: Are you expecting maybe a bit of a shortfall?

Ryan Smith: Yes. I mean, we can end up in a situation where, you know, the rental vacancy rate pops up to, you know, five, six, seven percent for a year or two. Yep. But the problem is with no new market housing being built, multifamily market housing, we're very little in, like, two or three years from now, all that extra rental stock starts to get sucked up by people who can't find housing to buy on the market side. And then you've got another two or three year, four years construction cycle for stuff to get permitted to get under construction.
So it could be, like, a volatile next few years. And so we're saying all of these buildings occupy, but not when I look at it. We've got a housing dashboard online that's available in the public if you search our website. Then you can really see the story of what's going on. Twenty twenty two, twenty twenty three, lots of building permits, fewer occupancies, and then twenty twenty four, twenty twenty five, lots of occupancies, so far building occupancies, not a lot of building permits, and new building permits.
Some projects, like market condo projects come back to be re permitted because through the planning process, development permits only good for two years, unless they get a foundation in the ground. So there was one that we did in February on Clement. There's another one next Tuesday night on Ella Street, to a big four tower, a thousand unit running on McAllister proposal. And they get another two years. And, hopefully, in that two years, they can start.
Other than that, there's, like, we'll see a few more of those. There's not a lot compared to how much housing we need a year. Our housing use assessment says between, like, sixteen hundred and fifty and twenty six hundred new units a year And these years, we're certainly not gonna hit it. And I keep telling counsel this in years, you know, probably late twenty twenty six to twenty twenty nine is what I'm worried about.

Matt Glen: Interesting. So it's funny because we need the more housing and, like, you can see it laying out pretty well right now, but if the numbers don't pencil, the numbers don't pencil. So how do we get ourselves over that hurdle? Like, what do you think can happen?

Ryan Smith: Yeah. And that's a challenging thing in a time like this where, like, there's all this construction going on and then everybody goes again and says, you know, why would we give development incentives? Yeah. And just to get something going that's new, doesn't pencil them like you said. Yep.
And there's probably a thousand reasons why these things aren't penciling right now. And Yeah. We've got building code changes financing changes at the CMHC level that have happened in lots of municipalities, like, constant zoning changes, development cost structures that keep going up. Like, all of these things are really, really challenging.

Matt Glen: Maybe those will be controversial, but what is with all the building code changes? It's just gets more and more specified the second it seems if if you applied for your permit six months ago, you have different building codes than you do now. And it's just do they not realize that we need more housing? And it just makes it way harder?

Ryan Smith: Like, everybody has a different priority, but it's the most important priority. I think the government have a problem. Really, like, sifting through that and saying, no. These two or three things are the most important things.

Matt Glen: Yeah.

Ryan Smith: And we're gonna focus on supporting these. Yeah. And those other things are not priorities. And so with building code, all sorts of things have become a priority at the same time with building companies just layering and layering and layering. We're doing like energy efficiency.
We're doing accessibility. We're doing the structural side in terms of making buildings earthquake resilient. And that's just the building code. And I'm not to mention, like, you know, city adds in electric vehicle, charging requirements, and then, you know Yep. X y and zed above that.
And I'd say, corona is probably better than many others at prioritizing. But still, I think that governments need to start having them look at themselves and saying, you know, what is the priority here? I've set it up, like, in Wednesday. When everything's a priority, nothing's a priority about that.

Matt Glen: Know exactly.

Ryan Smith: Like, how do you figure out what the most important thing, sir? And if we're gonna have the crisis Where are the eighteen other things the priority as well?

Taylor Atkinson: So I guess, like, as a municipality that gives feedback to the province, what is kind of the one priority that you're saying, hey, this has to happen at our level? Like, for the city of Kelowna to be able to get to the state that we need to. Because there are, like, so many things working against us. Right? Like, tariffs come in and it's, like, well, how do we know the cost of the next building when everything might go up twenty five percent?

Ryan Smith: So Yeah. Focus our feedback to things that are within our control. And, like, we could talk either, like, development cost charges and, like, probably our biggest feedback to the promise is on the electrical side of things. And that's a challenge and a bunch of different levels. Like, the local infill housing level, and there's, like, whole areas that are challenges.
And then there's the overall, like, what does our city look like in the future? And how is power impacting that? Because there's a discussion to be had there too?

