Ontario has reached a "new deal" with the City of Ottawa that involves the province taking on some major costs in exchange for the municipality encouraging more housing development and lowering taxes.

The province announced on Thursday that it will take ownership of Highway 174, support repairs to major connecting roads, and open a new downtown police station.

Premier Doug Ford said in Ottawa during a breakfast chat with the city’s mayor, Mark Sutcliffe: "We are announcing a new deal for Ottawa that will help the city continue to rebuild the economy and achieve key priorities, including building highways and homes.

Ford said the deal reflects the city's unique status as the nation's capital and the economic engine of Eastern Ontario.

The province will grant the city $546 million in a 10-year deal to help its recovery and economic revitalization. Ford said some of the funds will also be used to hire more police officers.

Sutcliffe said: "This is a big win for Ottawa."

The mayor said the funding "will ease significant budget pressures" and allow for better services for residents.

A portion of the funds will also be allocated toward conditional funding for emergency shelters, designing and building an interchange on Highway 416 in the suburbs, and a crosswalk.

Ontario stated that the city has made a number of "mutual commitments" to the province, including opening land for housing development, enhancing the vacant home tax, and reducing taxes.

Ford and Sutcliffe also called on the federal government to “do its part to help revitalize the downtown economy.”

Specifically, the premier urged the federal government to bring the workforce back to the office for more days in the week.

Ford said: “They need to get people back to work.” "Even like three days, anything. It seems crazy: I’m begging people to go to work for three days, that doesn’t mean they don’t work from home, but it really affects downtown.

Last fall, Ford announced a deal with the City of Toronto under which the province took ownership and operating costs of two highways as the city faced a $1.5 billion deficit for 2024.

The province, which is responsible for these highways, along with a promise to fund 55 new subway trains – conditional upon matching federal contributions – is set to provide Toronto with $7.6 billion in the form of a capital grant.

The province also granted Toronto up to $1.2 billion in operational funding over three years, including support for two light rail lines, funds for transit operations, and to create more shelters for the homeless.

As part of that deal, Toronto Mayor Olivia Chow conceded on the Ontario Place issue.

During the mayoral election campaign, she vowed to fight Ford’s plan to redevelop the waterfront attraction area that would see a massive spa, a new marina, redeveloped pavilions, a new concert venue, and new beaches built. Chow yielded because the city owned only a small piece of land that could have been expropriated by the province.

Ford said both Ottawa and Toronto face "unique" challenges that require new deals, but said similar deals for other cities are not imminent because the province is "pumping money" into other municipalities across the province.

Mayors of Ontario’s large cities, representing mayors of 29 cities with populations over 100,000, welcomed the special agreement for Ottawa.

Marianne Meed Ward, Mayor of Burlington and Chair of Large Urban Mayors, said: "This new deal shows that the province recognizes that Ontario’s big cities need significant new funding beyond the municipal tax base."

But the organization is pushing for new deals for other cities in Ontario as well.

Mayors said that municipal taxpayers support the province with up to $4 billion annually to pay for infrastructure and services that fall under Ontario government responsibility.

Meed Ward said: "We want to work together to strike a new deal for all cities that will help Ontario municipalities grow and thrive for years to come."

New Democratic finance critic Catherine Fife said that while the NDP is happy with the deal with Ottawa, she said the rest of the province’s municipalities want to be unified.

She added, "This government has some internal thinking to do when it looks at the damage it has done to municipalities and how it has hurt residents in this province, especially regarding the housing file."

Liberal House Leader John Fraser, who represents Ottawa, said Ottawa got less than the deal with Toronto.

Fraser said: "If you look at it on a per capita basis, you’ll find it’s incomparable."