A report<\/a> 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 \u201con the nature and status of actions taken in response.\u201d<\/p>\n It will be up to the 10 city councillors on the committee to approve or reject that recommendation.\u00a0<\/p>\n CBC Hamilton asked the city for its response to the audit and recommendations. In a statement sent Friday evening, the city said it will review the report with council and “discuss the findings and opportunities for improvement through the appropriate process.” <\/p>\n It also defended the project, saying “it is important to recognize that this was a large, complex project delivered to respond collectively to the immediate homelessness and housing crisis. Decisions were made in good faith based on the information and circumstances available at the time with the intent of serving the community\u2019s best interests,” spokesperson Lauren Vastano shared in an email on behalf of the city. <\/p>\n Audit launched in 2025 following complaints<\/p>\n The much-delayed<\/a> initiative resulted in the creation<\/a> 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\u2019t suitable. Social service provider Good Shepherd manages operations at the site.<\/p>\n The site, which fully opened last March, consists of multiple pre-fabricated cabins and several common buildings. It\u2019s the first of its kind in Hamilton but follows in the footsteps of similar publicly and privately run projects<\/a> based around tiny homes in communities such as Kitchener-Waterloo<\/a> and Kingston<\/a>.<\/p>\n In May, CBC Hamilton reported<\/a> on a staff report noting the capital costs had almost tripled from $2.8 million to $7.9 million \u2014 $5.1 million over budget.<\/p>\n Months earlier, city councillors had questioned<\/a> 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.\u00a0<\/p>\n The auditor general launched a value-for-money audit in 2025 after receiving \u201ca high volume\u201d of fraud and waste hotline complaints related to the project, the office said. The hope for the audit is that \u201cthe city will capitalize on the experiences gained and lessons learned,” it said. <\/p>\n 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.<\/p>\n The audit also included a legal opinion regarding contract management, which the city is not releasing publicly.\u00a0<\/p>\n The OAG said its findings can be grouped into several themes including insufficient research, inadequate planning, a lack of understanding risks, and a failure to communicate with city council in a timely manner.<\/p>\n Lessons to be learned from the project include \u201cthe importance of adequate planning and due diligence, and a project team with experience that aligns with the nature of the work,\u201d the OAG said in its report to the committee.\u00a0\u00a0<\/p>\n The OAG said Hamilton\u2019s Housing Services project team was inexperienced in construction projects and noted numerous oversight issues, including that the city\u2019s contracting approach was \u201cnot optimal\u201d and \u201clikely\u201d contributed to increased costs.<\/p>\n The purchase of the shelter units was governed by a purchase order rather than a contract, the OAG said, and the city did not use what few tools it had available to hold vendors accountable.\u00a0<\/p>\n The construction contract didn\u2019t have what it needed to control or monitor costs, exposing the project to \u201cuncontrolled cost escalation,\u201d the OAG said.<\/p>\n Audit finds staff did \u2018very little\u2019 research<\/p>\n The vendor who supplied the shelter units, Microshelters, had no prior sales or track record in temporary shelters, the OAG said, but the city did not know \u201cbecause basic due diligence was not performed.\u201d<\/p>\n The audit said there was \u201cno evidence\u201d of an organized search for suppliers, no advertising and no formal call for expressions of interest in the project. There was also \u201cvery little\u201d market research done to understand what types of tiny homes were available, the audit said, adding \u201csuch market research does not take a lot of effort.\u201d<\/p>\n Microshelters was the only supplier the city asked for a formal quote after council approved single sourcing to save time. The company reached out to the city to market their project as early as May 2024.<\/p>\n The supplier, which has two staff who are also the corporate directors and executives, does not manufacture products or have sample merchandise, the audit said. The company said it sourced units through a California-based company but did not know who manufactured them.<\/p>\n \u201cWe are struck by the fact that Microshelters did not know who the manufacturer of what they were selling was; and it is obvious that the city never asked that important question,\u201d the OAG said.<\/p>\n City paid $2.3 million for units without seeing them<\/p>\n In October 2024, the audit said, Hamilton paid nearly $1.2 million to the company before any city staff had physically examined the units, or gained any suitable understanding of the extent to which the structures would meet permitting and regulatory standards,\u201d the OAG said.\u00a0<\/p>\n In December 2024, the city paid a second and final instalment, meaning it paid the company roughly $2.3 million for the shelters \u201csight unseen,\u201d the audit said.\u00a0<\/p>\n By January 2025, the OAG said, the city learned the units would require \u201cextensive and costly modifications\u201d to meet Ontario standards.<\/p>\n At the time, MicroShelters’ co-founder Jeff Cooper told CBC Hamilton “all aspects of its business are proprietary and confidential” and declined to comment.<\/p>\n City staff previously defended the process. <\/p>\n In the lead up to the project, Mayor Andrea Horwath used strong mayor powers, which\u00a0allow mayors to take quicker initiative\u00a0on some issues,\u00a0to direct staff to create some kind of “sanctioned” encampment site because of the need for temporary housing. Grace Mater, general manager of healthy and safe communities, defended city staff’s management of the project on a tight timeline.\u00a0<\/p>\n “We’ve basically built a small subdivision in under four months,” she said.\u00a0“As with all projects of this magnitude, there were challenges along the way.”<\/p>\n The audit said it found \u201cno evidence that any city staff or administrators had personally benefited from, or undisclosed connections with, the transaction.\u201d<\/p>\n \u201cEven so,\u201d the OAG said, \u201cIt was a disturbing departure from the responsible administration of taxpayer dollars to single source $2 million worth of product without exercising basic due diligence.\u201d<\/p>\n \u201cThe outcome of such an under-researched purchase, without adequate due diligence, led to Microshelters Inc. overpromising and under delivering, and to costly modifications of the supplied structures.\u201d<\/p>\n \u201cWeaknesses\u201d in the contract process \u201cdid not leave the city with a necessarily clear path for the type of remedies an owner would normally expect to see when facing these kinds of issues,\u201d the audit said.\u00a0<\/p>\n 11 recommendations for city management<\/p>\n The OAG\u2019s recommendation to improve future projects and \u201caddress lessons learned\u201d include:<\/p>\n In addition to the OAG’s report being discussed next week, a day earlier, on Jan. 14, city council\u2019s General Issues Committee<\/a> will receive a different report and recommendations<\/a> on the outdoor shelter project, focused on evaluating its efficacy as a program.\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"An audit of Hamilton\u2019s outdoor shelter project found that when it came to constructing the shelters, \u201curgency overrode…\n","protected":false},"author":3,"featured_media":507034,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[2147,50],"class_list":{"0":"post-507033","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-news","8":"tag-canada","9":"tag-news"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/115872946698645284","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/507033","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=507033"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/507033\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/507034"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=507033"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=507033"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=507033"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"Two](\"https:\/\/www.europesays.com\/us\/wp-content\/uploads\/2026\/01\/1768080733_898_default.jpg\")
There are 40 cabins at the outdoor shelter, with space for up to 80 residents. (Samantha Beattie\/CBC)<\/p>\n\n