August 30, 2015


By Bartley Kives

Local

Swandel's backroom dealing with Shindico raises flags

During Glen Murray's first term as Winnipeg's mayor, former city auditor Shannon Hunt spent two years investigating city real-estate transactions.

In a scathing report, released in the spring of 2000, Hunt concluded city councillors were too involved in property deals. Elected officials, she declared, were undermining civil servants in the property department.

"This created the impression that the only way to get things done at city hall was to circumvent the process," the Free Press reported in a summary of Hunt's final report, which also chastised the civil service for failing to provide council with clear advice about the disposition of property.

"There are no policies on whether land should be sold by public tender, or directly to an interested buyer, creating an impression that some developers are favoured over others."

Given the events at city hall over the past 18 months, Winnipeggers can be tempted to think not much has changed since the 1998-99 timeframe of the city's last real-estate audit.

The city stands accused once again of favouring one developer, based on the conclusion of an external audit of Winnipeg's fire-paramedic-station replacement program. The public service stands accused once again of failing to provide information to elected officials and circumventing process.

But on this city council, elected officials have only suffered indirect damage from the maelstrom swirling about city hall.

Sure, Mayor Sam Katz is doing terribly in recent polls. And it's fair to say all members of council have been embarrassed by city's capital-procurement and real-estate woes.

Still, no member of this council has taken any form of direct flak. The closest has been St. Norbert Coun. Justin Swandel, the lone member of council to find fault in the fire-paramedic station audit and the only member of council to suggest his colleagues are only motivated by political expedience.

On Wednesday, Swandel risked further scrutiny by informing council he attempted to negotiate a deal to acquire fire-paramedic Station No. 12, the city facility built on Taylor Avenue property owned by Shindico Realty.

A proposed three-for-one land swap would have placed Station 12 in the city's hands, but that was cancelled amid the furor of the fall of 2012. Council then approved a plan to have city property officials and Shindico come up with appraisals for the land and split the difference, if the two values wound up close to each other.

The city came up with a $1.05-million appraisal, while Shindico's estimate came in at $2.08 million -- $1.2 million for the land and another $844,000 in compensation for the negative effect a fire-paramedic station has on neighbouring property.

The two sides were so far apart, city property officials recommended the land be expropriated.

To borrow a phrase from Boromir, one does not simply take property from Shindico Realty, a firm run by some of the brightest minds in Winnipeg real estate.

Expropriation is a confrontational process that can take years to conclude, especially if neither side is willing to settle on a given value.

Shindico, whose officials expressed disappointment with the cancellation of the land swap, is not likely to let the city get away without a hearing before the Land Value Appraisal Commission, a provincial body that determines what governments pay for land acquisitions.

The expropriation process requires the city to pay Shindico's legal costs and any interest that accrues as a result of payment delays. The Land Value Appraisal Commission, meanwhile, is clogged up with CentrePort Canada Way expropriation cases.

So Swandel, attempting to play the role of diplomat, began talking to Shindico in a last-ditch effort to stave off expropriation. He said he was trying to get Shindico within the vicinity of $1.5 million before other members of the city's Executive Policy Committee scuttled the back-channel discussions.

"I was having a conversation with a party to see if I could find some good ground," Swandel said Wednesday in an interview. "I was trying to save the city millions of dollars."

Swandel said he was close to a framework for a deal, but wasn't able to bring anything firm to EPC. He said he only mentioned his discussions with Shindico in passing because he wanted his council colleagues to know there was interest on both sides in avoiding a time-consuming, financial headache.

What council heard, however, was one of their colleagues went behind their backs to conduct negotiations. Property chairman Jeff Browaty (North Kildonan) called that inappropriate.

Did Swandel overstep his bounds? He certainly rejects any comparison to the behaviour assailed by Shannon Hunt 14 years ago.

"I've read that real-estate audit twice," he said, repeating that he was simply trying to save the city time and money.

More reading is on the way. A new real-estate audit is expected within months.

And this time, elected officials are not expected to serve as the focus.

bartley.kives@freepress.mb.ca

Republished from the Winnipeg Free Press print edition February 27, 2014 A5

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