Hydro accused of ‘outright stealing’ in $20.4M land deal

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This article was published 08/06/2016 (2484 days ago), so information in it may no longer be current.

Accusations of theft and bad-faith dealing dominated Wednesday’s discussion of the controversial Hydro land deal by city hall’s most powerful politicians.

Mayor Brian Bowman and members of his executive policy committee reluctantly endorsed the $20.4 million purchase of Manitoba Hydro lands needed to complete the southwest transit corridor Wednesday, but not before the councillors criticized Hydro’s executive and how the final purchase price was reached.

“I’m a strong believer in a deal is a deal,” said Coun. Janice Lukes, chairwoman of the public works committee. “This (deal) is like stealing, in my opinion. Outright stealing. It’s not right, it’s not right.”

“You’re telling us we had an agreement….(Hydro) broke the agreement. How is that acting in good faith?” said Coun. Marty Morantz, the city finance chairman.

An administrative report stated city officials and Hydro had an agreement to let an independent appraiser determine the value of the Hydro lands, but then Hydro balked at the $4.6 million price tag, claiming it was too low. Apparently in violation of the agreement, Hydro got a second appraisal and claimed the land is worth $32-$34 million. Both sides eventually agreed on $20.4 million, with the provision the cost to the city could be lowered if the city doesn’t need all the land and returns some of it to Hydro.

The 31 parcels of Hydro land along the transit corridor combined for a total 16 acres — making the deal worth $1.275 million per acre.

Manitoba Hydro’s board will vote on the deal June 13 and council will vote on it June 15.

But Hydro’s version of how the deal was negotiated is completely different from city hall’s report.

Hydro spokesman Bruce Owen insists the utility has done nothing wrong, relying on the words of City of Winnipeg COO Michael Jack, who said Hydro officials had acted in good faith and that the deal was “fair and appropriate.”

“We have a duty and obligation to obtain fair market value for the disposition of any Manitoba Hydro owned land,” Owen said. “We did that through a negotiated settlement.”

Owen presented a different version of events than had been described by city officials: rather than both sides agreeing to rely on an independent appraiser to set the price for the property, Owen said the process was that each party would obtain the advice of their own appraiser and negotiate a purchase price.

“The process was two sides get their own number and sit down and negotiate a settlement. There was an understanding there would be a process where both sides would get independent appraisals, get their numbers, then sit down and come to a negotiated settlement. Which is what happened.”

City officials went public with the Hydro land deal only Tuesday, when the report was a last-minute addition to the property and development committee agenda, which prompted that group of councillors to go behind closed doors to discuss the situation with senior city managers.

Bowman and his EPC members also went behind closed doors Wednesday to question staff for 40 minutes. When they emerged, several said they were only supporting the deal because the land is needed to complete the construction of the transit corridor.

Jack, the former city solicitor, said the agreement really wasn’t an agreement, more of “an understanding.”

But Morantz, a lawyer, questioned Jack’s position and wondered if the city could challenge Hydro’s change of heart.

Morantz challenged Jack: “You’re a lawyer — an agreement is an agreement.”

Complicating the negotiations between city hall and Manitoba Hydro were two factors: the city desperately needs the Hydro land; and, the city cannot force Hydro to sell the property. While city hall can expropriate private land it needs for projects, the city cannot expropriate Hydro property. It seems that Hydro negotiators took advantage of this situation to squeeze more cash out of city hall.

Transit director Dave Wardrop said the higher price for the Hydro lands will not affect the $587.3 million budget of the transitway project. The city had originally budget $16 million for all land acquisition for the transit corridor. Wardrop said that the Hydro deal will more than double that cost but added there have been efficiencies in designs that will lower the project’s overall cost and accommodate the additional money needed for the Hydro land. Wardrop said the project’s final budget will be disclosed in July, after the consortium doing the final design and construction submits its final work.

Coun. John Orlikow, chairman of the property and development committee, pleaded with his other EPC members for calm, arguing the final price had been negotiated by both sides and that there are positive elements to the arrangement, allowing the city access to Hydro lands for park n ride and kiss n ride facilities and drainage.

“This deal is not as horrific as it’s being made out to be,” Orlikow said.

Later, Jack insisted that Hydro officials had acted in good faith but Morantz refused to accept it, adding he hoped that the new members of the Hydro board — appointed by Premier Brian Pallister — would reconsider the original deal when they meet next week.

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While city officials in the real estate division have been criticized for their involvement in several recent scandals, including the Taylor Avenue fire paramedic station land swap and the police headquarters project, Morantz said those officials did not nothing wrong on this file.

“It was Hydro that changed the deal. Basically put us in an impossible situation. This is not about what we did.”

Jack, though, said city officials will be cautious in dealing with Hydro in the future.

“In hindsight, we thought we had proper agreement on the methodology that was going to be used to arrive at value,” Jack told reporters. “Were we to do this again, we would obviously be approaching it, scrutinizing it much more closely in terms in ensuring that we had absolute agreement. Again, we felt, based upon the correspondence with (Hydro) over the course of many months, that we did but hindsight is 20-20.”

aldo.santin@freepress.mb.ca