Highlights Highlights of a review of Newfoundland and Labrador Housing Corporation s Rental Housing Program from January 2007 to December 2007.

Office of the Auditor General Newfoundland and Labrador Highlights Highlights of a review of Newfoundland and Labrador Housing Corporation s Rental Housing Program from January 2007 to December 2007. Why our Office did this Review The objectives of our review were to assess the adequacy of the Corporation s rental property portfolio to meet the demand of its clientele and review the progress of the implementation of recommendations from the Housing Administration Study of March 2006. What our Office Recommends The Corporation should: develop a long-term housing accommodation plan; continue with their efforts to address the recommendations from the Housing Administration Study; ensure that Corporation staff comply with the policies resulting from the recommendations; and ensure all information in the Rental Management System is accurate. What the Corporation Said To provide balance to this report and to ensure full disclosure, the Corporation was asked to formulate a response to our findings and conclusions. The Corporation s response, verbatim, is included at the end of this report. Readers are encouraged to consider the Corporation s comments in this regard. Reviews of Departments and Crown Agencies January 2008 Chapter 2, Part 2.13 NEWFOUNDLAND AND LABRADOR HOUSING CORPORATION Rental Housing Program The Rental Housing Program (the Program) is the oldest and largest housing assistance program administered by the Newfoundland and Labrador Housing Corporation (the Corporation). The purpose of the Program is to provide affordable housing to low-income individuals and families. Housing Administration Officers (HAO) are responsible for delivery of the Program in four regions and are located at seven offices across the Province. The HAOs report to the applicable Regional Director in Eastern and Western regions and Managers in Labrador and Central regions. The Corporation s headquarters is located in St. John s. At the time of our review there were 26 HAOs employed by the Corporation. Figure 1 shows the rental unit portfolio by region. Figure 1 Newfoundland and Labrador Housing Corporation Rental Unit Portfolio by Region As at 8 November 2007 Type of Rental Unit Region Bachelor One Bedroom Two Bedroom Three Bedroom Four Bedroom Five Bedroom Total Eastern 80 678 659 2,006 492 19 3,934 Central 1 155 160 841 94-1,251 Western 4 159 202 745 100 14 1,224 Labrador 1 16 54 169 27-267 Total 86 1,008 1,075 3,761 713 33 6,676 Occupied 83 986 1,020 3,394 650 30 6,163 Source: Newfoundland and Labrador Housing Corporation Rental Management System What We Found The Corporation is unable to match the client demographics to its rental unit portfolio and as a result has an excess bedroom capacity in many of its units i.e. over-housed. The Corporation has 14,077 tenants occupying 6,163 rental units with a total of 16,041 available bedrooms. Therefore, even assuming that each tenant will occupy a separate bedroom, there is still an excess of 1,964 bedrooms. In fact, since 2002, the percentage of units with more bedrooms than occupants has increased from 35% to 40%. In March 2006 the Corporation completed a Housing Administration Study (the Study) of its Rental Housing Program and identified 48 recommendations in 9 areas of the Program. The purpose of the Study was to identify and recommend efficient and effective use of the Corporation s rental housing resources and improvements to client service. The Corporation identified 32 recommendations as priority to be implemented by 1 April 2007. The Corporation did not fully meet its goal of maximizing the efficiency and effectiveness of its rental housing resources as evidenced by the fact that the Corporation did not comply with all of the 32 recommendations by 1 April 2007. Recommendations which were not complied with covered such areas as: inspections prior to a tenant vacating, inaccurate waitlists, no certified tax returns obtained from new tenants, delayed collection efforts, no agreements to pay arrears, termination notices not always issued after 45 days of arrears, the need for improved contact with tenants and inconsistent applicant assessment among regions. To view the full report, refer to the web site www.gov.nl.ca/ag. For more information, call the Office of the Auditor General, 709-729-2700 or email adgmail@gov.nl.ca Auditor General of Newfoundland and Labrador Chapter 2, Part 2.13, January 2008

