You can probably count on one finger the number of feisty community activists who became major property developers. But that’s Mitchell Cohen, a guy who literally marched on city hall in early-1970s Montreal to protect the rights of evicted tenants, then a decade later joined up with developer John Daniels, the former Cadillac Fairview CEO who’d started his own company. Since 1984, the soft-spoken Cohen, who is also a songwriter, has kept his profit motive tuned to his social conscience. No project exemplifies that better than the Regent Park Revitalization, which, over 17 years, has gradually healed a wound in Toronto’s downtown. By ensuring that Daniels Corp. includes affordable and accessible housing in its condo, rental and community developments, Cohen has done more than construct 35,000 homes over his career. He’s built a strong argument that development can work for everyone. We met in Cohen’s light-filled Queens Quay office, overlooking Toronto Harbour.
Interest rates are higher than they’ve been in decades, and everyone’s worried about a recession. What’s this economic environment like for a developer?
The environment is tough. Costs were already going up—land cost, development charges, the cost of delivery or creating a home. Then the pandemic hit, and costs were driven up even further. Young people in the industry haven’t seen this, but I’ve been through it three or four times, and there will be an end. The challenge is to be patient and to understand that we’re not dependent on one kind of product. Yes, we build condominiums, and today that market is very challenged. But we’re also building rental housing, and the rental market has been good and is gonna be even better.
We’re in the midst of a housing affordability crisis in Canada. Most people blame supply. You’re one of the suppliers, so, why don’t we have enough homes?
I’m perhaps one of the few who doesn’t blame supply. You’ve seen the cranes in our marketplace for the past 20, 25 years; there’s been enormous supply. The real challenge is that there hasn’t been investment in affordability. The federal government got out of affordable housing in 1984. In Ontario, the province got out in 1995 with the “common sense revolution.” (1) The thesis was that an unfettered free market would create so much housing that there would be this trickle down. Well, guess what? That has not happened. The cost of housing continues to go up. We believe government needs to spend money to offset some of the costs, with a requirement to bring down the cost for a certain percentage of units within every new building and integrate affordable housing into new communities. That hasn’t happened.
What about investor demand—overseas buyers snapping up units? Is that part of the problem?
Or is it part of the solution?
Why would it be part of the solution?
Because when all those condos were getting built, there was no money to create rental housing. Rental buildings weren’t getting built in the 2000s and early 2010s because the economics didn’t work. So, someone who invested in a condo unit provided a rental unit. Now, had government said, “If you want to build that density, then 10% or 15% or 20% of the units have to be affordable, and here are the criteria for affordability,” the developer would have said, “Great. I want the density; I’ll provide the affordability matrix you’re asking for.” But government didn’t ask that. There was no national housing strategy until 2017. Then all of a sudden they said, “We’re gonna put $80 billion behind it.” And they rolled out programs that didn’t work.
What was the fundamental flaw in those programs?
In 2015, 2016, 2017, we and others finally began to build rental housing with no government assistance. Then the CMHC launched the Rental Construction Financing Initiative, to incentivize developers to build rental buildings they were already building. And the requirement was for only 10 years of affordability. How does that make sense? It doesn’t.
What changed around 2015 that made building rental units viable?
So little product had been built for a long time that the older product was now not as attractive. New buildings became an asset class people wanted. Pension funds and life insurance companies began investing billions of dollars in long-term income-producing properties. And it was working. They could get a 4% or 4.2% return, so it was okay to put that money away for 20, 30, 40 years. The pandemic hits, the cost of construction goes up, interest rates start going up, and the equation doesn’t work anymore. “Let’s just put our money into T-bills.”
Does the federal government’s recent decision to eliminate the GST on rental construction change that dynamic?
Yes, particularly if the provinces follow. Ontario is saying it’s doing its bit. So, the full HST will be waved on new purpose-built rental, and new senior and student residences. Not all the provinces have said they’re doing it yet.
But the provinces that do will be the ones that get rental housing.
Yes. People have been sitting on projects, saying, “I don’t want to build a condo ‘cause the market’s dead. I’d like to build rental, but the economics don’t work. Oh my god, we can take off the HST.” Now it pencils out. (2)
You’ve talked about trying to achieve something called SDG 11. What is that?
In 2015, the United Nations established 17 “sustainable development goals” we need to achieve by 2030. SDG 11 has to do with the creation of cities that are affordable, inclusive and resilient. That’s what we have been striving for in our work in Regent Park. (3)
You’ve been at Regent Park for 17 years. What stage are you at?
We are nearing the end of phase three, which is the end of our contract. There are 69 acres in Regent Park. We are nearing the end of 54, leaving 15 acres for phases four and five. (4) There was a moment when we had a contract for all phases. In 2017, Toronto Community Housing decided to terminate the contract and go to tender for the last two phases.
I’ve never been able to get the answer.
Do you have a theory?
TCH has suffered from some political challenges. In the early years, the board and management valued the public-private partnership model. In 2010, a mayor was elected (5) who determined that TCH was a boondoggle—”a gravy train”—that should be torn apart, and that the revitalization of Regent Park should be investigated because there was probably something untoward about it. After months of investigation, retired Ontario Superior Court Judge Patrick LeSage issued a report that said this was the best public-private partnership he’d ever seen—nothing untoward whatsoever. (6) But TCH went through a number of changes of leadership—I think it’s 13 CEOs in 17 years—so the concept of a long-term public-private partnership to create community has been lost.
What is it about Regent Park that inspired you to write a musical?
