The Government of Canada has announced the new $6 billion Canada Housing Infrastructure Fund to help support the cost of building infrastructure that supports new residential density and population growth.

This will go towards critical utilities infrastructure projects such as water supplies, sewerage pipes and treatment, stormwater catchment pipes, and solid waste infrastructure, announced Prime Minister Justin Trudeau in a press conference today.

But there is a big catch.

Although municipal and regional governments are largely the cost bearers of such critical infrastructure, the vast majority of the $6 billion will go to the provincial governments initially before being distributed to local and municipal governments.

With the provincial governments holding onto $5 billion, the municipal governments will receive $1 billion to help support any urgent infrastructure needs towards supporting more housing.

The $5 billion portion is going towards provincial governments, as the federal government is looking to ask the provincial governments to mandate their municipalities to enable more residential density, amongst various new federally mandated directions relating to housing.

In Canada, local and municipal governments are creatures of the provincial governments, which have the complete power to override cities.

All authority held by municipal governments are granted by the provincial government, and this has been fairly evident in British Columbia since last year. That provincial government has rolled out various new legislation requiring higher-density transit-oriented development near designated public transit hubs, up to six units on a single-family lot, and a Housing Supply Act, which requires cities to meet annual new housing quotas.

In exchange for a share of the $5 billion of funding, Trudeau's federal government is now giving provincial governments until January 1, 2025 to reach an agreement that promises the enactment of new provincial legislation that requires municipal governments to enable four units on single-family lots, such as duplexes, multiplexes, townhouses, and multi-family apartment buildings.

There would also be a three-year freeze on hiking building development charges/fees from April 2, 2024, for municipalities with populations of over 300,000 residents. The provincial governments would have to commit to curtailing such fees applied by municipalities on new development, which adds to the cost of housing.

Other requirements include adopting forthcoming changes to the National Building Code to support more "accessible, affordable, and climate-friendly housing options," requiring as-of-right construction for the government's upcoming Housing Design Catalogue, and implementing measures from the forthcoming Home Buyers' Bill of Rights and Renters' Bill of Rights.

However, if the provincial governments are uncooperative and do not reach an agreement with the federal government at the start of the new year, the $5 billion funding allocation will be added to the $1 billion municipal government stream, which suggests that the federal government will instead negotiate directly with municipal governments.

So far, in recent weeks, given the rumblings of a major federal housing announcement, Ontario Premier Doug Ford has expressed some ambivalence to the federal government's density-for-cash program, particularly the gentle densification of single-family lots.

"We need more affordable homes, and we need the infrastructure to help build these homes. That's why in Budget 2024, we're building more infrastructure, building more homes, and helping more Canadians find a place to call their own," said Trudeau in today's announcement.

"This is about fairness ‒ making sure communities have the safe, quality housing they need to get ahead."

Other measures announced by the federal government today include requiring higher-density transit-oriented development for residential uses within 800 metres of a frequent public transit service and post-secondary education institutions — as a condition of municipal governments receiving a share of the upcoming federal annual Permanent Transit Fund, which will help support the cost of building new and improved public transit infrastructure.

This requirement also includes eliminating all mandatory minimum vehicle parking requirements within 800 metres of frequent public transit.

As well, Trudeau's government also announced it would top up the existing federal Housing Accelerator Fund to municipal governments in exchange for cutting red tape and fast-tracking home construction through municipal policy and process changes.

The $4.4 billion Housing Accelerator Fund is now fully tapped out following 179 agreements with municipal and provincial governments, and today's announcement tops up the fund with an additional $400 million.