$1.1-billion plan under scrutiny

Auditor general has questions about affordable housing project

Alberta’s auditor general says the province must do a better job monitoring its $1.1-billion signature affordable housing initiative to make sure it meets the needs of low-income Albertans.

In an audit released Tuesday looking at Alberta’s five-yearold plan to help build 11,000 units of affordable housing, auditor general Merwan Saher raised several questions about the program, how grants were awarded and what kind of followup the Municipal Affairs department does.

“The ministry can rightfully claim success in increasing the supply of affordable housing,” Saher said in a conference call with reporters.

“The main point we’re making is the department can’t, at this time, answer three key questions: What impact did this investment program amounting to $1.1 billion ... have on the overall demand for affordable housing? Was the supply targeted to the right people in the right locations? And has the government in fact achieved value for money?”

Saher’s report was released Tuesday as part of a package of audits examining everything from collaboration between universities and colleges to the government’s new system of budgeting.

The province agreed to a hefty investment in affordable housing after the Alberta Affordable Housing Task Force urged the Stelmach government in 2007 to beef up the supply of apartments and homes for low-income residents at a time when several communities faced long wait lists.

In September 2011, the government announced it had met its goals of funding 11,000 units, combining a $1.1-billion investment spread out over five years with $1.1 billion from municipalities, nonprofit groups and the private sector. The money flowed through two programs: block grants to qualified municipalities and one-time grants for specific projects.

According to the report, about 5,900 units had been built as of April. Another 2,800 units are scheduled to be finished by March 2014, with the remaining 2,300 units in various stages of development.

Saher’s office pointed to some inconsistencies in how grant applications were evaluated and approved.

“The department assigned fewer points to need and affordability than we would expect for a program designed to increase the supply of affordable housing options to Albertans in need,” the audit said. “As a result, the department risked approving projects that were not well suited to the program, while rejecting others that may have been.”

The report also criticized the department for failing to document how it selected successful projects for funding. Staff from the auditor general’s office who tried to recreate the lists using official standards said they could not arrive at the same list of approved municipalities and grant recipients.

“We acknowledge that funding decisions require judgment and discretion,” the report said. “However, the department did not document its rationale for these critical judgments.”

Saher called on Municipal Affairs to do more to make sure those projects abide by the rules after they open their doors.

Families who live in provincially funded affordable housing must have annual incomes that fall below thresholds defined by the Canada Mortgage Housing Corporation and Municipal Affairs.

In Edmonton, that means someone can earn a maximum of $36,000 annually to rent a one-bedroom unit compared to a $69,500 income limit to qualify for an affordable one-bedroom unit in Fort McMurray.

“Nine grant recipients charged rental rates above the affordable housing rental rate.” Auditor Genera l’ s Report

Groups running affordable housing projects must keep rents at least 10 per cent below average market rents. If the units are for people who were once homeless, rents must be at least 20 per cent below average.

CMHC reported the average monthly rent for a two-bedroom unit in Edmonton was $1,071 in the fall of 2012.

As part of its review, auditor general staff visited 22 grant recipients with completed projects. Many failed to comply with some aspect of their grant agreements.

“Nine grant recipients charged rental rates above the affordable housing rental rate,” the report said.

In addition, almost half of the projects reviewed had one or more tenants whose incomes exceeded the maximum allowed to qualify for affordable housing.

“Two individuals had incomes that were more than twice the threshold and had been living in these affordable housing units for 16 months and three years, respectively,” the report said. “Also, some grant recipients did not have information to support their tenants’ income.”

A government statement issued Tuesday said Municipal Affairs will make changes.

“The ministry will complete a full evaluation of the previous affordable housing grant program and update existing programs and policies, and apply these improvements to current and future housing initiatives,” the statement said.

NDP MLA David Eggen called the auditor general’s critique of the affordable housing program the “most glaring problem” in the 158-page report.

“I think this is something we need to pursue a lot more because we know that people who require affordable housing are not getting what they need and we know we’re putting a lot of public money into this initiative,” he said.

Wildrose MLA Joe Anglin said the report shows there is a lack of accountability and transparency in the housing sector.

There’s a problem, he said, when there are some people living in affordable housing with incomes that are too high.

“That means the system is not working properly,” Anglin said. “We really do need to make the proper steps to look at what the auditor general has requested for some of his recommendations.”