Today’s federal budget to include funding for construction of rental apartments, though program’s impact on ‘affordable’ housing questioned

Finance Minister Chrystia Freeland’s 2024 federal government budget, which includes a $15-billion injection into the Apartment Construction Loan Program (ACLP), will be tabled in the House of Commons this afternoon.

Formerly known as the Rental Construction Financing Initiative (RCFI), the program aims to accelerate construction of new rental housing in Canada with a goal of building more than 131,000 new rental units across Canada by 2032. The extra funding had been announced prior to the delivery of the federal budget on Tuesday, April 16.

In Toronto, the ACLP program “could lead to” the addition of 17,000 new rental units, according to Mayor Olivia Chow.

Although officials say the program has granted more than $18 billion in loans to finance about 48,000 new rental units, many criticize the ACLP for failing to meet its goal as just 11,000 units have reached completion since the program’s 2017 launch.

However, Beaches-East York Liberal MP Nathaniel Erskine-Smith told Beach Metro Community News that this figure doesn’t account for the “32,000 under construction, and additional 16,000 that are now financed but don’t yet have shovels in the ground”.

“The new housing plan is serious and comprehensive,” said Erskine-Smith. “It is rightly and overwhelmingly focused on getting new housing built, protecting tenants, and ending homelessness. There’s new funding to spur rental construction, protect and build affordable housing, support the skilled trades, and expand the role of co-ops.”

Erskine-Smith said that, with this housing plan, the Liberal government is motivating other levels of government to “show ambition” by offering new infrastructure and transit funding to provinces and municipalities that “add density and welcome construction.”

In order to spur growth in Canada’s housing market, the federal government has added benchmarks provinces must meet before they can gain access to the recently announced financing.

This includes a commitment to shorten development approval timelines to 12 to 18 months, as well as building on government, non-profit, community-owned and vacant lands.

ACLP financed projects must also have at least five rental units and have a loan size of at least $1 million with aims of addressing housing market needs.

Still, the federal housing plan has been criticized by opposition parties.

“Justin Trudeau had eight years to fix the housing crisis to ensure families can find a home they can afford in the communities they love. But he disappointed Canadians by delaying measures to keep housing affordable,” said NDP critic for Housing Alexandre Boulerice in an April 12 press release.

As Canada’s largest National Housing Strategy program, the ACLP produces the least amount of affordable housing for those in need of core housing with reports indicating that only three per cent can be considered affordable.

This is due to the variety of definitions that the Canada Mortgage and Housing Corporation (CMHC) has come up with for affordable housing. According to CMHC, 20 per cent of a proposed ACLP project must provide rental options that are lower than 30 per cent of the average total income for all families for the area.

However, with CMHC’s calculations for affordability including homeowners with higher salaries than the average renter in a given area, larger units that are more expensive are considered “affordable”.

A 44-page National Housing Council sanctioned report highlights an RCFI-funded development in downtown Winnipeg that was allowed to charge $1,756 for an “affordable bachelor unit”. This was in fact 2.3 times more expensive than the average market rent for similar units.

“In some cases, new RCFI developments demolish existing low-rent units and displace low-income households,” stated the report.

Although the federal government has received criticism for the ACLP program’s failure to secure housing affordability, Erskine-Smith highlighted that “the ACLP is focused on spurring more rental construction overall, and is not targeted to low-income renters.”

“The program offers low-cost loans to get more rental housing built, to help drive down the cost of rent and level the playing field, especially for young people,” he said.

To preserve and expand Canada’s affordable housing portfolio, Erskine-Smith said the federal government relies on programs such as the Affordable Housing Fund and the Rapid Housing Initiative, “which has gotten over 15,000 affordable units built”.

On Thursday, April 4, the federal government also announced $1.5 billion for the Canada Rental Protection Fund – an initiative dedicated to preserving affordable rental housing across the nation.

East Toronto’s WoodGreen Community Services, which has been calling for the federal government to finance non-profits’ acquisition of rental housing in order to preserve Toronto’s affordable rental portfolio, issued a news release after the April 4 announcement applauding the Liberal government for taking steps to mitigating the current affordability crisis.

“This fund will provide $1 billion in loans and $470 million in contributions to non-profit organizations and community housing providers like WoodGreen,” read the news release.

Like Toronto’s MURA (Multi-Unit Residential Acquistion) Program, Canada’s Rental Protection Fund allows non-profits to purchase rental properties and ensure their “perpetual affordability”.

With the success of acquisition programs, critics argue that some of the newly announced federal funding should have been re-allocated to programs such as the Rental Protection Fund.

The 2024 federal budget will also includes $6 billion for the Canada Housing Infrastructure Fund which will upgrade water, wastewater, stormwater and solid waste infrastructure for future construction. These infrastructural upgrades are essential if Canada is to supply the additional 3.5 million units said to be needed by 2030 to restore housing affordability.

— Amarachi Amadike is a Local Journalism Initiative Reporter for Beach Metro Community News. His reporting is funded by the Government of Canada through its Local Journalism Initiative.

Amarachi Amadike, Local Journalism Initiative Reporter, Beach Metro Community News