Abandonment of City motion to dismiss

After expending significant energy and legal cost, we are astonished to learn that the City has decided to abandon its motion to dismiss the lawsuit. Given the revelations of incompetence and wrong doing that have dribbled out in the press over many months, we are not surprised. But why? And why now? Has the City decided to go to trial? Or has the City decided to seek a negotiated settlement, something that CFBB has been encouraging it to do for the last two years so that this dark cloud can be lifted from the City, and the taxpayer spared the cost of additional legal exposure?

CFBB

Brampton Not Well Served

Jealousy, corruption, and unbridled power all played a part in the City Hall expansion project in Brampton. The story and its impact on the community and culture is a litany of missteps, incompetence, and self-aggrandizement which tantalizes budding authors and encourages investigation. Single articles morph into book chapters and into volumes of encyclopedic proportions in attempts to tell the story accurately and completely. It is a story that can serve as a primer on what to not emulate for future civic projects, and to ensure that public taxpayer funds are being appropriately and carefully spent initially and over time in long term commitments.

Site selection

The City determined that it needed to consolidate its present and future space requirements into a new building in downtown Brampton, and they chose an off-centre site that was owned by the City in what was referenced as the South-west Quadrant. Direct connection from the new building to the award winning City Hall required an overhead bridge over George Street, blocking one of the few meaningful downtown urban sightlines to Gage Park, an outstanding urban oasis in the heart of the City.

The present City Hall had been designed to allow expansion to the north with elevator shaft capacity and knock out panels in what was considered the obvious and best location in the Southwest Quadrant to maximize the City’s institutional presence. It would act as a major catalyst for future, mixed use development to the north, providing a direct connection to the major transportation hub at the downtown G0 station. That would have potentially involved some degree of expropriation of property to accomplish, but the impact on City building would have been immense. Rather, the expansion was built on an off-centre site, somewhat hidden from the town centre of the Four Corners and behind many sub-standard retail buildings on the south side of Queen Street.

The use of the City owned site on George Street represents an opportunity lost to use the dynamic of the City tenancy to reinvigorate the Four Corners, already improved with the addition of the Rose Theatre and Garden Square, and to share that reinvigoration with related private sector development enthusiasm.

The Call for Private Sector Proposals

Traditionally, proposal calls for civic projects involve invitations to the private sector to submit their ideas for development which would meet the City’s requirements and terms of engagement. Transparency is assured, and the public is able to see the suggestions before a final decision and reasons for so doing is reached by the selection committee and approved by Council.

For some unknown reason, the City chose to use a completely new process called “Competitive Dialogue” never before used in Canada for municipal projects. It invited submissions and allowed private conversations with the proponents to take place prior to selection and required total secrecy on those conversations for all time. The City under the Call had complete control after the submissions were received. A confidentiality agreement had to be signed with the submission and no proponent would ever know whether his/her ideas had been shared with other proponents. The lack of transparency in the process was extreme. The result of the Call was telling. Of the 40 or so requests for Proposal Call documents outlining the terms of the Call in a glossy brochure, only three (3) actual submissions were received on this potentially lucrative contract.

It was clear by this result and in conversations with those who had had preliminary interest, the “Competitive Dialogue” process was deeply flawed and unattractive.

Contract Award

Rather than recognize that the private sector had reacted indifferently and abandon the process, the City soldiered on. One proposal submitted by a local developer with significant experience and local credibility was disqualified, and a second submission was at best half-hearted when it was shown on display boards to the public. The City then awarded the contract for the first and rights to future phases to the only effective remaining proponent, even though that company and its personnel had limited office and commercial construction experience, and in the minds of many, should not have been a qualified proponent.

The Architect

The winning bid included plans drawn by an exceedingly well known and knowledgeable architect, but the exterior designs were not met with much public enthusiasm. To those who liked it, the presentation was bold and modern. To those who did not quickly named it “the bar code building”, somewhat out of place in the downtown Brampton context with no attempted relationship to the present City Hall and its surroundings.

The plans showed a building shoe-horned into an irregular site which was clearly too small for the proposed design. The site boundaries forced an inefficient floor plate in the upper floors, and a contorted circulation plan in the below grade parking garage which ended up requiring an additional floor excavation to accommodate the total car parking needs. Servicing the building had to share ingress and egress lanes for the parking. The building at grade has encroached on the sidewalk and resulted in the need to narrow the road width. In fact, the building overhang at the corner of George and Queen has been significantly damaged due to interference with truck turning at the corner.

