The House that Rosalena Built: How a social housing program went awry in Pinehouse

Rosalena Smith house
Rosalena Smith and Mayor Mike Natomagan live in a lavish house in Pinehouse, the building of which was generously subsidized by roughly $50,000 in provincial funds and a $26,000 interest-free mortgage provided by the Village.

 

September 11, 2014, was a red-letter day in the Northern Village of Pinehouse (Saskatchewan), a community about 500 km north of Saskatoon. Provincial Social Services Minister Donna Harpauer flew in from Regina (via La Ronge) for the official opening of 10 new houses, sponsored under the Saskatchewan government’s Summit Action Fund (SAF) social housing project. She and federal MP Rob Clarke cut the ribbon at one of those houses on Block 13, Lot 14, followed by a reception inside.

The house at Block 13, Lot 14 just happened to be owned by Rosalena Smith, common-law wife of Mayor Mike Natomagan, and it was commonly acknowledged as one of the most lavish residences in the village. But it seems not to have occurred to most people that it really didn’t fit the SAF program requirements to assist low- to moderate-income families who were struggling to buy their first home. The irony certainly hadn’t struck Minister Harpauer or Tim Gross, the executive director of Saskatchewan Housing, who was also in attendance.

But one person WAS asking questions. Reporter Manfred Joehnck of Missinipi News, La Ronge, had got wind that something wasn’t quite right. “In the case of Pinehouse, there were only 10 people who qualified. Among them are four relatives of the mayor.” When Tim Gross was asked about this, he explained (to use Joehnck’s words), “it’s a mortgage broker that decides who qualifies for the program, not the local committee.”

When the author of this article recently made an Access to Information (ATI) request to the Village office for further details, he was provided a bit of clarification. The “mortgage broker” was Shannen Fisher of Thierman Financial in Prince Albert. She is described on Thierman’s website as a financial advisor, who is not and does not claim to be a mortgage broker, but she is a certified financial planner.

The local SAF committee in Pinehouse was only informally organized and never kept minutes. A few meetings were held in May 2012 and then the committee seems never to have met again.

So let’s go back and track as best we can how the Summit Action Fund “Traditional Housing Initiative” rolled out in Pinehouse.

The Pinehouse Transitional Housing Initiative is launched

In April 2011, June Draude, then Minister of Social Services, announced in Legislative Committee that $6 million in capital funding would be made available through Saskatchewan Housing Corporation to support families and individuals with the greatest housing needs and to increase the housing supply in the province. Mike Natomagan signed an agreement with Sask Housing on behalf of the Village and Pinehouse Business North Development Inc. on February 24, 2012, subsequently approved by Village council on March 9. The agreement provided for a grant of $500,000 for 10 houses to be completed by March 2014.

The informal Pinehouse Housing Committee met three times at the beginning of May 2012. The names of several village residents who might participate were discussed. At Village council on May 16, approval was given for the sale of five lots at $1.00 per lot. The price of those same lots was boosted to $10,000 each by council on October 10, for reasons unknown.

A quarterly report submitted by the Village at the end of June indicated that they were on track for getting those first five houses built by the end of 2012. But that was the last quarterly report submitted. How exactly the schedule went off track is unclear. We do know that no houses were built until 2013.

The project goes off track

It seems that financing was a major issue. In its final reports in December 2014 and March 2017, the Village explained that:

• 10 people received their homes that were built through sweat equity
• Partnered with a financial advisor who helped community members obtain financial information to budget and build better credit . . . [and]
• Built more capacity through wage subsidy and apprenticeships (also a challenge)

The Village outlined several challenges posed by the project:

• Finding qualified homeowners who could obtain a mortgage financially . . .
• . . . the community could not grasp the fact of a community based housing project of this stature at the time of construction
• The community has a lot more low-moderate income families who pay rent but need subsidy to obtain a mortgage . . .
• Most low income families could only afford to pay rent, they could not afford to make a mortgage payment
• Suppliers & trades contractors in the North is a challenge and changes the time frames of the building seasons . . .

From anecdotal accounts, there was little in the way of “sweat equity” involved in the building of these houses. The “wage subsidy and apprenticeships” provided tended to be Pinehouse Business North (PBN) employees and trainees building the houses while on PBN’s payroll. Other construction companies were not engaged in the project because the agreement was between Sask Housing and PBN/the Village. Other potential contractors do not seem to have been considered.

