Public real estate fire sale in Saint John
Deal would see Irving Oil get prime real estate, active terminal in exchange for contaminated land.
OTTAWA, December 2, 2008 — An untendered deal could see taxpayers hosed if the federal Transport Minister approves the exchange of $60 million worth of prime oceanfront property in Saint John, NB for a contaminated lot valued at $1.2 million plus a 99-year lease worth $10 million.
Long Wharf, a profitable and integral part of the city's port, is at the centre of the potential public asset fire sale.
The Saint John Port Authority which manages port property on behalf of all Canadians has concluded an agreement that would see ownership and control of Long Wharf transferred to Irving Oil Ltd. in a land-swap/lease deal that would short change Canadian taxpayers and cede to the Irving empire the most valuable property in the city.
Irving Oil will swap a nearby brownfield known as the Lantic Sugar site it has agreed to purchase for $1.2 million from the City of Saint John in exchange for a portion of Long Wharf, leasing the balance of the property for 99 years. Part of the lease payments will flow through a 40 year annuity that will be indexed.
"If this is an example of the public asset sale outlined in last week's Economic Update, Canadians can expect to be fleeced for billions of dollars," says Pat Riley spokesperson for Local 273 of the International Longshoremen's Association.
According to an engineering valuation commissioned by the ILA Local 273, the value of Long Wharf is close to $58 million, five times the value of the Irving offer.
No matter how the deal is structured it will violate the Canada Marine Act which requires that federal real property can be exchanged only for properties of comparable value. The Act also requires that real estate transactions ensure the asset base of properties suitable for port purposes is not depleted. Since the Irving deal would prohibit most port operations at Long Wharf, this legal requirement would not be met.
Less than 12 months ago, Stephen Campbell, the current chairman of the board of the Saint John Port Authority said:
"Long Wharf is our best facility. It's our most modern and serviced by rail. The Lantic Sugar property is "inferior" to Long Wharf. "We're not talking about equivalent properties by a long stretch."
"I agree with Mr. Campbell. Based on current rates, turning Long Wharf into a parking lot would produce more than eleven times more revenue for Canadian taxpayers on an annual basis," says Mr Riley.
There is no precedent for surrendering an active terminal for a project like the Irving Oil deal at any of Canada's other major ports.
"If this deal is approved it will set a troubling precedent for a great trading nation like Canada," Riley concluded.
Posted: December 05, 2008
Voices of privatization
Public Values (PublicValues.ca) is a project of the Golden Lake Institute and the online publication StraightGoods.ca