Repeating our mistakes

Does anyone in Red Deer remember Monarch Place? I’ll bet there are plenty of people in City Hall who do.

Does anyone in Red Deer remember Monarch Place? I’ll bet there are plenty of people in City Hall who do.

Not so much the Alberta legislature, where learning from one’s mistakes is not established practice. And therefore, it is entirely possible that Red Deer or some other Alberta municipality will see history repeat itself.

To refresh: Ten years ago, Monarch Place opened on the city’s north side, with 65 assisted living housing units. Most of units were to be subsidized for people with low incomes and physical disabilities, for people needing transitional housing, or who were escaping abuse in their homes.

The project, run by Innovative Housing Society of Canada, received a lot of taxpayer assistance: a $1.3 million Canada-Alberta Affordable Housing grant, $500,000 from the city of Red Deer, plus significant local contributions of both free building materials and labour from local businesses and groups.

In all, the society got a $6 million asset for a lot less than $6 million.

It took years to get this much out of them, but it appears their business plan was flawed from the start.

They did not anticipate the costs of live-in care for their residents; they did not plan for less than full continuous occupancy; there were the usual cost overruns.

They did not even plan for having to pay municipal taxes.

In short, even with all this taxpayer help, they said they were losing money from Day One.

So they took advantage of a legal loophole and sold the units as rental condos to absentee landlords — list price: $7 million. Those landlords formed a condo association and promptly doubled the rents, making them unaffordable for their residents. Some residents even had their showers closed off.

The loophole said if the original deal with the granting bodies was broken before 15 years, some of the money would have to be paid back. In 2008, the city finally got $244,000 back from its half-million gift. At the time, the society still owed the province $1.17 million.

Ten years is a long time in the life of a government, time enough to forget who screwed up by providing taxpayers’ money to groups with bad business plans.

So the province is ready to do it again. This time with seniors care.

Presumably, the new business plan has been given a little more thought. After all, Christenson Communities and Points West Living have calculated their annual profits per bed, per year.

The Monarch Place contract was for 15 years. These new contracts are for 30, renewable every five years.

The Christenson project got $4.7 million in provincial money, for 60 continuing care beds (at government-established rates), out of 122 units in Timberstone Mews.

Points West got $5.5 million from the province for 60 beds with the same deal, in a 139-unit project along Taylor Drive.

The group Public Interest Alberta paid the fees for a freedom of information search on the projects and found the Christenson project plans for a 29 per cent annual rate of return on their 60 government-subsidized beds, while Points West expects a 25 per cent annual return on theirs.

Do you have a business idea that would qualify for $4 million or $5 million in taxpayer grants, where, right in the application, you specify your expected rates of return — in this case between 25 and 29 per cent per year? Didn’t think so.

Bill Moore Kilgannon, executive director of Public Interest Alberta, doesn’t question public spending on seniors care. He questions why Alberta is allowing these kinds of profit returns. Ontario doesn’t, for instance, he says.

If something over $5,500 a year per bed is the going rate for a successful grant application, and the province has already funded 3,780 spaces — that’s over $20 million a year going into corporate profits, which taxpayers were told would be earmarked for seniors care.

Nor has Kilgannon forgotten the lessons of Monarch Place. What these companies are really getting is a big real estate asset for far less than cost. When their mortgages are paid, they will hold something worth far more than they paid for it.

What happens, say, on some five-year anniversary on this 30-year contract, when the government has had its memory wiped clean by elections past and is concerned only with the next election? Can the owners then say, well, let’s just sell this asset and walk away laughing?

Irene Martin-Lindsay, executive director of the Alberta Senior Citizens Housing Association, paints a pretty altruistic picture of the arrangements.

She says projects like this are mixtures of government-subsidized (and price-capped) beds and free market units, because the more expensive private beds help subsidize the costs. And really, the companies are just doing this because providing care for seniors is the right thing to do.

Who are we to question that? Are we taxpayers, voters, potential residents or something?

Ten years is a long time to remember, never mind 30. But I seem to recall the people at Monarch Place saying pretty much the same thing when they took the taxpayers’ money — and ran.

Greg Neiman is a retired Advocate editor. Follow his blog at readersadvocate.blogspot.ca or email greg.neiman.blog@gmail.com.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

WATCH: Songwriters discuss what makes a great country tune, creative process

Alberta Country Music Awards Songwriters Showcase was held in Red Deer Saturday

RCMP investigating fatal fire in Wetaskiwin

Wetaskiwin RCMP and the Major Crimes unit are investigating after human remains… Continue reading

The Mustard Seed to launch new wellness centre in Red Deer

A new service is coming to Red Deer to help the city’s… Continue reading

Penhold firefighters handle ‘difficult’ blaze

Penhold firefighters battled a “difficult” blaze Friday afternoon. Fire crews were called… Continue reading

Clearwater County firefighter recruitment campaign deemed a success

A firefighter recruitment campaign is being considered a success by Clearwater County.… Continue reading

Fashion Fridays: The basics you need for your body type

Kim XO, helps to keep you looking good on Fashion Fridays on the Black Press Media Network

Your community calendar

Feb. 1 A Jump Rope Competition will be held at the Abbey… Continue reading

Weersink and Kings shutout top-ranked NAIT Ooks

Queens hockey also knock off Olds College Broncos

Calgary Hitmen roll over Rebels 5-2

Hitmen 5 Rebels 2 The Red Deer Rebels looked like a team… Continue reading

RDC Queens sweep weekend series with Lethbridge

The RDC Queens picked up a pair of crucial wins on the… Continue reading

Photos: Strong turnout for 38th annual Oilmen’s Bonspiel

The 38th annual Red Deer Oilmen’s Bonspiel is well underway at the… Continue reading

St. John’s, N.L., lifts state of emergency eight days after massive storm

ST. JOHN’S, N.L. — The City of St. John’s has lifted a… Continue reading

Former cabinet minister Peter MacKay announces Tory leadership bid

STELLARTON, N.S. — Former federal cabinet minister Peter MacKay says he will… Continue reading

Most Read