The city of Greater Sudbury has come through with an emergency $2.2-million interest-free loan to help out the Canadian Mental Health Association for its 200 Larch Street project.
It’s all part of the CMHA’s 'Home for Good' program, in which they have been working with the city to create a new homeless shelter and harm reduction site since 2017.
Back in 2017, the city was successful with its bid to the Ministry of Municipal Affairs and Housing to proceed with renovating Sudbury’s old police headquarters.
In May 2017, the existing building and the property were transferred from the city to the CMHA as an in-kind grant for the project to use as a permanent shelter space.
The association issued a contract for construction and renovations at the site in February 2019.
Four months later, the city was told the financing and mortgage that the association had secured was not enough to finish off the renovations and that it would cover only a portion of the capital costs, putting the whole project in jeopardy.
City officials say they’ve been given no complete explanation as to why the CHMA would start construction without having the necessary funds in place.
A previous application with Canada Mortgage and Housing Corporation is still under review and not yet confirmed.
They issued a request for financial assistance in July 2019 to the city and a review was conducted through KPMG.
"Over the last few months, we’ve realized we made some mistakes as a committee, and so what we tried to do was bring everybody together, talk about what we did wrong, and how we can move forward,” said CMHA Chief Executive Officer Marion Quigley. “We’ve continued with everything and worked in the background to make sure the funding was in place, that wasn’t in place when we started."
"Canadian Mental Health Association does health and human service very well. What we don’t have experience with is capital projects, so we went into this hoping we were doing it the right way and we realized the mistakes we made were about signing the contract to have the construction start without having confirmation on all of the funding sources," said Quigley.
She said the CMHA felt pressure to get the project started so the provincial funding wasn’t lost, they had to get a mortgage in place and they also felt they had to have the shelter open by a certain date.
"In hindsight, what we should have done is have a property management office set up so we could ensure that we have all of the things in place prior to starting the project,” she said.
Sudbury city councillors didn’t appear to be entirely pleased about the last minute ask and the position the city was left in, with staff telling them if they had refused the request, the project would likely go into default.
"This council very much values the services that will be offered by CMHA in the 200 Larch building, that's why it's important for us to see all the capital work get done there and also respect the taxpayer dollars," said Ward 7 Councillor Mike Jakubo.
"My biggest fear is that if for some reason they went into default, the bank sold the building for the amount the mortgage was outstanding, then we'd lose the building and the opportunity to use it for services," said Ward 5 Councillor Robert Kirwan.
The decision was unanimously in favour of the loan.
Through it all, the contractor has continued to work on the site and it is now 60% complete.
Quigley says they are on track to reach their November 1 opening and there will be no cost overruns due a fixed price contract.
City staff says securing shelter space has been difficult for Greater Sudbury since the closure of the Salvation Army’s space in May 2019.
