Under increasing pressure from the public, the media and members of city council, Mayor Sam Katz this week finally ordered a review of a controversial proposal that saw the city swap two old fire halls and a piece of prime undeveloped land for a lot on Taylor Avenue, on which a new fire hall was built, all without proper council approval or oversight.
Adding to the concern is the fact the deal involved Shindico Realty, a developer and broker whose owner, Sandy Shindleman, is well-known to the mayor. Shindico has, in recent years, won a large share of city real estate business.
Concerned about allegations of abuse of process, Katz asked the city's chief financial officer, Mike Ruta, and chief administrative officer, Phil Sheegl, to scrutinize the deal to ensure it's correct and fair.
For those of you following this tale, the city essentially completed the swap with Shindico without getting council approval. In fact, the proposal was consummated not by a member of the property branch, but by fire-paramedic Chief Reid Douglas, an odd aspect to this story to be sure.
There are lingering questions about whether the city gave away in this proposed deal more than it is getting. Although the value of two older fire halls is very much up for debate, the inclusion of a plot of land on east Mulvey Avenue has really raised some eyebrows. As brown field, it hardly rates a second look. As empty land close to the city's new rapid-transit line, it is expected to increase in value many times as it takes shape as part of what is expected to be a lucrative mixed-use development.
The fact Katz blinked on this controversy is newsworthy. In general, when people start asking questions about why the city is, once again, doing business with Shindico or whether proper process was employed in awarding the business to Shindico in the first place, he doesn't blink. He has rarely given this much credence to an allegation against Shindico and Shindelman. Of course, his solution to this problem was less than optimum.
Sheegl had already declared he was "100 per cent comfortable procedure was followed." Sheegl's comments are factually incorrect; numerous procedures and rules were violated in the consummation of this deal. Shindico listed for lease one of the fire halls well before council had a chance to declare it surplus, paving the way for it to be sold. For the CAO to ignore the simple facts is worrisome and makes him the wrong guy to review the deal.
CFO Ruta finds himself in a similar boat. Ruta was the official who pointed out the deal to build several new fire halls -- worth $15 million -- was broken down into several smaller deals, none of which required council approval. There has been no satisfactory explanation about why that decision was made and on whose authority. All we know is who benefited from the decision, and that is driving the demands for more transparency.
Ignoring the obvious problem, Katz has continued to pour gasoline on the fire by dismissing the concerns about the deal, while at the same time insisting a review should be done. On Friday, Katz labelled criticism of the deal as "unadulterated nonsense." Why hold a review if you've already decided it won't find anything?
There are voices at city hall calling for a more formal audit of the proposed land swap. Katz has turned down those demands, claiming it would be premature given the fact the transaction has not officially been completed. This is a poor excuse and suggests the mayor does not have the power to stop the deal until a more detailed review can be done. It also suggests Katz could not have asked a contractor outside of city hall to do the review. He can actually do both.
It could be unfair to look at the amount of business the city conducts with Shindico and that company's relationship with the mayor, and assume there's something wrong. However, neither Katz, nor Sheegl, nor Ruta has demonstrated in a meaningful way whether it's in the interests of taxpayers to deal so much with one developer.
Former city councillor Peter Kaufmann, now a developer and broker, suggested there is something wrong with a system that relies so heavily on one broker to do all of its real estate and development work. Kaufmann claims there are other firms that could serve the city as well. His comments underline the need for an objective review. We need to know whether the system allows taxpayers to realize the full value of city-owned land.
Katz should know asking Ruta and Sheegl to look at the proposal is likely to ratchet up the concern and innuendo that's becoming the focus of this narrative.
The only way to put these concerns to bed is a clear and clean review of these transactions and the broader concerns about the way the city handles real estate matters, conducted without fear or favour. Katz has so far failed to provide the citizens of Winnipeg with that review.