Councillor Carr to ask City Council to investigate in context of “mysterious” $1.5 million DCL waiver for developer

vancouver-greens-adriane-carr-photo-6-dec-2016The Green Party of Vancouver has issued a media advisory today saying that Councillor Adriane Carr has submitted a motion for the Vancouver City Council meeting of December 13, 2016 on the topic of the “mysterious” waiver of a Development Cost Levy (DCL) at 1396/1398 Richards Street.

The story was first exposed by Global TV journalist Tanya Beja on November 30 (City of Vancouver says it mistakenly gave $1.5M break to real estate developer, with video), and has since been covered by other media. In brief, Onni (a major developer in Vancouver and North America) received a waiver of $1.5 million dollars in DCLs it should have paid for approval to build the 43-storey Charleson building at the corner of Richards Street and Pacific Avenue in Vancouver. The firm did not officially request the waiver, and should not have received it.

According to Global TV, “The Charleson,” a mixed condo and rental project in downtown Vancouver, has been subsidized by taxpayers without their knowledge or city council’s consent. “The city’s Rental 100 policy offers builders waivers on their construction levies, known as DCLs, if their residential project is entirely rental. Onni’s project included strata condos, so it didn’t qualify.”

Multiple staffers had to sign off on the deal before the waiver was granted. City manager Sadhu Johnston was quoted saying the City will “look back at all the emails, the forms, the communications to understand where that slip-up may have happened.” Johnston also said the City will be reviewing all 30 projects that have gone through the waiver program (under Rental 100, an incentive program to build market-priced rentals).

If there were 30 mistakes at $1.5 million each, the shortfall in city coffers could be $45 million. City Council will hold a Special City Council meeting on the 2017 Capital and Operating Budget, starting 9:30 am on Wednesday, December 7, with live web video. Councillor Carr’s motion is for December 13, but taxpayers should hope that this topic of DCL waivers will come up in the meeting.

We note that prominent developers  can be involved in numerous major projects every year with each municipality, and the relationships can exist for decades (outlasting civic political regimes and city staff careers), so each city decision needs to be seen in the context of a much deeper, longer relationship.

Below we provide related media links, plus the actual text of Councillor Carr’s motion calling for an explanation of the discrepancy in addresses associated with the development approval versus DCL waiver and “which City staff, through what legal means, have discretionary authority to over-ride a Council decision on the matter of a DCL waiver.”

MOTION ON NOTICE FOR DECEMBER 13, 2016
(
Source: Green Party of Vancouver media advisory)

Investigating DCL Waivers

MOVER: Councillor Adriane Carr

WHEREAS:

  1. City Council’s approval of the rezoning application for 1396 Richards Street at the Public Hearing of June 18, 2013, based on the Policy Report of May 6, 2016 presented to Council on May 15, 2013, required the payment of a Development Cost Levy (DCL) of $4,550,319 (Appendix G page 1 Public Benefits Summary), with no consideration of waiver of this DCL;
  2. The 2015 Annual Report on Development Cost Levies of May 20, 2016, presented to Council on May 31, 2016 notes in Appendix F page 3 a 2014 DCL waiver of $1,558,753 for 1398 Richards, an address for which there was no specific staff Policy Report or Public Hearing or Council decision, although the address is geographically located on the same site as the rezoning application for 1396 Richards Street;
  3. In an email to Council dated November 30, 2016, the City Manager stated that Onni Group, the developer for this site, agreed to pay the city the DCL, and staff are reviewing how this project received the DCL waiver and reviewing each of the 30 projects that have received DCL waivers since 2009 to ensure this didn’t happen with other projects.

THEREFORE BE IT RESOLVED THAT Council direct staff to include in its public report to Council on 1396/1398 Richards and the 30 projects that have received DCL waivers since 2009:

  1. How the address of 1398 Richards came to be used in the 2015 Annual Report on Development Cost Levies, as opposed to the address of 1396 Richards which was the address for the rezoning application and Public Hearing.
  2. Whether there are any other address changes relevant to DCL waivers.
  3. Whether the City provides discretionary authority to any City Staff to overturn a Council decision regarding payment vs. waivers of DCLs and if so:
  • Which City staff have this discretionary authority.
  • Since when.
  • Under what legal authority.
  • Under what specific circumstances or with what limits, if any.

********************

MEDIA COVERAGE

Vancouver hires external auditor to determine how developer got $1.5-million break (by Tanya Beja, Global News, 6-Dec-2016)
http://globalnews.ca/news/3111092/vancouver-hires-external-auditor-to-determine-how-developer-got-1-5-million-break/

City of Vancouver says it mistakenly gave $1.5M break to real estate developer (Global TV journalist Tanya Beja, Global News, 30-Nov-2016, with video)
http://globalnews.ca/news/3099233/exclusive-city-of-vancouver-says-it-mistakenly-gave-1-5m-tax-break-to-real-estate-developer/

City launches probe into $1.5M break to real estate developer: ‘It was a serious mistake,’ says city manager (by Jane Armstrong, CBC News, 1-Dec-2016). Article provides significant detail about the DCL waivers.
Vancouver condo development improperly given $1.5-million break (Simon Little, News Talk 980 CKNW, 30-Nov-2016)
http://www.cknw.com/2016/11/30/vancouver-condo-development-improperly-given-1-5-million-city-subsidy/
Here is another example of a separate major project by Onni in collaboration with the City of Vancouver.
Developer Onni to pay for new Canada Line station in Vancouver: Privately funded transit stop to be built at Cambie Street and 57th Avenue (CBC News, 30-Mar-2016)
Excerpt: “The area will be significantly transformed as a result of investments that flow from this,” said [Vancouver City Councillor Geoff] Meggs Wednesday. Onni will develop a parcel of land about 10 hectares in size, currently the site of the Pearson Centre, a residential care facility, and the Dogwood Lodge, a seniors complex. Vancouver Coastal Health currently owns part of the land, and operates the two facilities. The 10-year plan for the site includes a number of residential condo towers up to 28 floors in height, which will include a mix of market and rental housing. It also includes a new YMCA facility, a 69-space childcare centre, a new residential care home, a community health centre and a park.
***************
SELECTED UPDATES
Global reporter Tanya Beja tweeted on December 6 that “KPMG now doing external audit of @CityofVancouver to determine how Onni granted $1.5 million waiver.”

Global reporter Tanya Beja tweeted on December that “Onni repaying @CityofVancouver today for missing $1.55 million, following construction levy waiver granted in error.”

***************

Onni Group (https://www.onni.com/)
Offices in Vancouver, Chicago, Seattle, Phoenix, Toronto, Los Angeles, and Mexico
In Vancouver, offices at 550 Robson Street.

This is a privately held company, and virtually no corporate information is available to the public. However, Bloomberg currently lists the key executives for the Onni Group of Companies Ltd. as follows:

  • Mr. Rossano De Cotiis. Principal.
  • Mr. Morris De Cotiis. Principal.
  • Mr. Chris Evans. Executive Vice President.
  • Mr. Beau Jarvis. Vice President of Development.
  • Mr. Michael MacKay. Development Manager.

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