A lot of different octopus legs to follow on this PHS story. Here’s mine for today, a look at what got the province interested in examining the PHS books more closely — deficits caused, in part, by subsidies to the organization’s many social enterprises and its real-estate ventures, which were aimed at acquiring bits of land in order to build future social housing.
Housing Minister Rich Coleman reminded me (as did Mark Townsend of PHS), by the way, that many non-profit housing organizations look like real-estate barons on paper, because the way the province organizes social housing is that it gets the non-profits to take out mortgages on the properties they are running and then it provides them with the money to make the mortgage payments.
So PHS has mortgages on the Portland Hotel building, Tellier Place, the Pennsylvania Hotel and Woodwards on its financial statement. But those are social-housing operations it runs on behalf of the province. (It doesn’t have mortgages for many of the other operations it also runs, like the Regal, the Sunrise, the Washington, and Station Street.)
In addition, it had bought The Only at 20 East Hastings on its own and was paying a mortgage of $10,877 a month — a heavy load for a place generating no income. As my story notes, Mark Townsend had bought the building with a plan to redevelop it and the New Stanley together with social housing, offices and perhaps market condos. But the city froze all development applications in the area, forcing PHS to pay holding costs for that property for the last two years while waiting for the thaw.
Also, I had the information on this Sunday but there wasn’t room in today’s story for it:
The four managers who left PHS will be getting eight weeks’ severance — far less than the 18 months that would be more the norm for people with 20 years’ experience, but likely more than some people think they should get.
PHS set up many of the businesses to provide employment for residents of the 1,000 units of housing it manages in the Downtown Eastside, many of whom have addictions and mental-health problems.
PHS director Mark Townsend always said the ventures lost money, but his organization thought it was important to provide residents with meaningful but flexible work.
But Mr. Coleman said that was wrong.
“You can’t be robbing from the services they were paid to provide. Any cross-subsidization would be contrary to the operating agreement,” he said.
A new board, headed by former Vancouver Foundation CEO Faye Wightman, and operations managers brought in by BC Housing and Vancouver Coastal Health – the two main sources of financing for PHS – will make the decisions about all of the operations, Mr. Coleman said.
“They’re going to run this thing for some time. We’re not going to allow this to morph back to what it was.”
Mr. Coleman said PHS seemed to be doing well up to the 2010-2011 fiscal year. In spite of a special audit done in 2002, when the society’s bookkeeper died in the middle of the year and the books became a mess, he said there was no sign of problems after that.
But when deficits started creeping up, the province took a longer look.
It discovered the society, and especially four managers, were spending some of the money designated as an administration fee – about $2.5-million a year or nine per cent of its budget – on things that raised questions with the auditors, such as vacations for staff, trips by managers to international drug-policy conferences with stays at high-end hotels in London, New York, Vienna and elsewhere, restaurant meals and limousines.
But those expenses did not appear to be driving the deficit, Mr. Coleman said.
The financial statement that PHS’s auditors, EPR in Coquitlam, prepared for the March 31 year-end in 2013 was changed after a first filing showed an operational deficit of $2-million.
A complex real-estate transaction made that into an apparent surplus of $4-million after the statement was revised.
Essentially, the society exercised a 10-year-old option to buy the New Stanley building on Cordova, currently a shelter, for about $2-million from the City of Vancouver.
Mr. Townsend said the city demanded PHS exercise its option just before the March 31 deadline, which had the society scrambling. In the end, it got the $2-million from developer Ian Gillespie, with whom PHS had plans to develop the New Stanley and another property it had acquired, the site of the historic Only Café. Since the New Stanley property was actually worth $9.5-million on paper, that made it appear that the society had gained money – thereby converting a deficit to a surplus.
But the society was incurring debt from holding onto the Only Café site, because the city had suspended all development applications in the area while it worked on an overall plan for the Downtown Eastside.
