City manager Wayne Ritchie says he has no regrets about the process the city followed to secure a tenant for its long-vacant former Canadian Pacific Railway station or Owen Sound’s lease for the building with Mudtown Station.
“I’m thrilled with that building,” he said Wednesday during a press conference.
Mudtown “is going to pay taxes, it’s employing people, it’s bringing people to our harbourfront. It’s achieved all the strategic goals we wanted.”
Ritchie held the press conference at the Professional Centre, which is where city offices are located during renovations to city hall, to “address concerns raised in the community regarding details surrounding the lease of the CP station.”
About 60 people attended, including city councillors, staff, election candidates and members of the public.
During the one-hour event, Ritchie read a statement before answering questions from both the media and audience, even though it was meant to be a press conference.
Mudtown Station president Harold Kloeze and Owen Sound’s community services director Pam Coulter also spoke.
There have been concerns and allegations posted to social media and raised in the community related to the city’s investment in the CP station, its lease agreement with Mudtown Station and the links both Coun. Brian O’Leary and Coulter have to the business.
At least one person has filed complaints regarding possible ethical breaches and conflicts of interest with the city’s integrity commissioner and Ontario’s ombudsman.
Owen Sound bought the once-derelict 1946 CP station for $153,500 in 2010 with the goal of finding a use for the building that would maintain as many of its heritage features as possible, attract people to the harbour and encourage more private investment in the waterfront area, Ritchie said.
The city did not receive any responses to its initial request for proposals for a tenant.
Owen Sound issued a new RFP in 2014 and received two bids. Staff negotiated a lease with one of the proponents, who later backed out.
The city received no responses to a third RFP in 2016. Only one proponent, Kloeze on behalf of Mudtown Station Inc., responded to a fourth RFP in 2017.
Council approved a staff-negotiated lease with Kloeze in April 2017.
Under the 15-year agreement, Mudtown Station would pay $29,325 annually in rent, plus property taxes, utilities and outdoor maintenance.
The lease says Mudtown would spend $735,000 on the property, including $400,000 on brewing and restaurant equipment.
The city agreed to spend $615,085 for interior renovations and parking lot upgrades. It would recoup all but $161,000 of that investment through 20 years of Mudtown’s rental payments.
Ritchie said Wednesday that the city ended up spending less than $615,000, so the shortfall will be less than anticipated.
He said he believes Owen Sound spent the least amount of taxpayer dollars possible to renovate the city building to such a condition that a tenant could open up a business there.
“The negotiation was between two willing parties, either of whom could have walked away at any time. Since I felt this was a fair agreement and the best one the city could obtain, I recommended it to council and they felt the same,” he said.
Some have questioned why the city didn’t reveal in the RFP for the lease how much it would be willing to invest in the property, as other businesses might have been interested in submitting a proposal if they had that information.
Ritchie said the city wanted to wait until it had a proposal “so we knew what we had to invest to bring it up to a liveable standard and then move ahead.
“We certainly negotiated with the previous proponent and every deal was its own deal. At the end, in my opinion, it was the best deal that could be gotten for the city.”
Some people have also questioned whether O’Leary and Coulter’s links to Mudtown are a perceived or actual conflict of interest.
O’Leary, who is running for deputy mayor, purchased four shares in Mudtown Station, while members of Coulter’s immediate family have bought three shares.
Ritchie reiterated that those purchases were made more than year after council approved the lease with Kloeze.
“I believe the conflict of interest guidelines have been followed,” he said. “I know nothing was done improperly.”
Coulter said at no time during the Mudtown lease negotiations did she or her family have any interest in becoming shareholders.
Her family members didn’t meet with Kloeze to discuss shares until June 2018.
At the press conference, Coulter said immediately after her family members told her about their interest in buying shares, she discussed it with Ritchie. The city then received a legal opinion before the investment was made.
O’Leary, in a statement he provided to the media at the press conference, said he met Kloeze for the first time 15 months after council approved the lease.
“These facts make it abundantly clear that I was not an investor, had not had any discussions or correspondence about investing and, frankly, had not even considered the possibility of investing in Mudtown until well after my duties as a member of council were fully and properly discharged.”