SaskPower bought $25M of GTH land just in time to fund controversial deal
Bill Boyd and former political aide left everyone in the dark during land deal negotiations
Since the provincial auditor released her report on the Global Transportation Hub land deal at the start of summer the CBC's iTeam has been investigating what she found and comparing it with documents obtained through access to information and extensive interviews.
This is the second feature in a two-part series detailing what we have learned.
This controversy has become known as the "GTH land deal" but the iTeam has discovered that the GTH board and management had almost nothing to do with it. Back in 2013, the deal was put together, almost entirely, by then-GTH Minister Bill Boyd and his former political aide, Laurie Pushor.
- The two men put the multi-million dollar deal together without telling the GTH board or management.
- Boyd directed the purchase of the land. But during the recent election campaign, Brad Wall insisted politicians don't direct those sorts of purchases.
- The Ministry of Highways was preparing to buy the land when Pushor swooped in and bought it for three times more than Highways appraisal said it was worth.
- In a bit of remarkable timing, SaskPower bought millions of dollars of GTH land just in time to allow the GTH to afford to purchase the controversial 204 acres.
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Laurie Pushor was awake three hours before dawn, that frigid December morning back in 2013.
About a month earlier, Pushor was handpicked by his boss, Bill Boyd, to negotiate the purchase of 204 acres for the Global Transportation Hub from a Regina developer.
This property had been elusive. Boyd, as minister responsible for the GTH and chair of its board, had been trying to buy it for about 20 months.
One of the big obstacles was a lack of cash. The GTH simply couldn't afford it.
But then, a Christmas miracle of sorts.
SaskPower swooped down just-in-the-nick-of-time, and bought $25 million worth of property from the GTH.
It was more than enough cash to allow Pushor to wrap a bow around the $21 million GTH land deal.
In an email to GTH management at 5:09 a.m on Dec.19, 2013, he proclaimed "we have approval to acquire the land."
But as with so much involving the GTH land deal, there's a lot more to the story, just below the surface.
A 'cloak and dagger' deal
A closer look reveals the whole transaction had a cloak and dagger feel.
Officials in that ministry were getting set to purchase the property themselves, when Pushor plucked it from them — paying three times more than Highways appraisal said it was worth.
Highway's appraiser valued the land at $30,000 to $35,000 an acre. Pushor ended up negotiating a price three times higher — $103,000 an acre.
Highways officials weren't the only ones left in the dark.
Boyd and Pushor also failed to tell the GTH board and management that they were putting this deal together. GTH officials were unaware the negotiations were even happening.
The two men eventually arranged the purchase of the land from a Regina developer, who made about $5 million on the deal.
However Saskatchewan's provincial auditor found that taxpayers didn't fare so well.
In February, Premier Brad Wall asked Ferguson to audit the GTH land deal after CBC's iTeam shone a light on the mysterious transactions, and Boyd's role in them.
The CBC decided to take a deeper look in light of the auditor's report, documents obtained through access to information and extensive interviews with most of the key players.
That review has enabled the iTeam to stitch together a behind-the-scenes look at how Boyd and his former political aide put the deal together and the remarkably timed multi-million-dollar cash infusion that allowed it to happen.
Part One
In an interview, Provincial Auditor Judy Ferguson was crystal clear about who was in charge of the GTH land deal.
She said Boyd "took the lead on the actual acquisition. And the challenge was he didn't keep the board informed, he didn't keep management informed and he didn't keep [the Ministry of] Highways informed," Ferguson said.
"We don't, at the political level, get involved and say, 'Hey GTH, or Highways, let's do this manner of negotiating with this person and this manner with another,'" Wall said. "We just don't do that. The GTH came to this decision to acquire a lot more land because of the interest - because of the growth there."
Wall's statement also appears to contradict an email exchange between GTH CEO Bryan Richards and GTH COO Blair Wagar obtained by CBC through access to information.
