How Should Canada’s Cities Use the Housing Accelerator Fund?
(Source: Flickr/Eric Sehr.)
A new federal housing program in Canada is being touted as a game-changer for the country with some of the highest housing costs in the world.
The Housing Accelerator Fund (HAF) is a grant program that will inject $4 billion into Canada’s cities and towns by 2026–2027. Its intent: to use the power of the purse to incentivize cities to loosen zoning, conduct other regulatory reforms, and otherwise plan and lay the groundwork for lots of new homes. Cities apply for the money and must offer a credible plan to increase housing production to a target that exceeds the city’s average annual rate of growth by at least 10%.
According to former Vancouver Chief Planner Brent Toderian, the federal government is making clear it wants action, not talk. Toderian wrote on X, formerly known as Twitter, that the “federal housing minister’s letters are landing like meteors in city halls across the country, bluntly confirming where applications don’t go far enough & outlining what else cities have to do to get the funding.”
If you’re interested in housing policy, the Trudeau Govt’s Federal Housing Accelerator Fund is shaping up to potentially be the most impactful housing policy in Canadian history. Municipalities across the country are rapidly transforming local housing policy to access the funds. https://t.co/LdVFh9hco0
— Brent Toderian (@BrentToderian) October 21, 2023
Toderian predicts that the HAF will incite a wave of needed zoning reforms, unlocking missing-middle housing throughout Canada as municipalities vie to access the money.
The HAF is an interesting mix of centralized power and bottom-up planning. Ottawa sets the goal, but there is significant local discretion in how to achieve it, as long as what you’re doing is plausibly impactful. Cities must present an action plan with at least seven different initiatives to grow housing supply and speed up housing approvals. And they must do an assessment of their housing needs and document progress toward targets.
Already, Brampton, Ontario, has received $114 million; Hamilton has received $93 million; and Halifax, Nova Scotia, has received $79 million. These cities all have plans including altering zoning, allowing more housing near transit, speeding up permitting processes, and other reforms. Dozens more cities are applying for the money.
The goal is to help Canadian cities build 100,000 more homes than would otherwise have been built. If this target is reached, this amounts to a not-insignificant federal subsidy of $40,000 per home.
Using One-Time Money Well
The thing about a program like this is that there are a lot of ways to use the money well, and a lot of ways to use it poorly. The list of possible policies eligible for HAF funding is extremely open ended, and consists of:
Investments in Housing Accelerator Fund Action Plans
Any initiative included in the proponent’s action plan and approved by CMHC.
Investments in Affordable Housing
Construction of affordable housing.
Repair or modernization of affordable housing.
Land or building acquisition for affordable housing.
Investments in Housing-related Infrastructure
Drinking water infrastructure that supports housing.
Wastewater infrastructure that supports housing.
Solid waste management that supports housing.
Public transit that supports housing.
Community energy systems that support housing.
Disaster mitigation that supports housing.
Brownfield redevelopment that supports housing.
Broadband and connectivity that supports housing.
Capacity building that supports housing.
Site preparation for housing developments.
Investments in Community-Related Infrastructure That Supports Housing
Local roads and bridges.
Sidewalks, lighting, bicycle lanes.
Firehalls.
Landscaping and green space.
The top “Action Plans” category itself encompasses a huge list of possible policies including zoning and permitting reforms, incentive programs, and public-private partnerships. Innovation is encouraged. There’s a lot that’s worth doing in that realm.
It’s the stuff later down the list—“investments” in physical infrastructure—that starts to give me a queasy feeling that we’re going to see cities use this money in ways that undermine their prosperity.
Extending infrastructure to support housing, doing site preparation for greenfield land on the edge of a town: these are things that might induce the building of homes. They are also things that could easily worsen the long-term financial position of cities and towns that are already struggling with insolvency. Canada, like the United States, is decades into the Growth Ponzi Scheme model of development, in which cities take on permanent liabilities in the form of public infrastructure to support development that then fails to cover its own costs.
And we call it “investment.” There is little track record of being rigorous about doing the long-term accounting with new development under normal circumstances. How rigorous will cities be when it’s Ottawa’s money?
I am not being a naysayer here about the transformative potential or value of the HAF, or the depth of Canada’s housing crisis. I am saying that there are two paths a city can pursue, one of which will be very productive and potentially game changing, and one of which will likely be harmful.
The good: Use the Housing Accelerator Fund as an opportunity to truly accelerate—shift housing production into a permanently higher gear by making structural reforms to what it takes to build in your community.
The bad: Use the HAF as a source of one-time subsidy for development that would not be viable or financially productive on its own.
Dos and Don’ts
There is going to be a lot of local nuance to the conversation about how to prepare a HAF proposal and what to emphasize in any given community. Here is some broad conceptual guidance for local leaders trying to work through this, in the form of two Don’ts and two Dos.
Don’t use one-time money to take on recurring liabilities.
Roads, drinking, and wastewater infrastructure: these things are not a one-time gift you get to give to open up more land for housing. They are maintenance obligations you assume in perpetuity. There is almost no city in Canada that should even be considering subsidizing new greenfield subdivisions. Not until you’ve done everything you can (and I promise, you haven’t) to unlock the potential of infill development in areas already served by infrastructure.
Don’t use it to achieve a one-time effect.
Reducing private developers’ costs by doing, for example, site preparation, might bring a slightly cheaper housing unit to market. Over time, the impact of that will be swallowed up by the market forces that drive the prices of existing homes. This is an ineffectual use of a one-time grant of outside money. In the worst cases, you will be subsidizing development that would have been viable without subsidy.
Do look for large multiplier effects.
The goal here is to spend the money in ways that pay the community back many times over. A number of Canadian cities have already announced that they will be exploring pre-approved building plans as part of their HAF proposals. These are an excellent idea: once you have invested in that intellectual property, you have something that can continually smooth the process and reduce the costs of infill development, for almost no marginal cost. Think design contests resulting in such plan templates. Think proof-of-concept. There is a lot of room to get creative with policies or initiatives that will unlock a door that will then stay unlocked.
Do look for opportunities to permanently change the way housing is built in your community.
In every Canadian city, there are opportunities to build more housing in existing neighborhoods, thickening up the prosperity and vitality of your community while meeting growing housing needs. And in every Canadian city, there are regulatory and procedural obstacles to that housing. Focus your action plan on fixing your zoning. Fix your permitting process: identify bottlenecks and eliminate delays. Make sure your local small developer community is in the room for these conversations, and that you understand what obstacles prevent them from getting to building. The HAF is a great one-time opportunity to permanently remove roadblocks to financially productive and badly needed infill development.
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Daniel Herriges has been a regular contributor to Strong Towns since 2015 and is a founding member of the Strong Towns movement. He is the co-author of Escaping the Housing Trap: The Strong Towns Response to the Housing Crisis, with Charles Marohn. Daniel now works as the Policy Director at the Parking Reform Network, an organization which seeks to accelerate the reform of harmful parking policies by educating the public about these policies and serving as a connecting hub for advocates and policy makers. Daniel’s work reflects a lifelong fascination with cities and how they work. When he’s not perusing maps (for work or pleasure), he can be found exploring out-of-the-way neighborhoods on foot or bicycle. Daniel has lived in Northern California and Southwest Florida, and he now resides back in his hometown of St. Paul, Minnesota, along with his wife and two children. Daniel has a Masters in Urban and Regional Planning from the University of Minnesota.