Now, the federal government has threatened to strip funding from Toronto. The city needs to do better in its housing development strategies to prevent these fiscal cuts. Opposition to the warning stems from a larger Memorandum of Understanding signed between Toronto and the federal government in late 2023. The agreement deals with our housing crisis by producing almost 12,000 more housing units during the next three years. It is getting unprecedented support with $471 million in federal housing dollars through the Housing Accelerator Fund.
The Housing Accelerator Fund is meant to be a tool for Ottawa to use to pressure Canada’s biggest cities to increase housing production. Toronto Mayor Olivia Chow has been at the front of this recent push. This follows the city council’s earlier decision to place strict limitations on where developers are allowed to build up to six housing units on a single lot. This decision has raised alarm bells. Many residents feared the city was not on track to achieve the ambitious targets outlined in the city’s memorandum of understanding with Ottawa.
Warnings from Federal Officials
On March 11, former housing minister Nate Erskine-Smith cautioned that Toronto could lose up to 25 percent of its funding if it fails to increase housing density effectively. This message highlights the urgency for the city to align its policies with the commitments made under the Housing Accelerator Fund.
In Ontario, Municipal Affairs and Housing Minister Nate Robertson voiced his disappointment in follow-up messages. He admonished members of the city council for imposing restrictions on housing construction. In a third letter to then Mayor Chow in July 2025, he doubled down on his criticisms.
“As previously stated, I will underscore the possibility of reduced funding if the City of Toronto does not present solutions that ensure the spirit of the agreement is met,” – Nate Robertson
Robertson cautions that we need to remain focused on the spirit of the initial agreement. These goals are extremely important not just for getting federal assistance, but for addressing local housing needs.
Steps Toward Resolution
In an effort to resolve these urgent concerns, last month, City Council in Toronto made a somewhat unusual compromise. Under this plan, some wards in the city will be implementing the new sixplex framework. Additional sessions are still to come, allowing more people to participate down the line. This practice attempts to achieve the right balance between meeting urgent development priorities and respecting local communities’ fears of added density disrupting their community character.
Robertson has already called for a quick end to this standoff before December 20. It’s an important alternative proposal, one that urges Toronto’s new leadership to consider steps that really would address the root of the chronic housing crisis.
“I encourage the City of Toronto to revisit the measures they could implement to address the housing crisis and to restore the ambitious scope of this agreement,” – Nate Robertson
This call for action reflects a shared urgency among federal and provincial officials to ensure that Toronto meets its housing commitments.
The Path Ahead
As these conversations progress, it’s ever more important that Toronto not fumble its housing policy game. The city’s decisions will not only impact its funding but its ability to provide adequate housing solutions for residents facing increasing demand. It’s clear municipal and federal leaders are stepping up together to change the game in Toronto’s housing scene. Their partnership is going to be extremely important in the years to come.
