Monday, May 24, 2010

River Landing Parcel “Y” idiocy and secrecy drags on – another deadline missed, another freedom of information request denied


For 16 months Saskatoon residents have had to put up with one city council gong show after another as councillors ignored deadlines, set precedents, showed favouritism, betrayed previous decisions, and bent every rule in the book in a desperate attempt to salvage Lake Placid Developments proposed $200 million River Landing hotel-condo-office-retail project.

The latest chapter in the ongoing farce has councillors and city administrators working together to slough off another council imposed deadline.

Council at its meeting held April 12, 2010, directed administration to enter into discussions with Lake Placid and partners with the intent of entering into a new sale agreement for Parcel “Y” and the adjacent lane, based upon the terms and conditions of the original agreement with Lake Placid at a purchase price of no less than $4.8 million, including an appropriate due diligence review, with a report back to council on May 10, 2010, if possible, but no later than May 25, 2010.

The decision disregarded a resolution passed by council on August 19, 2009, stating that if Lake Placid failed to meet an October 30, 2009, deadline to pay the full balances owing on Parcel “Y” and the lane, then both sale agreements would be terminated “without further resolution of council.”

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

Lake Placid subsequently missed the deadline, and on October 30 the mayor issued a news release reaffirming council’s previous decision that not only were the sale agreements dead, but that Lake Placid had also forfeited its two deposits totaling $250,000 and the interest payment of $193,770.48 it made in August.

In a report to council May 25, 2010, that is outrageously short on specifics, city manager Murray Totland brought news about the most recent missed deadline: “Deloitte &Touche Inc., an independent outside auditor, was hired by the City to work directly with Lake Placid and its partners on the financial due diligence review. The Executive Committee has been meeting on a regular basis to review progress reports on the financial due diligence and provide direction to the Administration on the development of the Memorandum of Sale Agreement.

“At the time of writing, the financial due diligence review and negotiations on an agreement are ongoing. We hope a report will be available in time for the June 14, 2010, City Council meeting.” Note the word hope.

Because the executive committee meetings were held behind closed doors, the public will never know what “direction” councillors gave administration.

The city is refusing to provide even the most basic information about the meetings. On May 20, 2010, an email was sent to the city clerk’s office asking the following questions:

▪ What were the dates of the meetings?
▪ How many progress reports have been tabled?
▪ Are the reports from administration or Deloitte & Touche?

The response from administration the next day was short and to the point.

“I am unable to provide you with the requested information. In Camera agenda matters and discussions are not disclosed or released,” said deputy city clerk Joanne Sproule.

Administration was somewhat more forthcoming with information about the latest delay when interviewed by the StarPhoenix.

According to Sandi Schultz, the city’s special projects manager, councillors want certainty the megaproject can be completed.

“There certainly has been progress but council has to be really comfortable with level of risk in moving forward,” Schultz said.

City officials are also waiting on Lake Placid and Victory Majors Investments Corporation to finalize their partnership, Schultz said.

“This is a partnership and there are two parties that are coming forward to be able to develop this project,” she said. “There are some things they’re working through with back and forth negotiation. Unfortunately, we’re under this timeline microscope and negotiations take some new paths and they take time, but I don’t think it’s anything alarming or that would not normally happen through a negotiation process.” [Parcel Y decision expected in June (StarPhoenix, May 20, 2010)]

If councillors are still worried about “certainty” and “risk” at this late stage, then the problems might be greater than what the public is being told. It could be that the developers simply don’t have enough funding secured to complete the project. The worst thing to do would be to start building then have to shut down because of money woes. The scary thing is this council just might be reckless enough to take that chance. Its desperate behaviour over the past year is evidence of that.

The idea that Lake Placid and Victory Majors are still ironing out their partnership arrangement doesn’t seem to square with what the developers told council and the media two months ago.

