City manager report shortchanges public, council on financials of Lake Placid – Victory Majors deal, purchase price for Parcel “Y” and adjacent lane

City manager report in council’s April 12, 2010, agenda

Thanks to city council and administration the ridiculous and embarrassing River Landing Village saga continues.

At city council’s March 22, 2010, meeting, Karim Nasser, a director of Victory Majors Investments Corporation, confirmed that his company “signed a partnership” with Lake Placid Developments to build the riverfront hotel-condo-office-retail project “contingent on city hall reviving” Lake Placid’s sales agreement that expired October 30, 2009.

Councillors directed administration to investigate the financials of the Lake Placid-Victory Majors deal and report to city council April 12, 2010, seeking direction from council on whether to enter in negotiations on the sale of the land and the terms of the development.

Other councillors, like Ward 2’s Pat Lorje, asked administration to provide as much information as possible, including the updated land appraisals and due diligence on the financials of the deal. [Developers tout plan (StarPhoenix, March 23, 2010)]

However, it appears that the report submitted by city manager Murray Totland for council’s April 12 meeting falls well short of providing councillors with the information they asked for.

The report notes the purchase price for Parcel “Y” in 2008 was $4.765 million. The price for the adjoining lane was $475,494.21. Totland says administration has obtained new appraisals for Parcel “Y” from two separate companies.

“The appraisal reports completed by Suncorp Valuations Ltd. and Beatty Appraisal and Consulting Ltd. resulted in an estimate of value for Parcel “Y” within a narrow range of $98 per square foot to $110 per square foot. If these appraisals were used, the price average value between the appraisals is approximately $104 per square foot which would result in a purchase price of $11 million,” the report states.

Totland’s report, though, does not provide a new appraisal for the adjacent lane. No explanation is given why this information was omitted. It stands to reason that if Parcel “Y” has increased in value so has the lane.

Furthermore, the report gives no indication whatsoever if Lobsinger and Nasser are willing to pay the new purchase price. Again, no explanation is given why this information was not included.

Totland’s report also fails to provide the results of the investigation administration were asked to do on the financials of the Lake Placid-Victory Majors deal. The city manager instead says that if administration is instructed to negotiate with Lake Placid, it would “include in those negotiations a financial due diligence process.”

Apparently, city administration, and representatives from the city’s outside auditor, Deloitte & Touche Inc., met with Lobsinger and Nasser on Wednesday, April 7, 2010. Lobsinger and Nasser provided documentation for review by Deloitte and “indicated their willingness to provide further details as required by the outside auditors.”

Unfortunately, this is not what the public was led to believe would happen. Totland’s report does not come close to fulfilling council’s request for information. Council and the public are being severely shortchanged.

The bottom line is this discussion should not even be taking place. At its August 19, 2009, meeting, city council resolved that if Lake Placid missed the October 30, 2009, deadline to pay the outstanding balances owing on Parcel “Y” and the adjacent lane, then the agreement would be terminated.

“There’s no more chances,” Mayor Don Atchison said at the time. [Lake Placid gets time (StarPhoenix, August 20, 2010)]

On October 30, 2009, just two days after the civic election, Atchison issued a news release reaffirming council’s August 19 decision. And yet here we are five months past the deadline still discussing it.

Since council is unwilling to revisit the South Downtown Concept Plan 2004 and consider other alternatives, the only decision for council to make on April 12 is to receive Totland’s report as information and set the wheels in motion for the issuance of another request for proposals for Parcel “Y”.

If Lobsinger does not wish to participate in another RFP, which he told the city’s executive committee on November 23, 2009, that he would but backed away from on March 22, 2010, then that’s his decision to make.

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Recent River Landing posts

March 24, 2010:
Lake Placid CEO flip-flops interest in new RFP; City administration dragging its feet; Nasser financial commitment seems murky, halfhearted

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

November 19, 2009:
Mayor Don Atchison should explain nature of relationship with Lake Placid CEO Michael Lobsinger; City administration flip-flops on Parcel “Y”

September 28, 2009:
River Landing cost hits $135-million; Mayor Don Atchison’s comments insulting to Mendel family; public misled on new art gallery being “shovel ready”