Background Rental Housing Program overview The Rental Housing Program (the Program) is the oldest and largest housing assistance program administered by the Newfoundland and Labrador Housing Corporation (the Corporation). The purpose of the program is to provide affordable housing to low-income individuals and families. Housing Administration Officers (HAO) are responsible for delivery of the Program in four regions and are located at seven offices across the Province. The HAOs report to the applicable Regional Director in Eastern and Western regions and Managers in Labrador and Central regions. The Corporation's headquarters is located in St. John's. At the time of our review there were 26 HAOs employed by the Corporation. Figure 1 shows the four geographic regions, the number of HAOs and the number of rental units in each region. Figure 1 Newfoundland and Labrador Housing Corporation Geographic Regions Auditor General of Newfoundland and Labrador Chapter 2, Part 2.13, January 2008 279

Revenues and expenditures In 2006-07, rental revenue totalled $18.7 million ($19.3 million in 2005-06) and expenditures on rental housing totalled $53.5 million ($52.9 million in 2005-06). Rental units by region The Corporation has a total of 6,676 units available for rental. Figure 2 identifies the type of rental units and occupancy within each of the Corporation's four regions. Figure 2 Newfoundland and Labrador Housing Corporation Rental Unit Portfolio by Region As at 8 November 2007 Type of Rental Unit Region Bachelor One Bedroom Two Bedroom Three Bedroom Four Bedroom Five Bedroom Total Eastern 80 678 659 2,006 492 19 3,934 Central 1 155 160 841 94-1,251 Western 4 159 202 745 100 14 1,224 Labrador 1 16 54 169 27-267 Total 86 1,008 1,075 3,761 713 33 6,676 Occupied 83 986 1,020 3,394 650 30 6,163 Source: Newfoundland and Labrador Housing Corporation Rental Management System Housing Administration Study In December 2005, the Corporation appointed an internal committee to study the administration of the Rental Housing Program. The process examined existing policies and procedures and included consultation with employees involved in the Program and an analysis of Program statistics from the computerized Rental Management System. In March 2006, the committee issued a report titled Housing Administration Study (the Study). The report included 48 recommendations focusing on the following 9 aspects of the Rental Housing Program: 280 Chapter 2, Part 2.13, January 2008 Auditor General of Newfoundland and Labrador

rental housing structure (2); applications (10); income determination (6); lease administration(9); tenant transfer (2); rental arrears (8); tenant damages (5); termination of tenancy (1); and rental housing policy and program monitoring (5). Audit Objectives and Scope Audit objectives The objectives of our review were to: assess the adequacy of the Corporation's rental property portfolio to meet the demand of its clientele; and review the progress of the implementation of recommendations from the HousingAdministration Study of March 2006. Audit scope Our review covered the period January 2007 to December 2007 and included discussions with officials of the Corporation as well as an examination of files related to administration and delivery of the Corporation's Rental Housing Program. We completed our review in December 2007. Auditor General of Newfoundland and Labrador Chapter 2, Part 2.13, January 2008 281

Overall Conclusions The Corporation is unable to match the client demographics to its rental unit portfolio and as a result has an excess bedroom capacity in many of its units i.e. over-housed. The Corporation has 14,077 tenants occupying 6,163 rental units with a total of 16,041 available bedrooms. Therefore, even assuming that each tenant will occupy a separate bedroom, there is still an excess of 1,964 bedrooms. In fact, since 2002, the percentage of units with more bedrooms than occupants has increased from 35% to 40%. In March 2006 the Corporation completed a Housing Administration Study (the Study) of its Rental Housing Program and identified 48 recommendations in 9 areas of the Program. The purpose of the Study was to identify and recommend efficient and effective use of the Corporation's rental housing resources and improvements to client service. The Corporation identified 32 recommendations as priority to be implemented by 1April 2007. The Corporation did not fully meet its goal of maximizing the efficiency and effectiveness of its rental housing resources as evidenced by the fact that the Corporation did not comply with all of the 32 recommendations by 1 April 2007. Recommendations which were not complied with covered such areas as: inspections prior to a tenant vacating, inaccurate waitlists, no certified tax returns obtained from new tenants, delayed collection efforts, no agreements to pay arrears, termination notices not always issued after 45 days of arrears, the need for improved contact with tenants and inconsistent applicant assessment among regions. Detailed Observations Our review included an examination of: 1. The Corporation's Rental Housing Portfolio 2. Progress on Recommendations from the Housing Administration Study 282 Chapter 2, Part 2.13, January 2008 Auditor General of Newfoundland and Labrador

