City says it can't meet affordable housing targets without more help

UPDATE: Ottawa city councillors approved the long-range financial plan for housing and changes to the vacant unit tax at their meeting on Nov. 13, 2024. 

The City of Ottawa will not meet its long-term targets for building new affordable housing without "significant new, enhanced and continued support" from higher levels of government, finance staff reported on Wednesday. 

Councillors set a target of creating 500 new affordable housing units per year — but have so far not reached that goal even once. 

After the plan was approved in 2021, Ottawa's economic and social situation changed dramatically. 

An increase in construction costs and financing rates has slowed the pace of building, while an influx of asylum seekers has put unprecedented stress on the shelter system, staff outlined in their report. 

That's created a $931-million hole that staff believe can only be filled by the federal and provincial governments.

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"It's an ambitious plan," said Kitchisippi Coun. Jeff Leiper, who chairs council's planning and housing committee.

"I hope that those other levels of government are watching ... and hopefully have the ambition to match that with the scale that only those other levels of government can bring to the table."

'Giant hole' to fill

Between 19 and 222 units were created each year between 2020 and 2023, with the city set to fall short again in 2024 with 393 new homes. 

The cost of building affordable housing has gone up by more than 150 per cent, staff suggest. Building 500 units required about $56.5 million of equity in 2021, but is projected to cost $142.2 million next year. 

Councillors at Wednesday's joint meeting of the planning and finance and corporate services committees expressed frustration with the situation, which also affects funding for supportive housing to help people transition from homelessness. 

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"To have to go cap-in-hand to other levels of government to solve these massive problems that are rooted in poor federal and provincial decision-making is really, really frustrating," said Somerset Coun. Ariel Troster. 

"We don't have a funding source," she said. "We have a giant hole in our budget." 

Part of the city's plan to address the crisis include relying on the federal interim housing assistance program, which has so far reimbursed the city $48.2 million for temporarily housing those claiming asylum. 

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The city has also leased or purchased three properties for transitional housing, with an aim to add two more facilities for families and up to 20 single-family homes scattered across the city.

Key is two already controversial reception centres, for which funding negotiations continue. The plans should also allow the city to reopen community centres that became makeshift shelters during the pandemic.

Existing funding could be at risk

The city has secured tens of millions of dollars in funding from the federal and provincial governments to address the rise in homelessness and housing crisis since 2021 — none of which was nailed down when the plan was created.

But the number of dollars has varied wildly year-to-year in a way that staff said makes it hard to plan ahead.

Add to that the need to meet aggressive building targets to hold onto the federal Housing Accelerator Fund and the provincial Building Faster Fund. That's why the city said it needs to focus on creating new homes. 

"There is a significant supply gap in the city of Ottawa. We see that in vacancy rates. We see that in rental rates," said Debbie Stewart, general manager of the strategic initiatives department.

"There's significant funding that is at risk from other levels of governments if we're not achieving aggressive targets when it comes to building permits and new affordable housing units." 

Lauren Reeves, manager of affordable housing, told CBC the city is on track to meet the annual federal target of issuing permits for 12,500 new dwellings. 

Ontario's goals require private developers to put shovels in the ground, which Reeves said is more difficult to predict. 

The province's tracker said Ottawa was at 32.6 per cent of its goal for new housing starts as of August — putting it at risk of being left out of even the partial funding unlocked at the 80 per cent mark. 

Ottawa Morning7:57City falling behind on its 2030 affordable housing goals

A council committee will review its 2024 Affordable Housing strategy today, which reveals how the City of Ottawa has fallen behind on its annual targets.

Builders need to build

Leiper told CBC the city can only do what's in its power and the rest is up to the industry. 

"There are tens of thousands of potential units [approved] in greenfields, in infills, right across the city where the private sector builders have not put a shovel in the ground," he said. "It's time for builders to build."

Troster and Leiper also expressed concerns about Conservative Leader Pierre Poilievre's recent announcement that he would cut the Housing Accelerator Fund if elected. 

When asked about the possibility, Stewart noted that the federal government can renege on the deal at any time. 

"That's just the nature of government," Mayor Mark Sutcliffe told CBC when asked if he felt similar frustrations. "Even when we sign a long-term deal for five years worth of funding, it has to go through the budget every year. I think we're always ready to adapt." 

The new long-range financial plan also relies on continued, and increasing, funding from the city — including through the vacant unit tax. A proposed change to increase the tax for units that remain empty for consecutive years could be approved by council next week.

If that's approved, it could result in several million dollars more annually for affordable housing.