Taylor Atkinson: Yeah. So I think I originally reached out to you a few months ago because we had some, like, pretty outrageous headlines basically saying, you know, a Fortis infrastructure is not gonna fulfill the building needs for developers potentially as late as, like, two thousand twenty nine. Where are we at with that? Like, it kinda seemed like it came out. I saw a bunch of these headlines and then it just stopped recently.
But, yeah, I guess, what's the issue there?

Ryan Smith: Fortis approached us about, you know, eighteen, twenty months ago and said, hey, look, in a couple areas of the city, our substations are running out of capacity. And particularly one in the north end of downtown and then one on Victor Street on Saucier. The Saucier one was the most immediate, but they do long term capital planning, but the problem was, is that their delivery time on equipment is three to four years. And so they're ordering a capital plan, got out of sync with our growth management side of things and how we are planning and, like, what's gonna happen when in terms of development and where. And wasn't lining up that well.
And so we ended up with challenges in those two particular areas first. And there's a few other areas with more minor challenges. So we've been meeting to figure out, you know, how we deal with projects that, you know, are going ahead in those areas. And we created an earlier review and morning process for developers. And then we've been also working case by case our developers have with Fortis to try and change the energy load that buildings are creating.
To lessen it so that potentially they can still be energized in those areas as well. We're working with Fortis. They need to actually expand or twin the recreation substation, which is right near Redbird. I don't really just relate everything to breweries.

Matt Glen: Yeah. Not a lot of mistakes. Yeah.

Ryan Smith: We're that age. We're like, everyone's been there ever.

Matt Glen: Yeah. We just do exactly where that was.

Ryan Smith: Yeah. So in that area, we need another substation.

Matt Glen: Yep.

Ryan Smith: But It lands at a premium. So it's challenging to find something in that area. Trying to figure it out. It's not like a short term solution for either one of those. But I would say we're making you nothing hasn't been able to be built yet that's sort of been permitted because of those challenges.
That we may still run into that at some point. The thing we're also working on is in a lot of our alleys in the central city. There's overhead, my powerful fortress infrastructure, but with the amount of infill housing happening, a lot of pressures being put on that. And the locations of those poles

Matt Glen: Yes.

Ryan Smith: Sometimes, prevents housing and in vehicle housing or carat houses. And so we're gonna try to work with Fortis on what the future of, you know, those alleyways looks like in that infrastructure because we can't have individual projects. So if you're building a four unit building and you get hit with, like, an eighty thousand dollar power bill, that's Yeah. Stable in a project, that's never gonna work. Yeah.
And how can Kelowna strategically get involved to help you already do lane lane improvements, but maybe we need to coordinate those better with Fortis so that power goes underground and new transformers go underground or there's ways we can deal with that. So we're trying to figure that out.

Matt Glen: Because that can affect a property, but, like, I've been in person involved in a few of these where, like, you have a pole that's in a bad spot in the alley. That property, that would be either a private development a lot is all of a sudden, basically, not salable.

Ryan Smith: Mhmm.

Matt Glen: And it's just, like, it's kind of a crazy situation.

Ryan Smith: So Yeah. And often times, like, if that property does move infrastructure around, they front end the cost for that, but there's no recovery mechanism. Like, anybody else Yeah. Tries to take advantage of that, doesn't pay into it afterwards since No.

Matt Glen: Exactly. That's right.

Ryan Smith: The model needs to evolve and improve. So that, you know, if other people are getting them a benefit, everybody pays their fair share. And that that way the cost gets reduced from everybody's here. We all agree that infrastructure in a growing city needs to evolve and be improved, but it's just how you allocate the costs

Matt Glen: also just would look way nice to render around. So I think that's Yeah.

Ryan Smith: Oh, yeah. Totally. Yeah. Yeah.

Taylor Atkinson: Yep. Yeah. I mean, honestly, probably not a bad problem to have. Like, if you're growing as a city, these are the things that you're gonna come up on. I guess, maybe a bit of a segue into, like, DCCs, So first of all, I guess, two part question, like, can you expand on what DCCs go to?
And the second part would be, are you looking at tweaking some of those to incorporate some of these? So, like, one owner doesn't have the onus of that eighty thousand dollar bill and then everyone else gets it? Like, is there a way to structure that. So it's more beneficial.

