Toronto Star

Head of city’s real estate agency offered below-market rentals to staff despite 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 a freedom of informatio­n request, show Brian Johnston, then CEO of CreateTO — an arm’s length city agency started under Mayor John Tory’s administra

tion that’s responsibl­e for selling and leasing land to developers to build affordable housing — also sought a belowmarke­t unit for his niece from The Biddington Group, which, earlier this year, was renting out the newly built J. Davis House near Yonge Street and Davisville Avenue.

Following anonymous tips, the Star’s request for informatio­n in September through the freedom-of-informatio­n (FOI) process triggered an internal investigat­ion at CreateTO for the first time, the agency said in an email, leading to the firing of two employees in October who had rented the below-market units.

Johnston, who came from the real estate industry to lead the public sector organizati­on at the start of 2019 and was responsibl­e for a massive $27-billion portfolio of public assets, quietly stepped down in October without providing a public reason.

CreateTO said “due to privacy legislatio­n” it could not speak to matters related to his departure.

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

“In the midst of a housing crisis made worse by a global pandemic, that a city official responsibl­e for creating affordable housing would treat those homes as favours for his family and bonuses for his employees is despicable,”Matlow said.

Johnston, in an emailed statement to the Star, said he hoped the matter did not distract from the “outstandin­g work undertaken by the staff of CreateTO.”

“The offer (made in the Spring) to introduce staff to a rental opportunit­y was a sincere effort to help those that may be interested,” the statement said. “Subsequent to the offer, it was brought to my attention that, regardless of good intentions, there was the possibilit­y that some may interpret this as an attempt to unduly create a benefit to staff of a City of Toronto agency. Recognizin­g this, I withdrew the offer once fully aware of the implicatio­ns.”

Arnie Lash, a constructi­on and developmen­t manager at Biddington, said it is the developer’s policy “not to provide any informatio­n regarding applicants or tenants to any third parties.”

The email chains start at the beginning of May.

“Hope you had a good weekend,” reads a May 4 email from a senior administra­tor at Biddington to Johnston. “Did you have a chance 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 for your niece and nephew to potentiall­y rent so 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 chance to rent the units exclusivel­y to CreateTO staff.

“Random bit of informatio­n: I know a developer that is finishing a highrise at Yonge and Davisville,” the email said. “As part of their approvals, they are required to rent out something like 30 units at below market rents.”

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

“Anyways, I cannot guarantee that there are units available, but

I am highlighti­ng this as it looks like a great deal for someone who wants that location. Let me know. And PS, this is only for direct employees of CreateTO!”

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

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

“Could I get him in the queue for a unit if there is a meeting of minds (and $)?” the email reads.

On June 8, a month after the initial offer, Johnston appears to email a group of interested employees — the names and emails are redacted — to tell them his “generous” offer has to be rescinded.

He explains that someone from the city, who he does not identify, has called him to say “it does not look good that City staff are getting below market rents because of a policy imposed by the City.”

The developer, Johnston says, argued it is not in violation of a city policy. Regardless, he asks staff to withdraw their names from considerat­ion.

“I sincerely regret this and apologize. This was supposed to be a nice to have for staff members in need, not some abuse of City policy. But as you know, we are in a political environmen­t so bad stuff like this happens.”

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

And in another all-staff email the following day — also copied to the board — Johnston says that “to my chagrin, it has been brought to my attention that this opportunit­y could be viewed by some as City staff jumping the line to access the opportunit­y.”

He also says that despite the developer telling him the agreement does not specify how tenants would be selected, “there is still the perception that because we work for a City Corporatio­n we have some sort of inside track.”

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

In an April 30 email from the developer to Johnston, rents as of July 1 were said to be between $1,302.40 and $1,925 for a one bedroom, depending on the size of the unit, and $2,459.32 for a three-bedroom unit — all less than $2.69 per square foot.

At the Balliol Park developmen­t less than 500 metres away, also a new-build offering rentals, units are currently listed for nearly 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 some rental units at mid-range and affordable rents when they redevelope­d the Davis House site, a spokespers­on for the city planning department told the Star.

The city’s official plan requires that developers replace rental units if there are six or more existing rentals in a redevelopm­ent applicatio­n.

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

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

“The owner is required to offer all rental replacemen­t units not occupied by a returning tenant to the public on a fair and open basis, consistent with general practices within the rental market,” Leesti’s email said.

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

“When a CreateTO internal investigat­ion revealed that two employees had continued to pursue and secure units in the developmen­t after the then CEO sent a retraction email and instructed 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 steward of the City’s real estate assets and the agency firmly believes in and supports the goals and objectives of the City’s housing plan.”

CreateTO board chair Ron Carinci, recently appointed, said the board discussed the matter with Johnston in confidence at the first meeting held after the all-staff email was sent.

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

Asked why the board never followed up with employees or staff, Carinci said: “When Brian rescinded the offer, it was the board’s position that the matter was closed and there was no reason to conduct an investigat­ion at that point.”

Coun. Ana Bailao, who sits on the CreateTO board and is the mayor’s affordable housing advocate on council, said she didn’t immediatel­y read Johnston’s first morning update, but when she did go through it she immediatel­y flagged it.

“I was going through the email and I came across that offer and thought it was inappropri­ate,” she said. “I did pick up the phone and told him I had an issue with it.”

She also called city staff and asked them to look into it, she said.

Bailao said she has been looking for offers of affordable housing to be done in a more transparen­t way, moving a successful motion at council in October for staff to report back in the first quarter of 2021 on “an implementa­tion plan that establishe­s transparen­t access plans for new affordable housing units, including affordable replacemen­t rental units,” including that prospectiv­e tenants are in

come tested.

Matlow said his constituen­ts have been understand­ing of more constructi­on in the busy Yonge-Eglinton area to allow for more affordable housing and that the selection of tenants needs to be investigat­ed.

“If they knew that it might go to some rich developer’s friends and family, they wouldn’t have supported it, and for good reason,” he said.

“There needs to be a clear, accountabl­e and transparen­t process for how these units are shared and who gets them. It cannot be left for one public official to give first dibs to their friends and wellpaid employees.”

Leesti said staff are looking at improving how affordable housing is made available following Bailao’s motion and the approval of a new 10-year housing action plan.

“The board expressed its view that the offer and communicat­ion to staff was highly inappropri­ate.” RON CARINCI CREATETO BOARD CHAIR

 ??  ?? “I withdrew the offer once fully aware of the implicatio­ns,” Brian Johnston, former CEO of Create TO, told the Star in an email.
“I withdrew the offer once fully aware of the implicatio­ns,” Brian Johnston, former CEO of Create TO, told the Star in an email.
 ?? RICHARD LAUTENS TORONTO STAR ?? Coun. Josh Matlow, who represents the Yonge and Davisville area, called the move by former CreateTO CEO Brian Johnston to offer below-market rents exclusivel­y to his own employees a “betrayal of the public’s trust.”
RICHARD LAUTENS TORONTO STAR Coun. Josh Matlow, who represents the Yonge and Davisville area, called the move by former CreateTO CEO Brian Johnston to offer below-market rents exclusivel­y to his own employees a “betrayal of the public’s trust.”

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