Under Tremblay, deals attract scrutiny
In a write-down reminiscent of the controversial Faubourg Contrecoeur deal, Tremblay’s administration uses high costs to the developer to justify selling the last large portion of the Marc-Aurèle Fortin site at a token price. Part Six of a seven-part inve
Part Six of a seven-part series
In hindsight, the first sign that something was amiss in the sale of the last large piece of the MarcAurèle Fortin site should have been the silence.
In February 2008, a resolution was presented at city council to approve a housing development agreement with a consortium called Petra St-Luc that involved the company buying the city’s vacant land in Rivière-des-Prairies for $1.5 million.
The partners in the consortium were Groupe Petra, a company in which the Saputo family’s real estate arm was a partner, and Groupe St-Luc, the company that had built housing projects under municipal land development programs in the eastern end of the island since the 1980s.
No one in Mayor Gérald Tremblay ’s ruling Union Montreal party defended the deal at the council meeting, even though one opposition member spent a few minutes attacking it.
“It corresponds to a price of 70 cents per square foot, a veritable record for Montreal,” councillor Richard Bergeron said. He was the only elected member of Projet Montréal, a party he had cofounded a few years earlier.
It wasn’t necessarily a record low price for the city. And it actually followed a long history of the city buying high and selling low in the rectangle that made up the original 4.5-million-square-foot MarcAurèle Fortin site.
But Bergeron had only been on council since 2005. And he wouldn’t have learned of the site’s history from the information that was provided by the city ’s bureaucrats. As was usual for a Montreal civil service report, the one presented to council for this sale only offered a selective list of recent decisions concerning the land.
The report even indicated “NA” — “not available” — for what the city had paid to acquire the land years ago and “NA” for its current municipal assessment. Yet both of these figures were in city records.
“Of course you’ll invoke the decontamination costs to be paid by the developer, except that this land doesn’t appear to be particularly contaminated,” Bergeron said, continuing with his argument that the city was unjustified in selling such a large parcel for next to nothing.
He also said the winning bidder’s housing project was better suited to some off-island suburb such as Laval, St-Constant or Mascouche.
“With this type of low-density development, we have to expect on average at least two cars per household,” Bergeron said. “So much so that this project will translate into the addition of 650 vehicles to the number of cars on Montreal Island, which will produce an extra 3,250 tonnes of greenhouse gases a year.”
And the proposed houses, he said, resembled the “monster” homes the administration was already allowing in the borough of Pierrefonds, one of a handful of former suburbs that had remained part of Montreal after the demerger referendums.
“Montreal doesn’t need this type of urban development,” Bergeron said. “Not any more in Rivièredes-Prairies than in Pierrefonds or anywhere on its territory.”
And the city shouldn’t sell its land so cheap, he added, echoing the arguments that a long-ago predecessor, Michael Fainstat, had made in council chambers when Jean Drapeau was the mayor.
“The best thing to do with a piece of land of this many hectares is not to sell it for peanuts,” Bergeron said, “but to preserve its public character and reforest it.”
Tremblay and the members of his executive committee usually found Bergeron an irresistible target during council debates.
But this time, they didn’t bite. Not one offered a rebuttal.
The Union Montreal majority approved the development agreement with Petra St-Luc. Bergeron was the only councillor to register his dissent.
The sale price would eventually be questioned again, outside of council chambers.
And this time, the details of how the city had selected the winning bid — another piece of information that was missing from the civil service report — would attract the attention of the authorities.
Jean-Baptiste Pépin’s farmhouse survived the suburbanization of R.D.P.
By the 2000s, the homestead built by one of the area’s early postcolonial settlers was surrounded by a tight row of houses of varying shapes and sizes along Gouin Blvd. E.
Four generations of Pépins had occupied that stone house on the edge of the river between 1800 and 1911, before the land it was on was subdivided for development.
There were once an estimated 5,000 such rural homes in Montreal.
By the time the Tremblay administration unveiled the first urban plan of the megacity in March 2004, Pépin’s home was one of about 170 that remained.
The administration presented the urban plan as its vision of development across Montreal Island for the next decade.
For example, the Pépin farmhouse, which had been restored in 1968, was listed in the document as one of several privately owned buildings in R.D.P. that were of exceptional heritage and architectural value.
The urban plan pledged to tighten control over renovation or demolition of these buildings.
At the same time, the urban plan showed that in the extreme eastern end of the island, as in the extreme western end, the Tremblay administration foresaw lots more housing construction.
Nothing had happened on the southern portion of the MarcAurèle Fortin site in the 10 months since the Tremblay administration had accepted the withdrawal of Groupe immobilier Grilli’s offer to buy the site and had returned the developer’s $100,000 deposit.
