Province to charge “full market rent” for daycare centers in government buildings from 2025

EDITOR’S NOTE: This article originally appeared on The Trilliuma Village Media website dedicated exclusively to covering provincial politics in Queen’s Park.

Childcare operators and stakeholders are raising concerns about the Ford government’s plans to charge “full market rent” for childcare centers in government buildings starting next year.

The government has said funding from the $10-a-day program should offset the increases, but some operators have raised concerns about whether the new rental costs – which will rise from nominal amounts to hundreds of thousands of dollars in some cases – can be fully covered.

Several child care facilities were informed last year that the provincial government “will be imposing full market rents for child care facilities in government buildings whose leases have expired,” according to a letter from James Harvey, Ontario’s vice-president of infrastructure, which states: The Trillium receive.

“Although this will result in higher operating costs, child care operators should be able to offset the cost increases through federal funds provided by the Department of Education through the statewide Early Learning Child Care initiative,” said the letter sent last summer.

Carolyn Ferns, policy coordinator at the Ontario Coalition for Better Child Care (OCBCC), said she believes the decision to raise rents for several daycare centres is an act of “the province’s dereliction of its child care responsibilities.”

“Is there so much money being put into child care that we can afford to fill the coffers of other parts of the government?” Ferns asked. “These programs were paid a low rent because they were child care programs that were a public good, but now that the federal government has stepped in and we have a national system, the Ontario government is going to charge child care programs a market rent. They are just shirking their own responsibility to fund child care.”

While the letter said the rent increases would take effect in January 2024, at least one operator said the date had been pushed back to this September, before the government recently informed operators that the rent increase would be pushed back to September 2025, “in light of the Department for Education’s announcement that the implementation of the new nationwide funding approach for early childhood education and childcare (CWELCC) will take effect in January 2025.”

The government said this was part of “improving and rationalizing the management of state-owned real estate.”

“As 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 the province’s real estate assets in a consistent, responsible and sustainable manner, while helping to improve the lives of Ontarians by operating more efficiently,” said Ash Milton, a spokesperson for Infrastructure Minister Kinga Surma, in response to questions from The Trillium.

“We are also ensuring that childcare providers operating in state-owned buildings can manage these increases with little to no impact on their operations. This will be supported by the new cost-based funding approach that will come into effect in January 2025, ahead of the September 2025 rent changes,” Milton said. “More details on the structure of this program, including eligible accommodations such as rent, will be announced later this year.”

The government neither provided a list of all daycare centers threatened with rent increases, nor did it confirm or deny that around a dozen daycare centers would be affected.

Dori Cross, executive director of Campus Child Care Cooperative of Guelph, confirmed that her centre is located in a government building and is “affected by the market rent increase.”

“I can confirm that we are currently paying a nominal amount and this will increase significantly from September 2025,” Cross said in an email. “We have been informed that funds will be coming to us to cover the rent increase from funds from the Department of Education. Without these funds, our reserves to cover the rent costs would be depleted. Without the funds, the continued operation of the center would be increasingly difficult.”

The same is true for ACW – Tiny Travellers in St. Catharines. The child care centre is located in a building used by Ministry of Transportation employees, says Kim Cole, executive director of A Child’s World, Family Child Care Services of Niagara, which operates 19 centres in the region.

While children of government employees are given priority at the ACW – Tiny Travelers site, the center also houses several children from non-government families, she said. Currently, the center pays $10 a year in rent, but the government told the center last year that the rent would increase to about $160,000 a year.

Cole said the government had reduced the proposed rent to around $140,000 after expressing concerns, but talks on a new lease were ongoing.

“We told them it would be a risk to the families and children because we are not sure we can pay the proposed rent,” Cole said, adding that while the government has promised to cover the additional costs, she still has concerns.

“We are one of many child care facilities in Niagara and to have this money taken from our CWELCC funding and a large portion of it given to one facility, I didn’t think it was fair,” she said, adding that parent fees did not cover all of the costs the centers were currently incurring.

Under the CWELCC agreement between the federal government and the Ontario government, fees for families at centres participating in the program have already been reduced by more than 50 per cent. Centres that joined the CWELCC program will have their fees frozen in March 2022, with the government providing funding to cover the fee reductions. However, many in the industry have said that operators are overwhelmed without the ability to increase fees, which are a source of revenue for the centres.

“Paying $140,000 to the government for rent just doesn’t seem fair to me… after going all this time without that money,” Cole said. “I think it’s a conflict of interest… when one government demands money from us, knowing we’re getting money from the other government.”

She said they had considered moving to another location but had not found a suitable one yet.

Meanwhile, another daycare center near the provincial parliament is facing a significant rent increase.

Marie Thomson, executive director of Queen’s Park Child Care Centre, said that although her rent is only $1 a year, she has not had to write a single check in the 10 years she has been there.

“We went from zero to almost the half a million dollars they wanted from us, so you can imagine that was pretty upsetting,” Thomson said, adding that negotiations on a final amount were still ongoing.

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

Elinor Caplan, chair of the Management Board of Cabinet in the 1980s, described the Cabinet-approved model for the centre in Parliament in October 1985, according to the minutes published by Hansard.

“The Department of Government Services has provided space on the ground floor of Macdonald Block for a not-for-profit, co-operative daycare facility run by the parents who use the facility. This is to encourage other employers to follow our example and provide daycare in the workplace… The government will provide the space and use of the facility,” Caplan said.

Thomson said no one seemed to have “solid answers” as to what that would look like and how the costs would be covered.

“There is always a certain amount of fear because nothing is promised,” she said. “We get assurances, but at the same time we know we don’t get assurances because nothing is set in stone.”

Thomson said they had received a communication from the government stating that the impact of the rent increases would be “offset by CWELCC funding, but CWELCC funding is on shaky ground.”

“Outside of this lease, we are not getting enough funding to keep operations running as they are,” Thomson said, adding that many centers, including her own, are running at deficits. “It has put operators in a very contentious position and as a result, many facilities have had to close, classrooms have been closed, businesses have had to close altogether. We haven’t cleared step one yet and now we’re moving to step two with this lease.”

In response to questions about how to cover rental costs, Bradley Metlin, a spokesman for Education Minister Todd Smith, said the new funding approach would be made available “very soon to allow sufficient time for a smooth implementation.”

Metlin also said that federal funding for the CWELCC agreement totals about $13.2 billion over six years and that “the province is investing an estimated $33.4 billion in early childhood education and child care and full-day kindergarten during that period.”

However, the federal government criticized the province’s move.

“It is deeply disappointing that the province is putting more and more obstacles in the way of child care providers,” said Geneviève Lemaire, a spokeswoman for federal Family Minister Jenna Sudds.

“Implementation of the province-wide agreement is the province’s responsibility, and Ontario must work with providers to meet the needs of parents across the province. Minister Sudds is eagerly awaiting the release of the funding formula so that operators have the support and certainty they need to plan and grow. Operating costs such as rent can be covered through funding formulas.”

She said the federal government will “continue to closely monitor the situation and work with Minister Smith to ensure Ontario fairly supports our child care providers.”