Ontario Signals Overhaul to Building Faster Fund, Tying Funding to Municipal Housing Performance
Province Aims to Sharpen Incentives as it Pushes Municipalities to Meet Ambitious Housing Targets
TORONTO – The Ontario government is signaling a significant shift in the operation of its $1.2 billion Building Faster Fund (BFF), a key financial incentive designed to encourage municipalities to meet their aggressive housing construction goals. The changes suggest a move towards a more stringent, performance-based model that will directly tie provincial funding to the number of shovels actually in the ground.
The fund, launched in August 2023, is a central pillar of the province’s plan to build 1.5 million new homes by 2031. It rewards municipalities that reach at least 80% of their annual provincially assigned housing target with a portion of the fund.
The Current Model and the Proposed Shift
Under the current structure, the BFF has three tiers of funding:
- Target: Municipalities that hit 80%+ of their target get a bonus payment.
- High Achiever: Those that exceed their target by large margins are eligible for additional funds.
- Baseline: All 50 eligible municipalities receive a per-capita-based share of the fund, regardless of their performance, simply for making progress on pre-identified “priority initiatives.”
It is this “baseline” funding that the province is now targeting for change. In recent communications, government officials have indicated that this blanket funding may be restructured to ensure every dollar is directly incentivizing housing starts.
Driving the Message Home: “No Free Money”
The proposed overhaul sends a clear message to municipal leaders: the province expects concrete results. The changes are likely intended to:
- Increase Accountability: By making a larger portion of the fund purely performance-dependent, the province is putting more pressure on municipalities to streamline approval processes, remove barriers, and actively enable development.
- Sharpen the Incentive: The government believes tying funding directly to housing starts will create a stronger motivation for cities and towns to hit their targets than the current model, which provides some guaranteed baseline money.
- Address Criticism: The BFF has faced some criticism for its complexity and for providing funds to municipalities that are not on track to meet their goals. Restructuring the fund would directly address these concerns.
Municipal Concerns and the “Tools” Argument
Municipalities, through organizations like the Association of Municipalities of Ontario (AMO), have consistently argued that they need more than just incentives; they need the “tools” to get housing built. Their frequent requests include:
- Funding for Infrastructure: A plea for provincial and federal help to pay for the critical water, sewer, and road infrastructure needed to support new housing.
- Reform of the Ontario Land Tribunal (OLT): To reduce lengthy delays that stall projects for years.
- Clarity and Consistency: Municipalities have expressed frustration with frequent provincial policy changes, such as alterations to official plans and greenbelt boundaries, which they say create uncertainty and slow down planning.
What’s Next?
The government has not yet released specific details on what the new funding formula will look like. An announcement with concrete changes is expected in the coming months.
The move is likely to be welcomed by developers and housing advocates who argue that stronger accountability is needed. However, it may heighten tensions with municipalities who feel they are being held accountable for housing starts while facing significant financial pressures and infrastructure deficits.
This potential overhaul underscores the province’s determination to use every lever at its disposal—including significant financial incentives—to push its ambitious housing agenda forward and hold its municipal partners firmly to their commitments.