Winnipeg | RBC Convention Centre | Expansion | Completed

[bomberjet]

Well it's hit council floor now, only 4 months later. Chipman's are to buy the land as assessed by a real estate appraiser. So basically the value of the land, which is around $2-2.5M IIRC. Take the $3.75M from Stuart Olsen and we're getting closer to the $6.5M CV paid for it.

[Winnipeg Architect]

Originally Posted by bomberjet

Well it's hit council floor now, only 4 months later. Chipman's are to buy the land as assessed by a real estate appraiser. So basically the value of the land, which is around $2-2.5M IIRC. Take the $3.75M from Stuart Olsen and we're getting closer to the $6.5M CV paid for it.

Demo?

[bomberjet]

^ I guess. Anyone know what's going on with the other MPI lots. On Donald?

[Danny D Oh]

Originally Posted by bomberjet

Well it's hit council floor now, only 4 months later. Chipman's are to buy the land as assessed by a real estate appraiser. So basically the value of the land, which is around $2-2.5M IIRC. Take the $3.75M from Stuart Olsen and we're getting closer to the $6.5M CV paid for it.

This city is laughably bad at handling the sale of any parcel of land that has value. We've seen this with the former arena site, Winnipeg Square parkade, former stadium site and now in this debacle.

I'm not against subsidizing when there is little value to spur development, but cripes we've gotta take advantage when there is value.

[Simplicity]

Originally Posted by bomberjet

Well it's hit council floor now, only 4 months later. Chipman's are to buy the land as assessed by a real estate appraiser. So basically the value of the land, which is around $2-2.5M IIRC. Take the $3.75M from Stuart Olsen and we're getting closer to the $6.5M CV paid for it.

Chipman's aren't buying anything at the moment. It's going to an RFP.

The issue is a little broader than just making up the money. CV's been insisting they were left with no option but to give it to True North after Matthews Southwest - in their words - abandoned the project. It was said they weren't prepared to kick in for demolition costs and they weren't prepared to split carry costs on a pro rata basis (they only wanted and needed 2/3rds of the site). CV is also implying they received no 'credible' overtures based on some subjective set of criteria nobody but they know. And irrespective of that criteria, I don't doubt they're telling the truth. Nobody in their right mind was going to pay $6.6MM plus demo, plus finance costs, plus carry costs, plus everything else for that site. Ever. And True North wouldn't either, which is why they aren't.

But it's not credible to say somebody abandoned the site when that's only half the story. The people that abandon the site at say $7.5MM because CV fucked up the valuation probably don't do it at $2-$2.5MM if there's government incentive (which CV let slip this afternoon, True North will be seeking lots of it). And that's been the issue all along. Everybody knew the site was undevelopable at that value. That doesn't make everybody but True North derelict. It means CV was only prepared to fold that tent when Chipman asked them to. And given there were multiple responses to the RFP on the MPI lot across the street, there's no reason at all to believe there isn't still interest from the same groups, especially at a more reasonable land valuation.

And if anybody wants to believe a word out of anybody at CV, months after this True North option was already contemplated and signed, McGowan was still out promising a developer was lined up to pay full freight including demolition.

[trueviking]

............

[bomberjet]

You are correct Simplicity. I should have said whomever is developing the land will not be given the site. Rather they need to purchase it at market rate.

[biguc]

Originally Posted by bomberjet

Well it's hit council floor now, only 4 months later. Chipman's are to buy the land as assessed by a real estate appraiser. So basically the value of the land, which is around $2-2.5M IIRC. Take the $3.75M from Stuart Olsen and we're getting closer to the $6.5M CV paid for it.

As I understand it, the convention centre already paid Stuart Olsen 18 million to build a hotel. Getting 3.75 million back doesn't put anyone closer to even. The city's out another 14 million on this project.

[bomberjet]

I'm not quite sure that's the case. I think the hotelier was required to pay for and build their own hotel, no? This was just the site and a requirement of Stuart Olson getting the contract to build the convention centre. If so the City is just being completely fucking dumb.

[Simplicity]

Originally Posted by biguc

As I understand it, the convention centre already paid Stuart Olsen 18 million to build a hotel. Getting 3.75 million back doesn't put anyone closer to even. The city's out another 14 million on this project.

There was a hold back built into the contract stipulating that if Stuart Olson doesn't build the hotel, they forfeit $16MM of the total $180MM contract value. Matthews Southwest was to be the hotelier, Stuart Olson the contractor on that portion. They identified the Carlton Inn site as being the most realistic given that Lakeview - who owns the surface lot kitty-corner across York - was planning on a hotel at the time and thus wasn't interested in putting their site up for sale (and they'll probably never be). They tried to negotiate with the owners of the Carlton Inn and weren't successful. CV got involved and overpaid for the site expecting Matthews Southwest to take it off their hands. They didn't. Along with waning hotel demand and a land value that blew the project, they bolted. Stuart Olson then had to find another party and contracted Colliers to do it. The word publicly was that anybody who was even looking at the site was to pay both full value ($6.6MM) plus demo and make CV whole. CV then sent a cease and desist to Colliers telling them they had no right to market the land on behalf of Stuart Olson and in the meantime had already signed an option with True North at what they're calling a 'fair market value' - an obvious discount to what they've paid.

