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Did health unit headquarters go 41 percent over budget? (updated)

4:48 p.m. Tuesday update Mr. Orazietti has issued a statement summarizing his position on this issue and that of the provincial government. ************************* 6:10 p.m.

4:48 p.m. Tuesday update
 
Mr. Orazietti has issued a statement summarizing his position on this issue and that of the provincial government.
 
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6:10 p.m. Monday update

Sault MPP David Orazietti contacted us tonight to indicate that he strongly disputes some of the allegations made by Shaun Rootenberg in his lawsuit, including his claims that Orazietti acted as "sponsor" for an application for stimulus funding and "approved" provincial money to get land owned by Sault College ready for development.

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Original story - 4:02 p.m. Monday

Tomorrow will be the fourth anniversary of the official opening of Algoma Public Health's new headquarters at 294 Willow Avenue.

At the ribbon-cutting ceremony on July 28, 2011, there was a bit of joking by then-medical officer of health Dr. Allan Northan about the size of the waterfall in the lobby.

If allegations filed in court documents last week by APH's former interim chief financial officer can be believed, the grandiose lobby at 294 Willow Avenue is no laughing matter.

A lawsuit filed against the health unit by Shaun Rootenberg claims the building cost $26.8 million, $7.8 million more than the $19 million fixed price contract.

To this date, the full 41 percent difference in cost has not been reconciled, Rootenberg says.

Rootenberg is suing the City of Sault Ste. Marie and Lee Mason, chair of the APH board, seeking $8.5 million for alleged defamation, negligence, negligent misrepresentation, injurious falsehood and lost business opportunities.

His statement of claim, which has not been proven in court, says that consequences of the $7.8 million cost overrun were among many fiscal missteps that he fixed during his six months at APH.

"As a result of the overage, Algoma Public Health had to secure a $7-million loan with RBC that was never budgeted for and with respect to a property that they did not own and were merely tenants. The city refused to sign as a guarantor on the loan," the lawsuit says.

"RBC had to secure approval from Toronto and agreed to the loan on the goodwill associated with Algoma Public Health and that Algoma Public Health could not default on a loan given its position."

Rootenberg also offers an explanation for why APH didn't own its building, why it entered a 99-year lease, after which the property would revert to Sault College.

He says that in 2010, Dr. Northan and Jeffrey Holmes (then APH's chief operating officer) approached the city about applying for federal stimulus funding for a new APH headquarters.

"All parties were aware that Algoma Public Health did not qualify for stimulus funding under the-then stimulus funding guidelines," Rootenberg's suit claims.

Rootenberg then describes a complicated scheme devised to jump through the bureaucratic hoops necessary to render the project eligible.

"In order to be eligible, the project would need to be 'shovel-ready.' At this time, David Orazietti approved a million dollars of funding from the provincial government to get the site owned by Sault College (who were also ineligible to receive funding) shovel-ready,

"Mr. Orazietti also acted as the sponsor for the application for stimulus funding. In order to be eligible for funding, Sault College purportedly sold the land to the city.

"The city then received all the stimulus funding and floated the funds through to the construction of the Algoma Public Health building.

"The sale of the property from Sault College to the city was conditional on the property being returned to Sault College after 99 years. Algoma Public Health received a lease for the property from the city for $1 a year with all costs and risks to the property to be borne by Algoma Public Health.

"RBC provided construction bridge financing as a gap until the city received its staged stimulus funding allocations," Rootenberg claimed in his lawsuit.

The health unit's 99-year lease was also considered a joking matter at the ribbon-cutting four years ago.

"I know we gave you guys a 100-year lease or something like that," quipped Sault College President Dr. Ron Common. "But we won't be really disappointed if you decide to leave some time before then. This building would make a fine campus building."

Laughing, Common then proceeded to compare waterfall sizes between the new APH building and Sault College's newest campus building.

"Yours may be wider," Common told Dr. Northan, but ours is going to be taller."

Local officials are no longer so forthcoming about the APH building.

Responding last week to media enquiries about the Rootenberg lawsuit, APH chair Lee Mason said that the allegations were "in the hands of our legal counsel" and "will need to follow due process.”

MPP Orazetti also cited the lawsuit in declined to discuss Rootenberg's claims with SooToday, adding, however, that the lawsuit contained errors of fact.

Asked by us on Friday whether it was appropriate for APH to get federal stimulus funding, Sault MP Bryan Hayes said: "That's not a question that I'm capable of answering right now. I'm not aware that it went 41 percent over budget. Ask me that question next week. I'll look into it."

Sault Ste. Marie Mayor Christian Provenzano also declined to comment on the Rootenberg allegations.

Before he came to the Sault, Rootenberg did time at Beaver Creek Institution in Gravenhurst after pleading guilty to multiple counts of fraud involving more than $2 million.

(PHOTO ABOVE: Sault MPP David Orazietti at the official opening of APH's allegedly overpriced digs. Carol Martin/SooToday.)

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(PHOTOS BELOW: APH communications specialist Tim Murphy appears delighted at the 2011 ribbon-cutting ceremony. Algoma Public Health's grandiose, waterfall-graced lobby at its new headquarters on July 28, 2011. Carol Martin/SooToday.)

Previous SooToday coverage of this story
 

 


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David Helwig

About the Author: David Helwig

David Helwig's journalism career spans seven decades beginning in the 1960s. His work has been recognized with national and international awards.
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