By Onah Jung and Ted McIntyre
Are residential construction incentives for municipalities working, or do we need something more?
Ontario’s housing crisis is often presented as a numbers game, where targets are set and outcomes expected. Yet beneath the surface lies something more complex: a tale of choices, challenges and politics.
The launch of two different housing funds in 2023—the federal Housing Accelerator Fund (HAF) and provincial Building Faster Fund (BFF)—were framed as breakthroughs to tackle the housing shortage.
They promised to quicken the pace of construction and offered municipalities a golden opportunity: Meet or exceed housing targets, and funding will follow.
However, the results have been far from uniform, with some municipalities exceeding their goals while others are stuck in neutral.
The stark contrast raises two crucial questions: Are these funds actually working, and do most municipalities even want to build?
The varying success rates in housing starts from one city to the next are more than just a matter of construction efficiency. They reveal systemic barriers, political/community resistance and governance issues that could be preventing Ontario from solving its housing crisis.
Throwing Them a Carrot
The BFF is a three-year fund that provides up to $400 million annually to Ontario municipalities that have committed in writing to achieve their 2031 housing targets. The funding can be used for housing-enabling infrastructure and other related costs that support community growth. Performance is evaluated by comparing the municipality’s number of housing starts and additional residential units created in a calendar year against the annual target. Municipalities achieving 80% or more of their yearly target can access a portion of their allocation. The BFF provides double the funding for every 1% above 100% of a municipality’s target. Municipalities that do not achieve at least 80% of their annual target receive no funding.
The Housing Accelerator Fund is a four-year $4 billion program for Canadian municipalities and Indigenous governments. As the name implies, its primary purpose is to create more housing supply at a faster pace. The fund commenced with an advance to successful applicants upon signing contribution agreements with the federal government in the fall of 2023. Over 200 municipalities had entered into agreements as of the beginning of February. Funding is proportional to the incremental number of residential units the recipient targets, based on a formula of $20,000 per unit, with adders for affordability, density and transit proximity.
There’s also the new Canada Housing Infrastructure Fund program. With $6 billion spread across the country over 10 years, it’s focused on stabilizing and reducing the cost of home building (particularly with respect to lowering development charges) and funding housing-enabling infrastructure (specifically wastewater and solid waste infrastructure).
Municipalities can further access the Canada Public Transit Fund, a long-term fund to strengthen and expand existing transit networks. Its application requires larger municipalities to add greater density near transit and post-secondary institutions and to cut red tape and barriers to create more housing supply.
Why are these funding carrots even required when everyone already acknowledges a housing crisis? Well, change is hard, explains Canadian Housing Minister Nathan Erskine-Smith. “Exclusionary zoning is not new. Restrictive zoning is not new. NIMBYism is not new,” Erskine-Smith says. “While the federal government isn’t responsible for zoning in any direct way, we can use our spending power to encourage and reward municipalities that are (more ambitious), that are cutting red tape and ending restrictive zoning to get more supply built.”
Ontario’s BFF metric revolves around foundations poured, whereas the HAF rewards municipalities for greasing the wheels of the development process.
However, the incentives have not gone according to plan in municipalities like Burlington, Mississauga and Richmond Hill, which failed to meet even 35% of their 2024 targets.
Erskine-Smith acknowledges some of the legitimate challenges that have slowed development for builders. But he is also clear in his criticism of municipalities that actively hinder progress.
“There will be instances where some municipalities are firmly on track, where some are mostly on track but need to be pushed to speed things up, and other cases where they are completely ignoring their commitments and continue to adopt exclusionary zoning processes to ‘maintain neighbourhood character’ in the face of the affordability crisis. That’s where there will be consequences, and funding will be clawed back,” Erskine-Smith says.
Mississauga’s Streetsville Heritage Conservation District Plan might be a case in point. It has been criticized for stifling new housing development by labelling modern structures as heritage properties. This designation introduces additional layers of regulation that further delay projects, even when the need for new housing is urgent. It’s an example of how “weaponizing policies to block housing undermines provincial goals and worsens the housing crisis,” notes Ontario Home Builders’ Association CEO Scott Andison.
Success Stories:
Pickering & Oakville
Two GTA municipalities that have exceeded their targets are Pickering and Oakville. With a robust pro-housing philosophy, streamlined approval processes and strategic planning, Pickering blew by its expectations to the tune of 156% in 2024, posting 1,696 starts versus its target of 1,083. Mayor Kevin Ashe attributes the city’s continuing success to a combination of proactive policies and a passionate pro-growth stance.
As with most Ontario communities, Pickering has also expedited approvals and streamlined bureaucratic processes, reducing delays typically associated with large-scale housing projects.
And as with most, they’ve also had to address resistance to change. “I get it. I’m 62. I’ve lived in Pickering for 57 years, so I’ve seen this city grow from a small township,” Ashe says. “But when I speak to the housing supply issue, I note it as an opportunity for these people’s kids to live and work in the GTA. We need to have different housing options.”
Supply will not be a concern for Pickering anytime soon. “We have the community of Seaton, which is only 20% built out. There are plans for a dozen or so more condos in our city core, and in December, northeast Pickering was approved into our urban boundary. That’s a community over the next 20 or 30 years that will come to house 40,000 to 50,000 people,” Ashe says. “We will have supply for the next generation of homeowners.”
What can jurisdictions that haven’t as much room to stretch their arms do? “I think mayors not getting those greenfields investments because their communities are built out have to turn their minds to the missing-middle intensification of their transit corridors,” advises Ashe, whose 2023 BFF cheque amounted to $5.2 million. “Accessory dwelling units are another opportunity for soft intensification.”
