Debates of October 25, 2004 (day 27)

Thank you, Mr. Dent. Ms. Lee.

Thank you, Madam Chair. I just want to get more information on the cost of this. The information that Minister Roland provided states that the lease space would cost $379 per square metre. I know that is a metric number, but I don’t know what that is in footage, but could I just get a confirmation from the Minister as to whether this is a yearly figure? By my calculation, that is about $36,000 a year because I think we are looking at 95 square metres of useable office space. I would like to know what other costs will be there, because this is located in a mall. In a mall, there are common-use fees. There might be condo fees like common-area fees. What is the utility and power? Does the Minister have information on the total expenditure required for this office space on a yearly basis? Thank you.

Thank you, Ms. Lee. Mr. Dent.

Thank you, Madam Chair. I believe the Member’s figures are accurate. The cost of the space is within $3 a square metre of what we had estimated the cost would be, in going out for class A space, because it is almost exactly what the government is paying at other leased locations for class A space. The amount is actually less than what we had budgeted as part of the $266,000 for lease payments. Thank you, Madam Chair.

Thank you, Mr. Dent. Ms. Lee.

Thank you, Madam Chair. I don’t believe I got information as to what other costs there might be. Is that something that is within his knowledge? Thank you.

Thank you, Ms. Lee. Mr. Dent.

Thank you, Madam Chair. To the best of my knowledge, the per square metre costs are all the costs that we have. Thank you.

Thank you, Mr. Dent. Ms. Lee.

Thank you, Madam Chair. We have before us a special warrant for $115,000. My understanding is that that is a ballpark figure. That is something that they had to allocate before they could go out for RFP. There is a very good chance that this might be higher. It may end up costing the government more to renovate this. It might be less; I don’t know. Minister Roland indicated that the landlord is very cooperative in this regard. The landlord says that there are other plans to make some of the retail stores into office space, and this fits into their plan. That landlord has agreed to pay parts of renovating costs. Could the Minister indicate as to how much is the cost the landlord is assuming in terms of renovation and any other costs? Thank you.

Thank you, Ms. Lee. Mr. Dent.

Thank you, Madam Chair. I am not aware that the landlord has agreed to pick up any of the costs. The Member is right; the $115,000 is an estimate that has been provided by Public Works and Services, based on typical costs that they are finding in doing tenant improvements in other comparable space in Yellowknife. It could be more, it could be less, but we expect it will be fairly close to that dollar figure. Thank you, Madam Chair.

Thank you, Mr. Dent. Next on the list, I have Mr. Ramsay.

Thank you, Madam Chair. I will continue where my colleague, Ms. Lee, left off. In terms of the $115,000 special warrant, I am just wondering how a special warrant could be approved for the new office. Actually, from the information that the Department of Public Works and Services has provided the House, we found out that the actual landlord is paying most of the leasehold costs on the new office locating into Centre Square Mall. I am just wondering if the Minister could tell us what exactly the $115,000 is for and why the special warrant. Thank you.

Thank you, Mr. Ramsay. Mr. Dent.

Thank you, Madam Chair. The $115,000 is an estimate provided by Public Works and Services for the cost of tenant improvements for the space.

Thank you, Mr. Dent. Mr. Ramsay.

Thank you, Madam Chair. Is the Minister aware of what that portion of the leasehold improvements the landlord will be paying is? Thank you.

Thank you, Mr. Ramsay. Mr. Dent.

Thank you, Madam Chair. As I told Ms. Lee, no, I am not aware that the landlord is paying a significant portion of the tenant improvements. If there are any savings, then $115,000 won’t all be spent. It would, instead, remain in the government’s bank account.

Thank you, Mr. Dent. Mr. Ramsay.

Thank you, Madam Chair. Again, I guess I am just a little bit confused as to why the Department of Public Works and Services and the Department of Justice would come up with a figure of $115,000 for a special warrant, not knowing what they were getting themselves into in terms of the lease and the leasehold improvements that were going to be carried out in the new space at Centre Square Mall. That causes me some concern, that that wasn’t taken into consideration prior to the special warrant being taken into consideration. Thank you.

Thank you, Mr. Ramsay. Mr. Dent.

Thank you, Madam Chair. Madam Chair, this amount of money was approved by special warrant before Public Works and Services went out with the RFP. It would not be appropriate for Public Works and Services to advertise for somebody to supply space if we didn’t have the money to actually take it. So this estimate was done this summer, well before there was any knowledge of who or what space would be used. That is the normal process for making sure that we have a budget before the government advertises for somebody to provide us with a service or a space. We have to have the budget in place in order to justify it. So we had the budget in place. It was based on Public Works’ estimate of what it would cost on a per square foot basis to provide tenant improvements, based on their experience in Yellowknife. Thank you, Madam Chair.

