Toronto is getting into the movie business under mysterious terms that the city can’t yet reveal.
In a closely guarded deal worth undisclosed millions, city council approved a loan for the purchase of a minority stake in Filmport in order to partner with the producers of the legendary James Bond blockbusters to operate Toronto’s state-of-the-art studios.
But while Mayor David Miller touted the secrecy-shrouded arrangement as a boost for Toronto’s slowly reviving film industry, councillors privy to the terms said alarm bells were going off.
Few details were made public yesterday after council voted 31-7 in favour of the impending deal with Pinewood Studios for the operation of Toronto’s Filmport, which opened for business last year.
Mr. Miller said that once finalized, the terms and the amount of the loan being made via the Toronto Economic Development Corporation.
Until now, the city has been the landlord of Filmport through TEDCO.
“The arrangements that council passed today included the city giving a loan and receiving a minority ownership interest. That allows us a better ability to steer the future so that the risk we already have as the landlord is mitigated,” said Mr. Miller. “We don’t in the long-run want to run a film studio. That’s not what we’re good at. But we do want this film studio to succeed to create jobs in Toronto. We view this as a transition measure, but the transition may be several years.”
The money — “millions and millions” according to councillor Denzil Minnan-Wong (Don Valley East) treading as close as he could to the line without breaching the confidentiality code — will come out of the city’s land acquisition reserve fund.
“Your political antennae go up in this place when you get a report worth a lot of money and it’s dropped at your desk in your office around 4 o’clock or thereabouts on a Friday afternoon. So that’s alarm bell Number 1,” said Mr. Minnan-Wong, who tried and failed to have the action delayed for further discussion. “Alarm bell Number 2 there’s lots of money involved. Alarm bell Number 3 is that they write it in such a way that it’s so complex that you can’t really figure out the financial implications. But you do know it’s a complicated deal and there are things hidden within the report that put the city at a financial risk.”
Councillor Michael Walker (St. Paul’s) will be reported to the integrity commissioner for taking the confidential report to an outside forensic auditor over the weekend seeking insight — a potential violation of council rules.
He urged council not to rush into the deal, to no avail.
Mr. Miller said that the new arrangements would actually work to mitigate Toronto’s risk by giving the city a stronger say in Filmport’s operations, including a seat on the board. When operating at full capacity, Filmport could create about 1,000 jobs and generate $50 million worth of economic spinoffs.
“Overall what will happen as a result of this is that Filmport will be in a much stronger financial position to succeed going forward,” he said. “The underlying reason behind this transaction is to ensure it’s future success, to ensure it’s sufficiently capitalized to succeed for the future.”
There were hints the deal is something of a bailout of the brand-new Filmport, which has yet to rent out its biggest soundstage.
Reports suggest Sam Reisman, the CEO of Rose Corp. and Filmport’s founder, is looking to offload his 20% ownership stake after the Ontario Municipal Board vetoed his Smart! Centres development for former film studios.
The Mayor said the ownership changes might also mean a management shakeup.
“I can’t comment on Pinewood. I can say that TEDCO does hope to have a new management partner. It very much respects the work that Ken Ferguson has on behalf of Toronto Film Studio [where he is currently president], but if there were an international corporation in this industry who was a partner it would be a very positive development for us,” Mr. Miller said. “In Los Angeles they’re used to negotiating with corporations of that kind. It would mean Toronto would be a much more viable destination for the success of films.”
Source: The National Post