City council gives in to Lake Placid Developments, again; the south downtown, a legacy of favouritism

Mayor Atchison and Councillors Dubois, Heidt, Hill,
Lorje, Neault, Paulsen, Penner, Pringle, and Wyant

Another day, another sorry spectacle at city hall involving River Landing.

City council disgraced itself beyond belief recently when it agreed to re-enter negotiations with Lake Placid Developments to build the hotel-condo-office-retail project on Parcel “Y” in Saskatoon’s troubled south downtown, despite setting a firm deadline last summer that the developer missed.

At a special meeting on August 19, 2009, council granted Lake Placid an extension for payment of the balance of the purchase price for each of Parcel “Y” and the adjacent lane to 5:00 p.m., October 30, 2009. Failure to meet the deadline would result in each sale agreement being terminated.

Voting in favour of the deadline was Mayor Don Atchison and councillors Bev Dubois, Myles Heidt, Maurice Neault, Glen Penner, Bob Pringle, and Gordon Wyant.

Atchison said the deadline was an “absolute certainty now.” If the developer didn’t come up with money owing on the land the agreement would be “terminated.”

“There’s no more chances,” the mayor said. [Lake Placid gets time (StarPhoenix, August 20, 2009)]

On October 30, 2009, Atchison issued a news release confirming that Lake Placid failed to meet the deadline and reaffirmed council’s earlier decision that “both the Parcel Y and the adjacent lane agreement would be terminated without further resolution of Council.”

It’s important to remember that it was Lake Placid CEO Michael Lobsinger – in an August 17, 2009, letter to the mayor – that requested the deadline in the first place, which city administration recommended council approve. It was also administration that recommended to the city’s executive committee on November 23, 2009, that council authorize administration “to consolidate Parcel “Y” with the land adjacent to Parcel “Y” and proceed to issue a Request for Proposals (RFP) with a fixed purchase price based on an updated appraisal value.”

The committee rejected the recommendation and instead referred the matter back to administration “for a report regarding the current appraised value of the land, together with possible alterations to the RFP and to the DCD1 Guidelines.”

That report was due to be tabled at executive committee on April 19, 2010. Now that council has reopened negotiations with the developer it more than likely won’t see the light of day, which is what most councillors seemed to have wanted all along. Many had voiced their support for reviving negotiations with Lake Placid. It’s seems obvious the process was manipulated to ensure that outcome.

On April 12, 2010, the seven council members that supported the October 30 deadline ignored the earlier decision and voted in favour of re-entering negotiations with Lake Placid. They were joined by three other council members: Darren Hill, Pat Lorje and Tiffany Paulsen.

The message was clear. Council can and will play favourites. It will change the rules whenever it wants, and it can no longer be trusted.

Council’s problems on Parcel “Y” are of its own making.

The nonsense started during the October 2003 civic election when mayoral candidate Don Atchison publicly declared that his “vision” for the former Gathercole site included a spa hotel, condos and live theatre.

From January to March 2004, the city – working behind closed doors without any public input – raced through its south downtown concept planning process. On June 21, 2004, when council voted to adopt the plan, Atchison boasted at how the city did a year’s worth of work in just three months.

In May 2005, council found itself behind the eight-ball when Remai Ventures Inc. turned out to be the only company to submit a request for proposals for Parcel “Y”. However, the project later stalled and the developer pulled out in February 2007. The city had dodged a bullet. Rather than take a step back and consider its options council elected to forge ahead with another expressions of interest and request for proposals.

In September 2007, the city found itself backed into a corner again when Lake Placid Investments ended up being the only company to submit a proposal. This could have been avoided had the city rejected the developer’s submission, which did not appear to fulfill the city’s requirements. The EOI/RFP called for a destination attraction in the form of a cultural facility but Lake Placid’s proposal did not seem to have that. Furthermore, the public component of the developer’s project included elements not listed in the permitted uses of the Direct Control District 1 (DCD1) Guidelines. And yet, the city accepted the proposal. Now the city appears to be at the developer’s mercy. River Landing has become too big to fail. The city needs something, anything, built to pay the bills.

The city’s business incentives are designed to target housing to downtown, all forms of business to core neighbourhoods and industry in general – not theatres, office buildings, retail stores or hotels. Council doesn’t care though. For years it appears to have shown nothing but favouritism in the south downtown.

