Winnipeg councillors accuse Manitoba Hydro of bad faith in $20.4M land deal

Mayor Brian Bowman's inner circle has unanimously approved a $20.4-million purchase of land from Manitoba Hydro despite concerns the Crown corporation negotiated in bad faith and behaved in a manner akin to stealing.

Council's executive policy committee voted Wednesday morning to pay that amount for a parcel of land required for the city to complete the second phase of the Southwest Transitway.

• City committee OKs paying extra $16M to Manitoba Hydro for rapid transit corridor

That's nearly four times what the city expected to pay last year, when city property staff believed they had reached an agreement with Hydro to acquire the land for $4.7 million, based on a third-party appraisal.

"Both the city and Hydro agreed in June 2015, by way of confirming emails, that one of the particular scenarios was the manner by which the corridor was to be valued," Winnipeg real estate manager John Zabudney wrote in a report to council.

Hydro had a change of heart in January and commissioned its own appraisal, which placed the value of the land at $32 million to $34 million. The two parties finally arrived at $20.4 million after further negotiations.

This sequence of events angered several members of the committee, including public works committee chair Janice Lukes (South Winnipeg-St. Norbert), who characterized Hydro's behaviour as akin to stealing.

RAW: Janice Lukes describes Hydro's actions as 'outright stealing' from the city

8 years ago

Duration 1:42

Mayor Brian Bowman's inner circle has unanimously approved a $20.4-million purchase of land from Manitoba Hydro despite concerns the Crown corporation negotiated in bad faith and behaved in a manner akin to stealing.

"This is like stealing, in my opinion. It's outright stealing. It's just not right," Lukes said before she and her colleagues voted in favour of the purchase, which councillors knew nothing about until it was brought to council's planning, property and development committee on Tuesday.

Council finance chair Marty Morantz (Charleswood-Tuxedo-Whyte Ridge) accused Hydro of negotiating with the city in bad faith.

"I come from a background that says a deal is a deal," he said before urging Manitoba Hydro's new board to intervene in the matter before the Crown corporation considers the deal on June 13.

"I have great respect for people on the Hydro board, and I really think when they see this and have a close look at it, they're going to ask what's the fair and right thing to do."

'That's just not the way business should be done.' EPC, finance chair Marty Morantz reacts to the price increase for rapid transit corridor

8 years ago

Duration 1:13

City council's finance chairman is angry about a tentative deal that will see Winnipeg Transit buy Manitoba Hydro land at four times the price initially agreed upon by both parties.

City council will consider the deal on June 15. Winnipeg Transit director Dave Wardrop said the acquisition must be approved this month in order not to jeopardize the construction of the Southwest Transitway's second phase, which is a $587.3-million project when you include the widening of the Pembina Highway underpass at Jubilee Avenue.

Council property committee chair John Orlikow (River Heights-Fort Garry) said he was not prepared to jeopardize the transitway project, which will extend the Southwest Transitway from Jubilee Avenue to the University of Manitoba.

Orlikow said he was not happy the land cost increased, but characterized other aspects of the deal — including licensing of Hydro lands for park-and-rides — as beneficial for the city.

Cost savings

Transit director Wardrop said the purchase will not result in any cost overruns on the transit project, because other cost savings have been found within the $587-million budget.

Those savings will be disclosed in July, after the city signs a deal with a private partner in the transitway construction, he said.

Mayor Brian Bowman suggested the deal should not reflect poorly on city property staff, as Manitoba Hydro is a Crown corporation and cannot be compelled to sell land to the city.

Morantz, however, said he wanted to know how the city allowed the lower price to slip away. During the meeting, he asked chief operating officer Michael Jack whether or not the city had a deal in place.

"You're a lawyer," said Morantz, a lawyer himself.

Jack said there was no agreement in the legal sense, with a signed contract.

"Throughout any long, protracted negotiation, both parties are going to take different positions in terms of how you get to value," Jack told reporters after the meeting. 

"We realized fairly late in the negotiations that the parties weren't quite in agreement in terms of how we were going to arrive at the value — and then we had to go in a different direction."

Jack described the deal as fair and appropriate — and Manitoba Hydro agrees.

"This was a negotiated settlement. We have an obligation as a Crown corporation to our ratepayers to ensure we get fair market value for the disposition of any Manitoba Hydro land," said Bruce Owen, a public affairs officer for the Crown corporation.

"These are not marginal lands. They are active lands."

Winnipeg Mayor Brian Bowman said he does not believe the increased cost of the Hydro land acquisiton means the City of Winnipeg continues to have trouble completing real-estate transactions. In 2014, an audit of major city real-estate transactions concluded the city bought and traded land without conducting proper appraisals, among other issues.

"This is a matter involving Hydro," Bowman told reporters after the meeting. "We do not have the power of expropriation.… The facts on this are unique."