This article is a detailed follow-up to two previous articles about seriously deficient record keeping by the City of Vancouver’s Real Estate Services department. Big bucks are involved, and the implications are significant. See bottom of this article for background/links to previous coverage.
**********
City Manager Paul Mochrie, in a September 26th 2023 email, committed to sending a “substantive response” after he had followed up with his team regarding the Real Estate department’s lack of any records whatsoever related to its very important spreadsheet of False Creek South development statistics, and its related $100,000 contract with Coriolis Consulting. After over 6 months, Mochrie has not sent that “substantive response” yet and it seems doubtful that he actually intends to do so, given his total lack of response to a follow-up enquiry of December 15th 2023. This is especially surprising since the Real Estate department is managed out of Mochrie’s own office, reporting directly to Deputy City Manager Armin Amrolia.
Nor has any member of Council responded, although they were all copied on the original complaint and follow-up.
The Mysterious Spreadsheet
Real Estate Services cannot locate any records at all related to its spreadsheet “FCS – Parcel Info Summary sheet.xlsx”. This is a table of statistics for False Creek South (FCS) leasehold properties, which is unattributed and undated. City staff apparently have no idea of the origin of the floor areas in this spreadsheet. And yet these floor areas were used in 2022 as the basis for the calculation of lease extension prices totaling $110 million for False Creek South leaseholders.
The net floor areas (“Residential Units” column) for some of the stratas are incorrect, apparently including balcony and patio areas which should be excluded, and are not included in the floor areas for the other stratas. The spreadsheet also includes purported “Common Areas” for all the stratas which include apartments. These are all fictious floor area figures. Regardless of the proportion of apartments vs townhouses and the actual common floor area in a strata, these figures are simply 15% of the net area of the strata – but this is not disclosed. These were added to the “Residential Units” column to produce the “Total Residential” column. These were therefore also fictious floor areas, but City staff initially made an aggressive but unsuccessful attempt to use them (contrary to previous understanding) to calculate land values and lease extension prices.
Another strange aspect of the spreadsheet is that it merges together the statistics of two of the stratas although they are in separate buildings on separate airspace parcels. Coincidentally or not, these two stratas have the largest floor area error – 7% higher than the floor areas ascertained by appraisers for the City as well as independently by the appraiser for the leaseholders, and by BC Assessment. Combining the floor areas obscured the errors when compared.
Responses to FOI Requests
In response to FOI requests for the source of the spreadsheet, the City replied that the spreadsheet had been prepared for the Real Estate department by Coriolis Consulting, but that Real Estate Services could find no records whatsoever related to the contract that produced the spreadsheet (i.e. no RFP, no contract, no purchase order, no other work product, no invoices, etc). Finally, after the author had submitted 4 different FOI requests, paid fees twice, and waited 12 months, the Finance department was able to provide invoices showing that Real Estate Services had paid $100,560.81 from 2015 to 2018 for Coriolis’s work on False Creek South.
In response to the City’s assertion that Coriolis had produced the spreadsheet, Coriolis stated that the data in the spreadsheet (including the incorrect floor areas) had been given to them by the City. An investigation by the Planning Institute of British Columbia (PIBC) confirmed that the data had originated from the City.
Impact of Floor Area Mistakes
Compared to using the net floor areas determined by appraisers for both the City and leaseholders (which are in agreement), the use of the City spreadsheet’s net floor areas resulted in lease extension overcharges totaling approximately $1.97 million (averaging $12,000 for each unit in the two most affected stratas). Real Estate staff had made the same mistake regarding floor areas in the 1990s and eventually corrected it, providing refunds with interest to leaseholders who had overpaid (see Vancouver Sun article).
This time, however, City staff have said that no corrections to the lease prices will be made. Their stated position is: “as set out in the MOU [Memorandum of Understanding Strata Leaseholders Society – City of Vancouver], the aggregate land value forms the basis of the ground rent payment. With this approach, the inclusion or exclusion of certain buildings elements is not material.”
That ignores the fact that the aggregate land values were in fact calculated by multiplying the City’s strata floor areas by negotiated land values per buildable sq. ft., and that this calculation for each strata was shown in the negotiated draft versions of the MOU. The City, however, demanded that the calculation including the floor areas be deleted from the final MOU, or staff would not submit the MOU to Council for approval. “This was done intentionally to avoid disagreements over building floor areas” according to an email from City staff to a journalist. In other words, City staff required deletion of the floor areas from the MOU at the last moment, in order that they could argue against the correction of any floor areas, land values, and lease extension prices, if and when floor area errors were documented in the future. This approach was not consistent with the duty of good faith that the City owes to its leaseholders.
Accountability
There is a desperate need for accountability. It seems inconceivable that a professional City department would not retain any documents at all regarding a significant consulting contract worth over $100,000. And that they would rely on floor areas of unknown provenance for their leasehold lands in False Creek South in preference to the floor areas documented by appraisers they had hired (especially in light of the department’s admitted history of floor area errors).
It is also surprising that Real Estate staff (who have recommended numerous sales of City land to developers at below-market prices – $100 million less in the case of Westbank’s Vancouver House site) so adamantly refuse to correct approximately $2 million in overcharges to False Creek South leaseholders.
It is clearly high time for the City Manager or City Council to deal with the overcharges, unacceptable record-keeping, and use of incorrect statistics by City Real Estate Services (as well as its use of questionable appraisals to recommend below-market land sales to developers). The Director Real Estate Services at present, and at the time of the Coriolis contract and the use of incorrect floor areas, is Jerry Evans, who reports directly to Deputy City Manager Armin Amrolia.
Robert Renger
April 2024
Earlier articles about deficient record-keeping by Real Estate Services:
Earlier articles about below-market land sales to developers based on questionable appraisals:
Article on a 2016 City land sale with 84% of payment deferred interest-free for many years, resulting in still-delayed development of social housing on the site (Little Mountain land sale model).
CityHallWatch: Tools to engage in Vancouver city decisions 
city record keeping in many areas is in a serious disarray. another example is buildings leased to non-profits – there is no up-to-date and reliable list. very little data exists on what facilities the city owns, never mind the size of the properties. copies of leases do not exist (who signed them, when do they expire). the city has failed to spend money on systems to effectively manage its real estate holdings.