Katasa Group developer bails on pledged $300k donation to City of Ottawa

Gatineau-based developer Katasa Group says it no longer wants to donate the pledged $300,000 to Ottawa's Capital Ward, citing concern over council's motives.

The pledged money was intended to address Ottawa's housing shortage through a project at the intersection of Bronson and Carling avenues.

"This housing project was the subject of a draft donation agreement with the City of Ottawa, which was discussed but never signed by either party. The draft agreement was proposed by Coun. Shawn Menard on behalf of the City of Ottawa and intended to help ensure that residents of the neighborhood benefit from the improvements they have requested, as our project was a big change to the neighbourhood,” said the developer in a statement on Monday.

The developer says it agreed to this donation to support the community; however, it says, the effort now seems to be taking a political turn.

"We agreed to this donation as this was presented by a city official as a program that is typically asked of developers,” Katasa said.

"In the past week we learned that this donation is not going to the surrounding community and these requests have not been a typical program offered by the city. We believe this was part of the process, and now we know it's not.”

Instead, Katasa says other options are being considered, such as investing on a play area located at the back of the developer's property on Cambridge Street.

"In the current situation, we believe it is the best way to ensure that the community gets to benefit from this donation directly. Katasa has decided it was the best outcome for the community,” the group said.

The proposed donation became the source of fierce debate at last Wednesday's city council meeting.

Beacon Hill – Cyrville Coun. Tim Tierney told 580 CFRA on Saturday that the pledged donation raises eyebrows and sets a bad precedent for future funding tied to development projects.

"It's not passing the sniff-test," Tierney said.

"I have never seen anything specifically tied to something like this. It sets a very bad precedent."

After a heated council meeting, councillors voted to divide the donation across all 24 wards, but Tierney says he voted against accepting the money entirely.

"There's a lot of contradictions here and I would like the Ontario government to review this. I think this is very problematic," Tierey said.

"It's an embarrassment for the city – we can't allow that and we've got to go through the proper process. We would definitely love the money, but this is not what you do is tie it to a development."

The "voluntary contribution" to the ward was made as part of a memorandum of understanding negotiated by Menard for traffic calming measures and affordable housing. Menard insists the donation was made in good faith, with the developer previously proposing to build several projects in his ward.

'City missing out': Menard

Menard says he is disappointed in Katasa's decision but "not surprised." Menard says he respects the decision the developer made.

"It is unfortunate that people were raising that there was something inappropriate happening here," he said. "There was zero evidence presented except for inappropriate comments made."

Menard says the draft deal with Katasa was checked with the city's integrity commissioner and city's legal team. He rebukes any claim that he pressured the developer or that there was a conflict of interest.

"We uphold ourselves, our staff, myself, to the highest standards when negotiating and discussing with developers, and voluntary contributions that will benefit our community. I stand by this and I think we need to do this much more often in our city."

Menard says similar negotiations between councillors and developers have happened before in our city and happen across the country.

"More and more we are having development occur in our city, and we know more is coming. There are going to be more situations where community members and developers need to get together to talk about what future residents expect there and what existing residents expect there, and that is the job of a city councillor, to help mediate that."

Menard says the city as a whole misses out because now no money will go towards affordable housing or traffic calming measures.

"The city has lost out on this and it is a result of council shenanigans and inappropriate concerns that had no evidence."

The debate has prompted councillors to ask city staff to come up with a policy on how these types of negotiations should take place in the future.

But Ottawa's mayor says these types of deals with developments and voluntary contributions should never occur.

"I don't think we need a policy going forward, I think we need to put a stop to these types of contributions, period," Mark Sutcliffe said. "We are the decision-makers, city councillors are the people who decide whether an applications proceeds or doesn't. If, at the same time as an application is being considered, a councillor is negotiating with a developer on a voluntary contribution, it raises questions about the process and we don't want those types of questions. We want everyone involved — the public, councillors, the developers — to feel like the process is fair and transparent.

"Going forward let's not have ambiguity on that, we must hold ourselves to the highest standard, and demonstrate to the public that the process is fair."

Sutcliffe says he does not feel like the city lost out on investments to traffic claiming or affordable housing as a result of Katasa pulling their donation.

"There is no price on integrity; there is no price on maintaining the highest ethical standards and if we need to invest in traffic calming measures or affordable housing we will make those investments. We should not compromise on those standards for the price of $300,000."  

With files from CTV News Ottawa’s William Eltherington, Natalie van Rooy, and Leah Larocque.