Agenda Executive Policy Committee January 26, 2015

REPORTS
Item No. 1

Amendment to Council Decision Approval of Funding

Participation - Winnipeg Convention Centre Expansion Project

WINNIPEG PUBLIC SERVICE RECOMMENDATION:

1.

That in response to the request made by The Convention Centre Corporation (WCCC)
attached hereto as Schedule A, and subject to Recommendation 2 hereof, Council
amend its July 18, 2012 decision Approval of Funding Participation Winnipeg
Convention Expansion Project by deleting Recommendation VI.C.

2.

That the City and the WCCC enter into an agreement whereby the WCCC agrees to
transfer to the City the $3.75 million liquidated damages amount to be paid by Stuart
Olsen Construction Ltd. (SODCL) to the WCCC as consideration for the WCCC
releasing SODCL from its obligation to construct a hotel development at the property
located at 220 Carlton Street (the Site).

3.

That Council authorize a grant in the amount of $3.75 million to CentreVenture

Development Corporation (CentreVenture), which grant shall be payable within 30
days following the Citys receipt of the $3.75 million liquidated damages amount
pursuant to Recommendation 2 and shall be subject to the following conditions:
(i)

that 100% of the grant monies be used to repay a portion of the $6.6 million line
of credit increase granted to CentreVenture Development Corporation
(CentreVenture) to acquire the Site, which line of credit increase was
guaranteed by the City pursuant to the Council decisions of December 12, 2012
Loan Guarantee Increase CentreVenture Development Corporation and
December 11, 2013 Extension of Loan Guarantee Increase CentreVenture
Development Corporation;

(ii)

that in the event CentreVenture is unable to conclude a development agreement

for the Site within six months following the date of Council approval,
CentreVenture undertake a public bid process with respect to future development
of the Site;

(iii)

that CentreVenture include the following terms and conditions in its development
agreement with any future purchaser and/or developer of the Site, to the
satisfaction of the Chief Administrative Officer:

Agenda Executive Policy Committee January 26, 2015

(a)
(b)
(c)
(d)

specification of building(s) to be constructed on the Site;

a construction start date of one year from closing, failing which, title to the
Site reverts back to CentreVenture;
a construction completion date of two years from closing, failing which,
title to the Site reverts back to CentreVenture;
a minimum non-refundable deposit of $250,000.

4.

That the Public Service request CentreVenture to report back to the Executive Policy
Committee in 120 days with an update on development plans for the Site.

5.

That the City enter into, and the Chief Administrative Officer be delegated the authority
to negotiate and finalize the terms of, all necessary agreements between the City, the
WCCC, and CentreVenture required to implement any matters contained herein.

6.

That the Proper Officers of the City be authorized to do all things necessary to implement
the intent of the foregoing.

Agenda Executive Policy Committee January 26, 2015

DECISION MAKING HISTORY:

EXECUTIVE POLICY COMMITTEE RECOMMENDATION:
On January 21, 2015, the Executive Policy Committee laid over the matter.
David Sanders submitted a communication dated January 21, 2015, with respect to an
Amendment to Council Decision Approval of Funding Participation - Winnipeg Convention
Centre Expansion Project.

ADMINISTRATIVE REPORT
Title:

Amendment to Council Decision Approval of Funding

Participation - Winnipeg Convention Centre Expansion Project

Critical Path:

Executive Policy Committee Council

AUTHORIZATION

Author
K. Boryskavich

Department Head
M. Ruta

CFO
M. Ruta

CAO
D.Joshi
A/CAO

RECOMMENDATIONS
1. That in response to the request made by The Convention Centre Corporation (WCCC)
attached hereto as Schedule A, and subject to Recommendation 2 hereof, Council amend its
July 18, 2012 decision Approval of Funding Participation Winnipeg Convention Expansion
Project by deleting Recommendation VI.C.
2. That the City and the WCCC enter into an agreement whereby the WCCC agrees to transfer to
the City the $3.75 million liquidated damages amount to be paid by Stuart Olsen Construction
Ltd. (SODCL) to the WCCC as consideration for the WCCC releasing SODCL from its
obligation to construct a hotel development at the property located at 220 Carlton Street (the
Site).
3. That Council authorize a grant in the amount of $3.75 million to CentreVenture Development
Corporation (CentreVenture), which grant shall be payable within 30 days following the Citys
receipt of the $3.75 million liquidated damages amount pursuant to Recommendation 2 and
shall be subject to the following conditions:
(i)

that 100% of the grant monies be used to repay a portion of the $6.6 million line of credit
increase granted to CentreVenture Development Corporation (CentreVenture) to
acquire the Site, which line of credit increase was guaranteed by the City pursuant to the
Council decisions of December 12, 2012 Loan Guarantee Increase CentreVenture
Development Corporation and December 11, 2013 Extension of Loan Guarantee
Increase CentreVenture Development Corporation;

(ii)

that in the event CentreVenture is unable to conclude a development agreement for the
Site within six months following the date of Council approval, CentreVenture undertake a
public bid process with respect to future development of the Site;

(iii)

that CentreVenture include the following terms and conditions in its development
agreement with any future purchaser and/or developer of the Site, to the satisfaction of
the Chief Administrative Officer:
(a) specification of building(s) to be constructed on the Site;
(b) a construction start date of one year from closing, failing which, title to the Site
reverts back to CentreVenture;
(c) a construction completion date of two years from closing, failing which, title to the
Site reverts back to CentreVenture;
(d) a minimum non-refundable deposit of $250,000.

4. That the Public Service request CentreVenture to report back to the Executive Policy Committee
in 120 days with an update on development plans for the Site.
5. That the City enter into, and the Chief Administrative Officer be delegated the authority to
negotiate and finalize the terms of, all necessary agreements between the City, the WCCC, and
CentreVenture required to implement any matters contained herein.
6. That the Proper Officers of the City be authorized to do all things necessary to implement the
intent of the foregoing.

REASON FOR THE REPORT

Council approval is required to amend the terms of a previous Council decision. In addition, Council
approval is required to provide a grant to CentreVenture and for the City to enter into all necessary
agreements to implement the recommendations of this report.

HISTORY

On July 11, 2012 Council approved the Citys funding participation in the Winnipeg Convention
Centre Expansion Project by way of: (i) a $51 million grant to the WCC; and (ii) a $33 million loan
guarantee in favour of the WCCC (see Council minutes attached as Schedule B for further detail).

The $33 million loan was to be repaid by: (i) the WCCC servicing $17 million of the loan from the
annual operating income of the expanded facility; and (ii) the City providing an annual grant to the
WCCC of incremental municipal property and business taxes and the Province providing an annual
grant to the WCCC of incremental provincial education taxes and levies generated by an adjacent
property development, to service the net present value of the remaining $16 million of the loan.

In addition, the Citys loan guarantee was provided on the condition that the guaranteed maximum
price contract between the WCCC and the successful proponent contain a provision requiring the
proponent to service the annual debt payments related to the portion of the loan to be repaid by the
municipal and provincial incremental tax grant until such time as such incremental tax grant
commenced.

The foregoing Council requirement was included in the Citys funding agreement with the WCCC,
by placing an obligation on the WCCC to holdback $16 million out of payments to be made by the
WCCC to the successful proponent under the guaranteed maximum price contract until 30 days
following substantial completion of the adjacent property development.

The RFP issued by the WCCC provided that preferential consideration would be given to bids that
included the construction of a hotel development adjacent to the expanded Convention Centre
project site. The RFP was awarded by the WCCC to SODCL, on the basis of a bid that did include
such a proposal for construction of an adjacent hotel development.

During contract negotiations, SODCL and the WCCC (i) reached agreement on the $16 million
holdback requirement; and (ii) confirmed the site of the adjacent hotel development as the Site.
These items were documented in a letter of intent, and were to be included in the construction
contract between SODCL and WCCC. While the terms of the construction contract have been
negotiated, it has not as yet been executed by the parties.

As part of their bid, SODCL partnered with Matthews Southwest (an American hotel developer)
(MSW) with respect to the adjacent hotel development. SODCL / MSW attempted to acquire
three adjacent properties, including the Site, for the purposes of the hotel development but were
unable to conclude an acceptable purchase of any of the three properties.

CentreVenture was approached for assistance in negotiating with the ownership group of the Site.
CentreVenture and MSW entered into a non-binding Memorandum of Understanding setting out
each partys proposed rights and obligations with respect to the purchase whereby CentreVenture
would enter into a purchase and sale agreement with the ownership group of the Site (the
Ownership Group) to purchase the Site. The MOU contemplated that MSW would construct a
hotel on the a portion of the Site and CentreVenture would retain a portion of the Site for future
development. CentreVenture entered into a letter of intent with the Ownership Group committing to
the purchase of the Site and ultimately concluded the purchase; however, MSW subsequently
withdrew from the non-binding Memorandum of Understanding.

In order to finance the acquisition of strategic properties in the downtown, CentreVenture requested
a $6.6 million increase to their line of credit (from $13 million to $19.6 million), to be guaranteed by
the City. On December 12, 2012, Council approved CentreVentures request (see Council minutes
attached as Schedule C) for further detail).

The Citys loan guarantee was conditional on: (i) CentreVenture repaying the $6.6 million line of
credit increase no later than December 12, 2013; and (ii) all proceeds of the sale of the Site being
utilized to repay the $6.6 million line of credit increase.

Following a further request from CentreVenture, on December 11, 2013, Council approved an
extension to the $6.6 million line of credit increase and loan guarantee until the earlier of the full
repayment of the loan or September 30, 2016 (see Council minutes attached as Schedule D for
further detail).

IMPLICATIONS OF THE RECOMMENDATIONS

SODCL has advised the WCCC that they are not in a position to proceed with an adjacent hotel
development on the Site that would meet the needs of the WCCC as set forth in its business plan
and has requested that the WCCC release it from its obligation to construct such a hotel
development and eliminate the $16 million holdback requirement.

The WCCC has reached a conditional settlement agreement with SODCL whereby the WCCC
would release SODCL from its obligation to construct the hotel development and eliminate the $16
million holdback requirement, in exchange for payment of liquidated damages by SODCL in the
amount of $3.75 million to be paid on or prior to the payment of the last statutory holdback by
WCCC under the construction project (approximately April / May 2016).

This settlement is conditional on Council amending its July 11, 2012 decision to remove the
requirement for the proponent to service annual debt payments on the $16 million loan until such
time as the incremental tax grant commences and on the City amending its funding agreement with
the WCCC to eliminate the $16 million holdback requirement.

The settlement agreement also provides that upon satisfactory resolution of the foregoing matters,
the WCCC and SODCL will execute the construction contract within seven days.

The WCCC Board of Directors approved the conditional settlement on January 14, 2015 and has
submitted a request to the City for Council to facilitate the settlement (see Schedule A for further
details).

The Public Service supports the WCCCs request in order to facilitate the ongoing development of
the Convention Centre expansion and related developments for the enhancement of the downtown,
SHED and city economy overall.

CentreVenture has requested that if the settlement agreement is approved, the $3.75 million
liquidated damages to be paid by SODCL to the WCCC be advanced to CentreVenture to be
applied against the outstanding acquisition-related costs that CentreVenture incurred as a result of
its acquisition of the Site.

