Thoughts and Opinions On Today's Important Issues

Friday, July 03, 2009

Another Leak To Be Investigated

Oh no. More work for the Integrity Commissioner.

Someone had to know about this and wanted it out there in public. It is nothing more than another example of poor execution at City Hall, wastefulness and taxpayers losing out.

It is also an example of a negative story about the City never seeing the light of day in the traditional media that I can recall. Why not?

How much did it cost and how much did we lose? Does anyone have the faintest idea?

Seriously, it really happened this way.

I was having lunch yesterday when the mail came. My wife brought it in and there it was, a big brown envelope covered in stamps. Of course there was no return address. But what was the most suspicious was the handwriting for the address. Either someone tried hard to disguise his/her writing or it was written by a child of about 11 or 12 years of age it seemed to me to disguise further the identity of the person who sent it to me!

No worries. I keep sources confidential and I have destroyed the envelope!

I ripped it open and there it was. A copy of a Court of Appeal decision and the Trial Court verdict of another case that the City had litigated and lost. This time after being sued by the Windsor Family Credit Union!

Now it is no secret. And not as sexy as a strike leak. Court decisions are public after all. But it was never reported in the Star that I could remember. However, it is another case where Windsor citizens are losing out on lots of money for reasons that make no sense to me.

I wondered if he is ever interviewed by the Star about the case, the City's lawyer, Mark Nazarewich, will say as the City's lawyer Patrick Brode did in a case he lost that the spending of $29,500 for an appeal was justified:
  • "It was well worthwhile for city council to decide that we should contest this before the courts," said Brode.

    "We weren't successful, but I would suggest to you it was worth a try."

I really like that phrase, "worth a try!"

I also trust that he will not make an unfortunate comment such as

  • "Brode insisted Monday the OMB and the courts were wrong in this case and went so far as to liken their decisions to the verdict of the jury that acquitted O.J. Simpson of two counts of homicide."

In this case, the issue was simple although the facts are a bit complicated:

  • "Does the Corporation of the City of Windsor (City) have an interest in a Parking Garage at 275 Pitt Street part of the Riverside Drive Lands."

This is the parking garage behind the Hilton and the Cleary that went into default. The City seems to have problems with garages failing:

  • "Windsor Family Credit Union (the Applicant), in syndication with two other credit unions, agreed to lend to Pruefer $4,555,000. One of the terms of the transaction was that the Applicant would receive a good and valid first mortgage from 658Co. as security for its loan over the Parking Garage lands and building...

    The Applicant [WFCU]wishes to sell its security and apply the proceeds against its defaulted loan. The City has put the Applicant on notice that it believes it retains an interest in the lands upon which the Parking Garage is situated, pursuant to the terms of the Development Agreement and the Parking Agreement. It is the position of the City that the mortgage registered by Mr. Barat and his firm is not the first charge on the property...

    The Applicant has taken a neutral position. It wishes to convey this Parking Garage to realize on its security. It is requesting a judicial determination of whether it can do so, free from any competing interest registered by the City."

The issue is not academic. The City had an interest in 300 spaces in the garage. It claimed it had a "property" interest in the spaces and offered the Court a laundry list of ways that it could be decscribed:

  • "It is offered that the court should not feel obliged to pigeon-hole its interest under any one form, but might want to consider, beyond the suggestion of lease, an easement, a restrictive covenant, a license coupled with a grant of legal interest, or a profit `a prendre."

The City was to receive a revenue stream for the spaces until 2011.

  • "the City and 658Co. entered into a new arrangement whereby the City transferred its parking rights back to the numbered company in exchange for a yearly fee for space. Rather than take possession and operate the spaces themselves, the City instead elected to receive a revenue stream per space and, in turn, the numbered company was free to operate the entire Parking Garage."


  • "On July 2, 2005, 658Co. defaulted on its obligation to make payments to the Applicant. The Applicant took steps to realize on its security, and to collect the outstanding loan indebtedness."

