After analyzing the BC Liberal surplus land sales scheme, British Columbia’s auditor general wants the NDP government to do a better job to protect the integrity of bidding.
Carol Bellringer’s July 10-released report, An Independent Audit of the Ministry of Citizens’ Services Real Estate Asset Sales Management, included seven recommendations after her staff examined the first two years of the so-called Release of Assets for Economic Generation (RAEG) program.
“Ensure controls are in place to prevent and detect real or perceived bias, bid rigging, and collusion,” Bellringer recommended. “Improve public accountability reporting on sales of surplus real estate.”
RAEG was introduced in 2012 for the Citizens’ Services Ministry to sell unused or underused provincial land and buildings to help balance the 2013-2014 and 2014-2015 budgets, save maintenance costs, create jobs and spur economic activity on the surplus land. Bellringer’s staff looked at 14 of the 101 sales, which represented three-quarters of proceeds. The 101 sales reaped $435 million, which surpassed the $421 million target, but Bellringer said the land sales team should have done more to assess costs and benefits of selling versus holding surplus assets.
“More specifically, the Ministry of Citizens’ Services only focused on the revenue target, rather than all three of the planned benefits of the RAEG initiative: revenue, generation of economic activity and cost savings,” Bellringer wrote.
Bellringer found that sales averaged 97% of the appraised value, except for the Burke Mountain lands in Coquitlam.
Bellringer had no issue with the Burke Mountain appraisals, but she found fault in the sale to a major BC Liberal donor because government allowed bids for both individual and group parcels.
In 2014, the government put 21 land parcels totalling 584 acres for sale on Burke Mountain. Colliers International was hired as the broker. A forests ministry-sourced appraisal valued the lands at $145.96 million, but the government sold all but three for $93.83 million.
Fourteen of the 21 parcels were sold to Wesbild Holdings for $85 million, or two-thirds of the appraised value. City of Coquitlam bought four parcels at $11.83 million, or 80% of the value.
Between 2005 and 2017, Wesbild Holdings donated $504,101.30 to the BC Liberals. From 2012 to 2017, it donated $60,960 to the NDP. Last year, the NDP banned donations from corporations.
“We found direct comparability of the bids, based on the price offering for each parcel, was not possible, because government did not require bidders submitting grouped bids to disclose how much they were offering for individual parcels within their grouped bid during the bidding process.”
Since the end of the two-year time frame, the ministry created a Strategic Real Estate Service branch in the Real Property Division, updated guidelines and procedures, and now requires bidders to certify that their bid is independently developed and there has been no communication with competitors.
“No new property listings have been listed to date,” the report said.
The government also paid $67 million in accommodation costs to First Nations under the program.
Bellringer appeared to only scratch the surface, because the Burke Mountain sale was the only one mentioned specifically in her report.
In 2013-2014, the province took in $312.98 million, $125.79 million in 2014-2015, and $358.33 million in 2015-2016, for a three-year total of just over $797 million.
Under the program, the BC Liberal government also sold the 5.8-acre Dogwood Lodge property in South Vancouver to Onni, a major donor to the BC Liberals and Vision Vancouver, for $83.5 million in April 2015. The land was assessed at $149.27 million in 2017.
The land around Superior, Menzies, Michigan and Kingston streets near the Legislature in Victoria, called South Block and Portion Q, was assessed at almost $43 million in 2017, meaning it appreciated by almost $9 million since Concert and Jawl bought it.
Polygon bought and redeveloped the former Steveston Secondary land as luxury townhouses. It was assessed at $177.74 million in 2017 — an increase of $136.6 million from the purchase price.
The Willingdon Lands in Burnaby were sold to three First Nations backed by the Aquilinis for $57.9 million in 2014. The land increased by $14.85 million to $72.75 million in 2017.
Documents obtained under freedom of information show that $61.35 million was sold in 2016-2017.
The biggest sale netted the province $13.9 million at Fraser Heights in Surrey, to Vesta Properties, which paid $16.5 million. Murrayville Elementary in Langley was sold for $10.04 million to Lanstone Homes (Murrayville), a $9.1 million net for the province. Squamish Nation Land Holdings Ltd. paid $3.36 million for the Cheekye Fan, which was worth $3.2 million to the province.
Figures in 2017-2018, so far, included the $20 million sale of the Cottonwood Lands in Maple Ridge to Polygon Development 309 and Morning Star Homes, which netted $14.57 million for the province.
The documents said that net proceeds from the sale of Station Street Properties, which is earmarked for the new St. Paul’s Hospital, were reduced to $0 from $10.3 million. Approval to delete the property from the program was rejected in April 2017.
“Providence Health Care has been advised by their auditor, KPMG, that there will be no net gain realized from this transaction. Property transfer completed in 15/16; transfer was overseen by the St. Paul’s Hospital Redevelopment Oversights Committee and VCHA.”
Citizens Services spokeswoman Joanne Whittier told theBreaker in May that the RAEG program was discontinued in 2017 and the 2017-2018 sales revenue figure was on the miscellaneous revenue line item in the quarterly budget reports forecasts.
“Now when making decisions about whether or not to sell surplus lands, the ministry carefully considers whether properties can support new public infrastructure and provide social benefits to the community through development of schools, health care facilities, affordable housing and child care facilities.”
In June, for example, the ministry transferred vacant property in the Village of Queen Charlotte to BC Housing, for supportive housing.
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