Alexander P. Polishuk (retired) Andrew F. Camman Anthony F. Steele Susan A. Toth Kerry McGladdery Dent Sarah E. Bauer January 31, 2019 Michael Lerner Lerners LLP 88 Dufferin Ave London, ON N6A 1K4 Dear Mr. Lerner: Re: London Downtown Business Association (“LDBA”)/ your group Further to the AGM that took place on January 22, 2019, we are following up with you and your clients with respect to several important issues that remain outstanding and new issues that we have just became aware of. Transparency I should begin by advising you that, in the interest of transparency to its members, the Board has decided that all correspondence, where possible, will be provided to the membership and the public. This includes your previous correspondence to the City and the Chair. Response to Your Previous Correspondence First, it is necessary to address some of the issues you raised in your correspondence to the LDBA Chair dated January 10, 2019 (attached as Appendix “A” for the benefit of the members and public reading this correspondence), your letter to the City Manager of the same date (attached as Appendix “B”), your letter to the Mayor dated December 21, 2018 (attached as Appendix “C”), and a letter to the Mayor dated December 5, 2018 (attached as Appendix “D”). • Unnamed group of clients: In your correspondence, you have stated that you represent a “large base” and “over 100” Members. In the media, this number has ranged between 130 and 140. It appears that even at the AGM, many Members that are included in the list you provided to the Chair on January 10, 2019, (and attached as Appendix “A”) were unsure about whether they were represented by you and bound by the agreement Mr. White signed on their behalf. It is unclear if 535 Talbot Street, London ON N6A 2S5 Telephone 519.858.8005 Facsimile 519.858.4013 email: [email protected] [email protected] [email protected] [email protected] [email protected] web: www.pcslawyers.com the list you provided is a list of your clients. The anonymity is creating confusion and making open communication impossible. In order to continue to work with your clients, we ask that they be identified clearly. You have asked the LDBA for better openness and accountability, please extend the LDBA the same courtesy. • Allegations of improperly managed funds and mismanagement of funds: the LDBA is audited annually by the City’s auditor. The auditor has never raised any concerns and no mismanagement of funds ever identified. The LDBA strenuously denies these serious allegations that have no foundation nor merit. We view these allegations as potentially defamatory against LDBA staff and ask that you refrain from continuing to make these serious assertions, given that they are unfounded and lacking in any particulars. • Lack of term limit: this will be addressed by the ad hoc committee, however, section 204(10) of the Municipal Act does in fact set out the term of the directors as the same as the term of the council that appointed them. This is also reflected in section 4.3 of The London Downtown Business Association Improvement Area By- law (No. CP-2). • CEO’s Contract: the employment contract with Ms. Janette MacDonald is a private personnel matter and will not be provided to the public or the membership. There is no legal basis for your request. In addition, the Board conducts annual reviews of Ms. MacDonald’s performance. The Board has no concerns with her competence, management, and work. • Salaries: the LDBA will gladly disclose the total amount in the budget that goes to pay the salaries of its six staff. However, individual salaries are private personnel information. I can again assure you that those numbers have been audited by the City Auditor and no discrepancies or concerns identified. Staff do not have discretionary spending. The current percentage of the budget that goes towards salaries is well within best practices and expectations in the industry. • Petition: please provide us with a copy of the petition with the signatures in order to address concerns directly with the signatories. It is prudent to ensure your clients and the membership understand the impact these allegations and disputes have had on individual staff members of the LDBA. This has been a very difficult time for them. They feel that their reputations have been unfairly tarnished, and feel deeply distressed by the comments they have heard. They are hard- working, dedicated and loyal individuals, who care deeply about downtown London and all members (levy-paying or not, and regardless of the amount of the levy being paid). The LDBA Board unreservedly supports the LDBA staff and asks all Members to consider and allow staff to continue to do the excellent work they have always done with integrity and faithfulness. 2 Conflict of Interest The next point concerns you directly and is very serious. It appears your firm has a conflict. My client has just recently advised me that a little over three years ago, Lerners represented the LDBA. As your firm is aware, at that time, the LDBA was drafting an agreement involving Fanshawe College moving into the former Kingsmills location. Mr. James Dunlop had carriage of this file and was concerned about possible litigation. At the time, you were the head of the commercial litigation department. You were aware of this file and you personally chose Mr. Ian Dantzer to provide litigation advice. The result is undoubtedly a success story, and one in which your firm played a significant part. As I know you are aware, law firms owe a duty of loyalty to their current and former clients. This is, of course, a significant concern to my client. I feel it important to put you on notice that they do not consent to you acting against them. While they were your client, your firm had access to information about the organization obtained as part of the solicitor client relationship. It is our position that you have a