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Inside a Troubled BC Housing-Atira Deal: Altered Minutes, Duelling Appraisals

BC Housing helped Atira buy an SRO hotel for $7.8 million over assessed value. A Tyee special report.

Jen St. Denis 12 May 2023TheTyee.ca

Jen St. Denis is a reporter with The Tyee covering civic issues. Find her on Twitter @JenStDen.

BC Housing and Atira Women’s Resource Society inked a deal to purchase a single-room occupancy hotel in Vancouver’s Downtown Eastside for $7.8 million over its assessed value of $9.1 million — and the Crown corporation commissioned a second appraisal that significantly bumped up the value of the property, FOI documents show. Atira commissioned its own appraisal in October 2021, which valued the property at $16.2 million.

BC Housing also paid $900,000 to a private real estate owner, Steven Lippman, in an assignment fee to help close the deal. That assignment fee pushed the total purchase price up to $16.9 million.

The purchase of 303 Columbia St. reveals the pressure BC Housing and operators are under when it comes to providing adequate housing to people who are at risk of homelessness. But the deal also raises questions about the decision-making process inside BC Housing and whether one non-profit was given preferential treatment.

A forensic investigation report released this week by the provincial government revealed repeated conflict of interest violations between the BC Housing’s former CEO Shayne Ramsay and Atira Women’s Resource Society. Ramsay has been married to Janice Abbott, Atira’s CEO, since 2010. A conflict of interest protocol was supposed to prevent Ramsay from being involved in any decisions or discussions related to Abbott’s organization.

But an investigation by accounting firm Ernst & Young showed that Ramsay had frequently pushed for projects and funding to be directed to Atira. Since 2016, Atira’s funding has grown at a much faster rate than other large supportive housing providers, and it is now the largest supportive housing provider funded by BC Housing. In 2022, the non-profit received $74 million in funding from BC Housing, up from $17 million in 2016, according to the Ernst & Young investigation.

Ernst & Young also examined several property purchases made by Atira. One of those properties was 303 Columbia, a relatively well-maintained SRO hotel that Atira bought in 2022.

The building was supposed to provide housing to rehouse tenants of the rat-infested Colonial Hotel, an SRO that is in such bad shape that it can only be operated at 70 per cent capacity because the building’s aging plumbing and electrical wiring is unable to service a full building.

But 303 Columbia ended up being used to shelter the survivors of the Winters Hotel after that building burned down on April 11, 2022, killing two residents. Both the Colonial and the Winters are owned by Peter Plett, and both are or were operated by Atira Property Management as supportive housing with funding from BC Housing.

Atira Property Management Inc. is a for-profit subsidiary of Atira Women’s Resource Society. APMI operates 18 single-room occupancy hotels. Most of the buildings are operated as supportive housing and receive funding from BC Housing.

The Ernst & Young investigators found that Ramsay had changed meeting minutes to soften a BC Housing executive’s criticism of the purchase of 303 Columbia. Ernst & Young auditors also found that Atira Women’s Resource Society had used $2 million in restricted funds, with most of that money coming from a budget surplus, to buy 303 Columbia — even though budget surpluses are supposed to be returned to BC Housing. That violates Atira’s operating agreement with BC Housing, according to the Ernst & Young report.

After auditors pointed this out to BC Housing, the Crown corporation told Atira it would not approve the use of the $2 million to buy 303 Columbia. Atira then told BC Housing staff it would be unable to pay its workers and BC Housing staff gave the non-profit a $1.4 million grant, according to the Ernst & Young report.

The report authors say the 303 Columbia “transaction appears to demonstrate that Atira was making important financial decisions with the expectation that support from BC Housing would follow.”

The report also points out that another building Atira purchased in 2017, the Motel Hollywood in Surrey, was bought for $3.6 million — three times the appraised value of $1.2 million. Auditors said they found texts discussing the transaction sent from Ramsay to BC Housing staff, and did not find any records explaining the rationale for BC Housing funding the property deal.

In a response posted to its website Tuesday, Atira says a BC Housing staffer “agreed in principle to Atira’s use of restricted funds” to purchase 303 Columbia. The organization says it has now paid that money back to BC Housing.

