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Feud brews over Casa Loma Add to ...

Casa Loma is the perfect setting for palace intrigue, and that's exactly what's unfolded beneath its Norman and Scottish towers in the last two years.

Now the intrigue is moving from castle to council.

Toronto's elected officials will decide this week whether the Kiwanis Club, the charitable organization that has managed city-owned Casa Loma since 1937, deserves a third chance to drag the tourist trap into the 21st century or whether the city should begin severing a partnership that's been a royal pain for both sides.

Internal e-mails and other confidential documents obtained by The Globe and Mail show conflict has plagued a new City-Kiwanis management agreement practically since the deal took effect in the summer of 2008. The mayor now admits he was wrong to support the Kiwanians in 2006 and 2007, when a public review of Casa Loma's future recommended putting the 98-room castle's operations out to tender for the first time in seven decades.

"I rarely second-guess myself," David Miller said, "but on the Casa Loma matter, in the big scheme of what I have to deal with as mayor, it was not at the top of my priority list. I should have paid more attention to it and to the deficiencies that the public process identified."

The Kiwanians, meanwhile, feel deeply wronged after 73 years of service to the castle.

They accuse the city of blind-siding them by releasing two damning reports at executive committee last month - one laying out missed deadlines and cash-flow troubles, the details of which Kiwanis disputes, and another demanding Kiwanian Richard Wozenilek resign as chair of Casa Loma's board of trustees for allegedly funnelling $118,000 in castle legal work to himself.

"I have a right to protect my name and reputation," said Mr. Wozenilek, who insists he did nothing wrong. "They brought the battle forward and I'm not going to step aside just so the mayor can be appeased and feel he won the day."

If this seems like little more than inside-the-drawbridge politics, consider the consequences for Casa Loma.

The five-acre estate should be on the cusp of a renaissance. Toronto's Taylor Hazell Architects are nearly finished a $33-million restoration of the exterior of the castle and its stables, a remarkable undertaking funded largely by the city that began in 1997 and should be completed by 2012. (Historically, the city has been responsible for Casa Loma's exterior, Kiwanis for its interior.) But the feud has cast doubt on an equally ambitious overhaul that is supposed to be happening inside the castle - one that celebrates the Edwardian heritage of the mansion and the entrepreneurial spirit of its builder.

Sir Henry Pellatt, the brilliant tycoon who brought electricity to Toronto from Niagara Falls, hired E.J. Lennox, the architect who designed Old City Hall, to build him the grandest pile in Toronto.

Constructed by more than 300 men for $3.5-million between 1911 and 1914, Casa Loma was, on the outside, largely an homage to old world architecture.

But on the inside, Casa Loma was a 170,000-square-foot new-world showpiece. It boasted electric lighting, central vacuum, 40 telephones, heating and cooling systems and an elevator.

"Toronto was the place to be and Pellatt knew it," said Charles Hazell, the architect overseeing the restoration. "He was remarkable because he loved the city. That's the deeper story, not the cliché."

A cliché, unfortunately, is what Casa Loma devolved into after Sir Pellatt's fortune collapsed.

In 1924, the city seized the castle for unpaid taxes. It sat vacant for a dozen years before the Kiwanians offered to run it as a charitable venture, giving the profits to causes they supported. The service club marketed Casa Loma as a medieval castle; as the years passed it became a cheesy draw for American tour groups, brides and movie producers. (The castle makes cameos in X-Men, Chicago and Cocktail, among others.)

The city contributed to Casa Loma's deterioration by slapping paint on the building's Roman stone, a no-no that trapped water in the man-made brick. The liquid froze and cracked the stone, creating hazards like a chimney so badly damaged Mr. Hazell could rock it back and forth with his bare hands.

"There were school kids below on a picnic bench," he recalled. "It was a disturbing and galvanizing impression of what was wrong. You looked around the building and it was just full of those conditions."

The city decided that if it had to sink a fortune into Casa Loma's exterior, it ought to look at the inside, too.

In 2004, it struck the citizen-led Casa Loma Advisory Committee, which concluded two years later that Kiwanis should be thanked for its 70 years of service and invited to bid against competitors when its lease expired at the end of 2006.

The Kiwanians fought back. They hired councillor-turned-lobbyist Paul Sutherland and rallied club members to speak at committee meetings. Kiwanis convinced council to postpone the matter until after the 2006 election, after which the club drafted a new strategic vision for Casa Loma that won the support of city staff, most of council and Mr. Miller.

