Newly revealed contract puts government's justification for GTH land deal in doubt
Documents show no evidence of 'commitment' cited by Bill Boyd
A contract obtained by CBC casts doubt on one of the key justifications the Saskatchewan government gave for buying land for the Global Transportation Hub (GTH) from a politically well-connected businessman at an inflated price.
Bill Boyd, former minister for the GTH, said in a December 2015 interview that the government needed to make the land deal because of a "commitment" to build an interchange off the planned West Regina bypass that would allow trucks to flow into the hub without traffic lights — so-called "free-flow access."
"The free-flow access was always a very key part of the value proposition that we were selling to Loblaws and the railway and any other interested investors," Boyd said. "Every time we met with them that was an issue that was raised with us. 'When are you going to fulfill that commitment that was made to free-flow access?' "
If this was such a lynchpin issue, why wasn't it in the contract?- Todd MacKay - Canadian Taxpayers Federation
Boyd said that pressure drove the urgency to buy the 204 acres of land from Regina developer Anthony Marquart for far more than government appraisals said it was worth.
"Immediately upon doing that, that sort of relieved any kind of pressure we were getting from parties," Boyd said.
Where's this "commitment?"
The contract between the government and Loblaw — a document that has been secret until now — and the land sale agreement with Canadian Pacific Railway don't mention any commitment to "free-flow access" or an interchange. The government did promise to build a comparatively basic road to the GTH.
In the May 2009 contract with Loblaw, the province said it would construct:
- An access road from Dewdney Ave. to the Loblaw property.
- A four-lane divided highway from Highway 1 to Dewdney Ave. including an overpass over the CPR mainline.
- A two-lane highway from Dewdney Ave. to Highway 11.
In addition, a map attached to the contract shows the provinces plans for interchanges on Highways 1 and 11. However, there is no mention of free-flow access or an interchange related to the GTH.
The copy of the contract obtained by CBC is missing a few pages, but its authenticity was not disputed by the government or Loblaw.
The December 2009 land sale agreement with CP is also silent about free-flow access. In that contract the government agrees to:
- Build the west Regina Bypass connecting Highway 1 to Highway 11.
- Build an access road from Dewdney Ave. to CP's facility in the GTH.
- Upgrade Dewdney Ave.
However, in early 2014, the government decided to build an elaborate system of interchanges into the GTH - one on Rotary Ave. and the other on Dewdney Ave.
Todd MacKay, the prairie director of the Canadian Taxpayers Federation, said Boyd's claim that the Saskatchewan government had a "commitment" to build free-flow access to the GTH is puzzling in light of these agreements.
"If this was such a lynchpin issue, why wasn't it in the contract?" MacKay said.
"If there was that much urgency it had to be due to pressure that was applied over and above or outside this contract."
'What was the rush?'
MacKay said that fact raises a much bigger and more important series of questions.
"What was this pressure? What was the rush? Why were they hurrying? What would have happened if they didn't?" MacKay wondered. "Now the government has to answer those questions."
MacKay said the government's approach to buying this land from Marquart appeared hurried and chaotic.
"That final land deal was rushed through… so fast that Highways didn't know what the GTH was doing, and neither of them knew what the minister's office was doing. It was so rushed they couldn't have a conference call as they spend millions of dollars of taxpayers money," said MacKay. "And now we're not seeing that urgency laid out in the contract."
MacKay said it's conceivable there may be some other yet-undisclosed agreement the government made, but he said transparency demands that politicians now produce it if it exists.
"If there was another commitment made, verbal, on the back of a napkin, whatever, they'd better get that sorted out. Because they told Saskatchewanian taxpayers that they spent millions of dollars on land because they had to git'er done. We're not seeing that in the contract," he said.
"So why did we have to git 'er done and what happened to all our money?"
In an email, CBC asked the Premier's office if the government had ever made a commitment to any individual companies that it would create free-flow access to the GTH.
