Table of Contents
Introduction
Scope of the Review
Background
Chronology of Significant Events
Excerpts from Relevant Documents
Findings
Summary Statement
Appendix - Lot Transfers and Transactions
Letter from the
Minister of Education.
Citizenship and Youth to Concerned Citizen
Introduction
On May 2, 2005 the Minister of Education, Citizenship and Youth directed his Acting Deputy Minister to conduct a review and prepare a report on the financial and legal implications of transactions undertaken by The Seven Oaks School Division (SOSD), including those approved by the Public Schools Finance Board (PSFB), in the acquisition and disposal of land in the area known as the Swinford Park Subdivision (also known as the Riverbend
area or subdivision).
Specifically, the review was to address the following issues:
1. Did the SOSD act within its legal authority in the disposal of this land?
2. Did the SOSD conduct appropriate financial due diligence in the transactions associated with the disposal of this land?
3. Were the transactions financially beneficial to the SOSD?
4. Did the PSFB conduct an appropriate review of SOSD applications regarding the disposition of this land?
5. What should be done to improve the land disposition review process?
Scope of the Review
The review examined all relevant transactions undertaken by SOSD including those approved by the PSFB regarding the development and disposal of land in the area known as Swinford Park. The mandate and role of the PSFB with regard to the transactions that were approved were also examined.
All relevant legislation and policy documents were examined as were PSFB and SOSD minutes, various agreements between the parties involved, and pertinent correspondence. Interviews were conducted as required to obtain explanations and additional information regarding the transactions.
The review was conducted by staff in the Department of Education, Citizenship and Youth. External expertise and assistance was provided by the Internal Audit and Consulting Services Branch of the Department of Finance.
Background
The Public Schools Act (PSA) provides a defined list of powers to school divisions; hence school divisions can only do what the legislation expressly (or by necessary implication) empowers them to do. School divisions have the authority to acquire land without the approval of the Minister or the PSFB. School divisions may dispose of surplus property only upon obtaining approval from the PSFB.
The history of a new school site In the Swinford Park area dates back to 1995 when SOSD was exploring the ides of constructing a new school. By 1998. renovation of an existing school became the focus, however it was subsequently determined that renovation costs would exceed the costs of building a new school. In early 2001, in an effort to acquire land for a new high school, SOSD purchased land parcels (approximately 22 acres) in Swinford Park and subsequently undertook extensive community consultation regarding the development of this land. In the fall of 2004, an offer to purchase an alternate site for a high school was made pending a rezoning decision. Surplus undeveloped land of approximately 10 acres pertaining to the previously acquired Swinford Park site is presently held by SOSD for a future early/middle years school.
Chronology of Significant Events
January 10, 2001: PSFB meets with SOSD delegation to discuss the future of the West Kildonan Collegiate.
January 18, 2001: SOSD Chair sends a letter to PSFB Chair indicating that SOSD will be purchasing land for a school site. The letter serves notice that SOSD will be requesting reimbursement for development costs, as required.
February 1, 2001: SOSD commits to purchase 15 acres of land.
February 28, 2001: SOSD commits to purchase 4 and 2.3 acres of land.
March 28, 2001: SOSD Superintendent sends a letter to PSFB Chair indicating that SOSD has acquired 21 acres of land for a new high school and has engaged Lombard North Group Ltd. (LNG) to work on a development plan that would include sharing costs of upgrades to streets and residential development, possible location of the school and adjoining sports field.
April 2001 to July 2004: SOSD holds 14 community meetings to discuss the project.
June 12, 2001: SOSD sends notice of intent to construct a new high school to PSFB.
January 23, 2002: PSFB motion declining to support a new high school in Riverbend.
June 14 and 17, 2002: Memorandum of Agreement between SOSD and private landowners, signed by the landowners on June 14. 2002, and by SOSD on June 17, 2002, wherein SOSD to receive certain residential lots in exchange for providing services.
November 18, 2002: Final land purchase agreement - 0.35 acres - SOSD commits to undertake development of the land as part of the agreement.
January 7, 2003: SOSD enters into a professional services agreement with an engineering firm.
