Email trail intertwines city, real estate company on police HQ project
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A trail of emails obtained by the Free Press provides fresh insight into the close and collaborative relationship between local development firm Shindico and Winnipeg city hall during the administration of former mayor Sam Katz.
Police HQ contractor accused of altering invoices to settle old debts
Caspian Construction, the company at the centre of a city lawsuit involving the beleaguered Winnipeg police headquarters project, altered invoices to settle old debts with its subcontractors, newly filed court documents allege.
“In short, there are many irregularities in the Caspian defendant’s invoicing and the payment of subtrade invoices on the (project),” City of Winnipeg lawyers Michael Finlayson and Gabrielle Lisi alleged in a motion brief filed on June 14.
“They appeared to settle debts with subtrades from prior projects by altering invoices with or without subtrade involvement, and submitting them to the city,” the lawyers wrote.
The headquarters project was budgeted at $137.1 million in 2011 and ballooned to $210 million by the time it was completed five years later.
The emails reveal backchannel communication regarding several real estate projects, including a case where a specific city councillor was identified as an obstacle.
They show Phil Sheegl, a senior member of the public service and a close ally of Katz, referring to himself and Shindico as a joint entity.
They detail the existence of a meeting for three city employees at the home of Sandy Shindleman, co-owner of Shindico, to discuss buying the downtown Canada Post building that was later renovated into Winnipeg Police Service headquarters.
The Free Press shared the emails with Neil McArthur, a professor at the University of Manitoba and director of the Centre for Applied Ethics.
“The chumminess makes it uncomfortable given the larger context… We want our public officials to be impartial with regards to relationships with different developers, and to be devoted to not getting a good deal for developers, but getting a good deal for the public,” McArthur said.
“We want them to protect the public interest… What I get from those emails is that Sheegl seems to be interested in the interests of one particular developer, and there’s no mention at all of the public interest in anyway.”
The Free Press also shared the emails with a source in the local real estate industry who said that degree of collaboration and backchannel discussion between senior city staff and a private developer is highly unusual.
In July 2008, Bob Downs, development manager for Shindico Realty, wrote to his bosses Sandy and Robert Shindleman (Sandy’s brother and co-owner of the firm) to update them on a conversation he’d had with Ray Klassen, then-city manager of real estate.
The Shindleman brothers are longtime personal friends and business associates of Katz. The conversation between Downs and Klassen centred on various development projects Shindico and the City of Winnipeg were negotiating.
“Ray Klassen says that Land Titles will not allow a land lease because the building straddles the property line between our land and the city’s land. Ray says the only option is for us to buy the city land,” Downs wrote.
Downs broke down the price per square foot of various plots of land under discussion, and expressed hope when one parcel was formally appraised by the city, the firm would be able to skirt around a recent bylaw disallowing construction at the location.
He also mentioned a conversation he had with then-city councilor Justin Swandel.
“Justin is our problem because he has to call a special meeting of the standing committee on property and development and he has to agree to the price,” Downs wrote, referencing a plot of land on McGillivray Boulevard.
Sandy Shindleman responded to Downs’ email — copying Katz at his account as owner of the Winnipeg Goldeyes baseball team, and Sheegl at his City of Winnipeg account. Sheegl had been hired as director of the property, planning and development department three months prior.
During the exchange, Sheegl wrote of a change of leadership at Colliers, another local real estate firm. Shindleman sent a one-word response: “Good.”
“For us that he is gone?” Sheegl asked.
“I was just thinking does Colliers now think they have an in at the city… NOT.”
The Free Press contacted lawyer Robert Tapper for comment, who represents Shindleman, Katz and Sheegl. Tapper declined comment, saying two of his clients were out of town, and one was “under the weather.”
McArthur, meanwhile, said the fact the email went to Katz’ Goldeyes account, rather than his official city one, is a “red flag.”
“Politicians should not be using private emails for public business… The appearance here is of backchannel communications and a lack of impartiality.”
The July 2008 emails between Shindico and Sheegl, with Katz copied as a recipient, conclude with a message from Sheegl to Sandy Shindleman, asking him to set aside time to discuss three real estate properties, including “Canada Post.”
At that time, the city had an open request for proposals for the provision of commercial real estate services and one of the bidders was Shindico. An audit of city hall real estate deals would find Shindico was repeatedly leaked inside info during procurement bidding.
The former Canada Post building was purchased by the city and converted into WPS headquarters. Sheegl sent a formal letter of intent for single-sourced negotiations to Ray Simard of Canada Post on Dec. 16, 2008.
On Jan. 8, 2009, Sheegl (then deputy chief administrative officer) sent an email to property, planning and development director Deepak Joshi saying himself, Klassen and Barry Thorgrimson (of the real estate division), would be meeting at Sandy Shindleman’s home to put together an offer for the property.
The Free Press contacted the City of Winnipeg to ask for comment on the fact a city meeting was held at the home of a private developer.
In a written statement, director of corporate communications Felicia Wiltshire, said there were “many concerns raised regarding the WPS HQ project,” which have resulted in changes to the municipal employee code of conduct in the years since.
“To be clear, under the current code of conduct, any meetings held by civic administration, to conduct city business, at the home of a private developer would not be condoned,” Wiltshire said.
The city purchased the Canada Post building without conducting an appraisal, and with Shindico serving as a broker on the deal.
A later audit questioned why Shindico’s services were needed since Canada Post had already entered into single-sourced negotiations with the city by the time it was hired.
After securing funding for the redevelopment project, Shindico was then single-sourced a contract for real estate management services at the site.
The Free Press has obtained the entire set of owner’s meeting minutes for the WPS project, which show the extent to which design consultants on the job viewed Shindico and the City of Winnipeg as tied at the hip. On multiple occasions, Shindico and the city’s real estate division were conflated as one and the same.
“Contract awarded by Shindico (City of Winnipeg) to an independent contractor,” reads the owner’s meeting minutes from Sept. 11, 2012.
The Oct. 10, 2012, minutes read: “(Randy Benoit of the WPS) to follow-up at afternoon meeting with City of Winnipeg (John Zabudney & Bob Downs).
Zabudney was a longtime civil servant who served as the city’s manager of real estate during the controversy into the construction of four Winnipeg Fire Paramedic Stations by Shindico — in which a new fire hall was built on land owned by the real estate firm.
That and other controversial land deals and real estate transactions during the Katz era was the subject of a secret RCMP criminal probe — code-named Project Dioxide — that was uncovered by the Free Press earlier this year. It closed without charges.
In March, Manitoba Court of Queen’s Bench Chief Justice Glenn Joyal ruled Sheegl accepted a bribe in connection with the awarding of the WPS project, by showing favour to the building firm Caspian Construction. Sheegl has appealed the ruling.
The allegations against the other defendants have not been tested in court.
Ryan Thorpe likes the pace of daily news, the feeling of a broadsheet in his hands and the stress of never-ending deadlines hanging over his head.