Pickering has had the luxury of cherry picking in that latter regard. Blessed with room to grow and stellar new-housing numbers, the municipality elected not to apply for the HAF, given that federal fund’s accessory dwelling unit requirement. “We had just gone through a fulsome dialogue with our residents about protecting community character and were already meeting our housing targets,” Ashe says. “We do support ADUs and the like, but not the four units as-of-right, which was one of the criteria for the HAF.”
Oakville’s achievements, meanwhile, stem from a long-term strategic plan that prioritizes “livability” as a key factor in attracting new residents, according to Mayor Rob Burton. Focusing solely on increasing numbers without considering consumer demand is a flawed approach, he says. “Simply pushing for more starts without understanding market demand won’t solve the housing crisis. We need to align growth with what people actually want.”
While the housing numbers of Oakville and Pickering are to be applauded, was the BFF a carrot to entice both municipalities to facilitate development better, or was it simply found money? Burlington Mayor Marianne Meed Ward highlights an inherent flaw in the fund: The system is currently rewarding municipalities for housing starts approved well before the fund was even created. “The BFF did not put shovels in the ground,” Meed Ward stresses. “There were already approvals in many communities around us that were in planning for years before the BFF was launched.”
Despite progressing in streamlining the pre-construction process and reducing development charges, Burlington recorded just 754 of its 2,417 housing starts target in 2024. But those numbers don’t tell the whole story, Meed Ward contends. “We don’t build houses; we issue permits, and we have over 5,500 permits ready to go right now—that’s almost triple our obligations under the fund,” she says. “But what is complicating getting shovels in the ground are factors affecting the construction industry, such as the high cost of labour, supply shortages and inflation rates. All those things have combined to the point where developers tell us they’re putting projects on hold until the situation improves.”
A problem with the BFF is that it focuses on outcomes rather than the entire development process, which can create a vicious circle, Meed Ward notes. “The conditions you don’t control can negatively impact the ability of the industry to put shovels in the ground, and that means you don’t get any money to help create the conditions required to put more shovels in the ground! If you really want to reward municipalities who are trying to create the proper conditions here and now, it should be tied to issuing permits, because that’s what we control.
But the current criteria for the Building Faster Fund measures, judges and penalizes municipalities for what is outside of our control. We’ve had the highest number of foundation starts in a 10-year period in city history, yet we still won’t qualify for the fund because of how it’s structured.”
Even counting permits doesn’t tell the whole story, though, Andison observes. “You can put an application through to build 500 homes, but if the municipality doesn’t have the infrastructure in place to accommodate it—if there’s no pipe going to where those 500 homes would be—they can’t approve it in good conscience. From the province’s perspective, if they’re looking for the number of building permits as the indicator of growth in the community, those 500 units don’t get counted because the municipality hasn’t issued building permits, so the province doesn’t issue funds for that infrastructure!”
The Stick
Some arguments from Ontario jurisdictions are legitimate. Some are not. “In the end, we will all be judged by housing starts and completions—that is the ultimate metric of success (for the HAF),” Erskine-Smith says. “Having said that, HAF funds are delivered to municipalities committed to changing the rules of the game to get more housing built. That means delivering on the changes they committed to—ending exclusionary zoning, up-zoning to encourage gentle density everywhere, including greater density near transit and post-secondary institutions, adopting technology to speed up processes and e-permitting, and making public lands available to drive affordability. If they are doing everything within their control to get more housing built, that’s how I will judge whether they’re on the right track or not.”
And the public will get to see where every community stands. Just as the BFF includes an online tracker to monitor housing supply progress among Ontario municipalities, the Housing Accelerator Fund be adding a tracking feature. “We are going to deliver transparency with respect to the milestones and the progress that municipalities are making,” Erskine-Smith says. “Canadians should be able to see which municipalities are on track and which are not.”
While the HAF and BFF are a step in the right direction, they must be accompanied by systemic reforms that address underlying barriers to development. This includes rethinking incentive structures, introducing accountability measures and fostering an improved culture of collaboration across municipalities and the building industry.
There’s always room for improvement, suggests Andison. “I think, through work by OHBA and other organizations, the province understands better what some of these issues are now than when they initially put the BFF program in place. It was more restrictive than it needed to be.
“What we’re saying to the province is, ‘If you put out these complicated grant application programs that you expect every municipality to fit into, that’s unrealistic. But if you want municipalities to build more housing, and the plans comply with building codes, their local planning act and their official plan amendment, then the money should just flow from government! And having spoken with Ontario Minister of Municipal Affairs and Housing Paul Calandra, he is fully aligned with that: ‘Show me that you’re going do it, and we will give you that money. But you need to follow through. If we put that pipe in the ground, you can’t then say no, you’ve decided it’s not the type of home development you want there.’
“We need solutions that work for everyone—municipalities, developers and, most important, the residents who need homes,” Andison says. “Change is hard, but our builders live in the communities they build in. They are in touch with what’s needed. Politicians have to change with the times too. Otherwise their communities will suffer. My message to the mayor of Burlington and elsewhere in Ontario is that we’re happy to advocate with you to get rid of some of these restrictions that prevent you from moving forward.”
Erskine-Smith says he’s all ears if theree are suggestions to improve things. “We had a very detailed housing plan released last April, and I’ll continue to deliver on that plan. But I also welcome new ideas from the housing industry concerning removing barriers to help the market to build and deliver on our ultimate goals of affordable homes for all Canadians.”
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