Review Found Poor Budgeting and Oversight at Major BC Housing Operator

BC Housing staff had concerns about financial management at a large operator that received more than $40 million in provincial government funding last year.

But former employees say a 2018 financial review that found serious problems was shelved before it was completed.

BC Housing said the review was not completed because it “did not adequately substantiate the adjustments needed to fund Atira for the years under review.”

The former employees also say that two payments given to Atira Women’s Resource Society in 2013 and 2019, totalling $1.5 million, were unusual compared to how other housing providers were treated.

BC Housing says its own subsequent internal audit showed Atira Women’s Resource Society had been underfunded for several years and the Crown corporation sometimes makes funding adjustments for housing providers.

Atira Women’s Resource Society did not respond to questions about the report, which was undertaken by accounting and consulting firm BDO.

The Tyee has obtained a copy of a draft report by BDO, which outlines the results of its review of Atira Women’s Resource Society.

The Nov. 17, 2018, draft report says Atira Women’s Resource Society had been operating without accurate budgets for the past five years, often delivered financial reports late, and had frequently asked for more money from BC Housing to fund budget shortfalls. That was creating tensions with BC Housing staff, who were having a hard time determining whether the funding requests were justified, according to the draft report.

BC Housing’s executive team had been given responsibility for making decisions about Atira Women’s Resource Society because the society’s CEO, Janice Abbott, has been married to BC Housing CEO Shayne Ramsay since 2010. BC Housing’s conflict of interest rules prevented Ramsay from being involved in matters related to Atira Women’s Resource Society.

When BC Housing management received a draft of the BDO report, the former employees told The Tyee that the executive team made a decision to not fund any new projects for Atira until the financial management problems were resolved.

But BC Housing board chair, Cassie Doyle, decided against that plan, and the BDO report was never finalized, according to the former employees.

According to BC Housing, Doyle decided to move the financial review process to BC Housing’s internal audit team after consulting with the board chair of Atira Women’s Resource Society. BC Housing’s internal auditors report directly to the board, not to the executive team.

The Tyee has agreed to keep the former BC Housing employees anonymous because they fear professional repercussions for speaking out publicly. The Tyee has verified the identity of the sources and confirmed they were in a position to have knowledge of the matter.

The Tyee sent questions to Atira Women’s Resource Society in January about the 2018 BDO financial review and whether the non-profit has resolved the financial problems identified in the draft report. In a followup phone call, the organization confirmed it had received the questions and was looking for a copy of the report, but did not respond further.

Between 2017 and 2020, Atira Women’s Resources Society received a 128-per-cent increase in funding from BC Housing, according to audited financial statements. That’s larger than the increases for three other organizations that do similar work. Between 2017 and 2021, RainCity Housing and Support Society’s funding from BC Housing increased by 78 per cent; PHS Community Services Society received a 58-per-cent increase; and Lookout Housing and Health Society received a 75-per-cent increase.

While all four organizations do similar work, including housing formerly homeless people and tenants with mental illness and substance use issues, Atira Property Management Inc. runs an unusually large portfolio of single-room occupancy hotels.

SROs are the most challenging type of housing to run. The century-old buildings feature tiny rooms with shared bathrooms and no kitchens, and many tenants have severe mental illness, addiction or other health problems. Some tenants are involved in the illicit drug trade as buyers or sellers, which can lead to violence inside the buildings.

Following the publication of a Globe and Mail story that included information about the BDO report and an ongoing review of BC Housing by the B.C. government, Atira Women’s Resource Society published a statement on its website condemning The Tyee’s previous reporting.

That reporting has focused on complaints from tenants, staff and external support workers.

The Atira statement says it is not alone in facing challenges operating the housing.

“All of the large non-profits are struggling to handle the increased pressure of trying to meet the needs of increasingly complex social problems with limited resources and support,” the statement reads in part.

“There is also competition for the more interesting and exciting aspects of this work. If you think the SROs are on that list, give your head a shake. We have stepped up to do this work.”

Atira’s statement is a detailed point-by-point critical response to issues raised in The Tyee’s previous reporting. Readers can find the full statement here.

Years of financial strife led to BDO review

BC Housing is a Crown corporation that develops and funds social and supportive housing in British Columbia. Its 2021-22 budget includes revenue of $1.8 billion from the B.C. government and $166 million from the federal government.

BC Housing often contracts non-profit housing providers to operate buildings owned by the province, but also provides funding to help run buildings that are owned by non-profits or private owners.

Atira Women’s Resource Society is one of many non-profit organizations that operates housing in B.C., and the largest in Vancouver’s Downtown Eastside. With a mission to end violence against women, the society runs temporary housing for women fleeing violence, supportive housing buildings, daycares and services like a women-only overdose prevention site in the Downtown Eastside. In 2020, it had total revenues of $66.6 million, with 81 per cent of those revenues coming from government sources.

Its for-profit subsidiary, Atira Property Management Inc., operates 18 single-room occupancy hotels. Most of the SROs are run as supportive housing, and 11 of the buildings are owned by the province. The organization also has a development wing, Atira Development Society, and has built two new housing projects in Vancouver and one that is under construction in Port Coquitlam.