1. The Corporation's Rental Housing Portfolio Rental housing portfolio Figure 3 Many of the rental units managed by the Corporation were built over 25 years ago. At that time, the focus was to provide housing for families, which consisted primarily of two parents and multiple children. As a result, the homes constructed typically contained three or four bedrooms. In addition, there was little emphasis placed on housing for those with special needs. As a result, the Corporation was unprepared for the significant change that has occurred in the demographics of its clientele. The client base has changed from mainly families to single individuals, single parents and elderly couples. As at 8 November 2007, the Corporation had 6,676 rental units, 6,163 of which were occupied. Figure 3 shows the composition of occupants in the rental units. Newfoundland and Labrador Housing Corporation Composition of Occupants in Rental Units As at 8 November 2007 Type of rental unit Number of rental units Number of occupied rental units Number of bedrooms Number of occupants Number of vacant bedrooms Average number of occupants Bachelor 86 83 83 83-1.00 One bedroom 1,008 986 986 1,040 (54) 1.05 Two bedroom 1,075 1,020 2,040 1,707 333 1.67 Three bedroom 3,761 3,394 10,182 9,029 1,153 2.66 Four bedroom 713 650 2,600 2,112 488 3.25 Five bedroom 33 30 150 106 44 3.53 Total 6,676 6,163 16,041 14,077 1,964 2.28 Source: Newfoundland and Labrador Housing Corporation Rental Management System As Figure 3 shows, the Corporation has 14,077 tenants occupying 6,163 rental units with a total of 16,041 available bedrooms. Therefore, even assuming that each tenant will occupy a separate bedroom, there is still an excess of 1,964 bedrooms. Auditor General of Newfoundland and Labrador Chapter 2, Part 2.13, January 2008 283

As Figure 3 also shows, again even with the assumption that every tenant will occupy a separate bedroom, most of the rental units have an average occupancy rate that is lower than the number of bedrooms in the rental unit.as a result, there are vacant bedrooms in many of the occupied rental units. For example, the average occupancy rate for four bedroom units is 3.25 occupants. There are 2,600 bedrooms in the 650 occupied four bedroom rental units; however there are only 2,112 occupants. Therefore at least 488 bedrooms in the four bedroom units are unoccupied. Figure 4 Figure 4 shows the family size to bedroom count within the 6,163 occupied rental units. Newfoundland and Labrador Housing Corporation Rental Unit Portfolio Composition As at 8 November 2007 Number of rental Family Number of Bedrooms Total rental units with more bedrooms than Size 0 1 2 3 4 5 units occupants 1 83 933 446 547 92 4 2,105 1,089 2 52 477 1,048 131 4 1,712 1,183 3 1 82 1,045 155 12 1,295 167 4 14 558 131 3 706 3 5 1 163 91 3 258 6 27 38 1 66 7 6 10 2 18 8 2 2 >8 1 1 Total 83 986 1,020 3,394 650 30 6,163 2,442 Source: Newfoundland and Labrador Housing Corporation Rental Management System 284 Chapter 2, Part 2.13, January 2008 Auditor General of Newfoundland and Labrador

