Developer sues city over failed industrial joint venture and alleges city stole dairy-plant deal
One of Winnipeg's largest land developers claims the City of Winnipeg reneged on a St. Boniface joint venture last year and then abused confidential information from the scuttled plan to work out its own deal with a Canadian dairy giant.
In a lawsuit filed before the Queen's Bench on July 21, Terracon Development Ltd. is seeking damages from the city over the cancellation of a plan to develop 237 acres of vacant city land alongside the Winnipeg Aqueduct, south of the St. Boniface Industrial Park and Waters Business Park.
Terracon's claims have not been proven in court and no statement of defence has been filed. The damages at stake could be in the millions, as Terracon is seeking compensation for lost potential business at the cancelled industrial park.
Facing a shortage of serviced industrial land, city council voted in 2009 and 2013 to allow the city to proceed with a joint venture that would have seen Terracon service this land and then sell it off on behalf of the city, with both sides sharing in the profits.
Terracon built a $1.6-million road into the site but the joint venture was never concluded. City officials said it fell apart because Terracon insisted on being exempt from paying education taxes on the property.
In July 2015, council rescinded the joint venture agreement and then approved a city deal to sell part of the land to Parmalat Canada Inc. for $2.6 million. Both the city and province agreed to pay $8.2 million to service the new dairy plant, which is replacing Parmalat's existing operation in Old St. Boniface.
In a statement of claim, Terracon contends city officials stopped working on the deal during the 2014 civic election.
When a meeting was finally held between the two parties, Terracon claims it told the city a new Parmalat plan was "part and parcel" of the new project.
Terracon claims that in April 2015, the city then reneged on an understanding that the developer would not have to pay property taxes on the site.
Ultimately, Terracon claims the city made misleading claims that led the developer to spend $2 million on fees and a "useless road," abandoned the deal and also abused confidential information about Parmalat to enter into its own deal with the dairy company.
"Information about Parmalat and the nature of the development were provided to the (city) in confidence and on the understanding that a joint venture would be proceeded with, and certainly not for the purpose that the plaintiff would be sidestepped by the defendent," the claim reads.
The statement of claim also makes reference to a meeting attended by city officials, including Mayor Brian Bowman.
On Thursday, the mayor confirmed that meeting took place.
"Ultimately the developer did not choose to sign a joint venture agreement. My intent was that the party sign a formal agreement so that they could proceed and that didn't occur. I prefer formal legal agreements than understandings," Bowman said at city hall.
The mayor said he expects the city to file a statement of defence.
