Build Toronto in turmoil after six independent directors leave

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Build Toronto, set up to develop and sell the city's surplus land, is in turmoil after multiple departures from its board and allegations that the mayor's brother is trying to hand-pick the new chief executive for the arm's-length agency.

Six independent directors – five real-estate executives and one architect – have left or are about to leave the 13-member board. That includes the exit two weeks ago of chairman Stuart Lazier and the recent resignations of the two other independent directors serving on the committee seeking a new CEO, leaving Councillor Doug Ford as its only member.

Mr. Ford, vice-chair of Build Toronto, has stepped in as chair of the board, which includes two city employees and two city councillors from the mayor's executive committee. Only two independent directors remain.

A months-long search for a new CEO to replace real-estate veteran Lorne Braithwaite has been derailed, three sources familiar with the process say, by Mr. Ford. The sources say Mr. Ford has pushed to give the job to Toronto Port Lands CEO Michael Kraljevic.

The upheaval has some questioning Build Toronto's future and its ability to attract talent from the real-estate industry.

The agency, formed at the recommendation of a blue-ribbon panel four years ago, was envisioned as a way for the city get more value from its large property portfolio by entering into joint ventures with private developers rather than just selling surplus parcels of land. Its many projects include a site at Yonge Street and York Mills Road set to become an office building, as well as a $295-million joint venture with Tridel for a condo tower at the foot of York Street.

While it has generated millions for the city, Build Toronto has its critics on council. Its private-sector-style salaries and bonuses put its executives at a pay scale not enjoyed by other city staff and the size and design of some projects – such as the York Street condo – initially upset local residents.

Asked about the changes at Build Toronto, Mr. Lazier confirmed his decision to leave was sudden, saying it was "for personal reasons."

Mr. Ford said Thursday the search for a CEO is  "going good."

"We have five candidates. They are all good candidates and we'll see what the new board decides," he said.

Mr. Ford dismissed reports that he is trying to put Mr. Kraljevic in the post over the objections of other members of the search committee, but went on to list Mr. Kraljevic's experience in the industry. "I'll tell you one thing, he is one out of five candidates, excellent candidate," he said. Adding, "He's probably one of the leading candidates along with other people at Build Toronto."

Asked about the departure of six of independent directors from the Build Toronto board, Mr. Ford said one left because of a conflict and another decided not to return for another term. "It is always good to refresh a board," he said.

Other board members said the disruption at Build Toronto is partly the result of board terms coming to an end and the departure of its leader. It's not clear that all of the board members who are leaving are doing so because of the CEO issue.

"Any time there is a search to put a new CEO in place, everybody wants to get their person in," said Councillor Michael Thompson, a member of the Build Toronto board who is not a member of the search committee.

Mr. Thompson stressed no one has been chosen for the CEO post. He said the job is difficult to fill because it requires industry experience as well as an ability to balance the need to increase returns on land sales with the desires of councillors and local residents. The agency cannot just look to get the highest dollar, it also needs to leverage the sale of land to create city-building opportunities, he said.

For that reason, he said a "top dog," from the industry may not be an appropriate choice. "We have to figure a way forward," Mr. Thompson said. "There is a huge balancing act."

A list of new directors is expected to go to city council at its meeting next week. Two of the independent directors who are leaving have completed their four-year terms and have decided not to serve again.

Until the new directors are in place, the board will not pick a new CEO, said several directors, who confirmed Mr. Kraljevic is a candidate.

Even without an appointment, the shortlisting of Mr. Kraljevic is raising alarm bells with some councillors because of the role the Toronto Port Lands played in Mr. Ford's efforts to take control of development in the eastern harbour from Waterfront Toronto.

That plan, which Mr. Ford mused could include a Ferris wheel and megamall, would have shifted control of the city land to Toronto Port Lands, from Waterfront Toronto, an agency controlled by three levels of government.

Councillor Paula Fletcher, who led the fight against Mr. Ford's Port Lands vision, worries with his handpicked leader in charge of Build Toronto, the battle over development on the waterfront could begin again.

"I think we could have a collision course here and it really makes me concerned," Ms. Fletcher said.

Mr. Thompson said whoever becomes the new leader of Build Toronto will need a range of skills beyond real-estate experience. "The job has changed," he said.