As Figure 4 shows, there were 2,442 (40%) rental units which had more bedrooms than the number of occupants, even with the assumption that every tenant will occupy a separate bedroom. As a result, rental units were occupied by a smaller number of occupants than the rental unit's capacity. In fact, since 2002, the percentage of units with more bedrooms than occupants has increased from 35% to 40%. Conclusion The Corporation is unable to match the client demographics to its rental unit portfolio and as a result has an excess bedroom capacity in many of its units i.e. over-housed. Therefore, even assuming that each tenant will occupy a separate bedroom, there is still an excess of 1,964 bedrooms. Recommendation The Corporation should develop a long-term housing accommodation plan. 2. Progress on Recommendations from the Housing Administration Study In March 2006 the Corporation completed a Housing Administration Study (the Study) of its Rental Housing Program and identified 48 recommendations in 9 areas of the Program. The purpose of the Study was to identify and recommend efficient and effective use of the Corporation's rental housing resources and improvements to client service. On 22 January 2007, a Senior Executive Director issued an interoffice memo that identified 32 recommendations as priority to be implemented by 1April 2007 as outlined in Figure 5. Auditor General of Newfoundland and Labrador Chapter 2, Part 2.13, January 2008 285

Figure 5 Newfoundland and Labrador Housing Corporation Housing Administration Study Recommendations to be Implemented in 2007 Recommendations Program aspect Number Not adopted On hold pending new computer system To be implemented by 1 April 2007 Rental housing portfolio 2 1-1 Applications 10 1 4 5 Income determination 6-1 5 Lease administration 9 1 1 7 Tenant transfer 2-1 1 Rental arrears 8 - - 8 Tenant damages 5-4 1 Termination of tenancy 1-1 - Rental housing policy and program monitoring 5-1 4 Total 48 3 13 32 Source: The Corporation's Update on Housing Administration Study The 3 recommendations which the Corporation did not adopt addressed planning relating to the types of rental accommodations, advertising relating to types of tenants, and splitting HAO duties. Our review indicated that the Corporation did not comply with all of the 32 recommendations by 1 April 2007. Details on the recommendations are outlined in the following sections: A. Applications B. Wait List C. Rental UnitAdministration D. Rental Housing Policy and Program Monitoring 286 Chapter 2, Part 2.13, January 2008 Auditor General of Newfoundland and Labrador

2A. Applications ( 7 Recommendations) Application process Applications for rental units are processed at the regional offices where they are assigned a unique identifier and entered into the Rental Management System. An HAO assesses the application in relation to an established set of criteria including income and expenses. Once approved, the application is reviewed by a regional selection committee which recommends a rental unit for the applicant. As a result of the Study, the following recommendations were to be implemented by 1April 2007: the regional selection committees were to use their best efforts to consider client mix in the demographic areas of Department of Human Resources, Labour and Employment clients, seniors, working poor families, and non-elderly singles. Client mix is to be considered in the placement of new tenants and the transfer of existing tenants; for eligibility purposes, a household income threshold of $30,000, $32,000 and $40,000 is to be applied to the Island portion of the Province, Goose Bay and the North Coast of Labrador respectively. Certified income tax returns were to be used to verify income for all household members; total household net income should be used for eligibility purposes and for the calculation of affordability; any applicant within the low income thresholds and with a rental affordability problem should be considered eligible. (i.e. paying 25% or more of income as rent); the Point Score system used to rank applicants for eligibility was to be discontinued to be replaced with income eligibility only. As well, the requirement for home visit and credit reporting on the applicant was to cease; the actual hours of work over a month were to be used to calculate monthly income from employment. Where actual hours could not be verified, the employer should provide independent verification; and Auditor General of Newfoundland and Labrador Chapter 2, Part 2.13, January 2008 287