The challenges and inefficiencies in the layout could have been largely removed had the City agreed to acquire a small site fronting on the south side of Queen – a property owned by the disqualified bidder that was offered at a reasonable purchase price and who recognized the advantages its acquisition would be to the overall project. But the City officials and Council did not see those advantages, perhaps because of some animosity to the owner. And perhaps even the developer contractor would have enjoyed the benefits of the acquisition. It would have allowed him to use tie backs in or excavate the entire property and obviate the need to use an expensive construction methodology to build the project and protect the adjacent property from collateral damage.

City Staff

Throughout the initialization of the construction contract and its oversight, staff assigned to the project seemed woefully lacking in knowledge of development and construction process and the need for appropriate controls and inspection regimen to ensure that what the contractor was building met the terms of agreement with the architect and the builder. It was evident, for instance, that there was no commitment to adhering to an established site plan at the beginning of the project. Rather, the site plan was considered to be an open document right through the construction period, with City officials prepared to make adjustments as and when needed. Why? Because the City did not have to adhere to the rules and regulations that would face the private sector in a similar situation! It is all too evident that planning ‘on the run’ can have undesirable consequences.

The Long term Agreement

There is no question that the development cost of this project exceeds significantly the cost opinions of professional consultants with commercial office construction experience. And had the Call process followed a more traditional route, competitive tenders subject to market forces would have proven the point.

Armed with a long term lease of the building by the City for virtually all the space, arranging financing of the project, both construction and long term at attractive interest rates, was a gift to the developer owner. But those advantages which should have reduced the overall development cost did not fall to the benefit of the City lowering the net leasing rates.

While we do not know the details of the agreement, the City does not appear to have negotiated ironclad and clear developer responsibilities to be financially penalized for missed deadlines and space delivery delays. In fact, it would appear that extensions were granted, and penalties forgiven, all without the knowledge and agreement of Council, even though the City has had to negotiate hold over leases for leased space that could not be vacated at the termination of those leases.

And, before the developer contractor had even finished the main construction work for the project (the City had the responsibility for space fit up), it sold its position to a third party for an unknown price without the acquiescence of Council, meaning that the City has a different landlord than was contemplated for the next twenty-five years.

Significant Outstanding Events

Even before, and certainly since the partial occupancy, the following significant events have occurred and issues arisen which continue to keep this ill-begotten project in the news.

  • The original proponent (Inzola Inc.) which was disqualified has sued the City for $28.5 M for alleged bias on contract award some 5 years ago. The suit has not been settled, but depositions have been taken and are now a matter of public record. The information being reported in the press is certainly showing a dark side of the former City Mayor and official staff which appears to show skullduggery, favouritism, and corruption. A trial date is awaited.
  • During fit up by the City, all lights in the building were left on throughout each night, indicating a tremendous wastage of power.
  • There was a major flood in the mechanical room for unknown reasons and which remains presently under investigation. Responsibility for it is still unresolved.
  • Inzola, the owner of the immediately adjacent property on Queen Street West, has filed a $1,500,000 lawsuit against the City for negligence and punitive damages for exposing his property to excessive snow load.
  • The residential neighbours at the rear of the project are suing the City for trespassing and breach of contract for $2,250,000.
  • A notice of a third suit against the City has been recorded and may be filed, by Dominus, the original successful bidder, for $20 M. It is alleging that under the agreement, the exercise of the option to acquire the site for Phase 2, even though paid clandestinely by the City on behalf of Dominus, triggered its right to develop Phase 2.
  • City staff have just requested Council to approve the availability of $230,000 cash, needed to immediately pay the cost of making changes to ground floor retail space to allow for a restaurant tenant. The costs include doing X-rays to locate plumbing and wiring buried in concrete walls, to prepare for kitchen exhaust ducts, and to install new access doors to Queen Street. Pre-planning by the architect and his consultants for this known tenant occupancy appears to have been missed, as do the drawings that outline mechanical and electrical locations and which should have been certified by the consultants.

 

Summary

There would appear to be some evidence now being exposed in the press through access to the public record of depositions that there were some untoward relationships, chance meetings and conversations between the Mayor and some of those at the helm of Dominus prior to the award of the contract. It seems possible that those contacts could have resulted in a bias against Inzola Inc. and particularly its President, a former Citizen of the Year in Brampton. Time will tell.

Overall, this sorry tale of corruption, incompetence, insufficient oversight by staff and Council, and a shocking lack of vision have been at the expense of the taxpayer. Good governance has gone missing, and the City`s reputation badly tarnished.

