Falcon’s Follies: Part 2.
In my previous post I stated that the Gateway initiative and the construction of the SFPR, were crucial to opening up land development south of the Fraser. The new mandate given to BC Rail by former transportation minister Kevin Falcon is certainly assisting this venture.
There have been numerous land deals that have taken place since 2005 that are worthy of a second look – land deals that took place along the very contentious P3 project, the South Fraser Perimeter Road, land swaps that occurred with the Tsawwassen First Nations Treaty and prior agreements, and land purchases made by numbered companies owned by BC Rail.
These land purchases are something many people have known about for years. To be sure, every time a project is on the books, land speculators are scratching at the door, waiting to make millions. Nonetheless, the facts remain to leave us a provocative record of events and transactions, that – depending on who you ask, demonstrate either a wonderful bit of luck and good timing … or a stunning example of what is often the very profitable side to government land expropriations and public projects.
If you had been a visitor in the legislature on May 30th, 2007, afternoon sitting, you likely would have been listening to this exchange between Kevin Falcon and Guy Gentner :
SOUTH FRASER PERIMETER ROAD
G. Gentner: Mr. Speaker, 40 percent of the cost of the $1.1 billion South Fraser perimeter road is allocated towards land acquisition, making it the largest purchase of land for any highway project in the history of B.C. For speculators, there’s a lot of money to be made here.
Can the Minister of Transportation explain how it is that a numbered company paid $1.7 million for contaminated industrial land at 7590 80th Avenue in Delta on February 25, 2004, and flipped it less than a year later — only weeks before the announcement of the South Fraser perimeter road route selection — for $3.6 million?
Hon. K. Falcon: I know it doesn’t take long for those members opposite to climb up the grassy knoll and discover conspiracies everywhere they look. I think, again, that if the member would do his homework, the member would know that in 2004 that was a property that was actually put into foreclosure. That was the value assigned to that property at foreclosure. That is a different value than market value. The member should know that.
In fact, there is a 1998 appraisal report on that same property valuing it at $3 million. We paid $3.6 million through the Gateway project. That was based on an independently provided market assessment.
Mr. Speaker: Members. Members.
The member has a supplemental.
G. Gentner: Well, we know the government paid $600,000 more than the market value. There’s no question there.
G. Gentner: Yes, it did.
Okay. Let’s see. The residents with million-dollar vistas overlooking the Fraser are still awaiting settlement. Their lives are on hold, and yet speculators come in and buy and flip. Hmm, isn’t that interesting?
There’s concern in my community that there is another Gaglardi road deal in the making, where family and friends made oodles of money because of inside knowledge — buying land, knowing where a road was to be built. Can the minister assure this House that something similar is not happening with B.C.’s largest highway land acquisition?
Hon. K. Falcon: I think the member should be careful how he makes those kinds of allegations or casts aspersions, because the fact of the matter is that this is a road whose general route has been talked about and known for almost 20 years. It’s been part of a discussion with the local municipalities for a good six years under this government. There’s been no secrecy about where this route is going to be.
I can tell the member opposite — and the member should know — that I have full confidence in the professional public servants that are overseeing the property acquisition. Before acquiring any properties, they receive independently provided market assessments, market appraisals on those properties, and they negotiate fair market purchase prices.
When the member wants to talk about flips and kind of make all of those kinds of insinuations…. You’d better do your homework and make sure that’s actually the case. In this case, I believe that our employees acted totally appropriately.
Mr. Speaker: Members.
This is from Official Report of DEBATES OF THE LEGISLATIVE ASSEMBLY(Hansard)WEDNESDAY, MAY 30, 2007, Afternoon Sitting,Volume 22, Number 1,ORAL question pages 8357 -8360
Let’s work our way back to the specific transaction that prompted this exchange, more than two years after the fact that it was uncovered by a few concerned citizens who were fighting for their homes, their neighbourhoods, and a very vital part of the ecosystem.
Jeffrey Merrick is a partner with Blakes, Cassells, and Graydon law firm, here in Vancouver. By clicking on the link above, one can clearly see that in the areas of P3’s and infrastructure, he is highly esteemed and his reputation precedes himself. To be sure, he has been part of the Sea to Sky deal representing the concessionaire and Macquarie, even throughout the recent sale of their share in the Sea to Sky project.
Fact: On February 16th, 2004, the decision to extend the South Fraser Perimeter Road and add a western section from the Alex Fraser Bridge to Deltaport was announced.
