Thank you, Mr. Chairman. In regard to the office facility for Inuvik I’ve been making inquiries as to the vacant space available in Inuvik and what effect this could have on the market. I’ve been told that there is roughly a 7 per cent vacant office space rate in Inuvik, excluding the Perry Building, so here you’re looking at about another 3,200 square feet. Right now there are probably about 10,000 square feet of vacant office space in Inuvik, so unless we can prove that there’s going to be no market disruption by putting a building of 47,000 square feet in Inuvik and that it won’t have an impact…. I believe it will have an impact. In regard to the space that I’m referring to, that space is vacant as of today.

I’d like to ask the Minister what we have done in regard to the review of the possibility of an independent market disruption survey to see exactly what the implications of this project are for the retail market in Inuvik.

Thank you, Mr. Krutko. Minister Miltenberger.

Thank you, Mr. Chairman. There’s been no formal assessment done of the nature that the Member has characterized.

In regard to ourselves and the individuals who have made investments in the retail market and also to the amount of vacant space, with the economic situation we find ourselves in today dealing with banks, we must also realize that someone has to pay for the roughly 10 per cent vacant office space. Somebody’s got to cover the O&M costs of those facilities that are vacant. I think the cost is going to be a burden to those businesses that have made that investment. It’s crucial to realize that for any facility this government has a policy in regard to market disruption. In order to do justice to that market, we should ensure that we do a thorough assessment and review to ensure that the impacts on those businesses are minimal.

We had a similar situation that I mentioned happen here in Yellowknife with the federal government putting a federal building in Yellowknife. They went out of their way to do a basically independent assessment of the market in Yellowknife by way of the retail market, to give some comfort to the industry. I think that in regard to this proposal that we’re looking at for Inuvik, we shouldn’t do anything less than what’s been done by the federal government, and we should also realize that we do have a policy in place for that particular item.

I’d like to ask the Minister: is there a possibility that we take the time, do the study and ensure that we note that there will be no effect on the market, like I stated? Right now there’s about 7 per cent vacancy in Inuvik. Also, the three floors in the Perry Building have not been brought into this calculation. I think there is an argument to be made that we have to do justice to the individuals, the companies that have made this investment. Of course, someone’s got to pick up that extra cost of overhead and maintain that vacant space, because we’ve still got to heat it. We’ve still got to provide the overhead to sustain those businesses. So can the Minister commit to that?

The top floors of the Perry Building are unusable, which is one of the reasons there was a move. The lease proposal that was put to the government had over the life of the lease a $38 million premium attached to it, which is very significant. Available space in Inuvik, from what I understand, is scattered over a number of buildings. There’s not one concentrated place that would allow the government to bring together the resources as they’re currently planning. However, I’d ask Minister Michael McLeod if he wants to add anything further to this issue.

Thank you, Minister Miltenberger. Minister Michael McLeod.

Thank you, Mr. Chairman. This is a real significant issue for us, and it has been for some time. We need proper office accommodations for the employees in Inuvik. We don’t have very many government facilities in the community; 93 per cent of our portfolio is leased.

It’s starting to be a challenge now that we can’t identify any new facilities to move to. We have certainly a large number of issues with the Perry Building. There’s a possibility we may be evicted. MACA is housed in an old federal government warehouse. It’s 45 years old. We have air quality concerns. We have security issues with some of the income support offices. We really don’t have a lot of choices.

There’s a comparison being made by the Member that the federal government did a market disruption analysis in Yellowknife, which is not a fair statement, because there are no facilities vacant in Inuvik that we can identify. Yellowknife has vacant space, and there is market disruption only if there is competition. In this case we can’t find it. We need a balanced investment. We need to have some of our own accommodations for employees so that we’re not held to a huge cost factor when it comes to rental space because we don’t have any choices.

We have committed to the developers in Inuvik that we’ll continue to rent the same amount of space from the private sector as we did prior to the closing of the Perry, and we will commit to that. I think this is a good project, and it’s something that we can’t ignore. The facilities that we currently accommodate also don’t have barrier free access. That’s a concern. So we need the appropriate space in Inuvik, Mr. Chairman. That’s why we’re bringing this forward. It’s not that we want to move away from some of those current agreements. We’d like to keep those. But there’s still not enough, and our current facilities are just not appropriate.

Mr. Chairman, this was an issue that came forward that I raised in regard to the Department of Environment moving out to Shell Lake. They were saying they don’t know how they’re going to fill that space. That space is still vacant. No one has moved into that space in regard to the Department of Environment relocating to Shell Lake. There’s also the Professional Building in Inuvik which has a floor that’s basically vacant. So out of that, there’s almost 7,000 square feet of office space that’s vacant in Inuvik. I know that in regard to the Perry Building, that basically was a question of structural soundness of the building and how much weight was being distributed on the different floors. That’s why Public Works is on the first floor. Yet there’s still a cost associated with

those three floors being vacant in Inuvik, regardless if anybody is in there or not.

When you’re talking about moving Public Works and Services, the Department of Education, Culture and Employment, the Financial Management Board Secretariat, Municipal and Community Affairs, the Beaufort-Delta Health and Social Services Authority by way of setting up a health clinic, for me that’s a lot of bodies and a lot of space that’s going to be required in regard to where these people are going to come from. If you have a market that can only sustain, say, 10,000 square feet and you’re adding another 10,000 to the market, you do have more space that you have on the open market, which will cost someone not having the ability to maintain that space.