January 20, 2003: SOSD sends a letter seeking PSFB approval to dispose of land, including a 10 acre parcel of land In the Swlnford Park area, and advises that it will retain 12 acres of land for a future K-5 or K-8 school.
February 18, 2003: Two PSFB members meet with SOSD to discuss its 5 year capital plan.
February 26, 2003: PSFB motion authorizes SOSD to dispose of the land with the following conditions: (i) SOSD follow the normal surplus property disposition guidelines as established by PSFS, and (ii) a final purchase and sale agreement be submitted to PSFB for approval prior to closure of the sale of each property. SOSD was authorized to retain 100% of the net proceeds.
April 3, 2003: LNG sends a memo to SOSD and PSFB describing the Swinford Park subdivision plans. The letter also references the market for lots, including the organization of groups of tract builders and the lot sales approach. PSFB staff meet with SOSD and LNG to discuss this matter.
April 8. 2003: SOSD writes to PSFB indicating that the Board of Trustees passed a motion on April 7, 2003 as follows: “That the Board accept the recommendation for the public tender and sale of the New Riverbend Site residential lots on a block basis as outlined in the Lombard North Group memorandum of April 3, 2003, and that the Administration be directed to write a letter to The Public Schools Finance Board to authorize the Division to shorten the public tender period to no more than 30 days”.
April 23, 2003: PSFB notifies SOSD that at its April 9, 2003 meeting it authorized SOSD to shorten the public tender process to one month.
June 30, 2003 (due to Schools’ Finance Branch (SFB) October 31, 2003): note to SOSD 2002/2003 audited financial statement: “Subsequent, to the year end, the Division negotiated a Development Agreement with the City of Winnipeg for the Swinford Park Subdivision in the Riverbend area. The Division awarded the tender to provide services for its future school site and the adjacent building lots. The Division has now sold all of the building lots in Phase I for total proceeds of $1,840,000 and has committed to providing services for these lots of $670,000.”
August 13, 2003: SOSD contracts with a company for the construction of underground, services, paving and associated works in Swinford Park.
September 16, 2003: Lot Sale Agreements signed (Addendums dated October 29, 2003 and November 24, 2003). Agreements state that the cost of the installation of the following services shall be included in the purchase price: underground electric power, gas, cable and telephone lines; sewer lines and water mains; grading and gravelling; ornamental street lights; permanent street signs; boulevard tree plantings; concrete sidewalks and walkways; house connections from the street mains to the front lot line; concrete and asphalt roadway
services.
October 9, 2003: City of Winnipeg signs development agreement with SOSD. which outlines conditions, costs and services required to be installed by the developer (SOSD) upon construction of the lots to be sold for residential purposes.
April 29, 2004: Legal counsel for SOSD writes to the PSFB seeking approval of Lot Sale Agreements as the Winnipeg Land Titles Office is awaiting confirmation from PSFB before the land transfers con be processed.
May 2, 2004: Minister receives an email from a citizen concerned that SOSD is acting as the developer of Swinford Park and questions whether it has the mandate to do this.
May 3, 2004: SOSD couriers signed Lot Sale Agreements to PSFB.
May 5, 2004: PSFB authorizes the disposition of the lots as per the purchase and Lot Sale Agreements submitted on May 3, 2004 for approval.
May 6, 2004: PSFB Chair sends letter to SOSD Secretary-Treasurer outlining the May 5, 2004 motion.
May 7, 2004: Minister’s once sends concerned citizen email to staff In the Deputy Minister’s office.
May 12, 2004: Deputy Minister’s office sends concerned citizen email to the PSFB Executive Director to draft a response - a copy is also sent to the Director, Education Administration Services.
May 19, 2004: PSFB Executive Director contacts SOSD Secretary-Treasurer to discuss the response to the concerned citizen and prepares reply and forwards on May 20, 2004 for Minister’s signature.
May 26, 2004: Minister sends the response to the concerned citizen.
June 29, 2004: PSFB members and staff tour Swinford Park site with SOSD officials and LNG representatives.
