Developer: East Fonthill process “corrupted”

Rainer Hummel, right, waits to speak before Regional Council last Thursday while Pelham Mayor Dave Augustyn, left, makes one in a series of unsuccessful attempts to prevent Hummel's presentation from being heard. NATE SMELLE PHOTO

Presentation to Regional Council raises fresh concerns; Baty calls for forensic audit

 

BY DAVE BURKET and NATE SMELLE
The VOICE

A Niagara-on-the-Lake-based real estate developer has alleged that the Town of Pelham engaged in a “corrupted” process by its acquisition of land in East Fonthill, and a “potentially illegal” scheme to fund the transaction.

Rainer Hummel, a developer with some 30 years’ experience in Niagara, and whose company is the fourth largest holder of East Fonthill acreage, asserts that the Town’s 2014 deal to purchase land from the Allen Group, a GTA developer based in Toronto, cannot be explained rationally.

Speaking last Thursday evening in front of Niagara Regional Council, Hummel presented what he alleged was a timeline of transactions that suggested the Town sought to purchase land in 2014 from the Allen Group that the company did not actually own at the time. The Allen Group subsequently purchased the desired land in 2015—approximately eight acres— for about $225,000 per acre. Within days, according to the timeline Hummel presented to Council, the Allen Group resold about three acres of the land to the Town of Pelham for $928,000 per acre.

“That’s more than any piece of property has ever been sold for in the regional municipality of Niagara,” said Hummel.

“It looks to me nothing more than a backdoor way of bonusing a developer.”

Bonusing, or offering municipal incentives to developers, is illegal in Ontario.

 

Two of eleven slides presented by Hummel to Regional Council. SUPPLIED GRAPHICS

 

Hummel listed four other properties adjacent to or near the $928,000-per-acre parcel, stating that his company bought the lots as recently as seven months ago for an average of about $160,000 per acre. All were fully serviced lots.

The East Fonthill land purchased by the Town, he said, was “in the middle of nowhere,” and lacked all services.

Furthermore, the funding mechanism used to buy the parcel was the product of a scheme that saw the creation of development charges credits, valued at some $3 million dollars, to trade for the land, a practice that Hummel describes as “potentially illegal” and likened to printing money “in the basement.”

Hummel asserts that in June 2016 his firm was approached by the Allen Group with an offer to buy excess development charges credits at a five-percent discount. When he sought clarification from Pelham Town Hall on an unrelated matter, he said that an offhand conversation about the development charges credits with CAO Darren Ottaway was not enlightening. According to Hummel, Ottaway  asserted that, “There’s special ways that we sought legal counsel, and, apparently, there is ways that you can do this, and our lawyer said that it was fine.”

After Hummel raised his questions last summer, the Town halted the reselling by buying back credits remaining in Allen Group hands, asserting that accounting for them inside Town Hall had become a logistical problem.

Hummel’s presentation to Council nearly wasn’t heard. By employing parliamentary maneuvers, Mayor Augustyn repeatedly attempted to block Hummel from speaking, moves ultimately shut down by Regional Chair Alan Caslin on advice from the Clerk.

After the meeting, Augustyn said that the issues raised by Hummel had already been addressed by the Town.

“It’s in our 335-page response and it was raised at the Audit Committee and it was answered,” said Augustyn. “So we’ve debunked those myths already. All this stuff is just somebody trying to dress these same issues up in a different way and present it at a different venue, which is not the right venue. We’ve answered all these questions, and our auditor has answered all these questions. It’s standard operating procedure with growing municipalities do these types of things.”

Pelham’s other Regional Councillor, Brian Baty, disagrees.

“The presentation made at Council contains dates, specific addresses, financial data and questions  over lack of public documents that are cause for concern,” Baty said.

“They are more clear than the ‘whereas’ clauses in Councillor Barrick’s motion. Despite a 300-plus page document prepared by the Town and a ‘Meeting of Experts’ to rebut concerns, it is clear that the issue has not concluded. It is not the place of the Region to resolve this matter. It is time that the Mayor and Council initiate an independent forensic audit to support or refute these allegations and to make public all related support materials.”

Also speaking after the meeting, Hummel asserted that the turnover rate among Town staff is a warning sign.

“How do you go through four or five planning directors, or senior planning people in five years? How do you go through four or five finance people? They’re either fired or they quit. There’s a reason for that. Where is the problem? The question always is, what’s the common denominator? In Pelham, you see these strange transactions and then all of a sudden you see somebody being fired who’s in finance and then you see a strange transaction and you see somebody quitting.”

Through its Public Relations and Marketing Specialist, Marc MacDonald, the Town of Pelham released a statement last Friday, reading in its entirety:

“Town Council has taken these type of questions very seriously since they first arose at the end of March. Council, staff, industry, and legal experts have reviewed and addressed these same claims in public meetings, presentations, and in the compilation of our response documents. These documents serve as the Town’s official response, and those with outstanding questions are encouraged to consult them. The Town’s lawyers are reviewing Mr. Hummel’s presentation to Regional Council. Town Council will consider all next steps, including potential legal action.”

The implied lawsuit threat is something that Hummel says he’s heard before, asserting that a Town employee contacted him to say that they had been threatened with a suit if they spoke out.

“Why does somebody have to be sued for speaking?” he said.

“Whistleblowers, when they see something wrong they should have the ability to speak up. I mean I’ve paid the price for speaking up against Pelham. I’ve had every development application I’ve put forward turned down. So, there is a price to pay for it. But, you know what, I’ve been doing this a long time and I’ve got a lot of land, so if I put Pelham on hold for 10 years it’s not going to change my life any.”

Hummel expands on his experience with Pelham in an extended interview. See, THE CONVERSATION: A whistleblower blows, http://www.thevoiceofpelham.ca/whistleblower

For how the appraisers reached their valuation for the East Fonthill land discussed above, see Anatomy of a land deal: Appraisal alchemy: http://www.thevoiceofpelham.ca/anatomy

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