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politics

Answers to Your TCHC Scandal Questions

Why CEO Gene Jones lost his job, and how the TCHC became an organization in crisis.

Photo by Flickr user Padraic.

Today, the Toronto Community Housing Corporation’s board effectively fired CEO Gene Jones following a scathing report from the City’s ombudsman about the organization’s human resources practices and policies. The move is an effort to restore the credibility of North America’s second-largest social housing agency, which has been thrown into turmoil by the report’s findings.

Below, we’ll try to answer all your questions about Gene Jones, the culture, history, and structure of the TCHC, and what it was that brought the organization and its CEO to this point.

So what is the TCHC scandal all about?

Last summer, Toronto ombudsman Fiona Crean began hearing complaints from past and present TCHC employees about the social housing agency’s work culture and HR practices. She launched a formal investigation in August 2013, as that was the only way she could gain access to the documentation she needed to evaluate the allegations. More than 60 people were interviewed by the ombudsman’s office, and on Tuesday, Crean released her report, “Unrule(y) Behaviour” [PDF]. The 111-page document details myriad allegations, including ones related to conflicts of interest, jobs created without necessary documentation, improper firings, and arbitrary pay raises awarded without performance evaluations. The report indicates that such violations created a “climate of fear” in the workplace and that there had been an “abject failure of leadership.” Speaking to Torontoist about the violations, ombudsman Fiona Crean said, “In my 30 years of experience, I have never seen such a flagrant abuse of policy.”

Some of the report’s major findings include:

  • Lisa-Joan Overholt, a volunteer for Rob Ford who also donated to his campaign, was an assistant to Councillor Vincent Crisanti (Ward 1, Etobicoke North). She joined TCHC as a manager, earning $90,000. Six months later, she was given a $30,000 raise and a promotion to the senior director level without a performance review. This job was never open to anyone else, and neither Jones nor Overholt could provide a job description when asked.
  • Jason Gorel was on the board of directors of TCHC and was considered for the role of CFO. He did not announce his conflict of interest and recuse himself from the board until partway through the hiring process. One of his references for the position was then hired to be his assistant.
  • Leisin Chan, Gene Jones’s executive assistant, saw her pay bumped up to management level. Jones said she should continue to be paid for overtime, although that’s against the rules for management. When her salary won her a spot on the Sunshine List, Jones asked HR to change the figures so she would no longer qualify. The $109,000 she earned in 2013 is more than what city councillors—and some directors at the TCHC—earn. She was the highest-paid government-employed executive assistant in Ontario in 2013.
  • There were 81 new jobs created at TCHC between June 2012 and October 2013, and only 14 per cent went through the job evaluation process.
  • Of the 233 staffing changes in this time frame, paperwork was generated for only half of the positions, and even then, “almost every file was incomplete.”
  • There were 41 employees terminated without cause between June 2012 and October 2013. TCHC paid out severance worth $1.6 million in 2013.
  • The vice-president of asset management was appointed to lead that department despite never having applied for the job.
  • On his first day, the vice-president of human resources fired three directors in the department, each of whom had over 10 years’ experience, although he noted there were “no performance issues documented with any of them” and one had received positive feedback from Jones just three weeks earlier.

Wait, wasn’t it because of a scandal a couple of years ago that Jones was hired in the first place?

Absolutely. Jones became CEO of TCHC in June 2012 after a 2011 spending and procurement scandal hit the previous administration. That expenses and procurement scandal, reviewed by auditor general Jeff Griffiths, was arguably not as serious as the reactions of the the mayor and council might suggest. It was discovered that TCHC, then rated as one of the top 100 employers in Canada, had spent $1,000 on chocolates from Holt Renfrew, which were then given as thank-yous to top-performing employees (the chocolates were the same price at Shoppers Drug Mart, but whatever). The company had also spent $53,500 on a holiday party for its 1,500 employees, and used funds for corporate retreats, boat cruises, and other morale-building activities—things meant to strengthen job performance, increase employee retention, and attract prospective employees. But at gravy-hating City Hall, these expenditures—standard in any large private company—were considered taboo, and the newly elected administration was only too happy to burnish its image by saying so. What went largely overlooked was the procurement aspect of the Griffiths report: it found that rules had not been followed in awarding contracts and emphasized that such behaviour undermines the integrity of an organization.

Council called a special meeting to discuss the report and then fired the entire board, including the democratically elected tenant representatives who’d been put in place just three meetings earlier. The board was not given a chance to act on the report’s recommendations, the audit committee was not given the opportunity to review the report, and Speaker Frances Nunziata ruled during the council debate that councillors were not allowed even to refer to the report.

Council installed former councillor Case Ootes at TCHC as a one-man board: he promised he had no plans to sell off housing, and then recommended the sale of 900 homes. The mayor recommended the proceeds of the sales be used for the general operating budget (which is totally not a generally accepted accounting move). Ford also mused about privatizing TCHC, but that didn’t go anywhere.

