The federal government’s tightening of asylum rules has triggered a sharp drop in new claims, offering municipalities a rare breathing space to rebuild a shelter system that buckled under record demand. From Mississauga’s purpose-built reception centre to Niagara’s hotel-based dispersal model, cities are experimenting with alternatives to the ad hoc emergency response that left families like Kimberly’s stranded in the cold. But advocates warn the current lull may be temporary — and that the structural gaps exposed over the past two years remain largely unaddressed.
A System at Breaking Point
When Kimberly arrived at Toronto Pearson in December 2024, the temperature hovered well below freezing. A single mother from Kampala, she had fled Uganda after her advocacy for survivors of gender-based violence drew threats she could no longer ignore. Her four-year-old daughter had only the clothes on her back. Three days in an Airbnb exhausted their savings. Calls to the city’s central intake line returned the same answer: every shelter bed was full.
The operator’s solution was a bus ticket to Niagara Falls — a hotel room in a tourism corridor hollowed out by the pandemic, now repurposed as overflow housing for refugee claimants. Kimberly accepted. “We just needed a place where my daughter would have warmth,” she said. The Star is withholding her surname because her refugee hearing remains pending and she fears for her safety.
Her months in the Niagara hotel circuit became a full-time job in itself. Daily check-ins with caseworkers demanded proof of housing and job searches. Landlords required Canadian guarantors she did not have. Job postings attracted hundreds of applicants. Each return to the hotel meant another interrogation about her movements. The pressure to exit the shelter system was constant, even as the barriers to independence multiplied.
Kimberly’s experience was not an outlier. It was the system functioning as designed — or rather, as it had been forced to function when federal policy and municipal capacity collided.
The Policy Pivot
The surge that overwhelmed shelters in 2023 and 2024 was driven by a confluence of factors: global displacement at historic highs, the lifting of pandemic-era border restrictions, and a 2023 Federal Court ruling that struck down the Safe Third Country Agreement’s application to irregular border crossers — a decision later stayed pending appeal. Asylum claims in Canada peaked at over 140,000 in 2023, more than double the previous year.
Then came the pivot. In early 2025, Ottawa introduced a suite of measures: expanded visa requirements for Mexican nationals, faster processing for claims from designated “safe” countries, and a renewed push to enforce the Safe Third Country Agreement across the entire land border, not just at official ports of entry. The impact was immediate. By mid-2026, new claims had fallen by roughly 40 per cent compared to the 2023 peak.
Immigration Minister Marc Miller has framed the changes as necessary to preserve system integrity. “We cannot have a system where the only way to access protection is to arrive irregularly,” he told the House of Commons in June. Critics, including the Canadian Council for Refugees, argue the measures penalize genuine claimants and violate international obligations. The Federal Court is expected to rule on a constitutional challenge later this year.
For municipalities, the drop has been a reprieve — but not a solution.
Building the Reception Model
In Mississauga, the Region of Peel took a different gamble. Rather than rely on hotels, it opened the Peel Reception Centre in January 2025: a 680-bed facility designed as a first stop for claimants arriving at Pearson. Bunk beds line dormitory-style rooms. On-site services include legal aid navigation, health screening, language assessment, and housing coordination. The goal is to move people into community housing within 30 to 60 days.
Early data suggests it’s working. Average length of stay at the centre is 42 days, compared to 90-plus in the hotel model. Children are enrolled in local schools within a week. A partnership with a non-profit employment agency has placed 18 per cent of working-age adults in jobs within three months — modest, but double the hotel average.
“It’s not perfect,” said Dr. Nadia Hassan, the centre’s medical director. “But it’s a system. We know where people are. We can track outcomes. We can adjust.”
The centre cost $42 million to retrofit and operates at $18 million annually — funded through a mix of federal asylum support dollars and regional contributions. Peel argues the per-diem cost is lower than hotel contracts, which often included security, meals, and transportation markups.
Other regions are watching closely. York and Durham have signaled interest in similar models. British Columbia has piloted a “welcome hub” in Surrey, integrating settlement services with temporary modular housing. Quebec, which manages its own asylum intake under the Canada-Quebec Accord, has expanded its network of government-run centres d’hébergement.
The Niagara Experiment
Niagara Region took a different path. Lacking a single large site, it leaned into the hotel model — but with a twist. The region negotiated master leases with half a dozen properties, converting them into semi-supported housing. Caseworkers are stationed on-site. Children’s programming runs in converted conference rooms. A mobile health unit visits weekly.
The approach has drawbacks. Hotels are scattered, complicating service delivery. Isolation is a recurring theme in resident feedback. But it allowed Niagara to absorb overflow when Peel reached capacity — and to do so without the chaotic daily relocations that defined the 2023 crisis.
“We’re not building a permanent system on hotels,” said Regional Chair Jim Bradley. “But we’re not going to leave people on the street while we figure out the permanent system.”
The Hidden Population
Not everyone enters through the front door. The federal cancellation of thousands of “legacy” claims — files deemed abandoned or ineligible under new processing rules — has created a shadow population. A 33-year-old Haitian man who crossed from the U.S. in 2022, featured in a companion Star investigation, had his claim cancelled without a hearing. He cannot be removed to Haiti due to a moratorium on deportations. He cannot work. He cannot access settlement services. He exists in administrative limbo, housed in a Toronto shelter that is not funded for long-term stays.
Advocates estimate several thousand people are in similar positions. Their needs — legal representation, mental health support, basic income — fall through the cracks of a system designed for new arrivals, not stalled cases.
Why it Matters
Canada’s refugee shelter system is being rebuilt in real time, shaped as much by political necessity as by evidence. The current dip in arrivals is a policy choice, not a permanent reality — global displacement continues to rise, and no border regime is leak-proof. The reception centres and supported hotels now operating in Ontario are promising prototypes, but they remain fragmented, under-evaluated, and dependent on federal funding streams that could shift with the next election. If the next surge arrives before these models are scaled, standardized, and funded for the long term, the next Kimberly will still be calling a hotline that has no answer — and the next bus to Niagara Falls will still be the best a wealthy country can offer.
