Thank you. Mr. Ootes, are you basing your calculation to be the exact number or are you using that as an example? That would put the Minister in a position where he would be working on the assumption that your calculation is correct, Mr. Ootes.
Debates of Feb. 16th, 1998
Topics
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Page 831
The Chair John Ningark
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Page 831
Jake Ootes Yellowknife Centre
First of all, maybe they can tell me what they are paying per square foot in this Lahm Ridge Tower? My calculation is a minimum of $20.
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Page 831
The Chair John Ningark
Thank you. Mr. Minister. Mr. Ootes, your microphone was off. Mr. Ootes.
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Page 831
Jake Ootes Yellowknife Centre
Thank you, Mr. Chairman. What is very important here is, what is the square footage cost of the Lahm Ridge Tower? We do not have that. I need that in order to be able to put the exact figures together here. So far, I do not have that.
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Page 831
The Chair John Ningark
We heard your question. Mr. Minister.
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
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Jim Antoine Nahendeh
Thank you, Mr. Chairman. Mr. Chairman, it is impossible to compare some proposals that have come forward that Mr. Ootes is taking example from this forum. It is impossible to do that. The Yellowknife office plan that was approved last month is being implemented by this department, and we are going to be putting out a proposal call to seek the
best value for our dollars in Yellowknife. We do not want to say what the cost per square footage is, because it would set a benchmark for anybody who is going to be proposing office space for rent. The intention of this government is to try to get best value for the dollars. I have already said that there are a number of leases out there and the Lahm Ridge Tower is the third lowest of that whole arrangement that we have now. When we were looking at the extension options, the property management personnel did an analysis based on a number of factors. The base rent and the operations and maintenance costs per square foot are the major ones. The landlords' proposed rates are weighted against other leases that are similar to the one the government holds in the community. They are also considered as well as expenditures that we put into the different office buildings. We call it tenant improvements. There are a lot of factors that go into the whole decision. If you were going to start comparing different proposals that come forward here, like I said, it is impossible to do at this time. Thank you.
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Page 832
The Chair John Ningark
Thank you. Mr. Ootes.
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
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Jake Ootes Yellowknife Centre
Mr. Chairman, I would not have any difficulty doing a comparison check if I had the square footage costs of the Lahm Ridge Tower. It would take me five minutes to do a comparison. I have some figures here if it is 30,000 square feet we are dealing with a total cost of $39.41 per square foot. Take away your operating costs for taxes, et cetera or whatever is included in that. That is a guess, is it not? Say $15 per square foot, that is perhaps normal. Normally you are at $25, I have given the benefit of the doubt at $20. What is it, that is the question? What is that square footage cost? I need that in order to be able to deal with a $32 million expenditure under other operations and maintenance in this asset management area.
We are here to worry about the government's expenditures. I cannot justify sitting here and not being convinced that this was the best financial deal for this government. I do not know that and that is what I am trying to get at. Was this the best financial deal for this government? I am not getting an answer to my question, yet we have everything else but the square footage cost.
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
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The Chair John Ningark
Thank you. Mr. Minister.
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
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Jim Antoine Nahendeh
Thank you, Mr. Chairman. Mr. Chairman, I am told that the amount of space in the Lahm Ridge Tower is approximately 42,000 square feet. We will double check here with the department to get as close as possible to the number. Once you start going cost per square foot, the option that was proposed to the Executive and approved by the Executive is not the cheapest way to go. The cheapest way would be to fill up all our existing spaces, but there is the matter of the economy of Yellowknife at stake here. Who knew the gold prices were going to go down, that mines were going to be shutting down and that people would be losing their jobs? There is a big surplus of office space here in Yellowknife. The direction that we decided to go was to accommodate the businesses that own these office spaces in Yellowknife. Sure, the cheapest way to go would have been to fill up everything that we own, but that would create a bigger surplus in existing spaces here in Yellowknife. Thank you, Mr. Chairman.
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
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The Chair John Ningark
Thank you. The time for Mr. Ootes is up. Dealing with considering asset management, I have Mr. Miltenberger, Mr. Krutko, Mr. Steen. Mr. Miltenberger.
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
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Michael Miltenberger Thebacha
Thank you, Mr. Chairman. Is the Minister, now that he has acknowledged that there is about 42,000 square feet, there was a bunch of money being saved for improvements. The yard stick is cost per square foot. Can the Minister tell us approximately what the cost is per square foot?
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Page 832
The Chair John Ningark
Thank you. Approximately, Mr. Minister.