Fact: On February 24th , 2004, a numbered company –606306 BC Ltd. acquired the property at 7590 80th street in Delta for $ 1.7 million dollars. Jeffrey Merrick was the sole director, president and secretary listed on the company search.
Fact: On January 1st, 2005, Mr. Merrick’s numbered company,606306 BC Ltd,amalgamated with Quick Assets Inc.
Quick Assets Inc. listed four directors at the time: David Bush, John Cosulich, Sari Fleming and Anne Stewart, who also happens to be a partner with the same law firm as Jeffrey Merrick : Blakes Cassels and Graydon.
Anne Stewart has a long and prestigious history working side by side with the Ministry of Transportation on P3 projects- the Canada RAV line, the Sea to sky Highway, the Golden Ears Bridge, and Gateway/Port Mann. She is noted in the who’s who in world leading public procurement lawyers, among other accolades in the bio linked to in her name above.
Anne Stewart has also acted as legal counsel for the Cosulich Group, the parent company to Quick Assets Inc. and is listed on their site above as having done so since 1975. ( FYI- quick assets , in investing terms, are defined as those which can be converted to cash quickly, making this a rather clever company name)
Fact: On January 24th, 2005, just a few weeks after the numbered company listing Jeffrey Merrick as sole director amalgamated with Quick Assets Inc., that company sold the property in question at 7590 80th street to the B.C Transportation Authority for $ 3.6 million dollars – a profit of $ 1.9 million dollars , a handsome figure to be sure.
On January 31st, 2006, former transportation minister Kevin Falcon and premier Gordon Campbell announced and released the Gateway Program Definition Report Summary, which detailed the timeline of Gateway related projects. The SFPR is slated to undergo a pre-design public consultation period in 2006,with detailed design consultation not indicated until 2008. ( pg15)
The property at 7590 80th street is slated to be used as an intersection for the South Fraser Perimeter road. Zoned as industrial/extraction -peat extraction,the market value of the land at the time likely should have been comparatively lower than other industrial lands, considering the likelihood of contamination. ( pdf) The property is also part of a water mound crucial to the viability of Burns Bog, which the provincial government has signed a covenant to protect.
18.104.22.168 Taylor Ventures Ltd. (Athropa Landfill), 7590, 7664 80th Street
The Athopa Landfill site is located at 7590, 7664 80th Street. Athopa Development Co. Ltd. formerly operated the site, and it accepted commercial and industrial fill between 1994 and 1998 under a permit provided by the Corporation of Delta. In 1995 Taylor Ventures purchased the site. The site is currently under receivership and is being managed through Coopers & Lybrand Ltd. The site registry indicates that the 7664 80th Street site has been determined not to be a contaminated site and that 7590 80th Street site is suspected of containing petroleum hydrocarbons and is under assessment.
A group of concerned citizens started asking questions, doing searches on this property and many others along the proposed route.
What they found raised some eyebrows and leads us back to lawyers to the numbered company listing Jeffrey Merrick and Quick Assets, which listed Anne Stewart as directors.
Anne Stewart, who has so often worked closely with the Ministry of Transportation on a variety of P3 projects, was clearly listed as a Director of Quick Assets Inc., the company who made such a handsome profit on the property acquired by Jeffrey Merricks numbered company. To be fair, lawyers are often listed as the only directors on a numbered company,when acting on instruction from clients who perhaps wish to remain unknown. As such, usually the lawyer’s office is listed as the address for the corporate records. This certainly is plausible in the case of Merrick and Stewart both appearing as directors on seperate companies.
Cosulich group, the parent company to Quick Assets inc, has a variety of businesses under their banner, including shipping container companies that provide off dock services to shipping companies at Deltaport and the Vancouver port. Kozul Holdings Inc. and Delta Container ( Delco) are among the companies listed, as is Quick Assets Inc.,which is described as maintaining “a diverse portfolio of investments.”
It should be noted, Delta Containers inc / Kozul holdings is the owner of the property adjacent ( north side) to the property sold, which is still currently stacked with empty cargo shipping containers.
In the Hansard debate, Kevin Falcon said Mr. Merrick acquired the property via a foreclosure, hence the low purchase price. Then transportation minister Kevin Falcon, stated the government purchased the property at market value, as are most expropriations. Fair enough, but the property was still purchased for far more than it comparatively should have been considering the zoning and condition of the land. Based on a previous market valuation, at least $600,00 more, by some estimates.
