The federal government will invest more than $510 million over eight years in Alberta water and waste infrastructure under a new agreement intended to remove barriers to housing construction.

Prime Minister Mark Carney and Alberta Premier Danielle Smith announced the deal Wednesday. The money, delivered through the Canada Housing Infrastructure Fund, can support new or upgraded drinking-water, wastewater, stormwater and solid-waste systems. The governments say aging or overcapacity infrastructure has delayed development in communities across the province.

Alberta will cover at least one-third of eligible costs for projects led by municipal governments. At least $100 million in federal funding must go to projects in rural and Indigenous communities, matching a program rule requiring provinces to direct no less than 20 per cent of their allocation to those areas.

The agreement comes as homebuilding loses momentum. Canada Mortgage and Housing Corp. recorded 22,077 housing starts in Alberta centres with at least 10,000 residents during the first half of 2026, down 21 per cent from 27,902 a year earlier. Calgary starts fell 23 per cent and Edmonton starts dropped 20 per cent over the same period.

The federal housing agency has attributed the broader Canadian slowdown to economic uncertainty, higher development costs, weaker demand and growing inventories of unsold homes.

Ottawa says the agreement supports Alberta’s goal of adding 25,000 affordable homes by 2031. The release does not estimate how many homes the spending will enable or explain how affordability will be defined and tracked.

Alberta must submit projects seeking at least $25 million in federal contributions by Nov. 30, 2026, with remaining proposals due by March 31, 2030. No specific projects, municipalities or construction schedules were announced.