Highways official warned of 'political pressure' and 'fabricating numbers' in land deal with GTH
Former senior Highways official goes public on Global Transportation Hub
The man who was in charge of making sure Saskatchewan's Ministry of Highways followed its own land buying rules says it failed miserably three years ago, when it purchased property from the Global Transportation Hub.
In early 2014, Jeff Grigg, then-director of property standards with the ministry, was alarmed that Highways was "under significant political pressure" to buy land from the GTH at a vastly inflated price.
On Dec. 24, 2013, the GTH concluded its purchase of the now infamous 204 acres west of Regina from developer Anthony Marquart.
Within days, the GTH began negotiating to sell more than half of that land to the ministry.
For months, Highways had been planning to buy the land itself. It had the property appraised at $30,000 to $35,000 an acre.
Ridiculous. How did it ever get there? There's no appraisal that gives that number. There's no indicator not even in the ballpark of that number.- Jeff Grigg , former director of property standards for the Ministry of Highways
But to the surprise of Highways officials, the GTH swooped in before the ministry could make an offer and bought the land from Marquart for $103,000 an acre: three times more than Highways' appraised market value.
Marquart, a well-heeled donor to the Saskatchewan Party, made $5 million on the deal.
Grigg, a 35-year veteran with the ministry, found the $103,000-an-acre purchase price shocking.
"Ridiculous. How did it ever get there?" wondered Grigg, who retired in late 2015 and now lives in Alberta.
"There's no appraisal that gives that number. There's no indicator not even in the ballpark of that number."
By January 2014, the ministry had determined it needed 113 acres of that land: 58 acres for the West Regina Bypass interchange and an additional 55 acres to dig a 'borrow' pit, which would provide the soil needed to build up the road.
Grigg said shortly after learning of the purchase, his executive said the GTH would want Highways to pay at least half of the $103,000-an-acre price.
He was worried that standards might be compromised in order to justify that value.
In emails obtained through freedom of information, he urged his colleague, who was trying to figure out what Highways should pay, that they "need to be very cautious here on what [the ministry] pays and we can't be subsidizing the [GTH] just because of their decisions."
'Not in your best interest to be fabricating numbers'
Grigg said his job in Saskatchewan involved writing policies and procedures for buying land in the ministry and providing advice to ensure those rules were consistently followed.
He said he agreed to an interview with CBC News in order to set the record straight about this controversial land deal, which he believes needlessly cost taxpayers millions more than it should have.
"I'm a non-political individual. I'm not trying to embarrass the government," Grigg said.
His emails from 2014 show he was alarmed by the way negotiations were going.
The ministry does not know why any employee would engage in idle speculation of this nature.- Ministry of Highways communications official
"It's not in your best interest to be fabricating numbers," he wrote in early 2014 to his colleague. "Take the high road and let the executive be responsible for their decisions and be giving them the best advice possible and if they don't want to follow it, that's their choice."
Grigg noted that while Highways had appraised the land at $30,000 to $35,000 an acre, someone, whose name was redacted in obtained documents, was arguing that the land was worth closer to $50,000 an acre.
"That's his call," wrote Grigg. "We don't want to be fabricating numbers by trying to add premiums, severance and borrow calculations to the same piece of land as this will get us into major problems."
CBC News asked Highways to comment on Grigg's concerns.
In an emailed statement, an official wrote the "ministry does not know why any employee would engage in idle speculation of this nature."
Grigg says ministry was under pressure
Grigg said based on the ministry's appraisal, $50,000 an acre was unjustifiable as it was much higher than the ministry's market value appraisal.
But an internal email shows the GTH was pushing for much more.
In fact, it wanted the Ministry of Highways to pay precisely what it had paid: $103,000 an acre.
Late in the negotiations, the GTH's chief financial officer wrote: "I think this agreement provides a great framework for the transaction provided that we can make sure the numbers that fill it make us whole." In other words, GTH officials wanted to ensure they got back precisely what they paid for the land.
In the end, that's exactly what happened, according to the provincial auditor's review of the transactions.
The auditor notes the total price of the deal "approximates $103,000 per acre … the amount the GTH paid."
"Whoever crafted this had one intention in mind: getting close to $103,000 an acre so that the GTH wasn't out any money," said Grigg.
"If they could say, 'Well, Highways paid it through these means,' it's somehow justified in the government's mind," said Grigg.
'Horrendous problem for the ministry'
Grigg said the deal is a "horrendous problem for the Ministry of Highways" because it is precedent-setting.
"Everyone's going to want the 103,000-an-acre and it's nowhere near the true value of the land," said Grigg.
He said the ministry can expect landowners to be knocking on the government's door saying, "What about me? If you can crunch these numbers in this way I think you can crunch them again."
It's an argument Rudy Balzer is already making.
The Regina businessman owned comparable land right across the road from the 204 acres. It was also needed by Highways for the West Regina Bypass.
That lead Balzer to wonder why his land was worth so much less one and a half years after this deal with the GTH.
"If it's that costly on the south side of Dewdney Avenue, then the north side should be the same thing because it's going to be part of the same interchange," Balzer said. "I'm not being treated fairly."
He's now making that argument in court.
Grigg said Balzer's case shows this deal between the GTH and the ministry will have lasting consequences for taxpayers.
And it all could have been avoided.
Grigg adamant cheaper price possible
Grigg said in 2010, when he was director of the land branch at the ministry, he told executive he could buy the land for $10,000 an acre.
"I was adamant that it should be purchased," Grigg said. "Why it wasn't is still a question I have today. Why wasn't that land purchased for $10,000 an acre when we had the opportunity to do so as government?"
Grigg said he resigned near the end of 2015 over frustrations that his role was being diminished and the ministry was failing to take its own standards seriously.
He said the GTH land deal story is a case study in why it's crucial that the government has rules and consistently follows them.