The auditor general is calling for changes to how the B.C. government sells surplus land after finding a competitive bid process for the sale of of hundreds of acres of Crown land on Burke Mountain to Wesbild Holdings Ltd. lacked transparency.
Carol Bellringer, in her report released today, said purchase offers made by six bidders, including Wesbild, couldn’t be compared because each bidder grouped parcels differently.
A much stronger denouncement of the land sale, however, has come from the Minister of Citizen’s Services who said the BC Liberal government during whose tenure the Release of Assets for Economic Generation (RAEG) was carried out failed to do due diligence to ensure taxpayers got good value for the land.
“At the end of the day, you have a house that the city assesses at $800,000. You know that the market value of houses are selling at $1.4 million. Somebody offers you $600,000 and you take it — it’s not the fault of the developer but the fault of the government to act like a good steward of public assets,” said Jinny Sims, who is also the MLA for Surrey-Panorama.
She said the auditor general singled out the 2014 land sales on Burke Mountain for special review because the properties sold for much less than they were assessed for, at two thirds of the assessed value. However, she noted that some of Bellringer’s recommendations have already been put in place, including evaluating whether surplus land can be used for other purposes, such as hospitals and schools.
“We are doing a very careful assessment and we are gong to evaluate each property,” Sims said.
The so-called RAEG initiative was carried by the BC Liberal government to balance the budgets in 2013/’14 and 2014/’15, save costs and generate economic activity, but only focused on the revenue target, according to Bellringer, and, in fact, exceeded revenue targets, obtaining roughly 96.7% of assessed market value, and generating $435 million for provincial coffers.
However, the Burke Mountain sales achieved a much lower than expected price — just 66% of assessed value for properties purchased by Wesbild and 80% for those bought by the city of Coquitlam.
It was back in 2014 when the land sale in Coquitlam got underway. Twenty-one parcels were put up for sale — about 584 acres of Crown land — some of which could be developed immediately and others over the longer term.
Colliers International was hired to manage the sales process and an independent appraiser was hired and determined the value of the land was worth $145.9 million, according to the audit.
However, the bidders were encouraged to submit purchase offers for both single parcels and groups of parcels (the government believing this would boost competition for each property) making it difficult years later to determine whether the province got fair market value.
Six bids were submitted, some for individual properties and some for grouped parcels and in the end 14 parcels were sold to Wesbild for $85 million, at 66% of appraised value, while the city of Coquitlam purchased its four parcels for $11.8 million or 80% of appraised value. Three parcels were not sold.
Unfortunately, the grouping of the parcels in various ways between the different bidders made it difficult to judge whether the bids were comparable, the auditor states.
At the time of the sale a government spokesperson told The Tri-City News the Wesbild offer was chosen because it was the “lowest risk, most comprehensive bundling of parcels and greatest benefit to the community.”
However, the auditor general’s report notes “comparability of the bids, based on the price offering for each parcel, was not possible, because government did not require bidders submitting grouped bids to disclose how much they were offering for individual parcels within their grouped bid during the bidding process.”
While the bids for Burke Mountain were not directly comparable, most land sold for less than appraised value, the audit states.
However, the report doesn’t go as far as stating the bid was unfair, a claim that then-NDP leader John Horgan made when land sale documents were revealed later by the Opposition. He had concerns the province lost money on the deal because it was rushed.
Wesbild, a major Coquitlam developer, defended the land purchase at the time, noting that the bids were competitive and the company paid fair market value.
However, according to Bellringer, had bidders been required to provide information about how they valued each parcel of land during the bidding process, the government could have been in a better position to identify low bids, compare parcel bids of various bidders, negotiate the set price for individual parcels and obtain the price-per-parcel information required for accounting purposes.
The report contains seven recommendations, including that government assess the costs and benefits of selling versus holding surplus assets prior to their sale. As well, government should report to the public on how selling surplus assets can be in the best interests of the province, the audit states.
The report also recommends officials prepare a readiness checklist to assure due diligence work has been done, put in place controls to prevent and detect real or perceived bias, bid rigging and collusion, and make changes to how multi-parcel property bids are handled to make them more transparent.
The office reviewed 14 of the 101 sales, representing 75% of the total sales proceeds, and with the exception of the Burke Mountain lands in Coquitlam, government obtained, on average, 97% of the appraised value of the surplus property for the sales reviewed. The full report is online at www.bcauditor.com.
THE TIMELINE
• Feb. 8, 2012: Treasury Board gives approval to sell Burke
Mountain Lands
• Feb. 21, 2012: RAEG program announced in budget speech
• April 12, 2013: Standing offer Agreement signed with Colliers
• April 29, 2013: Request for independent appraiser
• Oct. 10, 2013: Independent appraisal report submitted to government
• Nov. 22, 2013: Listing agreement signed with Colliers
• Jan. 16, 2014: Kwikwetlem First Nations Benefit Agreement signed
• Feb. 4, 2014: Deadline for offers from potential buyers
• Feb. 5, 2014: Summary of buyers’ offers from Colliers
• Feb. 11, 2014: Katzie First Nations Benefit Agreement signed
• Feb. 26, 2014: Revised offer from Wesbild
• Feb. 26, 2014: Ministerial order approving sale of lands to Wesbild
• Aug. 28, 2014: City of Coquitlam offer to purchase
• Aug. 29, 2014: Ministerial order approving sale of lands to the City of Coquitlam
— Source, BC Auditor General