a net pay approach should be used for working poor clients with income from employment. Detailed findings Our review indicated that, while HAOs were informed of the need to implement the recommendations by 1 April 2007, the recommendations were not always complied with. We reviewed 86 of 810 applications that had been approved since 1 April 2007. We identified 87 issues with 54 approved applications as follows: essentially all applications (53 of 54) were approved without the provision of certified copies of income tax returns, as required; 12 applications were approved, but there was insufficient documentation to determine whether net income was adequately assessed; 9 applications were approved, but there was insufficient documentation to determine whether the applicant's current rent payments were compared to the applicant's income, as required; 3 applications were assessed based on the Point Score system that had been abolished as of January 2007; 2 applications were approved without a calculation of hours of work to determine the monthly income, as required; and 8 applications were approved, but there was insufficient documentation to determine whether the client was eligible. 2B. Wait List (1 Recommendation) Wait list policy The Study recommended that effective January 2007 the wait list should be renewed every six months and be purged of applicants who no longer indicated an interest in housing assistance. The recommendation was subsequently revised to renew the wait list every 12 months. 288 Chapter 2, Part 2.13, January 2008 Auditor General of Newfoundland and Labrador

Wait list as of 6 November 2007 The Corporation provided a list of applicants who, as at 6 November 2007, had been approved for residence in a rental unit but were waiting for a rental unit to become available. The list indicated a total of 951 applicants on the wait list. In 2003, a similar list indicated that a total of 771 applicants were on a wait list. Figure 6 identifies the number of applicants by region and the time on the wait list. Figure 6 Newfoundland and Labrador Housing Corporation Wait List by Region As at 6 November 2007 Time on Wait List Regions Eastern Central Western Labrador Total 1 to 6 months 195 83 97 44 419 7 to 12 months 119 60 42 16 237 More than 12 months 33 102 91 22 248 Sub-total 347 245 230 82 904 % of Sub-total 38% 27% 26% 9% 100% Unable to determine - 45 1 1 47 Total 347 290 231 83 951 Source: Newfoundland and Labrador Housing Corporation Rental Management System As Figure 6 shows, 248 of the 951 applicants (26%) have been on the wait list for more than one year. There are 47 applicants for which the Corporation could not demonstrate how long they were on the wait list because the application date occurred after the approved date in the Rental Management System (the System), these applications may have been incomplete, the information may have been recorded incorrectly or an HAO may not have entered data in certain fields in the System. Of these 47 applicants, 45 were from the Central region. Figure 7 provides similar information as Figure 6 on a demographic basis. Auditor General of Newfoundland and Labrador Chapter 2, Part 2.13, January 2008 289

Figure 7 Newfoundland and Labrador Housing Corporation Demographics of the Wait List As at 6 November 2007 Demographics of Wait List Time on Wait List Single Senior Single Single Parents Senior Couples Subtotals Other Total 1 to 6 months 78 65 161 20 324 95 419 7 to 12 months 60 46 67 13 186 51 237 More than 12 months 52 51 55 25 183 65 248 Sub-total 190 162 283 58 693 211 904 %of Sub-total 21% 18% 32% 6% 77% 23% 100% Unable to determine 3 4 21 1 29 18 47 Total 193 166 304 59 722 229 951 Source: Newfoundland and Labrador Housing Corporation Rental Management System As Figure 7 shows, 77% of the applicants on the wait lists are singles, senior singles, single parents and senior couples. This would indicate that the Corporation has a greater demand for smaller rental units. Officials indicated that they do not have a long-term accommodation plan in place to address the effect of the demographic changes. Wait lists may not be accurate Applicants on wait lists longer than 12 months were to be issued a letter requesting that they confirm that they still required a rental unit. Applicants not requiring a rental unit would be purged from the wait list. Our review indicated that the Corporation has not contacted all applicants on the wait list over 12 months as required.as a result, the wait list can not be purged and therefore may not be accurate. We reviewed files for 24 of the 248 applicants that have been on the wait list for 12 months or longer to determine if the Corporation had contacted the applicant to ensure the need for housing still existed. Our review identified the following: 290 Chapter 2, Part 2.13, January 2008 Auditor General of Newfoundland and Labrador

