Real estate agency

Toronto real estate manager offered staff below-market rentals despite city’s affordable housing rules

The head of the city’s real estate agency offered apartments with below-market rents exclusively to his own employees earlier this year, in violation of city policies on affordable housing, the Star has learned.

Internal emails, obtained through an Freedom of Information request, show Brian Johnston, then CEO of CreateTO – an independent municipal agency established under the administration of Mayor John Tory who is responsible for sales and leasing land to developers to build affordable housing – also requested a below- market unit for his niece from The Biddington Group, who earlier this year leased the newly built J. Davis house near Yonge Street and Davisville Avenue.

Following anonymous advice, the Star’s request for information in September through the FOI process sparked an internal investigation at CreateTO for the first time, the agency said in an email, leading to the dismissal of two employees. in October who had rented the units below the market. .

Johnston, who came from the real estate industry to lead the public sector organization in early 2019 and was responsible for a massive $ 27 billion public asset portfolio, quietly resigned in October without providing a public reason.

CreateTO said “due to privacy laws” he could not speak to issues related to his departure.

Com. Josh Matlow, who represents the Yonge and Davisville area, called the situation a “betrayal of public trust.”

“In the midst of a housing crisis made worse by a global pandemic, for a city official responsible for creating affordable housing to treat these homes as favors for his family and bonuses for his employees is despicable.”

Johnston, in an emailed statement to The Star, said he hoped the matter would not distract from the “remarkable job being undertaken by the staff at CreateTO.”

“The offer (made in the spring) to present staff with a rental opportunity was a sincere effort to help those who might be interested,” the statement said. “As a result of the offer, it was brought to my attention that, regardless of good intentions, there was the possibility that some might interpret this as an attempt to create an undue advantage for the staff of an agency in the city ​​of Toronto. Recognizing this, I withdrew the offer when fully aware of the implications.

Arnie Lash, construction and development manager at Biddington, said the developer’s policy “does not disclose any information about applicants or tenants to third parties.”

The email chains start at the beginning of May.

“Hope you had a good weekend,” read a May 4 email from a senior administrator at Biddington to Johnston. “Have you had the opportunity to review the floor plans I sent you last week?” Sorry to rush you, but I need to know which unit (s) to put aside so that your niece and nephew can potentially rent so that I can send the remaining available units to other parties.

Then on May 7, in a regular update to all staff, in an email that was copied to CreateTO board members, Johnston offered the option to rent the units exclusively to CreateTO staff. .

“Random information: I know of a developer who is finishing a building in Yonge and Davisville,” the email read. “As part of their approvals, they are required to lease something like 30 units at below market rents.”

Johnston went on to describe the building being in a “great location” and the rental prices.

“Anyway, I can’t guarantee that there are units available, but I point this out because it seems like a good deal for someone who wants this location. Let me know. And PS, this is only for the direct employees of CreateTO! “

It appears that at least four employees, whose names are redacted, emailed Johnston with interest in the units.

On May 7, Johnston also emailed another contact in Biddington from his home in Niagara-on-the-Lake, which he explained “is bigger than what we have in Toronto so much more comfortable” , to say that her niece was no longer in the market for an apartment but to request the availability of a CreateTO staff member.

“Could I put it in the queue for a unit if there is a deal (and $)?” The email reads.

On June 8, a month after the initial offer, Johnston appeared to send an email to a group of interested employees – names and emails redacted – telling them his “generous” offer must be canceled.

He explains that someone in town, whom he does not identify, called him to say “it doesn’t look good that the staff in town are below market rents because of a policy. imposed by the city ”.

The developer, says Johnston, argued that he was not in violation of city policy. Either way, he asks the staff to remove their names from the exam.

