GTH to repay Highways Ministry $2.86 million for unused land

Talk of a construction borrow pit, potentially becoming a money pit at the Global Transporation Hub (GTH), entered the legislative chambers Wendesday.

GTH critic Cathy Sproule has long been critical of the financial state of the inland port. She questioned Minister responsible for the GTH Don Morgan on an agreement between the GTH and Highways Ministry to repay $2.86 million.

“The first part is the 55 acres of borrow land; the government actually paid for it without using it and now they can’t get the money back,” Sproule said. “So that’s something that’s very concerning in terms of best practices for the Ministry of Highways. I don’t know why that would ever make sense.”

Borrow land is a construction term for land near a major construction project where dirt will be excavated and moved to another location. The ministry paid the GTH with the plan to use land close to a portion of the Regina Bypass as a borrow pit.

READ MORE: Diamond overpass opens 20-months ahead of schedule

During a May 14 committee meeting going over budget estimates for the Highways Ministry, deputy minister Fred Antunes said the following:

“So the original agreement was for the ministry to pay the GTH $3.575 million. We paid them 80 per cent of that amount, $2.86 million. It does not look like we’re going to use that borrow material, so we’ve actually signed an amending agreement with the GTH that they will pay that money back to Highways.”

Tweet This Click to share quote on Twitter: "So the original agreement was for the ministry to pay the GTH $3.575 million. We paid them 80 per cent of that amount, $2.86 million. It does not look like we're going to use that borrow material, so we've actually signed an amending agreement with the GTH that they will pay that money back to Highways."

This agreement was signed March 1, 2018 according to Antunes.

The $2.86 million shows up in as deferred revenue for the GTH in 2016-17 financial statements. The 2016-17 GTH annual report states this deferred revenue would convert to revenue on a percentage basis as work was completed or be refunded to the ministry as appropriate.

A representative with the Highways Ministry told Global News that ultimately the Regina Bypass Design Builders (RBDB) are responsible for sourcing materials. Knowing the Bypass would need a great deal of borrow land, the ministry purchased a number of options, including the GTH land.

The RBDB determined that the GTH borrow land would not be necessary, and that is what is prompting the refund.

Land sales

“That land is now available for companies who want to be adjacent to the Regina Bypass and who would benefit from free-flow access in/out to the Global Transportation Hub,” GTH communications and marketing director Kelly Brossart said in an email reply. “We are exploring all options to market that land and other available green space within our footprint.”

Now, the GTH will begin repaying the $2.86 million once the port resumes selling land, its primary source of income. That has been a challenge in recent years. In March, GTH Minister Don Morgan voiced his disappointment in the sales.

Morgan has instructed the GTH board of directors to develop an “aggressive” marketing strategy to move parcels of land.

“We’ve got a large number of unsold pieces of property that are there. Let’s look at what we can do to sell that,” Morgan said. “Part of that has to be the link up with the Regina Bypass, part of that has to be the rail link and that may take some time to work all the way through that.”

READ MORE: GTH minister says it’s too early to talk about selling the project as debt grows

New land buyers have not signed onto the GTH in the past two years, growing the inland port’s debt load to $37.3 million. Both Morgan and the GTH have attributed this to slow growth across the sector in industrial development.

Morgan said that he wants to give the publicly-funded business the ability to operate independently. He hasn’t ruled out the possibility of trying to attract realtors or outside consultants to stimulate land sales, but for now wants to let the board of directors put forward recommendations.

As for a future direction, Morgan said the GTH was created during a booming economy that has since slowed. Now, it may take other ideas to get a return on investment at the GTH.

READ MORE: GTH minister says there are no talks to sell Hub to Regina, but synergies exist

Across the aisle, Sproule is skeptical on whether that return will ever come.

“I’m having trouble finding any return on investment for taxpayers the way this deal was structured, the way the GTH was created, the way this authority was set up,” Sproule said.

“There’s so much wrong with this, I don’t even know where you can begin to fix it.”

While there have been set backs, there has been $485 million in private investment put into the GTH since 2010.