The Public Service supports CentreVentures request subject to certain conditions, including the
condition that 100% of such monies be applied to pay down the line of credit increase guaranteed
by the City (given that the line of credit increase is non-revolving, a payment of $3.75 million would
reduce the liabilities of CentreVenture and the City from $6.6 million to $2.85 million. It is
anticipated that the combination of the $3.75 million liquidated damages amount plus the fair market
value of the Site (representing total proceeds of the future disposition of the Site) will cover the
repayment of the line of credit increase plus carrying costs incurred by CentreVenture. The $3.75
million liquidated damages monies would flow from the WCCC to the City, and would be provided to
CentreVenture by way of a grant.

As a result of SODCLs request to be released from its obligation to construct the adjacent hotel
development on the Site, CentreVenture has been actively working to realize development on the
Site in order to ensure construction of a hotel which will generate incremental taxes and increased
revenues for the WCCC in accordance with their business plan.

CentreVenture is currently working with credible developers on a proposed development on the

Site, and will report back to Council within 120 days further details.

The Public Service recommends that proposed grant to CentreVenture be subject to the following
additional conditions: (i) that in the event CentreVenture does not conclude a development
agreement for the Site within six months following the date of Council approval, CentreVenture
must undertake a public bid process with respect to development of the Site; and (ii) that

CentreVenture incorporate the following criteria into any development agreement with a future
purchaser / developer of the Site:
o
o
o
o

specification of building(s) to be constructed on the Site

construction start date of one year from closing, failing which, title to the Site reverts
back to CentreVenture
construction completion date of two years from closing, failing which, title the Site reverts
back to CentreVenture
a minimum non-refundable deposit of $250,000.

Given that completion of a development on the Site would not occur until after the Convention
Centre expansion was completed, if Council were to adopt Recommendation 1 of this report to
remove the requirement for SODCL to service annual debt payments on the $16 million loan until
such time as the incremental tax grant commences, a funding gap will be created whereby the
WCCC will need to service the loan during this time period (in effect, the obligations of SODCL are
being transferred to the WCCC, which impacts the City as guarantor of the WCCCs $33 million
loan).

In the event that the WCCC is unable to fully or partially service the debt payments during the time
period between commencement of such debt payments and commencement of the incremental tax
grant, further alternatives would need to be explored including the possibility of bridge financing
under the Destination Marketing Fund Reserve. Any such decision would require a further report to
Council.

FINANCIAL IMPACT

Date:

Financial Impact Statement

January 15, 2015

Project Name:
Amendment to Council Decision Approval of Funding Participation Winnipeg Convention Centre Expansion Project
COMMENTS:
There are no direct financial implications associated with the recommendations contained in this report. The City's
financial risk will be reduced by granting the $3.75 million liquidated damages amount to CentreVenture to be used
to reduce the latter's line of credit balance, which is guaranteed by the City. The City is, however, exposed to
additional financial risk with the WCCC assuming responsibility for debt servicing of the $33 million loan amount,
also guaranteed by the City. As noted in the body of the report, should WCCC be unable to fully or partially service
the debt payments during the time period between commencement of such debt payments and commencement of
the incremental tax grant, further alternatives would need to be explored including the possibility of bridge financing
under the Destination Marketing Fund Reserve. Any such decision would require a further report to Council.
.

"Original Signed By"

Mike McGinn, CA
Manager of Finance

CONSULTATION
In preparing this report there was consultation with:
Legal Services
Corporate Finance
Planning, Property & Development
Office of the CAO
CentreVenture Development Corporation
The Convention Centre Corporation
Stuart Olsen Construction Ltd.
Province of Manitoba

SUBMITTED BY

Department: Legal Services / Corporate Finance

Prepared by: K. Boryskavich
Date: January 16, 2015
File No.

Schedule A.pdf

Schedule B.pdf

Schedule C.pdf

Schedule D.pdf

10

uLE Au

RBC Convention Centre

WINNIPEG

January 16, 2015

Mr. Deepak Joshi

Acting Chief Administrative Officer
City of Winnipeg
3rd Floor Administration Building
510 Main Street
Winnipeg, MB R3B 1B9
Email: Dioshiwinnipeg.ca
-

Dear Mr. Joshi:

On behalf of the WCC, the WCC confirms by way of motion duly passed by its Board of
Directors on January 14, 2015, the WCC approved deleting the requirement to hold back
$16 M under its contract with Stuart Olson Construction Ltd. (SOCL) subject to the City of
Winnipeg (City) deleting this requirement from the Contribution Agreement between the
City and WCC. Therefore the WCC requests the City to delete that requirement.
Sincerely,
The Convention Centre Corporation

Per:

Bob Silver
Board Chair
cc:

K. Boryskavich, kborvskavich@winnipeg.ca
K. Lahr, President & CEO, Convention Centre Corporation
R. King, (IC, rogerkingqc@gmail corn

Retered trademark of Roy& Bank of Canada Used under france by THE CONVENT1ON CENTRE CORPORATION which owns and operates the
feC Cnvention Centre Winwpeg,

T O4956iJ2O
F O$943-O3iO

www.wcc.mb,ca

375 fork Avenue

WInnoeg, ManItoba
Csa 73C 3J3

Council Minutes
Minute No. 498
Report Executive Policy Committee

Item No. 9

JuLy 18, 2012

July 11, 2012

Approval of Funding Participation Winnipeg Convention Centre

Expansion Project
-

COUNCIL DECISION:
Council concurred in the recommendation of the Executive Policy Committee and adopted the
foIlo ing:
1.

Creation of a new 2012 capital project in an amount of $51 million to consist of and be
financed by:
a)
a one-time grant to the Winnipeg Convention Centre Corporation for the Project
in an amount equal to, and to be financed by. the balance at December 31, 2012 of
the monies in the Destination Marketing Reserve Fund accumulated for the
purpose of funding future capital works for the Winnipeg Convention Centre; and
b)
a grant to the Winnipeg Convention Centre Corporation for the Project in an
amount equal to $51 million less the grant amount pursuant to Recommendation
I .I.a). to be financed by external debt, with debt servicing payments to be drawn
from monies in the Destination Marketing Reserve Fund accumulated for the
purpose of funding future capital works for the Winnipeg Convention Centre.

II.

Authorization of borrowing authority pursuant to Recommendation 1.I.b) in the amount

of up to $51 million.

III.

The issuance by the Winnipeg Convention Centre Corporation in accordance with

subsection 6(I)(a) of The Convention Centre Corporation Act of a promissory note in the
amount of $33 million in favour of the Royal Bank of Canada upon terms and conditions
determined by the Winnipeg Convention Centre Corporation and acceptable to the City
of Winnipegs Chief Financial Officer.

IV,

A $33 million loan guarantee in favour of the Winnipeg Convention Centre Corporation
as permitted under subsection 6(2) of The Convention Centre Corporation Act. subject to:
a) Council approval of Recommendation 1(V) hereof.

commitment from the Board of Directors ot the V innipeg (onvention Centre

Corporation to service the $33 million loan from the annual operating income oft
he expanded Winnipeg Convention Centre facility for up to 30 years.

Council Minutes

2
Report

Executive Policy Committee

July 18, 2012

July 11, 2012

COUNCIL DECISION (continued):

V.

An annual grant to the Winnipeg Convention Centre Corporation in an amount

equal to the annual incremental municipal property and business taxes, for up to
25 ears, on a complementary adjacent property development, subject to the
Province of Manitoba designating the property under the Community
Revitalization Tax Increment Financing Act (CRTIFA), such that 100% of the
incremental municipal property taxes and 100% of the incremental provincial
education taxes and levies allowable under the CRTIFA are provided to the
Winnipeg Convention Centre Corporation to service a Net Present Value (NPV)
of $16 million of the $33 million loan guaranteed by the City.

VI.

in the event that incremental property and business taxes determined under
Recommendation I N are insufficient to service the debt and un-serviced amounts
remain after applying Recommendation I .lV.b), an annual grant to the Winnipeg
Convention Centre Corporation in an amount equal to each such annual un
serviced amount to be paid from the monies in the Destination Marketing Reserve
Fund allocated for the purpose of funding future capital works for the Winnipeg
Convention Centre Corporation;
which approvals shall be subject to confirmation satisfactory to the Citys Chief
Financial Officer of:
A.
B.
C.

funding contributions of $46.5 million from the Government of Canada

and $51 million from the Province of Manitoba;
successful negotiation of total Project costs not to exceed $181.5 million;
and
successful negotiation of a provision in the guaranteed maximum price
contract between the Winnipeg Convention Centre Corporation and the
successful proponent pursuant to Request for Proposal No. 000524
Request for Proposal for the Expansion of the Winnipeg Convention
Centre and Complementary Downtown Development (the Proponent)
that obligates the Proponent their portion to service the annual debt
payments related to the net present value (NPV) of$16 million of the $33
million loan to be guaranteed by the City pursuant to Recommendation
I .IV until such time as the servicing of such debt payments h incremental
taxes pursuant to Recommendation l.V commences.

Council Minutes
Report

Executive Policy Committee

July 18, 2012

July 11, 2012

COUNCIL DECISION (continued):

2.

That the City request that the Province amend The Convention Centre Corporation Act to
revise the definition of Convention Centre in Section 1 of such Act to include the new
building located on the expansion site and to revise Section 6(1) of the Act to provide the
Winnipeg Convention Centre Corporation with additional borrowing powers.

3.

That the Chief Administrative Officer be delegated authority to negotiate and finalize any
necessary agreements between the City of Winnipeg and the Province of Manitoba, the
Government of Canada. the Winnipeg Convention Centre Corporation and any other
agreements required to implement any matters contained herein.

4.

That the City Solicitor/Director of Legal Services be directed to prepare all by-laws
required to implement the foregoing.

5.

That the Proper Officers of the City be authorized to do all things necessary to implement
the intent of the foregoing.

Council Minutes

4
Report

Executive Policy Committee

July 18, 2012

July 11,2012

DECISION MAKING HISTORY:

Moved by His Worship Mayor Katz.
That the recommendation of the Executive Policy Committee be adopted.
Carried
EXECUTIVE POLICY COMMITTEE RECOMMENDATION:
On July II. 2012, the Executive Policy Committee concurred in the recommendation of the
Winnipeg Public Service submitted the matter to Council.

Council MinutesJuly 18, 2012

ADMINISTRATIVE REPORT
Title: Approval of funding participation by the City of Winnipeg in partnership with the
Province of Manitoba, Government of Canada and the Winnipeg Convention Centre
Corporation for the Winnipeg Convention Centre Expansion Project (the Project).

