Hamilton hits provincial housing target. But anticipated $12-million payout 'falls short' of funding losses: officials

Hamilton achieved 3,347 housing starts -- when construction on homes begins -- compared to the annual target, 3,447.

Thespec.com
Jan. 30, 2024
Taviah Moro

Hamilton stands to land $12 million in funding after hitting provincial housing targets last year, but that still won't fill a local fiscal gap caused by other legislation, city officials say.

To receive their share of the Building Faster Fund, municipalities must hit at least 80 per cent of their provincially mandated housing goals.

“We overqualified,” Jason Thorne, the city's general manager of economic development and planning, told council during a recent budget presentation.

Hamilton achieved 3,347 housing starts -- when construction on homes begins -- compared to the annual target, 3,447, or nearly 100 per cent of the mark.

That's according to Canada Mortgage and Housing Corporation (CMHC) data posted on the province's online “housing tracker.”

The Ontario government “will begin to roll out” the Building Faster Fund allocations to municipalities that have hit or surpassed their targets “in the coming months,” Bianca Meta, spokesperson for the Minister of Municipal Affairs and Housing, said via email.

New homes
In 2023, the city issued permits for 4,263 units compared to 3,347 actual housing starts, markers that were both “just shy” of records, Jason Thorne, the city's general manager of economic development and planning, noted.

Cathie Coward
The Building Faster Fund, which is to provide $400 million in “new annual funding” for three years, springs from Premier Doug Ford's government's goal to add 1.5 million homes to Ontario's supply by 2031. Hamilton's target is 47,000 units.

The initiative has been met by criticism from municipal leaders, including in Hamilton, who say they're able to approve development applications, but can't force developers to actually start construction.

For instance, in 2023, the city issued permits for 4,263 units compared to the 3,347 actual starts, markers that were both “just shy” of records, Thorne noted.

Overall, it was a “pretty extraordinary year,” he said, noting a record-setting $2.5 billion in construction activity in Hamilton, which erased the previous high-water mark of $1.2 billion.

However, the city expects a dip in development-generated revenues in 2024 as the pace of applications starts to slow.

Thorne pointed to a number of factors, including “some general uncertainty” as developers see a drop in sales across all housing types.

“Their borrowing costs are up, their construction costs are up. The skilled-labour shortage is also an impact on them.”

One high-profile example of the retreating market revealed itself in December, when the firm behind the redevelopment of the downtown Hamilton City Centre mall into highrise condos announced the project was “on pause.”

CITY CENTRE
In December, the firm behind the redevelopment of Hamilton City Centre on James Street North announced the project was “on pause.”

John Rennison Spectator file photo
“The real estate market has fallen off a cliff,” IN8 Developments president Darryl Firsten told The Spectator. “But it’ll come back, there is still a lot of demand to live in downtown Hamilton.”

Amid this “cooling,” the hope is that in 2025 development applications will “start to rebound,” Thorne told council Friday.

Meanwhile, city officials have lamented the upshot of Bill 23, which lowers the revenue municipalities can draw from development charges through exemptions, reductions and phase-ins.

Cities rely on development charges to help pay for growth-related infrastructure, such as sewer lines, recreation centres and firehalls.

The Building Faster Fund is meant to make “the municipality whole,” but its anticipated $12-million payout falls short of the roughly $35 million the city is losing through Bill 23, finance boss Mike Zegarac told council during budget talks.

ZEGARAC
Mike Zegarac, general manager of finances and corporate services, says the city is losing roughly $35 million through Bill 23.

John Rennison Spectator file photo
“So, we'll be made whole by a third,” Coun. Brad Clark responded. “So somebody ate the other two-thirds of the pie.”

That gap is “being absorbed by local taxpayers and ratepayers,” Zegarac noted.

Another consideration is that the city hasn't yet seen detailed criteria that guides how it must direct the funding, whether it's to make up for exemptions or other areas, he added.

CLARK
“So we'll be made whole by a third,” Coun. Brad Clark said during Friday budget talks.