Toronto

City to review why it's paying $9.7M to rent building from parents of WE Charity founders

As questions swirl about the WE Charity's links to federal political leaders, Toronto city council has voted to look at how staff decided to lease a Cabbagetown building from the parents of Craig and Marc Kielburger, the beleaguered organization's founders.

Lease agreement with the Kielburgers doesn't make sense, Cabbagetown residents say

The City of Toronto rented 233 Carlton St. for nearly $10 million over the course of 10 years. The amount includes nearly $4 million in renovations paid for by the city. ( Keith Whelan/CBC)

As questions swirl about the WE Charity's links to federal political leaders, Toronto city council has voted to look at how staff decided to lease a Cabbagetown building for nearly $10 million from the parents of the charity's founders, Craig and Marc Kielburger.

Coun. Kristyn Wong-Tam, whose ward includes the building, moved the motion this week, saying the city needs to deliver a full explanation about how the deal was worked out for the building at 233 Carlton St., just west of Parliament Street.

"When the WE scandal blew up," said Wong-Tam, "community members started to raise the concern about how much the city was involved with the WE charity and the Kielburger family, especially as it pertains to 233 Carlton." 

Wong-Tam was referring to the controversy surrounding Prime Minister Justin Trudeau's Liberal government and the WE Charity. It all stems from a contract with WE to administer a $900-million federal summer student grant program. WE backed out of the deal amid conflict of interest allegations.against Trudeau and Finance Minister Bill Morneau, both of whom have family ties to the charity.  

Review to consider if city overpaid 

The city's review is set to include how staff came to know about 233 Carlton St., who from the WE organization communicated with staff to determine the financial terms of the lease, and if the agreed upon amount is in line with the current market value. 

The building is owned by 1622774 Ontario Ltd., which is listed as belonging to Fred and Theresa Kielburger. The City of Toronto got possession of the rental property at the beginning of 2020. The nearly 13,000-square-foot space is set to become the new home for the Adelaide Resource Centre for Women, a 24-hour drop-in centre. 

The review will look at how the lease agreement was handled and whether other rental units were considered to house the centre. 

A breakdown of the lease shows the city will be paying $6 million in rental fees, along with $3.7 million in additional renovations to the building. (CBC)

According to the lease, the city is paying nearly $10 million over a 10-year period, including $3.7 million in renovations, an amount many residents in the neighbourhood feel is extremely high.

Carmine Coccimiglio, who lives in the area and owns commercial properties, says the Kielburgers are getting about $4 million dollars in free upgrades to the building. 

"That's our taxpayer dollars," said Coccimiglio. "Tenants do not put in that amount of money" to renovate a building, he added. 

Property sat on the market for months

He also wonders why the city didn't negotiate a better price when the three-storey unit sat on the rental market for several months before the city scooped it up. 

"The owners had to take it off the market because it sat there for so long," said Coccimiglio. 

According to the rental listings, 233 Carlton St. was on the market from December 2018 to March 2019, and the price is listed at $26 per square foot.

Marc Kielburger, left, and Craig Kielburger, right, are pictured on CPAC as they appear as witnesses via videoconference during a House of Commons finance committee in Ottawa on Tuesday, July 28, 2020. The committee is looking into Government Spending, WE Charity and the Canada Student Service Grant. (Sean Kilpatrick/The Canadian Press)

CBC Toronto is unable to confirm the correct rental listing amount. After the listing was taken down at the end of March 2019, the city signed a lease in July 2019. 

The copy of the lease agreement that CBC Toronto obtained lists Wong-Tam as the councillor consulted about the rental agreement, however Wong-Tam says that's an error that has now been corrected. 

Never approved the rental, Wong-Tam says

"I was not given any option to approve or disapprove; I was just advised that this was going to happen," said Wong-Tam. 

Another concern, Cococimiglio says, is that the community feels as though it was blindsided by the deal and not informed that a drop-in centre would be moving into that space. 

Wong-Tam admits that the community wasn't given advance notice about what the space would become.

Staff was handling the lease agreement and was allowed to sign off on it, though Wong-Tam says the expectation was that the community would be contacted. 

About the Author

Natalie Nanowski

Reporter, CBC Toronto

Natalie is a storyteller who spent the last few years in Montreal covering everything from politics to corruption and student protests. Now that she’s back in her hometown of Toronto, she is eagerly rediscovering what makes this city tick, and has a personal interest in real estate and investigative journalism. When she’s not reporting you can find her at a yoga studio or exploring Queen St. Contact Natalie: natalie.nanowski@cbc.ca

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