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Emails shed light on city deals

Auditors relied heavily on notes to prepare real estate review

Posted: 07/4/2014 1:00 AM | Comments: 0

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The former Canad Inns Stadium. The report uses an email from Sheegl to assert he provided the eventual developer of the site a copy of a city search document days before an expression of  interest was made public.

WAYNE GLOWACKI / WINNIPEG FREE PRESS FILES Enlarge Image

The former Canad Inns Stadium. The report uses an email from Sheegl to assert he provided the eventual developer of the site a copy of a city search document days before an expression of interest was made public. Photo Store

Two days before Christmas in 2009, a City of Winnipeg property manager expressed concern in an email the city was about to outsource the management of the newly purchased Canada Post building.

The unnamed official felt the city could have handled the job without outsourcing the work to Shindico Realty, the firm that also brokered the $29.25-million acquisition of the structure slated to serve as the new Winnipeg police headquarters.

The next day, former Winnipeg chief administrative officer Phil Sheegl wrote to current acting CAO Deepak Joshi and told him he wasn't going to let the city employee "meddle in the deal."

Six months later, Shindico was awarded the property-management contract, retroactive to Dec. 1, 2009.

This anecdote is embedded on page 117 of Winnipeg's real estate management review by consulting firm EY (formerly known as Ernst & Young), an audit ordered in 2012 after city councillors became aware of the very same Canada Post building property-management contract.

The management work should have been tendered, the auditors concluded, stating it was outside the scope of a 2008 city search for firms qualified to handle major real estate transactions.

The full, 192-page version of the document, posted Wednesday, uses emails composed by Winnipeg's former chief administrator to paint a picture of the relationships between Sheegl, Shindico Realty and other entities.

Earlier Wednesday, before the audit was released, Sheegl slammed the review as "a joke" and "a political witch hunt."

Shindico president and CEO Sandy Shindleman also dismissed the auditors' report, insisting it was "impossible for them to know what they're talking about" without contacting his firm.

City auditor Brian Whiteside on Wednesday released a statement expressing confidence in the firm's "comprehensive report," which relied heavily on internal emails.

For example, the EY report uses an email composed by Sheegl in 2011 to assert the former CAO provided the eventual developer of the Canad Inns Stadium site -- a partnership involving Shindico and Cadillac Fairview -- a copy of a city search document for someone to develop the Polo Park land three days before the expression of interest was made public.

On April 11, 2011, the "former CAO provides the developer the EOI in an email labelled 'FYI and confidential,' " wrote the auditor in a summary of the events leading up to the $30.25-million sale of the site.

The expression-of-interest document was issued April 14, 2011.

In an interview Wednesday, Shindleman said his firm did not receive an advance copy of the document.

The EY report also uses emails sent and received by Sheegl to demonstrate an unidentified private company was aware of a plan to place a "water park and hotel" at the city-owned surface lot Parcel Four at The Forks in June 2008.

This was 11 months before the city issued a search for someone to design and build a water park within city limits -- and more than a year before that search was amended to include the purchase of city-owned land.

In a June 24, 2008, email, the unnamed company requested a copy of a "survey of that Forks lands for water park and hotel."

"I have it ready for you," Sheegl responded two days later.

The city expression-of-interest document did not specifically identify Parcel Four as being available for sale. Although the city internally considered a plan to build a water park and hotel at the site in 2009, no proposal to place these amenities at Parcel Four was made public before April 2012.

The EY report also uses emails sent by Sheegl to Shindico in 2008 and to an unnamed party in 2009 to assert Shindico was acting on the city's behalf in the sale of the Winnipeg Square Parkade, before the firm went on to represent the eventual buyer, Crown Realty Partners. "I have informed that you will represent the city in any negotiations and or/listing," Sheegl wrote on Oct. 30, 2008.

In February 2009, Shindico briefly listed the parkade for sale. The property had not been declared surplus at the time.

When an unnamed party external to the city asked whether Shindico had an exclusive listing, Sheegl responded by saying "Yes, they are representing our interests in negotiations."

The parkade was eventually sold to Crown Realty for $24 million. Shindico received a $400,000 commission on the sale in 2010, acting for the purchaser.

EY considered this a problem. "There could be increased risk of conflict of interest when the same external adviser has roles representing the city's interest as the seller and then acting as the broker for the purchaser," the auditors wrote.

In an interview Wednesday, Sheegl said Shindico did not act on behalf of the City of Winnipeg. Shindleman concurred in a separate interview, calling the assertion "a factual error -- and an important one."

Even the city, however, appeared unclear on the firm's role in the transaction. In a 2011 response to a freedom-of-information request made by the Canadian Taxpayers Federation, Winnipeg's planning, property and development department indicated Shindico was "given" the Winnipeg Square Parkade project by the city.

bartley.kives@freepress.mb.ca

Republished from the Winnipeg Free Press print edition July 4, 2014 A3

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