Friday, August 29, 2014
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BC Sheds Real Estate to First Nations in Opaque Deals

Sales could signal premier's plan to bypass treaty process in exchange for side benefits.

By Bob Mackin, Today, TheTyee.ca

Premier Christy Clark's chief of staff intervened in the province's sale of real estate to Vancouver-area First Nations.

Dan Doyle's involvement in the sales could signal a strategy by the Clark government to bypass the treaty process and adopt side-deals and short-term partnerships with urban First Nations that were the hallmark of the previous Gordon Campbell administration.

The B.C. government announced March 27 that Tsleil-Waututh Nation and Musqueam Indian Band are buying the 16-hectare Willingdon lands, site of the Maples Adolescent Treatment Centre and Burnaby Centre for Mental Health and Addictions, for $57.9 million.

Tsleil-Waututh and Musqueam also combined with Squamish Nation to buy the 3.6-hectare Liquor Distribution Branch warehouse in East Vancouver in a deal expected to close this fall. The purchase price has not been disclosed, nor has the government disclosed how much net revenue will flow back to the public treasury from the two transactions.

Squamish Nation hereditary chief and band councillor Ian Campbell said that Doyle "did parachute" into talks.

"He wasn't the lead on them, but simply helped because of the tight time frames and the challenges that all parties were faced with to make this happen in just a matter of months," Campbell said.

Doyle, who succeeded Ken Boessenkool as Clark's chief of staff in September 2012, is a retired deputy highways minister and former BC Hydro chair who oversaw venue construction for the Vancouver 2010 Winter Olympics organizing committee. When building was complete, Doyle acted as VANOC's liaison to the Squamish, Tsleil-Waututh, Musqueam and Lil'Wat. Together, the tribes were known as the Four Host First Nations and received grants, contracts and special access to the Games in return for allowing venues to be built within their traditional territories.

Doyle did not respond for comment.

On March 28, Squamish, Tsleil-Waututh and Musqueam signed a formal collaboration protocol regarding the properties. The three were also signatories to the B.C. Treaty Commission process in the 1990s, but only the Tsleil-Waututh talks with federal and B.C. negotiators are progressing.

The land sales stem from the BC Liberals' 2012 promise to raise $700 million from selling surplus property in a bid to balance the budget. How much will be returned to the public treasury after these transactions is not clear. The province says it will be business as usual for now on both sites, because it will lease back the buildings from the new landlords.

Interested buyer Burnaby 'surprised' by deal

Campbell said the province consulted the First Nations last May about the sale of 26 surplus properties in the Lower Mainland and Sea-to-Sky region worth approximately $135 million. Campbell said the trio expressed interest in buying two of the properties in December, setting in motion fast-tracked negotiations that included provincial financing.

"The province made an offer to the nations of a small percentage of what the total package was worth and the nations decided to use those moneys (to) directly reinvest back into the properties," he said.

Finance Ministry spokesman Jamie Edwardson said the unaudited net proceeds from Willingdon are estimated at $53.6 million, after deducting net book value and the costs of environmental assessment, marketing appraisals and legal fees.

"Taxpayers are receiving current appraised market value for best and highest use of the property," Edwardson said. "The province satisfied its duty to consult with the First Nations, and an economic benefit agreement was reached. The terms of the agreement are confidential. It involved a number of properties located in the three First Nations' traditional territories. An accommodation agreement was reached for sign-off of their rights and titles on these properties."

Edwardson also said the accommodation amount was "based on the strength of claim for each of these properties and was an obligation whether or not the First Nations had an interest in acquiring one or more of the properties."

Campbell said there are six months left to close the deal for the LDB property and a private development partner is likely to join. He said there were no immediate plans to redevelop the site, which was assessed at $31 million. LDB hired Ohio-based Sedlak Management Consultants last fall on a contract to help it find a new liquor warehouse location elsewhere in the Lower Mainland.

Campbell said LDB can stay at 3150 East Broadway for another three years with options to renew for up to two more.

Attorney General Suzanne Anton told a budget estimates hearing last July that the warehouse property would go on sale by fall "after the due diligence process is completed." A representative of her ministry said that broker Colliers was "doing market sounding" but the land was not yet on the market. "The sale will be a public process, and we will forward the link to the marketing materials as soon as they are available," read a statement from the Justice Ministry.

On March 7, three weeks before the sale was announced, the ministry issued another statement, claiming: "We are working to achieve the best sale option possible -- a process which includes completion of the required due diligence."

