Dear Winnipeg

A Fun Blog About Infrastructure and Municipal Finance

Give It Away

Dear Winnipeg,

It pains me to say this, but here it is… we should listen to Councillor Mayes.

I know, the good Councillor and I have not historically seen eye-to-eye on many things. [SOOO many things.]

And yet, here we are are. Me defending Brian Mayes’ stance on development, whilst quoting the Red Hot Chili Peppers. [Or George Strait if you prefer.]

How DID we get here? [Plus, who uses the word “whilst” anyways?]

Well, it all started last summer when big shot developers from Toronto rode into town, sniffing around the downtown mall, and throwing around all the hottest buzzwords.

“We’d like to invest in your downtown!”

“Economic development!”

“Public realm improvements!”

“Community hub!”

“Monorail, er… affordable housing!”

And from that moment on, a good number of our politicians were hopelessly smitten. [Rubes!]

But not our man Brian “NO to all infill development” Mayes. [I mean, even a broken clock is right twice a day!]

So a deal was struck with Starlight Investments, who would pay $69.9 million dollars for Portage Place, of which $22.9 million would go to the private corporation that owns the building, and $47 million would go to the Forks North Portage Partnership, who ultimately own the land and the parkade under the building. [That’s the “North Portage” Part of their name.]

They also own and manage that gem that is the Forks. [That’s the “Forks” part of their name.]

As for the “Partnership” part? The three partners are the City, the Province and the Federal Government.

Now, since the Forks has been living off the “several million dollars a year” of revenue from the parking and land lease at Portage Place, the three partners have decided to keep their share of the $47 million in the partnership, rather than cashing it out, so the Forks can invest it and continue to earn the (probably) $4 or $5 million a year they need off of it.

No issues there.

But now, here we are a year later. Starlight has not yet gone through with the purchase, and the deadline for them to back out has been extended by 6 months to the end of August.

I mean, this is a complicated deal, and gee-whiz, the economics of it just don’t seem to work… sorry everybody! But you know… if only the government could step in with some small financial support, we assure you this project is “beyond shovel-ready” and could move to a construction phase as soon as an agreement is reached.

$20 million from each level of government should cover it, thanks!

And so the Province was the first to acquiesce in May, ponying up $28.7 million in future school tax rebates.

Next up was the City’s turn to respond.

Luckily, the Executive Policy Committee (EPC) was able to make a clear-headed decision, based on facts, thanks to a report by the City’s Corporate Finance Department that actually did the math!! [I’m not crying, you’re crying!]

“The Public Service is recommending financial support that aligns […] with the reality that the direct financial benefit accrued municipally is limited in both its present value as well as its growth potential.”

— July 15, 2020 report on Starlight’s request for dough (page 9)

The Public Service recommended a contribution of no more than $5 million. Any more than that and the City would not be recouping its investment.

And the EPC concurred! [You do a little dance, then you drink a little water!]

But then they threatened to leave.

To be quite honest, at $5 million, the deal is dead.

— Marni Larkin, Starlight Investments spokesperson

[When that front door swung wide open, she flung her diamond ring, said, give it away!]

And this is where things got stupid.

And I mean really stupid. Like ignore the Corporate Finance department stupid.

All of a sudden, Councillors started falling over themselves to win back the Toronto suitors. [Actually, doesn’t that sound like a good sports team name? Maybe we could see the Edmonton Suitors play in the CFL…]

In a flurry of motions and amendments, first it was bumped to $11.3 million, but by the time the dust settled, Council was voting on a $20 million package, which passed by a vote of 9-7.

Poor Corporate Finance department. It sounds like their advice is starting to go the way of the Planning, Property & Development department’s. [Oh, PP&D, that Rodney Dangerfield of City departments…]

All for the chance at a fancy ribbon-cutting.

Anyways, once the feds OK their $20 million, Starlight will have amassed a total of $68.7 million in government incentives for this project, for those keeping a tally at home.

That’s eerily close to the $69.9 million they are paying to buy the place. It’s almost like they’re getting it for free.

Never mind that, only $47 million of the purchase price went to the governments, the rest went to the private owner of the building.

So let’s do the math here that my 2nd-grader can do:

The City, Province and Feds sold the land and parkade for $47 million to Starlight.

And now, they are offering Starlight $68.7 million in incentives.

They have effectively given the land and parkade away for free, along with a $21.7 million cheque, to Starlight in the hopes that this one single project will finally, after all these years, answer all of our prayers. Have we learned nothing?

On top of it all, if they were just going to give it all away, with a bonus $21.7 million cheque, shouldn’t there have been some sort of open tender process, so that everyone in the City had an equal chance to bid?

They could have simply written a $47 million cheque to the Forks, given the land and parkade away to the winning bidder along with $21.7 million, which the bidder could use to buy the building from its owner, then proceed with their development. The end result is the same. The cost to our different levels of government is the same. At the very least, it would have been a much more transparent way of giving away a public asset for free.

Heck, one of the bidders might even have been a partnership of various community groups from the downtown neighbourhood. They might have proposed to simply take ownership of the land and parkade, NOT buy the mall with the $21.7 million, but instead invest it, along with the annual $4-5 million in land lease/parkade revenue, into social programs to combat homelessness, poverty, the meth crisis, food insecurity, or really anything else they’ve identified as beneficial to THEIR own neighbourhood. And as the neighbourhood improved around them thanks to their efforts, god forbid they could share in the bounty of increased community wealth in part due to their ownership of the very land they sought to improve.

But I guess we’ll never know.

Because we gave it all away to the first handsome stranger who came into town. [Give it away, give it away, give it away now!]

And I’m no legal expert, but I have to ask, with all those Indigenous land claims outstanding, is the Federal government even allowed to dispose of any interest in land, even an indirect, partial one, without giving Indigenous Nations a right of first refusal on it?

Naive me, I thought that was decided with Kapyong. But I guess the law is complicated, so even if it wasn’t, in the interest of Reconciliation, I’d still say every level of government has a moral obligation to give Indigenous Nations at least a heads up if they’re planning on giving away ANY public land.

And if you’re a City Councillor reading this who just realized you’ve made a huge mistake, it’s probably not too late to lobby your federal MP to kill this deal now.


Elmwood Guy