The last time we looked at the
Winnipeg Firehalls Scandal we demonstrated how the project degenerated
progressively so that it went from:
- a one million dollar surplus on the first new fire station, then
- a pair of big deficits on the next two,
a fourth and final station being built by a process that's completely out of control with:
- no tender,
- no contract,
- no fixed budget,
- no timeline
- and no oversight.
Now for the bad news.
justify city council approval to cover a cost overrun of at least $2.2
million on the firehall currently being built in St. James ( the last
of the quartet okayed by council in 2009) the fire department submitted a
"report". In it was a financial accounting of the project so far---
what was spent on which firehall and how it compared to the original
We spent a week
pouring over the numbers. Here, for the first time ever, is a
detailed report of how the new firehalls were built.
If you thought you knew how city administrators spent your money, you're in for a big surprise.
overall budget for the four new fire stations was $15.3 million. The
city would borrow roughly $9.7 million from a federal
stimulus/infrastructure program to add to approximately $5.3 million
that had been (or would be) squirreled away from the 2006, 2008 and
2010 city budgets.
money would be used to build four new replacement firehalls -- Station
27 (Sage Creek), Station 18 (Charleswood), Station 12 (River Heights)
and Station 11 (St. James.)
Money was allocated to
each new firehall project to cover construction, land, and "other"
(presumably soft costs like lawyers, architects, etc.). The budget
allocation for Sage Creek was $5 million; Charleswood, $3 million;
River Heights, $3.17 millon; and St. James, $4.17 million.
The land where the old fire stations stood in River Heights and St. James was to be declared surplus and sold.
budgeted $340,500 in revenue from those parcels of land to be applied
to the overall budget ($170,000 for the new firehalls in River Heights
and St. James respectively).
was belatedly revealed in August that Fire Chief Reid Douglas made a
secret and verbal deal for a land swap with Shindico, the developer
building all the new firehalls. The swap was to include the St. James
and River Heights parcels plus land on Mulvey Avenue, in exchange for
the land owned by Shindico on which the new River Heights station was
built. The city later put a caveat on the River Heights station that
required the city to pay $960,000 for the Shindico land in case there
was no swap. That means the city valued the Mulvey land to be swapped
at $620,000. (Today the deal was scrapped by Protection Committee - http://www.winnipegfreepress.com/local/Firestation-land-swap-deal-dead-177510811.html )
Construction of the Sage Creek firehall started in mid-July, 2011 and the station was opened in January, 2012. Time: six months.
spent a shade more than $3 million on construction, meaning that after
approved adjustments to the budget they saved $652,000. They also saved
$358,000 on other expenses. All told they saved $1 milliion on the
Sage Creek station.
Note: This is important.
Reid Douglas said he treated the firehalls project as four smaller
and separate projects because each had its own unique elements. This
let him avoid telling city council who the builder was because he only
needed to inform council what he was doing if the budget of a project
exceeds $10 million.
The Sage Creek station had a surplus of one million dollars. This money had to go back to general revenues. It was not money that Douglas could use as a slush fund.
seeing as how he was treating each firehall as a separate project, it
could not be used on any of the other firehalls without city council
That wasn't how he saw it, though.
Charleswood and River Heights stations were built concurrently. They
started in September, 2011 and finished at the end of March, 2012 (the
deadline to qualify for stimulus money). Time: six months.
bid for the Charleswood station came in more than half a million above
the expected price. Plus they got hit by higher expenses (at least half
to cover working over the winter). The bottom line was a budget
shortfall of $661,000.
The construction of the River Heights station also cost more than
expected ($245,000). That, plus the added costs of working over the
winter, and the loss of $170,000 which was to come from the sale of
surplus firehall land resulted in a budget shortfall of $614,000.
Together, the two firehalls cost $1.2 million more than budgeted.
remember, all four new fire stations were separate projects. That means
that the fire department should have gone to city council and asked
separately for $661,000 to cover the shortfall on the Charleswood
station and $614,000 to cover the shortfall on the River Heights
Instead, Reid Douglas applied the million dollar
surplus on the Sage Creek station to the cost overruns on the other two
suburban stations and in his report to the city's protection committee
claimed a shortfall of only $264,000 on all three.
when he needed to, to cover up that Shindico was the sole contractor,
he claimed the budget for each project was under $10 million and he
didn't have to notify city council.
when it was convenient, he treated the projects as one so he could
move money from whichever was in surplus to the others that were
this happened on an Indian Reserve, the Taxpayers Federation would be
up in arms and screaming for somebody to resign. But apparently, this
is business as usual within the City of Winnipeg.
that the city's top administrators, including Chief Financial Officer
Mike Ruta, Chief Operating Officer Deepak Joshi, and Chief
Administrative Officer Phil Sheegl have all declared publicly that Reid
Douglas followed all the proper procedures and did everything by the
book --- their book.
brings us to the fourth and last firehall project -- the ultimate
boondoggle, also approved by the city's top administrators.
with us. We'll try to make sense out of this, although nobody is
giving a straight story about anything to do with this project. And when
they claim they are, they just raise more questions.
