Ontario's agriculture headquarters up for sale

Tuesday, March 27, 2012

Ken Russell photo

by SUSAN MANN

Farm leaders are looking for more details on the provincial government’s plan to sell the agriculture ministry’s Guelph headquarters building on Stone Road and lease back the space workers now occupy.

Ontario Federation of Agriculture president Mark Wales says he wants to see the business case for the government’s plans “before I say this is a great or a bad idea.” He says that will be part of the provincial budget being delivered Tuesday afternoon.

But if the building is sold Wales says he doesn’t want the agriculture ministry to leave the building.

Built in 1996, the 364,000-square-foot building houses AgriCorp, the Central Milk Testing Laboratory, the Agriculture, Food and Rural Affairs Appeal Tribunal, the Farm Products Marketing Commission, the Laboratory Services Centre, other agricultural staff, farm groups, including the Ontario Soil and Crop Improvement Association, and other government ministries, such as natural resources and environment.

Infrastructure Ontario spokesman Daniel Cayley says by email there are 1,200 staff working in the building, including 650 OMAFRA workers.

As for the value of the building, Cayley says “we intend to move forward on the necessary business and financial analysis of the proposed buildings for sale to finalize the details.”

Wales says the government moving its OMAFRA headquarters to Guelph from Toronto “had an impact” on farm groups, including the Ontario Federation of Agriculture, moving their head offices to be near the Stone Road building. The federation is in rented facilities.

“If they sell it we would encourage them to lease the office space because that’s why we’re there,” he says, noting the University of Guelph and other agricultural facilities are also located near the Stone Road facility. “It’s important that it all be together.”

Lorne Small, Christian Farmers Federation of Ontario president, says the Stone Road building’s construction was “originally designed to create jobs” during a deep recession when then New Democrat Bob Rae was Ontario premier. Moving the OMAFRA head office out of Toronto was also done because the government wanted to distribute jobs throughout Ontario, he adds.

The building’s sale “isn’t an agricultural issue,” Small says, noting if the sale is prudent the government should proceed. But his one concern is governments’ decision to balance budgets by selling off infrastructure. For example, a previous Progressive Conservative government sold Highway 407 in 1999 “and now everyone pays to a private company that is making money off 407. I’m not fond of doing that.”

Small says as a farmer he tends to want to own assets, such as land and buildings “because that’s the most profitable alternative.”

National Farmers Union Ontario coordinator Ann Slater says they’d rather the government made sure the money’s being spent in services rather than buildings. But she doesn’t have any strong feelings either way on the headquarters sale. There are other more important matters to deal with, such as the upcoming provincial and federal government budgets this week.

In its press release, Infrastructure Ontario says it plans to sell eight government-owned buildings across Ontario, including the OMAFRA headquarters, in 2013/14 plus reduce the office space it leases in Toronto and use the money it saves for health care and education. The sales will be done in an open, fair and competitive process, the government says.

“The private sector can manage office space much better and at a lower cost,” the press release says.

The move to sell buildings and reduce leased space in Toronto was one of the recommendations of the Drummond Commission and is part of the government’s plan to eliminate the deficit. It could generate about $500 million in revenues from the sales and leased space reductions and get additional net savings of almost $300 million during the next 25 to 30 years.

In a statement, Infrastructure Ontario Minister Bob Chiarelli says their plan requires that for any building sold “we would enter into a long-term lease back.” Changing the ownership status will not change the government’s commitment to operate in the communities where buildings are being sold.

Progressive Conservative agriculture critic Ernie Hardeman says he agrees the government isn’t necessarily the best property manager. But “even worse than that is if you’re selling your assets to pay your operating cost you are headed for the cliff.”   

Reaction from some observers was mixed. Northern Ontario dairy farmer and New Democratic Party agriculture critic John Vanthof says “if I sold my land and rented it back because I was going to save a few bucks in the short term, I’m not sure that’s a good move.”

Vanthof also questions the government’s statement that it will save money by selling the building. “It’s not much more than a claim.”

To sell a building the government already owns and then rent it back will over the long term “cost you more money,” he says.

But Guelph-area farmer Peter Hannam, who was instrumental in the development of the Ontario AgriCentre in Guelph, says “it’s a very sound business decision” depending on the sale price and what the government has to pay to lease it back. It’s a good business move especially for government “because they’re not set up to efficiently look after these things.”

Many large corporations have already sold their owned buildings and lease facilities instead. The federal government also tends to lease facilities, he explains.

As for who would want to buy the Stone Road headquarters, Hannam says there are many real estate companies and large developers who are in the business of owning large properties and leasing them out.

The property is also worth a lot more to a company if it has a signed lease and Hannam says it would probably come with a long-term lease of 10 to 25 years. He says the property sale wouldn’t mean OMAFRA would move out of the Guelph headquarters. BF
 
Update:

Harold Rudy, executive director for the Ontario Soil and Crop Improvement Association, says they lease space in the OMAFRA Stone Road building. But they don't expect the sale to have an impact on the association. They're in a long-term lease and they pay commercial rates. BF