Image Credit: Image Credit: Submitted/Appelt Properties and Wexford Developments

After spending more than $10 million trying to develop city-owned land in downtown Kelowna, a developer is suing the city for putting the brakes on the project.

At issue is a portion of the former RCMP site at 350 Doyle Ave. and the fact that the developer, now known as 350 Doyle Avenue Holdings Inc., paid per diems to students to speak in favour of the project last year.

“While council may ‘expect’ that an applicant will not reimburse members of the public for presenting to council, there is no statutory or other prohibition on doing so,” the court filing, issued Sept. 8, reads.

The saga began in June 2019 when the city issued a request for proposals to redevelop the site with mixed uses of commercial, condo or rental housing, and amenities like extending the city’s Art Walk and building a civic plaza.

On Dec. 12, 2019, Rise Commercial Developments Inc. was selected to build the project. That is now Appelt Properties Development Corporation which later joined forces with other partners to form 350 Doyle Avenue Inc.

On Feb. 10, 2021, the developer agreed to an 80-year lease with the city that included  $7 million to be paid by building the amenities. There were tight time-lines as to when construction had to start and finish.

The original design was for a 13-storey tower with 259 rental units.

The filing says city staff suggested the developer hire a public relations firm to help with the public consultation process and it hired Mary Lapointe.

The rezoning application went to public hearing in November 2021, and received second and third reading approval with final approval being subject to a development permit being issued.

About two weeks later, the developer was called into a meeting by then-Mayor Colin Basran where the mayor asked him to consider a taller, narrower building.

“The developer understood that the basis for this request was the ongoing opposition to the project from some members of the public and, in particular, concerns about the building’s mass blocking views of nearby buildings,” the court filing says.

It says part of the organized opposition came from the Kelowna Legacy Group that “held rallies and issued press releases” opposing the project.

In May 2022, a revised development permit for a 25-storey, 259-unit tower was applied for. That was scheduled to go to a public hearing with Kelowna City Council on July 26.

In June or early July, the developer hired a second public relations company, JDH Naturals Inc. to “engage with students” at UBC Okanagan.

“The developer selected JDH because it understood that the company’s principal, Jaxon Hicks, was himself a UBCO student and would be well positioned to engage with the student community,” the court filing says.

“The response from students was generally positive, with many expressing a desire for increased rental and affordable housing and downtown amenities in the city. JDH encouraged students who expressed support to attend and speak at the Development Permit / Development Variance Permit meeting and JDH offered to help those who attended to prepare speaking notes about their personal views on the project and the need for rental housing in the city.”

JDH learned that many students would have to spend time and effort, miss work and/or travel to attend the meeting and suggested a $200 per diem. That was upped to $250 during the public hearing because of the length of time that meeting took, the filing says.

“As the project had faced well-organized opposition, the developer anticipated that many members of the pubic who had the means to attend the Development Permit / Development Variance Permit meeting for the purposes of speaking in opposition of the project would do so and the developer wanted to ensure that other voices of the public – including those who would benefit from rental housing near the future UBCO downtown campus – could also participate,” the court filing said.

The per diems were not offered to students who were not in support of the project and the developer “did not authorize, and never would have authorized, payments to students to change their independently held views,” the filing said.

During that July 2022 meeting council supported the permits but made them contingent on a number of things, including the signing of a housing agreement making 10% of the units affordable.

In October of that year, an election was held and Basran was defeated by current Mayor Tom Dyas.

In April of this year, the developer was called into a meeting with the city where the developer first learned there were concerns about the per diems.

The developer responded by sending a letter to mayor and council saying it “did not pay any students for their comments,” the filing says.

In May, council instructed staff not to give any further consideration to the housing agreement and staff stopped responding to a number of other communications from the developer.

In June, city clerk Stephen Fleming reiterated that stand, writing to the developer that “council remained concerned with the integrity of the public process” adding that council intended to negotiate a reacquisition of the property, the filing says.

The developer followed up with a letter saying they still wanted to complete the project but were willing to talk about “full, fair and complete compensation.”

Those talk broke off as of July 26 and the issue was taken to city council at its Aug. 14 meeting.

At that time, council rescinded the development and development variance permits and said the developer could come back with a newly designed project.

The filing says by that time the developer had spent more than $10 million on the project, including getting down to the detailed designs needed to apply for a building permit, which it was ready to do by the end of June.

Much of that money would just be lost if the building had to be redesigned, the filing says.

The suit says it was unreasonable for the City to think the per diems tainted the July 2022 meeting and unreasonable to think it had the statutory right to rescind the permit approvals.

It also argues the city’s duty of fairness requires it to provide the developer with the full contents of the allegations made against it in terms of the per diems.

The lawsuit asks that the decision to cancel the permits be overturned, that court costs be paid to the developer and “such further and other relief as this Honourable Court may deem just.”

The City of Kelowna has 21 days to file its response.

None of the allegations have been proven in court.

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