Mr. Coleman said no one is suggesting police should investigate anyone at PHS. “We have not come to any conclusion there was fraud. There was bad spending, irresponsible spending, but it isn’t criminal to be stupid.”
34 responses so far ↓
1 teririch // Mar 25, 2014 at 11:30 am
Will the $2M ‘borrowed’ or whatever, from developer Ian Gillespie have to be repaid?
Or does he hold a stake in the New Stanley for future redevelopment purposes?
Personally I hope that some of the programs can be turned around and salvaged-maybe outside interests will be able to step up and help make them profitable.
2 Joe Just Joe // Mar 25, 2014 at 2:33 pm
Frances any insight on what changes are coming to the social enterprises? Will they all be affected or just the brick and mortar ones. Especially curious how this will affect OCS their security company.
3 Bill Lee // Mar 25, 2014 at 3:44 pm
Nice photo-(recent)history of The Only at
http://scoutmagazine.ca/2012/11/28/diner-with-a-flashlight-inside-the-only-and-the-loggers-social-club-on-hastings/
And did the [Property-Owner] PHS mess up the W2 media/social activism place at the Woodward’s site as noted in
“And speaking of divide and conquer, Irwin Oostindle blames PHS for failure of W2 space: “If PHS had left even 1% on the table that could have seen the community amenity succeed, instead they strong-armed the process for their own benefit.”
scoutmagazine.ca/tag/portland-hotel-society/
And rumours of several houses in Strathcona district being bought are bandied about.
4 Julia // Mar 25, 2014 at 5:00 pm
18 months severance for 20 years of service- where do I sign up?
5 Chris Keam // Mar 25, 2014 at 5:35 pm
Disclosure: In 2008 I received about 6 months salary in an ‘enhanced’ severance package for five years service when one broadcaster bought another. So a year and a half of wages for 18 years doesn’t sound like a huge payout to me.
But, if you like a big (severance) package, no better deal than becoming an MLA.
“The allowance gives MLAs up to 15 months’ pay, based on their base salary, which works out to as much as $127,000. MLAs who either choose not to seek re-election, or who lose their seat, are eligible.”
http://www.theglobeandmail.com/news/british-columbia/clark-says-financial-parachute-for-recalled-mlas-doesnt-make-sense/article5144301/
6 IanS // Mar 25, 2014 at 5:58 pm
A very rough rule of thumb in calculating notice periods at common law in wrongful dismissal actions is one month of notice, or payment in lieu of, for each year or employment.
7 Frances // Mar 25, 2014 at 7:05 pm
Hey Joe, Re the social enterprises. I have no idea. Most of the messages have been very soothing, so Coleman’s more forthright approach was a turnaround. But it’s not clear to me whether he’s concerned about only the money-losing ones and maybe others could show they can break even and will stay or ??? I think everyone just has to stay tuned. I also think someone might make a case that these are worth supporting through some program or another. Certainly they were seen as one of the cornerstones of the city’s efforts to foster local businesses in the area.
8 Everyman // Mar 25, 2014 at 7:36 pm
@Julia 4
That wouldn’t be out of line for what good companies and organizations pay.
9 F.H.Leghorn // Mar 25, 2014 at 7:45 pm
CK and IanS are muddying the waters. We’re not talking about wrongful dismissal, or defeated or retiring politicians. Read the KPMG financial review. Ask Board members from other charities what they think.
They have been dismissed with cause. Really appalling cause. They are lucky to get 8 weeks. The damage they have done to the Society and all those associated with it is incalculable. An apology would be a good place to start, rather than trying to duck responsibility. Man up, PHS. Show real leadership and integrity.
10 Silly Season // Mar 25, 2014 at 7:54 pm
@FH Leghorn #8
+1
11 Dan Cooper // Mar 25, 2014 at 8:35 pm
Ah, to be perfect in every way, know all there is to know, and thus be entitled to throw stones and decide others’ fate.