But although the organization had grown from a small organization that ran transitional housing for women fleeing domestic violence to a large supportive housing provider and property developer, it was struggling to prepare accurate budgets and deliver financial reports on time, according to the draft BDO report.

The financial review was commissioned in 2017 after years of trying to sort out Atira’s financial problems, according to former BC Housing employees who spoke to The Tyee.

BDO’s draft outlined the original mandate from BC Housing.

“The original intent of the review was to isolate the root causes of recurring deficits and operating cash flow issues for Atira Women’s Resource Society (‘Atira’). Once the causes were identified, focus would be aligned to outline solutions and remediation requirements to avoid a relapse,” it said. “BC Housing indicated that Atira was suffering from a series of annual deficits, a pattern of late financial reporting and repeated correspondence and meetings regarding cash flow deficiencies.”

“Our review uncovered that the past five years or more have been managed without accurate budgets,” BDO reported, and the organization was regularly running out of money and coming to BC Housing to ask for cash injections to fund everything from payroll to building repairs and furniture. Budgets were submitted late, and the organization was not accurately tracking its revenues and expenses, according to the report.

“The cash position for Atira was discussed with BC Housing many times over the last five years,” the BDO draft report says. “During this period, and through the discussions, BC Housing received several requests from Atira for additional cash injections to meet payroll and supplier obligations. A specific example of a funding request was to cover a 27th pay period, totalling $300,000, from fiscal 2015. BC Housing feels this item was unsubstantiated.”

The consultants described a process where initial inaccuracies in preparing the budget led to a domino effect of cost overruns and constant negotiations with BC Housing.

The BDO report also identified instances of BC Housing not being clear about what it would fund or what the process was for asking to cover shortfalls.

An excerpt from the BDO audit report describes how problems with inaccurate budgeting led to continuing problems:

• Year one’s budget is inaccurately prepared
• Overages are not considered extraordinary or inappropriate overruns and therefore not funded by BC Housing as expected by management
• Year one’s actual results exceeded the annual budget without approval from BC Housing
• Discussions ensued to determine how the overruns will be funded
• Financial reporting is delayed to BC Housing due to short staff and turnover of staff
• Delays in formal final annual review by BC Housing, with no clear conclusion as to the key issues
• Meanwhile the year two’s fiscal budget is being prepared without final and/or accurate data from BC Housing as to their assessment of year one
• This has been repeated for the last five years by rolling these amounts forward and throughout Atira Management and BC Housing staff have not been able to agree on appropriate figures, especially with respect to payroll.

BDO reported staff were not able to find all the records they were searching for because a number of older invoices had been lost when the place they were stored flooded.

The draft report also identified problems with Atira’s governance. Atira’s board has been “unable to promote effective oversight with draft budgets” and “board members are unable to support decision-making with incorrect, incomplete or misleading information,” according to the report. Auditors also found that Atira’s finance staff had high turnover and employees lacked the skills to manage the finances of the growing non-profit.

Housing providers can apply to BC Housing for extra funding for unforeseen expenses, such as damage to a unit caused by a tenant. But Atira was routinely requesting more money outside of that process, the former BC Housing employees who spoke to The Tyee said.

Those requests continued even after Atira had been given $839,000 in 2013 to make up for budget shortfalls.

By 2017, when BDO was brought on board to conduct the audit, the situation had gotten to the point where BC Housing staff were meeting regularly with Atira management staff to help Atira track expenses to revenues, according to the report.

“We did not have to do that with any other [housing provider],” one of the former employees told The Tyee.

The former employees who spoke to The Tyee said the large payments to Atira and the extent of the financial problems identified by the BDO review were both out of the ordinary.

BC Housing says BDO’s review focused on “outstanding issues related to budgets” for 2011 to 2017.

“The initial report produced by BDO, including the draft report dated Nov. 7, 2018, did not adequately substantiate the adjustments needed to fund Atira for the years under review,” BC Housing communications staff wrote in answer to questions from The Tyee about why the BDO review was halted before it was completed.

According to BC Housing, the internal audit team determined that Atira had been underfunded “for several years” and BC Housing agreed to pay Atira $686,242 in 2019. The Crown corporation confirmed it had previously paid $839,581 to Atira in 2013 “to address subsidy shortfalls in prior years.”

The Tyee asked BC Housing whether the financial problems identified in the draft BDO report are still a concern.

In response, BC Housing staff wrote that “the most recent operational review of Atira indicated compliance with BC Housing’s operational procedure standards.”

The Tyee also asked whether other housing providers had received payments similar to the $686,242 paid to Atira in 2019 and the $839,581 paid in 2013.

BC Housing said it regularly communicates with housing providers about their funding needs and sometimes makes adjustments “due to collective bargaining agreements, changes to project scope, or the impact of additional capital funding.” BC Housing did not say whether any of these factors played a part in the shortfall payments to Atira Women’s Resource Society. BC Housing also did not specify whether other housing providers had been given similar large payments.