The Big Picture
66 Third Street Shelter and the HSCIS Strategy
Refugee Shelter Subsidies and Future Funding Collapse
Since COVID, the federal government has covered the cost of housing refugee claimants in Toronto, contributing approximately $250 million annually to support temporary hotel shelters and related services.
This works out to about $54,112 per user per year, or roughly $148 per day, which includes accommodation, meals, and case support.
The federal government has recently lowered immigration intake targets and is reducing support for the Refugee Response Program. This means that the $250 million Toronto has come to rely on is set to decline sharply.
Meanwhile, Toronto’s shelter system costs have ballooned to nearly $800 million annually, putting further pressure on city finances.
Manufactured Crisis, Not an Emergency
Toronto has one of the largest shelter systems in North America (Toronto Shelter Support Services or TSSS), with more than 11,000 existing beds, and a budget that has grown to $800 million dollars a year.
Roughly 42% of those using the shelter system are refugee claimants, the majority of whom have been sheltered in temporary hotel spaces funded by the Federal Government.
Instead of keeping these federally funded hotel shelters open, the City chose to close many of them prematurely, creating an immediate and avoidable shortage of between 150 and 250 beds per night.
This self-inflicted gap was then presented as an urgent crisis requiring fast action — the construction of 20 new permanent shelters under the Homelessness Services Capital Infrastructure Strategy (HSCIS) over 10 years.
Follow the Money: $675 Million for 1,600 Beds
Toronto’s HSCIS proposes building 20 new shelters, each with 80 beds, for a total of 1,600 beds across the City. This results in a total capital cost of $675 million.
This works out to an average of $33.75 million per site or $421,875 per bed.
This price tag includes only partitioned sleeping spaces, not full apartments or private rooms. For comparison, the cost per square foot is more than triple the average for institutional builds.
A One-Sided Deal: The City Gets Assets, Ottawa Gets the Bill
In the 2024 TSSS budget, it was revealed that the City of Toronto intends to borrow the money to fund this program and then ask the Federal government for the full funding for this program.
Clearly this is to be quid pro quo for reductions in ongoing funding from Ottawa for refugees.
This is not a true system expansion. As existing shelters are being shut down, particularly the federally funded hotel programs, the actual net increase in available beds may be negligible. By the City’s own numbers, after balancing new construction with planned closures, the entire HSCIS program could result in zero to only a few hundred additional beds — all after more than a decade of building.
There is also no guarantee that these shelters will meet evolving needs. With the City rushing to secure funding and start construction before public or federal review, the risk of inefficiency, overbuild, or asset misuse increases. Meanwhile, the federal government would be left footing the bill, with no control over how the assets are ultimately managed.
In other words, Toronto is not expanding capacity in a meaningful way. It is replacing flexible, funded, short-term solutions with permanent municipal real estate — even while asking the federal government to pay the bill.
Democracy Bypassed: No Consultation, No Oversight, No Transparency
When City Council approved the HSCIS, it also granted broad authority to staff at Toronto Shelter and Support Services (TSSS) and CreateTO, the City’s real estate agency, to unilaterally select shelter locations. This means no formal Council vote is required to approve sites and no public consultation process is guaranteed.
Instead of local engagement, the City has leaned heavily on paid consultants and internal planning teams. Elected officials are often informed after the fact and communities are bypassed entirely until permits are underway. There are no mandatory notices, public hearings, and accountability measures tied to shelter selection decisions.
To make matters worse, the criteria used to choose sites remains secret. The New Toronto Initiative (NTI) has submitted Freedom of Information (FOI) requests to understand how and why certain locations were chosen — only to have those requests denied or delayed.
Toronto’s shelter expansion is being implemented through an undemocratic closed-door process that excludes elected officials and the public. This lack of transparency undermines trust and prevents communities from contributing to more equitable, effective solutions.
A Targeted Community: Why New Toronto Was Chosen
While many affluent neighbourhoods across the city were bypassed, this working-class community, with limited political power, lower income demographics, and already facing significant challenges, was quietly selected.
64% of South Etobicoke’s subsidized housing is in New Toronto and placing a shelter at 66 Third deepens the systemic inequality instead of distributing supports across the city.
The New Toronto Initiative (NTI) submitted five alternate sites that better aligned with Toronto Shelter and Support Services (TSSS) guidelines, including larger lots, appropriate zoning, and lower immediate risk to community services. These alternatives were ignored without public explanation.
