City being ‘shortchanged’ by Building Faster Fund

The City of Markham fears it’s being “shut out” of up to $15 million in provincial funds because of what it calls a “critical flaw” in one of the measures of the provincial government’s Building Faster Fund methodology.

The City issued a record number of 4,216 permits for housing units last year, significantly exceeding the provincial housing target of 3,667 housing units but says the Canada Mortgage and Housing Corporation (CMHC) recognized just 1,825 housing starts.

“Markham has proven that we can process housing applications and building permits quickly,” says Mayor Frank Scarpitti. “However, the province’s current methodology for counting housing starts is shortchanging municipalities like ours. Issuing a building permit is the last step we’re responsible for in order to start the construction of a new home. The province should be counting the building permits we issue towards our housing goal.”

The City of Markham signed a Municipal Housing Pledge in 2023, committing to work with the provincial government to build more housing. The province introduced the Building Faster Fund, a three-year, $1.2-billion program to help municipalities meet or exceed their housing targets to be used for housing enabling infrastructure and costs to support community growth.

Since then, Markham says it has taken “bold steps” to streamline the approvals process, including working closely with the development industry to find efficiencies in the planning process. The City has also updated its processes in response to the More Homes for Everyone Act, 2022 (Bill 109) and the More Homes Built Faster Act, 2022 (Bill 23).

Despite those efforts and a record number of building permits, Markham expects it will be shut out of “much-needed” provincial funds of up to $15 million for 2024. The City is criticizing the current methodology used by the Building Faster Fund to determine funding eligibility as “fundamentally flawed.” CMHC housing starts are measured when the building’s foundation is completed, which can be many months or even years after the city issues a building permit, it explains. That delay is “particularly problematic” for high-density developments, which take longer to build but yield a higher number of units.

Municipalities have limited control over market forces and business decisions of the development and building industry, which determine when to start construction of new housing units., the City notes. “We are concerned that our housing start results won’t be recognized by the province,” says Scarpitti. “For example, CMHC only recognizes a condo when the parking garage is built to ground level. The city’s approval work is only reflected years later when the structure is built past the ground level.”

While the City says it “appreciates” the provincial government’s commitment to partner with municipalities to facilitate the construction of more housing, it maintains it’s “crucial” the methodology for counting housing starts be revised to ensure municipalities like Markham receive the funding to which they’re entitled.

“We’ve done our part, now we expect the Province to do their part,” Scarpitti says. “Our City has proven that we’re doing what we need to do to deliver more housing.”