From:
http://www.theglobeandmail.com/servl...Story/National
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City, private partner blame each other for collapse of Union Station deal
JENNIFER LEWINGTON
CITY HALL BUREAU CHIEF
When the deal to revitalize Union Station fell apart this week, it had already been on life support for months.
Now the city's five-year effort to renew the landmark transportation hub with a private-sector partner is all but legally dead.
After years of controversy and delay, the city and Union Pearson Group lost faith in each other's ability to cross the finish line, a May 31 deadline to close the deal.
"We simply ran out of time," UPG spokesman Ron Taylor said.
Pressed, he said "UPG and all of the stakeholders have lost confidence in the city's ability to deliver the things we need to do this."
"This is a story about money," said one city source, questioning whether the consortium was ready to put up funds to proceed.
Though technically alive, the consortium crumbled in recent months as several members, some with new owners, opted out of the project.
"We are not in a position to put up equity," said Cubie Dawson, a senior official with New York-based Jones Lang LaSalle, a consortium co-founder now active only as a project consultant. "We have other investments we're looking at."
A spokeswoman for Brookfield Properties, which bought consortium member O&Y Properties Corp. last fall, said "we have no involvement" in the project. A spokeswoman for Oxford Properties, the real estate arm of OMERS (another UPG founder), said "we are no longer part of the consortium."
Consortium officials, who stress the six members technically remain as shareholders, dismiss the finance question as a "red-herring."
Instead, they blame the city for failing to produce key legal documents for the closing.
City officials are still negotiating leases with GO Transit and Via Rail, and drafting terms of a new governing body for the station. The city says it will meet obligations to prepare the documents by May 31.
That's not good enough, said John Levitt, a senior consultant to UPG. "I don't believe it is appropriate for the city to table these documents at the 11th hour and expect UPG to deal with lenders and investors at this late date."
He blames Mayor David Miller. "For the last 2½ years, the political signals we were getting from the mayor's office is that 'we want to see this deal happen.'
"When we asked for help . . . we got none," Mr. Levitt said.
One result of the deal's demise is the loss of the Ontario Archives as a possible tenant in Union Station, one of four sites short-listed by the province. UPG recently bid to house the archives in the west wing of the station, but needed more time to revise the consortium's original concept plans for that area.
At city hall this delay was not viewed as a deal breaker. But it was another hiccup in a drawn-out exercise that, rushed at the beginning, seemed doomed at the end.
In 2000, the city purchased Union Station, with a plan that included turning it into a tourist destination.
In 2002, Union Pearson Group won the job to renew it under a 100-year lease, beating a Chicago-based consortium.
But the selection immediately came under fire from critics, later enraged that key documents tied to the secret selection process had been shredded. In 2003, a review by the provincial Integrity Commissioner concluded that the process, though flawed, was fair.
Last November, council set a firm date of May 31 to complete the deal.
The deal died on Monday.
Consortium chairman Larry Tanenbaum, at a meeting with Mr. Miller, appealed for the mayor to win council backing to extend the deadline for three or four months.
Mr. Miller declined, citing three earlier extensions. His decision astonished council critics, who assumed he had the votes to buy time.
"I felt a couple of years ago we should move in another direction," said administration committee chair Sylvia Watson.
The clearest sign of council's political will was the silence that followed this week's news. Despite lopsided votes for the project during the past five years, including one in February, no councillor was ready to fight for an extension.