Province to charge child-care centres in government buildings 'full market-rate rents' in 2025

EDITOR’S NOTE: This article originally appeared on The Trillium, a Village Media website devoted exclusively to covering provincial politics at Queen’s Park.

Child-care operators and advocates are raising concerns about the Ford government's plan to charge daycares located in government buildings "full market-rate rents" starting next year. 

The government has said funding through the $10-a-day program should offset the increases, but some operators say they're worried about whether the new rental costs — which are set to increase from nominal amounts to, in some cases, hundreds of thousands of dollars — will be fully covered. 

Several child-care operators were informed last year that the provincial government would be "implementing full market rate rents for child-care operators located in government buildings whose leases have expired," according to a letter from Infrastructure Ontario Vice-President James Harvey that The Trillium obtained. 

"While this will result in increased operating costs, child-care operators should be able to offset the cost increases with federal funding made available by the Ministry of Education under the Canada-wide Early Learning Child Care initiative," the letter sent last summer stated. 

Carolyn Ferns, public policy coordinator with the Ontario Coalition for Better Child Care (OCBCC), said she sees the decision to increase rent for several child-care operators as the province "shirking their responsibility to child care." 

"Is there so much funding going to child care that we can afford to be using it to fill the coffers of other parts of the government?" Ferns said. "These programs were being given nominal rent because they were child-care programs, providing a community good, but now that the federal government has come and we have the Canada-wide system, the Ontario government's going to take market rent from child-care programs, so it's just them stepping back from their own responsibility to fund child care."

While the letter said the rent increases would kick in January 2024, at least one operator said the date was moved to this September, before the government recently informed operators that the rent hike would be postponed to September 2025 "in light of the Ministry of Educations announcement that the implementation of the new Canada wide Early Learning and Child Care (CWELCC) funding approach will be effective Jan 2025."

The government has said this is part of "improving and streamlining the management of government real estate."

"As a part of this change, we are working with child-care operators to negotiate new leases that reflect market value and are consistent with the government's plan to manage provincial real estate assets in a consistent, responsible, and sustainable way, while also helping make life better for Ontarians by working more efficiently," said Ash Milton, a spokesperson for Infrastructure Minister Kinga Surma, in response to questions from The Trillium. 

"We’re also making sure that child-care providers who operate out of government-owned buildings can meet these increases with little to no effect on their operations. This is supported by the new cost-based funding approach which comes into effect January 2025, ahead of changes to rents in September 2025," said Milton. "More details will be made available later this year on how this program will be structured, including eligible accommodations such as rent."

The government did not provide a list of all the daycares facing rent increases, nor would it confirm or deny that there are around a dozen affected child-care centres. 

Dori Cross, executive director of Campus Child Care Cooperative of Guelph, confirmed her centre is located within a government building and "is impacted by the market-rate rent increase."

"I can confirm that we currently pay a nominal amount and that will increase substantially commencing now in September 2025," Cross said in an email. "We have been advised that funding will be flowed to us to cover the cost of the rent increase through funding made available by the Ministry of Education. Without this funding, we would see our reserves depleted to cover the rent cost. Without the funding, the continued operation of the centre would be increasingly difficult."

It's the same for ACW – Tiny Travellers in St. Catharines. The child-care centre is located within a building used by Ministry of Transportation employees, according to Kim Cole, executive director of A Child’s World, Family Child Care Services of Niagara, which runs 19 centres across the region.

While priority is given to children of government employees at the ACW – Tiny Travellers location, the centre does have several kids from families outside of government as well, she said. Currently the centre is paying $10 per year in rent, but the government informed the centre last year that the rent would go up to about $160,000 annually. 

Cole said that after expressing their worry, the government brought the proposed rental amount down to around $140,000, but that discussions on a new lease are ongoing. 

"We did say to them that that would be a risk for the families and children, because we're not sure whether we could sustain the proposed rent," Cole said, adding that while the government said the increased costs would be covered, she still has concerns. 

"We're one of many child-care agencies in Niagara and for that money to be taken out of our CWELCC funding, and a big portion of that money to be given to one agency, I didn't think it was fair," she said, adding that parent fees don't cover all the costs that centres currently face. 

The CWELCC deal between the federal and Ontario governments has already seen fees reduced by more than 50 per cent for families at centres enrolled in the program. Centres that joined the CWELCC program had their fees frozen in March 2022, with the government providing funding to cover the fee reductions. But many in the sector have said that without the ability to raise fees, which is a source of revenue for centres, operators are stretched thin.

"For $140,000 to go to the government for rent just doesn't seem fair to me ... and when you've managed all along without that money," said Cole. "I think it's a conflict of interest ... for one government to be asking money from us knowing that we're getting money from the other government."

She said they've considered moving to another location, but haven't found anything suitable yet.  

Meanwhile, just down the street from the provincial legislature is another daycare facing a significant rental increase. 

Marie Thomson, executive director of Queen's Park Child Care Centre, said while her rent sits at $1 per year, she hasn't had to cut a cheque in the 10 years she's been there. 

"We go from zero to almost half a million dollars that they wanted from us, so you can imagine that that was quite upsetting," said Thomson, adding that negotiations on a final amount are still happening. 

She said the centre, which opened in 1986, was considered one of the first workplace child-care centres and was started to support the Ontario public service community. 

Elinor Caplan, chair of the Management Board of Cabinet in the 1980s, described in the legislature in October 1985 the model for the centre that had been approved by cabinet, according to Hansard transcripts. 

"The Ministry of Government Services has provided space on the main floor of the Macdonald Block for a nonprofit, co-operative daycare centre, which will be run by the parent users of the centre. This is to encourage other employers to follow our example to provide workplace daycare ... The provision by this government will be the space and the utility of the centre," Caplan said. 

Thomson said no one seems to have "solid answers" about what this will look like and how costs will be covered.  

"There's always a fear, because nothing is promised," she said. "We're getting reassurance, but at the same time, we know we're not getting reassurance, because nothing is set in stone." 

Thomson said they've received communication from the government saying the impact of the rent increases will be "offset by the CWELCC funding, but the CWELCC funding is shaky."

"Outside of this lease, we're not getting enough funding to support the operations as they are today," Thomson said, adding that many centres, including theirs, are facing deficits. "It has put operators in a very contentious situation, and that's why a number of operations have closed, classrooms have closed, businesses have shut down altogether. We haven't cleaned up step one, and now we're moving to step two with this lease."

Bradley Metlin, a spokesperson for Education Minister Todd Smith, said in response to questions about how the rent costs would be covered that the new funding approach "will be provided very soon to allow for sufficient time to support smooth implementation." 

Metlin also said that federal funding for the CWELCC deal totals around $13.2 billion over six years and that "the province is investing an estimated $33.4 billion in early years and child care and full-day kindergarten" over that period. 

But the federal government criticized the province's move. 

"It’s deeply disappointing that the province is putting more obstacles in the way of child-care operators," said Geneviève Lemaire, a spokesperson for federal Families Minister Jenna Sudds. 

"The implementation of the Canada-wide agreement is provincial responsibility and it is up to Ontario to work with providers to meet the needs of parents across the province. Minister Sudds eagerly awaits the funding formula to be made public so operators have the support and certainty they need to plan and grow. Operating expenses, like rent, can be covered by funding formulas."

She said the federal government would "continue to closely monitor the situation and engage with Minister Smith to ensure Ontario supports our child-care operators fairly."