Construction of the Humber Meadows Long Term Care Home on March 15, 2022. The Ontario government is more than doubling its construction funding subsidy for building new nursing homes and upgrading existing ones.Fred Lum/the Globe and Mail
The Ontario government is more than doubling its construction funding subsidy for new and upgraded nursing homes, as it faces a looming deadline to replace outdated facilities with those that meet modern design standards.
Almost 40 per cent of nursing homes in Ontario do not meet current provincial government standards requiring residents to be housed in single- or double-occupancy rooms. Most homes were built 50 years ago when multibed wards were common across Canada. Operating licences for homes with three- and four-bed wards expire in 2025.
Premier Doug Ford has promised to deliver 30,000 new long-term-care beds and upgrade 28,000 outdated ones by 2028. His administration has awarded 31,705 new beds across Ontario. But many projects, particularly in the not-for-profit sector, are in limbo because the government’s funding subsidy has not kept pace with rising interest rates and construction costs.
“These financial barriers mean many long-term-care projects have stalled before reaching the construction phase,” Paul Calandra, Minister of Long-Term Care, said in recently unveiling the higher construction funding subsidy.
The province urgently needs new beds – nearly 40,000 people are waiting for a spot in a nursing home. The enriched funding is designed to offset escalating financing and construction costs, and fast-track projects by this summer. To be eligible, projects must have shovels in the ground by Aug. 31.
Once construction is complete, homes will receive an additional subsidy of up to $35 a day for each bed, payable for the next 25 years. The new money is in addition to existing construction funding subsidies ranging from $20.53 to $23.78 on the same terms, depending on a home’s location and size.
“It’s going to get quite a few projects over the hump,” said Lisa Levin, chief executive officer of AdvantAge Ontario, a group that represents not-for-profit nursing homes. “This is definitely helpful for a lot of homes.”
AdvantAge has compiled a list of 13 projects with a total of 1,884 new and upgraded beds in the not-for-profit sector that can go ahead with the additional funding.
But many others in the sector won’t be ready by the Aug. 31 deadline, said Don Gracey, president of CG Group, a Markham consulting firm that advises the sector. He is concerned the government will reassign some of those projects to for-profit owners to help fulfill its promise of 30,000 new beds.
“I think it’s going to be difficult for them to meet that target,” Mr. Gracey said. “And I think getting close to that target will mean that the for-profit/not-for-profit balance gets seriously out of whack.”
For-profit companies own 57 per cent of the 627 nursing homes in Ontario, the highest share in Canada. They will remain entrenched in the sector under the province’s construction blitz.
Extendicare, one of the largest for-profit chain operators, says in an investor presentation that plans are progressing on 20 projects, with 4,248 beds awarded to the company, including replacing 3,285 beds in its outdated homes. Three new buildings are under construction in Sudbury, Kingston and Stittsville. The company plans to proceed with another four projects, subject to tender pricing and planning approvals.
“The new capital subsidy allows us to proceed with redevelopment of our homes despite the twin challenges of inflation and higher interest rates,” Extendicare CEO Michael Guerriere said in an e-mail response.
The for-profit chains have a competitive advantage because many are in the real estate development business and have the expertise in-house to deal with zoning and Long-Term Care Ministry officials to get their construction plans approved.
By comparison, building a new facility is a one-time venture for not-for-profit homes. Bernard Boreland, CEO of Mariann Home, doesn’t know if he can meet the Aug. 31 deadline to qualify for the new funding. The province awarded the not-for-profit home 76 new beds in March, 2021. But the home is still waiting for zoning approval to build on land it purchased in Vaughan, north of Toronto, back in 1999.
“The top-up funding is great,” Mr. Boreland said. “It’s just the timing.”
Tri-County Mennonite Homes, another not-for-profit, has approval to replace the 97-bed Nithview Home, near Waterloo, with a new 192-bed home. Steven Harrison, Tri-County’s chief executive, said he told government officials his project cannot meet the timeline.
But he added: “There was part of me that wanted to just roll the dice and say, ‘Yep, put it in there and we’ll be eligible for some extra cash.’”
For those projects that are well along, the added funding “will allow us to cross the finish line and start construction,” said Sue Graham-Nutter, CEO of the Rekai Centres.
The not-for-profit organization bought land in downtown Toronto in 2019 for a new home, and the Ontario government has awarded it 222 new beds.
" I think from the beginning the government knew that not everybody was going to be able to meet the deadline, but some homes can,” Ms. Graham-Nutter said.
As part of the new funding announcement, the government is helping not-for-profit homes finance their projects by allowing those that meet the Aug. 31 deadline to convert $15 of the $35 top-up into a grant, payable when construction starts.
Homes must raise at least 30 per cent of their construction costs up front and borrow the rest. Unlike the large chains, which have plenty of access to capital, not-for-profit homes do not build up reserves that can be used to help finance construction, and banks are less inclined to lend to them.