June 30, 2004: (due to SFB October 31, 2004): note to SOSD 2003/2004 audited financial statement - “During the year, the Division negotiated a Land Development Agreement with the City of Winnipeg for the Swinford Park Subdivision In the Riverbend area. The Division awarded the tender to provide services for its future school site and the adjacent building lots. The Division has agreements as at June 30, 2004 to sell 54 residential lots for $2,834,357 to two firms. To June 30, 2004, the Division has incurred $2,037,679 in land and development costs related to a future school site and residential lots.” (Subsequent to the 2003/04 audited financial statements, SOSD’s auditor advised the school division that the note to the financial statement should have reflected that SOSD had agreements as at
June 30, 2004 to sell 54 residential lots for $1,840,820 and not $2,834,357.)
September 13, 2004: SFB staff meets with PSFB staff and SOSD officials to discuss land development activities.
September 14, 2004: SOSD requests PSFB approval for the sale of 20 additional lots through a Lot Sale Agreement in an area called Grady Bend In Swinford Park.
September 24, 2004: SFB Director emails PSFB Executive Director about SOSD’s activities as a land developer.
October 20, 2004: PSFB Project Leader provides a verbal report to PSFB regarding land transactions and the SOSD.
October 26, 2004: PSFB Executive Director requests Land Management Services (LMS) to undertake a due diligence review of the Swinford Park development for the purpose of providing a feasibility/risk analysis of the proposed third phase of this project.
January 18, 2005: PSFB Project Leader requests a legal opinion regarding the Lot Sale Agreements.
February 4, 2005: LMS submits “Forensic Review - Phases 1 & 2, Feasibility/Risk Analysis - Phase 3 - Swinford Park Development” report (LMS report) to PSFB.
February 16, 2005: PSFB receives legal opinion regarding development activities in Swinford Park.
March 16, 2005: PSFB (i) authorizes SOSD to dispose of various parcels of land (known as Phase 3 Grady Bend project) in Swinford Park as per the purchase and Lot Sale Agreements submitted for review and approval on September 14, 2004; (11) advises SOSD that no future land development projects of this nature will be approved by PSFB, and (iii) requires SOSD to submit a full disclosure of all revenues and expenses for this project by way of a special financial statement to PSFB at the conclusion of the project.
May 3 and 4, 2005: PSFB Executive Director sends letters to school division Superintendents and Secretary-Treasurers; PSFB Chair sends letters to school division Chairpersons and Boards of Trustees advising that school divisions are prohibited from acting as property developers under the power granted to them in the PSA.
May 10, 2005: SOSD sends an open letter to the community providing the SOSD’s Board of Trustee’s perspective regarding the Swinford Park development.
Excerpts from Relevant Documents
Policy statement Governing the Disposition of Surplus Public School Properties, The PublicSchools Finance Board 1992
III Policy Considerations 3 - School divisions have been a contributor towards capital school costs as direct cost-sharing partners with the province prior to 1967, and post 1967 by assuming site development costs and, in all cases, by providing ongoing maintenance and repairs.
III Policy Considerations 5 - Section 174 of The Public Schools Act requires school boards to obtain the approval of The Public Schools Finance Board for the disposition of school buildings and property, either through lease, sale or otherwise.
IV Policy Provisions 3 - That The Public Schools Finance Board continue to exercise
considerable influence by participating in divisional disposition plans, including
consideration of usage of surplus properties that may be required for governmental purposes,
but that approved disposition activities be kept at the school division level.
V Disposition Process 3.3 - A meeting will be arranged with the school board and The Public
Schools Finance Board to review all proposals received including consideration of any
governmental or municipal requirements.
V Disposition Process 7 - For the purposes of this policy: “Property means
the building(s) and/or land upon which the buliding(s) is located.
The Public Schools Finance Board Act
Board agent of Crown 2(8) - The board is an agent of Her Majesty in right
of Manitoba.
Duties and Powers 3 - The board shall (e) consider such matters as may be
referred to it by the minister, and report thereon to the minister.
Rules of procedure 5 - The board may make rules governing its own procedure.
Professional and expert assistance 6(2) - The board may obtain the advice and
services of such Professional, technical and expert persons as it deems necessary to carry
out the business of the board. and shall pay out of the fund the salaries or fees of any
persons engaged for that purpose; but the board shall not incur an indebtedness exceeding
$5,000 in respect of any person unless it has obtained the approval of the minister
therefore.
