CONTRACT (A) Specifics:

508 Helmcken / 1077-1099 Richards Valuation Report

(the “508 Report”)

City staff identified and contracted for the services of these two specific contractors:

  • 1) Ernst & Young “E&Y”, whose duties included distribution of funds to Burgess Cawley Sullivan Associates & others, and;
  • 2) Burgess Cawley Sullivan Associates “BCSA” – Commercial real estate appraisers.

No signs of competitive bidding or public disclosure can be found.

Rennie Marketing Systems “RMS”

The completed 508 Report made for the City, credited Rennie Marketing Systems “RMS”, as fulfilling the “CAC Pro-forma” and “Estimation and validation of selling price” contract task which was relied upon by the City. The City agreed in the engagement letter that they would pay for contractors contributing to the 508 Report. The importance and significance of the tasks that RMS is said to have performed cannot be overstated. “CAC Pro-forma” and “Estimation and validation of selling price” can be extremely important if they are to actually to be relied upon.

Rennie Marketing Systems is a realtor. They eventually worked for the purchaser of 508 Helmcken (the “Purchaser) after being retained as the purchasers exclusive real estate agent concerning 508 Helmcken.

The purchaser who arranged the purchase of this ½ acre of downtown Vancouver City owned land, hired RMS at some point, for tasks which included that RMS sell “Pre Sales” of the newly approved luxury condominiums prior to its construction. The business of selling “Pre Sales” is a foundational part of the development process for condominiums which RMS appears to have been in charge of. RMS eventually became the exclusive “Pre Sale” realtor of hundreds of millions of dollars in not yet built condominiums. The condos have been advertised under the name of “8×8 ON THE PARK”. RMS would eventually be paid significant commissions as a percentage of the sales revenue of 8×8 ON THE PARK. The pre sales are nearly completed and RMS still represents the original purchaser.

The engagement letter and the 508 Report indicated the City (the “Seller”), was looking for unbiased independent 3rd party opinion. The 508 Report describes the duties of RMS on pages 17 and 27. The word CAC is mentioned 16 times in The Report that was contracted by the City. Pro-Forma is mentioned 9 times in The Report. The City “Project Management Budget” was made available to fund this contracting and no other contract or evidence of spending for RMS can be found anywhere.

At some point, RMS began working for the purchaser but it is fairly evident that RMS was working for the City to help create the 508 Report. We can only assume that RMS didn’t contribute their expertise for the City 508 Report for free? E&Y had the authority to engage and pay them on behalf of the City.

Contract Value Estimate: Our Society estimates that the total cost of the 508 Report was between $240,000 to $440,000. So far only about $140,000 has been accounted for.

February 23, 2015 Engagement letter

  • The Feb 23, 2015 engagement outlines staffs conscious non permissive demand for BCSA.
  • The Feb 23, 2015 engagement letter outlines the City’s contracting requirements.
  • The Feb 23, 2015 engagement letter was approved by City Solicitor, Francie Connell.

Broad Contract Objective (Feb 23, 2015 engagement letter)

“The Client is seeking an independent third party opinion in respect of a transaction that originated in Spring 2012 and was consummated in the Fall of 2012 involving the Client and Brenhill Developments Ltd (Brenhill”). Brenhill was the purchaser of City land (508 Helmcken)

E&Y acted as middleman for the City who contracted services of commercial real estate appraisers and consultants, Burgess Cawley Sullivan Associates, who are said to have created:

“An assessment of value arising from the Transaction in favour of each of the Client and Brenhill having regard to, inter alia:

  • The value of the swapped lands;
  • The economic value associated with the incremental increase in social housing units;
  • The economic value associated with the rezoning of the Brenhill Lands;
  • Between October 2012 and February 2015 approximately.

(the “508 Report”)

Money Flow Command Flow
Creation of the City expense account known as (the “Project Management Budget”). Created money to pay BCSA and E&Y City was in command of instructions to contractors
E&Y paid Burgess Cawley Sullivan Associates on behalf of the City. BCSA’s senior partner Sandra Cawley was the only listed appraiser in any of the related documents and is an accredited member of the appraisal Institute of Canada. She was the BCSA expert identified as supplying the contracted work to fulfill the City contract which demanded that BCSA do this work. The final report credited BCSA for having produced parts of this contract demand.

 

Cost Consultants: The two remaining subcontractors (BTY and Altus) focused on costs which are again evident in the report. E&Y had the authority to engage and pay them on behalf of the City as well.