In the final analysis the Village had to acknowledge that Sask Housing’s SAF guidelines were a poor fit for the Pinehouse demographic. Yet, there seem to have been little communication with Sask Housing/Social Services during the term of the project. No reporting was done (even though it was required) after June 2012. The project languished until sometime in 2013 when a novel approach was adopted.  Although never approved by Village council, a series of interest-free mortgages was issued by the Northern Village of Pinehouse.

Illegal mortgages

On July 30, 2013, the first of ten interest-free mortgages of $26,000 was signed by one of the participants in the SAF “Transitional Housing Initiative.” This was perhaps to assist participants to make their initial down payments. Such mortgages contravene the Northern Municipalities Act, Section 204(1), but this detail seems to have escaped everybody’s notice. All mortgages were executed in the Kirkby Law Office in Prince Albert. No official of the Village signed the mortgages, and when this author requested copies, the Village administrator initially did not have them on file in the Village office.

And who were the participants in the SAF housing program, and beneficiaries of the interest-free mortgages? The answer to that is quite surprising. No fewer than five (half) of the recipients were directly related or had a close business affiliation with Mayor Mike Natomagan. These included:

  • Glen and Verna McCallum (September 2013). Now president of Metis Nation – Saskatchewan (MNS), Glen was at the time an employee of the village and regional director of MNS. Mayor Mike Natomagan was president of Kineepik Metis Local and a collaborator in a number of MNS-related projects at the time.
  • Martine Smith (October 2013). Martine was the Village administrator and is the step-daughter of the mayor.
  • Jeremy Natomagan and Julia Lariviere (July 2014). Jeremy is the mayor’s son, and Julia is a Village employee.
  • Rosalena Smith (August 2014). Rosalena, principal of Minahik Waskahigan public school in Pinehouse, is the mayor’s common-law wife. In her mortgage, she swears that she has no spouse, but in fact she had already been living with Mike Natomagan for several years.
  • Emile and Sophie McCallum (October 2014). Emile is the mayor’s half-brother.

There has never been a satisfactory explanation as to how approval for SAF participation and the Village mortgages happened. Several of the participants already owned homes when they were approved for the housing project, so there was no demonstrated need under the terms of the Summit Action Fund.

It would appear that the decisions were being made in the mayor’s office since the informal housing committee did not meet after May 2012, and Village council minutes do not record any discussion there. Given the blatant conflicts of interest at play, one has to question the mayor’s involvement at all.

Excuses are made

In their final reports for the project, the Village provided some unique perspectives on how the Summit Action Fund “Transitional Housing Initiative” unfolded over the three years it was in operation. The reports claimed that in fact the initiative was responsible for 12-13 houses being built. Presumably as the participants paid back their loans over time, that created sufficient funds to build the two or three additional houses. But as the reports indicate,

While the original objective of getting low income individuals into home ownership was not achieved 12 [blanked out] families did obtain new homes, and as we all know, home ownership in a community is key to building a healthy, sustainable community.

The reports also suggest,

Subject to additional research and analysis, it does not appear that it is realistic that low income families will be able to afford to live in newly constructed houses. The cost is simply prohibitive.

Alternatively, models such as rent to own, could be researched to determine if this would make it financially feasible for low income earners to own a newly constructed house.

No follow-up, no accountability

There was no public follow-up as to how the Northern Village of Pinehouse found it impossible to provide affordable housing to low- to moderate-income families. Instead, we saw the $500,000 of public money diverted to sometimes quite prosperous families whose ability to purchase homes was never in doubt.  That provincial funding was then supplemented with highly questionable loans to the participants with nobody monitoring or noticing the illegalities.

Obviously it did not occur to Minister Harpauer, the day they cut the ribbon to Rosalena Smith’s house, that somehow the lavish residence into which she stepped and enjoyed tea and hors-d’oeuvres did not fit the criteria for the program she represented. She no doubt smiled broadly and offered effusive praise, but the accountability was totally lacking.  Personal friendship has a way of putting the blinders on.

D’Arcy Hande (15 Sept 2019)