When a country, a business, or a person is financially distressed, the sale of assets is one emergency measure they often take to avoid bankruptcy. The first assets to go are those that are not needed to earn a living. The company jet, the corporate yacht, the family cottage, the second car-these are the first assets sold for whatever price they can get.

The government of Canada must move more quickly than is suggested in its recent budget to balance its budget and begin reducing its huge national debt. Expenditure reductions are the main way that the government of Canada will achieve budgetary balance and eventual debt reduction and elimination. These reductions must be sustained over the long term. Expenditure reductions will be more acceptable to the Canadian public if accompanied by the sale of properties-land and buildings-not essential to the core operations of the federal government, and if all proceeds from the sale of these properties are used for deficit elimination and eventually applied toward reducing the federal debt.

Additionally, as part of its deficit reduction plan and because of the need to maximize value for money spent, the government of Canada must, wherever possible, adopt benchmark operating practices established in the private sector. In the downtown Vancouver office market, for buildings greater than 20,000 square feet, less than 7.5 percent of the office space is owner-occupied, and for the most part, those owner-occupied offices are occupied by government. Since the practice to rent rather than own office space predominates in the private sector, there is strong reason to believe that government should do the same. The government of Canada can seek the office rental efficiencies enjoyed by the private sector by selling its office buildings and renting the office space it needs.

Sales of redundant federal properties would also improve investor confidence in the government's resolve to address its debt problem. Finally, the government would get better prices for these properties if they were sold in a non-crisis atmosphere.

The objective of this study, "A Federal Government Land and Building Inventory for British Columbia," is to identify and evaluate all federal properties in British Columbia, and to recommend a procedure to determine which federal properties should be sold.

Payments to local governments in lieu of taxes are called "grants-in-lieu." They are necessary because Section 125 of the British North America Act (now the Constitution Act 1982) states that "no lands or property belonging to Canada or any Province shall be liable to taxation."

In place of taxes on federal property, the government of Canada has adopted the practice of paying grants to local governments. The coverage has now become quite extensive, with the grant base including most federal lands and buildings such as office buildings, research laboratories, airports, penitentiaries, hospitals, schools, libraries, national parks and historic sites, military bases, experimental farms, harbours, and the houses of Parliament.

Exclusions

There are some specific properties excluded from grants-in-lieu. These exclusions are in the following three categories: urban parklands; Indian reserves; and engineering structures such as wharves, breakwaters, bridges, and dams.

Also excluded is federal property leased to or occupied by a third party. Municipalities may, however, levy property taxes on the occupants, since a tenant of the Crown is not protected by the constitutional exemption of Crown property from property taxation.

Coverage

Grants are paid in lieu of the following taxes: the real property tax, the frontage or area tax, and the business occupancy tax (where it exists) in the case of certain Crown corporations that operate or are intended to operate independently of the federal consolidated revenue fund.

For all federal department properties and most federal Crown corporations, local business occupancy taxes, where they exist, are excluded from the calculation of payments in lieu. On other properties, mainly commercial Crown corporations, both business occupancy taxes and real property taxes are taken into account in establishing payments in lieu.

Regional distribution

Table 1 shows the 1993 estimated local government revenues from federal grants-in-lieu by province. It serves only as a rough benchmark for the geographical distribution by province of the market value of federal land and building properties. The method of evaluating federally owned and occupied property, the applicable property tax rate for each type of property and the extent of excluded properties vary from province to province.

Based on the assumption that the regional distribution of federal grants-in-lieu approximates the regional distribution of the market value of federal land and buildings, Table 1 shows that the bulk of the federal land and building is located in the central Canadian provinces of Ontario (45.80%) and Quebec (23.41%). This is not surprising since federal properties are heavily concentrated in Ottawa-Hull, Toronto, and Montreal.

In relation to the regional distribution of Canada's population, the provinces with a disproportionately large share of federal land and buildings are Nova Scotia, Manitoba, and Ontario.

In relation to the size of their populations, the Yukon and Northwest Territories are also major beneficiaries of federal government investment in land and buildings.

