Toronto's $13M in hotel shelter overspending could have paid for 52,000 room nights for homeless people

The City of Toronto overspent by $13.2 million over two years on emergency hotel shelters, according to a fiscal audit by the city's auditor general.

Money intended for housing support instead went to pay a host of hotel fees, the auditor general says. That's despite the fact the contracts preclude such fees.

In two years, $5.4 million was spent on hotel room vacancy fees, $5.3 million was spent on facility surcharges on meal invoices, and $2.4 million was attributed to "DMF" charges, although there was disagreement among those interviewed during the audit as to whether that was a tourism tax or some other unclear hotel fee. The audit notes hotels stopped including this charge in January 2022.

"Every dollar and every room matters," said Auditor General Beverley Romeo-Beehler in her report, which is expected to be discussed by the audit committee next week. It is expected to reach city council on June 15.

The misspent millions could have covered the cost of 52,000 room nights for homeless city residents, the audit found, as well as meals and support services "for an entire year."

Instead, hotels tacked the add-ons onto their invoices and city officials paid them out, the audit found. According to the audit, "some staff" handling the invoices didn't seem aware of the contracts or what charges were appropriate.

'My jaw dropped,' shelter hotel resident says

"You need to make sure you're being charged in accordance with the contract otherwise what's the point of having one," said City Coun. Stephen Holyday, who chairs the audit committee. 

"Everyone understands that during COVID it was a time of duress for the city, but there is an old saying… haste makes waste," he said. "We need to understand how to best manage contracts across the city." 

While the pandemic was certainly a complicating factor, the auditor general was careful to note that in some cases: "These incorrect amounts were being charged even before the pandemic."

"My jaw dropped," Gru, a shelter hotel resident whose legal name is Jesse Allan, told CBC News.

"Fifteen million dollars gets a lot of apartments for an entire year," he said — "actual apartments, which is what most people on the streets need."

Among her recommendations, Romeo-Beehler suggests the city develop a proper system for reviewing its invoices to make sure payments match contract terms. She also suggests that the city's Corporate Real Estate Management division take over the responsibility of contracting with hotels so that the Shelter, Support & Housing Administration division "can focus on core service delivery."

The audit notes its recommendations are focused on helping "make sure money goes toward providing more shelter spaces or creating permanent housing solutions for people experiencing homelessness."

'This is why we have an Auditor General': Tory

In a statement, Mayor John Tory said, "This is why we have an Auditor General" and that city staff "will be acting" on her recommendations. 

"I will be making sure that … we are doing everything we can to recoup any costs that shouldn't have been charged to the City," he said.

While the auditor general does serve as an important accountability check, Cathy Crowe, a long time street nurse and housing advocate, says it's ultimately up to senior city officials "to do a better job."

Last year was one of the deadliest for people experiencing homelessness in Toronto since Toronto Public Health began tracking in 2017. In 2021, 216 people died — 132 of whom were residents of homeless shelters.

To cope with the physical distancing requirements of the pandemic, the city opened 42 temporary shelters, including in hotels.

But COVID-19 outbreaks, food quality concerns, and other issues rendered some shelters not "suitable" for living, led some homeless residents to seek shelter in municipal parks. Attempts to clear some of those encampments last summer turned violent.

As of early March, the audit notes there were still nearly 4,000 people staying in under 3,000 rooms at 29 hotels. 

"Someone has to pay for this," said Crowe. "We should be absolutely outraged by this."