Ryan Smith: DCCs are actually, like, a kind of a higher order tool, and so I'll explain that a little bit. There are sewer water, road, park, storm drainage projects that are, like, either whole neighborhood or sector of the city related or whole city related. Say we wanted to four lane Richter Street in the future. That's something that benefits like our large area of the city. So we use the DCC program.
So many new units pay us share towards that. Plus, there's an amount built into that DCC charge for existing users that are benefiting from that as well. So when that road actually gets built, maybe fifty percent or sixty percent of that road. The need for that was related to new growth. And then forty percent was paid by existing users, which would come from taxation.
But mainly, we also, to bring down the cost, wanna subsidize that even a little more and we call that an assist factor. What we do is when we update our community plan, it's every five to ten years. We'll do an update to the DCC program and the DCC program then we say, here's the major projects that are funded by DCCs and figure out for each project how much funding is required? And do we need to buy land or will developers give us some of the land? Because land along that, you know, maybe it's a corridor.
Will get redeveloped. Figure all that out to the best of our ability and then review with the home builders and the urban development institute and go through almost like line by line, haggle over the cost of it sometimes to make the program more affordable. Projects need to come out of it. Funny that everyone says there's no transparency to it, but I sat in fifteen meetings before the last update where we talked about, you know, oh, well, there's a material cost in this road project that I think is unreasonable. Why is it there?
What's behind it? And we have to explain that to the genomic community. So from that perspective, I would say there's transparency. But if you're out there in the community, if you hear the term DCC and people complaining about it, it's a tough one to sort of wrap your head around. It looks like really, like, simple DCC explanation.
The whole development industry is basically paying towards specific global community projects. Good example of that would be the hard part that opened last weekend. A portion of that was built using development cost charge, park construction money. And we would be able to say if you said, oh, well, how much drama money went into that? Our team could say, oh, well, the amount of new units that were happening in this neighborhood, we charged them this amount, or this amount was contributed to that and taxation.
Which was, like, the existing area of residence who benefit paid x amount towards it as well. So it'd be great if there was actually, like, a really transparent way to see that. And that's one of the problems. Like, there's a lot of smart accounts and engineers who work on it behind the scenes. If we did a, like, a video every year that explained, like, here's where your DCCs went this year, then that would probably be better buy in from the development communities there.

Taylor Atkinson: Yeah. I mean, I don't think anyone can really dispute that it's not being spent in good projects like I mean, I was just at the Deer Park a couple days ago with the kids. It's amazing, you know. So Yeah. I think when we had you on last show, you know, you said something along the lines of we're kinda shooting ourselves in the foot in terms of it's becoming a very expensive city.
It's because we're reinvesting in these amazing amenities and that's just like a perfect example of it. You allocate those DCC fees where you want and you're never gonna make everyone happy.

Matt Glen: Not just make people all happy, but keeping people informed, like, are people gonna really gonna wanna watch the account and bringing on the numbers or even a video that I

Ryan Smith: mean, I think when you show where it's going and how much, you know, who's paying for what? That's kind of interesting. But, yeah, like the line by line stuff. Yeah. It's a little bit boring.
Right. And it's actually an interesting time though with DCC. So I find it interesting that I'm a nerd, so maybe we have to watch. So in the new level of government's housing platform, and I was assuming that they're gonna be acting on this, they had a commitment to have DCCs in half to

Matt Glen: have anything to do with them? Like, how do they do that? We're gonna see, I guess. Yeah. But then what's your opinion on that?
Like, are they just gonna pay the other half?

Ryan Smith: They said that they would for the half that we're not collecting, they will reimburse with a formula But I I think that that formula means that we only recover about half of what we're giving up. So we're something about twenty five percent of that. So that certainly impacts the community. And

Matt Glen: Yep.

Ryan Smith: Hopefully, there's some room there as the implementation happens on that to figure this out. I mean, I think the game of housing is the priority, and that's one of the tools that we have to help ease the crunch for developers and homebuilders. Yep. That's fine. But we hear from the community constantly here in Kelowna that you're not building enough infrastructure fast enough.

Matt Glen: Yep. Yep.

Ryan Smith: And so that if we're not funding it properly, that makes it even truer than it is today. And then, I mean, I think where we get behind is times like COVID where you know, prices went through the roof. Things were so unpredictable. You know, we were really unproductive in our infrastructure delivery programs for a few years. Yeah.
While we were still building housing, but we couldn't predict, you know, some of those costs were insane or, you know, we just weren't sure whether or not we could take a project. And you've wrapped that up again this year, next year that you're offering, you see way more infrastructure built and, you know, driving around right now. You can already see that in the community.

