Developer sues city over agreement

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This article was published 29/07/2016 (3366 days ago), so information in it may no longer be current.

A local development company is accusing the city of sidestepping a long-term agreement to develop land near the St. Boniface Industrial Park in order to close its own deal with a land buyer.

Terracon Development is suing the City of Winnipeg, saying the city breached a longstanding oral contract it had with Terracon to develop 200 acres of swampland behind the industrial park by waiting until Terracon had invested in the property, then letting the deal fall apart and approaching a buyer on its own.

Terracon argues the city made “untrue and/or misleading” indications the partnership was going ahead, only to leave the developer on the hook financially. Terracon says it paid roughly $1.6 million to extend Mazenod Road so the development could happen and also paid slightly less than $1 million in “soft costs,” upfront.

The allegations in the lawsuit have not been proven, and no defence has been filed.

Terracon says it first met with city officials in 2008 to float the idea of developing, subdividing and marketing industrial land equipped with a “hybrid design” of services to make the land more affordable. City council authorized the joint venture in principle in 2009 and approved the written joint-venture agreement in 2013. In its suit, Terracon says it expected it would share development costs with the city. The developer alleges it assumed all upfront financial risks on the project, and the city was to be responsible for school taxes on the property while the property was being marketed.

But the deal fell apart in April 2015 after Terracon says it told the city “in confidence” it was looking at the Parmalat milk plant as a buyer, because both parties couldn’t agree on who would pay the school taxes.

The city “insisted that property taxes be paid by the plaintiff then and for the future; this was problematic for the plaintiff because that could stretch into years,” Terracon says in its lawsuit.

Without a partnership in place, the city moved ahead with the Parmalat deal. City council approved the 15-acre sale last July — a move that was expected to cost the city $8.2 million in land-servicing costs. But in doing so, the city “maliciously or recklessly abused its role as a public office and intentionally or recklessly caused damage to the plaintiff,” Terracon’s lawsuit alleges, arguing the city should not have “seized a business opportunity” based on confidential information disclosed during joint-venture discussions.