Manitoba Hydro approves rapid-transit land sale to City of Winnipeg

Manitoba Hydro's new board has signed off on the contentious sale of Fort Garry land to the City of Winnipeg, a move that effectively punts the deal back into the hands of city council.

After deliberating for most of Monday over a deal to part with 16 acres of land needed by the city to complete the Southwest Transitway, Hydro's board decided to part with the land for $19 million, which is at the bottom of the $19-million to $20.4-million price range laid out in a deal considered too rich by some city councillors.

Hydro president and CEO Kelvin Shepherd said the Crown corporation negotiated in good faith with the city, contrary to claims by Coun. Marty Morantz that Hydro officials reneged on a 2015 agreement to part with the land for $4.7 million.

"I see no evidence of a negotiation in bad faith," Shepherd said Tuesday morning at a news conference in the lobby of Manitoba Hydro's Portage Avenue headquarters. 

Hydro president and CEO Kelvin Shepherd said the Crown corporation negotiated in good faith with the city

8 years ago

Duration 1:44

Manitoba Hydro's new board has signed off on the contentious sale of Fort Garry land to the City of Winnipeg, a move that effectively punts the deal back into the hands of city council.

Second valuation

Shepherd said the city and Hydro had agreed in principle to obtain an appraisal as well as on the method to be used to obtain that appraisal. He said the two sides diverged when the city brought forward an appraisal that would have had Hydro value the land at $12.7 million and then sell it to the city at a discounted price of $4.7 million.

"When the appraisal report came in, the methodology the appraiser used wasn't consistent with what we thought we agreed on," Shepherd said. "We had meetings with senior city officials, apprised them of our concerns and told them we would be seeking a second valuation, and they didn't object to that. So I can't see how that can be considered bad faith." 

Shepherd said there was no way junior Hydro officials could have agreed to a binding deal when the Crown corporation's land transactions are subject to board approval. He also said Hydro has a policy of ensuring it attains fair-market value when it sells land.

"From Hydro's point of view, this is a very, very valuable corridor. Think about what it would cost if we had to go and get another corridor to put these lines on," he said.

• Winnipeg councillors accuse Manitoba Hydro of bad faith in $20.4M land deal
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The deal approved by Hydro's board gives the city the option of reducing the sale price to $11.7 million if Winnipeg transfers roads and rights-of-way within the corridor to the Crown corporation. City officials have already expressed doubts about whether that is possible.

Hydro's board also approved the lease of other Crown corporation property in the corridor for parking and operating other facilities to support the bus rapid transit route, as long as the city waives taxes on the properties while they are being leased.

Shepherd said he could understand why some elected officials are unhappy, but in the end, senior Winnipeg public servants signed off on a negotiated settlement.

"At the end of the day, remember, this was ultimately a negotiation that was carried on by very senior city officials," he said. 

Hydro board chair Sandy Riley said in a statement that while it was unusual for the Crown corporation to comment on a land transaction, "in this unique circumstance" it was appropriate to address the matter in public.

"The board carefully reviewed both the terms of the transaction and the conduct of the negotiations, and while we recognize commercial transactions of this nature are often difficult to achieve — which may explain the reaction in the media to the results — we are satisfied that the outcome is a product of good faith negotiations," Riley said in the statement.

 The deal now heads to city council, where some councillors have vowed to vote against it. North Kildonan Coun. Jeff Browaty said Monday he wants to "put a bullet" in the second phase of the Southwest Transitway, which will run between downtown and the University of Manitoba's main campus in Fort Garry.

Winnipeg Transit director Dave Wardrop has said if the deal does not go through, work on the bus rapid transit corridor may not be able to proceed this summer.

• Winnipeg Transit's purchase of Manitoba Hydro land up in the air

The city initially expected to buy the Hydro land for $4.7 million, based on a third-party appraisal conducted by Dennis Browaty and the belief it had an agreement with the Crown corporation. Hydro then contracted an appraisal of its own, conducted by the firm Altus, which placed the land's value at $32 million to $34 million.

Subsequent negotiations took the price down to the intermediate range.

City council's property and executive policy committees approved the deal last week. Members of council who don't sit on those committees have sought more information at a pair of closed-door seminars, held Monday night and Tuesday morning.

Mayor Brian Bowman said Tuesday he hopes to find out whether the city actually can sell Hydro some rights-of-way and bring the sale price down further. 

The mayor said he has tried to keep the lines of communication open between the city and Hydro and would not characterize the relationship as strained.

Given the benefit of hindsight, Hydro would have dealt with the city differently, Shepherd said.

"One of the problems early on is that there clearly wasn't a formal agreement on how to proceed. There was an exchange of opinions and phone calls and emails," he said.

"We should have actually written a [memorandum of understanding] or an agreement and had a lawyer sign it."