Saskatchewan·CBC Investigates

Landowner's $129K appraisal 'irrelevant' to GTH land negotiations: Auditor's report

For months Premier Brad Wall and his government have defended the decision of the Global Transportation Hub to pay $103,000 an acre for 204 acres of land, even though government appraisals said the land was worth far less.

Auditor says seller’s appraisal provided to GTH only after negotiations were complete

Saskatchewan's auditor, Judy Ferguson, found that the GTH negotiator considered the $129,000 appraisal obtained by the seller to be 'irrelevant.' (Mike Zartler/CBC)

For months Premier Brad Wall and his government have defended the decision of the Global Transportation Hub to pay $103,000 an acre for 204 acres of land near Regina, even though government appraisals said the land was worth far less.

Wall claimed the seller had an appraisal that said the land was worth $129,000 an acre and the government had to take that into account.

However, a special report by Saskatchewan's provincial auditor into the GTH land deal casts doubt on that explanation.

Government appraisals said the land was worth between $30,000 and $65,000 an acre. Bill Boyd, the minister responsible for the GTH, said the seller's appraisal had to be considered.

"We had appraisals at a lower amount. We had appraisals at a higher amount and we came in somewhere in between," Boyd said. 

And during the election campaign Wall told the media he wished the GTH would release the $129,000 appraisal publicly because, "It shows that their appraisal was, the land was worth $129,000 an acre and we paid $103,000 an acre."

Government negotiator considered $129,000 appraisal 'irrelevant'

But the auditor's report revealed that Boyd's senior advisor, who negotiated the deal "deemed [the seller's] appraisal as irrelevant to the negotiations. As a result he did not formally review it."

In fact, she revealed that "the GTH did not receive the landowner's appraisal until negotiations were complete."

The NDP opposition said that is a stunning revelation.

It's alarming and concerning that the premier would have used this as his defence for months.- Trent Wotherspoon, interim leader of the NDP

"[Wall] was holding out that he had this appraisal that justified this exorbitant sum that ultimately wasted all this money. That was his defence," said Trent Wotherspoon, the interim leader of the NDP. "And that's been blown out of the water here today."

"It's alarming and concerning that the premier would have used this as his defence for months to learn now that that actual appraisal was never even reviewed by the government by the GTH before they offered to purchase and pay the exorbitant sum that wasted millions of dollars."

The auditor concluded that the GTH didn't have a business case for buying the land, failed to do its due diligence and did not keep key documentation. In addition she noted the GTH had a unique structure there were no clear lines of responsibility in the purchase and "these factors contributed to buying this land at a significantly higher price and not in a financially responsible manner."

Auditor reviews $129,000 appraisal

Ferguson said if the GTH had reviewed the seller's appraisal it may have discovered some factors that would have helped to negotiate a better price.

Her review of the document discovered that the appraisal "was prepared in February 2013 for a purpose other than selling the land."

She found the appraiser used a different methodology than the GTH demanded of appraisers it hires. The GTH and the Ministry of Highways "consistently instructed their appraisers to use the direct-comparison approach."

That's how they arrived at the valuations of between $30,000 and $65,000 an acre. The seller's appraisal didn't use the direct comparison approach.

In addition, the appraisal had been conducted on only one piece of the land for sale — the northwest quarter section — which the GTH appraisal valued at 20 per cent more than the southwest quarter section.

The premier said a range of factors were considered before arriving at the final price for the land, including the rising price of land and the give and take of normal business negotiations.

In the end, despite raising concerns about processes, due diligence and overpayment, the provincial auditor noted that she found no evidence of conflict of interest or fraud.

ABOUT THE AUTHOR

Geoff Leo

Senior Investigative Journalist

Geoff Leo is a Michener Award nominated investigative journalist and a Canadian Screen Award winning documentary producer and director. He has been covering Saskatchewan stories since 2001.

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