Because both Mr.Jeffrey Merrick and Ms. Anne Stewart appeared as directors on companies involved in the acquisition and subsequent sale of the land along the SFPR route, more questions arose as to whether or not this constituted a real or perceived conflict of interest – whether or not they were real principals or acting on the direction of an unknown client.
Specifically, because both lawyers worked in the same firm, both worked directly with the government and Ministry of Transportation, on various P3 projects ( including Gateway, in the case of Anne Stewart) and both appeared as directors who may or may not have benefitted directly from this land deal, the question arose whether this deal was the result of any access to inside ministry or client information that would not have been specifically or widely available to other residential property owners affected along the project route. And if they were acting on the instructions of a client who wished to remain unknown, how would that client have known specifically what was planned for this property at a time when even pre-design public consultations were beginning?
It is certainly true that although the project was widely talked about with municipalities etc prior to the above date, and residents had been told the government planned to ram through the Gateway megaproject in general, very few, if any, residential property owners had been informed as to specific information on the South Fraser Perimeter road and their homes prior to this date. In fact, as of 2007, many property owners were still in the dark as to what compensation they would get, how they would be affected and other pressing details. This short video highlights that lack of specific information bothering residents of the area, who had been living in limbo for some time.
It is a fact that it remained such a concern, that one person,Donna Passmore, filed a request with the law society to look into the concerns concerning a potential conflict of interest of these two lawyers with regards to this land purchase and subsequent sale in May of 2007. In October of that same year, the law society closed the file and determined that there was no basis for the allegations.
Anne Stewart now sits on the Ethics Committee of the law society of British Columbia and the property is under construction for the South Fraser Perimeter Road. You can view all the documents related to this sale here: http://www.scribd.com/7590-80th-Street-Package/d/48446607
There was a second SFPR property sold to the B.C. Transportation Financing Authority for a quick profit of approximately 2 million at the same time as the 80th Street property. The second property is at 7672 Progress Way. Ralph A. May, was the owner of the property under his company, Agri Management. He owns an ALR property of 144.8 acres. On October 16, 2002 he was permitted by the ALC to rezone 4.9 acres of the property for industrial use. Then the property was added to 3 acres of Delta’s road allowance to form a new 7.48 – acre parcel. Agri Management Corporation (Ralph May) sold the property to 652194 B.C. Ltd for $1,775,000 in March, 2004. Then the numbered company sold it to the B.C. Transportation Financing Authority for $3,880,000 10 months later. You can see the relevent documents here: http://www.scribd.com/doc/48446836/7672-Progress-Way-Package
Onto the Beedie Group, who are well-known developers south of the Fraser, and CHUM. In 2007, the Beedie Group purchased a property adjacent to the South Fraser Perimeter Road making for easy access to an industrial park. The property was purchased from CHUM for approximately 28$ million around the time of the takeover by CTV Globemedia. You can see more details here: http://www.scribd.com/doc/48448086/Beedie-Chum-Property-1
Look for more on Beedie from fellow blogger Norman Farrell shortly, and of course, Ryan Beedie, president of the Beedie Group is one of Falcon’s biggest supporters, as detailed in this video on the Falcon20/20 site.
There are other land deals along the SFPR that are currently being researched and documented, and brought to the public in a short while, so let’s move onto the biggest land swap and removal of ALR lands that occurred with the Tsawwassen First Nations Treaty.
The agreements made prior to the treaty being signed, as well as the treaty, have been called by some one of the provinces biggest schemes to get ALR land for the proposed Deltaport expansion. The driving force behind all of it, of course, being Falcon’s pet project and so often trumpeted leadership selling points, that Asia-Pacific Gateway initiative that brought us the SFPR, the new mandate he thrust onto BC rail and a whole lot of questionable moves on the part of the government he is a part of.
