Privatizing federal buildings a sweet deal for owners

I posted about this earlier but there is a lot more detail about the deals in this post from the Harper Index. Of course there is virtually no criticism that I have seen from the media. The opposition parties should be all over this. Perhaps the NDP at least will pick it up.


\Privatizing federal buildings a "sweet deal" for new owners

25-year deal leaves taxpayers responsible for billions in undefined future rent and maintenance costs.

Ottawa, September 6, 2007: Overshadowed by the Montebello summit in August, the Harper government announced it had sold off sixteen federal buildings on nine properties to a company from which it will rent them back at great profit to the new owner.

The nine federal properties in different parts of Canada were sold to Larco Investments for $630 million less than assessed market value, according to the National Union of Public and General Employees (NUPGE). Larco is a Vancouver- based company whose holdings include hotel and casino interests in Las Vegas.

The government plans to lease the buildings back from Larco at $79 million annually, plus open-ended management and maintenance charges, for 25 years. Larco gets an option to extend the leases indefinitely beyond 25 years.

The nine properties sold to Larco include:

- The Sinclair Centre 757 West Hastings St. in Vancouver;

- The Government of Canada Building at 401 Burrard St. in Vancouver;

- The Harry Hays Building at 220-4th Ave. South East in Calgary;

- Canada Place at 9700 Jasper Ave. in Edmonton;

- The Joseph Shepard Building at 4900 Yonge St. in Toronto;

- The Thomas D'Arcy McGee Building at 90 Sparks St. in Ottawa;

- The Skyline Complex, which includes seven buildings in the Nepean area of Ottawa;

- The Revenue Canada building at 305 Rene Levesque West in Montreal; and,

- RCMP headequarters at 4225 Dorchester West in Montreal.

In total, the Conservatives plan to sell off some 40 federal properties, carrying out an exercise started but not completed by the Martin Liberals.

Senator and public works minister Michael Fortier said, in a statement that it was "a fair deal for taxpayers" because the $1.64 billion sale price was $400 million higher than the assessed value of the properties.

NUPGE said, in response, "In fact, the Harperites appear to be deliberately downplaying the real value of the properties to make the sale look like less of a giveaway of public assets than it appears to be."

Independently assessed at $2.3 billion

"Contrary to government claims, the buildings were assessed independently by Informetrica at $2.3 billion, meaning that they were sold off at $630 million less than their fair market value," said Patty Ducharme of the Public Service Alliance of Canada (PSAC). Informetrica, a privately-owned Canadian company specializing in quantitative economic research, assessed the properties PSAC's request.

"This is a give-away of colossal proportion," said Ducharme. "In addition to ceding ownership of nine premium properties, the federal government has, in effect, written a $630 million cheque signed by Canadian taxpayers."

Informetrica arrived at this conclusion after analyzing details related to the sale of the buildings and information from publicly available sources.

"The structure of the transaction leaves taxpayers responsible for all maintenance and upgrades to the interior of the buildings," said Ducharme. "Tax dollars will ensure that the heating systems, windows, elevators, plumbing and electrical systems, etc. in these newly private buildings will be kept in top shape."

The deal requires taxpayers to pay Larco a management fee based on a percentage of the gross rent paid at each building. It also prohibits Ottawa from buying back the buildings at the end of the lease if the buy-back results in a financial advantage to the federal government.

"This a sweet deal for the new owners and a lemon for taxpayers. It's a 25-year guarantee of steady profits. Taxpayers will pay extra operating and maintenance costs, and the federal government will be able to buy back the buildings only if taxpayers do not benefit financially," Ducharme said.