Wednesday, January 31, 2007

The selloff begins

The Globe and Mail reports that the first substantive step toward a Con government selloff is a doozy, as Public Works is looking to sell off $1.5 billion worth of office buildings in order to lease them back from the private sector:
Ottawa is preparing to sell $1.5-billion worth of office properties across the country as part of the first phase of a plan that will see dozens of federal buildings go to the private sector with the government as a long-term tenant, sources say.

Sources in Toronto and Ottawa said nine buildings are likely to go in the first phase of the sell-off, including properties in Vancouver, Toronto and Ottawa.

The deal could hit the market within weeks and would be among the largest offerings of Canadian office properties...

The government is expected to use a process known as a “sale-leaseback,” by which it sells the buildings to the private sector and then rents them. The government is expected to use 25-year leases, sources said.

Mr. Fortier argued the government doesn't have the $4-billion needed to maintain adequately its portfolio of 6.8 million square metres of office space.

Under the planned “partnerships,” sources said, the private-sector companies would renovate the buildings at their cost and make money by renting them to the government...

The plans still have to be approved by the Treasury Board and the cabinet, which will have to decide among a number of options being put forward by Public Works. That decisions will be made next week, but others argue that an announcement is farther away, some sources said...

Selling buildings and becoming a tenant is seen as a way to make maintenance someone else's problem.

The previous Liberal government had considered privatizing the government's real estate holdings, but it explored solutions that could be applied to all buildings at once.

The Conservative government has opted to approach the issue much more slowly.
Now, it's fair to be concerned about the condition of buildings which haven't been properly maintained. But any need for maintenance can be addressed equally effectively today by having Public Works carry out the needed maintenance on its own - which would have the added benefit of not turning the federal government into a cash cow for the putative landlords through a long-term lease.

Instead, the Cons seem eager to falsely claim they can't meet the current maintenance costs in order to push toward a process which involves multiple future inefficiencies, including the likely higher cost of borrowing on the part of the private-sector actors and the cost of the lease payments themselves.

For the Cons, the goal of getting public property out of public hands may be seen to be worth the price. And indeed the Libs have plenty of explaining to do for their own intention to engage in the same type of process. But for Canadians who don't want their government looking for excuses to auction itself off piece by piece (to be rented back at a premium), the fact that the plan seems certain to move forward as long as Harper remains in power highlights the need for a change in government to stop the sell-off as quickly as possible.

Update: The NDP has more.

Update II: Still more from Greg, Dan and Paul Wells. Odd that it's the latter two who also picked up on the previous Lib connection, while the NDP didn't point out Brison's similar plans.

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