THE MONEY PIT

A Globe and Mail investigation shows for the first time how much
public and private money has been spent on Vancouver's Downtown
Eastside since 2000: $1.4-billion. What has all that money
accomplished? Limited progress at best. As Robert Matas reports, many
people believe the area is worse than ever.

VANCOUVER -- It has been nearly a decade since three levels of
government signed a landmark agreement designed to transform
Vancouver's notorious Downtown Eastside, but the neighbourhood
remains a vortex that sucks in junkies, the mentally ill and other
desperate souls from across the country. With a year remaining in the
agreement - and the 2010 Olympics about to put Vancouver in the
world's spotlight - a Globe and Mail investigation has for the first
time tallied how much public and private money has been poured into
Canada's worst slum.

The result: More than $1.4-billion later, the Downtown Eastside is
hardly better off.

An open-air drug market still thrives five minutes from a police
station. The bathrooms of decrepit hotels still serve as shooting
galleries for addicts. Prostitutes still offer their bodies from the
curbside. Drug pushers still prey on the mentally diminished,
multiplying the misery.

If there has been progress, it has been scant. The rash of drug
overdoses that killed more than 1,000 people in the 1990s has
dissipated, but the legion of addicts remains. HIV/AIDS is no longer
epidemic, but residents' health remains abysmal.

Even the politicians who were behind the Vancouver Agreement concede defeat.

"I've worked in the Downtown Eastside for a long time, since before I
got into politics, and I have never seen our community this bad,"
says Jenny Kwan, the NDP cabinet minister who led the province's
involvement in the agreement, signed in 2000.

"I can say that honestly, politics aside, I have never seen such
desperation on the streets. I walk down there in the early hours, I
go down to the community, and I am literally stepping over bodies."

Spending on the Downtown Eastside is "mind-boggling," says former
Vancouver mayor Philip Owen, another signatory to the agreement.

Mr. Owen says that until now he has had no firm idea of just how much
money has gone into the Downtown Eastside.

That is because nobody has been keeping track.

The federal, provincial and municipal governments, the Vancouver
Coastal Health Authority and more than 100 organizations working in
the neighbourhood record their own spending, but none keeps a global
tally. The Vancouver police department, meanwhile, won't release its
budget for patrolling the Downtown Eastside.

"No one seems to have a handle on it," says Bernie Magnan, the
Vancouver Board of Trade's chief economist. "We've tried several
times to get it, but we cannot seem to nail down what actually goes in there."

By conducting interviews, reviewing public documents and asking
groups to summarize their spending, The Globe reached a conservative
estimate for health, social services, housing, law enforcement and
other public services.

The grand total: At least $1,468,154,865 since the Vancouver
Agreement was signed, with roughly $717.5-million spent on health and
social services, $348.6-million on housing, $154.5-million on safety
and justice, $230-million on economic development and $16.8-million
on services that bridged those classifications.

Reaching the total was more art than science. Wherever possible, The
Globe used actual spending figures, but in some cases relied on
promises of spending or estimates where precise figures weren't
available. The calculations include some projects and services
outside the Downtown Eastside because the boundaries of the
neighbourhood are fluid and some of the projects aimed at the
neighbourhood's residents are located outside it.

The flood of spending has been concentrated mostly in a few squalid
blocks home to about 6,000 men and women; a huge chunk has gone to
about 2,100 people in crisis, health authorities say.

So why has $1.4-billion made so little difference to this relatively
small population? Where did the money go?

ONE ROOM FOR THE HOMELESS: $326,484

To help solve the puzzle of how so much money has been spent on
housing in the Downtown Eastside, consider the case of the Pennsylvania Hotel.

The historic five-storey structure, built in 1906 and designed by
renowned local architect William Tuff Whiteway, is located on the
edge of the most desolate stretch of Hastings Street, the main drag.
By 2000, the once-stylish, turret-topped building was a flophouse,
its 165-seat pub a drug den.

The city, provincial and federal governments worked together to
restore the heritage landmark, replacing the pub with a restaurant
and reconfiguring the living space into 44 units for the homeless.
The antiquated structure had to be brought up to current seismic and
building codes.

The province contributed $4.6-million from its housing budget and
agreed to pay $341,710 annually for health workers and counsellors
who work there. Ottawa contributed $4-million. The regional and city
government paid an additional $2.15-million.

Developer Concord Pacific contributed $3.6-million in exchange for
transfer of density to another property.

In total, it cost $14.4-million to reopen the hotel recently. That
works out to $326,484 per suite, for about 250 square feet of living
space, including a bathroom and kitchenette.

