Expert raised red flags about costly Brampton development deal
A financial expert 2015 report that was critical of a Brampton development deal has been filed as part of an ongoing lawsuit.

TheStar.com
Nov. 28, 2016
San Grewal and Peter Criscione

An expert hired to investigate financial decisions made by senior Brampton staff in a controversial half billion-dollar development deal raised concerns about the project’s high cost and other issues, including some that were never shared with council, according to new court documents filed in an ongoing lawsuit against the city.

Fay Booker, a financial expert with auditing experience who has worked extensively with the public sector, was critical of the way much of the procurement for a massive downtown redevelopment was handled. But her full, final 2015 report was never shown to council, which had ordered the investigation a year earlier.

According to the court documents filed in October, in her working notes Booker questioned why the rare procurement method was used, why a local developer was disqualified from the bidding, and was critical of how senior staff scored the bids, and in her report raised red flags about the cost of the project. In her notes, she also questioned how staff were held accountable in a procurement that did not allow council to see the bids and kept them out of the evaluation process.

Booker’s working notes and her full report were recently filed with the court as part a $28.5 million lawsuit by Inzola Group, which was disqualified in 2010 from bidding on the downtown redevelopment project. Some of the concerns raised in her working notes were not included in her final report. Inzola alleges the deal cost taxpayers “tens of millions” of dollars more than it should have and was “vastly in excess of market pricing” and that the city was biased against the company and in favour of the winning bidder, Dominus Construction. The city denies all the lawsuit's allegations. There are no allegations in the lawsuit against Dominus, which has stated it followed all rules of the bidding process.

Booker’s work was part of a broader investigation by lawyer George Rust-D’Eye, who was hired by city staff in 2014. Council had ordered the investigation into how the original deal was handled after the winning bidder sold its rights to the project before the first of three proposed phases was completed. Rust-D’Eye’s investigation did not involve Dominus’s sale of its rights to the project. Only the first phase was ultimately completed, at a cost of $205 million including financing, for a 126,000-square-foot city hall addition.

About a third of Booker’s report was included in the final investigation report prepared by Rust-D’Eye, who was hired to examine council concerns about the project’s cost, whether or not staff acted properly in awarding the deal and if the local builder, Inzola Group, was disqualified fairly.

Inzola’s disqualified bid, according to documents filed with the court, was never shown to council or the public. The lawsuit has revealed that its bid included an option for a 140,000-square-foot city hall expansion at a cost of about $95 million, including financing available to the city at the time.

In her report, Booker stated that the city spent $36.6 million more than it should have for the $205-million first phase of the project because it chose to lease the nine-storey city hall addition upon its completion. She said the city should instead have used a “build to own” model. This information was presented to council in the final investigation report, in which Rust-D’Eye concluded that “the City of Brampton obtained value for money.”

In Booker’s notes for her work, filed recently with the court, she wrote, “Why was ‘build to own’ eliminated? In the documents that I have reviewed, I don’t see clear rationale for elimination of build to own as an option . . . I may be able to understand that the City did not want to be the ‘builder’ but why not finance it themselves as the City has access to cheaper borrowing than private sector? Why pay profit margin to lessor on financing costs?”

Booker also addressed in her final report the $205 million price for the first phase, which she reported was the figure staff had given in 2009 for a 246,000-square-foot building, even though Brampton only got about 126,000 square feet for the same price, she wrote.

Regarding the procurement process called “competitive dialogue,” described by the city as a method for “particularly complex” projects, Booker wrote in her notes, that the downtown project “Does not seem complex.

“What was the rationale for using a ‘first in Canada approach?’” she wrote in her notes.

She also questioned in her notes how staff could have been “sufficiently trained” since the process had never been used before anywhere in the country. Booker stated that the proposal call designed for the project “seems inconsistent with the reasons for using a new and untested model.”

She also questioned:

• Why Inzola was disqualified for attempting to communicate with council about concerns over a restrictive secrecy clause it was asked to sign after submitting its bid, as the bidding rules did not explicitly state that such a communication would trigger disqualification, according to Booker’s notes.
• Why some of the scoring of the two developers that advanced to the competition phase — Dominus and Morguard — was done without quantifiable measurements. Booker pointed out in her report that staff had relied on “assumptions” and that the financial evaluation of the companies was subjective. “I don’t understand why the evaluation is subjective,” she wrote in her notes.
• The effectiveness of the “fairness adviser,” James McKellar, who was hired to guarantee that staff selecting the winning bid were acting fairly. Booker pointed out in her notes that it was McKellar who had originally proposed the procurement process and had been hired by the city to help design the process. “Is he in conflict as it was his process?” asked Booker. She also questioned in her notes whether McKellar, who was being “directed by City staff” was independent. Emails filed as part of the lawsuit show that the same staff McKellar was hired to hold accountable were heavily involved in writing parts of his reports to council. Booker also wrote in her notes that without directly observing the evaluation process by staff, “How did he gain assurance that it was conducted objectively, with no collusion in scoring?”

In her notes filed with the court, Booker analyzed McKellar’s reports to council. In one he wrote that “I have every expectation that the (staff he was supposed to provide oversight of) will continue to adhere to the provisions of the (procurement process).” Booker stated: “How is he able to give assurance on a process that is yet to take place?”

McKellar did not respond to requests for comment for this article.

When contacted, Rust-D’Eye told the Star and Guardian he had no comment.

In his final report, Rust-D’Eye found no wrongdoing and said the matters he investigated did not warrant council concerns about how the bidding process was handled by senior city staff. Regarding the cost of the project, Rust-D’Eye concluded in his investigation that “the City of Brampton obtained value for money.”

An email sent in April, 2015 from Rust-D’Eye to another external expert, Paul Emanuelli, who was also hired to help with the investigation, addresses why Booker’s full report was not made public. The email was recently filed with the court for the lawsuit.

“Hi Paul . . . I have addressed with the City Solicitors my proposed attachment of your report, and that of Fay Booker, to mine, but they have advised against doing that, on the basis that the Council requested MY opinion and conclusions.”

In an interview, Booker said she didn’t know why Rust-D’Eye didn’t make her full report public. Asked why Rust-D’Eye came to the conclusion that value for money was achieved in the deal, she said:

“What Mr. Rust-D’Eye did was of his own decisions. I was not privy to his process.”

The City of Brampton was asked for the names of the staff members who, according to Rust-D’Eye’s email, instructed him not to include Booker’s full report, and why he was told not to include Booker's full report.

Brampton spokesperson Brian Stittle said, “The City is party to a litigation process where all of the relevant evidence will be considered by the Court. As such it would be inappropriate to comment further at this time.”