Financial News

It’s pretty simple, as Joni Mitchell made clear in "Big Yellow Taxi," to pave paradise and put up a parking lot. And with their streamers and fluttering flags, no lot stands out more than a car dealer’s.

But now, with nearly half the country’s car dealerships closing as the result of the greatest reorganization of the auto business in North American history, what’s to become of the dealers’ vast parking lots? Or the empty buildings they may leave behind?

While no one has any clear idea – most dealers aren’t talking – some, including local architects and urban planners, are drooling over the possibilities of turning parking lots back into paradise.

"For planners, car dealerships are always opportunity sites," says Jennifer Keesmaat, of the Office for Urbanism, an urban planning and design firm, working on large-scale planning projects across Canada.

Community markets. Community gardens. A place for local festivals and celebrations.

And, of course, development – condos and other buildings are already slated for some former dealerships, including the Addison Cadillac dealership on Bay St. and the Old Mill Pontiac Buick site at Jane and Bloor Sts. – Old Mill is about to move a few blocks to a new site under construction.

Of Canada’s 700 General Motors dealerships, between 240 and 280 will close in the next 18 months, half of them in the GTA. According to Toronto’s official plan, existing zoning allows for some redevelopment, depending on the location, says the city’s chief planner, Gary Wright. And many dealerships are on main streets and avenues, viewed by the city as spots for commercial and population growth.

"In a general context, there is a role for those properties to play," Wright says.

But don’t expect them all to become condos, says Michael McClelland, principal architect at ERA Architects. "Given the area some of them are in, there isn’t going to be an instant call for having high development potential."

Experts expect many dealers to try to hang on to the automotive industry by switching to used cars or another brand. But they say while that may work for some, it won’t work for all.

So how else to make use of these properties?

"The challenge typically associated with a car dealership is that it usually ain’t pretty," Keesmaat says, since the buildings are usually one storey and set back from the street.

But there are many uses that could be permanent or temporary without involving infrastructure investment. "Parking lots traditionally have been the birthplace of community gardens and community markets," she says cash til payday. "Those types of hard surfaces, when they’re in a community, are a great place for festivals and events."

In an area without a development market, five- or 10-year leases for artistic or community purposes could be successful, McClelland says. Better that than sitting empty. "Toronto hasn’t had a history of large vacancies," he says. "It’s a social issue."

There can be a cultural solution, too. Neighbourhoods with a higher percentage of certain ethnic groups could benefit from space for incubator markets. In a well-developed area, says planner Joe Berridge of Urban Strategies, those properties can be great assets, becoming mixed-use buildings, with space for commercial, residential and office use.

There will likely always be a need for dealerships, but some are moving from large lots into buildings with great success, Berridge says. "They are getting much more urban," he says.

A perfect example of that is the eye-catching BMW dealership visible from the Don Valley Parkway, done by Quadrangle Architects.

"Everyone knows the auto industry is going through a catastrophic change, but we’re not going to just overnight eliminate cars, so therefore we’re not going to eliminate dealerships," says Quadrangle’s Brian Curtner. The BMW dealership, a former office building, is an example of adaptive reuse, a concept that may apply to some of the closing dealerships if the structures have "good bones," he says. "Many of the suburban one-storey buildings are not that malleable."

Nowadays, a new car order can be created entirely online, but Curtner notes he recently purchased a new car and did all his research on-site. "At some point you need to go and make sure that what you were imagining online is actually the reality," he says.

McClelland recalls how different a drive up Yonge St. through the downtown core was 20 years ago, with gas stations on many corners. "Most of those gas stations have now been replaced by smaller commercial property," he says. "The same thing may happen here."

And though it’s impossible to predict the outcome, there will be a metamorphosis. "Land use sometimes changes overnight and it frees up the potential to think of other things," McClelland says.

Ultimately, each closing property will evolve into something that fills a need or complements the immediate surrounding area, Curtner says. "That’s where the creative part comes in."

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Stock markets are likely in for a lower open Monday on sentiment that the strong spring rally on stock markets is due for a pause while a strong American currency helped punish commodity prices .

