Mississauga council greenlights $44 million plan to boost affordable housing

A new $44 million strategy to incentivize developers to build more affordable housing in Mississauga has received support from local elected officials. 

The Affordable Housing Community Improvement Plan (CIP)—presented to the City’s Planning and Development Committee on July 29th and approved by council on July 31st—will be implemented as a grant program, supported through funding from Ottawa, and is meant to help developers cover development costs like high interest or building materials as long as they are prioritizing affordable rental units. Mississauga staff anticipate the program could bring up to 500 affordable housing units online within the next three years. 

The program comes as Mississauga is seeing historically high rental rates, with residents paying upwards of $2,200 for a single bedroom apartment. Add another bedroom and you are looking at an average of $2,700 and up. Meanwhile, housing is considered “affordable” when it costs no more than 30 percent of a household’s income, including mortgage or rent payments and all other costs associated with housing expenses. The Canada Mortgage and Housing Corporation estimates the average yearly after-tax income in Mississauga to be approximately $90,000, meaning if a resident is paying $2,700 for a two-bedroom apartment, they are looking at 36 percent of their annual income going towards putting a roof over their head. 

“Moderate income households, which make too much to qualify for housing subsidies, are increasingly challenged to secure appropriate market housing,” the preamble to the new CIP states. 

Funding for the CIP will come from the City’s portion of the Housing Accelerator Fund—a federal subsidy—and the  Affordable Housing Reserve Fund, to a maximum budget of $44 million (an increase from $33 million that was proposed earlier this year). 

Along with the grant funding to incentivize affordable development, Mississauga staff will be consulting with the Region of Peel on recent provincial legislative changes that allow upper-tier municipalities to implement a municipal tax rate reduction of up to 35 percent for eligible purpose-built rental properties. Staff also asked the Region to boost its Affordable Rental Incentive Program and revise the administrative structure to increase the frequency of application windows to better align with Mississauga’s new CIP. 

Two of the City’s housing strategies — the 2017 Making Room for the Middle and the 2023 Growing Mississauga Housing Action Plan — have highlighted the barriers associated with developing new affordable housing that meets the needs of middle-income households. Both documents revealed “in the City of Mississauga new affordable rental housing is unlikely to be developed without the financial incentives given the gap between market and affordable rents.” 

“Market rents in Mississauga far exceed affordable rent levels for even moderate-income renters,” a press release from the City explained. “Renter households require a yearly gross income of almost $100,000 to afford a one-bedroom apartment in the city. The City’s CIP will help developers, landowners and homeowners offset some of the costs required to deliver new units at affordable rates.”

Rental units are becoming increasingly unattainable for many residents in Mississauga as prices continue to climb each month.

(Alexis Wright/The Pointer)

Between 2007 and 2023, average rents in Mississauga increased by 71 percent while the average wages in Ontario increased only 53 percent, according to numbers from City staff. Market rents in new buildings continue to stretch higher than many households can afford — a revelation documented in 2020 by the Region of Peel which found 80 percent of residents were unable to purchase a home or afford rent in Peel. Approximately 27 percent of Mississauga residents currently rent. 

Recognizing that the increase in housing costs has significantly outpaced income growth over the last decade and a half, the City’s CIP was identified as a tool to help encourage an increased supply of affordable rental housing units in new development projects, as well as a way to promote housing supply through gentle density in Mississauga’s existing neighbourhoods.

The CIP was also a part of commitments made by the City in its application to the federal government under the Housing Accelerator Fund. Mississauga received $112.9 million in December after approving fourplexes city-wide to address the housing crisis. The funding is meant to aid the City in implementing eight initiatives outlined in Mississauga’s housing action plan.

Staff have anticipated that the latest strategy to get housing built will bring between 300 to 500 new affordable rental units over three years — a number that was previously criticized by councillors for being drastically below the number of units needed to address the affordability crisis. Previous projections from staff estimated the federal government’s housing funds would help create 35,200 new units over the next decade; 13,000 of which could come over the next two years. 

Under the incentives laid out in the City’s CIP, the Multi-Residential Rental Incentive Program is the focus of the CIP, with staff anticipating it will have the greatest potential impact on affordable housing supply due to the size of proposals eligible to participate; the size of incentives; and the associated affordability requirements that must be met to secure funding. Through this stream, staff have planned for a target of 100 units per year over three years. The CIP also includes the Gentle Density Incentive Program, focused on encouraging housing supply in built-up neighbourhoods. It will not have any affordability requirements tied to incentives, the report to council noted. Staff caution it is challenging to predict what uptake will look like for the gentle density program, adding that education and marketing measures, on top of pre-approved plans, may increase demand for these units.

Mississauga has a plethora of traditional low-rise, single-family homes, but its city centre has seen a surge in highrises over the past several decades and there is a dire need for developers to prioritize affordable rent.

(Alexis Wright/The Pointer) 

“The CIP aims to strike a balance between providing enough incentives per unit to ensure the units are delivered, while also ensuring the funding goes far enough to incentivize as many units as possible,” the July 29th staff report explained. “Implementation of the CIP will be an important step forward for securing more affordable rental housing and enabling more gentle density supply in Mississauga.”

Although staff previously proposed a total of $33 million for the program, the updated report recommended that, based on feedback from developers, the grants be increased by $30,000 per unit to better bridge the financial gap (bringing the total incentive to $130,000 per unit for units rented at average market rent and $60,000 per unit for those rented at 125 percent AMR). This, staff explained during the July 29 meeting, would potentially shift $10 million of the government funding from infrastructure to housing, from what staff presented in May. The breakdown of the CIP would include $34.8 million of the accelerator funding, plus $9.32 million in the City’s housing reserve.

The report notes once the HAF money is exhausted, the City is able to draw from its Affordable Housing Reserve Fund to provide the grants. If CIP uptake is lower than expected, the federal funding can be reallocated to enabling infrastructure.

To ensure the funding flows swiftly to expedite the construction of new units, the program will be administered with “a rolling application window” that allows developers to apply at any time. Developers will receive funding on a first-come, first-served basis if the eligibility and criteria laid out under the programs are met, and grants will automatically be paid out when building permits are issued. A payback will be required plus interest for constructed units that do not comply with the conditions of the grants. The City is also asking the Region for revisions to its program application structure to increase the frequency of application windows or implement a rolling application approach to better correspond with Mississauga’s program, which is expected to launch in the fall. 

Applications will be accepted until 2027 or until the program funding is fully allocated.

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Twitter: @mcpaigepeacock

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