Two reasons that $16MM is now completely unenforceable: 1) CV never told Stuart Olson the land was now being sold off at 'fair market value' and not what they paid plus costs. That changes things immensely. 2) CV actively undermined Stuart Olson's ability to market the site with nothing in writing they were done with it. In fact, Bob Silver said that the WCC and Stuart Olson were still actively seeking a hotelier up until a month ago. But it's a moot point anyway; the site had effectively been under a binding option contract to True North as of June 12th. Even if Stuart Olson had brought somebody, there was nothing left to be had. The land was already effectively sold. No amount of Vossen trying to rationalize CV's actions by insisting Stuart Olson wouldn't have brought a 'credible' developer to the table or that they would have brought a '2-star' hotel to the site changes these facts.

CV cost the city the money and they're lucky the $3.75MM is coming at all. There's no doubt in my mind that CV frustrated Stuart Olson's ability to carry out their obligation enough that the courts would likely both leave them without liability, but perhaps even with damages. It's not worth going there.

We're lucky we're getting anything.

[Riverman]

^ I thought the lot on the corner across from the Carlton Inn was owned by the church.

[Simplicity]

Originally Posted by Riverman

^ I thought the lot on the corner across from the Carlton Inn was owned by the church.

Sorry, should've clarified. Kitty-corner to the east. Directly across the street from 155 Carlton.

[biguc]

Originally Posted by Simplicity

There was a hold back built into the contract stipulating that if Stuart Olson doesn't build the hotel, they forfeit $16MM of the total $180MM contract value. Matthews Southwest was to be the hotelier, Stuart Olson the contractor on that portion. They identified the Carlton Inn site as being the most realistic given that Lakeview - who owns the surface lot kitty-corner across York - was planning on a hotel at the time and thus wasn't interested in putting their site up for sale (and they'll probably never be). They tried to negotiate with the owners of the Carlton Inn and weren't successful. CV got involved and overpaid for the site expecting Matthews Southwest to take it off their hands. They didn't. Along with waning hotel demand and a land value that blew the project, they bolted. Stuart Olson then had to find another party and contracted Colliers to do it. The word publicly was that anybody who was even looking at the site was to pay both full value ($6.6MM) plus demo and make CV whole. CV then sent a cease and desist to Colliers telling them they had no right to market the land on behalf of Stuart Olson and in the meantime had already signed an option with True North at what they're calling a 'fair market value' - an obvious discount to what they've paid.

Two reasons that $16MM is now completely unenforceable: 1) CV never told Stuart Olson the land was now being sold off at 'fair market value' and not what they paid plus costs. That changes things immensely. 2) CV actively undermined Stuart Olson's ability to market the site with nothing in writing they were done with it. In fact, Bob Silver said that the WCC and Stuart Olson were still actively seeking a hotelier up until a month ago. But it's a moot point anyway; the site had effectively been under a binding option contract to True North as of June 12th. Even if Stuart Olson had brought somebody, there was nothing left to be had. The land was already effectively sold. No amount of Vossen trying to rationalize CV's actions by insisting Stuart Olson wouldn't have brought a 'credible' developer to the table or that they would have brought a '2-star' hotel to the site changes these facts.

CV cost the city the money and they're lucky the $3.75MM is coming at all. There's no doubt in my mind that CV frustrated Stuart Olson's ability to carry out their obligation enough that the courts would likely both leave them without liability, but perhaps even with damages. It's not worth going there.

We're lucky we're getting anything.

I hear that. But in a strictly hypothetical way, if centreventure hadn't tried to get a hotel going as part of the convention centre expansion, the convention centre could have paid 16 million (or something) less than the 180 they are paying Stuart Olsen?

[bomberjet]

The way I see it. Convention centre cost $180M. Then they placed a $16M holdback on that project to ensure that Stuart Olson worked out a deal to get the hotel built. If they didn't get that part of the project done, they would lose out on $16M from the convention centre contract (which was never signed I guess). So now since they worked out a deal for $3.75M in penalties, since CV got there dirty mitts allover everything. I think the City gave up on that because they would likely get torn a new hole if this went to court, with Stuart Olson walking away scott free and the City picking up the tab for legal fees and the rest.

But maybe I'm wrong and the City really is getting the shaft on the $16M. I'm not privy to any of the cost estimates, contracts or the like. So can't really say.

[bomberjet]

...

