2008

City loses $ 49 Million in Sole-Sourced Agreement – Jul 10/08

admin — Fri, 11 Jul 2008 02:57:11 +0000

News Update: Deal or No Deal – Jun 11/08 article – Globe and Mail.

Re: ‘City Council June 23/08 ‘Kiwanis Club of Casa Loma Management Agreement’

Torontonians’ are about to be robbed of over $49.36 Million* in losses for another 20 years when City Council meets on June 23^rd of 2008 to approve Kiwanis Club of Casa Loma Management Agreement.

(*refer below A to D on City loses $ 49 million)

The City Manager’s report recommendations for this lease agreement were approved by the City’s Executive Committee on June 3^rd 2008, granting Kiwanis Club to receive another 20 years ‘sole-sourced’ control of Casa Loma. For the past 70 years since 1936, Kiwanis Club have had monopolistic control for governance of our city-owned Casa Loma castle.

On Canada Day, Kiwanis Club (a US republican charity club) agreement will be effective for another 20 year tenure over Canada’s castle – 2^nd largest tourist attraction. For a total of 90 year’s control of Casa Loma’s operations at Torontonians expense.

The other City-owned public institutions such as the Ontario Museum, Art Gallery of Ontario, and Toronto Zoo, are operated under the City’s Board of Trustee’s control. Why have Casa Loma’s operations continued to be privately operated for over 70 years (+ 20 more years) under a ‘sole- sourced lease, without ever allowing any open public tender competition process?

*Torontonians (City) losses in revenues (A-D) below estimated over $-49.360 Million under City’s Mismanagement Agreement with Kiwanis Club of Casa Loma

Links are to the City’s Manager’s report (EX21.4) ‘Management Agreement for Kiwanis Club of Casa

Loma’ endorsed at Executive Committee on June 3^rd 2008:

* [Link: Complete Kiwanis Management Agreement.pdf] (66 pages)

Highlights of Kiwanis Management Agreement:

The City will continue to invest their budgeted $ 20 million exterior restoration project. City will be paying for mechanical upgrades including installing Air Conditioning for Casa Loma, building greenhouses and extensive renovations to abandoned derelict Hunting Lodge (3,000 sq. ft.) located on estate. Kiwanis has now been granted management of these buildings to generate additional revenues. *(-$ 20 M costs to City )

(pg. 9) City is capping their lease revenues to $ 800,000 annually out of the $ 5 to $ 6 million revenues Casa Loma generates. The City is reinvesting 100% of these revenues deposited into Casa Loma capital reserve fund for repairs and restorations of the Casa Loma estate. (-$ 16 M in 20 yrs.)

City will waive collection of $ 800,000. Revenues for 2008 *(-$800,000.)
(City has waived Kiwanis former annual lease fees of 1/3 of tourist’s revenues).

The City has waived Kiwanis former lease fees of 7% of the gross revenues on venues held.

*(-$ 4 M in 20 yrs. $ 200K yr. dif in city’s former fees average $ 1M yr. now capped @ $800K)

(Pg. 3) City will now waive collection of Casa Loma’s annual $ 178,000. Property taxes during their 20 year tenure. Due to the change in contract status to now pay Kiwanis Management Fees which will allow property taxes to be exempt under MPAC. * (-$3.560M + tax increases annually)

(Pg. 8 #3) City will be paying Kiwanis annual Management fees of $ 250,000. For 20 years term. This will pay for the Kiwanis Club’s Charity status to cover future donations that were previously paid from the $ 5-6 million annual revenues generated from Casa Loma operations. *(-$ 5M in 20 yrs.)

“The management Agreement also requires both parties to act as a prudent and diligent BUILDING OWNER in carrying out their respective ongoing maintenance responsibilities for Casa Loma”.

(Pg. 55 # 16.1) General- Kiwanis status will be changed from partner to independent contractor.

