The recently released fire hall audit report included damning information about how the city gave preferential treatment to local land developer Shindico. 

For example, it noted a private conversation between former fire chief Reid Douglas and former CAO Phil Sheegl on April 20, 2009, in which Sheegl apparently said, "I want Shindico to build these fire halls."

Douglas was said to have replied, "Then lets [sic] hope they're the low bidder then," according to the report.

On Jan. 26, 2012, Douglas outlined the land swap in an email to Sheegl and Deepak Joshi, the city's chief operating officer:

"My proposal to Bob for the Taylor site is as follows: We give them — Mulvey, Berry and Grosvenor including a 100K forgive on the monies owing on Grosvenor residual. They give us — the Taylor property in its entirety. In my estimations it is 1M saw off," he wrote.

"Get it done," Sheegl replied just over an hour later.

Then on March 29, 2012, the city's real estate manager sent an email to Barry Thorgrimson, the city's director of planning, property and development, seeking some "coaching."

"I need some coaching Boss," the manager was quoted to have said. "How are we doing to justify this land exchange[?] This deal favours Shindico by about $1.03M."

The manager also wrote, "We did advise Reid [Douglas] early on not to include the Mulvey site and rather just include the other two fire halls and pay the balance in cash. Also, there are complications with Mulvey (ie. lane widening required, variances, subdivide out Harbour Master)."

According to the report, Thorgrimson "apparently advised" the real estate manager to meet with Sheegl.

'It doesn't look good,' says councillor

Mayor Sam Katz and Sheegl have long been known to be friends, while Katz and Shindico president Sandy Shindleman were co-owners of the Winnipeg Goldeyes baseball club for about a decade.

Katz said on Monday that he is no longer a business partner of Shindleman, but Coun. Paula Havixbeck said the controversy doesn't bode well for the mayor.

"It doesn't look good. He is so closely tied," she said of Katz. "We know Phil Sheegl is his friend. When we went through this hiring process, he asked most of us to support him for the CAO.

"Look at where we've come. City hall has never looked worse."

Coun. John Orlikow said Katz should explain why he allowed Sheegl to resign and walk away with a severance package last week.

"I would not have accepted his resignation," Orlikow said. "Personally, if I was there I would have said, 'No, I'm not accepting your resignation. We'll wait until after.' He can choose to resign as well, but then you're not getting the package."

Orlikow said it's frustrating that council cannot question either Sheegl or Douglas since they are no longer city employees.

The councillor added that he thinks the Manitoba government should intervene in the matter.

"It's pretty hard for us as a city hall now, when you have the mayor being such a close friend with the CAO, when all these people [are] involved, and all these other questions that keep laying out," Orlikow said.

"We're hiding behind the confidentiality veil, that a third party, such as the province, may need to get involved."