Lister Block

Set Realistic Completion Bond for Lister Deal

By Graham Crawford
Published June 23, 2008

I would like to offer my comments on the amount of the completion bond mentioned in Andrew Dreschel's Friday column ("Lister hairball ready to be coughed up?", Hamilton Spectator, June 20, 2008) as a retired businessperson who, along with a business partner, built up a management consulting company specializing in strategic planning and leadership development, and with a staff of over 60 people working directly with CEOs in 18 countries, which we sold in 2001 to a company nearly 20 times times our size.

Mr. Joe Mancinelli is quoted saying, "They don't think the $250,000 is enough; we think it's too much," referring to the completion bond related to the development of the site behind the Lister Block.

A few lines later, Mr. Mancinelli says, "It's not a matter of if; we're going ahead for sure." Then, "But the only concern is how big the project will be, not if the project will go forward."

May I offer the following observations and advice to each City Councillor?

A completion bond that is less than 1 percent of the total cost of the contract value of the deal with the City is woefully low. There isn't a businessperson I know who would not take a $250,000 hit in order to close a $25,000,000 to $35,000,000 deal. Not one. Period!

You can get a 1 percent discount from your bank on service fees or credit rates if you know how to ask. In other words, they GIVE it away! I suggest, therefore, that we try something on the order of 10 to 20 percent - Namely, $2,500,000 to $5,000,000.

People tend to think twice about walking away from percentages and dollar amounts such as these.

Finally, given that Mr. Mancinelli is so confident that the building will be built, I would have concluded that he would have been comfortable agreeing to a much higher amount for the bond.

To me, it seems you can't say both things (bond too high / constructing for sure) - at least not convincingly. It's Mr. Mancinelli's business as to what he thinks is fair. It's my personal experience, however, that the amount suggested is absurd.

Graham Crawford was raised in Hamilton, moving to Toronto in 1980 where he spent 25 years as the owner of a successful management consulting firm that he sold in 2000. He retired and moved back to Hamilton in 2005 and became involved in heritage and neighbourhood issues. He opened Hamilton HIStory + HERitage on James North in 2007, a multi-media exhibition space (aka a storefront museum) celebrating the lives of the men and women who have helped to shape the City of Hamilton.

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By Frank (registered) | Posted June 23, 2008 at 09:42:03

I completely agree! Bonds are generally in the order of around 10% no matter what the project is...

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By markwhittle (registered) - website | Posted June 24, 2008 at 14:14:49

If Mancinelli walks the city should bring in the wrecking ball and allow someone with vision to build something Hamiltonians can really be proud of.

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By Mary Louise (anonymous) | Posted June 24, 2008 at 14:28:08

This Hamiltonian is proud of the Lister, thank you very much. Someone with vision would have restored it and turned it into residential with ground floor retail a decade ago.

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By Ryan (registered) - website | Posted June 24, 2008 at 14:42:14

As Graham Crawford points out, provincial heritage designation would give the city some leverage.

Right now LIUNA has the power and calls the shots, because LIUNA owns the building and refuses to a) do anything with it or b) sell it unless it gets a fat government subsidy to do so. Their threat, of course, is the threat of continued neglect leading up to and including demolition.

If the province designates the building, LIUNA loses the threat of both demolition and continued neglect. It would become illegal for LIUNA not to maintain the property; and unlike the city, there's a decent chance that the province would actually enforce its heritage rules.

At that point, LIUNA might as well either renovate the building on their own dime or else sell it to someone who will. That would preserve the heritage building, produce a new downtown use according to market forces, and save taxpayers around $15 million in subsidies (the difference between the market rate for office space and what LIUNA wants to charge).

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By MAWED OUT (anonymous) | Posted June 24, 2008 at 22:38:40


Would someone start banning MAW from leaving comments - his one act pony is getting tiring...

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