Nfld. & Labrador·CBC Investigates

The cost to house the homeless soared in N.L. last year, and for-profit shelters cashed in

People stayed in emergency shelters for as long as six month at a time, for rates as high as $350 a night. Shelter owner Leonard Phair says it was a waste of money.

Biggest shelter owner in St. John's says it was a waste of money

A client at one of Leonard Phair's emergency shelter houses in St. John's relaxes in his bedroom. (Bruce Tilley/CBC)

The Newfoundland and Labrador government saw a sharp increase last year in the cost of housing desperate people in private, for-profit shelters providing little to no health care or social services.

Records obtained by CBC News show these "emergency" stays lasted as long as six months at a time, and cost as much as $350 a night.

They sometimes stayed at the Captain's Quarters Hotel in St. John's for weeks at a time.

The budget for all emergency shelter usage was forecast at $3.6 million. Instead, it came in over $5.1 million in the last fiscal year.

The budget exploded immediately after the provincial government made changes to the system with the opposite goal in mind.

Some within the housing and homelessness sector say this is part of the growing cost of complex problems, like addiction and mental illness.

One shelter owner says it's a symptom of a broken bureaucracy.

The provincial government has turned down interview requests for this story by CBC and Radio-Canada, with Minister Lisa Dempster's staff saying she was too busy.

When pressed in the House of Assembly on Wednesday, Dempster said the budget increase was for several complex reasons, but said government is trying to move away from using private shelters and leaning on its non-profits instead.

'It's a waste of money'

When it comes to emergency shelters, Len Phair is the biggest player in the game.

For 16 years, he's continuously banked amounts in six figures, housing the most ill, vulnerable and sometimes dangerous people in the city.

Nobody benefited more from the increase in spending than him.

Leonard Phair brought in the most money of any private shelter owners last year — an amount just shy of the annual funding to the Salvation Army's Wiseman Centre. (Bruce Tilley/CBC)

Last year, his revenues soared to $1.1 million for tenants in four houses across St. John's.

While his name is synonymous with profit-earning shelters, Phair insists he's not the bad guy. 

He's just part of a system that allows people to get rich off the homeless.

"Look, I don't mind making money. I love making money," he said. "But I hate for the government [to be] wasting money. And right now, it's a waste of money."

Phair said the government isn't doing enough to help people move on from temporary shelters, and is instead allowing them to stay in the system for months at a time.

"I think they're operating a shell game," he said. "They're moving people from shelter to shelter to shelter instead of moving people on to their own spot."

CBC News and Radio-Canada have obtained night-by-night expenses showing the first half of the 2018-2019 fiscal year. It shows some clients moving between four private shelters in St. John's and the Captain's Quarters Hotel.

Shelters changed hands within government departments

The program previously existed under the Department of Advanced Education, Skills and Labour.

When a person had nowhere to stay, they'd call a number and someone from the department would place them in a shelter for the night.

In June 2018, the program was moved to the Newfoundland and Labrador Housing Corporation (NLHC). The goal was to use the expertise of the province's housing division to find long-term solutions for people with nowhere to stay — to get them out of the emergency shelter system and, if possible, into the provincial housing system.

Newfoundland and Labrador Housing falls under the Department of Children, Seniors and Social Development. (CBC)

Instead, the numbers show the opposite happened. For the first six months after the transfer, one individual stayed in the same private shelter for 203 nights in a row at $140 a night.

The most expensive stay happened at one of Phair's houses, where a client stayed 93 nights consecutively at $350 a night, costing a total $32,550.

"It's our tax dollars paying for this," Phair said. "Right now people are staying six, seven, eight months in a shelter.… It's not meant to be that way."

These shelters aren't providing any wraparound services at all.- Dan Meades

Phair provides his clients with three meals a day. Some of his houses have TVs in private rooms. He admits one house is a lot rougher than the others — it's where he houses people he deems to be high risk to damage his property.

Prior to last year, inspections were not mandatory for emergency shelters unless formal complaints were lodged. 

Under NLHC, all shelters in St. John's are now subject to monthly inspections by city staff, but Phair said he's noticed less attention paid to the people staying in the shelters.

"They are going around checking on shelters. Fine. But they aren't checking on the clients."

No help, no incentive to leave

The province funds a mix of non-profit and private shelters, divided into three categories.

The first category are annually funded non-profits  — like Choices For Youth and the Wiseman Centre. 

