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Tories sold land to reward friends,
McGuinty charges Liberal Leader just trying to prolong controversy, Hodgson tells legislature

Toronto -- Liberal Leader Dalton McGuinty told the legislature yesterday that two sales of land by the provincial government were "special deals" by the Progressive Conservatives to reward their friends.

He was pursuing his attack on the government for allowing questionable deals at the Ontario Realty Corp. in which government real estate appears to have been sold for less than market value.

The investigation into the past deals has become a troublesome scandal for the government, and it has been raised at almost every Question Period for the past six weeks.

In response to Mr. McGuinty's latest charges, Management Board Chairman Chris Hodgson accused the Liberal Leader of "using whatever scraps of information you can," to try to prolong the controversy over the Ontario Realty Corp.

But Mr. McGuinty would not be put off by Mr. Hodgson's defence that past land transactions are being studied by a team of forensic auditors and by the Ontario Provincial Police.

"We've got these rotten deals being uncovered throughout the province of Ontario," Mr. McGuinty said. "You're the government. You authorized all of these deals," he told Mr. Hodgson.

One of the two deals cited by Mr. McGuinty involved the sale in 1996 of the Bark Lake Leadership Centre near Haliburton for $2.85-million.

"They bought the land for $2.85-million and you gave them a mortgage back for $2.87-million," Mr. McGuinty said. "You paid them $20,000 to take the land off your hands."

In the second deal, long-time Progressive Conservative Party supporter George Damiani bought a parcel of land at the northeast corner of Jane Street and Steeles Avenue in Toronto for $1.27-million in May, 1998, from the Toronto and Region Conservation Authority. The land was to be used to build a crematorium.

In 1993, there had been a deal to sell the property to another purchaser for an affordable-housing project. The price on that deal, which fell through, was $2.15-million.

Mr. McGuinty did the math and asked, "Why was it in the interests of taxpayers that a government property that was worth $2.15-million in 1993 was sold for $1.3-million in 1996?"

Mr. Hodgson responded that "the Liberals' research isn't accurate." The minister argued that the statement that the property was worth $2.15-million does not take into account that the first sale was not completed at that price. "If it didn't close, it didn't sell."

On the issue of the Bark Lake Leadership Centre, Mr. Hodgson said he would await the reports of the auditors and of the OPP. The auditors are looking at all deals by the Ontario Realty Corp. going back 15 years to see if there are any suspicions of improprieties.

The ORC itself issued a statement providing details about the sale of a property on Bay Street that Mr. McGuinty raised in the legislature on Monday. The sale was the subject of a report in The Globe and Mail on Saturday.

The statement said: "This transaction was conducted in accordance with ORC practice in place at the time the transaction was consummated. The former practice dictated that surplus property be first offered to government ministries and then to the existing tenant. This process was followed."

Further, the statement said: "The property was appraised at $6.9-million in October of 1998. The closing price of the property was $6.5-million. The broker for the sale of these lands was Andrew Barnicke of J.J. Barnicke." The sale of the land came into question because nearby land was sold for considerably more to erect condominium towers. Mr. McGuinty told the legislature on Monday that the land would be worth $10-million if it was used for condominiums.

The ORC's statement explained: "The property is listed as historical for architectural reasons that had a negative impact on the resale value. . . . ORC required the historic designation as a condition of sale."

The statement added, "Given the historical significance of the building, the encumbrance on the property and the cost of repairs, a business case was developed that supported that this property be sold to the existing tenant at its appraised value."