Reports etc., from school divisions 8(3) - The board may require a school
division to prepare and submit to the board such reports and returns as the board deems
advisable, and to submit to the board for inspection any contracts or documents relative to
the affairs of the school division, and the board may make copies of such contracts ordocuments.
Special reports 13(3) - Notwithstanding subsections (1) and (2), the minister
may at such times and as often as he deems necessary, require the board to furnish to him,
in addition to the reports made under subsection (1) reports or information respecting all or
any part of the business and operations of the board, and the board shall comply with such
requirement.
The Public Schools Act
Certain duties of school boards 41(1) - Every school board shall (a) provide
adequate school accommodation for the resident persons who have a right to attend school as
provided in section 259; (o) select and purchase or rent school sites and premises, and
build, repair, furnish, keep in order and regulate the use of school buildings, lands,
enclosures and moveable property; (y) comply with directives of the minister.
Selection of school site 61 - Where a school site or an additional school site
or a change in school site is required in a school division or school district the school
board may select the site or may change a school site.
Purchase and expropriation 62 - Any school board may acquire by purchase, gift,
exchange or otherwise and, without the consent of the owner thereof, may enter upon, take,
use and expropriate land for a school site or land adjoining an existing school site which
the school division or school district requires for the enlargement thereof or, with the
consent of the minister, land which the school division or school district requires for
demonstration work in agriculture or horticulture, and any expropriation of land under this
section is subject to the provisions of The Expropriation Act.
Sale of school site or other property 67 - Subject to section 174. a school
board may dispose of any school site or school property not required by the school board.
Approval to acquire property 74(1) - Subject to the regulations, a school
board shall not do any of the following without the approval of either the minister or the
finance board: (a) Purchase, lease or otherwise acquire a building or part of a building to
be used for instructional purposes. (b) erect, enlarge or remodel a building or part of a
building to be used for instructional purposes. (c) enter into a contract for any purpose
described in clause (a) or (b).
Authority for disposal of land 174(1) - Subject to any regulations made under
The Education Administration Act, the school board of a school division shall not dispose
of any land or buildings owned by it, or any interests or right therein, by way of sale,
lease, gift or otherwise, unless it first obtains the authorization of the finance board
and, where the finance board authorizes the disposal of any land or buildings owned by a
school board, or any interest or right therein, it may require that the moneys realized from
the disposal be paid over to the fund.
Findings
1. Did the SOSD act within it’s legal authority in the disposal of this land?
The PSA provides a defined list of powers to school divisions; hence school divisions can
only do what the legislation expressly (or by necessary implication) empowers them to do.
The PSFB Chair, in a letter to all school divisions dated May 4, 2005, stated that “school
divisions are prohibited from acting as property developers under the power granted them in
The Public Schools Act.”
While only a decision by a court of law can say definitively whether SOSD acted within its
legal authority in the disposal of land in Swinford Park, a prudent interpretation of this
matter (supported by legal advice) is that SOSD did not act within its legal authority as
granted by the PSA. SOSD did not obtain legal advice regarding its proposed development
activities because, it explained, the PSFB had approved the Swinford Park land dispositions
and therefore it was assumed that there was no question of the development activity being
outside of its legal authority.
Whether SOSD obtained adequate or proper approval from the PSFB for the development activity
(whether allowed under the PSA or not) is another matter that will be discussed later in this
report.
2. Did the SOSD conduct appropriate financial due diligence in the transactions associated with the disposal of this land?
SOSD acquired the services of a company - LNG - with expertise in this area to undertake a
feasibility study and financial analysis of the project. Subsequent project management and
coordination was left with LNG. The LMS report stated that: “The School Division’s
consultants and contractors are reputable, and appear to have performed well”.
SOSD senior financial officials did not appear to be as familiar with the financial
dimensions as one might reasonably expect. Almost all requests for financial information and
explanation were acquired from LNG. We would not expect SOSD to have expertise in real
estate and residential land development, however, there does appear to have been an over
reliance by SOSD on its consultant to provide the necessary due diligence regarding
financial monitoring and reporting.