But there it was in the urban plan, shaded in yellow on a map to indicate it was “suitable for residential construction,” and specifically for single-family homes of two to three storeys in a low- to medium-density development — the same type of project that was proposed by the Grilli company in response to the call for bids while Pierre Bourque was in power.
And yet after defeating Bourque in 2001, the Tremblay administration had allowed the Grilli firm to withdraw its winning offer on the grounds that the infrastructure cost per unit in such lower-density development was high.
Meanwhile, the Grilli company may have retreated from the east end, but the developer had a major housing project percolating in the west end that was telegraphed by the urban plan.
A map showed much of western Pierrefonds, which was farmland, wetland and forest surrounding the Anse-à-l’Orme River, shaded in yellow for residential development.
Groupe immobilier Grilli owned property in the area.
Later, in 2006, the Tremblay administration would announce plans to allow 5,000 to 6,000 houses to be built by the Grilli company and four other developers on just over half of the 365-hectare natural space while the remaining 180 hectares would be conserved as “eco-territory.”
The Pierrefonds- Ouest housing proposal would get renewed support in 2015 from a subsequent mayor, Denis Coderre.
And while Coderre’s rival in the 2017 election, Valérie Plante, would vow to reject the proposed housing project and preserve the entire property as a “national urban park” if elected, she would modify her promise within months of entering office with her Projet Montréal party.
At an event in May 2018 to announce Montreal’s acquisition of 14 hectares of undeveloped land in neighbouring Ste-Anne-deBellevue to add to the Anse-àl’Orme nature park, Plante would requalify her pledge for western Pierrefonds as a wish to “save green spaces as much as we can, but we do know that there is also a need for housing in that area.”
Some of the projects that were foreshadowed in Tremblay ’s urban plan didn’t require a decade to be realized.
That’s because as the history of the Marc-Aurèle Fortin site demonstrated, a real estate deal announced today didn’t start yesterday.
Such was the case with the Faubourg Contrecoeur, city-owned land in east-end Mercier district.
Tremblay’s 2004 urban plan showed the Contrecoeur site shaded in yellow for residential development.
The site was then sold to a developer in 2007 at a heavily discounted price because of the decontamination costs that had been estimated for the city agency that sold the property for the Tremblay administration.
Frank Zampino, Tremblay’s executive committee chairman at the time, and others would be arrested years later in connection with the sale. A two-year fraud, conspiracy and breach of trust trial ended in 2018 with not-guilty verdicts for all of the accused on all counts.
The site was shown in Tremblay’s urban plan, but the word “Contrecoeur” didn’t appear anywhere in the document.
And yet about one million square feet of it had already been identified for sale and housing development as the “Contrecoeur sector” in Bourque’s Opération Habiter Montréal program in the 1990s.
Before Bourque, it had been earmarked for development of some kind in Doré’s 1992 urban plan. Before Doré, it had been designated for sale and housing development in the Opération 10,000 logements and Opération 20,000 logements of the Drapeau administration.
Moreover, city records from Bourque’s time showed that part of the Contrecoeur site was even decontaminated in 1994, something that wasn’t brought up at the trial.
The records from Bourque’s time also showed several soil contamination studies were conducted by the city and by petrol companies in the area — in 1989, 1990, 1992, 1993 and 1994.
In fact, 11 days before the 2001 municipal election, Bourque and his executive committee authorized yet more soil studies be done on the site, including on the decontaminated section to ensure that no pollution had seeped in.
Tremblay ’s 2004 urban plan also indicated what was to come for a long-disputed spot off the shore of R.D.P.
Île d’Argent was shaded dark green for conservation.
Four years later, the Tremblay administration bought the island through an intermediary, Ducks Unlimited, to preserve as a park.
The Argento brothers, developers who owned the island, received $4 million from the sale, plus up to a $9.9-million federal tax credit because it was considered an ecological donation.
The opposition criticized the $4-million purchase because two studies that were never shown to councillors had estimated the island’s market value at zero or $368,000.
The Tremblay administration cited another study, based on the zoning change granted by the Drapeau administration in the 1980s to permit the Argentos’ condo towers, had pegged the market value at $5.5 million.
Today, Alfonso Argento says the Tremblay administration’s decision to categorize the island for conservation in the urban plan was a complete surprise.
He and his brothers had notified the city that they were planning to revive their residential project in 2004, he says. “We were not advised they were putting our island down for preservation.”
And upon learning what was in the urban plan, “we wrote to the city and said it’s disguised expropriation.”
From Argento’s perspective, every city administration had engaged in double discourse when it came to conservation. Letters and other documents dating back to the 1980s tend to support him.
The Drapeau administration had assured conservationists it wouldn’t allow development, and then it changed the island’s zoning to residential.