In the past two years, the B.C. government has bought 13 run-down
residential hotels in the Downtown Eastside with the intention of
fixing them up for the homeless. The final bill for the real-estate
buying spree is not yet known.

The spending on housing in the neighbourhood goes well beyond buying
and reviving skid-road hotels.

In 2000, the federal and provincial governments announced at least
$72-million in expenditures on housing and temporary shelters in the
area. Since then, an additional $104-million has gone into subsidized
housing, outreach programs to homeless people and rent supplements,
according to The Globe's estimate.

In the same period, city hall spent $155-million on affordable and
subsidized housing throughout Vancouver. Although the city does not
separate its spending by neighbourhood, a municipal official said
much of the housing was for people who may have ended up in the
Downtown Eastside without alternatives.

It is also difficult to calculate the total cost of government
concessions granted to private developers that build in the Downtown
Eastside. The $183-million Woodward's redevelopment - a four-tower
project that promises to remake the western portion of the Downtown
Eastside - will have 500 units priced at whatever the market dictates
and 200 units of subsidized housing. The city compensated the
developer with concessions worth millions of dollars for the public
housing, heritage restoration and public amenities such as a daycare.

As well, the city has permits on its books for new projects worth
$70-million in the Downtown Eastside. The list includes subsidized
housing, market housing and renovations of an evening drop-in centre
for prostitutes.

AN EXPENSIVE DRUG COURT THAT DOESN'T WORK

Like housing, law enforcement and courts for the Downtown Eastside
have swallowed hundreds of millions of dollars.

Some costly judicial programs have not made a difference. One
example: Vancouver's special court for drug cases, which has cost
about $17-million to build and operate.

The city opened the court in 2001, embracing an idea pioneered in
Toronto three years earlier. Judicial authorities hoped that the
novel approach would help to combat substance abuse in the Downtown
Eastside. The concept is simple: Judges offer less-severe penalties
to addicts charged with narcotics crimes, provided they participate
in a court-supervised, 265-hour treatment program. Also, as a
condition of bail, the addicts must stay away from the neighbourhood.

The courtroom is located on the third floor of the Provincial Court
building, in the heart of the Downtown Eastside, and the atmosphere
is anything but typical.

On a recent day, dozens of offenders who had already pleaded guilty
filled the public gallery, listening as the names of the accused were
read out. Each time somebody answered and approached the bench, the
gallery broke into applause.

The judge was casual. "Hi, John," she would say. "How are you? What
would like to talk about today." But this kinder, gentler approach
hasn't kept the Downtown Eastside's addicts from reoffending. The
court accepted 322 offenders from December, 2001, to March, 2005,
according to an evaluation of the project done by Ottawa's ORBIS
Partners Inc., and funded by the National Crime Prevention Strategy.
Only 43 people - or 14 per cent - completed the treatment program.

The analysts compared the group with 166 offenders with addiction
problems who did not go to drug court. Their evaluation found the new
approach produced no statistically significant reductions in new
charges and convictions.

Nevertheless, the drug court continues to run in Vancouver (with some
changes to the treatment program) and the concept has been expanded
to include a downtown community court for mentally ill people, which
opened last fall in the Downtown Eastside. The new court process was
expected to integrate health and social services into the justice system.

The construction budget for the new court was $5.6-million, and the
cost of operating it in its first year is expected to be about $4.4-million.

LIVING FREE IN THE DOWNTOWN EASTSIDE

Any calculation of money spent in the Downtown Eastside must include
the incredible efforts of non-profit organizations and community
groups that have stepped in to fill holes in the public safety net.

A directory of free services in the Downtown Eastside prepared for
street people lists five shelters, seven locations for free clothing
and six places for free meals. Free phones, free hair cuts, free
dental work, laundry and showers are available.

At one such place, the three-storey Union Gospel Mission shelter, 76
people came for a free lunch one day last week. The menu featured
smoky sausage soup, meat sandwiches, cupcakes and orange juice, and
the line of mostly men in worn jackets and jeans wound down the
street and around the corner.

At the door, a scruffy man who looked to be in his 20s mumbled to
himself as he stood next to the front of the line. "His mind is
gone," a mission worker said. "He just stands in the doorway."

The Union Gospel Mission offers more than meals. The facility sleeps
40, and offers free clothes, toothbrushes, soap, razors, counselling
and courses to complete high school.

"Everything is for free," said Keela Keeping, a spokeswoman for the
mission. "But it is not really attractive. It would only appeal to
people who really need it."

The Union Gospel Mission, which run two additional sites in the
Downtown Eastside, receives no government funds. Corporate sponsors
such as Telus Corp. provide volunteers and cash.

