Winnipeg Free Press - PRINT EDITION

Parcel Four emerges yet again

Land's assessed value not revealed to council

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When Winnipeg's elected officials finish arguing over whether to call a real estate investigation an audit, a review or yet another embarrassing thingamajig, they'll be forced to accept yet another ugly revelation about Parcel Four.

This humble gravel parking lot near The Forks is the municipal version of a chronic STI. It's the gift that keeps on giving -- a recurring problem that continually plagues both elected officials and administrators, especially when they believe they've found a cure.

This 2.4-hectare surface lot first wound up in the public eye in 2008, when Riverside Park Management -- the non-profit corporation that sublets city land to the Winnipeg Goldeyes baseball club -- sought a retroactive rent break to the tune of $233,000.

Sam Katz owned the Goldeyes and was the president of Riverside Park up until the final months of a multi-year dispute with the city over Parcel Four's assessed value. Unfortunately, he was also Winnipeg's mayor.

Faced with an uncomfortable decision, council narrowly approved a revised lease for the land. When that lease was up, the city resumed control.

But the controversy wouldn't go away. In 2009, the city received a pitch for a luxury hotel and water park to rise on the site. When word about this leaked, the plan died on the vine.

Finally, in 2012, the city floated the idea of selling Parcel Four for $6 million to a mid-range Alberta hotel chain that would build a hotel and water park at the site -- with the help of $7 million worth of public money.

Winnipeggers, however, hated the idea. Council took note and the Alberta buyer sensed which way the wind was blowing and walked away.

Now, the land is slated to be transferred to The Forks, which hopes to see four or five residential towers, a parkade and an urban plaza rise on this site, increasing the property-tax revenue by a factor of 20.

This would have been the end of the controversy. But the real estate audit uncovered a problematic facet of the doomed 2012 water-park plan: As early as 2009, Parcel Four was assessed as high as $10 million, based on the highest and best possible use of the land.

This is ugly, because this value wasn't presented to council in the report recommending the $6-million sale. It wasn't even included in the history section, EY auditors remarked.

This poses the very disturbing idea somebody at the city suppressed this information, deliberately or accidentally. Either way, council was deprived of knowing what the land could have fetched on the open market.

Imagine if the city went through with a $6-million sale, only to learn later the land might have sold for an additional $4 million. Happily, the water-park plan evaporated and the land is slated to become a mixed-use, high-revenue-generating development in a city that could use more cash as well as more downtown density.

On Wednesday, even Katz conceded it was troubling to see the valuation didn't come before council. So why would city officials elect to leave out this piece of information?

Acting CAO Deepak Joshi said the 2012 report to council "was not a traditional real estate report" in that it was less likely to include details about the land's appraisal history. "The report was dealing specifically with whether or not to consider the site for a proposed hotel, parkade and water-park development," Joshi said in a statement. "The focus was on the use of the land. Thus, the level of detail included regarding appraisal was more condensed."

Joshi agreed with the audit's contention the $6-million valuation was based on the notion the land would house a hotel and water park. But this just demonstrates how badly blinkered city hall has become.

Barely two years ago, officials seized upon the idea of a very specific and idiosyncratic use for one of the largest remaining parcels of city-owned downtown land. Officials then pursued this plan without even considering another use for the land, let alone letting anyone else have a shot at buying it.

Katz, meanwhile, wondered aloud on Wednesday why the auditors would even examine Parcel Four.

Republished from the Winnipeg Free Press print edition July 3, 2014 A4

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About Bartley Kives

Bartley Kives wants you to know his last name rhymes with Beavis, as in Beavis and Butthead. He aspires to match the wit, grace and intelligence of the 1990s cartoon series.

Bartley joined the Free Press in 1998 as a music critic. He spent the ensuing 7.5 years interviewing the likes of Neil Young and David Bowie and trying to stay out of trouble at the Winnipeg Folk Festival before deciding it was far more exciting to sit through zoning-variance appeals at city hall.

In 2006, Bartley followed Winnipeg Mayor Sam Katz from the music business into civic politics. He spent seven years covering city hall from a windowless basement office.

He is now reporter-at-large for the Free Press and also writes an outdoor-recreation column called Offroad for the Outdoors page.

A canoeist, backpacker and food geek, Bartley is fond of conventional and wilderness travel. He is the author of A Daytripper’s Guide to Manitoba: Exploring Canada’s Undiscovered Province, the only comprehensive travel guidebook for Manitoba – and a Canadian bestseller, to boot. He is also co-author of Stuck In The Middle: Dissenting Views of Winnipeg, a collaboration with photographer Bryan Scott and the winner of the 2014 Carol Shields Winnipeg Book Award.

Bartley’s work has also appeared on CBC Radio and Citytv as well as in publications such as The Guardian, explore magazine and National Geographic Traveler. He sits on the board of PEN Canada, which promotes freedom of expression.

Born in Winnipeg, he has an arts degree from the University of Winnipeg and a master’s degree in journalism from Ottawa’s Carleton University. He is the proud owner of a blender.

On Twitter: @bkives


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