Government Operations Committee on April 24th, 2007

[Tim McGrath]

Again, percentages are usually based on a range of proceeds. Once you get into certain levels of proceeds, percentages change, so disclosing what the percentages are at this point would signal to the industry exactly the range of proceeds we would be expecting to achieve from the transaction.

[Garth Turner, Conservative, Halton, ON]

Okay, that answer completely mystifies me. I don't see how saying whether it's 3% or 4% or 5% is going to make that difference, but you're saying you're not going to tell us.

[Michael Fortier]

At this stage, no.

I will say this. I'd be happy to take it up with them, if we have a successful transaction, and see whether we can disclose it. Banks are usually very reluctant on M and A transactions to disclose their fees, for competitive reasons, and because of the confidentiality clause in the engagement letter—and I believe there is one—we'll have to see how we can deal with this, Mr. Turner.

[Garth Turner, Conservative, Halton, ON]

All right. It would be great to have an answer to that question, please.

Can you also tell us, when we sell the buildings and then lease them back, is there an additional commission on the lease?

[Michael Fortier]

No.

[Garth Turner, Conservative, Halton, ON]

Who's going to arrange that lease?

[Tim McGrath]

We are, Public Works and Government Services.

[Garth Turner, Conservative, Halton, ON]

You're not using any kind of leasing facility?

[Michael Fortier]

There's no broker, no intermediary.

[Garth Turner, Conservative, Halton, ON]

All right.

So there's no commission paid at all?

[Michael Fortier]

No.

[Garth Turner, Conservative, Halton, ON]

Are there any conditions on the sale of the building that will survive closing? In other words, are you selling 100% of your liability on those buildings when you close the deals?

[Michael Fortier]

Well, Mr. Turner, we don't have any liabilities on the building.

[Garth Turner, Conservative, Halton, ON]

There will be, depending on the terms and conditions of the sale.

[Michael Fortier]

We own them outright. It's not as though there's a mortgage with the Royal Bank on these buildings.

[Garth Turner, Conservative, Halton, ON]

No, but when you sell them, are there any conditions that survive closing? In other words, are you assuming any responsibility for structural conditions, for liability, for UFFI that's left in the building? Is there anything the government and the taxpayers of Canada are on the hook for, if this survives closing?

[Tim McGrath]

No. We've had environmental assessments carried out on all the properties. There's full disclosure in terms of the conditions. All of the environmental conditions were cleaned up and rectified when we did the acquisitions of some of the assets, so nothing is left over from a liability perspective on environmental issues. Nothing is left over. The lease agreement calls for the superstructure to be the responsibility of the new owners.

[Garth Turner, Conservative, Halton, ON]

So you're telling us there's no liability at all that will survive closing.

[Tim McGrath]

That's correct.

[Garth Turner, Conservative, Halton, ON]

We're done, we're just—

[The Chair, Liberal, Diane Marleau]

I'm sorry, Mr. Turner, but we'll have to go to the next turn.

Madame Bourgeois.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

Thank you, Madam Chair. Minister, gentlemen, good afternoon.

I would like to come back to something you said in your presentation. I will then follow-up with a question. At the bottom of page 1 of your opening remarks you refer to a $4 billion repair bill you are facing for upgrades to buildings across the department's real estate portfolio. What exactly does that $4 billion sum represent?

[Michael Fortier]

The amount is actually $4.5 billion. It is the estimated cost over the next 10 or 12 years of the upgrades that we need to undertake on our buildings. This work will be done across the real estate portfolio.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

Do those buildings include the nine that you are about to sell?

[Michael Fortier]

Yes, they are. They are integrated into the group of buildings for which the $4 billion are earmarked although, of course, the entire $4 billion is—