Wednesday, November 25, 2009

River Landing farce continues as city committee gives Lake Placid ‘unofficial’ extension; Coun. Glen Penner set to betray Aug. 19 vote on deadline


Scathing letter by local developer Ken Achs

The River Landing debacle has entered the realm of the absurd.

On October 30, 2009, Mayor Don Atchison issued a press release stating that the city did not receive payment from Lake Placid Developments for the purchase price of Parcel “Y”.

“At the August 19, 2009 Council meeting, City Council passed a resolution indicating that if full balances owing were not received by 5:00 p.m. on October 30, 2009, then both the Parcel Y and the adjacent lane agreement would be terminated without further resolution of Council,” Atchison said.

In August, Atchison said if the developer didn’t make the deadline it’s over. “There’s no more chances,” he said.

At a meeting held November 23, 2009, the executive committee of city council debated what the do about the situation. In attendance was Lake Placid CEO Michael Lobsinger.

According to the StarPhoenix, Lobsinger told the committee the company is “one signature away” from transferring the $200 million necessary to complete Lake Placid’s project.

In other words, he didn’t have the money. This is 24-days past the deadline and the city is still listening to him.

Lake Placid submitted its request for proposal for Parcel “Y” in September 2007. The project is a hotel-condo-office-retail complex. To date nothing has been built and the developer has missed a number of other deadlines.

In March 2009, Atchison said the developer had assured city administration its financing was in place for the project. [Construction delay (StarPhoenix, March 12, 2009)]

That doesn’t appear to have been the case.

The bulk of Lake Placid’s problems seem to lie in two areas: trouble in securing financing due to the international market collapse; and, required amendments to The Condominium Property Act and The Land Titles Act, 2000 to allow multiple condominium corporations on the site.

Local developer Ken Achs made an interesting observation in a letter to council dated November 13, 2009. Achs expressed concern that council was “reconsidering going back on its word about a drop-dead date” for the Lake Placid project. He suggested that “prolonging” the proposed project would have “negative effects.” One of his concerns was over the project’s financing.

“In order to finance such a massive project, any reasonable financial institution will require between 25% and 40% equity for a project like this. This means that any developer must have cash equity, not financing. Where is the equity? Ask any financier how this project can come together without equity from the developer. It just isn’t possible,” he said.

“We all know that projects always seem to go over budget. Just look at the riverfront development. What will happen if this condo/hotel/office development is over budget and partly built?” Achs asked.

By all accounts Ach’s letter fell on deaf ears.

As for the required amendments to provincial legislation, Crown Corporations Minister Ken Cheveldayoff introduced The Land Titles Amendment Act in the legislature on November 13, 2008. The bill was passed April 1, 2009.

The Condominium Property Amendment Act, 2009 was introduced on April 28, 2009, by Justice Minister Don Morgan and was passed on April 29, 2009. Both bills received royal assent on May 14, 2009.

It’s never been explained why it took so long to get the legislation drafted and introduced. Neither the city nor the developer has said exactly when they discovered that changes were required.

In two reports to city council – one on September 17, 2007, evaluating the developer’s RFP and the other on January 14, 2008, finalizing the sale agreement – city administration never once mentioned that amendments to provincial legislation were needed. Perhaps someone was asleep at the wheel and missed it.

At any rate, Lobsinger says he’s “100 per cent responsible” for the predicament his company is in.

“I am taking all the blame,” he told the committee. “I have spent $8.24 million of my own money and I only have my passion to show for it.” [Lake Placid finds some support (StarPhoenix, November 24, 2009)]

The dollar amount Lake Placid has spent seems to grow every time Lobsinger talks about it. In the StarPhoenix on June 24, 2008, it was “$1 million on plans so far.” On October 17, 2008, the newspaper reported him saying it was “$3 million to $4 million.”

In a news release on October 30, 2009, Lobsinger said his company “has spent $7 million planning the development and has paid the City of Saskatoon $700,000.” It’s hard to know what to believe.

Lobsinger wants to build the project and told the committee he’d submit another bid if the city sends out a request.

In the end, the committee directed administration to make changes to the initial request for proposals sent out two years ago and report back, the StarPhoenix said.

The city’s administration will look at making the RFP more flexible for developers while they await two land appraisals for the site, a process that will likely take three months.

This is where things get really stupid and outrageous.

At the meeting several councillors said they support selling the land directly to Lake Placid if the company’s financing comes through.

Councillor Glen Penner said when that happens he’s prepared to move the matter forward.

“If we find out that the financing is available, I’ll be making a motion that we enter into negotiations with Lake Placid.”

And what about the deadline that council set in August? Apparently it’s no longer valid.

According to the StarPhoenix, Penner told reporters that re-entering negotiations isn’t a contradiction of a previous decision that the Oct. 30 date would be a final deadline.

“One council cannot tie the hands of another council,” he said. “It’s the same people, but a new council, and if they decide that they want to reopen this, it’s up to this council.

“They have every right, legally and morally, to do so.” [Lake Placid finds some support (StarPhoenix, November 24, 2009)]

At the August 19, 2009, meeting Penner was one of seven council members that voted in favour of administration’s recommendation to impose a strict deadline.

It was argued the Oct. 30 deadline was merited because it was requested by Lobsinger and because council will no longer have to vote on the matter, with the payment for the land left with the company.

“This is not a political issue,” said Penner. “There are no more political decisions on this.” [Lake Placid gets time (StarPhoenix, August 20, 2009)]

Now he’s flip-flopping.

One wonders whether Penner bothered to tell his constituents in Ward 8 during the civic election that his vote came with an expiry date – Election Day, October 28. The answer is most likely no, he didn’t.

It would seem that honesty, integrity, credibility, and keeping one’s word don’t have a place in Penner’s thinking – at least on this subject. Penner’s comments are not only mealy-mouthed they also seem to be hypocritical.

When Lake Placid missed the deadline Penner told the StarPhoenix it’s time to test the market again, but said there’s no rush to develop the site.

“If we have to put grass on it for a little while maybe that’s what we should do,” he said. “I think what we need to do is take a longer-term view rather than shorter-term view.” [Future of riverbank site divides city councillors (StarPhoenix, November 3, 2009)]

Penner is not the only council member to make a 180-degree turn.

Mayor Don Atchison told the StarPhoenix in advance of the executive committee meeting that if Lake Placid’s financing arrives council has to make some decisions.

“It’s important we push ahead right now,” he said. “For me the main thing is for us to get started on us getting something built there.” [River Landing megaproject still viable: mayor (StarPhoenix, November 23, 2009)]

It appears the mayor’s word isn’t worth spit either.

What it boils down to is that by allowing Lake Placid to remain in contention while administrators work to update the RFP, the city has essentially given the developer an extension without officially resolving to grant one.

The committee’s conduct made a farce of the process. You’ve got a bunch of councillors openly supporting Lake Placid, basically saying that as soon as Lobsinger gets the financing they’ll approve selling the land. In the meantime, city administrators are expected to work on a new request for proposals that may never get issued. And to top it off you’ve probably got local developers watching this from the sidelines wondering, ‘why the hell would I spend time getting a proposal together when at any moment the rug could get pulled out from under me?’ It’s a sham.

The longer River Landing drags on the closer it seems to get to becoming one the most questionable projects in Saskatoon’s history.

3 Comments:

At 3:27 PM, Blogger CanNurse said...

Great summary of the latest on this whole mess! Thanks.
And you included such a perfect typicalcomment by Atch about (paraphrasing) "the main thing is just to put any damn thing on the site - quick!"
Could he be part of the problem...???

 
At 12:27 PM, Blogger 幾天 said...

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