Canada is grappling with a profound housing crisis. From acute shortages in housing supply to a deepening affordability gap, the country is witnessing rising rent costs, limited options for diverse family structures, and increasing displacement risks for vulnerable populations. This crisis is multifaceted and systemic, with roots in long-standing policy gaps, regulatory complexities, and market dynamics that vary across regions.
Municipal governments are at the heart of the solution. Given their authority over zoning, planning, permitting, and local infrastructure, municipalities directly influence the pace and nature of housing development. However, they face numerous barriers, including outdated regulatory frameworks, insufficient infrastructure capacity, and competing community interests. As the legal landscape evolves and federal programs proliferate to address these issues, municipalities require expert guidance to navigate this complexity effectively.
Procido LLP brings deep experience in municipal law, housing policy, and regulatory strategy, uniquely positioning us to partner with municipalities in addressing the housing crisis. This article delves into the current challenges, the evolving roles and opportunities for municipalities, and how Procido LLP can help local governments craft strategic, legally sound responses that balance community needs with development imperatives.
Understanding the Dimensions of Canada's Housing Crisis
The crisis is neither new nor simple. For decades, Canadian governments progressively withdrew from direct housing interventions, instead relying heavily on private markets to meet diverse housing needs. This shift has exacerbated affordability issues, as market-driven development rarely prioritizes housing for low- and moderate-income residents.
Today, over half of Canadian renters report significant concerns about paying rent. The supply of affordable housing is not only insufficient but also shrinking. Canada loses approximately 46,000 affordable rental units annually due to rent hikes, demolitions, and conversions to other uses. This loss disproportionately impacts marginalized groups, including Indigenous peoples, newcomers, and low-income families.
On the supply side, municipalities struggle with slow and cumbersome approval processes. The Organization for Economic Co-operation (the "OECD") reports that Canada ranks 37th out of 38 countries for the length of municipal housing approvals—taking on average three times longer than in the United States. This delay stems from outdated zoning bylaws, lengthy permitting procedures, and an absence of digital modernization. Furthermore, many municipalities restrict the construction of multi-unit or "missing middle" housing types, limiting diversity in housing options.
The Pivotal Role of Municipalities in Housing Solutions
Municipalities wield significant influence over housing outcomes through their land-use policies, zoning bylaws, infrastructure planning, and service delivery. Their decisions shape what types of housing can be built, how quickly development can proceed, and what support mechanisms are in place for residents.
Reforming Zoning and Permitting to Unlock Housing Supply
One of the most critical levers municipalities can pull is the modernization of zoning regulations. Restrictive zoning that limits density or excludes certain housing forms—such as duplexes, triplexes, townhouses, and low-rise apartments—creates artificial scarcity. By reforming these bylaws to allow for more diverse and higher-density housing, municipalities can facilitate more inclusive growth that reflects changing demographics and household types.
Equally important are reforms to planning and permitting processes. Simplifying approval steps, integrating digital tools, and establishing clear timelines reduce administrative burdens and delays. Digital building codes, for instance, are an innovative short-term strategy gaining traction, allowing real-time, online access to building requirements and fostering greater transparency and efficiency. These changes not only speed up construction but also encourage innovation through technologies like artificial intelligence.
Infrastructure: The Backbone of Housing Growth
Housing development is intrinsically linked to the availability of infrastructure such as water supply, wastewater management, transportation networks, and community services. In many Canadian municipalities, especially growing suburban and rural areas, infrastructure capacity limits the scale and speed of housing construction.
The federal government has recognized this bottleneck through initiatives like the proposed $6-billion Canada Housing Infrastructure Fund, designed to help municipalities upgrade and expand critical infrastructure to support new housing. Coordinating infrastructure investments with housing planning is essential to sustainable growth.
Financial Incentives and Program Development
Municipalities can deploy targeted tax incentives, grants, and financial tools to stimulate housing development that aligns with community needs. When aligned with comprehensive housing strategies and Community Improvement Plans (CIPs), such incentives encourage private sector investment while ensuring alignment with affordability goals.
