He didn’t need any more money. He needed immortality. And that’s what the Olympic Village will give him, one way or another
Zappia the Magnificent
With one quick, decisive swing, Joseph Zappia sweeps them all away. The complainers, whiners, doubters. The people with small ideas and petty plans. The journalists looking for scandals, chipping away at his reputation. Especially the ones dumping on his baby, the Olympic Village. Why can’t everyone be more like Mayor Jean Drapeau, the man he emulates, schemes with, makes deals with? “There’s a man with grandiose dreams like me,” he says. “We get along.” Dark and compact, Zappia builds his dreams of brick and mortar. At 20, the son of Calabrian immigrants, he wanted fame and floodlights as an opera singer. Instead he found fortune in engineering and construction, making his first million by his early thirties, taking the shortcuts of someone in a hurry, bobbing in and around the edges of legality and calling it the common sense of the man at the bottom. At 50, Joseph Zappia figures he’s got it made. Here he is, president of Zarolega, the four-man consortium building the Olympic Village. The sort of man who flies to Tehran three weekends out of six to get a $200-million road building contract. The sort of man who, against all advice, runs for the Progressive Conservative leadership. Thin-lipped, jut-jawed Joseph Zappia isn’t going to be put offby nigglers.
At the window of his seventeenth-floor downtown Montreal office, the president of Les Terrasses Zarolega Inc. looks out over his dominion. A tiny-veined nun’s hand picks out buildings he or his three partners own separately or in partnership; about $75 million worth of apartments, condominiums, offices and vacant lots. But inside the office, all around him are the signs of his own, personal, latest ventures. He somehow managed to get the largest number of licenses to sell Olympic paraphernalia. An Olympic clock ticks on the * wall. An Olympic lamp studded with athS letes, impaled in bronze, forever striving,
0 that will sell, yes, will sell, despite all this g negativism about the games. Olympic > shirts, key chains, stamps. Olympic posters 5 flower on the wall. But the hand is pointing
1 to the biggest project he or any of his partg ners—all new wheeler-dealers in the de£ velopers’ playground that is downtown
Montreal—have ever undertaken. There it is, peaking white and shiny over the perpetual five o’clock haze that settles over the low row houses of the east end—the pyramids of the Olympic Village. Something to be remembered by. Something to last. “I am the man who thought of it first. I am the man who negotiated it. I am the most important man behind it. Do you understand that?”
Roger Rousseau gently brushes back his grey-streaked hair. He brushes back, too, all those persistent questions. He talks like the ambassador he once was (to Cameroon), in tones of velvet cushioned in vagueness. When he says, “This is a very delicate situation. The various centres of decision-making cannot be controlled by influence,” he means Mayor Drapeau and builder Zappia and friends simply have not played the game fairly. Rousseau, as head of Montreal’s Olympic Organizing Committee (better known by its French abbreviation, COJO), is usually decorously cool, but he still ruffles when he remembers the early morning hours of October 21, 1974. Even the lushness of Vienna’s International Hotel couldn’t ease the “vulnerable” feeling of being up against the wall. The International Organizing Committee was demanding a signed contract for the building of the village—or else no Olympic Games. The builders, Zarolega, were fighting for the best terms possible— and winning. How had he got into such a position? Drapeau was supposed to build the village. He had found Zarolega. He had accepted their pyramid design. And then, when financing got hard to find, he had dumped the whole thing in COJO’S lap. So, as Rousseau explains it now, there was nothing to do but sign a disastrous contract. To let COJO take on an open-ended mortgage (“a man like me who doesn’t even like open doors”), assume the financial burden while all but giving away the eventual ownership of the village to the builders. A contract so favorable to the builders that only three months later Premier Robert Bourassa insisted that it be renegotiated.
