SE Benefits - Establishment of multiple rates for private accommodation

There are 2 issues related to topic "SE Benefits - Establishment of multiple rates for private accommodation".

Topic

SE Benefits - Establishment of multiple rates for private accommodation

Case numbers

• 2008-058 (F&R Date: 2009–07–31)
• 2009-011 (F&R Date: 2009–07–24)

Description

The Board found that the SE and IR policies are not reconcilable since the SE benefit is governed by a TB regulation, while IR requirements are provided under a CANFORGEN. In terms of approval authorities, the IR policy gives the career manager the authority to approve IR status, while DCBA controls the payment of the SE, the benefit which flows from the IR designation. The Board has expressed the view that since both the IR status and SE benefits are so interrelated, there should only be one authority to approve them both. In a number of cases reviewed by the Board so far, the career manager has authorized an IR only to have DCBA revoke the SE in arrears. In some cases this caused significant amounts of money to be recovered. As well, CF members have been left with extra living and/or transportation expenses that they might not have incurred had the IR been properly authorized or denied in the first place.

Recommendation

The Board recommended that the CDS direct an IR policy review and representations be made to the TB if necessary in order to clearly address IR status and SE entitlements or ineligibilities through proper regulations. The Board further recommend that, in the interim, clear direction be issued to the IR approval authority regarding the circumstances under which IR may be approved so as to avoid the regrettable situation of having one authority approve a benefit while another cancels it.

Final Authority Decision

The Board has received the Final Authority decision on the 2009-011 case, in which the CDS did not specifically address, nor mention, the Board's systemic recommendation with respect to the administration of imposed restriction (IR) and separation expense (SE). However, the CDS noted that DCBA was currently conducting a review of the domestic IR policy including the possible application of the policy to out-of-country scenarios.

The CDS was of the opinion that the Board's conclusions and recommendation were derived from inaccurate facts in that Les Cèdres, where the grievor moved at his own expenses, is located outside the designated geographical area of Montreal. Therefore, when the grievor was posted from St-Hubert to St-Jean, he was not entitled to a relocation at public expense, nor to IR and SE benefits. Since the CDS concluded that the grievor has no entitlement to IR/SE, it could explain why he did not address the Board's systemic recommendations on this issue. 

Topic

SE Benefits - Establishment of multiple rates for private accommodation

Case number

• 2014-094 (F&R Date: 2014–10–31)

Description

The Committee noted that a single Separation Expense (SE) rate was used for private accommodation regardless of where a Canadian Armed Forces (CAF) member is posted while both commercial and non-commercial SE rates significantly fluctuated depending on the market conditions of each geographical location.

The Committee found that allocating a single rate for all locations for private accommodation was not compatible with the definitions found in Compensation and Benefits Instruction (CBI) 208.997(2) for “private accommodation” and “fair market value”. In addition, upon reviewing bachelor and one bedroom apartment rental rates across Canada, the Committee found that the fair market value of a private accommodation should fluctuate from one location to another.

The Committee explained that allocating a flat and universal rate for private accommodations:

•    financially advantaged those who lived in a location where the money allocated by the CAF is superior to the fair market value of their private accommodations; and

•    financially disadvantaged those who lived in a location where the money allocated by the CAF is inferior to the fair market value of their private accommodations.

The Committee found that multiple rates for private accommodations should be established to account for the fair market value of each geographical locations.

The Committee noted that in accordance with Compensation and Benefits Instruction CBI 208.997(8), a single rate was used to reimburse Separation Expense SE for private accommodation regardless of where a CAF member is posted.  CBI 208.997(8) limits the amount of the SE benefit for private accommodations to the amount of the monthly rate approved for a single quarter Type H1, rated “very good”.  Both commercial and non-commercial rates are based on the market conditions in the geographical location.  These rates fluctuate significantly between $1,090 and $2,250 and are specified in the Table to CBI 208.997.  This is normal and expected in an open and unrestricted market however, allocating a single rate for private accommodation is not compliant with the following definitions found in CBI 208.997(2):

“private accommodation” means an accommodation rented by a member at fair market value and located within a larger residential property.

“fair market value” means the highest rent – in an open and unrestricted market – of accommodation or furniture agreed to by two persons who are knowledgeable, informed, prudent and acting independently of each other.
 
The Committee found that it was reasonable to expect that like other types of accommodations, the rates for private accommodation would fluctuate depending on the geographical location.  To validate this, information was obtained from the available reports on the Canada Mortgage and Housing Corporation website.  Although the information obtained does not contain specific data representative of private accommodation, it does demonstrate a significant market fluctuation between various locations across Canada for private bachelor and one-bedroom apartments.  For a private bachelor apartment, the monthly rent ranged from $322 to $1,043 and for a one-bedroom apartment, the monthly rent ranged from $505 to $1,344.  Therefore, it can reasonably be asserted that the fair market value of a private accommodation would also fluctuate from one location to another. 
 
In order to align the amount of the SE benefit for private accommodations with the fair market value described in CBI 208.997(2), the rate would need to be adjusted relevant to the geographical location.  While the Committee has found nothing in the regulations that would preclude the establishment of multiple rates for single quarters, Type H1, rated “very good”, creating these multiple rates would have a negative financial impact on the CAF members who reside in those types of single quarters.  Those CAF members would be charged for their single quarter based on the fair market value relative to their geographical location and they would not be entitled to receive the associated benefit for Post-Living Differential Allowance as outlined in CBI 205.45.  In the Committee’s view and in light of the definition of private accommodation, it would be reasonable to create an additional column to account for private accommodations in the Table to CBI 208.997 instead of referring to a rate that is used for another purpose (specifically a charge for single quarters).

It is the Committee’s opinion that allocating a flat and universal rate for private accommodations would do two things, neither of which is reasonable or acceptable:

- Financially advantage those who live in a location where the money allocated by the CAF is superior to the fair market value of their private accommodations.

 - Financially disadvantage those who live in a location where the money allocated by the CAF is inferior to the fair market value of their private accommodation.

Recommendation

The Committee recommended the establishment of multiple rates for private accommodation in different locations in order that CAF members receiving SE benefits will be neither financially advantaged, nor disadvantaged, by the varying costs of housing in different locations.  These rates should be added to the existing table to CBI 208.997 under the heading private accommodation.

Final Authority Decision

The CDS was of the view that the Committee did not present specific information regarding the average cost of "private accommodation" across Canada, and therefore he was not prepare to make any judgment regarding whether or not some CAF members are disadvantaged by the current rate. He forwarded the Committee’s report to CMP for any action he may deem necessary in this regard.