FOI documents re: UPG&City - release #2

Request No. 2012-41 August 16, 2012

Chris Bryan

.Air -NEW WESTMINSTER

Editor, New Westminster NewsLeader 7438 Fraser Park Drive Burnaby, BC V5J 5B9

Dear Mr. Bryan:

Re: Freedom of Information and Protection of Privacy Act (the "Act') Request No. 2012-41

I am writing about your request dated May 9, 2012 for copies of records of the following records:

• The original proposal fi:om Uptown Property Group (UPG) to the City for the office tower at the Multi-Use Civic Facility;

• The miginal agreement (MOU) between the City and UPG; • Any fonnal project agreement after the original MOU; • Closure agreement with UPG; • The letter ofte1mination ofUPG's involvement with the City on the project; • All paper (fonnal) cmTespondence between UPG and the City.

At this time the City is able to release the remaining documents to you.

• The withheld page fi·om original proposal fi·om Uptown Propetiy Group (UPG) to the City for the office tower at the Multi-Use Civic Facility; Please find enclosed.

• The letter oftennination ofUPG's involvement with the City on the project; Please find enclosed.

• All paper (formal) correspondence between UPG and the City. Please find enclosed the remaining portion of the correspondence.

Some of the records contain infonnation that is exempted from disclosure under the Act. This infmmation has been severed in accordance with following sections of the Act so that the remaining infonnation can be disclosed to you.

Doc#312507

Corporat10n of the City of New Westminster 511 Royal Avenue. New Westminster, BC V3L 1H9

T 604.521.3711 F 604 521 3895 E mfo@newwestcltyca

www.newwestcity.ca

August15,2012

• Section 17 (1)(f)- Information the disclosure ofwhich could reasonable be expected to harm the negotiating position of the public body.

• Section 22(2)( e)- the third party will be exposed unfairly to financial or other harm.

• Section 22(2)(f)- the personal information has been supplied in confidence.

• Section 22(3)01) - the disclosure could reasonably be expected to reveal that the third party supplied, in confidence, a personal recommendation or evaluation, character reference or personnel evaluation.

Section 17 of the Act has been used to protect the future negotiations of the City with business partners interested in working with the City on the MUCF project or potentially purchasing the project from the City.

Pursuant to section 52 of the Act, you may ask the Information and Privacy Commissioner to review any matter related to the City ofNew Westminster's response to your request. The Act allows you 30 days from the date you receive this letter to request a review by writing to:

Infonnation and Privacy Commissioner Fourth Floor 947 Fort Street Victmia, BC V8V 3K3 Telephone: (250) 387-5629 Fax (250) 387-1696 [email protected]

If you request a review, please provide the Commissioner's office with:

1. Your name , address and telephone number;

2. the file number assigned to your request (the request number quoted at the top of this page);

3. a copy of your miginal request for infmmation;

4. a copy of this letter; and

5. The detailed reasons or ground upon which you are seeking the review.

Doc#312507 Page2

Please contact me at (604) 515-3 764 or email me at [email protected].

Yours truly,

}; Jacqueline Killawee 1J tfL. Records and Information Administrator

C: Richard Page, FOI Head Corporate Officer

Doc#312507

August15, 2012

UPG PROPERTY GROUP

Expression of Interest- May 2010 New Westminster Multi Use C1vic Facility

UPG Property Group

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UPG's project team for this development consists of the following professionals:

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UPTOWN PROPERTY GROUP

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Corporation ofthe City ofNew Westminster MAR 2 3 £Un

AQMINISTflATOAS OFFICE 511 Royal A venue,

New Westminster, BC

V3L 1H9

Attention: Mr. Paul Daminato

Dear Paul,

Re: MUCF and UPG Office Project

We are writing to express our concern regarding some important issues which will have a significant impact on this Project.

Funding Shortfalls

We had previously expressed concern on numerous occasions that the MUCF design and program features will cost $8 to $10 million in excess of the DAC Funding of $3 5 million. Grant Turnbull has informed us that based on PCL' s cost estimates (provided in early February), the City's funding shortfall is approximately $8.2 Million, but that he has a series of cost reduction I deferral strategies which will be presented to City Council on March 28, 2011, which he feels will reduce the shortfall to approximately $3.5 million. Until the presentation is made to City Council Mr. Turnbull has advised that the details cannot be disclosed to UPG. We are concerned as to the completeness of Mr. Turnbull's $8.2 Million deficit calculations. For example we know parking for the Restaurant and Retail uses has not been considered in the costing and we do not know what cost allocation assumptions have been used in arriving at the deficit amount.