On Dec. 23, 2013 Wagar told Richards "we are moving forward with the offer to purchase the land owned by [Regina developer Anthony] Marquart."
Richards replied "thanks Blair. Based on your understanding from minister/chair (Boyd) let's proceed as directed."
The iTeam asked the Premier's Office to help reconcile the apparent contradiction. No one has responded.
Boyd asks former political 'wing-man' to negotiate deal
In early November 2013, Boyd asked a senior advisor to negotiate the land deal with prominent Regina businessman and developer Anthony Marquart. Marquart is the president of Queen City Sports and Entertainment Group which purchased the Regina Pats in April 2014.
But she does note that the senior advisor did not work for the GTH. She also says Boyd, as Minister of the Economy, appointed "one of his senior advisors" to negotiate the deal.
The only "senior advisor" the iTeam could locate who worked in the ministry at that time was Laurie Pushor. CBC asked the Ministry of Economy for all lists of documents given to the auditor and the only list the ministry provided was of Pushor's emails. It's clear from those emails that Pushor was intimately involved in all aspects of the negotiations, from beginning to end.
Over the years, Boyd and Pushor have developed a close working relationship. For more than two years, Pushor was Boyd's political wingman, serving as his chief of staff in the Ministry of the Economy.
He clearly earned Boyd's trust. In March 2014, Boyd elevated him to the role of assistant deputy minister. Then, in 2015, he was appointed deputy minister, in charge of the entire Ministry of the Economy— second in command only to Boyd.
The auditor discovered that Boyd didn't tell the GTH about the task he'd given the special advisor.
The GTH management and board were not aware of this request or involved in these negotiations.- Judy Ferguson, Saskatchewan's Provincial Auditor
"The GTH management and board were not aware of this request or involved in these negotiations." But she noted "this request seems to be within the GTH Minister's powers under the GTH Act."
The auditor asked the senior advisor why he believed he was chosen for the job.
He said Boyd called on him because the new GTH CEO, Bryan Richards, was still getting settled into his new role. He had just been hired that summer. The senior advisor explained there was a time crunch, as land prices in the area were rising rapidly.
Tapping former political aide to do land deal 'bad practice' says professor
"[Boyd] seemed to be involved more than one would expect in the purchases, by having a trusted ministerial aide lead the process," Rasmussen said.
"It should not be allowed, of course, as it does bring about the politicization of the neutral and independent public service."
He said the level of power wielded by the minister is "kind of shocking."
"[The GTH] shouldn't be just left out there running rogue with a minister who has all the authority," said Rasmussen. "That's just not acceptable in a modern democracy."
Appraiser says Marquart overpaid for the land
Marquart hadn't owned the land for long when the negotiations began in November 2013.
He had purchased the land about nine months earlier from Alberta businessman Robert Tappauf.
"I certainly knew that [the Ministry of Highways] may need it for their bypass. But I didn't concern myself with that," Marquart said. "At the end of the day being able to have land adjacent to a new bypass and having it accessible for industrial purposes, in my mind that trumped any concerns with expropriation."
Marquart paid Tappauf $72,000 an acre for some of the land and $84,000 for other parts.
A Ministry of Highways appraisal of the land from October 2013 says Marquart overpaid.
The appraisal company said it asked six Regina land developers if they would pay what Marquart did for this land and "none said they would pay this price even if it was fully accessible for development." The appraiser said the land was actually worth $30,000 to $35,000 an acre.
Despite that, Marquart told CBC's iTeam this land presented a great opportunity. "In my mind I was absolutely shocked why no one would look at this opportunity. For me it made complete sense."
Just nine months later, Pushor asked Marquart if he'd be willing to negotiate a deal. He was.
Emails obtained by CBC give a glimpse into how the deal came together.
Part Two
On Nov. 10, 2013, Marquart emailed Pushor some of the very basic details about the land; the legal land description and the number of acres.
A couple weeks later, on Nov. 25, Pushor was still trying to wrap his head around those basic facts, in preparation for a presentation about the land. A GTH board meeting was scheduled for Dec. 3.
