Office of the Auditor General completes Audit of Lease of space at Pier 7

HAMILTON, ON – The City of Hamilton’s Office of the Auditor General (OAG) completed an audit of the City’s Corporate Real Estate’s lease of space at Pier 7, 121 Haida Drive (formerly 47 Discovery Drive). 

The OAG was assisted by a third-party expert who benchmarked the major terms of the lease agreement against market standards. The OAG found that the lease terms were reasonable in the circumstances, however, there was room for improvement in the City’s administration and communications to Council. In particular, the proposed use of a single source procurement should have been proactively presented to Council for decision prior to entering negotiations.

“The main goal of this audit was to review whether the lease terms were fair and provided good value for money. Ultimately, the audit determined that the terms of the lease were reasonable overall, but there was significant room for improvement in communications to Council and the overall process of administration of leases.”

The OAG made four recommendations to address the audit findings and management agreed with all four and provided responses to each.

The recommendations include:

• Corporate Real Estate Office (CREO) and Facilities Planning and Business Solutions bring before Council their analysis of the costs and benefits of individual metering of commercial spaces at 121 Haida Drive
• Work with Procurement staff to provide clarity with respect to the Procurement Policy, in particular Policy #11 Non-Competitive Procurement and Schedule B Exemptions to the Procurement Policy. Where required, i.e. when staff do not have Delegated Authority with respect to a particular transaction, Council direction is sought prior to finalizing or executing any agreement
• Include formal appraisals report of market rent when negotiated leases are brought forward to Council for their approval
• Bring forward to Council an analysis that considers the use of tenant inducements.

• 121 Haida Drive (formerly 47 Discovery Drive) is otherwise known as “Williams Fresh Café”
• A tenant inducement is an incentive offered by landlords to attract new tenants or encourage existing tenants to renew their leases, sometimes can be in the form of financial benefits or property improvements