The Final Treaty for the Tsawwassen First Nation, which was ratified July 25, 2007, came with a large amount of protest from both citizens of Delta, conservationists and others who could clearly see the writing on the wall. -( this is a must read link, short and very pointed by Rafe Mair) In the end, there is no shorter way to say it other than the government got all the land they needed from the TFN, over two thousand acres of crown waterfront needed for proposed port expansion… and gave the TFN over one thousand acres of ALR- along with some cash and other incentives in return. It can’t be stressed enough how many TFN band members felt about this treaty and the land exchange, and to this day it stands as a sore point for many who felt band leaders sold them out. You can have a look at what happened prior to this treaty signing, here: http://www.scribd.com/doc/48457881/Prerequisite-Agreements-of-the-Tsawwassen-First-Nation-Final-Treaty
Of course, as detailed in my previous post, the TFN have plans in the works for retail centre – sources tell me they are looking at big box stores a la Walmart style, and industrial parks to the north near the port. A lot of land development on some of the finest farmland around.
Which leads me to the last piece of the land development puzzle, BC rail and their land acquisitions.
As shown in the previous post, part of BC Rails new mandate was to acquire “strategic” properties for possible future port expansion. They started approaching farmers and landowners back in 2007, although BC rail liked to say the people came to them. And yes, it was mentioned that the railway still held the power of expropriation, and of course they still do. Which is vitally important to remember.
In 2007 BC rail applied to the ALR to have some land removed for a 50 foot right of way – a copy of that application is here : http://www.alc.gov.bc.ca/application_status/Docs/37610sr.pdf
They were asking to purchase a strip of land approximately 60 m adjacent to the rail line and another strip next to another portion of the line to provide road access to its rail operations if the SFPR construction cut off the existing service road.
In 2008, after the appropriate processes were undertaken, the ALR replied with a conditional approval, which you can read here: http://www.alc.gov.bc.ca/application_status/Docs/37610d1.pdf
The land acquisitions went ahead as per the Property Identification Numbers ( PID’s) listed on the application.
However, two numbered companies went on to buy more land, in the area where BC Rail was once considering building that rail yard talked about in the previous post. A rail yard the railway was not eager to talk about and one that former Liberal MLA Val Roddick actually stated was not going to happen – that it was off the books.
In fact, the alleged rail yard was not even mentioned in the environmental assessments for the Deltaport expansion/third berth, back in 2007 :
“All of the rail improvements will be constructed within B.C. Rail’s property on the Roberts Bank causeway and within their existing right-of-way,” the Deltaport Third Berth Project assessment application states.
The absence of any details on a rail yard in the environmental assessment application worries politicians because the document was used by provincial and federal ministers to assess the impact of the overall project.
And then all was quiet. Or so it seemed.
Quietly, and without much notice, two numbered companies were making land purchases in the ALR, in an area close to the BC rail line. Large properties, farmland fertile and productive. Here are three separate packages of land title documents – the important thing to note is the numbered company on each.
These three land titles alone equal approximately 80 acres. The first and the third were purchased by 0839565 BC. Ltd. and the second purchased by 0838465 BC Ltd.
Both numbered companies have listed addresses of #600- 221 West Esplanade, North Vancouver… which happens to be the address for none other than BC Rail Company.
Could these perhaps be some ” strategic land acquisitions” for future port expansion ? Does the government make a habit of buying land under numbered companies?
I have confirmed with Richard Myhill Jones of BCR properties that the numbered companies are in fact, owned by BCR properties, a subsidiary of BC rail.
I also confirmed that the properties ” were considered strategic land acquisitions for future port expansion at the time. ” Just BC rail doing what they were ordered to do in the new mandate given to them by former transportation minister Kevin Falcon.
Makes you wonder what current transportation minister Shirley Bond knows about this. I confirmed with the ALR this morning that there have been no further applications from BC rail with regards to that land and that these lands are still currently in the ALR. But for how long, no one knows.And for what purpose as of yet, no one knows. Will the rail yard happen, and is this what these lands are for?
I am left with far more questions than I am answers following this post. Do the early land deals from 2005 constitute part of the announced project cost?
Is the government hiding the true cost of public projects by buying land prior to environmental assessments and approvals?
While it may not be illegal for lawyers who are actively involved in government business and assist other clients in buying land along said projects, is it right? Who is policing this and is this happening on other projects?
What was the real reason behind the downgrades for the SFPR, and how do they relate to these land deals?
And why is BC rail, a company that was to be wound down and assets sold because it was such a burden to the province, quietly given a new mandate that seems to be a key reasoning behind all of this – from the land deals to the port expansion to Gateway and the SFPR?
And most curious of all, why is it using numbered companies to buy prime farm land?
Between well-connected land speculators and the highly questionable way government does business in all of these deals, one thing is clear. Someone has some explaining to do.
Perhaps we could start with the man who wishes to be premier.