British Columbia

City launches probe into $1.5M break to real estate developer

The city of Vancouver has launched a probe into why a developer received a $1.5 million discount on construction fees even though it didn't qualify for the break.

'It was a serious mistake,' says city manager

The city of Vancouver has admitted that it gave a $1.5M discount to developer Onni when it built a 42-storey condo and rental unit at the corner of Richards Street and Pacific Avenue. (Darryl Dyck/Canadian Press)

The City of Vancouver has launched a probe into why a developer received a $1.5-million discount on construction fees even though it didn't qualify for the break.

City manager Sadhu Johnston said the city made a mistake and has launched an audit to find out how Onni, the developer, received the deep discount under the city's Rental 100 plan.

That plan allows developers to obtain waivers on their construction fees when they build much-needed rental apartments.

The 43-storey tower, called the Charleson, is located at the corner of Richards Street and Pacific Avenue. It 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.

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

"It looks like we made a mistake," Johnston said, adding he contacted Onni to inform the company of the error.

Development cost levies, or 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.

City records show that Onni owed the city $4.5 million in development fees when it built the Charleson.

With the waiver, it paid just $3 million, Johnston said.

He said city auditors will also take a second look at the roughly 30 other developments that received discounts under the same program.

Developer doesn't admit receiving discount

"As far as I know this has never happened before," Johnston said. "It's a very serious situation. We really need to understand how it happened and make sure it didn't happen in any other instance and make sure it doesn't happen again."

However, the developer has not agreed that a mistake was made. Johnston said he called Onni Wednesday, but the developer denied receiving a discount on the residential tower.

The City of Vancouver says a review from its planning department found that a $1.5M discount was given to developer Onni in error when it built a 42-storey condo and rental unit at the corner of Richards Street and Pacific Avenue. The report also says that there is no evidence of fraudulent activity in the waiver. (Onni)

No one at Onni was available for an interview Thursday. In a written statement, the company did not admit that it received a discount.

"This matter regarding the DCL payment has recently been brought to our attention and we are currently considering it," the statement said.

"Should there be an error we will rectify immediately." 

The $1.5-million waiver granted to Onni was the second biggest waiver granted by the city, according to a 2015 city report on DCLs.

Lawyer spots error

Lawyer Nathalie Baker was poring through that report 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.

Baker said she now wonders if other residential properties unfairly received waivers.

"The public needs to know what happened here."

NPA Councillor George Affleck said he's drafting a motion calling for a third-party audit of the DCL waivers.

'If there was any inappropriate behaviour either by staff or political interference, it should be brought to the light of day," Affleck said.

Comments

To encourage thoughtful and respectful conversations, first and last names will appear with each submission to CBC/Radio-Canada's online communities (except in children and youth-oriented communities). Pseudonyms will no longer be permitted.

By submitting a comment, you accept that CBC has the right to reproduce and publish that comment in whole or in part, in any manner CBC chooses. Please note that CBC does not endorse the opinions expressed in comments. Comments on this story are moderated according to our Submission Guidelines. Comments are welcome while open. We reserve the right to close comments at any time.