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Residents and activists gather outside a news conference after the closing of the Sahotas’ Regent Hotel in Vancouver on June 20, 2018.Rafal Gerszak/The Globe and Mail

The provincial government has been sending tens of thousands of dollars each month in welfare payments to decrepit hotels owned and run by a Vancouver family that has repeatedly been reprimanded by the city for leaving the derelict buildings in unsafe and unsanitary conditions.

The money is supposed to go directly to the hotel owners to pay the rent of the desperately poor residents who live there. But documents obtained by The Globe and Mail show that properties owned by the Sahota family have been flagged for poor record-keeping that have made it difficult to determine whether payments are actually being used to house the intended recipients.

Discrepancies between provincial government and hotel records have raised questions about the number of tenants actually living in the buildings – and concerns about whether the province is adequately monitoring where its money is going. Housing activists, meanwhile, are warning of possible fraud.

“How many times were they [the hotels?] ever audited by the province? How many times did anybody go after those private landlords?” Kerry Jang, a city councillor in his third term, said in a recent interview.

“They [the province] should be doing far more inspections – they should be checking up on clients to make sure they’re doing well,” he said. Provincial officials should also be determining where social-assistance recipients are actually living, he said.

Read more: Residents prepare for move as Vancouver closes run-down Sahota building

Related: For low-income residents in Vancouver, a different kind of real estate crisis

The shuttering of the Regent Hotel last week marked the second time in a year that a single-room occupancy (SRO) hotel owned by the Sahota family had to be shut down – and residents displaced – because of unsafe and unsanitary conditions. The Balmoral was closed in June, 2017.

A Globe and Mail investigation detailed years of failed efforts by the city to force the Sahotas to comply with bylaws. But questions remain about the oversight of provincial funds sent to SROs and the effectiveness of an agency created to address this very issue.

Provincial records and e-mails from activists to city officials show concerns dating back years about tenant list discrepancies.

An inspection at the Regent in 2017, for instance, found provincial records indicated more people were living at the hotel – 146 – than the 121 who were listed on the tenant register. City staff have flagged such inconsistencies in internal reports. And in e-mails, activists have raised worries about possible fraud involving the money that the province sends directly to the hotels to house some welfare recipients.

A Vancouver Police Department investigation in 2005, dubbed Project Haven, uncovered a network of criminal activity at three Downtown Eastside SROs, including one owned by the Sahotas. Investigators determined that owners, managers or desk clerks at all of the sites were complicit in welfare fraud, as well as drug trafficking and the movement of stolen property.

In particular, the investigation found landlords pocketed assistance money intended for SRO rooms by giving a cut of the payment to the resident. In exchange, the resident would leave the room empty, allowing the landlords to then illegally rent out that same space multiple times.

The province responded to that investigation by creating the Housing and Integrated Task Team (HITT) to improve oversight of SRO hotels, but that group issues no public reports and does not have the power to issue fines or notices. Instead, HITT refers any problems it might find to the province for follow-up and potential prosecution. No such referrals have been made in at least the past five years.

“What’s happening is that people at the lowest end of the income spectrum are being left in terrible conditions on government money,” says DJ Larkin, interim co-executive director of Vancouver’s Pivot Legal Society, a non-profit advocacy group that has lobbied for greater oversight of SROs.

The Sahotas have not responded to repeated requests for comment about their business.

The family is one of the biggest private landlords in the SRO sector, providing housing of last resort to some of the city’s most vulnerable residents, including many living with addiction or mental illness. Most residents are on income or disability assistance.

The province, for privacy reasons, does not disclose how much money it sends to each hotel address. But the payments can be substantial.

For example, The Globe and Mail obtained copies of electronic-fund-transfer reports from B.C.’s Ministry of Social Development and Social Innovation to two Sahota-owned SROs for February, 2017.

They show that Triville Enterprises, the Sahota corporation that owns the Regent Hotel, received 98 payments that month – ranging from $375 to $600 – for a total of $42,000.

The Balmoral Hotel received 93 payments for a total of $40,000 for the same month. Over the course of a year, payments for those two hotels would amount to almost $1-million. The Sahotas own five SROs, which comprise more than 500 units.

Last June, when city officials ordered the Balmoral Hotel closed for safety reasons, the Sahota family could not say how many people were paying rent to live there.

“A lack of the owners’ ability to provide an accurate tenant registry during the Balmoral relocation created significant challenges for tenant tracking, verification and outreach,” the city said in a November, 2017, report on SROs.

“This highlighted the need for the City to … implement an auditing process with provincial partners to ensure a level of compliance and accuracy.”

Andreea Toma, Vancouver’s then-licensing director, raised similar concerns in a 2015 report on the Regent, which is included in court filings for a proposed class-action suit against the Sahotas and the city by hotel residents.

“Police have spent time in the front office and staff don’t seem to have any idea who the tenants are,” Ms. Toma said in the report prepared for the city. “Drug dealing is rampant, there is gang activity and staff are turning a blind eye.“

Housing activists have repeatedly flagged concerns about the lack of provincial oversight. Wendy Pedersen cited discrepancies between the tenants’ lists at the Balmoral and Regent hotels and provincial records of people who should be living at those addresses in an e-mail to the city.

Thursday was the deadline for tenants at the Regent Hotel to move out after the City of Vancouver forced the closure of the property. The Regent is owned by the Sahota family, who have tended to ignore bylaw violations at their properties. A recent Globe investigation highlighted the deplorable state of living conditions in the hotel.

In an e-mail to city staff dated Feb. 26, 2017, and obtained by The Globe, Ms. Pedersen wrote that she was suspicious of welfare fraud.

“I personally know a few rooms that are double rented,” she wrote, adding that it appeared that some people who were supposed to be living in the hotel were subletting their rooms for cash and living elsewhere.

In another e-mail to the city, dated Feb. 28, 2017, Ms. Pedersen notes: “We can see that about 50 per cent of the rooms are not occupied by people who are paying for these rooms.”

The city official responded, asking Ms. Pedersen for more information.

The province has measures in place to monitor landlord abuses, including HITT. Its mandate, according to government documents, includes ensuring the “integrity of shelter payments paid on behalf of ministry clients.”

The team reviews tenant registries and ministry records.

According to documents obtained through Freedom of Information requests, HITT conducted more than 400 on-site verifications – where HITT team members “went out into the community to verify the residence” – in each of the past two years. It conducted a higher number – more than 1,000 – in each of the past two years through other means, “such as a telephone call or through information available electronically.”

Speaking in general, a HITT official noted that electronic systems allow ministry workers to cross-check addresses and tenants. If inspections turn up discrepancies, those are followed up with clients individually.

Shane Simpson, B.C.’s Minister for Social Development and Poverty Reduction, acknowledged in an interview the province has work to do.

He noted his ministry is working with the city to push it to enforce existing bylaws, adding that the province is open to discussions about changing regulations to ensure there are “substantive consequences for people who conduct themselves in ways that exploit people.

“The real challenge here, I think, with places like the Balmoral – with other places owned by people where there are serious questions about the legality of their conduct…we need to be able to do a better job of holding those folks to account,” Mr. Simpson said.

With research from Stephanie Chambers

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