WAITING FOR FARHI
Nearly 12 years after staking his claim in Windsor, little has come from the big plans of London, Ont., land baron Shmuel Farhi
The different faces of Shmuel Farhi, the prominent London, Ont., landowner who has spent in excess of $30 million acquiring 12 properties in Windsor over the last 12 years. Signs with his name in big block letters have sprouted across the city, but much of the prime real estate has remained undeveloped, leaving some people wondering, what happened?
I don’t come to Windsor to build a coffee shop. I come there to build and transform this great city. I have faith in this city.
City councillors were notified the night of March 30 about a special, closed meeting the next day at noon.
There was no report, only a motion to approve in principle a multimillion-dollar deal with land baron Shmuel Farhi.
The city would pay $75,000 to use his land next to the WFCU Centre for parking during the Memorial Cup. The city would also pay $3 million to buy 15 acres from Farhi, subject to an environmental assessment, for future parking and possibly an indoor sports centre that he supported. And council would approve in principle Farhi’s plan, including rezoning, for a residential and commercial development on the rest of his land, the site of a former auto-parts plant.
Some councillors wanted to consider this “disparate slew” of issues, as Coun. Chris Holt called them, separately. But it was all or nothing. The city needed parking. It wanted development. So the majority approved it. “There was a possibility we may not have had that land for the Memorial Cup if Farhi wanted to play hardball. The situation was we needed that Memorial Cup. Let’s make a deal and let’s iron out the details later,” said Coun. Paul Borrelli.
“I’m happy to work a deal with the city and the Spitfires ... for the betterment of the community,” Farhi said after.
But some councillors are concerned it wasn’t the best deal for the city.
It was the latest move by the prominent London, Ont., landowner who has spent more than $30 million acquiring 12 properties in Windsor over the last 12 years, according to land-registry records. Signs with his name in big block letters have sprouted across the city. Five of the deals included charges — usually a mortgage or secured line of credit or some other financial encumbrance on title — to Windsor Family Credit Union totalling $35 million.
It’s all prime or strategic property: on the riverfront, downtown where tens of millions of dollars of government money have been spent on revitalization, on Lauzon Road next to the WFCU Centre and across from the planned hospital and airport land and near the planned Lauzon Parkway extension to Highway 401, where municipal planners envision future development.
“The best real estate” in the city, said one realtor. It made Farhi important here. And he had plans — hotels, restaurants, retail stores, apartments that could top more than $100 million next to the WFCU Centre.
“First class,” he said of condominiums planned at Riverside and Bruce.
“I don’t come to Windsor to build a coffee shop,” he declared when he bought the riverfront lots at Janette. “I come there to build and transform this great city.
“I have faith in this city,” he declared.
He listed Windsor’s assets: the border, riverfront, a mayor and council who knew “how to welcome entrepreneurs.”
In the downtown, where most people saw vacant storefronts, he saw “once-in-a-lifetime opportunities.”
Windsor marvelled. And expectations grew.
Here was a major player and colourful character from outside Windsor who believed in the city and could help transform the core.
“A great news story,” said Marty Komsa, then-president and CEO of Windsor Family Credit Union.
“Quite visionary,” thenDowntown Windsor Business Improvement Association chairman Ron Bala proclaimed of Farhi.
“He (Farhi) was led in on a horse and carriage, given the keys to the city,” remembered current DWBIA chairman Larry Horwitz.
But nearly 12 years later, some people are wondering, what happened?
Windsor became part of Farhi’s empire in 2005, when he bought 100 acres off Lauzon Road, site of the Lear plant, for $8 million. It was also the year he met former mayor Eddie Francis at a wedding. A year later, as the city envisioned an urban village west of the core, Farhi acquired prime riverfront land west of the art gallery in a swap with the city. The deal made him a public figure here.
The city got 40 acres of Farhi’s land off Lauzon to build its longawaited new arena. Farhi got the riverfront land, valued at $2 million, a $1.5-million credit and a receipt for a $500,000 donation because he gifted the city five acres.
But there were other costs. The city must still remove concrete footings in the Riverside Drive property. It won’t remove them until Farhi develops the land, saving the cost of fill. In exchange, the city waived property taxes for three years, foregoing $60,000. But the cost of removing the footings, estimated at $180,000 10 years ago, is significantly greater now.
The deal prompted conspiracy theories. But a “post-construction review” by KPMG in 2011 noted that although the city didn’t get appraisals for either site because of an “accelerated timetable,” the values attributed to the properties “appeared reasonable.”
