Main takeaway:

There is no single “motel conversion grant,” but in Alberta a motel‑to‑micro‑suite project for low‑income tenants is typically financed by stacking:

Alberta’s Affordable Housing Partnership Program (AHPP) – provincial capital grant or land, often up to about one‑third of project costs, and it explicitly covers hotel conversions.
Federal CMHC capital programs – mainly the Affordable Housing Fund (AHF) and its rapid‑housing components, plus low‑cost loans under the Apartment Construction Loan Program (ACLP) or insured financing. These programs have already funded multiple hotel‑to‑housing projects in Calgary and elsewhere.
GST rebate for new purpose‑built rental housing – currently a 100% rebate of the 5% federal GST on qualifying new rental and conversion projects.
Municipal incentives – especially in larger cities (e.g., Calgary pre‑development grants and downtown conversion incentives), but potentially also in smaller municipalities via land, fee waivers, or in‑kind support.

The most substantial grants and forgivable loans generally flow to non‑profits, Indigenous organizations, and municipalities, or to private proponents partnering with them, with long‑term affordability commitments.

Below is a concise map of the main tools relevant to converting an Alberta motel into micro‑suites for low‑income households.

1. Alberta: Affordable Housing Partnership Program (AHPP)

This is the single most directly relevant provincial program.

Alberta’s Affordable Housing Partnership Program provides capital to public, non‑profit, and private‑sector housing providers for new builds, renovations, and conversions that create affordable housing. It is currently accepting applications, with an intake open until January 31, 2026.alberta

Key features and relevance to motel conversions:

Funding level:
- Provincial contribution of up to one‑third of total eligible project costs.alberta
- Contribution can be a capital grant, provincial land or building, or a long‑term lease/transfer of a government‑owned asset.alberta
Eligible construction types:
- Renovation of existing housing, adding at least 5 net new affordable units.
- “Conversion of non‑rental housing (for example, hotel or commercial space)” – motel to apartments fits squarely here.alberta
- Redevelopment / demolition and rebuild with at least 5 net new affordable units.
- New construction.alberta
Eligible costs: land acquisition; rezoning and permitting; design and consulting; purchase and renovation of existing units and conversion of non‑residential space to residential; demolition; reports; insurance; site works, etc.alberta
Project types: mixed‑income buildings with an affordable component; specialized housing (e.g., supportive housing); mixed‑use with ground‑floor commercial or services.alberta

Recent funding shows AHPP being used for exactly the kinds of projects you are asking about. In July 2025, Canada and Alberta announced $203 million under AHPP to help build over 2,300 affordable units in Alberta, including:

$3.08 million for Victory Outreach Foundation “to convert a hotel to affordable housing”, alongside numerous other new build and conversion projects.cmhc-schl+1

AHPP is designed to stack with CMHC programs: the application guidance explicitly allows you to submit your CMHC Affordable Housing Fund or Rapid Housing application as the basis for an AHPP application, with some added information.alberta

2. Federal CMHC capital programs for motel/hotel conversions

2.1 Affordable Housing Fund (AHF)

CMHC’s Affordable Housing Fund is now the flagship federal capital program under the National Housing Strategy. It provides low‑interest and/or forgivable loans and contributions for new affordable and community housing, but only to “partnered organizations” that have secured some funding from another level of government or partner.cmhc-schl

Relevance to motel conversions:

AHF supports both new builds and major rehab/conversion projects. CMHC explicitly highlights “Old hotel reimagined as mixed‑market housing with space for Calgary’s vulnerable residents” as an AHF‑supported renovation.cmhc-schl
Funds are typically tied to:
- Long‑term affordability commitments (e.g., rent ceilings for 20+ years).
- Serving target groups: low‑income households, people experiencing or at risk of homelessness, seniors, women and children fleeing violence, etc.cmhc-schl
Budget pressures: the Repair and Renewal stream is fully allocated, but the new construction / rapid streams remain open with additional loan top‑ups, and demand is highly competitive.cmhc-schl+1

In practice, a motel conversion with strong affordability and a municipal or provincial partner is positioned for AHF consideration, often with grants or forgivable loan on the deeply affordable portion plus low‑interest debt on the rest.

2.2 Rapid housing tools (RHI and Rapid Housing Sub‑Stream)

The earlier Rapid Housing Initiative (RHI) (now fully allocated) is directly relevant as a precedent: it funded multiple hotel‑to‑affordable‑housing conversions in Calgary:

Horizon 12 (Onward): hotel conversion to 33 units for vulnerable women; received $8.3 million from RHI Cities Stream.calgary
Vista Apartments (Silvera for Seniors): hotel conversion to 120 independent units for seniors; received $15.5 million from RHI Major Cities Stream.calgary

RHI guidelines explicitly allowed “conversion of non‑residential buildings into affordable housing” for vulnerable populations.calgary

Building on this model, CMHC has now launched a Rapid Housing Sub‑Stream under the Affordable Housing Fund, with about $963 million over 5 years to create roughly 2,400 new units/beds targeted at those in greatest need. This sub‑stream is intended to continue the kind of acquisition and conversion work RHI funded, now under the AHF umbrella.cmhc-schl

Realistically, this stream is primarily accessible to:

Municipalities, Indigenous governments, and non‑profits; and
Projects that are shovel‑ready, serving clearly defined vulnerable groups, often with on‑site supports.