Instead of answering, the Premier's office forwarded the question to the GTH. The GTH spokesperson didn't reply to the question directly.
Instead she wrote "a key feature to the businesses operating and interested in operating at the GTH is access to rail networks and free-flow access to the national highway system."
"Free-flow access is not a feature intended for any single GTH client, but to enhance and deliver on the GTH's purpose as an inland transportation port."
Loblaw contract subject to confidentiality agreement
The land sale contract with Loblaw contains a confidentiality clause the government says has prevented it from answering the most basic of questions about its relationship with Loblaw.
Last month, under questioning from the NDP in the legislature, the minister responsible for the GTH Don Morgan refused to say whether it gave the land to Loblaw for free or sold it to the company.
Obviously the field of dreams has become a field of weeds for much of that land.- Todd MacKay - Canadian Taxpayers Federation
Loblaw provided a public response saying "Loblaw purchased the GTH property in order to build a 1-million-square-foot distribution centre. We have since invested more than $200 million into the site, creating more than 600 jobs in the area and growing our already significant presence in Saskatchewan." Loblaw did not respond to a series of follow-up questions.
The contract confirms Loblaw did in fact agree to pay for the land and it agreed to pay a servicing fee too.
In May 2008, the province expropriated 160 acres of Douglas Voss's land "for a public improvement" for $558,000, or $3,500 per acre. A year and a half later, in December 2009, the province sold that property to a numbered company representing Loblaw for $340,000 or $2,125 per acre.
In the end, Loblaw used just over half of that land, about 83 acres, and returned the rest of it to the province. So it appears that in effect, Loblaw paid just over $4,000 per acre - not much more than the $3,500 the government expropriated the property for.
The contract says if Voss appealed the expropriation amount and won, Loblaw would be obligated to pay the difference up to $10,000 per acre. According to the Deputy Minister of Highways in a 2017 public accounts committee meeting, Voss did complain and the two sides settled but the amount of the settlement is confidential.
So ultimately it's still unclear what Loblaw paid for the land.
The contract also says Loblaw will pay a development fee of $5.525 million to help cover the costs of water, sewer and storm drainage. The GTH's 2009/10 annual report shows it received a development fee for precisely that amount.
Why the secrecy?
MacKay said the public should not be learning the details of an important government transaction from the media almost a decade after it happened.
"The government should not have signed on to that kind of secrecy when they were selling a valuable asset that belonged to the taxpayers of Saskatchewan," he said.
He said getting partial information years later makes accountability difficult.
"We don't know what the justification was for all of the pricing and transactions that happened here. That's a problem. We should be able to go through this stuff just like we should be able to go through the premier's lunch receipts if we want."
Field of dreams now field of weeds
MacKay said the root problem here is the government was using taxpayers dollars to get into business - which is something the Saskatchewan Party used to be against when it was in opposition.
In 2007, the party came to power promising the government would not be involved in picking winners and losers in the economy.
Weeks after winning the election, the Saskatchewan Party started working on its GTH plans. MacKay said if the GTH was such a great idea the private sector would have done it and assumed the risk.
"If the GTH had developed in a free market scenario where developers were developing it as they went along then the government could have matched infrastructure to the needs on the ground," he explained. "Instead because the government really manufactured this operation from the beginning it was the government betting the farm that this thing would be a massive success and nothing would ever go wrong."
And he said that bet, made with taxpayer money, hasn't paid off, as much of the land sits empty.
"Obviously the field of dreams has become a field of weeds for much of that land. We don't have nearly the traffic going into that facility that the government had hoped for."
The government recently acknowledged it should never have been in this business in the first place. MacKay said the government now needs to call a public inquiry to get to the bottom of what went wrong.
MacKay said the government's choice is transparency or years of more stories like this.
"The way this is going to continue to go is it's going to be a drip drip drip of pieces of information coming out and if history is any guide to the future none of these drips are good news," he said.