Across Canada, the political mandate is clear: build more homes, and build them immediately. Ambitious federal, provincial, and municipal housing targets dominate policy headlines, accompanied by multi-billion-dollar funding announcements and regulatory pressure on municipal councils to ramp up approvals.

Yet municipal engineers and public works directors know an inconvenient truth that rarely makes national soundbites: you cannot frame a roof or pour a foundation until you can service the tap and flush the toilet. Canada’s housing crisis is, at its foundational core, a municipal water and wastewater crisis.

At the Canadian Council for Public-Private Partnerships (CCPPP) Annual Conference, a panel moderated by Fraser Macdonald (Principal at StrategyCorp) brought together senior leaders across construction, operations, and public finance to dissect this bottleneck. The panel—featuring Lynnell Crone, Vice President of Collaborative Delivery at Bird Construction; Wes Muir, Director of Business Development at Veolia Canada; and Alex Ryan, Managing Director at the Canada Infrastructure Bank (CIB)—dug into the fiscal, technical, and operational realities stalling municipal capacity, and pointed to alternative delivery models to get projects moving.

The hidden 50 per cent

The financial scale of housing-enabling infrastructure is immense, leaving municipalities to shoulder heavy upfront capital expenditures with limited revenue tools.

“Three years ago, the Federation of Canadian Municipalities did a survey that basically said, of the five million-plus homes and residents that need to be built, infrastructure costs were $117,000 per unit,” noted Wes Muir. “Fifty per cent of those costs are water, wastewater, and stormwater. So you see the magnitude of the issue that we have here.”

Compounding this pressure is the erosion of traditional municipal funding levers. As provincial governments cut or cap development charges (DCs) to spur homebuilders, municipalities are left holding the financial risk.

“Municipalities have a limited fiscal capacity, competing priorities, and limited tools,” explained Alex Ryan. “They are being asked to deliver on an ambitious policy objective that requires a lot of upfront investment in infrastructure, where the timeline for the repayment—user fees, taxation, DC revenues—is pretty uncertain. It can be really difficult to stomach investing in all that infrastructure upfront and not knowing what the payback is.”

The traditional public-sector practice of waiting for development charges to accumulate in a reserve fund before breaking ground on a major trunk line or treatment plant expansion cannot keep pace with mandated population growth.

No down time allowed

Water and wastewater assets cannot be treated like roadways or conventional civil works. They are biological, mechanical, and regulatory lifelines that must operate around the clock.

“One of the biggest differences is that you’re not just building an asset that is somewhat stagnant,” said Lynnell Crone. “Water and wastewater is a living, operating facility that requires a very high level of reliability in the quality it produces and on-stream time. They really cannot go down.”

Furthermore, Canadian communities are rarely building greenfield plants. Most housing-enabling upgrades involve complex brownfield retrofits and plant expansions while existing treatment processes stay live.

“Often we’re trying to maximize the reuse of existing infrastructure where we can,” Crone pointed out. “It is aging, and there are a lot of unknowns. You don’t really know when you open up a tank what you’re really going to find, and you can’t easily inspect it ahead of time because it is in active operation.”

This operational reality exposes the flaw of traditional design-bid-build procurement. When municipalities spend years locking in rigid, preliminary engineering concepts before builders or operators are brought in, they create major project risks. When contractors later run into constructability issues or phasing conflicts, projects get bogged down in redesigns, disputes, and schedule delays.

Crone advocated for collaborative delivery approaches—such as Integrated Project Delivery (IPD) and progressive design-build—where the general contractor and technology providers sit at the table during early planning. By adopting outcome-based specifications (defining flow capacity, effluent standards, and reliability targets rather than prescribing exact valve makes or tank layouts), municipalities give the market room to optimize constructability and schedule tie-ins without service disruptions.

“Assumptions turn into risks if you don’t move them from assumption to fact,” Crone noted. “The earlier that everybody comes together, you have more options for mitigating risks, which ultimately drives cost certainty.”

The capital stack

While collaborative delivery addresses project execution, funding the upfront work remains the core hurdle.

Ryan noted that solving this requires looking beyond municipal general revenues to alternative balance-sheet mechanisms, such as Municipal Services Corporations (MSCs) and utility models supported by dedicated ratepayer user fees rather than municipal debt caps.

For small and mid-sized municipalities, standalone local tax bases cannot support the modern, capital-intensive facilities demanded by current environmental regulations. Under programs like the CIB’s Infrastructure for Housing Initiative, financing mandates often require substantial scale—such as a $50-million threshold net of grants—which forces communities to rethink jurisdictional silos.

The answer is regional pooling. Ryan pointed to the CIB-backed RSR Wastewater Cooperative in Manitoba, where several neighbouring rural municipalities banded together to replace aging lagoons with a single, modern centralized mechanical plant connected by regional collection mains.

“It’s far more efficient than each individual municipality investing in their own systems,” Ryan said. By aggregating demand, smaller communities gain the scale needed to attract federal concessionary capital, draw in private investment, and install advanced treatment systems that none of them could afford alone.

Operational capacity

Capital and concrete are only half the battle; long-term operations and asset management cannot be treated as an afterthought.

Muir pointed out that funding bodies increasingly demand modern digital tools. “One of the challenges we’re seeing from provincial and federal governments when municipalities bring projects forward is: ‘You’re replacing 1960s technology with 1960s technology. Where’s the digitization? Where’s the AI and machine learning that’s going to help us?’ It may cost more upfront, but it delivers operational benefits from day one.”

This push for technical modernization comes during an acute workforce crunch. The utility sector is facing a severe shortage of certified operators, forcing municipalities to ask senior Level 4 operators to delay retirement while struggling to recruit new talent into the trades. At city halls, engineering and procurement teams are equally stretched, often managing daily maintenance tenders while simultaneously trying to deliver half-billion-dollar capital programs.

Because of this bandwidth gap, more cities are turning to long-term advisory and operational partnerships—such as Veolia’s 30-year advisory mandate with the City of Winnipeg—to support capital procurement, asset management, and plant optimization.

Muir also urged local governments to look at wastewater facilities as energy assets. Water and wastewater treatment typically accounts for the largest energy draw and utility expense in a municipal operating budget. By co-locating anaerobic digestion facilities to process both municipal green-bin organic waste and wastewater biosolids, utilities can produce renewable natural gas (RNG). This turns an energy-intensive liability into an on-site power source that lowers long-term operating costs for ratepayers.

Planning ahead of the pipe

If Canada hopes to hit its housing targets, water infrastructure planning cannot remain fragmented and reactive.

Public owners need to bring provincial environmental regulators into planning conversations early to work through compliance hurdles well before procurement closes. At the same time, provincial and federal governments must provide clear, predictable, and funded capital pipelines so contractors, suppliers, and utility operators have the lead time to train staff and build delivery capacity.

Water is the foundation of local economic growth. Unlocking Canada’s housing supply will n...

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