The developer once expected to build hundreds of rental housing units on Kelowna, B.C.’s old cop shop property has taken the city to court for quashing the deal.
The companies, 350 Doyle Avenue Holdings Inc. and Centurian Appelt Ltd., filed a petition Sept. 8 asking the court to reverse Kelowna city council’s August resolution to take away its long-held development permit, claiming the decision was “unreasonable” and “procedurally unfair.”
They claim that the basis of Kelowna city council’s decision — an aversion to the developer paying a $250 per diem to each student who weighed in on the controversial project during a public consultation process — doesn’t break any rules.
They are asking that the court set aside the rescission resolution and that an order be made for the costs of this proceeding and other relief.
The 25-page lawsuit lays out the history of the project from 2019, when they became involved in a highly publicized bidding process to build the rental towers and community art walk space.
Their pitch was to construct 259 rental housing units in a 13-storey tower, 10 per cent of which would be affordable, and a community amenity space that tied into the arts district.
“The developer specifically proposed rental, rather than condominium units, in an effort to address the city’s growing housing and affordability challenges identified in the City Precinct Plan,” the petition reads.
To move forward with the development, the city and developer entered an agreement that allowed the developer to purchase an 80-year-old leasehold interest in the property for purposes of developing the project for a total purchase price of $7 million, a portion of which would be payable by way of construction of the community amenities included in the project.
A series of changes ensued but ultimately the project went ahead, with a request for a public consultation process to play out in June 2022.
For that, the developer asked a public relations firm to get further community involvement and approval. The firm, JDH Naturals, got UBC Okanagan students to weigh in with a promotional campaign at the school.
Through that, they learned students were generally in favour of the project, with many expressing a desire for increased rental and affordable housing and downtown amenities. Those same students also expressed reticence when it came to going downtown to weigh in on the development process.
So the developer and public relations firm decided a $200 per diem could be paid to students to participate — a process that there is no “legislation, city bylaw or city policy” prohibiting.
The support was not in return for a positive view being shared, but rather for time and effort.
“The developer did not authorize and never would have authorized, payments to students to change their independently held views,” the petition reads.
When all was said and done, the per diem came out to $250 per student, and the project continued to move ahead. The lawsuit states that council was aware of the per diem being paid as early as October 2022.
With that in the rearview mirror, approximately $1.8 million in project-related costs was spent between October 2022 and August 2023.
In April, however, there was concern about the per diem being raised and by June they learned the city was calling “the integrity of the public process” into question. Council, the developer was told, intended to negotiate a reacquisition of the property and wanted to know if they would be interested in engaging.
“On Aug. 14, after the developer had spent more than $10 million and four years advancing the project the city passed the rescission resolution at a regular council meeting rescinding the development permit authorization,” reads the petition.
Ultimately, the developer says this was an unreasonable decision, and the court should review the reasoning.
They said there should be no expectation that members of the public are not paid a per diem or that those who weigh in through the public process be unbiased.
Also, “certain sections of (a city council procedure bylaw) in fact require every presenter to have an interest in the proceeding,” reads the lawsuit.
“Speakers are expected to have an interest in the outcome, whether financial or otherwise. In these circumstances, a prohibition against financial incentives to attend a council meeting would undermine public participation and the integrity of council business.”
They also argue it was unreasonable for the council to conclude that it had the statutory authority to adopt the resolution turning back the development permit, based on legal and factual constraints on council principles of statutory interpretation.
“Indeed, the only reasonable interpretation of council’s enabling statutes is that council did not have authority to do so,” the suit states.
They claim there was also a lack of transparency in council and staff’s decisions, and that further undermines their decision.
“In the circumstances, no deference should be given to staff our council in a review of their actions and procedures culminating in rescission,” reads the document.
“The rescission resolution should be set aside as procedurally unfair.”
The City of Kelowna’s Clerks Office said they are preparing a response to the claim and are not commenting on it at this time.