Posted July 22, 2014
This is the second of a three part series on relating the circumstances that led to the Urbacon trial and the damages that taxpayers will face in the coming years. Part three will be published tomorrow. GB
In the summer of 2008, despite two extensions to the completion deadline, the city became concerned that employees, then working in leased premises, could not move into city hall because of construction delays. This meant that lease agreements would have to be extended so that employees could continue to function until they were able to move into the new building.
In late August, Chief Administrative Officer, Hans Loewig, sent an email to Urbacon saying how pleased he was with the progress and looked forward to a grand opening before the end of the year.
On September 19, 2008, Urbacon was ordered off the site and the city terminated the contract. City called in the police to enforce the order. Urbacon launched a wrongful dismissal lawsuit claiming $19.2 million. This was followed by lawsuits filed by the city against architects Moriyama & Teshima, and Aviva, the construction bondholder. The sub-contractors also filed an action under the Construction Lien Act.
Now the project faced a potential cost of $62,200,000.
The Farbridge administration now claims that it received outside legal advice that confirmed the city had the right to fire Urbacon. The author of that advice has never been revealed.
But there were other choices. The problem was that no one knew who was in charge. Who was calling the shots? Was it the mayor? Was it the council? Was it Hans Loewig? Some one had to make the final decision to kick Urbacon off the job site.
To this day, not one elected official or staff member has owned up to it. Except for CAO Ann Pappert, who said Hans Loewig made the unilateral decision without consulting council. Mr. Loewig left the city in December 2012 and did not testify in the Urbacon lawsuit trial.
As it stands now Ms. Pappert’s asserion was self-serving designed to protect the administration.
At the time of termination, the building was 95 per cent completed but work had not begun renovating the old city hall because staff was still working there.
The city then hired a contractor from Burlington to complete the new city hall and another contractor from Cambridge to convert the old city hall into the courthouse. Costs of these two firms to complete the work have never been revealed by the city. It is estimated to be some $5 million as it matches the city’s counter claim of the same amount. It is a claim judge dismissed.
Assuming this figure is accurate, the costs have now reached $67,200.000.
In November 2008, the city awarded Hans Loewig with a four-year contract with a beginning annual salary of $198,000. The contract included an unusual clause that allowed Loewig 12 weeks of unpaid leave plus his regular vacation time. During his tenure as Chief Administrative Officer for more than five years, Loewig never lived in Guelph.
He was paid some $415,384 plus benefits during that period while also receiving a pension from the City of Brantford where he worked for a number of years.
Could this be construed as a payoff for his work in firing Urbacon? While he was absent from the job for many months every year for five years, who was in charge and managing the staff? Was Mr. Loewig phoning in his input while away?
In 2009, the city and Urbacon agreed to mediate the dismissal to resolve differences. These talks failed and Urbacon proceeded with its lawsuit. Again the cost of the mediation session has never been revealed.
The hidden costs of this trial include legal fees on both sides of the issues, trial costs, consultant’s fees, staff costs. The damages portion of the trial in October will determine those costs.
Tomorrow, the costs escalate as the city hires a Hamilton lawyer to make its case.