There is Silence on Developer’s Old Ties to SODC

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Michael Hutchison (in a file photo above)

 

  • District of Squamish recently named Bethel Lands Corporation as one of developers for the Oceanfront Project, but missing from the press release was the full extent of the developer’s past relationship with SODC.
  • Documents reveal Michael Hutchison, the principal behind Bethel Lands Corp., was not only the vice-chair of SODC two years ago, he also brought forward an offer to help SODC with its financing. In return, he asked for a majority share on the SODC board itself and a first right to refusal on the land.
  • Present SODC directors, Bill McNeney, Gregg Smyth, and Matt Fraser, supported the proposal and took it to council, despite knowing its acceptance would give control of a public corporation to a private developer.  
  • The present SODC vice-chair, mayor and councillors are silent about the 2011 proposal, refusing to acknowledge its presence, let alone discuss it openly.

 

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By Gagandeep Ghuman
Published: Nov. 2, 2013

The year 2010 was an anxious time for Squamish Oceanfront Development Corporation (SODC).

As a guarantor of the debt, the district couldn’t borrow more money from the bank without affecting its borrowing capacity.

More delays seemed in store for the Oceanfront Park. Financing was getting to be a challenge, and the community was getting impatient as the debt piled up.

In this atmosphere of uncertainty, one man offered to come to SODC’s rescue.

“What advantage did being on the board give me? Nothing, other than a clear understanding of what the community’s expectation for this development was.” Michael Hutchison

He knew the financial travails of SODC very well; he was, after all, the vice-chairman of the SODC board and the head of its finance committee.

That man’s name was Michael Hutchison, once the vice-chairman of SODC and the principal of Bethel Lands Corporation Ltd, now one of the companies chosen to develop prime Oceanfront lands.

His offer: Bethel Interim Financing (May 25, 2011)

Mayor Rob Kirkham, SODC vice-chair Gregg Smyth, and councilors don’t even want to acknowledge that Bethel made an offer two years ago.

(To read an interview with Mayor and SODC vice-chair, please pick up the print copy of the Reporter from these locations)

In fact, they flatly deny any knowledge of this.

But documents show Hutchison’s previous proposal found great support among some SODC members, even though its acceptance would have meant losing control of a public corporation to a private developer.

Documents reveal he offered to lend anwhere from $7-9 million to SODC. In return, he demanded a majority control over the SODC board along with a first right of refusal on the land.

He might have hinted at the deal verbally while still on the board. But he stepped down and came back a week later with a more serious, and this time, a written offer, as shown below.

 Bethel 1Bethel 2Bethel Memo

 

 

 

 

 (PLEASE CLICK ON PICTURES TO ENLARGE)

Michael Hutchison refused to say whether he made an offer two years ago, citing legal issues around information disclosure.

But he strongly rejected any notion that he might have had any inside information.

He said there were 250 plus consultants and 75 board members and all the files were provided to anyone who wanted them.

“What advantage did being on the board give me? Nothing, other than a clear understanding of what the community’s expectation for this development was,” he said.

It’s time to look ahead, he added.

“I’m sick of hearing from consultant’s reports…we’d just like to get to work here,” he said.

Council rejects the offer

Bethel’s unsolicited proposal of May 2011 created divisions in the SODC board that sharpened over time.

One of the board members Tom Bruusgaard said he raised his concern over the unsolicited proposal. He was let go from the board about five months later in Oct. 2011.

In Oct. 2011, council voted Bruusgaard out, but three SODC directors—Bill McNeney, Gregg Smyth, and Matt Fraser—were reappointed to the board.

These three were sympathetic to Bethel’s proposal, even if they had their doubts.

When Matt Fraser suggested, for example, that the board control is lost with the Bethel proposal, Smyth argued that this proposal would help SODC keep the momentum going.

SODC chair Bill McNeney was in full support, arguing that this deal gave SODC a chance at success.

He felt that if this deal was delayed, ‘the pieces won’t get picked up again’. This was a way, he argued, to ‘keep SODC in the game and meet timelines’.

The Bethel deal, they told the council, could help reduce the district’s loan guarantee and move forward the Oceanfront park.

Even though the deal would have effectively given the board’s control to Bethel, both men repeatedly emphasized this was ‘clearly an interim financing agreement, not a partnership.’

“Bethel is a reputable and qualified Squamish community member who is committed to seeing the successful completion of the SODC Business Plan,” they told the council in 2011.

Despite the strong recommendation to the council, the then Mayor Greg Gardner and the council rejected the deal.

The council vote was unanimous in its rejection; in fact the staff said losing board control would mean the corporation could become taxable since it would be comprised of private directors.

In Oct. 2011, four months after the SODC brought forward the Bethel deal, council appointed Greg Gardner and Paul Lalli were appointed to the board.

