Townhomes Kingston carrying over $200K in rent arrears, mysterious expense increases: KPMG report

A report being delivered this week by KPMG to the City Of Kingston reveals that beleaguered social housing provider Town Homes Kingston, in addition to harbouring serious life safety concerns, had also been beset by a host of financial problems, including carrying inordinately high rent arrears, a higher-than-normal amount of deferred property repairs and maintenance, and custodial staff expenses which mysteriously increased in the months after all custodial staff had been terminated.

Townhomes Kingston, also known as the Kingston Municipal Non-Profit Housing Corporation, manages 397 apartment and townhouse units at several locations in the city of Kingston. It had its Executive Director removed and its board of directors’ powers stripped by the Service Manager for the City of Kingston and County of Frontenac on July 23rd after an initial operational review in the spring of 2018 revealed multiple concerns related to tenants’ health and safety, and the corporation’s governance and financial stability.

The KPMG report was commissioned to probe further into those findings and also to explore the possible amalgamation of Townhomes Kingston with another social housing provider, the Kingston Frontenac Housing Corporation, as a means of stabilizing and correcting the identified concerns with Townhomes Kingston.

Among the most serious of the findings, KPMG confirmed that Townhomes Kingston:

• had failed to secure a life safety system, that Fire Safety Plans at each of THK’s sites were outdated and not approved by the Fire Department;
• had financial statements which were not prepared in accordance with Generally Accepted Accounting Principles and, in some cases, presented multiple balance sheets with differing information;
• had failed to provide audited financial statements within the time required by the Housing Services Act;
• was carrying $212,078 in rent arrears owing for a period greater than 120 days;
• had significantly deferred repairs and maintenance on its buildings, putting them at risk and impacting tenant enjoyment and safety;
• showed maintenance wages and benefits had inexplicably increased in 2017, after it had eliminated its entire maintenance division;
• had made multiple rent calculations errors, resulting in tenants having to pay more and received less of a subsidy;
• repeatedly failed to be aware of or adhere to the directives of the Service Manager.

The KPMG report noted that Townhomes Kingston staff were not made available for interviews to answer or clarify any of the identified concerns. “We are not stating that there is anything incorrect or misstated in THK’s fiscal 2017 draft audited financial statements, rather the purpose of our commentary is to provide the reader with an understanding that there are gaps in our understanding based on the various THK documentation provided to us that cannot be reconciled/clarified,” said the report.

KPMG also noted that Townhomes Kingston suffered from serious organizational issues, including a high staff turnover and a Board Of Directors which did not conform to its mandated composition of 4 members of council and 3 members of the public.

The analysis will be presented to members of Townhomes Kingston at the City of Kingston’s council meeting on Tuesday, August 7th.