Provinces whose share of grants-in-lieu for federal properties are about the same as their share of the country's population are New Brunswick and Newfoundland, followed by Quebec and Saskatchewan.

The provinces that have the least value of federal land and buildings in relation to their share of the Canadian population are Alberta and British Columbia.

It was not possible to apply this analysis to Prince Edward Island, since the data for federal payments of grants-in-lieu are not separated from the property tax data for this province.

Click here to view Table 1: Estimated Local Government Revenues from Federal Grants-in-Lieu of Taxes, by Province, 1993

The preceding section showed that federal grants-in-lieu to British Columbia's local governments were only 7.44 percent of federal grants-in-lieu to all Canadian local governments. This section considers the physical holdings of federal properties by federal government department and by Crown corporation.

Table 2 shows the land and building holdings of 16 federal government departments (several are further sub-divided) and 13 Crown corporations, commissions and authorities. In total, the land holdings of these federal entities in British Columbia amounted to 748,731.2 hectares or 3.79 percent of all federal land holdings in Canada.

The government of Canada owns 6,070 buildings in British Columbia, with a total floor area of 2,501,249 square metres. This represents 10.04 percent of the total floor space of all federal buildings in Canada.

Table 2 shows that by far the largest federal landholder in British Columbia is the Parks Service of Environment Canada. Its holdings represent 86.25 percent of all federal land in BC. The next largest landholders are National Defence (6.30% of all federal holdings in BC), Energy, Mines and Resources (2.70%), various port authorities and harbour commissions (1.62%) and Transport Canada (1.56%).

National Defence owns the largest number of buildings (40.62% of all federal floor space in BC), followed by various port authorities and harbour commissions (7.77%), Transport Canada Airport Authority Group (7.03%), Canada Harbour Place Corporation (5.94%), Canada Post (5.88%), Public Works Canada (4.96%), Correctional Service Canada (4.52%), Royal Canadian Mounted Police (4.06%), Environment Canada Parks Service (3.69%), Canada Mortgage and Housing Corporation (2.79%), Agriculture Canada (2.58%) and Fisheries and Oceans (2.52%).

The data in Table 2 is for 1994 and therefore does not reflect the 1995 privatization of the Canadian National Railway Company. The federal government has also recently announced its intention to privatize its port authority holdings across Canada in 1996-97, which will include the Vancouver and Prince Rupert Port Corporations, and will also affect the Fraser River, Nanaimo, North Fraser, and Port Alberni Harbour Commissions.The government of Canada's National Marine Policy states that the Vancouver and Prince Rupert Port Corporations and the Fraser River Harbour Commission will become self-managed Canada Port Authorities (CPAs) upon passage of the Canada Marine Act, and that the other Harbour Commissions and regional/local ports in British Columbia may apply within 6 months of passage of the Act to have CPA status. All CPAs must be self-financing, but the government of Canada will retain the ownership of all lands at each of the CPA sites. Where regional/local ports involve First Nations' interests, native leaders will be given an opportunity to make proposals for future management of the ports-note

The proposed Canada Maritime Act would have the government of Canada retain the ownership of all lands at any Canada Port Authority site. This Fraser Institute study recommends that this provision of the proposed Act be deleted so that the government of Canada can sell these lands to help reduce the federal debt.

The government should also be allowed to sell the lands it owns and leases out to the Vancouver International Airport Authority and any other airport in British Columbia.

It is far more important for the government of Canada to reduce its debt than to be a landlord to maritime port and airport authorities in the province of British Columbia.

The Fraser Institute's 1995 pre-budget submission to the House of Commons, "How to Balance the Federal Budget and Keep Canada Together," recommends that the federal government cut back even further in those departments and programs where there was significant federal intrusion into areas of provincial jurisdiction. Table 2 shows the potential scope for sales of redundant properties if the federal government were to adopt this approach.

Click here to view Table 2: Federal Land and Buildings in British Columbia by Federal Department and Crown Corporation, 1994
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The British Columbia Assessment Authority was commissioned by The Fraser Institute to prepare a list of the federal properties in British Columbia, showing their location, actual use, assessed value, and square footage.

