City of Winnipeg unwilling to pay $20M to save Portage Place redevelopment

The company behind a major downtown development is asking for a $20-million financial contribution from the City of Winnipeg before a massive renovation can be started.

In a report posted late Tuesday, the city is only willing to debate approving $5 million to Starlight Investments.

The firm has promised to invest $400 million to redevelop Portage Place.

The deal, according to a Starlight spokesperson could be dead on arrival.

Toronto-based Starlight plans to add over 500 rental suites, community spaces, a pedestrian walkway and a downtown grocery store to the beleaguered mall.

Read more: Portage Place to undergo up to $400-M retrofit, multi-income residential towers added

Now the developer is asking the city, province and feds for help in the form of $20 million each over a five-year construction schedule.

Story continues below advertisement

That money is needed to shore up a $60-million funding gap.

Starlight says it looked at other options to reduce the cost of the project, including negotiating a lower purchase price of the mall from The Forks.

But the developer says The Forks needs all of that money to remain financially independent, so it wasn’t an option.

The online agenda for Wednesday’s Executive Policy Committee meeting suggests the city isn’t willing to write that cheque just yet.

EPC will instead debate giving up to $5 million in the form of tax increment financing — a quarter of the asking price — over 10 years, double the amount of time.

The recommendation from Public Service is that the money be handed out only after full or interim capacity is met and the final construction costs are available.

The report from the Public Service adds the city would only hand out that money if several other stipulations are met:

  • Starlight submitting a construction schedule demonstrating that completion of the entire project will occur within four years of obtaining construction financing
  • Financing being secured within a year of permits being awarded
  • Work on the project beginning within two years of Council approval
  • Matching support from the governments of Canada and Manitoba is achieved

The agenda was made available on Tuesday afternoon, just 15 hours ahead of the meeting at which it’s scheduled to be debated.

Story continues below advertisement

Waverley West councillor Janice Lukes says that turnaround is disappointing, arguing it doesn’t give the developer time to speak to EPC in person.

“I think it’s appalling. I represent 45,000 residents. I haven’t had time to read it and come down and speak to this report,” Lukes said.

“That’s very, very poor business sense from the mayor (Brian Bowman).”

A Starlight spokesperson confirmed to Global News the firm wasn’t contacted by the city, and found out this would be debated when the agenda was made available online Tuesday afternoon.

EPC will instead review a written letter from Starlight Investments President and CEO Daniel Drimmer on Wednesday, which includes the formal ask along with an economic assessment of the project.

Starlight says the following will be created as a result of the development:

  • $698m in economic activity – $329.1m of which is direct;
  • $325m in net contribution to GDP;
  • 3,343 person-years of employment;
  • $199m in income for households;
  • $129m in business operating earnings;
  • $84m in tax revenues, generated across all levels of governement; and
  • Accomodating for 868 residents bringing $12.4 million in annual retail spending.

In the letter to the City, Starlight says the project will address Winnipeg’s rental housing needs and help reduce crime.

The project’s various skywalks promise to provide more “eyes on the street,” according to Drimmer.

Story continues below advertisement

The glass and glazing effect means that “you have no choice but to see the people around you, walking with you and walking on the street below you,” explains Starlight COO Glen Hirsch.

Can Portage Place revamp improve safety in downtown Winnipeg?

Can Portage Place revamp improve safety in downtown Winnipeg?

Also up for review is a community benefits overview document, which includes better transit access, streetscape improvements, an outdoor court, a pedestrian street north of the development, a community centre, green roofs and public art.

The Public Service report, prepared by Chief Corporate Services Officer Michael Jack, says the proposed project would bring property taxes up from $430,767 to over $1.3 million annually.

But Jack says the direct benefit to the City is limited in comparison to the $20-million ask from Starlight — and since financial benefits to the City, province and federal government won’t be the same, an equal amount of support from all three levels holds no merit.

Story continues below advertisement

“The Public Service is recommending financial support that aligns not only with its assessment and review of the tangible and intangible benefits of the Revitalization Project to downtown Winnipeg and the City overall, but also with the reality that the direct financial benefit accrued municipally is limited in both its present value as well as its growth potential.”

If the City approves its proposed grant, and the provincial and federal governments were to chip in the full $20 million asked of them, Starlight would still be searching for $15 million from its original request.

The province has already committed $28.7 million in education property tax increment financing rebates over 20 years following the completion of the build.

Read more: Manitoba’s new tax increment financing to support Portage Place redevelopment

Provincial Economic Development and Training Minister Ralph Eichler called that investment “no risk” to the province in a release earlier this year.

“This new program in Manitoba’s investment support tool kit will bring business investment and jobs to the province,” Eichler said.

The City of Winnipeg is looking at employing a similar program for Starlight, but the two sides are still $15 million apart on how much should be handed out.

If it were up to Lukes, she’d hand Starlight every dollar it’s asking for.

Story continues below advertisement

“We have a big problem downtown. I’m a suburban councillor. I know people don’t go downtown because there’s a big problem downtown,” Lukes said.

“I really believe this development — with a community centre and all the other amenities — will tremendously benefit [the area].”

However, since Lukes doesn’t sit on the Executive Policy Committee, she feels her opinion will fall by the wayside.

Fort Rouge-East Fort Garry councillor Sherri Rollins, who sits on the Executive Policy Committee, sees the benefit in the development — and is prepared to fight for it.

“I feel good (Starlight) is engaging with the Assembly of Manitoba Chiefs, Social Planning Council and their community voices,” Rollins said.

“We need good community vision to sustain their voices in the downtown — and that’s my aim.”

Global News has reached out to Starlight for comment but has not yet heard a response.

Story continues below advertisement

Starlight Investments’ Josh Kaufman says speaking to the community is vital to shaping the project

Starlight Investments’ Josh Kaufman says speaking to the community is vital to shaping the project

© 2020 Global News, a division of Corus Entertainment Inc.