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