Anyway, explain again (rather than just taking it for granted) why a politician who just decides to quit – or gets turfed for massive incompetence – after a term or two and get another job deserves a year or so of severance, regardless of their work performance or whether they did evil things and are reviled, while people should get nothing who, whatever is being truly or falsely claimed about later – were according to the government itself perfectly acceptable and did good work for decades up until three years ago.
p.s. You might also refer back to my comment on the other thread regarding libel (not slander, which has to be spoken not written), and then check on some things before writing or stating again AS A FACT that these folks were “dismissed with cause” or the like.
12 gman // Mar 25, 2014 at 9:05 pm
As I understand it they chose to step down from their positions so as not to bring damage to the PHS…….they quit! No severance is due them and all these comparisons to other institutions private or public are nothing more than deflections.
If they would have stayed and defended their actions and the Government tried to fire them then they could have had their day in court.But I don’t imagine they wanted to go through discovery.
13 gman // Mar 25, 2014 at 9:37 pm
Another way to look at this is that they were not directly employed by the Government and the only way to get rid of them would be to cut funding and that would be inhumane.So now we are faced with the question,will they insist on a severance package taken from the pockets of the very people they claim to care about,or will they walk away and find other employment with all their supposed talent and expertise others seem to suggest they have?
14 blp // Mar 25, 2014 at 10:13 pm
from Paul Willcocks blog:
It was probably just a sideshow in terms of the B.C. Rail trial. But Brian Kenning’s time in the witness box offered an interesting look at the deep divides in B.C. these days. Kenning is a Liberal supporter who was appointed a B.C. Rail director after the 2001 election. He was part of the board that recommended selling the railway. That happened in 2003. But in 2004, the shrunken corporation spent $72,276 on Canucks tickets. In 2005, the Crown corporation spend $29,000 on BC Lion’s tickets. In 2006, $45,349 for prime Canucks seats. Companies buy hockey tickets in an attempt to influence customers. It wouldn’t be seemly to offer the purchasing agent for a client $300, but tickets to a Canucks-Canadiens game are OK. B.C. Rail really didn’t have any potential customers to woo. The corporation was reduced to selling real estate and administering a 40-km spur line used by real railway companies. So spending $150,000 on tickets to pro sports looks suspiciously like self-indulgence. Meanwhile, Kenning testified he was paid $400,000 for sitting on the corporation’s board for eight years. Even when it was down to 50 to 60 employees and less than $20 million in revenue, he collected about a $40,000 a year. And CEO Kevin Mahoney received $570,000 in salary and benefits for heading a company with $18 million in revenues and a few dozen employees in 2007. What’s striking is that this was all going on as the Liberals were putting every government program through a core review.
15 Chris Keam // Mar 25, 2014 at 10:23 pm
The quantity and quality of severance pay was brought up. A few posters, myself included, responded with information about typical severance pkgs. This is not a ‘deflection’ or an attempt to ‘muddy the waters’. Simply part of the conversation.
16 gman // Mar 25, 2014 at 11:28 pm
The severance question was brought up by Julia#4 and If I may say more to point out the appalling costs and waste of funds.And then others immediately jumped in and compared other severance packages that in the public’s eye are irrelevant to what they expect of an NFP that claims to act in an altruistic manner. There is a moral standard that cannot be overlooked,we expect better.
17 gman // Mar 25, 2014 at 11:52 pm
It is ironic we call them Not For Profit’s and pay the executives hundreds of thousands of dollars.
18 tf // Mar 26, 2014 at 12:02 am
At the risk of jumping in —
A non-profit doesn’t mean they can’t pay their executives a good salary; it means the purpose of the society is something other than profit for shareholders.
A for-profit company is Telus or Jim Pattison Group or a Bank; everything they do is for the purpose of making a profit for shareholders.
A not-for-profit could provide housing for the less-fortunate; offer community literacy programs; advocate for the environment. To run a non-profit, you need good people – thus a good salary isn’t unusual.
