Government Operations Committee on Aug. 20th, 2024

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you for that.

Many times you've indicated that TBS did not or does not have eyes on the real property purchases under the threshold of $10 million and that Global Affairs actually has to be able to demonstrate due diligence in following the framework that has been given to them for the purchasing of real property.

Who do they demonstrate that due diligence to?

[Samantha Tattersall]

Within a department, accountability rests with the deputy head, and then the deputy head—

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Is that at the deputy minister level?

[Samantha Tattersall]

It's the deputy head, yes, and the deputy head under the current policy will appoint a senior designated official responsible for real property, and they will set out their real property management framework. So when GAC is here, they could outline what their framework, their delegations and their governance are.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Right, but they basically demonstrate due diligence to themselves. Nobody else has any role to play in actually assuring that Global Affairs Canada is following due diligence.

[Samantha Tattersall]

Part of the external element is the appraisal that is provided by an external party.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you.

I'll turn my time over.

[The Chair, Conservative, Kelly McCauley]

Mr. Genuis, go ahead.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Thank you, Chair.

In terms of cost to taxpayers, it's important to underline that we haven't sold one residence and purchased another. We currently have two consul general's residences in New York, each of which has very substantial carrying costs.

Tom Clark was apparently so keen on a new luxury condo that they bought that condo before even listing the existing property, with no guarantee that it would sell at an acceptable price.

In general, as it relates to Treasury Board policy, would you say it's a best practice to secure a buyer for the first property before purchasing the second?

[Samantha Tattersall]

Our policy doesn't speak to sequencing. Our policy speaks to making decisions based on the full life-cycle costs. The sequencing and how that is determined would be set out within the department.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Do you think it's common sense that we don't need two consul general's residences in New York and that you need to make sure that you're going to be able to sell the first at an acceptable price before you purchase the second and also that you don't want to be responsible for very significant carrying costs for two properties on an ongoing basis? Would that seem to you like common sense?

[Samantha Tattersall]

I would say, in how I'm managing my real property portfolio, that I would want to understand the sequencing they've used and whether they've included those costs in their life-cycle costs analysis.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

But just from a common sense perspective, most people who are pinching their pennies.... We're going through a cost-of-living crisis. Many Canadians can't afford homes at all, but most people don't go out and purchase the second home before they've begun the process of selling their first home, because they don't want to be on the hook for the costs associated with owning two homes at once over a long period of time. Again, this first property wasn't even listed until last week, essentially immediately before these committees were starting.

Shouldn't the Government of Canada apply these common sense real world insights to their decisions involving real property?

[Samantha Tattersall]

I think I would want to understand from GAC officials when it was that they started the process to ready the property for disposition, and how that figured into their strategy around the replacement of the official residence.

[The Chair, Conservative, Kelly McCauley]

Thank you very much.

All the way from sunny Windsor, Mr. Kusmierczyk, go ahead.

[Irek Kusmierczyk, Liberal, Windsor—Tecumseh, ON]

Thank you very much for that enthusiastic and very accurate introduction, Mr. Chair.

I'd say that 99.99% of the questions I have are actually directed towards GAC because GAC holds pretty much all of the cards and all of the answers to the questions that we have here, but I do have some questions to pose.

I want to begin by setting a bit of background here.

As I understand it, the Government of Canada manages 6.9 million square metres of real property. That's about seven million metres of real property.

Am I in the ballpark here?

[Mark Quinlan]

Mr. Chair, I can answer that question.

That is accurate with regard to the PSPC portfolio, speaking to office space. Out of that 6.9 million square metres there is roughly one million square metres of special-purpose space, warehouses, etc. You then have another six million square metres of general-purpose office space. Out of that six million square metres you have embedded special-purpose space, so it's not always pure office space. That is the PSPC portfolio.

Speaking to the Government of Canada portfolio, I believe the number is more in the neighbourhood of 23 million so PSPC's share is roughly one quarter.

[Irek Kusmierczyk, Liberal, Windsor—Tecumseh, ON]

So you're saying 23 million. Okay. I apologize for low-balling it significantly.

Is it fair to say that the Government of Canada has experience in the area of managing real property?

[Mark Quinlan]

I think it would be fair to say that the Government of Canada has experience managing real property. That being said, of course, I can speak only to PSPC's portfolio.

[Irek Kusmierczyk, Liberal, Windsor—Tecumseh, ON]

Okay.

I want to talk about some of the protocols and rules around the management of real property, including the directive on the management of real property, which states that acquiring property must be done in a manner that is fair and that aligns with commercial real estate practices.

Do you have any reason to suspect that this part of the directive was not followed? Is there anything from what you've read that says that this part of the directive was not followed when it comes to the process being fair and aligning with commercial real estate practices?

[Samantha Tattersall]

I can answer that question.

When we talk about fair, we talk about the fact that they looked at options based on the requirements, that there was a process to identify all properties, that they did market testing by engaging a broker, and that they undertook an appraisal. Aligning with commercial real estate practices would mean that they followed the legal, due diligence process and commercial practices in New York.

What I know from what's been submitted to this committee is that they undertook an appraisal and they engaged a broker. My understanding from talking with officials at Global Affairs is that they undertook a financial analysis of the options. That's what I know now.

[Irek Kusmierczyk, Liberal, Windsor—Tecumseh, ON]

Have you seen any evidence to tell you that this part of the directive was not met?

[Samantha Tattersall]

Given that the only information I have is what's been publicly available, I can only rely on what has been submitted to this committee.

[Irek Kusmierczyk, Liberal, Windsor—Tecumseh, ON]

So you haven't seen any evidence to the contrary that would contradict or violate the directive?

[Samantha Tattersall]

From what has been submitted, I have not, but I think part of the evaluation of this committee is to make sure that GAC followed the policy.