Despite financial troubles, city says taxpayers won’t pay for Town Homes Kingston’s deficits

Click to play video: 'Despite financial troubles, city says taxpayers won’t pay for Town Homes Kingston’s deficits' Despite financial troubles, city says taxpayers won’t pay for Town Homes Kingston’s deficits
Town Homes Kingston was running hundreds of thousands of dollars overbudget, according to a recent city report – Nov 5, 2018

Town Homes Kingston, the not-for profit property company currently under city review, was spending beyond their means, a recent city report says.

The report will be presented to council on Nov. 6 and says the municipally-subsidized housing corporation ran an $180,000 deficit in 2017 and was projected to run a deficit of over $200,000 by the end of 2018.

Nevertheless, Lanie Hurdle, the city’s service manager who took over Town Homes Kingston in late July, says Kingston’s taxpayers will not be covering the company’s extra costs.

READ MORE: Municipal low-income property company taken over after alleged health and safety breaches

On July 23, the city declared Town Homes Kingston a “project in difficulty,” unseating the executive director and its board of directors while taking charge of the company’s nearly 400 mixed-income non-profit units.

Story continues below advertisement

At the time, the city cited breaches of Housing Services Act for the takeover, but as time went on, Hurdle said the company’s finances were more in need of attention.

“There’s some short-term concerns that are more around health and safety, but the long-term concerns are more related to asset management, making sure we can maintain long-term affordable housing,” Hurdle told Global News for a previous story.

They have since named Lee Campbell as interim executive director to take over operations of the company.

Kingston’s director of social housing and social services Sheldon Laidman said Campbell was chosen for his experience as a former manager with the city’s housing and social services department.

READ MORE: Kingston reaches deal with developer for two downtown high-rise apartments

Laidman also said the $180,000 deficit for 2017 will be covered by reserve funds from Town Homes Kingston.

“This accumulated surplus has however been depleted and will not be available to cover any future deficits,” Laiman added.

According to Hurdle, the projected 2018 deficit of $200,000 will have to be paid for by re-mortgaging a non-social housing apartment complex owned by Town Homes Kingston.

“That’s why we have the re-financing of Eldon Hall, and some of that money will be utilized for capital works at Eldon Hall.”

Story continues below advertisement

On top of a substantial operational deficit, the city’s report emphasized a large amount of neglected capital works projects.

“A significant backlog of maintenance requests was uncovered, with inadequate means by which to prioritize and ensure follow-through with tenants.”

Laidman said a lot of small essential repairs were neglected, like fire, safety and water infrastructure.

“Small things, they add up over 400-plus residential units.”

Laidman couldn’t be specific about what the total capital repairs budget might be — he said the city is still assessing the amount of work that needs to be done — but said repairs will have to be done over a number of years since the company’s operating budget is already stretched.

The report identified the maintenance company, CJM Property Management, employed by Town Homes Kingston as a major drain on the capital works budget. The city chose to end that contract on Nov. 1, calling the deal “extremely burdensome and unsustainable financially.”

The CJM Property Management contract assured payment of $350,000 in administration costs per year and nearly $400,000 for general maintenance.

“This figure does not include extraordinary capital costs that arose, which are outside this contract, but would be undertaken through this contract as well,” Laidman said.

Story continues below advertisement

On Aug. 7, council voted to merge Town Homes Kingston with Kingston & Frontenac Housing Corporation, another non-profit social housing group, which will be taking on all of the maintenance projects left over by the previous administration.

READ MORE: City to vote on the future of Town Homes Kingston

But Laidman said that merging two subsidized social housing companies is complex, and that the city is working out recommendations on how to undertake that marriage, which aren’t expected to be ready until next year.

“At this point, staff are concentrating on ensuring that due diligence is undertaken to understand the best way to bring these organizations together legally, financially and operationally.”

As for why so many capital works projects were put off, Laidman said he couldn’t comment on the decisions made by previous management.

“The city of Kingston provides money to subsidize social housing companies,” said Laidman. “How they used that money is up to them.”

Sponsored content