City accused of delaying, derailing property plan

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This article was published 27/09/2023 (714 days ago), so information in it may no longer be current.

The City of Winnipeg is being accused of unfairly holding up the redevelopment of a prominent Main Street property for more than a decade, most recently by attempting to buy back part of the land.

By contrast, the city claims the property’s current owner must honour a clause that would let the municipal government purchase 219 Main St., which is adjacent to Earls restaurant’s former downtown location.

The saga began in 2012, when the city declared the property surplus and sold it for $690,000 to OGGI Investments Ltd. The deal included a clause that the city could buy back the land for that price minus 10 per cent if it was not developed by October 2015.

In 2014, Earl’s Holdings (Main Street) Ltd. bought the company that owned the land for $1 million and, as a result, the land itself. Earls then submitted a development proposal for the land, proposing a new restaurant, new commercial space to replace its adjacent restaurant and a shared parking lot between the two buildings.

A city committee rejected that plan in a tied vote in 2015, noting a Winnipeg zoning bylaw had recently changed for all Main Street properties. The new rules called for a minimum 35-foot building height, taller than the proposed single-storey structure, and required developers to obtain city approval for any associated parking.

In 2020, Earls entered an agreement to sell 191 Main (its former restaurant site before moving to 300 Main), 219 Main and another nearby site to a numbered company for $1.2 million and asked the city to officially end the buy-back clause.

The city declined, so Earls applied to court to have the caveat removed.

In 2021, the city filed a legal claim against Earl’s Holdings and 10060193 Manitoba Ltd., seeking a court to order to exercise the clause, which would transfer 219 Main back to the city for the price of $621,000.

In court last week, Earls’ lawyer argued the city action has stalled the development unfairly, noting the company began planning its 2015 development proposal before the new height and parking standards were imposed.

“It is fundamentally unfair for the contracting party to then change the rules of the game,” said Jamie Kagan.

Kagan stressed the city shouldn’t be able to “sleep on” its caveat on the land, noting it made no effort to buy the property back for several years, as Earls continued to use it for overflow parking.

In a statement of defence, Earls denies it is under any legal obligation to surrender the property and alleges the attempt by the city to reclaim it at the original price is no longer valid.

“The property is now worth $1.2 million. By this action, the city claims to be entitled to take back the property for $621,000, which is approximately half the current value of the property,” the document states.

The restaurant claims the legal dispute is now delaying a new “substantial development” proposal that includes the land, though it does not offer details of that development.

The city’s lawyer told court there was no expiry date for the municipal claim on the property and the city did not unfairly delay the previous restaurant development.

“The city did not stop this development. It’s respectfully submitted that, ultimately, Earls did not submit a plan that met (what) the city needed. … The city spent months after the variances were denied, the appeals were denied, trying to work with this developer to find a solution,” said Kalyn Bomback.

Bomback said the city has some interest in using at least part of the land for future rapid-transit development but said its interest isn’t limited to that purpose.

She noted the city is not required to approve specific development proposals.

“Sometimes development agreements fall through, sometimes they don’t work and sometimes you end up with a parking lot for years, and the city doesn’t want to see that,” said Bomback.

She said the city is in discussions with a developer about the latest proposal.

The city and Kagan declined interview requests.

Justice Vic Toews reserved judgment on the matter.

Coun. Brian Mayes, a former chairman of city council’s property and development committee, said it’s surprising to see another city land-use decision in court, noting the city also faced legal challenges over the proposed redevelopment of the Parker lands.

“It just seems to be part of a larger pattern of land-planning matters going to the courts,” said Mayes.

The councillor said it may be time to consider creating some form of planning commission to make some city land-use decisions, since multiple rulings are now being appealed in court or at the Manitoba Municipal Board.

“There seems to be a lot of litigation now surrounding these matters, so I think some sort of different approval process makes sense,” said Mayes.

joyanne.pursaga@freepress.mb.ca

Twitter: @joyanne_pursaga