The potential deal would be discussed at that meeting.
"Because it would suck to buy the wrong piece of land," quipped Todd MacKay with the Canadian Taxpayers Federation. He reviewed the emails received by CBC's iTeam.
MacKay said it's odd that multi-million dollar negotiations were being conducted in such a slapdash manner.
"This is a big deal. Why isn't a team of people working on it? Like, why is it two guys going back and forth trying to nail down the details?" MacKay wondered. "Why aren't experts involved?"
Let's meet 'just so we can say we did' suggests Pushor
On that same day, Nov. 25, Pushor suggested he and Marquart should get together.
"I wonder if we should meet face to face, just so we can say we did!" Pushor wrote.
The two men met the next day.
You kind of destroyed the optics of it if you say it's all about optics in an email and that becomes public.- Ken Rasmussen, University of Regina
Rasmussen said Pushor likely never intended for that email to get out. "You kind of destroyed the optics of it if you say it's all about the optics in an email and that becomes public."
"Why would the optics matter?" Rasmussen wondered. "Maybe to make it look like it wasn't… a done deal or something? I'm not sure."
The iTeam offered Pushor an opportunity to explain what he meant when he suggested meeting "just so we can say we did" but he declined to address that or any other issue related to this deal.
Pushor pulls the rug out from under the Ministry of Highways
While Pushor was negotiating with Marquart the Ministry of Highways was planning to buy the land itself. According to the auditor, Highways officials had no idea that Boyd had asked Pushor to go get the land.
"The GTH Minister or the senior advisor not informing [highways] of the negotiations… resulted in duplication in the use of public resources," the auditor found.
From August to December 2013 it was clear that Ministry of Highways officials believed they would be buying this land and so they proceeded on that assumption. The auditor found they were "actively undertaking acquisition processes."
The ministry was planning to build a complex interchange on the 204 acres for the West Regina Bypass which was to consume much of the land.
So highways officials began their standard procedure for buying land; the procedure they had followed to purchase all of the other property along the Bypass route and all of the other GTH land. It was the ministry that originally assembled the entire "GTH footprint."
They ordered two appraisals of Marquart's property. The first concluded it was worth $30,000-$35,000 an acre.
On Dec. 19, Highways officials met to strategize about how to buy Marquart's land.
Days later, everything came to a screeching halt.
I will not be communicating further with you on this matter.- Bill Boyd, Former Minister responsible for the GTH
On Dec. 23 an acting assistant deputy minister of Highways wrote to his staff saying he'd just been informed that "the Global Transportation Hub will be moving forward with the purchasing of the land from Marquart on the West Regina Bypass."
He asked his staff to cancel the second appraisal.
The iTeam asked Boyd and Pushor to comment on why they didn't keep the Ministry of Highways, GTH management or the GTH board in the loop during these negotiations.
They declined.
Boyd said he'd already cooperated with the provincial auditor and the Conflict of Interest Commissioner and had done an interview with the iTeam back in December 2015 so "I will not be communicating further with you on this matter."
When pressed as to why the GTH bought the land instead of Highways, Wall didn't give a clear answer. But he conceded there may have been a communications gap between the two organizations.
"The lack of, I would say, a focused approach by government is the problem that I've readily admitted to," Wall told reporters in a scrum shortly after the report was released. "That may well have been part of it -- the relationship between Highways and GTH. And we're accepting the recommendations and implementing them so we can avoid this in the future."
Despite the mistakes Wall noted that, according to the auditor's news release, "the audit did not find evidence of conflicts of interest, or indications of fraud or wrongdoing by the GTH management or board of directors."
Taxpayers group wonders how much the GTH lost
MacKay said it made little sense for Boyd and Pushor to keep the Ministry of Highways in the dark while they negotiated this deal.
"Highways has folks that buy millions of dollars worth of land all the time," MacKay said. "It's routine for them."
