Toronto parking executives were inflating the purchase price of a land deal in North York, auditor general says
An investigation into a North York land deal being handled by the Toronto Parking Authority found senior executives were pushing the purchase at an inflated price without proper evaluation following a series of apparent conflicts involving a veteran city hall lobbyist and a city councillor.
The proposed $12.2-million deal for a strip of land south of Finch Ave. next to Hwy. 400 was paused after the auditor general became involved and questioned both the process and the price.
Up until now, the pending deal has been discussed in secret, behind closed doors.
The findings of a nearly 10-month long investigation were released Tuesday in a 76-page report after the auditor general was asked to look into a mundane-sounding land deal being handled by the Toronto Parking Authority.
The land deal is connected to future plans for a Finch West LRT. In March 2016, council approved, as part of a much larger report, that the Toronto Parking Authority acquire the property to be used for city parking and bike share.
It also included the possibility for a public space project that included a long-held dream of erecting North America's largest flagpole pushed by local Councillor Giorgio Mammoliti, who was involved in the land sale deliberations.
Auditor General Beverly Romeo-Beehler concluded that the “(Toronto Parking Authority)’s actions created unnecessary risk of overpaying an additional $2.63 million.”
“There was significant risk to the city and TPA’s reputation because of the lack of independence, transparency and judgment expected of the Toronto public service,” she wrote. “The lack of judgment in disclosing information to the lobbyist, not checking for conflicts of interest and not obtaining an independent sign valuation is concerning.”
At audit committee at city hall on Tuesday morning, chair Councillor Stephen Holyday said the confidential report was rightly discussed in public and was released.
“I am persuaded that the confidential attachment should actually be made public,” he said.
In her report, Romeo-Beehler found that the Toronto Parking Authority’s cost assessment of the deal, of which a large digital sign on the property was an essential part, was $2.6 million more than the fair market value and that parking authority executives failed to get an independent valuation, instead directing the analysis provided by a hired sign consultant.
The investigation was sparked after Councillor John Filion, a member of the Toronto Parking Authority’s board, who repeatedly asked for due diligence on the deal, including land appraisals. After fearing there would not be enough time to review the financials and halt the deal if necessary, he contacted Romeo-Beehler in September 2016.
The auditor general found the deal overall was worth $9.5 million. She wrote that had Filion not brought the purchase plan to her attention, the parking authority would have over paid. She noted the Toronto Parking Authority disagrees with that assessment.
The auditor general said there was no evidence of Toronto Parking Authority staff or their sign consultant directly benefiting from the land deal. “However, we are comfortable concluding that the approach does not meet what is expected of Toronto public service staff,” she wrote.
Toronto Parking Authority President Lorne Persiko and Vice President of Real Estate and Development Marie Casista “said that they would have come to the same conclusion” about the value of the land, Romeo-Beehler wrote, and that “they always intended to obtain the opinion of the independent business valuator for the sign.”
Romeo-Beehler went on: “We disagree. The board was informed that it was their sign consultant who was valuing the sign and the real estate appraiser was asked to include the opinion of the sign consultant.”
The auditor noted she had difficulty obtaining information and that explanations to the questions she posed were “inconsistent.” That struggle to obtain information “limited our ability to form conclusive findings,” Romeo-Beehler wrote.
Though Casista was on vacation, the auditor general found documentation that she was actively working with the sign consultant involved on the file and that a spreadsheet related to the sign’s value was deleted from her inbox.
“The VP said that it was deleted in error and she could not recover it,” Romeo-Beehler wrote.
The auditor general’s report shows Mammoliti was involved in having a veteran sign lobbyist, Paul Sutherland, a former North York councillor, continue working with the Toronto Parking Authority to negotiate the land deal even though he was also the lobbyist for the sign consultant assessing the value of the billboard on the land.
Sutherland was working for the Emery Village BIA, of which Mammoliti is a board member, to move the flagpole project forward.
Sutherland was negotiating for the Toronto Parking Authority to develop the flagpole and public space as part of the purchase agreement. The project was estimated at $5 million with the Emery Village BIA covering costs.
Mammoliti suggested to TPA president Persiko, the auditor general wrote, that city-held funds — cash collected from developers for community benefit — could be used for that purpose.
More to come