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23 April 2017
Saskatchewan Government Transfers 300 Acres to CP at No Cost


Regina Saskatchewan - A confidential document obtained by CBC's iTeam says the Saskatchewan Ministry of Highways agreed to provide Canadian Pacific Railway (CP) 300 acres of serviced land at the Global Transportation Hub (GTH) at no cost.
 
The government has steadfastly refused to release this December 2009 contract, despite a recommendation from the Saskatchewan Information and Privacy Commissioner to do so, and despite ongoing pressure in the legislature from the NDP opposition.
 
In addition to the 2009 agreement, CBC has learned the government also signed a two-page amending agreement with CP in 2013.
 
CBC has not obtained a copy of that document.
 
At the time the 2009 contract was signed, CP's rail yard was located on Dewdney Avenue, just north of downtown Regina.
 
But, the agreement says, CP required a new facility "to provide the capacity and level of integrated rail/truck service required by its current and future customers."
 
CP and the province agreed it would be mutually beneficial to work together to find a new location and build a facility.
 
CP sold its old site to the City of Regina for $7.5 million.
 
And the province agreed to provide CP serviced, accessible, land west of the city "at no cost to CP and free and clear of all encumbrances" except for a few easements.
 
The agreement says the land is being given to the private railway company "in consideration of CP's contribution to the project".
 
According to the contract, CP agreed to pay for railway infrastructure, container handling facilities, and buildings for the project.
 
Meanwhile, the Minister of Highways promised to pick up the cost for most everything else, including land, servicing, the moving of power lines, and construction of CP's parking lot and internal roadways.
 
After reading the agreement, Todd MacKay with the Canadian Taxpayers Federation said it appears CP received 300 acres of serviced land for free.
 
"If CP did in fact get this land for free, we need to know why," said MacKay.
 
"It's a pretty good value for CP, it would seem. But how is that a good value for taxpayers?"
 
Serviced Land at No Cost to CP
 
According to land title records, the government expropriated most of the 300 acres from farmers in 2008.
 
It acquired the majority of that land for less than $4,000 an acre.
 
After signing the agreement, the government transferred that land to CP.
 
The agreement says the government will run services, such as water and sewer, to the land at no cost to CP.
 
The ministry told CBC's iTeam it cost $10 million to service the GTH land.
 
The government also committed to pay for "all internal roadways, parking lots for intermodal transfer of containers," and it promised to move power lines wherever they needed to go, at no cost to CP.
 
Despite multiple requests, the Ministry of Highways has refused to say precisely how much taxpayers actually paid for all this.
 
The contract says that for the land, servicing, power line move, and parking lot development, the government is willing to pay "a maximum of $20 million to the total cost of those items."
 
A Promise to Build Roads and Highway
 
The ministry also promised CP it would pay for a series of "improvements" to the surrounding roadway.
 
It committed to construct the West Regina Bypass, beef up Dewdney Avenue, and build a road from Dewdney to the new CP facility.
 
The agreement doesn't say how much all of this will cost nor does it spell out precisely which agency will pay for what.
 
The document references a separate "contribution arrangement" between the province, CP, the federal government, and the City of Regina.
 
However, government officials have confirmed some details about what has been spent.
 
An email from the Ministry of Highways says from 2008 to 2015 the total cost of the West Regina Bypass was $104 million.
 
The province paid $77 million, with Ottawa picking up the other $27 million.
 
It also said the GTH access road cost $4.5 million and the cost of beefing up Dewdney was $1.7 million.
 
Comparing CP and SaskPower Deals
 
Mackay said this deal with CP is puzzling when compared with what SaskPower paid to acquire its land at the GTH.
 
CP officially opened its new facility in January 2013.
 
Later that year, Saskpower purchased less than half that land, 145 acres, for $25 million.
 
That works out to about $172,000 per acre.
 
Using the same value per acre, CP's 300 acres of land would have been worth $52 million in 2013.
 
MacKay wonders why a private company was promised so much at no cost, while a publicly owned company paid top dollar.
 
It's a discrepancy that Mackay says requires an explanation.
 
"SaskPower paid a pretty high price. Maybe there's a good explanation for that, but taxpayers deserve to get that explanation with clarity and, frankly, a pretty detailed balance sheet."
 
MacKay said the SaskPower deal is particularly galling, because since making the multimillion-dollar purchase, the Crown corporation has let the land sit idle.
 
The company has said its development plans are on hold because of difficult financial times.
 
No Comment from CP or Government
 
MacKay added that the agreement with CP leaves many unanswered questions and he said it's possible CP covered the cost of the land by some other means not spelled out in the contract.
 
"A deal this big and complex, you always have to be able to recognize there may be factors not articulated in 11 pages," MacKay said.
 
For weeks, CBC's iTeam has been asking questions of CP and the government about this agreement.
 
In an email, CBC presented the facts in this story and a copy of the 11 page agreement to CP and the government before publishing.
 
However, both agencies have refused to comment for reasons of confidentiality.
 
"CP has not released, and objects to the release, of the agreement," wrote a CP spokesperson.
 
Meanwhile, a ministry spokesperson wrote in a statement that "CP operates in a highly competitive business environment and the Ministry respects the fact that release of commercially sensitive information could harm their interests."
 
But MacKay said the ministry is spending public money and has an obligation to account for it.
 
"As citizens and taxpayers, we own that land. They're buying and selling our land and so it's incumbent on the government to explain why they're doing what they're doing with that land," he said.
 
Government Withholds Contract
 
Last year, CBC's iTeam requested a copy of the CP agreement through freedom of information legislation.
 
The government refused to release it, citing the objections of CP.
 
CBC requested a review of that decision by Saskatchewan's Information and Privacy Commissioner.
 
He found there's no legal reason for the government to withhold it and recommended it be publicly released in its entirety.
 
The commissioner said despite the protests of CP and the Ministry of Highways, the document contained no commercial, financial, or technical information that must be kept private.
 
Since the spring session of the legislature began, the NDP has pushed Premier Brad Wall to make the CP agreement public.
 
"If his moral compass still worked, he would do the right thing, come clean with Saskatchewan people, and release these documents," said Trent Wotherspoon, leader of the Opposition, earlier this month.
 
Wall responded, "we signed a confidentiality agreement as previous governments have in the past with companies, and we feel duty bound to that confidentiality agreement."
 
Taxpayers Federation Wants Full Costing of GTH
 
Wall has also responded to Wotherspoon by assuring him that taxpayers are doing well at the hub because "there's money being made at the GTH on land sold."
 
But MacKay wonders if the facts bear that out.
 
"How can we know whether the GTH is making money if we don't know how much we've spent to get it up and running?"
 
He said out of respect for taxpayers, the government should provide detailed information about what they agreed to pay in this contract with CP and why.
 
Geoff Leo.

Quoted under the provisions in Section 29
of the Canadian Copyright Modernization Act.
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