City pays nearly $500K for land it overlooked near Waverley underpass

The City of Winnipeg bought a nubbin of Fort Garry land for almost $500,000 because officials in charge of acquiring property for the Waverley underpass lost track of its ownership.

The city is the early stages of building a $155-million underpass to to eliminate Waverley Street traffic delays at the CN Main line. Before the project could proceed, the city had to expropriate some properties and get permission to cross others in order to reroute the street, as well as the rail line, during construction.

According to a report to city council's property committee, the city identified all the land it needed for the project in May 2015 and started working on purchase or easement deals the following year.

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It wasn't until this February when city officials learned they lost track of one crucial piece of property, a 12,600-square-foot triangle of land south of the rail line and east of Waverley Street. The city wasn't aware CN Rail sold it in July 2015, when the railway got rid of a former spur line. 

With no time to expropriate the land, real-estate officials recommended the city buy it outright. This led council's property committee to meet behind closed doors last week to approve the purchase of the land for $491,288, a premium rate equivalent to about $1.7 million per acre.

Transaction a 'motivated sale'

"The purchase price falls in line with other motivated sales for critical acquisitions over the past five years," Winnipeg real estate manager John Zabudbney wrote in a report to the committee.

He wrote if the city didn't acquire the land this spring, it would delay the construction of the rail-line detour until after this summer. That, in turn, would cost the city another $7.5 million a year in construction costs and require both Ottawa and the province to give the city more time to complete the project, contrary to their funding agreements.

"Redirecting train traffic over to the temporary rail-line detour in the fall of 2017 is critical to the overall project schedule, as it allows underpass bridge construction and associated roadworks to occur in subsequent years," Zabudney wrote.​

"The rail-line detour construction work is seasonal in nature — it can not occur in the winter — therefore, a delay in obtaining the required lands would result in at least a one-year delay to the project completion date."

Council property committee chair John Orlikow (River Heights-Fort Garry) said he could not comment on the deal because revealing what the city paid for the land could weaken its position in future property transactions.

Alissa Clark, a spokesperson for the city, said real estate officials could not comment for the same reason. She said reports like this are approved behind closed doors because "they may contain information which, if disclosed, could prejudice contractual or other ongoing negotiations by the City of Winnipeg."

CN sold the land as part of a larger sale of 12 acres to a numbered Manitoba company whose director is listed as Toronto financier Moray Tawse, the co-founder of First National Financial, Canada's largest non-bank lender.

Timothy Dewart, the Winnipeg lawyer for the numbered company, said he has no knowledge of the transaction.

CN spokesperson Kate Fenske said the railway was not looking for a buyer for its old rail spur.

"CN was approached in 2014 by an interested party who wanted to purchase the land. The land was sold and it closed in 2015," Fenske said in a statement.

The city's purchase of the 12,600-square-foot portion of this land does not need any further approval by council.