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City of Penticton takes responsibility for costs incurred by wine centre relocation

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November 10, 2017 - 2:15 PM

PENTICTON - A hastily made agreement between the City of Penticton and the B.C. Wine Information Society has resulted in some consternation on city council.

Wine society board chair Rod King and B.C. Wine Information Centre manager Linda Kowalchuk approached council at a meeting Tuesday, Nov. 7 seeking an outstanding balance of $59,847.44 for items agreed to in a letter of understanding signed between the city and the society in December 2015.

The Wine Centre, originally located in the building now part of Gateway’s new Cascades Casino, was approached by the city in September 2015 to relocate in order to allow construction of the new casino.

The wine centre had a lease on the building good until 2025, but agreed to relocate, signing a letter of understanding with the city over terms and conditions of their new space as well as some allocation for reimbursement. 

The wine centre returned to the location in Gateway Casino’s new building after in opened in April.

Unresolved costs include the installation of a stained glass window at $7,402.50, fixtures with an outstanding balance of $15,419.31 and the construction of two washrooms for the centre at a cost of $37,025.63.

Part of the agreement with the city said the items provided in the society’s leased space were to be included in the new space. The two washrooms were an additional cost required by city building inspectors after the wine centre relocated to the new casino building.

In their presentation to council, King and Kowalchuk noted the wine centre was a thriving business when the city came to them requesting the relocation.

City facilities manager Bregje Kozak told council the wine centre submitted two invoices to the city, one in February for $49,216.09, which was paid in full, and a second one issued in May for $100,631.35 for a total request of $149,847.44.

Kozak said the request was approximately $60,000 more than the total reimbursement of $90,000 agreed to in the letter of understanding.

She said it was unfortunate the agreement, which included handwritten notations and additions, did not have more clarity around it.

“Our position is if they had additional costs, they should have come back to the city for approval prior to the money being spent,” she said, adding if council agreed to reimburse the wine centre for the full amount, a funding source would have to be identified.

“This is a situation that didn’t allow for time, time that hopefully would have alleviated these misunderstandings,” Coun. Judy Sentes said.

She said the city finds itself in a position of having to accommodate.

“I actually applaud the wine centre. They had an agreement that would have provided them comfort for a long time, and they responded to our request to be a partner and to work with us,” she said.

Sentes said the agreement was open to interpretation in a number of ways, but didn’t think anyone should be “hard shipped” by it because it was a benefit to everyone.

She said she would support what the wine centre was asking.

“The vagueness of this agreement - I’m going to suggest this isn’t going to go into the contract hall of fame. This is all over the map... this is as vague as it could be. The wine centre went out of their way to help by letting us break their lease,” Coun. Max Picton said.

Chief administrative officer Peter Weeber said the matter had been brought to council because of the weakness of the agreement.

“We don’t give out $60,000 on a handshake and a wink. I think it’s a good message for all community groups, no matter how cooperative you are, if you sign an agreement you should be protecting your own interests,” Weeber said, adding it went to council because staff did not have the authority to make a decision.

“I don’t disagree with anything that was said here,” said Mayor Andrew Jakubeit, adding it was “maybe a lesson learned."

Council agreed to an alternative recommendation to reimburse the wine centre in full for both invoices, at a total of $149,847.44, funding the balance through general surplus. The cost of the stained glass installation will be borne by Gateway Casinos.


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