Province made an "exceptionally" fast decision on BC Place casino, says NDP critic Spencer Chandra Herbert

In March 2009, the BC Pavillion Corporation (PavCo) sent out a call for proposals to develop the land west of BC Place. Sixteen weeks later, PavCo selected a proposal from the Nevada-based Paragon Gaming, Inc. for an ultramodern, mega-casino. This proposal now sits in City Hall waiting for city council to vote on a development permit. But evidence suggests that PavCo, which owns the stadium land, employed a process that allowed an unusually speedy selection of Paragon Gaming as developers.

"The sequence of the events was exceptionally fast for government," Spencer Chandra Herbert, NDP opposition critic of Tourism, Culture and the Arts, told VO in an interview last Thursday.

"Normally a process like this takes over a year because of the need to determine that this is the best thing for the tax payers and to make sure that the bidder is on the up and up," he said.

The BC Place project took place over 16 weeks from start to finish, Howard Crosley, General Manager of BC Place, operated by PavCo, said.

An unusual, secretive and flawed process?

Before the casino deal was inked, PavCo had to seek approval from council for a land development project at BC Place. This process began officially in 2008, when a report from the City's director of planning recommended amending the False Creek North Official Development Plan (FCN ODP), to include the possibility of sub-area zonings for a casino. It's the same report that recommends that PavCo, the Crown Corporation that manages BC Place, be authorized to undertake renovations on BC Place.

But by calling their project a land development, the government may have avoided the regular, lengthy and complicated process of evaluating proposals from different bidders, said Doug McArthur, SFU professor of public policy.

"It could have been a public-private partnership [also known as a P3], but that office would have insisted on competitive bids. So the government put it out as a land development project, but does not seem to have followed the standard required competitive process for land development projects," McArthur said.

Competitive bidding is essential if the government wants to maximize its return and protect against the perception and reality of favouring a private party with government assets, he said. "Normally, for a land deal, it would be done by putting the land on the market and asking bidders to set out uses, bid price, and terms and conditions."

Transcripts from the BC Legislature afternoon sitting on March 23, 2010  reveal that there were only two expressions of interest in the lands at BC Place.

S. Herbert [NDP critic of Tourism, Culture and the Arts]: I'm curious. With the RFP [Request for Proposal] that was given for that chunk of land, how many, I guess, statements of interest or how many actual proposals came through for that site? If it's possible…. I don't know if you're able to share the names of those companies, but if not, just the number of proposals that were given that were credible options.

Hon. K. Krueger [formerly Minister of Tourism, Culture and the Arts]: There were only two respondents to the RFP, and I can't name the unsuccessful company.

                            Kevin Krueger

The details of the evalution process, including the name of the other bidder, have not been released to the public.

"They’re private. You’re dealing with a private developer who doesn’t want that information released," Crosley said.

But according to Chandra Herbert, policy dictates that this information is supposed to be avaliable on the BC Bid website. "This is supposed to increase transparency so that there’s no favouritism," he said. The documents for the BC Place proposals were never posted on that website.

Chandra Herbert said he had written letters to PavCo and tried contacting the ministry but has been unable to receive this information. He initially tried contacting PavCo, who referred him to the Minister, who then referred him back to PavCo, who referred him to the Minister again. Finally, PavCo told him that he should proceed with a Freedom of Information (FOI) request.

"This is a complete stall tactic. A delay tactic. There’s no reason for them to do this. I don’t know if they are trying to hide something, given that the deadline is looming. I’ve been asking for this information since last spring," he said.

"I need to see the RFEI [request for expression of interest] and the RFQ [request for quotation] because they might have written them in such a way that there could only be one bidder," Chandra Herbert said.

Minister Krueger, who is now Minister of Social Development, did not respond to VO's request for comments by publication time.

The evaluation process

In the spring of 2010, PavCo announced a 70-year lease agreement with Paragon Development Ltd. for two acres of BC Place west side lands. However, the gaming company was notified of its selection as a preferred proponent on June 29, 2009.

The selection of Paragon Gaming and an entertainment resort, including the casino and two hotels, was based on who submitted the best proposal for the property, one that would best suit the stadium, Crosley said.

“[This means] anything that would add to the area, that would create a synergistic effect to the stadium and will help the stadium and its business.”

In a standard land deal, the government starts the process by putting the land on the market and asking bidders to set out uses, bid price, and terms and conditions, said SFU professor McArthur. "In the tender call, the government would set out any terms and conditions it expects to be met."

"Abnormal in the extreme," is how McArthur describes the length of time it took PavCo to select Paragon Gaming.

The three-step process involving the preparation of tender documents, followed by the public annoucement of calls for proposals and finally the return of proposals by bidders can take up to one year, he said. "It would not be unusual."

The BC Place project took 16 weeks, said Crosley.

The selection process for a bidder for the RCMP E Division Headquarters Relocation, a P3 project, lasted over two years. On February 6, 2008 advance vendor notification was issued and on April 22, 2010 the project agreement was signed.

"The average length of a procurement process [for a public-private partnership], from the release of the request for qualifications (RFQ) to financial close (signing of the project agreement with the Preferred Proponent) is 14 - 18 months," Katie White, Senior Communications Consultant for Partnerships BC, a government-owned company that oversees public-private partnerships in the province, wrote in an e-mail to VO.

A necessary move

Paragon Gaming, the BC Place casino developers, own the Edgewater Casino at Plaza of Nations but their lease expires in 2013. Had they not received the 70-year lease agreement for the land at BC Place, Paragon would have had to find another home for Edgewater, renew their lease, or the casino would have had to cease operations.

"This casino relocation is necessary because Edgewater Casino's lease with the City of Vancouver at its current location ends in 2013," wrote a senior public affairs officer from the Ministry of Public Safety and Solicitor General, the ministry responsible for gaming, in a e-mail to VO.

Solicitor General Rich Coleman declined an interview with VO. 

At the time PavCo was receiving proposals, everybody knew that Paragon would need to move the casino, Chandra Herbert said. There’s only one casino license avaliable in the city, he pointed out. "This seems to suggest to me that there’s a strong likelihood that PavCo knew they would apply."

When asked if Paragon would have moved to another location without the BC Place development, Tamara Hicks, Director of Corporate Affairs and Communications for Paragon, said, "Paragon is not the owner of the Edgewater lands and is subject to a lease that expires in 2013."