Toronto Auditor-General Jeffrey Griffiths listens to Councillor Adam Vaughan addressing council on Tuesday.Moe Doiron/The Globe and Mail
While recent controversy over Toronto Community Housing focused on parties, perks and untendered contracts, city audit officials acknowledge they have yet to scrutinize the role of HSI Solutions Inc., a wholly-owned subsidiary of TCHC that supplies a wide range of contracting and building maintenance services both to its owner as well as public and private clients around Greater Toronto and Ontario.
Auditor-general Jeff Griffiths's office "put a little box around HSI," which has 250 employees and its own board of directors, because they wanted to complete their initial investigation quickly, said AG director Jerry Shaubel. Mr. Griffiths's report last week recommended audits of all TCHC subsidiaries, including HSI.
It is evident the seven-year-old firm plays a significant role in TCHC's purchasing process, although how much is not clear. TCHC's published procurement policy doesn't mention the subsidiary, nor do its financial statements reveal how much of the agency's $200-million in annual purchasing flows through HSI.
The "business opportunities" page of TCHC's website, however, refers equipment and service suppliers to tenders and bid documents listed on HSI's website, and describes the firm as a "major provider of construction and maintenance services to Toronto Community Housing." HSI staff referred questions to TCHC public affairs officials, who provided a written statement.
The agency's 2009 annual report cites $180.7-million in repair-related outlays by TCHC, as well as "non-rental revenues" of $35.1-million, which includes lease income from retail spaces, billboards and cell towers.
Some of the non-rental revenue comes from HSI, which actively markets itself to municipalities, colleges, universities and private landlords and is considered to be the largest such company in Ontario. About 10 per cent of HSI's revenues come from outside TCHC, the agency said.
The firm has won contracts to provide a diverse range of services to outside organizations, among them two consulting sessions on bed bug eradication to Ottawa Community Housing. "They conducted training for us and it was very effective," OCH chief executive Jo-Anne Poirier said, noting that both contracts were under $10,000.
Peel Region in 2007 selected HSI during a competitive bidding process for a contract under $500,000 to replace fuel containers in stand-by generators. Peel has also referred the firm to some of its 46 social housing providers. Some of those contracts involved energy retrofits.
Beyond the municipal sector, HSI has delivered ongoing general contracting services to George Brown College, whose purchasing officials consider it to be a "qualified" supplier, according to spokesman Paul Zanettos.
Yet HSI also maintains close relationships with some of its clients. Two Peel officials have served on HSI's board, but Peel spokeswoman Joan Endersby said they are not involved in Peel's purchasing decisions.
As well, the company contributed a gift in the $5,000 to $9,999 range to George Brown's fundraising arm, a potentially contentious step given the ongoing controversy about city councillors using public funds to make charitable donations.
Incorporation documents show that former TCHC CEO Derek Ballantyne, who stepped down from his job as CEO of Build Toronto in the wake of the scathing audit, established HSI in early 2004, soon after Queen's Park downloaded the province's social housing agency and merged it with the city's.
Councillor Paula Fletcher, a former TCHC director, said the idea was to gain economies of scale by offering maintenance services to other social housing agencies. "If you're doing it for 60,000 units, you could add another 10 [thousand]and make money," she said. "Size matters."
The current board chair is Antoinette Tummillo, a senior executive at Colliers International, a commercial real estate and property management firm. HSI's board consists of private-sector executives and community members, as well as the TCHC's CEO and chief financial officer. Until last year, it included former CFO Gordon Chu, the manager who oversaw the "strategic procurement unit," which came in for sharp criticism from the auditor-general.
Councillor Giorgio Mammoliti, another former TCHC director, said he didn't recall seeing separate financial statements about HSI's operations, its non-TCHC revenues, or the allocation of profits. "I guess [they]would go into TCHC reserves."
Ms. Fletcher and Mr. Mammoliti both said they weren't aware of HSI's donation to George Brown's foundation.
In recent years, Ms. Fletcher said, TCHC's board and its managers looked to HSI to improve the agency's ability to respond to repair requests from tenants. The firm recently hired a Bell Canada manager to boost customer service.