Winnipeg Free Press - PRINT EDITION

Kenora's tomorrow

The next Kelowna, says one developer; the next Banff, says another

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KENORA -- Call John Gale the "Donald Trump of Kenora" if you like. Just keep your distance, because he's likely to chase you and try to put you in a headlock.

Gale is preparing a barrage of development for Kenora -- a five-star resort and conference centre, a theme park, new lakefront cottage lots, an RV park and more -- unlike any seen in recent times. He's just very un-Trump-like when it comes to ego and courting publicity.

"I hate that crap," he says with a grimace.

Can't be helped now, at least the publicity part, not for the guy from The Pas who didn't have two nickels to rub together growing up. Gale has plans to oversee up to $1 billion in development in Kenora. Can he deliver?

The changes to Kenora aren't coming from Gale alone. The city of about 15,000 people has recently turned into a battleground for developers. The first volley came last year when Qualico Homes of Winnipeg won a bidding war for the former staffhouse site of Abitibi-Consolidated (now AbitibiBowater) -- almost a kilometre of waterfront property inside Kenora.

Qualico eventually paid $3.4 million for the parcel. "We believe (the property) is the jewel of Kenora," said Barry Hedgecock, Qualico manager of the project called Headwaters. The first phase of construction of 90 luxury condos in five buildings is planned for this fall.

Abitibi was Kenora's largest private employer for over 80 years, before it stopped just prior to 2006. Its pulp and paper mill employed 1,500 people in the 1970s. Staff was sharply reduced when it closed its paper machine in 2001, and just 361 workers remained when it closed for good three years ago.

That was followed by the shuttering of other forestry companies that had grown around Abitibi, bringing total losses to more than 1,000 jobs. Combined with the droves of American tourists who have stopped vacationing in the area, Kenora's economy was suddenly looking like the shirt that wasn't supposed to go in the dryer: badly shrunken.

The city's response has been a strategy to capitalize on its greatest asset: Lake of the Woods. "Kenora's idea is rebranding itself as a tourism and 55-plus retirement community, and we believe in that 100 per cent," said Hedgecock.

Gale was one of the bidders who lost out to Qualico. He was semi-retired at the time, spending most of his time at his luxury cottage on Lake of the Woods.

Gale's background isn't that of a typical developer but, then again, this being Kenora, perhaps it is. Gale was born and raised in The Pas, a former fur trade post turned forestry town much like Kenora. His father worked for the railway while his mom stayed home to look after their six kids.

In the mid-1970s, John graduated from Keewatin Community College in The Pas as a radio and TV service technician. He spent the next three years setting up remote telephone systems in Northern Manitoba.

He moved to Winnipeg and earned a diploma in mechanical engineering from Red River College in 1980. He began work in research and development at Delro Industries in Winnipeg, a subsidiary of Midwest Diamond Drilling. There he made his fortune.

Diamond drilling sounds confusing, like you're drilling for diamonds. What it really means is that the bits used to drill through rock for mineral exploration are made with industrial grade diamonds, the hardest natural material on earth.

The old model diamond drill used diamonds up to one carat in size. The diamonds were then used in a thrust-and-retreat method to fracture rock.

New technology was surfacing when Gale came along that changed the way drills functioned. Gale and personnel at Delro seized the opportunity and developed the technology into an entirely new drill.

Instead of using large diamonds, their diamond drill used thousands of diamonds as tiny as one-five thousandth of a carat. "Like grains of salt," Gale said. Instead of fracturing the rock, their diamond bit operated at very high speed to grind the rock. The new diamond drill bit revolutionized the industry, drilling rock at three times the speed as the technology it replaced.

In 1987, Gale and three partners engineered a management buy-out of Delro and changed its name to Dimatec Inc. in Winnipeg.

Today, Dimatec still leads the "big boys" like DeBeers in diamond drill technology by three to five years, Gale says proudly. He sold his 50 per cent stake in the company last year to partner Ivor Perry.

After Qualico won the bidding war for the Abitibi land, Gale asked Kenora realtor Duncan Carmichael to look around for any other available properties. Carmichael came back saying Abitibi had four other properties totaling 540 acres.

So Gale and Carmichael came up with a plan "to do Abitibi a favour," Gale said. They put together a blanket offer for all the Abitibi properties "instead of cherry-picking." That way Abitibi could close its chapter in Kenora quickly, rather than see it drag out.

They flew to Montreal with the proposal. Abitibi was interested but wanted to see more. Gale and Carmichael put together a 78-slide presentation, flew to Montreal again, and showed it on a Friday. "On Monday, we got a call from the board of directors saying they'd take it. I thought, 'Gee. You've got to be kidding.'"

The purchase agreement is for 540 acres at just over $10 million. Some people in the Kenora area think Gale got a pretty sweet deal.

