Water-park pickle

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Mayor Sam Katz knows how he'd like to spend $7 million on a new water park at The Forks. (THE ASSOCIATED PRESS ARCHIVES)

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Mayor Sam Katz. (WINNIPEG FREE PRESS ARCHIVES) Photo Store

Ever since the day he became the mayor of Winnipeg, Sam Katz has never seemed to care too much about the perception of potential conflicts between his public responsibilities and private interests.

This has been a mistake, at least in the eyes of citizens who like to believe their elected officials are doing everything in their power to ensure public office is held in high esteem.

As the vast majority of Winnipeggers is aware, Katz is both mayor of Winnipeg and the majority owner of the Winnipeg Goldeyes, the baseball club that plays out of Shaw Park.

Shortly after his initial election in 2004, Katz chose not to place the club in a blind trust, credibly declaring it would be foolish to assume he would pay no attention to the team's operations once a deputy was placed in charge of its operations.

There was not much of a public outcry at the time, but the decision has proven momentous. Eight years later, it remains fair to ask whether Katz is capable of separating his dual roles.

Some time in the coming week, Katz must decide whether or not to recuse himself from a pair of votes on a city plan to sell a prime parcel of downtown land for the purposes of developing a hotel, water park and parkade.

The land in question is Parcel Four, a 2.2-hectare surface lot at the southwest corner of Waterfront Drive and William Stephenson Way, an intersection almost within foul-ball distance of Shaw Park.

While it would be foolish to suggest the operation of a 50,000-square-foot water park, 250-room hotel and 450-stall parkade at Parcel Four would make or break the Winnipeg Goldeyes' balance sheet, it would be equally foolish to suggest these new amenities would have no effect whatsoever on the operation of Shaw Park or the Winnipeg Goldeyes baseball club.

The water-park deal would see the city sell Parcel Four to Alberta hotelier Canalta for $6 million. The city would also give Canalta a $7-million grant in exchange for $700,000 worth of admission credits every year for the next 25 years.

This plan is slated to come before executive policy committee on Wednesday and then council as a whole on April 25. Katz's office has declined to say whether he will be take part in either vote -- possibly because this will be a difficult decision.

If Katz chooses to vote, he opens himself up to accusations of conflict of interest, much as he did half a decade ago when he took part in an EPC vote to provide financial relief for the Burton Cummings Theatre.

Katz himself was owed money by the non-profit heritage venue and has said he wound up taking a loss on his investment. Nonetheless, he still took part in a vote that affected his private interest.

Recusing himself from the water-park vote this week, however, would also pose a problem, because Katz has already involved himself with the plan.

Over the past three years, Katz has taken part in at least two closed-door council seminars about the plan -- once last week and previously in 2009, when an earlier version of the plan was proposed.

Katz also appears to have been kept in the loop about water-park developments over the past few months, based on public comments he's made about a deal coming forward soon.

On paper, Katz could claim the current deal was handled solely by Phil Sheegl, the city's chief administrative officer. But since Sheegl is also one of Katz's closest friends -- "He's not just a friend, but a close friend," the mayor has said -- there is no plausible deniability here.

In other words, if Katz recuses himself this week, it will be fair to ask why he didn't declare the conflict earlier. If he doesn't recuse himself, it will be fair to criticize him.

Of course, Katz has put himself in this sort of sticky position before. For three years, his duties as mayor and Goldeyes owner came into conflict due to what is now known as the Riverside Park Management affair, a city hall scandal that also involved Parcel Four.

Riverside Park Management is a non-profit organization that leases Shaw Park and several surface parking lots from the city and then sublets these properties to the Winnipeg Goldeyes. Katz served as the organization's president until April 2008.

Up until October 2008, Riverside Park leased Parcel Four and sublet it to the Goldeyes, who used it as a surface parking lot. The rent was pegged to the assessed value of the land, but due to construction north of The Forks in the 1990s, that land had not been assessed.

As a result, the city collected rent from the site before 2005, when Parcel Four was assessed at $3.7 million. Riverside Park and the city then spent three years duking it out over the assessment.

This dispute finally was settled in 2008, when council narrowly voted to effectively forgive $233,000 worth of Riverside Park's unpaid rent by retroactively reducing the size of the parking-lot lease.

Katz recused himself from the council vote but was otherwise engaged in the dispute. One letter obtained by the Free Press shows a financial adviser kept him in the loop.

This sort of conflict, of course, is not illegal. Katz did not break any laws or rules, except for the informal political maxim that suggests politicians must strive to be at least as decent as the rest of us, if not better. What Katz did was only wrong in the sense that his conduct lowered the esteem of his office in the eyes of the general public.

Today, however, the city is poised to sell the very same plot of land, overvalued at $3.7 million five years ago, for $6 million.

There was no competitive bid for Parcel Four, which became available after the city cancelled a private water-park deal with Canad Inns and made downtown lands available as part of a new search for a water-park developer.

Something other than a water park and hotel complex may generate more property taxes for the city and better complement The Forks and the Canadian Museum for Human Rights. But the city, led by Katz, is pushing for the water-park complex and the exclusion of other possibilities.

Whether or not Katz decides to recuse himself this week, it is fair for the public to ask why the deal on the table is the city's only option for Parcel Four.

It may very well be Sam Katz just really likes water parks, even at the exclusion of generating more short-term capital and ongoing revenue for the City of Winnipeg.

bartley.kives@freepress.mb.ca

Republished from the Winnipeg Free Press print edition April 15, 2012 A8