“I sincerely regret it and I apologize. It was meant to be a good thing for staff in need, not an abuse of city politics. But as you know, we are in a political environment. , so bad things like this happen. ”

“As they say, ‘No good deed goes unpunished!’ “

And in another email to all staff the next day – also copied to the board – Johnston says that “to my regret it has been brought to my attention that this opportunity could be viewed by some as the staff. of the City who skip the line to access the opportunity. . “

He also says that although the developer told him that the agreement does not specify how tenants would be selected, “there is always the feeling that because we are working for a municipal company, we have some kind of internal lead.” .

Johnston continues: “Inside track, yes, but only because I know the developer, not because we work in the City!

In an April 30 email from the developer to Johnston, the July 1 rents were between $ 1,302.40 and $ 1,925 for a bedroom, depending on the size of the unit, and $ 2,459.32 for a room. three bedroom unit – all under $ 2.69 per square foot.

In the Balliol Park development within 500 yards, also a new build offering rentals, units are currently listed for almost a dollar more per square foot – $ 1,698 to $ 2,039 for a one bedroom.

The developer had a legal agreement with the city to offer rental housing at mid-range and affordable rents during the redevelopment of the Davis House site, a spokesperson for the Planning Department told The Star.

The city’s official plan requires developers to replace rental units if there are at least six existing rental units in a redevelopment application.

Council approved Davis House’s application in August 2010 – one of the first approvals for demolition and replacement of rental housing under city powers established under the City of Toronto Act, said the town planning.

“At the time of the request, only 12 units were rented and the remaining 21 units had been vacant for a long time,” city planning spokeswoman Ellen Leesti said in an email.

“The landlord is obligated to offer to the public all rental replacement units not occupied by a returning tenant on a fair and open basis, in accordance with general rental market practice,” Leesti’s email said.

Susan O’Neill, spokesperson for CreateTO, said the agency is “committed to ensuring that we consistently maintain the highest standards of ethical behavior,” calling Johnston’s offer an “error in judgment.”

“When an internal CreateTO investigation found that two employees continued to research and secure units in development after the then CEO sent a withdrawal email and asked staff to withdraw their interest, CreateTO acted decisively and in accordance with the organization’s code of conduct.

“CreateTO is committed to being a responsible manager of the City’s real estate assets and the agency strongly believes in and supports the goals and objectives of the City’s housing plan.

Newly appointed CreateTO board chairman Ron Carinci said the board discussed the matter with Johnston in confidence during the first meeting held after the email was sent to everyone. staff.

“The board expressed the view that the offer and communication with staff was highly inappropriate,” Carinci said in response to questions emailed by the Star.

When asked why the board never followed up with employees or staff, Carinci said: “When Brian canceled the offer, the board said the deal was closed and that there was no reason to investigate at this point. “

Com. Ana Bailao, who sits on CreateTO’s board of directors and is the mayor’s attorney for affordable housing on the council, said she did not immediately read Johnston’s first morning update, but when she did walked through it, she immediately reported it.

“I was scanning the email and came across this offer and thought it was inappropriate,” she said. “I picked up the phone and told him I had a problem with this.”

She also called city staff and asked them to inquire, she said.

Bailao said she was looking for affordable housing deals to be done more transparently, tabling a successful motion to council in October for staff to report in the first quarter of 2021 on “an implementation plan that sets plans transparent access to new affordable housing, including affordable replacement rental housing, ”including that potential tenants are subject to an income assessment.

Matlow said his constituents understand more construction in the bustling Yonge-Eglinton area to allow for more affordable housing and that tenant selection needs to be considered.

“If they knew this could go to the friends and family of a wealthy developer, they wouldn’t have supported it, and for good reason,” he said. “There has to be a clear, accountable and transparent process for how these units are shared and who gets them. It cannot be left to one public servant to give their friends and well-paid employees the first chance. “

Leesti said staff are looking to improve the provision of affordable housing following Bailao’s motion and the approval of a new 10-year housing action plan.

Jennifer Pagliaro is a Toronto-based reporter who covers city hall and city politics for The Star. Follow her on Twitter: @jpags

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