(Pg 8) Acquisition by the city of Casa Loma’s Art and Artifacts’, equipment and intellectual property ‘including trademarks acquired by Kiwanis over the years’. Valued at over $ 1.384 million dollars to buy back all of Casa Loma’s furnishings and artifacts.

The city will be making annual payments to Kiwanis Club of $ 50,000. + GST and accumulated interest over a 20 year term INORDER TO ASSUME THAT THE CITY OWNS ALL ASPECTS of the physical aspects of the Casa Loma estate.

(Pg. 55 # 16.1) General- Kiwanis status will be changed from partner to independent contractor.

(Pg. 5) Kiwanis Club’s new Casa Loma Board shall now be equal, consisting of 7 members appointed by the city and 7 Kiwanis members. (14 members, 3 year term).

The Chair will be appointed from board members on the advice of the Kiwanis Club’s President and approved by Mayor. (Therefore Kiwanis still runs everything and they have written their own contract herewith to bind the city for 20 years with a clause for renewal.)

(pg. 54 e) “Current CEO of Casa Loma shall be deemed to be approved by the board” Why?

(pg. 55) *Request for Proposal, already done by Kiwanis to be APPROVED by new board…no further approval by the city will be required.

*Kiwanis Club has ‘already hired’ the Liberty Grand Group to take over all catering of venues and entertainment operations at Casa Loma. This was done as part of Kiwanis strategy to secure City staff and Council’s approval to give a 20 yr. lease without allowing any competitive open tender process for Casa Loma’s governance. In opposition to City’s CLAC report for NEW GOVERANCE.

(Pg. 58) # 44- Contract Renewal Clauses. (For Kiwanis to continue their sole source contracts that will be ending after 90 years since starting 70 years ago in 1936 until 2029.

City Manager’s recommendations (2 pgs.) [Link: Executive Council Summary.pdf]
Note: Staff Report under Financial Impact: “… no direct cost to the City”

Kiwanis Club operates as a non-profit organization; they will now also be exempted from paying Casa Loma’s hugely undervalued property taxes of $178,000 annually. Why has city’s assessment of Casa Loma’s estate taxes been so undervalued and bias in favour of Kiwanis Club’s during their 70 years of leasing renewals? For the next 20+1 years including 2008, Casa Loma’s property taxes will be exempt exclusively for Kiwanis Club. Why?

Furthermore, Casa Loma’s property value is more than $100 million. The city is losing massive amounts of income over the next 20 years by exempting Kiwanis Club from paying any property taxes. These taxes have always been unjustifiably low for Canada’s irreplaceable 80,000 sq. ft. Edwardian Castle, especially if it’s located on 6 acres within Toronto’s premiere Forest-Hill district. Casa Loma is renowned as Canada’s famous castle generating millions in profits annually to Kiwanis while costing the city $45 million over the next 20 years.

On top of the exemption from the past property taxes paid, the city also plans to pay $250,000 annually for the next 20 years, to Kiwanis as “Management Fee”. Under their new agreement structure this will entitle Kiwanis to be exempted from paying City property taxes altogether – for the next 20 years.

During the past 70 years Kiwanis has benefited from further exemptions to Provincial and Federal business income taxes as they operate Casa Loma under their ‘not for profit’ charity business status.

For this charity status, Kiwanis donates a meager 2.5% (two and a half percent) to their ‘self interest’ charities out of over $5 million annually received from their Casa Loma operations.

History of how the City took over Casa Loma – 1930’s

Sir Henry Pellatt builder of Casa Loma was ‘forced into bankruptcy by the City during the Great Depression (1929). First the city in their political heist expropriated (without payment) Pellatt’s private Toronto Electrical Company to form Toronto’s ‘Public’ electricity company that latter became Ontario Hydro.

Sir Henry Pellatt was knighted by King George for building his power plant ‘on Niagara Falls’ to bring electricity to Toronto. (Creating TTC’s Electric streetcar tracks).

Following the City’s Public take over of Pellatt’s private hydro company, the city increased Sir Henry Pellatt’s property taxes on Casa Loma’s by 25 times higher than his castle’s former assessed value.

