Better get used to hearing stories like this...For the record, Public Works minister Michael Fortier, who answers to no voters since he was appointed by Stephen Harper, wants to dispose of many of the 350 buildings taxpayers own across Canada. To do this, he hired two banks – Montreal and RBC – to do a feasibility study on the potential sale of 40 of them. For this, each bank was paid $100,000. The study concluded (not surprisingly) that buildings should be privatized, and the banks picked nine of the best office towers to market as a pilot project. These buildings are currently used to house federal civil servants, plus rent to some other tenants, and the suggestion was that they be leased back for terms of up to 25 years...
...Ultimately, Fortier accepted the banks’ recommendation, and triggered a second contract which gave these same banks the right to market the buildings. The banks will be paid out of the proceeds, expected to be $1.5 billion, on a commission basis. The amount of the commission is unknown. The terms of the potential lease-back are unknown. The amount of money the purchaser will make in profit is unknown, as are the new owner’s obligations in terms of leasehold improvements. In fact, it is impossible to know if this is an advantageous deal for the Canadian taxpayer, or a sweetheart deal for the buyer, or a kiss-off deal for the banks.
2 comments:
Red Canuck: The proposal to sell public buildings and lease them back from the new owners is astoundingly stupid. In fairness, the idea of Government vacating the landlord role (which it has historically not performed well) was first proposed by Scott Brisson during the short-lived Martin government. In his speech to the Economic Club of Canada, in which he laid out his plans, (and which remains on the Public Works website), he did mention that he didn't have any firm ideology on the matter and, fortunately, it turned out that nothing came of it.
The manner in which the Tories have gone about this idea reminds me of Mike Harris' firseale of public assets here in Ontario. We lost so many assets at well below their market value (the Bruce Nuclear deal was the most widely publicized, but certainly not the only such deal). Now it seems the feds want to inflict Ontario's "Common Sense Revolution" on the whole country.
MD - The proposal to sell public buildings and lease them back from the new owners is astoundingly stupid.
I'm inclined to agree with you about this, although I purposely didn't say so explicitly in my blog post, since I don't have the data to back this up. But I think a lot of people are uneasy about selling off public assets without the requisite transparent risk/benefit analysis and at least some idea about the dollar figures involved. The degree of secrecy here certainly lends creedence to the fear that these assets will be sold below market value. This scheme may raise some short-term capital for the feds, but will probably ultimately cost taxpayers a lot more money (which these leaseback arrangements usually do).
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