Furthermore, the LMS review noted that SOSD’s income statement is not consistent with the
quality of financial reporting warranted by a commercial venture of this scale and therefore
recommended that SOSD prepare or commission financial statements to be prepared in accordance
with generally accepted accounting principles. Moreover, on March 16, 2005, the PSFB, as part
of its approval for Phase 3 of the project, required SOSD to disclose to the PSFS revenues
and expenses associated with the project by way of a special financial statement upon
conclusion of the project. SOSD responded by stating that accounting for the land development
activities would be done in their 2004/2005 audited financial statement which would include
a note fully disclosing the land development project including all revenues and costs
incurred.
In February 2003 the PSFB approved the disposition of approximately 10 acres by SOSD, subject
to “a final purchase and sales agreement be submitted to the Public Schools Finance Board
prior to the closure of the sale of each property”. However, SOSD submitted signed Lot Sale
Agreements dated in the fall 2003 to PSFB for approval in May 2004. By signing the Lot Sale
Agreements prior to PSFB approval, SOSD may have accepted undue risk, in the event PSFB
approval was not received.
3. Were the transactions financially beneficial to the SOSD?
Commencing In 2001, SOSD purchased approximately 22 acres of land in Swinford Park for the
purpose of acquiring land for a school site (school divisions routinely buy and ‘bank’ land
as future school sites). While a high school sits generally requires no more than 8 to 10
acres, the additional land was acquired (i) to address community concerns regarding access
to the school, and (ii) vendors were only willing to sell their entire parcel of land. SOSD
retained approximately 12 acres and sold the remainder as serviced residential lots through
Lot Sale Agreements.
In response to environmental concerns raised within the community, the SOSD has dedicated
approximately 2 acres for a natural frog habitat and buffer zone. SOSD is planning on using
the remaining 10 acres of undeveloped land for an early/middle years school. Thus the
investment in this land could only potentially be recouped through the sale of the land or
the use of the site for a future school and reimbursement of eligible costs in accordance
with PSFB guidelines.
SOSD intended to “self finance” the cost of servicing the lots, except for the initial use
of $400,000 taken from SOSD’s operating fund. Self financing in this case means that
committed builders would provide progress payments on the lots they were to acquire
which would then be used to pay for the servicing of the lots. However, our review indicates
that due to timing differences, SOSO utilized up to approximately $900,000 from operating
funds for certain periods of time. SOSD did not receive any funding from the PSFB for the
Swinford Park development.
SOSD has stated that it expects to realize “a profit of about $700,000… which sits as a
serviced future school site”. Although we conducted an extensive review of SOSD’s information,
a determination of the final financial outcome cannot be definitively stated as all revenues
have not been realized and expenditures have not been incurred. This situation needs to be
carefully monitored.
4. Did the PSFB conduct an appropriate review of SOSD applications regarding the disposition of this land?
Prior to May 2004
In March 2001 the SOSD advised the PSFS of its purchase of land in the Swinford Park area in
the hope of building a new high school. At the same time, SOSD advised of a development plan
being worked on by SOSD’s consultant regarding such things as sharing costs of upgrading
streets and residential development. The latter, however, did not provide any clear
indication that the street upgrading and residential development would be carried out by
SOSD. The PSFB assumed that references to development costs pertained directly to a future
school site.
On January 20, 2003 the SOSD Superintendent wrote to the PSFB Chair stating that it had
acquired more land than it needed in the Swinford Park property for a school. SOSD was
seeking permission to sell the surplus land and retain all proceeds: “The division would like
to sell this excess land to developers or builders and is exploring its options in this area.
We hope to sell the excess land to developers or builders in the near future”.
On February 26, 2003 the PSFB approved the disposal on the condition that SOSD follow the
normal PSFB disposition of surplus property guidelines, as established by PSFB, and that a
final purchase and sale agreement be submitted to PSFB for approval prior to closure of the
sale for each property. The disposition guidelines, dated October 1992 and developed in
cooperation with school divisions, do not contemplate school division development of
residential lots prior to sale.
On April 3, 2003 a letter from LNG to SOSD and PSFB staff indicated that the land would be
sold on a lot basis. The letter notes that procedures had been developed by PSFB “to sell
surplus school properties in “as is condition” and place all responsibilities for rezoning,
development approvals. etc., upon the successful bidder”. The letter also raised a concern
that a delay in a decision “would defer construction of services by Seven Oaks”. The base
price per lot was stated as being in the $790/front foot range - the letter did not indicate
that this represented the cost of fully-serviced lots rather than raw land.
