Government Operations Committee on Aug. 27th, 2024

[Thomas Aabo]

I'll chime in and maybe Mr. Miller will add something at the end.

It is fairly unusual to watch any type of real estate asset priced at one end get reduced by 40% without selling at the same time. There was a very specific dynamic taking place in that area, especially with that building. There was a transition in ownership and a desire by the new owners to, in essence, transact, and the willingness to transact turned out to be for the benefit of the Government of Canada.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Thanks for that.

Mr. Miller, do you agree?

[Jonathan Miller]

Yes, I do.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Okay.

Looking at the appraisal that was done for the condo that was purchased, the appraiser notes “cautious optimism” when it comes to the long-term health of the Central Park South real estate market. It says that the neighbourhood's endearing popularity and limited new inventory are likely to sustain long-term residential demand.

Is that a view that both of you gentlemen share?

[Jonathan Miller]

Yes. There is a distinct difference between the condo and co-op markets. The Midtown neighbourhood is essentially the central business district of Manhattan. It has seen an influx of residential condo development, and in the long run, we're expecting price growth going forward.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Just on the surface, would it seem this is a reasonable investment if you're looking at the chance that this property appreciates over the years or decades that the Government of Canada holds it?

[Jonathan Miller]

I can't speak to whether or not it's a good investment. I can speak to the market conditions, and the market conditions suggest, as we have seen for the past decade, that the condominium market has more of a potential upside direction over the long term than the existing co-op market, which currently outnumbers condominiums in the market three to one.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Thank you.

Mr. Aabo.

[Thomas Aabo]

I would agree with Mr. Miller's assessment. The area is still up-and-coming in the sense that a lot of new development has been released to the market that has been more or less adopted by the market. Again, with the continued influx of foreign investment into New York, we anticipate that will continue to grow. We agree with the appraiser's assessment.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Thanks for that.

One of the criteria that led to the conclusion that the existing—or former, I suppose—property was no longer suitable had to do with rules imposed by the co-operative in which it was located that constrained GAC's ability to hold events at the property.

I'm just curious. You noted that the current property is not located in a co-op. Are there any rules that constrain GAC's use of the property?

[Thomas Aabo]

The rules of a condo building are very different from the rules of a co-op building, which is one of the reasons, as you said, that the government appeared to have desired to move to the new location.

The new location certainly has rules. Every building in New York City, I would imagine anywhere, has rules. We acquired those rules and shared them with the committee, I believe, or they are on their way to you. It is our understanding from a review of those rules that they are severely less limiting than what a co-op board was presenting in the past.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Mr. Aabo, I don't know if we've gone over this already, but what precisely were the rules that were problematic at the former location?

[Thomas Aabo]

I can't speak to those rules exactly, as I was not the holder of the apartment nor restricted by those rules, but in general, co-op boards are more restrictive. Co-ops are very focused on a specific type of family and family lifestyle, not necessarily suitable for a public residence of the sort of a mission of Canada.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

At the consul general's property, there are two separate roles. One obviously is the diplomatic role when it comes to entertaining other diplomats and high-profile officials and having events, that sort of thing. The other role is responding to the needs of Canadian citizens, particularly emergency travel requests.

Are members of the public, like Canadian citizens who need emergency assistance with travel documents, able to access the new property without any barrier?

[Thomas Aabo]

Thank you for the question.

[The Chair, Conservative, Kelly McCauley]

I have to interrupt. Please give a very brief answer.

[Thomas Aabo]

The new condo has very strict security measures and several points of entry that are supervised. They would need to be cleared by the residents of the condo in order to access it, but if they were cleared, they certainly could access it.

[The Chair, Conservative, Kelly McCauley]

Thanks very much, Mr. Bachrach. I'm glad you brought up the issue of the condo rules. Global Affairs actually promised at our last meeting to get some information back to us on those rules that day or the very next day. I checked with our clerk yesterday, and they still have not gotten back to us. I'm glad you brought it up.

Global Affairs, if you are watching this, and I assume you are, you owe us those documents. You promised us those documents, or at least a response about them, so I hope you will get to providing them to this valued committee.

Mr. Brock, go ahead, please.

[Larry Brock, Conservative, Brantford—Brant, ON]

Thank you, Chair.

I'm going to be directing questions to you, Mr. Aabo.

I understand that your real estate firm is currently the listing agent for 550 Park Avenue, unit 12E, the existing consul general premises. I also understand that you played a part in the purchase of West 57th Street. Is that accurate?

[Thomas Aabo]

That is indeed accurate. We participated in two RFP processes, one for the purchase of the new official residence and one for the disposal of the existing residence.

[Larry Brock, Conservative, Brantford—Brant, ON]

Thank you. I wanted to confirm that.

Government of Canada officials, Justin Trudeau's government and Global Affairs have confirmed that the purchase of West 57th was predicated on the fact that the Park Avenue property required, in essence, over $2 million in renovations. It was originally purchased in 1961, it had renovations completed in 1982 and it was good enough for 19 previous consuls general, except for Tom Clark, who wanted a different location and was granted that.

I think it's disingenuous—and I think it's actually a lie to Canadians—that Justin Trudeau and his government are claiming that this property was essentially a fixer-upper. That couldn't be further from the truth, and I'm going to quote from your listing page for Park Avenue:

A perfect example of the grand Golden Age apartments of the 1920s, this...masterpiece is full of volume, scale, and ideal circulation. A great room with 11' ceilings and large windows that frame exposures to the north and east invite you into the heart of the home, while the adjacent dining room could comfortably host down a dinner of 18. Designed for hospitality, a commercial kitchen and butler's pantry are further complimented by direct access to a separate staff office and storage room, as well as the in-unit laundry. A den/library just off the entrance gallery, as well as a powder room, complete the northern wing.

Along the southern corridor, four bedrooms, all with en-suite bathrooms and walk-in closets, and two with corner exposures offer privacy and comfort.

With its high ceilings, large windows, herringbone walnut floors, and ample storage throughout, this residence offers the perfect framework for generation living and is truly a space to behold.

That, sir, is your listing. That is hardly indicative of a New York City condo adjacent to Billionaires' Row that demands 2 million dollars' worth of renovations. Would you agree with that?

[Thomas Aabo]

It is a wonderful residence, and it will serve, very well, owners who have the needs the residence offers up. If those needs are no longer met, residents will probably want to find—

[Larry Brock, Conservative, Brantford—Brant, ON]

In your professional opinion, this is not a fixer-upper. Is that correct?

[Thomas Aabo]

In my professional opinion, that is not a fixer-upper.

[Larry Brock, Conservative, Brantford—Brant, ON]

Sir, this is move-in ready luxury in a heritage building, isn't it?