Toronto to receive $162M federal top-up for sheltering asylum seekers, low-income renters

The federal government will provide $162 million in new funding to the city of Toronto to help cover the cost of housing thousands of asylum seekers and to help low-income people pay rent, Deputy Prime Minister Chrystia Freeland announced Friday.

Freeland made the announcement at a settlement agency in North York alongside Mayor Olivia Chow and a group of Toronto MPs. A total of $143 million of that amount will help reimburse costs incurred by the city last year and in the first quarter of 2024 to shelter refugee claimants in city homeless shelters, according to a news release.

That money represents Toronto's share of a larger $362 million top-up to the Interim Housing Assistance Program (IHAP) announced earlier this week, following pressure from Quebec and cities that are struggling to cope with the costs of housing an influx of newcomers.

Freeland said Toronto would also receive an additional $19.75 million through the Canada-Ontario Housing Benefit, which helps low-income people cover rent payments.

"More newcomers will have a safe and stable place to call home while they get settled in Canada," Freeland said. "This additional support is going to help the most vulnerable people pay their rent every month."

Deputy Prime Minister and Minister of Finance Chrystia Freeland speaks to the media during the federal cabinet retreat in Montreal, Monday, Jan. 22, 2024. (Christinne Muschi/The Canadian Press)

Since last summer, the federal government has faced growing calls from the city to help cover the increasing costs of housing thousands of asylum seekers in city homeless shelters. Dozens more were sleeping on the streets or being housed in churches after being turned away from the city's at-capacity shelter system.

The federal government previously announced a $97 million boost in funding in July and the province said it would provide $600 million over three years as part of its "new deal" with the city, contingent on federal funding.

But the city said that wasn't enough.

Toronto has been demanding more than $250 million to cover operating costs in its shelters, with the city's budget chief previously warning that property taxes would need to be raised by an additional six per cent — on top of an already historic 9.5 per cent increase planned for 2024 — if the federal government didn't come through with more cash.

Chow confirms no additional tax hike to cover shelter costs

On Friday, Chow thanked Freeland for the support, saying an additional tax hike is no longer necessary.

When combined with previous financial support from the other levels of government, Chow said the new funding will cover the city's shelter expenses up until the end of March 2024, with additional support necessary to cover the rest of the year expected in the upcoming federal budget.

"They have fully delivered on what we have asked for to help us support the thousands of refugees in Toronto's shelter system," Chow said.

While Freeland wouldn't confirm how much additional funding will be included in the federal budget, she said the two governments are committed to working together to tackle this issue.

"We're going to work hard together to be sure that the money we've provided goes as far as possible and supports as many people as possible, " Freeland said. "That's why the housing benefit element is so important because it's both better for a person and less expensive for us collectively if people can have a permanent place that they call home rather than be in the shelter system."

Mayor Olivia Chow said Friday the city won't need to add six per cent to its planned 9.5 per cent property tax increase to cover shelter costs after the federal government announced additional financial support. (Evan Mitsui/CBC)

Chow said the housing benefit has already helped 1,650 people move out of the shelter system since September by subsidizing their rent payments. The additional funding announced Friday will help another 2,000 people find permanent housing, Chow said, which in turn will open up more spaces in the city's at-capacity shelter system.

"They want to cook their own food. They want to have their own place to stay. They want independence," Chow said. "And it's hard to do that when you're in a shelter."

Chow said Thursday the city is currently housing around 6,000 asylum seekers and refugees in its shelters, accounting for more than half of its shelter population.