Critical Path:

Executive Policy Committee

Council

AUTHORIZATION

Author

Department Head

CFO

CAO

G. Holmes

G. Holmes
Acting Director

M Ruta

P Sheegl
CAO

1. That Council approve:

creation of a new 2012 capital project in an amount of $51 million to consist of and be
financed by:
a) a one-time grant to the Winnipeg Convention Centre Corporation for the
Project in an amount equal to, and to be financed by, the balance at
December 31, 2012 of the monies in the Destination Marketing Reserve Fund
accumulated for the purpose of funding future capital works for the Winnipeg
Convention Centre; and
b) a grant to the Winnipeg Convention Centre Corporation for the Project in an
amount equal to $51 million less the grant amount pursuant to
Recommendation 1la), to be financed by external debt, with debt servicing
payments to be drawn from monies in the Destination Marketing Reserve
Fund accumulated for the purpose of funding future capital works for the
Winnipeg Convention Centre;
II. authorization of borrowing authority pursuant to Recommendation 1 .l.b) in the amount of
up to $51 million;
Ill. the issuance by the Winnipeg Convention Centre Corporation in accordance with
subsection 6(1 )(a) of The Convention Centre Corporation Act of a promissory note in the
amount of $33 million in favour of the Royal Bank of Canada upon terms and conditions
determined by the Winnipeg Convention Centre Corporation and acceptable to the City
of Winnipegs Chief Financial Officer;
IV, a $33 million loan guarantee in favour of the Winnipeg Convention Centre Corporation
as permitted under subsection 6(2) of The Convention Centre Corporation Act, subject
to:

Council Minutes

July 18, 2012

a) Council approval of Recommendation 1(V) hereof;

b) commitment from the Board of Directors of the Winnipeg Convention Centre
Corporation to service the $33 million loan from the annual operating income
of the expanded Winnipeg Convention Centre facility for up to 30 years.
V. an annual grant to the Winnipeg Convention Centre Corporation in an amount equal to the
annual incremental municipal property and business taxes, for up to 25 years, on a
complementary adjacent property development, subject to the Province of Manitoba
designating the property under the Community Revitalization Tax Increment Financing Act
(CRTIFA), such that 100% of the incremental municipal property taxes and 100% of the
incremental provincial education taxes and levies allowable under the CRTIFA are
provided to the Winnipeg Convention Centre Corporation to service a Net Present Value
(NPV) of $16 million of the $33 million loan guaranteed by the City; and
VI. in the event that incremental property and business taxes determined under
Recommendation 1 .V are insufficient to service the debt and un-serviced amounts remain
after applying Recommendation 1 .lV.b), an annual grant to the Winnipeg Convention
Centre Corporation in an amount equal to each such annual un-serviced amount to be
paid from the monies in the Destination Marketing Reserve Fund allocated for the purpose
of funding future capital works for the Winnipeg Convention Centre Corporation;
which approvals shall be subject to confirmation satisfactory to the Citys Chief Financial Officer
of:
A. funding contributions of $46.5 million from the Government of Canada and $51 million from
the Province of Manitoba;
B. successful negotiation of total Project costs not to exceed $181.5 million; and
C. successful negotiation of a provision in the guaranteed maximum price contract between the
Winnipeg Convention Centre Corporation and the successful proponent pursuant to Request
for Proposal No. 000524 Request for Proposal for the Expansion of the Winnipeg Convention
Centre and Complementary Downtown Development (the Proponent) that obligates the
Proponent their portion to service the annual debt payments related to the net present value
(NPV) of $16 million of the $33 million loan to be guaranteed by the City pursuant to
Recommendation 1 IV until such time as the servicing of such debt payments by incremental
taxes pursuant to Recommendation 1 .V commences.
2. That the City request that the Province amend The Convention Centre Corporation Act to revise
the definition of Convention Centre in Section 1 of such Act to include the new building located on
the expansion site and to revise Section 6(1) of the Act to provide the Winnipeg Convention
Centre Corporation with additional borrowing powers.
3. That the Chief Administrative Officer be delegated authority to negotiate and finalize any
necessary agreements between the City of Winnipeg and the Province of Manitoba, the
Government of Canada, the Winnipeg Convention Centre Corporation and any other agreements
required to implement any matters contained herein.

4, That the City Solicitor/Director of Legal Services be directed to prepare all by-laws required to
implement the foregoing.
5. That the Proper Officers of the City be authorized to do all things necessary to implement the
intent of the foregoing.

Council Minutes

July 18, 2012

REASON FOR THE REPORT

Council approval is required to:
i. provide a grant to the Winnipeg Convention Centre Corporation as identified in
Recommendations 1 .1, V and VI if required;
ii. provide borrowing authority identified in Recommendation 1 .11;
iii. approve a loan guarantee identified in Recommendation 1.IV;
iv. assign annual incremental municipal property taxes as identified in Recommendation 1 .V,
v. disburse funds from the Destination Marketing Reserve Fund for the purpose outlined in
Recommendation 1 .1, and;
vi. request that the Province amend the Convention Centre Corporation Act as stated in
Recommendation 2.

IMPLICATIONS OF THE RECOMMENDATIONS

The Winnipeg Convention Centre Corporation (WCC) under the direction of its Board and
subject to formally securing all funding requirements, will proceed with a major facility expansion
project that will almost double its existing size and result in a convention facility that upon
completion would rank fourth in size in Canada, and significantly enhance Winnipegs ability to
compete successfully for national scale events.

The City of Winnipeg will enter into funding agreements with the WCC and the two senior levels
of government in conjunction with the shared funding obligations for the project.

The City of Winnipegs funding contribution will be reflected as a liability of $74 million on the
Citys consolidated financial statements, consisting of $41 million in external borrowing and a
$33 million guarantee of the borrowing pursuant to the terms and conditions of the promissory
note to be issued by the WCC in favour of the Royal Bank of Canada, as detailed in the
following paragraphs.

The WCC will secure an externally financed Line of Credit during construction, leading to term
debt repayable as set out in the recommendations, to be reimbursed according to the
negotiated funding agreements with all parties.

The long-term borrowing of $33 million by the WCC, to be guaranteed by the City of Winnipeg,
will be funded as follows:
o

$17 million in Net Present Value represented by new / incremental revenues

generated by the expanded facility projected over 30 years;

$16 milhon in Net Present Value represented by annual incremental municipal

property and incremental provincial education taxes and levies on a complementary
adjacent property development projected over 25 years.

As a condition precedent to City funding, the WCC shall be required to provide

confirmation satisfactory to the Citys Chief Financial Officer of successful negotiation of a
provision in the guaranteed maximum price contract between the WCC and the successful
Proponent that obligates the Proponent to service the annual debt payments related to
the net present value (NPV) of $16 million of the $33 million loan to be guaranteed by the
City until such time as the servicing of such debt payments by incremental taxes
commences WCC has retained Deloitte to provide financial projections, analysis and
assumptions related to the WCCs funding commitments for the expansion project.
Operating revenue projections prepared by Deloitte on behalf of the WCC indicate that

Council Minutes

July 18, 2012

there should be sufficient other revenue to service the $17 million component of the $33
million loan. The other $16 million will be funded in whole or in part by tax increment
financing and incremental business taxes dedicated by the City and Province on a
complementary adjacent property development. Because negotiations are yet to be
completed, it is not known at this time what the full value of tax collections will represent
over the 25 year amortization period of the loan. If projected revenue is not achieved
there is a risk that a shortfall in payments may occur which would need to be addressed
by the WCC based on its financial surplus position in the year prior to the year of the
shortfall, or the City as guarantor. It is recommended that any funding shortfalls that
remain unresolved by the WCC be funded from the Destination Marketing Reserve Fund.
These projections also identify existing operating revenues, adjusted annually for inflation,
that include the continuation of annual operating grants estimated at $2.9 million in total
from the City of Winnipeg and the Province of Manitoba.

The WCC will secure the services of a full-time owner advocate to oversee the construction
project and professional accounting services to oversee the accounting for all costs and
reimbursements associated with the overall project.
OurWinnipeg, Complete Communities Our Downtown Always a Priority policy platform will be
supported and further advanced by a significant renovation / expansion of a Convention Centre
facility in downtown Winnipeg. The expanded facility will serve as a place of vibrant, peopleoriented extended-hour activity and complement other existing and planned downtown
amenities including the Sports Hospitality and Entertainment District and CentreVenture
Development Corporations Portage Avenue Development Strategy.

HISTORY! DISCUSSION

Since 2001, there have been a number of iterations and past proposals for the expansion of the
WCC.
Business Case analysis by various consulting firms identified the need to expand the current
facility in order to sustain the facilitys competitiveness with Tier 2 convention facilities in other
Canadian cities. Tier 2 facilities typically compete for events of a national scale. A number of
other Tier 2 cities have contemplated, engaged in or recently completed convention centre
expansion projects.
In 2008. Council approved a 5% Accommodation Tax (By-law 70/2008) and a Destination
Marketing Reserve Fund. The mandate of this Reserve fund as established includes:
o an annual operating grant of $1.5 million to the IVinnipeg Convention Centre, and
up to 40% of the annual Accommodation Tax revenue, to a maximum of the
o
estimated annual payments required to service the amount of future debt that will be
allocated to the Citys portion of construction costs relating to a planned expansion at the
Winnipeg Convention Centre, be set aside within the Destination Marketing Reserve
Fund, and dispositions from the Destination Marketing Reserve Fund for this purpose
require approval of Council.
..

A letter of endorsement was provided from the Chief Administrative Officer of the City of
Winnipeg and the Province of Manitoba, dated July 8th, 2011 identifying a proposed funding
structure for the project (Schedule A),

A letter of endorsement dated June 18, 2012 was provided from the Government of Canada
that the Government of Canada has identified the expansion and renovation of the
indicating
.. .

Council Minutes

July 18, 2012

Winnipeg Convention Centre as a priority for funding consideration under the Building Canada
Fund Major Infrastructure Component
(Schedule B). The letter further states that
this
letter does not signify funding approval
but rather, states the terms under which funding
approval will be provided (see also Schedule C).

. . .

The total turnkey cost of the project will be set at $181.5 million, including enhancements to the
existing facility. At the time of writing, the WCC is in the process of negotiating a guaranteed
maximum price contract of $147 million for the expansion component of the project. The
balance of $34.5 million of the total project cost of $181.5 million is attributed to owner
responsibility improvements to the existing facility in conjunction with the expansion project.
Funding for the project will be derived from the following sources:
Government of Canada (Building Canada Fund)
$46.5 million
Province of Manitoba
$51 million
City of Winnipeg
$51 million
Winnipeg Convention Centre (future operating income)
$17 million
Hotel and other Development (incremental property
and business taxes)
$16 million
Total Project Cost
o

The City of Winnipeg

Up to $41 million in borrowing, net of the estimated balance dedicated in the Reserve
(projected to the end of 2012 to be approximately $10 million) will be secured through
annual payments from the Destination Marketing Reserve Fund (DMRF), created by
Council in 2008, and identifying in part that...
up to 40% of the annual Accommodation Tax revenue, to a maximum of the estimated
annual payments required to service the amount of future debt that will be allocated to
the Citys portion of construction costs relating to a planned expansion at the Winnipeg
Convention Centre, be set aside within the Destination Marketing Reserve Fund, and
dispositions from the Destination Marketing Reserve Fund for this purpose require
approval of Council. Projections of the Destination Marketing Reserve Fund using
conservative assumptions indicate that there will be sufficient Accommodation Tax
revenue to service the annual debt amount for the expansion project within the
Reserve mandate previously established by Council (Schedule D)
Any shortfall in funding relating to the $33 million loan guarantee unresolved by the
WCC will be paid as a grant to WCC from any surplus funding remaining in the amount
allocated to the WCC in the Destination Marketing Reserve Fund for this purpose.

