Scathing report on BC Housing partner Atira prompts calls for full audit

Nov 24 2022, 7:55 pm

The dust is still settling following a leaked report earlier this week that outlined severe accountability and structural issues with the organization of Atira Women’s Society, the non-profit entity tasked by BC Housing to deliver and operate a significant number of provincially funded social housing and supportive housing projects.

The report was independently conducted by BDO, and commissioned by BC Housing, which had become increasingly concerned by Atira’s “series of annual deficits, a pattern of late financial reporting, and repeated correspondence and meetings regarding cash flow deficiencies.”

Although the analysis was completed in November 2018, four years ago, the report’s findings are still relevant as it is widely believed Atira’s operational issues have not only been largely unaddressed if addressed at all, but they have further greatly deteriorated. All the while, BC Housing has since provided more contracts to the controversial operator.

Atira manages about two dozen housing buildings, many of which have been deemed highly problematic. The most notable recent incident was the April 2022 fire of the Winters Hotel SRO in Gastown, which resulted in two fatalities, and required the building’s demolition.

“BC Housing, as the primary funder [of Atira], needs to gain comfort that the necessary changes are in progress and that management is able to provide accurate and timely information on the current and future operations,” reads the November 2018 report.

BDO states that during its fact-finding meetings with the management of Atira and BC Housing, neither party could clearly explain the specific cause of the non-profit housing operator’s systemic pattern of deficits. But it had become clear that Atira “assumed its overages would be covered by BC Housing.”

Atira also had an archaic system for tracking its own finances, with BDO indicating inconsistent accounting practices applied across the entire organization, improper accounting methods that do not follow CPA standards, mismanagement from the use of draft budgets as guides due to delays in getting approved budgets, budgets are based on poor legacy assumptions and mathematical errors, and a lack of experienced staff with knowledge of the organization to conduct proper and timely reporting.

It was also brought to attention by BDO that Atira’s “budget is managed by the line item, not on service outcomes.”

Moreover, “a significant number of the older invoices could not be located as there had been a flood and records had been lost.”

BDO further determined that board members were unable to make sound decisions with incorrect, incomplete, or misleading information and that approved budgets are carry-forward budgets, which lacked critical thought to the deep analysis of operational costs and acquisitions.

“Board members do not ask strategic questions due to historic lack of accuracy with base business model,” noted the report.

According to the analysis, some maintenance repairs on the buildings were “reactionary to keep vacancy rates down.” It was revealed in the report Atira received about 35% of its revenues from the rent of its tenants, many of which use welfare as their primary income to pay rent.

When it comes to the operational conditions through staffing, BDO stated high staff turnover created pressure to hire and train, with less attention to due diligence on who was being employed, and that “staffing is not optimized across the organization.”

In response to the findings, earlier this week, BC Liberals leader Kevin Falcon called on the BC NDP provincial government to conduct a full audit of BC Housing and Atira.

“We are going to continue to put the pressure on the person who really has to answer for this, David Eby,” said Falcon.

“David Eby was the minister responsible for housing. He never publicized this buried BDO report, he fired the entire NDP-appointed board of BC Housing on a Friday evening, and he’s the one who released the Ernst & Young report on the Canada Day long weekend hoping nobody would pay attention. It’s that kind of deviousness that’s not appropriate for a government minister, let alone the premier of our province.”

According to Falcon, through freedom of information documents, the operating funding levels to Atira under the BC NDP government in recent years more than tripled to about $52 million annually.

“No other housing provider has experienced such a massive increase in funding, record-high spending, coupled with record financial mismanagement,” said Falcon during Question Period in the BC legislature on Wednesday.

During the debate, Eby asserted BDO’s review largely spanned Atira’s overall operations under the previous provincial government led by the BC Liberals, although the specific financial analysis spanned 2017/2018, when the BC NDP was in charge.

Eby also brought to attention that a forensic audit of BC Housing is underway, following the recommendations of an Ernst & Young analysis on the operations of the crown corporation. At the same time the Ernst & Young report was publicly released in July 2022, Eby, who was the Attorney General and Minister Responsible for Housing at the time, fired most of the board of directors governing BC Housing.

“I can provide the members of this House with some of the terms of reference for the forensic engagement of BC Housing: to ensure specific internal controls at BC Housing are in place and operating as described, including record retention and decision-making processes and procedures for funding service providers,” said the premier, adding that the findings of the forensic audit will be established in early 2023.

The Ernst & Young report, commissioned by the provincial government, also found major financial record-keeping and administration issues with BC Housing, suggesting the crown corporation needs to reform its procurement processes, and improve its oversight of third-party contractors, whether it be non-profit housing operators like Atira or building design consultants.

Over the years, critics of Atira and BC Housing have accused the leaders of both organizations of a conflict of interest, given that Atira CEO Janice Abbott is married to longtime BC Housing Shayne Ramsay. In September 2022, after 22 years, Ramsay left his role with BC Housing.

The review notes 80% to 85% of BC Housing’s services are delivered by non-profit housing operators, and the “current oversight processes for these providers are manual in nature with limited ability to objectively assess provider performance (financial and non-financial) and manage overall risk.”

BC Housing’s mandate has grown enormously under BC NDP governance, which has tasked the crown corporation to lead and execute this government’s enormous affordable housing and homelessness strategies. Their annual budget has increased from $782 million in the 2017/2018 fiscal year to $1.9 billion in 2020/2021.

The 10-year budget for BC Housing through the 2027/2028 fiscal year is buoyed by the provincial government’s $7 billion housing affordability plan.

To meet the objectives, the provincial government also increased BC Housing’s borrowing limit from $165 million to $2.8 billion.

But BC Housing’s practices have not kept up with the exponential growth of its mandate over a short period of time, with the review stating the crown corporation needs to improve its due diligence and risk assessments, and upgrade information technology infrastructure to streamline processes.

Earlier this week, Eby announced the formation of the new standalone Ministry of Housing, which will be a housing department led by a dedicated Minister of Housing. It is anticipated the new Ministry will oversee a reformed BC Housing, while also providing greater organizational capacity to deliver the new premier’s ambitious and aggressive housing affordability strategies.

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