City releases investigation findings on mistaken $1.5 million DCL waiver for Onni

SadhuJohnston, CoV photo, web, Mar-2016

Sadhu Johnston, City Manager

This is part of a developing story. The City of Vancouver has released its official report about a waiver of $1.5 million in development cost levies (DCLs) which should have never been granted to Onni Developments.

 

The City Manager (Sadhu Johnston) deserves kudos for facing this issue, acting promptly, and making the result public quickly. The timing of this report is important, as there are two motions for City Council next Tuesday (see agenda) calling for an investigation. At the same meeting, City Council is to approve the 2017 city budget, with tax increases. Taxpayers will want to know that developers have all been charged the proper fees and levies.

Further below we provide the text of the City’s official statement plus the seven-page report by the City’s Chief Risk Officer.

For background, see our previous post, which includes media links and background (Councillor Carr to ask City Council to investigate in context of “mysterious” $1.5 million DCL waiver for developer, 6-Dec-2016).

To be quick here are tweets by investigative reporter Tanya Beja (Global News) who broke the original story, showing her tweeted responses to the report. A crucial point is that the person who wrongly granted the $1.5 million waiver was not interviewed for this review. Public trust is based on trust and verify. Perhaps further investigation is needed to verify that all is proper. Note also that the review of 29 projects that received waivers under the rental construction incentive program is to be completed in January 2017.

 

Download “Review of DCL Waiver Issue for the Charleson Project,” by Robert Bartlett, Chief Risk Officer, City of Vancouver: cov-dcl-wavier-report-chief-risk-officer-8-dec-2016

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Information Bulletin by City of Vancouver, 9-Dec-2016 (bold is by CityHallWatch)

City releases its findings on DCL Waiver issue

The City of Vancouver has completed its review of the Development Cost Levy (DCL) Waiver issue for the Charleson Project located at 1396/1398 Richards Street and is releasing those findings including recommendations to ensure this does not happen again.

The DCL Waiver is authorized by the Vancouver Charter, and is detailed in the City’s DCL By-laws. The DCL Waiver provides a financial incentive to developers that produce for-profit affordable rental housing. Rental housing is critical to Vancouver’s social diversity and economic health. Vacancy rates are critically low. Through STIR and Rental 100 initiatives, the City has demonstrated significant recent success in stimulating the supply of new rental housing. Since 2009, the City has approved over 5,000 units of market rental housing, with over 3,000 units completed or under construction.

The City was made aware that it had wrongfully approved a DCL waiver for a project that did not qualify. The City’s Chief Risk Officer conducted an interim investigation to review this particular transaction to determine the cause of the error. This process included reviewing the file, the correspondence, and interviewing approximately 10 people that have been involved in the file. [CHW: “Approximately”?]

The key objective of this investigation was to assess the process that resulted in the DCL Waiver being granted to Charleson Project and to determine if there is a risk that another unqualified project would be granted the DCL Waiver. This investigation found that City staff approved the DCL Waiver for the Charleson Project in error. The Planning Department conducted an initial assessment of the other DCL Waivers granted in the program. They found that there was no evidence of fraudulent activity and this error is an isolated incident. Several factors contributed to the error. These factors include; a transition to new rules, a lack of appropriate oversight and a need to improve documentation.

The Chief Risk Officer has made recommendations on how DCL waivers are processed, approved and what staff are accountable for the entire process. Those recommendations can be viewed in the attached report.

The City is also conducting an internal audit of past DCL waiver projects. The audit will be completed by January 2017. The objective of this audit is to ensure that all 29 DCL waivers issued since 2009 are accurate, in compliance with applicable policies, and appropriately authorized.

An external audit peer review will be conducted by KPMG on the City’s audit plan and report.

The City of Vancouver received re-payment from Onni on December 2, 2016 for the amount of $1,558,753.33.

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