Sunday, March 25, 2007

When did the City of Saskatoon know that Remai Ventures would not proceed with its River Landing Hotel & Spa development?

A recent viewpoint letter to The StarPhoenix by local business owner and former Broadway Business Improvement District board member, Greg McKee, raised some excellent questions surrounding Remai Ventures aborted plans to build a hotel spa at River Landing in Saskatoon.

In his March 23 letter McKee wrote “it had been rumoured for months that the hotel/spa proposal wouldn't proceed. Why did it take so long to become public? Was it to get past the municipal election, or was it for construction costs to go even higher?”

If the “rumour” is accurate I have another question to add to the list. When did Mayor Don Atchison and City Manager Phil Richards first become aware that the hotel spa was in trouble and likely wouldn’t proceed?

Remai Ventures submitted its River Landing Hotel & Spa proposal on May 24, 2005, in response to a Request for Proposal process that City Council approved on March 7, 2005. City Council received the proposal as information at its May 30, 2005, meeting. From there it went to an administrative review committee for evaluation.

On June 27, 2005, City Council gave the go-ahead for its administration to begin negotiations with Remai for a hotel spa.

In Spa deal salvageable, councillors indicate (SP June 30, 2005) it is reported that the city administrative committee negotiating with Remai “will ask council for its final approval as early as July 18.”

Remai’s proposal contained a ‘Project Time Line’ on page ten with July 18, 2005, listed as “Agreements to Council for Approval.” So far things appeared to be going as planned.

The months, however, began to slip by with no definitive reason why things were taking so long.

At its November 28, 2005, meeting City Council received a report by tourism consultant David Russell of Vancouver, who the City commissioned to study the feasibility of the River Landing Destination Complex.

In the November 17, 2005, report Destination Centre Assessment Russell wrote:

“The River Landing plan is, in our opinion, sound and will achieve its intended objectives for making the waterfront a place for people, attracting investment, and transforming the image of the City.”

“The hotel/spa is a critical component of a vibrant and thriving waterfront. The sooner that this project is approved and commences construction, the greater the confidence in the overall River Landing project.”

Where is Russell today?

November 2005 was important for one other reason. In its proposal Remai listed a number of “Development Considerations for Financial Viability” with one being “The City will have all adjacent roadwork completed and all street services to the property line installed by end of 2005.”

When the City’s Sale Agreement and Incentive Agreement with Remai finally reached City Council for approval on December 12, 2005, there were no timelines for construction included for either party other than a December 31, 2008, deadline for Remai to have the foundation and underground parking completed.

It’s nearly April 2007 and the extension of Second Avenue South onto the former Gathercole site has yet to be built. The adjoining roundabout and Spadina Crescent extension appear to have finally been completed over the winter.

In River Landing spa gets council OK (SP Dec. 13, 2005) one crucial point is mentioned: “The ultimate design and appearance of the hotel must still be approved by the city and the Meewasin Valley Authority.”

The process never reached that point.

In Remai selects local firm for hotel-spa project (SP Dec. 14, 2005) it was reported that Remai “dropped the Calgary architectural firm that came up with the first hotel-spa design, and is now counting on Kindrachuk Agrey Architecture to give the project a “more visually appealing” look, says company president Ellen Remai.”

Despite the change in firms Remai Ventures construction manager Curtis Zwack said “We plan on starting construction in the spring of 2007. We would like to really have it open by the fall of 2008.”

The months began to slip by again with no word on the progress of the hotel spa until the following spring.

On March 13, 2006, the city manager's office presented City Council with the City of Saskatoon Corporate Business Plan 2006-2008. With respect to River Landing Phase I the report states the City will "facilitate design and approval process for the River Landing hotel/spa" and "complete street and streetscape on the Spadina extension to the roundabout at Second Avenue."

The corporate business plan is important for at least two reasons. First, it does not mention when work will begin on the extension of Second Avenue South. Second, it seems to suggest the City would continue to work with Remai to "facilitate" progress of the hotel spa.

In River Landing will take shape this summer (SP Apr. 3, 2006) Zwack confirmed that construction on the $35-to $40-million hotel wouldn’t begin until the spring of 2007.

For the next six or seven months there was little or no mention of the hotel spa or its progress. According to the timeline in Remai’s proposal tasks to be completed included developer consultations with the City & MVA; structural, mechanical and electrical design work for the architect; preliminary structural and mechanical designs; working drawings; building permits and site excavation. It appears these needed to be done before the foundation could be poured let alone for construction on the “super structure” to begin.

To date it appears that no site excavation was done which would have sent a clear signal that things were proceeding as planned.

In Mayor bullish on future (SP Jan. 2, 2007) Mayor Don Atchison outlined his hopes for 2007 with River Landing at the top of his list saying “Hopefully (developer Ellen), Remai will be underway there with her hotel, and the Persephone Theatre is underway now.”

Hopefully? At the time this comment didn’t seem to draw any attention.

