Police HQ investigation could have impact on Shaw Park lease: sources

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This article was published 01/02/2017 (3349 days ago), so information in it may no longer be current.

When former mayor Sam Katz became linked last week to the criminal investigation into the Winnipeg police headquarters project, it may have thrown a wrench into his hopes for an early renewal on the lease for the Shaw Park baseball property.

Sources at city hall said discussions with Katz about the lease renewal have been ongoing for the past 1.5 years but the RCMP allegations that Katz might have benefitted from a secret payoff to his friend and former city CAO Phil Sheegl will have an impact on the department’s recommendation on the lease renewal. Katz is president and CEO of the Winnipeg Goldeyes, which plays at Shaw Park.

“What happened last week can’t be ignored,” said an employee with the planning department, who requested anonymity because they are not authorized to speak publicly on the issue.

The City of Winnipeg owns the property on which the ballpark is built. In 1998, council agreed to give Katz a 25-year lease for the property, in exchange for him to build the ballpark and lease payments of $1 annually. The lease is held by Riverside Park Management, a non-profit holding company set up by Katz in 1997, which in turn sub-lets the ballpark property to the ball team. The lease expires July 27, 2023.

The ballpark was an instant success and the team regularly sets league attendance records. It was originally built with 6,140 seats and underwent an expansion in 2003 with the additional 1,200 more seats.

Coun. Ross Eadie, who was known as a vocal critic of Katz as mayor, said the city is obligated, for now, to continue negotiations with Katz. However, he said while the ballpark was a gamble 25 years ago and deserved the $1-per-year lease deal, the team is successful and the arrangement should reflect that situation.

“The $1 per year was based on financial projections or business case for building an actual baseball stadium,” Eadie (Mynarski) said. “Therefore, any consideration on the lease value of the land should be based on the current and projected financials for the team. Mr. Katz makes a pretty penny from the team’s operations. It is my belief Riverside Park Management should pay market value for the use of the City’s property.”

Katz has not returned phone calls or emails since the release of the RCMP affidavits last week, which allege Sheegl gave Katz $100,000 from the $200,000 he received as a secret commission from Caspian owner Armik Babakhanians in exchange for giving his firm the police headquarters project.

The RCMP allege Babakhanians and another Caspian employee altered sub-contractor invoices and fraudulently inflated charges for work done on the project. In addition to alleging the secret commission to Sheegl, Babakhanians and others are also alleged to have offered a bribe to the police building project manager as a way to facilitate the invoice fraud.

The RCMP also allege Babakhanians fraudulently altered and inflated the value of invoices for the construction of the Canada Post mail processing plant adjacent to the Richardson International Airport.

No charges have been laid against any individuals named in the RCMP affidavits. Babakhanians has denied any criminal wrongdoing, as has the lawyer for Katz and Sheegl. The criminal investigation has been going on since December 2014. Information contained in one of the RCMP affidavits states the force expects to complete its investigation by the end of May.

A planning department official said staff are finalizing a report on the ballpark lease. It will include a review of how other municipalities (Ottawa, Vancouver, Edmonton, Calgary) treat leases on valuable, downtown civic-owned property; the benefits to the city from the presence of the ballpark; examines whether city hall wants the land back for other purposes; and, whether the lease rate should be adjusted to reflect current market values.

The report is expected to be finalized in about a month.

A source said that while the lease doesn’t expire for another six years, Katz wanted an early indication from the city on whether it was amenable to renewing the lease, as that would affect his decision-making on possible upgrades to the facility.

Couns. Shawn Dobson and Janice Lukes also said that, regardless of the criminal investigation and findings of a potential public inquiry, it’s time Katz paid full value for the ballpark land.

“I will say that $1 a year might have been needed for start-up but it is an established business now and that no longer applies,” Dobson (St. Charles) said. “We should charge what the market will bear.”

aldo.santin@freepress.mb.ca