Housing starts up in Ontario but towns say they’ve missed out on millions of dollars

Ontario’s housing construction sector saw a glimmer of good news in May as the province saw an uptick in homes being built, even as municipalities complain that the agency responsible for keeping track of the data is undercounting new builds.

The latest data, collected by the Canada Mortgage and Housing Corporation (CMHC), shows a 23-per cent increase in homes under construction in May in Ontario cities with a population size of 10,000 or higher, compared to the same time last year.

Developers broke ground on 7,062 new projects last month, compared to 5,722 in May 2023, according to the CMHC, the bulk of which were multi-residential units compared to the typical single-family homes built in the province.

While the overall figures — 30,311 housing starts in 2024 — is still down by six per cent compared to 2023, the surge in housing starts comes as welcome news to a province looking to add 1.5 million new homes by 2031.

Exactly how that data is measured, however, is a point of contention.

Several Ontario towns and cities say they missed out on millions of dollars each in provincial funding not because CMHC failed to count new housing starts properly, robbing them of grant funding.

The complaints about lost money are related to a bonus system introduced by the Ford government for towns and cities that hit their housing targets.

The Building Faster Fund (BFF), the provincial bonus pot, was launched in 2023. It gave money to those that achieved 80 per cent or more of their goals, measured by the number of housing starts, long-term care beds and secondary units like basements within a year were rewarded with a cash injection.

Some towns and cities are concerned that the system doesn’t quite work as it should, accusing the federal agency CMHC of failing to include all the new homes that developers have started to build.

Ajax, Ont., was one of several municipalities that thought they had hit their targets and were in line for funding, only to find out the federal CMHC did not agree.

“I got a not very nice letter from the province advising me that we didn’t meet our targets and we weren’t getting our $4 million BFF funding,” Ajax Mayor Shaun Collier said during a May council meeting.

Town officials believe Ajax built 90 per cent of its 1,247 housing unit goal. The data from CMHC, however, said it had built just 64 per cent. The town said the federal agency failed to count a 324-unit apartment building “which shares a foundation with another unit which was counted.”

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“We did reach 90 per cent,” Collier said. “It was because CMHC can’t count that they listed it as 64 per cent… the cost of that miscount by the federal government cost us $4 million.”

A motion recently passed by Ontario’s Big City Mayors called on CMHC and the province to “course correct and restate the accurate housing start numbers” for 2023, along with a demand to revisit the funding handed out.

It also asked the province to consider basing future BFF money on permits that have been issued and not the number of homes started.

Clarington, Ont., was another town that was confident it had hit its housing targets. Despite its optimism, it also got a letter from Housing Minister Paul Calandra saying it had failed.

Mayor Adrian Foster told Global News that CMHC’s tracking and verification methods led to an undercount.

“They drive around and they decide if something is in or (if) something is out,” he said.

“In our case, a number of units — where we have not only building permits but inspections being done, there is no question that these units were moving forward — weren’t counted.”

The Town of Clarington said it missed out on $4 million of BFF money, representing roughly five per cent of its annual $77 million budget.

“We are not able to comment on our interactions with municipalities, but we would encourage Clarington to reach out to CMHC directly,” a spokesperson for the federal agency said.

“CMHC stands by its numbers and methodology as it relates to the (starts and completions survey). As part of our data-collection process, we work with all municipalities, including Clarington to produce the most accurate and objective data based on our methodology. We are confident in the data produced.”

The mistake, Mayor Foster said, is difficult to comprehend.

The town had completed several inspections on the units that weren’t counted, including inspections of the case footings going into the project.

“To our mind, it is black and white; there’s s not a lot of grey here,” he said.

“So in our case, not only do we have the permits but we have got the building inspections… there are documents signed, there are documents dated, that seems pretty straightforward and easy path from a to b.”

The Town of Cambridge is also concerned that it was undercounted and missed out on potential funds.

Cambridge deputy city manager Hardy Bromberg told Global News his city was in discussions with the province over the issue.

“There is some discrepancy, they recognize that, and I am very grateful through the mayor’s efforts and her contacts at the province (that) the province is willing to look at these numbers,” he said.

“I know we are working with the province in terms of reviewing these numbers and, again, hopefully, there’s a better outcome for our community.”

Housing Minister Calandra recently admitted he was aware of issues with how CMHC measured its data.

Speaking at a legislative committee, he said the province has “got to do a better job collecting data” related to housing and affordable housing.

“As we’ve heard through some of the criticism of the BFF funding and how CMHC tracks shovels in the ground, I think we also need to do a better job of how we accumulate that data from our municipal partners,” Calandra said.

“We don’t have a tool right now that allows me to go in and say, ‘This is what you’re actually doing.’ And I think our municipal partners would like that as well.”

Despite the promise to listen from Queen’s Park, frustration remains among the municipalities that missed out on a chunk of money they’re confident they should have received.

“The end result is that Ajax residents are missing out on $4M that could be put towards housing enabling infrastructure,” the Town of Ajax said.