conflict of interest and my client objects to you continuing to represent your yet unnamed group of clients. It is your responsibility to address this conflict immediately. In the meantime, we will continue to correspond with you until your clients have received advice on this issue and have retained new counsel. We do this without prejudice to our ability to raise this matter should you decline to address this serious conflict. It is incumbent on you to see to this matter with alacrity and if you fail to do so we will seek instructions to have you removed by the courts. Should we be required to pursue this we will be presenting the courts with this letter on the issue of costs. Ad Hoc Committee Finally, with respect to the ad hoc committee, as you know, the budget failed to pass and your unexpected point of order during the Board slate vote created a great deal of confusion and turmoil1. Despite our efforts prior to the AGM, the good faith agreement you participated in achieving was disregarded. However, at the end of the AGM, a motion was passed to put together an ad hoc committee to review Board processes. In addition, the LDBA feels that it is in the best interests of the organization and London for it to comply with the spirit of the agreement that was put in place. However, we will be making adjustments to the format of the committee based on what we heard at the AGM. For example, it appears that there are many members that were unaware or unclear about whether you represented them. Further, there were many other members that you do not represent that made important points and raised important questions. It is important to 1 To clarify the voting situation definitively, please note that section 204(6) of the Municipal Act, section 8.4 of The London Downtown Business Association Improvement Area By-law (No. CP-2), and section 7.1 of the LDBA’s Procedure By-Law all state that each member shall receive only one vote, regardless of the number of properties that that member may lease or own. 3 make sure that a cross-section of these voices participate, and not just your clients and the Board. Secondly, it is important that the ad hoc committee include representation from non-levy paying Members. Your clients have asserted that if a member does not pay a levy, they do not have “skin in the game”. This is a very unfortunate (and inaccurate) characterization. The LDBA does not provide services to its Members based on the amount of levies that Member pays. The LDBA, like all BIAs, is legislatively mandated to oversee the improvement, beautification and maintenance in its area, and to promote the area as a business and shopping area. Members of the LDBA like the Grand Theatre and Fanshawe have significant “skin in the game”, and a great deal to do with improving and promoting Downtown London, even if they are exempt from paying a levy. The majority of Members appreciate the impact that non-levying members have and understand that all Members are working together for the betterment of London’s Downtown, regardless of how much each Member may pay in levies. As such, the Board has determined that the ad hoc committee will consist of seven members plus a facilitator of the Board’s choosing. The Board will be appointing two of its own members, as well as approaching three Members-at-Large (including one non- levy paying member) chosen specifically from those who spoke out at the AGM. This is both in keeping with the agreement we had attempted to implement, but also provides for a greater diversity of voices, and will include those who do not identify as your clients. Finally, we invite you add two people from your own group to the committee. The Board proposes Mr. John Fyfe-Millar and Mr. Keith McAlister to represent the LDBA. With respect to the Members-at-Large, the Board will be approaching Ms. Kathy Navackas, Ms. Gayle Harrison and Mr. Tarek Moharram. The ad hoc committee will also be empowered and encouraged by the Board to utilize experts such as Mr. Andrew Sancton and Pillar Nonproft Network, and to seek legal advice where necessary to work through its mandate. In addition, the committee may well end up asking City Hall to change the municipal by- laws that govern BIAs. As a result, we feel that other BIAs will want and should be able to participate and provide feedback. Similarly, given that the processes this ad hoc committee will be reviewing are directly tied to municipal by-laws, we will be inviting and strongly encouraging the appropriate staff and Councillors from City Hall to attend the meetings. Finally, all ad hoc committee meetings will be open to the membership and public to ensure the greatest possible participation and transparency. All meeting times and locations will be advertised to the public and to the membership and attendance and regrets will be tracked. 4 The ad hoc committee’s mandate will include (but will not be limited to) reviewing nominations, board structure, elections, term limits and the Procedural By-Laws as well as municipal by-laws. We hope that your clients will move quickly to recuse yourself from this file, appoint new counsel and that the two names put forward by your clients will devote extensive time to doing this very important work. Conclusion: The Board is deeply troubled by the alleged loss of confidence of its Members, but the Board is also heartened by the participation at the last AGM. As you know, it is often difficult to attract participation, and we hope Members continue to attend events and reach out to the LDBA with concerns. We are also pleased to note that the Members were willing to share difficult feedback openly, frankly, and without fear. The LDBA recognizes how vital it is that Members feel able to share input publicly and confidently and this suggests that the organization is already well on its way to positive change. When it comes to London’s Downtown, all Londoners have