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By\u00a0<\/p>\n
Sonal Gupta, Local Journalism Initiative Reporter Canada’s National Observer\n <\/p>\n
After decades of slow home-building by cities, Ottawa offered them a deal: change the rules that limit where and how homes get built and federal money would follow. But as some cities resist or reverse parts of their deals, it is unclear what counts most: passing new housing rules, keeping those rules in place or approving more homes.<\/p>\n
The consequences have been uneven. Red Deer, Alta., and Oakville, Ont., refused Ottawa\u2019s requirement to allow up to four homes on many residential lots and lost their housing deals entirely, forgoing millions in grants. Calgary passed, then rolled back, a similar rule and still kept its next payment. Markham, Ont., a Toronto-area suburb, rejected the four-home rule, too, but lost only part of its funding. Toronto lost about two per cent of its funding after limiting six-unit buildings to certain parts of the city.<\/p>\n
Critics and city officials say Ottawa is enforcing the program case-by-case instead of coming up with a predictable and evenly enforced system.\u00a0<\/p>\n
Economist Mike Moffatt, the founding director of the University of Ottawa\u2019s Missing Middle Initiative, said the Housing Accelerator Fund was meant to push cities to allow more homes on lots once reserved for single-family houses, speed up approvals and make it easier to build near transit \u2014 and for those rules to stick.<\/p>\n
\u201cThe whole point of the housing accelerator was to incentivize municipalities to make these kinds of permanent reforms,\u201d Moffatt said.<\/p>\n
But the agreements also included targets for how many homes cities expected to permit. Moffatt said that has muddied the test of success: cities can point to housing numbers and argue they delivered, even when they resisted or reversed the rule changes Ottawa wanted.<\/p>\n
In an email to Canada\u2019s National Observer, the Canada Mortgage and Housing Corporation (CMHC) said the fund rewards local governments for cutting red tape and building homes faster. Communities submit housing action plans, with each initiative broken into milestones. Funding flows annually after a progress review.\u00a0<\/p>\n
But David Harris, the agency\u2019s spokesperson, said when cities backtrack, there are consequences.<\/p>\n
\u201cCMHC also monitors communities\u2019 progress on implementing their Action Plans and if commitments are not met or are reversed, HAF funding is at risk,\u201d Harris said.<\/p>\n
Harris said most of the nearly 240 communities with agreements are implementing their plans as expected, and money from reductions or cancelled agreements is made available to communities that agree to do more.<\/p>\n
But Moffatt said Ottawa\u2019s language has softened as debates over fourplexes and neighbourhood change became more politically difficult. \u201cWhen they mean \u2018red tape,\u2019 they mean zoning,\u201d Moffatt said. \u201cThey want to talk about zoning without using the Z-word.\u201d<\/p>\n
The program was heavily customized, with each city signing its own agreement, making it hard to know what penalty a city would face if it fell short.\u00a0<\/p>\n
\u201cThere\u2019s zero consistency here,\u201d Moffatt said.\u00a0<\/p>\n
Red Deer had been approved for $12.5 million in federal grants in March 2025. Mayor Cindy Jefferies said the city wanted to use the money for apartments, row houses, townhouses and affordable housing.<\/p>\n
But after public meetings, the city concluded residents did not want fourplexes allowed across all residential neighbourhoods.<\/p>\n
\u201cThe \u2018blanket zoning\u2019 piece is problematic,\u201d Jefferies said, adding Red Deer residents weren\u2019t concerned about fourplexes in general, particularly in places like transit routes, corner lots and major roads. \u201cIt was that you could do that anywhere you wanted.\u201d<\/p>\n
Jefferies said Red Deer could still deliver much of its plan without applying the rule citywide. Ottawa cancelled the agreement.<\/p>\n
Oakville, Ont. had a similar outcome. The town had been approved for about $25 million, but federal officials ended the deal after council rejected changes that would have allowed four homes on residential properties and taller housing near Sheridan College.<\/p>\n
But for nearby Markham, which also rejected the four-home rule, Ottawa reduced its funding by about $7 million instead of cancelling the deal.<\/p>\n
\u201cThere had been some exceptions made for some municipalities across Canada and not others,\u201d Jefferies said.<\/p>\n
Markham Mayor Frank Scarpitti said the city should be judged against the rest of its agreement. The program allowed it to work with non-profits, faith groups and builders to deliver rental and affordable housing. Markham had committed to 1,640 homes and now has agreements for more than 1,900, including more than 300 affordable units, Scarpitti said.<\/p>\n
\u201cWe delivered 99.99 per cent of the agreement,\u201d he said.<\/p>\n
Scarpitti said Ottawa should keep funding cities that can show progress.\u00a0<\/p>\n
\u201cGive us another $58 million and we\u2019ll deliver another 1,900 units for the federal government,\u201d he said.<\/p>\n
Toronto also faced a partial penalty. The city had already allowed up to four homes on residential lots before its federal deal \u2014 its promise to the feds included expanding permissions for six-unit buildings. After council limited those buildings to parts of the city, Toronto was docked about $10 million from its $471-million agreement. The city was contacted for an interview but did not provide one before publication.<\/p>\n