City ends pause to housing program at centre of kickback scheme

As the City of Ottawa lifts a pause to rent supplement programs linked to a kickback scheme, housing staff are still working to sever indirect ties with the landlords implicated in the scandal.

The supplements help low-income residents access private market housing by paying the difference between what they can afford and market rents. They're a key element of the city's housing first program.

The pause did not affect existing tenancies, but it has left a backlog of new applications that housing advocates worry will leave people homeless for longer during the coldest time of the year.

The city quietly began the pause on Dec. 16, two weeks after a scathing report from Auditor General Nathalie Gougeon, whose office found evidence of a kickback scheme involving a city housing worker and a group of landlords.

"In response to the Office of the Auditor General (OAG) report, to ensure proper oversight, staff deemed it necessary to temporarily pause some approvals and implement a requirement for management approval before issuing certain benefits," said a written statement from Kale Brown, acting director of housing and homelessness.

Gougeon's report found that a city case worker helped landlords secure tenancy agreements at rents well above market rates, partly paid for through the supplement. In exchange, the case worker received about $22,000 in kickbacks from a group of private landlords.

Brown said city staff launched their own comprehensive review of municipally funded housing benefit files during the pause. According to Brown, it confirmed existing program guidelines were being followed appropriately.

"As such, the housing benefit programs will resume on January 15," he wrote. "The City is currently reviewing options for additional safeguards that can be added to the current program guidelines to prevent issues."

City still working through legal issues

The auditor general recommended that the city terminate all business with the landlords and work on a transition plan for clients that currently live in those units. City management accepted that recommendation, saying "all business relationships have been halted on a go-forward basis."

Management said they were working on a plan to terminate existing business with the landlords and transition tenants to alternate units. They expected that would take until the second half of this year.

But the legal reality appears to be complicated.

"The City remains committed to ending all business relationships with landlords of concern," Brown said. "A strategy for implementing this process is currently in development."

He explained that there are actually two kinds of benefits. In one case, the city signs agreements with landlords to provide rent supplements to them. In the second case, it pays housing allowances directly to tenants, who can then choose where they live.

The city hasn't initiated any rent supplement agreements with the landlords since the auditor general's report, according to Brown, and won't accept them in the future.

"The City's direct business relationship with the landlord is limited to rent supplements, which is an agreement between the City and the landlord," he said. "To ensure no one is left without housing, these agreements have been terminated but benefits continue to be payable until the current tenants vacate or lose their benefit."

"Given tenants remain eligible for the rent subsidy program, the process of ending a tenant's lease is currently under legal and policy review," he added.

As that review goes forward, Brown acknowledged that the city will still accept new applications for housing allowances from tenants seeking to live in buildings owned by the landlords, though that doesn't imply staff will necessarily approve them.

Delay has 'real consequences,' says advocate

Brown said the four-week pause has created a backlog of about 30 applications. It's expected to take about two to three weeks to work through them.

Kaite Burkholder Harris of the Alliance to End Homelessness Ottawa said she understands the need for the city to conduct an investigation and ensure accountability with public money, but she urged staff to now "go as fast as humanly possible" to process applications and get people housed.

She expects that the backlog could be significant.

"This has real consequences in the middle of winter for people who are on the street," Burkholder Harris said. 

"Every day that somebody has to stay outside, that could be housed, is another potential tragedy where somebody passes away in the cold, as has happened in the past week, unfortunately, in Ottawa."