More hotel details emerge
FORMER Winnipeg chief administrator Phil Sheegl was the city official who first invited Winnipeg's downtown-development agency to get involved in the purchase of the former Carlton Inn.
In March 2012, Matthews Southwest -- a Dallas-based hotel developer that served as construction company Stuart Olson's original partner in the expansion of the convention centre -- was having trouble negotiating a deal to purchase the Carlton Inn, former CentreVenture president and CEO Ross McGowan said Monday.
McGowan said in an interview that after several months of negotiations with the hotel's owners, facilitated by CentreVenture at the behest of Sheegl, Matthews Southwest agreed to spend $5.5 million for two-thirds of the Carlton Inn site, while CentreVenture would contribute an additional $1 million in June 2012. Matthews Southwest backed out of the project in November 2012. CentreVenture went ahead and purchased the Carlton Inn for $6.6 million. Stuart Olson, which was obliged to build a hotel at the site or face a maximum penalty of $16 million, gave CentreVenture eight separate assurances over 14 months it was committed to the hotel project, McGowan said.
In April 2014, following pressure from CentreVenture, Stuart Olson president David LeMay asked former mayor Sam Katz "for assistance in getting out of the mess," McGowan said. A $3.75-million settlement was negotiated during a conference involving LeMay, Katz, McGowan and acting Winnipeg CAO Deepak Joshi.
Stuart Olson nonetheless engaged in two subsequent efforts in 2014 to find a hotel partner, first by partnering up with Winnipeg developer Ken Reiss in a proposal to build a hotel and new headquarters for Manitoba Liquor & Lotteries at the Carlton Inn site in June -- and then by issuing a public search through Colliers International in November.
Evan Johnston, Stuart Olson's Calgary-based vice-president and legal counsel, declined to comment on why his company simultaneously sought a settlement and looked for a hotel partner.
CentreVenture board chairman Curt Vossen suggested the failure of the RBC Convention Centre to sign its contract with Stuart Olson gave the construction company the legal confidence to shirk its hotel-building obligation.
Convention centre board chairman Bob Silver, a co-owner of the Winnipeg Free Press, rejected that assertion. "We had an enforceable contract," Silver said, noting Stuart Olson would not "pay close to $4 million" if it could get away with paying nothing.
City council approved the $3.75-million settlement last week.