8 files had letters issued requesting that the applicant respond to indicate they still needed a rental unit. Of these 8: 4 applicants responded that they still required a rental unit; and 4 applicants did not respond. 11 files contained no documentation that letters had been issued or any notation indicating that the applicants were still in need of housing; and 5 files contained notes that contact had been made with the applicant within the last 12 months confirming that they were still in need of a rental unit. 2C. Rental Unit Administration (17 Recommendations) Rental leases renewed without required documentation Rental Lease Renewals Approved applicants are required to sign a lease which outlines the terms and conditions that the tenant must meet when renting the unit from the Corporation (e.g. monthly rent amount). The lease must be renewed every three years. The Study recommended that in order to renew a rental lease, tenants must provide copies of certified income tax returns to the Corporation (exception: long-term clients of the Department of Human Resources, Labour and Employment (DHRLE). In addition: lease renewals were to continue on a project renewal basis for all working poor, seniors and clients of DHRLE; and lease renewal notices need only be issued and executed where there is an actual change in the monthly rent. Our review indicated that the Corporation did not always comply with the new requirement that files for lease renewals contain a copy of a certified income tax return. Auditor General of Newfoundland and Labrador Chapter 2, Part 2.13, January 2008 291

We reviewed 98 of 983 files relating to renewed leases on rental units with the Corporation since 1 April 2007. We found that 76 of the 98 files had the leases renewed without a certified income tax return on file. Inspections The Study recommended that: move-in inspections should occur for new tenants. Where possible, inspectors should perform this task in rural areas during their regular scheduled visits; home inspections and project and ground inspections should be conducted; move-out inspection should occur with the tenant before the unit is vacated; and move-in, move-out and annual inspections should be documented using the standard corporate forms. To determine which units have been inspected, head office staff must request this information from each regional office. Inspections not being carried out Our review indicated that these requirements were not always complied with. Furthermore, we found that the Corporation does not maintain a comprehensive listing of completed inspections. We reviewed 49 of 484 tenants who had been placed in units from 1 April 2007 to 19 November 2007. We found that in 4 instances there was no evidence that a move-in inspection had been conducted. We reviewed 60 of 593 tenants who had vacated their rental units from 1April 2007 to 19 November 2007. We found issues with 33 as follows: 25 had no evidence a move-out inspection was completed; 6 had the move-out inspection done after the tenant had vacated; 1 file was unable to be located by the Corporation; and 1 file was incomplete. 292 Chapter 2, Part 2.13, January 2008 Auditor General of Newfoundland and Labrador

Corporation not complying with requirement Tenant Damages The Study recommended that only damages awarded by the Residential Tenancies Division (RTD) of the Department of Government Services should be applied to a rental account. This direction was also provided in the interoffice memo issued to all regional offices by a Senior Executive Director. The Corporation was unable to provide a listing of tenant damages that had been applied to tenant accounts. Officials indicated that historically they were not subject to the Residential Tenancies Act and did not obtain an award of damages from the RTD when applying tenant damages to tenants' accounts. Although the Corporation became subject to the Act in 2000, officials indicated that the Corporation has continued to apply tenant damages to tenant accounts without these damages being awarded by the RTD. As a result, the Corporation is not complying with the new requirement. Refurbishing Rebate Program not developed Refurbishing Rebate Program The Study recommended that a Refurbishing Rebate Incentive Initiative was to be piloted in Grand Falls-Windsor. The purpose of the initiative was to motivate tenants to maintain rental units in a good state of repair during tenancy and when vacating by providing a rebate in cases where the rental unit was well maintained. At the time of our review, the policy for this initiative had neither been developed nor implemented. Auditor General of Newfoundland and Labrador Chapter 2, Part 2.13, January 2008 293

