Auditor General Committee — February 12, 2026 — Transcript
← Auditor General Committee February 12, 2026
Sorry, we've got Brian online, right? Here we go. Test one, two, three. Great.
Good morning, everyone. Welcome to the Auditor General Committee meeting of February 12th, 2026. I will let everybody know that this meeting is being held in person and by electronic means. Council members and the public may participate by either method. Any voting members joining electronically are required to enable your video to confirm quorum. For the public, the meeting is being live streamed on the city's website and on YouTube and meeting progress will be updated regularly by the Van City Clerk, X account. In case of an emergency requiring evacuation, hopefully not. There are two exits located beyond the glass doors and to the left. And if the glass doors are blocked, please use one of the four additional exits within the chamber. A reminder not to use the elevator, use the stairs instead. Should you require mobility assistance, please remain where you are and security staff will guide you to a safe location. A defibrillator is available at the end of the hallway outside. the chamber. Please also note everyone that a new public speaker podium has been installed on the left side of the public gallery. That's my right and your left. Staff and any public speakers, you can adjust the podium heights as needed using the controls on the right hand side of the podium. I want to acknowledge that we are on the unseeded homelands of the Muscum's Qualmish and Slaid with Truth people and thank them for having cared for this land and look forward to working with them continuously in partnership as we build our great city together. I also want to recognize the immense. contributions of the city of Vancouver's team members who contribute every day to help make our city an incredible place to live work and play. And with all that said, clerk, can we have the roll call please?
Yes, Vice Chair Kirby Young is in the chair. Counselor Domino is absent. Councillor Classen has a leave of absence for personal reasons all day. Councillor Montague? President. Counselor Joe, Councillor Frye, External Representative Archie G. Sophie Choi, Charlie Taylor, Charlene Taylor, you have quorum Vice Chair Kirby Young.
Great. Thanks very much. I also do want to acknowledge at the top of the meeting that this is our external advisor, Sophia Choice, last meeting.
I know.
Thank you so much, Sophia, for your contributions to the committee and the city of Vancouver. I know that you have a lot of demands on your time, and we are grateful for that. Thank you very much. Okay, everybody, the plan for the day is that we have three items on the agenda, followed by an in-camera meeting. With respect to in-camera, the committee is required to meet in person later today. The reasons and authority under the charter are listed in the agenda. So would someone like to move a motion now to go in camera? Moved by Councilor Joe, seconded. Councilor Frye. All in favor? Great. Seeing none opposed. On to the agenda. We have a full docket today. Our first report is the audit of land sales and exchanges. And before we begin the agenda item, I do want to remind the committee members if anybody has a conflict of interest now would be the time to declare it. Seeing none. This item will have a presentation from the auditor general might as a meeting. Mike McDonnell, who will present and then subsequently respond to questions. He has staff with him from his office. Suburran Kethmad, Kretschmad, Kvichma Chandran. How's that? And Hamish Flanagan, we also have city staff from the city manager's office here as well this morning for Mill State, Environment and Facilities Management and Law available to answer questions. So, Councilors, you remember that you have five minutes to ask questions and committee members of the Auditor General and staff after that point. So Mike McDonnell over to you.
Great. Well, thank you, Chair. And good morning, members. First up on our busy agenda today, as results from our audit and land sales and exchanges. Next slide, please. I decided to conduct an audit of land sales and exchanges after my office received a whistleblowing complaint about various land sales. As my team began gathering evidence that appeared, there might be underlying systemic issues that would be better addressed through performance audit that looked at the overall picture rather than looking at isolated transactions. As we all know, the value real estate and the lower mainland is rather high. Therefore, the value of these transactions can be very significant, as well as being of public interest. Slide, please. The city of Vancouver is one of the largest landowners within its borders. It has authority to dispose of surplus land through sales and exchanges, leases, or grants. Conduct of these transactions must be consistent with the Vancouver Charter and Council-approved policies. Land sales can support city goals, such as revenue generation, urban development, the creation of public amenities, and so it's important to secure the maximum value from each transaction. So there's only one chance to make the best decision. Once sold, they're gone. There are three major types of land sales and exchanges, major site developments, which are landholdings sold to facilitate development by the purchaser, surplus streets and lanes, which are small parcels located within or next to larger development sites, and strips and bits, which are small constrained parcels with minimum development potential due to the location or other limitations. The city's practice has been to sell land with redevelopment potential priced at its current zoning value and seek to capture a portion of the value increase resulting from rezoning through community amenity contributions or CACs. These contributions, which can be made in cash or in kind, apply to all CAC eligible rezone properties, regardless of whether the land was previously owned by the city. Next slide, please. The objective of the audit was to determine whether the city of Vancouver maximized value for land sales and exchanges. We defined maximum value, you defined maximum value, used. using elements from the council policy for sales, city-owned lands, and the city's direct sales policy. These policies provided the elements the city must consider for open market and direct sales, including the city's long-term strategic objectives and priorities, fair market value, in terms and conditions required by the city. The audit covered the period between January 1, 2016 and June 30, 2024, and included policies and practices related to city land sales, as well as information provided to council for decision-making. making. We examined 16 transactions representing 40% of the total, which was 90% of the total value over the audit period. Slide, please. We assessed whether land sales and exchanges maximized value for the city, including whether REFM aligned its real estate portfolio with city objectives, had effective processes to ensure and demonstrate value, included examination of monitoring and reporting practices concerning land sales and exchanges after contracts were signed
and conducted post-transaction due diligence. Next slide, please. We didn't look at land leases and acquisitions, aside from those included in a land exchange, nor did we assess the application of development finance tools and land capture mechanisms outside of land sales negotiations and agreements. We didn't examine the city's work related to amenity cost charges. Lastly, we didn't look at governance of city land portfolios unrelated to sales and exchanges. Slide, please. Overall, we found that our audit criteria weren't met. We concluded that policies, processes, and documents weren't in place. for the city to demonstrate that it had maximized value for its land sales and exchanges. There's an opportunity for the city to enhance its practices. Improvements such as increasing alignment between operational activities and strategic goals, clarifying policy requirements, and improving the quality of information provided to council could better position the city to demonstrate it has maximized value. Next slide, please. I provided 10 recommendations in the audit report. The recommendations flow logically from the reported findings and conclusions, and I believe, are implementable and largely self-evident. I hope to see an action plan to address all 10 recommendations in the weeks ahead. I'll now ask Subran Permachandran, the engagement leader for the audit, to present our detailed audit findings and resulting recommendations. Subran. Thank you, Mike. And good morning, AGC, Chair. And as Mike noted, we examined several areas in the audit. We found that RAFM did not have a strategy to align its real estate portfolio, the city's overall strategic objectives, 13 of 16. transactions in our sample were direct sales, where the city was responded to either an unsolicited offer or resulted from rezoning negotiations. The city had not been, has not had a competitive sale since 2016. We found the city did not have a centralized database of properties, which identified characteristics such as revenue stream projections or upcoming capital costs, which would have helped proactively and strategically manage the land portfolio. Our first recommendation is that the real estate and facilities management department should establish a clear strategy that aligns the real estate portfolio with broader city objectives and define performance metrics and targets to enable monitoring and track progress. Next slide. The next area we examined were policy requirements for land sales and exchanges. With council's approval, the city released a public-facing policy, which deleted two key phrases from the version that was used internally. That approach was not compliant with the freedom of information and protection of privacy act, HIPA. The approved policy document also included several gaps that did not clarify expectations and requirements for land sales and exchanges. Next slide. Our next recommendation is that the real estate and facilities management department should
clarify and update its land sales policy to ensure that it is clearly written for all internal and external stakeholders complies with Flippa and includes definitions of key terms, requirements for the use of third-party appraisals, guidance on open market sales, and guidance on when staff are required to re-engage counsel for further direction. Next slide. As it relates to the policy requirements, we examined all other applicable requirements and guidance in place for land sales and exchanges. REFM had compiled various land sale disposition documents into a policy binder. However, the binder included documents that were outdated, superseded, and extraneous, and not marked as such. The documents ranged in date from 1974 to 2023. We also found a policy contravention for our transaction in our sample. The policy requirements in point. place at the time of the transaction noted that when land was provided for social purposes, it is only to be done through long-term leases. However, the report to counsel for this transaction incorrectly cited social purposes as the circumstance which permitted a direct disposition. Despite this policy contravention, counsel gave RFM authority to negotiate directly with the counterparty for this transaction. Next slide. Our next recommendation is that the real estate and facilities management department should develop and implement a clear. authoritative and consolidated source of policy guidance on sales and exchanges of city-owned land that is consistent with legislation and counsel-approved policy, follows established review process, assigns responsibilities, and delegates authority. Next slide. Focuses on mandatory requirements and is distinct from documented procedural guidelines. Next slide. Next, we examine whether adequate information was provided to counsel for it to effectively carry out its oversight role. RIFM did not follow counsel-approved policies. that limited aggregate extensions on transaction closing dates to 90 days without further counsel approval and required interest to be charged from the original closing date. Two transactions in our sample had sale prices over $90 million each, and each were extended by at least three years. Counsel was not asked to approve any of these extensions, and interest was not charged for either transaction. RAFM did not maintain documentation on how it assessed whether to amend contract terms or dates. The staggered nature of these transactions made it difficult to see what was deferred, the risks involved, and how the city's overall return had changed over time. Our next recommendation is that the Real Estate and Facilities Management Department should establish an appropriate review and approval process for material changes, ensure that sales contracts are consistent with all applicable council policies, and document post-transaction analysis to identify what went well and what could be improved. We also recommend for land-sale transactions involving high-esel transactions involving high- high-risk factors that the real estate and facilities management department should
update counsel when transactions are completed and provide regular updates on outstanding components. Although counsel was routinely provided with transaction sale prices, they did not receive details on the probability and likelihood of transaction benefits not being completely realized. Counsel also did not receive information on the dollar value of other benefits or costs arising from transactions such as potential lost revenue. For example, there's also an instance of where key information was not flowing to counsel. For one transaction in our sample in particular, the sale of 601 Beach Crescent, the city had issued an invitation to offer an ITO for potential bidders, which stated that the city would take responsibility for any additional CAC obligations not specified in the ITO. However, the subsequent sales contract identified the purchaser as solely responsible for any additional CAC obligation. Years later, after it was determined that there was a $12.1 million cash CAC due staff confirmed to the buyer that the city bore responsibility for the CAC without documented rationale for ignoring the legally binded contract, which stated otherwise. At that time, the assurance was not supported by a contract amendment, nor was their documentation indicating that counsel had approved this decision. We found that for six transactions in our sample, counsel was not told that the sale price was less than the appraised value, differences of which range between $50,000 and $2 million. dollars. Staff in those transactions did not demonstrate that public value had made up the difference on these transactions, and instead, counsel was told that the negotiated price represented market value, which was an oversimplification. We cannot definitively conclude that these properties were sold less than market value, nor can we attest to market value having been obtained. For the sale of 601 Beach Crescent, the city had considered four scenarios, which were presented to counsel using a mix of present and future values, which lacked context. staff did not use net present value calculations, which is the most effective means of quantifying present and future costs and benefits. Our retrospective net present value calculations confirmed that despite the selection of the offer with the highest net present value, in three of four scenarios, the net present value we calculated, were millions of dollars lower than the values reported to counsel. Next slide. RIFM's approach to selling land at current zoning instead of conditionally approved zoning was not documented in policies and percentage. procedures related to land sales, but did align with the city's established CAC procedures. In three transactions in our sample, we identified differences in land value between current and conditionally approved zoning. The differences in values range between $500,000 and $2.9 million. Council was not made aware of these differences when approving these sales. We recognize that the CAC process is an opportunity for the city to achieve financial and non-financial