In an interview with StarPhoenix reporter David Hutton on March 17, 2010, Victory Majors director Dr. Karim Nasser said the “partnership agreement for the entire $200-million hotel-office-condo project is being negotiated… and should be finalized by the end of the week.” [Lake Placid revival (StarPhoenix, March 18, 2010)]

Nasser and Lake Placid CEO Michael Lobsinger addressed council separately on March 22, 2010; with each one confirming they had an “agreement” to work together. The meeting minutes posted on the city’s website summarizes their presentations as follows:

▪ “Mr. Michael Lobsinger, Lake Placid Group of Companies, spoke regarding Lake Placid’s commitment to the River Landing project and indicated that he has an agreement with Dr. Karim Nasser’s company, Victory Majors Investment Corporation, for the purposes of developing River Landing. Mr. Lobsinger requested that that the City re-open the purchase and sale agreement for Parcel Y and lane. Mr. Lobsinger also took the opportunity to introduce Mr. Manlio Marescotti of Marriott Hotels, indicating that the Marriott is interested in this project as well.”

▪ “Dr. Karim Nasser, Victory Majors Investment Corporation, confirmed Lake Placid’s agreement with Victory Majors Investment Corporation and asked Council to support a motion to refer the River Landing proposal submitted by Lake Placid back to the Administration to review and report.”

The StarPhoenix the next day said Nasser described the agreement as a “signed partnership.” [Developers tout plan (StarPhoenix, March 23, 2010)]

On March 23, 2010, the CBC reported Nasser saying the project was “economical” and “sustainable,” and that he was prepared to write a $5 million cheque to the city to keep the project moving. He said work on the project could begin 45 days after the city sells the land, and the development could be completed within three years. [Saskatoon gives River Landing bid another chance (CBC News, March 23, 2010)]

Nasser’s offer, however, is only enough to cover the outstanding balances owing on the land. He didn’t mention the $200 million needed to complete the project. The problem here is that the developers have not made public a copy of their signed partnership agreement, and likely never will. Who really knows for sure what it says?

All this occurred more than two months ago. And now city administration is telling the public that the developer’s are still haggling with one another. It’s ridiculous.

Nasser’s company, the StarPhoenix says, has been following the city’s requirements to provide documentation through the due diligence process to satisfy council and outside auditor the project can be completed.

Special projects manager Sandi Schultz said the due diligence process performed by the external auditor involves looking at the financing strategy, a business plan, cost estimates and revenue projections. [Parcel Y decision expected in June (StarPhoenix, May 20, 2010)]

However, the city is refusing to release the terms of its agreement with Deloitte & Touche.

On April 20, 2010, an access to information request was submitted to the city clerk’s office for a copy of the terms of reference, agreement or contract between the city and the outside auditor. The request was denied.

In a letter dated April 28, 2010, the city clerk advised, “There is one document that is responsive to [the request], being a letter that confirms the terms of engagement of Deloitte & Touche LLP by the City of Saskatoon to provide financial consulting services. I am not releasing this letter for the following reasons:

▪ It was provided in explicit confidence to the City by Deloitte and it contains proprietary information, the disclosure of which could reasonably by expected to prejudice the competitive position of Deloitte. [Section 18(1)(c)(ii) of The Local Authority Freedom of Information and Protection of Privacy Act]

▪ It contains information which, if disclosed, could reasonably be expected to interfere with negotiations of the City with Lake Placid Developments. [Section 17(1)(d) of the Act]”

It is important to note that section 18 of the Act is mandatory, but section 17 is not, it is discretionary, meaning that the city could release the information if it wanted.

The lack of transparency around Parcel “Y” since 2005 when Remai Ventures Inc. proposed a spa hotel/condo development for the land has been disturbing. In June 2006, the city denied a freedom of information request for all documents between June 1, 2004, and December 12, 2005, regarding the proposed spa hotel and site that weren’t already publicly available. The city refused access to more than 80 records. And this was just one request. There have been others since.

Add to this the disgraceful level of secrecy surrounding the city’s backroom dealing and despicable decision last year to move the Mendel Art Gallery to River Landing, and you have the ingredients for one of the dirtiest, most suspect redevelopment projects in Saskatoon’s history.