Matt Glen: Yep.

Ryan Smith: So hopefully, yeah, we're made as whole as possible on that so that the community and the infrastructure side of things that people think less about it doesn't suffer.

Taylor Atkinson: What excites you about a new liberal government policies for housing at our municipal level or provincial level? Yeah. Are there any policies that have come out that you're like, I actually think they're gonna really hit this one out of the park and follow through with it. Like, we're excited to implement it as a city.

Ryan Smith: It'll be interesting to see. They talked about, like, Canada builds program or build Canada program,

Matt Glen: like, the modular housing thing.

Ryan Smith: Well, actually, the other is two things. If the federal government gets involved in housing. I don't think they should do it to compete with developers in any way, shape or form. I think the development industry can serve the top, sort of, twothree of the people of Canada quite well. But where, I think, it's failing is the very affordable housing out there.
And, like, shelters and helping those that have, like, mental health addiction issues like housing and treatment for that. So if Canada is gonna get involved federally, that's the spot for it. So I'd be excited to see them in very important. It seemed like that's what the campaign platform said. And then the other part of it is, yeah, the modular prefabricated side of things Yep.
And seeing the federal government help the SRIs of our region Yep. Could produce for years on hand at full capacity, knowing that for instance, the government might buy off their excess supply. Then they can, you know, borrow for improvements in technology upgrades and expansions, and not have to worry about the market cycles because that's what kills those plants now is you know, they ramp up and then they have to lay everybody off and then they ramp up again and just kills production. So if they can produce at a higher level long term in the region and the ones that get bought off by the government become affordable housing supply, I think everybody wins. Places like that, or whether government should be involved, the de risking?

Matt Glen: Yep.

Ryan Smith: And not in competition with development.

Matt Glen: I like that. That's a good point. I feel like the modular housing and the infill that we're gonna be having in Kelowna, like, are just like a match made in heaven. But it just feels like that there's two are just made for each other. Because the model houses are super nice places.
Right? They're not, like, mobile home parks or, like, real houses, and they're very nice.

Taylor Atkinson: And nothing wrong with mobile homes either, man.

Matt Glen: Nothing wrong with mobile homes, but, like, I've just say downtown is not gonna turn into a mobile home park. Like, they're very nice places.

Ryan Smith: Well, in the assembly, I was like, once you've built a foundation and, like, with the plumbing, you could drop, like, four units onto that in a day.

Matt Glen: Yeah. Exactly. Exactly.

Ryan Smith: You know, be ready, like, bring it on the outside, finishing, and, like, those are quick projects. If the inventory is available. Yep. And, like, from a technology perspective, one of the other things gets me excited is, I mean, maybe you're selling property, buyer's agent comes and says, like, well, what can we do with this? And you can say, oh, check out the city's website.
It'll walk you through what you can put there. Yep. Then you can figure out, okay. Well, that's eligible for far, and it will suggest prefab designs from a bunch of different Yes. Prefab builders.
Or designs that are maybe non prefab tools that will fit on that property. And then say, okay. Well, if you wanted to go prefab, here's the time it would take to, you know, fulfill your order. Or if you wanted to use a regular builder, here's three builders that that are ready to go in the next six months and could start. And that may involve some collaboration with the Canadian home builders locally.
And they've got, like, a great, well organized chapter here. And, you know, if they could drive business and juggle clients based on that. I mean, I it's funny I sort of supervised the construction of those growth of the community. But I had to go build my own place, and I didn't know have some of the context that I have right now. Where do you start?
Who do you use this company? How long is it gonna take? Like, Most people have no idea if you're not in the industry.

Matt Glen: Even meeting someone like Taylor to finance it. Like, talk to Taylor, just all these different options. I agree. Go to one place when you just have all these options. It would just, like, streamline the process.
So

Ryan Smith: Yeah. Web banks do this. And one of the advantages of this advantages to each, like, there's no reason that we couldn't be the hub of that information. I would have, you know, a simple sort of software process that walks you through step by step by step. And we've sort of started that.
We have a chatbot for our info housing that helps. Yep. But I think we'll see that hopefully grow over the next few years, and I've got a manager in our housing area who's really passionate with that, and I think they'll be having a full mouth.