Since then, Rousseau has watched the
$33-million price tag escalate to around $80 million, and it’s still climbing. The original $ 12.6-million COJO mortgage is now more than $60 million, much of it probably unrecoverable. Even worse, last November 150 members of the RCMP and the Quebec Provincial Police raided the offices of village builders, subcontractors and some professionals, armed with complaints of kickbacks, fraud, a 10% skimming off the top of bids by “certain parties” which police hinted ominously might reach the millions. Even the home of the late Simon St. Pierre, vice-president of COJO, was searched. As if that wasn’t enough, there were complaints about the $1.38 million in bonuses paid to two contractors who finished their work in half the time they predicted it would take. (“I nearly went crazy but what can you do?” shrugs Rousseau.) There were charges that the 19-storey pyramids would be a cramped home for the 11,000-plus athletes; that the design was really a steal from an apartment complex on the French Riviera; that the outdoor corridors were unsuitable for Canadian weather; that after the games the 980 units would never sell as condominiums, glutting the market; that the east end was the wrong place for luxury apartments anyway, with factories to the east, low-income houses, a dreary string of motels to the south, and the Olympic stadium to the southwest. The white shimmer was threatening to become a white elephant, even before the completion date of May 15. “If I could have foreseen these problems I would have turned so fast and gone the other way,” moans Rousseau. Finding the facts somewhat distasteful, he slips into metaphor. “I see this as a ship pointing into the horizon, a ship that has had all the shots thrown at it that it can take.” The ship is a luxury liner few people asked for but for which many will pay.
When Drapeau went looking for builders for the Olympic Village in 1973—a village to match the grandeur of the stadium just one quarter of a mile to the southwest—Zappia was ready to take on something big. He had been in construction since the age of 23, staying unmarried so that he could move around the country from construction site to construction site, learning the sub-trades, learning as he went that “the person at the bottom might take a shortcut which might not be illegal ... the line of legality is not easily drawn ... I look at the law as being common sense.” Zappia was getting a name as a builder. He put up a large condominium in Longueuil and a doctors’ clinic in St. Lambert. His biggest project, the 21-storey Peel Plaza apartments in the city core, was built with three men who were later to form Zarolega with him—Rene' Lepine, Andrew Gaty and Gerald Robinson.
Zappia and Drapeau knew each other from a previous encounter. In the 1970 municipal election Zappia formed the Montreal Party which fielded 15 candidates. Oddly enough, his party seemed more intent on attacking the only other opposition to Drapeau, a group called FRAP (Front d’Action Politique), linking it to the FLQ which had just burst on the scene. (Zappia still calls them “that FLQ bunch” and Drapeau “a good mayor.”) In the political climateof the time, Drapeau’sCivic Party easily swept all the seats, but the impression lingers on that Zappia was a plant, out to split the vote, a charge that emerged again when he ran for the Progressive Conservative leadership.
When the specifications for the village structure to be built on the municipal golf course were made public, Zappia was one of the first—and the few—to respond. His $54-million project was rejected as being too “extravagant,” but Drapeau told him to keep working on it. Drapeau all along wanted a permanent structure rather than a temporary one—a building put up by private entrepreneurs, which would sell as condominiums after the games. In their approach to the village Zappia and Drapeau were not far apart.
In May, 1974,over a business lunch, Zappia brought up the idea with his three partners. There were plenty of drawbacks. The project would mean putting up 980 units all in one spot, throwing them on the market all at one time, at a period when no builder would dream of building more than 250 units at a time. A project of that size, if built at all, would have been put up in stages, sold in stages. As well, it would mean dealing with the city, and the early specifications and Drapeau’s temperament had already shown how complicated that might be. Still they were attracted. Gaty, a Hungarian immigrant who gave up his profession as a doctor to make his millions in real estate, said: “Let’s face it, we all have a little pride and vanity.” Robinson had been a partner with Gaty on a couple of ventures and was willing to try another. Lepine, 45, a big bear of a builder who started with luxury homes and finished with highrises (he owns six in Montreal).liked the opportunity to build something innovative. “I didn’t want to build just boxes. A builder always builds the same square boxes because he can’t speculate. It’s too expensive to experiment. You have to take advantage when you get an exceptional occasion — like building for the government.”
