The End of The Portland Hotel Society

July 1, 2014

Through the window of the Radio Station Cafe, Mark Townsend looks out on a lost empire. In this East Hastings hangout for the addicted, the cured, the street artist, the drifter, he seems to fit right in with his army jacket, aviator sunglasses tucked into a white shirt, and tight jeans artfully ripped. He raises his teacup, sparkly bangles clinking on his wrist, while outside locals weave past en route to Insite, the supervised injection site he and his partner, Liz Evans, battled to start and keep going for more than a decade. Down the block, people sit or doze in front of Pigeon Park Savings, an institution the two created so area residents could cash their welfare cheques without ruinous fees.

In 1992, the couple transformed a rundown hotel at the end of the block into a kind of housing no one had tried on Vancouver's Skid Row, where hardly anyone was evicted, even when they threw TVs out windows or threatened staff. Along the way, they helped rehabilitate the image of their neighbourhood: not a ghetto but a community of, yes, people with problems. Townsend was the odd-jobs maintenance guy at that hotel, then called the Portland, after a long stint in British theatre; Evans had gone to nursing school in Ottawa and started a career as a psychiatric nurse before she was hired to run the place. The two quickly became a couple, running it like a guerrilla operation, its unofficial motto, Get Shit Done. Don't sweat the rules; don't let the bureaucratic bastards get you down.

Evans was the diplomat, the planner. Townsend was the enforcer, the media handler — the terrorizer, when necessary. Their operation grew rapidly during the NDP '90s and continued to expand after, always oriented to get shit done. Keep people in housing, start a bank, start a chocolate-making business, fight the federal government to keep Insite's doors open, figure out a mechanism for delivering anti-overdose medication, come up with a system to end the chaos of welfare-cheque day, buy property for a housing project without a clear way to pay for it, do deals with developers. Whatever it took.

It's all over now. After two decades, Townsend and Evans and two of their closest colleagues at PHS Community Services Society — the name the Portland Hotel Society adopted — submitted their resignations in early March, following a showdown with their two biggest funders. Vancouver Coastal Health and BC Housing made sure that Townsend and Evans could never come back; their weapon: damning audits that described an organization running a suspiciously complicated set of books and rewarding its directors extravagantly.

It's a tragedy worthy of Shakespeare: savvy generals, brought low by their own hand, cede the battlefield to those they've always fought hardest — in this case, the phalanx of bureaucrats and rule-followers now marching down East Hastings on an inspection of their newly conquered territory. The group doesn't even notice Townsend on this slow Monday morning as they file past the café. "It's heartbreaking to see someone like this taking over your job," he says, pointing to one of the new management group. "He's a nice guy, but he has no soul for this." These new PHS board members have spent their lives living far from the edge, avoiding risk, which for Townsend is a huge problem. "You should make mistakes and things should go wrong if you're going to find the right thing."

By that strategy, the directors of PHS were geniuses. The question is, which wrong thing did them in? Was it their sloppy, uncontrolled financial management? Or that, combined with Townsend's notorious abrasiveness? Or were they standing in the way of some other agenda, as many in the Downtown Eastside believe. After all, the province could simply have demanded a new, more vigilant board and could have parked a couple of accountants in the office to bring discipline to the finances. Even, maybe, removed Townsend but kept the others: Evans, policy director Dan Small (ex-husband of MLA Jenny Kwan), and finance director Kerstin Stuerzbecher. (PHS's fifth co-manager, Tom Laviolette, wasn't asked to resign.)

To critics, the downtown Eastside's messy system of putting hundreds of millions of dollars into the hands of grassroots nonprofits run by people and volunteer boards with wildly varying skills is a series of disasters waiting to happen. After all, they argue, look at the record. The Downtown Eastside Residents Association, started by noble crusaders Bruce Eriksen and Libby Davies in 1973, became so dysfunctional that the province had to shepherd it into receivership in 2010. The Downtown Eastside Youth Activities Society, the needle-exchange pioneer started in 1988 by take-no-prisoners John Turvey, had its $600,000 in contracts terminated by Vancouver Coastal Health in 2009 when it fell apart. Now PHS.

Why would the province perpetuate this charitable boom and bust? For one thing, a lot of nonprofits — Lookout, The Bloom Group (formerly St. James Community Services), RainCity, Kettle Society, and more — function perfectly well. Plus, nonprofits are often more nimble and better able to handle chaos than your harassment-policy-aware health-care worker. But the main reason? It's so stunningly cheap to let nonprofits deliver these difficult services that their directors could live in a hotel in Paris year round and the organization's services would still be more cost-effective than the salaries of the licensed nurses, social workers, physiotherapists, and others in the top pay grades of the institutional health system.

