Pubdate: Wed, 04 Feb 2015
Source: Province, The (CN BC)
Copyright: 2015 Postmedia Network Inc.
Contact: http://www2.canada.com/theprovince/letters.html
Website: http://www.theprovince.com/
Details: http://www.mapinc.org/media/476
Author: Sam Cooper
Page: 4

PHS CONFIDENT AFTER SPENDING SCANDAL

NON-PROFIT: Group has changed its financial structure to allow for 
more accountability, Ted Bruce says

A year ago, the PHS Community Services Society, a sprawling nonprofit 
known worldwide for providing housing, clean needles and compassion 
to Vancouver's addicts, nearly overdosed on bad spending.

Since then, the society has significantly increased its spending and 
holdings in Vancouver's Downtown Eastside, and big financial risks remain.

The society now has $18 million in debt and $70 million in land and 
buildings in the DTES.

But Ted Bruce, the veteran public health official who took over the 
society, believes the non-profit will survive and continue to run its 
controversial supervised injection site.

Started in 1996 with assets of just $2,400, PHS rapidly gained 
government contracts for harm reduction services in the DTES. It was 
credited for having passionate employees dedicated to a small and 
innovative management team.

But in early 2014, senior managers were forced to resign after 
several explosive audits uncovered hundreds of thousands spent on 
luxurious travel, limos, spas, family vacations and gifts.

There were also questions about a land deal that appeared to bolster 
the society's balance sheet and a web of "social venture" companies 
owned by employees that auditors believed "present an elevated risk 
of fraud, corruption and abuse."

Bruce says he took over because he feared funding and trust in harm 
reduction services in the DTES could evaporate following the audits.

The steady charge from Vancouver's harm reduction critics has been it 
is a 'poverty industry' that provides good salaries for those who 
provide it. And the spending scandal seemed to support that charge.

"The financial structure had to be changed and to some extent, the 
organization structure was very flat, so there was a lack of clear 
accountabilities," Bruce said. "I think I and the board would say we 
have maintained the services, when the organization could have collapsed."

Last spring, the PHS reported building and land assets of about $55 
million, with 300 employees and about 1,000 tenant-clients.

The society now has $70 million in land and buildings, with 350 
employees and about 1,200 tenants, Bruce said.

There was about a $2-million operating debt for 2014 and PHS holds 
$18 million in long-term debt related to land mortgages.

Only three of eight social venture companies identified as risks by 
auditors are still operating.

Bruce said he has increased the delivery of primary medical care to 
tenants and this represents at least a partial shift from PHS' 
previous harm reduction focus.

Policy changes are also pending for In site as PHS awaits word on 
whether its operating permit will be extended this spring. The 
tension between medical treatment for addiction and harm reduction's 
way of managing addictions is always present in the DTES, Bruce said.

For the people who have worked with PHS for years and still deeply 
believe in its former managers, there has been some difficulty adjusting.

"The staff was feeling discouraged and mistrustful of the interim 
board and they have been mistrustful of me," Bruce said. "But I think 
we have managed to reduce the anxiety of staff and build a level of trust."

PHS' latest financial statement, released in November 2014, revealed 
that a "financial derivative" connected to a development deal and 
"previously recorded (as) an investment of $6 million cannot be 
supported," and was wiped off the society's balance sheet and 
recorded as "nil."

The "derivative" is a piece of paper related to the Stanley/New 
Fountain, a single room occupancy hotel given to PHS in 2001 by the 
Greater Vancouver Housing Corp.

The property was reportedly appraised at $9.51 million in 2012. PHS 
is believed to have lost about $900,000 running the hotel and the 
City of Vancouver took over the property's mortgage while giving PHS 
an option to buy it back.

In 2013, a cash-strapped PHS transferred that purchase option to 
developer Westbank in exchange for an agreement to develop the site 
with Westbank.

In April 2013, Westbank exercised the option to buy the building for 
$2.34 million and now owns it.

However, Bruce said the value of the deal reached with Westbank "was 
very questionable."

"It may be worth something in the long run and we are very hopeful 
there will be up to 80 units of social housing there eventually," 
Bruce replied when asked if PHS has lost any claim on the asset it 
previously owned.

PHS leases rooms in the building from Westbank.

"It certainly is difficult," Bruce said of the subtraction of $6 
million from PHS books, "but to some degree, it was not money in the bank."

Also connected to the deal is the sale of a Downtown Eastside 
property called The Only, which B.C. Housing bought back from PHS for 
$2.25 million in November 2014.

B.C. Housing Minister Rich Coleman said he is comfortable with the 
growing size of PHS because of its reformulated management team.

"What was good about the PHS is it takes care of some of the toughest 
clients we deal with, and the employees on the ground have a lot of 
compassion," Coleman said.

"I think some of the senior-level folks, what got away from them was 
the notion of what the money invested in the non profit was really 
meant for. But also, some of them were also visionaries in mental 
health and homelessness and addictions."
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MAP posted-by: Jay Bergstrom