Toronto’s latest report from the Auditor General, reviewing commercial leases at Union Station, says the city missed out on an estimated $9.4 million from rents not being collected from tenants.
Beverly Romeo-Beehler’s report is alerting city council to take action immediately to “restore revenues” following the completion of the Union Station Revitalization Project (USRP).
Beehler claims that in the past four years, since the city last settlement with anchor clients, close to $10 million has been lost in leasing revenue and that “delayed collection” from the real estate division resulted in the city missing out on a return of $740,000 in interest.
Etobicoke Councillor Stephen Holyday, who sits on the Audit Committee, says it’s likely the accounts will be eventually settled however, the interest is likely lost forever.
“We have lost $740,000 in interest because we didn’t have that money in the bank” Holyday told AM640’s Kelly Cutrara Show, “Because we weren’t diligent, we’ve lost some hard cash.”
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The audit also showed that the city’s take from Union leases has been about $59 million over the last five years, but, operating costs have totalled around $62 million.
Holyday went on to say that the other take away from the report is the real estate division’s lack of a solid business plan going forward once the hub’s $800-million renovations are complete.
“So they have leased out 4,000 sq.-ft. out of 165,000 that will go online” said Holyday, “If we don’t get it right at the beginning as we start to fill up the space, we’re going to be out a lot of money.”
Mayor John Tory showed his concern at a Q and A, following his address at the Toronto Region Board of Trade at a luncheon on Wednesday. Tory said he would be “aggressively pursuing” the reason why it was that people chose not to collect rents.
“These are scarce dollars that we need to provide child care, to build more transportation, and to provide for the homeless among many other things we need to do,” Tory said.
In closing her report, Romeo-Beehler made 21 recommendations that her department believes will “remediate the collection” of the city’s leasing revenue streams at Union.
The city’s audit committee will meet next week to go over the recommendations which include taking appropriate action to take to settle the accounts from 2010 to 2015, review VIA Rail and Metrolinx settlement calculations, and to ensure settlements are reached annually with all tenants going forward.
Holyday says two other recommendations are in motion right now including the placement of a head lessee, and the centralizing of services that would done by separate agencies.
“It’s my hope that when you centralize something, you do get those critical masses of expertise,” said Holyday, “And I think we’re going to get a new board of director which would be good news for the taxpayer going forward.”