Much was made in the accounting reports of the top managers' compensation: $150,000 a year, plus overtime, RRSP contributions, child-care support, and double payouts for vacations. The salaries were extremely rich for the nonprofit sector but commonplace in the bureaucracies that worked with PHS. At Vancouver Coastal Health, almost 500 people, many of them regular nurses, earn between $100,000 and $125,000 a year; the PHS staff working alongside them made about $40,000 a year if they were line staffers, twice that at most for the few mid-level managers. At Vancouver Coastal Health, another 170 make more than $125,000, and at BC Housing, which is essentially a head office managing multiple nonprofits, 30 people make over $100,000 and 18 make between $125,000 and $200,000. The CEOs of both agencies earn about $350,000.

Townsend — the ubiquitous face of PHS — has spent the last few months persistently trying to explain why the compensation was only about trying to even things out. (Evans, in contrast, has been publicly silent. Friends say she is devastated.) In 1991, he explains, when Evans was hired to manage the original Portland, she left a $58,000-a-year job at Vancouver General Hospital to make $12,000. Her salary in recent years has only helped even things out, he insists. And for the staff, many of the expenses detailed in the audits — flights to visit a dying father, spa treatments, birthday presents, staff meetings held over restaurant meals — were meant to compensate for modest salaries and unpaid overtime. Their travels to international conferences allowed PHS's innovative work to be highlighted. Even the couple's famous staff Christmas parties, legendary on the Keefer Street block where they live with their two children, were meant to reward a year's service. They would turn their small house (which, between renos and purchases of adjoining property, came to be worth at least $2 million) and yard into a carnival for the night: cocktails, a cover band, snow-making machines, limousines — all of it a far cry from the modest potlucks other housing operators put on for their staff.

"It's complicated," Townsend has said repeatedly about PHS's tangled finances. They were always on the brink, he admits, because they were trying to do so much more with their money than any other housing group. And unexpected things happened. When a contract extension he'd counted on for the federal government's At Home experiment didn't materialize, there was a shortage in the management fees that PHS used for its legal costs, international-visitor meals and limo rides, trips to Health Minister Tony Clement's offices in Ontario to stage protests, and more. A Vancouver Coastal Health payment of $980,000 that didn't arrive in time helped push PHS into yet another deficit. BC Housing, the bureaucracy they were forever scrapping with, began to look more closely at their financial statements and, ultimately, demanded a financial review. David Ostrow, CEO of Vancouver Coastal Health, had famously warned Townsend a year earlier that he was endangering his relationship with the agency by staging protests over changes to program funding; the review prompted his organization to start its own audit.

The group at PHS had never felt they were more than tolerated. But they had always managed in their own way: Evans and Small diplomatically, Townsend railing about how BC Housing "fucks up over and over." But the contracts and the money had kept coming, the annual audits were approved, even if there'd been an increasingly dark feel to negotiations in recent years.

Months after the review and audit started, it still looked as though BC Housing and VCH might go a less dramatic route. BC Housing installed a set of accountants in PHS offices. Housing Minister Rich Coleman says throughout the fall, there was some thought that the province could "right the ship." Then overnight, the accountants were gone and intense negotiations started to force resignations. BC Housing CEO Shayne Ramsay had had it. Coleman, sympathizing with Ramsay, agreed. Townsend deployed a lawyer from Farris, Vaughan, Wills & Murphy, but then, faced with the threat that Vancouver Coastal Health would terminate their contracts, gave in. There are stories swirling that it was the health bureaucrats who pulled the pin, but Coleman says no: "It was the reverse. Health wanted to delay." The housing bureaucracy was fed up. "At some point someone says, ‘This isn't solvable. You're not getting the cooperation you need.' " It might have worked if they'd been dealing with Evans. "I had a lot of time for her. I never had a lot of time for him because he was such a jerk."

Townsend knows how harshly he's judged. "I'm a person people hate. I've lived my life being hated." Since the fall from grace, he's been jarringly upbeat, determined to spend as much time as it takes to explain, explain, explain, still meeting with groups and activists from the Downtown Eastside, still planning. He may have been fired, but he's not quitting. There's something yet to be done. He doesn't know what. But something.

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