City of Vancouver staff can't prove it maximized value in some land sales: eight-year audit
“The Real Estate team has reviewed the report in detail and agrees with many of the proposed enhancements. However, we note that some findings do not fully reflect the operational context or the information provided by staff during the audit. Land transactions, particularly those involving complex Community Amenity Contribution (CAC) negotiations require careful consideration of market conditions, financial feasibility, and the City’s long‑term policy objectives,” reads the statement by the City Manager’s Office in reaction to the audit.
“These negotiations often involve balancing multiple interests to achieve fair and sustainable outcomes for both the public and development partners. We believe that greater consideration of this complexity would provide a more complete picture of the work undertaken by staff. The Real Estate team remains committed to transparency, continuous improvement, and constructive collaboration with the Office of the Auditor General to ensure future reporting reflects both operational realities and the high standards expected of our programs.”
While the audit found no evidence of fraud, it identified systemic weaknesses in policy, process, and reporting that, taken together, mean the City “could not demonstrate that it maximized the value of its land sales and exchanges.”
Vancouver’s municipal government is one of the largest landowners within its own boundaries, with real estate assets spread across three major portfolios: the Capital Fund, the Property Endowment Fund (PEF), and the Vancouver Affordable Housing Endowment Fund. The Capital Fund alone represents tens of billions of dollars in assessed value, making land sales among the City’s most financially consequential decisions.
Because land values have risen sharply over the past two decades, each sale is effectively irreversible. “There is only one chance to get it right — once land has been sold, it is gone,” Macdonell wrote in his report, underscoring the permanent nature of these transactions and the importance of rigorous oversight.
The Auditor General’s Office reviewed 40 qualifying transactions during the audit period and selected 16 for deep analysis. Those 16 deals accounted for about 40 per cent of all transactions but roughly 90 per cent of the total dollar value, focusing scrutiny on the City’s largest and most complex sales and exchanges.
The audit assessed whether the City’s Real Estate and Facilities Management (REFM) department — the branch responsible for negotiating land deals — had systems in place to ensure transactions achieved “maximum value,” defined not only as price, but also as alignment with City priorities, appropriate terms and conditions, and public benefits.
In practice, this did not mean auditors could prove the City definitely lost money on specific deals, with one notable exception involving a human calculation error. Rather, they found that documentation, analysis, and reporting to City Council were often insufficient to show that the best possible outcome had been achieved for the public.
The problem, the report argues, is structural and procedural: weak strategic direction, unclear or inconsistent policies, gaps in record-keeping, and incomplete information provided to elected officials.
One of the most significant findings is that the municipal government lacks a coherent, citywide strategy for selling or exchanging land. Instead of proactively managing its portfolio to advance priorities like housing, infrastructure, or long-term revenue, most transactions were triggered by outside requests from developers or emerged as side effects of rezoning application negotiations.
Of the 16 major transactions reviewed, 13 were direct sales initiated by outside interests rather than by a City-led strategic plan. Competitive, open-market sales have been rare, with none conducted since 2016. This ad hoc approach, the auditor warns, makes it harder to ensure land is being used — or sold — in ways that best serve long-term public goals.
Compounding the issue, the City does not track meaningful performance metrics, such as how closely sale prices align with appraisals or how much public benefit is generated relative to asset value. Without those benchmarks, City Council has little ability to judge whether the real estate portfolio is being optimized.
The audit also highlights a striking governance concern: the City maintains two different versions of its Land Sale Policy — one internal and one public-facing. The public version omits key language found in the City Council-approved policy, without indicating that any information has been redacted.
Beyond the dual-policy issue, the audit finds the policy framework itself is incomplete. Key terms like “market value” are not clearly defined, there is limited guidance on when third-party appraisals are required, and there is no clear rulebook for when City staff must return to City Council if a deal’s terms change materially.
Perhaps the most politically sensitive findings concern how and when Council was informed — or not informed — about changes to major deals.
In four of the 16 reviewed transactions, the City approved extensions longer than 90 days without going back to City Council, even though existing policy requires approval from elected officials beyond that threshold. Two of those deals were each worth more than $90 million and were delayed by roughly three years.
City policy also requires that when closing dates are extended, interest should be charged on delayed payments. That clause was not applied in two of the largest transactions. The audit estimates that, using prime interest rates at the time, the City could have been entitled to more than $26 million in interest — a figure meant to illustrate scale rather than serve as a precise claim.
City staff told auditors that delays were tied to complex rezoning processes and that charging interest might have jeopardized the deals. The Auditor General suggests that judgment calls should belong to City Council, not to City management acting on its own.
Another recurring issue is how sale prices were presented to elected officials. In six of the 16 transactions, City Council was not informed that the negotiated sale price was below the appraised value of the land. The gaps ranged between $50,000 and $2 million.
While appraisals are not absolute and there can be legitimate reasons to accept a lower price — especially if the City gains other public benefits — the audit found that those trade-offs were not clearly documented or explained. In many cases, City Council was simply told the negotiated price “reflected market value,” without being shown the underlying assumptions, constraints, or differences from the appraisal.
Essentially, the auditors suggest that City Council often lacked the full picture needed to weigh financial and non-financial considerations properly.
One transaction receives special attention: the sale of 601 Beach Crescent, located next to the north end of the Granville Street Bridge in downtown Vancouver. The City sold the property to Pinnacle International in 2016. The developer saw its rezoning application — for its 55-storey, mixed-use tower with strata market ownership condominium housing, social housing, and retail/restaurant uses — approved in 2020, but the project has since stalled.
In this deal, the City structured the sale to include an initial payment and a deferred “adjustment price” tied to future rezoning that would allow more buildable space. Auditors found a calculation error in how that adjustment price was computed, resulting in an understatement of nearly $13 million in what the buyer will owe the City. That amount remains outstanding because the rezoning conditions have not yet been met.
The same transaction also exposed governance gaps around CACs. Although the final contract made the developer responsible for additional affordable housing requirements arising from rezoning, the City later agreed — via email — to cover a $12.1 million cash CAC itself. Auditors found no documented rationale for overriding the contract and no evidence that City Council approved this concession.
Internally, REFM relies on a “Standing Authorities and Procedures Binder” that contains decades’ worth of memos, policies, and guidance — some dating back to the 1970s. The audit found that this collection includes outdated, contradictory, and superseded rules, with no clear indication of which documents are still in force.
That confusion, combined with inconsistent file documentation, makes it difficult to revisit decision-making, assess compliance, or apply lessons learned to future deals. In some competitive sales, even basic records — such as final evaluation weightings or net present value calculations — were missing from files.
The Auditor General issued 10 recommendations aimed at overhauling how the City manages land sales and exchanges, calling for a clear, City Council-approved strategies that links land dispositions to broader City goals, a consolidated, up-to-date, and transparent policy framework, stronger rules to define when City Council must be re-engaged on changes to approved deals, improved documentation, risk monitoring, and post-transaction reviews, and more complete reporting to City Council, particularly around appraisals, risks, and the financial and non-financial trade-offs involved in each transaction.
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