Auditor General identifies shortcomings in the City’s administration of childcare, cultural and social non-profit leases

Vancouver’s Auditor General, Mike Macdonell, has released a report on the City of Vancouver’s management of childcare, cultural and social non-profit leases.

The City provides non-profit organizations (NPOs) with below-market and nominal leases of City-owned or leased land, buildings and spaces. These NPOs deliver a wide variety of important community services such as childcare centres, neighbourhood houses, theatres and art galleries.

The audit found that about 30% of spaces didn’t have a current lease in place while the tenant continued to occupy the property, a situation called “overhold”, with a large proportion in overhold for 10 years or more. Long term overholds in effect bypass Council’s authority to issue grants in-kind, something which is required by the Vancouver Charter.

In 2020, the City developed a lease management framework to improve administration of its non-profit leases, however, there was no implementation plan and the audit found that the framework was only partially implemented. As a result, the audit concluded that the City had not effectively managed its portfolio of childcare, cultural and social non-profit leases.

The City defined objectives and intended public benefits for providing space to non-profit operators, which were approved by Council. However, the audit found that the City had not conducted and documented monitoring to determine if these benefits had been achieved. Competitive processes for selecting new operators were conducted, however, documentation supporting decisions was not consistently retained.

The audit noted the need for the City to provide Council and the public with better information to understand the full extent of financial support given to individual non-profit operators and the portfolio as a whole. The audit also identified the opportunity for the City to develop a funding model to recover costs from senior levels of government for properties leased to childcare operators.

The report contains ten recommendations to assist the City in effectively managing its childcare, cultural and social non-profit leases. The City has accepted all the recommendations and has provided action plans in response.

Quotes

Mike Macdonell, Auditor General

“The spaces provided by the City to the non-profit sector at low or almost no cost strengthens the social fabric of our community. But to obtain the best value for everyone, leased properties need to be well managed, and the performance of lessees should be assessed,” said Auditor General Mike Macdonell.
 
“Long-term overholding – allowing a space to be occupied without a current lease agreement – in effect bypasses Council authority to provide grants, and is a practice that should stop,” he added. “Council and the public should receive better information concerning the value of non-profit leases, including leases in overhold.”

Contact:

Mike Macdonell
Auditor General for the City of Vancouver
mike.macdonell@vancouver.ca
604-871-6211

To view the report, please visit our website.