Kiwanis and the city set out to make the strategic vision a reality, including a new curatorial focus on Edwardian Toronto, the creation of a heritage district with the nearby Spadina House and City Archives, and a refreshed visitor experience that would lure more locals to the castle.

The new, 20-year management agreement that took effect July 1, 2008, created a Casa Loma board of trustees made up of seven Kiwanians, seven city appointees and a handful of ex-officio members.

Disagreements flared up right away.

The management agreement stipulated that the new board's chair would be appointed by the mayor, upon the nomination and advice of the president of the Kiwanis Club of Casa Loma, for a three-year term.

Kiwanis put forth Mr. Wozenilek, an imposing grey-haired lawyer with tortoise-shell glasses who had been overseeing the attraction since 1991. Mr. Miller tried to limit Mr. Wozenilek's term to a year, after which he would step aside for a city employee, but Kiwanis refused and installed Mr. Wozenilek for three years.

The relationship grew more strained when facts related to Mr. Wozenilek's alleged conflict-of-interest were highlighted.

In January of 2009, Casa Loma management asked a member of the board to approve invoices from Mr. Wozenilek for legal work he had performed on a new caterer's contract. (The city's official report says it's $118,000; Mr. Wozenilek says it's about $40,000.) Mr. Wozenilek, who said he's always been open about the legal work he's done for Casa Loma, inserted a clause exempting his firm, Keel Cottrelle, from the new board's conflict-of-interest agreement.

He didn't point out the provision or recuse himself, but he said he believed that everyone on the board - along with Mayor Miller - knew that Casa Loma paid him and Keel Cottrelle for legal work. As Don Kibblewhite, a Kiwanis appointee, pointed out, board members had received bios of their new colleagues, including one saying the chair was a lawyer at Keel Cottrelle.

"I don't think I made any errors," Mr. Wozenilek said.

In April 2009, the Casa Loma board appointed a sub-committee which voted to pay Mr. Wozenilek's bills, cut the Keel Cottrelle exemption and direct future legal work to another firm.

The matter seemed settled until late that year, when it came to the attention of the Mayor, who eventually demanded Mr. Wozenilek's resignation.

"This is my appointee," Mr. Miller said. "I can't have it on my conscience as mayor of Toronto that I appointed someone who was paying himself hundreds of thousands of dollars from a facility that isn't meeting its goals, that is financially strapped without properly dealing with the conflict of interest."

By early 2010, relations between the city and Kiwanis were crumbling like Casa Loma circa 1996.

Mr. Wozenilek sent several e-mails to board members trying to sniff out who had spoken to the Toronto Star for a story about the castle's troubles. In an April 19 e-mail to the board he said there was a, "very well orchestrated attempt designed to cause us to fail in our efforts," citing the Star story, letters from city staff and an unpleasant meeting with the mayor.

The dispute burst into the open last month, with the pair of reports to council's executive committee.

The main report accused Kiwanis of failing to hold up their end of the management agreement. The deal stipulates that all the castle's net revenues, a new ticket surcharge and the equivalent of property taxes - which the city stopped collecting from Casa Loma under the new deal - be deposited in a Casa Loma Improvement Fund to pay for upgrades.

But Kiwanis has been using the fund to cover operating shortfalls, meaning there will only be $335,000 in the account by 2011, not $1.5-million as projected, according to the city. Kiwanis has blown deadlines and failed to complete required projects, the report says.

Virginia Cooper, Casa Loma's CEO, says the recession hit the castle hard. She and Kiwanis sent a lengthy rebuttal to councillors alleging errors in the city's report - there's at least one glaring mistake in that Sir Henry's Café, the new basement restaurant that replaced Druxy's deli, is open for business, contrary to the report.

It's true, too, that Kiwanis has had some achievements: The new deal with Pegasus Hospitality Group of Palais Royale fame, a cutting edge new audio and visual guide and an innovative partnership with a women in skilled trades program to redecorate Casa Loma's hunting lodge in Edward fashion.

Still, according to an internal board report, the castle lost $317,875 in 2009, a year in which attendance dropped 3.4 per cent and sales at the basement gift shop dropped 20.7 per cent.

That's why Rita Davies, the city's director of culture, is eager to see work accelerate and the intrigue end at Toronto's palace.

"It is an emblem of modernity," she said of Casa Loma. "It has a lot more interesting story to tell about Toronto than knights in shining armour."

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