Toronto will extend the leases of 17 temporary shelter hotels for up to five years as part of its services for unhoused people, city council decided this week.

The extension is part of a new $674.5 million capital plan for homelessness services in which the city aims to replace the shelter hotels, which first opened during the COVID-19 pandemic, with more permanent facilities. The capital plan involves the creation of 20 new shelters over 10 years.

Gord Tanner, general manager of Toronto Shelter and Support Services, said in an interview on Friday that the city plans to identify or purchase five of the new sites this year. He said the new permanent shelters could support specific groups, including youth, families and Indigenous peoples.

"This plan allows us to create stability going forward so we can continue to get people off the streets and into shelter and into housing and that we are starting to do this now going forward in a more cost effective way that will support the best outcomes possible in the system," Tanner said.

The city has not released the cost of extending the leases of the shelter hotels, saying the information is confidential as negotiations continue. Currently, the 17 shelter hotels provide spaces for about 2,000 people and more than 200 families. During the pandemic, the city leased a total of 29 shelter hotels.

Tanner told council on Thursday that it costs the city about $260 a night to house one person in a shelter hotel. He said the largest shelter hotel in Toronto has 380 people, while three or four have more than 200 people each. Some have generated more concerns from community members than others, he added.

On Thursday, council approved a staff report allowing the city to implement the capital plan, giving staff the authority to continue the leases of the shelter hotels as the city seeks to build its base shelter system. Tanner told council that the report doesn't address concerns of particular communities about individual shelter hotels.

"The report really allows us to now stabilize the shelter system, which has been through quite a challenging time over the last few years, allow the clients that are using those programs the time to develop appropriate housing plans and move into permanent housing and allow us to continue to meet the the tremendous need of folks who are in need of our services at the moment in the city," Tanner said.

Tanner added that a shelter should ideally have about 80 beds, a size that would allow staff to provide a more customized focus. Smaller shelters are also able to integrate better into local communities, he said.

The capital plan represents a shift from shelters being hosted in leased-spaces to building new city-owned facilities with a maximum of 80 beds.

The city added thousands of shelter beds during the pandemic to create necessary space between people using the service, signing leases with hotels to provide the accommodations. But staff have long-warned that the shelter hotels are not financially viable in the long-term.

According to city statistics, 10,607 people were actively homeless in Toronto in the last three months. A total of 9,835 people stayed in the city's shelter system as of Thursday. An average of 170 individuals were unable to secure a bed in the shelter system nightly in December 2023.

Tanner said the city was supporting 12,065 unhoused people inside and outside its shelter system as of Feb. 4, with the help of the Canadian Red Cross. Nearly half of the total are refugees.

Diana Chan McNally, a community worker at Toronto's All Saints Church-Community Centre, said it's good news that the city is extending the leases of the shelter hotels and not shutting them down immediately, which she said would be "absolutely disastrous" for unhoused people. But she agreed that shelter hotels are not a long-term solution to homelessness.

"Really, we need to transition out of these shelter hotels," she said. "I would really like to see us move out of these spaces and actually build smaller, decent spaces as well as spaces that are appropriate for different communities."

Chan McNally said the capital plan is something that should have already been in the works given the pressure on the shelter system.

"This should have been happening a long time ago. We've seen the crisis of homelessness become completely astronomical and out of control in our city and we haven't done nearly enough to actually address it," she said.

Chan McNally said she is concerned, however, that the new permanent shelter sites might be in under-served areas, away from the downtown core, and said the city should have a plan to shelter people in the communities that they prefer. But she said she supports the city's focus on building smaller shelters.

"When you have a larger shelter, it's like warehousing people, which is not nice. It's a terrible situation to be put into a location where you have hundreds of other people and not nearly enough staff so your needs aren't being met," she said.