Unfinished mall becomes city’s albatross
Part Two of a seven-part series
It costs a lot of money to keep a white elephant.
The city of Montreal discovered that fact when it became the owner of a partially built shopping centre called Place Marc-Aurèle Fortin in 1993.
The empty, unfinished mall in Rivière-des-Prairies rose three storeys above a parcel of land that the city had sold to developers Lucille and Lionel Duval for $3 million in 1986, while Jean Drapeau was mayor.
The city executive committee, chaired by Yvon Lamarre, had declared the Duvals the winner of a bidding process that had clearly been skewed in their favour.
They had been sold on the Duvals’ proposal to build a “mini downtown” for R.D.P. even though an initial selection committee had deemed their hulking shopping centre unrealistic and unfeasible.
Yet it was the next administration at city hall, the reform-minded Montreal Citizens’ Movement, that gave the necessary approvals for the mall’s construction.
Despite being the antithesis of Drapeau and his Civic Party on most issues, the MCM and its leader, Jean Doré, allowed R.D.P. to continue to be developed as its predecessors had imagined.
The outpost was known among municipal politicians as the “wild east,” an area where “if something smelled fishy, it was definitely there,” as one ex-MCMer would describe R.D.P. decades later.
And in this frontier, the story of how the city came to repurchase the Marc-Aurèle Fortin site would show once again that Montreal — under any administration — excelled at losing money on real estate.
The project called for 175 stores, two major supermarkets, office space, municipal library, Maison de la culture, six-screen cinema, bowling alley and 2,000 underground parking spaces. So why did Place Marc-Aurèle Fortin — a ‘Cadillac’ of a shopping centre, according to its developer — fail? And why did the city buy it back, an unfinished hulk in the ‘wild east’ of R.D.P.? Part Two of a seven-part investigation by Linda Gyulai
During the years that it played the lonely role of opposition to the Civic Party juggernaut before 1986, the MCM criticized the Drapeau administration’s housing program, Opération 10,000 logements, almost as often as it criticized His Honour’s autocratic leadership.
The voice of the MCM on council during that time was Michael Fainstat. Despite being his party ’s sole elected councillor for some of those years, he provided a formidable opposition.
From the start of Opération 10,000 logements, Fainstat objected to the Drapeau administration’s strategy of buying or expropriating land in R.D.P. at high prices and selling low to developers to construct houses.
The strategy was “suicidal,” Fainstat told council in 1980 when one of the expropriation bylaws came for a vote. The city would empty the city core and contribute to on-island sprawl by subsidizing construction in an area that was really more a suburb than a Montreal neighbourhood, he warned.
Drapeau’s councillors booed and shouted at Fainstat, but he persisted, arguing that Montreal should prioritize rehabilitating and “repopulating” the heart of the city.
However, Lamarre countered that support for housing construction was a matter of justice for the people of R.D.P. because the area needed enhancement.
Fainstat voted against the bylaw. He was the only member of council to do so.
By Fainstat’s reckoning, Opération 10,000 logements subsidized homes for wealthy people with cheap city land because the prices of the houses that were built were out of reach for most Montrealers.
Fainstat also dared to challenge the Civic Party on the financial contributions it received from real estate developers who had contractual ties to the city with the land they bought under Opération 10,000 logements and with the zoning changes they obtained for their projects.
The developers, whom Fainstat would name at different council meetings amid threats from Drapeau that he could be sued, had donated and even solicited campaign contributions for the Civic Party.
“I find it scandalous,” Fainstat said in council in September 1982, “that Mayor Drapeau, already blamed in the investigation into the Olympic Games, accepts that companies tied to the city through contracts give contributions to the party he leads. It may be legal, but it’s immoral.”
Fainstat named such companies as Ma Baie Construction and Raoul Blouin Ltée, which were negotiating with the city to buy land under the housing program, now renamed Opération 20,000 logements to reflect a higher target of housing units.