RentalArrears The Study recommended the following requirements related to administration of rental arrears be implemented by 1April 2007: rental collections were to be given priority; collection procedures should commence immediately after an account is 10 days in arrears; personal contact should be made and maintained on a persistent basis with the client to collect the full balance owing. All collection contacts should be documented in the Corporations rental management system; within 45 days of rental arrears, a formal written arrangement should be negotiated with the client to resolve the arrears and keep rental payments current; clients should be advised that if an arrangement cannot be reached in 45 days, or an internal arrangement is broken, the Corporation would issue a termination notice. An Order of Eviction should simultaneously be filed with the RTD. The Corporation should always seek to mediate to resolve arrears; when tenants provide a notice to terminate tenancy while in arrears, the Corporation should immediately file for a hearing at the RTD for an order for arrears; arrears accounts should not be sent to a collection agency until all reasonable internal efforts are made to collect or legally secure the rental arrears; and management should meet, at a minimum of once a month, with the HAO responsible, to review each and every account in arrears and discuss collection efforts. Our review indicated that the Corporation did not always comply with the new requirements. This is evidenced from the following findings: 294 Chapter 2, Part 2.13, January 2008 Auditor General of Newfoundland and Labrador

Collection efforts not applied to arrears as required As of 5 November 2007, there were 1,911 tenants who owed the Corporation rental payments totalling $658,637. There were 79 tenants who had not made a rental payment in 45 days or longer. We reviewed 8 of these files with arrears totalling $4,337 and identified the following 21 issues: 6 had no evidence that collection efforts started when the account was 10 days in arrears; 4 had no evidence of personal contact being maintained throughout the collection process; 6 had no evidence of an agreement to pay on file; and 5 had no evidence that a notice of eviction was filed after 45 days. We reviewed 6 of 60 accounts that had been sent for collection from 1April 2007 to 6 October 2007 and identified the following 9 issues relating to 3 files: 3 had no evidence that collection efforts had started when the account was 10 days in arrears; 1 had no evidence of personal contact being maintained throughout the collection process; 2 had no evidence of an agreement to pay on file; 1 had no evidence that a notice of eviction was filed after 45 days; 1 had no evidence that a hearing with Residential Tenancies Division was filed for; and 1 did not have a hearing with Residential Tenancies Division immediately upon the tenant vacating the rental unit, instead it did not file a hearing until 60 days after the tenant vacated. Auditor General of Newfoundland and Labrador Chapter 2, Part 2.13, January 2008 295

D. Rental Housing Policy and Program Monitoring (7 Recommendations) Policy and procedures manual not updated The Study recommended that: higher mileage rates should be available to HAOs required to travel where fleet vehicle is unavailable and the HAO accepts the conditions for the higher rate designation; for the Eastern regional office, small fuel efficient fleet cars should be made available to HAOs. These should be marked to indicate a corporate vehicle; continued vigilance and adherence to corporate transfer policy should occur. Transfers and their reasons should be available for review/reporting in any new rental management system; regions must strictly adhere to corporate policy and procedures, including approved forms; requests for policy and procedure changes/amendments should be routed through the Policy and Procedure Coordinator; teleconference calls between the Programs Division and regions should occur at least once a quarter. Minutes of these discussions should be retained; and at least once every two years, HAOs and their managers from all regions should meet to review policies, practices and relevant concerns regarding the delivery of the Rental Housing Program. The first HAO conference should be held in Gander in 2007 to coincide with theannual Tenants Conference. Our review indicated that not all requirements were always complied with as evidenced by the fact that: several policies are still in draft form e.g. tenant damages, inspections, lease renewals and the arrears policy; none of the new policies are included in the Corporation's policy and procedures manual; and 296 Chapter 2, Part 2.13, January 2008 Auditor General of Newfoundland and Labrador

file maintenance varies between staff and from region to region, i.e. some files contain letters stating they were approved for housing, some files have a note written on the file, and some files have nothing indicating they were approved. Conclusions The Corporation did not comply with all of the 32 recommendations by 1 April 2007. Recommendations which were not complied with covered such areas as: inspections prior to a tenant vacating, inaccurate waitlists, no certified tax returns obtained from new tenants, delayed collection efforts, no agreements to pay arrears, termination notices not always issued after 45 days of arrears, the need for improved contact with tenants and inconsistent applicant assessment among regions. Recommendations The Corporation should: continue with their efforts to address the recommendations from the HousingAdministration Study; ensure that Corporation staff comply with the policies resulting from the recommendations; and ensure all information in the Rental Management System is accurate. Auditor General of Newfoundland and Labrador Chapter 2, Part 2.13, January 2008 297

