Surplus government real estate sales achieved target revenue, but room for improvement
In 2012, government established a two-year initiative called the Release of Assets for Economic Generation (RAEG). Unused, or under-utilized, provincial land and buildings were sold, in part to help balance government budgets in 2013-14 and 2014-15.
“The RAEG initiative had three planned benefits: revenue, generation of economic activity and cost savings. However, government only focused on the revenue target,” said Carol Bellringer, auditor general.
The Ministry of Citizens’ Services, which planned and carried out the initiative on behalf of government, designed and followed appropriate processes to surpass its revenue target of $421 million, but there was room for improvement.
The report contains seven recommendations, including that government assess the costs and benefits of selling versus holding surplus assets prior to their sale. As well, government should report to the public on how selling surplus assets can be in the best interests of the province.
The office reviewed 14 of the 101 sales, which represented 75% of the total sales proceeds. With the exception of the Burke Mountain lands in Coquitlam, government obtained, on average, 97% of the appraised value of the surplus property for the sales reviewed.
“It’s critical that government use expert knowledge and judgement about when and how best to buy, maintain and sell assets to meet current and future provincial needs,” said Bellringer.
Government has always, and will always, buy and sell real estate assets. Since 1981, almost 1,500 surplus government properties have been sold.