In 2010, with Windsor’s unemployment rate still over 12 per cent and the city’s population down, Farhi returned. He went on a buying spree downtown.
Farhi’s Windsor City Parking Corp. bought the parking garage on Pitt Street West in a power of sale for $4 million in April. His Richmond Block London Corp. bought two more prime riverfront properties at Janette Avenue for $1.4 million in July. Another Farhi company, BSN London Corp., bought a lot on Pitt Street West east of Janette, alongside six heritage buildings, for $27,000 in August.
It was all around where the city was proposing a canal and marina.
In January 2012, Farhi was back again. BSN bought a fourth prime riverfront lot, east of the art gallery, in a power of sale for $280,000. The same day, Farhi’s 333 Riverside Drive West Ltd. bought the City Centre Business Mall next to the lot in another power of sale for $520,000. There was a $1.6 million charge on title to Windsor Family Credit Union.
Farhi’s purchases occurred the same week a consultant’s report proposed a “cultural cluster” at the art gallery. The report recommended expanding the art gallery to Farhi’s lot on the east side, which the consultant thought was owned by the city, to house a new library and museum. Francis said the city wouldn’t buy or expropriate the lot.
Farhi’s land now surrounded the proposed cultural hub and planned aquatic centre.
“Now, we basically have control of this area,” he joked at the time.
In May 2013, as the city scheduled major events for the new aquatic centre, two Farhi numbered companies bought two riverfront hotels, the former Radisson and Hilton. He bought the former Radisson, assessed at $6 million, for $3 million and the former Hilton, assessed at almost $8 million, for $6.695 million. Vrancor Group, a hospitality company in Hamilton, was a partner in the deal. There were two $15 million charges, again to Windsor Family Credit Union.
The hotels gave Farhi a cluster of five adjacent properties downtown.
One of the numbered companies bought a third riverfront hotel, the former Travelodge, east of Ouellette Avenue, for $4.15 million in June 2015. There was a $3.5 million charge to Windsor Family Credit Union. It gave Farhi three of the four downtown riverfront hotels.
Then, three months after the location of the planned hospital on County Road 42 was announced in July 2015, Farhi Holdings bought 18 acres across from it for $570,000.
Farhi had taken over three problem properties formerly owned by troubled developer Bill Docherty — the parking garage, City Centre Business Mall and land east of the art gallery, a longtime eyesore after Docherty left it partially excavated. Farhi paid $1.5 million in back taxes on two of the properties. The city also received $385,136 to settle a dispute over the garage encroaching on city property on Chatham Street. Farhi repaired and painted the building, too.
The former Hilton is now a Best Western Plus, and the former Travelodge, being renovated, is to become a Holiday Inn Express.
The former Radisson became Club Riverside student residence in 2013, when university and college campuses were being established downtown, but closed after a year. Farhi said recently it will reopen as some type of private residence.
But the riverfront lands remain vacant, like missing teeth along the city’s biggest asset.
The lots at Janette have patches of cracked pavement, weeds and grass and concrete barriers around the perimeter. Farhi’s website advertises them as parking lots.
The land west of the art gallery, next to a lovely park with trees and sculptures, is a parking lot. People used to ask former Ward 2 councillor Ron Jones, what’s the plan?
Farhi’s lot east of the art gallery, across from Dieppe Gardens, had a sign advertising a roof company recently.
His promise to bring the business mall, largely vacant, “up to our standards” hasn’t happened. He told Biz X Magazine again in January he is investing “millions” for a “complete rebuild” and possible expansion. Meanwhile, he has received $37,725 in vacant building property tax rebates.
The land next to the WFCU remains a 60-acre eyesore in growing east Windsor with two trailers displaying giant Farhi signs.
City records show an application for a car sales lot in 2011. Farhi also bid for the new hospital on that site. Mostly, he has used it to operate an overflow parking lot for the WFCU Centre. Knowing the arena needed more parking, he listed his land for sale in 2015 for $18 million — triple what he got per acre when he sold the 40 acres to the city. Meanwhile, hockey conveners complained that they don’t book the WFCU for tournaments because there are no hotels nearby.
Farhi is all over the place. He buys, but it just sits there. To invest is great, but please build something. Your downtown can be built up if you build.
“When they were planning this, they gave the impression development would occur around here,” one convener complained.
After the deal with the city in March, Farhi announced a residential and commercial development worth tens of millions of dollars. But no hotel.
Farhi refused an interview with the Windsor Star.
