By Sonal Gupta, Local Journalism Initiative Reporter
Calgary’s decision to roll back a major housing initiative puts it at odds with the federal government, with hundreds of millions of dollars in federal grants at stake. But it’s hardly alone in walking back density commitments after pocketing the cash.
The Housing Accelerator Fund is designed to increase housing supply by helping municipalities remove barriers that limit the development of multi-unit housing, such as duplexes, triplexes and fourplexes.
But Calgary’s recent decision to roll back its blanket rezoning has become a test case for that enforcement. The city has already received about two-thirds of its $251-million accelerator fund agreement, with a third payment of roughly $64.7 million recently secured and a final payment of about $65 million still to be confirmed.
Mike Moffatt, an economist and founding director of the University of Ottawa’s Missing Middle Initiative, said the risk for Calgary lies almost entirely in the final payment.
“The federal government has been very lenient on the reductions,” he said. “If the upzoning never really stuck, the city still wouldn’t lose the money it’s already collected. Ottawa’s main lever is to withhold or reduce the final payment, not suddenly ask for a big cheque back from Calgary.”
After months of intense debate and public hearings, Calgary city council voted in early April to repeal the city’s 2024 blanket rezoning, which had allowed owners to build fourplexes and other low‑rise housing with minimal difficulty on many formerly single‑family-only lots across most of the city.
The repeal means zoning on most residential parcels will revert to the older, more restrictive low‑density rules that were in place before 2024, effectively rolling back the automatic density increases the federal government had tied to the accelerator fund. The repeal will not take effect until Aug. 4.
In an email response, the office of federal Housing Minister Gregor Robertson said Calgary has recorded some of the country’s highest housing starts per capita in recent years.
Calgary’s third payment was approved with conditions, the ministry said, citing the city’s progress so far and Mayor Jeromy Farkas’ commitment to a “more nuanced approach to land use policy” that still aligns with Calgary’s accelerator fund commitments.
But to Moffatt, Ottawa has landed itself in a politically and logistically untenable position, vulnerable to cities’ changing political winds.
Ottawa is finding it increasingly difficult to monitor and enforce the conditions attached to its housing agreements, a reality that he suggests will fundamentally colour how federal officials approach any future rounds of housing funding.
“I would be skeptical that the federal government would create a program like this again in the future,” he said.
Ottawa’s enforcement problem
Moffatt said the oversight at the core of the federal government’s predicament is that Housing Accelerator Fund agreements did not clearly set out what penalties apply when a city later changes course. That has left Ottawa to make enforcement decisions case by case. Some cities saw reduced future payments and others, including Red Deer, Alta., had their agreements terminated outright after being found repeatedly out of line with multiple key clauses.
Moffatt said Calgary is not setting a new precedent but following one. In Markham, Ont., a suburb of Toronto, Ottawa cut the third installment of funding by 50 per cent after the city failed to follow through on a zoning change that would have allowed up to four units on a single lot without going to the city for approval. Moffatt sees a lot in common with Calgary’s case.
“You can kind of swap out Markham’s name and plug in Calgary,” Moffatt said.
In Markham, Ottawa reduced the third installment after Mayor Frank Scarpitti moved to cancel a planned zoning change that was part of the city’s Housing Accelerator Fund agreement. The case added to Moffatt’s concerns that cities were becoming more willing to walk back housing reforms after seeing relatively limited consequences elsewhere, including Toronto, where the city council rejected citywide sixplex zoning reforms, facing only a $10 million cut from the $471 million federal fund — about a two per cent reduction.
“I don’t think the federal government is in a position to suddenly start imposing very strict penalties when they’ve been much more lenient on other communities in Ontario. If Calgary were to be treated more harshly, the federal government would effectively be lying in the bed they’ve made for themselves,” Moffatt said.
Critics say Calgary’s move to scrap its blanket-rezoning bylaw breaks the good-faith spirit of the federal fund.
Brent Toderian, former city planner for Calgary and Vancouver and head of TODERIAN UrbanWORKS sees Calgary’s move as a major reputational and strategic setback for the city. The policy, initially designed to increase housing density and curb suburban sprawl, was a core component of Calgary’s agreement to secure federal funding. By abandoning these reforms, he said the city council has not only broken a critical commitment to the federal government but has also engaged in “bad faith” politics.
He said that regardless of the exact wording of the accelerator fund agreement, the federal government holds both a political and moral responsibility to deliver a firm and clear response to cities that renege on their commitments, lest they undermine the success of the entire program.
“The federal government has an obligation to not just shrug their shoulders, and admit they should’ve done a better job in the agreement structure,” he said.
Ottawa needs to make it clear that cities cannot treat federal housing agreements as one‑way bets where they take the money, promise to build denser housing more quickly and then roll back those changes without serious consequences, he said.
He added municipalities that make changes to reforms they willingly agreed to should be told those decisions will affect their eligibility for future federal funding programs.
“Otherwise, they are sending the message that gaming the system, and essentially cheating other Canadian cities who acted in good faith, will be permitted.”
The city that played by the rules
Cities like Windsor, Ont., which turned down federal money to avoid forced upzoning, feel slighted watching Calgary’s case, Moffatt said.
Windsor Mayor Drew Dilkens said his city initially submitted a density plan based on the original terms of the program, focusing on transit corridors, mixed use nodes and commercial centres. But Windsor later opted out after Ottawa changed its requirements and insisted on allowing fourplexes across residential areas.
Dilkens alleged that one of local MPs, a Liberal at the time, suggested the city did not need to play it straight. He said he was told the city could just apply, go through the motions, collect the money and then, if the zoning proved unpopular, change it back.
He refused, calling the idea a “shell game” that would rile up residents by letting them believe their neighbourhoods were being sold out before quietly reverting to the old rules.
Dilkens said watching Calgary’s case made it feel as though the federal program was designed for cities willing to play the game. He pointed to communities like Tecumseh, Ont., which received federal funding and later backed away from key zoning changes, but was still allowed to keep the money already paid out.
“For honest brokers like us who are actually trying to help solve the issue, who actually are just forthright and saying we don’t want that but we still need infrastructure money… it’s frustrating watching money go to communities that didn’t ultimately get there,” he said.
Windsor could have used the funds to waive development charges citywide, incentivizing thousands of new housing units while still ensuring the development charge account was replenished and growth continued to pay for growth, he said.
Dilkens added the federal government should set a clear target for how much housing a city needs to add, then give municipalities the freedom to propose their own plan for meeting that goal while accounting for their local conditions and community concerns.
”Then hold us accountable … if we’re not doing what we say we’re going to do, so be it.”
Sonal Gupta / Local Journalism Initiative / Canada’s National Observer.
