December 21, 2003

The City and Candarel

This sorry story starts with the late Mr. Landry, President of Chrysler Canada being persuaded to relocate that company’s Canadian headquarters in downtown Windsor. It appears that to overcome an apparent reluctance by Mr. Landry, it was suggested that the taxpayers of this city would construct a suitable building to accommodate the headquarters. Mr. Landry finally agreed but only if he was granted the sole right to designate the developer. The city’s representatives agreed to this unusual request and immediately lost control of a project being publicly funded. Daimler/Chrysler agreed to lease space in the new building, but other than the cost of fitting out the floors they occupied, they would not be required to contribute to the capital cost of the project. The rest is history.

We all remember the fanfare accompanying the announcement of this “glorious” addition to the waterfront. A thirty-two storey edifice with a shining pentagram, slated to be the tallest building between Windsor and Toronto. It would be the envy of General Motor executives across the Detroit River, and the catalyst for a downtown revival. It has to be assumed that the council members were naïve, misled and misinformed. This is the only conclusion to be drawn from their approval to expropriate the Norwich Block before a definitive building design and signed rental agreements were completed. Their later approval to rent two floors of unnecessary space at a ridiculously high rental, cries out for an explanation.

From the outset, the project was doomed and should have been very quickly abandoned. Despite rumours to the contrary, tenants were not found and the original design and scope of the building was soon just a memory. It suffered contraction after contraction until all that remained was a run of the mill development and very little reduction in cost.

The published cost of expropriation was $15 million, a figure that was immediately challenged by many developement professionals.. When it became abundantly clear that the estimated cost was, in fact, totally inadequate, the administration began a programme of opposition to those seeking legitimate compensation. It is a matter of speculation whether that unfortunate action was implemented independently by the administration, or initiated by the Mayor and city council. The treatment meted out to Elias Delicatessen clearly illustrated a desperate attempt to try and justify the faulty estimated cost of expropriation. After refusing to entertain a settlement for three years, the city initiated a hearing before the OMB. To save approximately $100,000 of Elias Delicatessen’s claim, taxpayers were hit with a legal bill for close to $1.5 million. This resulted in a loss of $1.4 million on this single claim alone. How dramatically highlighted is the poisonous atmosphere in city hall where taxpayers were regularly treated as adversaries. A subsequent lack of opposition, points to council’s support for the disgraceful treatment of those who suffered the traumatic experience of expropriation. After three years there are still many claims outstanding. They should be negotiated and settled without delay, negating the necessity of high priced legal proceedings.

The Candarel scandal continues to drain the city’s finances. Without an official public report it appears that a conservative minimum estimated cost is $2 million a year for the foreseeable future. I have examined the documents supporting the Candarel master agreement and lease. Without legal training the documents are extremely difficult to understand.

However, a question arises as to the extent due diligence was applied on behalf of this city. There is to be a challenge to Candarel’s interpretation of the lease. Perhaps it is time to challenge the whole agreement.

Whatever happens, taxpayers have the right to seek answers to this ongoing scandal. The current council has an obligation to pursue and publish a full report naming those who were responsible and hold them accountable. Further, council must give reassurance that tax dollars will never again be used in any commercial projects.

Al Nelman