Winnipeg Free Press - PRINT EDITION

Fireworks erupt at city hall

Controversies find fertile ground to grow, engulfing the mayor and civic officials

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For no discernible reason, controversy seems to strike city hall once every two years.

In 2004, former mayor Glen Murray's midterm resignation created political turmoil. In 2006, the OlyWest hog-plant proposal left protesters pounding on the council chamber's glass wall.

In 2008, the Riverside Park Management affair drew attention to Mayor Sam Katz's dual duties as politician and private businessman. And in 2010, the divisive Youth for Christ drop-in centre debate ensnared federal officials as well as city council.

But none of these events came even close to approximating the intensity of a cascading series of embarrassments that rocked city hall in 2012, when elected officials and senior administrators spent much of the year in crisis-management mode.

The pyrotechnics began in April, when officials floated a profoundly unpopular plan to erect a water park and hotel on Parcel Four, the same plot of city-owned land that served as the flashpoint in the Riverside Park affair. By the middle of May, the idea was dead, along with any semblance of unity among council's powerful executive policy committee.

The seeds of public skepticism then blossomed into a forest of cynicism in the late summer and fall, when revelations emerged about the city's fire-paramedic station replacement program as well as Katz's corporate and real-estate activities in Scottsdale, Ariz., where he maintains a second home.

As the city enters 2013, two separate teams of external auditors are conducting a comprehensive review of the fire-paramedic station construction program and a broader audit of major city real estate transactions dating back at least five years. The outcomes of the audits remain to be seen.

But the reputation of the City of Winnipeg has already been affected to the point where public confidence in city hall is low, according to a majority of city councillors.

"Citizens are really telling us there needs to be more accountability and transparency at city hall. I think you've got to ensure you have people's trust and confidence," said St. James-Brooklands Coun. Scott Fielding, a fiscally conservative EPC member expected to run for mayor in 2014 if Katz decides 10 years in office are enough.

Singling out the fire-paramedic station construction program, Fielding said city administrators made a lot of mistakes this year. Ensuring city hall is more accountable will be the most important priority in 2013, he said, adding Winnipeg must implement whatever recommendations come out of the external audits.

Fort Rouge Coun. Jenny Gerbasi, among the first to call for external audits, said there is an unprecedented level of public concern about how city hall conducts itself.

"How do you make it all make sense?" asked the longtime council critic. "I wish I had all the answers."

After such an unusual year, a Probe Research poll conducted in late November and early December suggests 49 per cent of Winnipeg adults do not want Katz to run again for mayor, with 32 per cent supporting a run for a fourth term. The poll also suggests 40 per cent of voters believe Katz has done a poor job of separating his personal interests and public duties, compared with 24 per cent who believe he's done a good or excellent job in this area.

The mayor, however, said he doesn't believe 2012 was a difficult year to endure.

"There are tough days and there are good days. That's what happens, and anybody who's ever been in business, or if you work, you have your good days and you have your bad days," Katz said in a year-end interview. "You may think it was a tough one. I may think there were ones before that were much tougher. Everything is relative."

As the top elected official in the city, Katz cannot be faulted for attempting to put on a brave face. But the notion 2012 was just like any other year seems unbelievable. To recap, here are the five most significant controversies that emerged this year at city hall.

1. The water-park debacle

At the behest of Mayor Sam Katz in 2008, the City of Winnipeg offered $7 million of public funds to a private developer willing to build an indoor water park. The cash was initially awarded to the Canad Inns Corp. but then withdrawn when the Winnipeg company made little progress on a Polo Park hotel expansion.

Following a second search for a private water-park partner in 2009, councillors were told of a proposal to build a hotel and water park at The Forks. A report recommending such a proposal finally came forward almost three years later, in April 2012. The proposal was to offer the $7-million grant to Alberta hotelier Canalta, who would also take possession of Parcel Four, the empty surface lot south of the Shaw Park baseball stadium and west of the Canadian Museum for Human Rights.

A broad coalition of private and public interests reacted negatively to the idea. Architects complained such a structure would be an inapproriate neighbour to the Antoine Predock-designed CMHR.

The Forks complained they were not consulted from a planning perspective. The real estate industry grumbled that no one else had a chance to purchase prime land at The Forks. Councillors complained about a lack of detail about the public-access part of the deal and the structure itself.