benefits that in part bridge the difference in value. between current and approved zoning. However, achieving a higher upfront price could provide a more certain financial benefit for the city. Counsel should be provided with the opportunity to understand the full range of options for the sale price and CAC components of the land sale transactions. Next slide. Our next recommendation is for the Real Estate and Facilities Management Department to provide counsel with information to inform decision-making for land sale approval, such as validating that the sale price met or exceeded market value of the land or that public value made up the difference, the property value assessed by third-party appraisers, information on the assumption and constraints used in the appraisals, next slide, high-risk terms and conditions, risks that the expected benefits of the transactions may not be fulfilled and other pertinent information as identified by counsel. REFM did not have a requirement to document price rationale, which would demonstrate the relevant factors that were given appropriate consideration to support the final sale price. We note that this type of the type of price. of analysis had been recommended to REFM twice before by external consultants in 2016 and the city's internal audit department in 2018 but was not implemented. Although the city's land sale policy established competitive sales as the default, it did not establish criteria that could be considered, should be considered, in obtaining maximum value in competitive sales. As noted previously, the city has not had a competitive land sale since 2016. Next slide. Our next recommendation is that the real estate and facilities management department should ensure that adequate and consistent document retention practices are embedded in its policies and related procedures. Next slide. We also examined the resources to support staff in executing their tasks and oversight of those tasks. RIFM's internal process map lacked both a formal review schedule, a threshold for obtaining third-party appraisals, and noting when internal approvals were needed. There was also no requirement to complete the transaction review checklist after it was established in 2020. Four of the seven most recent transactions, lack the complete checklist in the transaction file. Our next recommendation is that the real estate and facilities management department should ensure that transaction checklists are completed, appropriately signed off, and retained in the transaction file. Updating existing process maps and checklists, and ensure that these documents are easily accessible to all staff that support city land sales, schedule for regular review and updates, and reviewed an update per the schedule. Next slide. Our last findings relate to the monitoring and oversight process and the path forward from a calculation error. The contract structure for the sale of 601 Beach Crescent was unique and complex. The city received an initial base price of $20 million and would receive the remaining adjustment
price based on the completion of specific conditions. We found that the city's structuring of this deal was reasonable. The adjustment price calculation required the input of gross buildable area, and here the city had made a miscalculation. The miscalculation resulted in the city calculating an adjustment price of just over $97 million. whereas the adjustment price should have been just over $110 million, understating the amount owed to the city by the buyer by just under $13 million. The milestone related to the delivery of the adjustment price has not yet occurred. Next slide. Our final recommendations are that the Real Estate and Facilities Management Department should establish risk-based monitoring and follow-up practices for land sales to ensure that appropriate monitoring for land sales once council approval has been obtained, and until the city has agreed, has received all the first. agreed upon financial and non-financial benefits and have independent validation of high-value calculations. Next slide. And for the 601 Beach Crescent adjustment price miscalculation, the real estate and facilities management department should present a comprehensive financial and non-financial analysis outlining the best available options for the council's consideration and approval. I'll turn it back over to Mike. Thank you, Sue Brin. The next slide, please. Thank you. We have two recommended recommendations for the committee as a committee as a second. is typical at the end of these presentations, that the Auditor General Committee endorsed the 10 recommendations in the report dated February 5th, 2026, entitled Land Sales and Exchanges, and Further, that the committee recommend, Council endorse the 10 recommendations. Happy to take questions at this time. Yeah, thanks very much to the Auditor General and the team. I'm going to provide an opportunity for the committee now to hear from REFM staff, and I think Armin M. ROLio is going to provide some comments. Thank you to the chair and to the committee member I'm here respectfully with our city team to respond to the OAG report on land sales and exchanges. This will serve as our public facing response to this report in chambers, as opposed to reacting in other channels. While we appreciate the role of the Auditor General and we support some of the recommendations, in principle, we do not concur with the core findings. In key areas, the analysis does not fully reflect the way community amenity contributions and complex real estate transactions operate in practice. Across market cycles, delivery models, and policy-driven negotiations. As a result, certain assumptions are flawed, critical context is missing, and some conclusions are not borne out by evidence. Our goal today, we hope, is to clarify that context, address specific findings, in particular, the 601 beach transaction, and outline concrete concrete concrete,
policy and process improvements we will also bring forward. The context and how do CACs actually work in practice. They are negotiated. They are policy-driven packages that balance land economics, public benefits, and council direction. In many transactions, the fee-simple sale price is just one part of the broader negotiated outcome that also includes in-kind amenities, residual land value modeling, and rezoning risk. none of which we actually saw in this report. Evaluating the sale price in isolation misstates the total public value and could have detrimental consequences on the CAC benefit itself. Interest charge in closing extensions. We acknowledge that certain extensions proceeded without counsel approval and that some contracts did not contemplate interest on extensions. In practice, however, staff would have not recommended charging interests where delays flowed from the buyer due diligence or city regulatory timelines, particularly on multifaceted rezoning. Because a city as the approval authority can itself be the source of the delay. Charging interest in those circumstances would be inequitable and inconsistent with common industry practice. We do, however, see this as an area that necessitates change. And we will bring forward. a policy update to formalize extension protocols, clarify when council approval is required, and codify the approach to interest for city-caused or approval-related delays to be more consistent with industry practice. Sale price versus market price. Findings overstate the gaps. We dispute the conclusion that negotiated sale prices fell below market value in a manner adverse to the city. Staff requested changes to these inaccurate findings, which lack sufficient context. All such requests by the OIG were not considered. In CAC context, market value must be assessed with the total package in view. Residual land value under existing zoning, counsel's directions on any rezoning, and the distribution of risk and the in-kind public benefits secured. Retrospective valuations that treat rezone value as a given or strip out amending concessions do not reflect how value is actually realized for the public. Land sales and CAC negotiations, policy-driven direct sales. The city often requires site consolidation to achieve council-approved planning outcomes. In such cases, lane or street portions have limited utility, except when assembled with the adjacent lands. This is not rocket science, it's just common sense. competitive sale is typical, impractical, and counter to policy intent.
A direct sale to the consolidating owner is the only viable route. Who else would be interested in a purchase like this? The current policy categories, one, restricted to adjacent owner, aim for fair market value, and two, essential to assembly, attempt above market value. However, this can blur in practice. When consolidation is required by, policy. Attempting above market in category two can also conflict with CAC objectives if it effectively double counts the uplift intended for the public benefit. We will intend to bring forward a policy to clarify to align direct sale categories with planning consolidation requirements and CAC delivery, including standard valuation assumptions for lanes under current zoning. Valuation of lands at rezone value. a misapplied assumption. Current city procedure is to Vend lands in CAC-related transactions at their current zoned value. This is not done without process. This is done for a specific reason due to the independence of land residual related to CAC negotiation. To sell lanes at conditionally re-zoned value creates legal challenges, the nuance of which were not considered fully by the OAG. Valuations for city lane portions should not be tied to current zoning with the benefits of uplift captured through the CAC framework rather than through speculative lane pricing, risk allocation, and as is where is sales. The city has in practice transferred land on and as is where is basis with the purchaser bearing environmental utility relocation and other site risks. Because the city does not share these risks, as private vendors sometimes do, direct price comparisons to conventional risk-sharing transactions are not apples-to-apples. In many deals, price and risk are inversely related. The city's position reduces the risk to the taxpayer, lowering the nominal sale price, and that inherently is the issue. Lane sales, appraisals, documentation expectations. Many of the OAG's findings were not substantial. We were only provided with limited excerpts, two or three pages, of the OAG commissioned retrospective appraisals without market comparables or residual analysis, as would have been required. Appraisals, as per standard industry practice, must be read in full. Relying on excerpts can mischaracterize methodology and conclusions. However, while we respect the OAG's position on this, the OAG could have redacted the OAG's position on this, the OAG could have redacted
the name of the appraisal company and provided a more fulsome reporting on how the comparative analysis stacked up to our rationale. In addition, and more importantly, the CAC procedures, these are staff procedures that we are required to follow, set out specific assumptions that were not reflected in the audit, including valuation date tied to the timing of the rezoning application, residual land value modeling approach for both existing and rezoning. scenarios, excluding purchase price as a representation of the market land value under the existing zoning. Omitting these constraints can materially overstate lost value, which is the crux of the OAG criticism in this report. Going forward, we will update our appraisal instructions and file documentation standards to ensure consistent valuation assumptions and clearer records for counsel and auditors, including qualified amenity concessions where feasible. Direct sales, where competitive bidding is not logical or feasible. For lanes essential to site consolidation, competitive processes are typically neither practical nor in the public interest. Third parties cannot assemble or use a lane that serves other landowners. It defies logic. The audit acknowledges policy ambiguity here, and we agree that the policy needs to be clearer, and therefore, we will put up. propose policy language that defines when a direct sale is required by planning consolidation, set standards, valuation approaches for street lane portions, and clarifies council reporting where direct sale delivers greater public value than a hypothetical competitive sale. 601 Beach, facts, council disclosure, and resolution. The purchase and sale contract addressed the sale terms only. CACR. obligations were resolved after execution and were identified as a city obligation in the invitation to offer and on all which offers were then submitted. Council was informed at the city obligation to pay the CAC on July 8th, 2020 in an in-camera presentation. July, sorry, counsel then subsequently approved an extension agreement of up to $3 million for up to three years on April the 15th, 2025. Under that agreement, the 2nd, the 2026, the 2026th, the $12.1 million, CAC paid from the buyer's initial $20 million purchase price, pre-price reduces the city's option repurchase price by $12.1 million. If the buyer fails to meet these obligations, including the payment of the remaining $97.7 million, by the anniversary or any other extension, the option price falls from $20 million to $7.9. More importantly, counsel was advised of the calculation error and the CAC treatment in a memo dated August 4th, 2025,
with a public release of that memo dated September 8th, 2025. In short, the city secured a materially improved downside position. The statement that counsel was not advised and that the CAC was illegally or legally the buyer's responsibility is incorrect, based on the invitation to offer and the council approved to terms. We will recirculate the precise memo date in the Council RTS to ensure that the public record is clear and complete. Audit statement on below appraisal direct sales. The report cites six of the 12 direct sales closed below appraised value, which REFM disputes as incorrect, misleading, or missing sufficient context. The OAG. then notes that there may be valid reasons and that the public benefits can compensate for price differentials. Well, that is exactly how negotiated CAC's function. There is an inherent trade-off between land price and an amenity value, while preserving the voluntary nature of the negotiated CAC. Presenting either a higher land value price or a higher CAC as a menu option can undermine that voluntary framework and the integrity of the negotiation. Despite the characterization in the audit period, and to put this into perspective, this team has delivered through CAC negotiations, substantive cash benefits and therefore value to the city, inclusive of, 4,500 units of social and affordable housing, 1,500 licensed child care spaces, 40 plus parks, cultural, and community facilities, 15 CACs, housing projects totaling 1,361 units, and two sites for future city amenities. These outcomes reflect the city's commitment to the stewardship of city land to provide long-term public benefits under council direction. I would also like to point out a governance clarification. REFM and RES, real estate services, negotiates CAC transactions. The director of planning brings the CAC recommendations forward and council makes the final decisions. CACs are not approved by REFM. They are approved by council on planning's advice. We appreciate the Auditors General's efforts and share the goal of transparency in continuous improvement. With the policy clarifications and documentation enhancements outlined today, we will make our practices more clearer, more consistent, while continuing to deliver the public benefits that council and the residents expect. All in the spirit, again, of condition. continuous improvement. Thank you. Thank you. Thank you for the response and the comments. So I just want to remind committee members at this point, you have, unless you move additional rounds,
because I suspect this is going to be a fulsome conversation. You have up to five minutes to ask questions of the audit general and of city staff, and we will begin that now. I'm going to advance Councilor Montague first. Yeah, move for a second round, Chair. Okay, moved seconded by Council Joe, all in favor. Carry on, Council Montague. Yeah, thanks. And I do appreciate the fulsome response from staff on this because there were a lot of red flags that I had when I was reading this report, and I read it several times. And I think the staff response gives some real context to the report that may be missing.
My first question is the report says that sales were below appraised value and acknowledges that there are public benefits and CACs that offset the price, but didn't include them in the assessment of value. And my question is, why did the audit not assess overall public benefits, including things like housing and child care community amenities when evaluating those land transactions? And would that not provide a more balanced value, a balanced view and an actual value received by the city? Well, thank you for that question, Councillor Montague. The issue is documentation. We were looking for documentation to support the additional.
values and to provide evidence of the overall maximization of value. Because, yes, as we explicitly acknowledge in the report, there's more to it than the price. There's no argument about that whatsoever. What there was missing was the evidence that would allow us to see that that had all been considered. So I guess there may have been a lot of documentation, but community benefits in CACs clearly have a worse. So I'm puzzled as to why it wasn't included in a calculation of value. So how does, without the documentator, how does the audit reconcile the finding that some sales were below appraised value and look at what you call, I think you called it an upfront price only. It didn't include the community benefits and CACs that are clearly a part
of the purchase cost. And that that's exactly the point to Council Remedueue. That that we were looking for was documentation, costings, pricing, things that would draw us to understand how that gap was being filled. Okay. I'll move on to something else.
