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— May 16 2000, Tue. - by Richard Mackie, Queen's Park Bureau
Valuable Bay St. property sold for a third its value: McGuinty
Toronto -- A valuable piece of property on Bay Street in downtown Toronto was sold in violation of the government's own guidelines for one-third of its value, Liberal Leader Dalton McGuinty told the legislature yesterday.
"When we look at the details of this sale, it appears that you broke your own rules," Mr. McGuinty told Management Board Chairman Chris Hodgson. He was referring to rules covering government sales of property by Ontario Realty Corp.
But Mr. Hodgson refused to get into a discussion of the sale, the latest in a series of questionable land transactions by the troubled agency responsible for managing more than $5-billion-worth of government real estate.
"The questions that are being asked about transactions will be dealt with in the proper process. The auditors are looking at it, and they will give us a report back," Mr. Hodgson told the legislature.
Later he told reporters that the deal is under scrutiny. "I believe that all sales transactions going back 15 years . . . the auditors will review. This has been brought to their attention [to see] if there's some irregularities." Mr. Hodgson stressed that current and future deals are under detailed examination. "For properties that are being put on the market, independent auditors will review [any deal] before it can close, the senior-management team reviews it . . . and then the Ontario Realty Corp. board has to review it and sign off on it."
The property in question is on Bay Street between College and Wellesley streets. It is considered the last remaining property suitable for development on a stretch that has been lined with condominium towers over the past 15 years.
The Globe and Mail reported on Saturday that the property had been sold on Jan. 28 for $2-million. That is half-a-million dollars less than the government received three years ago for a nearly adjacent property that is less than one half its size.
"Industry experts have stated that it could be worth as much as $6-million. Converted into condominiums, the land could be worth $10-million," said a background paper released by Mr. McGuinty's office.
Mr. McGuinty noted in the legislature that the Ontario Realty Corp., with Mr. Hodgson's blessing, had put in place new guidelines for the sale of real estate that would have made the controversial Bay Street sale impossible without Mr. Hodgson's approval.
But Mr. Hodgson said that the guidelines did not necessarily affect this transaction. "There's a difference between when a transaction closes and when the transaction is entered into."
The minister conceded that the questions raised by The Globe article and by Mr. McGuinty are serious. "That's why the independent audit process is so important."
Last fall, stung by reports of questionable transactions, ORC president Tony Miele asked independent auditors to look into the agency's past dealings.
The study by the independent auditors led to the forensic-auditing group of Grant Thornton being recruited to look for criminal activity, and to a request to the Ontario Provincial Police to launch its own investigation.
So far, the forensic auditors have asked the courts to allow them to seize the records of three former ORC employees and of about two dozen private companies and individuals who dealt with the agency.
The auditors, in documents filed in court, have alleged that there were systems of "bid-rigging" and "kickbacks" that involved at least two former employees.
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