City meets with Lake Placid
Officials suggest new deadlines be set for project payments
By David Hutton, The StarPhoenix August 19, 2009
The city's administration is recommending councillors set a deadline of the end of the month for Lake Placid Developments to come through with the $214,197 in interest it owes the City of Saskatoon for its River Landing Village mega-project.
If that payment is made, the company will have until Oct. 30, two days after the fall civic election, to pay the $4.55 million it owes the city for the land south of 19th Street, across from Persephone Theatre. This must be done before the developer can break ground on the proposed $200-million-plus hotel-condo-retail-office project.
"I'm still hopeful that Lake Placid has just encountered a number of difficulties in securing financing," said city manager Murray Totland. "I want to think that that's what this is and I've received assurances that that's what the situation is and financing is imminent.
"I think it's in our best interest for the city for this deal to proceed."
Lake Placid CEO Michael Lobsinger will face questions from councillors at a special meeting at 11 a.m. today after missing a Monday payment deadline.
Some on council argue an extension is warranted if the interest is paid by month's end, given the global economic trouble, while others believe it's time to find a new developer for the land sooner rather than later.
If the extension isn't granted by council, then Lake Placid would be in default and the city would be forced to take back the land and search, yet again, for a developer for one of the city's most valuable riverfront properties.
"We don't have a Plan B sitting on the shelf here at City Hall," said city manager Murray Totland. "We'd need to go back to the drawing board of sorts and rethink how'd we'd like to go forward on perhaps a different proposal."
There have been other local developers who have shown an interest and have the "financial wherewithal" to build a cornerstone project on the site, said Coun. Gord Wyant.
"I want to hear what Mr. Lobsinger has to say," Wyant said. "It's hard to believe he's not genuinely interested in moving this project forward.
"But at some point in time we have to move forward on this project. If there are people who are genuinely interested in moving forward on that land (other than Lake Placid) we have to give them the opportunity sooner rather than later."
Lobsinger, in a two-page letter to council, said his company has spent more than $6.5 million toward the project, including land acquisition, finance fees, designs and marketing, among other costs. Lake Placid made two downpayments totalling $250,000 late last year.
The company has pre-sold 50 condo units, the letter states.
Lobsinger argues funding for the project "will be released to us shortly." With problems securing funds from Canadian banks because of the global credit crisis, the company turned to overseas lending institutions but is having difficulty obtaining the financing, he wrote.
"This process has taken far longer than we originally anticipated," he wrote.
The development at the cornerstone River Landing site is crucial in attracting private development for the rest of River Landing, which counts Persephone Theatre, which had some public funding, as the only private-sector tenant thus far.
Without "meaningful" private-sector investment, it becomes difficult to attract solid proposals for housing and restaurant developments on the other sites the city has up for sale in the south downtown, Totland said. The city is also relying on those land sales to finance $6.3 million in cost overruns on Phase 2 riverfront projects, west of the Senator Sid Buckwold Bridge.
"I think it's a catalyst for the River Landing project and will allow the other plans that we want to unfold to come to their full value and fruition," Totland said. "It makes River Landing what we always said it should be. Suddenly the whole site is animated and it starts fulfilling the mandate envisioned for it."
As for what he expects of the meeting, the city manager said he's hopeful.
"I'd love to see them bring a $5-million cheque to council tomorrow," Totland said, laughing. "That would prove they're committed."
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