True North deal has to wait

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This article was published 27/01/2015 (4082 days ago), so information in it may no longer be current.

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Mayor Brian Bowman is drilling the message into Winnipeg’s business community and senior civic administration there are no shortcuts to success and no one gets special treatment at city hall.

Bowman and members of his executive policy committee on Monday rejected the strong advice of the city’s downtown development agency and ordered CentreVenture to see who else might be interested in developing the vacant land that used to house the Carlton Inn.

That was the compromise Bowman ordered following an almost three-hour special EPC meeting Monday. At the meeting, it was revealed publicly for the first time CentreVenture had struck an exclusive deal with True North Sports & Entertainment — whose chairman, Mark Chipman, was Bowman’s biggest campaign supporter in the civic election. The deal was to develop the Carlton Street property in a mega-project that could involve a hotel, an open public square and commercial and residential space.

Even though CentreVenture officials said True North had an exclusive, ironclad deal to develop the Carlton Street site, Bowman said True North will have to demonstrate its offer is better than any others for the property.

“We’ve seen that (‘get ‘er done’) approach at city hall for some time,” Bowman said during the EPC meeting, in reference to the slip-shod, corner-cutting approach linked to former CAO Phil Sheegl and his handling of the fire-hall replacement program. “There’s ‘getting it done’ and getting it done the right way.”

For Bowman, the “right way” involves putting the True North deal on hold and calling for expressions of interests to see if any other developer has plans for that site.

CentreVenture had wanted to continue exclusive negotiations with True North for another six months, and if that didn’t work out, it would see if any other developer had plans for the property.

CentreVenture officials also revealed Mark Chipman was a member of the CentreVenture board when his company first approached the agency with its plans last May, and he did not resign from the CentreVenture board until July.

Bowman said any problems CentreVenture faces going forward with True North are the result of its own missteps on the Carlton Street property.

“Let’s keep in mind the reason we are here right now is because CentreVenture entered an option agreement (with True North) when there is an existing agreement in place for the same property,” Bowman said. “We’re playing cleanup.”

The compromise was a compromise from Bowman’s original position, in which he wanted the Carlton Street property to be subject to a formal request for proposals — a more controlled process that would have required CentreVenture to specify what it wanted to build on that site. Bowman said calling for expressions of interest allows developers to pitch their own potential projects for the property without restrictions.

Determining if there are other developers interested in the property was the only way Bowman and his EPC were prepared to accept a deal from the convention centre to allow construction firm Stuart Olson to buy itself out of a commitment to bring a hotel partner to the area with a $3.75-million buyout, instead of the original $16-million holdback on final payment in the $180-million convention-centre expansion project.

Stuart Olson won the contract for the construction-centre expansion with the condition it bring in a hotel operator to build a major, first-class hotel near the expanded convention centre.

The deal was later changed to require the hotel be built at the corner of Carlton Street and St. Mary Avenue, where the Carlton Inn once stood. CentreVenture had bought the hotel and demolished it.

Convention-centre officials were concerned CentreVenture’s secret deal with True North had compromised Stuart Olson’s efforts at securing a hotel operator and had unwittingly given the contractor a good defence if the case ever went to court.

CentreVenture officials supported the buyout settlement, arguing the $3.75 million would flow to city hall and help offset any losses in the sale of the Carlton Street property — which CentreVenture purchased for $6.6 million — to True North.

Coun. Jeff Browaty (North Kildonan) said he was concerned CentreVenture would never recover its total investment in the property — estimated to be close to $7 million, including purchase price, demolition costs and legal expenses — in a sale to True North because the deal calls for the property to be appraised as less valuable, vacant land.

CentreVenture officials repeatedly tried to reassure Bowman and EPC the True North deal is the best one for the city, explaining they never believed Stuart Olson was committed to building a quality hotel after its initial hotel partner walked away from a deal to buy the Carlton Street property and the contractor was never able to get another hotel partner.

A True North spokesman declined to comment on EPC’s decision and would not say whether it will participate in the public bid for the Carlton Street property.

CentreVenture said there was no attempt to keep city hall in the dark in its dealings with Mark Chipman.

CentreVenture chairman Curt Vossen, who is CEO of Richardson International, and Richard Olfert, the agency’s secretary-treasurer, said senior city officials encouraged them to negotiate with True North and they were kept informed every step of the way.

Bowman repeatedly said he was disappointed CentreVenture had failed to produce any of the relevant documents he had requested of them last week, including correspondence and board meeting minutes, involving the Carlton property and its deal with True North.

But Olfert and Vossen said that material had been shared with civic officials. However, they conceded those officials weren’t allowed to share the information with members of council.

“There is still a lot of information that we don’t have access to,” Bowman told reporters following the meeting. “We had to make the best decision under the current circumstances.”

Vossen and Olfert said that former mayor Sam Katz was directly involved in sorting out the mess with Stuart Olson, explaining that Katz helped negotiate the $3.75 settlement with the contractor.

“I have no doubt that things could have and should have been done better here at city hall,” Bowman said following the meeting. “We’ll take whatever steps we can at city hall to ensure we don’t get into this situation again.”

Bowman said CentreVenture will have to deal with any fallout from True North over the change in the arrangement that EPC will bring to council Wednesday for approval.

aldo.santin@freepress.mb.ca