Kelowna Developer Targets Mayor Tom Dyas In Lawsuit Over Rescinded Permits

As promised, Appelt Properties has filed a lawsuit against the City of Kelowna after permits for its project on 350 Doyle Avenue were rescinded by Council this past summer, according to filings in the Supreme Court of British Columbia.

At its August 14 meeting, Kelown City Council received a recommendation from City staff that the development permit and development variance permit that had been issued to Appelt Properties be rescinded, after the City learned that several of the people who spoke in support of the project at the public hearing, held in July 2022, had been paid by Appelt Properties.

Greg Appelt, the company's Founder and President, appeared before Council over the phone and voiced his displeasure with the recommendation, calling it a "profoundly disappointing turn of events" and saying that Appelt Properties would "use the tools available to us to challenge that action."

The City nonetheless rescinded the permits and Appelt Properties has now followed through, filing its notice of civil claim on February 1.

In the notice, filed by 350 Doyle Avenue Holdings Inc. and Centurion Appelt (350 Doyle Avenue) Limited Partnership, Appelt Properties claims that the City of Kelowna and Mayor Tom Dyas made "unlawful attempts" to delay or stop the 350 Doyle Avenue project and did so "for improper reasons, including but not limited to, Mayor Dyas' political objectives and vision for the property, appeasing a group of Kelowna residents known as the Kelowna Legacy Group (KLG), and the City's desire as owner of the property to reacquire the lease at a discounted price and pursue other development opportunities."

On its Facebook page, the Kelowna Legacy Group describes itself as "an informal collection of concerned citizens who are requesting that City Council do more consultation on creating a comprehensive plan for civic property at 350 Doyle Avenue in downtown Kelowna."

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. On December 12, 2019, the City selected Appelt Properties as the developer of the site, entering into an agreement that would see Appelt Properties purchase an 80-year leasehold interest in the property for a price of $7,000,000, a portion of which would be payable through community amenity contributions (CACs).

The lease agreement also mandated that the developer begin construction on the project on or before January 24, 2024 (amended to January 20, 2025 upon rescinding of the permits), and that the City could terminate the agreement if the developer failed to meet that requirement.

After some revisions that saw the density increased, Appelt unveiled a proposal for a 25-storey tower with 259 rental units, office space, retail units, and an arts hub, and its proposal was approved by Council after the public hearing was held in July 2022.

However, after the municipal election in October 2022 brought in a new Council, Appelt Properties — formerly known as Rise Commercial Developments — says Council "began taking various actions to stall the project" and that Mayor Tom Dyas' "true motivation" was to stop the project. The claim says that KLG was formed by Dyas and that Dyas expressed opposition to the project during his election campaign.

Both the developer and City continued trying to push the project forward until the City discovered that supporters who spoke at the public hearing in favour of the project had been paid per diems by a consultant — JDH Naturals Inc. — hired by Appelt Properties, with Mayor Dyas receiving an email in January 2023 from an individual who said that he and several others were "paid $250 via e-transfer for my comments." Appelt says it paid speakers to cover the costs of missed work and transportation, not to buy support.

Mayor of Kelowna Tom Dyas and President of Appelt Properties Greg Appelt.(Tom Dyas, LinkedIn / Appelt Properties)

Appelt's lawsuit takes particular aim at Dyas.

After Council rescinded the permits in August, Council passed a resolution endorsing the creation of the Community Task Force on Performing Arts, whose purpose was to pursue the redevelopment of the Kelowna Community Theatre as part of an alternative redevelopment proposal that would also include the 350 Doyle Avenue property. Appelt Properties notes that Dyas was appointed as the Chair of the task force and claims that Dyas has been a known supporter of the project, over Appelt's proposal, through KLG.

Appelt also notes that the Kelowna Community Theatre proposal was designed by Les Bellamy, who — along with Mayor Dyas — formed KLG. The proposal was rejected by the City in 2019, prior to Dyas becoming Mayor, and Bellamy had also spoke out publicly against Appelt's redevelopment plans.

Appelt claims that Dyas and Council are using the per diem issue as a reason to delay — and ultimately stop — the project, setting the stage for the Kelowna Community Theatre proposal to be revived.

"The City’s current City Council and Mayor Dyas have, at all material times, been motivated to stop, delay, and/or harm the project for unlawful or improper reasons, including without limitation: advancing political objectives unrelated to any lawful or valid concern of the City with respect to the project; appeasing members of KLG; appeasing Bellamy and other personal friends of Mayor Dyas and/or City Council who stand to personally benefit from stopping the project by, among other things, preserving views from their condominium buildings, maintaining their property values, and profiting from their own opportunity to redevelop the property and the Theatre property."

Appelt also claims that the City is intentionally trying to suppress the value of the property so it can reacquire it at a lower price, and claims that Dyas and Council have a "personal dislike" of the project and/or Appelt Properties. Hinting toward conspiracy, Appelt also claims that Dyas and Council decided to look for ways to prevent the project from progressing and did so behind closed doors, "at a time unknown to the developer, but known to Mayor Dyas and City Council."

Other actions Appelt claims Dyas and Council took to delay the project include requesting greater affordability be provided with their project, repeatedly dragging out the process of finalizing a housing agreement, and inviting the developer to reapply for its permits knowing that the given timelines they have set out would be difficult to meet.

Legally, Appelt Properties is claiming that the City is in breach of their lease agreement, which states that the City will act lawfully and in good faith, among other duties.

Appelt claims that as a result of the rescinding of the permits, and the resulting delay, it will suffer a loss of profit from the project, a delay in when they see their profit, and increased project costs, on top of the legal fees. Appelt is seeking general damages, special damages, and special costs, but have not specified the amounts they are seeking.

The City of Kelowna has 21 days to respond. In a statement on Friday, the City said the Mayor and Council "followed due process and acted in the best interest of the city" and that it would not be commenting further on the case.