The City of Winnipeg will also continue to provide an annual operating grant to WCC in
the amount of $1 .5 million from the Destination Marketing Reserve Fund as previously
directed by Council and in addition to funding provided for the facility expansion
project,

All borrowing by the City has to be approved by the Provincial Minister of Finance.
The Province of Manitoba
The contribution from the Province of Manitoba for the expansion project will be a
maximum of $51 million. This investment includes the proceeds from the sale of the
provincially-owned land at the southwest corner of York Avenue and Carleton Street
which is the site of the expansion project.
-

$181.5 million

The Government of Canada

Council Minutes

10

July 18, 2012

A $46.5 million contribution will be secured through the Government of Canadas

Building Canada Fund program Major Infrastructure Component (BCF MIC)
through the formal application and approval process required for this program. This
funding will flow on a reimbursement basis based on compliance with the programs
eligible cost criteria.

The Winnipeg Convention Centre Corporation (WCC)

The WCC will be issuing a promissory note in the amount of $33 million in favour of
the Royal Bank of Canada, with respect to the financing detailed in the following
paragraphs.
A line of credit guaranteed by the City will be acquired to provide financing during the
construction project. It is expected that this line of credit will not need to exceed $33
million at any one stage during the construction period.

Upon completion of construction (anticipated in 2015), the WCC will roll the above line
of credit into a $33 million borrowing facility at a fixed interest rate and guaranteed by
the City of Winnipeg. This borrowing facility will be funded as follows:
$17 million in Net Present Value of the $33 million above will be secured from new
revenues raised annually through the expanded operations of WCC with a 30-year
amortization period;

$16 million in Net Present Value of the $33 million above will be secured through
annual incremental municipal property, incremental provincial education taxes and
levies, and incremental business taxes from a complementary adjacent property
development with a 25-year amortization period;

The WCC has factored debt servicing payments corresponding to the $17 million
and $16 million net present value amounts above into their pro forma operating
projections for the new facility during and post construction. The WCC has
retained Deloitte to prepare financial projections, analysis and assumptions related
to the WCCs funding commitments for the expansion project which are to be
guaranteed by the City of Winnipeg.

With respect to ownership, currently the City of Winnipeg holds title to the land and subsection
8(1) of the Convention Centre Act provides that ownership of the convention centre is vested in
the corporation. The Act defines convention centre according to specific road boundaries. In
this regard, recommendation 3 of this report seeks among other things, an amendment to the
Act to account for the expanded boundaries of the convention centre as defined.
Formal confirmation of funding commitments will be sought from each of the senior levels of
government as a condition of funding from the City of Winnipeg and prior to commencement of
project construction. It is important to note that there are specific requirements that must be
followed under the terms of the federal Building Canada Fund (BCF) program (Schedule C).
Included in these requirements are eligible and ineligible project cost criteria. In particular, the
cost of land acquisition and all costs incurred prior to Ministerial approval in principle are
considered ineligible. The letter provided by the Government of Canada dated June 18, 2012
serves as confirmation that the renovation component of the project pertaining to the existing
building will be eligible for federal funding.
Borrowing arrangements will be formalized by the Winnipeg Convention Centre Corporation
with terms acceptab!e to the City of Winnipeg in conjunction with the $33 million loan guarantee.
Formal agreements will be struck with all funding partners involved with respect to the terms of
the monetary contributions to the project.

Council Minutes July 18, 2012

11

The Province of Manitoba has provided formal notification to parking customers currently
accessing the property in conjunction with an anticipated project commencement date as early
as September 1, 2012, subject to funding and other required approvals being in place.
An owners representative has been secured by the WCC to oversee the construction project in
accordance with the Guaranteed Maximum Price contract provisions.
The WOO has secured professional accounting services to oversee the project cost accounting,
payment and reimbursement process for the project during construction, and under the terms of the
agreements with its funding partners.
The WCC represents a consolidated entity in the City of Winnipegs financial statements so any
outstanding debt guaranteed by the City reflects on consolidation in the Citys financial
statements. The following is the policy criteria related to requests for loan guarantees as
th,
adopted by Council on June 17
1992:
A. Requests for loan guarantees shall be submitted to the City Treasurer for review to
determine if the request meets the requirements of the policy.

This report has been submitted to and reviewed by the City Treasurer.
B. The organization requesting the loan guarantee must provide a service, which, in
whole or in part, falls within the mandate of the City of Winnipeg.
The mandate of The Convention Centre Corporation is to operate and promote the
Winnipeg Convention Centre.
C. The project for which the loan guarantee is being requested must not be in conflict with
City policy.

The project for which the loan guarantee is required does not conflict with City policy.
D. The organizations services must be available to the community at large without
restrictions based upon ethnicity, religion or race and without unreasonably restrictive
membership or user fees.

The seivices the Winnipeg Convention Centre Corporation provides are available to
the community at large.
E. The organization must be non-profit.

The Convention Centre Corporation is a non-profit organization continued without

share capital under The Convention Centre Corporation Act.
F. The organization must produce financial records and a business plan that
demonstrates the organizations long-term viability and capacity to meet the
obligations of the loan that they are asking the City to guarantee.

The Winnipeg Convention Centre Corporations annual financial statements are

consolidated with the City of Winnipegs audited annual financial statements.
The Winnipeg Convention Centre has provided a pro forma analysis and related
assumptions supporting the entitys ability to provide operating income sufficient to
offset the $13 million portion of the $33 million loan guarantee by the City of Winnipeg
(Schedule C)

12

Council Minutes

July 18, 2012

The additional $16 million in external borrowing under the loan guarantee is to be
offset by incremental municipal property and provincial taxes from an adjacent hotel
development for a maximum of 25 years.

G. The organization structure and the principals of the organization must be judged by the
City of Winnipeg as competent to independently implement the business plan of the
organization.
The Convention Centre Corporation was continued under The Convention Centre
Corporation Act and has a 15 member board of which 9 members are appointed by
Council, 2 members are appointed by the Province of Manitoba, and 4 members are
appointed by the Board.

H. Unless there are very special circumstances, the maximum amount of outstanding
loan guarantees for any one organization will be $1 .000.000.00.
The loan guarantee request is for up to a total of $33 million, with the condition of a
funding contribution of $46.5 million from the Government of Canada and $51 million
from the Province of Manitoba, and based on a total project cost of $181.5 million.
Council has granted loan guarantees in excess of the $1 million maximum amount in
the past.

The loan that the City is being asked to guarantee should not represent more than
50% of the total funding of the project. The organization requesting the loan guarantee
must have raised at least 20% of the total project costs from non-City of Winnipeg
sources as a down-payment, i.e. if the organization is receiving a City grant for their
project, the grant cannot be counted as part of the 20% down-payment.
The total of $33 million on which the City of Mnnipeg will be providing a loan
guarantee represents approximately 18% of the total funding of the project. Direct
funding from senior governments (i.e. non-City sources) represents approximately
53% of the total project costs.
Under the terms and conditions recommended in this report, the Winnipeg Convention
Centre Corporation will secure an initial ilne of credit of up to $33 million during the
construction period that upon construction completion will be converted to a 30-year
term loan. The loan guarantee by the City of Winnipeg on the $17 million portion of
the $33 million in borrowing by the WCC represents approximately 9% of the total
project cost of $181.5 million, The remaining $164.5 million is to be funded by equal
contributions of $51 million from the City of Winnipeg and the Province of Manitoba,
$46.5 million from the Government of Canada, and an additional $16 million loan by
the WCC (to be guaranteed by the City of Winnipeg) to be serviced with annual
municipal incremental property, incremental provincial education taxes and levies and
incremental business taxes from an complementary adjacent property development.

J. The loan that the City is guaranteeing must be related to a capital asset.
The borrowing by the Winnipeg Convention Centre Corporation that the City of
Winnipeg is guaranteeing is for the construction of an expanded Convention Centre
facility.

Council Minutes

July 18, 2012

13

K. The capital asset must be insured to the satisfaction of the City Treasurer both during
and after construction.
The Winnipeg Convention Centre Corporation will be responsible for all insurance
requirements during and after the construction period to the satisfaction of the City of
Winnipeg.
o

The Consultant (Architect / Engineer) should provide the title holder with
evidence of Professional Liability insurance. The amount required will be
dependent upon the value and type of project/use.
Depending on the value of the project and the funding arrangement either the
City of Winnipeg or the Contractor will be required to provide a Wrap Up
Liability policy and a Course of Construction Policy. If underground work is
required to support the additional structure the title holder may also request a
Contractors Pollution Liability insurance policy be put into place.
Depending on the funding situation the City of Winnipeg could be added either
as a Named Insured or as a Loss Payable on the Course of Construction policy
and either as a Named Insured or as an Additional Insured under the Wrap Up
Liability policy.

Debt Strategy Impact and Borrowing Authority

On June 22, 2011, Council adopted the Debt Strategy report for tax supported, utilities and
total City borrowing. The project requires $41 million in long-term debt financing and a loan
guarantee of $33 million in favour of the Winnipeg Convention Centre Corporation. The
impact on the City of Winnipegs debt position is an incremental $74 million of debt as the
Winnipeg Convention Centre Corporation is consolidated within the Citys financial
statements.
The impact of this debt financing falls within the City debt limits established in the Council
report as outlined in the table below.

Total City net debt as a percentage of revenue maximum of 85%

Forecasted peak rate including proposed debt from this report 79.2%

Total City debt servicing as a percent of revenue maximum of 11%

Forecasted peak rate including proposed debt from this report 8,0%

Total City debt per capita not to exceed maximum of $2,050

Forecasted peak rate including proposed debt from this report $1,836

Council Minutes

14

July 18, 2012

FINANCIAL IMPACT

July 6. 2012

Date:

Financial I moact Statement

2012
Firm Year of Program
Project Name:
with
the
partnership
in
Winnipeg
of
the
City
by
participation
funding
of
Approval
Centre
Convention
Winnipeg
the
and
Canada
of
Province of Manitoba Government
Inc. for the Vvinnipeg Convention Centre expansion project
2.Oui

Winnipeg Convention Centre

Expansion:
$
$
S
S

Facility Expanon
Upgrades to Exisiting Fecility
Total Expenditures
Less: Existing Budgeted Costs
Additional Capital Budget Required

#########
$4300000
#########
#########
#########

#########
###ft#####
#########

########
########
########

$
$
$

#########

########

#########
21,300.000

#########
#########

4.800,000
3,223.200

22.876.800

#########

18800000
10500000
29,300.000
(6000000)
23.300.000

Funding Sources:
External Debt
Federal Government Contribution
Provincial Government Contribution
Loan Guarantee of u t S33M
Oth&
Total Funding

15.276,600
23,300,000

Total Additional Capital Budge

Required

1 71,500,000

Total Additional Debt Required

41.000,000

Current Expenditures Revenues

Direct Costs
Less: Incremental Revenue/Recovery
Net Cost/(Banefit)
Less: Existing Budget Amounts
Net Budget Adjualment Required

3.723.200
#########

S
S

2Oi to 2fl4

$
$

########
########

#########
3,110,000
$

########
########

9,300,000
#########

#########
#########
$
-

Additional Comments: The FIS has been prepared on the basis of a full costing of the capital project which
will be managed by the WCC. Federal, provincial and city grants will be made to WCC, so the Citys capital
budget will only rlect its grant of $51 million. Facility expansion costs are expected to total $147 M
while upgrades to the existing WCC total $34,5 M for an overall total of $181 .5M. Existing budget
represents $1 OM in estimated accumulated accommodation tax revenue approved by Council for the
expansion of the WCC. The remaining $1 71.5M is to be financed as indicated $41M in external debt,
$46.5M from the Government of Canada, $51 M from the Province of Manitoba and up to $33M in loans
taken out by WCC and guaranteed by the City. Direct costs in 2014 represent the first of 30 annual P& I
payments on the S41M n external borrowing. Beginning in 2015. in addition to $3.1IM in P&l payments,
the first of 25 annual grants to WCC of $1228500, funded by ncremental municipal & provincial taxes
-

from

,omrIemenh-,r,

ortirent

hotel nrorwrtv rtevelonment

will he

icert to rerov

1 M of the

in this FIS.
flrininI .erined h,

Mike McGinn, CA
Maner of Finance

Council Minutes

July 18, 2012

15

CONSULTATION
In preparing this report there was consultation with:
Province of Manitoba Canada-Manitoba Infrastructure Secretariat
Manitoba Hotel Association (through the City of Winnipeg Assessment and Taxation Department)
Economic Development Winnipeg (through the City of Winnipeg Assessment and Taxation
Department)
City of Winnipeg Corporate Finance Department
City of Winnipeg Legal Services Department
City of Winnipeg Assessment and Taxation Department

SUBMITTED BY

Department:
Division:
Prepared by:
Date:
File No.