The British Columbia Assessment Authority assesses properties at fair market value. It concentrates appraisal professionals in a single organization and uses a state-of-the art computer system, the Computer-Assisted Property Assessment System (CAPAS), to generate a database of high quality. An independent review of the Authority referred to it as a "world class assessing resource" that should be "held up as an example in North America of how an assessing authority should be operated."

There can, therefore, be a high degree of confidence that the list of federal government properties in British Columbia is complete, and that the assessed value approximates market value for the properties listed.

Findings

Table 3 shows the distribution of federal properties for the 25 assessment areas used by the BC Assessment Authority. The 3,550 federal properties in British Columbia had a total assessed value of $4.1 billion, as of July 1, 1994. The largest concentrations by assessed value were in the Capital Area (23.7% of all federal holdings in BC) and in the Richmond-Delta Area (20.3%). This reflects the extensive property holdings of the naval base at CFB Esquimalt and the Vancouver International Airport.

By number of properties (but not assessed value), the heaviest concentrations of federal properties were in the Northwest (507 properties) and Port Alberni (503 properties) Assessment Areas. This reflects the existence of a large number of lighthouses, navigation and communication devices, wharves, and national parks such as Pacific Rim.

The included map of BC shows the location of the assessment areas in the 3 regions used by the British Columbia Assessment Authority. Appendix A extends the analysis of Table 3 to the 232 local jurisdictions throughout the province.

Click here to view Table 3: Summary Distribution by Assessment Area of Government of Canada Property Holdings in British Columbia (as of July 1, 1994)

Click here to view Assessment Areas map of BC

Case studies

Unfortunately, the British Columbia Assessment Authority's CAPAS database does not allow it to list government of Canada properties by government department and Crown corporation. Individual searches yield this information.

Several spot checks were done for this study by a random sampling of use codes. Some examples of the kind of additional information that can be gathered from an individual search are shown in Table 4 and referred to in the Recommendations section of this study.

Click here to view Table 4: Some Examples of Detailed Federal Property Descriptions

Treaty negotiations in BC

The governments of Canada and British Columbia and the First Nations in British Columbia have agreed to a treaty negotiation process.

This study recommends that the government of Canada make it clear to all Indian bands or nations in British Columbia that all federal properties surplus to its needs in British Columbia will be sold to help eliminate the federal deficit and eventually begin reducing the federal debt, but that where a property involves aboriginal interests, the Indian band concerned will be given the right of first refusal, following a reasonable period, on any offer to purchase this property.

Introduction

Federal properties are grouped in this chapter into three categories:

1) Federal properties that should be declared surplus and sold, with the proceeds used for deficit and debt elimination. These include mainly properties now owned by Transport Canada, Forestry Canada and National Defence.

2) Federal properties that should be turned over to the province of British Columbia as federal programs and departments are devolved to the provinces. Major examples highlighted in this study include properties owned by Agriculture Canada, Environment Canada's National Parks Service, Corrections Canada, and Canada Mortgage and Housing Corporation.

3) Federal properties that would be sold as part of the privatization of a crown corporation. The major examples are Canada Post, the Canadian Broadcasting Corporation and the remaining CN properties in British Columbia held by the Canada Lands Company Ltd. (CLC), a federal Crown corporation that manages and/or disposes of certain surplus federal lands on behalf of the government of Canada.

This section uses the government's Directory of Federal Real Property, 1992, updated to 1995, and cross-referenced wherever possible to the British Columbia Assessment Authority information on 1994 assessed values.

Twenty-nine federal property managers were contacted for this study. Properties are not appraised by these managers until such time as they are declared surplus.

Following the 1995 privatization of Canadian National Railways, the government of Canada retained substantial real estate holdings for future development or disposal. CN's former real estate division has been merged into CLC.

CLC now has an expanded mandate to manage the disposal of various federal real estate properties and ensure that the government receives fair value for their sales. It also conducts property management and holds some special purpose properties, such as the CN Tower in Toronto.

To give some guidance as to which properties should be declared surplus, the sections that follow identify federal properties in British Columbia by major department. The main source for these property listings is The Directory of Federal Real Property which, unfortunately, does not provide assessed values. Cross-references to the listed properties in the British Columbia Assessment Authority information on 1994 assessed values was done wherever possible. A complete listing cannot be made because the BC Assessment Authority often identifies the owners as "Crown Federal" and does not identify the owner by government department.

