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Winnipeg Free Press - PRINT EDITION

Parkade sale logical at $21.4M, council told

Winnipeg Square site faces hefty repair bill

By: Bartley Kives

30/10/2009 1:00 AM | Comments: 46

Winnipeg Square charges some of the highest monthly rates in the city.

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Winnipeg Square charges some of the highest monthly rates in the city. (WAYNE GLOWACKI / FREE PRESS ARCHIVES)

CITY real-estate managers are urging councillors to accept a $21.4-million offer for the Winnipeg Square Parkade even though they say that price barely makes the deal worthwhile.

On Monday, two council committees will meet behind closed doors to decide whether to sell off the 33-year-old, three-storey parkade that generates $1.8 million in annual revenue for the Winnipeg Parking Authority.

City hall has been considering the sale of since 2008, when politicians mused whether the proceeds could be used to eliminate the parking authority's artificially accumulated debt, fix up two other parkades and possibly build new parking facilities.

Councillors once placed the value of the parkade as high as $50 million. But when the city asked potential buyers how much they'd be willing to pay, the responses ranged from $17.1 million to $21.4 million, councillors were told Thursday morning.

According to city real-estate managers, selling the parkade makes financial sense if the sale price exceeds $21 million. If councillors accept the highest offer, the net proceeds from the sale would be $21,039,000, after $361,000 in real-estate fees are deducted. That's good enough for officials to recommend selling the parkade even though they express some doubts over whether now is the best time to get rid of such a valuable city asset.

"This conclusion is particularly sensitive to changes in assumptions, both in terms of revenue growth and capital improvements required," real-estate managers write in a report to council. "In this regard, there is a question whether the city should continue to hold the property until economic conditions change. Although this represents an option, risks present themselves at various times during the life of ownership and it is difficult to predict future conditions."

One of the largest factors driving their decision is a pending parkade repair bill that could be as high as $12.1 million over the next five years. However, the Winnipeg Parking Authority pegs the cost of the repairs at only $2.5 million.

The disparity between those estimates has some city councillors questioning the wisdom of selling the parkade, especially as downtown parking prices continue to rise. Winnipeg Square already charges some of the highest monthly rates in the city -- $265 for a reserved spot and $225 for unreserved spaces -- and plans to raise rates again next year.

"They're just making a case for selling it off and they're cherry-picking numbers to make that case," said Fort Rouge Coun. Jenny Gerbasi, whose ward include the parkade.

Mayor Sam Katz, however, said the proposed sale price is attractive. "Keep in mind, that's a lot of money. I don't know about you, but I don't have that in my bank account," the mayor told reporters.

According to the report, the city could use the proceeds of the parkade sale to eliminate the Winnipeg Parking Authority's $12.2 million debt to the city, which was racked up when council used to force the special operating agency to fork over some of its profits every year.

The rest of the cash could be used to eliminate a separate $9.2-million line of credit the parking authority has with the city, the report states.

If council agrees, there would be no cash left over to make $4.5 million worth of required repairs to the Millennium Library and Civic Centre parkades or build new parking structures. Following the sale, the Winnipeg Parking Authority's annual revenue would also decline from $3.8 million a year to $1.7 million annually.

"This is like selling your house to buy groceries," charged Gerbasi, who claims the sale makes little sense. "Keeping this parkade and making a modest investment in it will maintain a sustainable revenue stream for the next 50 years."

bartley.kives@freepress.mb.ca

Republished from the Winnipeg Free Press print edition October 30, 2009 B1

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46 Commentscomment icon

Mayor Sam Katz, however, said the proposed sale price is attractive. "Keep in mind, that's a lot of money. I don't know about you, but I don't have that in my bank account," the mayor told reporters.

What a "brilliant" businessman and politician. Compare the city's finances to an individual's. That doesn't make any sense at all. Much like this sale.

I'd like to see more investigation and details about the relationship between Sam, Shindico (Sandy Shindelman) and the other involved business partners. This stinks and is not the first shady dealings that have occurred between these parties since Sam has been mayor.

I really hope that Winnipeg voters realize that this kind of thing happens when you elect a "businessman" mayor based on only his public persona.

It's become crystal clear over the past years that Sam's priority is to the business leaders (his real colleagues) and NOT the city. Just go back and look at his position on a number of issues such as developing Assiniboine park. We need a mayor that puts the city's needs and growth first!