Fainstat also named Remo Construction, which had received city approval to build houses on the edge of the Saraguay forest in the northwestern part of the island.
The Montreal Urban Community intended to preserve the Saraguay forest as a regional park, but the Drapeau administration during this period of the early 1980s allowed some house builders to nibble at it. That’s how such streets as Antoine-Berthelet St., later known to the public as Mafia Row because of the houses constructed on it in the early 1980s for members of the Rizzuto clan, came to be built.
Drapeau repeatedly answered that all contributions to his party were made legally. Fainstat, he would say, was just seeking publicity before election time.
At another council meeting in February 1983, Fainstat brought up the party’s contributions from the Argento brothers, developers who were seeking provincial authorization to build four highrise towers with 700 condominium units on Île d’Argent, the unofficial name of the island they owned just off the shore of R.D.P. district.
The Drapeau administration had given its okay for the development in 1981, the same year that an Argento brother solicited $4,500 in contributions for the Civic Party.
“It’s unbelievable, all the people that are swarming around us,” Fainstat remarked to a reporter shortly after the MCM won the 1986 election and he was appointed chairman of the executive committee.
“All these people who were really secret admirers of the MCM all these years, who, although they supported the Civic Party financially, now say they really, really didn’t like the Civic Party,” Fainstat said sarcastically.
“But it’s OK as far as I’m concerned. If they ’re people who want to be part of this feeling of openness
and change, fine. Everybody starts with a clean book as far as I’m concerned. Everybody’s welcome.”
Power does funny things to a political party.
Sometimes, what a party calls rotten and in need of changing while it’s in the opposition can magically become the right course and the status quo after it gets into power.
And when the party has a grassroots that continues to espouse the program that got it elected while caucus members who are managing the complexities of office start to deviate from it, a schism as wide as a river will appear.
On the one hand, the Doré administration invested massively in building social housing and cooperatives.
On the other hand, there was Overdale, an entire downtown neighbourhood where the administration allowed the expulsion of low-income tenants so developers could demolish the Victorian houses and build condominiums. It became a symbol of the divisions that led to the splintering of the party.
And then there was R.D.P., remote enough to barely garner notice.
Here, the Doré administration continued to sell parts of the MarcAurèle Fortin site for the same type of housing that Fainstat had once criticized as being out of reach for poor families, and often to the same developers that had worked with the Drapeau administration.
The continuity was even written into the sales deed when the Doré administration agreed in the autumn of 1987 to sell 112 lots of city land inside the Marc-Aurèle Fortin rectangle, north of Maurice-Duplessis Blvd., to developer Groupe St-Luc.
The deed for the $2.1-million sale stipulated that Groupe StLuc’s housing project on the site would have to be modelled on projects built nearby for Opération 20,000 logements.
Also in 1987, the Doré administration granted Groupe St-Luc an extension to finish building a 306unit housing project begun under Opération 20,000 logements next to the Marc-Aurèle Fortin rectangle.
The Drapeau administration had sold the land to Groupe St-Luc for $1.05 million in 1984, a year after the city had purchased it for $2.44 million.
The founder of Groupe St-Luc was Robert Varin, whose arrest on corruption charges in February 1987 over an alleged $250,000 bribe offer to the mayor of Anjou didn’t impede his business dealings with the Doré administration, even before he was fully exonerated due to a lack of evidence.
Varin was arrested with three other individuals, including a person whom the newspapers described as a “pseudo-financier” who had testified at the CECO public inquiry into organized crime. Varin sued the mayor of Anjou for making false allegations after he was exonerated.
The Doré administration carried out the sales of the Marc-Aurèle Fortin site under Opération Habiter Montréal, the housing program it launched to replace Opération 20,000 logements.
Doré and his team also bought up the remaining land in the rectangle that the Drapeau administration had outlined in its 1981 expropriation order.
