The Crisis
It’s not news that Canada is mired in a housing affordability crisis. A 2024 Abacus report found that 9 in 10 Canadians are concerned with the current state of housing and over half are worried about their ability to pay their mortgage or rent. Across Canada, 57% fear they could lose their home if their financial situation changes, a figure that rises to 61% in Ontario. In 2024, more than 80,000 people experienced homelessness in Ontario, with over half experiencing chronic homelessness.
According to a new report by the United Way Greater Toronto and the Co-operative Housing Federation of Canada, Ontario will need more than 800,00 affordable housing units for low-income households by 2036. This includes 93,000 supportive housing units and 55,000 for Indigenous families.
Affordable housing providers are thus a critical part of the solution. But, while the Province of Ontario has committed to building 1.5 million homes over the next 10 years, it hasn’t set any targets for affordability. And Ontario’s rate of housing starts has actually fallen over the last six months – to its lowest level in a decade.
The Problem with Transit-Oriented Development
What might be news is that one of the most popular solutions to the housing crisis – transit-oriented development (TOD) – is making it worse, not better.
More transit is good for the climate, our health, the economy and family budgets. When affordable housing is located near transit, research shows it provides significant benefits, including access to jobs, school and social opportunities. Ontario’s Transit-Oriented Communities program has a goal of creating “vibrant, mixed-use communities that will bring more housing, including affordable housing options, and jobs within a short distance of transit.”
But the billions of dollars in infrastructure funding going to transit today is making housing more expensive – not less. Here’s the problem: when major transit projects are announced, nearby property values rise, affordable units are lost to redevelopment, and low-income residents – often racialized and equity-deserving populations – are pushed out of their communities.
This is precisely what happened in Waterloo, Ontario. Housing affordable to low-income residents along the new LRT corridor was demolished and replaced with new condominiums. This did increase the overall supply of housing – but decreased options that were accessible to lower income residents.[1]
Speculation and increased demand increases the barriers faced by non-market housing providers, who already face challenges including a lack of access to financing for pre-development, cash flow issues and capital funding for acquisitions.
Moreover, even though the Permanent Transit Fund requires applicants to have regional housing plans, there are no federal or provincial incentives, policies or programs to support non-market housing near transit lines.
Transit infrastructure policies and existing zoning reinforce the challenges. Housing and transit frameworks are often planned separately and thus, misaligned. And this lack of coordination leads to lost opportunities: if the city does not move quickly enough to preserve or zone land appropriately near the transit line, the principle of highest and best use will inevitably displace lower income people who need the transit most.
At the same time, the transit system loses ridership from those who most need access to it. The transit agency will be forced to spend operational dollars to service the people who have been displaced and now live farther afield.[2]
A Solution: Equitable, Transit-Oriented Affordable Housing
In 2023, Social Innovation Canada (SI Canada), a national charity that works to apply innovation to social and environmental challenges, launched the Equitable Transit-Oriented Affordable Housing (ETOAH) Lab. In partnership with CMHC, the City of Hamilton, Hamilton Community Foundation, and others, it co-designed a new model to align transit investments with long-term housing affordability.
Through a structured, collaborative process, Lab participants identified and co-developed a social finance fund to preserve existing and create new affordable housing near transit corridors in the City of Hamilton. Modelled on actual projects, the fund uses a blended capital approach combining concessionary capital and private investment, and offers fixed income-like returns for philanthropic and institutional investors. It will complement other financing sources, working to fill the gaps faced by affordable housing providers.
The initial pilot fund is targeted to provide $18.7 million, consisting of $14.7M in flexible, affordable capital for community housing projects to be deployed alongside $4M in grants from the City of Hamilton.
- Designed in collaboration with the City to provide flexible, affordable financing to the non-market housing sector:
- Uses a “blended capital approach”, complementing current granting programs
- Supports projects so that they can access CMHC program CoI and MLI Select
- Collaborates with City for deal origination and investment • Flexible debt and mezzanine financing for acquisition, development, and construction financing for non-market housing along transit lines
- Uses government funds to leverage private investment to support non-market housing projects
- Scalable and perpetual, able to grow to continuously accept new investors and provide ongoing stream of returns as long as they own the asset
- Target return of 3.5 – 5%
The Key Role of the Municipality
The Lab also played a key role in shaping policy and supporting strategic initiatives at the City, including as part of the Holistic Housing Sustainability and Investment Road Map, which is helping Hamilton unlock federal funding and prepare for new transit developments.
For the City, the Lab’s insights helped guide zoning changes to encourage higher density development along transit corridors. In 2023, it introduced by-laws to regulate apartment quality and licensing and protect tenants during temporary relocations. In June 2024, the City passed the Rental Housing Protection By-law, which limits the conversion or demolition of rental properties. This by-law preserves the rental stock while balancing tenant protections with development goals.
CATCH: Sustaining and Developing Community Housing Near Transit
An important outcome of this work was the creation of the Canadian Alliance for Transit-Connected Housing (CATCH): a new national initiative designed to support the sustainability and development of community housing along transit lines. CATCH, with the help of its partners and advisors – including SI Canada, the Canadian Housing and Renewal Fund, the Community Housing Transformation Centre and the Canadian Urban Institute – will replicate and scale the process used in Hamilton in cities across Canada.
CATCH addresses the unintended consequences of transit-oriented development by ensuring affordable housing is preserved and created where it’s needed most: near transit.
The goals of CATCH are threefold:
- To create a Centre of Excellence with a national inventory of best approaches to deliver transit-oriented affordable housing;
- To replicate a structured engagement approach that creates and facilitates local collaboratives to develop inclusive, integrated housing and transit infrastructure plans in cities across Canada; and
- To apply proven social finance models for targeted investment in community housing in transit-oriented development areas, creating blended capital funds
CATCH is ready to work with municipalities who are interested in replicating the success of our Hamilton pilot. Working closely with the city or region, CATCH will bring diverse stakeholders around the table for a structured, collaborative process to integrate transit and housing plans that protect existing affordable housing and identify how and where new affordable housing can be developed.
CATCH will also create a blended capital fund in each location where it works. CATCH will work with municipalities to codesign a process to ensure that the CATCH Fund works alongside municipal funding and financing programs to maximize their impact.
This is a national endeavour, but it is deeply rooted in local communities. In each city, the needs and conditions will vary. The Hamilton Lab demonstrated that a collaborative, multi-sectoral approach can bear fruit.
Ultimately, CATCH’s goal is to unlock the preservation and development of more than 20,000 affordable units near transit every five years. Working in partnership with municipalities, community housing providers and investors, CATCH aims to build a national, $2B “fund of funds”, leveraging over $2 in private investment for every $1 of public funding and unlocking $1.3 billion in private investment.
No other fund in Canada focuses on affordable transit-oriented development. The CATCH Fund is an innovative and scalable funding solution – a public/private/civic partnership that comes together as a blended capital fund to unlock infrastructure challenges.
Canada needs bold, systems-level solutions to the housing crisis. CATCH is a national opportunity to align public investments, empower communities, and help reverse the displacement trends impacting low-income and racialized Canadians. We invite cities, investors and partners to join us in working toward connected, sustainable and prosperous communities.
[1] Goldstein, M. (2024). Equitable Transit Oriented Affordable Housing: A Necessary Complement to Transit Development in Hamilton. Canadian Housing Evidence Collaborative (CHEC), Hamilton, ON, Canada
[2] Canadian Urban Transit Association. Housing is on the Line: How Public Transit Can Tackle Canada’s Housing Crisis. October 2023 at 12.