“He did ask me to share with you ... that he continues to believe in the future of Windsor,” his communications director, Jim Chapman, wrote in an email.
But, he wrote, “we don’t see ourselves or our plans as ‘key’ to anything. We develop when it makes economic sense to do so ....
“Like most Ontario communities, it has taken Windsor a long time to climb out of the economic doldrums, slowing development across the board,” he wrote. “And the transition from a bad economy to a better one is still far from complete.”
Longtime local commercial realtor Jim Williams, who has worked with Farhi, agreed, saying, “No one person can just say, ‘It’s time now’ and make it happen.”
There has to be a market, driven by jobs and people moving here, Williams said. That hasn’t happened — until recently.
Now, expectations are rising again.
Mayor Drew Dilkens, who wants Farhi to build on Riverside Drive and next to the WFCU Centre, has been working with him for more than a year.
“He owns a lot of property. I’m trying to see if something can be done to benefit Farhi and Windsor,” Dilkens, who refused to speak to the Star, told the London Free Press in January.
“Farhi is all over the place,” said Borrelli. “He buys, but it just sits there. To invest is great, but please build something. Your downtown can be built up if you build.”
Coun. Irek Kusmierczyk, who hears the almost daily announcements of new development in Detroit, looks at the gaps on Windsor’s riverfront and wonders, “What’s the holdup?”
“You’ve got this gorgeous riverfront that other cities would kill to have and yet we’ve got parking lots and vacant lots,” he said. It hurts the city, he said. “Vacant lots and parking lots are not attractions.”
Governments have spent tens of millions building the aquatic centre, museum and new downtown university and college campuses. Unemployment has plummeted, population has rebounded, real estate is on a tear.
Asked Horwitz, “If you can’t do it now when the city is hot, then when can you do it?”
If Farhi doesn’t build, said Kusmierczyk, “let someone else take the risk.” But Farhi won’t sell, he told the Free Press.
Farhi told the Star this year he has spent $70 million downtown.
“Nobody has invested as much in downtown Windsor as Shmuel Farhi,” he said.
But, “we’ve not seen much return.”
He praised the new university and college campuses in the core, but “you need a lot more residents to bring downtown Windsor alive,” he said.
“He drives a hard bargain,” Dilkens told the Free Press.
Farhi has been ahead of the city every step, said Coun. Rino Bortolin, who represents downtown. Everyone knew when the arena was built that it didn’t have enough parking. So Farhi operated an overflow parking lot on his remaining land. Then he closed it, citing the cost of liability insurance.
Now, the city could pay double the price per acre that it paid for the arena land 10 years ago.
“We’re ... caught between a rock and a hard place because we need the parking,” said Borrelli. “Farhi is asking a fair chunk,” he said, but “it’s only too much if you don’t need it. The market is determined by Farhi.”
Dilkens has also said he hopes that if the city builds an indoor sports centre on part of the land it buys from Farhi, private investment will follow. He cited Farhi’s proposed development.
The sports centre will help his development, Farhi has told the Star.
“The more development we have, the better it is,” he said.
But the sports centre is not in the city’s five-year capital plan and isn’t a priority in the 20-year vision. There are four other indoor sports centres in or near the city.
If the city doesn’t buy his land or build the indoor sports centre, will Farhi still develop?
When he announced his first development there nine years ago, he said the new arena would help it. But he didn’t build.
Three months ago, he told the Free Press there is no market for housing on the land. Now, he said there is. If there is, why does the city need to build anything to spur his development, asked Coun. Bill Marra, chairman of council’s planning and economic development committee, which recommended three subdivisions recently.
“It’s the busiest we’ve been in years,” he said of the committee, “not because of anything the city did but because the economy improved. If there’s a market for Mr. Farhi or anyone else to make money in, they’ll proceed.”
Said Bortolin, “it was probably the right time to pull the trigger on his development, but he used the development to press us into buying the 15 acres and renting land for (the Memorial Cup). He made out pretty well.”
Dilkens has also suggested that the city build a controversial underpass under Riverside Drive near Farhi’s property at Bruce Avenue to prompt him to develop.
“If we do this properly, it will be something that creates incentives for the property owner to make a huge investment in residential development,” he said.
Coun. Hilary Payne said it’s too expensive, people won’t use it and there are more pressing priorities. But if Farhi promises to build, “certainly it would make me more favourably inclined,” he said.
“The city focuses too much on Farhi’s lots,” Horwitz said bluntly.
Instead, it should focus on things that all urban areas need, like more attractive economic incentives, bike lanes and markets.
