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Updated: KED put on pause by Gateway Casinos

Gateway Casinos representative writes that ‘it is not commercially reasonable’ for them to proceed with site preparation work at this time
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The Kingsway Entertainment District property is seen undisturbed today, the day that site preparation was scheduled to commence.

The Kingsway Entertainment District project has been put on pause by Gateway Casinos & Entertainment Ltd. 

“At this point in time it’s a delay, it’s not a cancellation of the project,” Mayor Brian Bigger told Sudbury.com, clarifying that Gateway Casinos has reaffirmed their commitment to the project despite putting things on hold.

The property off The Kingsway remains undisturbed, despite city council requesting in September that site preparation work would begin by today at the latest. The KED is slated to include a municipal arena and a private hotel and casino. 

In emailed correspondence to city CAO Ed Archer which was leaked to Sudbury.com, Gateway Casinos executive vice president development and construction Jagtar Nijjar wrote that although they still support the project, now’s not the time to break ground.

“The KED project continues to be challenged by significant risks, including the ongoing Minnow Lake Restoration Group legal action that will not be heard in court until April, 2022, and the OPP investigation called for by the City,” he wrote. 

“Given this uncertainty around the project, it is not commercially reasonable for Gateway to continue to provide additional significant funding to the next phase of the project until these ongoing challenges are resolved and the entire scope of the project is confirmed to be moving ahead.

“We hope for a quick and successful resolution of the outstanding issues, and in the meantime, we continue to work collaboratively with other project stakeholders.”

The city and developer were prepared to move forward today, Bigger said, adding that one partner requesting a delay was enough to put the project on hold. 

He’s still of the opinion that all four partners, including the city, developer, Gateway and an unnamed hotel represented by the developer, need to be on the same page.

“I believe the greatest value is in all three moving forward together, and so that’s where we sit at this time,” Bigger said. 

In his correspondence to Archer, Nijjar wrote that Gateway has already spent approximately $3.9 million on the project and that they remain “supportive of the KED project and continue to invest significant time and resources into the project as we believe it is the best location for a premier gaming and entertainment facility in Sudbury.”

Today’s groundbreaking was supposed to be the first big step toward the KED’s 2024 grand opening, but it remains unclear what the implications of the Gateway-imposed delay might be.

“City staff and the developer are working closely with Gateway to try to figure out what the timing can be, what the implications would be,” Bigger said. “They’re trying to ensure that work could begin as soon as possible. … That’s what we are trying to clarify with Gateway -- the timelines that they believe are necessary.”

One of the key concerns Gateway cited has to do with a legal challenge by the Minnow Lake Restoration Group, which seeks a judicial review of city council’s handling of the KED. 

Last month, the lawyer representing the group, Eric Gillespie, said in a media release that the city is proceeding with the KED at their “own risk and potential peril.”

If successful, the legal challenge would deem a July 14, 2021, vote of city council to OK the next steps in the KED development null and void, which Gillespie said would stop the arena expenditure immediately.

As they have done with other legal challenges related to the KED, Bigger said he anticipates the city coming out on top once again with the Minnow Lake Restoration Group challenge.

At the same time, he said that if their goal was simply to delay the project, they appear to have already succeeded.

The Ontario Provincial Police investigation that Gateway has expressed concern about is in relation to Ward 3 Coun. Gerry Montpellier’s claim in September that he did not vote on the location for a new municipal arena in 2017 due to an “offered financial conflict of interest” by two individuals, one representing the developer and another who represented Gateway. 

“Being familiar with my business involvement and participation with Ontario and Michigan casinos, both suggested the opportunity to personally profit by supporting the Kingsway location,” Montpellier wrote in a lengthy Facebook post. “This for myself as a city councilor is clearly unethical and cause to abstain.”

Although Montpellier subsequently denied he was offered a bribe, city council voted to request that police investigate Montpellier’s comments. 

City council is expected to receive a report by city administration at their Dec. 14 city council meeting on the latest happenings related to the KED, but their discussion won’t be limited to that report. 

An anti-KED petition is still expected to be presented at a future city council meeting after being delayed last week when the meeting hit its three-hour mark. As of today, the change.org petition has received 3,124 signatures, with more collected via physical copies distributed downtown. 

Earlier today, Ward 11 Coun. Bill Leduc, whose ward includes the KED property, said that he was still looking forward to the project proceeding as quickly as possible. 

Dismissing the project’s opponents as a small group of misinformed people, Leduc said, “In order to accomplish things in life, Sudbury has to grow,” and that the KED is an important part of this growth. 

Sometime before the actual construction of a municipal arena is approved by city council, Ward 4 Coun. Geoff McCausland said that he will present a motion seeking assurances from the project’s partners related to builds. As it stands, there is no written agreement beyond initial site preparation work. 

Whenever it does take place, site preparation work is to be completed by Bot Engineering & Construction Ltd. The company issued the lowest bid in 2018 at $8.5 million, which has since been updated to approximately $9.4 million.

This cost will be bolstered by the city’s retention of an engineering consultant to provide contract administration and inspection services, at a cost of approximately $330,000. The city is currently negotiating with J.L. Richards & Associates Ltd., which is headquartered in Ottawa and has offices in Greater Sudbury. 

The total site preparation cost of $9.73 million will be split as per the cost-sharing agreement between the project’s key partners. 

The city will commit $5.9 million, Gateway Casinos & Entertainment will spend $2.2 million, the hotel share is $1.1 million and the developer’s share is $530,000. 

The city’s share is the greatest in this initial stage of the project due in large part to the fact they are responsible for the $5.6-million events centre parking area, according to the report by city engineering services director David Shelsted.

Tyler Clarke covers city hall and political affairs for Sudbury.com.

 



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Tyler Clarke

About the Author: Tyler Clarke

Tyler Clarke covers city hall and political affairs for Sudbury.com.
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