Persephone Theatre

There was no formal RFP process for the live theatre component of River Landing Phase I. The right to build a theatre on the cultural block was basically handed to Persephone on a silver platter.

On May 3, 2004, Linda Frank, the former president of Persephone Theatre, presented city council with a concept plan for a new auditorium and indicated that they would like to be included in plans for redevelopment of the south downtown. Council referred the matter to administration “to commence discussions with Persephone, and report to Council as appropriate.”

Frank addressed council again on September 20, 2004, and asked the city for a commitment of land that would allow the theatre to move forward and be the lead party on the cultural block development. The matter was referred to the administration for a report to the executive committee, in a timely fashion, regarding all of the issues involved.

Scene III, a partnership of two Saskatoon theatre companies – Shakespeare on the Saskatchewan and La Troupe de Jour – submitted a competing proposal to build a new performance theatre on the site.

At council’s November 15, 2004, meeting Raoul Granger, Co-Chair, Scene III and Tony Badger, Project Manager, Scene III, provided a PowerPoint presentation with respect to the Facility Development Concept Plan.

Scene III was criticized at the meeting for not having a business plan in place. Mr. Badger pointed out that Persephone Theatre did not have a business plan either when it addressed council earlier that year, but council didn’t want to hear that. The matter was referred to the administration for consideration.

On November 29, 2004, city council adopted a recommendation by the executive committee to “provide conditional approval, in principle, for the Persephone Theatre new building project proposed to be located in the Cultural Block.”

The executive committee made the decision at an in-camera meeting held November 22, 2004. The committee’s report contained one lousy paragraph pertaining to the theatre. It offered no insight into how the decision was reached: “After already receiving proposals for the live performance theatre component of the Cultural Centre, the Executive Committee of City Council is recommending that conditional approval be given to Persephone Theatre. The preliminary development plan will better identify the additional uses and possibly suggest modifications or additions, and how they can be best accomplished.” Scene III never stood a chance.

On December 7, 2005, council approved a deal in which Persephone received a five-year tax incentive under which the non-profit theatre will pay no taxes in its first year of operation in the new building, with discounts of 80, 60, 40 and 20 per cent in each of the following four years. The theatre will be exempt from property taxes during construction.

The StarPhoenix reported that Persephone paid $30 per square foot, or about $888,600 for the parcel of land at the corner of Second Avenue and Saunders Place. [Curtain call for theatre (StarPhoenix, December 8, 2005)]

However, what wasn’t reported is that the land was originally valued at $32.50 per square foot.

On December 5, 2005, the city advised Persephone that it had obtained a fresh appraisal that differentiated between the values of the north half and the south half of the River Landing cultural block. The north half was valued at $30 and the south half, being closer to the river, was valued at $36. Accordingly, the city reduced Persephone’s cost to $30 per square foot, and that was the price reflected in Persephone’s purchase agreement.

Also on December 7, 2005, council announced its priorities for the Canada Celebrates Saskatchewan initiative administered by Western Economic Diversification Canada (WD). Persephone was listed second behind the Victoria Bridge and ahead of the Mendel Art Gallery which was third. The River Landing Phase I Riverfront Park was fourth. The problem, however, is that the city does not own Persephone. The theatre really had no business being on the list.

Remai Ventures Inc.

On December 12, 2005, council approved a sale agreement and incentive agreement with Remai Ventures Inc. Under the deal, Remai received a total of $3.1 million in tax incentives from the city over the course of the spa hotel’s construction and its first four years of operation. The sale price for Parcel “Y” was $1.6 million, well below the appraised value of $2.9 million.

Atchison voted in favour of the sweetheart deal, despite saying previously there would be no tax breaks or subsidies on the hotel site and that the city must receive every dollar of the land’s value.

Current councillors that voted in favour of the deal include: Bev Dubois, Myles Heidt, Maurice Neault, Glen Penner, and Gordon Wyant.

At its February 13, 2006, meeting council received a letter from Betty Anne Latrace-Henderson, president of Airline Motor Hotels Ltd., expressing concern over council’s decision to provide tax breaks to Remai Ventures, a direct competitor. Latrace-Henderson wished to compete on a level playing field and was looking for similar treatment. Her company had recently invested over $9 million and 18 months to upgrade the facility (formerly known as the Quality Inn) in order to acquire the Hilton franchise.

