Richard Gleeson
Northern News Services

NNSL (Jul 10/98) - There are more questions than answers surrounding the city's agreement to cover the cost of servicing a lot shortly after it was purchased by Yellowknife South MLA Seamus Henry.

The deal was brought to light by Ald. David Ramsay (left), who said he has yet to get a full explanation of how such a thing could happen without council's knowledge or approval.

"What I've found is a lot of money being spent and not a lot of answers," said Ramsay. "Seamus is a good businessman and cut a great deal. It's too bad it's at the expense of the city."

Ramsay said he has discussed his concerns with all members of council, except Mayor Dave Lovell and Blake Lyons, who were out of town this week.

"(Aldermen) were surprised and are asking questions," said Ramsay. "But again we're being kept in the dark."

The Range Lake Road property, future site of a Dairy Queen and doughnut shop, has a complicated history.

Last August its then- owner Eric Malmsten sold the property for $300,000 to a numbered company formed a month earlier by himself, Henry, Henry's wife and eldest son.

For three months leading up to that sale, Henry and Malmsten had been lobbying the city to extend its water and sewer services to the lot.

In a May 29 letter to city administrator Doug Lagore, Malmsten and Henry reasoned, "This development will not only add to the tax base of the city, but will also create up to 40 full and part-time new jobs."

Council of the day bought the argument and rewarded the effort by providing a grant of $50,000 to offset the cost of extending services to the lot.

In March of this year, Henry bought out Malmsten's interest in the company that owned the property, and soon after renewed efforts to get the city to pay the full cost of servicing the lot.

Less than two months later Henry had in hand a signed memorandum acknowledging the city would "pay for the installation of approximately 65 metres of dual water main and 65 metres of sewer main, the design, tender, construction and maintenance will be the responsibility of the city."

It is unclear, even to Mayor Dave Lovell, how the city's role in the project changed from contributing $50,000 to footing the full bill.

"We goofed," said Lovell. "Somewhere along the line the focus went from paying a certain amount to paying to build it."

Lovell pointed to the fact that the city got a new SAO and new director of public works at about the time Henry renewed its efforts. It was also dealing with organizing the Arctic Winter Games, noted the mayor.

Ramsay said the project has already been tendered. Eight companies responded with bids on the project. The lowest was $127,000, but the city has yet to award the contract.

"Developers I've talked to say that's not the way things are done," said Ramsay. "There are other ways to spur development. You don't just haphazardly give out grants."

Lovell said he could think of only one instance, on Old Airport Road, where the city paid to have services brought to lot lines. He could not name one instance where the city paid for services brought directly onto the lots.

City council is expected to deal with the issue Monday at its noon committee of the whole and at its evening council meeting.

Sources in city administration say the deal has yet to be finalized. Lovell said he expects a legal opinion on the city's obligations to be ready for Monday.

Ramsay said two lawyers he had spoken to said the memorandum was likely legally binding.

Calls to Seamus Henry's constituency office were not returned by press time.