Neighbourhood groups call for inquiry into 'scandalous' development at old Montreal Children's Hospital

Neighbourhood groups are calling for a public inquiry into how the social housing component of a $400-million development at the site of the old Montreal Children's Hospital disappeared from the building plan.

Maryse Chapdelaine, a project manager with the Peter McGill Community Council, was surprised to learn that nearly three years after it was announced, the social housing project was dead.

"We're trying to figure out, maybe not who's to blame, but how could this happen?" said Chapdelaine. "Without the social housing units, the project makes no sense."

The proposed social housing units made the highrise development acceptable to some community members. Now they're not only off the table, but the subject of an ongoing legal dispute.

The situation has become so acrimonious that the developer says he would build a tower of social housing for free — if Mayor Valérie Plante resigned.

Community groups want to know what went wrong — and whether this saga might serve as a cautionary tale as the city tries to confront a housing crisis.

The old hospital site is located on the square bordered by René-Lévesque Boulevard, Atwater Avenue, Sussex Street and Tupper Street.

In addition to more than 1,000 rental and condo units, the new development is set to include an enlarged park, community centre, library and auditorium.

The original plans also called for 174 social housing units, something for which there is an urgent need, say neighbourhood advocates.

The average rent in the Peter McGill neighbourhood is about $1,200 per unit, said Éric Michaud, project manager for the neighbourhood housing group, the Comité logement Ville-Marie.

He calls the lack of social housing at the old hospital site "a terrible failure."

"It's scandalous, what happened," he said.

Michaud said he hoped from the start that the public land on which the hospital sat would be returned for public use. He said he was dismayed when a private buyer bought the land for about half its appraised value in 2015.

Residents 'excited' for original plan

Public documents show the McGill University Health Centre sold the land for $25 million in 2015.

The land is being developed by Philip Kerub's company High-Rise Montréal (HRM) and the developer Devimco Immobilier.

The two developers proposed the six tower project.

Devimco is responsible for four of those housing towers.

HRM was responsible for two housing towers.

The first is 1111 Atwater, a posh skyscraper being marketed as the most luxurious condos outside of Dubai.

There was also Tower 6, where the social housing was supposed to be built.

"We were very happy to hear when it was announced that there was going to be social housing units for families," said Chapdelaine of the original plan.

Graham Singh, a pastor and father who moved to the neighbourhood several years ago, said the prospect of a mixed development attracted him to the area.

"We were really excited to be living in this part of Peter McGill, where we were expecting this development to come out in the way that it had been proposed," he said.

Developer met with city 'countless times'

The president of HRM, Philip Kerub, says he went in with good intentions.

"I was trying because I wanted to do it," he said in an interview with CBC News. "It was important for me to actually make a deal and get this social housing."

According to documents filed to the Quebec Superior Court, HRM signed a contract with the City of Montreal in June 2017, during the tail end of the Coderre administration.

It includes a clause allowing the developer to pay a penalty of $6,235,000 if a deal could not be reached to build social housing after nine months of negotiation. CBC News has reviewed the relevant part of the contract.

Kerub said his team met with the city "countless times" to work out a deal.

He said the requirements for social housing are strict, and court documents claim HRM paid more than $750,000 to engineers, architects and other staff to draft plans for the housing.

Per legal documents, HRM was looking at building a turnkey social housing project which would then be sold to the City and the City's housing office, the OMHM.

According to the court filing, the developer says a tower that adhered to the standards of social housing would cost at least $40 million, but the city was able to offer a maximum of only $34.5 million.

Kerub says he elected to pay the $6,235,000 penalty included in his contract rather than lose millions of dollars and build the housing.

"I said, that's just not reasonable. Now, [the city] delayed me long enough… now we have to go our separate ways," he said.

Publicly, Mayor Valérie Plante started calling out HRM as early as July 2019.

By September 2019, negotiations had stalled. Kerub decided to pay the penalty and propose his Plan B for Tower 6.

Plante retaliated by proposing changing the zoning of the sixth tower, so the building would have a maximum of four storeys instead of the approved 20.

"There was a social contract that was made by the developer," Plante said during the council meeting on Sept. 16, 2019.

"It's sad. It's a shame."

This was news to Kerub, who says he says he signed a legal contract — not a social contract — and that the city is both smearing his name and breaking the contract.

"I'm tired of being attacked and being called the villain when it's the exact opposite," he said.

Last month, HRM filed an injunction to prevent the rezoning of Tower 6, saying the city broke its contract and the developer ought to be allowed to build a 20-storey tower.

"It's absurd. It's really outrageous. And now they've drawn themselves into a lawsuit, which they're going to lose miserably," he said.

Kerub said he offered them other locations for social housing, and proposed creating student housing or a condo hotel in the sixth tower, where the social housing was supposed to go.

"You know what I said to my friends? I said, the city still wants me to build social housing? No problem. You tell Valérie Plante to resign, and I'll build it for free," he said.

He also questions the logic of blocking a 20-storey tower of potential housing amid a housing crisis.

"How does that benefit the population?" he said. "You lost everything now and you cut it down to four storeys to try and penalize me. But how are you going to penalize me? I tripled my money here."

The City responded with a statement, saying it could not comment on the matter because it is before the court. The statement said that the contract with HRM was signed by the previous administration, and that social and affordable housing is a priority of the Plante administration.

The ordeal has left people who live in the neighbourhood scratching their heads, wondering how a municipal government that promotes social housing could have let this happen.

"I would support a public inquiry not to see something change on this site because it is too little, it is too late," said Singh, "But I would support a public inquiry to try to do much better with figuring out how we're actually going to see downtown Montreal developed in the future."

For now, because of the legal proceedings, any project for the sixth tower is in limbo. Kerub said so far, no court date has been set.

WATCH | See what the work looks like at the site of the old Montreal Children's Hospital: