Ottawa says Ontario failed to meet affordable housing goals, won’t send funds to province

Open this photo in gallery:

The federal government says it will withhold $357-million in affordable-housing funding from Ontario and instead send it to city service managers responsible for the issue, after Ottawa said the province failed to commit to a target of building almost 20,000 units.

The change means the province won’t be reimbursed for any funds already spent and will lose the discretion to pick and choose which projects receive the money, since the decisions will be taken by the federal government.

The decision made last week by federal Housing Minister Sean Fraser to send the funds directly to Ontario’s 47 service managers – which include regional governments and administrative boards that operate social housing and homelessness plans – is the latest example of Ottawa bypassing provinces to deal directly with municipalities when it comes to funding for housing.

Ottawa has already been signing agreements with municipalities through its Housing Accelerator Fund, and has also threatened to go around provinces with its new $6-billion housing infrastructure fund, announced in last month’s federal budget, that would require provinces to agree to a list of conditions such as increased density to access the money. Ontario rejected those requirements immediately.

Other premiers have also objected to the federal government dealing directly with municipalities on housing, and Alberta has introduced legislation that would prohibit local governments from dealing directly with Ottawa without the province also being involved.

The latest dispute with Ontario stems over how the province plans to meet its target of 19,660 new rent-assisted social housing units by 2028, as part of a $5.8-billion transfer agreement with the federal government.

Under the agreement, Ontario and Ottawa agree on housing targets and the province must submit an action plan every three years detailing how the targets will be achieved. The province is then reimbursed for what it spends by the federal government. The money goes toward rent supplements, housing allowances and repair funding as well as construction and renovation.

In a letter sent to the provincial government last Tuesday, Mr. Fraser said Ontario lags far behind its provincial and territorial counterparts when it comes to building more affordable-housing units and is refusing to share further details of its plan.

“I owe it to Canadians to ensure that their money, which Parliament has authorized for investments in new affordable housing, is actually spent on building more affordable housing,” he wrote.

But Ontario argues that Ottawa refuses to acknowledge the number of units it has built and the tens of thousands it has refurbished, adding that the province has the oldest social-housing stock in the country. And Ontario’s Minister of Municipal Affairs and Housing, Paul Calandra, accused the federal Liberals and Mr. Fraser of wanting to “hand out cheques” across Ontario.

In a letter to service managers sent on May 1, Mr. Fraser said the full funding that was meant to flow through the province will be delivered instead directly by the federal government. He said he plans to meet with the service managers to ensure the money flows quickly.

In an interview, Mr. Fraser said Ontario has only committed to building 28 per cent of its target and, as federal money flowed, the province reduced its own investment in new community housing.

“I can’t be in a position where we transfer funding for affordable housing that will never be built,” he said.

Toronto’s housing affordability crisis poses threat to city’s future

Mr. Fraser said his government wants to deal with provinces directly, and he believes Ontario wants to build more homes: “We seem to have a sticking point when it comes to affordable housing for low-income families, in addition to addressing the needs of middle-class families by building more homes in the market.”

Mr. Calandra, however, said Ontario has built 11,000 affordable-housing units since 2018 and has renovated 123,000 units – far more than the committed 23,000 units in the signed agreement. He said Mr. Fraser is complicating matters by cutting out the province in the funding plan.

“It’s just bizarre at best,” Mr. Calandra said in an interview. “How he is going to design that is a mystery to us,” he added, noting it’s up to service managers in different cities to decide how to best design affordable housing.

Brian Rosborough, executive director of the Association of Municipalities of Ontario, which represents municipal and regional governments, said withholding federal funding for affordable housing “would have devastating impacts on low-income families and worsen Ontario’s housing and homelessness crisis.”

He said the uncertainty caused by the latest dispute is affecting payments that families need to pay rent as well as funding for municipal capital investments in community housing.

“We urge both the federal and provincial governments to come to the table with Ontario’s municipal sector to put community housing, rent supplements, shelters and other critical supports on a sustainable path,” he said.

Arianne Robinson, a spokesperson for Toronto Mayor Olivia Chow, said in a statement that the city leader “is happy to work with any level of government to access funding for housing.”