We talked about, you talked about appraisals in the report. And appraisals and land assessments are great tools, but ultimately a property is only worth what someone's willing to pay for it. And as noted by you and staff, these are complex and sometimes unique deals. So I assume
the buyers of some of these, of some sales is very limited. In some cases, the land may only be useful for one, for actually just one buyer. If negotiations break down and a deal can't be reached and there isn't anyone else in the queue, what happens and what is the cost of the city? I'm looking at things like costs to maintain property, including vacant land, losses and tax revenue, no community benefits. What happens when those are you? negotiations stop or breakdown. The city still owns land. The issue is, and we've said this very loudly in the report, there is only the one opportunity to get it right. There needs to be, though, given the magnitude of the transactions, there needs to be complete. Well, some documentation to support that the city obtained this best value. So the issue isn't necessary that we didn't get best value, that we just can't necessarily show it. Could you say that again, please?
So is the issue then that it's not that the city didn't get best value, is that we can't show it. Correct. Okay. There's one thing in the report, and I may have to come back on for an answer, and this may be, I don't know if this is for staff or the AG, but there's a part of the report, and it was actually quite high, it was highlighted in the presentation as well.
And I'm going to read a portion of it, so I don't get it wrong. But it says that the city lacked a strategy to align the disposition of city-owned surplus land with its broader strategic goals. Provides a little bit of context. And then it says this ad hoc method lacked alignment with comprehensive strategy focused on achieving the highest and best use of land assets. But isn't the VHDO, the VODC, and the GBE, were they not meant to address that very issue? but that was a, and that was something brought forward by staff, but eventually scuttled by basically a minority group of four on council. Councillor Montague, you're right. You will have to come back on for that answer. I'm sorry. I'm going to, do you want to put yourself back on it? I'm going to advance Councillor Frey. Yeah, and if this is at the tip of the auditor general's tongue, based on, I'm happy to give space for the auditor general to respond to Councilor Montague, if that's tip of your tongue otherwise.
What we found lacking was the strategy to link the land sale portfolio with long-term maximization of value over a period. All these transactions over the audit period, excuse me, the vast majority, were conducted on an ad hoc basis, as opposed to part of a plan. disposition of land that was probably best done that way. And I guess what we're looking for was here's the city's very extensive portfolio of properties that it owns, and it's an unusual situation, Vancouver having quite so much land the city itself owns within its own boundaries. And what is that going to look like years to come in terms of what are we going to develop? What are we going to sell somewhere else? What are we holding for future? value and that's what was that was essentially what was lacking. This is a similar finding to what the mayor's budget task force brought forward to council two years ago, which was endorsed that there should be more strategic approach to managing the city's real estate value to maximize return on the path. That begins with documentation, essentially. Yes. Okay. Now that being said, because I heard the deputy city manager talk about memos, from 2025, August 4th and September 5th that detailed the Beach Avenue.
Did you have access to those files? Did you have access to enough information to, like, was there, were you able to review in-camera decisions that weren't published? Thank you, Counsel for Friday. The audit period concluded in June of 2024, and we've been working through with those findings since then. So subsequent events like that, especially a subsequent event that came along as we were, finalizing the report. You'll appreciate this has been a draft for a very long time.
Would be the ideal sort of thing for the city to put in a response to a recommendation. Okay. I track that. I guess a question for the, maybe I'll just jump over to the deputy city manager with a little bit of clarity on the response to the recommendations from the auditor general. Am I following correctly that you're generally supportive of the recommendations from the AGO with the exception of the piece on Beach Avenue?
No, that would be wrong. Okay. Thank you. Okay. Maybe if I mean, I'll jump back on for a second. I get up for my thoughts here. Thanks. Okay. Thanks, Councillor Frey. Councilor Joe, you have the floor. Yeah, thanks, Chair. Thanks, other than General for conducting this work, very important for the for the city. So I got a few questions here. So many of those transactions, the decision was made actually in camera, meaning it's not so how do you obtain those in-camera information? Are those
information released to you? Yes, they are. I have access to this. So you understand all the rationale behind each transaction. Oh, we understand the rationale that was presented to counsel.
Okay. All right. So the other question is about maximizing the land value. So we know the market conditions fluctuating all the time. So what is your criteria of this market value? And how do we compare that? Did you use PC assessment or any other tools to benchmark? No, we, well, it's a matter of, okay, what information was presented to council and presented as being market value.
How does that compare to work that we had from consultants that provided a context for what market value,
an up zoned value would have been as opposed to simply at the existing zoning. And what's the gap? And how do we explain that? And what documentation was there to show that the city was obtaining the value for that difference. That's what we found missing. See,
I didn't say the city did not maximize value. They said the city did not demonstrate, could not demonstrate. There's a vast difference between those two things. Yes. Okay. Thanks. So other questions regarding the documentation. So when council received this package, there's always clear documentation regarding what is the in-kind contribution. What is the value of income contribution and what is the overall value in the staff's presentation. So you are seeing there's not too many documentation to capture that? Not sufficient. Okay. So in the console package, there's always clear value for each contribution, in-kand or cash. why there's no documentation, I just don't get it. Did that documentation, did it adequately bridge the gap? Did you know that that was sufficient to bridge the gap between the current zoning and the conditional up zoning? I don't think you did. Okay, can you elaborate more about that? Because I saw all those numbers in the package. You wouldn't have seen, and you did not see, what the assessed value for the property was. at the conditional up zone value. That was not included in the package council or so. All right. Thanks. Okay. Other questions, out of those 16 transactions, how many of those transactions have the environmental and utility risks? Well, it varies on site. So that would be part of the assessment process. Okay. So I know the numbers seeing that is undervalued a lot, but what is the percentage? in terms of the overall transaction? I can't put a figure on that because of the absence of the information. And that's why we brought forward figures for illustrative purposes, not to say, hard and fast, this is what was left on the table. I could not do that. And that has not been done. And it shouldn't be characterized as such. Okay. So basically, from what I understand from this presentation, and your answer is, you know, we couldn't tell about how much. value it was under or perhaps or we don't know because there's no documentation. Is that a fair summary of the conclusion? It was insufficient documentation. Okay. But some people I saw in the media or in the communities in that city, you know, undersell the value of the land, which is very different from this conclusion. How do you... I have no control over what people in the media write or say. You'll appreciate. We chose the words. in the report carefully. If people choose to mischaracterize those, I'm afraid that is out of my control. Okay. So I got one question.
I'll come back. I don't have enough time.
Thanks, Chair.
Okay. We're going to move to one of our external advisors now, and that is Archie Johnson. And just make sure your mic's on.
There you go. Thank you, Chair. I have a thread. So land sales, a very, very important process. activity of the city. So Mike, thanks for tackling this very comprehensive issue, and I appreciate your analysis and your recommendations. And a question for the deputy city manager. I appreciate your response as well in terms of both the audit response and also your oral presentation today. I guess a question, when I read through your response, you know, your response. and listen this morning, there's obviously some discomfort with the recommendations. And I guess my comment would be when you're developing your action plan, that it'd be more clear as to which recommendations you're in agreement with and which recommendations you don't believe fits the environment that you're working in. So I think that it's a lot. It's a little bit difficult to sort of, it's very clear that this concern with the report. But, you know, the action plan, I think, is where you'll be setting that out.
Correct. And thank you for that. And we will. Archie, do you have, are you continuing on with further questions?
I'm finished.
You're finished? Okay. All right. Thank you. I'm going to advance Charlene Taylor now.
Thank you. As similar to what Archie just said, I just wanted to be clear with the city. I mean, you mentioned that you agree with. many of the proposed enhancements. I just wanted to know which specific recommendations they agree with and which they don't. And then the action plan. I just wanted to be more clear because I was, it's anyways.
Fair enough. Right. We are still combing through all the recommendations. And obviously, we've got and actually had orated a few of the action items as well. We would like to collate those with those recommendations and ensure that we move forward in a coordinated manner. But we will. I'm sorry, I can't answer all of them. Obviously, there's 10 of them. Or nine of them. now, but I think they do require, and we totally agree that there needs to be policy updates, especially in the time period, that this is, CACs and land sales have evolved at the city of Vancouver through subsequent counsel, obviously, and staff as well. So I think it's ripe for a refreshment, and we absolutely agree and appreciate that. But I can't answer your question fully. I'd like an opportunity to look through the recommendations. Again, look to what our action items are and then make sure that they're coordinated.
Okay.
And we will definitely provide a document that you'd be able to see clearly at that point.
Okay. Because that's always the benefit of doing an issue a lot. It is just the action plans that can come from it for the improvements that benefit the city of Vancouver. Correct. And we're committed to continuous improvement. Okay.
And then the only other question I just had was with respect to the interest, there was a few cases where the interest was foregone.
So are you going to pursue some recovery for some of those? Or is it probably a case-by-case basis? It is a case-by-case basis. And as I said in the, in my presentation, that in many cases, regardless, we wouldn't not have agreed to actually even consider an interest.
In the future, we'll make sure that council is aware that we're not considering the interest. And then just in terms of updating the council on amendments, like, are you going, what are your plans with respect to just that?
I think that's my last question. We'll provide a more fulsome response from that as well. Okay. Understanding it's an important issue. It is. It is. It is. And I recognize that. For accountability, transparency. Absolutely.
Thank you. Of course. Thank you.
Thank you very much. Okay. I put myself on the cues.
I'm going to ask a couple of questions. Just going to preface my first question by saying that I saw a language in the report a couple of times that said that the procedures and documentation do not indicate necessarily the city received full and best value for the transactions, but they don't necessarily indicate it does not. And I'm paraphrasing that. It does appear to be both a documentation as well as potentially practice and an intersection with older regulations. I'm going to direct my question, I guess, to our head of RAFM. And that is really that at this moment in time, counsel are sitting in an general committee with a report in front of us that asks. us to endorse these. We're hearing from staff that you support some, but not all the recommendations, not full clarity on which ones those are. And so counsel has a decision asked to make today in terms of how to dispose of this. What sort of time do you feel that you might need to provide some information back to the committee with respects to delineating the recommendations in question? Because it does strike me, there's some irony in not having full information to make a decision when that is. also a theme that appears to come up in the report, on the audit itself. I appreciate that. We'd like two weeks. Okay. Thank you. I'm going to ask a question now and direct it to our auditor general, and that's really around. Would you characterize some of the recommendations? I think you said resulting from the fact that there was potentially a lack of documentation, that is it a number of different factors such as some policy, may be pre-existing, have not necessarily been sunset, updated, and consolidated. May not be modernized. It might be a combination of that. It might be a policy that departs from previous practice because with a rationalization for counsel to consider in terms of updating, it might be, for example, alignment on something like annual reporting with planning and RFM working together to indicate what a summary on an annual basis of land transactions and value received. Is it those types of things, do you think that would clarify some of the gray areas that were identified in Liverpool? We have a recommendation. Thank you, Chair. We have a recommendation number three, which speaks to fuel tidying up the guidance, removing redundant pieces, contradictory pieces, contradictory pieces, and being more specific around what things need to be documented. So it's not just removal of things that don't work. anymore. It's not just complying with guidance from counsel or seeking an exemption from it, but it's also creating more fulsome documentation, documenting how market value is determined, documenting how best value has been achieved, documenting the value of the various components of
agreements and CACs. That's essentially what we found lacking to a great extent here, and would put us in a position to be unable to conclude. Okay. Can you speak to sort of following up on that, can you speak to what you see is the role of planning that may be bringing forward the CAC recommendations? Real estate has an important role in negotiating those delivery goals over to engineering. There may be factors that are not anticipated that may impact how or the nature of amenities that are delivered. So would you say that this is an alignment opportunity? I'm trying not to stray into one of the summary reports in our whistleblowing report, which did speak in part to coordination between departments. And to be honest, I'm a little reluctant to get too far into telling departments how they should speak to each other. Really, all I would want to suggest is that each group has their specific roles based on, you know, the responsibilities that they've been assigned by the city manager. and it's incumbent upon them to communicate. Okay. And yet you noted gaps in the report, hence I think, felt fair. It opens it up for questions. It would be hard of that, sure. Okay. All right. I'm going to advance some of the other counselors are coming on for second round of questions. Councilor Montague, go ahead. Yeah, thanks, Chair. I don't know. Did staff have any, anything to add on my last question at all, Chair, regarding the VHTO, VLDC and GB, if not, I'll move on. Thanks, Councillor Monskou. Andrew Newman, Director of Real Estate Services.