Planning, Property and Development

Economic Development
Gary Holmes
July8, 2012

v:\strategic support services team\economic development initiatives 201 1\convention centre\ris report
drafts\wcc expansion july 6-12 version post announcement june 25-1 2.doc
-

ATTACHMENTS:
Schedule
Schedule
Schedule
Schedule
Schedule

A:
B:
C:
D:
E

Funding letter from the City and Province dated July 8, 2011
Funding letter from the Government of Canada dated June 18, 2012
Building Canada Fund funding requirements
Summary sensitivity analysis Destination Marketing Reserve Fund
Sensitivity analysis WCC funding commitment

Council Minutes

16

July 18, 2012

Schedule A: Funding letter from the City and Province dated July 8, 2011

JLI)yS, 21

Mr. Xiua Lb
Prjns i:i CEO
Wrip CivAfltrS
:375 Yc itne

r1r8

-I3C 2.J3
{tj

DxarMr.

*i.

Or e,,l oI Fh Prov,nc-e

,j Manba an.1 Io ity f Wirnic we woiId ik to rxin or

rrtnieris $uppr 0 mO4t Trt wlh re ev cs rq.ir 5 expand th
VJir,- Cot teri ltit JCC;

1rt ioir.ce or ifriIut xr,cih, c3r, f Whnip.g -c a.tud 1: make thu Conentn Cete

ntirn a prcaiy br tur4i cn th briert tiiianrj CartaJ Furd

Inr,Fiijra CcdIponL,;l bed or 1h f ft3r [nUflcjr1.t tjuIure:
OF r.aie SrI mfihI
MeoIro
$t1 mi.io
tTtty al Wirnip
5 I ml
Cnysrt1itt Citre
Titiuiori

Mjrr

rcw1 o

BCF 4jr i1
tbrttuatp C.itpc.nen
$-13 rntttn + $7i .IIir
c

Hotel ceIomvrt

AccimodaLon Tax
\PV.fWCc pj
NFVC La Ivr-r ni

19

tilIiori

15

trtue trm

flttljorl TotM Profrt C*

iThe Prrwisc9 01 ?4ar, tub2 ai Ite f1jy ci ld. r;ec furihar ent1ei tt WQC nri lerward
or Pirpi ol ID The 0YriOpmar1 coiltoiur;tly.
a

la rrrth wth tht .aur,re

Siacr 0 lie afu c.l1oma rhe rFP. twoeral ookrnn1t apjzal uid Ctry C;cvnuu
pro1,
proJt]c at:ilrt .t. ri p06.1n cCarn6ror InIi tta fail,
rexl rIepe cli Llii impcriri plojeol lh wtil be a
Jeaed o t tc 10 mcwe 1
iurthc ercrnc caliJyr fur diwnluwr Wir.nire zfld Iha proinc aa a vttol,,

tt

MatIieson
ocrecir CEOC

Phi 5Jreai
Cily i W

Council Minutes

July 18, 2012

Schedule B: Funding letter from the Government of Canada dated June 18, 2012

June 18-2012 Letter

from the Governrrent

17

iii
a
I

Council Minutes

18

I.

Government
CaSts

01

July 18, 2012

Gouernnwr
do Cai

rS%*t Canoe

ft 18 2o2
Klaus Labs
President and Chief Executive Officer
Winnipeg Convention Centre
375 York Avenue
4 Manitoba R3C 333
Winnipeg
Dear Mr. Lahr:
We arc pleased to formally advise you that the Government of Canada has identified the
expansion and renontion of the Winnipeg Convernion Centre as a priority for binding
consideratiofl tinder the Building Canada Fund Major !nfrastnxcture Component.
-

tinder this program, the Government of (24 a will consider an investment of up to onethird of
the projects total eligible costs, to a maximum federal conthbution of $4&646667. Under no
circumataxes can this contribution be increased, For greater certainty
4 please be aware that
should there be insouciant etigible coats to suppoti lbs maxrrntan amount the federal share
would be limited to one$hfrd of the total eligible costs,
W3d1e the Cove
eat of Canada is pleased to consider this project a priority for tithding, we
roust impress Ufkih you that th c letter does not signify funding approval More specifically 4515
potential federal broiling of this project will be conditional upon:
The Winnipeg Convention Centre must confirm all other binding sources for
the project;

The completion of a federal project review that results in a determination that

the project meets the Building Canada plan requirements and allows for a
recommendation for federal uapprovahan principle To this end please pmvsde
all ot the information necessary for federal officials to undertake this project
review;

Jflltre, where applicable the requtremeru a of tre Candwm knv,rvrsnirntal

Assessment 4cr and the requireniants 5th Aboriginal consultations under
section 35 of the Conrnnuion Act 1982;

Qmad1

Council Minutes

July 18, 2012

2Follow;rtg any announmerit of the prqject and poor to the start of

constsuaion activities aMfor other appropriate project milestones, the

Wmznpeg Corstentron Centre svtll nate that stgnage is erected whKh clearly
displays current Cioveissoseot of Canada and Economic ActIon Plan branding
in prominent locations at the project site, The Government of Canada will
further confirm and communicate aoditional requirements and expectations
from time-to-lime in this respect and,

The signing of a contribution agreement that will detail the project elements,
schedule. costs and fbnding partoneters,
Finally we ssttrst also infotna you that any project coats moaned before federal approval-inprinciple ant ineligible for federal reinsbssnement Furthermore, any constroction that
begins
before federal approvakn-principlc could jeopardize the proposed funding. Should you choose
-

to move forward with issuing a bid solicitation ahead of receiving the projects
approval-in.
principle, the document should clearly state that the awardIng of any renultirg
contract is subject
to federal finding being secured. Awarding of all contracts should only take place alter
you have
been iatbnned of federal apptnval-in.principle of handing for the project The Government
of
Canada will have rio obligation to enter into a contribution agreement or to reimburse any
costs
associated with a project for which a contract has been awarded ahead of federal approval-inprinciple, as signalled through a letter from us.
Thank you for your coliaberation to date, and we look forward so working
with you on tisia
important project.

Yotta sincerely,

Steven Fletcher P,C, MY.

cc. The Honourable Ron Lssmieux, M L.

Minister of l,ocal Government
His Worship Sam Katz
Mayor of the City of Winnipeg

19

Council Minutes

20

July 18, 2012

Schedule C: Building Canada Fund funding requirements

BCE Funding
Requirenents

Bulldlng Canada Fund Major Infrastructure Component:

Proiect Overview Requirements for Tourism Projects
The Building Canada Fund (BCF) is designed to increase investment in public
infrastructure and contribute to broad federal objectives; economic growth, a cleaner
environment and strong and prosperous communities. In order to ensure these
program objectives are achieved, all projects must be supported by a project
overview that includes an assessment of the proposed project. This document
provides the minimum information requirements for Tourism project proposals under
the Major Infrastructure Component (MIC) of the BCF.
Eligible Recipients
To be eligible under the MIC, the funding recipient must be one of the following:
a. A province or a local or regional government established by or under
provincial statute;
b. A public sector body that is established by or under provincial statute or by
regulation or is wholly owned by a province or municipality; or,
c A private sector body, including not-for-profit organizations, either alone or in
partnership with a province or a government referred to above, which
includes First Nations.
Tourism Subcategories
To be eligible under the Tourism category, projects must fall under one or more of the
following eligible project subcategories;

Convention Centres

Exhibition hall-type facilities

Tourism Project Assessment Criteria:

Proponents of MIC Tourism projects will be required to provide the following
information to federal officials as part of their project cverview.

1,

Project Overview

1 1

A detailed overview of the project design and work to be carried out. including
maps and diagrams showing the location, characteristics and phases (if project
is part of larger master plan or project)

Council MinutesJuly 18, 2012

1.2 The estimated start date and completion date of the project components.

Financial and Legal Requirements.

21

Identification of the project components and their total estimated eligible and
ineligible costs (see Annex A for the list of eligible arid ineligible costs).

2.2 Identification of the proposed funding sources and the expenditure profile
reflecting total eligible costs.
2.3 Indication as to the level of confidence, degree of accuracy and level of
contingency of the proposed cost estimates.
2.4 Assurance of capacity to operate and maintain the service or investment on a
sustainable, long term basis, where appropriate for complex projects and when
the recipient is a not4orprofit organization or the private sector.
2,5 Demonstration that the project will adhere to all applicable federal legislation
and obtain all necessary federal permits and authorizations required for the
project.
2.6 Status and plan to complete environmental assessment and First Nations
consultations, where required. Infrastructure Canada will assess the impact of
the project on Aboriginal Rights and Treaties using the project footprint
(location) To this end the proponent must fill out the questionnaire in Annex B
and return it to Infrastructure Canada.
2.7 Confirmation and assurance that the contract award process for eligible costs to
be funded under the project is competitive, fair, transparent and consistent with
the Agreement on Internal Trade.
3.

Project Benefits

3.1

The proponent must demonstrate how the project provides benefits to

Canadians in support of one or more of the following outcomes:
Increases the number of visitors and/or length of stay and/or quality of stay:
and

Promotes Canada or the region as a leading destination for Canadian and

international tourists

21

Council Minutes

22

July 18, 2012

-3-

4.

Risk Mitigation

4.1

Identification of significant risks and outhning of the measures and/or the

proponents capacity to mitigate these risks (eg. cost increases, project delays,
risk of scope change due to results of environmental assessment).

4.2 For non-governmental recipients, provision of assurance of appropriate

governance structure. capacity. track-record managing large projects, and
capacity to obtain non-federal funding for the project.
5,

MinImum Federal Requirements

5.1

Demonstration that newly constructed or materially rehabilitated infrastructure

intended for use by the public must ensure appropriate access for persons with
disabilities, including meeting the requirements of the Canadian Standards
Association Technical Standard Accessible Design for the Built Environment
(CANICSA B651 -04) for new construction or, subject to the Ministers approval,
any acceptable or similar provincial or territorial standards.

