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The City of Toronto paid $853,000 over three years for emergency shelter beds for the homeless that were never used, says a report by city auditor-general Jeff Griffiths.

The payments for unoccupied rooms at a motel in St. Catharines, Ont., between 2001 and 2003, when homeless advocates complained of overcrowding in Toronto shelters, are cited as part of an often critical review of the city's fiscal management of its hostel system.

The findings of the report, to be debated by the city's audit committee next week, drew immediate comments of dismay from housing advocates and critics at City Hall.

"This is a serious violation of the trust that the citizens of Toronto placed in our shelter system," said Councillor Olivia Chow, chairwoman of council's community services committee. "There has to be an accounting system to make sure every penny is saved."

Councillor Doug Holyday, vice-chairman of the audit committee and a critic of the city's homeless strategy, said "this kind of waste of taxpayers' money has got to stop."

"The homeless situation is bad enough without wasting money on rooms that were never used."

According to the auditor's report, a review of invoices showed that the city paid the motel operator $56,000 in 2001, $415,000 in 2002 and $382,000 in 2003 -- a cumulative total of $835,000 -- for the unoccupied rooms.

Under the three-year contract, the city had access to a total of 54 rooms at the unnamed motel, paying $40 a night for the unused rooms.

In the report, city hostel officials say unexpected external events, notably the Sept. 11 terrorist attack in 2001, led to a drop in refugees to Canada, some of whom end up using hostels, and thus lower demand for emergency hostel space.

The city used almost all of the motel rooms in 2001. But under the fixed contract, 34 per cent of the rooms were unoccupied (and already paid for) in 2002, rising to 36 per cent in 2003. The contract with the motel ended that year.

The auditor's revelations come as Mayor David Miller promised to present a strategy for housing the homeless this winter by late November. Council has also asked for a comprehensive plan by January on combatting the city's problem with homelessness.

After reading the auditor's report, Ms. Chow questioned why the city had not made better use of the paid-up but vacant motel rooms. She noted that in 2002 and 2003 housing advocates highlighted bleak conditions in the city's shelter-bed system, with overcrowding at centres in downtown Toronto.

The auditor's report also concludes that the city could generate additional revenue of between $550,000 and $1-million by capitalizing on the full range of provincial subsidies for emergency shelter housing and support.

To that end, the report makes a number of recommendations for the city to improve the operation of its emergency shelter system.

The recommendations echo the view of housing advocates who say too little time and money is spent on finding long-term accommodation for those in need.

The previous Conservative government at Queen's Park opted to fund shelter beds., not permanent housing, in Toronto.