Yeah, we do have some comments on that. Principally, that there is, and there was represented to the Auditor General, that there are strategies for our dispositions in our land holdings.
We routinely review our portfolio with financial services on an annual basis. This information was made very clear to the Auditor General and was not included in the report. Are some of these reactive sales? Absolutely. In cases where it's precipitated by a rezoning or an adjacent assembly, the city would look at those as very prime opportunities to secure a premium above market value. So it is an incorrect statement to make that there is no strategy. Could there be room for improvement in these? Absolutely. But some of these points were addressed time and again and not included in the appraisal. in the audit. If I may, I just want to clarify a few other comments that are maybe a bit disputed on this. And that is the point around the 601 Beach Crescent deal and that information being brought to the Auditor General and not included in the report. The OEG's report actually includes subsections noting after the audit subsequent significant events. So there were opportunities for the OAG to speak to information that they learned after June 2024 or 2025. However, documentation on the 601 Beach deal, which very, very clearly outlined to council and the public, the error that was made and the recommended next steps was made apparent to the OAG and was not included in the report. To Council Joux's comments on the ability to measure the public benefit. I think that is absolutely within the OIG's capability to do to look at a delta between sales price and what is publicly available information on the total value benefits. That information is in the public record. And to the question of transactions falling below appraised value, I think that is worth exploring a bit further. I can absolutely speak to what that percentage is. delta is between appraised and sale price. In three of those transactions, we were actually within 4 to 6% of the appraised value. Industry standard is generally anything within 5% to 10% is deemed to be market. So on three of those transactions, we were within 4 to 6%. A fourth transaction was in the threshold of around 300k, which fell below our policies for appraised value. And so it was relied upon staff into evaluations on that. The remaining two, and this speaks directly to some of the points around this $2 million delta, relied on a range of appraisals, multiple appraisals. I think it's probably worth noting an appraisal is one party's opinion of value. It is not a
determinative piece of information on that. There's many reasons why parties would get different appraisals, whether that's for insurance, for financing. or often in our case for negotiating purposes. In two of these transactions, there was two appraisals. This was all made aware to the OAG. There was a buyer's appraisal and the city's seller appraisal. In both of those occasions, the ranges were essentially met in the middle. So we would have one where we'd say at $2 million from the buyer. Our opinion of value was closer to six. After a significant negotiation, we ended up roughly around $4 million. you could just as easily have construed that that property was oversold by $2 million versus the findings stating that it was undersold by $2 million. I think it's a very important piece to understand that appraisals are not determinative. They are one party's opinion of value. And ultimately, the market price is what it transacts at between a willing buyer and willing seller. Those appraisals are tools to negotiate to that point. These facts were all laid out to the OAG and were not included in the report. Yeah, Andrew. Thank you for that.
I appreciate that. I'm going to move for a third round if I could, chair. Maybe just going back to 601 Beach and asking of staff, one of the key assertions here is that the city used the wrong numbers in calculating the gross buildable area. Can you speak to that specifically? Is that?
Yes, that's correct. Counselor Fry. There was a miscommunication. between the planning department and the real estate services team regarding the deductions for balcony exclusions. Ultimately, no monies have been lost. And as was updated to counsel in August and publicly in September, it was made very, very clear that this deal still represented the best opportunity for the city. And that's looking back retroactively at all the other bids that were made and looking at the value of those bids and the context of this error. It still superseded those. by a long shot.
That's correct. Yeah. And again, the subsequent events that were not noted in the audit are that we have renegotiated that deal to be significantly in the city's favor in terms of there being now $3 million extension payments due for the next three years. And if we do need to exercise that option to purchase the back, the strike price has been reduced by $12.1 million.
To the, there's a quite provocative statement in here as well that there's been no competitive land sales since 2016. Can you speak to that assertion at all?
I think that that is, that is an accurate statement. As I mentioned before, a lot of these are precipitated by rezoning or assembly projects where the city sees a good opportunity to unlock value that is above what would have been achieved on that site. we're generally not a big seller of lands. As you're aware, the PF is to large extent to land bank for strategic reasons and to some small except for income generation as well. And the goal is to obviously advance that further. But there have been quite a few direct sales, but not that many tenders as of late. And again, the assertion being that the majority of direct sales are bits and strips, That's correct. Not entirely. Business strips for lanes, et cetera, and also development assembly opportunities. So an adjacent owner who would be able to achieve a much grander list of public benefits and value creation and ergo, better payment for the city.
No, it wouldn't. In this opportunity, we would view this as by far, the best opportunity to unlock value is to vend it into an assembly project. That adjacent buyer would be able to pay substantially more. And in those appraisals that we brought forward in those cases, we've often done both a standalone valuation and an assembled valuation to come up with those recommendations.
Okay. I guess just getting back to, and maybe this is a question for the deputy city manager, but I'm looking at the, on the, I'm looking at the, on the, the whole recommendations. And I mean, I can appreciate that the 601 Beach may require a little extra time to respond to, but by and large, I think the documentation that's kind of requested generally in here and strengthening oversight and counseling update. Is that not fairly reasonable and agreeable that we can, without assigning blame or anything, just as a moving forward,
kind of like, can we can we start? Absolutely. I think we can actually strengthen them. That's the time we'd like. There's things that we'd like to. actually augment to actually make the recommendations even stronger. Okay. Thank you. Thank you. All right. That's good. Thank you. Thanks, Councillor Fry. Counselor Joe.
Yeah, thanks, Chair. So I got further question for our staff. So first question is for all of our land sale transaction and also the, how many with CEC income contribution and how many with cash CEC contribution? We know that. And how many we suppose?
I'm not sure if I can answer that.
Ballpark, any estimation? Or only for those 16 transactions? I just want to understand, for this report, how much income contribution we did not consider.
I would have to look into that and get back to that.
Okay. Thank you. And then, again, I asked the same question to the auditor general. For the 16 transactions, how many transactions with environmental and utility. risks. Do we know that? Do we know how many had environmental risk for utility issues? Yeah, out of those 16 transactions.
Significant number.
Yeah, a significant number.
Again, I wouldn't be able to quote the precise amount, but it is not unusual for those risks to be present in virtually all transactions.
Okay, thank you. Other questions for the auditor general. Let me see. So what is your communication process during the auditing process with REFM? Are they been very co-op? optative supporting all the documents you need?
This has been a challenging audit to clear, Councillor Joe, in all honesty. You know, it's been stated repeatedly that we've been told and not listened to. We've been told information and we haven't been listening. And that's just not true. In relation to the 601B chair, yes, counsel may have been informed mid to late this year, but when were they aware of the error? long before then. So the communications we had with RIFM was, look, the finding is the finding as of the end of the audit. You have an opportunity to make this look positive. Here is the recommendation. The recommendation is perfectly reasonable. Just respond saying this is what you've done. It's already taken care of. But no, we're deciding to make an issue of it here in the council chamber today. That's pretty much reflective of how the audit's gone.
Thank you. Other questions, I think for my first round of question, we know there's a significant difference between the conclusion that we don't have enough documentation to assess or to evaluate whether the city maximize the land value. So that's one conclusion. The other conclusion is, yes, city did not maximize the value for land sales. Do you agree there's a fundamental difference between these two different conclusions?
Oh, I believe that's what I said in your last rounder questions.
Okay, so I saw in this presentation the audit conclusion slide number seven. It says Citi did not demonstrate that it maximized the value for its land sales and exchange.
It could not demonstrate.
Exactly. That's very different than saying that it wasn't happened and it didn't happen.
We were unable to conclude on that. I couldn't say that it did. It couldn't say it didn't. There were a couple of errors that we've pointed to specifically. And indeed, I'd like to speak to one of those errors. That was the payment for CACs on 601 Beach, where staff have stood here today. And they've also put out to the media that that was fundamentally incorrect. And I'd like to ask Camus Flanagan to speak to that from a legal perspective. Yes, please. Thanks, Mike. So just a little bit of background on that. The city obviously said that the invitation to offer obliged them to pay this 12 million. $12.1 million amount. But the clues in the name, invitation to offer. Contract 101 tells you that you need offer and acceptance. You need a legally binding agreement to have any sort of obligation in a legal sense. And so the invitation to offer is not even an offer. It's an invitation to offer. So you haven't even got to offer yet, let alone offer and acceptance. So it's pretty clear that, from that, that once they did get offer an acceptance, which is in a separate sales agreement, there was no reference to the party's obligations regards to that payment. And if there was any doubt about that, the contract itself includes a clause that says that the sales contract is the entire agreement. So it's called an entire agreement clause, section 1.25 of the agreement. And in fact, even the ITO itself says, only those duties and obligate. which were expressed in the sale contract would apply. There's nothing in the sale contract about that. So in sum, the ITO doesn't have any binding legal status. The contract is the legally binding document. I mean, that's contract 101. And it contains no obligations regarding the CAC. Sorry, I should. Councilor Joe is at time. I should have been watching that better. So I think we do have a third round, Counselor Joe.
Yes, thanks. I have some questions as well. And I'm just going to ask the simplistic one from the last. layman's perspective. So now in the public realm, people think that the city received $12 or $13 million less for Beach Avenue. So I guess my question directly to staff in layman's terms, I know this was touched on earlier. Councilor Frye asked about it. But can we provide some clarity in terms of, I know you talked about future value or the city has received as value, but I'm just looking for simplistic clarity. Are we owed $12 or $13 million? And if not, how are we receiving the value?
Those payments have not been made. outstanding adjustment price has not been paid. It is correct to state that it is now reduced by $13 million, but the long and the short of it is that value still exceeded all other bids. In the term, in the process of renegotiating this deal, which was brought to your approval in camera.
Can I jump in just because I'm type for time?
Yeah, absolutely.
Because I'm becoming more unclear as we discuss it further. You're suggesting the city received a great sale price, but my question is around the reported, reputed issue of the fact that the calculation was incorrect. So is it just that the calculation is incorrect, but the sale price was good, so that's the response.
I get, I'm not. It was incorrect. However, has any money been lost? No, the transaction has not closed.
But does the contract not suggest that the calculation is incorrect according to the contract, and are we not supposed to legally fulfill the contract? contractual terms unless they are otherwise changed or remedied.
Yeah, so the contractual terms that were agreed to include included this error, and we are now obligated to proceed if they do close on the deal with the negotiated price at $97 million.
So the error is also in the contract. So counsel approved, counsel approved thinking it was the city was receiving a higher amount, but the contract gave the proponent a lower amount.
That's correct.
And the city has no remedy on that?
Well, the remedy has been to seek significant concessions in the extension agreement, wherein they are now paying $3 million per year, and that if they don't proceed...
And is that $3 million, again, for clarity, this is where I'm looking to understand? Is that not based on interest? And does there a policy that state that we should have charged interest and we chose not to? Because are we not conflating to different...
Yeah, yeah. It is a bit of that. Council of Cricket Young, it's the previous extensions that were provided were, to the auditor general's point, we should have sought explicit approval from counsel on those.
So are we not remedying two distinct and different observed departures from policy here? And should the interest remedy have come to counsel separately for a council decision and then an acknowledgement from counsel of the gap with respects to the calculation? because it appears now that we are now mixing two issues and calling it one remedy.
I think that there was an attempt by staff to resolve all of these issues in one single extension package. And so the fact is that that agreement was struck in 2016 to go back and to attempt to renegotiate at this at this point at values that are over 300 a billable foot would have resulted in no traction in terms of the city being able to keep that contract alive. So we were a bit bound by the terms of that contract and not able to amend that specific contract. However, the extensions... So the three... If I may, just to keep going for time.
So the $3 million that is being charged is that annually, like will the city, how much would the city make up expected over time?