The Ministry of Highways appraised the land between $30,000 and $35,000 an acre and could have bought it near that price using its power of expropriation.
"Why was that tool left in the toolbox?" MacKay wondered. "We don't have a clear answer for that."
MacKay notes that the auditor concluded the GTH overpaid, but she doesn't say by how much. He finds that frustrating.
"If you or I or anybody else lost millions of dollars for our employers, they'd probably want some specifics on that," MacKay said.
The auditor told CBC in an interview that her audit didn't explore the value-for-money issue. "We've clearly indicated that we didn't establish estimates for fair value," Ferguson said. "We didn't try to do that."
Boyd and Wall said $129,000 appraisal was key
Earlier this year, before the auditor's report was released, Boyd and Wall were telling the public that there was one linchpin when it came to negotiations with Marquart.
But the auditor presents quite a different picture of Marquart's $129,000 appraisal.
- The senior advisor (Pushor) viewed it as "irrelevant in negotiating the price."
- The senior advisor did not formally review it.
- It was done on the most expensive of the two parcels of land and didn't discount the lesser quality land.
- While the Ministry of Highways and the GTH require a direct comparison method, this appraisal employed a cash flow subdivision development analysis. The auditor notes this method is based on numerous highly variable assumptions.
A board decision item obtained by CBC shows that the board considered Marquart's appraisal and its own appraisal which said the land was worth $51,000 to $65,000 an acre.
But the board was not informed of the Ministry of Highways appraisal of the same land, completed the same month as the GTH's appraisal, which said the land was worth $30,000 to $35,000.
It's not clear why that appraisal was not considered or presented to the board.
Boyd brings GTH board into the loop — sort of
In the Dec. 3, 2013 GTH board meeting, Boyd revealed that negotiations were underway for the 204 acres. However he didn't tell the board "who was leading the negotiations or specifically who was buying the land," the auditor reports.
Instead, the board merely discussed what the land might cost and how much of it the GTH and the Ministry of Highways might need.
Boyd presented the board "with a recommendation that the government acquire the East Parcels… with surplus lands sold to the GTH for further development." The board agreed.
One hour after the meeting, Pushor emailed Marquart saying "we have moved thru the first step of the process here successfully so remain optimistic."
That recommendation was brought to the Dec. 4 or Dec. 11 cabinet meeting — it's not clear which.
But the result is clear.
"Cabinet authorized the GTH to acquire the East Parcels," the auditor wrote.
'The GTH board was not aware the GTH was buying the land'
In its Dec. 3 meeting the GTH board agreed to ask "the government" to buy the 204 acres. The auditor found at that point the board didn't realize that the GTH would actually be making the purchase.
The auditor found that "until it received its Dec.19, 2013 meeting materials on the morning of Dec. 19, the GTH board was not aware the GTH was buying the land."
It seems like the decision was made internally in government, before the board was even made aware of it.- Todd MacKay, Canadian Taxpayers Federation
The auditor said "the GTH Board should have been provided with more time to consider the information."
Her office interviewed members of the board and found some were confused about what they were supposed to be doing; "whether their role was to provide advice to the Chair, take direction from the Minister, or make decisions."
That Dec. 19 board meeting happened at noon.
Seven hours earlier, at 5:09 a.m., Pushor sent that email to GTH CEO Bryan Richards announcing "we have approval to acquire the land," and instructing him to make an offer to Marquart.
MacKay observed "it seems like the decision was made internally in government, before the board was even made aware of it" which makes it look like the board was being "treated like a rubber stamp."
The auditor notes that the board approved the deal "as directed by the minister" and "based on the understanding that cabinet had approved the purchase."
Part Three
When Boyd asked Pushor to start negotiating with Marquart in November 2013, there was one glaring fact that made the whole thing seem unrealistic.
The GTH didn't have the cash to buy the land. It probably didn't have the borrowing power either.
The organization had a debt limit of $40 million and was already carrying a $20-million loan. That would have made a $21-million purchase from Marquart a stretch.
