Developer behind paid supporters at public hearing threatens legal action after Kelowna council pulls permit

A developer is threatening legal action against the City of Kelowna after council revoked a variance permit for a 25-storey tower in the heart of downtown.

Council voted unanimously Monday to pull the permit for the proposed project at 350 Doyle Avenue from Appelt Properties over what a city staff report has called a "tainted process." The report is referring to $250 payments made by a public relations company hired by Appelt to students who spoke in favour of the project to council last year.

Greg Appelt, president of Appelt Properties, told CBC in a written statement that his company will be exploring legal options in the wake of council's decision.

"For the students who spoke up in favour of increased housing options, this is a slap in the face and a clear message that their voices are not given the same weight by council as those of well-funded, well-organized opposition campaigns," said Appelt.

The city owns the .35 hectare site where Appelt planned to construct 236 long-term rentals and 26 below-market rentals. Council considered a development permit and development variance permit for the site at a hearing on July 26, 2022, where two dozen members of the public spoke.

According to a report to council presented Monday, the city began to receive tips in October that some of those public attendees were paid by JDH Naturals, a company that does not have a Kelowna business licence and was being paid by Appelt.

"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," city clerk Stephen Fleming told the council meeting.

The city's report says that at the 2022 summer meeting, roughly half the attendees referenced the need for affordable housing, including a principal employee of JDH Naturals.

The report recommended rescinding the permits, which council did, saying it will allow Appelt Properties to reapply.

Appelt spoke to council virtually Monday and called the payments per diem reimbursements for students who missed work or paid for travel to make the July meeting.

"This did not break any rules, policies or laws," said Appelt. "Can we really pretend that some students receiving a $250 dollar per diem for speaking about the need for rental housing taints this process?"

The clock is also ticking on the project because, under the current lease agreement between the city and the company, construction has to start by January. But the city says it will extend that construction start date by a year if Appelt reapplies.

Former Kelowna city manager Ron Mattiussi spent 11 years in the role and said he has seen a lot of orchestrated crowds at public hearings, but proof was never presented that people had been paid.

"It is unprecedented. It's a situation where, unfortunately, some members of council felt that this was somewhat untoward, and I totally understand," said Mattiussi.

There is no clear guidance for such a situation in the province's Municipal Act or Local Government Act or in the local Kelowna city bylaws on public hearings.

A city spokesperson said as of late Wednesday afternoon, no legal challenge to council's decision had been filed.