Developer who paid public hearing supporters sues City of Kelowna for rescinding permits

A developer has filed a legal petition asking the B.C. Supreme Court to order the City of Kelowna to allow a 25-storey building to proceed after council revoked permits for the project last month, citing a "tainted" approval process. 

The source of the conflict revolves around a $250 per diem payment Appelt Properties provided students through a public relations company last summer for speaking favourably to city council about the project and the need for more rental housing in downtown Kelowna. 

The city became aware of the payments last fall after council granted Appelt Properties development, and development variance permits to build a 25-storey mixed-use building on a city-owned plot near the Kelowna waterfront.

Last month, city council voted in favour of a staff recommendation to rescind the permits over what it called a "tainted approval process" and allow the developer to reapply.

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The company denied it did anything to taint the process, saying it had not broken any bylaws or legislation by paying the students for their time.

This week, the developer, now known as 350 Doyle Avenue Holdings Inc., followed through with a threat of legal action by filing a petition asking the court to quash or set aside council's decision.

"It was unreasonable for the City to conclude the per diem reimbursements tainted the ... process at all or to the extent warranting rescinding the development permit/development variance permit authorization," the petition states.

In the filing, the developer says it has invested millions of dollars into the project since it signed a long-term lease with the city on the property in 2019 and was set to apply for a building permit prior to the city's action.

More than $10 million invested in the project

"The developer has spent more than four years working with the city, council and the public and various contractors in advancing the project to the construction-ready state and incurred more than $10 million in project-related costs, much of which will be sunk costs if the developer is required to submit a new development application," the petition states.

When presenting a report to city council about the situation last month, city clerk Stephen Fleming made the argument for rescinding the permits over the developer's payments to students. 

"Paying people to speak when this is not known undermines the process that is the heart of what a public hearing or development application meeting is about," he said.

Prime piece of Kelowna real estate

The development project is slated to be built on the site of Kelowna's former RCMP detachment building, across from city hall near Kelowna's waterfront.

The project has attracted considerable public interest since the city put out a request for proposal to redevelop the site with a mixed-use commercial, condo or rental building that includes an extension of the community's Art Walk and the building of a civic plaza. 

None of the claims in the legal petition have been proven in court.

The developer and the City of Kelowna both declined requests for interviews about the lawsuit.

A city spokesperson says the city's clerk's office is preparing a legal response to the court petition and declined to comment further.