According to emails between Abbott and an unnamed Atira staffer released by Atira, Abbott told the staffer the vice-president of operations for BC Housing, Dale McMann, had “agreed in principle to allow us to use 2019 surplus for equity in the 303 Columbia purchase and will also provide a cash injection for the balance.”

Atira also said that the Motel Hollywood needed to be urgently purchased because vulnerable women and girls were being trafficked in the building. “The purchase of the Hollywood wasn’t just about the money — it was about ending the exploitation of women — Atira’s primary mission,” the non-profit wrote in a response to the Ernst & Young report.

Neither Atira, Janice Abbott nor Shayne Ramsay responded to requests for comment for this story.

Here’s how 303 Columbia came to be purchased by BC Housing and Atira, despite the reservations of some BC Housing staff.

‘This appraisal is “hypothetical”’

The Tyee obtained details of the sale of the building to Atira Women’s Resource Society, which was backed by funding from BC Housing, through a freedom of information request. The Ernst & Young forensic investigation provides further details about the sale.

The documents provide an inside look into the challenges of providing supportive housing in the Downtown Eastside. The correspondence and reports also show how housing providers and BC Housing have struggled to maintain aging single-room occupancy hotels and find places for tenants who may have to be moved because the buildings are in such bad condition.

The documents show that the original rationale for buying 303 Columbia was to provide better housing to tenants of the Colonial Hotel, a privately owned SRO on Water Street that was very poorly maintained.

Before it was sold to Atira Women’s Resource Society, rooms in 303 Columbia were rented to students.

According to an August 2020 appraisal of the property, BC Housing had intended to make its own offer for the property.

Abbott came to BC Housing with her own proposal to buy 303 Columbia in June 2021. Abbott explained that the Colonial Hotel was in terrible shape, and the private owner of the building, Peter Plett, was planning to raise the lease rate, meaning the cost would rise to operate the building.

She also told BC Housing staff that the asking price for 303 Columbia was $18.5 million, “but I think I can negotiate it down to $16.5 million.”

In emails to BC Housing staff, Abbott proposed transferring Atira’s operating agreement with BC Housing for the Colonial to 303 Columbia. Atira would buy the property using a $13.4 mortgage from Vancity and $3.4 million in equity. To help Atira pay the mortgage, BC Housing agreed to pay an annual $920,000 subsidy to Atira over the course of the 25-year mortgage. Atira is listed on the property title as the owner of the building.

Private landowner Lippman had secured an offer to purchase the building at $16 million. Lippman was then prepared to assign that offer to Atira and BC Housing for $900,000.

BC Housing, which was interested in buying properties like 303 Columbia to add to the province’s stock of housing for low-income people, had already appraised the building in August 2020. That appraisal by CWPC Property Consultants valued the property at $10.4 million.

In November 2021, CWPC did a second appraisal of 303 Columbia for BC Housing, this time valuing the property at $14.8 million. The reason the price was so much higher, the appraiser said, was because BC Housing had asked the appraisers to value the property using a hypothetical scenario: “I have been… instructed to assume the units are rented at market rates with typical operating expenses for this use. Based on the above, this appraisal is ‘hypothetical.’”

There is no indication in the correspondence or reports BC Housing sent to The Tyee as part of our FOI request to suggest that 303 Columbia would actually be operated at market rents. The Colonial houses people who are on income or disability assistance.

In an April 25, 2023 letter written in response to the Ernst & Young forensic investigation report, Atira refers to yet another appraisal of 303 Columbia, which valued the property at $16.2 million in October 2021.

BC Assessment data shows that 303 Columbia is currently assessed at $9.5 million, down from $10.1 million in 2022.

Michael Geller, a real estate developer who has experience in both market-rate and social housing development, said it’s common for developers and public agencies like BC Housing to get a second appraisal — and often appraisals are tweaked to bring the valuation closer to the asking price for a building to support a purchase. Geller pointed out that even though 303 Columbia is not a market-rate building currently, it could be rented at market rates if it was sold to another buyer.

