Challenge to arena deal could threaten return of NHL to Quebec City

QUEBEC CITY — The Globe and Mail

The Quebec government is being told that it will have to do whatever it takes if it serious about getting a National Hockey League franchise in Quebec City - even if it means sidestepping some of its own laws.

Like Winnipeg, which is celebrating this week the return of the NHL, Quebec City lost its team in 1995. But unlike Winnipeg, a new arena will be built in Quebec City exclusively with public funds at a cost of $400-million.

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But a deal involving that arena has prompted a legal challenge that could jeopardize an agreement to bring an NHL team back to the city.

Two citizens are taking on Quebec City for a deal approved by the city in March would allow media giant Quebecor Media Inc. to manage the sports facility when it opens in 2015. Critics argue the deal appears to violate the provincial Charter of Cities and Towns, which lays out strict rules regarding the awarding of municipal contracts.

The challenge argues that the city bypassed the public-tendering process in the deal and that taxpayers were left in the dark with respect to other potential bids.

In fact, the city did not call for public tenders but conducted what is called a competitive bidding process, where companies were invited to express their interest in managing the new sports facility. According to the mayor, it was because Quebecor Media was the only bidder with the desire and financial ability to attract an NHL franchise that the company was chosen to negotiate a mutual agreement to manage the facility.

To get around the rules, a private member's bill was tabled in the National Assembly that would sanction the deal between Quebec City and Quebecor, saying its provisions "are deemed not to contravene" provincial law.

"We can't sign a final deal because we don't have the certainty that it complies with the Charter of Cities and Towns," Quebec City Mayor Régis Labeaume told a National Assembly committee Thursday during hearings to debate the bill. "On Sept. 7, there will no longer be a deal [with Quebecor Media] And when you no longer have a deal, everything can fall apart."

Mr. Labeaume said that Quebecor was the only potential partner that could bring an NHL franchise back to the city. And he said the deal would be highly profitable, generating $100-million over 20 years in rent and naming rights. Moreover, the city would also get a cut of the profits from various other events that would be staged at the arena.

The president and CEO of Quebecor Media Inc., Pierre Karl Péladeau, told the committee that if nothing was done to protect the deal from being overturned by the courts, it would create a degree of uncertainty with the NHL and derail any chances of attracting a franchise to the city.

"The process leading up to the deal was done according to the rules and negotiated in all transparency. It is the best offer. The competitive bidding process and the spirit of the law was respected. Are we going to deprive ourselves of an arena and a hockey team because of a formality?" Mr. Péladeau said.

Quebec law prohibits a city from building a publicly funded facility for the sole beneficiary of a private company. It also requires a city to hold public tenders to receive the best possible bid for the management of such facilities.

Denis de Bellevale is one of the two city residents who filed a suit against the city before Quebec Superior Court this week in order to block the deal. He said the deal amounted to cash pay-out to Quebecor of $40-million a year for the next 20 years.

"The futility and the absurdity of this financial package is enough to scandalize even the most hardened capitalist," Mr. de Bellevale told the committee.

Mr. de Bellevale is a former Parti Québécois minister who was also the city's director-general for several years. He is supported in his cause by city resident Alain Miville de Chêne, who said the deal was equivalent to renting a $400,000 home for only $375 a month.

"At that rate I would take ten of them and make a huge amount of profits," Mr. de Chêne said.

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