Beyond incentives, municipalities can foster innovative service delivery models by partnering with community organizations, non-profits, and private sector stakeholders. Programs such as rent subsidies, community land trusts, and public-private partnerships diversify housing solutions, enabling municipalities to respond comprehensively to local housing challenges.
Federal and Provincial Supports: Opportunities and Gaps
The federal government's recent Canada Housing Plan, unveiled in April 2024, reflects an increased commitment to addressing housing affordability and supply. The plan includes several notable investments and programs:
- An additional $1 billion to the Rapid Housing Stream, which has been effective in creating affordable and non-profit housing.
- A new $1.5 billion Canada Rental Protection Fund to help non-profits acquire private-market rental buildings at risk of displacement.
- Funding for co-operative housing developments, which provide long-term affordable rents outside the private market.
- Significant allocations to homelessness programs, including Reaching Home.
- Investments targeting Indigenous housing in urban, rural, and northern communities.
While these measures are promising, they fall short of the scale of need. For instance, the Rental Protection Fund's capacity to save 2,500 units annually barely scratches the surface of the 46,000 units lost each year. Additionally, the plan's overwhelming emphasis remains on incentivizing private market housing supply through grants, loans, and zoning reforms, with comparatively less funding targeted at non-market, deeply affordable housing. Affordability protections, like a national Renters' Bill of Rights, are emerging but still under development and require strong intergovernmental cooperation to be effective.
Protecting Existing Housing and Managing Emerging Challenges
An important dimension of the housing crisis is safeguarding existing affordable housing stock. The rapid growth of short-term rentals, for example, has diminished the availability of long-term rental units in many urban centers. To combat this, the federal government has committed $50 million to a Short-Term Rental Enforcement Fund to help municipalities enforce local regulations.
Furthermore, recent legislation aims to remove income tax deductions for short-term rental operators who violate provincial or municipal rules, reinforcing the imperative that housing must serve community residents first.
How Procido LLP Can Support Municipalities
As Canada's housing crisis intensifies, municipalities face growing pressure to implement effective, legally sound strategies that foster sustainable and affordable housing. Procido LLP offers tailored legal guidance to help municipalities revise and modernize zoning and planning bylaws, update policies, and establish regulatory frameworks that encourage diverse, inclusive housing options.
We assist municipalities in broadening housing options by revising zoning bylaws to accommodate a wider range of housing types, including missing middle forms like duplexes, triplexes, and townhouses. Our collaborative approach ensures development goals align with community input, helping to mitigate legal risks while fostering inclusive housing solutions.
Procido LLP also advises on streamlining planning and permitting processes to reduce delays and increase transparency—such as incorporating digital innovations—without compromising essential safety and quality standards. We guide municipalities in crafting policies that improve efficiency and accountability in approvals.
In addition to land use and infrastructure planning, Procido LLP works with municipalities to strengthen local governance by helping establish robust internal policies and decision-making frameworks. Through the development of clear, enforceable procedures and bylaws, we support councils and administrative staff in navigating complex issues with confidence and consistency. Effective governance is foundational to executing long-term infrastructure strategies and building resilient, well-managed communities. We also support municipalities in securing and managing infrastructure funding by negotiating agreements with provincial and federal governments. These efforts ensure alignment with housing objectives and compliance with program requirements, facilitating the delivery of critical housing infrastructure.
Recognizing the impact of short-term rentals and other factors on housing availability, Procido LLP assists in drafting and enforcing effective bylaws, leveraging federal enforcement funding, and navigating related legal challenges to protect housing stock.
Procido LLP is committed to transforming complex housing challenges into practical, sustainable solutions through expert legal counsel and strategic policy advice. For municipalities seeking a knowledgeable legal partner to advance zoning reform, policy innovation, affordable housing initiatives, and other municipal issues, Procido LLP offers the expertise to build resilient, inclusive communities.
View the published article here on page 33 of the Municipal Voice.
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