The LDU designation from The Directory of Federal Real Property refers to "Land Directory Unit," an inventory number that identifies each listing in the Directory.

Properties that should be declared surplus

Transportation

This study recommends that all properties managed by Canada Port Authorities and the Vancouver International Airport Authority become available for sale for debt reduction purposes. If sold at the assessed values shown in this study, the government of Canada would raise the following amounts for debt reduction purposes:

Click here to view table

Tables 5 and 6 provide further detail for airports and ports belonging to Transport Canada from the Directory of Federal Real Property.

Click here to view Table 5: Transport Canada-List of Airports in British Columbia

Click here to view Table 6: Transport Canada-List of Ports in British Columbia

Forestry

The federal government has recently indicated its intention to devolve its forestry operations to the provinces. Table 7 shows that much of its property is leased rather than owned. Still, Forestry Canada owns a substantial building in Saanich (the Pacific Forestry Centre with a 1994 assessed value of $25,458,000) that should be declared surplus and sold with other properties throughout the province.

Click here to view Table 7: Forestry Canada-List of Properties in British Columbia

Defence

National Defence Canada is a major federal property owner in British Columbia. Table 8 lists the government of Canada military bases and other properties in British Columbia.

CFB Chilliwack and Vancouver Detachment Jericho Beach will be sold in the next few years as part of the federal government restraint program. Other properties, such as the former Royal Roads Military College, will be used for other purposes. Continuing government restraint will likely see more military properties declared surplus in British Columbia in coming years.

Click here to view Table 8: National Defence-List of Properties in British Columbia
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Properties that should be devolved to the provinces

Agriculture

The federal department of agriculture should be mostly devolved to the province of British Columbia, with the government of Canada retaining some limited role in international co-ordination. Table 9 lists the federal government's holdings of agricultural properties in British Columbia, which could either be sold or turned over to the province as part of this devolution process.

Click here to view Table 9: Agriculture Canada-List of Properties in British Columbia

Parks

Federal parks, such as Pacific Rim National Park, should not be sold, although they might be transferred to the government of British Columbia Parks Service to increase administrative efficiency. The national parks in British Columbia included in this study are listed in Table 10.

Click here to view Table 10: Environment Canada Parks Service-List of Properties in British Columbia

Corrections

Most federal correctional institutions in British Columbia are located in the Upper Fraser Valley, with the exception of William Head west of Victoria. There is some potential for the privatization of these services and/or the devolution of these services to BC Corrections. Table 11 shows the land and buildings held by Corrections Canada in British Columbia.

Click here to view Table 11: Correctional Service of Canada-List of Properties in British Columbia

Canada Mortgage and Housing Corporation

There are 276 properties owned by Canada Mortgage and Housing Corporation in British Columbia, with an assessed value of $155,917,200 as of July 1, 1994.

CMHC owns a piece of vacant land in the District of North Vancouver with an assessed value of $79,458,000. It also owns 10 buildings assessed at between $1 million and $10 million. The rest of its properties are mostly single family dwellings located throughout British Columbia.

The Fraser Institute recommends the complete devolution of federal public housing activities to the Government of British Columbia, including the transfer of all CMHC properties.

Properties that should be sold through privatization

Post offices

There are 139 properties owned by the Canada Post Corporation in British Columbia, with an assessed value of $111,881,149 as of July 1, 1994. The main post office buildings in downtown Vancouver and Victoria were assessed at $40,297,000 and $10,844,000 respectively. There are 18 other properties assessed at between $1 million to $5 million.

The Fraser Institute recommends the privatization of Canada Post, including the sale of all its properties, with all of the proceeds used to reduce the federal debt. If the policy of complete privatization were not palatable, the government could opt to simply privatize the services provided, then realize the value of the properties separately.

Canadian Broadcasting Corporation

The CBC owns 86 properties in British Columbia, with an assessed value of $50,830,700 as of July 1, 1994. The CBC Regional headquarters in downtown Vancouver was assessed at $48,068,000. Most of its remaining properties are small communications devices scattered throughout the province of British Columbia.