If they proceed for all three years through this new rezoning, we'll receive $9 million. And the buyback, which was originally... structured at $20 million will be reduced to $7.9 million. So there is a material change in our position of roughly $21 million in terms of benefit to the city over this next three-year period if they don't transact. There's a couple of things that have to happen to earn that entire amount.
I think that this needs to be documented and articulated for Council on the public record for clarity.
Yes, it has been already articulated in the public record through a memo.
With that level of detail? Because I don't recall that level of detail.
We can go back and revisit the in-camera report, but certainly we worked with long-term financial planning to spell out exactly all the outcomes that would happen and how we would earn those monies. So it's not a guarantee that we will make up.
I think that would be helpful. That's my time, but I have to keep everybody on task. So thank you.
Absolutely. I'm going to advance our external advisor, Charlene Taylor. I was just going to make one quick comment with respect to the subsequent events. I think that as long as it appears in the report, even if it's in your response to make you look proactive, that you've addressed it, that could be just a win-win in that way it's not lost. So I think that that would work well. So I just wanted to say that. And the other one is more just a clarification, just based on my counterpart's question over here. With respect to environmental liabilities and asset retirement obligations. Do you — have you ever had to, I guess, accept future remediation costs in any of your deals? It's just based on the work I've seen. I definitely have seen some cases where they've done that, where they'll say, okay, you know, we'll accept responsibility up to this point. You, after you purchase it, take any subsequent. It's just, it could be a lot of future liabilities, and I'm just curious what you do on just to confirm. Yeah, absolutely. It's a bit case by case. Generally, the practice has been to sell these on an as-is-where-is basis. So that liability is offloaded to the buyer, but it's not a hard and fast rule. And I think one of the examples I will draw upon is actually internal transactions. Now, I know we're one city, one budget, but there still are often transactions that have to occur between different funds. And in those cases, if we were... were to seek full market value, the PEF or capital fund, if it were, as the seller, would be obligated to take on those remediation costs. Thank you. Thank you. Sorry. Thank you. Sorry, thank you. Next, we have Sophia Choi. Sorry. Oh, I'm sorry. I skipped over. Sorry, my bad. Archie Johnson. Thank you. Just a quick question, Mike. In terms of the recommendations, what is your current view of them? Thank you, Archie. I appreciate there's been some pushback or reticence to accept them. In all of our audits, we strive really hard to come up with recommendations that are implementable, that get to root causes, and address in a proactive, forward-looking way, whatever findings that we had and have reported. And I look at it through the 10 recommendations. You know, Armand mentioned at one point it's not rocket science. None of these are. I think these are all fairly straightforward and implementable. You know, recommendation three, clean up outdated policies.
Recommendation four, comply with Council direction and inform Council of material changes. Recommendation six, give Council more complete information. Recommendation seven and eight. Complete your documentation and retain your documentation. These aren't new recommendations, by the way. Recommendation two, comply with provincial privacy legislation. Recommendation one, take a strategic approach. There's no rocket science in any of these. Okay. Okay. Thank you. Over to Sophia Choi. Thank you. I think I was probably just going to add on to what you've just said. I think after hearing all the comments, I mean, I think the recommendations are constructive. There clearly looks like a need to clean up policies and processes so that there is transparency when we're making decisions and that it's clear and supportable the decisions that are being taken. So I am a bit concerned that other prior recommendations were not implemented. So I don't know if that's a theme, but I guess I will ask, since we have this report in front of us, will that address some of the prior recommendations from the other reviews so that when we get the actions in two weeks, we can be fairly comfortable that it will be comprehensive and address all of the shortcomings that have been previously identified. I think it should address the previous recommendations. Thank you for the questions, Sophia. I would also say that I'd be concerned if a desire to revisit the audit findings, as we've been doing today, distracts from a focus on improved services to Council that can be achieved through implementing the recommendations. I really think that's where we should be. Thank you very much. Councillor Montague, you're up. Councillor Montague, you might be muted.
Sorry, I thought I hit my button. I was going to ask a few more questions on 601 Beach, but I think most of those questions have been answered through either the AG or through Councillor Kirby-Yung's questions on it. I was concerned that the fact that that report to Council, that informed Council of calculation errors wasn't included in the audit report, but I think that's all been dealt with and responded to. My last question is, it may be kind of an odd question, but Mr. Ranger identified himself in a Vancouver Sun article as the whistleblower in this case. And I've seen his name on other matters related to the city and complaints. My definition of a whistleblower is someone who works for or closely with an organization — here, the city — and therefore has, I guess, intimate knowledge of its workings. Someone who brings forward an issue as a result of that direct working knowledge and someone who needs protections of anonymity because of their position. That doesn't seem to be the case here, though. So I guess my question to the AG would be, how does that definition fit into this context? And do you look at why someone not in that position comes forward?
Oh, thank you very much for that question, Councillor Montague. I would refer you to the whistleblower policy, which defines the whistleblower as not just being an employee, but an individual also outside of the organization. So it is entirely appropriate for my office to receive and assess whistleblower reports that come from outside the city. With respect to identity, identifying a whistleblower. I have never, and I never will, short of being ordered by a court of law to do so, identify who a whistleblower is. If people wish to put themselves out in the public domain as such, they may do so, but I still will not speak to it. We take every whistleblower complaint we have received seriously, whether it's — and oftentimes they're anonymous, sometimes they're not. Sometimes people have agendas.
You're entirely right about that.
And the issue is to look for what substance may be within somebody else's agenda, not to be part of it. I am politically independent. I can vote in the City of Vancouver, and I choose not to, because I am impartial. End of story. So you don't look at the
background of the individual making that complaint?
Of course I consider it.
Okay. Okay. Thank you. Those are my questions, Chair. I appreciate it.
Thank you, Councillor Montague. And finally, Councillor Fry.
Yeah, and I appreciate that we have speakers coming following this as well. I'm just trying to look at a roadmap forward here. We've heard from the deputy city manager in REFM that they'd like more time to work on this. Is there a universe where we can refer this back to work on those recommendations? and I heard the deputy manager say that they wanted to strengthen those recommendations. Does that work in your universe? Is that something that we can facilitate? Is that helpful?
The staff provided first drafts of these recommendations, and they have not changed significantly since the middle of October last year.
These recommendations stand on their own, are appropriate. And if it is the city's desire to go above and beyond, I would invite them and welcome them to do that. But that has no impact on the recommendations that are before you today, Councillor Fry.
Okay. No, I appreciate that. Maybe if I could ask the staff just to comment on the idea — I didn't realize that you'd had this since October — and what difference an additional two weeks makes?
Absolutely. I believe actually the first drafts even began before that. I think on balance, the recommendations are quite fair. Absolutely. Generally, we don't take huge exception with the recommendations. It is the findings backing up those recommendations which we do take exception with. And that is the essence of why this has been delayed. This was represented as being about a two-month audit. It has now gone on for 14 months. And despite repeated attempts by staff to clarify those findings, we have not seen any movement on that. And so, again, just to emphasize, I think the recommendations, if you give us the balance, the two weeks, I think we are largely in alignment and agree with those recommendations, but it is the underlying findings and the lack of counterpoints that were in the audit that we find a bit troubling and we're not able to accept.
Okay. I mean, I appreciate that clarification and I think, you know, we should noodle on a roadmap for it, because obviously we want to — I mean, I think these are good recommendations from the Auditor General's office. And I think we can move forward on it. I appreciate that 601 Beach may be a little bit more complicated in that context, and that you take umbrage, or you disagree with the findings that led to the recommendations, which it really isn't really the same as the recommendations either way.
That's exactly right. Disagree with the findings. The recommendations themselves, I think are immensely valuable for the organization. We're committed to seeing those through.
Okay. I think that's helpful because, I mean, when we approve recommendations, we're not necessarily approving findings per se, those aren't the enactables. Okay. Thank you.
Thanks, Chair. Thanks, Councillor Fry. All right. We do have speakers from the public registered for this item, and so we'll now shift to that and hear from the first registered speaker who is Louis Belegas, who is here in person.
I see — I'm approaching.
Good morning, Louis. You have five minutes when you are ready. I'm sorry, three minutes. We're in a different forum. Three minutes. Go ahead when you're ready. And for three.
My name is Louis Belegas. I am a Vancouver resident practicing urbanism in the U.S. and Canada for 40 years. I support the report and all recommendations. Next slide, please. By presenting evidence of malfeasance in an internal report, the Auditor General offers a systemic signal that we have reached a structural ceiling. Next. Rather than dive deeper into the report, I will widen the scope to include analogous conditions I find in the planning system. You paint building towers as providing housing, but there is no public benefit in perpetuating a crisis in housing affordability. Next. Putting the focus on the Broadway tunnel, a prohibitively expensive SkyTrain builds less route, limiting resident mobility. Plans concentrate population in the core, making residents prey to housing price inflation. Next. Because high cost per kilometre concentrates capacity inside the urban core, affordability is driven into the periphery and into the neighbouring regions, where the SkyTrain is just too costly to reach. Looking to generate returns on transit investment, rather than ending the housing crisis, government gives away density and height, limiting housing outcomes to tower plans, and unwittingly perpetuating a government-made housing crisis. Next. If the future you are planning requires people to leave before it arrives, then it isn't really much of a future or a plan at all. Good planning isn't what works best on day one. It's what still works long after the planners and the urban designers are gone.
Thank you. Thank you. Thank you.
Okay, good morning. My name is Stephen Boas. I live in work in Vancouver. I support the work of the auditor general. This is excellent work. The work needs to continue and have support, and the scope needs to be broadened. There's also a need for more accountability. What you see here is the area under the Granville Street Bridge where CAC was not delivered. Next slide. The $6 million figure in the referral report is stated there, but this is just just the tip of the iceberg where the CSA was not delivered. Next slide. For 1412, 1450 House Street, now called Vancouver House, the 2014 sale of city land was $96 million below market value, and the city owned 87% of the site in areas A&B. Another potential buyer would have offered more, but the city turned it down. This sale of land also needs to be audited, and sales of land can take place after a review. zoning is approved and often do next slide you've heard a lot about the other side of the Granville Street Bridge with a $13 million error key information being withheld from council on the sale 601 beach and key information has been withheld on multiple occasions from council by staff the city decided to waive the 12.12 million dollar CAC and there are many issues here but in terms of the transparency toolkit things like wealth audits people actually need to be held accountable for their actions and maybe this should involve federal agencies. Next slide. The former city manager discharged a $1 billion mortgage that the city held on several properties back in 2011 and an extended audit should cover this as well. And I'm showing here the 21-story tower at Alexander English Beach at the Devi in Bidwell. Next slide. The city just walked away and had nothing. And finally, let's look at the sale of the land for the 40-story tower at 1477 West Broadway. city's purchase price of $3,795,000. This is grossly under market value. Maybe it was around $7 million, but you know, someone should look at that, get a proper appraisal. There was no appraisal done on this site. Appraisal was used a couple of properties over mid-block, adjusted, and I'm really concerned about the statements that were released under FYI, under a long protracted FOI, which was, I need to be able to defend the sale of as market value going back and forth with the developer and senior staff. That's not the way I'd like to see land sales done. Land was sold at well below market value, and, yeah, we need accountability, and there is no way of dealing with the culture of secrecy we have here. Many things cannot be FOIed with the P-A-E-E-F, so excellent work by the auditor general. It needs to continue, and please broaden the scope. This is just the tip of the top of the job.
iceberg. Thank you so much. Thank you. I appreciate that. You are at time. And now next we're moved to speakers by phones. We have Colleen Hardwick.
