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Alberta says Ottawa is overstepping by funding municipalities directly for housing projects

The Alberta government is considering new legislation to prevent the federal government from going directly to municipalities and providing funding for projects such as housing and transit.

Prime Minister Justin Trudeau announced more funds for pre-fab construction as part of a series of announcements teeing up what is set to be a housing-focused budget. Trudeau made the announcement in Calgary on Friday with a $600-million price tag.

At a media conference in Winnipeg on Thursday, Trudeau also promised to earmark $1.5 billion in funds for non-profits to acquire more rental units across Canada and ensure they remain affordable.

“Younger generations, like millennials and Gen-Z, feel like they’re falling behind because housing costs are just too high,” said Trudeau on Friday.

“That’s not OK — and it needs to change.”

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In response to the announcements, Alberta’s Social Services Minister Jason Nixon told reporters on Friday that the federal government is overstepping provincial jurisdiction, adding that provinces are best equipped to deal with local housing issues.

He said the United Conservative government is prepared to pass legislation that would stop the federal government from being able to directly fund municipalities or other organizations that are primarily funded by the province.

Click to play video: 'Feds announce $1.5 billion to expand affordable housing'

Feds announce $1.5 billion to expand affordable housing

“We are a little shocked to see that all of a sudden the federal government seems to be taking housing seriously. From our perspective, that probably indicates some challenges that are happening for the federal government, with their political ambitions for the next election,” Nixon said.

“We are also quite shocked to see that the federal government is still not responding to the request from the province to work with us in a serious way, and continuing to bypass the provincial government to work with municipalities, which is clearly our jurisdiction.”

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Nixon also said the federal government does not understand housing problems in rural municipalities or Indigenous nations across Alberta. He told reporters he wants more transparency on how the federal funds will be dispersed, including if the funds will be dispersed based on population size.

He also said the federal government’s restrictions on what type of housing need to be built in order to access the funding will make housing more unaffordable for Albertans.

To access a previously announced $6-billion housing infrastructure fund, the federal government said provinces and municipalities will need to bring in pre-approved zoning for catalogue homes and fourplexes.

“We’re in the best position to be able to make sure that we can get funds distributed across the province in a way that can help all of the province.

“We continue to see disproportional amounts of investment, primarily with Calgary and Edmonton, who need it … But there are no serious investments in rural Alberta and Indigenous nations, which is a very serious question that we see taking place in this country,” Nixon said.

“We have stranded projects right now where municipalities, where the province and municipalities have put up a third of the funding each, but the federal government is nowhere to be seen because they continue to come to town and give out large amounts of money but not actually invest in side projects inside our province. Then they go somewhere else to invest in those projects.

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“My biggest concern on the municipal issue is if we have mayors that seem to have access to the current federal cabinet that can disproportionately be able to get money from the Accelerator Fund … I represent places like Sundre and Rocky Mountain House. The premier represents places like Brooks, who are desperately in need of some real investment. Their mayors can’t pick up the phone and get access to the federal cabinet.”

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Nixon’s statement comes at a time when cities and towns across Alberta are experiencing a housing crisis.

Click to play video: 'Trudeau announces $6B infrastructure fund in upcoming federal budget'

Trudeau announces $6B infrastructure fund in upcoming federal budget

According to the 2024 Rental Market Report published by the Canada Mortgage and Housing Corporation, Calgary’s rental vacancy rate sits at 1.4 per cent, now on par with Toronto (1.5 per cent). The average rent for a two-bedroom apartment is around $1,695 a month, up by 14.3 per cent year-over-year.

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Edmonton’s rental vacancy rate sits at 2.4 per cent, and the average rent for a two-bedroom apartment is around $1,398. That is up by about 6.4 per cent year-over-year.

Paige Doering-Griffen, a renter in Calgary, said her rent for a 400-square-foot, one-bedroom apartment in Calgary’s Bridgeland neighbourhood was increased by $200, and they now pay $1,750 a month. They noted that a lot of amenities in the building have been broken for a while, and a lot of people move in and out of the building because of the expensive rents.

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“Me and my friend are going to move in together. We’re trying to find a place, but we’ve been looking for months … It’s competitive, and people are trying to pay more than what the asking price is or when you go to view a place, there’s 20 people who are showing up all at the exact same time,” Doering-Griffen told Global News.

“Just between me and my friend alone, we pay over $4,500 just in rent and utilities. That’s not including parking or anything like that. So we have to try and find a place that is cheaper than that.”

The CMHC says demand for rental units in Calgary will remain high for the next few years.

“We basically expect the continued drivers as migration from other provinces in Canada and also internationally to provide rental demand for the (Calgary) region,” said Michael Mak, an economist with the CMHC.  “Most of the demand that we’re going to expect in Calgary will be from people looking for more affordable homes, that might be movers from B.C. and Ontario.”

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Mak said Calgary’s vacancy rates have been declining since 2022, which is reflective of the demand for housing in the city. It’s also reflective of the city’s “relatively strong economy” where people have relatively high incomes.

However, he said he expects vacancy rates to rise by 2026.

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“That’s really reflective of the amount of rental housing that’s being built … like all the towers being put up in Calgary right now, either through recent supportive measures that have allowed for more rental construction … And with more vacancy or higher vacancies in the future, that would slow down any price growth in rents,” the economist said.

“Demand is still expected to be high as Calgary still remains … a larger Canadian city where there are attractive jobs. It’s also an attractive city and people are considering moving there if their housing conditions might get too expensive.”

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Click to play video: 'Calgary councilors want plebiscite for city-wide rezoning'

Calgary councilors want plebiscite for city-wide rezoning

Calgary Mayor Jyoti Gondek said in an interview with Global News on Friday that the funding from the federal government will not affect the city’s mission to build and approve more affordable housing units.

Calgary city council is currently considering blanket rezoning, which will allow for rowhouses and duplexes in neighborhoods where previously only single-family homes were allowed to be built. A public hearing on the matter is scheduled for April 22.

“So the very interesting situation we find ourselves in as municipal elected officials is the push and pull between other orders of government, offering their opinion or offering directives. Right now, the thing that’s in front of us is a decision about how we wish our city to grow and how we are going to address a housing shortage,” Gondek said.

“Certainly we do appreciate it when funding options are available to us, but we were elected by Calgarians to make strong decisions for them, and that’s what we remain focused on.”

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Click to play video: 'Alberta municipalities must approve housing to receive priority affordable housing funds: minister'

Alberta municipalities must approve housing to receive priority affordable housing funds: minister

Edmonton Mayor Amarjeet Sohi said in an emailed statement Friday afternoon that he welcomes the federal government’s announcements because they will build homes faster and cheaper.

“Edmonton continues to be a leader in housing affordability because of our fast permitting timelines, permissive zoning, and investments in affordable housing. I welcome these new federal measures that will support innovation to build homes faster, cheaper and more quickly,” Sohi’s statement read.

“I welcome the opportunity to work with all levels of government on the priorities important to Edmontonians. I am cautious of any interventions that will add additional red tape and slow down the rollout of funding and support to municipalities.”

But Nixon said the proposed legislation will not add more red tape, but reduce it.

“What it will cut down on is coming to town, announcing large amounts of money and not actually investing in projects that get built,” he said.

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–With files from The Canadian Press and Global News’ David Baxter and Jennifer Ivanov.

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