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Gateway project takes shape (4/02)

By Ian Ross City officials feel confident the third time will be the charm in retaining the right private developer to finally revive Sault Ste. Marie’s stalled Gateway tourism project.
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By Ian Ross

City officials feel confident the third time will be the charm in retaining the right private developer to finally revive Sault Ste. Marie’s stalled Gateway tourism project.

After a few false starts with some earlier companies, city staff anticipates tabling both conceptual and business plans from a leading international developer and operator of customized leisure, restaurant and hospitality venues to city council by mid-April at the earliest.

The project includes a proviso that private-sector funding for the project can be secured by both the Toronto-based MagiCorp Entertainment Inc. and the city, says city planner Don McConnell.

Both the company and the city need to show some “significant” private-sector investment to lever government dollars.

“The private sector is always the last to buy in,” says McConnell, “so we may be fairly done in mid-April. But I’d prefer to have all the private-sector ends tied in before we went to council.”

MagiCorp is applying the finishing touches on some concrete development plans to unveil a concept for a major waterfront tourist attraction with private investment to finally access $15 million in Northern Ontario Heritage funding set aside for the development.

Should council give their approval this spring, the development proposal will move on to the Northern Ontario Heritage Fund board for review. And should the heritage fund green-light the proposal, the Ontario Management Board would study it, a process likely to take two months.

“We’d really like to be in construction in October” by starting to drive pilings and do some foundation work to get a jump on next spring’s building season in preparation for a summer, 2003 opening, says McConnell.

Though McConnell was not willing to place a price tag on the project, MagiCorp’s Web site is billing the planned development as a $45-million entertainment and tourist project expected to open in June 2003. The project will include an all-suites hotel, mixed-use interactive tourist attractions, an historical and cultural centre and a theme restaurant.

MagiCorp comes to the table with an impressive resume of global interests as specialists in designing, building and operating entertainment complexes in North America, Europe and the Far East, partnering with the likes of billionaire entrepreneur Sir Richard Branson and his UK-based Virgin Entertainment Group.

The seven-year-old development company has done entertainment complexes for Saga, has developed indoor ski hills, night clubs, upscale restaurants and worked in locations across Japan, in Shanghai, Budapest and Whistler, B.C.

It was named in Profit magazine as one of Canada’s 100 fastest-growing companies in 2001. One of their most recent projects is an entertainment centre in Manchester, England that includes a partnership with Branson who is investing $7 million with the company for the project now under construction.

Another is a joint venture with the Mills Corporation, a U. S. developer, to build the entertainment component of what will be Europe’s largest shopping centre in Madrid, Spain.

“Their strength is their ability to bring together major partnerships,” which may include bringing other players onto the site to develop the hotel and retail components at Gateway, says McConnell.

The original vision behind Gateway was to siphon off a portion of the estimated one million Americans who annually visit Michigan’s upper peninsula.

A few years ago, municipal leaders rallied around a proposal put forward by a Chicago-based tourism consulting group, Economic Research Associates (ERA), for a pavilion-type attraction that would entertain and educate first-time American visitors on the natural wonders and culture differences of Canada.

But two potential developers came and went until MagiCorp entered the picture late last year.

After the city had released a glossy 16-page prospectus on the city-owned Gateway property in the spring, they went door-knocking in search of a new developer for the 14-acre piece of prime waterfront property just south of the Sault’s charity casino.

“Of the 40-some doors we knocked on, (MagiCorp) was the only company that said “This makes sense,”” says McConnell. The city signed them to a partnership development agreement in November to draw up the concept and the business plan.

McConnell explains what piqued MagiCorp’s interest in Gateway was access to heritage funds.

The city intends on spending as little money as possible on Gateway’s development, says McConnell. And to minimize their risk, MagiCorp traditionally does not take more than a 20 per cent equity position in any given development.

Having already been given a sneak peek at MagiCorp’s vision for Gateway, McConnell says the concept resembles a slight departure from ERA’s Discover Canada theme into a concept that incorporates and promotes more of the Sault’s existing attractions.

MagiCorp analysed the Sault’s Parks Canada Heritage Lock, Agawa Canyon tour train, Bushplane Museum, shopping, and restaurants to assemble a proposal to market all of the city’s tourism assets as one huge development.

“They’ve taken the approach, which I totally agree with, that it’s difficult to develop something on the site that is large enough to get people to specifically come here, because we’re not Disney World,” says McConnell.

He would not discuss the specifics of the concept because the company is still in negotiations with commercial suppliers, he adds.

“ERA’s proposal was basically a market analysis. MagiCorp’s will tell you what you’re going to see when you walk into the place.”

The project has been in limbo since the lead developer First Gulf Development of Mississauga and the city parted ways after failing to reach common ground on components that should be incorporated into the project.

The developer had problems with a proposed truck corridor that eventually severed the property from the adjacent casino, and the city was not willing to chip in $24 million towards a suggested multi-purpose arena on the site, when the money could be better spent on a new hospital.

Before that, the Sault Tribe of Chippewa Indians and the city broke off discussions after the Michigan casino and hotel giant would not agree to take on the whole project.

“I’m really encouraged because MagiCorp has really embraced the project and has a good sense of where it should go,” adds Sault Ste. Marie’s tourism manager Ian McMillan.




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