Councillors had concerns about city hall extension: $205M cost; too close to street; taxpayers paying for delays; and $3M charge

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

Three outgoing Brampton councillors raised concerns that the $205 million cost of Brampton’s city hall extension was far too much, that it was not set-back far enough from the street and that taxpayers had to cover millions of dollars for delays that should have been paid by the builder.

The builder’s admission of a $3 million over-charge in the construction cost, which the city later said was not a mistake and kept in the cost to taxpayers, was also highlighted during testimony by three retiring councillors.

Their testimony was heard during trial for a $28.5 million lawsuit filed by a disqualified local builder that alleges former senior city staff and former mayor Susan Fennell were biased against the company and did not want it to get the deal for what was supposed to be a $500 million downtown re-development project.

The City of Brampton and Fennell deny the allegations in the lawsuit.

Inzola Group and its principal John Cutruzzola filed the claim against the City of Brampton in 2011, and the trial wrapped up six weeks ago after the case ground through the court for almost seven years. A decision could come as soon as next month, or as late as early next year.

During the trial, which was held in Orangeville’s Ontario Superior Court, retiring councillors who voted on the project in 2011, testified about concerns they had before and after the deal was brought to council for approval.

John Sprovieri, Grant Gibson and Elaine Moore revealed a number of alarming problems they saw with the project.

Sprovieri testified about delays in the construction of the new city hall building, which was supposed to be ready for staff to occupy in January of 2014. Despite a 13-month delay, and an eventual completion date of February 12, 2015, the city started paying the annual $8.2 million in rent to the builder months earlier, in July of 2014, according to evidence presented in court.

“There was about $19 million worth of work still to be completed,” Sprovieri testified, explaining that he had asked senior city staff about what still needed to be done on the city hall expansion, after the deadline for delivery had passed.

“They provided a list of items that were supposed to have been completed.”

Sprovieri, who voted in favour of the project in 2011, but has since been one of its harshest critics, told the court he was surprised when he found out the city had begun paying the rent in 2014, even though the building was far from complete.

“The whole matter has gone from bad to worse,” he told the court. “I didn’t believe we should be paying rent when the work wasn’t even close to being completed.”

There are no allegations in the Inzola lawsuit against the builder, Dominus Construction, which won the contract to be the city’s 25-year partner in a proposed three-phase deal. Dominus has stated it followed all rules of the entire process for the project.

Only the first of Dominus’s proposed three phases was completed, the city hall expansion, which will cost the city $205 million over 25 years. A planned downtown library and other features in the remaining phases never moved forward, and in 2014, before the city hall extension was completed, Dominus, in a surprise move, sold its rights to the project to Fengate LP, prior to the eventual completion of the work by Dominus.

Sprovieri also testified that he learned Dominus had sent senior city staff a communication, after it submitted its original bid in 2010, that its $94 million construction price was incorrect and that staff needed to reduce this to $91 million because of a calculation error. The price was not reduced, and city staff testified during trial that their own calculation showed the $94 million figure was correct.

None of this was shared with council members before they voted to approve Dominus in 2011.

Councillor Grant Gibson, during his testimony, was asked by Inzola’s lawyer if he was aware of a $480,000 payment that senior city staff made to Dominus in 2011 to secure land for its proposal, property the bidder was supposed to tie up without the city’s involvement in assembling the lands.

Gibson, who voted against the deal in the final 6 to 5 vote in August of 2011, testified that he only found out about the $480,000 of taxpayer’s money that was handed over to Dominus without council’s knowledge by senior staff, through the court case, when evidence was later revealed that showed the secretive payment was made.

Gibson was asked by lawyer David Chernos, what he would have done had he known about the $480,000 deal senior staff arranged with Dominus without getting approval from council.

“I would have asked for their resignation. I certainly wouldn’t have supported it,” Gibson replied.

The two key senior staffers, Julian Patteson and Mo Lewis, who authorized the transaction without council’s knowledge, are no longer with the city. Lewis resigned in 2013 and Patteson was let go in a reorganization of senior management in 2016.

