June-10-2008 Globe and Mail – Deal or no deal – the city and Kiwanis play for CL

by JOHN BARBER  jbarber@globeandmail.com June 10, 2008

Here are the clues: broken glass in a medieval turret, a handful of vintage weapons missing, a grandfather clock on the roof and a trail of blood leading north into the teeming city. Agatha Christie couldn’t have given the local constabulary juicier evidence than what one or more idiots left behind at this weekend’s bungled break-in at Casa Loma.

But the real-world detective gravitates to Schedule “G” of the draft version of the city’s latest management agreement with Kiwanis Club of Casa Loma, the one labelled “Inventory,” to discover whom this strange swag belonged to in the first place. Finding the dossier strangely empty, he undertakes a troubling journey into the heart of a one-sided deal that appears to arrange for profits from the tourist trap at the public’s expense.

Empty Schedule “G” is the tell-tale, if only because it demonstrates how one-sided the city’s latest deal with Kiwanis really is. Two years ago, the club declared that it owned the rights to the name “Casa Loma” and all the furnishings and artifacts inside it. City officials disagreed. Now, the same officials are asking city council to pay Kiwanis $1-million for stuff they once claimed the city owned.

But that’s just a minor bit of unfinished business in what otherwise appears to be a fait accompli. The proposed deal is a triumph for the Kiwanis Club, which has rented the castle for more than 70 years but was facing eviction. It is also the closest the David Miller regime has ever come to embracing the sleazy business practices of the Mel Lastman gang.

If it wasn’t for a charity’s name on the lease, the Casa Loma story would be a major scandal: a sweetheart deal offered on a sole-source basis to insiders after intense closed-door lobbying.

The main story is well known: The city appointed a blue-ribbon panel to recommend a new future for the castle after the Kiwanis lease expired. Following the panel’s advice, staff recommended the old hulk be transferred to a new board of city appointees with a mandate to revitalize it. The club went crazy.

But it acted smart: hiring former councillor Paul Sutherland to lobby for it, co-opting the revitalization by hiring the consultants who planned it for the city, and lining up the well-connected Liberty Entertainment Group to provide the necessary operational savvy.

A year later, city staff abandoned their recommendation to stage a competitive Request for Proposals on the future of Casa Loma, instead saying it would be better to let Kiwanis carry on for another 20 years.

Last week senior staff in the water department extolled the presence of a “Fairness Commissioner” scrutinizing its tender to acquire $220-million in water meters. But there was no such scrutiny of the Casa Loma deal because there was no tender. Why the thing is sliding through the system without any comment from the Auditor-General is simply inexplicable. Somebody has to explain the foxy arrangement by which the city hopes to free Kiwanis from the obligation to pay property tax on the castle – a $178,000 gift. By structuring the new deal as a management agreement rather a lease, Kiwanis and the city hope to persuade provincial authorities it shouldn’t pay taxes. The city is actively conspiring to rob its own treasury.

My favourite detail is the $250,000 annual management fee the city is agreeing to pay Kiwanis in compensation for the charitable work the club does there. You and I are donating that much to Kiwanis so it can donate the money elsewhere in its own name.

But this is just the beginning. The accountability provisions of the deal are as weak as the giveaways are generous. Kiwanis retains total control of the revenue side while the city’s share is capped. General revenue continues to fund expensive capital work. The club has struck a dream deal, but nobody outside the back rooms can explain it.

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