A report from the City of Vancouver's chief risk officer says a $1.5 million discount on construction fees to Onni Group for its Charleson Project was made in error and the company has repaid the amount to the city.

The developer received the development cost levy (DCL) under the city's Rental 100 plan, which allows developers to obtain waivers on construction fees when they build rental apartments.

The 43-storey tower is located at the corner of Richards Street and Pacific Avenue and contains a mix of condos and market rental units but under city rules, to qualify for a waiver, the development must be 100 per cent rental units.

'No evidence of fraudulent activity'

The DCL Onni received was found by lawyer Nathalie Baker while doing research on the city's Rental 100 plan. She spotted Onni's waiver and was curious because she wasn't aware of a big rental building in the Yaletown area.

She found the rezoning application for the project, which did not request a waiver, noting the building was a mix of condos and market rental units.

Now the city says its investigation found that city staff approved the DCL waiver for the Charleson Project in error.

"Our Planning Department conducted an initial assessment of the other DCL waivers granted in the program," wrote the city on its web site."They found that there was no evidence of fraudulent activity and this error is an isolated incident."

Several factors contributed to the error, including:

  • Transition to new rules.
  • Lack of appropriate oversight.
  • Need to improve documentation.

The planning department says in the report that the DCL waivers for another 29 projects were properly administered but the process for evaluating and approving them, "needs improvement and is not properly documented."

Internal audit promised

DCLs are charged to developers to offset the costs that a development places on public infrastructure, such as roads, parks and day-care centres.

The waivers were designed to encourage developers to build more affordable rental units.

A further internal audit will also be conducted including past DCL waivers, which the city says 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," said the city.

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

Last May, a 1,000 square foot condo in the Charleson sold for $1.3 million.