[ByeByeBaby]

Even without blanket rezoning, Calgary was building at a much faster pace and more in line with population growth than almost any municipality in Ontario or BC. Why shouldn't that be rewarded? And now, two municipality can both have blanket rezoning, but one is building faster, and one slower, yet they both receive the same funds? We shouldn't pay for policy because the world is complex and municipalities can hit goals in a variety of ways rather than the government dictated way.
The spending should be phased. You meet your target in year 1, you get the year 1 funds, you meet it in year 2, you get the year 2 funds. I'm not sure why municipalities should require all the payment up front, when the spending should be phased by year anyways. It doesn't make sense to spend all the HAF funds in year 1, then have that funding source be 0 in years 2/3/4.

That example works, but doesn't make sense the way you've phrased it. Municipalities get their base funding, their salary, in your example. And the HAF funds is a bonus, for meeting certain performance benchmarks. Many jobs have stock options or other performance based compensation, which may not relate to your job directly (in a big company), but you get compensated for well or poorly the company is doing. No company pays a bonus up front for expected output, and neither should taxpayers.

Why would the feds pay money for something that was going to happen anyway? That's a terrible waste of public funds. In fact, if the goal is housing affordability, why are any funds coming to the areas where housing is more affordable?

HAF funding wasn't based on a single policy, different municipalities have chosen different policies -- although diverse zoning was something that the feds were looking for.

HAF spending is phased, although it's not strict as you describe -- the money does come in over time. But the expenditure comes up front. One HAF funded project in Calgary are some Main Street upgrades. In year 1, the City spends money on engagement and design. In year 2 and 3, the City spends money on construction and implementation. The increase in housing likely doesn't start coming until year 4, when all the money's been spent. If oil drops off a cliff, the housing just doesn't come at all. Even a much more straightforward project, like building an affordable housing complex, has the expenditure come before the units are actually finished. In that case, there's at least no risk, but why are cities (most of which are much smaller and have less robust budgets than Calgary) effectively lending money to the federal government?

Imagine funding the Green Line like that. How it works now is we think it'll get 50,000 new riders, the feds think it's a good project, they send us $2 billion. The way you're talking, we build it, and then when it opens -- oops! we only get 40K riders, and so we have to find $400M in the couches somewhere to cover the funding gap. Or we get 60K new riders - hooray!, but the Broadway Skytrain and Ligne Bleu Anjou extensions both open the same year, so tough, we get $1 billion since those other lines gained a lot more ridership.

Municipalities don't get any base funding, so there's no salary. If you agree to work a 40 your week, you get your salary. You shouldn't get your salary reduced because your coworker is also supposed to work 40 hours but works 60 instead.