Canada Harbour Place Corporation

Canada Harbour Place Corporation had an assessed value of $101,913,000 as of July 1, 1994.

Canada Lands Company Ltd. properties in British Columbia

Canada Lands Company Ltd. (CLC) has 12 properties in British Columbia for sale, comprised of 301.6 acres as of February 16, 1996.

CLC holdings which are for sale include:

Click here to view table

CLC should work closely with professional realtors in British Columbia to sell surplus federal properties and obtain the best price possible for Canadian taxpayers.

This study provides information in Appendix A in the form of a summary of the distribution of the 3,550 properties owned by the government of Canada in almost every community in British Columbia. Many of these properties should be declared surplus and sold if they are not being used to provide necessary services to the people of Canada.

Table 12 is a questionnaire that can be used to compile information on federal properties that might be considered surplus by the government of Canada.

By becoming aware of what the federal government owns and by becoming informed on what it does with its properties, British Columbians will be able to make positive recommendations to the federal Minister of Finance and to their member of Parliament for property sales that would help reduce the national debt.

The specific recommendations of this study are:

1. Everyone in British Columbia interested in a more efficient use of their tax dollars and in eliminating the federal deficit more quickly should conduct case studies on the federal properties located in their communities, as identified in this study, and communicate their findings to the federal Minister of Finance and to their members of Parliament.
2. All proceeds from the sale of government of Canada properties should be used for deficit elimination and eventually be applied toward reducing the federal debt. The only properties that should be retained are those that are absolutely essential for the core operations of the federal government.
3. The government of Canada is engaged in several commercial operations such as restaurants, parking garages, fish hatcheries and logging operations. It also owns vacant industrial land clearly not required by the government. All of these commercial operations of the federal government should be sold.
4. The government of Canada should make it clear to all Indian bands or nations in British Columbia that all federal properties surplus to its needs in British Columbia will be sold to help eliminate the federal deficit and begin reducing the federal debt. Where a property involves aboriginal interests, the Indian band or nation should be given the right of first refusal, following a reasonable period, on any offer to purchase the property.
5. The government of Canada should not retain ownership, as is proposed under its new National Maritime Policy, of federal lands at Canada Port Authority sites or at the Vancouver International Airport and other airports, if these lands can be sold. It is far more important for the government of Canada to reduce its debt than to be a landlord to maritime port and airport authorities in the province of British Columbia.
6. In addition to Transport Canada, other departments with properties that should be declared surplus and sold include Forestry Canada and National Defence.
7. Some federal properties should be turned over to the province of British Columbia, as federal programs and departments are devolved to the provinces. Major examples highlighted in this study include Agriculture Canada, Environment Canada's National Parks Service, Corrections Canada, and Canada Mortgage and Housing Corporation.
8. Federal properties that would be sold as part of the privatization of a Crown corporation include the holdings of Canada Post, the Canadian Broadcasting Corporation, Canada Harbour Place Corporation, and the remaining CN properties in British Columbia held by the Canada Lands Company Limited.

Click here to view Table 12: A Government of Canada Real Property "Declared Surplus" Questionnaire for British Columbia

The government of Canada could raise at least $1 billion by declaring surplus and selling 440 properties out of its $4.1 billion inventory of 3,550 properties in British Columbia. Most of these properties are in transportation.

Given the urgency of quickly eliminating the federal deficit and beginning to reduce the national debt, it is far more important for the government of Canada to sell these properties to reduce its debt than to be a landlord to maritime port and airport authorities in the province of British Columbia.

Concerned British Columbians should investigate the federal properties in their communities identified in this study to determine whether or not each property should be declared surplus and sold. These findings should be communicated to the federal Minister of Finance and to local members of Parliament.

The responsibility for Canada's mountainous federal debt belongs to all Canadians; the responsibility for doing something concrete and practical about it also rests with all Canadians.


Appendix A

Click here to view Appendix A: Summary of Government of Canada Property in British Columbia by Area and Local Jurisdiction (Values as of July 1, 1994)

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