5.2 Newly constructed or materially rehabilitated buildings must meet or exceed the
energy efficiency requirements of the Model National Energy Code for Buildings,
where applicable.
53 Beginning April 1, 2011 proponents of projects with a proposed federal
contribution of above $50 million must demonstrate how they will use PublicPrivate Partnership (P3) procurement. or if the project is not pursuing P3
opportunities, the proponent must provide an explanation of how P3s were
considered and why they were not pursued.
5.4 Tourism projects from non-government recipients only must:
Increase the number of visitors to the region and/or the length of stay andor
the quality of stay:
Demonstrates that the community has the necessary infrastructure to
support the facility,

Council Minutes

July 18, 2012

ANNEX A

EliqiNe and Ineligible Costs

EHgible costs will be all direct costs that are, in Canadas opinion, properly and
reasonably incurred and paid by an eligible recipient for an eligible investment under
a contract for goods or services necessary for the implementation of a project.
Eligible costs include only the following

The capital costs of acquiring, constructing or renovating a tangible capital asset,

as defined and determined according to accounting principles generally accepted
in Canada;
The costs of joint communication activities (press releases, press conferences,
translation, etc.> and road signage recognition set out in the Communication
Protocol that will form part of the federal-provincial contribution agreement:
All planning (including plans and specifications) and assessment costs specified
in the agreement such as the costs of environmental planning, surveying,
engineering, architectural supervision, testing and management consulting
services. Canada will contribute no more than 15% of its contribution to this cost.
The costs of engineering and environmental reviews, including environmental
assessments and follow-up programs as defined in the Canadian Environmental
Assessment Act and the costs of remedial activities, mitigation measures and
follow-up identified in any environmental assessment;
Costs of project-ielated signage, lighting, project markings and utility adjustments;
Costs of aboriginal consultation:
The costs of developing and implementing innovative techniques for carrying out
the Project:
Recipient audit and evaluation costs as specified in the agreement; and
Other costs that, in the opinion of Canada, are considered to be direct and
necessary for the successful implementation of the Project and have been
approved in writing prior to being incurred.
Eligible project costs can begin to accrue effective as of the date indicated by the
Minister of Transport, Infrastructure and Communities in writing to the proponent
following the Ministers approval in principle of the project However all eligible costs
outlined above can be reimbursed to the recipient only following the signing of the
contribution agreement in respect of the project.

23

Council Minutes

24

July 18, 2012

The following are deemed ineligible costs:

Costs incurred before the date indicated by the Minister of Transport,

Infrastructure and Communities in writing to the proponent following the Ministers
approval of the project:
Costs incurred after the project completion date;
The cost of developing a business case or proposal for funding;
The cost of purchasing land and associated real estate and other fees:
Financing charges and interest payments on loans;
Leasing land, buildings, equipment and other facilities;
General repairs and maintenance of a project work and related structures, unless
they are part of a larger capital expansion project tied to capital expansion;
Serices or works normally provided by the recipient, incurred in the course of
implementation of the project, except those specified as eligible costs;
The cost of any goods and services which are received through donations or in
kind;
Employee wages and benefits, overhead costs as well as other direct or indirect
operating, maintenance and administrative costs incurred by the recipient, and
more specifically costs relating to services delivered directly by permanent
employees of the recipient, or of a Crown Corporation or corporation owned and
controlled by the recipient, except for other costs that, in the opinion of Canada,
are considered to be direct and necessary for the successful implementation of
the project and have been approved in writing prior to being incurred, or In cases
where the recipient can demonstrate value for money and that the costs are
incremental;
Provincial sales tax and Goods and Services Tax, for which the recipient is
eligible for a rebate, and any other costs eligible for rebates; and
Legal fees.

Council Minutes

July 18, 2012

25

ANNEX B
Protect Location Questionnaire Aboriginal Consultations
In order to facilitate and accelerate the assessment of your request for funding, Infrastructure
Canada needs to geographically locale your project accurately The nformahon provIded will
ensure the proper location of the project for future reference, You axe therefore asked to
complete this questionnaire to the best of your knowledge and with as much precision as

poss*Ie,

Address of the project

Location I
Civic Number:

Location 2

Unit/Suite/Apt:
Street Name:
Municipality:
County:
Province:
Postal Code:
Project Longitude:

!
Q

Project Latitude:

AddItional Project Location Details:

Please indicate,
heotcomonent any points of interest, intersections, major
highways or streets, or other physical charactenstics located in the vicinity of the project (Le.
near airport, adjacent to Lions Gate Bridge, 3 km east from Centennial Park, at intersection
ci Fifth and Queen, etc.)

Component B:
Component C:
Component D:

Project Location Documents:

Please include as an attachment (hard copy or electronic file) any further project location
documents that may be useful in locating the project, such as: hand-drawings on a printed map,
print of maps from Google MapsGocgle EarthMapQuest/Yahoo Maps ek.. location plan,
project
site map. aerial photo, legal or written description of project location, survey plan, engineering
plan, or any other plans or drawings from reports, studies or analysis.

26

Council Minutes

Schedule D: Summary sensitivity analysis

2018)

Funds Committed forWCC Expansion

Projected 40% Portion of Accommodation Tax
Less WCC Capital
Cash Outflow related to Expansion
Balance of Funds for WCC Expansion

July 18, 2012

Destination Marketing Reserve Fund (2012-

$41M rn Debt, 30-Year Amortization Period (2014 to 2043) @6%

SCENARIO 1:
2012
$ 8 068,000
$ 3040.000
$ (826,000)
$10,282,000
(8,500,000)
$ 1,782.000

2013
$1,782,000
$3,120,000
$
$4 902,000
(1,782,000)
$3,120,000
-

SCENARIO 2:
2012
Funds Committed for WCC Expansion $ 8,068,000
Projected 40% Portion of Accommodation Tax $ 3,040,000
Less WCC Capital $ (826,000)
$ 10,282,000
(8.500,000)
Cash Outflow related to Expansion
Balance of Funds for WCC Expansion $ 1,782,000

-,

2014
$3,120,000
$3,320 000
$
$6440000
(3,111,000)
$3,329,000
-

2015
$3329000
33360,000
$
$6 689,000
(3,111000)
$3,578. 000
-

2016
$3578000
$3,400,000
$
$6,978,000
(3,111,000)
$3,867,000
-

2017
$3867000
$3440 000
$
$7,307 000
(3,111000)
$4.1 96,000
-

2018
$ 4.196,000
$ 3.480,000
$
$ 7,676 000
(3,111 000)
$ 4,565,000

$41M in Debt 25-Year Amortization Period (2014 to 2038)

2013
$1,782,000
$3,120,000
$
$4902000
(1,782,000)
$3,120,000
-

2014
$3,120,000
$3,320,000
$
$6,440,000
(3.357.000)
$3,083,000
-

2015
$3,083,000
$3,360,000
$
$6,443,000
(3,357.000)
$3,086,000
-

2016
$3,086,000
$3,400,000
$
$6486000
(3.357,000)
$3,129,000
-

2017
$3,129,000
$3,440,000
$
$6,569,000
(3.357,000)
$3,212,000
-

SCENARIO 3: $41M in Debt, 30-Year Amortization Period (2014 to 2043)

2012
Funds Committed for WCC Expansion $ 8068.000
Projected 40% Portion of Accommodation Tax $ 3040,000
Less WCC Capital $ (826,000)
$10,282,000
(8,500,000)
Cash Outflow related to Expansion
Balance of Funds for WCC Expansion $ 1,782,000

2013
$1,782,000
$3,120,000
$
$4,902,000
(1,782,000)
$3,120,000
-

SCENARIO 4:
2012
Funds Committed for WCC Expansion $ 8,068,000
Projected 40% Portion of Accommodation Tax $ 3.040,000
Less WCC Capital $ (826,000)
$10 282,000
0 Expansion
(8 500 000)
Cash Outflow related t
52 CCC
BaanDe3fFjrs forWOC Exoansor $

2014
$3,120,000
$3,320,000
$
$6,440,000
(2,398,000)
$4,042,000
-

2015
$4,042,000
$3,360,000
$
$7,402,000
(2,398,000)
$5,004,000
-

2016
$5,004,000
$3,400,000
$
$ 8,404,000
(2,398,000)
$6,006,000
-

2017
$6,006,000
$3,440,000
$
$ 9.446.000
(2,398,000)
$7,048,000
-

$41M in Debt, 25-Year Amortization Period (2014 to 2038)

2013
$1782000
33,120.000
$
34902000
(1 782 000)
$3 20 CCC
-

2014
$3,120,000
$3,320,000
$
$6 440 000
(2 645 000)
$3 95 CCC
-

2015
$3,795,000
$3 360,000
$
$7,155,000
(2 645.000)
54513000
-

2016
$4,510,000
33.400,000
$
$7,910 000
(2 645 000)
35265 000
-

2017
$5,265,000
$3,440,000
$
$8,705 000
(2.645.000)
56060300
-

@ 6%

2018
$ 3,212,000
$ 3,480,000
$
$ 6,692,000
(3,357,000)
$ 3,335,000
-

4.25%

2018
$ 7,048,000
$ 3,480,000
$
$10,528,000
(2,398,000)
$ 8,130,000
-

4.25%

2018
$ 6.060,000
$ 3.480,000
$
$ 9540,000
(2.645.000)
S 6 895 CCC

ASSUMPTIONS
follows: 2012 $8.5M, 2013 & 20141. Construction to begin on September 1, 2012. Citys $51 million contribution is to be cash flowed as
and 2015 -$8 5M.
in the Destination Marteting Reserve Fund.
2 Citys $8.5 million 2012 contribution to be financed from the accumulated balance held
Fund is used in 2013 to reduce the amount
3 The remaining $1,782,000 in accumulated fUnding held in the Destination Marketing Reserve
otherwise bonowed.
4. Debt issued on January 1, 2013 with first P&l payment on January 1, 2014.
remaining balance of accumulated funds for the WCC
5 Debt amount equal to $51 million less portion contributed to WCC in 2012 and less
2012
31.
expansion as at December

Council Minutes

Schedule E: Sensitivity analysis

July 18, 2012

27

$33 million guarantee

Gxintja, Centre Axm Peyrrent MxtTe

Prciected Cmjeticn tith Z115
Prwi

$331vM

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42
I

479/a
t
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scm
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625%
6YA
625Y
7.cxD

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(S?,iESiZi
(22!793)

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(SI,742l3)
9II
15I1
(16,W73L
2E881)
(S

$l7rm,

(1U)

(577*

(,Z47ii2)

(S3336358

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(5i17,I46g
(i44634
($i41I4714)
(Si,Z), 17L77)
(S1JEiili7
($I,7,32JQ1
(S1234

($&i2241)

($Z46U!BE
($527SS9
(?,5%83lil)
(S23S137)

($11,aR53)
1,EBSJ2
U173
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(53,421
(Si. 0T3

($z5aw1
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($2rP2)Rci.
(52.Si.747 07)

ZIlS interest rete utilized in [t Strategi

(5

$i7rrn
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(SiO131)Q1

$lfrrm
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($i,O5i4Q37

(51, 1CF,874LU
3]$72)S787)
($1,17f33i (i?)
($117&X

(Si. 135,J1) 32)

(i
m513
(1,iQ?EL
i222,fl1

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(57I9
(52D)
(ti3SL2
(Si,(rFQ2
($IU57J1)
(!,1rni23)
S,4$2

(S1,321,21823)
($i.33I,65Z
(S,335133G3)
(iEcx3

($1,su
($i,3iiRQ
(5,32)1E
(Sf2,R

($1. 13263i3
($i,225,ZT2)Ce
(5i,2S7,iM4
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($c3&z4j (cJ1Q44)
(SW747 ($i1xo1)

Council Minutes
Minute No. 87
Report Executive Policy Committee

Item No. 2

December 12, 2012

December 12, 2012

Loan Guarantee Increase

CentreVenture Development Corporation

COUNCIL DECISION:
Council concurred in the recommendation of the Executive Policy Committee and adopted the
following:
I.