skin in the game. The LDBA recognizes it has work to do to address the concerns of the membership. The LDBA is committed to listening to its Members and the public and undergoing a transparent and inclusive process to address and respond to these concerns. Yours very truly, POLISHUK, CAMMAN & STEELE Susan A. Toth 5 Lerners LLP 85 Dufferin Avenue P.O. Box 2335 LERNERS London, Ontario N6A 4G4 Telephone: 519.672.4510 Fax: 519.672.2044 www.lerners.ca LAWYERS Michael M. Lerner Direct Line: 519.640.6321 Direct Fax: 519.932.3321 [email protected] January 10, 2019 FILE NUMBER 111581-00002 Gerald Gallacher Nicholson Sheffield Architects Inc. 358 Talbot Street London ON N6A 2R6 Dear Mr. Gallacher: Re: Downtown Business Improvement Area As I believe you know, I represent over 100 property owners and tenants all of whom are levied to support the work of the DBIA who are concerned with the administration and management of the organization. It is the widely held opinion that the actions of the Board do not reflect the best interests of those who are levied by the municipality to support the activities of the Association. I have attached a list of those who have come forward to express their concern. I am concerned that without further discussion, the AGM will contrary to the best interests of the Board, its members and most importantly the citizens of London. As part of my research, I have also conducted a review of the by-law that creates the DBIA. There are significant flaws in the by-law that could call into question the actions of the Board and some of those actions may be subject to judicial review. I recently met with the City Solicitor and discussed with him the existing by-law. It is agreed that the by-law should be comprehensively reviewed and amended as may be required. I have written to the City asking that the by-law be referred to the City Solicitor for review. I am advised that the AGM of the DBIA is scheduled for Tuesday, January 22, 2019. I respectfully request that the Board support a rescheduling of the annual meeting until such time as certain concerns have been considered and documents that are requested have been produced. The concerns of those who have come forward include but are not limited to the following: 1. The lack of transparency relating to the revenue and expenditures and the preparation of financial reports of the Association. 2. The amount of the annual expenditures that relates specifically to salaries. 3. The process by which individuals are nominated to serve on the Board. 4. The inability of members to be nominated from the floor at the AGM that would likely require an election by ballot. LERNERS Page 2 LAWYERS The members do not feel that the CEO and the Board accurately reflect the best interest in opinions of the members on critical issues that have arisen in the last four years. A substantial number of members no longer have confidence in the Board of Directors. Those who I represent do not wish this to become a disruptive and divisive process that will jeopardize the ongoing efficiency of the DBIA. Accordingly, it is my respectful request that all steps be taken to avoid a situation that could well embarrass the Board and its members. I have instructions to meet with the Board or its delegate to try to come up with an interim solution of the identified problem. A solution may well be to adjourn some part of the AGM to a date to be determined with the uncontentious issue going forward on January 22. I previously requested a copy of the contract of employment of the CEO. To date, my request has been ignored. It is not in the interests of anyone if I am required to make the required application under the Freedom of Information Act to obtain access to the contract. In addition to production of the contract, I seek clarification as to which Board member or members negotiate the contract with the CEO and the manner in which the contract is approved by the Board and the membership. It has come to my attention that there are members of the Board who have not been privy to something as fundamental as the terms of the contract of employment in order to satisfy themselves that they have fulfilled their fiduciary duty to the organization and to its members. In order to resolve these matters in a responsible, respectful and dignified manner, I request the opportunity to meet with you and discuss these concerns in greater detail. I repeat that I do not believe it is in the interests of the downtown to ignore the concerns of over 100 members and some attempt should be made to come to a resolution that not only will be in the best interests of the DBIA but the downtown in general. Given that time is of the essence, I ask that you favour me with a prompt reply. For you/ information, I enclose a copy of the letter to the City Manager asking that the existing by-law be reviewed. Yours e truly, Michael M. Lerner MML/jl Encl. 8057576.1 This is a list of current LDBA dues paying members requesting major changes to the organization's operation. The list only includes businesses that pay the levy. J.B Simpson Jewellers Bertoldi's David's Bistro Urban Outfitters London International Academy Lofthouse Living Abruzzi Donohue Funeral Home To Wheels The Ceeps/Barneys Richmond Diamonds Marienbad/ Chaucers The Barre Pilates Cyclepath May McConville (Vivid) Insurance Big Blue Bubble Pfaff Jewellers Bluland Enterprises Tillmann Ruth Robinson Architects Bella Booteek Elizabeth Noel Marky's Crepe Café Gleed Commercial Fellini Koolini's Wine Rack Endo Jewellers McDonalds Rebirth Wellness Centre Eyes on Richmond Entitled Hanger 9 La Casa Jill's Table Healthy Obsession Fitness Frankly Scarlet Kosmos Joe Kool's Nova Vita Hair Salon Blucor Group Bikini Paradise Ann's Tailoring& Design Salon Thairapy Cushman Wakefield Your Highness J.Dee's Market Grill Grow and Bloom Co. Tim Horton's B.W.K. Developemnts Redtail G.C. Michael Gibson Gallery