Corporation's Response Recommendation: NL Housing should develop a long-term housing accommodation plan. Corporate Response: NL Housing has recognized for some time, the issue of over housing in its portfolio, especially as it relates to three bedroom homes. This issue has arisen over time due to factors beyond NL Housing's control. Our housing stock was developed during a time when family size dictated the need for larger homes. Over the past two decades, the birth rate has declined rapidly and, with an aging population, many of our clients are living alone as their children have moved out to other accommodations. NL Housing is presently working on a Provincial Housing Strategy to be completed in the fall of 2008. This Strategy will look at all aspects of housing in the Province, with a view to identifying specific actions to be taken to address issues such as demographic changes and housing demand. In the interim, NL Housing is pursuing other avenues including seeking an increase in its rent supplement program and other initiatives which would give the flexibility to better meet the changing demographics of our clientele. Your report indicates that NL Housing has a number of vacant homes. It should be noted that in excess of 50 percent of these vacant homes were unavailable for rent for various reasons, such as no client demand and homes that require major repairs. The vacant homes which are available for occupancy, once they have been refurbished, are adequate in numbers to manage the needs of families who require three bedroom homes. The challenge for housing is that 77 percent of clients on our wait list require one and two bedroom homes and as is pointed out in your report, these clients should not be placed in three bedroom homes because they would be overhoused. 298 Chapter 2, Part 2.13, January 2008 Auditor General of Newfoundland and Labrador

Recommendation: NL Housing should: Continue with efforts to address recommendations from the Housing Administration Study. Ensure that NL Housing staff comply with the policies resulting from the recommendations. Ensure that all information in the Rental Management System is accurate. Corporate Response: As indicated in your report, NL Housing initiated a comprehensive joint review of its Rental Housing Program between NL Housing and CUPE Local 1860. The report was completed in March 2006. All recommendations were to be implemented on April 1, 2007, with the exception of those tied to the new computer system. During the period after the report was released until implementation, all staff, in particular the HAO's, were continually consulted for input on results of the study in order to ensure validity of the study's findings. In January 2007, a directive was sent to all staff indicating which recommendations were to be implemented by April 1, 2007. This was subsequently followed up by an In-House newsletter released in February 2007. During the months of June and July 2007, senior management met with regional office staff to follow up on the implementation of the study. During the September 2007 Tenant Conference held in Gander, there was a seminar held with all HAO's and regional office management to review the progress of implementation of the recommendations. This was also followed up in October 2007 with a memorandum from senior management to all regional offices. NL Housing is very diligently following up on the implementation of the study and will continue to monitor the progress. A number of recommendations cannot be implemented until the new computer system is activated on April 1, 2008, but we are pleased to report that the remaining 32 recommendations have been actioned. Auditor General of Newfoundland and Labrador Chapter 2, Part 2.13, January 2008 299

You indicated in your report that as of November 5, 2007 there were 1,911 tenants that owed NL Housing rental payments totalling $658,637. This is factually true as of that date, however, it should be noted that many of our clients do not pay their rent on the first of the month. We review outstanding arrears as of month end and action at that time, as necessary. In the case of the November 2007 month end, rental arrears were $190,840 for 560 accounts. NL Housing has worked diligently towards updating existing policy and drafting new policies as related to the recommendations arising from the HAO study. NL Housing will continue to monitor the Rental Housing Program to ensure compliance with all policies. NL Housing considers the issue of data integrity very important and has set up an internal senior management committee led by the Senior Executive Director to review and make recommendations to ensure that the data is accurate and reliable. NL Housing is in the process of implementing a new fully integrated computer system, which should also aid in providing more accurate and reliable data. 300 Chapter 2, Part 2.13, January 2008 Auditor General of Newfoundland and Labrador