For immediate release
Winnipeg Green Party requests City Auditor to audit Lindenwoods Joint Venture Profit Sharing Agreements
Thursday, October 5, 2006
"Taxpayers have the right to know how their money is being spent and what commitments Council is making on their behalf." says Winnipeg Green Party spokesman, economist and lawyer, Markus Buchart.
Mayor Sam Katz is touting public private partnership (P3) agreements to build three new district police stations for Winnipeg. The trouble is - and Mayor Katz should know this - that Winnipeg has never built transparency or accountability into its P3 agreements.
The Winnipeg Green Party wrote October 3 to the City Auditor, Ms Shannon Hunt, asking that her office conduct performance audits of another P3 - the first and second Joint Venture Profit Sharing Agreements between the City of Winnipeg and Genstar Development Company - Lindenwoods Residential Subdivision.
This summer, a Freedom of Information and Protections of Privacy Act application for the annual financial statements of the Lindenwoods Joint Ventures was denied under a third-party exemption provision. Apparently, the financing of development costs was secretly charged to - - and "profits" were secretly paid into the Land Operating Reserve Account. There is no public record of the actual costs and benefits of this joint venture that would allow an independent evaluation or audit.
"Why on earth are City Councillors considering another joint venture with Genstar to build in Transcona when they haven't done their homework on the performance of the Lindenwoods joint venture?" asks Steve Smith, Winnipeg Green Party candidate in Transcona.
Other jurisdictions allow free access to P3 agreements. The citizens of Winnipeg have not been provided with either periodic accounting reviews nor a full-blown accounting at the end of the Joint Ventures.
In keeping with its policy, the Winnipeg Green Party has also asked the City Auditor to make recommendations on how to build full transparency and accountability into any future public private partnerships involving the City of Winnipeg.
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Contact: Markus Buchart, Winnipeg Green Party Spokesman, Tel. 772-9869
Background
In 1986, the City of Winnipeg entered into a Joint Venture Agreement with Genstar Development Company for the development of approximately 80 acres (50% owned by each party) from the intended McGillvray Industrial Area.
The Committee of Finance and Administration, dated September 12, 1989, stated, "This joint venture proposal has proceeded to everyone's satisfaction under the terms of the agreement and has been financially successful for the City."
However, the final draft of the agreement was apparently never made available to the public. Nor were the annual financial statements made public.
In September 1989, the City of Winnipeg and Genstar proposed a second Joint Venture Agreement to develop the adjoining 114 acres of City land and 114 acres of Genstar lands. The pro forma envisioned development occurring between 1990-1996. Apparently, market conditions prevented the execution of this agreement. The city eventually signed a second joint venture with Genstar in 1998 with each party contributing 54 acres each.
The public does not know how well initial expectations were met nor are there clearly identified profits and losses. Start-up costs of a land development are reputedly very high. It is not until the serviced lots are sold off that "profits" may be realized.
The City of Winnipeg Audit Department's "Real Estate Management Audit", March 2000, clearly shows that there is always room for improvement.
A report on, "The Charleswood Bridge - an Assessment of a Public -Private Sector Partnership", supervised by Dr. John Loxley, Economics Department, University of Manitoba in 1997, concluded:
"The funding side of the agreement is, therefore, a cause of some concern. A much larger issue is, however, that of the confidentiality surrounding the deal. Other jurisdictions allow free access to PPP agreements. City Council should be obliged to make this the practice in Winnipeg. Taxpayers should have the right to know how their money is being spent and what commitments Council is making on their behalf."