2.3 Apartment Construction Loan Program (ACLP)

The Apartment Construction Loan Program (formerly the Rental Construction Financing Initiative) offers large, long‑term, low‑cost CMHC loans for purpose‑built rental projects, including conversions.

Example:

In 2025, CMHC committed $64.3 million in ACLP financing to convert an office building at 606 4th Street SW in Calgary into 166 rental homes, with additional City of Calgary incentive funding and equity from the developer.cmhc-schl
As of March 2025, ACLP had committed $23.35 billion in loans to support over 59,000 rental homes nationally.cmhc-schl

ACLP is more about cheap debt than grants, but can be paired with:

AHF contributions (for any deeply affordable units),
AHPP grants in Alberta, and
Municipal incentive programs.

For a motel conversion aiming at a mixed‑income model (deeply affordable plus near‑market), ACLP + AHF + AHPP is a common structure.

2.4 CMHC mortgage insurance for affordable conversions (e.g., MLI Select)

Even outside the main capital programs, CMHC mortgage insurance can be structured to support affordability in motel conversions.

Example:

In Red Deer County’s Gasoline Alley, a developer is converting “The Suites” hotel into apartments, including 47 affordable suites. CMHC will back a 40‑year loan with mortgage insurance, conditional on at least 50% of units being affordable, with CMHC setting rental rates and auditing annually.reddeeradvocate

This is essentially insurance‑enhanced, long‑amortization financing, rather than a direct grant, but it can substantially improve project economics for an affordable motel conversion.

3. GST/HST: 100% federal GST rebate on new rental / conversion projects

For an Alberta motel conversion into long‑term rental micro‑suites, the enhanced GST/HST rebate for purpose‑built rental housing is highly relevant.

The federal government now provides a 100% rebate of the 5% GST (or federal HST portion) on certain new purpose‑built rental housing, including conversions from non‑residential buildings.canada+2

Key points:

Applies to:
- New or substantially renovated multi‑unit rental complexes.
- Conversions from non‑residential buildings (e.g., an office or hotel) into a multiple‑unit residential complex, provided the building existed and was non‑residential as of September 13, 2023.canada+1
Main conditions include:
- Construction/ conversion must begin after September 13, 2023 and before 2031, and be substantially completed before 2036.canada+1
- The complex must have at least 4 self‑contained units (each with private kitchen, bath, and living area) or at least 10 private rooms or suites.cba+1
- At least 90% of the units are held for long‑term residential rental (not short‑term stays).canada+2
In Alberta, there is no provincial HST component, so the rebate covers the full 5% GST on qualifying construction or self‑supply.

For a motel‑to‑micro‑suite project, this effectively eliminates GST on construction and conversion costs, provided each micro‑suite is a self‑contained unit and the project is operated as long‑term rental.

4. Municipal incentives and local examples in Alberta

4.1 Calgary: downtown conversion and housing incentives

Calgary has several municipal tools that interact with CMHC and provincial funding:

Downtown Calgary Development Incentive Program (DIP):
- Offers $75 per square foot (up to $15 million) to convert empty downtown office space into residential units.calgaryherald+2
- Frequently stacked with CMHC funding (e.g., AHF and ACLP) for large office‑to‑residential conversions like 800 Six West, a mixed‑use residential project receiving over $83 million in combined AHF and city funding.connectcre+1
Housing Incentive / pre‑development grants:
- The City has provided pre‑development grants (up to about $50,000) and development fee rebates to support non‑market housing providers preparing RHI and other proposals.alphahousecalgary

While these are currently concentrated on downtown office conversions, they demonstrate a willingness to co‑fund conversions and to align with CMHC and AHPP dollars. For a motel conversion inside city limits, early discussions with the city housing group can identify:

Zoning / land‑use path (e.g., change from hotel/commercial to multi‑residential).
Potential fee waivers, tax incentives, or land contributions.
Whether the municipality is willing to co‑sponsor AHF/AHPP applications.

4.2 Calgary hotel‑to‑housing case studies

The following conversions show how hotel assets have been repositioned into affordable or supportive housing in Calgary:

Centre 4800 (former Quality Inn):
- Extensive renovation of a 1960s hotel into 79 units (33 studios, 39 one‑bedrooms, 7 two‑bedrooms), plus community and commercial space.cmhc-schl
- Funded by a mix of:
  - CMHC’s National Housing Co‑Investment Fund – Revitalization (predecessor to AHF) – about $8.78 million.
  - CMHC Seed Funding (~$50,000).
  - A provincial capital grant (~$5.17 million).
  - City of Calgary contribution and non‑profit equity.cmhc-schl
- Operated using a Housing First model with mixed‑market and rent‑geared‑to‑income units.cmhc-schl
Horizon 12 and Vista Apartments (RHI Round 1):
- Horizon 12: hotel conversion to 33 units for vulnerable women, funded by $8.3 million from RHI Cities Stream.calgary
- Vista Apartments: hotel conversion to 120 independent seniors’ units, funded by $15.5 million from RHI Major Cities Stream.calgary

These illustrate the typical pattern: layered CMHC, provincial, municipal and non‑profit contributions to make a hotel‑to‑affordable‑housing conversion viable.

