03/27/2013 03:09 EDT | Updated 05/27/2013 05:12 EDT

Non-profits owed apology over 550% rent hikes: Toronto ombudsman

TORONTO - A new report by Toronto's ombudsman says city staff hiked rents for several non-profit organizations by up to 550 per cent without justifying the increases.

Fiona Crean's latest report looks into the city's Below-Market-Rent (BMR) program, which allows certain non-profit community groups to lease space from the city at a reduced cost.

The document says six community groups leasing space in a city-owned building were treated unfairly by staff from the city's Real Estate and Facilities divisions, who gave "widely varying" estimates but no explanation for the rate changes.

A complaint was filed in February 2012 after the six organizations were informed of the increases. According to the ombudsman's report, the city failed to justify the rent hikes, even after numerous requests from the occupants.

The real estate division also improperly charged one group more than $20,000 for property taxes over seven years, even though none were owed, the report says. City staff spotted the error in 2008 but no correction was ever made and the charges continued, it reads.

"It's one of the worst examples of service I've seen coming out of city hall in the four years I've been here," Crean said in a phone interview Wednesday.

"They were told the rate would go up, but they then spent a period of months and then years trying to get accurate information from the city," said Crean.

She was sharply critical of the city's inability to deliver on the promises and commitments it makes.

"This is about extremely deficient performance and poor communication to the public," said Crean. "Staff repeatedly broke their promises and commitments to the agencies."

In one instance, a promise of information to be given in one week was provided 18 months later. Crean says that is unacceptable and the fact the two city divisions are "under-resource" is no excuse.

"If this were a private business, it would have gone under in six months," she said. "The public service has a higher level of duty to its citizens and taxpayers."

Crean says the city manager has found her report to be "comprehensive," and will implement all 22 of its recommendations, which include a call for the city to issue an apology to the complainants.

The names of the agencies involved have been withheld from the report "to protect the identity of those who might not otherwise come forward," said Crean.