It would be an absolute shame if this debacle is not seen as a learning experience not only here, but across the country. It is essential that we do better, and rebuild trust in our democratic leadership and representatives.

Fortunately, the Mayor has requested that the Ontario Ombudsman, Paul Dube, review the entire project, from procurement, to oversight, to lease contract obligation, and to final occupancy. His report is awaited. But one things seems sure. Brampton has the opportunity to put new procurement policies and construction procedures in place that can serve as a role model for civic project development in Canada and beyond.    

 

Doug Bryden 

CFBB welcomes the announcement from CAO Harry Schlange that a significant restructuring of Brampton’s City Administration and concomitant personnel reduction will take place immediately. We have long believed and in fact, suggested that a change in culture was absolutely essential in order to improve operational performance and individual behaviour at the City.
We are hopeful that these changes, endorsed unanimously by Council, will have the positive impact intended to enable this fast and exciting City to reach its full potential to the benefit of all taxpayers, investors, residents and business entrepreneurs.
We wish to express our thanks to all those departing and hope that other each and every one will find other opportunities in the near future.

Chris Bejnar and Doug Bryden co-chairs

CFBB – September 7, 2016

CFBB is pleased to have the opportunity to comment upon the long awaited and recently released Rust-D’Eye Report. Given the fact that CFBB was formed initially three plus years ago due to what we considered a flawed RFP and contract award for the City Hall expansion, we have been following this project with more than a keen eye. We have made numerous submissions to Council and the media on various concerns throughout the process, and continue to do so today. We have submitted a more detailed summary to all Council members for your review.

Our Comments

1) We add our voice to the chorus of upraised shouts in the community and beyond saying that this report lacks credibility. It is largely based on a series of interviews and discussions with staff (some already departed) and consultants, all of whom were deeply involved in the development of the ‘Competitive Dialogue’ process and contract award through to the actual construction and partial occupancy of the City Hall expansion. With a lawsuit hanging over their collective heads, why would anyone admit to a flawed, little understood process, or that the process could have been implemented better, or that staff acted improperly, or without authority? Shouldn’t Council have been able to anticipate the outcome without spending an inordinate amount of taxpayer money, to this point according to the media having reached $268,000?

No attempt seems to have been made to interview outside groups like ourselves that might have had a different view or perspective based on Proposal Call and development experience. That seems an obvious shortcoming. A listing of those interviewed should have been included as an Addendum.

Mr. Rust-D’Eye appears to have had an altogether similar experience in the neighbouring community of Oshawa, where his report there enraged the public and garnered charges of “whitewash”. Perhaps if Councils could set different parameters for these ‘investigative’ reports and how they should be mandated and prepared, credibility of the ‘fact finding’ could be improved. Best practice would have been to hire a well-known specialist in municipal procurement rather than a lawyer whose firm had past connections with the City. It would have allayed any sense of conflict of interest.

2) It seems very hard to understand why the City needed to go to the expense of hiring a highly paid consultant to recommend and help implement the ‘Competitive Dialogue’ RFP process, a European import procurement concept which was totally unfamiliar in Canada. It was only instigated in the U.K. in 2006 to be used in large and complex projects. To date, so few have been completed that there is limited experience with its success or legal exposures. The interpretation of the process by staff and the Canadian consultant resulted in extreme secrecy and control of information, shutting out even the elected politicians as well as the public. In our opinion, it was simply an inappropriate, costly, and unduly complicated concept to be used in Brampton to build its relatively small, straight forward City Hall expansion project for which the public demanded transparency and accountability. Too much authority and latitude was delegated to staff who were themselves unfamiliar with the process and seemingly not schooled in development matters.

And yet, Mr. Rust D’Eye has no trouble exhorting the concept and process as being unflawed, well implemented and appropriate for Brampton. We believe he is a little out of touch with reality here in Brampton.

 

3) When 40 plus RFP packages were taken out by a variety of interested parties, but only three applications were received, why didn’t the alarm bells sound that there just might be something wrong with the Call. After all, the City Hall expansion project should have been seen as an attractive opportunity by the development community, particularly with a solid Brampton city tenancy in an economically difficult climate at the time.

We can speculate on why the response was so completely poor – process too secretive, terms too unfair and one-sided, Brampton past reputation for Calls, a feeling that the outcome was known in advance. Whatever, only three replied; surely a minimum number to indicate a successful competition, and one of those was disqualified. Imagine! Only two potential players remained. Had it not been for Brampton tenant requirements, this RFP should have been cancelled.

