Hydro Board approves land sale to City of Winnipeg for $19 million

June 14, 2016

Deal provides option for reduction in price to $11.7 million

The Manitoba Hydro-Electric Board yesterday approved the negotiated sale of approximately 16 acres of active transmission corridor land owned by Manitoba Hydro to the City of Winnipeg for $19.0 million, with an option for the City to reduce the price to $11.7 million if they transfer roads and road right of ways within the corridor. By purchasing this land, the City will be able to begin work this summer on the second phase of Bus Rapid Transit (BRT).

The board also approved the lease of other Hydro property in the transmission corridor to the City for uses such as parking and operating other facilities in support of the BRT initiative. The Crown corporation did not seek commercial rents for these leases, instead agreeing to provide the leases on the basis that the City would waive taxes on those properties while they were being leased by the City.

In approving the sale, Manitoba Hydro-Electric Board Chair Sanford Riley said, “Though Hydro does not ordinarily comment publicly on commercial negotiations, in this unique circumstance we felt it appropriate to address the matter directly. The board carefully reviewed both the terms of the transaction and the conduct of the negotiations, and while we recognize commercial transactions of this nature are often difficult to achieve - which may explain the reaction in the media to the results - we are satisfied that the outcome is a product of good faith negotiations.”

Kelvin Shepherd, Manitoba Hydro’s President and CEO said, “Our role is to protect the interests of Hydro and its stakeholders but we were sympathetic to the requirements of the City and have worked to accommodate them.”

To provide additional clarification, Manitoba Hydro agreed to work with the city to obtain an initial non-binding estimate of value using mutually agreed upon methodology and assumptions. It was stipulated that the appraisal’s methodology would recognize the land was an active, heavily utilized transmission corridor and that Hydro did not have any interest in disposing of the land but recognized the City’s need to obtain it.

In the end, Manitoba Hydro did not agree with the draft appraisal as it discounted the land on the basis it was deemed to be vacant and surplus, and that it failed to take into account the impact on the rest of Hydro’s land. Hydro advised the City of this and engaged a second appraisal from a firm with recognized expertise and experience in corridor appraisal. Ultimately Manitoba Hydro negotiated a deal with the City which took into account both the City’s and Hydro’s perspectives. Hydro acted in good faith and came to an agreement which protected the interests of the utility and its ratepayers, but was also satisfactory to the City of Winnipeg administration and supported the BRT initiative.

“The $11.7 million land purchase price is consistent with the agreement previously reached by the parties and is based upon a fair market valuation of $22.4 million, with no compensation for injurious affection which had been estimated at an additional $10.3 million,” said Shepherd. “As part of the negotiations Hydro agreed to accept a lower amount of $19 million for the land, and to further reduce the price to $11.7 million if the City acted within 18 months to transfer roads and road right of ways within the Hydro-owned transmission corridor lands to Manitoba Hydro.”

“Manitoba Hydro and the City of Winnipeg have been negotiating this agreement in good faith over the past several months,” added Shepherd. “Despite significant differences in land assessment values from two separate appraisers I believe we have reached a fair agreement for both our ratepayers and all Winnipeggers. We remain committed to working with the City as they move forward on this next stage of BRT.”

The 16 acres of land lies within a major Manitoba Hydro transmission corridor in south Winnipeg. The utility maintains high capacity overhead transmission and neighbourhood distribution electrical lines in this right-of-way essential for the supply of electricity to south Winnipeg. The corridor also includes underground electric cables, natural gas supply lines and underground communications lines.

As BRT construction work in this corridor continues it will also require relocating underground pipelines and cables between Jubilee Avenue and the University of Manitoba. Some overhead electrical distribution lines will also have to be relocated.

“The cost of this relocation work, and the full sizing of required land exchanges between the city and utility, has not yet been finalized,” Shepherd said. “As always, we will continue to be reasonable and fair in our dealings with the city.”

The land acquisition agreement needs to be approved by Winnipeg City Council on Wednesday.