Thunder Bay council to consider development incentives as city works toward housing targets

Now that the City of Thunder Bay has secured money through the federal government's Housing Accelerator Fund (HAF), it's time for council to decide how to spend it.

City staff are presenting three reports to council next week, with recommendations to:

1. Approve a funding allocation plan.
2. Approve an affordable rental housing funding program.
3. Activate the city's existing construction assistance grant program.

Though the city applied for $45.6 million, it's been approved to access up to $20.7 million through the housing accelerator program.

The city entered a contribution agreement with Canada Mortgage and Housing Corporation (CMHC) in February thatoutlines the terms and conditions of the funding, the city's approved action planand its growth targets.

Prime Minister Justin Trudeau visited the city at the end of February to make the announcement,which the government says will help fast track more than 600 new units over the next three years.

It's part of Ottawa's broader plan to spurthe construction of more than 6,500 homes in Thunder Bay over the next decade, a small fraction of the national 650,000-home target in that time frame.

Incentivizing development

The city itself isn't responsible for building houses; instead, its role involves attracting developers to meet the community's needs.

The CMHC provides the housing acceleratordollars in four equal advances, the first of which has already been paid.

The second and third instalments are conditional on whether the city implements its approved action plan, and the fourth depends on whether the city achieves its growth target of1,691 units by February 2027.

Over the next three years, about 66 per cent of the fund is going toward grants, Summer Stevenson, the city's project manager for the housing accelerator, explained in an update on Wednesday.

"This is direct incentives and different funding opportunities for not-for-profit organizations, developers, and individuals who are looking to build more units," Stevenson said.

While the city's original action plan anticipated about $27 million in grant money which was conditional on securing the $45.6 million that was originally requested the amount has been revised to roughly $10.6 million.

"That's a fairly significant reduction. However, we are very confident that we've been able to save as much money as possible to provide direct incentives," Stevenson said.

"We're still looking at a total allocation that's very, very similar per incentive unit."

Guaranteed affordable units

Those applying for the grants must meet certain criteria; at least 30 per cent of their proposed units must beconsidered affordable.

As of October 2023, the average rental rate in Thunder Bay was $1,237 a month, according to CMHC.The city's goal is for at least 20 per cent of all units supported by the housing accelerator money to be affordable.

The plan is to allow up to 30 new affordable units through the proposed affordable rental housing funding program this year, pending council's approval.

"Based on the number of applications we receive this year and the success of the projects that move through this program, we will recommend either an increase in funding next year or a new allocation," Stevenson said.

Over the past few years, construction costs have risendrastically, which is a big barrier to development.

The hope is that providing grant money "will push the not-for-profits above that bar, so they're able to move forward on these projects instead of sitting on them and not having enough money to move forward," Stevenson said.

One caveat is that the housing accelerator money does not apply to transitional or shared housing, which may impact the types of not-for-profits that can apply, she said.

However, the provincial government announced more than $9 million last week for 52 new transitional units in Thunder Bay.

Increasing density in core areas

Devon McCloskey, the city's manager of planning services, saidthe core areas targeted for growth are Westfort, Port Arthur and Fort William.

She said there are many benefits to adding density to existing urban areas.

"There's benefits for those residents to have equitable access to services, to have less reliance on cars, to move around, to be able to access existing services and infrastructure," McCloskey said.

By activating the construction assistance grant program, which is already part of the city's community improvement plan, the city would allow up to 40 new residential units to be built, she said.

The upcoming reports to council will be posted on the city's website in advance of the May 6 council meeting, under the agendas and minutes section.

The city's approved HAF Action Plan consists ofeight initiatives. More information can be found on the city's website.