About an hour into Monday's City of Kelowna Council meeting, a City clerk introduced the next item on the agenda: a development application by Kelowna-based Appelt Properties for 350 Doyle Avenue, describing it as "something that's not usually come before Council" and "a bit of an usual application."
The City was recommending that Council rescind the development permit and development variance permit previously issued to Appelt Properties (formerly named Rise Properties Limited) because the City had come to learn that Appelt paid students to speak in support of the project at a public hearing held in July 2022.
The property at 350 Doyle Avenue was previously an RCMP detachment, which Council endorsed for redevelopment in September 2018 after the RCMP moved to a new location on Richter Street.
The City of Kelowna engaged HM Commercial to list, market, and sell the property, with an asking price of $6.5M. According to the City, multiple proposals were received, and the City chose Appelt's, with a lease and covenant finalized by February 2021.
A public hearing was held on July 26, 2022 regarding Appelt's proposed development, with Council hearing from a total of 24 people before authorizing the issuance of the development permit and development variance permit, which would allow Appelt to build a 25-storey tower with 259 rental units, office space, retail units, and an arts hub. The project, which also includes Wexford Developments, has since been named Muse.
The subject site at 350 Doyle Avenue.(HM Commercial Group)
Beginning in October, following the municipal election, the City and the incoming Council began receiving statements that some of the individuals who voiced support for the project at the public hearing were paid to do so, with Mayor Tom Dyas receiving an email in January from an individual who said that he and several others were "paid $250 via e-transfer for my comments."
Upon investigation by staff, Appelt confirmed that the company they hired to conduct public engagement, JDH Naturals, provided "nominal expenses" to an unspecified number of people who spoke in support of the project at the public hearing. JDH Naturals later said it reimbursed speakers $250 each to cover things such as lost pay from missing work, travel, parking, and meal expenses.
In a report dated August 14, the City said that "Conceivably, some of the presenters may have lost earnings, but it seems highly unlikely that across the board, each of the presenters' expenses reached $250."
Looking back the meeting minutes, the City found that approximately half of the 24 people specifically cited the need for affordable housing and student housing as a reason for their support, which was something Council had emphasized. The City also found that one of the people who spoke in support of the project was the Principal of JDH Naturals.
The City has still been unable to ascertain how many of the speakers were paid by JDH Naturals.
Speaking to Council remotely (audio only) on Monday, Greg Appelt, the company's Founder and President, began his remarks by voicing his displeasure.
"First, we'd like to go on record in saying that this has been a profoundly disappointing turn of events for us," Appelt said. "We have worked in good faith with the City for many years on this project to date, spending millions of dollars completing the design and approvals and bringing it to the point where all we need is a building permit to begin construction."
Appelt then noted that after criticism of a previous iteration of their proposal, a 13-storey tower, they went back to the drawing board and returned with an updated proposal to address those criticisms and Kelowna's need for rental housing, before finally addressing the issue at hand, which he euphemistically referred to as "the issue raised with students."
"This Council is concerned [about] a per diem reimbursement of $250, from our public relations vendor to students who spent time, effort, and — in many cases — hard costs for travel or missed work shifts, in order to participate," Appelt said. "We have not hidden the per diem reimbursement and we have been transparent whenever asked about it."
The latter does appear to be true, but the former does not, as Council has said that it did not know about the per diems at the time of the public hearing, which is the core issue. Greg Appelt then turned to the whataboutism strategy.
"This did not break any rules, policies, or laws. In fact, we know that many who speak in opposition do so because of their bias, as most have financial motivations. A well-funded and organized oppositional campaign even held a rally prior to the same meeting, and neighbours seeking to protect the views and property values of their condo buildings were well represented. Can we really pretend that some students receiving a $250 per diem for speaking about the need for rental housing 'taints' [the word used by the City in its report] this process?"
The City has not said the payment violated any policies or laws, with the crux of their reasoning being that the payment was not known at the time of the public hearing and that this "undermines public confidence in the public process." It also said, in the report prior to this week's meeting, that "While Council would expect that consultants, such as architects, engineers, planners or lawyers, would be compensated by a proponent for their assistance in making a presentation to Council, there is no similar expectation of compensation having been paid to members of the public who make presentations."
Appelt concluded his remarks by saying he would challenge the action if the development and development variance permit were rescinded.
"If the City decides to rescind this development permit and development variance permit, we will use the tools available to us to challenge that action," said Appelt, likely alluding to legal action.
He then signed off by saying he would not take any questions, because there was nothing else to add.
Immediately after Appelt signed off, Council did not discuss Appelt's remarks, and unanimously carried the motion to rescind the permits.
Appelt Properties now has the option to resubmit a development permit application, with the possibility of the current proposal being changed, and the City has amended its lease agreement with Appelt to extend the construction commencement deadline of January 20, 2024 and substantial completion deadline of January 20, 2028 by one full year.
Based on Appelt's remarks, however, it appears he will be going the route of fire and fury.