[CoryB]

This is my understanding of the situation:

The contract with Stuart Olson for the entire project is still unsigned and any portion of the contract, including the holdback and requirement to build a hotel, could still be disputed. This potential dispute could place the entire project in a state of limbo. Rather than deal with a questionable enforceable contract they settled.

[biguc]

Originally Posted by bomberjet

The way I see it. Convention centre cost $180M. Then they placed a $16M holdback on that project to ensure that Stuart Olson worked out a deal to get the hotel built. If they didn't get that part of the project done, they would lose out on $16M from the convention centre contract (which was never signed I guess). So now since they worked out a deal for $3.75M in penalties, since CV got there dirty mitts allover everything. I think the City gave up on that because they would likely get torn a new hole if this went to court, with Stuart Olson walking away scott free and the City picking up the tab for legal fees and the rest.

But maybe I'm wrong and the City really is getting the shaft on the $16M. I'm not privy to any of the cost estimates, contracts or the like. So can't really say.

I think you're right that 3.75 is the best the city could hope to get back at this point. It's just looking like even with that, this whole stupid endeavour has cost the city close to 20 million between the Carlton Inn purchase and paying Stuart Olson to do something, then later telling them to fuck off.

[DavefromSt.Vital]

Interesting, Marriott has bought the Delta chain:

http://www.newswire.ca/en/story/1477795/...ment-to-acquire-delta-hotels-and-resorts

It is therefore less likely that any new hotel in the SHED would be a Marriott

[Simplicity]

Originally Posted by biguc

I hear that. But in a strictly hypothetical way, if centreventure hadn't tried to get a hotel going as part of the convention centre expansion, the convention centre could have paid 16 million (or something) less than the 180 they are paying Stuart Olsen?

It goes beyond this a little. The city wanted the hotel because the taxation that would eventually arise would be used to underwrite a portion of the $33MM the city had committed to the WCC - an arm's length division of the city. When Stuart Olson couldn't close on the site at a reasonable cost, CV got involved to put the deal together with money that was loaned to it by the city in the form of a line of credit because that's what CV does for the city. They're an arms length development bank (or at least that was their original mandate). And the development agreements with the province and feds had stated that the hotel was to be attached to the WCC because that's the convention centre model and that was the basis under which their funding came. So it's not quite true to say they wouldn't have had to spend the money because it's questionable as to whether there was any expansion at all without that 2nd and 3rd level funding that was at least partially dependent on a hotel.

You're right in that CV ultimately screwed it all up. But that also doesn't mean you'd see $16MM from Stuart Olson. You're better off settling than having the land tied up in a protracted legal battle where the terms of the deal are at issue. Nobody could force the family to sell the hotel. They took what they wanted. The question is really about, as a Winnipegger, you think the Carlton Inn was such a derelict nuisance that taking it out at nearly any cost was worth it.

I'm on the fence about that. Either way, CV should've conceded they were trying to socially engineer an area, taken the writedown and political lashing that went with it, and allowed Stuart Olson to continue at the discount True North was getting. If they were still unable to proceed, then you put it out for RFP. CV didn't quite cost the city $12.75MM like it would appear on the surface. It's far more nuanced than that, unfortunately...

[buzzg]

Originally Posted by Simplicity

It goes beyond this a little. The city wanted the hotel because the taxation that would eventually arise would be used to underwrite a portion of the $33MM the city had committed to the WCC - an arm's length division of the city. When Stuart Olson couldn't close on the site at a reasonable cost, CV got involved to put the deal together with money that was loaned to it by the city in the form of a line of credit because that's what CV does for the city. They're an arms length development bank (or at least that was their original mandate). And the development agreements with the province and feds had stated that the hotel was to be attached to the WCC because that's the convention centre model and that was the basis under which their funding came. So it's not quite true to say they wouldn't have had to spend the money because it's questionable as to whether there was any expansion at all without that 2nd and 3rd level funding that was at least partially dependent on a hotel.

You're right in that CV ultimately screwed it all up. But that also doesn't mean you'd see $16MM from Stuart Olson. You're better off settling than having the land tied up in a protracted legal battle where the terms of the deal are at issue. Nobody could force the family to sell the hotel. They took what they wanted. The question is really about, as a Winnipegger, you think the Carlton Inn was such a derelict nuisance that taking it out at nearly any cost was worth it.

I'm on the fence about that. Either way, CV should've conceded they were trying to socially engineer an area, taken the writedown and political lashing that went with it, and allowed Stuart Olson to continue at the discount True North was getting. If they were still unable to proceed, then you put it out for RFP. CV didn't quite cost the city $12.75MM like it would appear on the surface. It's far more nuanced than that, unfortunately...

As for the Carlton Inn itself, I really don't think it was that bad. Sure it wasn't a Delta/Radisson/Alt/Etc, but compared to many of the other hotels like it in the city, it was at least fairly clean outside and didn't look too bad, and there wasn't too many problems there. It had at least been painted recently.