PSFB members and staff are of the view that prior to May 5, 2004 there was no explicit or
sufficient reference in the documentation provided to the PSFB by SOSD, or information
provided in meetings and phone conversations to indicate that SOSD was undertaking
residential land development in Swinford Park. SOSD, however, is of the view that the
information provided was sufficiently clear (and was intended to be clear) about the
residential land development that SOSD was planning and undertaking for the PSFB to know
what it was doing.
There was no follow-up by the PSFB to enquire about the status of the disposition during the
period April 2003 to May 2004. Furthermore, the few references to development activities
made by SOSD in the documents provided did not cause more question to be asked. The lack of
follow up and inquiry has been explained by PSFB members and staff by the fact that there is
no precedent of this nature and therefore there was a “mindset” that assumed the development
activities referred to with respect to residential lots were being, or would be, undertaken
by a private developer. This explanation notwithstanding, it is clear that PSFB members and
staff should have been more diligent in its review of the documents that were provided
by SOSD regarding this matter.
May 2004 to Present
The Lot Sale Agreements sent to the PSFB on May 3, 2004, and approved by the PSFB on
May 5, 2004, clearly outlines that SOSD was developing residential lots prior to sale.
However, standard PSFB internal operating procedures were not followed with respect to the
May 5, 2004 approval of the Lot Sale Agreements. In fact, the handling of the Agreements
was highly unusual.
The Agreements were not listed as an agenda item and were walked in at the very end of the
May 5, 2004 PSFB meeting. The Lot Sale Agreements clearly outlined the extent of SOSD’s
development activities and that the Agreements had been signed (in contravention of an early
PSFB directive to return with proposed unsigned Agreements). However, PSFB Board members and
the PSFB Executive Director do not recall reading the documents, or who brought the documents
to the Board meeting or how the issue was presented. PSFB members do recall a sense of
urgency relative to a request from SOSD’s legal counsel to hasten the approval to facilitate
completion of the sales through the Land Titles Office.
No analysis of the Agreements was conducted by BSFB staff in spite of the fact that the
documents had arrived at the PSFB office on May 3, 2004 and that the PSFB has never before
been asked to approve a Lot Sale Agreement. In fact, the PSFB Project Leader has stated that
he did not have possession of the documents nor did he retrieve a copy to read after the
documents were approved at the May 5, 2004 PSFB meeting. Standard practice would entail the
preparation and presentation of formal written analysis and recommendations to PSFB members
to ensure they are appropriately aware of the issues. When there Is insufficient analysis,
the standard practice is to defer the item to the next Board meeting. This did not happen.
The Lot Sale Agreements were approved at the May 5, 2004 meeting.
Furthermore, Section V. Clause 3.3 of the PSFB policy guidelines respecting the disposition
of surplus properties requires that before a land disposition Is approved there will be a
meeting between the PSFB and the applicant school division. Such a meeting did not happen in
this case.
Finally, a letter was sent the next day to the SOSD Chair from the PSFB Chair notifying the
SOSD of the PSFB approval of the Agreements. This occurred prior to the ratification of the
motions at the next PSFB Board meeting which is not standard practice.
In September 2004 it was brought to the PSFB’s attention that the land development undertaken
by SOSD may be outside of the legislative authority of SOSD. The PSFB subsequently requested
a financial review and a legal opinion regarding this matter, and on March 16. 2005, the PSFB
approved the final phase of the development with the provision that: “The school division be
advised that no future land development projects will be approved by The Public Schools
Finance Board”. The approval was granted to avoid the potentially serious and negativeconsequences of SOSD not following through on the contractual obligations it had entered into
with builders regarding the development of land in Swinford Park.
On May 4, 2005 the PSFB Chair sent a letter to all school divisions stating that “Please
note that the development and sale of fully serviced residential building lots does not
qualify as an eligible activity. School divisions are prohibited from acting as property
developers under the power granted them In The Public Schools Act.”