While the Drapeau administration had used a budget of $8 million to buy parcels in the northern part of the Marc-Aurèle Fortin site in 1983 and 1984, the Doré administration spent another $7.68 million between 1988 and 1992 to acquire the last 200 parcels in the part south of Maurice-Duplessis.
Despite Fainstat’s previous concerns about development in R.D.P., the Duvals’ shopping centre grew larger with the blessing of the Doré administration.
The administration rushed through the approval of the site plan for phase one of Place MarcAurèle Fortin in 1987, two weeks before the city ’s new consultation policy went into effect and would have required public hearings on the plan.
The administration also sold more city land to the Duvals that year so they could expand their project.
The Duvals had now conducted a market study, which their architects informed the city had concluded the shopping centre needed to be bigger.
The project now called for 175 stores, two major supermarkets, including a Steinberg, 92,600 square feet of office space, a municipal library, a Maison de la culture, a six-screen cinema, a bowling alley and 2,000 underground parking spaces, plus hundreds more above-ground.
As well, five high-rises, most of them with interior passageways to the mall, would offer 859 apartments, mostly for seniors.
It was a huge project for the couple, who were working with their son. Their experience before this project was in doors and windows.
The Duvals drafted the sales contract on their company letterhead, giving the city a deadline of 3 p.m. eight business days later to sign or their offer for the additional city land would be withdrawn.
But this wasn’t how the city carried out transactions, so several months later a document generated by city bureaucrats wended its way to council for approval.
The civil servant responsible for the file in the city’s buildings and purchasing department was Renaud Paradis, the former aide to Yvon Lamarre, who was now a high-level civil servant.
The terms of the sale were as the Duvals had laid out. And the city wound up curving a street into an ‘s’ around the additional land that was sold to them. The civil service report didn’t mention how much that cost the city.
In June 1990, the Doré administration came to council with a resolution to close part of MarcAurèle Fortin Blvd. and cede the land for free to the Duvals to prepare phase two of their project. In exchange, the developer would create a public passageway and pay for the relocation of underground infrastructure.
However, dissident councillors were against giving the land for free. They also accused the Doré administration of deliberately driving up real estate prices in R.D.P. and feeding speculation by assessing the value of the parcel at $800,000, or $14.88 per square foot, to calculate the Welcome Tax.
“The project is advancing very well,” John Gardiner, the executive committee member responsible for urban planning, told the council meeting.
The shopping centre was, in fact, a year behind schedule.
Gardiner’s reassurance was echoed by fellow MCM councillor Giovanni De Michele, who represented R.D.P.
The shopping centre, De Michele told council, “will open in September.”
But the mall would never open. In reality, numerous contractors had registered liens on the property because the Duvals were behind on paying the bills.
Aimé Charron, a former city councillor, had built a gas station in the mid-1980s on the southeast corner of Maurice-Duplessis and Fernand- Gauthier Ave., across the street from where the shopping centre was going up. Years later, he would recall Lucille Duval dropping by his office at the station one day to ask him for a loan to cover the payroll.
Charron had served one term with the Civic Party in Plateau Mont-Royal from 1978 to 1982, and was now an entrepreneur.
“That might help you this week, but how will you pay wages next week?” he recalls telling Duval before turning her down.
Duval remembers things differently, saying she only asked Charron to suggest a bank for a loan.
The Duvals declared bankruptcy in 1991 before their $80-million concrete beast was finished.
By Charron’s account, he lost a $30,000 investment to open a T.J. Cinnamons franchise next to the cinemas when the mall went under.
The Toronto-Dominion Bank, the Duvals’ lender on the Place Marc-Aurèle Fortin project, had foreclosed before construction was finished.
The Duvals, whose personal loss was in the millions, lost their home in Ahuntsic for unpaid municipal taxes.
Decades later, Lucille Duval still says she’s mulling a lawsuit against
the bank, which cut off funds “for no reason.” By her contention, the bank president had it in for her and her husband, who died in 2003 following an illness that she blamed on the affair.
