Regina city councillor says taxpayers getting 'shafted' by GTH for millions of dollars

An agreement that would see the Global Transportation Hub pay the City of Regina for services like water, sewer and the transportation network is still in limbo after eight years of negotiations.

City councillor Andrew Stevens says the negotiations have been lopsided because of how the provincial government stacked the deck in favour of the GTH.

"In every respect, the Global Transportation Hub as an authority was calling the shots and it was really up to the city to get what it could under the circumstances," said Stevens.

"Everything to date suggests that the city is and will be shortchanged millions of dollars."

GTH gets special rules

In December, the two sides had finally reached a deal after negotiating since 2010. But months later, it still hasn't been signed.

"The city and the GTH are currently in the process of finalizing the legal agreement," wrote a city official. "This is not an uncommon timeframe for legal agreements of this complexity."

Because of the lengthy negotiations, the GTH has thus far avoided compensating Regina taxpayers for many of the services it uses.

If a private developer built an industrial subdivision in the city, it would have to pay $147,000 per hectare as a "Servicing Agreement Fee" (SAF), a fee designed to help the city pay for growing infrastructure.

The GTH is developing 420 hectares in city limits. Under normal circumstances that would mean an SAF payment of $62M into city coffers when the development was complete. So far, the GTH has paid about $1.7 million in fees. These payments were for fire protection services, parks and recreation and an administration fee.

The GTH is exempt from SAFs thanks to special legislation. The crown corporation operates as its own municipality, a city-within-a-city.

"It essentially exempts the Global Transportation Hub from playing by the rules that other developers, residential and commercial interests, would have to follow within the city of Regina limits," Stevens said.

In addition, the GTH and its tenants don't pay taxes to the city. Instead, the city collects taxes from GTH tenants, about $1.9M in 2016, and then turns it over to the GTH, minus an administration fee.

"From the agreement fees that would otherwise have been paid to what we're seeing in terms of property taxes, we're getting shafted," Stevens told CBC's iTeam.

"We're being detrimentally affected by the structure of this legislation and the Global Transportation Hub itself."

City administration trying to get some cash from GTH

Under the 2013 Global Transportation Hub Authority Act, the GTH only has to pay for services on a "cost recovery basis," which allows the Hub to pick and choose services a-la-carte.

In December, the GTH agreed to pay the city $3.3 million as part of a "capital contribution agreement," rather than the $62 million SAF a private company developing the 420 hectare GTH would be required to pay once buildout was complete.

"The initial payment owing to the city based on the current buildout at the GTH would be $3.3 million," Executive Director of City Planning and Development Diana Hawryluk told city council in December. She said it pays for the GTH's connection to the city's water, wastewater and transportation systems. "As development occurs, additional payments would be made."

The money hasn't actually been paid yet as the agreements have not yet been signed.

Hawryluk pointed out in a December interview that while the GTH agreed to pay a lower fee, the services it will be receiving are capped.

"They're only getting very limited capacity in our system," Hawryluk said, meaning a capped amount of access to the water, sewer and transportation systems. She said comparing the $3.3M payment the GTH is making to the $62M SAF isn't "apples-to-apples" because the GTH is choosing a limited number of services with limited use of city infrastructure.

According to the city's December report on the agreement, this is "fair and equitable for the purpose of compensating the city for the capital costs of obtaining capacity from the city's infrastructure network."

Stevens says city administration did a good job of negotiating and "salvaged what it could for the city."

The two sides have also negotiated a few other fees that the GTH will pay the city. So far, it has only paid the parks and recreation fee, taxation administration fee and fire protection. The rest will be owing when the agreement is signed.

• A $400,000 payment in lieu of parks and recreation (which has already been paid).
• $1.1 million for fire protection since 2013 (approximately $20,000/month).
• Three per cent of annual taxation as an administration fee to the city (because the city collects the taxes for the GTH) - Since 2013, the GTH has paid $216k.
• Five per cent of annual taxation "in recognition of the impact GTHA traffic has on the road network."
• One point five per cent of annual taxation as an administration fee to the city for the serving agreement

Once he agreement is signed, the payments will only apply going forward. They will not be retroactive. The city didn't explain why.

In a written statement, the GTH said the development brings a lot of value to the city because of the hundreds of employees working at the hub. 

"Yes, they will not receive additional service fees," a spokesperson wrote. "But they do receive all the benefits of having people living in the city, buying homes, buying vehicles, buying groceries, paying taxes and all those social and economic benefits that come from job creation."

Stevens 'can't imagine' why city would buy GTH

Last week Don Morgan, the minister responsible for the GTH, said the province would consider selling the development to the City of Regina.

Stevens said this seems like an unattractive idea at first blush.

"The Global Transportation Hub by all accounts is a financial disaster," he said, noting that recently the province revealed the GTH is $37 million in debt. "So I can't imagine why we would want to take something over that's in that state of affairs."

Both Regina Mayor Michael Fougere and Morgan have insisted there have been no talks but both have also expressed an interest in having the conversation.

Stevens said he would be willing to look at a proposal if it brought in new revenue and wasn't a burden to taxpayers. But he asked why the province would consider unloading the GTH if it was capable of doing those things.

"My initial response is if there was money in it I'm pretty sure the provincial government would keep it," Stevens said. "So I'm really curious what's on the table and what it means for the City of Regina with these sorts of negotiations going on in the media."