Gibson, who raised the issue of whether or not the required property had been secured by Dominus prior to the 2011 vote to select the company for the deal, was asked by Chernos if Fennell had told him that the money to secure the property had come from Dominus.

“That’s right,” he replied.

“You didn’t learn the city paid the … $480,000 price until 2014, right?” Chernos asked.

“That’s right.”

Court documents revealed that Fennell signed the agreement for the $480,000 transaction with Dominus in 2011, but she has stated she was not aware of what she signed and only found out about the arrangement in 2014, when the rest of council found out.

Gibson also testified that he thought the $205 million cost for the nine-storey city hall addition was far too high.

“I still to this day don’t completely understand the financials of it.”

The trial revealed that Inzola’s disqualified bid would have cost the city $110.2 million (including lease costs) for a slightly larger building than the one Dominus built for $205 million, including the cost of the lease.

Chernos asked Gibson if he tried to get the cost per square foot from staff before the final vote in August of 2011.

“Yes, I asked that question a number of times.”

“You never got any further explanation?”

“No, I didn’t.”

Councillor Elaine Moore also testified during trial, detailing efforts she made to understand what she believed to be an excessive price for the city hall extension.

“We wanted to know the details, no details were given (for the cost).”

Inzola lawyer Stuart Svonkin asked her if she ever received responses from staff about the details of the Dominus cost, before the final vote in 2011.

“No, we did not.”

The court was shown an email that Moore sent in 2011 to senior staff, which was also sent to Fennell.

The court heard that Moore could not make sense of the staff claim that Dominus’s $94 million construction cost worked out to $242 a square foot. Calculations provided by witnesses during trial showed the $94 million construction cost for 126,000 square feet of usable administrative space and about 440 parking spots, which is what Dominus was required to deliver, works out to more than twice the square foot cost staff provided to council members in 2011.

“That math didn’t work for you,” Svonkin said to Moore. “Did you ever get a response?”

“No, I didn’t,” she replied.

Moore testified that she voted against the deal in 2011 because she did not have enough information about the costs and because of lingering questions about the property that was supposed to have been secured by Dominus — which council members learned three years later had been tied up with $480,000 paid by the city, on staff’s authorization.  

Sprovieri testified that the finished building is too close to the street and does not meet the required set-back, which has resulted in the city hall extension being hit by trucks on multiple occasions.

He testified that when he questioned city staff about the building getting hit because it doesn’t meet required set-backs, they told him they had special “delegated authority” to allow the building’s construction so close to the street.

Svonkin asked Sprovieri if he accepted staff’s explanation, that they had the authority to allow the limited set-back, with little room for a sidewalk.

“No. I did research. Only Committee of Adjustment could give that (authority) and they hadn’t."

The city has maintained throughout the case that it followed all the rules for the project and that no bylaws, building codes or rules for the scope of the project were broken.

Sprovieri also addressed the issue of taxpayers paying rent twice to house city staff, during the 377-day delay in the completion of the city hall extension.

During his testimony he was asked if he was aware that not only were taxpayers paying rent to Dominus before the building was ready, but that the city had to pay additional rent to the property owner of the office building where staff had been working, because that lease had to be extended due to construction delays in the city hall expansion. Dominus, under the contract at the time, was supposed to pay penalty costs due to its delays, but the city forgave the company of almost $1.5 million in penalties, after Fennell signed an agreement in 2014 to excuse the amount without council’s knowledge.    

Sprovieri was asked by Svonkin if he addressed the delays, at the time.

He replied that he raised questions about the reason for the delays during a council committee meeting and was told by staff that a strike by elevator workers and an ice storm were the main causes.

“The elevator work hadn’t even begun yet and I couldn’t see how the ice storm caused the delay. That was never explained to us,” Sprovieri told the court.   

When asked if he thought it was a waste of taxpayer dollars to be paying rent twice, to Dominus, even though the building was not yet ready, and to the company that owned the office space where staff had to remain because of the delay, Sprovieri was quick to respond.

“Big time. Yes.”