Co-op...Housing Millions Down the Drain

For Your Review, some excerpts about the non-profit co-op housing sector in Canada

Toronto Star

May 20, 1995

By Kevin Donovan, Staff Reporter

"Housing millions down the drain"...

 

"First in a series A Toronto Star team is probing abuses in non-profit housing, a program that will cost Ontario taxpayers $1 billion a year. Future stories will look at the players, the problems, and solutions."... 

"Let's look at the numbers for the whole program from 1986 to 1995. It cost $8.95 billion to build 86,354 units. Roll those numbers around in your mouth. As a taxpayer, you will want to know if you got good value for your money."

"At the lucrative trough of non-profit housing, many have come to feast."---"Along the way, millions of dollars have been misspent, overspent or waisted down the giant money pit."

"Consultants accounted for about $300 million in fees over the ten years."

"Architects racked up about 550 million in fees. Sometimes there were design flaws."

"Lawyers accounted for about $50 million in fees, using a conservative ministry of housing estimate."

"No single story tells the entire tale of waste and malfeasance."---"Listen to what some people connected to non-profit housing have to say."---"Richard Allen, the most recent NDP housing minister is running a tighter ship than the last government: The board of directors of a group - often people who had never balanced a cheque book or built a garden shed - are suddenly thrust into having to organize the building of, for example, a $25 million, 200 unit building."---"Donna Hamilton, a consultant who worked on many non-profit housing projects in Barrie and Toronto: People have gotten away with financial murder...they have wasted millions and millions of dollars."...

"Keith Ward, a senior housing bureaucrat in Peel Region, in a letter last year to Ontario's housing ministry warning that unscrupulous people would make a killing at taxpayers' expense: We have already begun to hear news of wheeling and dealing...bribe offers...requests for kick-backs."

"A ministry of housing official: There isn't a police force in the world big enough to investigate all the rot in non-profit housing."---"Andrew Ross, founding president of the Lakeshore Village artist Co-op, who believes the good of non-profit housing will be destroyed by the waste in the system."

"Bill Morris, president of the Co-op Housing Association of Ontario."..."Co-ops have the highest average unit price. Co-op association leader Morris says that's because they build more family units than regular non-profits."---"Co-ops have another built-in cost. Morris' group receives 1 per cent of the total capital cost of each project. Since 1986, that amounts to about $22.5 million, used for developing more co-ops, educational programs, bailing out co-ops in financial trouble and association salaries."---"In Niagara Falls, where you can purchase a 10-year old, three-bedroom townhouse for $40,000, and a new one for $80,000, the Skyline Co-op built 60 townhouses for $106,094 a unit."

"At the Marigold co-op in Whitby, substandard elevators and smoke detectors were installed. It cost thousands of dollars more to do the job right."---"At the union-built Harmony-King Co-op in Oshawa, $20,000 has disappeared and the ministry is investigating a "double-billing" situation involving the former board president who hired his brother as property manager."

"Across the province, co-op and non-profit boards are screaming for more money. Many are increasing the size of their mortgages, which will translate into higher taxpayer-funded subsidies."---The government's theory is falling apart. They are becoming more expensive to run, says housing consultant Donna Hamilton."

"In Oshawa, the Consideration Co-Op is close to bankruptcy and has sued the ministry of housing over reductions of about half a million dollars in its annual subsidy. The ministry is threatening an audit. Co-op members are taking turns sleeping on a mattress in the boardroom, standing guard over the books."---"The original mortgage was 12.5 million for this 99-unit building. A second mortgage of $425,000 was later tacked on to cover expenses, including $40,000 more consultant, Lantana. Until recently, the co-op had $750,000 in the bank. But the ministry has told them an administration error caused a $543,809 overpayment in subsidies. The ministry started taking it back. But a good chunk had been spent on board approved "wish list" including window coverings for solarium's, a chain-link fence, equipment for members' use, including a big screen TV and CD player. Other money went to hire a director's spouse as a part-time cleaner. She became the highest paid employee."

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Comments:

In Ken's view, as at 2022, many of the same problems still exist within the non-profit co-op housing sector in Canada since this article was published back in 1995.

The article helps to explain why very few non-profit co-op housing units have been built in Canada since 1995. Some of the following links support Ken's views:

 

A Fraud And Illegal Acts Friendly Culture in Co-op Housing

Noted Articles And Links In Co-op Housing

Excerpts From 171 page Thesis on Co-op Housing

Crisis Situations In Housing Co-operatives

 

Crisis Situations in Non-Profit Co-op Housing Research Highlight

 

Non-Profit Housing Co-operatives in Canada are Vulnerable to Embezzlement by their very nature. First, there are "NO OWNERS" Watching every dime of their money. Unfortunately, most people are less concerned when it is Not Their Own Money at Risk...

Information may be revised without prior notification

Ken Hummel, Administrator, CHIE