The City of Moose Jaw will receive more than $3.1 million for selling property on the exhibition grounds, although once costs to service the land are considered, that profit will shrink to about $690,000.
During its Dec. 16 regular meeting, city council voted 6-1 to approve the sale of 11.95 acres to Canadian Tire Real Estate Limited (CTREL) for $3,171,725, or $265,500 per acre.
Also, city administration was authorized to proceed with acquiring a qualified contractor to perform the work to service the parcel, along with pursuing a partial connection to the remaining 66.05 acres to the north that is being serviced at the same time as the Canadian Tire parcel, for $2,484,000, with the land reserve account to fund the project.
Coun. Brian Swanson was opposed.
CTREL will pay $3.1 million for the property, which is $265,500 per acre. However, once expenses are factored in for servicing the 11.95 acres, this leaves the City of Moose Jaw with a profit of $688,725, or $57,634 per acre.
Council discussion
Tenders could be issued in March for the servicing of the 11.95 acres (0.478 hectares) and then awarded in April when a detailed design is completed, said city manager Jim Puffalt.
There are many conditions that have to be reached before Canadian Tire Real Estate will pay in full, he added. Since the company has 180 days — or until June — to do that, city hall will issue the tenders but not award them until full payment has been received.
If the conditions are removed and the path is clear, then site development work could start before payment is received in full, added legal counsel Elaine Anderson.
“I do not want to give legal advice in open council, but there are safeguards,” she added.
Contract concerns
The way the contract is worded, it is possible to award the tenders before full payment is received, Swanson said, which is something he didn’t want to see happen since Canadian Tire could walk away from the deal without paying a penny. He understood that everyone was optimistic about this agreement, but pointed out optimism has been floating around this long-delayed deal for 38 months — a delay attributed to Canadian Tire.
Anderson replied that she didn’t anticipate Canadian Tire walking away, while council could decide that no work would start before the deal is closed.
Servicing costs were pegged at $2 million in 2016, but have increased to $2.4 million, Swanson said. He asked city administration during a meeting behind closed doors and by email for a list of those additional expenses and a revised estimate but did not receive anything.
As an elected official working on this project, Swanson was concerned that administration wouldn’t let him see those extra expenses that have increased by 20 per cent.
Changes in expenses and revenue
City administration does not provide detailed analyses to the public on land sales since it would affect administration’s ability to complete agreements, Puffalt said, which is why no information was provided. However, one reason costs have increased is PST was not applied to construction prior to 2017.
All the costs are reasonable, while this is a fair and reasonable deal, he added.
“Costs to the city to service this land have increased by $400,000, but revenue for the city on this deal was originally going to be $316,000 an acre (and) now it’s $265,500 per acre,” Swanson said.
This land was originally not for sale, so city council paid the exhibition company a fee to free up this property, he remarked. No other company could bid on this land, while Canadian Tire has put restrictions on more than 20 extra acres that make them unsellable for years.
“I do not believe they should have the power to place restrictions on land that they’re not paying any deposit on … (or) paying for at this time,” Swanson continued.
Too much vacant retail space
He was also concerned that council was helping relocate several businesses into one central location, thereby increasing retail space when there are already too many vacant retail locations. The new Canadian Tire store and its subsidiaries would also minimize the visibility to the north and further restrict the saleability to future businesses.
There have been five concept agreements discussed over the years, but this one is the most restrictive, said Swanson. It was estimated in 2016 that the municipality could receive $1.3 million in net profit from this deal, but now it is receiving half that.
This purchase would not have crossed council’s desk if it had been a “straight deal,” he continued. However, council is dealing with it due to all the concessions and “granting of extraordinary circumstances” in the agreement. This includes providing tax exemptions, allowing the purchaser to place restrictions on additional unpaid land, and helping relocate other businesses.
Jumping through hoops
This is a deal this city council inherited from the previous council, said Mayor Fraser Tolmie. The delays were due to bureaucracy, such as communication issues between city hall and the exhibition company. There were also challenges with provincial regulations around possible burrowing owls in the area.
“That’s part and parcel of doing a deal, that you have to go through some hoops,” he said.
Council received an email from Puffalt saying the 11.95 acres would cost $265,000 per acre, compared to other properties in the Grayson Industrial Park that cost $200,000 an acre, Tolmie remarked. Administration has said the municipality will still recoup its overall costs on this deal when the service expenses are subtracted.
“We have been working very hard on this deal. This has taken a lot of effort to get moving … . This creates opportunity,” he said.
Council did have concerns about how long it was taking and reached out to Canadian Tire, which helped get the agreement finished, Tolmie pointed out. Canadian Tire Real Estate is a billion-dollar company with more than 1,600 stores in Canada. The company said this is the fastest deal it has ever reached, which is positive for council and city administration.
City council next meets on Monday, Jan. 13.
