Federal Housing Minister Sean Fraser said he won't give the Ford government over $350 million because the province hasn't agreed to build nearly 20,000 affordable housing units.
Instead, the money will go directly to service managers — such as regional governments or municipalities — the institutions responsible for actually building homes.
“We are disappointed that Ontario chose not to accept our conditional offer that would have reimbursed them for funds they have already spent for 2023/2024. However, we have a responsibility to ensure that public dollars that were agreed to be spent on affordable housing are being spent on just that. With or without the involvement of the Government of Ontario, we are going to follow through on investing our portion into affordable housing in Ontario," said Micaal Ahmed, Fraser's spokesperson, in a statement to The Trillium.
With the feds going over the province's head, Ontario won't get reimbursed for money already spent and won't be able to control which projects get funding.
It marks the end of a months-long battle between Fraser and Ontario Housing Minister Paul Calandra.
The spat started earlier this year when Fraser said Ontario wasn't living up to its end of a $5.8 billion bilateral agreement signed in 2018 to build 19,660 social housing units by 2028.
Under the agreement, the province is reimbursed for money spent building new affordable units. The province must send action plans outlining how it would reach mutually agreed-upon construction targets.
Earlier this year, Fraser asked Calandra to share his plan.
Ontario's existing plan showed the province had only built six per cent of the promised units. Calandra provided a revised road map to get to 28 per cent of the target.
On March 31, Fraser gave the new plan his "conditional approval" but said it still lacked ambition.
"By way of comparison, other provinces and territories are projecting to reach at least 66 percent or more of their goal over the same time period. A dramatic improvement to the action plan, and more progress is required to demonstrate that Ontario will meet its target by the end of the agreement," Fraser wrote in a letter to Calandra.
On April 30, the final chapter ended.
"Since our last exchange of letters, I have come to understand that a conditional approval was not acceptable to you and that Ontario is unwilling to provide further details as to how it will meet the target it agreed to," Fraser wrote.
During the entire ordeal, Calandra said the federal government was being unreasonable and not considering progress made through other programs.
If Ottawa were to count affordable units built with money from other programs, “Ontario’s progress hits nearly 60 per cent of the 19,660 number,” Calandra said in a letter.
Fraser’s position also didn’t consider “some major factors that should be taken into account,” Calandra said.
Since the agreement was signed in 2018, “the economic landscape has shifted drastically with the rising costs of building materials, supply chain disruptions, gaps in the labour market, and most of all, higher interest rates.”
Ontario’s social housing stock is also the oldest in the country, Calandra said, which is why his government has prioritized repairs over building new units. Focusing on building new stock at the expense of existing units “would amount to gross negligence on our part.”
In March, the Association of Municipalities of Ontario (AMO) backed Calandra in a letter to Fraser.
“I am writing today on behalf of Ontario’s municipalities to urge against any cuts to federal funding for affordable housing,” AMO President Colin Best wrote. “This would have devastating impacts on low-income families and individuals, and further exacerbate the housing crisis across the province.”
"The uncertainty caused by this latest dispute between the governments of Canada and Ontario is impacting payments that families and individuals need to help pay the rent, as well as funding already earmarked for important 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,” AMO executive director Brian Rosborough said on Monday.
On Monday, Calandra criticized the feds for going directly to service managers because that's exactly how the province builds affordable housing.
"We have been for weeks telling the federal government that we fund housing through service managers, that the province directs its funds through service managers in co-operation with municipalities. They have for weeks, been telling us that they did not want to do it that way," he told reporters.
"And finally last week, they agreed with us that that funding would happen through service managers. I fully expect that the federal government, now having agreed with us that this is the best way of doing it, will provide Ontario the $357 million that municipalities and our partners have fronted them, and that we can continue on doing the really good work that we've accomplished."
On May 1, Fraser sent a letter to Ontario's 47 service managers to mollify concerns around funding shortfalls and ask for meetings to chart a path forward.
"I want to assure you that the full amount of this funding which was meant to flow through the province will nevertheless be used to make investments in affordable housing and housing supports for the most vulnerable in Ontario, and will be delivered directly by the federal government," he wrote.
It's the latest example of Ottawa bypassing provinces and going directly to municipalities to build homes.
The federal government's Housing Accelerator Fund gives money to municipalities in exchange for more permissive zoning rules. Ottawa has signed dozens of deals with Ontario cities worth billions of dollars.
Last November, Premier Doug Ford said he was no fan of the program because it encroaches on provincial jurisdiction.
“You can’t have the federal government going into a certain town or certain city and dumping funding and not even discussing with the province. That's unacceptable. We call it jurisdictional creep,” Ford said.
“We look forward to hopefully them changing their mind, not surprising each and every one of us one morning when they're in A, B, or C town, dropping millions of dollars, when that's not their jurisdiction,” he added.
Ottawa doubled down on the direct-to-municipalities approach in the federal budget. It established a $6 billion fund for housing-enabling infrastructure like water and wastewater treatment plants, also in exchange for looser zoning rules
It's split into two tranches: $5 billion for provinces and $1 billion for municipalities.
If a province doesn't agree to end exclusionary zoning, the money will be available to individual municipalities. The Ford government has already ruled out agreeing to those terms and is trying to get municipalities to work alongside it to change's Ottawa's mind.