The drop comes after the Toronto S&P/TSX composite index roared ahead just over 40 per cent since early March.

The rise has in particular been supported by a 150 per cent charge ahead in the base metals sector and a 45 per cent jump in the energy sector on hopes that an economic recovery will boost demand.

But advances on North American markets slowed last week as traders looked without much success for fresh signs the economy was strengthening.

The main Toronto index edged up 0.7 per cent or 76 points last week while the Dow Jones industrial average was flat, up a slight 36 points for the week.

Indexes were held back in part by worries about higher interest rates as U.S. Treasury yields hit a high for the year of four per cent at one point during the week.

The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.75 per cent from 3.80 per cent late Friday.

The U.S. dollar strengthened Monday morning, which sent the Canadian dollar down 1.16 cents to 88.29 cents US.

Russia's finance minister, Alexei Kudrin, said during a weekend meeting of G-8 finance ministers in Italy that the dollar's status as the world's main reserve currency wasn't likely to change soon. He has been one of those in the Russian administration raising concern about the dollar in recent months.

The stronger greenback also pressured commodity prices with the July crude contract on the New York Mercantile Exchange down 79 cents to $71.25 a barrel.

The Toronto base metals sector will likely trade lower as the July copper contract in New York stepped back five cents to US$2.32 a pound.

Gold prices also headed lower as the August bullion contract on the Nymex dropped $6.40 to US$934.30 an ounce. On the corporate front, investors took in a major deal in the financial sector.

In corporate news early Monday:

– Sun Life Financial Inc compare car insurance prices. (TSX: SLF), one of Canada's largest insurance companies, says it is acquiring the United Kingdom operations of Lincoln National Corp. for about C$395 million. The deal is expected to be completed in the third quarter.

– Crescent Gold Ltd. (TSX: CRA) said it has signed a deal with subsidiaries of Barrick Gold Corp. (TSX: ABX) under which Barrick will buy gold ore from Crescent's Laverton gold project north of Kalgoorlie in Western Australia.

Under the deal, announced Monday, Barrick will treat the ore at its nearby Granny Smith mill. The agreement came after of memorandum of understanding between the two companies signed in February.

– Uranium One Inc. (TSX: UUU) says it has inked a deal to acquire a 50 per cent interest in the Karatau Uranium Mine in Kazakhstan. It will buy its portion of the mine from the Russian state-owned uranium mining company known as "ARMZ" (JSC Atomredmetzoloto).

The statement says the purchase price will be paid by way of the issuance of 117 million common shares of Uranium One, which closed at $2.83 on the Toronto Stock Exchange on Friday, and a cash payment of US$90 million.

– Natural gas giant EnCana Corp. (TSX: ECA) said it has entered into fixed price hedge contracts on about 35 per cent of the company's expected natural gas production. The Calgary company said the hedge applies to about about 1.39 billion cubic feet per day of its gas production in 2010.

EnCana said it will get an average price of US$6.21 per thousand cubic feet for the 2010 gas year, which runs from Nov. 1 to Oct. 31, 2010.

– Pilot trainer and aviation technology provider CAE Inc. (TSX: CAE) said it won a series of contracts from U.S. defence contractor Lockheed Martin and an undisclosed customer to design and manufacture four C-130 simulators and several training devices for military customers around the world.

The contracts were signed over the last three months and are worth more than C$115 million in total.

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The Missouri Insurance Department is forbidding the Universal Casualty Company from writing new insurance policies in the state, following a rash of consumer complaints.

The Chicago-based company writes auto insurance and collects $5.9 million in premiums a year in Missouri.

The department says the company is slow to respond to claims and refuses to send insurance adjusters to inspect damage, relying instead on car owners to send in photos and police reports. Universal makes "low ball" settlement offers and sometimes refuses to pay claims without conducting a reasonable investigation, the insurance regulators say unsecured personal loans online.

A company spokesman declined comment.

The Insurance Department reports receiving 63 complaints against the firm this year, 13 times the number it would expect from a company its size. The company will be allowed to continue servicing existing policies.

