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The Canada Mortgage and Housing Corporation (CMHC) has cancelled its agreement with the City of Red Deer to provide $12 million in federal housing funding, citing the city’s failure to meet mandatory grant conditions.
In a statement released Friday, the CMHC said that as of July 21, 2025, the City of Red Deer was found to be non-compliant with a mandatory requirement for the second funding round of the Housing Accelerator Fund (HAF) agreement that it had originally signed in February 2025.
“As a result, the agreement will be cancelled effective Jan. 16, 2026,” the statement read.
The city has already received around $3 million, the first installment of the $12-million agreement. Of that funding, the city has spent about $40,000 so far on public engagement.
The funding was tied to a condition requiring a blanket zoning change to allow up to four units per residential lot as-of-right. After public consultation revealed citizens’ concerns with the condition, city council rejected the requirement, which would have eliminated the need for public consultation or rezoning for landowners to add up to four units.
Housing and Infrastructure Minister Gregor Robertson provided CBC News with a statement that said the federal government is working with the City of Red Deer on next steps.
Still hopeful
Red Deer Mayor Cindy Jefferies said she remains hopeful the city can still reach a compromise with Ottawa.
“My first reaction was, ‘Well, maybe that’s helpful,’” she said. “Maybe what we need to do is create a new agreement that reflects the reality of Red Deer not wanting to go to a blanket zoning position.
“We could do four-units housing, but only on some sites. … It was the blanket piece that was causing problems for our community.”
According to the city, several letters outlining these concerns were sent to Robertson by former mayor Ken Johnston last year, but no response was received.
On Dec. 19, 2025, the CMHC formally warned the city it was in breach of the agreement and gave it 21 days “to cure the non-compliance or repay the first advance of HAF funding.”
Last week, city council passed a motion — with a 7-2 vote — brought forward by Coun. Chad Krahn that directs administration to continue to seek dialogue with Ottawa rather than immediately returning the $3 million in funding.
“Our council didn’t want to just send the money back without having a conversation with the minister,” Jefferies said. “We’re hoping that terminating this agreement will open the door to an addendum or an amendment.”
Coun. Kraymer Barnstable was one of the two councillors who voted against Krahn’s motion, raising concern about ongoing risk to the city.
“The hope is dwindling, and I don’t want us also in breach of contract,” he said during a council meeting last week. “You don’t know what the ramifications could be.”
“I think we need to start preparing for how we make housing work in the city of Red Deer without the federal dollars.”
Highly competitive
The CMHC said the HAF application process was highly competitive, with more than 540 applications submitted and 241 agreements signed.
“Only the most ambitious applications were successful, and many of those applicants have met or exceeded the ambition of their HAF agreements,” the organization said, adding that funding from cancelled agreements will be redirected to other communities.
“Thanks to the reforms Canadian cities and towns are implementing under the Housing Accelerator Fund, in just the first year, local governments who received funding issued 160,585 residential building permits, 22,000 more than expected.”
Jefferies said she is hopeful that Red Deer will be given a chance to make an amendment to its application for the funding that the CMHC would be able to consider, rather than having the money clawed back and it being allocated to another community.
“I think there’s good reason for the federal government to want to work with a city our size,” she said.
“Red Deer really needs housing. Red Deer is the third-largest city in Alberta. And we want to make this work in a good way.”