Ottawa could be looking at a significant financial hit as the federal government moves to wind down a key program that has helped the city shelter asylum seekers over the past several years.
The Interim Housing Assistance Program (IHAP) has been a financial lifeline for Ottawa's shelter system, which was strained when a surge of refugee claimants arrived in the city. Now, with IHAP funding uncertain beyond March 2027 and new reports suggesting cuts could be deep, Ottawa is working on contingency plans, but the numbers are daunting.
The Scale of the Problem
Ottawa is currently receiving $112 million from IHAP for the 2025–2027 period. That money has been used for everything from overflow hotel rooms for migrant families to a hotel purchase designed to shelter refugee claimant families more permanently.
But according to analysis by the Canadian Centre for Policy Alternatives (CCPA), which obtained figures reported to the parliamentary budget officer, the federal government's plans to cut spending on immigration programs could effectively reduce IHAP funding to zero after March 2027. The CCPA argues this amounts to "cost downloading", the federal government offloading its obligations onto municipalities.
The program's share of eligible costs is also being reduced: starting this April, the federal government will cover only 75 per cent of eligible costs, down from the current 95 per cent.
Ottawa's Exposure
The City of Ottawa is already preparing for a more challenging fiscal landscape. Councillor Laura Dudas, who chairs Ottawa's community service committee, told CBC that the city wasn't surprised by the news and has been working on contingency plans.
But contingency plans don't eliminate the potential cost. If IHAP funding disappears entirely, Ottawa would need to find other sources to shelter refugee claimants, costs that could run into the tens of millions of dollars annually.
The federal government, for its part, says it has not announced a full stop to IHAP funding. Immigration, Refugees and Citizenship Canada (IRCC) said in a written response to CBC that it is making "targeted adjustments" that reflect a 34 per cent drop in asylum claims in 2025. The implication is that lower migration levels justify lower funding, but critics argue the cuts are disproportionate to the decline in need.
A City Watching Closely
Ottawa has built up a significant infrastructure for sheltering asylum seekers, including partnerships with hotels, community organizations, and city-run facilities. Much of that infrastructure was built with the assumption that federal funding would continue to help cover the costs.
If the federal government significantly reduces its contribution, Ottawa will face difficult choices about service levels, facility closures, or asking other levels of government to fill the gap. The city's tight operating budget leaves little room to absorb new costs without trade-offs elsewhere.
The situation is one that other Canadian cities are monitoring closely as well. Toronto and Hamilton have also relied heavily on IHAP funding and face similar exposure if the program is wound down.
Source: CBC Ottawa