Thank you. Colleen Hardwick speaking, assuming you can hear me. I'd like to say thanks to the office of the Auditor General for conducting this audit and producing these reports. Thank you to Robert Renger for being a whistleblower in the area of real estate disposition. We would not be here with them today, without them today, which is testament. to the importance of independent oversight in the city of Vancouver. Quite literally, it is the land, the 114 square kilometers from Boundary Road to the University Endowment Lands that is the foundation of the city, its real estate assets, as well as its financial well-being. This was formalized through the city's real estate department and property endowment fund going back to the days of Mayor Art Phillips and the original team council. Mr. Phillips expressed his concerns. to me personally about land disposition and the long-term implications. Once it's gone, it's gone. So today, the city's real estate portfolios are primarily overseen by real estate services, as we've discussed with the real estate and facilities management, which includes the capital fund, the PEF, and VAHF. And I have personally observed changes at City Hall over the years, over the years covered by this report. And I've watched key land transactions and sheds. shifts in the so-called culture of the organization. I sat on the development permit board until 2008 when Gregor Robertson was elected with a vision majority that affected an equivalent to a corporate turnaround at City Hall. I also sat on the mayor's task force in housing affordability in 2012 and watched the creation of Vahef. The auditor showed that the city could not demonstrate that it maximized value for land sale and exchanges. And that being the case, I would appreciate it if the Auditor General would reveal whether the individuals who made these decisions are still employed at the city. Specifically, were there any changes in senior staff and real estate once they began their investigation? Did anyone resign or retire right around that time? There have been a lot of significant turnover in the last number of years together with a loss of institutional memory. And the legacy of community-based planning has been replaced by a development promotion approach, which has put staff in lockstep with the industry in terms of their success metrics. It's clear to me today that real estate services is in and largely in step with the development industry, as opposed, I would argue, to the larger public good.
I just have a final thing I want to say.
I'll give you a few more seconds. I, right. And I've been very careful. in the way that I've constructed this and I've lost a bunch of time there. But mistakes have been made. And whether they were intentional or not, there is no question.
Colleen. Respectfully, if you listen to me, I said I will give you a bit of extra time for that. Please go ahead.
Thank you. Okay. Mistakes have been made. And whether they were intentional or not, it seems clear that we need to have accountability, whether that's with former city staff or elected officials. Thank you. And having been an elected official, I often hear the routine rubber stamping of saying that this is what's put before us.
That's time. We cannot undo the past, but we can put checks and balances in place for the future. And I look for it.
Thank you. We do need to be respectful to all speakers with respects to time, and I did provide a substantive amount extra there. We're at 343 over the three minutes, so I'm just going to note that for the record. And we'll move on now to speak. Speaker number four, which is Sean Nardi, also by phone.
Good morning. You can hear me?
Good morning, counsel. My name is Sean Nardy, and I live in Vancouver. I would like to start by thanking the Auditor General and his team for diligently investigating REFM. Furthermore, I would like to thank former city counselor Colleen Hardwick for spearheading the auditor general role. If I want for Hardwick's integrity, persistence, and courage, the city wouldn't have daylighted this massive financial loss, nor have the opportunity to correct it. We owe her a debt of gratitude. The AT's office reviewed 16 real estate transactions and revealed the loss of approximately $60 million. If the AT were to examine all transactions over the past 15 or 20 years, it's easy to imagine this figure quickly growing into the many hundreds of millions. These losses were attributed to systemic errors and process gaps within RAFM, a lack of diligent management by city managers, and an absence of good governance by successive mayors and counselors. However, some of the errors border on the dubiously incompetent. Given that the city just did somersaults trying to find $120 million to fulfill Mayor Sim's zero percent tax increase goal, I suspect that these losses might have come in handy. I reviewed a large amount of city staff correspondence and assured you that this is just the tip of the mismanagement iceberg. Vancouver rights have been trying to bring your attention to questionable real estate transactions and many other questionable staff actions for years, but no mayor or council paid attention except Colleen Hardwood. The AT is shining a light on some of these errors proving not only that residents were right by the council's chronic dismissiveness toward residents, unhealthy deference towards city staff and milk toast oversight enable these activities to go on for as long as they have. I fully support the AG's 10 recommendations and encourage you to implement them post-haste. Moreover, given the obscene amount of money lost in these errors, a full and vigorous inquiry into REFM's operations, conduct, and all transactions, as well as the lack of oversight by multiple city managers and mayors and councils, going back at least a decade would be the absolute minimal reasonable response. You owe a statutory fiduciary duty to the city of Vancouver and to the residents of the city. The public has warned counsel about these discrepancies for years and counsel knew or should have known that something was awry. It is now your responsibility to fully investigate and fix this problem. Make no mistake, this is Metro van grade mismanagement and you are holding the hot potato. In this election year, I trust you will find yourselves as furious as I am about these revelations that you will focus the entirety of your energy to fixing them, doing everything in your power to ensure that the employees whose lapse has permitted these errors to occur our discipline and that hard stops are put into place to ensure that the city never experiences catastrophic, avoidable financial losses like this again. Thank you for your time.
Thank you for speaking to council. Moving on to speaker number five, Stanley Lee. Yes, we can. Stanley. Please go ahead.
When you're ready? The city could not demonstrate it maximized value. First of all, I want to applaud the opposite general's office for the great work that it has done along with the whistleblower. The report revealed various past mistakes and systemic failings, including how frequently council approved major land sales and other decisions while being poorly informed. Examples include appraisal assumptions not being disclosed. Sales below appraised value not clearly documented and explained, and contract extensions went. for without returning to council despite the policy. Once the land is gone, it's done, like it's forever. The report also shows that most land sales were initiated by external buyers, not the city. That means the city is losing out on opportunity to get as much value as it can. And this is seeing money in terms of, when we're talking about tens of billions of dollars in land asset to do the things that you guys claim that you care about. I think the city, I think the council needs to act on it, even though many of you likely won't be back after the elections. At the same time, while I know the city's debt broke, I hope you guys don't use real move zero as an excuse to get rid of the office.
Thank you. Great. Thank you very much. And final speaker number six is Robert Renger. Robert, are you on the line?
It's a moment when we're talking about the heads of sales dollars in why I'm
Hello.
Robert, is that Robert? Yes, it is. Okay, you have three minutes to dress council. Please go ahead.
And just a sec before we start, I'm just going to make sure we've got some back. Can you hear me?
We can, we can hear you. If you can just give us a moment. I'm just trying to clarify we've got some background noise.
Okay.
Can we when to start? Do you have a device running the meeting in the background? Can you mute that?
Or? I've just, I muted it a minute ago.
I'm Robert Renger, a resident of Vancouver, and I support the report. I'm a retired longtime city of Burnaby Development Planner with knowledge and experience related to public land sales. The people of Vancouver should be very grateful to the last council that instituted the position of Auditor General. And now to the Auditor General for this report, which I must say is devastating. Sadly, it shows that the public has lost many millions of dollars due to the outlandish approach of selling land, ignoring the higher density that it has been rezoned for. And it's very disturbing that the instruction staff routinely give to the appraisers to achieve lower valuations were not disclosed to council or the public. A number of people, including myself, had been trying unsuccessfully to point this out to council for years. But now, that you have the recommendations from the auditor general, you will hopefully put a business-like system in place for land sales. I'm gratified that this report acknowledges the $13 million adjustment price calculation error for the sale of 601 Beach Crescent, which I pointed out to staff last March. I was truly shocked how staff and counsel totally refused to respond about the error for many months, after which we found out that they had secretly, in camera, given the purchaser, the discount from the error right after I had pointed it out, and also added another $12 million CAC's discount to that. That particular land sale of a prime development site has been a disaster from the start and every step along the way. Ten years after it was sold, it's still vacant, with 90% of the purchase price still owing. interest-free until now. And we're still waiting for the 152 units of promised and sorely needed social housing. I sincerely hope staff and counsel will take better care of the public interest in the future
and do so with more transparency and accountability. Thank you.
I think we're dealing operators here. That concludes the rest of our speakers list.
At this point, we would normally move a motion, but I want to make sure that council is, clear in terms of what is being asked of it, or the committee is clear in terms of what's being asked of it. And I do intend to move something myself later, so I'm going to turn the chair to Councillor Joe. But essentially, we have a report in front of us. The report recommendation is that the Auditor General Committee endorsed the 10 recommendations in the Auditor General's report dated February 5th entitled Land Sales and Exchanges, and further that the Auditor General Committee recommend that counsel endorsed the 10 recommendations, sorry, that's a duplicate here on the script. I'm reading that.
They are two separate. Yeah. Okay.
And then the first one, the second clause is essentially the same thing, but with endorsement to counsel. So that is on the table for counsel's endorsement. I'm just looking to ensure that everybody's clear on what is being asked at this point.
Yes. Okay.
All right. Do we have a motion? Would anybody like to move a motion? Move by Council Joe, seconded by Councilor Fry.
Okay.
Now we have a motion on the table. which folks can speak to, but Councilor Joe, can I turn the chair over to you? Because I'd like to move an additional clause.
Yeah, sure. Please go ahead, Councilor Corbya.
Okay. I'm going to send this into the clerks so they can put this on the screen. And staff can let me know if it would be helpful to have a couple of minutes to bring this up.
Two minute recess. Counsel Joe?
Yeah, sure. Let's take a two minutes recess. Okay, let's come back at 1122. Okay, 1122. Just want to check with. All, Councillor. Everything's good. Oh, Councillor Fry. Let me bring Councillor Fry. All right. Thanks, everyone. So we have quorum. So, Councillor Kerb Young. Please go ahead.
Yeah, thanks, Chair. I have been, this is a really important discussion, and I appreciated what I heard from both sides. What I took away from the, I'm just going to provide some context for the amendment that I'm proposing. When I took away from the audit was not necessarily the city had left money on the table, but it couldn't demonstrate that it had knocked. And there was an opportunity with the sort of obvious specific exception discussion around Beach with a genuine calculation error, etc. But I think what this pointed out to me is that when you have reference to some policies from 1978, 1980, 81, our world is very complex now with respects to land sales transactions and negotiations and the intersection between those policies and community amenities contributions. And what I took from that is that we have an opportunity to. to clarify procedures and consolidate and documentation. I also heard some agreement from our staff. I heard, first of all, I heard an acknowledgement that these are very complex transactions from our staff. I heard a lot of passion around the process. There is a great deal of moving parts in these projects. There's a lot of work that goes into sort of landing project for the city and a good deal and trying to keep projects moving in economic times. Having said that, I also heard that the there was some agreement with the recommendations, some that there weren't, and some opportunities to potentially strengthen them. So acknowledging all of that, I think it would be helpful for the committee to add a further clause of the recommendations that reads. Further that the auditor general committee recommend to counsel that counsel direct staff to report back in response to the findings of the audit with their proposed response, including but not limited to updated, consolidated, clarified, and modernized procedures related to land sales and exchanges. considerations for information provided to council related to land transactions, potential annual reporting related to land sales, including sales value and related community value and benefits received, and any further updates or improvements that staff themselves might recommend. And so that's an additional consideration as a further clause for the committee to consider. It will be ultimately counsel that can direct staff, but the committee can provide recommendations.
Second about Councillor Frye. Any other comments? Please add yourself into the queue. Councillor Frye. Can we advance Councillor Frye? Okay, please go ahead.
Yeah. Thanks, Chair, and thanks, Chair, and thanks, Councillor Kirby Young. I very much appreciate this amendment as recognizing what is a complex situation, but I think that there is clearly some information exchange that needs to be better facilitated in allowing staff to respond to some of this and their concerns around the nature of the findings. I think by appropriately directing or recommending to counsel that counsel direct staff to report back with their findings on the audit and their proposed response to the recommendations, I think is helpful and actually moves this forward in a positive way. And while respecting the tenor of the findings from the AGO, which is indeed that there needs to be more clarity in this process. And I think that's what we all recognize and agree on. And so how we get there, I think this is the right path forward. So thank you for that amendment.
Thanks, Councillor Fry. Seeing no one else on the queue. So let's go to the vote. So committee members, please register your vote on the voting panel. We are voting on the Councilor Kerbillon's amendment. Clerk, I can tell who is, yeah. Okay, so the amendment passed unanimously. So back to you now, Chair Kerbiel.
Okay. Okay. For the committee now, we now have amended recommendations on the first.
floor. Would anybody like to provide any closing comments before we go to the vote? No comments from the committee? Okay. Council from Montague, go ahead. Yeah, thanks, Chair. I won't say much. I think it is important to just reiterate what you said in your comments earlier in that. I think there is an issue here with how portions of this report had been interpreted by some and that there is no indication that there was money left on that. the table. So I just wanted to just highlight that that I think I think it's important with regards to this. But whilst, you know, staff have clearly said they have some concerns with how the audit was done. but that at the end of the day, there is nothing to show that that money was left on the table. I just wanted to highlight that and just reiterate that was the case because some of the speakers, at least one, if not two of them, talked about how there was a financial loss or an insubseen amount of money lost. And that's just not the case that hasn't been shown. So I thought that was important to highlight. and I'll be happy to endorse the recommendations.
