Toronto is officially breaking an agreement with the federal government, and it could cost the city something like $30 million dollars — potentially more, if the feds get really cranky. These are the consequences of the suburban, primarily conservative majority of city councillors voting late in June not to expand building permissions across the city, as Toronto had previously agreed to.
At its meeting on June 25, city council debated the motion to approve sixplexes in all parts of the city, which had been approved by the planning and housing committee earlier in the month. That in turn had built on more than a year of work by council and staff to meet commitments made under the Housing Accelerator Fund, a $4 billion federal program bribing encouraging cities to streamline approvals for new homes to be built. Toronto is in line to receive nearly $120 million this year for the commitments it had made — among them, an explicit commitment to allow “permissions for residential units for up to six dwelling units.”
The debate was depressing in a way that’s extremely familiar to longtime council-watchers. Despite the HAF agreement being signed and announced back in December of 2023, some councillors denied that the sixplex item was part of the agreement and expressed disbelief when planning and housing committee chair Gord Perks reminded them that it was. Many of them seemed to be learning substantial facts that have been in the public domain for many months, live on camera. For additional reference, staff produced a letter from the then-federal housing minister Nate Erskine-Smith, dated March 11 of this year, insisting that the city needed to meet its commitment on this item by June 30, 2025.
In the March letter, Erskine-Smith added for ominous emphasis: “As we work to ensure compliance with over 200 HAF agreements across Canada, we are establishing consequences for non-compliance. In this case, if Toronto does not fully implement the above initiatives and milestones by the newly extended timeline, the federal government will cut funding equivalent to 25% of the annual payment.” That’s just shy of $30 million.
Council did not, in its June meeting, allow sixplexes citywide. Instead, it clarified some rules around fourplexes and maintained their permissions citywide, but sixplexes were only legalized in the central Toronto-East York district and Scarborough’s Ward 23 (represented by Jamaal Myers, a genuine outlier among the city’s suburban councillors who has welcomed intensification in his part of the city).
There are some legal questions one can raise about what the city actually agreed to in its HAF agreement: Milestone 3 requires the city to “permit more low-rise, multi-unit housing development through as-of-right zoning by-laws in Neighbourhoods across Toronto, including permissions for four-storey multi-unit residential development, including multiplexes”, and, separately, allow for sixplex permissions. Is the city then required to allow sixplexes city-wide? Or is the current status quo, with fourplexes allowed across Toronto and sixplexes allowed in the central district (plus Ward 23) compliant?
Perks warned councillors that they’re putting HAF funding at risk by voting for the half-a-loaf motion he introduced to stave off outright defeat at the hands of a recalcitrant, exclusionary majority on council. He also alleged (without naming anyone in particular) that some federal Liberal MPs have been telling suburban city councillors that the sixplex vote is not, in fact, required as part of their agreement with the feds.
Which brings us to the question of what Ottawa will do in response to Toronto’s vote. Arguably the city is in breach twice: once for curtailing sixplex permissions and again for not legalizing four-storey buildings. The city’s excuse is that the provincial building code hasn’t been updated to make four-storey buildings feasible either; Ottawa would be within its rights to say that the city is responsible for the zoning rules within its power and a deal’s a deal.
There’s more than one reason why the feds might hold their fire. First of all, the minister who fired a warning shot across Toronto’s bow in March is no longer in cabinet. Erskine-Smith was replaced as housing minister by Vancouver’s Gregor Robertson after the recent election. That election didn’t return a Liberal majority, and the government of Mark Carney might be cautious about picking a fight it doesn’t need. Erskine-Smith may not be minister, but his letter implied something that’s still undeniably true: this isn’t just about Toronto. Many other cities have HAF funding, and if Canada wants to start bringing the hammer down, it has the potential to generate backlash not just in suburban Toronto but across the country.
For its part, a spokesperson for the housing minister told TVO Today in an emailed statement that, “The Housing Accelerator Fund rewards ambitious housing initiatives from local governments, with a focus on reducing bureaucracy, zoning restrictions, and other red tape. We are working closely with the City of Toronto to meet these goals.”
The alternative might be even more of a nightmare for the Carney government: if it lets Toronto be seen to flaunt its commitments under HAF and get away with it, it will have a hard time convincing councils around the country to take it seriously. The feds could very well watch their credibility and effectiveness on one of the single most important policy files of their government evaporate.
If something is needed to tip the balance, we should remember that allowing sixplexes citywide is good policy and entrenching suburban exclusion is both technocratically and morally indefensible. Carney should tell his Toronto MPs to stop undermining his government and Robertson should give Toronto one more chance to get this vote right and announce that if they don’t, this year’s HAF allocation will be $30 million short.
For her part, Mayor Olivia Chow has been reticent to use the strong-mayor powers available to her, but she doesn’t necessarily have to use an outright veto of a council majority. Because of the financial sums involved, she can call a special meeting of council and present councillors a clear choice: either accept sixplexes citywide or accept the mid-year property tax increase required to fill the budget hole their exclusionary politics would otherwise create. The mayor can use her budgetary powers (including vetoing any bad-faith amendments) to force some clarity in a debate where bad actors prefer to obfuscate: in short, to demand that suburban councillors put their money where their mouths are.
A majority on council might still choose to keep their parts of the city frozen in amber even at the cost of tens of millions of dollars, but the federal government would have warned other cities not to mess around.
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