Audit raises serious concerns with city’s land sale processes

A recently released performance audit by the City of Vancouver’s Auditor General Mike Macdonell raises serious concerns about the city’s land sale policies and city staff’s execution of those land sales in the past decade.  

Issues raised in Macdonell’s audit include city staff acting without required approval from city council, a unilateral decision and an error by staff that threatened to cost the city over $25 million, and a general lack of evidence that the city maximized value in its land sales and exchanges. 

“We found that the City could not demonstrate that it maximized value for land sales and exchanges,” Macdonnel’s audit found, which examined 16 transactions that occurred between 2016 and the summer of 2024.

The audit characterized the city’s approach to land sales as “predominantly reactive,” with most transactions initiated by a potential buyer or a rezoning rather than as part of a deliberate city strategy. “This ad hoc method lacked alignment with a comprehensive strategy focused on achieving the highest and best use of land assets,” Macdonell diplomatically explained. 

More broadly, the city’s policies and guidance for land sales are “inconsistent, if not contradictory,” according to the audit. That situation is due to the lack of consolidation, where the city’s land sale policies exist separately from other sources of guidance, including procedures required by city council. 

Without a clear hierarchy or relationship between all the relevant land sale policies, there’s more room for missteps and errors by staff, which the audit found ample evidence of.  

Real Estate department goes rogue 

The city’s Real Estate and Facilities Management (REFM) department is responsible for land sales on behalf of the city. The audit found that Council-approved policies weren’t followed by REFM in at least four transactions. That included land sale extensions in two cases, which resulted in three-year payment delays. City policy is that any extension beyond 90 days must be authorized by council. 

Also in contravention of city policy, REFM chose not to charge interest on the delayed payments for those two properties, which were the two highest-value transactions reviewed in the audit process. The delays were linked to “complex rezoning and regulatory delays” city staff told Macdonell, meaning they would not have recommended that interest be charged in these cases. 

That’s something city council might have agreed with if they had the opportunity, but a recommendation to forego interest was never brought to council for a decision, Macdonell found. City policy requires that, by default, interest be included in all land sale extensions.

Macdonell estimated that charging interest at prime rates in these two cases could hypothetically have generated over $26 million for city coffers. Macdonnel stressed the figure reflects the significance of the issue, if not the realities of the revenue that actually would have been generated. 

“Requirements for Council approval are not perfunctory – they are an important control requirement, and it is inappropriate for management to in any way supplant its judgement for that of Council,” Macdonell said. 

In comments to Vancity Lookout, a spokesperson for the city said land sale closing extensions are “normal practice for complex development transactions,” but did not explain why the extensions weren’t brought to council for approval. 

Regarding the lack of interest on the extensions, the city said “industry practice, and City practice, is not to charge interest in these circumstances,” adding that city staff will be seeking policy amendments to align with industry practice.

In response to those comments, Macdonell told Vancity Lookout that “while these directions may be inconsistent with real estate industry practices … they do not override specific policy direction from City Council to staff. City staff did not have the authority to disregard Council’s direction to seek approval for extensions or charge interest.”

“A very poorly conceived sale”

“I'm very pleased that we were able to have an independent look at what I think has been very, very wrong in terms of the city's land sales to developers,”  Robert Renger, a former civic planner with the City of Burnaby, told Vancity Lookout. 

It was Renger’s whistleblower complaints to the Auditor General Mike Macdonell’s office that led to the performance audit of city land sales. In particular, the 2016 sale of 601 Beach Crescent by the city was a “very poorly conceived sale,” Renger said. 

Renger has written extensively about the 601 Beach deal for CityHallWatch, highlighting how, almost a decade later, the bulk of the purchase price is still owed to the city by Pinnacle International, the buyer, and nothing has been built, including the 152 units of social housing negotiated as part of the rezoning process. 

There also appeared to be a $13 million calculation error made by city staff, underestimating the amount owed by developer Pinnacle International, which Renger flagged back in March 2025. That significant mistake has now been corroborated by Macdonnel’s audit, which Deputy City Manager Armin Amrolia has described as a “discrepancy.”   

Macdonnel recommended that REFM “present a comprehensive financial and non-financial analysis outlining the best available options for Council’s consideration and approval,” in response to the miscalculation.

In the same sale, the audit found that city staff facilitated a further discount of $12.1 million by taking on Pinnacle International’s responsibility for a community amenity contribution (CAC), ignoring its legally binding contract with the developer in the process.  

According to the audit, despite the CAC payment legally being the responsibility of the buyer, city staff got council approval to pay the CAC without informing councillors that the city was not required to do so. “This raises questions about how concessions with cost implications to the City of this magnitude are made and provided to Council,” Macdonell wrote. 

The city told Vancity Lookout it disagrees with Macdonell’s claim that the CAC was a developer obligation, indicating the CAC was determined to be a city obligation prior to entering the sale contract. 

“There is no new information in the [city’s] response that hasn’t already been raised and considered by my team during the audit prior to its publication,” Macdonell told Vancity Lookout.

“All information contained in the report is thoroughly supported by objective evidence. Any assertions to the contrary are simply incorrect,” Macdonell added. 

The deadline to close the deal has been extended until 2028 by the city, which is also not collecting interest on the over $97 million it’s still owed by the developer, according to the Globe and Mail and city records. As part of the extension the developer will make yearly payments of $3 million, for up to three years, toward the purchase price. 

Handfuls of recommendations 

Macdonell’s audit included ten recommendations for the city’s Real Estate and Facilities Management Department to improve its processes around land sales. 

Those included aligning the city’s real estate portfolio with broader city objectives, creating a consolidated source for city land sale guidance and policies, ensuring adherence to council policies around extensions and interest, consistently retaining documents, and providing full information to council to inform its decision-making.

“I would be concerned if a desire to revisit the audit findings distracts from a focus on the improved service to Council that can be achieved by implementing these recommendations,” Macdonell said.

We rely on readers like you sharing these stories to help others discover our journalism. Share today: Facebook | Twitter | Linkedin | Bluesky | Copy this url