In the past five years, there has been a striking increase in the number of people experiencing homelessness, including unsheltered homelessness, across Canada (Infrastructure Canada, 2024). Facing this growing crisis, local governments are changing and expanding their responses. An important innovation is tiny homes, a form of deeply affordable and supportive housing for people leaving homelessness. In this brief article, I ask what explains local government's increased leadership and innovation with respect to homelessness and housing crises. Drawing on interviews and document analysis regarding the development of a tiny homes community in a mid-sized BC municipality, I identify three factors that have contributed to local government's policy innovation: 1) local officials are keenly aware of the inadequacies of federal and provincial responses and of the need for alternative approaches; 2) they hold important resources, notably local knowledge and land; and 3) they are facing pressure to respond from citizens and service providers.