It looks like the B.C. government is one of the few outfits in the province that has managed to lose money — on paper — in the sizzling Lower Mainland real-estate market.
Opposition critics went to town Tuesday on new information showing the province might have left more than $40 million on the table in its rush to put assets up for sale in order to balance budgets.
As with most real-estate conversations, there’s still lots of room for argument.
But the paperwork obtained by the NDP after a long dispute with the government about its release shows that something doesn’t add up.
Either the exhaustive appraisal that the government paid for was way off base, or the parcels were sold at well below what they were worth.
The land sales were controversial right from when the program started in 2012. B.C. Liberals accelerated routine land sales when they were stretching to balance the 2013 budget.
A target of more than $700 million was set, later knocked down to $625 million, to be raised by selling dozens of parcels of Crown land.
It was branded as a fire sale by the Opposition, while the government said the assets were underused and selling them off would spur economic development and raise money. Numerous high-profile lots in Victoria were included in the program.
But it’s a specific Coquitlam-area property that caught the legislature’s attention on Tuesday. A number of parcels near a huge, ongoing housing development on Burke Mountain were sold last year and the Opposition was keen to learn financial details. Requests were refused, but the information and privacy commissioner eventually mediated a partial release.
The documents show the government commissioned an appraisal firm and it compiled a lengthy report on 14 parcels in the area, and arrived at a value of $128 million. It further suggested the lands would need six to nine months’ exposure on the market to get the best value.
But the government sold them all for a total of $85 million in a much-shorter time period.
The sales were conducted through an open tender that generated competitive bids. Six offers were made for anywhere from two to all 14 of the parcels and B.C. accepted Wesbild Holdings’ bid for all 14 of them, on the basis it was the lowest risk, had the most comprehensive bundling of the parcels and made for the greatest benefit. The NDP noted in passing that the firm is held by Hassan Khosrowshahi, a significant donor to the B.C. Liberal Party.
Faced with a report suggesting $128 million was to be had if the government marketed 14 parcels over six to nine months, the government sold them in three months as a package for $85 million.
Horgan said they were sold for $43 million less than they were worth because of the drive to raise cash to get the budget in the black. The parcel-by-parcel breakdown raises even more questions. Some of the sale prices are close to the appraisal values, but others are way off.
One parcel appraised at $5.6 million sold for $100,000. A piece appraised at $17.5 million sold for $6.9 million. A piece appraised at $20.6 million sold for $13.8 million.
NDP MLA Mike Farnworth said the biggest housing boom in history is underway and there are bidding wars, but this is the first time in history that a piece of land worth several million dollars has been given away for $100,000.
Citizens Services Minister Amrik Virk was delegated to answer the questions but came up well short. He said it was the best offer, so the government took it. Any other observations about value are just speculation.
Based on the shortage of full explanations, that speculation will likely continue.