Between now and when the City shares the details of the cost reduction and deferral strategies with us, we are continuing to expend monies and resources as your partner in the Project. This is in reliance upon on the City's continued assurances that the funding shortfall is under control. In the event that the cost reduction I deferral strategies are not adequate to address the funding of the City's portion ofthe Joint Budget we will expect the City to commit to funding

UPG Property Group Inc.

1101 - 900 West Hastmgs Street Vancouver. BC · Canada V6C 1E5

T 604 688 7900 F 604 688 7930

www.uptownpropertygroup.com


from other sources. Please seek instructions from City Council to confirm that it will make that commitment.

MUCF Design Status

We are well behind schedule for settling the MUCF design, and changes are still being made to fundamental components and to the parkade, which may have significant cost implications. For example, the realignment of the parking ramp proposed by the City's architect at last Wednesday's design meeting would reduce the total parking stalls from s t?t,Yr) , and add suspended slab costs. We have also discovered that the MUCF design has not allowed for loading dock access for the restaurant and the retail space, and for the office recycling and garbage removal, which must be corrected. We need the MUCF schematic design to be settled so that we can move on to the next phase of the design process. Please instruct your architect accordingly.

Restaurant Parking

We assume that any restaurant on the ground floor of the MUCF will require ~, .. a)(,r)parking stalls in addition to the parking contemplated for the MUCF. Please confirm what parking will be necessary. Please also confirm that the cost of the required parking for the restaurant will be included in the MUCF costs.

Project Budget and Cost Allocation Process

A key issue for us to proceed to the Development Agreement stage is the conclusion of the Project Budget and Cost Allocation Agreement. We are not in a position to invest the time and resources to pay for the drafting of the Development Agreement and other key agreements at a time when we have not been able to even start the budget and cost allocation process. This is key to our committing to proceed with the Project. We need to hear from the City regarding the draft Cost Allocation Agreement forwarded to you on February 9, 2011, and in particular, that you accept the Guiding Principles that we inserted in that document.

Strategy Regarding Excavation and Shoring

Understandably, your construction manager is anxious to proceed with the tendering of the excavation of the site, because his role is to focus on the construction aspects of building the parking and the MUCF, rather than concern himself with the business negotiations or the commitment of the parties to fund this important step in the Project.

UPG Property Group Inc

1101 - 900 West Hastings Stree t vancouver. BC · canada V6C lES

T 604 686 7900 F 604 686 7930

www.uptownpropertygroup.com .3


At a business level, our negotiations have been structured in such a manner that our commitment to proceed beyond funding our share of certain consultants' costs in designing the base building of the Project is dependent on the conclusion of a Project Budget, Cost Allocation Agreement and Development Agreement. In view of the delays we have experienced, we have very little time in which to compress many important steps in the Project, with the very probable result that the City could be facing a deadline for tendering of the excavation and shoring contract and commencement of excavation on June 1, 2011, before we have committed to proceed with the Project. UPG will not be in a position to commit to fund its portion of the excavation and shoring until these very important documents are in place.

The excavation and shoring contract is a dramatic illustration of the risks faced by both parties if we continue to fail to meet Project milestones and require extensions of the timelines we have agreed to for the rollout of the various phases of the Project. We need to discuss this contingency, as it will be a key determinant as to whether the Project will include our office tower component or be reduced to a stand alone MUCF, with the attendant higher costs for the City of the latter alternative.

We suggest that a business meeting with our key people and legal advisors be scheduled in the near future to address these important issues.

Sincerely yours,

Alan Leong

UPG

cc Gary Holowatiuk Mike Quattrocchi Don Cooper

UPG Property Group Inc

1101 - 900 West Hastings Street vancouver. BC · canada V6C 1 E5

T 604 688 7900 F 604 688 7930


.~'~·l NEW WESTMINSTER

November 4, 2011

UPG Property Group Inc. 330- 555 Sixth Street New Westminster, BC V3L SH1

Attention: Mr. Alan Leong, Vice Chairman

Dear Alan:

I am writing further to your letter of November 3, 2011. Needless to say, the City is disappointed that

UPG has decided to step back from the project at this time.

I would like to clarify that the City is not trying to renegotiate the terms of the MOU, unilaterally change

the underlying business terms of the MOU, or attempt to strike better financial terms for the

Development Agreement. The City is simply trying to ensure that it complies with its statutory

obligation to receive fair market value for the disposition of the air space parcel to UPG. This is a

fundamental term of the MOU that has been reinforced on many occasions.

