Manitoba Liquor and Lotteries scraps $75M relocation plan

One year after announcingit would move itsheadquarters to downtown Winnipeg, Manitoba Liquor and Lotteries has scrapped that $75-million plan,saying it would not be a responsible use of public money.

The Crown corporation announcedMonday that the relocation plan, which would consolidate its offices and 400 employees at the former Medical Arts BuildingonKennedy Street,isunnecessary and "at risk of significant cost overruns."

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Polly Craik, chair of the liquor and lotteries board of directors, said the corporation reviewed the plan and decided to abandon it over concerns about renovating the building and connected parkade.

"I think it's a little bit different if you're building new, but this is a building that is older and needs retrofitting as well as the work on the parkade, so cost overruns and items out of budget any delays would certainly negate any of the savings," she told reporters.

The NDP government announced in September 2015 thatthecorporation's new home base would be theMedical Arts Building onKennedy Street. It's currently headquartered on Empress Street near Polo Park.

The purchase price for the15-storeybuilding, an attached parkade and asurface parking lot was $7.9 million and officials estimated it would cost another $66 million to renovate and expanditto accommodate about 400 employees.

But the Progressive Conservatives, who replaced the NDP after the provincial election in April, appointed a new board of directors and ordered a review of the purchase and relocation plan.

On Monday, Craik said the review concluded that the "corporation's existing office space is sufficient to meet the ongoing needs of staff."

She added thatit does not make sense for the Crowncorporation, which sells alcohol and gambling, to be in the property development and managementbusiness as well.

"The way we're looking at it is what is in the best interest of the corporation to run the businesses at hand, and what is going to allow us to deliver the most money back to the province? Because our job is to look after the public's money," Craik said.

"We don't see that spending $75 million on corporate offices is the best use of public funds."

Support for downtown

When they announced the move last year, the NDP hailed it as a fiscally smart decision that wouldresult in$23.6 million in cost savings over the next 20 years.

The savings would come throughefficiencies found in centralizing the five offices currently being used around the cityat Buffalo Place, Empress Street, MiltStegallDrive, St. James Street and Pacific Avenue for the corporation.

In addition to that, injecting400 more people intodowntown would boost thecity's economy, the NDP said.

'We are disappointed'

Downtown Winnipeg BIZ executive director StefanoGrande said he was discouraged to hear the current administration had a change of heart.

We hope the current [provincial] government will maintain a downtown-first policy.- Stefano Grande

"We are disappointed to not see 400 jobs ...coming downtown, but we have to respect the decision of the board of liquor and lotteries," Grande said.

Grande called the Medical Arts Building a great asset and said "there are a number of opportunities to redevelop that building."

Grande described the downtown as the "employment centre of our city," and acknowledged that the arrival of as many as 400 well-paid employees would have an impact.

"We hope the current [provincial] government will maintain a downtown-first policy," Grande said.

'Pure politics'

NDP Crown services critic Ted Marcelinoon Mondaycalled the decision "pure politics" by a Tory government focused on wipingout NDP decisions.

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The liquor and lotteries boardtook many months to do their due diligence before choosing the Kennedy Street location, he said.

"The savings of almost $24 million that was envisioned when the due diligence process was made by the corporation is now down the toilet. I don't know the thinking behind the decision to get it out of the way," Marcelino said.

He added that Monday's announcement shows the Tories are not committed to developing Winnipeg's downtown.

Keep in mind the Medical Arts Building is an older building and it could hold all kinds of surprises.- RonSchuler

But Crown Services Minister Ron Schulerdisagreed, saying the government already has "a significant presence" downtown through the Manitoba Hydro and Manitoba Public Insurance headquarters.

The PCsbelievein downtown Winnipeg and believein promoting it "but it's also got to be smart for taxpayers," he said.

All boards of directors for the province's Crown corporations were tasked with doing facility reviews after the Tories were elected.In this case, Schuler said the liquor and lotteries board decided its "core business isn't being a construction company [and] it's not being a landlord" a decision that his government fully supports.

Manitoba Liquor and Lotteries scraps $75M relocation plan

8 years ago

Duration 1:42

One year after announcing it would move its headquarters to downtown Winnipeg, Manitoba Liquor and Lotteries has scrapped that $75-million plan, saying it would not be a responsible use of public money.

"Keep in mind the Medical Arts Building is an older building and it could hold all kinds of surprises," he said.

"We think that there are companies that could take on that building, could probably renovate it very well and could make good money,because that's their business."

Employees who were supposedto move into the downtown building will stay in the existing locations, most of which areleasedandeasily renewable, said Manitoba Liquor and Lotteries board member JamesMorden.

A total of $10.25 million was spent on the project, including the $7.9-million purchase price for the building, taxes, other fees andinitial development costs,Craik said.

She added thatshe believes the building can be sold at market value for approximately $11 million, and the sale could recoup some of the initial costs related to thepurchase.

Parkadethe 'jewel'

Shelter Canada president Arni Thorsteinson used to manage the Medical Arts Building and said liquor and lotteries can reasonably expect to make $11 million or more on the sale of the building.

Thorsteinson said the valuehas gone up since the Crown corporation acquired the buildingin part due to construction plans for True North Square,a$400-million mixed-use development onCarltonStreet behind the Medical Arts Building.

Demand for parking in the area is expected to rise when that project is completed, makingthe Medical Arts Building's 450-stall parkade a revenue generating"jewel," Thorsteinson said, adding it costs between $35,000 and $40,000 per stall to build a newparkade.

Schuler added that the building will be sold "through the proper channels."