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
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Jim Antoine Nahendeh
Thank you, Mr. Chairman. Mr. Chairman, this department is going to be going out soon for a proposal call to the existing businesses in Yellowknife. It is the advice of the deputy minister not to release the figures. It is not for withholding information, but it is for trying to do the best business for this government. There are a number of buildings that we have and the cheapest base rate we have is $11. The highest is $23.25. However, if you add the operations and maintenance on top of it, it increases quite substantially. For example, the cheapest one, $11 base rate, the operations and maintenance is $11.11, so that makes it an annual of $22.11 which is quite low. Then also, the $23.25 one, the highest base one that I mentioned, has an operations and maintenance of $9.72, which makes it $32.97. These are the existing leases that we have. In the case of the Lahm Ridge Tower, I think that if you are insisting on it, then I will tell you. The base rate we negotiated was $16.10, and the operations and maintenance is $10.05, which makes it $26.15. So, we are in the middle of the pack. Like I said, we are the third lowest in this whole deal. It is not only the base and the operations and maintenance that is taken into consideration, as well, Mr. Chairman. Thank you.
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Page 832
The Chair John Ningark
Thank you. Mr. Miltenberger.
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
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Michael Miltenberger Thebacha
Thank you, Mr. Chairman. Just to confirm as well, initially this was touted as a good business deal, that it made sense. You say the cost per square foot is in the middle of the pack which I have no reason to dispute. I just want to confirm that there was a willingness to pay at somewhat of a premium because of the current economic situation in Yellowknife. You mentioned the downturn in gold prices. I think it was specifically the one issue you mentioned, but there was a willingness on the part of the government to pay somewhat of a premium and not necessarily go with the lowest cost per square foot price because of that other factor.
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Page 832
The Chair John Ningark
Thank you. Mr. Minister.
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
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Jim Antoine Nahendeh
Thank you, Mr. Chairman. Mr. Chairman, it is true, however, there are other factors that were taken into consideration. Namely, that the common response from the department was their desire to remain in the building. There is a matter of, since 1990, this government had invested $0.5 million in the Lahm Ridge Tower for tenant improvements, which is putting up the walls, divisions for the offices, rug improvements, the switches, the lighting and so forth. If we go
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Page 833
The Chair John Ningark
Thank you. Mr. Miltenberger.
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Page 833
Michael Miltenberger Thebacha
Mr. Chairman, I would just like to get back briefly to the comment made about five minutes ago by the Minister, which was a new one, as far as I can recollect, in listening to this lengthy discussion on the Lahm Ridge. That was the recognition of the current economic downturn in Yellowknife being a factor in the decision making, making the government more willing to pay a slight economic premium in doing the negotiating of this contract. I am just interested to know, is that sort of a free-floating criteria since the deputy has full authority to negotiate these leases and to make that kind of assessment that has, I would say, some political overtones because of the implication for other jurisdictions if they are going to be willing to pay premiums since a lot of communities have, in fact, experienced economic downturns? Is there a fairly clear criteria in evaluating these kinds of lease proposals that have that particular factor in there in a way that is nonpolitical but is part of the economic mix? Thank you.
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Page 833
The Chair John Ningark
Thank you. Mr. Minister.
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
February 16th, 1998
Page 833
Jim Antoine Nahendeh
Thank you, Mr. Chairman. Mr. Chairman, the comment of taking the Yellowknife economy into consideration is more in line with trying to rationalize the total Yellowknife office space plan of which the Lahm Ridge Tower is a small part of the overall plan of retaining existing spaces, with the renegotiated lease being more financially beneficial than was originally negotiated. This office plan is, again, not the cheapest solution for the Government of the Northwest Territories in satisfying the office needs here in the capital of the Northwest Territories. The simplest and cheapest solution would have been to retain the existing long-term leases that we have and government-owned buildings and consolidate government departments within these buildings wherever possible. That would have been the cheapest solution. In one of the earlier documents, it was one of the options. However, the least-cost option could be potentially devastating to the economy of the City of Yellowknife. There is an existing office surplus of 120,000 square feet on the market in Yellowknife. There is an expanding surplus, as well, coming to division. The action also recognized the impact of government decision on the economy of Yellowknife. Thank you.
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Page 833
The Chair John Ningark
Thank you. I want to be fair to all of you. Mr. Miltenberger, your time is up. However, later on after I recognize a couple of Members here, if you want to go back to posing questions, that is up to you. On the list I have Mr. Krutko.
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Page 833
David Krutko Mackenzie Delta
Thank you, Mr. Chairman. In spite of the amount of vacant office space in regard to the decision to go forth with the leases the government presently has approved, the Minister is saying they are still reviewing and seeing where there are savings to be made. Yet, we have something like 120,000 square feet of vacant office space in Yellowknife. Then there is going to be down sizing of the government with division coming along. How can you state that we are being fair to not only this government but fair to the real estate market when we are leasing space at a prime rate. Plus, in regard to the economy in Yellowknife, where there is a lot more competition for office space, which Mr. Ootes made reference to, and an offer that was put on the table of almost $10 dollars a square foot in regard to selling the Laing Building, where there is a push from the developers to bring down the cost of the lease per square foot in Yellowknife. I would like to ask the Minister, why did they approve this knowing that these conditions were out there and that the office space plan was still being developed? Why did we not wait until after the plan was completed and take into consideration all the circumstances around division and down sizing of the government in the west? Thank you.
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Page 833
The Chair John Ningark
Thank you. Mr. Lovely.