The allegedly cozy relationship between developer Shindico and city hall came under further scrutiny this morning from a taxpayer watchdog.
Colin Craig, Manitoba director of the Canadian Taxpayers Foundation, wondered why the city had awarded a management contract to Shindico for the former Canada Post tower at an annual cost of $157,000 when city staff eventually took on the job for $45,000.
Craig also questioned why the civic administration let the Shindico contract run on for 230 days when council ordered it cancelled after 90 days.
"The (civic) administration should provide some accountability and some answers," Craig told the downtown development committee.
Shindico’s involvement with the city is part of two audits – its role in the construction of four fire stations and as part of a longer-term review of the city’s real estate dealings, in particular the former Canada Post tower.
Shindico was awarded a management contract of the Graham Avenue tower, acquired by the city as part of the $30-million purchase of the former Canada Post building.
Civic administration said Shindico was originally awarded the contract because it had ranked first on a 2008 request for qualifications (RFQ) from companies capable of providing real estate services as well as on a 2010 follow-up search for the same services.
The CTF complained last year the search did not spell out the fact the city was also looking for a property manager.
Council subsequently ordered the administration to cancel the Shindico contract in 90 days but Craig told the committee Shindico retained the contract, without council approval, until the end of June 2013.
Craig’s revelations prompted committee members to ask the same questions of its administration this morning.
But Barry Thorgrimson, the city’s director of planning, property and development, said that while city staff could do property management work far cheaper, Shindico was paid the industry standard rates for the work it performed.
Thorgrimson said the contract with Shindico was based on a percentage of the gross rents that will be generated at the Graham Tower – a standard practice within the industry.
A report to the committee stated that after the Shindico contract was cancelled, the city issued a search for a new property manager but decided to conduct the work itself at a an annual cost of $45,000.
However, Thorgrimson said the city will still have to hire a leasing agent for the tower to ensure all the offices are rented out.
Thorgrimson said that even though council ordered the contract terminated for the end of February 2013, Shindico was kept on the job longer because it was taking civic staff longer to prepare the paperwork to conduct a new search for a property manager; which, in the end, was decided was not needed.