Images are unavailable offline. The former property of the Thistletown Regional Centre in Etobicoke. Tijana Martin

The Ontario government has cancelled a plan to build affordable housing on a piece of unused provincial land in Premier Doug Ford’s Toronto riding, saying the original deal wasn’t good enough.

Under a plan announced by the then-Liberal government in 2017, the vacant 11-hectare site of the Thistletown Regional Centre – once a children’s mental-health facility – was supposed to become an 800-unit housing development, with 160 homes offered at rents at or below average market rent. Another 80 units at the site, which is near the intersection of Kipling and Finch Avenues in northwestern Toronto, were to be made available under an affordable-ownership scheme.

But after Mr. Ford’s Progressive Conservatives were elected last year, the deal with Mattamy Homes and two non-profit agencies was quietly scrapped.

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The site, which is in one of Toronto’s poorest neighbourhoods and along the route of the proposed Finch West light-rail transit line, costs the government $1.2-million a year to maintain its deteriorating buildings and keep them secure.

Richard Clark, a spokesman for the Premier, said the previous government’s deal on Thistletown failed to produce both enough affordable housing – and enough cash for Queen’s Park.

“We believe that the proposal accepted by the previous government dramatically undervalued Thistletown in terms of both revenue for taxpayers and the potential for housing that's affordable,” Mr. Clark said in an e-mail.

He said the government was reviewing all of its real estate for sites suitable for either affordable housing or long-term care homes, and that no decision has been made on what to do with Thistletown.

In March, Mr. Ford received a briefing on the status of the site, according to the Premier’s calendars obtained by The Globe and Mail through a Freedom of Information request. The Premier also had briefing in his schedule on surplus land sales in January.

The plan was set to receive a range of financial incentives from the city for affordable housing, including waived fees and property taxes. Don Peat, a spokesman for Toronto Mayor John Tory, said the mayor remained committed to working with other governments to get affordable-housing projects built. “The Mayor is hopeful that the progress we had been making on the Thistletown site, including affordable housing and supportive housing, can be resumed,” he said.

A provincial government source, who The Globe granted anonymity because they were not authorized to speak publicly about the development, said the decision to put it on hold was made by the province’s Housing Ministry. It came after postelection meetings with representatives of Mattamy Homes, the developer involved, who offered up larger-scale plans for the site than those approved by the previous government, the source said. The original plans allowed for townhouses and at least one mid-rise building – even though there are taller towers in the area.

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Discussions with Mattamy continue, the source said, but the government will likely open the site up again to other bidders. A new deal could involve the construction of more units, with or without the pledge of any additional designated affordable housing, the source said.

However, a privately developed site of this size would have to make offering at least 20 per cent of new units at or below the city’s average market rate a “first priority” under Toronto’s inclusionary zoning policy.

The Thistletown site dates back to the 1920s when it served as a “country branch” of the Hospital for Sick Children. In the 1950s, it became a children’s mental-health centre, and in the 1970s, numerous cottages were built on the grounds to serve as group homes. It has been empty since the previous Liberal government shut it down in 2012.

The main hospital building, which dates from 1928 and was designed by renowned architects Henry Sproatt and Ernest Ross Rolph – who were also responsible for the University of Toronto’s Hart House and the Royal York Hotel – is on the city’s heritage register.

In 2017, former premier Kathleen Wynne pledged that the site would be redeveloped. The government offered it for sale for $44-million.

The source in the current government said that deal would have seen Mattamy put $30-million into restoring the main building and its gym, creating a community centre and see that cheque counted against the asking price. With that contribution – and further discounts for other undertakings on the site – the government’s take on the sale was whittled to well below the remaining $14-million, the source said, arguing the proposed community centre would duplicate a nearby facility. Mattamy did not respond to requests for comment.

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The government has gone ahead with two other affordable-housing projects on surplus provincial land in Toronto initiated by the Liberals, one in the West Don Lands and another downtown. But the PC government backed out of a Liberal-brokered affordable-housing land deal in Hamilton last year.

“I think it’s certainly wrong for Ford to be delaying desperately needed affordable housing when we could have shovels in the ground,” said Suze Morrison, the Ontario NDP’s housing critic.

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