A failure to comply with this statutory requirement would leave the Development Agreement vulnerable

to legal challenge. Such a result would not be in the interests of the City or UPG. Accordingly, it is

essential that City council be satisfied that the City is rece iving fa ir market value. The City is exercising

necessary due diligence to assist council in making this decision and has engaged a consultant for that

purpose. The consultant provided earlier advice in relation to the air space parcel valuation indicated in

the MOU.

The City is t aking further steps to f ind a solution to th is issue that will hopefully meet the needs of both

parties. As noted in t he comment sheet we circulated last week, the City's advisors recognize that there

is value to the City associated with the parking contributions to be made by UPG. The City has

instructed its consultant to value these contributions and we expect to hear from them in the next few

days.

Office of the City Administrator 511 Royal Avenue. New Westminster. B.C. V3L 1H9 Telephone: 604-527-4551 Fax: 604-527-4599 Email : [email protected]

.~

... 2

In the meantime, the City needs to continue with the project as necessary to ensure construction of the

MUCF is completed on schedule. The City will respect UPG's request not to be named in any general

contractor appointment or public announcements and the City will s,? rJJ(te) on behalf of

UPG in moving forward at this time. The City is also continuing to work on addressing outstanding

Development Agreement issues to the extent we can, and we have made progress on a number of items

that we had hoped to discuss with you at Wednesday's Steering Committee meeting that UPG was

unable to attend. We have instructed our solicitors to finalize the air space parcel easement and parking

easement contemplated under the Development Agreement. Ideally, we would like to meet with UPG

next week to continue work on the DA.

The City remains firmly committed to finalizing the Development Agreement and we sincerely hope UPG

will step back into the project and that we will be able to resolve this issue as soon as possible.

y~cr U\k Paul Daminato City Administrator

cc: Bart Slotman Gary Holowatiuk Steve Matheson Don Cooper Mike Quattrocchi

Office of the City Administrator 511 Roval Avenue. New Westminster. B.C. V3L 1H9 Telephone: 604-527-4551 Fax: 604-527-4599 Email : [email protected]


Corporation of the City of New Westminster 511 Royal Avenue New Westminster, B.C. V3l1H9

Attention: Mr. Paul Daminato, CAO

Dear Paul:

Re: Multi Use Civic Centre Project

I am writing in reply to your letter of November 4, 2011 .

November 7, 2011

Our concerns regarding the negotiation of the Development Agreement and the City's recent position as to the valuation of in kind contributions are well documented and continue to apply. We are unable to participate in any further Steering Committee meetings at this t ime.

If you have a concrete proposal you wish to make, feel free to forward it to us and we will respond in due course.

Yours truly,


::::,(.0/~ Vice Chairman

c.c. Gary Holowatiuk Steve Matheson Bart Slotman Don Cooper


330- 555 Sixth Street New Westminster. BC ·Canada V3L SH l

T 604 525 8866 F 604 525 1387


; l I 0

NOV - (2011

ADMINISTRATORS OFFICE

7

Corporation of the City of New Westminster 511 Royal Avenue New Westminster, B.C. V3L 1H9


Dear Paul:



November 15, 2011

In reply to your letter of November 8, 2011 , we will advise you within the next 10 days as to our Board's decision with respect to any future involvement with this project.

Yours truly,


~/{4/~ Alan Leong Vice Chairman


UPG Property Group Jnc. 330 - 555 Sixth Street New Westminster, BC ·Canada V3L 5H1

T 604 525 8866 F 604 525 1387


, ... NOV 1 7 2011 I ADMINISTRATORS OFFICE

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I IIII[ : l .,., , . 1 I

~. 1111-II J:let

NOV 2' 9 2011

AOMINISTRAT~S OFFICE

Corporation of the City of New Westminster 511 Royal Avenue New Westminster, B.C. V3L 1H9


Dear Paul:



November 25, 2011

We are writing to advise that despite our best efforts and the very significant time and resources invested in the design process and contract negotiations, UPG is formally terminating its involvement in the MUCF/Office Tower project. Please accept this letter as a Termination Notice as contemplated by the Cost Recovery Agreement

As I hope you will appreciate, this was a decision which was not taken lightly,

Since we became involved in this project in May of 2010, UPG has incurred significant soft costs for design, legal fees and project management. During this period world economic markets have softened. Pre-leasing opportunities could not be seriously pursued, as we were unable to make a firm commitment to build when we still had not signed a Development Agreement Our commercial risk for the Office Tower has escalated as a result of these factors and our Board of Directors has determined that it can no longer accept such a high level of risk.


