Montreal Mayor Sees Projects Replacing Corruption

Montreal’s fourth mayor in less than two years is trying to rebuild the city’s reputation and infrastructure.

Denis Coderre, 50, is betting the anti-corruption promises that lifted him to office can help attract the cash needed to modernize the 371-year-old metropolis. The city projects requiring at least C$21 billion ($19 billion), four times the annual budget, to update its roads, bridges and sewage systems in the next decade. The mayor spent three days in New York this month pitching investors.

“To his credit, he chose to clear the air” and discuss corruption in an April 15 speech to the Manhattan Chamber of Commerce, said Alexis Martin, a New York-based managing partner at Altios International, a consulting firm that helps small and middle-sized businesses expand abroad. “He clearly showed he was willing to tackle this problem.”

Coderre is not only fighting entrenched interests but the hangover of a separatist movement that threatened to split the French-speaking province of Quebec from Canada. While Montreal is known as a North American outpost of European “joie de vivre” -- as Coderre calls it -- its 7.9 percent unemployment rate exceeds the national average and its borrowing costs are higher than Toronto’s and Vancouver’s.

The first step involves persuading investors and businesses he can create what he calls an “honest city.” In the past two years, two mayors of Canada’s second-most populous city after Toronto have been forced out amid allegations of wrongdoing.


Gerald Tremblay quit after 10 years in 2012 following reports that his party received payoffs for construction contracts. His successor, Michael Applebaum, was arrested in June 2013 and charged with conspiracy, fraud, breach of trust and corruption. He resigned the next day. Both men say they did nothing wrong.

Corruption is “always the elephant in the room,” the mayor told reporters in New York.

Besides the speech and a meeting with potential investors at a Cirque du Soleil show, Coderre also held talks with Mark Peters, who runs New York City’s Department of Investigation, a municipal agency founded in 1873 that he said serves as an inspiration for a cultural change.

Three months after his November election, Coderre created the post of an independent inspector general to review all public-works contracts, with the power to cancel them.

“New York lived that, we’re all passing through these cycles,” Coderre said in an interview with Bloomberg News on April 14. “With the inspector general now, we have a new culture of governance.”

Freeing Cash

Coderre also announced a plan on April 3 to cut about 2,200 jobs -- or 10 percent of the municipal workforce -- through attrition to free up cash. Annual savings after five years amounting to about C$240 million will be channeled into upgrading infrastructure, the mayor said.

Works will include replacing the 124-year-old water pipes beneath Ste. Catherine Street, the downtown shopping hub.

In August, a three-meter deep sinkhole swallowed a bulldozer, shutting a busy street for more than two weeks. Authorities attributed the collapse -- at least the third such incident since 2012 -- to repair work on a sewer pipe.

Investors expect progress. The city’s bonds have outperformed debt from Toronto and Vancouver since Coderre’s election. Through April 28, Montreal’s relative bond yields narrowed 13 basis points to 121 basis points, while Toronto’s so-called spreads were unchanged at 88 basis points over the same period, Bank of America Merrill Lynch data show.

Corner Turned

“The corner has been turned,” Coderre said in the interview. “Not only are we open for business, but we mean business.”

That would mark a turnaround.

After the separatist Parti Quebecois won 1976 provincial elections, companies such as Sun Life Financial Inc., Canada’s third-largest life insurer, and Bank of Montreal moved their executive offices to Toronto. Montreal lost 15 company headquarters between 1990 and 2010, according to a January 2013 report by the Fraser Institute, a policy-research group in Vancouver.

Major employers based in the city include Bombardier Inc., the world’s No. 3 maker of commercial aircraft; Canadian National Railway Co., the country’s biggest railroad; and CGI Group Inc., Canada’s largest technology company by market value.

With cobblestone streets and cafe terraces evoking European cities, Montreal’s architecture illustrates the blending of the Old and New Worlds. Coderre rarely passes up an opportunity to tout his city’s cultural offerings -- including what the Guinness World Records calls the biggest jazz festival.

For executives like the consultant Martin, though, it’s neither the politics nor the culture that counts most -- “it’s the economic results,” he said. “Montreal has a cost of doing business that’s much lower than New York, so for investors who want to do business on the East Coast, it’s a great alternative.”

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