That an additional loan guarantee of $6.6 million on behalf of CentreVenture

Development Corporation (CentreVenture) be approved to increase the Corporations
line of credit from $13 million to $19.6 million to enable the acquisition of strategically
located properties within the downtown.

2.

That the line of credit increase and additional loan guarantee noted in Recommendation
No. 1 be:

3.

A.

Provided for a maximum of one year from the date of Council approval or until
receipt by CentreVenture of $6.6 million in proceeds from the disposition of such
strategically located properties. whichever occurs tirst, at which time the line of
credit and related loan guarantee provided by the City of Winnipeg to
CentreVenture will revert back to $13 million.

B.

Subject to an undertaking of CentreVenture Development Corporation to apply

the $6.6 million, or such other amount realized, in net proceeds from the
disposition of strategically located properties noted in Recommendation No. 2A,
to the reduction of the outstanding line of credit balance guaranteed by the City
pursuant to the additional loan guarantee that is the subject of this report.

C.

Subject to such other terms and conditions as may be deemed necessary by the
Chief Financial Officer to protect the interests of the City.

That the Proper Officers of the Cit be authorized to do all things necessary to implement
the intent of the foregoing.

Council Minutes
Report

Executive Policy Committee

December 12, 2012

December 12, 2012

DECISION MAKING HISTORY:

Moved by His Worship Mayor Katz,
That the recommendation of the Executive Policy Committee be adopted.
Carried
Councillor Wyatt asked to be recorded as having voted in opposition to the item, in accordance
with Rule 47.7 of the Procedure By-law.

EXECUTIVE POLICY COMMITTEE RECOMMENDATION:

On December 12, 2012, the Executive Policy Committee concurred in the recommendation of
the Winnipeg Public Service and submitted the matter to Council.

Council Minutes

December 12, 2012

Title:

Request to Increase Loan Guarantee CentreVenture Development

Corporation

Critical Path:

Executive Policy Committee

Author
G. Holmes

Council

Department Head

CFO

B. Thorgrimson

M Ruta

CO
D Joshi
COO

1. That an additional loan guarantee of $6.6 million on behalf of CentreVenture Development

Corporation (CentreVenture) be approved to increase the Corporations line of credit from $13
million to $19.6 million to enable the acquisition of strategically located properties within the
downtown.
2. That the line of credit increase and additional loan guarantee noted in Recommendation # 1 be:
a. Provided for a maximum of one year from the date of Council approval or until receipt by
CentreVenture of $6.6 million in proceeds from the disposition of such strategically
located properties, whichever occurs first, at which time the line of credit and related
loan guarantee provided by the City of Winnipeg to CentreVenture will revert back to $13
million.
b. Subject to an undertaking of CentreVenture Development Corporation to apply the $6.6
million, or such other amount realized, in net proceeds from the disposition of
strategically located properties noted in Recommendation # 2a., to the reduction of the
outstanding line of credit balance guaranteed by the City pursuant to the additional loan
guarantee that is the subject of this report.
c. Subject to such other terms and conditions as may be deemed necessary by the Chief
Financial Officer to protect the interests of the City.
3. That the Proper Officers of the City be authorized to do all things necessary to implement the
intent of the foregoing.

Council IVlinntes

December 12, 2012

CentreVenture requires an increased line of credit to proceed with acquisition of strategically

located properties within the downtown in accordance with its mandate.
Council approval is required for an increase to the loan guarantee provided by the City of
Winnipeg on behalf of CentreVenture with respect to its line of credit.

IMPLICATI

--

CentreVenture will acquire the properties for future development within the downtown.
CentreVenture will have a maximum of one year from the time of Council approval of
Recommendation # 1 of this report to reduce the outstanding balance of their line of credit to no
more than $13 million.
Upon expiry of the one year period noted above or until receipt by CentreVenture of $6.6 million
in proceeds from the disposition of such strategically located properties, whichever occurs first,
the line of credit and related loan guarantee provided by the City of Winnipeg will revert back to
the previously approved maximum amount of $13 million.

HISTORY! DISCUSSION
On June 23, 2010, Council concurred in the recommendation of Executive Policy Committee and
adopted the following:
1.

That an additional loan guarantee of $8.5 million to Centre Venture Development Corporation be
approved to increase the Corporations line of credit from $4.5 million to $13 million.

DISCUSSION
The increase in CentreVentures line of credit to $13 million approved by Council on June 23, 2010 was
to enable financing of new development initiatives in the downtown. Examples include bridge financing
for the Downtown Residential Development Grant Program and property acquisitions such as the recent
purchase of the St. Regis Hotel. The temporary increase to $19.6 million is necessary to enable the
acquisition of strategically located properties within the downtown consistent with CentreVentures
mandate.
Loan Guarantee
When the City guarantees a loan, it must disclose this potential liability in the financial statements.
If the organization were in default of the loan agreement, the City would be obligated to make
payments on the loan. In this specific situation, CentreVenture represents a consolidated entity in
the Citys financial statements so any outstanding debt reflects on consolidation in the Citys
financial statements. The following is the policy criteria related to requests for loan guarantees as
adopted by Council on June 17th, 1992:
A. Requests for loan guarantees shall be submitted to the City Treasurer for review to
determine if the request meets the requirements of the policy.
This report has been submitted to the City Treasurer for review.

B. The organization requesting the loan guarantee must provide a service, which, in whole or
in part, falls within the mandate of the City of Winnipeg.

Council Minutes

December 12, 2012

Centre Ventures goal is to promote and foster economic, residential and cultural growth
and development in the downtown district of the City of Winnipeg.
C. The project for which the loan guarantee is being requested must not be in conflict with
City policy.
The project for which the loan guarantee is required does not conflict with City policy.
D. The organizations services must be available to the community at large without
restrictions based upon ethnicity, religion or race and without unreasonably restrictive
membership or user fees.
The services Centre Venture supplies are available to the community at large.
E. The organization must be non-profit.
Centre Venture is a non-profit organization incorporated without share capital under the
laws of Manitoba on July 9, 1999.
F. The organization must produce financial records and a business plan that demonstrates
the organizations long-term viability and capacity to meet the obligations of the loan that
they are asking the City to guarantee.
Centre Ventures financial statements have been included with the Citys Detailed Financial
Statements since 2003 and, therefore, are readily available for review. Centre Venture
most recently provided the City with a business plan for the years 2011 through to 2013.
G. The organization structure and the principals of the organization must be judged by the
City of Winnipeg as competent to independently implement the business plan of the
organization.
Centre Venture has demonstrated the ability to implement its business plan as endorsed by
Council.
H. Unless there are very special circumstances, the maximum amount of outstanding loan
guarantees for any one organization will be $1 ,000,000.OO.
The increase of $6.6 million in the loan guarantee is for a limited period of time to a
maximum of 1 year or untIl receipt by Centre Venture of $6.6 million in proceeds from the
disposition of such strategically located properties. whichever occurs first Council has
granted loan guarantees in excess of this maximum amount in the past
I.

The loan that the City is being asked to guarantee should not represent more than 50% of
the total funding of the project. The organization requesting the loan guarantee must have
raised at least 20% of the total project costs from non-City of Winnipeg sources as a down
payment, i.e. if the organization is receiving a City grant for their project, the grant cannot
be counted as part of the 20% down payment.

Council Minutes

December 12, 2012

Centre Venture does not meet these criteria.

J. The loan that the City is guaranteeing must be related to a capital asset.
The increase in the Line of Credit to Centre Venture that the City of Winnipeg is
guaranteeing is for the acquisition of capital asset(s).
K. The capital asset must be insured to the satisfaction of the City Treasurer both during and
after construction.
Insurance arrangements will be made with Centre Venture Development Corporation by
agreement.
Debt Strategy Impact
On June 22, 2011, Council adopted the Debt Strategy report for tax supported, utilities and total City
borrowing. This project requires an additional $6.6 million in short-term debt financing. The impact on the
City of Winnipegs debt position is an incremental $6.6 million of debt as CentreVenture Development
Corporation is consolidated within the Citys financial statements. The Debt Strategy ratios are based on
the 2012 Adopted Capital Budget and the 2013 Water and Sewer Rates Report.
The impact of this debt financing falls within the City debt limits established in the Council report as
outlined in the table below.
Total City net debt as a percentage of revenue maximum of 85%
Forecasted peak rate including proposed debt from this report 70.0%
Total City debt servicing as a percent of revenue maximum of 11%
Forecasted peak rate including proposed debt from this report 7.8%
Total City debt per capita not to exceed maximum of $2,050
Forecasted peak rate including proposed debt from this report $1 720

Council Minutes

FINANCIAL IMPACT
Financial Impact Statement

December 12, 2012

Date:

November 29. 2012

Project Name:
Request to Increase CentreVenture Devetopment Corporation Line
of Credit
COMMENTS:
There is no financial impact to the City in the granting of a loan guarantee unless there is a default in the
payment of the loan. CentreVentures debt forms part of the Citys consolidated debt in the financial
statements.

Original Signed By
Mike McGinn, CA
Manager of Fnance

Council Minutes

December 12, 2012

CONSULTATION
In preparing this report there was consultation with:
Corporate Finance
Legal Services

SUBMITTED BY

Department:
Division:
Prepared by:
Date:
File No.

Planning, Property and Development

Economic Development
Gary Holmes, Manager of Economic Development
December 5, 2012

o:\reports directive\office of the director\downtown manager\201 2 reports gh\201 2 12 05 ris report centreventure
loan guarantee final.clocx
-

Council Minutes
Minute No. 102
Report Executive Policy Committee

Item No. 7

December 11, 2013

December 11, 2013

Extension of Loan Guarantee Increase

Centreventure Development Corporation

COUNCIL DECISION:
Council concurred in the recommendation of the Executive Policy Committee and adopted the
following:
1.

That the term of the additional loan guarantee of $6.6 million on behalf of CentreVenture
Development Corporation (CentreVenture), which allowed an increase to the
Corporations line of credit to up to $19.6 million, and which was approved by Council
on December 12, 2012, be extended under the parameters identified in Appendix 1 of this
report.

2.

That the Chief Financial Officer be delegated the authority to approve the terms and
conditions of the loan guarantee and all other documents deemed necessary by the
Director of Legal Services and City Solicitor to protect the interests of the City.

3.

That the Proper Officers of the City be authorized to do all things necessary to implement
the intent of the foregoing.