330 - 555 Sixth Street New Westminster, BC ·canada V3L 5H1

T 604 525 8866 F 604 525 1387


- 2 ~


In spite of the fact that this public/private development experiment has not succeeded, we have benefited from the relationships we have enjoyed with the City and its staff, and we wish you success in the completion of the MUCF. We will provide full cooperation in the process of our disengagement and in directing our consultants accordingly, so that the City will not be delayed in the completion of its Project. We will also provide an accounting of soft costs for review by the City in due course.

Yours truly,


Alan Leong Vice Chairman


www.uptownpropertygroup.com (0

December 19, 2011

UPG Property Group Inc. 330 - 555 Sixth Street New Westminster, BC V3L 5H1

Attention: Mr. Bart Slotman, Vice President

Dear Bart,

RE: Reconciliation of MUCF I Office Tower Joint Development Project Soft Costs s ,., I',)('F)

On December 14th, 2011, we received UPG's invoice# 1056 for recovery of . of consultant costs relating to MUCF I Office Tower joint development project for the period September to November, 2011. Accordingly, we attach payment in the amount of $399,964.84, which is net of UPG's s'?riYf) share of joint project management costs (Pivotal) paid by the City up to November 2, 2011 (a reconciliation and copies of Pivotal's invoices are attached). With this payment the City has met its obligations under the Cost Recovery Agreement pertaining to reconcil iation of project soft costs for the Multi-Use Civic Facility I Office Tower joint development project.

In accordance with section 10 of the CRA, UPG is to provide to the City all plans and designs and other documentation obtained from consultants and contractors in respect of the MUCF/office tower project. Accordingly, please forward or make available for pick up any such documentation in UPG's possession and direct consultants and contractors to forward or make available such documents in their possession for use by the City. Your prompt attention to this matter would be greatly appreciated. Thank-you for your continued cooperation with respect to UPG's disengagement from this project.

If you have any questions regarding this matter please give me a call (604-527-4514).

Sincerely,

Gary Holowatiuk, CA Director of Finance and Information Technology

c.c. Alan Leong Paul Daminato Steve Matheson

Attachment

/(

Corporation of the City of New Westminster 511 Royal Avenue New Westminster, B.C. V3L1H9

Attention: MUCF Steering Committee (delivered via email) Paul Daminato [email protected]

Lisa Spitale [email protected]

Gary Holowatiuk [email protected]

Mayor Wayne Wright [email protected] Councillor Bill Harper [email protected] Councillor Jonathan Cote [email protected]



January 17,-2012

In mid-December of 2011 we seemed to have reached agreement in principle on the framework of terms to apply to UPG's transitioning out of the MUCF/Office Tower Project, as described in the attached Framework for Agreement. The concepts in discussion included the terms of payment to UPG to recover its costs after signing an exit agreement, an assignment to the City of UPG's interest in Project documents developed by it, an assignment of UPG's marketing and leasing program for the Office Tower, and a confidentiality agreement requested by the City. This would allow the City to proceed with the entire Project in a relatively seamless fashion. To date, we have cooperated fully with the City in good faith to facilitate that transition.

We have no intention of entering into any confidentiality agreement or mutual release at this t ime.

UPG Property Group Inc. 330 - 555 Sixth Street New Westminster. BC · Canada V3L 5Hl

T 604 525 8866 F 604 525 1387


Yours Truly,


~A:v.~ Vice Chairman

c.c. Steve Matheson Bart Slotman Don Cooper


-2-

UPTOWN PROPERTY CROUP

UPG-CNW FRAMEWORK FOR EXIT AGREEMENT

Hand over of all UPG materials, drawings, plans, renderings etc.

Assignment of contracts and agreements with consultants (complete with a release from such consultants and an

indemnity from the City for future liabilities} and assignment of interest in project documents drafted by

UPG'slegal counsel.

Hand over of relevant current pre-leasing file materials

UPG to provide reasonable cooperation to the City in its pre-leasing program and in its search to secure an

alternate developer. UPG will not be obligated to directly undertake any activities, but will refer its pre-leasing

contacts to the City's leasing representative.

CNW to reimburse UPG for its actual, out of pocket cost {see note 1) incurred In regard to the project outside the

- .T 17 r,) t/) first payment upon signing of the 'exit agreement' (see note 2 below)

- $ / 7!t)a:) • second payment upon the signing of a development agreement with a replacement developer

(or upon the City proceeding with the office tower project on its own or converting the office tower

project to residential). The payment obligation for 2"d payment will be triggered on the earlier of:

a) the City entering into a binding agreement with a third party to develop the air space above the

MUCF for office or residential uses;

b) the registration of an air space parcel for the air space above the MUCF; or

c) the commencement of construction by the City or a third party in the air space above the MUCF.

Mutual Release. City to indemnify UPG for any claims by consultants and third parties and costs going forward.