The contractor on the St. James station is Shindico. Only there is no contract. It seems that Reid Douglas just gave the project to Shindico without putting it out to tender or seeking other bids.
that to how hard he worked to keep Shindico's name away from city
council and you've got a really, really big question that involves the
words favoritism and cover-up.
Not to mention
that Winnipeg's top administrators see nothing wrong with an untendered
contract worth millions going to a company owned by a close friend of
the mayor, especially the administrator who is also a close friend of
Nope, nothing to see here.
Shindico got a permit from the city in March, 2012 to start pouring the foundation for Station 11. Then, get this, four months later,
in July, Fire Chief Reid Douglas "and Winnipeg Fire Paramedic Service
project manager Christine Friesen" appeared before Assiniboia community
committee asking for approval to move the proposed fire station closer
to Portage Avenue.
FOUR MONTHS LATER? The other firehalls were built in six months. What was going on here?
and apparently "project manager" Christine Friesen, had been dicking
around for four months after getting a permit to start pouring the
Do you think they could have negotiated a contract in those four months? A contact with a time deadline? And a price? And, maybe, an idea of what they were building?
as it turns out, nobody can give a simple answer as to what they're
building. A fire station with a museum? Without a museum? With a
hazmat unit from St. Boniface? No, not from St. Boniface. A hazmat
unit from the Maples? Uh, maybe. Or maybe just a training facility.
Isn't this the sort of thing you sort out BEFORE you start
Just as you might want to know how big a building you're building.
Reid Douglas says now that it was always going to be 14,000 square
feet. Except that the Winnipeg Free Press says documentation shows it
started as a 10,000 sq.ft. project. And every print story we can find
says it was going to be 12,000 sq. ft. and not one says 14,000 sq. ft.
we have a project for a fire station and nobody knows for sure how big
it's going to be, what's going to be in it, or when its supposed to be
finished. Winnipeg's top administrators say this is the way
business is done in this city. Maybe it's time for some new
administrators. Maybe? Hell, no maybe about it.
told the Assiniboia community committee that moving the fire station
closer to Portage Avenue would "increase visibility of the station,
improve traffic sight lines and reduce the overall footprint of the
station by about 600 square feet." Apparently during the two-hour
meeting, there was no discussion that the station had grown to 14,000
We do now
know that one month later, on Aug. 9, 2012, Shindico informed Douglas
that the estimated cost of the new Fire Station 11 had ballooned and
could be as much as $2.3 million more than initially budgeted. Douglas
says he told Ruta, who told him to go to city hall to get the extra
Ruta wasn't the least big curious about why the cost was now 56
percent higher than predicted a year earlier. Or how the other projects
On budget? Not on budget? Isn't the financial officer in charge of how your money is spent?
In this case he apparently couldn't care less about an overrun of greater than $2 million.
else of interest happened in August, 2012. Shindico put the former
St. James fire station land up for lease. Shindico did not own the
land. It was part of the secret land swap Douglas had
negotiated,though. Coincidence? Yeah, that's it. Coincidence.
that coincidence was spotted by CBC which reported Shindico's odd
listing. And though Shindico pulled it immediately, it opened the door
on the scandal that's sweeping the city.
reporters were scrambling to report the Shindico /old firehall
land-lease story, the company was apparently hard at work on the new
St.James station. Because, according to the report submitted to the
city, by Sept. 9, 2012 the fire department had spent $858,000 on its
new firehall. That's out of a budget of $4.1 million.
It looks like they poured the foundation at last.
here's where the story get even more queer. Shindico was saying the
project would now cost $6.5 million or $2.2 million more than the
initial budget. Douglas dutifully went to Protection Committee seeking
that extra money. He intimated, and Mayor Sam Katz echoed, the
suggestion that Shindico was finishing the work at its own expense
while waiting to be repaid by the city.
Katz said he has no issue with construction taking place without a contract.
think the private sector is certainly putting their faith in city
hall," the mayor said. "My understanding is they had a contract award
for the foundation and now they're acting in good faith."
Except that there should be $3.1 million in the kitty waiting to be spent.
would anybody say Shindico is working for free with the expectation of
being repaid later? They are being paid by city taxpayers and won't
need that additional $2.2 million for a while yet.
Unless, ha ha, that $3 million has been spent somewhere and nobody is telling. Ha ha.
wants the $2.2 million fast-tracked to Shindico. He says that would
keep the budget from ballooning even further with winter costs.
that? It took six months to build each of the other fire station. That means construction on the St. James station will carry on all winter in any event.
And costs will increase accordingly.
Contract? We don't need no stinking contract!
Labels: CBC, fire stations, Free Press, Mike Ruta, Phil Sheegl, Sam Katz