Other groups depend heavily on government support. Some groups, such
as the Downtown Eastside Youth Activities Society (DEYAS), receive
almost 100 per cent of their funding from the government. No one
calculates how much has been spent over the decade on those services.

And yet, after all that investment in health, safety and housing,
more is required to turn the Downtown Eastside into a community just
like any other in Vancouver. Considerable effort has gone into trying
to re-establish businesses, provide job training for residents and
brighten up the neighbourhood.

The city has kicked in $400,000 to match some of the projects
financed under a $10-million provincial government grant for
neighbourhood improvements, such as new awnings on buildings, new
neon signs and cleaning up graffiti.

The city also made an effort to provide job training with a program
of temporary work for eight people in recovery from drug use. Four
went on to full-time employment. The budget for the program was $163,000.

Projects under the Vancouver Agreement are among the more aggressive
attempts to change the social and economic realities in the
community. The governments put $6.9-million into creating an
organization to develop business in the area and help find work
opportunities for residents. Building Opportunities with Business
Inner City Society, better known as BOB, has achieved small victories
for several people, but it has not succeeded in remaking the neighbourhood.

The agency had played a role in the purchase of $25-million worth of
goods and services from suppliers in the Downtown Eastside and
adjacent neighbourhoods. BOB was also involved in arrangements
leading to jobs for 102 residents. But it was set up with ambitions
of helping find work for many more people.

Meanwhile, government spending on social assistance rivals spending
on health and housing. About 73 per cent of the 7,100 people on
welfare who live in what the province considers to be the Downtown
Eastside receive payment at the highest level possible. The province
is paying out $70-million in this year alone. An additional
$9.7-million was spent this year on help for families and children in
the neighbourhood. The cash injected over the decade amounts to
hundreds of millions of dollars.

LIGHT AT THE END OF THE TUNNEL?

Although some believe that the Downtown Eastside is worse off now
than it was a decade ago, others see progress.

Donald MacPherson, Vancouver's drug policy co-ordinator, recalls the
tragic rash of overdose deaths in the 1990s. "Around 200 people died
in 1993, another 200 in 1998," he said. "People were also dying of
HIV at an incredible rate. There was a sense of despair on the street."

While the debate raged over the appropriate response to the urban
crisis, money began to flow. At least $300-million has been spent
since 2000 by the health authorities in the Downtown Eastside. More
than half of the funds have gone to services and housing supports for
addicts and the mentally ill. A supervised injection site, an
experiment with heroin distribution and support for abstinence-based
treatment brought in $31-million more.

The government also has committed funds for services for the mentally
ill and addicted that are located outside the neighbourhood. In the
past few years, new drug-treatment centres and institutional care for
the mentally ill worth $41-million have been unveiled.

Working together under the Vancouver Agreement, the three levels of
government contributed $300,000 toward a $6.5-million drug-treatment
centre called The Crossing at Keremeos, which has opened in the B.C.
interior and is expected to cost $2.4-million to operate in its first year.

The facility is located 350 kilometres to the east, but the Downtown
Eastside is more than just a local problem, says Christine Lattey,
executive director of the Vancouver Agreement's co-ordination unit.
"It's a B.C. and a Canada problem."

"If you look at the Downtown Eastside, you can provide services for
people who are there," she explains. "But you also have to look at
how you prevent people from getting there in the first place."

According to Ms. Lattey, the Crossing at Keremeos can do just that -
and is an example of how spending under the Vancouver Agreement and
other programs has helped to improve situation. But it clearly hasn't
helped enough.

"You just need to walk down there to see there is a lot that has not
been done."

Robert Matas is a member of The Globe and Mail's Vancouver bureau

Poor and uneducated

82

Percentage of Downtown Eastside residents who live alone.

38

Percentage of residents without a high-school diploma

$14,024

Average annual income of residents who live alone.

$6,282

The average annual income, minus government subsidies.

With a per capita income that's less than half the national average,
the neighbourhood is among the poorest of the poor. The percentage of
residents who failed to finish high school is double the average for
the rest of British Columbia.

"We've basically got a Third World country stuck in the middle of
downtown Vancouver," says Krishna Pendakur, a professor of economics
at Simon Fraser University.

These figures have been compiled by Patrick Brethour, the Globe and
Mail's British Columbia editor, drawing from the 2006 census with the
help of special software from Tetrad Computer Applications Inc.

See globeandmail.com for an explanation of the methodology and how
Statistics Canada deals with the homeless in the census.

How it added up

Where did the $1.4-billion figure come from?

To find out how much money has gone into the Downtown Eastside since
the city, provincial and federal governments signed the Vancouver
Agreement in 2000, The Globe and Mail began by reviewing public
documents and asking the various groups and agencies that operate in
the area for a summary of their spending.