Doré’s Montreal Citizens’ Movement had opposed development of the island while in the opposition, but once in power it didn’t touch the residential zoning that had been granted by Drapeau.
The provincial government offered contradictory messages as well.
In the 1980s, one official sent Argento instructions on what material to use as backfill to get the island excluded from the provincial flood plain map so it could be developed.
Then another official sent him a telegram ordering him to remove the “illegal” backfill.
And the province then excluded the island from the flood plain map in 1991 because it had been backfilled.
Argento also contends that despite designating the island for conservation in the urban plan, the city told Argento two years later that the residential zoning was still valid. The brothers submitted an updated version of their project in 2007, which the city examined and then ultimately blocked before sending in Ducks Unlimited to negotiate a sale, he says.
“We don’t think we made a penny on the island,” Argento says. His firm used $3 million of the ecological tax credit, giving them a total of $7 million from the sale, he says.
By his calculation, they spent $4 million on plans, backfill and other work between 1980 and 1983 — worth $7.9 million in 2008 dollars — and another $500,000 on more plans and $150,000 on permits in the 2000s when they revived their project. There was also lost profit.
“We got fed up with the bad faith of the city. If it was our choice, we would never give them the island.”
Forget long-term vision — Tremblay’s urban plan foretold events in the near future with amazing accuracy.
Bergeron wasn’t far off when he speculated at the 2008 council meeting that the administration would use decontamination costs to justify selling that piece of the Marc-Aurèle Fortin site at a low price.
It was the overall infrastructure cost to develop the site that the city claimed made the land worthless.
The public works department of R.D.P.–Pointe-aux-Trembles borough estimated the infrastructure cost at $21 million based on the street layout of the Grilli project as the city prepared to launch a call for bids in 2005.
The borough’s estimate was nearly double the $11-million figure in the 2003 civil service report when the Grilli company withdrew its offer. And the figure that had been given in 2000, when the Bourque administration authorized the first call for bids, was $6 million.
Joseph Farinacci, the civil servant in charge of the city’s real estate transactions division and responsible for the 2005 call for bids, would later testify at the Charbonneau commission of inquiry into corruption in Quebec’s construction industry that he didn’t have the expertise to contest the borough’s estimate of $21 million.
But anyone would have spotted a discrepancy if they looked at old civil service reports.
The executive committee authorized the call for bids to sell all 2.14 million square feet of the last chunk of the Marc-Aurèle Fortin site shortly before the fall 2005 municipal election campaign began.
The starting bid price was set at $1 million, a fraction of the $3.75 million that Groupe immobilier Grilli had offered and a fraction of the $5-million market value estimated in 2000 when the city was selling just the 1.19 million square feet where the houses would be built.
Farinacci testified at the Charbonneau commission that the high infrastructure costs estimated by the borough rendered the land worthless. So that was why his division established the opening price at a “token” $1 million, he said.
And yet city auditor general Jacques Bergeron would find the land appeared to be worth three times that when he examined the sale for his 2009 annual report.
He would also criticize the civil servants for writing “NA” in their report instead of the $7.67 million the city had paid to acquire the land between 1988 and 1992.
The bid specifications in 2005 set the same parameters as five years earlier: 200 to 300 homes containing one to three residential units, with parking and a “significant” amount of green space for each house, all of it surrounding a large park.
The project, the civil service report said, was to “offer the green suburbs in the city.”
However, the specifications were less stringent — and therefore less costly for the future developer — than in the previous calls for bids.
For example, the sound barrier to be built by the developer to screen out the adjacent industrial zone now had to be three metres high, not four metres as the city had previously insisted.
As well, the specifications no longer required the developer to bury the electrical and telecommunications lines, although such a proposal would be favoured.
The city received three bids at the end of 2005, shortly after the Tremblay administration was reelected to a second term.
The highest offer of $1.5 million came from Iberville Developments. The company was the partner with the Sochaczevski developers in 3311155 Canada Inc., which had bought the Place Marc-Aurèle Fortin shopping centre across the street from the Bourque administration in 1998.
However, the Sochaczveskis didn’t partner with Iberville Developments to bid on the southern portion of the Marc-Aurèle Fortin site. And the Sochaczveskis didn’t put in their own bid.
“By the time I heard about it being offered, it was gone. So I never got involved,” Michael Sochaczevski says all these years later.
“By the time I heard about it being offered, it was gone. So I never got involved,” he repeats when he’s told the land was the object of three calls for tenders between 2001 and 2005, and that no one bid the first time.
The selection committee that met in the spring of 2006 recommended Iberville as the winner.
There would be conflicting testimony over what happened next.
But the result would fit with the history of the Marc-Aurèle Fortin site. Iberville didn’t remain the winner.