2
Report

Council Minutes

Executive Policy Committee

December 11, 2013

December 11, 2013

DECISION MAKING HISTORY:

Moved by His Worship Mayor Katz,
That the recommendation of the Executive Policy Committee be adopted.
Carried

EXECUTIVE POLICY COMMITTEE RECOMMENDATION:

On December 11, 2013, the Executive Policy Committee concurred in the recommendation of
the Winnipeg Public Service and submitted the matter to Council.

Council Minutes

December 11, 2913

ADMINISTRATIVE REPORT

Title:

Request to Extend Term of Temporarily Increased Loan Guarantee

CentreVenture Development Corporation

Critical Path:

Executive Policy Committee

Council

AUTHORlZATlON

Author
G. Holmes

Department Head

CFO

CAO

B. Thorgrimson

M. Ruta, CEO

D. Joshi, A-CAO

RECOMMENDATIONS
1. That the term of the additional loan guarantee of $6.6 million on behalf of CentreVenture
Development Corporation (CentreVenture), which allowed an increase to the Corporations
line of credit to up to $19.6 million, and which was approved by Council on December 12,
2012, be extended under the parameters identified in Appendix 1 of this report.
2. That the Chief Einancial Officer be delegated the authority to approve the terms and
conditions of the loan guarantee and all other documents deemed necessary by the City
Solicitor I Director of Legal Services to protect the interests of the City.
3. That the Proper Officers of the City be authorized to do all things necessary to implement the
intent of the foregoing.

CentreVenture requires an extension of the term of the increased line of credit due to
additional time being required to dispose of the property at 220 Carlton Avenue.
Council approval is required for an extension of the term of the loan guarantee provided by
the City of W n nipeg on behalf of CentreVenture with respect to ts inc of credit.

IMPLICATIONS OF THE RECOMMENDATIONS

CentreVenture will have until September 30, 2016 to reduce the outstanding balance of their
line of credit to no more than $13 million.

Council Minutes

4
.

December 11, 2013

Upon expiry of the extended period noted above or until payment in full by CentreVenture of
the additional $6.6 million line of credit increase, whichever occurs first, the line of credit and
related loan guarantee provided by the City of Winnipeg will revert back to the previously
approved maximum amount of $13 million.

HISTORYIDISCUSSION
On June 23, 2010, Council concurred in the recommendation of Executive Policy Committee and
adopted the following:
1. That an additional loan guarantee of $8.5 million to Centre Venture Development Corporation
be approved to increase the Corporations line of credit from $4.5 million to $13 million.
On December 12, 2012, Council concurred in the recommendation of Executive Policy Committee
and adopted the following:
1.

That an additional loan guarantee of $6.6 million on behalf of Centre Venture Development
Corporation (Centre Venture) be approved to increase the Corporations line of credit from
$13 million to $19.6 million to enable the acquisition of strategically located properties
within the downtown.

2.

That the line of credit increase and additional loan guarantee noted in Recommendation
No. 1 be:

3.

A.

Provided for a maximum of one year from the date of Council approval or until receipt
by Centre Venture of $6.6 million in proceeds from the disposition of such
strategically located properties, whichever occurs first, at which time the line of credit
and related loan guarantee provided by the City of Winnipeg to Centre Venture will
revert back to $13 million.

B.

Subject to an undertaking of Centre Venture Development Corporation to apply the

$6.6 million, or such other amount realized, in net proceeds from the disposition of
strategically located properties noted in Recommendation No. 2A, to the reduction
of the outstanding fine of credit balance guaranteed by the City pursuant to the
additional loan guarantee that is the subject of this report.

C.

Subject to such other terms and conditions as may be deemed necessary by the
Chief Financial Officer to protect the interests of the City.

That the Proper Officers of the City be authorized to do all things necessary to implement the
intent of the foregoing.

DISCUSSION
The extension of the period of the temporary increase in CentreVentures line of credit from $13
million to $19.6 million is necessary to enable CentreVenture to complete the disposition and,
potentially, subdivision of the property at 220 Carlton Street in order to pursue a full return on their

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investment. CentreVenture has confirmed that the anticipated full return from sale is achievable,
based on their analysis of recent comparable property sales. However, the likelihood of a full return
will be further enhanced as development proceeds on adjacent properties within the recommended
extension time period. In addition, should the opportunity to subdivide materialize, it would be
unlikely, for practical reasons that development of both sites would occur simultaneously. Thus the
granting of an extension of time would enhance the likelihood of orderly development and
achievement of full market value for the properties.
The extension date of September 30, 2016 was selected to coincide with the project completion date
as identified in the contribution agreement dated May 24, 2013 between The City of Winnipeg and
The Convention Centre Corporation. As noted above, it is anticipated that the likelihood of achieving
full market value for properties adjacent to the newly expanded I renovated RBC Convention Centre
will be greater as the project nears completion.
Loan Guarantee

When the City guarantees a loan, it must disclose this potential liability in the financial
statements. If the organization were in default of the loan agreement, the City would be
obligated to make payments on the loan. In addition, specific to the temporary increase in
CentreVentures line of credit, should the property at 220 Carlton Avenue be sold for less than
its $6.6 million acquisition cost, the City could be held responsible for the shortfall; as a result,
in the event of a shortfall Recommendation 2.b. requires CentreVenture to report back to
Council within 60 days of the disposition of the property with a financial plan pursuant to which
CentreVenture will pay off such shortfall. CentreVenture represents a consolidated entity in
the Citys financial statements so any outstanding debt reflects on consolidation in the Citys
financial statements. The following is the policy criteria related to requests for loan guarantees
as adopted by Council on June 17th, 1992:
A. Requests for loan guarantees shall be submitted to the City Treasurer for review to
determine if the request meets the requirements of the policy.
This report has been submitted to the City Treasurer for review.
B. The organization requesting the loan guarantee must provide a service, which, in
whole or in part, falls within the mandate of the City of Winnipeg.
Centre Venture s goal is to promote and foster economic, residential and cultural growth
and development in the downtown district of the City of Winnipeg.
C. The project for which the loan guarantee is being requested must not be in conflict with
City policy.
The project for which the loan guarantee is required does not conflict with City policy.
D. The organizations services must be available to the community at large without
restrictions based upon ethnicity, religion or race and without unreasonably restrictive
membership or user fees.

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The services Centre Venture supplies are available to the community at large.
E. The organization must be non-profit.
Centre Venture is a non-profit organization incorporated without share capital under the
laws of Manitoba on July 9, 1999.
F. The organization must produce financial records and a business plan that
demonstrates the organizations long-term viability and capacity to meet the obligations
of the loan that they are asking the City to guarantee.
Centre Ventures financial statements have been included with the Citys Detailed
Financial Statements since 2003 and, therefore, are readily available for review.
Centre Venture most recently provided the City with a business plan for the years 2011
through to 2013.
G. The organization structure and the principals of the organization must be judged by the
City of Winnipeg as competent to independently implement the business plan of the
organization.
Centre Venture has demonstrated the ability to implement its business plan as
endorsed by Council.
H. Unless there are very special circumstances, the maximum amount of outstanding loan
guarantees for any one organization will be $1,000,000.00.
The increase of $6.6 million in the loan guarantee is for a limited period of time to
September 30, 2016 or until payment in full by Centre Venture of the additional $6.6
million line of credit increase, whichever occurs first. Council has granted loan
guarantees in excess of this maximum amount in the past.
The loan that the City is being asked to guarantee should not represent more than 50%
of the total funding of the project. The organization requesting the loan guarantee must
have raised at least 20% of the total project costs from non-City of Winnipeg sources
as a down payment, i.e., if the organization is receiving a City grant for their project, the
grant cannot be counted as part of the 20% down payment.
The request by Centre Venture does not meet these criteria.
J. The loan that the City is guaranteeing must be related to a capital asset.
The increase in the Line of Credit to Centre Venture that the City of Winnipeg is
guaranteeing is related to a capital asset.
K. The capital asset must be insured to the satisfaction of the City Treasurer both during
and after construction.

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December 11, 2013

Insurance arrangements will be made with Centre Venture Development Corporation by

agreement.
Debt Strategy Impact
On June 22, 2011, Council adopted the Debt Strategy report for tax supported, utilities and total City
borrowing. This project requires an additional $6.6 million in short-term debt financing. The impact on
the City of Winnipegs debt position is an incremental $6.6 million of debt as CentreVenture
Development Corporation is consolidated within the Citys financial statements. The Debt Strategy
ratios reflect the debt required for this project.
The impact of this debt financing falls within the City debt limits established in the Council report as
outlined in the table below.
Total City net debt as a percentage of revenue maximum of 85%
Forecasted peak rate including proposed debt from this report 68.6%
Total City debt servicing as a percent of revenue maximum of 11%
Forecasted peak rate including proposed debt from this report 7.1%
Total City debt per capita not to exceed maximum of $2,050
Forecasted peak rate including proposed debt from this report $1 754

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FINANCIAL IMPACT

Financial Impact Statement

Date:

December 4, 2013

Project Name:
Request to Extend Term of Temporary Increased Loan Guarantee
Centre Venture Development Corporation
COMM ENTS:
There is no financial impact to the City in extending the term of the increased loan guarantee. Further,
the granting of a loan guarantee results in a financial impact to the City only if there is a default in the
payment of the loan. CentreVentures debt forms part of the Citys consolidated debt in the financial
statements.

Original Signed By
Mike McGinn, CA
Manager of Finance

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December 11, 2013

CONSULTATION
In preparing this report there was consultation with:
Corporate Finance
Legal Services

__SUBMITTED BY

Department:
Division:
Prepared by:
Date:
File No.

Planning, Property and Development

Economic Development
Gary Holmes, Manager of Economic Development
December 6, 2013

o:\reports directive\office of the director\downtown manager\2013 reports gh\2013 12 06 centreventure loan

guarantee extension ris report.docx

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APPENDIX I

Parameters for the Extension of the Term of the Temporarily Increased Loan Guarantee
1. The term of the temporarily increased loan guarantee amount of $19.6 million shall not extend
beyond the earlier of:
a. The date of payment in full by CentreVenture Development Corporation
(CentreVenture) of the additional $6.6 million line of credit increase, or;
b. September 30, 2016, to coincide with the Winnipeg Convention Centre Expansion and
Renovation Project completion date as identified in the contribution agreement dated
May 24, 2013 between The City of Winnipeg and The Convention Centre Corporation.
at which time the line of credit and related loan guarantee provided by the City of Winnipeg to
CentreVenture shall revert back to $13 million.
2. The extension of the term of the temporarily increased line of credit and additional loan
guarantee noted in # 1 shall be:
a. Subject to an undertaking of CentreVenture to apply the $6.6 million, or if less than $6.6
million, such other amount realized, in net proceeds from the disposition of the property
located at 220 Carlton Avenue, immediately upon receipt, to the reduction of the
outstanding $6.6 million line of credit balance guaranteed by the City pursuant to the
additional loan guarantee as referenced in this report.
b. Subject to an undertaking by CentreVenture that if the net proceeds from the disposition
of the property located at 220 Carlton Avenue are less than $6.6 million, CentreVenture
shall report back to Council within 60 days of such disposition with a financial plan to pay
off the remaining portion of the $6.6 million line of credit balance in full.
c. Subject to such other terms and conditions as may be deemed necessary by the Chief
Financial Officer to protect the interests of the City.