Feds to bypass Ontario government and give housing money directly to service managers

The federal government has kept its promise to withhold more than $350-million in Ontario funding earmarked for affordable housing and will send it directly to service managers after the province “failed to meet its obligations.”

The money was part of a bilateral housing agreement signed in 2018 and was meant to be used to reimburse the province for affordable housing investments.

Under this agreement, Ontario pledged to deliver about 19,660 affordable housing units. However, in March the federal government told the province their funding was in jeopardy.

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In a letter sent to Ontario Housing Minister Paul Calandra on March 21, officials noted the province was greatly behind in their goal, with an anticipated 1,184 new units by the end of 2024-2025.

“This leaves 94 per cent of the target to be achieved during the last three years of the agreement, which is not realistic,” Federal Housing Minister Sean Fraser wrote to his provincial counterpart at the time.

Fraser noted that unless the province provided a revised plan that shows how it intends to meet its targets, he would withhold $357 million in funding for affordable housing.

Between March 21 and April 30, the federal government says it offered the province conditional approval for the funding as long as some of the measures proposed in the revised action plan could be implemented by Sept. 30, 2024.

“The additional measures you have proposed include mandating annual supply targets for Service Managers, adopting a focus on creating new affordable housing units, and improving data collection and reporting related to these initiatives.

“These are good initiatives, but they are ones which Ontario made a similar commitment to realize last year. They have yet to materialize.”

Fraser said if the province could make some progress by the fall, they would get the money.

A month later, the feds say there has been no movement.

“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 to Calandra. “I am disappointed that through your rejection of the conditional approval you have decided to forego the federal funding that would reimburse Ontario for investments it makes under our agreement.”

“I cannot accept an Action Plan that demands funding for affordable housing that will never be built.”

Speaking at the legislature on Monday, Calandra said he was pleased the government agrees that service managers should be the ones who administer the funding.

“We have been for weeks telling the federal governments that we fund housing through service managers, that the province directs its funds through service managers in cooperation with municipalities.”

However, the minister says he does not agree with Ottawa bypassing the province in the process. Previously, Calandra has called the decision “unacceptable” and said the affordable housing targets do not take the current economic landscape into account, nor the province’s work to repair and renovate units.

Service providers should not be impacted by the decision to withhold funding, the federal government said.

Fraser has said he hopes the province won’t pull funding in future years, but that he would meet with service providers to find a way to ensure funding delivery.