But most importantly, members of the public swamped city council with calls and emails expressing concerns ranging about the size of the proposed water park, the location and the speed at which the plan would pass through city council.

After initially reacting angrily to the suggestion he could not vote on the proposal, Katz recused himself from the debate to avoid any conflict of interest. Council then voted to delay the plan, which led to Canalta withdrawing from the table.

At executive policy committee, the divisive debate over the water park sowed the seeds of discontent that eventually blossomed into the departure of St. Norbert Coun. Justin Swandel in the fall, when other events at city hall elicited more skepticism.

2. Fire-paramedic foibles

In August, a CBC reporter went out for a walk with his dog on Grosvenor Avenue and came across a for-lease sign on the old fire-paramedic Station No. 12. As it turns out, the land had not been declared surplus by the city and the listing by Shindico Realty was premature.

This dog-walking episode sparked the biggest scandal to hit city hall since Katz's election in 2004, as it was revealed fire-paramedic chief Reid Douglas negotiated a three-for-one land swap that would have seen Shindico take possession of the old Station No. 12, the soon-to-be-decommissioned Station No. 11 on Berry Street and a vacant parcel of riverfront city land at Mulvey Avenue East.

What the city would get in return was the land below the new Station No. 12 on Taylor Avenue, built on Shindico property. Amazingly, no one on council knew anything about the deal.

At first, Winnipeg chief administrative officer Phil Sheegl defended the program. But continuing questions about the land swap, the construction contracts and the disclosure about the entire program to city council led Katz to ask city finance officials to review the deal.

But this process only yielded new questions about cost overruns at the new Station No. 11, under construction inside a cloverleaf at the intersection of Portage Avenue and Route 90. There were simply too many question marks to satisfy city auditors.

By the end of September, council voted to approve both an external review of the entire fire-paramedic station replacement program and a broader audit of major city real estate transactions. The fate of Sheegl, Douglas and possibly other city officials may be determined by the results of the review, expected some time next year.

At the end of the year, Katz said the program likely would not have sparked any concern had Shindico not listed the Grosvenor fire hall before council had a chance to vote on the land swap.

3. The Duddy Enterprises affair

In 1987, future mayor Sam Katz told the Free Press his friends call him Duddy. In 2002, future chief administrative officer Phil Sheegl, a friend of Katz, created an Arizona shell company called Duddy Enterprises.

In March 2012, Sheegl sold Katz the company for $1. When the sale came to light in the fall, the mayor initially claimed to be the subject of a media witch hunt before reversing field and conceding he should not have purchased a shell company from the head of the public service.

Katz then sold the company back to Sheegl for $1 and declared the story over, without explaining what the company did or why he needed it.

4. The $1-million mystery home

In August, Katz purchased a home in Scottsdale's upscale Windgate Ranch development from Teri Nordstrom, the sister-in-law of Shindco Realty president Sandy Shindleman. Shindleman and Katz are partners in the Winnipeg Goldeyes baseball club. The purchase price of the 4,400-square-foot property was not disclosed in county records due to an exemption that applies to properties purchased in full, but the mayor said he paid fair market value for the home -- about $1 million.

Records revealed 2011 and 2012 property-tax bills for the Windgate property were sent to Nordstrom at Katz's Winnipeg address, but Katz declined to answer why the bills were sent to him in Winnipeg. He also would not answer questions about the nature of his relationship to Nordstrom.

5. The conflict-of-interest complaint

As the year comes to an end, the mayor is haunted by a seemingly innocuous event that took place two holiday seasons ago: a 2010 Christmas party held at Hu's Asian Bistro, an Ellice Avenue restaurant he owned.

Earlier this year, restaurateur Joe Chan filed a declaration in the Court of Queen's Bench alleging Katz violated municipal conflict-of-interest rules by spending $2,915 of public funds at Hu's. After making procedural errors, Chan, who manages the Cathay House Restaurant and has worked for Daniel McIntyre Coun. Harvey Smith, withdrew his motion and was forced to pay $750 in court costs.

The complaint was then picked up by human rights lawyer David Matas, who filed another declaration.

The case is headed to court on April 2. If a judge decides the taxpayer-funded party breached the conflict-of-interest rules, Katz could lose his seat.

 

bartley.kives@freepress.mb.ca
jen.skerritt@freepress.mb.ca

Republished from the Winnipeg Free Press print edition December 26, 2012 B1

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