Real estate deal scrutinized

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BORIS MINKEVICH / WINNIPEG FREE PRESS Shindico earns $154,000 a year to manage old Canada Post building. The firm got $804,000 when the city bought the building. (WINNIPEG FREE PRESS) Photo Store

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The City of Winnipeg's real estate division is under fire once more from the Canadian Taxpayers Federation, which questions the process that resulted in Shindico Realty earning $154,000 a year to look after five tenants in a city-owned office tower.

In 2009, the city signed a services agreement with Shindico to manage the former Canada Post building, which is being renovated into the new headquarters for the Winnipeg Police Service. Revenue from the 10-storey office-tower portion of the Graham Avenue property allowed Shindico to earn $309,000 in property-management fees in 2010 and 2011, according to city spokeswoman Michelle Bailey.

Shindico won the contract because it ranked first on a 2008 request for qualifications (RFQ) for companies capable of providing real estate services for the city, property director Barry Thorgrimson said.

Colin Craig of the Canadian Taxpayers Federation, which learned of the fees through a freedom-of-information request, said the search for real estate firms did not spell out the fact the city was looking for a property manager.

"We're wondering how the city handed out property-management contracts when that didn't seem to be contemplated in the RFQ," said Craig, arguing the city search should have been explicit about what services were involved -- and should have asked for property-management rates from all interested firms.

"How does the city know market rates if it didn't go out and ask a number of firms in the industry?" he asked, claiming he has heard from five Winnipeg firms that have said they didn't have a chance to bid on the work.

Thorgrimson said he's satisfied all firms did have the opportunity to respond to the 2008 request for qualifications. According to that search, real estate work for the city "may include acting as a buyer agent, listing agent, site evaluation, due diligence and marketing of commercial properties or any other related type of work as specified by the contract administrator or designated representative."

Property management is an example of "any other related type of work," Bailey said in a statement. "Therefore a separate RFQ was not issued for property management."

Shindico was in the best position to get the work for the Canada Post building because it had assisted the city in acquiring the structure, said Bob Downs, the firm's development manager.

The city paid $29.25 million to obtain the building in 2009. According to information obtained by the CTF's Craig, Shindico earned $804,000 in commissions and other work related to the purchase.

"We were involved with the property for the better part of 2009, from the initial discussions with Canada Post to the closing and in that process became very familiar with the building and many of the principals associated with occupying the building," Downs said. "Certainly, our knowledge of the building would have been unique, given the time we spent."

In the future, the city must be more clear before it procures property-management services, said city council property chairman Jeff Browaty. He said he plans to introduce a motion next month, calling on the city to be more explicit in any future request for qualifications governing real estate.

Council protection chairwoman Paula Havixbeck also said the city must be more explicit, given the dollars involved. "I want to know what's competitive for the industry," she said. "On a go-forward basis, I want to ensure the best value for our citizens."

Shindico's contract for the former Canada Post property calls for the firm to receive four per cent of the gross revenues as well as potential construction management fees of eight per cent, should improvements be made to the tower.

bartley.kives@freepress.mb.ca

Other deals must be

reviewed: Wyatt

THE fire-paramedic station replacement program is not the only city real estate plan that should be reviewed by external legal and property experts, Transcona Coun. Russ Wyatt said.

On Monday, Mayor Sam Katz and city auditor Brian Whiteside said Winnipeg will employ outside help to complete the city's review of the way four new fire-paramedic stations were built.

Wyatt said Tuesday the city should have external experts review the proposed sale of the downtown parking lot known as Parcel Four, the purchase of the former Canada Post building and the search for qualified real estate firms.

Wyatt, one of only three councillors who voted for the sale of Parcel Four to an Alberta hotelier, said he doesn't believe there's a problem with the three plans but wants to put to bed questions raised by others. For example, Coun. Jenny Gerbasi has called for a broader real estate audit.

Republished from the Winnipeg Free Press print edition September 26, 2012 0