Taylor Atkinson: Nice. I was gonna ask about the chatbot. Do you guys have like, top ten questions? Or what are people mostly asking that they don't know? I was just so curious, what the conversations are?

Ryan Smith: That's maybe another another question. Let me go back and get the dev. Look, I deal mostly in that dialogue. Accounting people are using it? When are they using it?
And so we have, like, a hundred to two hundred people a month using it using our various chat bots in our area. And mostly during business hours, smaller percentage, evenings, and weekends type things. When we actually talk about them in the media, then the use goes up. Yep.

Taylor Atkinson: It's about a skyrocket.

Ryan Smith: Yeah. If you post this, they will get more and get spikes different from that. Or I was talking about our chat box integrity on Monday on this technology panel that I was on somehow. My tenure tells me, like, I'm terrible at Minecraft. He's been trying to train inquire about you.
And he thinks it's hilarious that I'm so bad at video games. But, yeah, I'm presenting at conferences. I'm talking about artificial intelligence. I'm not the guy who could tell you exactly,

Matt Glen: like, the

Ryan Smith: how the software were, the training that, you know, but just our experience, like, you know, so far and one of the things actually that we're finding is that the chatbots, once you get them going and they're answering questions for people, they're meant to answer, like, you know, in our building process where we launched them first, we get tons of questions about, like, swimming pool construction, for example, and how high fences need to be around swimming pools for the setbacks from property lines with the house and all those types of things, that's what gets asked pretty frequently. But if you don't maintain the chatbot, it actually starts to get dumber and answer questions in people. Oh, really? I'm not even lying.

Matt Glen: Happened to my the revised

Ryan Smith: nation about it yesterday with one of our tech guys. And he said, yeah. That's one of the challenges that we're having. I don't know if it's because the chatbots aren't getting, like, positive reinforcement through and what. I didn't know enough about it.

Matt Glen: So we all have to do our part and go ask the questions to make it smarter.

Ryan Smith: I actually think it's because the chatbots are pointed at, like, specific bylaws and areas for information. Yeah. So if we're changing in those areas, how that information is worded or presented, then it's pulling things up. It'll misinterpret and what it's putting them into its own words. I think that's maybe what's going on, but, yeah, again, as a guy, he's, like, not the expert.
I was the the liberal arts planner. I'm not a I'm not a yeah.

Taylor Atkinson: That's pretty funny. I feel like I can relate to the chatbot. You know, if I don't get positive reinforcement, I'm just

Ryan Smith: gonna get

Taylor Atkinson: to the meeting.

Matt Glen: You just start lying.

Taylor Atkinson: You don't need a fence there. That's fine. Yeah.

Ryan Smith: Well, I I think it's a danger in that because we're actually giving people advice. Yeah.

Matt Glen: And you know, it's something fun.

Ryan Smith: We we start getting terrible building permit submissions for certain things. Right. They're all consistently around the same way. Our chatbot's called Kyiv. So let's know these probably ties fall.

Taylor Atkinson: But, again, it's like a natural growing pain that, like, we have to evolve that way. Right? Like, to speed things up and make it more efficient.

Ryan Smith: Yeah. I I think if we weren't trying to use new technology, there'd be a signal of our community saying, what's our local government deck? They're not trying to be more efficient. They're not trying to provide service to us in a more convenient way. And we'd be getting criticism over that.
And we're actually a great size to be testing those things because if we are putting wrong information out there, it's not like we're in a city the size of Surrey. We're like, you know, six or seven hundred thousand people are getting terrible information. We're a little bit smaller than that. So, you know, maybe we see it show up with a couple people in the next too much. And I say this consistently, staff can also give the wrong information too by accident.
And so, I mean, it's not the first time it's happening won't be the last. Yeah. Yeah. Well, and

Taylor Atkinson: by implementing some of this stuff too, like, you guys are getting grants at a provincial and federal level too. Right?

Ryan Smith: Oh, yeah.

Taylor Atkinson: You know, you're getting recognized as, like, an innovative city. So therefore, there's benefits to it.

Ryan Smith: Oh, yeah. Big time. Big time. Yeah. Yeah.
Again, invited to tech panels that has no business for one.