The second tier are non-profits, funded on a nightly basis. 

When those shelters are full, or a person is turned away because of other issues like active addiction, mental health crises or poor hygiene, NLHC places them in the third tier — private, for-profit shelters.

They are considered the bottom rung because they do not provide additional support beyond food and shelter to help a person improve his or her situation.

"These shelters aren't providing any wraparound services at all," said Dan Meades, director of the Transition House Association of Newfoundland and Labrador. "They're just providing what is oftentimes substandard, unsafe housing for individuals."

Dan Meades, provincial co-ordinator of the Transition House Association of Newfoundland and Labrador, says private shelters provide a necessary service but have no obligation — or incentive — to help someone move on. (Marie Isabelle Rochon/Radio-Canada)

Meades works primarily with non-profit shelters helping victims of domestic abuse. He said the private shelters are providing a necessary service right now, but there's no obligation for them to help clients move on.

"They make more money having those beds filled, and so there's no incentive for a for-profit shelter to help somebody leave the shelter, to provide them the supports to move beyond that stage. They're fully incentivized to keep somebody in that shelter."

Meades said it's important to understand the reasons why a person ends up in these shelters. Right now, there's limited capacity at places like Choices For Youth or the Wiseman Centre, especially for people in the depths of addiction or mental illness, or for people with violent tendencies.

Being in a private shelter is better than being homeless, he said, but there needs to be a plan to get away from a multimillion-dollar reliance.

He's also worried about an overreaction to this story.

"What we don't want to see is government just cutting this budget," Meades said. "This emergency shelter budget is very important … but we need to find a way that's a little better for clients, and I think you can do that while saving money."

Moving in the right direction, minister says

In the House of Assembly on Wednesday, Question Period opened with several queries directed towards Dempster about this story, paired with the unfortunate timing of a violent death outside an emergency shelter the night before.

Dempster said the NLHC has made positive steps this year in limiting shelter stays and getting the budget under control. She said the department has seen a 38 per cent reduction in clientele for emergency shelters this year.

Lisa Dempster, minister responsible for Newfoundland and Labrador Housing Corporation, speaks to reporters at Confederation Building in St. John's. (Peter Cowan/CBC)

Speaking to media after Question Period, Dempster said the death had nothing to do with the topic.

"The incident that happened last night on Bond Street wasn't connected to one of our shelters," she said. "I've spoken with my staff at housing. Nor was it one of our clients from the shelters."

As for the long stays and budget overrun, Dempster chalked it up to a mix of complex clients and departmental growing pains.

"It's only been 16 months. We're learning as we go," she said. "You know, there's always this transition period you go through. But we're certainly trending in the direction we need to."

New strategy will address private shelters 

Doug Pawson has a hard job ahead of him.

He's the new executive director of End Homelessness St. John's, an organization that provides guidance for the entire housing and homelessness sector in the city.

The group is almost ready to release its new five-year plan, which will set the course for non-profit organizations moving forward, and ultimately affect how government funds its efforts.

Doug Pawson, executive director of End Homelessness St. John's, says it's more cost-effective to help people find and maintain their own housing. (CBC)

He also wants to see government get off its reliance on private, for-profit shelters, which account for about 40 per cent of the shelter space in St. John's.

"It's far more cost-effective to have individuals find and maintain housing of their own with wraparound supports," Pawson said. "And that's our goal moving forward with End Homelessness St. John's."

But how do you fix that?

People are landing in these shelters for a reason — they have nowhere else to go. 

Pawson said it starts with having non-profit places that can accept anyone, regardless of their complex needs and problems.

There will always be a cost to house the homeless — it's inevitable — but Pawson, like Meades and Phair, believes people can be helped in smarter ways, and avoid long stays in emergency shelters.

"The cost to the public system for sheltering individuals is enormous and it doesn't matter who the shelter provider is. I mean, that's the cost of societal breakdown," Pawson said. "The cost savings is enormous once we find a way to do that more effectively."

End Homelessness St. John's is expected to release its five-year plan before the winter comes.

Phair, meanwhile, acknowledged speaking out could hurt his business — but said he doesn't care.

"I'm almost 70 years old. I'm ready to retire," he said. "More people gotta speak up. Unless we speak up, we're not going to fix the problem. Newfoundland, we're in hard shape. We just can't turn a blind eye to it."


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About the Author

Ryan Cooke works for CBC out of its bureau in St. John's.

With files from Patrick Butler of Radio-Canada