Building even a small apartment building in the GTA is a risky proposition. Simply acquiring the land can be difficult enough, and then navigating the years-long process to get the necessary permits and approvals can sink otherwise motivated builders. All of this becomes even more difficult for anyone looking to build housing aimed at lower-income owners or tenants: even with subsidy, affordable housing developers operate on razor-thin margins and can’t simply pass costs on to the end user. So, policymakers must find creative ways to get projects from drawing board to keys-in-doors.
A coalition of housing advocates representing both for- and not-for-profit housing have proposed what they’re calling an affordable housing revolving fund, complete with the obligatory policy paper released earlier today. This would not fund the building of homes, roads, or sewers directly; the Ford government already has substantial financial commitments on those fronts.
Instead, Woodgreen Community Services, a Toronto-based non-profit, as well as BILD GTA, one of the associations representing private developers in the region, want the provincial government to dedicate pot of money to help developments get through a precarious early part of the process.
The revolving fund would specifically provide small loans for projects that have progressed past the earliest stage (think of literally starting with a blank sheet of paper and a dream) and are now facing procedural hurdles, such as satisfying building and planning officials in the local municipality. That process takes time, and time is money. This is the valley of death that many projects can’t quite clear.
The Woodgreen report estimates that these costs make up a small fraction of the total cost of a new project – something like five to 10 per cent – but represent a crucial choke point that developments on smaller margins can’t cross without help, particularly in the current financial environment. Small, low-interest loans can help projects make it to viability and when those loans are repaid early in the life of a new development, that money is returned to the revolving fund plus interest to help the next cohort of projects.
The proponents are hoping to put a more formal proposal before the provincial government before the next budget, in the hopes of shaking some money loose from the Building Ontario Fund, established by the Ford government last year to help drive investment in strategic sectors, including affordable housing. How much money? According to Woodgreen, the province would need to commit something like $100 million for a minimum viable effort, and more would of course be welcome.
How much of an impact could this kind of money have on affordable housing? The policy paper looked at an existing Woodgreen project in Toronto and modelled what it might have meant to have a revolving fund available, finding a net benefit to Woodgreen of $750,000 over 50 years. Not a huge sum in the context of provincial policy, but every dollar saved allows a non-profit to turn that money to their services instead.
But looking at the impact of a single project (one that’s already been built) might be the wrong lens through which to judge this policy. The point isn’t simply to lower the costs of projects we know about (though that is welcome), it’s to make more projects viable. The Ontario Non-Profit Housing Association surveyed its members last year and estimated there was capacity for 70,000 new affordable housing units within five years, just on lands they already own, if supportive funding was available — nearly tripling the province’s existing affordable housing stock.
There are a few reasons this kind of fund might be alluring to Queen’s Park. First of all, the political problem of a housing crisis has receded somewhat from the headlines but has hardly disappeared outright, and the government still needs an answer for a housing sector that’s struggling. A revolving fund can start small and be expanded if it shows early promise but (crucially) doesn't represent a large new ongoing expense for the government. Instead, the revolving fund finances its own growth from repaid loans, and only becomes a problem for the treasury if a large number of projects default on their loans; that’s not impossible but also fits under the category labelled “every idea is a bad idea if it’s done badly.”
One point worth emphasizing is that financial supports for affordable housing could potentially deliver some quick wins for a province that badly needs them, but the policy paper shows that they’re not something to pursue instead of things like zoning reform or development charge reductions. A true “all of the above” housing policy needs to include not just new money for affordable housing but also more permissive zoning and other forms of regulatory relief. The policy paper addresses this question pretty directly and finds that not even a revolving fund can save a marginal development in the face of high development charges. Further, a large share of the savings in the model come simply from time savings, and a revolving fund is only one way to achieve that — the government can also streamline approval processes to move affordable housing through the system more quickly.
The revolving fund’s proponents are going to spend the winter months sharpening their pencils and formalizing their proposal for the government’s consideration. The spring of 2026 could see some glimmers of hope for affordable housing, if this idea survives contact with the government at Queen’s Park.
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