City Manager Bob Nicolay says the City of Medicine Hat is seeking a third party operator for Invest Medicine Hat (Tiffany Goodwein/CHATNewsToday)

By Tiffany Goodwein

City no longer ‘invested’ in Invest Medicine Hat; division to be outsourced

Jul 13, 2021 | 6:14 PM

MEDICINE HAT, AB – It happened a few years ago, and now it will happen again. A city department responsible for municipal land sales and economic development will be going to a private operator.

City Manager Bob Nicolay confirmed the city is looking to hire a third-party contractor to operate Invest Medicine Hat.

Invest Medicine Hat became a city department in 2019, after being contracted out in 2013. Nicolay said the move to a private operator is a cost-saving measure.

The latest budget update showed Invest Medicine Hat is projected to lose $912,000 by the end of the year. The previous budget update in October projected Invest Medicine Hat’s losses at $1.2 million.

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Nicolay said the losses indicated in the budget are due to the COVID-19 economic downturn.

“It’s been very difficult to do lot sales and land sales and business attraction in the midst of the pandemic. But that aside the whole process of looking at outsourcing Invest Medicine Hat is consistent with Accelerated Financially fit, so we are hoping to save in the vicinity of $1 million a year,” he said.

A request for proposals went out on June 15 and it is expected to close Monday, July 19. There was no formal announcement about the request for proposals, something Nicolay admitted was a mistake on his part.

Not a conflict of interest, city says

Jason Melhoff, the city’s current Managing Director of Invest Medicine Hat has submitted a bid to operate Invest Medicine Hat under the private company Orka Management Group (City Of Medicine Hat Website)

CHAT News has learned that one of the people who has registered to place a bid to operate Invest Medicine Hat is Jason Melhoff, the city’s current managing director.

Melhoff is listed as a bidder under the private company Orka Management Group located at 660 Second Street, otherwise known as the Compass Business Centre. The location is where the original Invest Medicine Hat office was situated when it was privately operated under Ryan Jackson.

When asked about a potential conflict of interest, given Melhoff’s current role as a city staff member, Nicolay said the city has a very fair and proper process and there are no conflicts.

“His (Melhoff’s) company isn’t in economic development. His company is as a developer, and we knew that when we hired him to come in and set up Invest Medicine Hat in the first place. Absolutely no conflicts. In fact, we check those every step of the way. We have a very thorough process to ensure that no conflict of interest ever invades decision-making at city hall,” Nicolay said.

Nicolay first encountered Invest Medicine Hat in 2016, when he was a businessman. He said he was extremely impressed with the model and how it generates economic development. Invest Medicine Hat was widely known for bringing Aurora Cannabis to the city. Aurora Cannabis announced back in November that it would be pausing operations indefinitely, and in March confirmed that the greenhouse facility located in the Box Springs is for sale.

Still, Nicolay said the model is one that is successful.

“It is extraordinarily effective at creating B2B business to business conversations about investment in our community, creating employment opportunities, creating economic growth, it really is the economic engine behind growing the assessment base so we don’t have to grow the tax rates ” he said.

At the time of the interview, Nicolay was unable to say how much it cost the city to bring Invest Medicine Hat into the public sector, or if it will cost taxpayers once they privatize, only to say, it was an efficiency measure to bring it in and it will be an efficiency measure to outsource it.