Build Toronto, created by the city to maximize revenue from the development and sale of surplus land, lost more than $2-million last year, a result that has some councillors saying it’s time the city take another look at how it manages its real estate holdings.
The loss is included in financial results released Tuesday and is characterized as a “temporary setback” by city staff, caused by a lack of sites ready for sale and a slowing of the land market.
The $2.1-million loss compares to $38.8-million profit for 2012.
The poor financial showing comes after a year of leadership turmoil at the city agency, which saw the departure of all eight of its independent directors amid a protracted search for a chief executive and a failed attempt to appoint a chairman.
Councillor Doug Ford, the vice-chair of Build Toronto who faced allegations that he derailed the CEO search by trying to install his hand-picked candidate, said the results were caused in part by the quality of the land in the portfolio, but also suggested change was needed.
“I find it ironic. I was raked over the coals about the leadership of Build,” he said in an interview Tuesday. Mr. Ford said the new CEO Bill Bryck, who took over from retiring leader Lorne Braithwaite in late October, is making changes and reducing staff. But he said Toronto needs to look at consolidating the real estate holdings of all agencies and corporations, including the TTC, Toronto Hydro, the Toronto Parking Authority and Toronto Community Housing.
“Right now, we have little dribs and drabs. We need one real estate division,” he said.
“We have depleted a lot of the inventory right now and we have to review everything from top to bottom,” he added later.
Build Toronto’s new CEO, Mr. Bryck, said although the agency sold no properties last year, it has several that will likely come to market in the coming months.
“Real estate development is a cyclical business,” he said in an interview Tuesday. The agency has a number of “strong properties” that will generate sales in two to four years, and is forecasting $543-million in revenue over next five years, he said.
At one point last year, all members of the CEO search committee had left the board except for Mr. Ford, including the agency’s former chairman. Mr. Braithwaite agreed to delay his retirement, scheduled for the spring, until November so that a new search could be done.
Councillor Denzil Minnan-Wong, a member of the city’s executive committee who has been critical of executive salaries at Build, said the whole point of creating the arm’s-length agency and hiring industry experts was to increase revenue for the city by adding value to its surplus land before putting it on the market.
“It’s easy to sell a property that’s A grade,” he said. “They make their salaries by taking B or C class properties and turning them into A grade.”
Mr. Minnan-Wong also said the city needs to examine how it manages real estate across divisions and agencies. “I think there is some value in taking a second look at it,” he said.
In addition to the financial results, the agency reported compensation numbers for last year. For 2013, retiring CEO Mr. Braithwiate earned $512,955 in total compensation, including $319,214 in salary and a $187,364 bonus, as well as benefits and expenses.
Mr. Bryck earned $45,154 in salary as CEO for the last two months of 2013.
The financial results will be on the agenda of next week’s executive committee and will go to city council in June.