By pausing their investment in the Kingsway Entertainment District, Gateway Casinos ended up tacking on an additional $1.1 million to the project.
According to a report by city administration presented to city council on Thursday, this was due to the last-minute nature of their decision to put their investment into the project on hold.
“Within days” of the scheduled Nov. 29 start date of site preparation work at the KED site in late November of last year, Gateway Casinos informed the city that they were pausing their commitments.
“In delaying the Contract, the Contractor, Bot Engineering & Construction Ltd, requested compensation for the costs incurred, standby for labour and equipment, and other ongoing costs until such time that other work could be secured, or the contract started,” according to the municipal report.
There was a negotiated settlement with Bot Construction to minimize these costs and the risk of potential litigation, which ended in a settlement of $1.1 million. Shared between the project’s partners, the city’s expense was $666,600.
In emailed correspondence to the city leaked to Sudbury.com, Gateway Casinos executive vice president development and construction Jagtar Nijjar wrote that although they still supported the project, it wasn’t time to break ground.
He cited “significant risks,” such as the ongoing Minnow Lake Restoration Group legal action and an OPP investigation as their chief concerns with the project.
The OPP investigation has since concluded, with police determining there was no corruption in a case of alleged KED bribery.
In a Sept. 4, 2021, Facebook post, Ward 3 Coun. Gerry Montpellier alleged that he was offered a financial incentive to support a location on The Kingsway for a new arena/events centre in 2017. He subsequently denied he was offered a bribe, and clarified during Thursday’s meeting that the comments he heard were “suggestive in nature but not criminal.”
The Minnow Lake Restoration Group’s legal challenge received its day in court in April. A trio of judges have yet to make a decision or announce when their verdict might be presented.
The group’s case had to do with an allegation that city council and administrators did not follow proper procedure in their dealings with the KED, including council not being presented with various promised reports they’d requested.
When it comes to who is responsible for the delay in site-preparation work, it “gets really convoluted,” Minnow Lake Restoration Group president John Lindsay told Sudbury.com. Although Gateway Casinos backed out at the last minute, they in turn pointed to the OPP investigation and the legal challenge as key motivators.
“Our court case was not based on attempting to destroy or hold up the project,” Lindsay added. “It was merely to determine if all of the information could have been presented to council to make a decision one way or the other.”
A blame game took place several years ago with the city’s Second Avenue roads project, Lindsay said, which he describes as another worthy fight done for environmental reasons related to an increased use of road salt. This road-widening project was initially estimated to cost $6.6 million and ended up coming in at approximately $8 million when it was tendered three years later.
The Minnow Lake Restoration Group is a not-for-profit environmental organization mandated with protecting the environment, Lindsay said, noting that although their KED-related legal challenge centres on an alleged breach of procedure, their concern is environmental in nature.
When it comes to the legal challenge, he said, “We’ve got no choice but to go ahead … and do what we can to save the drinking water of 50,000 people.”
Legal challenges associated with the KED have cost the city approximately $770,000 in legal costs and counting, including those dismissed by the Local Planning Appeals Tribunal in late 2020. It remains to be seen what impact the years of delays have had on construction costs for the project, which the city has budgeted $100 million toward since 2017.
City council will be presented with a final budget proposal next month, at which time anything greater than $100 million will require additional approval. Pending this approval, they will also select a lead contractor under the progressive design-build process the city has opted to take.
Tyler Clarke covers city hall and political affairs for Sudbury.com.
