Auditor slams officials over Hamilton’s outdoor shelter project saying 'taxpayers absorbed' the 'fallout'

An audit of Hamilton’s outdoor shelter project found that when it came to constructing the shelters, “urgency overrode the importance of due diligence and good governance.” 

According to Hamilton’s Office of the Auditor General (OAG), the project suffered from “a lack of accountability, governance and control mechanisms,” inadequate oversight over costs, and a failure to understand and manage risks. 

Weak contracts and a lack of oversight and experience “created a permissive environment where vendors had the opportunity to ‘make a meal’ of the project while the city and its taxpayers absorbed the financial and operational fallout,” the OAG said.

The audit and 11 recommendations to city managers were published Thursday in an agenda ahead of a Jan. 15 Audit, Finance and Administration Committee meeting. 

A report to the committee, prepared by the OAG, recommends the city manager be directed to respond to the recommendations and report back to the audit committee by July “on the nature and status of actions taken in response.”

It will be up to the 10 city councillors on the committee to approve or reject that recommendation. 

CBC Hamilton asked the city for its initial response to the audit and recommendations. Spokesperson Lauren Vastano said staff can’t answer questions prior to the committee meeting. 

The much-delayed initiative resulted in the creation of an outdoor compound on Barton Street W. with what they said would be temporary housing for up to 80 people, for whom traditional emergency shelters aren’t suitable. Social service provider Good Shepherd manages operations at the site.

The site, which fully opened last March, consists of multiple pre-fabricated cabins and several common buildings. It’s the first of its kind in Hamilton but follows in the footsteps of similar publicly and privately run projects based around tiny homes in communities such as Kitchener-Waterloo and Kingston.

In May, CBC Hamilton reported on a staff report noting the capital costs had almost tripled from $2.8 million to $7.9 million — $5.1 million over budget.

Months earlier, city councillors had questioned the suitability of MicroShelters, the company supplying the tiny homes. It turned out the Brantford, Ont., business went through an American company to order the units from China. 

The auditor general launched a value-for-money audit in 2025 after receiving “a high volume” of fraud and waste hotline complaints related to the project, the office said. The hope for the audit is that “the city will capitalize on the experiences gained and lessons learned," it said.

The audit involved sources of information such as a review of council and committee reports and meetings, contracts, invoices, communication records, construction documents, interviews with staff and examinations under oath.

The audit also included a legal opinion regarding contract management, which the city is not releasing publicly.