Additional cost overruns at Winnipeg's new police headquarters, not the fire-paramedic stations scandal, turned out to be the straw that broke the camel's back when it came to Phil Sheegl's run as the city's chief administrative officer.
During the first week of October, city council's executive policy committee was presented with a draft version of a report that projected $10 million to $17 million worth of additional cost overruns related to the conversion of the former Canada Post building on Graham Avenue into Winnipeg's new police headquarters.
That project had already been capped at a supposed guaranteed maximum price of $194 million following $28 million worth of cost overruns announced in 2011. Those were related to inaccurate initial construction estimates and previously undiscovered problems with the barrier between the interior and exterior of the building.
The revelations of additional millions worth of cost overruns related to changes in the accepted design angered EPC members already upset by Sheegl's termination of fire-paramedic chief Reid Douglas on Sept. 25 before the release of fire-paramedic station audit that was expected to clarify the role Douglas played in the bungled construction project.
When Sheegl could not explain who authorized the change orders to the police-headquarters project, weary EPC members decided they had enough of the CAO's management of city projects. Transcona Coun. Russ Wyatt, for instance, had initially called for Sheegl to resign in October 2012.
"That was the last straw," said a source at city hall, speaking on condition of anonymity, referring to the police headquarters. "This was like fire-hall audit No. 2. We didn't need this garbage."
The new police headquarters project started out in 2006 as a $19-million effort to fix the crumbling Tyndall-stone facade on the Public Safety Building, Winnipeg's current police headquarters.
But when that project cost ballooned above $40 million due to the cost of "decanting" police, or temporarily placing them in other secure offices during construction, the city decided to put recladding the PSB on hold.
It then decided to purchase the former Canada Post building in 2009 and convert it into the new police headquarters at an initial projected cost of $135 million. Sheegl, who was Winnipeg's deputy CAO at the time, oversaw the police headquarters project and persuaded Ottawa to sole-source the sale of the Canada Post building to the City of Winnipeg.
The Winnipeg Police Service supported the project because the larger space on Graham Avenue would consolidate a number of police offices under one roof. Major cost overruns first emerged in 2011, however, when it was revealed the city failed to discover problems with the structure during 18 months of due diligence conducted on the building.
After that revelation, Sheegl and Mayor Sam Katz announced they had secured a guaranteed maximum price on the building with the help of construction expert Ossama AbouZeid.
Change orders, however, are not covered by a guaranteed maximum price. So after another $10 million to $17 million worth of costs were revealed, Wyatt drafted a letter Oct. 2 calling for Sheegl's termination, multiple sources said.
Initially, five members of EPC signed that letter. A sixth, North Kildonan Coun. Jeff Browaty, was on his honeymoon and unable to sign, multiple sources said.
Through a lawyer at the firm Duboff, Edwards, Haight & Schacter, Sheegl then told EPC he considered himself terminated and requested 18 months worth of severance, sources said. But the former CAO continued to come to work for several weeks.
"He considered himself terminated already," said another source at city hall, who could not explain why a person who believed he was fired was coming to work. "That's a very excellent question. He wasn't terminated at the time."
For two more weeks, Katz and other members of executive policy committee discussed what to do about Sheegl. All agreed the CAO had to go, but there were differences of opinion on whether he should be terminated before the release of the fire-paramedic stations review, sources said.
"We didn't know what the audit would say," said one city hall source. "We didn't know, but we wanted the guy gone."
EPC members then received another letter directly from Sheegl, demanding he be allowed to leave the city before the release of the fire-paramedic review, multiple sources said. A lawsuit for damages was threatened if the city did not comply, multiple sources said, based on the potential damage to Sheegl's health and reputation.
Several EPC members argued against complying, figuring the optics would be better if they waited until after the release of the fire-paramedic stations review and fought a severance battle with Sheegl, sources said.
But eventually, after city solicitor Michael Jack assured EPC the review would not recommend Sheegl be dismissed, it was agreed Sheegl would go before the review came out. "They didn't want a gong show on the floor of council," one city hall source said.
On Oct. 17, Katz announced Sheegl's resignation. The following day, news of his severance package and the letter from EPC was leaked to a radio station.
Then on Oct. 21, the release of the fire-paramedic stations review suggested Sheegl was responsible for the majority of oversight of the troubled project.
Sources said members of EPC were unhappy Katz did not share this fact with them, as they expected Sheegl would have verbally told Katz what to expect from the review.
Open infighting among members of EPC broke out Wednesday, when Katz said he wished EPC had never signed the letter demanding Sheegl go.
"I think the timing was really bad, and if that hadn't taken place, we would have had our audit done," Katz told reporters. "Then things could have moved forward from there, so I thought the timing was terrible."
City hall sources said some members of EPC felt they had "been thrown under the bus" by Katz, as well as by the leak of the severance package they approved. Several EPC members, including St. Boniface Coun. Dan Vandal and St. James-Brooklands Coun. Scott Fielding, are considering running for office at other levels of government.
A report into cost overruns at the police headquarters is expected within weeks. Police officials are working on trimming the costs, a source at city hall said.