City's executive policy committee votes in favour of $5M for Portage Place redevelopment
'To be quite honest, at $5 million, the deal is dead,' company spokesperson says
Councillors on Winnipeg's executive policy committee voted Wednesday to provide a grant of up to $5 million to support a massive redevelopment of Portage Place Mall.
Starlight Investments, the company that struck a deal to buy and redevelop Portage Place mall in 2019, says without more funding from the city, it won't go ahead with its plans.
The Toronto-based company has said it needs $20 million from the municipality to move forward. A report from city administrators recommended giving the $5 million through tax increment financing over 10 years.
"This is quite shocking to me and to be quite honest, at $5 million, the deal is dead," Starlight spokesperson Marni Larkin said prior to the committee's vote.
Mayor Brian Bowman said the redevelopment of Portage Place was "a potentially transformative investment" in the city's downtown and supported providing some funding.
However, Bowman says the report contains an analysis showing the city was the smallest player between the three levels of government. The report also says the city would receive a modest return on its investment in the project and wants to see what the federal government will contribute.
"The return on investment is heavily weighed toward the federal and provincial governments … and the feds aren't in yet," Bowman told reporters Wednesday.
The City of Winnipeg, the Manitoba government and the federal government accepted the company's conditional $69.9 million offer last summer to buy Portage Place. All three levels of government are shareholders in the property through the North Portage Development Corp.
In a letter sent to city administration, Starlight says it is $60 million short of what is needed for its plans for the mall and requests $20 million each from the city, provincial and federal governments.
The city's funding recommendation is based on "an assessment of the tangible and intangible benefits to downtown and the city overall," the report says.
It also reflects that the project's direct financial benefit to the city is limited, the report says. Tax increment financing, or TIF, is a funding mechanism that uses future property tax revenue to stimulate development.
Michael Jack, the city's chief corporate services officer, told councillors on EPC the report "was coming in hot, at the 11th hour," with the August deadline for the deal looming and only one city council meeting left this summer to approve any support for the development.
Jack says the fundamental principles on how the city had issued TIFs to other projects such as True North Square and at the Forks were applied to the Starlight proposal, but acknowledged the process "was more of an art than a science."
'Willing to meet terms': Starlight
Fort Rouge-East Fort Garry Coun. Sherri Rollins told her fellow EPC members "we need to give this a real look … it's once in a generation."
"This is not about a $5 or a $20 million cheque. It's about making the deal work. It's always been bigger than council. In this deal we are setting the stage for others to succeed."
In May, the province pledged $28.7 million in tax increment financing for the project.
Larkin said Starlight was surprised by the city report, as discussions with the city had been going well, and the company felt it had clearly outlined the benefits of the project to the city.
"We're not saying, 'Could you write us a cheque for $21, $20 million tomorrow and we'll just carry on work?' We're willing to meet terms, we're willing to bend over, we're willing to extend the timing of the payments [from the city]," she said.
St. Boniface Coun. Matt Allard was the lone EPC member to vote against accepting the report and the $5-million grant.
"It seems to me we'd be voting on a dead deal.… I have some reservations," Allard said.
City council will hear the recommendations of the report next week.
With files from Sean Kavanagh and Sarah Petz