Taylor Atkinson: That's also maybe one question. I'm just curious about single family houses building permits on that level. You know, we kinda spoke obviously about condos and maybe some purpose built rentals. Mhmm. Are we seeing much activity on any kind of building permits for single family homes?
Or is that just kind of sitting by the wayside now?

Ryan Smith: Yeah. He's pretty consistent. We see between, like, two hundred and three hundred and fifty a year in Kelowna. This is actually no such thing as single family zoning anymore in Kelowna.

Taylor Atkinson: Right.

Ryan Smith: That kinda ended last year when the province changed all its legislation.

Matt Glen: Yep.

Ryan Smith: Why we still see people building single family homes, obviously. And about seventy percent of the single family homes that get built have secondary suites of them now.

Taylor Atkinson: That is awesome.

Ryan Smith: Kind of an interesting stat. But you could do single family house, secondary suite of caretos depending on your lot if you wanted to now and do a thing like or you could do four plex or two twos. So we're starting to see that trickle out into like, some of the suburban neighborhoods now used to just be a center of the city thing in Kelowna. Yeah. And now, you know, in the lower mission you're seeing if you're and there's great concern over this in the lower mission.
And, you know, I don't know if people weren't paying attention to the news last year, but this something that's provincial.

Matt Glen: I was gonna ask you, have you seen, like, any specific flashpoints?

Ryan Smith: Yeah. I mean, I mean, yeah, the first few applications that we've approved for three or four unit buildings sort of in that lower mission area. We're hearing Yeah. Like, great concern over that.

Matt Glen: Yeah.

Ryan Smith: And we did water down the provinces, like, their zoning regulations, that they asked us to implement quite a bit from what got implemented in the center of the city to sort of suburban, collect, or parts of Rutland and the mission. All of that a life of touch, and we complied with the provincial legislation. And I'm saying this publicly and stuff like we circumvented their rules in any way. Yeah. Yeah.
But it was just sort of a a later touch approach when this stuff happens, it's complicated. It's not point in language that, you know, the average person living on, like, SARSons grown to understand.

Matt Glen: Yeah.

Ryan Smith: We did actually quite a bit of advertising last year about our infill programs and what was happening. We had, like, bust up advertising. By thinking back. I don't know if I have the intention to hey, bust up advertising.

Matt Glen: Especially not the kind of people that are gonna be bitching about a fourplex Nextel.

Ryan Smith: Yeah. Exactly. Can we do more advertising at, like, the BMW dealership? That's actually a good idea. I'm gonna do that next time.

Matt Glen: Yeah. I actually have a couple lots for sale of McLeary and, like, all the interest we've got is four plexus. And I'm just like, hey, this is interesting.

Ryan Smith: You know? And some of those lots are, like, the parking's really sort of the limiting factor can you get the parking lot and comply with her bylaws? And we're actually been pretty strict on that because in those areas, lots of people have, you know, the two and three cars. And so we're trying to make sure that they get the minimum number of parking stalls and being inflexible on that front.

Matt Glen: Yep. Nice.

Ryan Smith: We'll see more friction in that area as more of the city starts to see different housing types end up in their neighborhood. And I think we had our biggest year last year for Intel housing for, like, that four to six unit level. And we did forty five hermits for those. And I think success in my mind would be if five years from now, we were doing a couple hundred a year. Really?
Yeah. For a couple hundred a year. And of those couple hundred, if thirty or forty were modular, I think that that would be a really good news story.

Matt Glen: That would be awesome.

Taylor Atkinson: How do we get to that level?

Ryan Smith: That whole combination of, like, availability for modular housing, you know, partnerships with Fortis, trying to make things easy on that front. Continuing to make sure our process here remains streamlined. And then maybe, Taylor, you can save it than I can. But, like, borrowing for those four unit buildings is a little bit different, I think, isn't it? They're borrowing for, like, a house in Sweden?

Taylor Atkinson: It is. Yeah. They are coming out with some great programs that they have, but still even at the government level or, like, CMHC, a lot of lenders haven't allowed those policies yet. They're like, yeah. We we have the information from CMHC, but we don't really know how to implement it in our own

Ryan Smith: Yeah.

