City secures property in case police HQ compensation not paid

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This article was published 01/11/2024 (320 days ago), so information in it may no longer be current.

The City of Winnipeg has yet to receive even one penny of the millions of dollars in legal compensation it is owed in relation to the police headquarters project, but elected officials say they’re confident the money will be paid.

Coun. Jeff Browaty, chairman of the finance committee, said there are assurances a multimillion-dollar settlement of fraud and construction deficiency lawsuits launched over the Winnipeg Police Service headquarters project will be paid.

“My understanding is that even though it may not be immediate… We have property now that’s secured to ensure that we are paid back the monies owed. Apparently, those securities have been, those properties have been guaranteed to us,” said Browaty.

Council approved the settlement in March 2023. Under its terms, the city would receive $21.5 million if the payment was made in full within 12 months of council’s approval, $22.5 million if paid within 24 months, or $23.5 million if paid within 36 months.

If the payment is not made within 36 months, the city would ask the Court of King’s Bench for it to be paid $28 million.

“There’s a schedule of what the amount would be. If they were to default or not make it… certain properties were guaranteed to the city,” said Browaty.

Serious concerns surrounding the WPS HQs project, which included the purchase and renovation of a former Canada Post facility on have plagued city council for years. The building opened at 245 Smith St. in June 2016, at a cost of about $214 million — well-above its original $135-million price tag. An external audit later found the project had been severely mismanaged.

The RCMP conducted a lengthy investigation into fraud and forgery allegations, but no criminal charges were laid.

In 2018, the City of Winnipeg filed a statement of claim to seek damages for alleged construction deficiencies from major contractor Caspian Projects and structural engineering consultant Adjeleian Allen Rubeli, alleging both companies were “negligent” in their work on the headquarters. In 2020, the city launched a civil suit against Caspian, AAR and dozens of other defendants, alleging a fraudulent scheme inflated the price of the project.

The allegations have not been proven in court.

In 2022, a judge found Phil Sheegl, the city’s former chief administrative officer, had accepted a bribe from the police headquarters project’s contractor and ordered him to pay the city $1.1 million of compensation. Sheegl lost an appeal of that ruling in July 2023.

Mayor Scott Gillingham said he’s confident both payments will be made.

“The city’s owed that money, the courts have said so, so I’m confident we will get those funds at some point in time,” said Gillingham.

The mayor said the city’s legal department is working on the issue.

“I am confident… the taxpayers of Winnipeg will get their money,” he said.

Coun. Cindy Gilroy said it is frustrating the city is still waiting for these payments, as it struggles to balance its own budget.

She noted the money could help the city pay for crews to clean up needles and weapons at city parks on a daily basis, which a recent report estimated would cost about $200,000 to $260,000 per year.

Gilroy fears a tight budget could prevent the spending from being approved.

“We know that the city needs money. When we talk about $200,000 to help pay for staff people (to clean up parks), that could go a long way. That does concern me (that this hasn’t been paid),” she said.

In an email, city spokesman David Driedger confirmed the city has not received payment in either case but “continues to take steps” to ensure that happens.

He noted properties could be involved in the Caspian settlement.

“If it is not paid by the end date in the council-approved settlement, the city has secured several properties which would then be used to obtain payment to the city. We are not able to share any additional details at this time,” wrote Driedger.

Premier Wab Kinew was asked about the police HQ scandal Friday and whether he’s concerned that criminal charges were never laid. He didn’t answer the question directly but said the public needs a satisfactory explanation, which is why his government will hold a public inquiry.

“How do we ensure that Manitobans have confidence and trust when the City of Winnipeg goes and builds large-scale public investments like this,” the premier said.

“We want the average person to think that everything’s above board when we’re doing these big public projects.”

No date for an inquiry has been set.

— with file from Carol Sanders

joyanne.pursaga@freepress.mb.ca

X: @joyanne_pursaga