Government Operations Committee on June 2nd, 2016

[Robert Howald]

It will be a cost within our pro formas for a project. In all instances they are contaminants that are fine in place but have to be dealt with through the development. There will be lines or monies within our financial pro forma not only for servicing costs but as well for environmental remediation or building demolition, and with that any greater care that needs to be taken. It's all built into our financial pro forma for a project.

[Nick Whalen, Liberal, St. John's East, NL]

On a go-forward basis in the projects, are you then completely alleviating Canada Lands of environmental liability at the end of a project when these residential developments occur? For instance, in Pleasantville, in my riding of St. John's East, there is a 64-acre development ongoing. It's a former U.S. military base; I can only assume there are very strange things lurking under the soil.

At the end of that project, will Canada Lands still retain any residual environmental liability, or will it all have been discharged?

[Robert Howald]

It will be discharged. That's the comfort that we have and that we'd rather not pass on to another. You've been there, so you will have seen that we have quite an extensive demolition process going on with the remainder of the buildings that are on the site just to be able to eliminate the contaminants within the buildings as well as any in the soil.

[Nick Whalen, Liberal, St. John's East, NL]

Unlike Ms. Shanahan, I feel that property developers always tend to make out pretty well. In terms of your profile on profits in property development, do you benchmark your results against other property developers in the same market? How would you be comparing against developments in the Galway site for Pleasantville, or do you do that benchmarking market by market?

[John McBain]

For us, because of the value proposition that we propose for Canadians, we don't view ourselves as the same as other developers. For example, because of the percentage of green space that we include in our properties, and the commemoration of heritage and legacy projects that we include as part of our projects, we're not driving to the same end result. However, in markets we do need to see the comparables. We need to understand what we're doing. The balance of those value proposition elements against profit is part of what makes us what we are.

[The Vice-Chair, Liberal, Yasmin Ratansi]

Mr. McCauley, you have seven minutes.

[Kelly McCauley, Conservative, Edmonton West, AB]

You mentioned at the beginning that the company was dormant until reactivated in 1995 and that you operate with a mandate defined at that time. Is the mandate still considered relevant or is it perhaps out of date?

[John McBain]

It's an interesting question.

I'm always impressed when we look—

[Kelly McCauley, Conservative, Edmonton West, AB]

Excuse me. I only have a few minutes.

[John McBain]

Okay.

I'm impressed by the quality of the mandate and the foresight it showed—

[Kelly McCauley, Conservative, Edmonton West, AB]

Okay. You generally—

[John McBain]

—but at the same time, the world of real estate and development is evolving.

[Kelly McCauley, Conservative, Edmonton West, AB]

That's perfect.

I've been reading through the opening remarks. You talk about being “the master developer of properties”. Very quickly, keeping in mind that we have about three minutes, when you talk about being the master developer, what does Canada Lands look after before it's turned around?

[John McBain]

We get a 300-acre property, sometimes after—

[Kelly McCauley, Conservative, Edmonton West, AB]

Let's say it's Griesbach. We'll talk about that.

[John McBain]

In terms of a plan like Griesbach, we do stakeholder engagement and engage with the communities. We propose a plan that goes to the city. We then get the feedback, we adjust the plan, and it gets approved, and we then have a development plan. Then we make the decision. Do we do bulk sales of property to developers who build, or do we do as Bob was describing earlier? Do we service, put in the roads and the underground services, and sell individual lots? We define the entire plan and the requirements of construction in it.

[Kelly McCauley, Conservative, Edmonton West, AB]

What value is it for us to do the full package, to run the roads in and do the other infrastructure amenities?

[John McBain]

I'll turn it over to Bob, but for us it's really a question of where the most benefit is for Canada Lands and therefore the return to the crown. We assess the market.

Do you want to answer that, Bob?

[Robert Howald]

There is profit to be made all the way through, but probably the most significant profit that a developer makes is on what we call “the first lift”, or after you get the plan approved by a municipality, because all the planning, uncertainty, and risks are out of the way.

We do tend to continue and do the servicing and put the infrastructure in place, primarily to ensure that the commitments that have been made through the consultation through the community plan are actually built out as is, so that the end product is as advertised, and so we don't dispose of it prematurely and a developer buys it and looks to change the plan.

In the end, we're selling serviced lots or blocks on a defined plan. We put all the skeleton or roads and services in place. The end product is as was anticipated through the process.

[Kelly McCauley, Conservative, Edmonton West, AB]

We—and when I say “we”, I mean Canada—are making more money off it that way.

[Robert Howald]

Yes.

[Kelly McCauley, Conservative, Edmonton West, AB]

Do you run into conflicts with private sector developers in undercutting them or with the advantage we have?

[Robert Howald]

No, we don't, in that an element of Canada Lands on the real estate side is that it's a small group. In your Edmonton situation with Griesbach, there are five people who operate that, but we hire out all of the disciplines that we require from the professional services, from the engineers, the consultants, and the architects to the actual contracting for the work.

[Kelly McCauley, Conservative, Edmonton West, AB]

The current government has talked about affordable housing. Have we or has the federal government had many discussions with Canada Lands yet? The reason I ask is that in Edmonton it's a big focus of our current mayor, and it's a focus of our provincial government. Have we been in talks about how you have land, serviceable land that you could turn over, or is that just not down the path yet?

[John McBain]

We certainly have that conversation with every development in every municipality. In addition, we work with federal programs such as the surplus federal real property for housing initiative.

We've had the fortune to brief our minister on a couple of occasions and have indicated where we're taking in the work that we do with respect to supporting affordable housing desires at the municipal level.