This week's audit of the City of Winnipeg's real estate transactions sheds light on how warnings about the city's involvement with local developer Shindico on projects such as the purchase of the former Canada Post building were ignored by former top bureaucrat Phil Sheegl.
The city acquired the building on 266 Graham Ave. and is converting it into the Winnipeg Police Service's new headquarters.
The Ernst & Young report's executive summary, released on Wednesday, said no appraisal was performed by the city on the building, and that fact wasn't disclosed in city reports recommending that council approve the purchase.
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City council has asked for a separate audit of the cost overruns related to renovating the building into the new police headquarters.
The report said Shindico was awarded contracts as the exclusive broker of the building as well as its manager.
Shindico was also at the centre of a land swap involving fire halls — a controversial land deal that prompted city council to order this audit in the first place.
The EY audit found that the awarding of the contract also involved Phil Sheegl, who resigned as the city's chief administrative officer shortly before a separate audit of the fire hall land deal was released, and current acting CAO Deepak Joshi.
Below are highlights of the Canada Post building management contract process. The full timeline is on page 117 of the EY report, which you can read here.
No one from Shindico was available to comment on Thursday.
July 15, 2008
Phil Sheegl, who was then director of the city's Planning, Property and Development Department, emails Shindico saying, "Call me about Canada Post." At the time, the city was still evaluating which companies would qualify to work on major real estate transactions, including the Canada Post building project.
Jan. 9, 2009
Sheegl, who by then had become deputy chief administrative officer, emails the new Planning, Property and Development director, Deepak Joshi, regarding a meeting outside city hall — to be held at the home of a Shindico representative — to prepare a proposal.
Jan. 21, 2009
Shindico signs on as the exclusive broker for the deal. Its one-year contract is backdated to Jan. 1.
Feb. 17, 2009
In an email, the manager of the city's Real Estate Division warns Sheegl and Joshi that "the real estate community is starting to talk," and recommends using other pre-qualified brokers instead of Shindico.
March 4, 2009
A city real estate official raises an issue internally — that brokers have been calling the city "expressing concern over the decision making process in choosing one of the five pre-qualified proponents," according to the EY report.
Sept. 29, 2009
Sheegl approves a $100,000 advance to Shindico on real estate commission.
In an email to Joshi, Sheegl writes, "Just treat the $100,000 as an advance on the commissions. In the case that we don't close this would still be a reasonable amount for all the work done so far by the Proponent," according to the audit report.
The letter goes on to say, "Just make sure it is understood that this is an advance on the total commissions payable to the Proponent."
Nov. 19, 2009
Sheegl emails senior city management stating that Shindico will manage the property at 266 Graham Ave.
Nov. 25, 2009
City council approves the purchase of the former Canada Post building for $29.25 million.
Dec. 7, 2009
Shindico receives $804,375 in commission related to the sale of the building, according to the audit report. That detail would become public in 2011 thanks to a Freedom of Information request filed by the Canadian Taxpayers Federation.
Dec. 23, 2009
An employee of the Property Management Department sends an email expressing concern that an external party is managing the property. "He feels the property could have been managed internally," according to the audit report.
Dec. 24, 2009
Sheegl emails Joshi saying he is "not going to let the City employee meddle in the deal," according to the EY report. Shindico is copied in the email.
June 29, 2010
After Shindico has been managing the property for months, the City of Winnipeg and Shindico finally sign a property management contract for 266 Graham Ave. The start date shown on the contract is Dec. 1, 2009, a date six months earlier.
Aug. 14, 2011
Information provided by the city to the Canadian Taxpayers Federation under a Freedom of Information request outlines the commission/payment that Shindico has been paid for the Canada Post building project and two others..
It indicates that Shindico received $157,621.16 in management fees in 2010 for the building. The project was never put to tender, so no other companies could bid on the work.
April 26, 2012
Nearly two years after it was signed, city lawyers ask to see the Canada Post building management contract. Upon review, they say it puts the city at risk.
Nov. 6, 2012
The city's standing policy committee on property development decides to give Shindico 90 days' notice that it will terminate the property management agreement.