"There has to be some question about what the process was for deciding how to dispose of (the LDB warehouse)," said NDP liquor critic Shane Simpson. "Whether they went in knowing that they had what would maybe be a preferred buyer in some of the First Nations, which would be fine, if you tell people that."

David Greer, a representative of the Ministry of Technology, Innovation and Citizens Services real property division, contacted Burnaby officials on March 27 to advise them of the Willingdon transaction.

"In the course of our legal duty to consult with First Nations on disposition of Crown Lands, an economic development opportunity for the First Nations was realized and the property was acquired," Greer wrote.

Burnaby Coun. Colleen Jordan said that the sale came as a surprise.

"Our staff had been working with them for months on this, and from what we understood from our staff, negotiations were going along pretty good," Jordan said. "If we're equal partners we should've been able to put in a bid and see who had the best bid at the end of the day. We didn't get that opportunity. It doesn't seem right."

Who got the better deal?

A request to interview Minister Andrew Wilkinson was not fulfilled. A prepared statement from his ministry said: "Government policy permits direct sales to First Nations. During this consultation, an agreement was reached to purchase the lands for the full appraised value. The City of Burnaby was aware of the proposed sale from the outset."

Jordan Bateman, B.C. director of the Canadian Taxpayers' Federation, said the government may not have maximized the return for the public treasury by not considering competitive bids.

"You had an interested other party -- did government use that interest to ratchet up the price?" Bateman said. "It's impossible to know how much money was left on the table by not asking for bids."

As for the secrecy surrounding elements of the deal, Bateman said: "If these lands are being sold to First Nations as part of an overall plan to extinguish other claims, great, tell us about it and put all that information on the table."

In February's budget, the government did not show precisely how much land had been sold, only claiming $580-million worth had been sold or is up for sale. Revenue targets for 2013-2014 and 2014-2015 were adjusted to $300 million and $200 million, respectively.

Documents about the so-called Release of Assets for Economic Generation project said property worth more than $1 million that was marketable by March 2014 and not required by government to meet its strategic priorities was eligible for sale. Lands set aside for First Nations treaty settlements, along with ICBC, BC Hydro, B.C. Parks and B.C. Pension properties, were off-limits for sale.

The 550-member, North Vancouver-based Tsleil-Waututh is nearing a land claims treaty with the province and federal government. The B.C. Treaty Commission's annual report said Tsleil-Waututh met regularly in 2013 with negotiators and "continues to make progress."

"There is agreement from all parties to work toward a land and cash offer," said the report.

Musqueam and Squamish are stalled in the third stage of the six-step treaty-making process. Squamish has opted instead for commercial and real estate opportunities, such as the 2010 proposal to build towers on reserve land by the south end of the Burrard Bridge.

In 2008, the 1,300-member Musqueam became the landlord for River Rock Casino Resort in Richmond as part of a $250-million land and cash out-of-court settlement with the province.

All three have shown interest in properties the federal government wants to sell in Vancouver and West Vancouver. The Fairmont land, formerly home of the RCMP's B.C. regional headquarters, was listed along with federal property near Jericho Beach and in West Vancouver in a federal presentation on Strategic Disposal of Surplus Property in Greater Vancouver to a November 2010 federal workshop. 

WHAT'S FOR SALE?

The LDB property includes a head office, flagship retail store, security control centre, data centre, test laboratory, support and training facilities, cafeteria, fitness centre and daycare.

Last September, LDB hired Sedlak Management Consultants of Ohio to help find a new warehouse location in the suburbs and decide whether it should lease or buy the new facility. In 2013, while he was liquor minister, Rich Coleman said he wanted LDB to move to a purpose-built facility.

The biggest purpose-built private liquor warehouse in B.C. is Richmond's ContainerWorld, which already has a pre-distribution contract with LDB. ContainerWorld has a commercial arrangement with Italian-based wine and spirits forwarder Giorgio Gori, a sister company of Exel, the German-owned logistics giant that unsuccessfully lobbied the government to privatize LDB.

ContainerWorld is expanding its 500,000-square-foot Richmond warehouse by 100,000 square-feet for a July 2014 completion. By then, it will be double the size of the East Vancouver distribution centre.

For the year ended March 31, 2013, LDB recorded $2.95-billion gross sales and a $1-billion profit transferred to government.

— Bob Mackin

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