Where possible, hard numbers were used, but precise figures were not
always available. So the tally also includes some estimates and
promises of spending. (In some cases, it was impossible to avoid
including projects and services that are outside the neighbourhood
because the Downtown Eastside's boundaries are often interpreted
differently, and some of the services provided to its residents
originate elsewhere.)

In the end, a conservative assessment of the health, social services,
housing, law enforcement and other public services came to at least
$1,468,154,865, consisting of roughly $717.5-million for health and
social services, $348.6-million for housing, $154.5-million for
safety and justice, $230-million for economic development and
$16.8-million on services that span categories.

For the most part, this money was spent on an area that is home to
6,000 people, the vast majority of it going to 2,100 of them who are
considered to be in dire need.

Reserve judgment

14

Percentage of area residents of aboriginal descent.

The Downtown Eastside's aboriginal population is, proportionately,
seven times that of Vancouver as a whole. "In some people's minds,
it's the largest reserve in Canada," says John O'Neil, dean of health
sciences at Simon Fraser University and a specialist in aboriginal health care.

Why so many natives? Housing costs are certainly much lower, but Mr.
O'Neil says many newcomers from reserves come looking for a familiar
face, despite the grim surroundings.

Out of work

60

Percentage of residents not considered participants in the labour force.

Officially, the unemployment rate for the Downtown Eastside is only 5
per cent - but that's because more than six people in every 10 aren't
even counted among those who have a job or are looking for one. Of
those who able to work, only one in three does. That is less than
half the average for B.C. and for the entire country.

"This is worse than the Great Depression," Simon Fraser University
economist Krishna Pendakur says.

The official figures, of course, don't include anyone who breaks the
law to earn a living.

Alone and childless

7

Percentage of residents yet to reach the age of majority.

The average Downtown Eastside household consists of just 1.3 people,
making it half as big as an average family elsewhere in the city, the
province or the country as a whole. As well, the percentage of
one-person homes (among residents 15 and older) is triple that found
elsewhere, while the 7 per cent for children and teens compares with
25 for the country as a whole.

Research in motion

59

Percentage of residents who have moved in the past five years.

39

Percentage of Canadian residents who have moved in the past five years.

The way residents move around suggests a huge turnover in population,
but a large number of those who move don't leave the city - and may
not even venture beyond the Downtown Eastside.

AHEAD IN THE SERIES

In the coming weeks, The Globe and Mail will introduce four experts
who will lay out fresh solutions for the neighbourhood.

On March 24 at 7 p.m. PT, The Globe, in partnership with CTV and the
University of British Columbia, will bring together the experts and
Globe columnist Gary Mason for a public forum at UBC's Robson Square
campus. For tickets, visit globeandmail.com/thefix.

And join CTV British Columbia tomorrow night at 6 p.m. PT, and again
on Monday, to meet some of the people profiled in these pages.
Outside B.C., the interviews will be available on CTVBC.ca.

In Monday's news section

The Architecture Solution

Globe and Mail reporter Wendy Stueck talks to Gregory Henriquez, the
architect behind a bold experiment to have wealthy condo owners
living with people in subsidized housing.

Feb. 25: An online discussion with Mr. Henriquez from 1:30 to 2:30
p.m. ET (10:30 to 11:30 a.m. PT)

Monday, Feb. 23

The international development solution

The Globe's Mark Hume talks to UBC scholar Aprodicio Laquian, a
specialist on how to improve the lives of slum-dwellers.

Feb. 24: An online discussion with Prof. Laquian at 4 p.m. ET

(1 p.m. PT)

Monday, March 2

The public policy solution

The Globe's Robert Matas on Jim Green, the former city councillor
behind the Downtown Eastside's controversial safe injection site.

March 3: An online discussion with Mr. Green at 4 p.m. ET

Monday, March 9

The education solution

Wendy Stueck talks to Margo Fryer, founding director of the UBC
Learning Exchange, a storefront education program based in the
Downtown Eastside.

March 9: An online discussion with Ms. Fryer at 4 p.m. ET

[Sidebar]

Ground zero

Vancouver's Downtown Eastside, a venerable neighbourhood plagued by
drug addiction, mental illness and prostitution, is composed mostly
of low-income housing and social-service agencies. About 27 per cent
of the commercial frontage along Hastings Street, the main
thoroughfare, is boarded up. Since there's disagreement on where the
Downtown Eastside begins and ends, The Globe and Mail selected these
boundaries when compiling its Statistics Canada data on the neighbourhood.

Map by Tonia Cowan