“The decision to select the final proponent was made by Council, not SODC. His previous time as a director did not factor into the decision.” Coun. Doug Race

They later resigned sensing public opposition to their appointment.

Unanswered questions

SODC vice-chair, Mayor Rob Kirkham, and councilors chose to respond in monosyllables when asked about Bethel’s previous offer.

SODC’s vice-chair Gregg Smyth refused to even say whether he was aware of any dealings Michael Hutchison had with the SODC besides his role as a director.

He had a one-word answer: ‘No’ (See interview in print paper)

No, No, and No also came from Mayor Kirkham, Coun. Bryan Raiser, Coun. Patricia Heintzman, and Susan Chapelle when asked if they were aware of any Bethel dealings with SODC.

Coun. Doug Race said he wasn’t sure what “insider information “might have existed at all.”

Despite Coun. Race’s reassurances, several questions remain unanswered, and here they are:

For Michael Hutchison:

Why did you resign from SODC? Why did you want to help the SODC in 2011? Why did you want majority control over SODC board?

What are you proposing now?

For SODC directors:

Why are you so reluctant to even acknowledge Bethel’s previous proposal, let alone discuss it?

Why did the present directors support the 2011 proposal, despite the knowledge that board control would be lost to a private developer?

Why didn’t you disclose the full extent of Hutchison’s involvement to the community?

For Mayor and council:

Why did you reject Hutchison’s earlier proposal?

How is his present offer different from the previous proposal?

Did you ever delay the SODC project that emboldened a private developer like Hutchison to sense an opportunity to control a public corporation?  

Who are the other companies who responded to the RFP for Oceanfront lands in 2013?

What are their names and their proposals? Why can’t you disclose their names ?

 

Comments

  1. Dave says:

    Is this “disease” specific to Squamish? Will there ever be a cure for it? Many of us are getting fed up with it! Suspected pathogen…Squamishus dillydallyus
    Need I really explain what I mean here?

  2. Richard Tripp says:

    Kudos to you for digging at this story Gagandeep. It’s this kind of in depth questioning and persistence that has won you recognition and respect as a journalist. Please keep up the pressure. Hopefully the citizens of Squamish will join you in demanding better answers prior to the completion of this handover or the next election.

    It seems very hard to believe those saying “no” and one has to wonder if the parties involved truly believe their actions to be beyond reproach why then are they so reluctant to admit their involvement or be candid in detail? Giving them the benefit of the doubt is difficult. In a town as small as Squamish it beggars belief that Mayour and Councillors could be so unaware of moves at play on such a major issue.

    It’s time to put the truth about this deal, the current and past relationships of SODC, the DOS, Mayor(s) and Council into the public realm. Anything less makes believing Squamish’s best interest’s are being served a tough ask. Anything less will also lead to continued speculation ( rightly or wrongly ) that Squamish is not open to fair, competitive and just development. Just that possibility alone will continue to preclude Squamish from reaching the higher ranges of it’s amazing potential.

  3. Jaspera says:

    Good to see some in-depth investigative journalism, which is badly needed in this town. Well done, Squamish Reporter. Keep it up; keep fielding the questions, and find the answers; and let the public know. And good points by Richard Tripp. To date with this Council it’s been largely smoke and mirrors. Little openness, truth, transparency, accountability – all exemplified by the SODC debacle and the mounting debt for Squamish and its tired taxpayers. And what are the real costs , both direct and indirect (or should I say hidden?)of the Oceanfront, from the date of its acquisition to now? What are they anticipated to be over the next year, 5 years, 10 years, etc. ? It would be nice to know how they’ve impacted our taxes, and will in the future? Thanks, Gagandeep for exploring this issue in-depth.

  4. heather gee says:

    Thanks Gagandeep, your investigations and revelations are truly appreciated.
    Whatever is revealed, gives us less confidence in our decision makers at DoS.

  5. Jeff Cooke says:

    In the interests of transparency, I would be very interested in knowing more about the other proponents and offers. I know we (Squamish is the shareholder) spent a large amount of money with a high end international property marketing company to find qualified proponents for the project. Were they ineffective in getting wide and quality interest in the project? Did others see value in the project? What held them back from making a better proposal? It seems like a waste of time and money to market to potential buyers and end up with the one who has known about the project for years already.

  6. Larry Murray says:

    The following remarks are based on the fact that the Oceanfront lands and waterways belong to the citizens of Squamish. They do not belong to Council or SODC or, in fact, should not belong to a developer. When a real estate agent sells your property, they never own it. They bring their expertise and financial marketing forward and enable a sale. Likewise, SODC, properly run, would be able to harness the finances and expertise of a top end developer, add in the land and water lot collateral and have a partnership project going forward. The developer makes a good profit and SODC remains in control of the ‘house’. Seems the present approach has made SODC willing to sell the property outright to the bidder who can wipe out the debt. Where is the profit for the community? Where are the amenities? How can we be sure our land will not be flipped again and again? What happened to the ‘arms length’ corporation. Where is the transparency in who the other proponents were? (Holborn, Intrawest, Concord-Pacific and Qualex were the top four developers in the earlier deal) Is there a SODC conflict of interest statement in their governance? Is this based on the Community Charter?
    Too many concerns and questions that need to be addressed.