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New rules proposed by the Ontario government would forbid the placement of large wind turbines closer than 550 metres to a residence, a distance that could affect the economic viability of many wind projects across the province.

The province-wide regulation would create for the first time a minimum setback distance for wind turbines from dwellings, roads, railway lines, wetlands and other environmentally sensitive lands or airspace.

Wind turbines emit noise and some rural residents have complained the massive machines are disrupting sleep and making people sick. The proposed setback aims to keep noise levels below 40 decibels, which, according to the government, is a level "experienced in a quiet office or library."

Sean Whittaker, policy director at the Canadian Wind Energy Association, said the 550-metre setback is not a surprise. He said Energy and Infrastructure Minister George Smitherman had already publicly stated that 500 metres would likely be a starting point.

"Our members right now are going through the guidelines and determining what impact they’ll have on their projects," Whittaker said. "We will be providing feedback to the government through the normal review process."

The ministries of environment and natural resources will hold information meetings at six locations across Ontario this month, where the public will get a chance to voice their support or concerns.

Wind Concerns Ontario, a coalition of citizens who oppose industrial wind development, called the proposal a "promising move in the right direction" but urged the government to go further. In recent months, members of the group have called for mandatory setbacks of 1,500 metres or more.

Coalition spokesperson Beth Harrington said the setback should be measured from property lines, not from the actual place of dwelling. She added that the proposed regulation does not adequately address low-frequency noise or deal with individuals affected by existing wind-turbine developments.

The required setback for new projects could run as high as 1,500 metres if a cluster of 16 or more turbines emit a combined manufacturer’s decibel rating of 106 or more, but experts called that an unlikely scenario that is already a possibility under existing regulation.

David Timm, vice-president of strategic affairs at Toronto-based wind developer AIM PowerGen, said a developer could reduce the setback distance down to the 550-metre minimum by proving through a noise study that actual sound is below 40 decibels.

Timm said those noise studies and the 40-decibel target are common in the industry. What developers must now come to grips with is a province-wide minimum setback of 550 metres even if noise levels are proven to fall below 40 decibels.

"Noise issues are very site specific," he said, adding that minimum setbacks were generally between 300 and 450 metres when municipalities controlled the process.

Whittaker said that adding another 50 or 100 metres to setbacks might not seem like much, but it can ruin the business case of a wind project when combined with other planning constraints.

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DETROIT — Chrysler was reborn Wednesday under a new Italian parent, but it can’t shake the shadows of its past: It’s not selling enough cars, its fleet is tilted to trucks and SUVs, and help is more than a year away.

A 42-day stay in bankruptcy court cleansed the company of much of its debt and labor costs, but many analysts say Chrysler’s immediate future is bleak. It lost $8 billion in 2008, and sales are down by almost half through five months of this year.

Cars designed by its new owner, Italy’s Fiat Group SpA, won’t make it to the U.S. until late 2010. And even then there are no guarantees American drivers will want the small cars Fiat specializes in.

"Fiat is really not a known commodity in the U.S. market," said David Koehler, a clinical marketing professor at the University of Illinois at Chicago. "It doesn’t resonate with the target market."

The new Chrysler began operations Wednesday morning after the U.S. Supreme Court refused to hear an appeal of lower court decisions that allowed the transfer of most of the old Chrysler’s assets to Fiat.

Fiat CEO Sergio Marchionne was named chief executive of the new company and quickly shook up the management, replacing Chrysler’s chiefs of marketing, finance and product development and cutting layers to make the company more focused on individual brands, such as Jeep, Chrysler and Dodge.

Jim Press, who was Toyota Motor Corp.’s top U.S. executive until he joined Chrysler in 2007, was named deputy CEO and probably will run the company when Marchionne is in Italy.

In an e-mail to Chrysler’s 54,000 workers, Marchionne acknowledged the company’s problems and said he was determined to repair them payday advance online. Five years ago, he wrote, he stepped into a similar situation at Fiat, perceived at the time as a failing bureaucracy that made poor cars.