19 IanS // Mar 26, 2014 at 12:09 am
At common law, if an employee has been dismissed with cause, no notice is necessary. That result is, of course, subject to any express contractual terms addressing termination.
20 gman // Mar 26, 2014 at 12:21 am
tf,you miss the point,non profit pays their executive directly from the funds they take in ,therefore every dime they pay themselves is taken away from the cause they claim to support.If sideshow bob and the wife were truly committed to the cause I think they would have donated their basement to the cause and not collected rent then charged a thousand a month for cleaning services.And don’t try and tell me this was some kind of janitorial training program.
21 Jay // Mar 26, 2014 at 12:37 am
A different perspective…
http://rabble.ca/blogs/bloggers/michael-stewart/2014/03/portland-hotel-society-should-be-defended
22 L Leeman // Mar 26, 2014 at 1:04 am
Hmm Severence. Usually that means you are SEVERED.. and in that case you dont RESIGN.
People who resign.. resign their right to severence, even in Canadian case law.
No?
23 Frank Ducote // Mar 26, 2014 at 11:01 am
Did someone say there are 177 social agencies operating in the DTES? Not too hard to believe. But if so, I am reluctant to suggest there should be even more such entities.
Nonetheless, perhaps breaking down the PHS’s enormous scope of services into smaller units could help overcome the Topsy-like growth of such a single dominant provider/management entity. One that by many accounts had lost touch with other agencies operating in the same arena.
Also, a return to competitive bidding for some services might be in order. That, plus sunset clauses.
24 Bill Lee // Mar 26, 2014 at 12:02 pm
Defensive move?
Chess being played in the DTES?
…[Westbank Corp. president Ian ] Gillespie, whose company redeveloped Woodward’s for $400 million, said redevelopment of Stanley/New Fountain isn’t a big priority.
“We felt like over a long run it was an important site,” he said. “Blood Alley is really important to the nature of that neighbourhood and we’ve got a property across the street (60 Cordova) we’re really concerned what type of retail went in, because of our investment in Woodward’s. It was really more of a defensive move.”
In May 2010, 209 subsidized apartments at Woodward’s opened. Of those, 125 units are PHS-operated in the nine-storey West Hastings building.
HEADLINE: Stanley/New Fountain Hotel was a key prize for PHS
Bob Mackin / Vancouver Courier March 25, 2014 01:55 PM
– See more at: http://www.vancourier.com/news/stanley-new-fountain-hotel-was-a-key-prize-for-phs-1.919830
25 IanS // Mar 26, 2014 at 12:42 pm
@ L Leeman:
“People who resign.. resign their right to severence, even in Canadian case law. No?”
Very broadly speaking, employment agreements are said to contain an implied term that reasonable notice of termination will be given. Hence, if an employee is fired for something other than cause, he or she is entitled to reasonable notice or payment in lieu thereof.
If the employee quits, there is no obligation on the employer to provide notice. (As an aside, there is some law which suggests that the employee is required to give reasonable notice in those circumstances.)
All of this is subject to express contractual terms. There is no reason why an employer and employee could not agree that the employer will pay severance if the employee resigns, but that would be pretty unusual in my experience.
26 IanS // Mar 26, 2014 at 12:43 pm
@ L Leeman:
“People who resign.. resign their right to severence, even in Canadian case law. No?”
(apologies for the duplicate post)
Very broadly speaking, employment agreements are said to contain an implied term that reasonable notice of termination will be given. Hence, if an employee is fired for something other than cause, he or she is entitled to reasonable notice or payment in lieu thereof.
If the employee quits, there is no obligation on the employer to provide notice. (As an aside, there is some law which suggests that the employee is required to give reasonable notice in those circumstances.)
All of this is subject to express contractual terms. There is no reason why an employer and employee could not agree that the employer will pay severance if the employee resigns, but that would be pretty unusual in my experience.
27 Morven // Mar 26, 2014 at 5:42 pm
There is one form of organization appropriate for an organization delivering health and social services.
