Calgary's Federal Funding in Jeopardy Over Zoning Policy Reversal
A stark warning from city staff suggests that if Calgary councillors proceed with campaign promises to repeal blanket rezoning, the municipality could forfeit hundreds of millions of dollars in crucial federal government grants. The comprehensive report outlines potential financial losses reaching up to $861 million across multiple funding programs tied directly to housing development conditions.
Federal Correspondence Confirms Funding Conditions
New correspondence received this week from the federal government's housing agency appears to confirm that Calgary would not receive the remaining balance of its Housing Accelerator Fund grant if the controversial zoning policy is eliminated. This development comes despite the city having successfully met its housing targets under the current agreement.
The contract structure for the Housing Accelerator Fund stipulated that Calgary would receive 25 percent of funding upfront, followed by 25 percent annually for three subsequent years, contingent upon reaching established housing benchmarks. To date, the city has received more than $122 million through this program.
Multiple Funding Streams at Risk
The potential financial impact extends beyond the Housing Accelerator Fund alone. The city report identifies several other federal programs that could be affected, including Ottawa's Canada Public Transit Fund and the Build Communities Strong Fund. All these programs share housing development requirements that align with Calgary's current zoning approach.
Calgary originally secured $228.5 million from the Housing Accelerator Fund program in 2023 to support its comprehensive housing strategy. The city received an additional $23 million in 2025 after exceeding primary benchmarks outlined in the agreement.
Understanding Blanket Rezoning
Blanket rezoning refers to a land-use bylaw amendment approved by the previous council in 2024. This policy established residential grade-oriented infill as Calgary's default residential zoning district. The R-CG district permits development of up to four residential units on a single parcel without requiring property owners to first obtain land-use redesignation.
This zoning approach was a central component of the city's housing strategy, designed to gradually increase density in older communities that were previously zoned exclusively for single-family detached housing. The policy represented a significant shift in Calgary's urban development approach.
Funding Utilization and Housing Success
The federal funds have been strategically deployed to accelerate multiple housing initiatives throughout Calgary. These include:
- Accelerating housing projects in the downtown core
- Spurring investment in transit-oriented development
- Streamlining housing approval processes
- Incentivizing secondary suite development
- Funding critical infrastructure improvements
- Supporting non-market housing development
Despite the potential policy reversal, Calgary has demonstrated significant success under the current framework. The city granted occupancy to 28,000 new homes in 2025 alone, surpassing established housing targets since the agreement was originally signed.
Historical Context and Current Developments
A 2023 letter to former mayor Jyoti Gondek from then-federal housing minister Sean Fraser indicated that Calgary needed to eliminate "exclusionary" zoning policies to qualify for Housing Accelerator Fund grants. This historical context underscores the direct connection between federal funding and zoning reform.
Ward 4 Councillor DJ Kelly revealed to reporters on Wednesday that a new memorandum from the Canada Mortgage and Housing Corporation suggests Calgary's remaining funding balance would be withheld if blanket rezoning is repealed. This development creates a significant policy dilemma for city council members who campaigned on reversing the zoning changes.
The situation presents council members with a challenging decision: follow through on campaign promises to repeal blanket rezoning, potentially sacrificing hundreds of millions in federal funding, or maintain the current policy to preserve critical financial support for housing and infrastructure development.
