Allegation #3: 

When the lease came due on space CHAA rented the contract provisions were not followed. Other proponents tried to get space but were denied, however the incumbent did not follow the process to retain leased space.

Procedures and results:

  Procedure Results
3.1 Acquire lease agreement (current and prior).

IA inquired with the management team regarding the lease arrangement between CoW and the CHAA. Management indicated that:

- This is the 3rd and final term of lease extension as per the original agreement which has ended on Dec 31, 2019

- There is no new lease agreement signed after each extension, however there is to be notice from the lessee as to the desire to renew and rate confirmation from the City to the lessee.

- Current management is not aware of any written notice received from CHAA for its intent/request for extension as per agreement (should have been received by Sep/Oct of 2014 for the 3rd and final renewal).

- Lease and other utilities payments are made by CHAA directly to YQG as per article

 

3.02 of the agreement. YQG collects the payment as recipient of lease payments from CHAA.
We witnessed a letter from YQG to CHAA for 3rd and final extension stating updated annual rate. However, we noted that the agreement was not updated to address the legal names of current parties - as per the original agreement, Serco Aviation Inc was named as the recipient of lease payments from CHAA. Serco Aviation Inc. was the name prior to the change to YQG.


IA obtained the lease agreement and noted that the lease is between CoW and CHAA starting January 1, 2000 for a term of five (5) years with an option of 3 further extensions for 5 years (up to 2019). Extensions require that the lessee sends a written notification of its intent to renew three months prior to lease end date. The lease agreement was dated May 31, 2001 and signed by the Mayor of the City and CHAA president. IA noted that the following:

 

- the Lessee shall have and hold the Leased Premises from and after the 1st day of January, 2000 for a term of five years and then to be fully complete and ended, subject to any right to extend provided for herein.

- If the Lessee shall hold over after the expiration of the Term, as same may be extended, with the consent of the Lessor, such holding over shall be constructed to be a month to month tenancy.
3.2 Acquire evidence that all terms are met for lease renewal were adhered to.Review evidence for last renewal to determine if sufficient notice was given in accordance with contract.

IA inquired with the management team regarding the written notice by CHAA showing its intent for lease extension. Management indicated that such evidence of written notice by lessee was not available. While management was not able to provide evididence of written notice of intent to extend the lease from the lessor as part of the City records. Management was able to present a letter which we observed from YQG to CHAA for 3rd and final extension indicating the updated annual rate. This indirectly implies that YQG and the City had a basis for issuing the letter and implies the final 5 year extension was agreed to by the City/YQG. The lessee’s payment of the monthly rent corroborates their intent to renew.


Management also notes that in the event that notification was not provided the contract indicates that the agreement reverts to a month to month lease arrangement.


As such, the lease agreement appears to be in the 3rd and final extension period for 5 years.

3.3 Determine if other parties could have leased the space

Management is of the view that the lease remains active and therefore the space is not usable by other parties until the lease agreement is formally terminated.


While the notice of intent to exercise the contract term extension was not available in City records,