COVER

A CLUB CLOSES ITS DOORS

ANN SHORTELL December 22 1986
COVER

A CLUB CLOSES ITS DOORS

ANN SHORTELL December 22 1986

A CLUB CLOSES ITS DOORS

COVER

It was an unusual coalition with an unlikely purpose. In late August, Ottawa-based lobbyist Michael McCabe, flanked by five irate developers, swept into the office of Monte Kwinter, Ontario’s minister of consumer and commercial relations, for a meeting. That was the most criti-

cal of a series of conferences that the businessmen had arranged with highpowered Ontario politicians and influential bureaucrats to demonstrate their growing outrage. The object of their anger: a proposal by the Edmonton-based Ghermezian family to imitate their West Edmonton Mall with a 10-million-square-foot entertainment and shopping complex in Mississauga, on Toronto’s western outskirts. The developers told Kwinter that they would fight the Ghermezians’ move into the richest retail market in the country.

Fight: It may have been the first time that several Canadian developers banded together to fight someone in the same business. Traditionally, members of the real estate industry have insisted that the marketplace should be open. But when the Ghermezians arrived in Ontario 18 months ago for private meetings with Kwinter, many developers felt threatened. At first, municipal and provincial officials appeared to embrace the project as a

potentially enormous tourist attraction. But the development lobby argued that the Ghermezians were selling a shopping mall as a tourist magnet in order to secure special concessions from the province—and circumvent the normal development planning route. Said McCabe: “We decided

the case we were going to make was the case against special treatment.”

Key: Members of the lobby group had business interests to protect. Bruce Heyland, for one, president of Hammerson Canada Inc., was planning to increase the size of Mississauga’s largest shopping centre, the 1.1-million-square-foot Square One. Other key members of the lobby included James Bullock, president of the shopping centre division of Toronto property giant Cadillac Fairview Corp. Ltd., which owns the downtown Toronto Eaton Centre and other properties. Lome Braithwaite, president and chief executive officer at Cambridge Shopping Centres Ltd., which owns Oakville Place shopping centre, was also a lobby member. They claimed that the huge mall proposed by the Ghermezians would draw business away from their ventures.

The Ghermezians were unprepared for such a formidable campaign waged against them by their own industry. Indeed, they said that they were stung

by the backlash, which their opponents mounted just as the Ghermezians were preparing to attract eastern investors to West Edmonton Mall. This fall the Ghermezians issued a prospectus for a $480-million bond issue to provide long-term financing for the mall. The issue is expected to close in January, but few financial institutions have bought the bonds. And Nader Ghermezian, a director of the family’s Triple Five Corporation Ltd., told Maclean's that he believes there is a link between the developers’ criticism and the lack of interest in the bond issue. Said Ghermezian: “They know if they can stop us in Edmonton, they’ll win.” Connections: For their part, the developers denied that they had tried to upset the Ghermezians’ financing plans. Rather, they said that they were representing their own interests to the Ontario government. In preparation, Heyland hired McCabe, who has strong connections to Liberal party officials, to organize the lobby. The lobbyists collected detailed dossiers on the Ghermezians and conducted private studies on the tourism potential and financial feasibility of the proposed mall. As well, they encouraged such business groups as the Retail Council of Canada and the Canadian Federation of Independent Business to protest against special help for the proposed shopping mall.

In September the Ontario government abandoned any interest in the plan and refused the Ghermezians’ demands for more than $200 million in tax and other concessions. In early October the land option held by the Ghermezians for the mall expired—a signal that the family had retreated. Said Kenneth Rosenberg, executive assistant to Kwinter: “As far as we’re concerned, the issue is dead.” Persistence: Most of the developer lobbyists declined to take credit for their change of fortune. “I think we were only one element in the decision,” said Cadillac Fairview’s Bullock. “The Ghermezians are a fairly shrewd group who recognized they were trying to row uphill.” Still, Mississauga Mayor Hazel McCallion told Maclean's that Nader Ghermezian continues to stay in contact with provincial officials. With the family’s track record of persistence and patience, the betting is that the lobbyists’ fight is not over yet.

ANN SHORTELL in Toronto