Legal review finds City Hall neglected ‘due diligence’ in pursuit of George Street parkade project

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In a legal review undertaken by Young Anderson Barristers & Solicitors, they concluded that the major issues associated with the housing project arose “as a result of the City pressing forward without first having undertaken appropriate due diligence, both in terms of design for the Parkade and consideration of the appropriate allocation of risk.”

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The report goes on the say that the city’s longstanding goal of revitalizing the downtown “and its strong belief that the Housing Project and Parkade were much-needed development to spur on that revitalization, led the City to press forward with negotiations with the Developer, and enter into significant financial commitments, without having first undertaken sufficient design work to fully understand the costs associated with the commitments that the City was making in agreeing to pay the costs of construction of the Parkade and the costs of off-site works necessary for the construction of the Parkade.”

The report made the following recommendations:

• When the City is interested in partnering with a private developer for the provision of a public service such as affordable housing, it is best practices for the City to engage in an open process seeking proposals from interested developers. By doing so, the local government is able to draw on the expertise and creativity of those interested developers and identify a range of possible arrangements under which the public service can be provided. This is especially beneficial where the economics of the proposed service are known to be challenging, such as with affordable housing, as the City will be able to adjudge which arrangement will provide the greatest degree of service at the least cost.
• When considering the appropriate contractual relationship for a construction projects, it is important to understand the risk associated with each form of contractual relationship. Generally speaking, cost plus contractual relationships, while often providing the lowest estimated price for a project, place the greatest risk on the City, which risk can result in the actual cost of the project being significantly higher. On the other hand, a stipulated price contractual relationships, while often providing the highest price for a project, place the least risk on the City, with the project often being completed for that price or less.
• The City should undertake a detailed review of its project management processes, beginning with the planning/due diligence phase, through to procurement, and ending with the actual administration of the contract.

In a statement from Mayor Lyn Hall, he says “council takes the findings of the independent legal review seriously and we accept all of the conclusions of the independent legal review. In particular, we are implementing all of the recommendations of the report.”

You can read the report here.