Rental housing tower approval rescinded after developer paid supporters

Artistic rendering of the 25-storey tower at 350 Doyle Avenue, Kelowna. (Zeidler Architecture/Appelt Properties)

A developer is being forced to go back to square one on its development permit process to build a 25-storey rental housing tower in downtown Kelowna.

Earlier this week, in a vote for an exceptionally rare reconsideration, Kelowna City Council unanimously approved the recommendation by City of Kelowna staff to rescind the development permit and development variance permit for the project at 350 Doyle Avenue, named Muse.

City Council approved the reversal swiftly, without any commentary or debate, after hearing from City staff and the developer, Appelt Properties.

The permits were previously approved by City Council in July 2022 after hearing from a total of 24 public speakers during a public hearing meeting prior to the vote on the project. About half of these public speakers argued for the need for affordable housing, student housing, or affordable student housing.

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Then in October 2022, City officials began to receive complaints that some public speakers were paid to speak in favour of the application. According to City staff, an email received by Mayor Tom Dyas in January 2023 particularly stood out, with an individual confirming that at the request of a friend, he and several others had spoken in favour of the project and “was paid $250 via e-transfer for my comments.”

Upon inquiry by City staff’s investigation, Appelt Properties confirmed its public relations firm JDH Naturals covered the “nominal expenses” of some individuals who participated in the meeting. JDH Naturals then told City staff they reimbursed public speakers $250 each to address City Council.

Prior to City Council’s reversal vote, Greg Appelt, the founder and president of the Kelowna-based development firm, defended the strategy of his company and its contracted public relations firm. He said the individuals that were paid to speak in support of the application were students.

‘This Council is concerned about a per-diem reimbursement of $250 from our public relations vendor to students who spent time, effort, and in many cases hard costs for travel or missed work shifts in order to participate. We have not hidden the per diem reimbursement, and we have been transparent whenever asked about it. This did not break any rules, policies, or laws, and in fact we know many who speak in opposition do so because of their bias, as most have financial motivations,” said Appelt.

350 Doyle Avenue Kelowna Appelt Properties

Artistic rendering of the 25-storey tower at 350 Doyle Avenue, Kelowna. (Zeidler Architecture/Appelt Properties)

In their rationale for the recommendation to rescind the application, City staff stated, “It is difficult to accept the explanation” by JDH that the set amount of a $250 payment covers real and opportunity costs for the public speakers to attend the meeting.

City staff asserted these payments to public speakers — who were not the application’s consultants, architects, engineers, planners or lawyers — eroded the integrity of the decision-making process.

“The direct payment to individuals to speak in favour (or opposed) to an application undermines public confidence in the public process, to the extent of calling into question the validity of the public hearing or meeting. Council’s decision, based as it was on paid statements of support, is subsequently tainted,” stated City staff.

Furthermore, during this week’s public meeting, City Clerk Stephen Fleming said, “The rules of the game were tilted in a way that two of the three players weren’t aware, and it’s time for a do-over.”

Appelt suggested to City Council his firm would consider legal action against the municipal government if the permits were rescinded.

To further defend his team’s strategy, Appelt also brought to attention the measures an anti-development group took to express their opposition to the project and suggested students receiving a per diem for speaking about the need for rental housing does not undermine the process.

A 2021 joint report by the provincial and federal governments on BC’s housing affordability issues specifically highlights how vocal, well-organized neighbourhood groups are a barrier to new housing, even though they may not be fully representative of the general population. Homeowners are also more likely to oppose changes to their neighbourhood that add density, given that this group will not necessarily directly benefit from it.

While the democratic processes are important, the report continues, there is an over-reliance on public hearings to make decisions on rezonings, neighbourhood and district plans, and official community plan amendments. Public hearings are said to “favour certain voices over others.”

Students and others in need of housing — the occupants of such future projects — are said to be underrepresented in such public hearings, but direct payments or cost reimbursements to the general public in exchange for voicing their support are not a publicly known common practice.

Some municipal governments have processes to ensure local voices within their jurisdiction are weighted differently than those from outside their community, such as requiring public speakers to state their locale or even their home address prior to addressing elected officials in a public hearing.

“This has been a profound turn of events for us,” continued Appelt. “We have worked in good faith with the City for many years on this project to date, spending millions of dollars in completing design and approvals, and bringing it to a point where all we need is a building permit to begin construction.”

“A well-funded opposition funded campaign even held a rally prior to the same meeting, and neighbours seeking to protect the views and property values of their condo buildings were well represented. Can we really pretend that some students receiving a $250 per diem for speaking about the need for rental housing taint this process? If the City decides to rescind its development permits and development variance permits, we will use the tools available to challenge that action.”

There are also financial ramifications to Applet Properties as a result of City Council’s decision to rescind the permit approvals.

Not only will the developer incur new costs to restart the application, but they will see added costs as a result of the years-long delay to the start of construction. Construction costs for labour, equipment, and materials will increase due to inflation.

Through a bidding process, Appelt Properties was previously selected by the municipal government in September 2021 to long-term lease the City-owned lot at 350 Doyle Avenue and undergo a redevelopment of up to 13 storeys. The site was previously a former RCMP detachment.

Due to City Council’s decision to rescind the permit, the lease stipulations have been altered. Construction is now required to start by January 2025 instead of January 2024, with substantial completion by January 2029 instead of January 2028.

The project has been controversial for other reasons, too; while they originally proposed a 13-storey, mixed-use building with rental housing, they returned to the municipal government last year with a 25-storey design.

The design changes were made in response to feedback received by City staff and local residents over the bulk of the 13-storey building, which obscured more of the views for adjacent buildings. To address these concerns, the proponents then returned with a revised concept of a more slender building with a taller height of 25 storeys, effectively redistributing the density to reduce view impacts.

Artistic rendering of the 25-storey tower at 350 Doyle Avenue, Kelowna. (Zeidler Architecture/Appelt Properties)

The development concept previously approved by City Council in 2022 provides 250 secured purpose-built rental homes, including 100 studio units, 99 one-bedroom units, and 60 two-bedroom units. About 10% of these units were set aside as below-market rental homes.

Within the lower levels, there would also be 14,000 sq ft of office space, 14,900 sq ft of ground-level retail/restaurant use, and 6,000 sq ft of ground-level cultural space for the Kelowna Arts Hub.

“This lower podium is designed to evoke feelings of a historic Kelowna context, achieved through strong architectural detailing, including but not limited to historic tumbled red brick, extensive masonry details (soldier courses, cornices, sills, pilasters and pilaster bases), gridded ‘warehouse-feel’ windows and trellised canopies, with c-channel and tie-back detailing,” reads the design rationale by Zeidler Architecture.

“These well-planned details enhance the human scale of the lower podium while honouring Kelowna’s historic built form and materials that contribute to the downtown core’s character and charm. Commercial retail tenants will have several storefront options that allow flexibility for patio use and open-air dining opportunities, connecting the street with the building.”

Over 200 vehicle parking stalls would be largely located above ground within the upper levels of the five-storey base podium. There would also be over 300 bike parking spaces.

Over $4 million will be spent by the developer to fund a new civic plaza, an extension of the Kelowna Art Walk public realm, and the Creative Hub.

Site of the former RCMP detachment at 350 Doyle Avenue, Kelowna. (Google Maps)

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