Another day at city hall, another contentious real-estate negotiation

Nearly two years after Brian Bowman was elected Winnipeg's mayor, questions remain about the city's ability to handle major real-estate transactions and construction jobs.

Bowman was elected mayor in 2014 on a promise to bring more openness and transparency toa city hall that was reeling from three solid years of troubledreal-estate deals and capitalprojects.

Public confidence in city hall had been compromised severely by the fire-paramedic station construction scandal, the police headquarters scandal and a series of questionable real-estate practices involvingthe Parker land swap, the Winnipeg Square Parkade saleand the aborted sale of downtown surface-parking lot Parcel Four, to name just a few examples of problematic files.

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Three separate external audits documented cases where city property officials failed to appraise parcels of land beforethey bought, sold or swapped them. There were also severalinstances whencity council was not informed about decisions undertaken by city staff.

That's why Bowman and his council colleagues were notpleased on Tuesday morning, whensenior city officialsshowed up at council's planning, property and development committee with a surprise report abouta land deal involving fluctuating property appraisals, negotiations gone awry and a pricetag on the rise.

• Winnipeg councillors accuse Manitoba Hydro of bad faith in $20.4M land deal

In 2015, the city real-estate managers thought they had reached an agreement with Manitoba Hydro to buy a chunk of land the city needs to complete the Southwest Transitway, the bus corridor that will eventually connect downtown to the University of Manitoba's Fort Garry campus.

City staff thought a deal was in place to buy the land for $4.6 million, based on a third-party appraisal. But in January 2016, Hydro decided to hire an appraiser of its own and came back with a value range of $32 million to $34 million.

After months of negotiations, both sides eventually agreed upon a $20.4-million sale price. Councillors, however, didn't learn about this until this week, when officials told them to approve the deal now or run the risk of delaying the construction of the $587-million Southwest Transitway project.

Council's property committee approved the deal on Tuesday. Executive policy committee followed suit the next day, albeit with a lot of grumbling about Manitoba Hydro's change of heart.

Whether or not Hydro negotiated in bad faith, as some councillors claim, a question still remains: How is it possible that city real-estate managerswho've already endured a universe ofscrutiny and scorn in recent years could once again fail to nail down a favourable deal for the City of Winnipeg?

If you ask Michael Jack, the city's chief operating officer, no one in the real-estate division messed up.

"I don't believe this is any cause for concern," he told reporters on Wednesday after being asked whether Winnipeggers ought to be worried about the city's ability to engage in land transactions.

"Wewere dealing with a party fromwhom we couldn't expropriate. That is a uniquetype of negotiationand it hada unique dynamic.I don'tbelievethere's anything abouthow our real-estate division approached this that should draw any criticism."

At the same time, Jack conceded city staff believed they had a deal in place but did not nail it down.

"We realized fairly late in the negotiationsthe parties weren't quite in agreement in terms of how we were going to arrive in that value and then we had to go in a different direction," he said.

"It was later in the game that we would have liked. But we had a general agreement how we were going to approach value and then the parties diverged."

According to council finance chairMarty Morantz, it wasn't the dynamics of the deal that led to the price going up, but Manitoba Hydro itself.

"In the future, when we deal with Manitoba Hydro, we'll have to be muchmore diligentin termsof how we document our arrangements," said Morantz, the councillor for Charleswood-Tuxedo-Whyte Ridge. "Hydrochanged the deal and basically put us in an impossible situation."

So didHydro outfoxcity real-estate staff? No, not all, Morantz insisted.

"I have a great deal of respect for our public service. They're very hard-working people who have the best interests (of the city)," he said."I don't think this would be fair to lay this at the feet of our negotiators."

Winnipeg's mayor also cautioned against drawing any conclusions about what happened in the case of transitway negotiations.

"I think the facts of this case are unique," Bowman said.

To recap, we had multiple property appraisals, drawn-out negotiations and councillors being informed about a rising pricetagin the form of a last-minute, walk-on report.

The mayor called this unique. Winnipeggers may just callit familiar.