Council discusses divesting of City-owned buildings

By Jensen, Randy on May 27, 2020.

Blair Richter, assets manager for the City of Lethbridge, speaks with reporters after city council, meeting as Community Issues Committee, was presented with considerations for divesting City-owned properties. Herald photo by Ian Martens @IMartensHerald

Tim Kalinowski

Lethbridge Herald

tkalinowski@lethbridgeherald.com

City council is considering divesting numerous City-owned properties over the next few years, and is seeking a process from staff on how to do it in a responsible way.

The drive to divest comes after Phase One of the KPMG operational review identified the City of Lethbridge appears to own more real estate than comparable cities in other parts of Canada at 345 distinct buildings.

KPMG had recommended council consider selling off 10 per cent of these buildings per year over the next three years. In a process outlined by KPMG, in the first year it would be older facilities offered at a blanket price of $3.25 per square foot. The second year would be more viable properties whose costs outweigh their utility, and those would be sold at $6.50 per square foot. Larger and more valuable assets could be sold in the third year at $9.75 per square foot.

Blair Richter, assets manager for the City of Lethbridge, warned councillors at Monday’s Community Issues Committee meeting that reaching the KPMG target of a 30 per cent reduction in City-owned assets over three years may be a bit too ambitious.

“It all depends on how council wants to pursue this,” he stated. “If they are really eager to sell facilities then that’s a big target. But we then also have to identify the services that are going to be at stake with doing that. That’s a key part of the process: to identify the key services that may be impacted and make a decision around those services.”

Richter proposed to council a more nuanced process where each building council wants to sell is graded based on four criteria: location, functionality, rate of utilization and versatility of the asset.

“We reached out to several internal stakeholders to get their input on the process,” explained Richter. “It’s basically a combination of identifying the functional scores and the financial impacts to selling different City facilities. At the end of the day there is still a decision that has to be made by councillors to determine which buildings they want to divest.”

Councillors at CIC on Monday unanimously voted to forward the issue to the next Audit Committee meeting of city council and bring back recommendations on what assets might be on the block for full council discussion and vote at a future regular meeting.

The decision was ultimately in council’s hands, Richter confirmed.

“The next steps will be for council to give us some feedback as to which buildings they want to start selling, and then start reviewing the data we have in terms of operating costs, life-cycle maintenance, and those kinds of things,” he said. “And then start looking at crunching numbers and providing recommendations to council.”

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