City surplus expected after multimillion-dollar police headquarters settlement factored in

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This article was published 03/03/2025 (442 days ago), so information in it may no longer be current.

The city expects to record a multimillion-dollar surplus in 2024, but that outcome banks on a long-awaited settlement from the police headquarters project that it has yet to receive.

Unaudited financial data up to Dec. 31, 2024, predicts the city will end the year with a $7.2-million surplus, despite a bleak November forecast predicting a $20.5-million deficit for the year, according to the report.

“The improvement is mainly due to the year-end recognition of a receivable of $22.5 million related to the police headquarters settlement and changes in various other departments,” the finance report states.

Higher interest earnings and savings also helped improve the financial outlook.

While council approved the settlement back in March 2023, it was not factored in to previous city budgets. Council’s finance chairman said it’s now safe for the city to count on the money.

“When council agreed to the settlement agreement, there was a timetable for payment, as well as a requirement to put certain properties under guarantee to the city. Those guarantees have now been registered… so we’re confident that, at some point, we will be made whole. It’s six properties and the amount is… $28 million,” said Coun. Jeff Browaty (North Kildonan).

Two years ago, city council approved the settlement of fraud and construction deficiency lawsuits it had launched over the Winnipeg Police Service headquarters project. Under the terms, the city would receive $21.5 million if the payment was made in full within 12 months of council’s approval, $22.5 million if paid within 24 months, or $23.5 million if paid within 36 months.

If not paid within 36 months, the city would ask the Court of King’s Bench for it to be paid $28 million.

Serious concerns surrounding the WPS HQ project have plagued city council for years. The building opened at 245 Smith St. in June 2016, at a cost of about $214 million — well-above its original $135-million price tag. An external audit later found the project had been severely mismanaged.

The RCMP conducted a lengthy investigation into fraud and forgery allegations, but no criminal charges were laid.

Mayor Scott Gillingham said he’s also confident the city can now rely on the settlement money coming through, which will help offset the cost of the project for residents.

“One of the reasons I supported a settlement was to basically get some recovery for the City of Winnipeg taxpayers. We did reach a settlement and now that settlement has been recognized in the city’s finances,” said Gillingham.

Both the mayor and Browaty said they could not confirm dates for actual payments.

“We’re certain we’ll get the police headquarters settlement money in some way or form… And our very risk-adverse (public service) made this recommendation to us and that’s why it’s moving forward,” said Browaty.

In 2018, the city filed a statement of claim to seek damages for alleged construction deficiencies from major contractor Caspian Projects and structural engineering consultant Adjeleian Allen Rubeli, alleging both companies were “negligent” in their work on the headquarters. In 2020, the city launched a civil suit against Caspian, AAR and dozens of other defendants, alleging a fraudulent scheme inflated the price of the project.

The allegations have not been proven in court.

The finance report notes the surplus is set to boost the city’s rainy day fund to nearly $18 million, as of Dec. 31, 2024. Even after that transfer, the pandemic-dwindled reserve will still fall $64 million short of its council-mandated minimum balance (which matches six per cent of tax-supported budget expenses.)

A few city departments ended the year with a loss, due to high costs for snow removal, as well as Winnipeg Fire Paramedic Service overtime and Workers Compensation Board injury claims. Revenue from property and development permits also fell short of expectations.

Gillingham said city staff approved 14,000 housing units last year, so permit revenue should rebound soon.

“We expect 2025 to be a significant building year… (with) a lot of projects breaking ground,” he said.

The Winnipeg Police Service ended the year with a $4.7-million surplus, which city staff credit to higher photo enforcement revenue, as well as reduced overtime and accommodation costs.

Meanwhile, other city reports indicate a looming potential trade war with the U.S. could change the price of major projects. The issue is identified as a “new risk” for the multi-billion-dollar north end sewage treatment plant upgrade.

“Project cost impacts resulting from potential 25 per cent retaliatory tariffs… (have) the potential to impact items such as steel, process equipment (i.e. centrifuges), and electrical equipment,” a sewage upgrade report notes.

Browaty said the city will attempt to procure local products to reduce the risk of tariff-related price hikes.

joyanne.pursaga@freepress.mb.ca

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Joyanne Pursaga
Reporter

Joyanne is city hall reporter for the Winnipeg Free Press. A reporter since 2004, she began covering politics exclusively in 2012, writing on city hall and the Manitoba Legislature for the Winnipeg Sun before joining the Free Press in early 2020. Read more about Joyanne.

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