In 2023, the federal government introduced the Housing Accelerator Fund (HAF) to speed up housing development. Unlike previous programs, Ottawa chose to negotiate these agreements directly with municipalities rather than working through the provinces and territories. While this approach may have offered more favourable optics for Members of Parliament, it overlooked the absence of infrastructure to support these direct relationships.
Traditionally, housing agreements were signed with provincial governments, which have legislative power over municipalities and dedicated departments to manage those relationships. In response to the shift, CMHC has been scrambling to build a municipal engagement team, and Infrastructure and Housing has brought in former municipal officials to support the effort. Nevertheless, it’s clear that little thought was given to the governance framework – or that municipalities may engage in a game of chicken with the federal government when faced with constituent pushback.
Frustration over increased density is growing in Canadian cities. In Edmonton, concerns have been mounting over the introduction of eightplexes in older neighbourhoods. Now, a more concerning situation is unfolding in Toronto.
In June, Toronto city council voted against allowing sixplexes citywide – a key condition of its Housing Accelerator Fund (HAF) agreement with Ottawa. At its June 25 meeting, council debated a motion to approve sixplexes in all parts of the city but ultimately passed an amendment that maintains citywide permissions for fourplexes, while restricting sixplex construction to eight wards in the Toronto-East York district and Ward 23 (Scarborough North), where a pilot program is already underway.
Back in March, then-federal housing minister Nate Erskine-Smith warned Toronto Mayor Olivia Chow that failing to implement a citywide policy permitting sixplexes would result in a 25 per cent reduction in federal funding, which translates to almost $30 million of the $118 million that Ottawa has pledged annually through the HAF. Canada’s new housing minister has not yet confirmed whether he will uphold that position.
Some have argued that withholding funding amounts to unfair punishment. But this is a contractual agreement. If a contractor hired by the city failed to meet their obligations and still demanded full payment, the city would likely refuse. The same principle should apply here: if Toronto doesn’t follow through on its commitments, why shouldn’t the federal government reconsider how much it’s willing to pay?
Ottawa has negotiated HAF funding agreements with more than 170 municipalities across the country. If Toronto is allowed to walk back its commitments without consequence, it could set a troubling precedent and unleash total chaos as other municipalities demand similar concessions – undermining the integrity of the entire program.
In 2023, Toronto introduced a policy allowing fourplexes to be built as-of-right across the city. Since then, just 108 multiplexes have been completed. Realistically, even if sixplexes were approved under the same terms, a construction boom is unlikely. The city’s high development fees—ranging from $63,000 to $68,000 per unit—would continue to discourage builders from starting new projects. Nevertheless, city councillors are likely worried that the mere possibility of such developments could sink their chances of re-election.
As Ottawa looks to rein in spending, it may be time to reconsider its approach. Transitioning HAF agreements back to the provinces and territories would align funding with the levels of government that hold legislative authority over municipalities – and have the administrative machinery to manage these programs effectively.
Independent Opinion
The views and opinions expressed in this publication are solely and independently those of the author and do not necessarily reflect the views and opinions of any person or organization in any way affiliated with the author including, without limitation, any current or past employers of the author. While reasonable effort was taken to ensure the information and analysis in this publication is accurate, it has been prepared solely for general informational purposes. Any opinions, projections, or forward-looking statements expressed herein are solely those of the author. There are no warranties or representations being provided with respect to the accuracy and completeness of the content in this publication. Nothing in this publication should be construed as providing professional advice including investment advice on the matters discussed. The author does not assume any liability arising from any form of reliance on this publication. Readers are cautioned to always seek independent professional advice from a qualified professional before making any investment decisions.