Taylor Atkinson: Underwriting guidelines. So there's like a lag there. You know, it's coming. It's

Ryan Smith: it's coming. Yeah. So that's I think that, but, like, lots of things will come together in the next few years. There's financing. There's development process.
There's the construction. The power aspect of this and making sure that's right. And I think it will come. I think we're doing the right things in Kelowna. They're preapproved designs too that we have.
We're expanding that catalog of preapproved designs. Well, there are some federally preapproved designs. We'll adopt. And, hopefully, if builders can build, you know, the same versions of the same thing over and over two. That will help speed up the approval process for Inpal housing?

Taylor Atkinson: Yeah. Well, we had a great episode a few months back. It was a two part one. We brought you guys on with Sandbox as well to go over some of their designs. And I went to Inpal housing day as well as awesome.
So, yeah, you guys are doing good things. We appreciate it.

Ryan Smith: Yeah. One of the other bits that we might look at doing is need funding to get infill going. There's lots of property owners who are like land rich and dashboard

Matt Glen: a lot. I've talked about that a lot.

Ryan Smith: Yeah. But maybe they have two kids that are just finishing up at University of Calgary or Nate or down like a UBC and wanna come back. The house isn't right. They've got a small mongolow. How do they do it?
They want build something for their kids and then they sell a couple of units on the property or something like that. Like, how do they afford to do that? Yep. And how do they pay for the the drawings, the DCCs to get it rolling? And so we've been talking with a couple different moms, small housing, BC, dental, from Alberta about, you know, how we make that work.
And so, you know, if we got some extra money from the federal government for our housing accelerator projects, we may roll a project like to help more intel get going.

Taylor Atkinson: So you would essentially, like, partner with the existing homeowner.

Ryan Smith: We would loan money to get things going, and then they would pay us back when we end with a little bit of interest. Yeah. Like, we're essentially acting like a small bank anyway. And then we would roll that into another project. And hopefully, we build up our capital to invest over time.
And, you know, we started with, you know, two or three projects a year and then, you know, fifteen years from now. We're doing thirty or forty.

Matt Glen: That would be awesome. Because you're right. That is a major need.

Ryan Smith: Yeah. And it's not being facilitator banks. Aren't quite there yet. Yep. Yeah.
I mean, I think there's lots of or maybe for whatever reason, like, they just don't fit their risk profile. Yep. We think they're low risk. And who they partner with? If they're partnering with established groups who are, you know, can help them project manage at the whole way through when we trust them, then I I think yeah.

Matt Glen: That would be a huge factor too. But, yes, I guess, on the right track.

Ryan Smith: It's gonna be a really interesting next, I would say, the year let's see what the federal government does first. I think they need to move pretty correctly on that. Yeah. I was like, Brent. And so if the GST exemptions for first time homebuyers will probably happen quickly, do they allow foreign buyers to buy new housing that could happen quite quickly?
The GCC's may or may not be more complicated? Like, I'm thinking of everything we'd need to change here when we're changing our DCC by law. I don't know what tools they have to like order us to do it and how that works out. Yeah. I know that the provincial government is also considering changing the time when DCCs get paid with that construction project.

Taylor Atkinson: Would be awesome.

Ryan Smith: Yeah. From when we issue building permit to when occupancy permit is. Yeah. And that would be a big deal for a lot of people. Like, just those three things coming together, I think start to change the way the developers are looking at the housing market.
But there's probably some more fundamental change in prioritization that needs to happen in this country over the next five years if we wanna be, like, consistently delivering housing

Matt Glen: Yep.

Ryan Smith: Back to the priority sort of discussion. We keep seeing provincial and federal government get more involved in municipalities business, but it's for good reason because, like, the priorities are all over the place. Yep. Think a component to that is measurement too. The province is already measuring how much housing we're producing.
CMHC is already measuring us in a bit of a different way. But you know, across Canada, hopefully, we'll see the federal government say, okay, that the communities that have streamlined their processes the best to, you know, accept and permit housing and are, you know, working well with industry to do that. We'll get their fair share of infrastructure dollars and grants because that's what we've not been seeing is sort of our fair share on that front here. We've been good performers, good partners with government, and we'd love to continue to be that. It's like the infrastructure help is a really big big piece to the puzzle

Taylor Atkinson: a little bit. Awesome. Well, thank you so much for coming on. And, I mean, yeah, we love having anyone from the city come on, but here awesome, man. So, yeah, appreciate it.

Ryan Smith: Yeah. Appreciate it, guys.