September 21, 2017

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Three-ring circus at city hall

Monday Mayor Brian Bowman and his colleagues tried to make sense of the latest city hall real-estate debacle. The Winnipeg Convention Centre and CentreVenture -- both quasi-government entities -- have overlapping deals on their books to develop a hotel site that CentreVenture bought at 220 Carlton Street. Last week, CentreVenture also took flak when it was revealed the agency brought Canad Inns into a bizarre deal to co-own downtown hotels to limit its tax exposure.

Bowman felt that this latest property circus was "not cool" (and it isn't). Friday he insisted the agency should use competitive bids to develop its properties, starting with 220 Carlton. Remember -- council financed CentreVenture's site purchase with a generous line of credit. CentreVenture claims it can't open the deal up for bids because it is bound by its secret deal with True North until their option expires later this summer. When Bowman asked to review the deal, CentreVenture officials bobbed and weaved. So Bowman and his colleagues voted to insist on bids anyhow.

There's just one odd thing about Bowman's solution.

It helps to start from the beginning. In 1999, Mayor Glen Murray created CentreVenture. Winnipeg already had a development partnership with Ottawa and Broadway in the form of The Forks North Portage Partnership, but Murray didn't want to have to wait for co-operation from other levels of government in his quest to accelerate downtown development. City hall gave this new agency four tools to do its job. The agency was given empty or dormant downtown properties for resale. It got a $10 million dollar "bank" to finance loans and mortgages. The city also transferred administration of various tax credits to CentreVenture so incentives could be packaged into property deals. Finally, it gave CentreVenture arms-length status and an operating grant to hire staff, so it'd be free to negotiate directly with prospective developers.

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Hey there, time traveller!
This article was published 28/1/2015 (967 days ago), so information in it may no longer be current.

Monday Mayor Brian Bowman and his colleagues tried to make sense of the latest city hall real-estate debacle. The Winnipeg Convention Centre and CentreVenture — both quasi-government entities — have overlapping deals on their books to develop a hotel site that CentreVenture bought at 220 Carlton Street. Last week, CentreVenture also took flak when it was revealed the agency brought Canad Inns into a bizarre deal to co-own downtown hotels to limit its tax exposure.

Bowman felt that this latest property circus was "not cool" (and it isn't). Friday he insisted the agency should use competitive bids to develop its properties, starting with 220 Carlton. Remember — council financed CentreVenture's site purchase with a generous line of credit. CentreVenture claims it can't open the deal up for bids because it is bound by its secret deal with True North until their option expires later this summer. When Bowman asked to review the deal, CentreVenture officials bobbed and weaved. So Bowman and his colleagues voted to insist on bids anyhow.

There's just one odd thing about Bowman's solution.

It helps to start from the beginning. In 1999, Mayor Glen Murray created CentreVenture. Winnipeg already had a development partnership with Ottawa and Broadway in the form of The Forks North Portage Partnership, but Murray didn't want to have to wait for co-operation from other levels of government in his quest to accelerate downtown development. City hall gave this new agency four tools to do its job. The agency was given empty or dormant downtown properties for resale. It got a $10 million dollar "bank" to finance loans and mortgages. The city also transferred administration of various tax credits to CentreVenture so incentives could be packaged into property deals. Finally, it gave CentreVenture arms-length status and an operating grant to hire staff, so it'd be free to negotiate directly with prospective developers.

There isn't enough space in the Free Press to list the pros and cons of CentreVenture's deal-making history, And that's partly the point; as CentreVenture's mandate has shifted over time, it has become ever harder to know whether the secretive agency is really generating a measurable return on its latest investments.

After its relative success on Waterfront Drive a decade ago, CentreVenture lobbied to start developing in Point Douglas, despite criticism it hadn't finished renewing the territory it already had. Then, CentreVenture shifted focus again to the renewal of Central Park. The work it did was great, but it's not clear why a costly development agency was leading the charge for park renewal.

The public accidentally got to glimpse past CentreVenture's public relations curtain in 2013, when a city report admitted some downtown condos were sitting empty, and developers themselves were "skeptical" of future investment. We only learned this because CentreVenture needed council backing for its plan to hand out $10,000 to condo buyers — a double subsidy, since eligible units had already been subsidized during construction.

Meanwhile, CentreVenture was shifting focus to another new frontier: improving the on-street experience in a new entertainment district. As part of its latest mission, the agency went on a buying spree of down-market downtown hotels without an exit strategy, all financed with a new City of Winnipeg line of credit.

Many cities have used arms-length development agencies to lead urban renewal. But in recent years, the concept itself has run afoul of the public's growing appetite for efficiency and transparency.

The most spectacular example of this trend is in California, where Gov. Jerry Brown — a Democrat and former Oakland mayor — wiped out 400 urban development agencies in 2011. Brown argued the cash and property tax room spent by urban redevelopment agencies was better spent on public education.

California lawmakers lost faith in the arms-length model in part because of a wave of investigations by California's state comptroller (similar to a provincial auditor). His reviews found hidden financial abuses, excessive secrecy, empire building and mission creep were chronic problems in many redevelopment agencies.

None of that has been found in Winnipeg, of course. However, when it comes to mission creep, it's worth asking why CentreVenture is costing the general city fund more than ever, when it was founded on an explicit promise that it'd be self-sufficient by 2005.

Bowman's call for public CentreVenture bids is interesting. After all, city hall used to administer CentreVenture's tax credits on its own. For all their recent faults, city public servants also have far more experience with expressions of interest and public bids than CentreVenture does.

So if city hall can already openly do what Bowman has asked CentreVenture to do, why pay a half-million in annual operating grants to a backroom development agency to do it for them?


Brian Kelcey served as a senior adviser in the Mayor's Office from 2005 to 2008.

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