“City Council has now set a precedent which we feel deserves fair consideration and application. Therefore, we would ask that the City of Saskatoon entertain the possibility of a similar arrangement for Hilton Garden Inn, to ensure fair treatment that recognizes our value to the City and significant investment which will surely promote Saskatoon’s economic prosperity as much as the River Landing Spa and Hotel,” Latrace-Henderson said.

A motion to refer the matter to the administration and finance committee was defeated. The letter was instead referred to city administration “to respond to the writer.”

As George Orwell said in his book Animal Farm, “All animals are equal, but some animals are more equal than others.”

Famous Players/Cineplex Galaxy

On March 21, 2005, council voted in favour of providing “an annual grant to Famous Players in an amount equivalent to the amusement taxes collected by Famous Players at the theatre to be constructed on Block CC, Plan 00SA33273 (formerly Block 146).”

Mayor Don Atchison and current councillors Bev Dubois, Myles Heidt, Maurice Neault, Tiffany Paulsen, and Gordon Wyant voted in favour of the deal.

The city refused to commit to extending the same incentive to the existing downtown theatres run by Cineplex Odeon and Famous Players.

Council also approved a 100 per cent property tax break on the theatre in its first year, dropping to 80 per cent in the second, 60 per cent in the third, 40 per cent in the fourth and 20 per cent in the fifth.

Mayor Don Atchison and current councillors Bev Dubois, Myles Heidt, Maurice Neault, Tiffany Paulsen, and Gordon Wyant voted in favour of that deal, too.

Councillor Glen Penner was not present during the votes.

In June 2005, Cineplex Galaxy LP announced an agreement to purchase the Famous Players theatre chain from Viacom Inc.

On June 25, 2007, council finally voted to abolish the amusement tax but Atchison refused to support the move noting council had defeated a motion to kill the tax when it passed the city budget.

“I don’t know how you can pass things that were defeated. . . . To pass this today, you’re sending a very bad message.”

Instead of killing the tax now, the city should have waited until later in the year when it knows if it’s running a surplus or deficit, Atchison said. [Council axes tax (StarPhoenix, June 26, 2007)]

The hypocrisy is astounding.

Lake Placid Developments Inc.

On June 23, 2008, council voted in favour of unfairly bending the rules to allow Lake Placid to build River Landing’s hotel four storeys higher than zoning guidelines permit.

The maximum building height for a hotel at the corner of Second Avenue South and Spadina Crescent was eight storeys. Council passed an amendment to the site’s special zoning allowing the hotel to rise to 12 storeys.

Councillor Charlie Clark said two developers told him they might have submitted proposals had they known the city would be flexible with the zoning rules.

“I have some real questions about the fairness of the process. I question, when this is what the competition was based on, going back and changing the rules now.”

Atchison didn’t seem to give a damn about the integrity of the process.

The amendments are “minor,” he said. [River Landing hotel can add four storeys (StarPhoenix, June 24, 2008)]

Voting in favour of the amendment was Atchison and councillors Bev Dubois, Myles Heidt, Maurice Neault, Glen Penner, and Gordon Wyant.

Councillor Tiffany Paulsen was not present for the vote.

On September 15, 2008, city council dutifully approved a request by Lake Placid to permanently close and purchase the lane right-of-way behind the former Legion building for $475.494.21. Lake Placid owns the former legion site and wanted to consolidate the lane for future development.

On June 22, 2009, city council granted Lake Placid an extension to June 30, 2010, to complete all excavation required for the development of Parcel “Y”, River Landing Phase I, provided that payment in full for Parcel “Y” was received no later than 5:00 p.m., Monday, August 17, 2009. The original deadline to complete the excavation was June 30, 2009.

At its November 30, 2009, meeting council received a letter from Ken Achs, president of Mid-West Development (2000) Corp., blasting councillors for “reconsidering going back on its word” about the October 30, 2009, deadline for Lake Placid’s proposed project.

“The City afforded this project every conceivable chance to go ahead and bent every rule to make it happen. You extended the time for payment and then excused missed interest payment deadlines. Finally, you emphatically set a drop-dead date. Now, it appears you may go back on what you said,” Achs wrote.

It took some time but on April 12, 2010, council did just that. It went back on its word.

Airline Motor Hotels, Jan. 31, 2006

Mid-West Development (2000) Corp., Nov. 13, 2009