Provinces, federal government feud over Ottawa’s Housing Accelerator Fund amid affordability crisis

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Federal Housing Minister Sean Fraser says Ottawa won’t stop sending money directly to municipalities for housing, despite a threat from the country’s premiers to put in place laws that would give them final say over how funding is spent on infrastructure in their cities.

The contentious issue is Ottawa’s Housing Accelerator Fund, which offers billions to cities directly to speed up development. The policy is also intended to persuade municipal governments to loosen zoning rules that prevent additional homes in many neighbourhoods.

The jurisdictional squabbling over the housing program has emerged as the federal government tries to refocus on the issue of housing supply, affordability and other cost-of-living matters.

The provincial and territorial premiers raised objections to that funding model at a meeting this week in Halifax, where they agreed in an official communiqué to explore “legislative frameworks” similar to Quebec that require provincial authorization before municipalities enter into agreements with Ottawa.

The premiers’ also voiced opposition to “application-based” funding, which is how the accelerator fund is structured. Such funding requires municipalities to apply for the money and meet certain criteria in order to receive it.

Nova Scotia Premier Tim Houston, the current chair of the Council of the Federation, said the premiers are demanding that the federal government start working with them and not around them.

“We’re hoping that the federal government just sees that with common sense,” Mr. Houston told reporters Tuesday in Halifax. “But if not, the premiers all spoke about the willingness to adopt legislation that is similar to Quebec that requires the federal government to deal fairly with the provinces and municipalities at the same time.”

However, Mr. Fraser said he won’t be changing course in spite of the premiers’ concerns.

“There is no circumstance in which I’m willing to slow down when it comes to building houses in this country in the middle of the housing crisis,” he said Tuesday when asked about the premiers’ objections.

Mr. Fraser said the accelerator fund has made real progress in the past few months on tackling housing issues that have languished for years.

“One of the things that I found a bit surprising was that I never heard these objections before it was uttered in a news conference yesterday,” he said, adding that mayors want Ottawa to “keep going” with the existing approach.

“There is yet to be a single community put their hand up and say ‘I don’t want you to put federal money on the table to incentivize changes in my city,’” he said.

During the news conference on Monday, Ontario Premier Doug Ford accused the federal government of “jurisdictional creep” and called for greater co-operation.

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“You can’t have the federal government going into a certain town or certain city and dumping funding and not even discussing it with the province,” Mr. Ford said.

Alberta Premier Danielle Smith said Monday that she was also concerned about fairness for her province, and said Quebec has had success with its model, having recently received $900-million in housing funding as result of negotiations with Ottawa.

Mayors representing the largest cities in Ontario said they welcome funding from any level of government.

Cam Guthrie, the mayor of Guelph, Ont., on social media called comments from Mr. Ford and the other premiers “infuriating.” He said Mr. Fraser’s moves to prompt municipalities to change restrictive zoning rules or see their funding evaporate had done more for housing in just a few months than provincial governments have achieved in years.

“I’ll pick up Minister Fraser at the airport and drive him to my city and roll out the red carpet if he’s got money for us,” Mr. Guthrie said in an interview. “And if I have to pick him up at the airport without the province, I am happy to do that, too.”

Toronto Mayor Olivia Chow has no objections to receiving federal housing money directly.

“Mayor Chow welcomes all federal funding to improve housing affordability in Toronto,” Arianne Robinson, a spokeswoman for Ms. Chow, said in an e-mail.

Halifax Mayor Mike Savage, chair of the Federation of Canadian Municipalities’ big city mayors’ caucus, which includes 23 of the country’s biggest cities, said municipalities will take assistance from any order of government.

“Let’s just stop arguing about jurisdiction and start fixing the problems,” he said. “I don’t think it’s right to say the feds shouldn’t be supporting municipalities directly.”

Burlington Mayor Marianne Meed Ward, chair of Ontario’s big city mayors’ caucus, said municipalities need an “all-hands-on-deck” approach when it comes to solving the housing crisis.

Still, she said her group is looking for a new municipal funding framework that would allow cities to better plan for the long term.

“Federal government has all the money, provincial government has all the power, municipality has to deal with all the issues,” she said.

With a report from Jeff Gray in Toronto.