Clearly, this RFP Call is seen here and elsewhere as an abject failure. The Brampton public never had the opportunity to see refreshing creativity with the efforts of an enthused development community.

So Mr. Rust D’Eye’s enthusiastic description of the process and outcome carries little weight, and in fact, suggests a not very informed view.

 

4) The report includes the report of Fay Booker, a financial consultant, retained to analyse the entire financial arrangement and whether it represented “value for money”. Her findings in our view are the real Achilles heel for Mr. Rust-D’Eye’s positive conclusions, for she makes it clear that Brampton overpaid by approximately $36 M going the route that they did with the selected contractor, Dominus. That parallels conclusions that CFBB reached a few years ago. Once we were able to find out the areas of the component parts of the project (not from the City but from Freedom of Information Ontario!), we used industry standard and published construction cost information and ascertained that the Dominus project development cost was in excess of 20% higher than it should have been. That, of course, translates into higher annual rental payments.

For Mr. Rust-D’Eye to reach the conclusion that, faced with the Booker analysis, the deal with Dominus represented good “value for money” is quite beyond comprehension. No matter what the report says, the Brampton taxpayer has been “shafted” because of previous Council decisions on this project. They, perhaps, unwittingly allowed it to happen on their watch. What a legacy to leave for the citizens of Brampton who will be paying for this lapse in good judgement for the next 25 years.

 

5) The so called ‘Option Agreement” regarding a small piece of land needed for Phase Two (Library Phase) appears to be one of the great “sleight of hand” moves. Apparently, through a little known capital acquisition fund mentioned in Addendum One of the RFP, staff have the right and authority to make land acquisitions without specific Council approval. Staff used that fund to pay a fee for a three year, irrevocable land option for $480,000 to secure the land for Dominus, unbeknownst to Council. The question we would have: Is use of this fund legitimate to purchase an option only, money which would be lost unless Phase two proceeded and which would require a further outlay of $2M to actually purchase the land in three years’ time, all without verification by Council?

The Rust-D’Eye report seems to sanction and not be troubled by this move. We are not so sure. Why should Council not have been informed, just to be open and accountable? But that seems to be the way with this whole project.

 

6) The former CAO has stated that staff had the authority to transfer the Dominus lease agreement (and, presumably, the original agreement with Dominus) to the new landlord Fengate without ever advising Council. That seems to us to be a real stretch, given that the deal with Dominus described them as “the long term partner with the City”. Did staff assume authority to, in effect, free wheel with formal agreements using their own best judgement? Did Council even know about their new “long term partner” before the deal was papered? And shouldn’t it have? Mr. Rust-D’Eye seems not to have been bothered by this extraordinary assumption of power by staff.

By the same token, staff along with the Mayor, agreed to cap the penalty for Dominus for missing delivery dates. Shouldn’t that have been a Council decision?

Had substantial completion been achieved last summer and so certified by the architect when Dominus decided to depart the project and sell their interest to Fengate? Was the building ready for tenant occupancy with appropriate occupancy permits issued to allow tenants to occupy the space without liability and for rental payments to commence?

So many questions arise when the Council and the public are not made privy to basic information to which they should be entitled or be made aware. Secrecy begets secrecy, and trust is easily eroded.

Summary

For us, the conclusions of the interim Auditor General’s report on a whole host of accounts does not stand muster. It lacks credibility, particularly so because it ignores the Booker findings that show the Dominus deal to have been far more expensive than a more traditional and transparent arrangement to build the needed facilities. Additionally, to have found and supported interviewee accounts of implementation perfection defies reality.

A process to improve our SWQ really began in 2005, that’s 10 years ago! It regained momentum in the summer of 2009 and almost 6 years later we still don’t have a project that is complete, a project that actually re-developed the SWQ of the Downtown, a project that ignored any architectural integrity and design, didn’t involve the public or elected officials, was too expensive, has made re-development of the actual SWQ more complicated, was secretive and filled with controversy. We have only one comment…..…WHY?

Many of you ran for elected office on the promise to “clean up” City Hall, make it more open and transparent, more accountable and to restore business community and taxpayer confidence.   Quite frankly, if it wasn’t for the efforts of a few Council members, a few concerned residents and business owners, and one reporter, the sweeping change of voter sentiment that helped you get elected might have never happened.

We believe everyone here is familiar with the saying, “you learn from your own mistakes”. So please tell me how can the city of Brampton move forward and become a leader, a model for accountability and transparency if we don’t even admit that any mistakes were made?

Thank you.

Doug Bryden and Chris Bejnar, and John Buch

Co-Chairs – CFBB