Lepine remembered the beautiful, Sshaped pyramids designed by French architect Andre Minangoy in Baie des Anges. He still had a pamphlet showing the building (the kind of trivia a builder would keep) and that very afternoon the four builders were in Drapeau’s office putting forward their idea. Drapeau was so enthralled by the idea, the next week he sent a representative with the builders to visit the site and talk to Minangoy. By June 28, aftei putting aside a temporary village proposal by the University of Montreal for $24.6 million, Drapeau proudly unveiled the Olympic pyramid. The four men formed Zarolega, taking two letters from each name to make the title. It was their biggest project by far. (The design itself was given to the Quebec architectural firm D’Astous & Durand. Minangoy apparently wanted to sue for plagiarism, but gave it up as not worth the legal bother.)
But while the idea was easy to copy, financing was not so simple. All along the builders were fighting for a good deal. They wanted to be compensated for the eight months the building would be used for the Olympics, and they expected to get direct financial backing from the Central Mortgage and Housing Corporation. But after Drapeau made a premature announcement saying some such funding was imminent the CMHC rejected the project as unsuitable for its needs (most of the units would be too small for low-income dwellings, the outdoor corridors impractical for old people). As negotiations fumbled and Drapeau tired of Zarolega, it was becoming obvious to COJO there might not even be a village. At the last minute, with the IOC breathing down his neck, Rousseau, who didn’t know one end of a builder’s blueprint from another, found himself in charge. Up against the wall.
Even the builders admit with sly smiles that the contract Zappia and Rousseau finally agreed upon in Vienna was “very favorable” to Zarolega. The builders were to invest four million dollars (two million immediately and the rest later) and take an $18.4 million first mortgage from the Banque Canadienne Nationale, with the CMHC acting as guarantor. The difference, $9.6 million at the time, was assumed by COJO as an open-ended second mortgage to be repaid at first mortgage interest rates. (This commitment soon jumped to $12.6 million as the project was enlarged to accommodate an increased number of athletes. COJO was also responsible for paying $7.6 million to alter the building for village use.) After the games, Zarolega would make 10% selling the project as condominiums. But it had to sell over half before the end of the year (an unrealistic tar-
get) or else it reverted to a rental project. In that event the builders would then repay COJO’S loan out of their net rental profits. In 1982 they could cancel their debt to COJO outright by paying 10 times the amount of the greatest annual net profit (not expected to be much in those first difficult years). COJO could not foreclose in default and no rental profits were to go to COJO until Zarolega had deducted an annual depreciation of $ 1.25 million a year (based on a present cost estimate of $80 million), operating costs, first mortage interest payments and expenses. As well, Zarolega would make a management fee: 12% on the first $30 million and 8% on the next three million. The builders recouped their original two-million-dollar investment in management fees alone in six months time.
Then construction costs started to explode. When work started in December,
1974, several months behind schedule, subcontractors’ bids were double what had been expected, COJO watched as its original bill multiplied like rabbits. By January a special National Assembly committee took a close look and ordered the contract reopened. (At that time, the builders revised their estimate to $45 million—without taking into consideration contingencies such as overtime and bonuses.) The new contract, worked out last July but still unsigned because of continual delays, is slightly more favorable to COJO. At least, it gives COJO more alternatives. Zarolega’s investment has been dropped to two million dollars, its fees raised to $5.2 million, but COJO can buy back the village if it repays the builders’ investment and pays them another five million dollars. (The contract also amends the repayment of COJO’S loan to 38 years and provides that the first mortgage be repaid at the same time, after which COJO can foreclose in default.) COJO, and ultimately the Quebec government, will probably elect to take over the project and make the best of it rather than let so much of their money slip away. Had the village been built to the price promised, everyone would have made a profit, or at least broken even. But
with the present price tag, the units, if sold as condominiums, would be astronomically expensive. The post-Olympic economic slowdown, which everyone is expecting, won’t be the right sort of climate for that kind of dreaming.
