The decision shuts the door on a proposal from a Toronto-area developer who wanted to convert the arena building into the world's largest indoor water park.
The city's profit from the sale of the arena land will be offset by the demolition costs, which are expected to be $1.45 million or higher.
The property and development committee members and other civic officials refused to confirm the arena's fate, claiming it was a confidential property matter not to be publicly disclosed. But several sources, including other councillors, confirmed the arena decision.
Not even the winning bidder was officially told the news.
"I heard that we won," said Sandy Shindleman, president of local development firm Shindico, which represents the Polo Park ownership group. "I expect the city will tell us officially some time next week."
Coun. Harvey Smith was critical of the secrecy that surrounded the process.
"I think the people of Winnipeg should know who is bidding and what they bid," Smith said. Former NDP MLA Marianne Cerilli also criticized the process, adding that a handful of city councillors had been treating Winnipeg Arena as their personal property.
Cerilli said the public should have been consulted on the arena's fate, and a decision on it shouldn't have been made behind closed doors.
The civic committee approved the sale of the land to Ontrea Inc., a development company owned by the Ontario Teachers' Pension Plan Board, which also owns Polo Park Shopping Centre. The pension plan owns $75.7 billion worth of assets across the country, including Canada's largest mall, the Eaton Centre in downtown Toronto.
The city administration's confidential report stated that Ontrea hadn't submitted any development plans for the site, stating only that it would build either a series of single-storey or multi-storey commercial buildings of the same quality as the Polo Park mall, with a total construction value of $12 million. Ontrea stated it was also in the process of acquiring the CKY television studio building, which lies between the arena and the mall.
As part of the deal, the city has agreed to first demolish the arena at its own expense, then transfer the five acres of cleared land to the mall owners.
The demolition won't occur until the new downtown arena, the MTS Centre, opens. The city had stated that the earliest possible possession date for a vacant Winnipeg Arena site would be June 2006 and possibly as late as Jan. 31, 2007.
The city and Winnipeg Enterprises Corp. put the arena and its land up for sale at the end of last year. The deadline for bids closed March 26. City officials would not disclose how many bids were received, but sources in the development community said as many as six proposals were submitted for the property.
The confidential city administration report stated that only two bids were considered acceptable. The other bid was from United Equities, a local firm whose holdings include the first commercial building on Waterfront Drive.
Warren Greenspoon, a principal with United Equities, said his company bid less than the Polo Park group's $3.6 million, so he wasn't surprised the mall owners won the competition.
The administration report stated that United Equities had bid $3.04 million. The report said United Equities planned to build mixed-use office and commercial buildings, including a three-storey office building and three restaurants.
The Polo Park owners "are the biggest buyer and could afford to pay more than anyone else," Greenspoon said. "It was more valuable to them than anyone else."
But the Toronto-area developer that proposed the water park said his offer was actually worth more to the city.
Sieg Holle, president of Hollecrest & Associates, said he offered the city $2.5 million for the arena and land -- saving the demolition cost -- and would have paid the city an additional $3.5 million if plans for two highrise towers and an underground parkade were eventually approved.
City officials dismissed the Hollecrest proposal because it failed to include several key components, including a mandatory 15 per cent deposit and a detailed list of members of the investment group. Holle also neglected to submit the official offer-to-purchase document and no one from his firm signed for the proposal that was submitted.
Holle refused to accept any responsibility for missing out on the deal. Instead, he blamed "a murky process" at city hall, which he claimed was rigged in favour of the winning bid.
Coun. Mike Pagtakhan, chairman of the committee, rejected that suggestion. "It was fair. Everyone knew the process up front," he said. "It's not about who you know."
Although the committee met privately, it allowed Ty Tran, the Norwood man who circulated a petition that garnered 16,000 signatures in favour of the water park, to briefly speak about the project.
Tran emerged from the closed meeting to a crush of reporters, where he broke down in tears.
"All I asked was that they listen to the people," said Tran. "It's just a lot of politics."
Tran said he believed the process was weighted against the Hollecrest bid in favour of Ontrea.
Former mayoral candidate Peter Kaufmann, whose commercial real-estate firm was working with Hollecrest, also addressed the committee. He said the city had 101 days to ask Hollecrest to fix its proposal but did not.
Kaufmann said the Hollecrest bid, however flawed, was a better financial deal for the city, so city staff had a duty to make sure it didn't die an early death.
"Should they be punishing Hollecrest and the citizens of Winnipeg by accepting $3 million or $4 million less?" asked Kaufmann, who wanted the bids thrown out and the process restarted.
The committee didn't consider that option, said Pagtakhan, because reasonable bids had been received.