So, yes, there was a scandal, but the response to it was used by the new mayor as a political opportunity to shape one of the City’s largest arm’s-length corporations in his image. A better response would perhaps have involved more caution and a consideration of how governance and controls at the organization could be improved. But that wouldn’t have made for a good headline.

I had the impression Gene Jones was doing a good job. Was I wrong?

That depends on whom you ask. Jones built a reputation as a fixer for U.S. social housing agencies, having worked in Kansas City, Indianapolis, San Francisco, and Detroit. But Toronto’s organization is on a different scale—the TCHC is North America’s second-largest provider of social housing. For example, Toronto has 15 times more units than Detroit.

And those cities confronted different challenges. Detroit was in receivership, and that situation gave Jones additional power and authority; American housing agencies focus largely on administering vouchers. The management of TCHC is significantly more complicated.

In terms of his style, Jones is a populist civil servant whose approach reminded a lot of people of Rob Ford’s. If someone comes up to him with a problem, for example, he generally says he’ll attend to it personally—this is very popular with some tenants, many of whom feel the company has been out of touch with their concerns.

But in such a large organization—1,500 employees and 164,000 tenants—this kind of approach has limited value; it involves no systemic solutions. Both frontline and senior staff who spoke with Torontoist said that Jones has failed to articulate a larger vision or strategy for the organization.

Here’s a video of Jones visiting TCHC properties:

Gene Jones was brought in to rebuild trust in TCHC and to improve internal governance. But his lack of vision has prevented the organization from moving forward, and the HR violations that occurred on his watch have resulted in a kind of workplace paralysis: employees are less willing to suggest new initiatives or try to solve problems, for fear that doing so might provide grounds for them to be fired. The high employee turnover rate over the last two years has led to a loss of institutional memory, and it appears little thought has been given to succession planning.

Okay, so that stuff doesn’t sound all that good. What happens next?

At a special meeting, the board decided to fire Gene Jones, who will leave with a $200,000 severance payment in hand. In a statement, the TCHC board referred to it as a “mutual decision,” which is a really polite way of saying he was fired. The board will convene another meeting next week to decide the fates of the other executives mentioned in Crean’s report.

The company’s chief development officer, Greg Spearn, will act as interim CEO. He was chosen probably because he is the highest-ranking employee not touched by the scandal, and he also has detailed knowledge of the company’s frontline operations.

For his part, Rob Ford was sad. He called it “one of the worst days in Toronto’s history” and said that the ombudsman, Fiona Crean, should resign. Crean will be up for re-appointment at the next council meeting, and Ford will likely object to her being re-hired.

What about the political side of things? Jones was kind of Rob Ford’s guy, right?

Rob Ford loves Gene Jones. When the mayor had a radio show, Jones appeared regularly as a guest, and they would chat about football and how TCHC was turning the corner. In his campaign literature, Ford claimed that Jones had “renewed credibility at TCHC.” It will be a lot harder to make that claim with a straight face now—although that won’t stop the mayor from trying. In the wake of Jones’s firing, Ford has indicated he will work to bring Jones back to TCHC if he is re-elected as mayor.

Some of the mayor’s closest allies have also rushed to Jones’s defence: Doug Ford (Ward 2, Etobicoke North) and TCHC board members Cesar Palacio (Ward 17, Davenport) and Frances Nunziata (Ward 11, York South-Weston) all voiced support for the CEO, and may try to use the issue to energize the so-called Ford Nation base. It’s odd to watch them twist themselves into knots defending arbitrary executive raises, but that’s City Hall in 2014.

Okay, but how is this affecting TCHC tenants?

That really is the bigger picture here, and unfortunately it gets lost when we talk about Gene Jones and his alleged culture of fear.

When you think about TCHC, there are really two significant backlogs: the $864-million capital repair backlog and the waiting list of eight to 10 years for affordable housing. Both come from the same cause: there’s an inadequate funding model for the delivery of affordable housing needs, and resources continue to decline relative to the rapidly increasing demand.

And that capital repair backlog is going to get much worse, too. Over the past three years, it has increased by over $200 million, and it’s expected to rise to $3.6 billion in 10 years, as many buildings will need structural repairs because they’re reaching the end of their intended life span.

Council passed a plan to lobby other orders of government for funding to help deal with this backlog, and was hoping some relief might be found in the upcoming provincial budget—but the prospect of such aid being given is now less likely: Why, after all, would the provincial government hand $1 billion to a corporation that appears to be in crisis?

The future of the organization’s structure is itself uncertain: some will undoubtedly call for changes, and those could take any number of forms.

Regardless, it’s the 164,000 TCHC tenants—about 5 per cent of the population of Toronto—who are the ones really affected by all this wrangling, and left wondering how and when stability will be found.

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