There was no regional fairness, no community meeting, and no impact assessment shared publicly before selection. The City’s decision placed a disproportionate burden on one neighbourhood — not because it was the best site, but because it was the easiest politically.
New Toronto was selected not for its suitability, but for its lack of organized resistance. The decision reflects a failure of equitable planning and reinforces the perception that some communities are treated as expendable.
Third Street Is the Wrong Site
The Third Street site in New Toronto was never suitable for a shelter. The lot is in a quiet residential area, on a street hemmed in by the lake, directly adjacent to elementary schools, childcare centers, and seniors’ buildings.
Despite these sensitive surroundings, no risk mitigation or buffer strategy has been provided. Residents, educators, and community workers were not consulted and were only informed of the project after key approvals were already in place.
Toronto has often pointed to specific shelters as “success stories” when defending its broader strategy, but none of those examples look anything like the shelter proposed at 66 Third Street in New Toronto.
These shelters are located on large lots ranging from 28,000 to 60,000 square feet, surrounded by employment or industrial land. These sites benefit from physical buffers, limited residential disruption, and better access to transit and services.
In contrast, the Third Street lot is only 9,246 square feet, less than one-third the size of those model sites, and is surrounded almost entirely by residential zoning, including schools, childcare centres, and seniors’ residences.
With a reduction at this site to 50 beds, the cost per bed may now exceed $675,000, despite offering only partitioned sleeping cubicles with no private washrooms or kitchens.
The design also fails to offer any meaningful personal space for shelter users. Partitioned cubicles will be crammed into a small footprint, with the original design providing less square footage per person than even federal prison standards. The setup offers no privacy, no path to permanent housing, and limited dignity for those living there.
Paraphernalia for Illicit Drug Use
Toronto’s shelter standards claim to support “harm reduction”, meant to minimize risks associated with illicit drug use by handing out clean crack pipes & needles for intravenous drugs like heroin and fentanyl.
However, the implementation at sites like Third Street reveals a deep contradiction between the policy and its practical realities.
Under this model, shelter residents are provided with drug-use kits, including needles for intravenous drugs, crack pipes, cookers, tourniquets, and step-by-step “how to” instructions for using various illicit drugs. But at the same time, drug use is explicitly banned on site. This pushes shelter residents to buy and use drugs outside in the surrounding community — playgrounds, school yards, and in front of residents’ homes.
This contradiction creates serious public safety concerns, undermines the integrity of the model, and increases the risks for both shelter users and residents in the area. It also places enormous pressure on first responders, local businesses, and neighbourhood institutions that are not equipped to manage these consequences.
Better Alternatives Ignored: Supportive Housing
While Toronto is proposing to spend $421,875 to $675,000 per shelter bed, other City-led initiatives show that permanent, supportive housing can be built faster, cheaper, and with better outcomes.
The Toronto Modular Housing Initiative, launched in partnership with federal and provincial governments, successfully delivered 275 permanent supportive housing units with wraparound services for $85 million, an average of $309,000 per unit, even after COVID-related cost overruns. The original target was $190,000 per unit.
These modular homes offer residents private space, kitchens, bathrooms, and long-term stability, along with access to social supports. They are more effective at reducing chronic homelessness and promoting dignity, recovery, and community reintegration than temporary shelter beds.
Despite this, the City is pushing forward with far more expensive shelters that provide less space, no privacy, and no path to permanent housing. In many cases, two modular homes could be built for the cost of one shelter cubicle.
NTI’s Recommendation: Pause, Review, and Rebuild the Process
NTI is supportive of investment in permanent housing solutions that provide privacy, dignity, and long-term recovery. But this must be done with transparency, consultation, and fiscal responsibility. The current strategy is financially unsound, undemocratic, and harmful to the very communities it is meant to support.
There is still time to correct course. With a transparent review and a commitment to fairness and fiscal discipline, Toronto can meet its shelter and housing goals without sacrificing public trust or putting vulnerable people into high-cost, low-outcome facilities.
We urge the Federal Government to reject the $675 million HSCIS capital request until a full financial and operational review is completed.
We urge the Province of Ontario to create legislation to prevent shelters from being placed within 500 meters of schools, seniors’ centres, and daycares.
We urge the City of Toronto to immediately halt construction at Third Street and launch a public consultation process with the local community, remove their delegated authority to TSSS for site selection, disclose all site selection criteria and alternatives considered, and reallocate capital funds toward supportive housing models with better outcomes and lower costs.