In a small notice in its April 3 weekly report, the City of Regina announced it had authorized the sale of four parcels of city-owned land for “less than current market value and without a public offering” at a price of $4 million.
The report did not mention of the huge size of the contiguous land, 633.57 acres, and included no indication of the buyer’s name.
An independent appraisal, done by Brunsdon Lawrek and Associates a month before the deal was announced, had valued the land at $6.3 million.
According to sources, the buyer, which has a one-year option to purchase, is Viterra, a private agricultural processing and transport company owned by the British Columbia Investment Management Corp., the Canada Pension Plan Investment Board and Switzerland-based Glencore, an international commodity trading and mining company.
In the sale notice, the city stated anyone wishing to contest or discuss the sale could register by April 9 to attend a virtual council meeting on April 12, in which the land sale was the only topic.
At the meeting, Federal Co-operatives Ltd. – which owns land adjacent to the city acres – challenged the sale, calling it “rushed” and “secretive” and said the city had provided the buyer with “preferential treatment” that resulted in a sale for less than market value.
“We emphatically request that the City of Regina withdraw the motion and instruct the city manager to pursue a more transparent process with enhanced due diligence, inclusiveness and open competition,” reads the letter to council from Pam Skotnitsky, vice-president, strategy at Federal Co-Operatives.
In a unanimous decision, however, Council confirmed the option to sell the land to the original buyer.
As the city explained, it would receive a non-refundable $50,000 option fee which the buyer has one year to exercise on the purchase of the land, which is waiting for industrial redevelopment from agricultural use.
While the sale has proved controversial, real estate professionals have sided with the city.
“This land was purchased back in the 1970s for $478,000. Not a bad uptick for the city on the optioned price of $4 million today,” said Kelly Macsymic, business manager at Stuart Commercial Inc. and a broker with ICR Commercial Real Estate, Regina.
Local agents say the city had been trying to sell the land for years, without success, and that the appraisal would have been difficult because there were few similar land sale comparisons.
“It’s doubtful the city had multiple bidders lined up for this expanse of land. On the other side, appraisers were likely hunting for comparable land sales of this size outside of ag-related transactions,” Macsymic noted.” It makes the value process very selective, from both an appraisal and a market view. Market trumps appraisal in this case as the market value reflects what someone is willing to pay today.”
Viterra has not commented on the sale, but the buyer apparently has big plans for the 633 acres. According to the city, “the development would employ a significant number of construction jobs followed by ongoing permanent jobs as well as indirectly supporting another 1,500 jobs. Overall, the development is projected to add approximately $500 million to the Regina region’s gross domestic product. “