Right now there’s 7 per cent vacant office space in Inuvik, from what I was told this morning. So how can you use the argument without doing a survey to state that basically there isn’t going to be an effect on the market when you didn’t even do a survey yourself? All I’m asking is that we as government take the time to do an independent review and survey on exactly what space is available, where the space is, who owns that space. Putting 47,000 square feet of office space into Inuvik, what impact will that have on the market?

Thank you, Mr. Krutko. Mr. Miltenberger.

Mr. Chairman, we know what space is available in Inuvik. We know that it’s in small quantums scattered across the buildings that are available, that there’s no single space that’s big enough. We know that the one offer that we did have had a $38 million premium attached to it. We know that our current portfolio is 93 per cent leased, 7 per cent that we own. That is a balance not recommended by anybody in terms of having a balanced portfolio so that you can have room to move and adjust your needs and not be caught or held to the fact that you’ve got no flexibility because all your eggs are in one basket.

In regard to the question about Shell Lake and other specifics, I’ll ask Mr. Aumond to reply, if he could, please.

Thank you, Minister Miltenberger. Mr. Aumond.

Thank you, Mr. Aumond. Next on my list is Mrs. Groenewegen.

Thanks, Mr. Chairman. Well, that makes me feel a lot better — only 37,000 square feet.

I think it is incumbent on the government — if they want to spring an office building into the capital plan at the eleventh hour that’s not even in the five year capital plan and want to drop this into the mix basically with no notice

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to make very compelling

arguments for why they need this money to build this new office building in Inuvik. I think they have failed the test in terms of making that argument. I hear a lot of information, but saying that there isn’t a single location in Inuvik with 37,000 square feet…. Well, surprise, surprise. That is a small town. What small town has 37,000 square feet of space sitting waiting to be rented to the government? What small town has 37,000 square feet of office space in one location?

I don’t think the analysis has been done. I don’t think the assessments have been done. I think the economy is such in Inuvik right now — if I could be so…. I’m not there personally, but I think that things are perhaps in a bit of a holding pattern right now, waiting to see what’s going to happen with the pipeline. I think there aren’t a lot of private companies probably looking for space right now that the government may vacate, just because I understand that the level of activity is not what it normally is in Inuvik right now. There may be better timing for the government to build 37,000 square feet of office space than there is right now.

I guess also, to the issue of fairness and distribution of capital dollars, it would be nice to collocate 37,000 square feet of people and services in one building in Inuvik, but is it absolutely necessary? I mean, in all towns — and even in Yellowknife — government services and offices are distributed throughout the community. It’s never been a mandate or a policy of this government to try to collocate a whole lot of different activities into one building.

If there is such a savings and such a good argument to be made for building this in Inuvik and for having all of this under one roof, that argument will still be good next year, you know, as opposed to renting from the private sector. That argument will still be good next year. I don’t have any qualms about deferring this project until there’s been a full assessment done. I mean, we’re talking about…. People need room to spread out, and they need comfort and they’re in old buildings.

Well, like I said before, let me tell you about an old building in Hay River where it’s not comfortable and

we’re trying to educate children. You know, teachers have to go to work, too, and they have to work in circumstances that are not good. So the business of this being an old building doesn’t really…. Old building? Some government employees in old buildings doesn’t really have a big impact on me.

I mean, if there’s an issue of safety, that’s different. If there’s an issue of security, that’s different. Our highest priority when our capital projects are prioritized is the protection of people. I haven’t heard of any health or safety threats to the folks that are distributed around various locations in Inuvik. I understand the Perry Building, perhaps on the higher floors, has been condemned, for lack of a better word

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it’s not accessible

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but I’m not so

certain that the ground floor has the same kinds of issues.

Like I said, there could be very, very good reasons for this, but I don’t feel that the case has been made for this coming onto the capital plan the way it did and just being so urgent that we have to move on it right now. I would rather defer it by a year. If the arguments are very good, they’ll still be good a year from now.

I don’t really have any questions about it. I think, you know, Mr. Krutko has done a very good job of sort of canvassing the issues. The fact that there are 120 million bucks, probably, in capital going into Inuvik this year, and now we want to put another in excess of $20 million into Inuvik…. I think there are a lot of other regions, a lot of other communities that are also interested in capital in their communities, in their regions. I don’t think we need to overload Inuvik with a hundred and whatever it turns out to be — $150 million in capital.

There is an issue of fairness and distribution and equity. I think it’s the role of this government to ensure they assess all the needs and spread things out and pace development in one community in such a way that the local economy can even pick up and absorb and benefit from some of that development. You have too much going on in one community at one time. What happens is you end up having to import your trades and import a lot of your labour. If you pace that over a period of time, I think it’s more beneficial to the community as well.

Anyhow, for me, Mr. Chairman, I haven’t heard the compelling argument that needs to be made to pass the test of this being an urgent capital project to come onto our books and be supported at this time. That’s my position on it. It’s more of a comment than any question.

Thank you, Mrs. Groenewegen. More of a comment than a question, but if the Minister wants to respond. Minister Miltenberger.

Thank you, Mr. Chairman. We’ve listened carefully to the discussion. The Member’s indicated her opinion. She’s stated it for the record, and I appreciate that.

Thank you, Mr. Miltenberger. Next on my list is Mr. Beaulieu.

Thank you, Mr. Chairman. I am going to talk about another community for just a minute. I was wondering if the department had done a technical assessment on GNWT-owned office space in Lutselk’e.

Thank you, Mr. Beaulieu. Mr. Miltenberger.

Thank you, Mr. Chairman. I’ll defer that question to Mr. Aumond.

Thank you, Minister Miltenberger. Mr. Aumond.

Thank you, Mr. Beaulieu. Minister Miltenberger.