A Receiver was appointed by WFCU:

  • "The Receiver ceased making payments to the City for any sums owed under the Parking Agreement. Instead, it applied the receipts from the parking operation firstly to the taxes owing and secondly to the Applicant’s interest and principal payments under its defaulted loan. The Receiver has not paid any of the receipts from the Parking Garage to the City for any obligations under the Parking Agreement."

The case does not set out what the revenue stream is that the City has lost since 2005 but it has to be a substantial amount for 300 spaces, probably more than enough to pay for the cost of PRBs for the few recently hired CUPE members. If it was one dollar per day per space as an example, well you can do the math. Remember at Canderel:

  • "An agreement between Chrysler and the city sets a monthly rate of $32.50 for the majority of its spaces. [325] Other tenants will pay $75 per month, plus taxes."

Or was the City only to get 5 cents a day as they negotiated with the Keg?

In the end, the Court held that dismissing all of the City arguments:

  • "I conclude, therefore, framing my findings in terms of the relief sought in the Amended Notice of Application, that the Corporation of the City of Windsor has no rights or interest arising from a Parking Agreement dated September 2, 1986, or any amendments thereto, in the lands known municipally as 275 Pitt Street West, in the City of Windsor, in the County of Essex."

Now that decision in itself is unfortunate. It demonstrates to me again the inability of the City to draft documents properly to protect its interests. Blame it on the previous Administration. You better believe it.

However, there is a wrinkle here that shows me that the present Administration is no better. Can't the City ever do anything properly.

As you may recall,

  • "On March 7, 2007, the City sold the Cleary Auditorium and the lands on which it was located to St. Clair College. The City presently owns no other lands which are or were the subject of the Development Agreement.

    The City did not assign or purport to assign its interest in the Development Agreement or the Parking Agreement to St. Clair College as owner of the Cleary Auditorium lands. The Development Agreement and the Parking Agreement are not registered on title to the Cleary Auditorium lands."

The Court said the following and here is why the way City Hall operates scares me so much:

  • "It is clear, then, that I do not believe the City acquired an interest in land as a result of those agreements. However, even if I am wrong in that conclusion, I believe the City’s sale of the Cleary Auditorium on March 7, 2007 terminated any potential interest it may have acquired...

    The plain reading of paragraph 7.05 is that the obligations of Pruefer or any succeeding owner vis-a-vis the City continue as long as the City retains ownership of the Cleary Auditorium. Similarly, any responsibilities under the Development Agreement terminate upon the sale, as it is then impossible to any longer benefit the City. The City’s sale to St. Clair College in no way assigned to the purchaser any of the City’s existing parking rights at 275 Pitt Street.

    I conclude, therefore, that whatever parking rights or potential property interest the City might have maintained in 275 Pitt Street was terminated on March 7, 2007."

DUH, did the City have a position or did it not? In 2007, it knew that it was owed money since the garage was in default. If it did have a property interest, then why did it not protect itself when the sale took place? If it did not, then why did it litigate and spend who knows how much money in fees to fight the case?

The Court of Appeal wrote a very short APPEAL BOOK endorsement:

  • "[1] The appellant raises for the first time on appeal the issue that the City has rights of enforcement to parking spaces that are statutory rights under s. 41.1(10) of the Planning Act.

    [2] We agree with the respondents that arguing this ground for the first time on appeal is not open to the appellant, both as a matter of practice in this court, as well as because the factual record in the Agreed Statement of Facts and appended documents does not include all of the evidence necessary to fully and properly consider the argument for the first time at this level.

    [3] The application judge fully considered the issues raised before him and determined that the appellant has no interest in land referable to the parking spaces that are the subject of the application. We see no error in his conclusions and findings.

    [4] The appeal is therefore dismissed with costs fixed inclusive of G.S.T. and disbursements on the partial indemnity scale of $25,000 to the respondents represented by Ms. Daly and $4,500 to the respondents represented by Ms. Farlam.

Ooops, someone did not make an argument at trial. Too late to make it in the Court of Appeal for the first time! Can you imagine if it was a winner of a position! What a shame.

Is this a cost that should now be added in to the sale of a City asset to St. Clair College as part of that deal? It makes that deal look even worse than it did before.

Who is the whistleblower and how much more information will be placed by this person and others in my mailbox. I can hardly wait!