The Ontario government has announced a new program to support municipalities in the construction, expansion and repair of underground infrastructure projects that enable new-housing construction.

It launched its Housing-Enabling Water Infrastructure lending stream on November 28. The program, which is part of Infrastructure Ontario’s loan program, will provide up to $1 billion for drinking water, wastewater and stormwater infrastructure projects.

“We continue to hear from our municipal partners that one of the greatest barriers to building more homes is the need for new and expanded drinking water, wastewater and stormwater management facilities,” said Infrastructure Minister Kinga Surma. “I know there are communities across the province that want to get new homes built but need to expand their water capacity first. This new flexible financing option will help more municipalities get shovels in the ground on much-needed water infrastructure projects and more homes.”

The lending stream will provide municipalities, including small, rural and northern municipalities, with more flexible loan options during both the construction and repayment phases of the project.

Municipalities will be able take advantage of flexible borrowing terms that allow them to defer interest payments during the construction phase until projects are substantially complete, select longer debenture repayment terms of up to 40 years, choose more flexible repayment terms and incur lower administration costs.

“The affordable, long-term financing available to municipalities through IO’s lending program has supported the modernization and renewal of public infrastructure in 335 municipalities across the province,” said IO President and CEO Michael Lindsay. “We look forward to working with our municipal partners to realize the potential of this lending stream, ultimately to enable the construction of more housing to benefit the people of Ontario.”

The Infrastructure Ontario Loan Program provides municipalities and other public sector partners with short-term construction financing and long-term fixed interest-rate loans at affordable interest rates. As of October 2024, the program has supported over 3,800 local infrastructure projects valued at more than $22 billion.

The government is also investing nearly $2 billion in housing-enabling infrastructure funding through the Housing-Enabling Water Systems Fund and the Municipal Housing Infrastructure Program, in addition to the provincial Building Faster Fund, to help municipalities deliver the core infrastructure needed – such as roads, bridges, drinking water and wastewater facilities – to build more homes across the province.

Infrastructure Ontario will begin accepting applications from municipalities on December 2.