Colonel, Sir Henry Pellatt was forced into bankruptcy by the City, losing his castle and all of his belongings within 10 yrs. of building his Casa Loma.

The City’s and Kiwanis Club’s Partnership Agreement:

Why is it that during these past 70 years, the city has been assessing Casa Loma’s taxes at 25 times under the estates property value, exclusively for the benefit of Kiwanis Club since 1936?

It is a disgraceful mockery to Sir Henry Pellatt’s legacy, Canadians and Toronto’s taxpayer that the city has been structuring the past 70 years of ‘sole- sourced’ leases privately awarded to Kiwanis Club.

With profits from Casa Loma of $5 to $6 Million annually, why is it costing the city unjustifiably excessive amounts of over $ 49 Million, hence bankrupting Torontonians? Why is the city granting Kiwanis Club to be exempt from paying any taxes for both property and business income in their operations of our very profitable castle?

Not only is the city losing all potential property tax revenues from Casa Loma’s $ 100 Million estate, they are also in a sole-source partnership with Kiwanis in monopolizing the control of Torontonians’ lucrative castle operations.

In May 2006, Mayor David Miller – Chair of the Executive Committee, had recommended to City Council NOT to renew or extend Kiwanis lease. Kiwanis then hired Lobbyist Paul Sutherland – the former Deputy Mayor to Mel Lastman, who successfully derailed city staff’s report to city councilors. All of a sudden there was a complete change in staff directions, in opposition to their own CLAC report recommendations to NOT RENEW or extend Kiwanis’ lease ending September 2007. [Link: City’s CLAC report]

In May 30^th 2008, the ‘City Staff Report’ presented to the City Council that there is no longer any reference to City Council’s commissioned 2 year report from the Casa Loma Advisory Committee – CLAC’s report (May 2006) recommendations were to replace Kiwanis management with new governance.

Kiwanis Club’s Chair, partner at Weir and Folds law firm and lobbyist Paul Sutherland have influenced the reversal of City Council’s decision in June 2006 – to disallow further open tender process and give Kiwanis another 20 years lease on Casa Loma.

Kiwanis have taken claim to all of the rights trade name for Casa Loma’s, including furnishings, Sir Henry Pellatt’s artifacts and everything that has been donated over the past 70 years. The City’s Solicitor opinion to Kiwanis claims of ownership is that the City owns the trade names and all property rights to Casa Loma. Why is the City paying Kiwanis $ 1 Million for Casa Loma’s property owned by the City? [Link: Star-Trademarks Article]

For over 70 years, the public have been convinced that Kiwanis Club owns Casa Loma since that Kiwanis has been branding their name as: Kiwanis Club of Casa Loma and buying all trade mark rights to Casa Loma – our 2^ndlargest tourist attraction.

The question remains: Who is willing to stand up to the City and fight these injustices? Can anything be done at this time before the city signs this detrimental private partnership agreement?

On June 23^rd, City Council WILL accept the attached Kiwanis Club of Casa Loma Management Agreement unless something can be done to stop this injustice being made by our Municipal Government.

For copies of the City Council’s report, Management Agreement for the June 23^rd of 2008’s Council meeting and press archives, please visit www.CasaLomaTrust.ca

Thank you for your thoughtful consideration to help take back governance of our City’s Castle!

With kindest regards,

Trelawny

Trelawny Howell,

Great-grand Niece of Sir Henry Pellatt (Casa Loma)

T: 416 927-9866 Fax: 416 927-1825

Email: trelawny@sympatico.ca

Website: www.CasaLomaTrust.ca

*Links to city agreements:

Complete Kiwanis Management Agreement.pdf and Executive Council Summary.pdf

Deal or no deal – the city and Kiwanis play for CL – Jun 10/08

admin — Thu, 10 Jul 2008 16:53:02 +0000

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.

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

admin — Tue, 10 Jun 2008 03:25:38 +0000

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

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.