The provincial and federal governments quietly signed a fresh Ontario affordable housing deal worth hundreds of millions of dollars after months of tense back-and-forth and threats to scrap the funding altogether.

Shortly after Doug Ford’s new cabinet was sworn in March and with Mark Carney installed in the Prime Minister’s Office, Ottawa and Queen’s Park signed off on a deal to work together on new housing.

Details of the need to sign the new agreement were contained in a handover binder prepared for Ontario’s new housing minister in March and recently obtained by Global News using freedom of information laws.

The same agreement had caused months of grief the previous year as two housing ministers traded barbs, accusations and threats.

Last year, the federal and provincial housing ministers clashed repeatedly over the National Housing Strategy – a bilateral, long-term agreement to build affordable housing.

The fund provides money to provinces for their affordable housing strategies. It is designed to run for 10 years, with milestones to renew the funds.

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Then-Canadian Housing Minister Sean Fraser wrote to his Ontario counterpart, Paul Calandra, in March 2024 to demand “urgent” action on his affordable housing plan, accusing Ontario of failing to deliver thousands of new units.

The letter kicked off back-and-forth jabs, where Ottawa rejected Ontario’s various affordable housing plans, claiming it was refurbishing old units and not building new ones. The federal government said it would withhold $357 million in fresh funding until it was satisfied.

The federal government eventually said it would sidestep Ontario and give the money straight to local service managers in the province instead. At the time, Calandra said that was exactly what he wanted.

“For weeks, we’ve been saying, ‘It is distributed through our service managers,’” he said in May 2024.

“Now, the big, bad federal Minister of Housing is going to punish Ontario. Do you know how? By distributing the money the same way we have done it for the last 35 years: through our service managers.”

After the snap winter election, Calandra was shuffled from housing to education, while Fraser is now the justice minister.

A briefing binder prepared for incoming Ontario Housing Minister Rob Flack in March 2025 said one of the first decisions he would have to make would be to sign off on a new federal-provincial agreement to ensure affordable housing dollars continue to flow.

“Ministry staff are reviewing federal input and will bring forward options for the Action Plan for Minister’s decision following the election,” the briefing binder, accessed via freedom of information laws, said.

Sometime in March, the two governments came to an agreement.

“The National Housing Strategy (NHS) bilateral agreement signed with Ontario runs from 2019/20 to 2027/28,” a federal spokesperson said.

“The targets and outcomes for funding available under the agreement were mutually agreed upon in March 2025 through a three-year Action Plan for 2025/26 to 2027/28. This ensures the continued availability of federal funding for Ontario.”

Flack’s office indicated he wanted to reset the relationship with his federal counterpart after a tense year. The latest agreement will prioritize rent-assisted units, according to the Ontario government.

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