Good morning, Mr. Chair.
I'd like to begin by thanking the committee for the opportunity to speak to you about Canada's official residence in New York City, which the government recently purchased. I'm pleased to be able to explain the reasons for the purchase, the significant financial savings that this new residence offers, and how it benefits daily activities. The consulate general in New York is one of GAC's most important missions. Not only does it provide essential services to approximately 300,000 Canadians living in the area, and thousands of Canadians who visit there every year, it also plays a key role in protecting and promoting Canada's trade and investment interests. More specifically, the consulate supports our activities in a city that's not only the financial capital of our largest trading partner, but the financial capital of the world. It provides services to Canadians across a vast territory encompassing five states that collectively account for over $200 billion in bilateral trade annually.
The official residence in New York City is more than just a place of residence. It is an essential venue for hosting key interlocutors in smaller, more personal settings. Federal, provincial and territorial representatives frequently use this space to engage with partners and advance Canada's interests. While this residence and others like it are used as living quarters by our heads of mission, their primary function is as government work sites where important diplomatic events and business meetings are conducted. Over the past two years alone, more than 50 official functions have been hosted at the residence, including business and networking events as well as round table discussions, each providing a unique opportunity to engage with local leaders on issues that matter to Canadians.
GAC is the custodian of the Government of Canada's diplomatic and consular real property abroad. As such, we are responsible for acquiring, maintaining and disposing of the office space, official residences and accommodations used by Canadian personnel abroad.
These acquisitions must comply with Treasury Board policies and Global Affairs' internal guidelines to ensure transparency and value for money.
The replacement of the official residence in New York was carefully planned and executed. It represents up to $7.4 million in net present value savings for Canadians. An aging asset is being replaced with a well-located, smaller and more cost-effective property, positioning Canada to meet both current and future needs.
The previous residence at 12E-550 Park Avenue was acquired in 1961 and was used extensively. The building is now over 100 years old. Concerns about the condition of the current residence were first raised, actually, in 2014. In 2017 a building condition report indicated that many systems were nearing the end of their life expectancy and foresaw a mid-life refit in the early 2020s at today's cost of up to $2.6 million.
After conducting a detailed analysis of the options and following a governance review, GAC, with the assistance of a local real estate expert, appraised 21 properties in seven neighbourhoods of New York, one of the most expensive real estate markets in the world. After careful consideration, Global Affairs Canada selected the property located at 111 West 57th Street.
This recently renovated property is situated in the heritage portion of a building in Midtown, contrary to previous reports suggesting that it was in a skyscraper. It is conveniently located near our office and other international organizations. The apartment is smaller than the previous property, more efficient and cost-effective, and it was purchased at a price that was recently reduced.
Finally, the current official residence is now listed on the market. It was listed at $3.9 million higher than what was paid for the new residence. We are very proud of this replacement transaction that not only promises a substantial one-time savings for Canadians, but also avoids $2.6 million in renovation costs and delivers $115,000 in ongoing annual savings on operational fees—cutting expenses in half—in a real estate market that has consistently shown an annual increase in return on investment.
I look forward to addressing your questions and providing further details on the rationale behind this purchase, the expected benefits for Canadians and the financial considerations involved. Our goal is to ensure transparency and accountability in this matter. We're here today to provide any information you may require.
Thank you, Mr. Chair.
