HERE’S THE deal. You buy a farm for, say, $1.5 million because it is perfect for your needs, can accommodate your expansion plan and is in an area of increasing land values so asset net worth will rise regardless of cash flow.
By the way, the purchase price was a bit of a bargain because the previous owner got in a bit over her head and had to sell to pay off debts.
The farm wasn’t perfect so over the next four years, you invest another $600,000 to make it suit your needs while asset values grew.
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Then, you sell it for not much more than you have invested, agree to lease it back for 25 years at a tidy profit for the new owner, agree to pay rent based on the assumption that the farm always will be at optimum production and agree to watch the new owner reap the benefit of the asset value increases.
Does this sound like a good business plan?
If you are public works minister Michael Fortier, apparently so.
Last week, he oversaw the sale to a private Vancouver real estate company of nine valuable federal properties, among them the massive building on the western edge of downtown Ottawa that his department purchased in 2003 to be the new headquarters for Agriculture Canada.
The government paid more than $92 million, has invested more than $43 million to make it fit for both Agriculture Canada and the Canadian Food Inspection Agency and now has sold it with a 25-year leaseback arrangement.
You can be sure reporters are scouring political and business records to find any connection between Larco Investments Ltd. and the Conservatives.
But even if no connection is found, it is difficult to follow the business rational.
Public Works got a deal in 2003 when it bought the building because former owner Nortel was on the ropes after the collapse of the Ottawa high-tech bubble.
It needed to unload a site that could house thousands when its workforce had shrunk to hundreds.
It was perfect for Agriculture Canada.
It needed new headquarters and found at a bargain price the only real possibility in the vicinity of the fabled downtown Central Experimental Farm – the Nortel Skyline Complex at the western edge of the department’s farm fields in the centre of the nation’s capital city.
And with Ottawa one of the hottest real estate markets in the country, the federal government undoubtedly has seen the value of the property soar in the past four years.
But Fortier is a Montreal economic ideologue with ties to the conservative Montreal Economic Institute that believes the best government is the least government.
Of course the business community should own government buildings! What are you, communist?
It is difficult to see this as a good deal for Canadian taxpayers.
But the government does retain the right to name the buildings it rents from Larco and surely the Skyline Complex name will change.
The current Sir John Carling building was named after John A. Macdonald’s last agriculture minister.
If the Conservatives retain office, maybe we’ll have the Alvin Hamilton building.
And if Stéphane Dion succeeds, how about the Eugene Whelan Complex?
Don’t laugh.