4.3 Other Alberta motel conversion examples

Red Deer County (Gasoline Alley – The Suites):
- Proposal to convert an existing hotel into a mix of affordable and market apartments, with CMHC‑backed 40‑year insured financing, and at least 50% of units designated as affordable with CMHC‑set rents.reddeeradvocate
Sundre (Parkwood Motor Inn):
- A former motel being converted into 24 rental units in Sundre. Public reporting does not spell out the funding stack, but it shows rural motel assets being repositioned into long‑term rental.thealbertan

These projects suggest that even in smaller centres, motel conversions are viewed favourably, especially when structured with a clear affordability commitment and where CMHC insurance or AHPP support can be brought in.

5. How a typical Alberta motel‑to‑micro‑suite project would be financed

For a central‑Alberta motel being converted into small self‑contained suites aimed at low‑income tenants, the most realistic funding stack usually looks like:

Core capital stack
- AHPP: target up to ~33% of total eligible costs as a provincial grant or land contribution, framed as “conversion of hotel to affordable/mixed‑income housing.”newswire+2
- CMHC Affordable Housing Fund: seek a mix of low‑interest and, if feasible, forgivable loans or contributions for the affordable units, especially if serving people in core housing need or at risk of homelessness.cmhc-schl+1
- CMHC insured financing / ACLP: for the balance of capital and to secure long‑amortization, low‑rate debt.cmhc-schl+1
Tax treatment
- Structure the project to qualify for the GST purpose‑built rental housing rebate, so that the 5% GST on construction/ conversion is fully rebated, which is significant on a deep retrofit.canada+2
Municipal participation
- Seek municipal support in the form of:
  - Letters of support and participation as a formal partner (important for AHF and AHPP scoring).
  - Development fee reductions/waivers, tax relief, or municipal capital contributions similar to the RHI projects and downtown conversion incentives in Calgary.calgary+3
Ownership and operating model
- The strongest subsidy packages almost always involve:
  - Non‑profit or Indigenous ownership, or
  - A public/private partnership where a non‑profit or municipality masters leases the building or a portion of the units, and the private owner provides capital and operations.
- Long‑term affordability covenants (e.g., 20+ years of capped rent levels) are standard for both AHF and AHPP.cmhc-schl+2

6. Practical next steps (in Alberta context)

If the goal is to explore converting a specific motel into low‑income micro‑suites:

Define the concept clearly
- Unit count and sizes; target tenant groups (e.g., seniors, low‑wage workers, people exiting homelessness); proportion of deeply affordable vs. moderate‑rent units.
- Whether there will be on‑site supports (which can strengthen the case under rapid/ supportive housing streams).
Engage locally early
- Talk to the municipality’s housing/planning staff about:
  - Land‑use and rezoning path (hotel/commercial to multi‑residential).
  - Whether they will co‑sponsor an AHF and AHPP application and potentially contribute land, cash, or fee waivers.
Coordinate CMHC and AHPP applications
- Review CMHC’s AHF application guide and Alberta’s AHPP guidelines and sample agreements, then map the project’s affordability and financials to their criteria.cmhc-schl+1
- Alberta explicitly allows you to submit your CMHC AHF/RHI application as your AHPP application, with some addenda, which encourages a coordinated approach.alberta
Model the financials with GST rebate in mind
- Design the units so each micro‑suite is a self‑contained dwelling (kitchen, bath, living area) and ensure at least 90% of units are long‑term rentals, to qualify for the full GST rebate on the project.canada+3
Choose an ownership structure suited to funding
- If you are a private owner, consider partnering with a non‑profit housing operator or Indigenous organization to:
  - Strengthen eligibility for grants/forgivable loans.
  - Provide credible long‑term management for a vulnerable‑tenant building, which funders heavily weight.cmhc-schl

Bottom line

In Alberta, yes, there are meaningful government subsidies to convert an old motel into micro‑suites for low‑income people, but they are not turnkey or single‑source:

Provincial AHPP funding has a clear pathway for hotel conversions and can cover up to one‑third of project costs.cmhc-schl+2
Federal CMHC programs (Affordable Housing Fund, Rapid Housing‑type sub‑streams, ACLP, insured financing) have already funded several Alberta hotel‑to‑housing projects, especially when led or co‑led by non‑profits and municipalities.reddeeradvocate+4
Tax measures, particularly the enhanced GST rebate for purpose‑built rentals, materially improve feasibility if the conversion is structured as long‑term rental housing.canada+2

Success typically depends less on the building type itself (motel vs. office vs. other commercial) and more on how deeply affordable the units are, who the project serves, and whether a strong public/non‑profit partner is at the table.

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Friday, November 28, 2025

Alberta/Canadian Government subsidy to renovate old motels to become micro suites for low income people