Brampton councillors prepare to grill report’s author

An investigation into a $500-million deal fell short of what was expected, councillors say.

Thestar.com
May 3, 2015
By San Grewal

Brampton councillors and residents will address an investigation into the city’s controversial $500-million downtown redevelopment plan at a special council meeting Monday evening.

Council hired lawyer George Rust-D’Eye to investigate after court documents in a $28.5-million lawsuit against the city raised questions about staff’s involvement in the deal. The lawsuit was launched by a developer who alleges he was unfairly disqualified from the project’s bidding process (the city denies the lawsuit’s allegations).

The bidding process was led by senior Brampton staff, who used a procurement process never before tried in Canada. Staff was given the responsibility of analyzing all the bids, recommending a winner and negotiating the final deal. Council was not allowed to see the bids and had little involvement other than voting yes or no on the staff decision to award the project to Dominus Construction.

Rust-D’Eye’s report, released April 27, cleared staff of any impropriety.

The city has been billed almost $269,000 to date for the report, after councillors were originally told it would cost $50,000 to $60,000. Yet some councillors say the investigation did not pay attention to some key questions. Here are some of the areas they say have not been addressed:

Did taxpayers get good value in the deal negotiated by staff?

Councillors say the findings of chartered accountant Fay Booker, hired by council to provide financial expertise, were ignored. Booker wrote that the city could have saved $36.6 million by using different financing. The project’s first phase will cost $205 million. She also said the size of the building - now almost complete - is not nearly as large as what staff had indicated the city should get for that amount.

Also, under its lease arrangement, the city is paying $8.2 million over 25 years, which works out to an interest rate of 7.2 per cent, according to a January financial report for the city by former Ontario auditor-general Jim McCarter. He and Booker have questioned the high lease rate taxpayers are paying and Booker suggested Dominus was able to build its own high profit margin into the lease.

Rust-D’Eye, quoting staff, concluded that they achieved “value for money” in the deal.

How did staff handle a deal to fund a $480,000 option of land for Dominus?

When staff presented a report to council in March 2011 recommending Dominus as the bid winner, it stated that the company had secured an option on a parcel of land needed for phase two of the project. Councillors asked for confirmation of this during the meeting before they were to vote in favour of the staff pick. Staff told council then that Dominus had secured an option on the land; however, public documents in the court case, which council provided to Rust-D’Eye, indicate Dominus did not have an option on the land when council voted in March of 2011.

Councillor John Sprovieri told the Star he indicated to Rust-D’Eye that he would not have supported the deal, which eventually was approved in a 6-5 vote, had he known Dominus did not have an option on the land. Staff, without council’s knowledge, later used taxpayer’s money to fund the option for Dominus.

Councillors say Rust-D’Eye failed to explain why council was never informed. They also want to know why Rust-D’Eye didn’t question staff about the eventual purchase price of $2,480,000 that was paid for the land after a 2014 deal, despite staff telling council the price was $2,000,000. They say the report also fails to explain why a reserve fund was used to pay for the land even though it’s not intended to be used for such a purchase.

In his report, Rust-D’Eye said, “I have not conducted a thorough review of this issue,” and that when staff in 2014 advised council to buy the land, it was akin to “ratifying the taking over of the option.”

Why did staff not provide clear explanations for how they evaluated the bidding?

In her analysis, within Rust-D’Eye’s report, Booker raised the following issues about the bids:

Why did staff present to council in March of 2011 a report that suggested Dominus’s bid would provide more space than the other bidder, Morguard, when in fact Morguard’s bid would have delivered almost 30,000 square feet more than Dominus’s bid? Staff responded to Booker that the extra space was for a library feature and was deemed to be “confidential.” Therefore it “could not be disclosed in the public realm.” Dominus did not include a library feature. Councillors want to know why Booker wasn’t given the chance to scrutinize the staff response and how staff decided what they would or would not disclose about the bids.

Booker asked why a construction cost of $94 million was presented to council when Dominus had indicated the figure was incorrect and should have been $91 million. Staff responded that $94 million was the correct figure. Their response was not scrutinized by Rust-D’Eye even though in the court documents staff suggest $94 million, the price the city paid, was incorrect.

Booker asked why the March 2011 report to council recommending Dominus indicated that Morguard’s proposal would require the purchase of land it did not own, when Booker finds that in the same report she “does not see reference” to the “land acquisition” needed for Dominus’s proposal. The staff response does not explain why the March 2011 report includes no reference to the land deal needed for Dominus’s proposal, which council learned three years later was funded by the city without council’s knowledge. Rust-D’Eye did not scrutinize the staff response.