In Downtown legion branch prepares for last dance (SP Jan. 15, 2007) the SP reported Remai president, Ellen Remai, saying that a date for demolition of the Legion building had not yet been set. “Concept drawings for the hotel spa are being drawn up and construction should begin by summer with an opening date near the end of 2008,” said The SP.

It was mid-January 2007 and Remai was apparently still at the concept drawing stage for its hotel spa. A spring 2007 construction start date had now become summer 2007.

In Farmers’ Market construction still behind schedule (SP Jan. 16, 2007) Chris Dekker, manager of special projects for the city discussed the progress of several River Landing projects. It was reported that “Plans for a hotel-spa to be built by Remai Ventures Inc. are still in the design process.”

In King George Hotel makes endangered buildings list (SP Feb. 17, 2007) the SP reported that “construction of the hotel is slated to begin this summer.”

In Legion auction precedes move (SP Feb. 23, 2007) the SP again reported that “construction of the hotel is slated to begin this summer.”

In Legion sale huge draw (SP Feb. 26, 2007) the SP – for a fourth time – reported that “construction of the hotel is slated to begin this summer.”

The following day the City received Remai’s letter (dated Feb. 26) stating that its plans for a River Landing Hotel & Spa would not proceed.

No site excavation, no timely roadway completions, in regular contact with Remai whose project was apparently still in the design stage as of mid-January 2007 and the public is expected to believe that the City of Saskatoon had no inkling ahead of time that the River Landing Hotel & Spa was in trouble?

McKee is right. This is “disturbing” and needs to get “properly talked out”. There are many questions that need to be answered. But will it happen?

Local entrepreneurs best for downtown

Greg McKee
The StarPhoenix

Friday, March 23, 2007

Following is the opinion of the writer, a Saskatoon resident and business owner.

I was in San Francisco a couple of weeks ago and felt what I thought was a minor earthquake. It's probably only coincidence that I felt it at the moment Ellen Remai's heralded spa/hotel imploded into Saskatoon's very own ground zero.

How disappointing. The city's deal with Remai had been heralded like a royal wedding. I was never against a spa/hotel, but what was most needed was good planning. Even those of us who appreciated the business-minded vigour displayed by our last council have to admit this deal with Remai produced a bankruptcy.

There was no shortage of excuses -- times changed, market conditions are different. In reality the times and market conditions are better than when the deal was struck. Saskatoon is attracting attention as one of the few rising real estate markets in North America.

Complaints about rising construction costs are red herrings. The reason a hotel isn't viable here hasn't changed in the three years since council made this deal -- there is a lack of demand for rooms. It's basic Economics 101 that appropriate demand, versus supply, assures profit. It is because demand is high in places such as London or Tokyo that construction continues despite significantly higher costs.

Without sufficient demand, Remai is clever to run. Even if she suspected the project wouldn't be viable when she struck the deal, she was still smart to go ahead because the taxpayers took most of the risk. This came about because the mayor and council had trashed so many other proposals for being too small, too communist, or unable to hit a home run.

On an equally disturbing note, it had been rumoured for months that the hotel/spa proposal wouldn't proceed. Why did it take so long to become public? Was it to get past the municipal election, or was it for construction costs to go even higher?

I hope this gets properly talked out, and that we learn from it. In the past whenever anyone publicly questioned this project, our scribes and broadcasters called the rightfully skeptical public old thinkers and pessimists. People were chastised for having a "Saskatchewan mentality."

There was much ink and blather about how great things would be if only the Depression-era citizens got off the road.

Many other jurisdictions, when planning keystone developments over which the community has such a sense of ownership, ask the community beforehand what it wants. I, and many other commentators made the point early on that imposed solutions rarely fly.

I believe in the power of locally owned business. I don't think we have to beg and subsidize big businesses and chains to come here and save us from local entrepreneurs. It would have been far better to let small and medium-sized local entrepreneurs fill up a renovated Gathercole building.

Had we taken that route, Saskatoon would now have a bustling collection of locally owned, small but interesting businesses spicing up the River Landing.

The city has spent millions on millions to level and prepare this field of broken dreams. Now our mayor says he'll fix it all up. He insists he has some ideas. Does this mean I'm supposed to let Mayor Don Atchison sally forth to impress another bride with my money in his pocket?

The city has to stop and plan. It must admit the process is broken, and re-engage citizens by gathering input. A non-political panel of business and community leaders should be appointed to produce a mixed plan that both relies on and boosts local business.

Don't look for a super buyer, look for a number of our developers who have proven themselves locally.

Atchison once told us it was wise to, "Take care of the big things, and the little things will take care of themselves." I think it's the opposite. Think of the site filled with idea-rich local entrepreneurs, with risk and reward spread amongst them.

Feeling a little gun-shy? True-blue local entrepreneurs won't leave us standing at the altar.

©The StarPhoenix (Saskatoon) 2007


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