Policymakers say the move will support the construction of hundreds of affordable homes
The City of Ottawa will waive up to $250 million in development charges, fees, and property taxes to support the construction of hundreds of affordable homes on surplus federal lands, as part of a landmark federal-municipal housing agreement.
City councillors approved the contribution during a special joint meeting of the finance and corporate services committee and the planning and housing committee at city hall on Friday.
Ottawa is the first municipality in Canada to reach an agreement with Build Canada Homes to deliver more affordable housing, mayor Mark Sutcliffe said at the opening of the meeting.
“The agreement before us today is historic. It is a game changer. We will build 3,000 new homes in Ottawa. These will be truly mixed-income communities, with the emphasis being on providing affordable and supportive housing. Well over half of these units will be lower, or significantly lower than what the market can typically provide,” Sutcliffe said.
The deal builds on a $400-million partnership between the city and the federal government, announced by prime minister Mark Carney in December, to build up to 3,000 affordable homes in Ottawa.
The plan
Build Canada Homes is a federal agency launched in September, with the mandate to scale the supply of affordable housing by leveraging public land, flexible financial tools, and modern construction methods. In February, the federal government introduced the Build Canada Homes Act, legislation that would establish the agency as a Crown corporation dedicated to building affordable housing in communities across the country.
The agreement calls for 2,000 mixed-income and affordable units on surplus federal lands, along with 1,000 additional non-market units in the city’s existing housing portfolio through Build Canada Homes financing. Of the 2,000 units, 1,200 to 1,400 would be classified as market units, while 600 to 800 would be designated as affordable housing. Build Canada Homes has identified 1495 Heron Rd. and Phase 7 of Wateridge Village as initial development sites.
The city’s $200 million to $250 million contribution comes largely through forgone revenue. Property taxes on the affordable units will be waived over 75 years, representing a projected loss of $135 million to $180 million. A further $65 million stems from exemptions on development and community benefit charges, as well as waivers on building permit and planning fees. Sutcliffe maintained the city is “not putting any cash” into the agreement and is “simply foregoing future revenue.”
City staff noted that market rental units are expected to generate between $234 million and $273 million in new property tax revenue over time. The total construction cost for the 2,000 units is estimated at $1 billion to $1.2 billion.
Concerns raised
Not all councillors supported the proposal. Coun. Jeff Leiper, chair of the planning committee, urged Sutcliffe to return to negotiations ahead of the meeting.
“Eliminating development charges, as proposed, will result in a $50-million shortfall at the City. That’s money that’s intended to build infrastructure that we need to support growth. Without it, we’ll need to delay projects or borrow more to build them,” Leiper said on his website.
Leiper also argued that property tax relief should apply only to units meeting the city’s strict affordability definition, CTV News reported. City staff acknowledged that only 300 to 400 of the designated affordable units would meet that standard, as the Build Canada Homes definition allows for higher maximum rents.
Pipeline housing
The second component of the agreement would see Build Canada Homes contribute up to $150 million in capital and low-interest financing toward 1,000 additional affordable and supportive units already in Ottawa’s pipeline. The city would contribute approximately $80 million to that component through waived fees, charges, and taxes.
