Nunavut Housing Corp. faces $60M in cost overruns

The Nunavut Housing Corp. announced that its housing trust has overspent by $60 million over the past five years, but that won't change its goal of building more than 700 new homes by the end of this year.

Managed by the housing corporation, the Nunavut Housing Trust Delivery Strategy was created in 2006 and received $200 million in federal funding to build between 700 and 750 affordable housing units by 2010.

But housing corporation president Alain Barriault said poor budgeting, poor expenditure tracking and high labour costs led to $60 million in cost overruns. A full independent audit will yield more details at the end of this summer.

"Had it been caught earlier, the overruns could have been contained and would be far smaller," Barriault told reporters in Iqaluit on Thursday.

Underestimated 2008 audit

Barriault, who has been the Nunavut Housing Corp.'s president since December, said corporation officials also underestimated the advice of federal Auditor General Sheila Fraser, who warned in a 2008 audit report that there would be problems managing the trust.

"The Auditor General of Canada warned in 2008 that there was a potential for problems if the [Nunavut] Housing Trust did not receive additional support," he said. "Looking back, she was clearly right."

One major problem Fraser identified then was a shortage of housing corporation staff — 23 out of 89 positions were vacant by the end of 2007. Housing corporation officials say there are 19 staff vacancies today, although 14 more positions have since been created.

Hunter Tootoo, the minister responsible for the Nunavut Housing Corp., said the Nunavut Housing Trust will still meet its goal of building 726 homes in the territory.

"All the Nunavut Housing Trust projects, like I said, are scheduled to be completed this construction season," he said.

No missing money: minister

Tootoo said the Nunavut government will spend $40 million to address the cost overruns, while the housing corporation will have to come up with the remaining $20 million by adjusting its budget.

"I want to be very clear that we are not talking about missing money. Instead we're dealing with the reallocation of spending to offset shortfalls," Tootoo said.

The Nunavut Housing Corp. has to manage an additional $100 million in federal stimulus funding through the Canada Mortgage Housing Corp.

The Nunavut Housing Corp. has used that fund to purchase materials for 285 homes, and officials say they will reassess costs and build a construction schedule for those homes next month.