The purchase includes 1.5 kilometres of lakefront on Cameron Bay, where Abitibi used to keep log booms. Another parcel includes 2.2 kilometres of waterfront on the Winnipeg River. A third parcel includes the highest point in Kenora. Then there's the old mill site.

Gale has plans for all of it, and is teaming with CB Richard-Ellis, the biggest commercial real estate company in the world. He is also working with the likes of large commercial developer Chartier & Associates (company head Marcel Chartier is Gale's cousin, and was also raised in The Pas), and Lombard North Group in Winnipeg.

At Cameron Bay, the second bridge you cross entering Kenora from the west, Gale plans to subdivide the west side into executive cottage lots up to an acre in size. "You won't even see your neighbour, like living in a park," he said. He plans to build "boomer" bungalow condos on the other side.

At the mouth of Cameron Bay, he wants to build a marina and boutique hotel with a good restaurant that boaters can visit on the water. A boardwalk would circuit the bay and connect everyone, like in a village.

At the second Winnipeg River property, Gale plans to build more boomer bungalow condos. All his developments are low density, one of the prime concerns of Kenora residents who fear congested streets.

That development, Veteran's Drive, is to include a two-or-three level assisted living building, and an RV park--a missing piece of the puzzle for a city like Kenora--close to downtown.

The third property on Rideout Bay promises to be a fun place. The plans are for a five star resort and conference centre situated on the highest point in Kenora, overlooking Lake of the Woods to the south, Winnipeg River to the north, and downtown Kenora to the east. The resort would include an indoor water park and possibly an outdoor water slide down the steep north slope. A performing arts centre would be part of the conference centre.

A conference centre is something Kenora dearly lacks, said Mayor Len Compton. "We have to have a conference centre or we're going nowhere. We can't even handle a convention of 500 people right now," he said. Gale also wants to add a sportsplex on the conference centre site, including a hockey arena.

For the third property, Gale also plans a theme park that might include water slides, tubing, log rides, bumper boats and even zip lines.

"We need a theme park, as well," said Compton. "We need something. I'm not sure kids want to come into Kenora just to see the museum."

Compton is less sure about more condos. There is a market in couples with cottages on islands (Lake of the Woods has more than 14,000 islands) who want a place on the mainland for the winter. Condos are also being marketed in Winnipeg, Regina and Calgary.

The Qualico condos are high end, ranging from $380,000 to about $1 million, for an average of about $600,000. They are up to 2,200 square feet.

The fourth and final property is the old Abitibi mill site, which comes with four buildings and 250,000 square feet of space. It will be an industrial park, or, as Gale calls it, a "business and technology park."

Gale has hooked up with Wincrief Forest Products, a joint venture between Moncrief Construction and four local First Nations, to provide First Nation people job opportunities to make modular homes. First Nations buy the majority of modular homes. So aboriginal workers will be largely building for their own people. "The natives have to get something out of this," Gale said.

Wincrief is an existing business but needs a place where it can expand. Gale hopes Wincrief can be on site by the end of the year. Other projects are probably a year away from breaking ground.

Gale also envisions things like a sawmill opening on the site to make the 2x4 and 2x6 lumber needed to build the homes, as well as suppliers of other structural materials opening shops. He foresees hundreds of jobs being created.

"Basically, it's trees in, houses out," he said. "This could be a big employer. We're targeting 20 homes a month coming out of the factory. That's a lot of cabinets, windows and doors. So we want to entice suppliers of windows and doors to build on site. We'll have lots of room for satellite manufacturing."

He is also looking at using waste materials as alternative energy sources.

Gale is working with Kenora council, who see his vision as more of a 10-year plan. Due diligence and remediation must still be performed on the Abitibi land.

"He's not a ritzy, ritzy type of guy. He's a nice guy and a lot of people like him," said mayor Compton. "We've got a lot of confidence that John Gale will do what he says."

Gale sees himself as someone who is capable of filling a need. "I'm the guy that clears the way," he said.

"I'm not a developer. I have a vision. I know what would work. All I'm doing is getting the right people together to do the right thing. Whether I lease some of the property or sell some of it, I have the advantage of dictating what I want there."

Other developers have been arriving, too. The sale of Abitibi land "brought this parade of developers out here who had never seen Kenora," said Jennifer Findlay, Kenora economic development officer.

One Winnipeg developer hopes to build a new shopping centre in Kenora near the WalMart.

Meanwhile, Qualico also bought a six-acre parcel across the water from their Abitibi staff house, for $2 million. The land was previously owned by former dentist Mike Zagrodney, who had it surveyed for an 11-lot subdivision. The thinking is Qualico is land-banking that property for now to protect its Headwaters project.

"We see Kenora as the next Canmore or Kelowna," said Qualico's Hedgecock. "Those cities were pure mining, forestry mill towns at one time. They made the transition."

Not surprisingly, Gale is shooting higher. "I think this could be the next Banff," he said.

Republished from the Winnipeg Free Press print edition September 6, 2009 B1

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