Katz Group launches court battle with Edmonton homeless organization over $5M donation

A subsidiary company of the Katz Group is suing a local agency that provides services to the city’s homeless population for breach of contract.

Ice District Corporation, which is a part of Katz Group Real Estate Inc., filed a claim in Edmonton’s Court of King’s Bench in November, arguing it should be off the hook for a conditional $5-million donation it promised to pay as part of Boyle Street Community Services fundraising efforts for a new location.

The social agency’s future home known as King Thunderbird Centre, okimaw peyesew kamik in Cree, and the cost of that relocation, is at the heart of the legal battle.

According to court documents obtained by CBC News, the Katz Group alleges that it shouldn’t have to make the donation because Boyle Street didn’t try hard enough to fundraise on its own.

Meanwhile, Boyle Street argues in its own filings that the Katz Group is trying to get out of its commitment to help with the relocation now that it has acquired the downtown property it repeatedly offered to buy from the social agency.

None of the allegations made as part of the civil claim have been proven in court.

Katz Group Real Estate is part of the Katz Group, a private conglomerate founded by Daryl Katz, the billionaire owner of the Edmonton Oilers.

The Katz Group led the construction of Rogers Place, the downtown arena where the Oilers play, as well as development in the surrounding area, which has since been renamed Ice District.

Both the Katz Group and Boyle Street declined interviews for this story, but provided written statements saying they’re in the midst of trying to resolve the dispute through a private arbitration process.

“We can’t comment on the details of legal proceedings currently ongoing; however, we remain supportive of Boyle Street Community Services and their plans to move into the King Thunderbird Centre, which will provide them with a long-term, sustainable facility to deliver their services,” said Tim Shipton, OEG Sports & Entertainment’s executive vice president of external affairs.

OEG Inc., formerly known as Oilers Entertainment Group, is another part of the Katz Group enterprise.

In an emailed statement, Boyle Street Community Services said its position on the issue is outlined in its statement of defence filed with the court.

“We have and continue to explore multiple funding avenues for this critical project as we owe it to those that we serve to ensure this building becomes a reality,” Boyle Street said.

The ‘backstop gift’

Before striking a deal with the Katz Group, Boyle Street operated a community centre out of an old warehouse in downtown Edmonton for 25 years, on land just northeast of Rogers Place.

In 2021, Boyle Street agreed to sell the property at 10116 105th Avenue to the Katz Group, with plans to put the money toward the purchase and renovation of a new facility.

Along with the construction of Rogers Place, the downtown arena where the Edmonton Oilers play, the Katz Group has led development of the surrounding area, which is now known as the Ice District. (David Bajer/CBC)

The social service agency signed a lease for $1 per month with the Katz Group that allowed it to continue operating out of its former building until 2023, when it was expected to relocate.

As part of the conditions of the sale, the Edmonton Oilers Community Foundation also made a $10-million donation to Boyle Street to put toward its new premises.

According to the Katz Group’s filings, the Oilers’ charity is an arm’s-length foundation that is run independently with its own board of directors.

The sale and donation were publicly announced, and a capital campaign was launched to fundraise $28.5 million for the project — with at least $8.5 million needed at a minimum to move ahead.

But according to court documents, Katz Group and Boyle Street also signed an agreement for a “backstop gift,” agreeing that if Boyle Street was unable to meet its fundraising goal on its own during the campaign, the Katz Group would give it an extra $5 million.

The gift amount would decrease on a dollar-for-dollar basis if Boyle Street was able to raise at least $8.5 million on its own.

Dispute over fundraising efforts

In its filings, the Katz Group alleges that Boyle Street didn’t try hard enough to fundraise  and was planning to rely on the backstop gift.

“The charity has not utilized its ‘best efforts’ in undertaking and completing the capital campaign,” it alleges in an amended statement of claim filed Nov. 24, 2023.

The Katz Group claims that Boyle Street initially targeted a small number of private donors, rather than casting a wider net for donations, that its efforts to get government funding were inadequate, and that Boyle Street was fundraising for its endowment fund rather than focusing on raising money for its new site.

It’s also alleged that Boyle Street failed to provide regular updates on the status of the fundraising efforts.

The claim asks the court to declare that Boyle Street breached the contract and that the Katz Group doesn’t have to pay any part of the $5 million.

Boyle Street’s new King Thunderbird Centre is now expected to be completed in early 2025. (Travis McEwan/CBC)

In its statement of defence filed on Dec.13, 2023, Boyle Street denies much of the Katz Group’s allegations, and instead alleges that the Katz Group is trying to get out of its commitment to support development of the new building because it already has what it wanted — the land adjacent to Rogers Place.

“Rather than focusing on the unprecedented houselessness and drug poisoning crisis in Edmonton, developing the new premises, and using funds for these purposes, Boyle Street must now use its resources to defend the allegations made by Katz Group,” Boyle Street alleges in its court filings.

When the backstop agreement was signed, the Katz Group offered to support the fundraising campaign, but failed to follow through and was generally unresponsive despite Boyle Street’s repeated efforts to reach out and provide updates, Boyle Street alleges in its filings.

Boyle Street also defended its fundraising efforts — stating that during the campaign it reached out to thousands of supporters, major donors, politicians and ran ad campaigns — raising more than $7.3 million by the end of 2022 from 171 private donors, and additional funds since.

The social agency also says that it tried to get the city, the province and the federal government to provide grants and funding, but that both the city and province have declined to offer any support, and that it has applied for a federal grant that has yet to be approved.

Lease extension

The court documents also reveal why Boyle Street suddenly vacated its longtime downtown property in fall 2023, despite its new location not being ready, and despite Shipton publicly stating that Boyle Street had been offered a lease extension for a nominal fee.

At the time, Boyle Street declined to comment on why it wouldn’t accept the offer.

In its statement of defence, Boyle Street alleges that when the King Thunderbird Centre project ran into delays, it asked for an additional extension of the lease at its 105th Ave. location.

It claims the Katz Group agreed on the condition that Boyle Street would forego the $5 million backstop gift.

“This offer was high-handed and made in bad faith given the impossible position Boyle Street was in,” the statement of defence alleges.

Boyle Street Community Services moved out of its location at 10116 105th Avenue in a sudden shift to four temporary sites. (Natasha Riebe/CBC)

Boyle Street decided to vacate the property, and set up in several temporary locations around downtown Edmonton.

Boyle Street alleges that it then tried to collect the $5 million once it was off the property, but that the Katz Group refused to pay and then filed a lawsuit.

The Katz Group has since filed a response, disputing many of the claims in the statement of defence and denying that it asked Boyle Street to forego the $5 million during lease discussions.

In the statement to CBC News, Boyle Street said it has continued to move forward with both fundraising through other avenues and construction of the new facility, which is now expected to be completed in early 2025.