FOI Reveals More Details Of Failed Carpere Deal
By Robert Thomas
On May 13, 2019 a jubilant Mayor Fraser Tolmie announced the “largest land deal in the history of the City of Moose Jaw”. Council would hear about the sale of 780 acres of land to Carpere Canada and the promise of better things to come.
For the many naysayers - both inside and outside of the community - the Carpere agreement showed them they were wrong. The South East Industrial Park (SEIP) had a new tenant with far more potential than the ill-fated Canadian Protein Innovation (CPI) proposal.
Carpere's arrival almost immediately swept away the memories of failure to secure the $60 - $100 million pea protein plant CPI had proposed.
But what happened to the Carpere deal? What had the City on March 3, 2020 issuing a news release announcing the deal had collapsed “as a result of extensive due diligence” Carpere would not be proceeding with the agreement? (See photo below)
In documents obtained by MJ Independent through a Freedom of Information (FOI) request it appears a major reason Carpere Canada backed away from the agreement was because of the off-site levy.
The documents came as part of a June 8, 2020 FOI request for all records related to the SEIP from January 2018 to June 2020.
Initially MJ Independent was quoted $1,800 for an electronic version of 98,447 documents or $24,620 for a hard copy version. But we used provisions in The Freedom of Information and Protection of Privacy Act to successfully obtain a sizable number of documents initially requested. A large part of our argument was the documents should be released in the public interest.
The documents show negotiations between the City and Carpere Canada went on for over 18 months before the initial deal fell apart with Carpere deciding not to finalize the agreement.
As part of the SEIP deal Carpere had agreed to pay $10,000 per acre plus a $49,600 per acre off-site development levy. The levy was to be paid only as land was developed. The levy would not increase for ten years.
Off-site levies are charged to help pay for infrastructure to support the new development.
Moose Jaw has Bylaw 5568 The Development Levy Bylaw. The bylaw establishes the off-site levy at $49,600 per acre. Additionally the levy increases at a rate of two percent annually to make up for inflation and increased infrastructure construction costs.
To facilitate the initial Carpere deal Council passed Bylaw 5593 Carpere Development Levy Exemption Bylaw.
Bylaw 5593 exempts Carpere's SEIP development from the annual two percent increase to the off-site development levy for a period of ten years from concluding the deal.
According to the documents key dates in the Carpere deal are in the first week of December 2018.
On December 5, 2018 economic development officer Jim Dixon sent over discussion notes for Mayor Fraser Tolmie to address with Carpere Canada when City officials met with Carpere representatives on December 6th and 7th, 2018. See the discussions points below.
Two key things should be pointed out and that is the discussion points list the City wanting $20,000 per acre - they eventually agreed on $10,000 per acre.
Going into the discussions the off-site levy is listed at $49,600 per acre and Carpere Canada was to pay infrastructure costs including access and sewer and water estimated at an additional $49,000 per acre.
In the area of Value-Added Activities the concept is to install large enough utilities to save money for future growth.
This indicates the strong likelihood if Carpere had proceeded with their SEIP project the City would not have had to re-open their Budget to find $2.5 million for the waterline to the SEIP.
SEE RELATED - City Scrambling For Cash
City and Carpere officials met December 6th and 7th in Moose Jaw where they hammered out a deal.
There was somewhat of an urgency with Mayor Tolmie wanting the deal finalized before Christmas holidays - it was termed a “Chinese Fast” .
In a December 19, 2018 email Mayor Tolmie wrote to Carpere CEO Yee-Ming Low that other than holding the off-site development levy at $49,600/acre for ten years, the levies were non-negotiable. See photo below.
In the email Mayor Tolmie wrote the actual off-site development costs for the lands being negotiated on were $92,727/acre while the City is only receiving $49,600/acre a difference of $43,127/acre.
“…we are subsidizing this project $43,127 per acre!” he wrote.
Further in the December 19, 2018 email Mayor Tolmie states since Carpere wanted to change the terms of the December 7, 2018 agreement and that SaskPower was now the anchor tenant and the entire agreement was open to negation.
Land at the SEIP was now more valuable than $10,000/acre especially given other parties were now expressing interest in the SEIP, he wrote.
Documents obtained through the FOI do not mention what other parties were interested in the SEIP.
The deal slowly progressed through 2019 as Carpere and the City worked on rectifying various stumbling blocks.
After requesting an extension Carpere identified items the City needed to complete as part of the due diligence for the agreement to proceed (see below).
Despite over 18 months of work in the end Carpere Canada walked away from the initial deal.
Do you think the Carpere deal is dead? Well you might be surprised.
Come back tomorrow for part two.