Twelve city-owned buildings identified for potential sale to non-profits – Winnipeg Free Press

City workers could soon negotiate the sale of 12 municipal buildings estimated to be worth between $5 million and $10 million to the nonprofit tenants who use them, and possibly sell some for as little as $1 each.

A city report asks the city council to authorize staff to negotiate deals with tenants who rent the properties and have expressed interest in buying them. The city council will have to approve the plan.

Mayor Scott Gillingham said it was too early to say which buildings, if any, would be sold for $1 or what property value the city might forgo, noting that the report lists several options.

“I think we have to weigh and consider the cost to the city of the long-term maintenance needs of some of these buildings and whether they are truly surplus to the needs of the city and, if there is a opportunity… provide this building or sell this building to a nonprofit, then we should definitely consider that,” Gillingham said.

In 2020, the council directed staff to create a “strategic facilities master plan” that would look at all city-owned buildings and determine what to do with them.

That led staff to ask 40 of the city's 86 nonprofit tenants whether they would buy the buildings they occupy, excluding others that can't be sold, such as community centers.

According to the report, about 12 groups have expressed interest in purchasing their buildings, with most saying a $1 price tag would be necessary for them to do so.

Several sales options could be considered, including selling the properties to tenants at a price below market value (with or without a clause allowing the sale to be canceled under certain conditions), entering into a long-term land lease at below market value (where the city keeps the land and the tenant owns the building) or selling the property to the tenant at market value, the report states.

“The utility recommends that council authorize negotiations to sell the buildings to interested current nonprofit tenants at a price below market value,” wrote Marc Pittet, the city's director of real estate and land development.

If the council approves the call to let staff negotiate such transactions, any sales below 80 percent of market value would require individual approval from the Property and Development Committee.

Gillingham said he does not anticipate the effort to assess and eventually sell city buildings, which he has long supported, will produce a profit.

“I don’t think my goal was ever to make money from buildings. I think the goal, ultimately, is to streamline and, frankly, avoid some maintenance costs … retaining a building, as a city, that we no longer use,” he said.

Although he said the ideal would be to get the market value of each property sold, he is not sure that is feasible.

“The City of Winnipeg has a vast real estate portfolio. Each of these buildings incurs operating and maintenance costs. And those costs add up quickly…(We're) trying to be good stewards of taxpayers' money,” Gillingham said.

Advice. Sherri Rollins, chairwoman of the Property and Development Committee, echoed the mayor's sentiment that the city should evaluate its real estate portfolio.

“Some of the buildings you see are well-used, well-loved buildings, where day care centers occupy them, senior spaces occupy them, entire schools… (It shows) where do we go from here? “Rollins said.

The report predicted that the city could significantly reduce its maintenance costs if the buildings were sold.

“The most recent asset review indicates that projected capital financing requirements would average $2 million (more per year) over the next 10 years for the 12 buildings. This cost assumes that all building components are replaced at the end of their service life, which is not always the case,” Pittet writes.

He notes that the city's rental portfolio is considered to be in “poor to very poor condition” and that selling assets would reduce Winnipeg's infrastructure deficit.

A request to speak to a real estate and development official was not granted Thursday. In an email, spokesperson Kalen Qually said allowing staff to negotiate directly with tenants should help ensure nonprofit tenants can remain in place when a sale is considered.

“Without these recommendations, council policy requires buildings to be publicly marketed, which introduces a risk of tenant displacement,” Qually wrote.

The Property and Development Committee will take its first vote on the issue on July 4.

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Joyanne Pursaga
Journalist

Joyanne is a city hall reporter for the Winnipeg Free Press. A journalist since 2004, she began covering politics exclusively in 2012, writing about Manitoba City Hall and the Legislative Assembly for the Winnipeg Sun before joining the Free press early 2020. Learn more about Joyanne.

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