I’ve been a songwriter all my life. And I’ll tell you the moment. It’s Feb. 6, 2006. Mayor David Miller is on site. We’re demolishing the first building. There are hundreds of residents there, and I know a lot of them because I’ve been in the community for months. A grandmother looks at me and says, “Mr. Cohen, my family’s and my history are being erased.” (7) And that hit me in the side of the head. In that moment, I felt the responsibility. We’re a builder; we can build buildings. How do you stitch together a community that is being torn apart? I went home that night, picked up my guitar, and I started to write a song—”Buildings coming down/I hear the wrecking ball”—which became the central song in what became, several years later, The Journey. (8)
One thing that connects your songwriting to your efforts to build affordable housing might be empathy. Would you say empathy is rare among developers?
Most developers have a different mindset; the primary goal is achieving profit. We have had a mindset that says we can achieve profit while exercising empathy, if you want to use that word. And it’s a good word, because it’s about people.
Does Daniels make less money with that attitude than it otherwise could?
Hard to measure, but I think we make more money. I mean, we’re a successful company. We care about the quality of what we build, and we’re recognized for that. (9) But we also do a lot of other things around the social infrastructure, to ensure that people feel good about the community they’re living in.
For developers, what’s the downside of building affordable housing?
The worry is always, “If we bring in people who are renting on subsidies, it’s gonna bring down the value of my market units.”
And you say?
Bollocks! We have done thousands of affordable housing units over the decades. And we have proved time and again that we can integrate affordable housing into condominiums and into purpose-built market rental buildings, and it’s seamless.
Do other developers see Daniels as a troublemaker, setting the bar too high?
I hope not. For many years, we were a lone voice saying inclusionary zoning is a good thing. Nobody liked us for that. But we weren’t able to accomplish that. Because every single building you see would have affordable housing in it, had that been adopted. We’re now saying to the industry, “We can do better with accessibility.” And some are saying, “Yeah, yeah, sure, but it costs more.” And I’m saying it actually costs very little more, if any, if you think about it in advance. The concrete guy doesn’t care that you have a depressed slab so somebody can roll into a shower. Is that being a troublemaker? Sure. I don’t care.
What’s your view of the Greenbelt debacle?
The Greenbelt should be preserved forever. We don’t need any of that land to achieve the housing targets. Let’s build density where infrastructure already exists, on our main streets, with transit at the door.
You had great hopes when the city had John Tory as mayor and the Liberals in provincial government. How did that pan out?
What I anticipated—governments talking to each other to create affordability—did not happen. But the city has tools. It could say, “Every unit of affordable housing that gets built will not have property taxes charged in perpetuity. There will be no development charges. There will be no building-permit fees.” This is slam-dunk stuff that is within the city’s toolbox.
And if Mayor Olivia Chow says, “Toronto can’t spare that money,” what do you say?
I say that the value of our city will go down as a place to live and work if we continue to ignore affordability. The businesses will leave, because commuting two and a half hours from wherever is not the answer. We need to create places in the city for the key workers to live near where they work. We’re gonna erode the value of the city by not making that investment.
The federal government wants to bring in roughly 500,000 new Canadians every year. The economy needs them, but how do we house them?
In Toronto, it’s fairly simple. Apply zoning that allows 10 or 12 stories on major avenues, with set-back rules. The big cities of Europe all have six, eight, 10, 12 stories on the major avenues. That creates density along transportation routes, which is where we want it.
Do you have enough workers to build all those homes?
That’s a huge issue. We don’t have the workforce to build anywhere near the Ontario goal of 1.5 million homes by 2031. The bricklayers are retiring. The formwork contractors are 60. What are we doing by way of creating scholarships, bursaries, training pathways? We need to bring in the next generation of workers to come even close to satisfying that need.
Should the government be targeting construction workers in those 500,000 new Canadians?
You’re relentlessly upbeat in advocating for affordable housing. Do you ever get discouraged or angry?
I am often discouraged and angry, but I try to turn that into: What can we do to demonstrate what can be done? We’re gonna continue to be upbeat about what we can accomplish. And hopefully others will say, “Hey, we can do that, too.”
1. He’s referring here to the election of Mike Harris in 1995, whose Progressive Conservatives gutted government spending.
2. On Sept. 26, the federal government also announced a 50% increase in the amount of mortgage bonds issued, raising an additional $20 billion every year for new rental construction.
3. Dream Residential REIT and Choice Properties REIT are two other builders cited by Cohen as embracing SDG 11 principles.
4. In Regent Park, Daniels has completed...
› 3,063 condos
› 346 market-rate rental units; 34 “deeply affordable” units for 40 years
› 332 market-rate seniors apartments
› 1,261 TCH replacement apartments with rents geared to income
› 403 new TCH affordable rentals
› 853 residential units still under construction
5. Rob Ford was elected mayor in 2010.
6. Suggestions of improper conduct by TCH executives, in purchasing Regent Park condo units, led to an investigation headed by former Ontario Superior Court Chief Justice Patrick LeSage. In his report, released in August 2012, LeSage concluded the executives “did not receive any benefit or preference not available to the general public.”
7. The 2,083 Regent Park households whose homes were demolished were promised a “right of return” to a home suited to the household’s current size, with rent geared to income.
8. Songs from The Journey will be performed at Toronto’s Koerner Hall in June 2024.
9. Daniels has won multiple awards, including 2023 Ontario Builder of the Year (large volume) by the Ontario Home Builders’ Association.