GTH loses another $3M after land deal goes sideways

New revelations uncovered in a committee meetingby the Saskatchewan NDPshow that more troubles with land deals have driventhe now-infamous government-owned Global Transportation Hubanother $2.9M into debt.

"Taxpayer loses again," said the NDP's Cathy Sproule after learning of the failed deal between the GTH and the Ministry of Highways in Monday's meeting of the standing committee on the economy.

Back in 2014, the ministry agreed to pay $3.6M to use 55 acres of the GTH's land for a "borrow" pit, a source of soil, gravel and sand for the West Regina Bypass. Highways paid the GTH 80 per cent of that money - $2.9M - up front.

But it turned outthe company building the bypass didn't end up using any of that material. When asked by CBC for an explanation as to what went wrong the ministry wrote an email saying the company "found material that better met their needs."

Now the ministry wants to return the borrow pit to the GTH and the GTH is on the hook for that $2.9M.

"It's a liability [for the GTH]," highways deputy minister Fred Antunes toldSproule in the committee meeting. "They will pay that money back to Highways."

Part of the GTH land deal scandal

The transaction for "borrow" material between Highways and the GTH was just one step in a labyrinthine series of transactions which have come to be known as the GTH Land Deal that saw two politically well-connected businessmen make millions on land that wound up in taxpayers hands for far more than government appraisals said it was worth.

Confused about the GTH land deal? Here's a short explainer video

8 years ago

Duration 8:39

In 2015, CBC Saskatchewan's iTeam started looking into a transaction between the Global Transportation Hub and a Regina developer. This video is a summary of what CBC has learned since then.

In December 2013the GTH, at the direction of its then-minister Bill Boyd, purchased 204 acres from Regina developer Anthony Marquart for $103,000 an acre, despite government appraisals saying the land was worth far less.

Jeff Grigg, the director of property standards for the ministry at the time, spoke of his reaction to the deal at the time in an interview last year.

"Ridiculous. How did it everget there?" Grigg asked. "There's no appraisal that gives that number. There's no indicator not even in the ballpark of that number."

At the time, Highways was planning to expropriate the land for $30,000 to $35,000 an acre.

Grigg knew the ministry needed some of that land for its bypass project and was worried the price was going to skyrocket.

In an email at the time, obtained through access to information, he wrote to a colleague "need to be very cautious here on what [the ministry] pays and we can't be subsidizing the [GTH] just because of their decisions."

"It's not in your best interest to be fabricating numbers. Take the high road and let the executive be responsible for their decisions."

In the end, the two organizations agreed to a package deal that involved 113 acres, piles of additional borrow material and the cost of hauling it.

The provincial auditor found that the agreed upon price "approximates $103,000 an acre" which she notes is "the amount the GTH paid."

That left Grigg shaking his head in disbelief.

"Whoever crafted this had one intention in mind: getting close to $103,000 an acre so that the GTH wasn't out any money," said Grigg. "If they could say, 'Well, Highways paid it through these means,' it's somehow justified in the government's mind."

Though on paper, the GTH owes the ministry $2.9M, it won't have to fork over that money immediately.

"The funds will be recovered as they sell the land or as they develop the land,"Antunessaid in committee.

Sproule said that likely means Highways won't get repaid for a very long time because, "you know how land sales are going at the GTH right now." The organization hasn't had a sale in a couple of years.

She also points out that this land, which is adjacent to the new West Regina Bypass, is "probably the worst land in the GTH available for sale right now," because it would have very poor access.

Recently the minister publicly mused about the possibility of the government selling the GTH possibly to the city of Regina.

Antunes points out that this debt would travel with the GTH to its new owner.

"There's a clause in the agreement that ensures that we get paid if the land is sold, leased, or transferred. So it would still be a liability for whoever took it over."