Hotel rooms

Audit finds Toronto overpaid millions for hotel rooms for shelters – Toronto

The City of Toronto overpaid millions of dollars for hotel rooms used to shelter the homeless before and during the COVID-19 pandemic, according to the city’s auditor general.

An audit released in late May found the city overpaid $13 million for costs that should have been covered by its contracts with hotel owners.

He also revealed that Toronto paid up to $3 million for vacant rooms at the start of the contracts and more than $5 million more for empty rooms in hotels rented under a pay-as-you-go deal. ‘use.

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Social distancing requirements in the wake of the pandemic in early 2020 saw Toronto dramatically increase the number of hotel rooms it used to accommodate homeless people.

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Before the pandemic, the city had about 700 hotel rooms under its lodging system, according to the auditor general’s report. These rooms were mainly for families and refugees, while others were housed in the standard city shelters.

In March 2022, after two years of pandemic protocols, the city had 3,900 people staying in 2,900 hotel rooms across 29 sites, according to the report.

Figures suggest that hotel rooms rented by the City of Toronto’s social services and housing staff have increased by more than 300% in 24 months.

The report found that in 2021, Toronto spent an estimated $320 million on hotel space associated with its shelter operations. Of this amount, $118 million was spent on the rooms themselves and $29 million on meals.

“The City of Toronto has implemented the most comprehensive response to the COVID-19 pandemic for people experiencing homelessness in Canada,” a city spokesperson told Global News.

“(Toronto) moved quickly in 2020 to open 48 new temporary shelter sites to provide additional space for physical distancing, prevent potential outbreaks in shelters, save lives and minimize the spread of the virus. COVID-19 in shelters and the community.”

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The auditor general acknowledged that the pressure of a rapid transition during the pandemic has made tracking more difficult for city staff, but said some issues existed before the pandemic began.

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“Every dollar counts when it means more funds can be used directly to ensure there are enough beds in emergency shelters during the winter months or more funds can be redirected to the creating additional permanent housing to address homelessness,” the report said.

The apparent overpayment of a local tourist fee has been identified as a key area of ​​overspending.

The report says $13 million plus tax was billed for the DMF, a destination marketing fund raised by hotel associations to boost tourism and regional marketing.

The charge, levied by some hotels at 3% for the city, was not included in the city’s contract with hotel companies, according to the report.

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“Some staff who process bill payments were unaware of the contracts or unsure if particular charges should apply,” the city auditor found.

Non-contractual expenses amounted to 52,000 nights in a room or 140 rooms with food and wraparound support for an entire year, the report calculated.

According to the report, the hotel operator stopped charging the fee for all hotel rooms from January 2022 and agreed to refund a three-month period of the fee on future bills.

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According to the report, charges started appearing on invoices in August 2019 and earlier. “These charges are unrelated to the pandemic,” the report said.

He noted that the contracts “clearly state that the price (i.e., room rate) is all-inclusive, except for taxes.”

The DMF fee is not a tax.

“(The city) appreciates and welcomes the findings of the Auditor General (AG) in the audits of case management and hotel operations,” the Toronto spokesperson said.

They said the city attorney was working to review the terms of the contracts with the hotels and “recover all costs, if any.”

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The Auditor General’s report also criticized the city for paying for rooms without filling them.

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“We note that vacant room fees do not appear to have been discussed and that the City continues to pay vacant room fees even when the contract does not specify that vacant rooms must be paid for,” the report said.

The report estimates that between $2 million and $3 million was spent on unused rooms early in their lease “as new programs ramped up, as well as for a variety of other operational reasons.”

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The report also revealed that the hotels – referred to in the report simply as Hotel C and Hotel D – were billing the City of Toronto for vacant rooms in paying hotels. The practice cost the city $5.4 million plus tax between April 2020 and August 2021, the auditor general said.

“At Hotel C and Hotel D, we observed that the hotel operator was charging the city the full room rate of $114 per night for vacant rooms from April 2020 through August 2020, even though vacant rooms should not have been charged at all,” the report states. said.

The audit also found the city paid $840,000 for hotel storage space between August 2019 and 2021, as well as a $68,000 payment to use up to four hotel printers over two years. .

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A motion will be considered at the next meeting of the Audit Committee to request an update on the matters set out in the report. If approved, staff would report back in July.

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