City staff could soon negotiate the sale of 12 civic buildings it estimates are worth $5 million to $10 million to the non-profit tenants who use them, and possibly sell some for as little as $1 each.
A city report requests council provide permission to let staff work out deals with tenants who are leasing the properties and have expressed an interest in buying them. City council would need to approve that plan.
Mayor Scott Gillingham said it’s too soon to say which, if any, buildings will be sold for $1 or how much property value the city could forego, noting the report lists several options.
MIKAELA MACKENZIE / FREE PRESS
The Granite Curling Club is one of 12 non-profit tenants of city-owned properties that expressed an interest in buying the building they currently lease from the city.
“I think we do need to weigh out and consider the cost to the city of the long-term maintenance requirements of some of these buildings and whether or not they’re really surplus to the city’s needs and, if there is an opportunity … to provide that building or sell that building to a non-profit organization, then we certainly should consider that,” said Gillingham.
In 2020, council directed staff to create a “strategic facility master plan” that would review all city-owned buildings and determine what to do with them.
That led staff to ask 40 of the city’s 86 non-profit tenants if they would buy the buildings they occupy, excluding others that can’t be sold, such as community centres.
About 12 groups expressed interest in buying their buildings, the report says, with most saying a $1 price would be needed for them to do so.
Several sale options could be considered, including selling properties to tenants at below-market value (with or without a clause to reverse the sale under certain conditions), entering into a long-term ground lease at below market value (where the city keeps the land and the tenant owns the building) or selling the property to the tenant at market value, the report says.
“The public service recommends that council authorize negotiations to sell the buildings to the interested current non-profit tenants, at below-market value,” writes Marc Pittet, the city’s manager of real estate and land development.
If council approves the call to let staff negotiate such deals, any sales for less than 80 per cent of market value would require individual approvals from the property and development committee.
Gillingham said he didn’t predict the effort to assess and possibly sell city buildings, which he has long supported, would produce a profit.
“I don’t think it was ever my goal to make money off the buildings. I think the goal, ultimately, is to rationalize and, frankly, avoid some maintenance costs… by hanging on to a building, as a city, that we’re no longer using,” he said.
While he said getting market value from each property that’s sold would be ideal, he’s not sure it’s feasible.
“The City of Winnipeg has a large inventory of buildings. Every one of those buildings carries with it operating and maintenance costs. And that quickly begins to add up… (This is us) trying to be good stewards of taxpayers’ dollars,” said Gillingham.
Coun. Sherri Rollins, chairwoman of the property and development committee, echoed the mayor’s sentiment that the city should assess its real estate portfolio.
“Some of the buildings you see are well-used, well-loved buildings, where daycares occupy them, seniors’ spaces occupy them, whole schools… (This figures out) where do we go from here?” said Rollins.
The report predicts the city could cut its maintenance costs considerably if the buildings were sold.
“The most recent asset review indicates anticipated capital funding needs would average $2 million (plus per) year over the next 10 years for the 12 buildings. This cost assumes all building components are replaced at the end of their life, which is not always the case,” writes Pittet.
He notes the city’s rental portfolio is considered to be in “poor to very poor condition” and selling assets would reduce Winnipeg’s infrastructure deficit.
A request to speak with a property and development official was not granted on Thursday. In an email, spokesman Kalen Qually said allowing staff to directly negotiate with tenants should help ensure the non-profit tenants can remain in place when a sale is pursued.
“Without the recommendations, council policy requires the buildings to be publicly marketed, which introduces the risk of tenant displacement,” wrote Qually.
The property and development committee will cast the first vote on the issue on July 4.
joyanne.pursaga@freepress.mb.ca
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Joyanne Pursaga
Reporter
Joyanne is city hall reporter for the Winnipeg Free Press. A reporter since 2004, she began covering politics exclusively in 2012, writing on city hall and the Manitoba Legislature for the Winnipeg Sun before joining the Free Press in early 2020. Read more about Joyanne.
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