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City plans to expropriate land for fire station No. 12

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City hall is taking developer Shindico to the expropriation process over the firm’s Taylor Avenue land where it built the new #12 fire paramedic station.

City officials said negotiations that have been ongoing for 14 months have now reached "a stalemate" after Shindico wanted to be compensated for what it claims is loss in value to other land it owns adjacent to the new fire station.

From the Oct. 7, 2013 Ernst & Young audit into the fire paramedic stations construction project:

Shindico had originally offered the city the Taylor Avenue land in June 2010 for $900,000 but said it would prefer to do a land swap rather than take cash.

Administration added a third parcel (409 Mulvey Ave East) into the swap, without knowing its value but knew that the three parcels combined were worth more than Shindico’s Taylor property.

When administration agreed to the land swap, it violated a city bylaw that states only council can declare city land surplus.

Administration allowed Shindico to begin construction of the Taylor fire station before arrangements were in place to acquire ownership of the land from Shindico.

The city already owns land on Taylor that could accommodate construction of a fire station but it was never considered by administration as an alternative to the Shindico property.

The fire hall replacement program is $3.2 million over budget, which includes an estimated cost of $1 million for the Taylor property. The over-expenditure will increase further if the city’s is forced to spend more than $1 million for the property.

The city still plans to sell the three civic properties originally included in the land swap, but instead of allocating the proceeds to the city’s land reserve account, administration recommends the proceeds be used to offset costs associated to purchase Shindico’s Taylor land.

"We haven’t been able to agree on a final price," Barry Thorgrimson, director of planning and property development, told a news conference this afternoon. "We believe the values that we are coming up with and the offers we are presenting are reasonable and what would be expected and they are not agreeing to it."

An administrative report to the property and development committee shows the two sides are not that far apart on the value of the land where the fire station sits: the city offered Shindico a little more than $1 million for the Taylor property; and Shindico placed the value at $1.2 million.

However, Shindico also wants an additional $844,000 thrown into the deal for what it says is the loss in value in the adjacent land Shindico still owns because the fire hall was built beside it.

Thorgrimson said Shindico is being unreasonable, adding they weren’t concerned about the presence of the fire hall when they first offered the land to the city.

The report states Shindico has refused council’s proposal to engage an independent appraiser to act as a final arbiter on the value of the fire hall property.

The city has been negotiating with Shindico to buy the Taylor Avenue property since November 2012, after an angry council killed an administrative proposal to swap three city properties for the Taylor site.

The Taylor fire hall was one of four new halls Shindico was contracted to build in a program that was several million dollars over budget and a team of forensic auditors from consulting firm Ernst & Young concluded was mismanaged by city officials and plagued by unfair contract awards to Shindico.

Shindico has disputed the E & Y findings, arguing the firm offered the city the lowest possible price.

Council only learned of the land swap after Shindico prematurely marketed one of the city properties before the deal was finished.

Council was also upset to learn the administration had authorized construction of the Taylor Avenue fire hall before the city had taken ownership of the land — councillors were under the impression the city already owned the land before construction had begun.

Council was prepared to split the difference with Shindico if their respective appraised values were within 10 per cent of each other, but if the spread was greater, suggested it go to binding arbitration as a way to avoid the messy and costly expropriation process.

Shindico general manager Bob Downs said the company would not comment on the possible expropriation.

Coun. Jeff Browaty, chairman of the property and development committee, said the city is reluctantly going the expropriation route only after all reasonable efforts to reach a fair deal with Shindico have been frustrated.

"We have a fire hall on land that we don’t own," Browaty (North Kildonan) said, adding the city has to acquire ownership of the property.

The expropriation process will add more to the cost of the land, Browaty said, explaining that the city will have to pay Shindico’s reasonable legal costs during the process and other costs needed to determine fair value for the property.

Browaty said he can’t support Shindico’s claim for an additional $844,000 related to what they say is loss in value to their adjacent property.

Browaty said in this instance, Shindico offered the Taylor property to the city knowing the impact it would have on their property.

"Shindico knew very, very much what was going on there," Browaty said. "Would they honestly do something that would cause that much injury ($844,000) to their own land. That number is unfair."

Thorgrimson said Shindico is being unreasonable by claiming its remaining land on Taylor has suffered as a result of the construction of the fire station. The remaining Shindico property has frontage on Taylor, Thorgrimson said, adding it’s of sufficient size to be subdivided and developed.

Thorgrimson said the expropriation process could take 12 to 24 months but the decision of the Land Value Appraisal Commission is final and cannot be appealed. He said it’s still possible both sides could reach a settlement before the case goes to a hearing.

The expropriation process freezes the value of the land at its current worth, and cannot be affected by market conditions as the process drags on.

The city has received offers for the three parcels of land it was originally going to swap with Shindico. The combined sale price for all three is $1.686 million — money which will eventually be used to offset the cost of Shindico’s Taylor Avenue property.

Coun. John Orlikow said the audit and ongoing dispute with Shindico has detracted from what should be a celebration over the construction of four new fire halls.

Orlikow (River Heights - Fort Garry) said the administration created the mess by circumventing council and negotiating deals "in the back room."

"We should all be concerned how a project that is so beneficial to Winnipeg went off in such a poor manner," Orlikow said. "What this shows we don’t have the (administrative) leadership managing these projects."


Updated on Friday, February 14, 2014 at 11:25 AM CST: updates that mayor will not attend news conference

12:26 PM: adds sidebar

1:02 PM: Adds comment from Coun. Jeff Browaty.

3:39 PM: Writethru.

4:42 PM: Updated.

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