Okay. Thanks, Councillor Montague. Seeing no one else on the queue at this point. I once going twice. Okay, we'll call the vote. And that passes unanimously with none in opposition. I'm going to thank and appreciate everybody for working through a very important conversation. Instructively. There's a lot there. And we are all stewards of the public trust. And I think that we have really We have staff that have a lot of excellent expertise, and we have some work that we can do to perhaps better pick some of that work. So, and thank you to the Audje General and the staff team as well. Okay. I'm just looking at the committee now. We still have a pretty full agenda for the day. Is everybody good to keep going? Would anybody like a five-minute break at this point?
Keep going? Okay.
All right. Okay. We're going to move on now to item number two on the agenda, which is the 2025 annual whistleblower report. Before we begin, if anybody believes they have a call. conflict of interest. Now is the time to declare it. I am not seeing any. This item does have a presentation and the auditor general will present to respond to questions along with staff from the office, including Barun Bantia and Hamish Flanagan. Please go ahead, Mike.
Thank you, Chair. This, our second whistleblower report provides a summary of my team's activities and results for the last year. The report, excuse me, report on levels of activity, which have remained high and summarize the results of investigations that have led to recommendations that have led to recommendations to city departments. New this year, we've followed up on recommendations made in 2024 and in our June of 2025 interim report, all of which were endorsed by council. The city departments have engaged and implemented a very high proportion of recommendations is commendable. In my view, it speaks positively to the seriousness with which city teams have taken these recommendations and embrace the opportunities for improvement that they present. Look forward to continuing this positive and productive engagement this coming year. Now ask Kamish Flanagan, the auto principal responsible for whistleblowing, to present the summary of 2025 findings and recommendations resulting from our investigations. Thank you. Thanks, Mike. So to start, once the first slide comes up, there we go. So just a quick refresher on what the whistleblower program is about. So the whistleblower policy determines the scope of the whistleblower program. And the central concept in the policy is about. is serious wrongdoing. And that term is further defined in the policy and includes fraud, waste, serious misuse of funds or assets in certain conflicts of interest. It's just one tool in a suite of initiatives necessary to demonstrate a commitment to honesty and integrity. Culture, tone from the top, other city policies, particularly the Code of Conduct, are also important. Next slide. So context is also useful. Council assigned the order to general responsibility for a role. revised and expanded whistleblower policy from January 1st, 2024. And that, as we touched on earlier, enabled the public to report and brings Vancouver into line with other large Canadian municipalities. Reports are received via a dedicated OIG-managed web form, email or phone. And you'll see in the graphic on this slide from page 8, the breakdown of reports by intake method. Next slide. So the policy is explicit. It doesn't duplicate other mechanisms that already exist, and I've listed some there in that slide. So this is our second annual Whistleblower Report, and this presentation highlights some of the key content in it. Right at the start of the report at pages 4 and 5, we've included a summary of what went well and what was a challenge for the program in 2025. And then on this slide as well, you'll see
a graphic of showing where reports originated from in the program in 2025. And noting that we received proportionally more external than internal whistleblower reports. And we also note that 21% of reports, and this is in our whistleblower report, were anonymous. And more than a third of those anonymous reports were from city employees. The reports were anonymous, but the content made clear that they were employees. So this highlights, again, the value of a whistleblower policy, the fear of retaliation that goes along with being a whistleblower, even with the protections the policy offers. Next slide. So getting into some key results. We report on two KPIs for the whistleblower program in the OAG Annual Report, so I won't cover those here. Spoiler alert, we achieved them. But some highlights from our activity for the year. 171 of 177 reports we received, which contained 204 allegations in total, were resolved in 2025. This volume is significant or notable because our peers report that in the second year of a whistleblower program, volumes typically decline versus year one, but that wasn't the case here in the city. All 2024 reports that were still open at the end of that year were closed in 2025. Well, that's a small number, they're typically larger and investigations, so it's essential they're resolved in a timely manner, so we're very pleased with that. Next slide. This chart here shows, taken from the report, shows the disposition of whistleblower reports, and I'll just speak to a few of the bars in this chart. So the first one illustrates that every report has an initial assessment. The second referral, this can be to a city department for bylaw enforcement issues, to the CHRO for Code of Conduct, or other HR issues. Preliminary assessments are a more detailed look, where issues appear to have merit and are within the scope of the whistleblower policy. The next stage is an investigation. The whistleblower policy also allows investigations to be delegated. Typically, we do that where there are issues that arise within the scope of the policy, but they're intertwined with other conduct issues. We consider our independence before delegating and work with the CHRO. Retaliation and audit. other final two categories. The audit is obviously the one that we've just discussed, and retaliation is where there have been allegations of retaliation for making a whistleblower report, so we had three of those in the last year. The next slide, thank you, just gives a best effort to show reports by theme. It's obviously imprecise, but it's our best efforts. So the most common issue was related to workplace behaviour and employment issues. This includes allegations of serious
wrongdoing by city employees or contractors, but also some issues more traditionally dealt with by human resources function and best directed to the CHRO. In some cases, for example, allegations of time theft. This distinction may only be determined by conducting some initial assessment that gives a sense of the scale and the nature of the behaviour. Employees in particular may prefer to report initially through the whistleblower program because the OAG is independent, has easily accessible and secure mechanisms. Out of scope reports include allegations that may raise valid issues, but are just beyond the scope of the city's current whistleblower policy. An example is allegations we received about city-controlled corporations, which are not included in the scope of the city's whistleblower policy. Next slide. One of the things, as I mentioned, is that we refer reports sometimes when they're out of scope. And we don't conduct these referral investigations. But what we do do for the benefit of council is track them for completeness. And I just want to highlight here the interesting result from this year where 10 referrals were reported back as being substantiated or partially substantiated. So this is a nice value add from the whistleblower policy because it shows that reports that come in, even outside scope that are referred on, show that we're acting as an independent and accessible conduit for people to report issues in and around the city. Next slide. So flagship results include that we provided 40 recommendations to city departments from OAG whistleblower reports. And I'll speak to those in a little more detail. We also implemented some whistleblower software, which may not sound very exciting, but that procurement, which was part of a larger audit procurement, allowed us to update our web. which is on the website and also to create a new web page as well. With enhanced features including clearer guidance about the scope of the policy, process maps to explain the process under the policy, and a complainant self-assessment tool to consider to allow complainants to consider whether the whistleblower policy or another forum is the best place to raise the issues. And you might recall last year we talked about the challenge of getting the balance right between scoping out reports that we were. receive and doing that in an efficient manner. So we're very pleased with the progress and the updates we've made. Next slide. One of the other key results which this committee is already well familiar with, just reminding this was a 2025 outcome, was the delivery in June of our first substantial employee-informed whistleblower investigation, which identified and addressed significant control weaknesses in the city in relation to an inspection function.
Next. So as Mike mentioned at the top of this presentation, this is our first opportunity to actually report on implementation of recommendations. And we're pleased to say that it is good news. So 17 recommendations that this committee endorsed in 2024. And in addition, 19 in the June 2025 interim report that I mentioned. So the report contained. So the report contains. the city's update or the city self-report, we don't audit or scrutinize their responses. So this is the city reporting that 14 of 17 of those recommendations from 2024 have been implemented. And already for what is only a six-month plus report, the interim report, the city reports 14 of 19 of those recommendations from the June 2025 interim report that this committee endorsed have been are implemented. Next slide. So in the annual report, we, for this year, we highlight six reports. I'm just going to quickly summarize the four that had recommendations with the aim of enabling this committee to endorse those recommendations for follow-up with the city. So the first report, and it's actually been alluded to and obviously has had added significance in light of the performance audit that we've just discussed, was around the delivery of community amenity contribution. This was looking at a particular development where there was an agreement that included $6 million of in-kind value. We found through our whistleblower investigation that management of that in-kind CAC fell short of a reasonable standard and therefore amounted to waste under the whistleblower definition. We made six recommendations to address those shortcomings that we found and we had excellent engagement from the city in response to those. are at page 26 and 27 of the report. I'll just run through them quickly next slide. As they're included in detail in the report and on the slides, I won't read them in full. But to summarize, we recommended that there needed to be clear documentation of the components of in-kind value. There needed to be a calculation of the cost implications for more than minor changes and those needed to be documented, which might sound familiar. And you should get the cost implications. Council approval of materiality thresholds for reporting and approving changes. Next slide. The balance of the recommendations are about the need for monitoring for delivery, using existing accountability mechanisms, the occupancy permit that the city issues being the key leverage over developers to ensure that CACs are delivered. And ensuring that promised CACs and any changes are publicly accessible for transparency
and accountability. This should be a good news story of amenities delivered. And finally, ensuring that the agreed amenities are actually publicly accessible. Next slide. The second report involving recommendations revolved around the allegation and allegation of preferential treatment in the allocation of Park Board mobile vending permits. We found that there was a significant gap between the advertised and the actual selection processes. The process on the website looked good with criteria and clear deadlines, use of a panel to evaluate bids, but unfortunately the actual process differed quite substantially from what was advertised with one person making decisions, criteria not followed and no weighting of criteria. So it was not possible to objectively evaluate applicants, which obviously creates significant vulnerability to all sorts of issues. There was also frustration about questioning of the process and the inability of Park Board to show that it was robust, led to staff comments that could have been interpreted as threatening retaliation. Staff were pleased to report very receptive to the recommendations and, in fact, shared their learnings with the city who run a similar street vending operation for improvements. And next slide. So the recommendations were about having a robust. and procedurally fair process with public criteria and that are documented. Next slide. We also made a recommendation about responding to queries professionally in a timely manner, a source of frustration that contributed to the fear about predetermination. And then finally, the need to have the selection panel as advertised to address potential integrity risks. Next slide. The next report was in relation to the next report was in relation to procurement of some advice about planning services for the False Creek South neighbourhood. The engagement initially scoped at $50,000. Ultimately, the city paid over $900,000 to a contractor. The allegations which have outlined on this slide were that the city contracted with a firm without a competitive bidding process, that the contract was inappropriately managed, including payments made before they were. authorized and that a subsequent city contract potentially duplicated the consultant's work. And I'll briefly deal with each allegation in turn. Next slide. Sorry, I'll get you to the next slide. Thanks.