Somehow the builders can make it all sound very reasonable. Especially Gaty, the financial fox.Telling you not to payany attention to Zappia’s explanation of the con tract (“he gets it all secondhand from me anyway”), he explains they were reallyjust poor suckers. Who else would have undertaken to build such a large project in such a little time? Several other builders were approached by the city but refused to do it. The city’s own planning director had said the village project, which will house 3,200 people after the games, is “like building a whole town on a street corner.” Who could have foreseen the tremendous jump in inflation which was to come? Hadn’t the Olympic stadium, too, jumped from $120 million to $600 million? The village was too large a project for 90% of the local subcontractors. Most of them didn’t even bother to bid, limiting the choice. True, the builders paid high bonuses, but if the project had fallen behind schedule it would have cost millions in overtime to catch up. True, subcontractors “padded” their bids: they were only defending themselves against inflation and labor problems that only the year before had caused many of them to go broke. And there was always that Olympic deadline. If they had only started a year earlier.
So now they are under investigation. Their homes, offices, chalets raided. Two hundred boxes of documents carted away. Subcontractors interrogated on the smallest details. Their phones bugged. The intimation that the $60,000 in cash stolen from Zappia’s home (the day before he installed a new alarm system) was somehow part of alleged payoffs. (“I always kept a lot of cash at home. I do a lot of business abroad,” explains Zappia.) One Zarolega consultant was away when police raided his home and took his apartment keys and car keys. It took two registered letters and two months of waiting to get them back. In exasperation, Gaty asks: “If we had such a good deal, why should we steal?” The builders also point to the fact that every tender was closely scrutinized by COJO and, after the parliamentary committee, by a firm of consultants. Gaty says: “We told our employees right from the beginning to expect an investigation. That is an inevitable after a project of this size.” It will be the builders then who will be up against the wall. “In this climate everybody will be looking for scapegoats. All the cards are stacked against us.”
Details. Mere details. Zappia is once again alighting on the Olympic Village mess—but only momentarily. Oh, maybe a couple of truck drivers stole a few things from the site. (What’s $200,000 worth of theft on a construction site anyway? Lepine had once asked.) And it’s possible some subcontractors made deals between themselves. It’s possible. He’s not losing any sleep over it all. There are other things to worry about. There are people out there just waiting to get you, he says. The establishment. Look at what happened to him when he tried to run for the PC leadership. His partners, and even Claude Dupras, Quebec PC head and one of the chief engineers on the village, tried to talk him out of it. But he was just as good as any of the other candidates. He hired an old Union Nationale organizer, Christian Vien, paid him $5,000 to get nomination signatures from delegates. Before he knew what was happening, he’d been thrown out by the party hierarchy for irregularities in his nomination papers. The names of 26 delegates overlapped with those submitted by another candidate, Brian Mulroney. One signature was false. Several delegates, when questioned, said they thought they had been signing for Mulroney, not Zappia. He fought back by suing Vien and two other campaign workers for two million dollars.claiming they sabotaged him. He says Vien hired Marc Dubuc and Paul Delaney, old-time Tory workers, to get names for him even though they were at the same time working for Mulroney. “I’ll make him cough up every penny I gave him,” mutters Zappia.
In the gold-lit room of the café in the Ritz Carlton, many of the waiters are Italian. They know Zappia well. It’s one of his favorite places. There is something quiet and reassuring about their deftness and deference. He lets the maître d’ suggest a wine—“something Italian”—and confides he won’t come out all that badly from this Olympic business. (It’s true sales are lagging by six months in the Olympic souvenirs. He had expected to make about $10 million, but it might only be two million now.) But he certainly got personal publicity. And he learned a few things. “It’s just because I’m Italian, you know. The English try to do everything to stop a fellow’s progress. I didn’t know until I got into this just how much discrimination there is.” But I remember another morning when he confided into the phone: “All you have to do is zap someone and he becomes a martyr. I guess I’ve become a martyr.” I remember, too, the editor of a local Italian newspaper who called me up to say: Mr. Zappia really is a good man, you know. As Zappia dissects his steak, he leans over and switches into Italian—an Italian tinged with a foreignness, too long away from home: “We Italians we have to stick together. You have to make them understand I am the important man behind the scheme. Don’t write anything if you’re going to write something negative. Don’t rap me to rap the Olympics.” Just before he leaves, he kisses me lightly, Italian style, on both cheeks and says, “Who knows, perhaps there may even be a little something for you in this.” ^