It was an expensive lesson for Penticton city council, that taxpayers are footing the bill for.
The City of Penticton is paying a $200,000 termination fee for abandoning a development agreement with the Trio Marine Group for the marina and restaurant at the Skaha Lake Marina.
“Maybe there is a bit of an upfront cost right now, but moving forward with a better scenario in place at Skaha over the next 29 years, I am sure we will be further ahead,” said Mayor Andrew Jakubeit.
Enacting the terms of the agreement means the end of a proposed 29-year lease with Trio Marine Group to upgrade and operate the marina beyond the 2018 season.
Though the cancellation was announced today, the decision was made earlier this summer.
“We initiated this in the late summer and agreed to announce it September so it wouldn’t impact their business operations. We are sensitive to that,” said Jakubeit. The Trio Marine Group will continue to operate the marina through to end of 2018.
Related: Partial costs released for Skaha Lake Park controversy
The City of Penticton said the key reason for the decision began last fall when the waterslides and use of green space were removed from the development proposal.
“After scaling it back from the waterslide, a $4-million plus project down to $1.5 million, did it really warrant that length of lease (29 years) in a premier park?” said Jakubeit, who wouldn’t rule out creating another 29-year lease with a new partner, if that is how the city chooses to move forward with revitalizing the marina.
“I don’t think that is realistic,” said Jakubeit. “If someone is going to invest a bunch of capital, they need to have some security to recoup that.”
According to the terms of the agreement, the City of Penticton will pay a $200,000 termination fee that caps the settlement and limits potential liability and/or higher costs. As part of the process, the city has incurred two year’s worth of administrative, legal and other costs at $168,700 while still collecting $112,900 in revenue over the term of the four-year license to use agreement. Trio Marine Group is covering all other costs for the development proposal.
Lisa Martin, spokesperson for the Save Skaha Park Society said they are happy to see the deal terminated after opposing it for two years.
“It’s regretful it has taken this amount of money. When you think of the lawyers’ fees for their side and our side, it has been a huge financial cost to see it get to this point. We are regretful it took this much, but at the end of the day the deal is done, Trio is gone and life goes on,” said Martin.
The society said they spent $17,511 as of Aug. 31, 2016 opposing the deal, which included filing a civil suit in B.C. Supreme Court, dropped in Dec. 2016 when the deal with Trio was renegotiated to remove the waterslides.
The city refused to release court costs, but in Nov. 2016, Jakubeit said the city’s legal bill had already grown past what a referendum would have cost (about $35,000) but hadn’t yet exceeded $100,000.
Jakubeit also wouldn’t say if cancelling the agreement had anything to do with the remaining civil suit started by Nelson Meikle before he died and carried forward by his daughter Lori-Anne Cole.
Related: Lawsuit against city persists after Meikle’s death
“Some of the particulars around the termination agreement were agreed by both parties to be confidential. I can’t really elaborate,” said Jakubeit. “It is sometimes a fine line in terms of protecting third party interests or the city’s interests or legal matters.
“At the end of the day, I think most of the community wanted to see this start over again, and we are acting on that.”
Jakubeit said city council has learned a lesson about ensuring the public is engaged in planning.
“It went off the rails with having a bad process,” said Jakubeit, noting that it took more than a year-and-a-half to develop the downtown revitalization plan, with a great deal of public input.
By contrast, the original deal with Trio Marine Group to develop the marina area, including the waterslide was conducted behind closed doors, with even the developer unable to speak about their own project, due to a non-disclosure agreement the city had them agree to.
“We want to start fresh with a good process because we have acknowledged and seen where having a poor process can lead you and the value and power of proper engagement,” said Jakubeit.
In the future, a comprehensive community engagement process, developed through a council approved procedure as part of the park use policy, will guide decisions around parkland use, according to Jakubeit.
“So it is not at the whim of a particular council but it walks through a robust process,” said Jakubeit. “It circles back to having great intentions but following a poor process. There are valued lessons.”
The Parks and Recreation Master Plan Steering Committee is currently preparing the draft policy that will be the subject of a community engagement process to be held when the draft is ready for comment.
Information about the consultation on the Parks and Recreation Master Plan, including the draft park use policy when ready, can be found at www.shapeyourcitypenticton.ca.