Confidentiality Agreement regarding the terms of the parties' prior agreements regarding the development of the

project.

The Release and the Confidentiality Agreement will no longer apply if the City defaults in the payment of the

described above.

Notes:

1. Such costs not to include compensation for UPG's time, efforts.

2. The !''l "'Yr) reimburses UPG for cost for base building design effort {to 100%) and cost of marketing and

leasing program and materials. The remaining: ! '7 ('>"f-J is for all other actual costs incurred by UPG,

including cost consulting, legal (CNW plans to use legal agreements drafted by UPG), financing,

accounting, appraisal, and so on.

IL/

January 18, 2012

Mr. Alan Leong Vice Chairman Uptown Property Group

NEVV WESTMINSTER

11 0 1 - 900 West Hastings Street Vancouver, BC V6C IE5

Dear Mr. Leong:

File: Doc# 221612

Re: Multi Use Civic Centre Project- Response to your letter of January 17, 2012

Pursuant to your letter of January 17, 2012 to the MUCF Steering Committee, UPG raises the following:

• In mid-December, 2011, UPG and the City had agreed on a framework allowing UPG to transition out of the MUCF/Office Tower Project, as described in your attached "Framework for Exit Agreement"; and

• By January 25, 2012, the City is to notify you that the City has agreed to accept the terms in the Framework for Exit Agreement, and failing that, UPG will consider other remedies against the City, including legal remedies.

Framework for Exit Agreement

While the principles in the Framework for Exit Agreement were discussed by the City's MUCF Steering Committee, only City Council can approve such a document. It is important to note that City Council has not approved all of the principles in the Framework for Exit Agreement. Based on your attached Framework, there are eight components for consideration. The City has excerpted each of the eight components and has provided a response. See below.

1. Handover of all UPG Materials

It is our understanding that we have all or almost all of the documents and materials that UPG needs to provide, and we would like to confirm that. We would appreciate your assistance in providing any materials that may have been overlooked.

~~ ,1, ;l:l··:~\i(,:\ '}~ lht' Cit.'.' <,f ;~(.,,\. vv~~:~1 ~ ~d!~:~tt:~

Dc'vr.l<'i)!1H~ I li 5,.,1Vk<'~ L)c-•piJ. t me· :11 1-'1 ;:1·:: ·in[' I >h.ti~ior ,

',1 '1 Hoyd t·:·tc~nli(•, !'lew W<>~1min$1.C' I' , r·.\ \13! 1i IS' } {~()Jf , '((t J! ~~_i/ f {)(Jfi.!J/./,fi,~~\J rplTi pt):, lf.·'rlfV\H ,y\..~l.{it'',I . Cik

IS

NEW WESTMINSTER

January 18, 2012 -2 - Development Services - Planning

2. Assignment of Contracts and Agreement with Consultants

Assignment where required by the City - the City may enter into new contracts with some consultants as necessary, rather than taking over existing contracts.

3. Handover of Relevant Current Pre-lease File Materials.

Again we believe the City has the materials and would like your confirmation that this is so.

4. UPG to Provide Reasonable Cooperation to the City in its Pre-leasing Program.

We have received this and we are proceeding with your cooperation.

5. CNW to Reimburse UPG for · -:; 17 (i)rF)

s ~7r ll 't)

Based on received approved invoices, the City will pay UPG's outstanding design costs (currently estimated at ~ • 7 (•):o l) and UPG's marketing and leasing material costs (currently estimated at s1 ._,t,)(r> ) upon signing of the exit agreement.

6.

We understand from Mr. Slotman that this figure may be as low as ;-,;;o~ 'IJ md we would like confinnation of that.

7.

I~

NEW WESTMINSTER

January 18, 2012 - 3- Development Services - Planning

8. Confidentiality Agreement regarding the Terms of the Parties' Prior Agreements etc. and Release and the Confidentiality Agreement

We think release and confidentiality should continue to apply- · 5 17 f' l)fr:')

January 25, 201 2 J?eadline

As noted previously, only City Council can approve the tenns of the Exit Agreement on behalfofthe City. There is a City Council meeting scheduled for January 23, 2012. In order to meet your January 25, 2012 date, I propose that Steve Matheson and I meet with you and Bart Slotman hopefully on Friday, January 20, 2012 to discuss this letter and your response. Your letter of January 17, 2012, this letter of January I 8, 2012 and your response to this letter will all be provided to City Council at the January 23, 2012 meeting for their deliberation.

Regards

Lisa Spitale, Director of Development Services

!7

FOI documents re: UPG&City - release #2

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Transcript of FOI documents re: UPG&City - release #2