  7. larry mclennan says:

    By definition, if you are on the board of an entity; you are an insider. If Mr. Hutchinson states that he had no insider information-it must be presumed that he either didn’t attend any meetings where information was discussed/revealed or he suffers from convenient amnesia. Plus, 250 consultants??? 250- is that correct??? What the hell were 250 consultants employed for? How many studies are necessary?? I’d like to know whether board members were paid for meeting regarding all these consultants and ,if so, were those payments capitalized , thus obscuring them from the income statement. What was the breakout of over $600,000 capitalized in 2012? How much is left on the LOC before its gone. My rough & dirty calculation is that SODC is totally tapped in 2014. Making a deal under desperate circumstances usually doesn’t work well for the desperate party.

  8. Wolfgang W says:

    To Mr. Hutchison’s credit, even he is ‘sick of hearing from consultants’ reports’ according to the interview. I think it is high time that the citizens and long suffering taxpayers of Squamish conduct their own audit and investigation into the SODC saga to obtain the clarity we deserve. Who could possibly object to that?

  9. Nelson Winterburn says:

    What concerns me is the rather broad code of silence regarding who knew what and when! With such a high rate of denial among our ‘lawmakers’ (Squamish Councillors), there must be a lot more to the matter of conflict of interest regarding Mike Hutchinson and his knowledge of SODC matters. I would wonder what influence was at play regarding the switch from the mortgage being held by the Pacific Western Bank and the transfer of same to the Scotia Bank.
    I also have concerns about the decisions being made by council on behalf of the SODC. Where is the evidence of arm’s length with regard to the relationship between SODC and Council? Why is there not a greater representation of long time Squamish citizens on the SODC board.

    Mayor and council need to do a better job of keeping the Squamish taxpayers informed of what is happening at the oceanfront. I do not believe either SODC or Squamish council have told the whole story on the ‘development deal’ and it is timely that they do so.

  10. Douglas R. Day says:

    The Mayor of Squamish is in this mess way past his neck.
    He was the Bank Manager for Scotia Bank who loaded up SODC with the impossible debt of some $10 Million dollars.
    He then switches jobs to be our Mayor, overseeing the firesale of the SODC lands to a former Diector of SODC with insider knowledge of everything.
    This whole thing is right out of space cadets!
    Only in Squamish could such a thing be going on.
    There should be rioting in the steeets over this, and there may be yet!
    Respecfuly submitted
    Douglas R. Day
    Squamish & Vancouver

  11. LArry McLennan says:

    Careful Dougie- I interpret your missive in this way- that there appears to be an appearance (forgive me- I just had to write it this way) of less than arms lengthliness with regard to this Hutchinson/ SODC/ Scotia Bank/ Mayoral proposal. Hopefully all other readers will interpret it this way. Such an interpretation minimizes any legalities- I hope.

  12. Douglas R. Day says:

    Hi Larry,
    Hard to get sued for telling it how it is.
    In any event, the players involved in this mess, would not have the balls to sue me.
    Imagine the fun of examinations for discovery of all documents, meetings the works.
    There would be no hiding behind stalled or ignored FOI requests, such as demanding the Squamish Reporter pay some $5,000 to get access for it’s readers to some of the basic info regards SODC
    Bring on the lawsuits boys, and let some fresh air of what should be public information into the room!
    Cheers,
    “Dougie”

  13. Dave says:

    I recall the quote by W.S. Which started like this: “There is something rotten in the ………..of……………” One really wonders about changing the ending to fit something anew!? Come on guys, clean this thing up and get on with it!

  14. LArry McLennan says:

    I have to admit- that would be entertaining. Perhaps tickets could be sold thus reducing the SODC spending deficit. With regard to the $5000- why can’t the SODC simply provide a detailed general ledger (which should show payments to whom and where it was costed ) for the price of paper and ink. My accounting packages (Simply & Quickbooks) can do that in a few minutes. Upon review, questions regarding specific expenditures could quickly be answered and very little search time for documents would be necessary. When one considers that the office staff is already being paid and may have spare time available (how busy are they?) ; presumably any extra costs time-wise would be minimal.

    • Wolfgang W says:

      Seconded by another ‘bean counter’. Simple, and at least putting the endless speculation about the nature of expenditures and the accumulated debt to rest. Everyone would benefit.