An Ontario town is set to lose some federal housing funding after voting against permitting fourplex construction by default, with the government saying it was in breach of its agreement.
The town of Tecumseh, Ont., will lose $3.2 million from the federal government’s Housing Accelerator Fund (HAF), according to a letter from the Canada Mortgage and Housing Corporation (CMHC).
“As previously communicated to you, the commitment to implement four units as-of-right (‘4UAOR’) is foundational to the Housing Accelerator Fund’s program objectives, which focus on enabling long-term, systemic changes that accelerate housing growth,” the letter reads.
“Accordingly, you are not able to achieve the 4UAOR Initiative, as required, and therefore, you are in breach of the terms and conditions of the HAF Agreement.”
As-of-right means structures, like fourplexes, can be built without requiring a special process such as a public process.
In an email to Global News, the CMHC said communities receive funding through submitted action plans, but if they aren’t adhered to there can be consequences.
“When these commitments are not met, funding can be reduced, or agreements terminated,” a spokesperson for the CMHC wrote. “Any decisions regarding changes to these agreements will be communicated publicly in accordance with established procedures.”
There are more than 200 communities receiving funding from the HAF, ranging from small towns to cities as big as Toronto.
Tecumseh Mayor Gary McNamara told Global News the funding cut for his town was disappointing.
“You’re always disappointed in terms of a substantial amount of money for a small community,” McNamara said. “I would say that the book is — we’re at the last chapter and we’re closing the cover pretty quickly.”
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The town council voted last summer 4-3 against allowing the fourplexes to be built as-of-right.
Months later, the town received a letter on Dec. 24 advising if it does not “cure the non-compliance” in 37 days, the CMHC and Tecumseh would need to enter a termination process.
In 2024, Tecumseh received about $4.4 million from the HAF and as of January 2026 has spent approximately $1.1 million on other housing initiatives.
The letter from the CMHC said that money will not have to be repaid as it went towards projects set out in the initial action plan approved.
But the loss of $3.2 million will still be difficult to recoup, McNamara said. He told Global News the money would have gone towards storm-water retention for the building of homes in certain parts of the community.
“It is reflected in our budget,” McNamara said. “We’re fortunate enough that we can utilize reserves in order for us to make up that shortfall. But in the same token, whatever you take out of reserves, you’ve got to replace it at some point in time.”
Tecumseh isn’t the only one at risk of losing funding over not moving ahead with a project. Toronto is also facing a cut over its decision on sixplexes.
Last year in July, Housing Minister Gregor Robertson told the City of Toronto it could pull approximately $30 million in funding, claiming it was falling short on its promise to ramp up density.
Robertson wrote in a letter to Mayor Olivia Chow he was disappointed by a recent decision to limit where builders can put up to six housing units — or sixplexes — on a lot.
City council voted in June on a plan that would see some city wards sign up to the sixplex framework. Others could have the choice to opt in later.
The city signed a deal with the feds in late 2023 and received $471 million. The plan would see the city build nearly 12,000 new units over three years.
Nate Erskine-Smith, who held the role of housing minister before Robertson, previously told Chow in a March 11 letter that the city could lose up to 25 per cent, or about $30 million, of its funding.
Robertson said in July he wanted to find a solution to the impasse by Dec. 20, but no announcement has yet been made by the minister regarding the funding.
Asked if there was an update on the future of that funding, the City of Toronto said it was submitting a report this month.
“The City of Toronto will be submitting its second annual Housing Accelerator Fund (HAF) report to the CMHC this month and will await further updates regarding CMHC’s review and assessment,” a spokesperson for the city said.
—with files from The Canadian Press
© 2026 Global News, a division of Corus Entertainment Inc.