In developer circles, businesspeople would gossip about just how many people lost their jobs at the bank in the wake of the fiasco.
Paradis suggests the Duvals waited too long to get the project built and get store leases signed.
The TD bank, meanwhile, was apparently uninterested in owning a 1.15-million-square-foot unfinished shopping centre.
The bank allowed the city to seize Place Marc-Aurèle Fortin rather than pay the $3.5-million outstanding municipal tax bill on it.
Quebec Premier Robert Bourassa and his cabinet made a controversial decision early in 1992 to move Hôtel-Dieu Hospital from downtown to R.D.P.
Doré, who had won a second term in the 1990 election, argued against moving the Hôtel-Dieu because it would leave a crater downtown.
The mayor was also opposed to the site that the government was eyeing for the hospital.
The province wanted the vacant parcel in the southern part of the Marc-Aurèle Fortin rectangle, which the city had just finished acquiring for $7.68 million for eventual housing development. The site was across the street from the vacant shopping centre, tucked behind a row of townhouses along Maurice-Duplessis that had been built under Opération 10,000 logements by the Argento brothers’ company.
However, the hospital move excited one MCM councillor from R.D.P.
The arrival of a hospital will surely revive construction of Place Marc-Aurèle Fortin, De Michele predicted in an interview with La Presse.
De Michele also anticipated the hospital move might accelerate the province’s plans to extend Highway 25 with a new bridge connecting R.D.P. and Laval.
Those projects will be a boon for construction companies in the eastern part of the island and for real estate speculators in eastern Laval, he told the newspaper.
De Michele also said he expected a hospital would benefit the Argento brothers’ project for highrise towers on Île d’Argent given the proximity.
The Quebec government had recently removed the island from the provincial floodplain map, which cleared the way for development on it. That, in turn, raised its value and caused the Montreal Urban Community to abandon its plan to purchase and preserve the island as a park.
The vice-president of Construction Gasperino Di Iorio Inc., which had built Place Marc-Aurèle Fortin and was the principal creditor in the bankruptcy, also predicted the hospital arrival might encourage someone to buy and relaunch the shopping centre.
Though unfinished, Place MarcAurèle Fortin had a municipal valuation of $39.7 million.
The director of the Hôtel-Dieu suggested the mall could accommodate pharmaceutical companies and doctors’ offices.
The La Presse article also said two anonymous sources indicated that businessman Giuseppe Borsellino, president of Groupe Petra Ltée, was about to make an offer on Place Marc-Aurèle Fortin, possibly for a seniors’ residence. Borsellino didn’t confirm anything.
For opponents, however, land speculation was one more argument against the hospital relocation.
“Land that’s worth $3 million will suddenly be worth $30 million,” Michel Bourdon, Parti Québécois MNA for Pointe-aux-Trembles, said in the La Presse article. “It’s clear that major entrepreneurs will make a lot of money just with the construction of the hospital and the bridge.”
But if Place Marc-Aurèle Fortin was generating so much interest, it wasn’t apparent when the city put the shopping centre it had seized from the bank on public auction in November 1993.
Following tradition, the city opened the bidding in the amount of the unpaid taxes.
But no one else put in an offer. That left the city to acquire Place Marc-Aurèle Fortin for its bid of $3.5 million.
And even an unfinished shopping centre needs to be maintained.
Immediately, the city issued a $360,000 cheque to Richter et Associés, the firm that had managed the property for the bank, to cover heating, electricity, security, insurance and other expenses on the vacant mall to the end of January 1994.
The following month, the Doré administration awarded a $1-million one-year contract for the mall’s upkeep to Richter et Associés.
They were the first of the city’s expenditures to maintain its white elephant.
Could anyone expect to get a better deal than $3.5 million on a nearly finished shopping centre?
A new administration at city hall would make sure the answer was yes.