Disqualified bid was $95M less than the $205M for city hall extension; building is short of promised space, trial hears

(This is the third in a series of articles The Pointer will be publishing, detailing the trial in the Inzola Group’s lawsuit against the City of Brampton)

The City of Brampton disqualified a bid to build its city hall extension that would have saved taxpayers $95 million, compared to the $205 million price tag for the winning bidder’s proposal, which is now being paid, according to evidence in the recent trial for a lawsuit over the disqualification.

Evidence presented in Orangeville's Ontario Superior Court of Justice for the lawsuit launched by the disqualified bidder also shows a discrepancy between the amount of office space that was supposed to be built under the terms of the bid contract and the actual office space that was eventually constructed. The evidence suggests the finished city hall extension is short about 4,500 square feet of administrative space, an area the city is currently paying for as part of the $205 million cost for the expansion.

Inzola Group’s lawsuit against the City of Brampton, alleging it was unfairly disqualified from the bidding process for a $500-million downtown re-development deal, does not include any allegations of wrongdoing by the winning bidder, Dominus Construction.

Dominus has stated that it followed all rules for the project.

During trial, evidence was presented that suggests the allegedly missing administrative space was shown in documents provided by the city to have been constructed in the below-ground part of the structure, where the underground parking lots are located. The city’s key witness in the case testified that no such administrative space is located in those underground levels primarily used for parking.

The lawsuit was filed in 2011 by Inzola, after it was disqualified from the bidding process in 2010. After Dominus sold its rights to the project prior to its completion, only the first of three proposed phases, the new city hall extension (the only phase that was approved by council), went forward.

Inzola claims former senior officials and then-mayor Susan Fennell were biased against the company and didn’t want it to get the lucrative contract.

Fennell and the City of Brampton have denied all allegations in the lawsuit.

During an earlier portion of the trial in Orangeville, which concluded two weeks ago, lawyers for Inzola presented the details of the company’s bid.

Under the disqualified Inzola offer the city would have paid $63 million for the construction cost of the city hall extension—$42 million for 140,000 square feet of administrative space and $21 million for 600 underground parking spaces.

The city could have paid this lump sum amount for the entire project or, under Inzola’s offer, it could have entered into a “leaseback” arrangement to make payments over 20 years that would have totalled $110.2 million. The interest rate on the arrangement works out to just over 6 percent.

The city eventually entered into a deal with Dominus, which proposed to build 126,400 square feet of administrative space and 446 parking spaces for a construction cost of $94 million. The City of Brampton agreed on a lease-to-own arrangement for a total of $205 million, paid in annual installments of $8.2 million for 25 years. The interest rate for this arrangement is about 7.3 percent.

In 2010, after Inzola and Dominus, and a third bidder, Morguard, submitted their offers for the deal, in response to the Request for Proposals the prior year, the three companies were asked to sign a confidentiality agreement.

After Inzola saw that the specific confidentiality agreement, which was not included in the original RFP contract, would prevent the company from ever sharing the details of its bid, including its price, if it did not win the job, it declined to sign it. When the company attempted to address the issue with council at a public meeting, to reach a resolution regarding the permanent confidentiality clause, the attempted communication was the reason the city disqualified the company, for allegedly violating the no contact rules of the RFP, meant to prevent firms from lobbying.

Inzola argued during trial that there is no such rule in the RFP contract that prevented the company from seeking a solution at a public council meeting to resolve the disagreement about the permanent confidentiality clause.

Another issue raised in the trial was whether or not Dominus delivered the 126,400 square feet of administrative space in its offer, part of the requirements under the RFP contract.

Lawyers representing Inzola showed Julian Patteson, the former head of buildings and properties for the City of Brampton and its key witness throughout the seven-year-old lawsuit, measurements of the building taken in 2014 by the architectural firm hired by Dominus (the city hall extension was supposed to be ready for occupancy in January of 2014, but construction was delayed by about a year).

The drawings of the building were done around the end of 2014. According to the submitted documents for the breakdown of those measurements, the above-ground part of the building is about 4,500 square feet short of the administrative space that Dominus was required to build. The document shows that the space is accounted for in the below-ground portion of the building, where the parking lots are located.

The trial heard that the city has never addressed the discrepancy. It accepted the finished building as is, suggesting it meets the space requirements of the RFP contract.

The document provided by the city for trial shows the missing administrative space is located on the below-ground levels.

Patteson was asked during trial if there is any administrative space on those underground levels.

He testified that there is no administrative space on those levels.