Property worth $130 million picked up by Brenhill at a $15-million value
The deal started to move forward in late 2011, when Brenhill approached city officials with a land swap proposal, which was based on the construction of about 162 new social housing and affordable units on property owned by the developer at 1099 Richards, to unlock the re-development potential of a valuable piece of city land at 508 Helmcken, city documents say. Social housing units were built on the property in 1986, and it was encumbered by a long-term lease to a social housing operator.
As plans moved forward in 2012, the city’s Helmcken property was valued internally by city staff at $15 million for the purposes of the land exchange proposal with the developer in January 2013, documents show.
About two weeks later, in February 2013, a private appraisal commissioned by Brenhill showed that 508 Helmcken would be worth $80 million if rezoned as planned, Postmedia learned from B.C. Housing officials last week.
Now, four years after the city gave 508 Helmcken to the developer at a $15-million value, it has been assessed as high as $130 million by B.C. Assessment, and documents show it could be worth even more at market rates.
The social housing project at 1099 Richards has been completed and handed over to the city. And Brenhill has reportedly pre-sold the majority of units for its planned mixed-use 36-storey luxury tower, including 454 residential units, at 508 Helmcken. MLS data shows units are being marketed by Rennie Marketing Systems, in connection with sales brokers at offshore-focused real estate companies including New Coast Realty and Magsen Realty.
A 1,781-square-foot threebedroom apartment in the yetto-be-built luxury tower sold for $3 million last summer and a larger three-bedroom unit sold for over $3.5 million, Postmedia has learned.
Many documents related to the deal have only been disclosed by the City of Vancouver and B.C. Housing as a result of the steady pressure of freedom-of-information requests from community activists, and litigation, including a 2014 B.C. Supreme Court challenge that successfully quashed the deal’s rezoning. A judge said the city’s public process for the deal was inadequate, but the city won an appeal in April 2015.
Critics are asking whether city taxpayers got fair value in the deal. There are also questions as to whether the social and familyfriendly housing benefits city planners promised have been realized.
William McCarthy, a private developer, real estate consultant and past president of the Real Estate Institute of Canada, studied recent public documents to provide an opinion on the land swap.
“From what I have seen to date, the city and its taxpayers did not receive either financial value or ancillary benefits from this convoluted transaction,” McCarthy said. “Rather than … first commissioning a comprehensive property appraisal, engaging independent real estate experts to guide them and then offering their site for sale in an open and fair bid process, the city instead … did the exact opposite.”
NDP housing critic David Eby has asked why B.C. Housing, which is mandated to provide social housing, provided a previously undisclosed $39-million loan to Brenhill. The loan in 2016 required reporting of pre-sales progress in the luxury tower.
It has also been revealed that Rennie, the realtor, was involved in bringing forward the loan proposal to B.C. Housing ’s board while Rennie was a member of that board in November 2013.
Rennie recused himself from the discussion and approval of the funding for Brenhill from B.C. Housing in the deal, documents show. But B.C. Housing officials refused to disclose to Postmedia why Rennie recused himself.
Rennie did not respond by deadline for information on this story this week. Brenhill also did not respond to requests for information on the timing of its agreement with Rennie for this project.
“Bob Rennie was appointed to the B.C. Housing Management Commission’s board of directors on April 27, 2012, for a two-year term,” B.C. Housing stated in response to questions from Postmedia. “We are not aware of any contractual relationship he had with Brenhill.”
Rennie conducted himself in a similar fashion when the loan came before the B.C. Housing commissioners in February 2014. On that occasion, meeting minutes reveal that Rennie “left the boardroom due to the perception of a conflict of interest with this project.”
Documents obtained by Postmedia show that, in 2012, the city authorized its head of real estate services Michael Flanigan to negotiate directly with Brenhill without the city hiring a third-party appraiser. Flanigan determined Brenhill’s land at 1099 Richards was worth $8.4 million and the Helmcken lot was worth $15 million, the city told Postmedia.
In September 2013, after stickhandling the land deal for city hall, Flanigan left his job to take a position at B.C. Housing. He wrote a report in November 2013 that was used to support a construction loan from B.C. Housing to Brenhill for the project. The report was based on Brenhill’s February 2013 private appraisal of 508 Helmcken, B.C. Housing told Postmedia.
Flanigan’s November 2013 report to B.C. Housing’s board said: “The underlying residual land value of the city lot once rezoned is estimated to be $80M, therefore, B.C. Housing’s security should a default occur remains robust. … (I)f the city is unable to approve the rezoning enactment and subsequent density increase … it could result in the project being re-evaluated by Brenhill for financial feasibility.”
In response to Postmedia’s question about when Flanigan became aware of Brenhill’s appraisal, B.C. Housing spokesman Mat Loup said: “Garnett Wilson Realty Advisors Ltd. conducted the appraisal on Feb. 13, 2013. B.C. Housing staff reviewed the appraisal on Oct. 22, 2013, at Brenhill’s offices. Michael Flanigan was not aware of the existence of the appraisal and was only made aware of it following that meeting.”
In a March 28 technical briefing to reporters, a B.C. Housing official argued the agency’s involvement in the Brenhill project was justified and delivered social housing units at no cost to taxpayers. Brenhill has repaid its $39-million loan to B.C. Housing, the official said.