Ottawa Coun. Mathieu Fleury is raising a red flag over what he's calling a bad deal between the city and a for-profit shelter business providing temporary housing for families in Vanier.

The city places hundreds of homeless families in budget motels at a cost of about $100 per night, or $3,000 per month. It's meant to be a temporary solution until they can find permanent homes.

In 2013, the city expanded its agreement with the Ottawa Inn on Montreal Road, where 47 units are reserved for homeless families, to include another 41 units in nearby apartment buildings. The hotel's owner, Ahmed Ali Syed, bought and refurbished the units specifically for that purpose.

Fleury, who's concerned about the cost of the arrangement and questions whether city staff broke any rules when they agreed to it, has brought it to the attention of the city's auditor general, Ken Hughes. Hughes's office has not confirmed whether it plans to conduct an investigation.

"I'm fine with it, theoretically, if the owner was willing to sign a lease," Fleury said. "Then the tenants, those families, would have all the rights under the Landlord and Tenant Act, and I could assure you it wouldn't be as expensive."

Coun. Mathieu Fleury says a city deal with a motel is putting vulnerable residents at greater risk. 0:28

City-wide, the average monthly rent for a similar-sized apartment was $1,564 in 2018, according to the Canada Mortgage and Housing Corporation — about half of what the city is spending to keep the families housed in the Vanier apartments,

Those families would be better served if the city invested the money in permanent, affordable housing, said Fleury, a longtime critic of the city's practice of placing homeless families in budget motels. He pointed out that the city already offers rent supplements to low-income families.

"The owner of those residential properties is not interested [in a traditional leasing arrangement] because they make so much money," he said.

Fleury said the sole-sourced agreement, which did not require the approval of council, is an example of bad governance.

This room at the Ottawa Inn is occupied by a homeless mother, her 12-year-old daughter and two-month-old baby. (Laura Osman/CBC)

Apartments save money, city says

Janice Burelle, the city's general manager of community and social services, defended the city's deal with Syed, saying it provides better living conditions for families and actually saves taxpayers money.

Because many of the homeless families are extended with many children, they'd normally be spread among two or three motel rooms at a cost of $200 or $300 per night — $6,000 to $9,000 per month — with no kitchens or private bedrooms.

Manzoor Ali Syed and his father, Ahmed, bought up several buildings near the Ottawa Inn and converted them into apartments to house homeless families. The city pays about $3,000 per month for use of the units. (Laura Osman/ CBC)

By contrast, even large families can fit comfortably into one of Syed's apartments for just $100 per night.

An internal City of Ottawa email obtained by CBC suggests the apartment deal saved the city $800,000 in 2015.

Shelley Van Buskirk, the director of housing services for the city, said the families' rights are already protected under the city's agreement with Syed, even without a formal lease.

"Any issues are escalated to us and are immediately investigated and resolved," Van Buskirk said.

Forever homes

Syed's son, Manzoor Ali Syed, who manages the motel and the apartments, said the family is open to the idea of creating permanent, affordable housing, but the need for short-term emergency shelter isn't going away.

"We have more space, we're saving the city money," Manzoor Syed said. "Now they can use that money to go and actually build affordable housing to put these people in their forever homes."

In fact, the family would like to expand its agreement with the city to include 25 more apartment units, but the city has been reluctant to sign on because staff would rather see those units rented at market prices to ease Ottawa's tight vacancy rate.