Thank you. So allegation one, the city contracted with a firm without a competitive bidding process. We found that the process did not meet several procurement policy requirements for selecting and contracting a third party, and it amounted to a serious mismanagement of public funds under the whistleblower policy. That finding was supported by the fact that the city sole sourced the contract without satisfying the grounds in the procurement policy. There was no evidence of approval for the sole source, and no documentation of whether sole sourcing represented best value to the city, best value being a defined term in the procurement policy, which requires consideration of a number of factors to to ensure value for money for the city. And of interest clause 1.3 of the policy says that best value should be maximised by wherever possible avoiding sole source contracts. Next slide. Thank you. In the contract's second phase, the city attempted to invoke the exigent circumstances exception to sole source without posting a notice of intent to contract, which is the one safeguard safeguard against inappropriate sole sourcing. The The asserted need for confidentiality was not formally documented or independently scrutinised. And it was also unclear whether the confidentiality itself was actually needed. And this next bullet point shows that sole sourcing shielded the selection from stakeholder engagement and scrutiny, which appeared to be in contrast with the council's endorsed vision statement and provisional guiding principles for False Creek South, which had committed to engage community and stakeholders in a meaningful way. Next slide. When you're ready? Thanks. So, allegation two, was that the contract was inappropriately managed, including payments made before they were authorised. That allegation was also substantiated. Steps required under the city procurement policy were not taken or documented, and again, the finding was that there was a serious mismanagement of public. funds. Work began before city approvals were obtained. Invoices exceeded purchase orders at several points. There was no total or fixed price in the contract and the structure avoided the policy requirement from the procurement policy where cost increases are subject to increasing levels of senior level approval. And that chart that you saw on that previous slide showed the tracking of invoices and approvals. And you'll see where invoices exceed approvals in a number of places. Thanks. Next slide. The final allegation was that a subsequent city contract potentially duplicated the consultant's work. This was not substantiated. A new request
was issued in 2024, but the $4 million contract was awarded to a different consultant for related, but not the same work as the previous consultant's work. So the recommendations. The recommendations theme are about improving the city's procurement practices to better achieve the aims of the procurement policy and mitigate risks. They focus around improved documentation of the decision rationale and increased scrutiny of that rationale. Next slide. Slide behind. No, we're good. Yeah. Again, the recommendations are on the slides and in the report, but in summary, if relying on exceptions to public procurement, there's a need to document and detail the rationale for that. Senior management review of sole sourcing that occurs without a public call or a notice of intent to contract is necessary. Next slide. There needs to be independent assurance over the actions of a chief procurement officer when they are the ones exercising the discretion in these sorts of cases. And there needs to be formal reassessments of sole sourced contracts at certain dollar thresholds, revising sole sourcing and whether a notice of intent to contract is required. Next slide. Other recommendations are that time and materials contracts need tighter controls. In this case, there was no total cost, total price. There needs to be documented rationale for contract scope expansions. And finally, there needs to be consequences for staff who commit the city to spending without necessary approvals after appropriate education, of course. Next slide. The fourth and final report with the recommendations from 2025 was an allegation that a City of Vancouver employee had a conflict of interest in the procurement of an external consultant. And we found that there was no conflict. The procurement was administered by the employee's unit, but that particular employee was not involved in it. However, the investigation identified some shortcomings in the city's management of the procurement processes and the resulting standing offers for consultants. So we made two recommendations regarding procurement process and coordination that are on the next slide. Again, in essence, the recommendations say there needs to be better coordination with end users of the procured services, including involving staff using those services in developing criteria and potentially scoring proponents. And secondly, and this, again, I feel like I'm repeating myself, but better documentation of administrative decisions. This includes documenting the rationale for utilizing pre-qualified consultants over others
and when consultants' work is deemed unsatisfactory. And consultants' work needs to be evaluated by staff before considering whether to award future work. We're pleased that the city accepted our recommendations and has already incorporated the feedback into a new procurement process that was conducted for consultants working for this department. Back to the Auditor General. Thank you, Hamish, and thanks for speeding things up a little bit, in recognition of the time. Go to the next slide, please. We have two recommendations for the committee to consider, excuse me, for the Auditor General Committee, to consider that you endorse the 21 recommendations in our whistleblower report, 2025, and further that this endorsement be recommended to council for approval. We're happy to take questions at this time. Great. Thanks very much for the presentation. So, committee, are there any questions for the AGC staff at this point? Okay, I'm not seeing any. Sorry? Oh, okay. Go ahead, Charley. Just make it quick. And it's more for the record, I think, really. But could you just confirm that? Was anything illegal or fraudulent found, and was any money lost? Because that's useful information to know, whether it be the AG or the actual people conducting the investigation. Thank you for that question. Charlene, we did not find any evidence to suggest potential fraud in any of the investigations. Okay. And was any money lost or do we track that, or does the department track that? In terms of money lost, the reports that we have brought forward to you here didn't have a financial implication in that. But I was just thinking also the department. It's more about authorization and the procurement side. Okay. Okay. We did find, obviously, the findings of waste in relation to the CAC in-kind CAC. And obviously the findings in relation to the procurement as well noted that that amounted to serious wrongdoing under the whistleblower policy. Thank you, Hamish. Okay. Great. Thank you. Not to any other questions, but I do want to note for council that for procedure, similar to council procedures, this committee meeting will cease at noon unless and reconvene at one o'clock unless we make a motion to extend to complete the business as an option. Okay, moved by Councillor Zhou, seconded by Councillor Fry. And then we would have to, we are currently looking at available rooms, given that we're running along today, which will determine. Do we have an update on that? Staff? Okay. It's a little fluid.
If we can get through this quickly, we have a room up until 1 o'clock, but it does commence when this meeting finishes. Then we will go straight to in camera. Yeah, unless the committee entertains another, a different motion to, because that's not on the floor, which hasn't been seconded, a different motion to complete the public one and to refer in camera to a future date. Those are the options available to the committee. Councillor Zhou, that's your intention? Okay, so Councillor Zhou's moving to complete all of business. Councillor Fry seconding? Yes, thank you. Any comments? All in favour? Okay, we will carry on. We have one. Thank you for the public on this item. Thanks to the AGC staff for the presentation. We'll hear from the speaker, Stanley Lee. Do you have Stanley on the line? Chair, the speaker is not on the line. Okay. Do we have no other speakers correct? Okay, that is the end of our speakers list. Council, is there any discussion at this point? Would somebody like to move a motion? Do with the recommendations, Councillor Zhou? You have a seconder? Seconded by Councillor Fry. Committee members, any discussion on this report? I'm not seeing any. We'll call the vote. And that passes unanimously with none opposed. That concludes item two on our agenda, and that moves us on to item three, which is the 2025 Office of the Auditor General Report and 2026 operational plan. And Mike McDadell, would you like to introduce the item, please? Thank you, Chair. Yes, I have the privilege today to present to you my office's 2025 Annual Report and 2026 operational plan. We'll just wait for the slides to pop. There we go. Excellent. So on to the next one, please. Excuse me. The annual report was released at the end of January in conjunction with my 2026 audit plan. The Auditor General Bylaw requires me to produce only an annual report, a record of what my office has done in relation to objectives set for the year. Record of past achievement is fine on its own, but it's far more meaningful when it's related to what comes next. To achieve that, as in prior years, the annual report is also the Office of the Auditor General's 2026 operational plan. You can see in one place, how we performed, where we are now, and where we're headed. 2025 represented the third full year of operations for the OAG, and our second year receiving and assessing reports and conducting investigations under the whistleblower policy.
Activities under the whistleblower policy were the subject of the previous item on today's agenda. I issued two new audit reports in 2025, containing a total of 23 recommendations, and in June and December, I released the fourth and fifth follow-up reports on the status of previous audit recommendations, continuing a semi-annual process that began at the end of 2023. Next slide, please. 2025 was the second year my office was fully staffed. It's a rather impressive group with a combined total of over 110 years of audit experience. Every staff member has at least an undergraduate degree in fields ranging from commerce, criminology, psychology, history, politics, biology, and general arts, and all but one of the team has either a graduate degree or professional designations, some with both. Graduate degrees at both the master's and doctoral level include business, law, criminology, education, child and youth care. And the professional designations include three chartered professional accountants, three certified information system auditors, four certified fraud examiners, and three certified internal auditors. Obviously, some people have more than one designation. Next slide, please. Like any leading organization, we monitor our performance through a framework outlining why we're here and what we're trying to accomplish. Ours begins with a mandate drawn verbatim from the AG bylaw, which is to assist council in holding itself and city administrators accountable for the quality of stewardship over public funds and for the achievement of value for money in city operations. Our four goals, each with associated key performance indicators, describe how we fulfill our mandate and execute the mission. Quality audits, timely and effective whistleblower investigations, objective recommendations, and a positive return on investment for taxpayers. KPI 1.1 measures the number of audit reports released. This year, I released a total of four reports, two audit reports and two follow-up reports, which was two fewer than anticipated. Two audits that I had hoped to release last year were in progress at year end. The audit of land sales and exchanges was the first item on today's agenda, and my audit of community grants is scheduled for presentation to this committee either at its April or May meeting. The timeline for formalizing and finalizing performance audit reports is sometimes unpredictable and will vary depending on the nature of the findings, conclusions, and recommendations. But simply, some audits are easier to finish than others. KPI 1.2 speaks to external quality review by my practice regulator, which is typically conducted every three years. CPABC's next practice inspection is scheduled for March 12th, so just under a month. And our goal is to meet the practice review requirements with no reportable deficiencies identified. In addition, the Office of the Auditor General for Halifax Regional Municipality, who follows the same standards as our office, conducted a peer review of our office in December this past year and no significant issues were identified in that work.
Slide, please. Reports released in 2025: there was the recreation facility asset management, which was released in September. The audit examined whether the Vancouver Board of Parks and Recreation and the city effectively managed existing recreation facilities to align with strategic goals, meet service level priorities, and optimize asset life cycles. The report contained 13 recommendations. In November, we released our second cybersecurity audit. The audit examined aspects of the city's cybersecurity posture and contained 10 recommendations. Due to the sensitive nature of the topic and the risk posed to the city by disclosure of potential vulnerabilities, the report was presented to council in camera as permitted under Section 165, subsection 2, subsection 1, subsection D, the Vancouver Charter. Slide, please. Goal two is to conduct timely and effective investigations and complaints received under the city's whistleblower policy. The first KPI under this goal focuses on the timeliness of initial assessments of whistleblower reports. An initial assessment will be conducted for every report we received under the whistleblower policy to determine if on its face the allegation could constitute serious wrongdoing as defined in the policy. The timely assessment of whistleblower reports is intended to build confidence in the process by providing complainants with assurance that their reports have been given appropriate consideration. Where we have contact information, we circle back with complainants to inform them of our outcome. The intention is to ensure that reporters feel they've been heard, that they feel respected, and that they understand our decision, even if it's not what they might have hoped for. In 2025, as planned, all whistleblower reports were assessed within 10 business days. Investigation reports under the whistleblower process may lead to recommendations for corrective action, as you've just seen. Follow-up on the status of recommendations is conducted annually and reported to council. KPI 2.2 measures this rate of implementation. The city reports having implemented 82% of our recommendations from last year, though slightly lower than hoped for, it remains, I think, a very positive reflection on the seriousness with which our recommendations have been taken by the city. I'll continue to monitor the rate of implementation next year to see if 90% is a realistic target. This is still very new for all of us. Next slide, please. Goal three is to provide city departments with objective and helpful recommendations as evidenced by three things. The proportion of recommendations accepted by audited departments, the proportion of audit recommendations endorsed by this committee, and the proportion of recommendations implemented over three years. We aim to have all of our recommendations accepted by audited departments and in practice this won't always happen. But acceptance is what we work towards and strive for. And indeed, all 23 recommendations were accepted last year by the city. We also aim to have all of our recommendations endorsed by this committee. This should be what happens, and in practice it was what happened last year with all 23 of our recommendations endorsed by this committee. KPI 3.3 is measured through the semi-annual follow-up process.
In December last year, the city reported having fully or substantially implemented 17 out of the 33 recommendations that were issued in 2023, or 52% of the total. It's my hope that this will rise to 60% next year, although this is entirely dependent on the city's actions. Next slide, please. The last goal is for our work to yield cost savings or enhanced revenues that at least match our operational costs over five years. We estimate that the implementation of our recommendations should have resulted in financial benefits to the city of $31.3 million. Compared to the total cost of operating the office since its inception of $6.9 million, we see a total return on investment of 453%. For five years, we estimate a total economic benefit to the city of $90 million. of the work conducted so far. Details of this estimate can be found on page 11 of the annual report. Well, I'm obviously quite pleased with this result. As I've done in prior years, I must caution that my goal is for the office to cover its costs rather than to be a profit centre. This is an appropriate goal for an audit office. Not all audits will have positive financial implications, and nor should they. The benefits from implementing audit recommendations often relate to improved governance, performance and risk management, and either don't have direct financial benefits, or potential financial benefits that just would not be credible to estimate. I'm aware of no other auditor general at any level of government in Canada who voluntarily publishes estimated cost savings. I believe this is due in part to the challenges and risks associated with auditors presenting this kind of information. Primary among these challenges is the issue of attribution. It's the city that ultimately implements my audit recommendations and it's difficult to directly attribute to my work, costs that have been saved or avoided, or revenues that have been enhanced. I take a conservative approach, therefore, in calculating these amounts and update them periodically in consultation with the city. But they do nonetheless remain estimates that can't be independently audited or verified. So while the information is interesting, its value is also limited and should be considered in the context of the other performance information that's been provided to you. That's the end of my presentation. I'm happy to take any questions.
Great. Thank you very much. I do want to confirm. I should have noted if anybody has a conflict to declare it now would be the time, and I am not seeing any. Are there any questions on the report? And I'm not seeing any. There are no registered speakers for this item and no vote is necessary as the item is for information only, and that concludes item number three. Can I have a motion to adjourn? Seconded. All in favour. Okay, thanks everybody. That concludes the public meeting and we'll — let's take five minutes, just because it's been a long stretch, and then we will convene for in-camera at 12:11. Thanks.
Good.