But no matter. At the last minute, something remarkable happened.
On Dec. 4, 2013, SaskPower asked cabinet for approval to buy 145 acres of land from the GTH for $25 million.
Cabinet said yes.
Just in time, the GTH's financial woes were solved.
That $25 million would allow the $21 million deal with Marquart to go ahead.
Boyd was wearing 2 hats
That's a fact that grabbed the attention of the NDP's Trent Wotherspoon. On May 12, 2014 in the Saskatchewan legislature, he prodded Boyd about the timing.
"It would have been an interesting conversation to watch the Minister for the GTH convince the Minister for SaskPower that he should place millions of dollars out here," Wotherspoon said.
Boyd shot back "the member opposite has his facts incorrect. Theofficials… approached the GTH themselves asked for the opportunity to buy property out there."
SaskPower's board approved the purchase in mid-October, just a few week before Boyd sent Pushor to negotiate the deal with Marquart. The deal between the GTH and SaskPower was concluded mid-November.
SaskPower said it was going to build a "Logistics Warehouse Complex" at the GTH, featuring almost 500,000 square feet of offices, shops, warehouses and storage facilities. Construction was set to begin October 2015.
SaskPower's GTH project now on hold
However, the $25 million land still sits empty.
"Right now the timeline is indeterminate," Marsh said at a SaskPower news conference in the summer.
Rasmussen believes it's clear what was really going on here.
"You can call it a sale but obviously it was a transfer of funds from SaskPower to the GTH," Rasmussen said.
He said the fact that SaskPower paid $25 million for idle land is a problem.
Rasmussen said the deal was done "at the expense, frankly of the taxpayer of Saskatchewan who could have gotten that money as a dividend that SaskPower would have paid or SaskPower could have used it to improve its services."
Part Four
With money in hand, GTH management was scrambling to write up the offer, as instructed by Pushor.
But emails show they didn't know the very basics of this deal, like which land they were buying and who they were buying it from.
In one email, COO Blair Wagar asks Pushor for the sellers name.
"Want to be sure have this right as it will be who the cheque is made out to," Wagar wrote.
MacKay said this is almost unbelieveable.
"Why is the GTH so far out of the loop that they're asking who to make the cheque out to? That's odd. Right?" said MacKay, noting this was the largest purchase in GTH history.
"Why wouldn't it be good for them to know what's going on. Why didn't they know? Why didn't they insist on knowing? Like that's pretty much the job right?"
A question of cabinet confidentiality
The offer was sent to Marquart on Dec. 23 with one condition, the auditor discovered.
The $103,000 an acre offer said it was subject to cabinet approval.
An email from the GTH reveals Marquart pushed back.
"The seller insisted on receiving an unconditional offer, asap."
The auditor found that Boyd supported Marquart's request, for an intriguing reason.
"The GTH Minister asked condition be removed after [Marquart] questioned condition given [Marquart's] understanding that Cabinet had previously approved the purchase."
In other words, Marquart said the deal didn't still require cabinet approval because cabinet had already given it the thumbs up. And Boyd appears to have agreed with him according to the auditor's account.
That struck Mackay as surprising.
"Given cabinet confidentiality, why did the seller know this information?" he wondered.
I don't know what happens in cabinet. And I'm not supposed to right? So if somebody has information like that it's worth asking where it came from.- Todd MacKay, Canadian Taxpayers Federation
Cabinet decisions are to be kept secret until executed.
"I don't know what happens in cabinet. And I'm not supposed to right?" said MacKay. "So if somebody has information like that it's worth asking where it came from."
The iTeam asked Marquart and Boyd to comment on this issue. Neither of them have responded.
He also noted that Marquart wanted the condition removed "asap."
MacKay observed that the entire process seemed rushed and lacking in diligence. He wondered why the urgency?
"That's something I've never understood throughout this whole process, is what was the rush?"
On Dec. 24, Pushor received an email from Wagar announcing "we have an ACCEPTED offer to purchase."
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