MLAs probe tower deal

by Jeff Colbourne
Northern News Services

NNSL (Feb 04/98) - One sweet deal. That's how Mackenzie Delta MLA David Krutko sees an eight-year lease extension a Yellowknife company struck with the GNWT to provide office space.

"You're talking about almost a $10-million deal, but there's a lot of other vacancies in Yellowknife," Krutko told the legislative assembly Monday, referring the Lahm Ridge Tower lease.

Krutko cited more than 9,000 square metres (100,000 square feet) of vacant space in Yellowknife plus another 2,250 square metres (25,000 square feet) of vacant space currently being paid for by government.

Lahm Ridge Tower offers about 4,500 square metres (50,000 square feet).

"If you look at the economics in the territories right now, the number of businesses shutting down and the whole question of division, after 1999, what's the size of the public service going to be in the West?" he asked.

"The deal is not practical."

Minister of Public Works Jim Antoine dismissed Krutko's comments about the "sweet deal" and reiterated his reasons why the lease extension with 974102 NWT Ltd. was such a good deal for the government.

Antoine's deputy minister, Ken Lovely, signed the eight-year lease with the guarantee of avoiding $1.4 million in tenant improvement costs that would be incurred if the lease were dropped and the government departments relocated.

The new owners also agreed to replace the existing air-handling systems and carry out $100,000 worth of building improvements that would result in savings to the GNWT of over $500,000 over the life of the lease.

But Krutko also made known concerns to the minister on Monday about the fact that aboriginal companies have repeatedly tried to purchase office space in hopes of leasing the space to the GNWT, only to be told the government is not interested in long-term leases.

"What the government was telling them was, 'Sorry we can't make these commitments,' but all of a sudden they make a commitment here. Why was that?" Krutko asked.

Hay River MLA Jane Groenewegen also grilled Antoine in the house about the lease.

Her motivation, she said, is to bring about transparency and accountability with government.

"I don't know if there's anything up with Lahm Ridge Tower but there is a perception the Lahm Ridge Tower deal was not above ground," said Groenewegen.

"Whether or not there's any substance to that perception I don't know, but what I do know are the factors that contributed to the perception."

Groenewegen promised to continue asking questions in the house until some resolution is achieved and all speculations about the deal are laid to rest.

Since 1985, the GNWT has been leasing Lahm Ridge Tower, owned by Albert and Hazel Marceau, to house the departments of Education, Culture and Employment and Transportation.

That lease expired on Nov. 30, 1995. The GNWT had the option of extending the lease to 2005 but decided to opt out, claiming uncertainty over departmental cutbacks. Marceau was forced into a month-to-month lease.

On Sept. 29 last year, the building, valued at $5.8, million was mortgaged by Pacific and Western for $4.2 million and sold for $4 million to Roland Bailey and Mike Mrdjenovich. The lease is good for nearly $10 million over eight years.

Albert Marceau has been unavailable for comment despite numerous attempts to contact him at his home in B.C.

An MLA who asked not to be named said they spoke with Marceau last fall after the deal was signed and Marceau was not pleased with the deal.

"He was pissed off," said the MLA.

"Since that time Marceau hasn't talked to me."

The MLA wanted to talk to Marceau to clarify questions regarding the lease extension and sale of the building.