Can the city tell us anything?!


#1

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.”

Just like Council couldn’t give us any details about the mystery budget savings line created by the union last year, couldn’t show us a pile of public complaints regarding recreation that caused big changes, couldn’t explain why the non-payment of the Citywest dividend last year caught them by surprise, couldn’t tell us how they dropped the ball on the PTI work camps that wanted to be on city land . . . and on and on.

Maybe Miss Ashley, so good at knocking softball questions out of the park, can come on here and explain why this is the most secretive Council ever? She did, after all, run on promises of transparency, only to participate on a council that spends most of its time in-camera.


#2

[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.”

Just like Council couldn’t give us any details about the mystery budget savings line created by the union last year, couldn’t show us a pile of public complaints regarding recreation that caused big changes, couldn’t explain why the non-payment of the Citywest dividend last year caught them by surprise, couldn’t tell us how they dropped the ball on the PTI work camps that wanted to be on city land . . . and on and on.

Maybe Miss Ashley, so good at knocking softball questions out of the park, can come on here and explain why this is the most secretive Council ever? She did, after all, run on promises of transparency, only to participate on a council that spends most of its time in-camera.[/quote]

Surely you’re mistaken, I’ve seen little of these items you have mentioned reviewed at council or in the media.


#3

[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.”

[/quote]

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.


#4

Thanks for the great post, BTravenn.

This is a graphical version of the situation:


#5

Hope there is more to this story than it seems. If the City is hoping to get a LNG plant out at Ridley Island, I am pretty sure they are going to have to come to an agreement with the group that is taking them to court.


#6

The mayor has shed a bit of light about why the deal may have fallen through with WatCo. The city is now talking to interested parties who would complete a full remediation plan that would have to be approved by the provincial government.

thenorthernview.com/news/255357831.html


#7

That’s interesting and again it’s good to see the Northern View eliciting a bit more information from our usually reticent Mayor.

When the City files its’ defence it will be interesting to see why they think that getting a full remediation plan approved by the Province was a condition of the exclusivity agreement with WatCo. That requirement does not appear in WatCo’s statement of facts as to the terms of the original written exclusivity agreement or the oral agreement that succeeded it (under which the City continued to accept payments of $90,000 a month while negotiating a final agreement).

Was a remediation plan a term of WatCo’s 12 July 2012 Conditional Offer that the City accepted? That does not appear in WatCo’s statement of facts and seems unlikely, but we’ll have to wait and see what shows up in the Court filings.

WatCo says that part of the $2 million of land payments went towards “mitigating environmental damage” (paragraph 62 of their notice). That seems to square with His Worship’s statement about some chemicals, PCBs and transformers having been shipped out < thenorthernview.com/news/254272271.html >. So some environmental remediation work was done on Watson Island, by all appearances at WatCo’s expense.

Now this may sound contrarian, but bear with me. Why would the City make a remediation plan a condition of the sale?

A current or past owner of a contaminated site can be held liable for remediation. But a municipality is exempt from those requirements if it involuntarily acquired a contaminated property under a tax sale, as happened with Watson Island after Sun Wave defaulted on its’ taxes.

Here’s an excerpt from a Ministry of Environment fact sheet on the topic:
“Could a local government be held liable for a
site it acquired through tax default?
Local governments are now protected when
they become owners of a contaminated site
involuntarily – for example, as a result of a
property tax default.”
< bclaws.ca/civix/document/id/ … g/03053_04 >.

So if the City was not liable for remediation, why would an alleged failure by WatCo to prepare a remediation plan be a deal breaker? It appears that the City could have left those issues to WatCo for when it took ownership of the property.

WatCo alleges in its notice of claim that the City induced WatCo to continue to make $90,000 a month payments when it intended to seek offers from other potential purchasers, contrary to the exclusivity agreement. It also says that the money that was spend on environmental mitigation unjustly enriched the City when it repudiated the exclusivity agreement.

Could it also have been that the City wanted an approved remediation plan in order to improve its’ prospects of selling the property to someone else for a higher price? We don’t know what the council’s thinking was on that point, but perhaps that will come out in the Court filings as well.

The main issue, though, may be this: even if the deal fell through for good reason, why does it follow that the City should be able to pocket the $2 million that it received from WatCo? According to WatCo, under the exclusivity agreement that money was to be returned if a sale was not completed. It will be interesting to see how the City responds to that question.


#8

WatCo accepted the city’s term sheet on February 14th which means they accepted everything that the city wanted but was rejected because the city had probably received one or two better offers of more money, not a better remediation plan from some other group. This is just speculation but my guess is it is probably true. Today we would have $5.7 million more in the coffers, no monthly maintenance, tax revenue accumulating and the pressure on WatCo to work with the provincial government to start cleaning up this mess in our backyard and bring more businesses to the Watson to increase tax revenue, jobs and prosperity for Prince Rupert.

We are about to get hit with less coal traffic, some of us cheer that but others face layoffs, less revenue for the community etc.

Sell Watson now, get this over with before things get worse.


#9

Typical gong show !!


#10