[quote=“drummerboy”]So, once again, we are left without answers from the city, as mayor Jack has finally come out and acknowledged that the city is paying for the Watson Island maintenance costs again: thenorthernview.com/news/254272271.html
But, he said that he “can’t give an exact dollar amount.”
It’s always good when the Northern View (or anyone else for that matter) can extract some information from His Worship about the Watson Island issue, but a couple of points in their April 7 article could do with some clarification. It says:
“Court filings submitted by WatCo indicate the company was paying the city between $75,000 and $90,000 per month, with the last cheque accepted in January. Those payments will not be coming as WatCo is now pursuing legal action against the city, leaving the city to foot the bill. But Mussallem said what will be paid has been cut by recent activity at the site.”
The payments to the City did not stop because of WatCo’s legal action against the City. It’s the other way around. The City refused WatCo’s February payment of $90,000. By doing so the City repudiated the exclusivity agreement under which WatCo had been paying monthly land expenses while negotiating a final agreement to buy the property.
The following timeline is from WatCo’s notice of claim:
The initial payments of $75,000 a month commenced after an October 2011 agreement with the City and were made by a partnership of the Lax Kwalaams First Nation and the Metlakatla Development Corporation, which later entered into an agreement with Colonial Coal. In July 2012 WatCo was formed to pursue the purchase, at which point the payments increased to $90,000 a month. A conditional offer to purchase the property for $5 million was accepted by the City.
The events from November 2013 to 1 April 2014 are particularly confusing.
29 November: The parties started negotiating a final agreement based on a lease with an option to purchase. WatCo delivered a draft document to that effect for consideration.
9 December: The council held a closed meeting about Watson Island, but the details are unknown.
13 December: The City provided WatCo with a revised form of lease, but WatCo considered that the term was so short that it did not make commercial sense. The parties then resumed negotiations of a ‘definitive agreement’ to sell the property to WatCo.
The City unilaterally increased the price to $5.7 million, although it had previously published a notice of disposition under the Community Charter that it intended to sell the property to WatCo for $5 million.
17 December: The City said that it “preferred” that WatCo purchase Sun Wave’s assets for an anticipated purchase price of $3 million. That is intriguing, because in the 29 August 2013 media release announcing that the City had reached a settlement with Sunwave (the details of which it would not disclose) it said that Sun Wave would not be paid “any City money”. Did the settlement include paying off Sun Wave, but not with City money? The media release also said that “The legal and other expenses have been paid by Watson Island Development Corporation (WatCo) to support the City as part of their agreement for sale for Watson Island”. < princerupert.ca/images/news/217.pdf >
27 December: WatCo gave the City a draft Term Sheet accepting the revised $5.7 million price and setting out provisions relating to the purchase of Sun Wave’s assets.
January 2014: WatCo paid the monthly $90,000 land expense to the City.
13 January: The City said that the purchase would not be contingent on WatCo purchasing Sun Wave’s assets.
20 January: City council held a closed meeting, the details of which are unknown.
7 February: WatCo submitted a revised Term Sheet and asked that any final issues be identified before final submission to the City council. No issues were raised.
11 February: The Term Sheet was submitted to a closed City council meeting for purchase of Watson Island for the $5.7 million price that the City had stipulated in December.
12 February: The City rejected the Term Sheet, said that it would only continue to negotiate on a non-exclusive basis and would consider offers from other prospective purchasers. WatCo says that the City set out the terms on which it would conclude the sale.
14 February: WatCo presented for signature a Term Sheet accepting the City’s offer, but the City did not execute the Term Sheet. WatCo later (on 25 February) presented an Option Agreement which the City also did not execute.
The City returned WatCo’s cheque for the $90,000 land expense for February. From 31 October 2011 to January 2014 the City had received about $2 million in land expenses.
In the midst of these developments the City was preparing for the 2014 financial plan and budget, which by law requires public consultation.
24 February: A proposed budget was presented to council that projected $1,390,000 in revenue relating to Watson Island; not much less than the $1,435,820 reported to December 2013. No revenue was projected for 2015 onwards, presumably because the property would be sold by then. No mention was made of a change in the situation with Watson Island.
The same information appeared in the 24 March report to the council, which other than a passing reference to Sun Wave’s tax default does not mention Watson Island, and again in the 2014 Financial Plan Bylaw that was passed by the council on 1 April with some amendments relating to recreation fees.
As for His Worship acknowledging that the City would be covering Watson Island costs but he “can’t give an exact dollar amount”, the approved 2014 budget projects costs of $1,390,000.
So what do we make of all this? Accepting a budget that assumes that the City will receive much the same revenue for Watson Island as in the past, only a few weeks after refusing further payments from WatCo, is puzzling at best.
Perhaps an explanation from the council will be forthcoming, although based on past practice, that seems unlikely. A better source of information may be the City’s defence in the WatCo court action, which commenced on 27 March. A response must be filed within 21 days if the City wishes to dispute the claim, which includes the return of the $2 million in land payments and other damages.