"Through hard work and tough choices, we have remade Fiat into a profitable company that produces some of the most popular, reliable and environmentally friendly cars in the world," he wrote. "We can and will accomplish the same results here."

Work is already under way to convert some Chrysler factories to produce small Italian-designed cars. Neither Chrysler nor Fiat, however, would say which models would come first or how many would be imported to the U.S.

Chrysler also plans to roll out new versions of its popular Jeep Grand Cherokee SUV and Chrysler 300 large sedan by the end of next year, along with a rechargeable electric vehicle. But analysts said those probably were delayed in the bankruptcy process, making the next 18 months look iffy.

The good news for Chrysler is that it has cut its expenses enough that it can break even with lower sales, said Gary Dilts, senior vice president of global automotive operations for J.D. Power and Associates.

Some of those cuts, however, costs thousands of jobs in the St. Louis area. Chrysler’s Dodge Ram assembly plant in Fenton is scheduled to be permanently idled by the end of September, and last year the company closed its minivan assembly plant, also in Fenton.

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MONTREAL – Air Canada's (TSX: AC.B) shares got a lift Tuesday after the financially strapped airline reached tentative deals providing a 21-month moratorium on pension contributions with three unions.

The Montreal-based airline's shares gained nearly 13.5 per cent in trading, gaining 19 cents to $1.60 on the Toronto Stock Exchange.

Investors were responding to an overnight announcement that deals had been reached with three of Air Canada's five unions, moves that will save the airline millions of dollars in costs as it tries to deal with a cash crunch during the current recession.

Talks are continuing with unions representing pilots and flight attendants.

The agreement achieved with machinists, service agents, dispatchers and retirees provides the airline with labour peace and would save it millions of dollars in annual pension contributions for past service.

In exchange, workers will obtain an unknown equity stake in the airline to mitigate the risk of them agreeing to defer pension contributions individual health insurance plans.

Air Canada parent company ACE Aviation Holdings (TSX: ACE.B) would also become involved in financing the airline.

Leslie Dias, local president of the Canadian Auto Workers' Union which represents 4,500 service agents, said the tentative contract agreement will provide security for members while helping the airline to avoid another court filing for bankruptcy protection.

Ratification votes are expected next week. The union's first attempt to ratify a tentative contract agreement failed earlier this year.

Airline analyst Jacques Kavafian of Research Capital Corp. said labour agreements with all employees, while positive, would be only one part of the effort needed to ensure Air Canada's survival.

He said the airline must still raise financing and reduce its operating costs.

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When the closely guarded NHL constitution becomes a public document, hockey icon Wayne Gretzky becomes a target and even the Toronto Argonauts are drawn in, you know the gloves are off in the battle for the Phoenix Coyotes.

The increasingly messy business of saving or relocating the bankrupt team – which in some ways is overshadowing a highly entertaining Stanley Cup playoffs – has allowed an unprecedented look behind the scenes at the NHL.

The league’s constitution has historically been kept hush-hush, but it’s now available (links on right-hand side of page) after the Coyotes’ legal team filed a marked-up version of it yesterday as evidence.

The legality of that constitution – the backbone of the old boys’ club which BlackBerry billionaire Jim Balsillie desperately wants to join – is at the heart of the conflict over whether the Coyotes can relocate to Hamilton.

Among the legal slings and arrows let fly in the cascade of documents filed yesterday:

• Argos co-owners David Cynamon and Howard Sokolowski are among four groups interested in buying the Coyotes.
• Coyotes’ lawyers maintain the league constitution proves the Toronto Maple Leafs hold a veto – in violation of the Canadian Competition Act – that prevents another team from moving to Hamilton.
• According to the NHL, the $212.5 million (all figures U.S.) offer from Balsillie to buy the Coyotes is more like $165 million.
• The Phoenix suburb of Glendale, desperate not to lose the anchor tenant at the arena it went $200 million in debt to build, suggested Gretzky, the Coyotes’ coach, is overpaid and should have his annual salary slashed by $6 million.
• The NHL is threatening to charge a "substantial" fee if the Coyotes are moved to Hamilton.