Thank you, Mr. Dent. Mr. Ramsay.

Thank you, Madam Chair. I guess if that’s government practice to spend this much money on an 1,800 square foot office location, that to me looks fairly exorbitant, really. I don’t know if there are going to be gold-plated doorknobs or gold-plated toilet seats in this place, but it begs the question of what is the money going to be spent on? One-hundred-fifteen-thousand dollars on an 1,800 square foot office space? It’s an awful lot of money to be spending on an office. Thank you, Madam Chair.

Thank you, Mr. Ramsay. Mr. Dent.

Thank you, Madam Chair. I’m advised that this is within the normal range for this class of office. It’s certainly not anywhere near the cost that you would find for, for instance, the Human Rights Commissioner’s office, which would be outfitted to a much higher standard. So this is just regular office space and that, Madam Chair, is what it’s costing to outfit office space in Yellowknife.

Thank you, Mr. Dent. Mr. Ramsay.

I thank the Minister for that and I questioned the expense on the human rights office, as well. I mean, it’s exorbitant. It really is. I appreciate the Minister’s response. Thank you, Madam Chair.

I didn’t hear a question there. Ms. Lee.

Thank you, Madam Chair. Just for the record, I think it should be stated that the information Mr. Ramsay and I refer to in terms of the landlord agreeing to cover the majority of the cost comes from written information that we received from the Minister. We can’t really table those, I guess, but it’s stated clearly and I guess Minister Dent wasn’t made aware of that. But it has been provided to all the Members, this information that the landlord has agreed to pay a majority of the renovation costs because they feel that it is in line with what they had been planning for the mall where they see more spaces turning into office spaces, I guess. I don’t know.

One of the reasons Mr. Roland gave in terms of why the decision was made not to re-open this competition once the three proposals were received and all three were found to be not acceptable, the decision was then only made to go to those three to see if there were any alternative spaces and in the end the third one, the successful one, was able to provide a space. The reason given was that, one, they didn’t think there was any other space in Yellowknife. I mean, that’s what was provided to us. This is one of the answers that we got from Mr. Roland. Two was that they felt that it was good for the government to save on advertising costs that it would cost to re-run this ad. I don’t know, those two reasons don’t seem to justify to me a reason for a sole source for the government to enter into a five-year lease contract and two more options to renew that would in all likelihood turn into a 15-year lease. That’s a long-term financial commitment and for the government to say we just assumed that there wasn’t any other space and that advertising costs would be too large, that seems to me that it doesn’t meet the test that I would think one would have to go through or the government should go through when deciding whether or not they should go with sole source or not. So I would like to ask Mr. Dent, or maybe Mr. Voytilla has this information, what was the basis or evidence that suggested that there was probably no other office space in Yellowknife?

I want to point out again that the first RFP advertisement was only out for 18 days. I don’t know if that is normal time. I mean, when I was looking for staff in my office I made sure I ran it in September, not in August, because I knew everybody was away in August and I made sure I ran it for three weeks. If you’re looking for office space, something that permanent, you would think that you would advertise for longer. So that’s 18 days and on that basis they have concluded that they wouldn’t come up with any other space. The second thing is how much would the advertising costs be? I’m sure it’s in the couple of thousands, $2,000 or $3,000. I don’t know. I’d like to know how much the advertising cost is that made them justify that answer. Thank you.

Thank you, Ms. Lee. Mr. Dent.

Thank you, Madam Chair. Madam Chair, I think it’s important to remember that this special warrant was approved on August 22nd. On August 22nd the FMBS had absolutely no idea that a landlord or potential landlord would be willing to pay for part of the tenant improvements, whether that’s a small part or a big part. So that didn’t factor into the decision at any time. The expectation was that the tenant, that being the Government of the Northwest Territories on behalf of the Legal Services Board, would have to pay for the entire cost of the tenant improvements, and that’s typically what has happened. So if there has been a negotiation that has allowed the government to save money on this, then I think that’s good news, but there was no way we could predict that was going to happen at the end of August. When I brought forward this proposal for money it was because we thought that we would need $115,000 to provide the space for two lawyers and their support staff, no matter where the office was located in Yellowknife. That was just the cost that was expected. So that’s what this amount of money was based on.

Why was it not advertised again? Well, when you’ve had an advertisement out for space you expect that because it’s a public process that you’re going to get all of the people who have space submitting a response. Eighteen days is usually considered quite adequate. If somebody who wanted to submit a proposal had called Public Works and Services and said listen, I’m interested, would you consider extending so that I have a chance to respond, I suspect that they would have considered it because oftentimes RFP closing dates are extended. So I think that probably would have been possible.

