Ottawa says its housing deals with cities will build 750,000 homes in the next decade

OTTAWA — The Liberal government has finalized all of its deals with municipalities under the housing accelerator fund, a program it says has triggered Canada’s biggest-ever movement to increase residential density.

Housing Minister Sean Fraser announced Monday the federal government has signed 179 housing deals via the $4-billion housing accelerator fund. 

The program has “led to the largest up-zoning movement in Canadian history,” a government news release said.

Ottawa says the competitive process for funding resulted in 544 applications, but only one-third of them were successful.

The agreements, which run until 2026-27, are expected to help fast-track 107,000 permits within the next three years and build more than 750,000 homes over the next ten years.

“We’ve allowed communities to advance local solutions in exchange for federal investments,” said Fraser in an interview with The Canadian Press.

The Liberal government has raced to sign housing deals with cities since it launched the program in June. That energy coincided with a significant drop in support for the Liberals in polling as Canadians became increasingly angry with the government over the cost of living.

Experts often point out Canada’s housing shortage is caused in part by excessive red tape, slow permitting processes and high development fees at the municipal level.

According to the Canadian Home Builders’ Association, average municipal approval timelines for housing projects in 2022 spanned from three months to nearly three years, depending on the city.

The housing accelerator fund has been touted by the Liberals as the solution to these problems. It offered communities federal dollars in exchange for changes to bylaws and regulations that would boost home construction.

Although the specifics of the agreements vary, Fraser says he’s managed to secure significant changes from cities, including the digitalization of the permitting process and an end to exclusionary housing, or zoning that limits what you can develop on specific land. 

Under the agreements the federal government, municipalities receive 25 per cent of their funds upon signing and 25 per cent each year thereafter, provided they reach specified milestones. 

Conservative Leader Pierre Poilievre has also suggested that the solution to the housing crisis requires the federal government to push cities to be more development-friendly.

Poilievre’s signature proposal, which was outlined in a private members’ bill in September, requires cities to increase home building by 15 per cent each year to receive their usual infrastructure spending. 

The Conservative proposal would reallocate $100 million from the housing accelerator fund to give additional money to communities that greatly exceed the housing targets. 

Cities that fail to meet that target would see a decrease in the federal dollars they receive, while those that exceed it would get additional money.

Meanwhile, the Conservative leader blasted the Liberals’ $4-billion fund, saying it funnels money to the same “gatekeepers” who are contributing to the bottleneck. 

A spokesman for Poilievre wouldn’t say whether the Conservatives would scrap the housing accelerator fund if they were to form government. 

“Common sense Conservatives will reward those who get homes built and punish gatekeepers that block home building. By contrast, Trudeau’s so called ‘housing accelerator fund’ has done nothing to fix the issue he’s created after eight years in power,” said Sebastian Skamski in a statement. 

When asked about the criticism, Fraser fired back at Poilievre’s housing plan, calling it “doomed to fail.”

Frasier said “whoever” designed the Conservative plan “must have spent no more than five minutes thinking about housing policy.” 

The minister said the pool of money Poilievre would dole out in bonuses is too small and the 15-per-cent rule could lead to “perverse incentives.”

That’s because a city that experienced little population growth could potentially put less effort to boost housing than a neighboring community, but still receive more funding.

This report by The Canadian Press was first published March 4, 2024. 

Nojoud Al Mallees, The Canadian Press