Despite obstacles, city moves forward with KED – staff report

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Report to city council Tuesday

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Despite considerable risk, a legal challenge and a police investigation, the city is moving forward with the proposed event center for the Kingsway Entertainment District.

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In a report to be presented at Tuesday’s board meeting, staff say a major RFP is expected to be released shortly, which will move the project forward.

“The design-build call for tenders is expected to be released before the end of January. It is expected that the final board decision point, confirmation of the final budget based on the outcome of the RFP, will be presented to the board in late June or July 2022, ”the report said. “As noted in previous reports, there is a compliance team that includes third-party expertise assisting in the procurement process. , as well as an equity monitor in place. The costs for this step include the fees of unsuccessful developers in the design-build procurement process and will total approximately $ 700,000.

KED will include a $ 100 million event center paid for by local taxpayers; a $ 60 million casino built by Gateway Casinos; and an upscale hotel, owned and operated by Genesis Hospitality. Staff predict that the resort will open to the public in 2025.

Staff also note in their report that two companies – ASM Global and OVG Facilities – have been shortlisted as potential site operators for the event center, following a prequalification request.

“These are the two largest operators of North American sites and each have significant operational experience and a large network from which to draw both expertise and, once the facility is operational, booking opportunities to organize events. events that activate the facility and generate the expected economic activity within our community. “

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A call for tenders is expected to be published by mid-January and awarded at the start of the second quarter.

“Once selected, the site operator will participate in the design-build process, providing information on the final design to ensure the operational effectiveness and efficiency of the new facility,” the report notes.

The update shows that of the $ 3.9 million already spent on KED, the city has spent almost $ 3 million.

Despite the efforts made to move forward, the project presents significant risks. On the one hand, there is no construction commitment in place obliging each partner to complete their respective project.

“The current cost-sharing agreement only covers site preparation, roads and common items, including site leveling, and does not oblige each partner to build their facility,” the report notes. “All partners recognize that the success of any individual partner can only be achieved if all three facilities are built. Neither partner wants to build their facility without other projects continuing as well and all partners want to mitigate the risk of one of the other partners withdrawing.

The city plans to develop a project completion agreement, which requires each partner “to build and operate their respective facility.” The partners anticipate that the terms of the PCA can be negotiated over the next three to four months and will include a construction schedule for each of the facilities to coordinate completion dates. The PCA project will be presented to the board in a closed meeting prior to its execution. “

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Staff say the PCA will be conditional on the city awarding the design-build contract.

“The start of site preparation will be adjusted to begin after the PCA is executed,” the report notes. “This will be after the design-build contract is awarded and will begin in the summer of 2022. This will delay the scheduled opening of the event center until 2025.”

A police investigation is also underway. District 3 Council. Gerry Montpellier sparked an OPP investigation when he posted an open letter on his Facebook page last year alleging that representatives from Dario Zulich, the property developer, and Gateway Casinos approached him before the vote of the center of events in June 2017 in an attempt to influence its decision.

“The Greater Sudbury Police Service Chief of Police has reviewed the matter and referred it to the OPP for investigation,” the report said. “Staff know that officers from the OPP Anti-Racketeering Directorate have initiated investigations, but the timing of any findings or reports is unknown. “

The city is also facing a legal challenge. The Minnow Lake Restoration Group is seeking a judicial review of a July 2021 board decision regarding KED, which allowed work on the project to continue. The community group wants this decision declared null and void.

“The city vigorously defends the MLRG lawsuit with the support of partners,” the report said. “There is a potential risk of future legal action, as the experience of this project shows. The timing of the MLRG trial hearing date depends on the availability of the court system, but could be in April. “

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Staff say the city will defend itself “vigorously” and expect a positive outcome.

“Consistent with its positive results in all previous legal actions related to this project, the city is confident in the success of this trial,” the report notes. “Nonetheless, the risk associated with the timing of a hearing date cannot be fully mitigated.”

As staff note, work is on hold at KED until the lawsuit and police investigation are resolved. On November 29, the city received an unexpected email from Gateway, in which the company said it was putting a hiatus on all spending related to KED.

“The city received written notification through a letter from Gateway Casinos and Entertainment Ltd. indicating that it will not proceed to the next phase of the project (site classification) until the ongoing lawsuit and investigation is resolved and the full scope of the project is confirmed to go from there ‘before,’ the report notes. “With this notification, the city and the developer suspended the site leveling contract that was due to begin. All partners are working together to address the implications of this delay and to develop a revised plan for moving forward. “

Staff will present this update to the board at tomorrow’s meeting. It starts at 6 p.m. and can be streamed live at tinyurl.com/4dtn3b3y.

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Twitter: @marykkeown

Facebook: @mkkeown

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