There is another for a hybrid organization delivering services and acting as an entrepreneur.
Without casting too many brickbats, the provincial and city governments seem to me to have been asleep at the switch.
-30-
28 Dr. Frankentower // Mar 28, 2014 at 11:12 am
FB tweets: “So hope all conspiracy theorists have clued in to fact that DTES fire tonight was at Washington Hotel, managed by PHS.”
Interesting comment, in light of Keith Baldrey’s recently tweeted conspiracy theory:
“If the NDP had won the election last year, would the PHS audit have been made public? I’m betting not. Call me crazy!”
So Frances, do you believe Keith Baldrey is a “crazy” conspiracy theorist, too, or is this just another example of blatant media bias for you to show your journalism students?
Of course, if Baldrey was not in a position of influence that required professionalism and integrity, we could simply dismiss this as a stupid joke by another idiot on the internet.
29 brilliant // Mar 29, 2014 at 9:07 am
It’s ridiculous if there are 177 social.agencies having to operate in the DTES. The province needs to.reopen Riverview to house people who can’t function in the community
30 gman // Mar 29, 2014 at 11:29 am
Mike hits the nail on the head.
http://moneytalks.net//mikes-content/mikes-daily-comment/12322-distinctions-you-should-really-give-a-damn-about.html
31 Norman // Mar 29, 2014 at 1:53 pm
I usually don’t care for Pete McMartin’s column, but today’s (March 29) is dead on in identifying the issues involved in preventing real progress in the DTES: too many agencies and too many agendas.
32 F.H.Leghorn // Mar 29, 2014 at 5:51 pm
Baldrey tweets (for God’s sake) from “a position of influence”. That’s rich.
What I find most interesting is the people who are NOT posting on this thread. Crickets from so many of the usual suspects.
Frances probably has no shortage of examples of media bias already, but one can’t help but wonder if a Dix cabinet would have handled this differently.
Still no sign of an apology from Townsend & Co., Inc. Just more feeble excuses. And please, during the weepy press conference, say “I’m profoundly sorry for WHAT I DID” and not “I apologize to those who felt they were affected by WHAT HAPPENED”.
33 teririch // Mar 30, 2014 at 2:40 pm
There was an interesting little doc on Our Vancouver this morning (March 30) with regard to the DTES.
Back in the 60’s the at that time city council put into place a 20 year plan to address bascially, what we are still seeing today – social housing issues, crime, drugs.
The approach was harsh – they bulldozed areas and built new social housing under the idea that better housing would help clear up some of the other ills.
In the 70’s they realized it didn’t work. Saturating the area with social housing and programs only grew the problems.
34 Kenji // Mar 31, 2014 at 3:53 pm
@29
Yes – although, although. Being dysfunctional per se is not a crime, and it may not be enough to get an involuntary committal either. I mean, I think if you are found passed out in the alley on a urine soaked mattress with a needle hanging out of your arm, you are by definition not managing your shit and should be put away for your own good. But I don’t think that is the legal test. You need multiple medical opinions and so on.
Nor is being a vagrant or, for that matter, an aggressive ranting panhandler a crime. It might be a misdemeanour but most people call it an a-hole. You don’t get locked up for that longer than a night here and there.
In other words, sweeping the problem under the carpet – or in an institution, deadened with psychotropics – is probably not possible even if it is desirable.
I don’t even think it is desirable.
My focus would not be on these people so much as their kids. We should make rehab and health services available for the adults, who might or might not be interested in cleaning up – let’s face it, quite a few of them are never going to be employable and will never have anything better to do than get wasted until peacefully (hopefully) expiring.
But their kids…their kids can be helped. The cycle can be broken if they get fostered or adopted into situations where they are treated with respect and affection, and taught the virtues of education, sociability, reasonableness and independence.
To do this, the province needs to rethink its approach to child welfare, to put the needs of the children first and that of abusive parents and clueless bands a distant second.