The other problem with advertising again, would have been with the delay. The reason that I sought the money was because I was very anxious to be able to get the Legal Services Board another office so they could start to deal with the backlog as quickly as possible. We didn’t want to wait any longer than we absolutely had to in order to get this office open. So we had already advertised for lawyers, the process had been started to find new staff lawyers. There’s not much point in having the staff if you don’t have a place for them to work out of. So there was quite a bit of urgency on my part to make sure that this was moved forward. I didn’t personally put any pressure on the department not to re-advertise, but they knew that I was anxious and the department was anxious to see this go ahead and I suspect that there was some concern about the extra time that it would take if the process of advertising had to be undertaken again. Thank you, Madam Chair.

Thank you, Mr. Dent. Ms. Lee.

Thank you, Madam Chair. I don’t think I got the answer on why. At least Mr. Roland, and I know he’s not here, at least his assertion that chances are there are no other spaces, I think it was just a matter of decisions that officials had to make with the set of circumstances that it had. I had a question, now I’m just losing my thought here. My understanding is a special warrant is for money that has already been spent. Is that true? Or is it just allocated and sitting in a bank somewhere or account somewhere waiting for renovations to start, and if that’s the case right now there’s money sitting there somewhere? Right now there has been no work done on that renovation because we know that there is another business that’s operating there as we speak. So then why are we being asked to approve this money because that money was not spent anyway?

Thank you, Ms. Lee. Mr. Dent.

Thank you, Madam Chair. Madam Chair, actually maybe Ms. Lee missed it because I did answer her question about why the expectation was that anybody who had space would have already applied for it, and that is that whenever you have a public process, people who are landlords tend to be very aggressive. In the experience of government. when an advertisement is placed for space, there are always, or there seems to always be, particularly for governments to take that space, there is always a big demand. Landlords typically respond very aggressively when governments advertise that they have space available. So the expectation is that once you have run an advertisement process, and landlords also know about the Public Works website, once it’s been posted and the advertisements have run, the expectation is that everybody who is interested in the space has submitted an application. Now, was there other space out there? Well, there may have been, but perhaps the landlords were not looking to rent 1,800 square metres or 1,800 square feet, they wanted to rent larger or smaller portions. It’s really a question of supply and demand and what’s available at the time. Since the interest was in finding the space at that time, the expectation was that everybody who had space that was suitable would have responded.

As to what is a special warrant; a special warrant is the authority to spend. So the Members are quite right; the money hasn’t been spent, the money may not all be spent, but the usual practice is to make sure that you have the authority to spend before you sign a contract that would require the expenditures, such as tenant improvements.

Thank you, Mr. Dent. Next I have Mr. Pokiak.

Thank you, Madam Chair, just to follow in line with my colleagues here, Madam Chair, a special warrant for $115,000 is a lot of money. Let’s just say that I’m glad that the Legal Services will have an office, but at the present time I’m still struggling with the thought of $115,000 for renovations of an office space. So that sort of falls in line with what Ms. Lee and my colleagues here were saying. The tenant or the landlord agreed that the majority of the cost would be at their expense, so how much above the $115,000 is the landlord willing to put into the office space? Thank you.

Thank you, Mr. Pokiak. Mr. Dent.

Madam Chair, if the landlord is going to put money into the tenant improvements, then I would suspect that we wouldn’t spend the $115,000. We have the authority to spend $115,000, but we will only spend whatever is required to develop the space. So if it only takes another $10,000 to develop the space, that’s all that would be spent. If it takes $115,000 to develop the space, that’s what will be spent. But we have the authority to spend in the area of $115,000 now, to fit up the space. Thank you, Madam Chair.

Thank you, Mr. Dent. Mr. Pokiak.

Thank you, Madam Chair. Madam Chair, can the Minister please indicate whether the landlord is willing to cover the cost of renovations of the office space? Thank you.

Thank you, Mr. Pokiak. Mr. Dent.

Thank you, Madam Chair. I’m not sure that I can confirm that that’s the case. There may be negotiations underway and that may be the end result, but to the best of my knowledge I can’t say that that is certain.

Thank you, Mr. Dent. Mr. Pokiak.

Just one last thing, Madam Chair, thank you. It is indicated in the letter that we have in front of us here, it’s very clear that the landlord is willing to take up most of the cost. So can you follow through to find out how much more, other than the $115,000 it will cost to renovate that office space? Thank you.

Thank you, Mr. Pokiak. Mr. Dent.

Thank you, Madam Chair. Madam Chair, the landlord may be prepared to pay a good part of the expenditures. As I said, this special warrant was passed on August 22nd. There were no negotiations with any landlord at that point in time. So when FMB passed this, there was no way of knowing whether or not that was going to happen, so it doesn’t really matter to this decision when it was passed as to whether or not a landlord is prepared to pay. If we can get the landlord to pay for it, then that’s great, because it means that we don’t have to take the money out of the government coffers; we’ve managed to save money instead of spending it.