Geller said the B.C. government’s publicly stated intention to buy properties like 303 Columbia during the COVID-19 pandemic to provide more housing for low-income people “distorted the market,” leading to higher asking prices.

But Geller said the large gap between the sale price of 303 Columbia and the assessed value of the property is a cause for concern, because BC Assessment takes into account the recent sales history of other properties nearby.

“In this case, there was still a significant variation between the purchase price and the assessed value, and that should raise flags,” Geller said.

The front door of 303 Columbia features an Atira property management logo on the glass. The door includes wood panelling and gold handles.
The original rationale for Atira to purchase 303 Columbia was to provide better housing to tenants of the Colonial Hotel, a privately owned SRO on nearby Water Street so poorly maintained that it could only operate at 70 per cent capacity. Photo by Christopher Cheung.

Former BC Housing CEO removed criticism from minutes: report

On June 30, 2021, BC Housing vice-president of operations McMann told Abbott that BC Housing was interested in moving forward with the deal. On Dec. 8, 2021, McMann told Abbott that BC Housing would provide an operating agreement “in an amount that will allow Atira to service the mortgage payment.” McMann explained that would be the “simplest way to make this work and avoid all the footwork around leases, capital improvement estimates, etc.” He said BC Housing could likely justify a 10-year operating agreement.

But not all BC Housing staff were behind the deal. According to the Ernst & Young forensic investigation, emails from May 2021 showed some BC Housing staff stating “that BC Housing was not supportive of purchasing the property themselves, given a discrepancy between the appraised value of the property and the asking price.”

According to the Ernst & Young report, one BC Housing executive told investigators that he voiced concerns about the deal during a Jan. 5, 2022 meeting, and then abstained from the vote on the transaction.* Ernst & Young investigators noted that abstention vote was “significant” and should have been recorded in the minutes of the meeting. But according to emails the investigators obtained, Ramsay instructed staff to change the meeting minutes to soften the criticism of the deal, including removing details about a $2 million renovation the building would need. Ramsay also asked the executive to change their abstention vote, according to the report.

After eight months of discussion, appraisals and meetings between BC Housing staff and Atira, the deal was approved by BC Housing’s executive team in January 2022.

Three months later on April 11, 2022, a fire swept through the Winters Hotel, operated by Atira Property Management. While BC Housing initially reported that all the tenants had survived, 11 days later the bodies of two residents were pulled from the rubble. Dennis Guay, 53, and Mary Ann Garlow, 68, had lost their lives in the devastating fire.

In the months that followed, a fire investigation report showed that fire extinguishers had been empty, sprinklers and alarms were turned off, and fire escapes were locked at the time of the fire. Many tenants and business owners also said they were not told the building was on fire watch after a previous fire on April 8, 2022, and did not see regular fire watch patrols being conducted between April 8 and April 11.

With 303 Columbia sitting empty, most of the surviving Winters tenants were moved into that building. While the building was in relatively good condition, the SRO still needed renovations to bring it up to fire code. That meant that for months, a regular fire watch had to be conducted to make sure the building was protected, at a cost of $190,000 so far, which BC Housing has paid. Another $80,000 has been invoiced to BC Housing from Atira Women's Resource Society, which the Crown corporation is currently reviewing, according to BC Housing communications staff.

As details emerged about the Winters Hotel fire, some tenants said they no longer wanted to live in a building operated by Atira Property Management Inc.

Some of those residents have now joined a class action lawsuit against Atira Property Management and the City of Vancouver.

Meanwhile, tenants at the Colonial Hotel at 122 Water Street are still living in a building that some residents previously told The Tyee makes them sick.

“While the people who moved into the Columbia came from a different building than anticipated, the purchase served its purpose of ensuring there was capacity to house tenants being displaced from another building,” BC Housing staff wrote to The Tyee in an email in response to questions about the purchase of 303 Columbia.

“Without this purchase, displaced Winters Hotel residents would have been without a safe and secure place to stay.”

*Story updated on May 13, 2023 at 2:30 p.m. to correct that the meeting in which a BC Housing executive said he voiced concerns about the deal was on Jan. 5, 2022, rather than 2023.  [Tyee]

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