Balsillie, NHL Commissioner Gary Bettman, Coyotes’ owner Jerry Moyes, their lawyers and various other minions and allies filed dozens of documents – some as long as 100 pages – into the wee hours of yesterday in support of their respective causes.

Judge Redfield T. Baum has until Tuesday to go through the legal arguments on relocation and who actually controls the team. He’ll make his decision shortly thereafter.

It will be the culmination of a months-long battle, which has turned into what almost seems a personal war between Bettman and Balsillie over whether Moyes is allowed to sell the insolvent team to an owner the NHL might not want and move it to another market against the NHL’s wishes.

The NHL, which late last year advanced Moyes funds to keep the franchise afloat, argues it has final say. Balsillie calls that position an unreasonable restraint of trade.

The marked-up parts of the constitution filed yesterday are targeted for legal challenges, namely the veto rights, found at the bottom of article 4.3: "No franchise shall be granted for a home territory within the home territory of a member, without the written consent of such member payday loan."

Hamilton is considered part of the Leafs’ territory since it’s within a 50-mile (80-kilometre) radius of Toronto. Coyotes’ lawyers say the Leafs have prevented relocations to Hamilton before – the last was an attempt by Ottawa – and aren’t likely to approve this one. The Leafs refer all calls to the NHL.

Coyotes’ lawyers say the NHL’s constitution violates Canadian competition laws and U.S. antitrust laws and implored the judge to ignore it.

Till now, Gretzky – a minority owner and hockey deity – has been treated with kid gloves in these proceedings. Although the Great One is also a creditor in the bankruptcy, his name is rarely invoked. So it’s quite a shock Glendale would take aim yesterday at the man who has been the face of the franchise.

The city says Gretzky is overpaid and should have his salary slashed by $6 million as part of a $15 million cost-saving measure. Glendale says that could turn the Coyotes into a money-making team, thus negating the need for relocation.

"Reduce compensation to Wayne Gretzky from $8 million to $2 million," concludes a report from Gerald Sheehan of Beacon Sports Capital Partners, hired by the city to go over the books.

Glendale, which is said to be willing to offer tax breaks to a new owner, says mismanagement by Moyes is the only reason the team is losing $30 million a year.

For his part, Bettman cited bylaw 35 of the NHL constitution, which says league rules require a seller to exhaust all avenues before considering relocation. He says the Coyotes haven’t done that.

Bettman said Cynamon and Sokolowski are among four groups who’ve asked to be approved as owners in the bankruptcy auction, set for June 22. Both declined to comment, referring questions to the NHL. It’s unclear whether they would keep the team in Glendale.

Bettman said others interested are Chicago sports magnate Jerry Reinsdorf, Coyotes’ minority owner John Breslow and an anonymous Phoenix businessman. All would keep the team in Arizona.

Their interest and Glendale’s willingness to help in restructuring "all indicate that relocation may well be unnecessary," Bettman wrote.

Balsillie reminded the judge his job is to get the best deal possible for creditors, and believes his $212.5 million offer will do just that.

Bettman thinks otherwise, and believes Balsillie’s offer is more like $165 million.

As for how much Balsillie would have to pay as a relocation fee for moving into the Hamilton market, those numbers were confidential, but Bettman said it would be equal to the difference between the purchase of the Coyotes and the value of a team in southern Ontario.

Some have estimated that could be $100 million.

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The Star recently asked readers for their best advice to deal with a number of recession-related problems. One question we didn’t pose was: "How to prepare for an interview."

But that didn’t stop Colleen Taylor of Stouffville from sending us her tips for completing a successful interview.

"These tips are my own, based on my experience," Taylor says. "They represent what I see as being the greatest barriers to why people are not successful when applying for a position.

"It’s often not because they are not qualified for the job. People just fail to be prepared or they underestimate the importance of being prepared. It’s a competitive marketplace and people need to find ways to differentiate themselves from the other candidates."