Born in Israel, Farhi came to Canada in 1986 after meeting a realtor from London. He started Farhi Holdings in 1988. Fifteen years ago, when he was buying dozens of strategic properties in London’s struggling downtown, he was heralded for his faith in the core and considered key to its future.
Now, he’s the largest landowner in downtown London, with more than 100 properties, including prominent and heritage buildings, plus large tracts along Highway 401 and holdings in two dozen other Southwestern Ontario communities.
But while some applaud his commitment to the city, where he is also a philanthropist and London Knights fan, others say he has hurt downtown.
Farhi said he has spent $75 million downtown. He has renovated heritage buildings, maintained his buildings and attracted technology companies. But while the core is on a roll, its population rising along with new residential towers and proposals for major residential-commercial projects, “none are on Farhi’s lots,” said London city Coun. Paul Hubert.
Former city councillor Gord Hume cites the old library, a heritage building on the edge of the core that the city sold to Farhi more than a decade ago.
“Part of the reason we sold it to him,” said Hume, then-library board chairman, “was because he produced a coloured sketch of a proposed multi-storey condo that was very attractive. The city was very focused on creating more residential opportunities downtown.” It never happened. “We have had discussions about a number of developments that haven’t come to fruition,” said a London city hall source.
The public has complained that developers are demolishing heritage buildings for proposed highrises when there are parking lots available, the source said. While Farhi isn’t the only parking lot owner, he owns a significant number.
One example is a parking lot that takes up an entire block near the courthouse, an area of the city that residential developers are interested in, according to the source. Farhi feels he needs the parking for his nearby buildings.
A real estate source described Farhi as “an acquirer of huge amounts of properties” who tends to hold them and not develop them.
“He owns a tremendous amount of unproductive land,” the source said. It can be an “impediment” to development, he said.
“Nobody knows his goal,” said the source.
“I don’t,” said Hume, “and I’ve thought about it a lot. There are some real opportunities he has in London if he chose to go that direction and it would be great for our city. But so far he has not made those investments.”
Farhi, a chess player, has said of his Windsor holdings “You have to have a long-term view. We acquire, as we go along, strategic properties that we think are going to benefit the future of Windsor and the future of our business. You have to ... see where you want to be, 20 years ahead.”
With so much money tied up in property, people also wonder how Farhi finances more acquisitions. In an interview with the Free Press in 2007, he dismissed rumours that he invests money for Israeli investors.
London’s downtown master plan calls for discontinuing temporary commercial parking lots. The city is also considering phasing out the 30 per cent property tax rebate for vacant buildings. The measures are aimed at speculators.
A vacant building bought on speculation “makes it difficult for us to revitalize the core,” Coun. Stephen Turner said.
Some say Farhi, seen as shrewd and aggressive, throws his weight around because he owns so much.
“The more I own, the more I control. The better for me,” he told the Free Press after a buying spree in 2007. Hume expressed concern then that one person owns so much of the city.
Certainly Farhi is seen by some as arrogant.
“To know me is to love me,” he once boasted to the Star.
“I would caution you not to believe everything you hear,” his communications director, Chapman, wrote. “The numbers and facts speak for themselves. Everything else is just hearsay or slander.”
But there have been some confrontations in London. Farhi wanted to demolish the Capitol Theatre in the heart of downtown for parking in 2006. The city wanted the facade and part of the commercial space saved to preserve the street’s character.
“It would have had a devastating effect on our streetscape,” said Hume.
According to the Free Press, Farhi told the city he would save the facade if the city leased space in the building because he needed a tenant to be able to afford the renovation. He told a board of control meeting that if the city didn’t solve parking issues in the core he could let his buildings rot or demolish them. He had $100 million to invest, he said. “Do you want it in London?” he asked.
The city leased space and Farhi saved the facade and built it out.
“He played hardball,” said Hume.
Farhi also wanted the city to lease space in his half-empty Bell building in 2010. If it didn’t, it would be cheaper to close the building, Farhi said. There was fear that if the building closed, Bell would move its then-700 jobs out of London.
“The city shouldn’t be dictated to by a developer on renting space, even if jobs are at stake,” then-deputy mayor Tom Gosnell was quoted in the Free Press.
Are there parallels between Windsor and London?
“It’s identical,” the real estate source said.
Back in Windsor, Bortolin said, “I would hope that an investor would come in and do something that’s good for Windsor and good for his bottom line. Dan Gilbert is going to make billions of dollars off his moves in Detroit, but he’s done them in a way that he thinks he’s helping the city as well.”