WITHOUT PREJUDICE

London developer Shmuel Farhi’s accounts of the events leading up to a tentative deal with Farhi for property at the west end of Talbot Street to be the new home of Elgin St. Thomas Public Health as taken from an April 19, 2012 email to Ald. David Warden and Mayor Heather Jackson, with copies to Ald. Gord Campbell and Ald. Tom Johnston. This follows April 28,2012 discussion in City Scope which you can read here. The email is entitled Without Prejudice . . .

Hello Dave:

I am very pleased we finally had the opportunity to talk at length yesterday about the history of the Health Unit’s search for a new building.

As I told you, I met with Paul Smith, Cynthia St. John, Amy Dale and others in my office in the early fall of 2009 and we received “verbal agreement” on a design/build/lease package.

On November 5, 2009, Cynthia sent an email that included the following: “I am pleased to report that Amy will be in touch with you and Colleen to finalize the offer to lease. The board did have some specific questions about materials used in the design and such but nothing that will hold us up. Once Amy, Colleen and I have finalized the offer to lease, I have direction from my board to sign it so we are moving ahead which is great news. Thank you for your patience and availability over the last while to finalize this deal.” (Emphasis mine.)

On November 5, 2009, Kim Eitel of the Health Unit emailed the following to me: “Amy Dale will be in touch with your office Friday or Monday to finalize the “offer to lease”.” (Emphasis mine.)

I had to buy most of the block bounded by Talbot, William, Queen and Centre Streets to ensure we could provide plenty of parking (107 spaces) as well as the two-story building that by this time had evolved from the original one-story iteration. I did so on the understanding that we had a deal that would be modified only in the specifics of the premises (exterior surface, fixtures, colours, etc.).

Then the crazy dance began. When we drove to St. Thomas to close the deal we were told they were concerned by their lack of experience in such financial matters and had retained the services of Andy Spriet to review the package.

As he was and is a competitor and not a “consultant” as such, I was not surprised when he raised doubts about the deal to which we had previously agreed. I suggested any concerns they might have regarding the cost of materials could best be addressed by retaining a quantity surveyor, but the seed was sewn and doubt followed doubt. From then on things just went round and round.

I thought several times about launching a suit for bad faith negotiations but was talked out of it by Gordie Campbell and Tom Johnston who continued to hope common sense would prevail and a new Health Unit would ultimately be built on my west-end parcel.

But in the end, which is apparently where we are now, the Board decided to build the new premises themselves, which I have 100% confidence will be a financial disaster.

My only hope is that they will build it in the right spot, on that parcel at Talbot and William, where it will at least still serve as an anchor for the redevelopment of the west end of the city, even though a very expensive one.

I will sell the land for what I paid for it when I assembled the parcel to meet the Unit’s expressed needs (approximately $1.4 million) but if they choose to reject that option and further compound the foolishness of taking on a construction project, I will have to reconsider my earlier reluctance to go to court because somebody has to speak up for the taxpayers.

I am ready at any time to answer any further questions you may have.

Best Regards,

SF
Shmuel Farhi, President

Farhi Holdings Corporation