Taylor, a veteran manager in private health care, has interviewed many candidates for positions over the years. Anyone trying to jump back into the workforce might find her following tips helpful:

• Know where and when your interview is. Whatever you do, don’t be late. Plan for traffic. Plan for difficulty parking. Do whatever you need to do – just don’t be late.
• Dress appropriately and pay attention to personal hygiene. Is your hair groomed and clean? Are your nails trimmed and are your hands clean? Are you clothes clean? Do you look like you just got out of bed?
• Know how to shake hands 16 pt business cards. Firm and purposeful, no wet-noodle shakes.
• Take time to learn about the job you are applying for. Did you read the posting? Do you know what the key responsibilities are? And do you know what strengths you have that make you the perfect candidate? You will be asked questions relating to this point in any interview.
• Know something about the company you are applying to. Check to see if they have a website. Figure out why you want to work there.
• Choose your references wisely. Make sure you know they will be suitable references and won’t sell you short.
• Know the content of your resum? and bring an extra copy. You may be asked about details you have included. If someone else wrote it for you, be sure you know the content and that it’s accurate.
• Follow up your interview with a thank-you email. Before you leave, ask for the interviewer’s card. Send an email to thank the person for their time. You may even want to highlight again why you think you are perfect for the job.

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NEW YORK — Morgan Stanley, JPMorgan Chase & Co. and American Express Co. moved closer to repaying government bailout money, announcing a series of new stock sales.

The stock offers disclosed late Monday and Tuesday are a precondition for the financial companies to pay back loans received under the Troubled Asset Relief Program last fall. The Treasury Department is expected to announce next week the first group of banks that will be allowed to repay the money.

Hundreds of banks received funds as part of the $700 billion program last fall as the government tried to break a logjam in lending and in credit markets. The largest recipients now are itching to unburden themselves of the loans and the government oversight that comes along with them, although the government must approve any applications from banks to repay the funds.

"They want to get out from under the ‘Scarlet T’ as fast as possible," said Paul Miller, an analyst with Friedman, Billings, Ramsey & Co.
Treasury Department spokeswoman Nayyera Haq declined to comment on the TARP repayment process.

JPMorgan priced an offer Tuesday to raise $5 billion, while American Express said it would raise $500 million and Morgan Stanley said it would raise $2.2 billion. Goldman Sachs Group Inc. and Bank of New York Mellon Corp Internet Payday loans. previously have raised funds with the goal of repaying TARP funds as well.

Keefe, Bruyette & Woods Inc. analysts said the savings banks would get from repaying government loans would far outweigh the negative effect that new shares would have on banks’ stock prices. Analyst David Konrad increased his earnings estimate for JPMorgan based on its stock offer, while analyst Sanjay Sakhrani said repaying the loans could increase earnings for the year by as much as 20 cents per share.

Morgan Stanley received $10 billion in TARP funds, while JPMorgan received $25 billion and American Express received about $3.4 billion. In return for the loans, the government received preferred shares and warrants to purchase common stock. It is still unclear how much it will cost banks to repurchase the warrants.

The wave of stock offers comes less than a month after banks began going to the market to help meet capital shortfalls outlined by the government’s stress tests. JPMorgan and American Express did not need additional funds, but Morgan Stanley was told it needed $1.8 billion. Morgan Stanley has raised $3.5 billion in stock, more than covering that shortfall.

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A major South African trade union yesterday threatened mass strikes to push for bigger interest rate cuts after the ruling ANC cautioned labour unrest could deepen the country’s first recession in 17 years.

The metal workers, who also vowed to take action against commercial banks, made their threat two days before new President Jacob Zuma gives his first state of the union address against a background of global economic crisis.

"If matters are not resolved we will have mass rolling action," National Union of Metalworkers of South Africa general-secretary Irvin Jim said at a news conference yesterday guaranteed payday loans.

While one of Zuma’s biggest tests is how he handles investors, he must also deal with the trade unions that helped his rise to power after years of crises, corruption cases and ANC power struggles that he says nearly ruined him.

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