GTH hiring consultant to guide divestment, governance restructuring

The Global Transportation Hub (GTH) is in the process of hiring a third party consultant to guide the government divestment of the GTH and form a new governance structure.

Minister responsible for the GTH Don Morgan made the announcement Friday, Jan. 4 2019.

Morgan said they are looking to hire private sector entities to take care of two aspects of the GTH: marketing the unsold 700 acres of land and the day-to-day operations like utilities and snow removal.

“With hindsight, we should have not been in it in the first place,” Morgan said on the province’s role in running the GTH. “When you do something like that it’s difficult for governments to be in. You’ve got market fluctuations and the taxpayers shouldn’t be subject to that kind of thing. So our goal is to ultimately sell the land, and then do something different.”

Morgan said the government wants to cut public operating costs at the GTH. There is no cost estimate on what may be saved at this point. Morgan said private realtors could be paid on commission instead of the ongoing salaries of GTH management.

According to the 2017-18 GTH annual report, salaries and benefits totaled $1.79 million for the 2018 budget.

The GTH has struggled to sell parcels of land, with no sales taking place in the past two years. This has resulted in debt at the GTH growing to $40 million as of the province’s midyear fiscal update.

Half of the total land at the GTH has been sold since its inception. Loblaws is the largest client, employing over 600 people.

Currently, the people in charge of administration and marketing are one in the same.

GTH critic Cathy Sproule does not see how changing the management structure will bring tangible change, or a return on investment, to the inland port.

“It’s operations, so I’m not sure what the point of privatizing that would even be, in fact it would likely be even more expensive,” Sproule said. “On the marketing side they’re obviously not having any success, so I think this is a desperate move to try and get some move sales happening, but I wonder about the ability of a private company to do any better than  the people that have been working out of the GTH for the last 10 years.”

Morgan said the province does not plan to transfer the ownership of any public assets to the private sector. The minister added this route is being taken in as a “step-by-step” process to divest from the GTH and try to accelerate land sales, because there won’t be someone that will buy the GTH outright.

“We don’t believe that there’s going to be a buyer that will come along and buy 700 acres of land in Saskatchewan, serviced land or land that can be serviced,” Morgan said. “So we think it has to be sold over a period of time by a realtor.”

Morgan added that there is no timeline for when these contractors will be brought on to run the GTH, but he’d like to see it happen sooner than later.

The province also announced that GTH President and CEO Bryan Richards will not be part of the transition going forward.

“I want to thank Bryan for his work and vision over the past five and a half years,” GTH Board Chair Terry Baker said. “We wish Bryan all the best with his future endeavours and we will work closely with Matt and the remaining staff as the divestment proceeds.”

Morgan said Richards’ severance package is still being negotiated.

“What I see happening here is firing the CEO, and if they’re doing anything they’re privatizing it. They’re just trying to find an excuse to move on and make some progress where the current operating people and marketing people haven’t been able to make any progress,” Sproule said.

The size of the board and other staffing levels at the GTH Authority may change as the province moves forward with this plan. During this transition, the province says key staff members in operations, business development, marketing and investment attraction will remain in place.

Legislation governing the GTH will remain in place. Under this legislation, the GTH Authority is essentially considered a small municipality, having to provide a variety of utilities and services, like fire protection and transit.

This is a legislation is a barrier to an outright sale, because these services will still need to be provided to current GTH clients like Loblaws and Emterra. The GTH has a contract with the City of Regina to provide certain services, but Morgan said there have been to talks of Regina absorbing the inland port.

Despite sale difficulties and growing debt, Morgan said he still believes the GTH can be profitable.

“I challenge this minister to actually put together the cost/benefit analysis. To put together to total expenses that this GTH has cost the taxpayers and to try and demonstrate how on earth it can ever make money,” Sproule said.

“Even if they sell all the land, and I think that’s debatable. There’s no way the taxpayer is going to recoup the investment.”