The first warning sign for us was when he refused to put his financial dealings in a blind trust as he campaigned to do initially.

I hope that Winnipeggers wake up to what Sam is really about before the next election. Although, I suspect that he won't be running again now that he's set up and improved his and his business's finances for the next number of years.

DISGUSTING....ONCE AGAIN!!!

Then Mayor and council need to be fired.

But, City administration needs to held accountabe too.

If Council did something to bankrupt the city and the CFO and CAO went along with it, and did not provide information on the complete picture, is there not a legal issue here? At minimal an ethical one? They should be stripped of their proffesional designations, and not allowed to pactice again.



I say sell the parking lot. Let the sale of the lot be just another in a long line of sell out decision by Katz and his cronies. Let the sale be another example of why we believe the City of Winnipeg is run by self serving idiots and conservative zealots. If citizens conclude the city is run by idiots and managed by folks who are in it for themselves we will want less and less city government...exactly what conservative ideologues want to achieve. Where else can you get a 2 for 1 like this...fatten wallets and destroy people's interest and trust in government at the same time. [edited]

@Joe: The sale of the parkade is not up to Winnipeg's chief financial officer, whose name is Mike Ruta.

It is purely a political decision. It will be up to council and council alone.

@Spence Furby: I first started writing about the parkade in July 2008. I also wrote a couple of stories in February, when it was briefly and erroneously listed for sale by Shindico.

It can not be sold off until council declares it surplus.

Bartley Kives

@Kives: thanks for that background info.

It's good to see interest in this article, I'd like to see more on this story.

Who is the CFO of the city?
He should be fired for not protecting the interests of the taxpayer.

If the thing makes 1.8 million PROFIT then that means the city can take that money to the bank and get a 40million loan. That is enough money to

1. Pay for all repairs
2. Pay off the debt
3. build many more parkades if that is what is needed

And the city still owns an asset that generates more money EVERY YEAR.

Do the math. In 20 years the City is way ahead of the game.

If Sam does not understand 101 businesses then clearly he is not that smart, or does not care about the economic health of our city. Which is it Sam?

BK, ask a commercial broker to verify these numbers.

Then take Sam to the cleaners and expose him for either not being bright or for putting his opinions ahead of the economic health of the city.

Everything wears out. There was a life expectancy for this parkade and they have known all along they should be budgeting for repairs. Where is that money? Where is the part that they realize they have a responsibility to provide affordable parking to citizens who wish to go down town? I find parking costs are too high now downtown--in effect they have driven me away. It appears it will only get far worse.

I agree that more information is needed before a decision is made. One thing I am curious about is who has made this 'barely worth it' offer? Given that 21mil was the cut off point, the offer of 21.4 makes me slightly suspicious. Did the person or company know that this was the city's limit? Is there any connection between those making the offer to purchase and someone at City Hall? Is this another case of the government selling its assets cheaply to friends?

avatar

the last official act of a corrupt government is to loot the nation.... if you've noticed over the past 8 years, all the big corporations have been sold off or moved out of the country, the major public owned corporations have or will be sold, major infrastructure like highways will be sold and have new toll booths installed... Canada and the US are being brought down to the standard of living in Mexico so the new north american corporation can be formed with the remnants of the 3 old corporations.

the people in power have admitted to all the crimes and are operating right in front of our faces.... so why is there just a handful of patriotic citizens trying to point out the pink elephant in the living room ?

we were lied into a war, we've had our rights legislated away based on the excuse used for the war, we're unconstitutionally borrowing money from international banks with compounded interest that we can NEVER pay off, our infrastructure is being sold off..
unless we all stand up against the criminal politicians and criminal bankers, you can enjoy the end of Canada folks.. one day we can tell our grandchildren about the semi-free country we used to have.

the criminal fractional reserve banking system needs to be stopped and the players need to be brought to justice....lets get back to the constitution and create our money from the bank of canada so we can enjoy the fruits of our labour instead of lining the pockets of international bankers and their politician buddies

So it may cost $21 million to repair and someone is willing to pay $21 million to buy it.
Seems like someone thinks that for $42 million they can make money.
Maybe we should reevaluate how it is being run instead.

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