City seeks arbitration over police HQ costs because it can't sue contractors
Mayor says taxpayers shortchanged by deal which prevents city from seeking compensation in court
The City of Winnipeg wants money from the contractors responsible for its problem-plagued police headquarters — but has signed away its right to sue.
Mayor Brian Bowman said the city served notice Tuesday to the builder and designer of the downtown project that it intends to seek compensation for project deficiencies that add up to "a significant amount of money."
Bowman said the city informed Winnipeg construction contractor Caspian Projects and Ottawa structural engineering consultant Adjeleian Allen Rubeli that Winnipeg intends to use an arbitrator to recover the cost of problems with the Graham Avenue HQ, which opened in 2016.
The city gave up the right to sue the contractor or the designer as part of a contract signed by the previous city administration, said Bowman, describing that deal as unusual.
"Arbitration, we are advised, is our only option for seeking compensation for deficiencies on the project. Our CAO has advised it is unusual for the city to have a contract in place that removes our ability to sue," Bowman told reporters at city hall following an executive policy committee meeting.
"It is pretty clear to me that the best interests of the City of Winnipeg and taxpayers were not paramount by those responsible for entering the contract with Caspian."
The city's police headquarters was built within the shell of Canada Post's old downtown office and warehouse complex. City council approved the purchase-and-renovation project in 2009 at a budget of $130 million.
By the time the project was completed in 2016, it cost taxpayers almost $214 million, not including all financing charges.
The project was the subject of a scathing external audit that was completed in 2014 and also has been under RCMP investigation since December 2014.
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Design and construction issues with the project, including holding rooms with false ceilings and vehicle ramps with insufficient headroom, were disclosed by city officials during the construction process. Additional problems, including ventilation issues and leaks, were identified by the city after it took possession of the building.
Winnipeg chief administrative officer Doug McNeil said city property officials have compiled a list of deficiencies, but would not disclose what they are, how much they have cost the city to date and how much they will cost to repair.
"It's a significant amount of money we would like to recoup," he said, adding the arbitration process prevents him from saying more.
"Part of the arbitration process is it's a private, confidential process. That's why we prefer the lawsuit route, because it's much more open and you can see what we're doing," McNeil said Tuesday.
"My experience as a public servant is we usually retain a right to sue."
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Bowman said he has never heard of a contract where a municipality gives up the right to seek legal action to address deficiencies.
"The city under the previous administration tied its hands to arbitration," Bowman told reporters. "I have never heard of this and I don't believe it is common."
McNeil said outside legal counsel was employed to put together this contract. He declined to identify the firm in question, explaining that firm was simply doing as its client asked.
McNeil also said he is not certain which former city official signed the contract, but pegged its signing in late 2011 and said CAOs usually oversee contracts.
Bowman said Winnipeg chief financial officer Mike Ruta attempted to intervene, with little success.
"We've been advised he made attempts," the mayor said. "The practices and the oversight of the CAO were limited under the previous administration."
Premier Brian Pallister has rejected this call, saying the RCMP must complete its investigation into the police HQ project first.
Minister of Municipal Relations Jeff Wharton hinted the province is open to the idea of an inquiry after the RCMP are finished investigating.
Bowman and McNeil said they have not been briefed by the RCMP about its investigation.
Adjeleian Allen Rubeli principal Peter Chang said he has no comment on the arbitration or the police HQ project.
"We just finished the project and it's a project we'd like to forget," he said over the phone from Ottawa.
Caspian did not immediately respond to requests for comment.