Auditor General Finds No Fault with BC's Hotel-Buying Spree

B.C.’s auditor general said Tuesday the provincial government and BC Housing paid under market valuations for nine hotels bought quickly to shelter homeless people during the COVID-19 pandemic.

The report looked at four properties in Victoria and five in Vancouver that the B.C. government bought between May 2020 and May 2021. The hotels, with 810 rooms, were purchased for a total of $202 million during a time when tourism had plunged sharply because of the pandemic. At the same time, cities were struggling with large encampments of unhoused people in city parks.

In May 2020, the provincial government used a public safety order to move people out of Oppenheimer Park in Vancouver and Topaz Park and along Pandora Avenue in Victoria, saying there was a high risk of COVID-19 transmission within the encampments. Residents were offered housing at some of the newly acquired hotels.

“BC Housing met all relevant approvals and policy requirements,” the report said.

Over the next 12 months, the B.C. government continued the strategy of buying hotels, eventually spending a total of $405 million to buy properties to house people who were experiencing homelessness. The nine properties the auditor general’s office audited represented 55 per cent of those purchases.

Critics had pointed out that some of the hotels were purchased for much more than their assessed value.

For instance, the B.C. government bought the Patricia Hotel for $63.8 million, a price 4.5 times higher than the assessed value of the property. But the purchase included a parking lot that can be developed in the future, and the total property parcel had been assessed by market appraisers at $63.1 million.

The auditor general says BC Housing acted properly when it got appraised market value assessments for each of the properties, which took into account current market conditions and future land use.

The auditor general’s office says the total paid for the nine properties, $202 million, was eight per cent below the total market appraisals of $220 million.

The report says that although the purchases were made quickly to deal with an emergency situation, all of BC Housing’s processes for making large property purchases were followed properly.

The report highlights how much more the government spent on acquiring housing for people experiencing homelessness starting in 2020 compared to previous years. In 2018, the B.C. government spent $24 million to acquire 10 properties to house people experiencing homelessness, or around $2.4 million per acquisition.

In 2020, the B.C. government spent $203 million to purchase just over 40 properties, or around $4.9 million per acquisition.

Staff with the auditor general’s office said they could not explain why purchase prices per property were so much higher than prior to 2020. The audit examined the nine purchases, they noted, not earlier transactions.