Thus, it is clear that until September 2004, the PSFB did not follow standard practice and
procedure regarding the disposal of land in the Swinford Park development. Moreover, the
PSFB did not exercise due diligence regarding SOSD’s request for the disposition of land in
the Swinford Park area. This lack of due diligence is especially surprising given the fact
that approval was sought through the submission of Lot Sale Agreements which was in itself
highly unusual if not unprecedented.
Citizen Complaint
On May 2. 2004 a citizen emailed the Minister of Education, Citizenship and Youth stating
that SOSD was undertaking development activities and questioned whether this was appropriate.
On May 12, 2004. the complaint document was forwarded to the PSFB Executive Director for a
response and a copy was provided to the Director of the Education Administration Services
Branch. A copy of the complaint document was sent to the PSFB Chair who does not recall
seeing it.
Although the PSFB Project Leader had the opportunity to read the complaint document he did
not because he assumed the Executive Director would provide the response. After receiving
the complaint, the PSFB Executive Director phoned the SOSD Secretary-Treasurer to discuss
what the Ministerial response should be but did not ask about the validity of the complaint
raised - specifically whether SOSD was involved in residential lot development activities.
No explanation with respect to SOSD’s land development activities was offered. Furthermore,
there was on investigation of the complaint through a review of internal documents including
the Lot Sale Agreements that were approved by the PSFB on May 5, 2004. No additional
information was brought to the attention of PSFB members despite the recent approval on
May 5, 2004.
A reply was drafted by the PSFB Executive Director which he says was reviewed by the PSFB
Chair. The Chair does not recall seeing the draft response. The draft stated that: “The
matter of community development appears to be a local issue and as such, I would encourage
you to deal directly with the school division and city councilors who have jurisdiction on
community development issues.” The response as drafted by the PSFB Executive Director was
sent to the Minister’s office for the Minister’s signature, which is normal practice. The
Minister’s office was not advised that anything about the complaint warranted further action.
Ratified PSFB Minutes are sent to the Deputy Minister’s office for information and the PSFB
Executive Director may consult with the Deputy Minister on matters of new policy or certain
issues as they arise. This matter was not brought to the attention of the Deputy Minister.
The concern raised by the citizen complaint was not properly investigated. The letter
prepared for the Minister’s signature was incorrect and inappropriate.
5. What Should be done to improve the land disposition review process?
With respect to the land disposition process, we recommend:
1. That the PSFB disposition guidelines be clarified regarding the role and approval
of PSFB in the disposition of land by school divisions.
2. That school divisions report to PSFB annually on all land holdings and any acquisitions.
3. The the PSFB undertake an internal review process to assess the adequacy of internal
processes and reaffirm the importance of following proper procedures in all cases.
4. That a process be established whereby PSFB staff and SFB staff collaboratively review
capital fund transactions and notes of the audited financial statements provided by
school divisions for the purpose of identifying unusual transactions and occurrences.
5. That a formal communications protocol be established between the Deputy Minister’s
office and the PSFB Executive Director’s office that outlines expectations regarding
communication on matters of significance.
With respect to Swinford Park development, we recommend;
1. That the Minister of Education, Citizenship and Youth direct SOSD to provide a plan as to how SOSD will cease all residential land
development in Swinford Park as soon as possible while taking into account the contractual obligations into which it has
already entered.
2. That SOSD commission a special audit upon completion of the Swinford Park development
project that provides a full and transparent accounting of all revenues and expenses related
to the project, and that the audit results be provided to the Minister and be released to
public.
Summary Statement
The transactions dealt with in this report respecting the Swinford Park development are
unusual and complex. following, in summary form, are the most significant findings:
(i) the development activity undertaken by SOSD in Swinford Park is not sanctioned by The
Public Schools Act;
(ii) the SOSD employed external expertise to manage the Swinford Park development but did not
exercise adequate internal oversight;
(iii) determination of the final financial impact cannot be made at this time and
special-prepared audited financial statements will be required; and
(iv) the PSFO did not exercise due diligence regarding SOSD’s request for the disposition of
land in Swinford Park.
It is our hope that this report has provided some clarity and that the recommendations will
help strengthen processes and procedures, clarify roles and responsibilities, and prevent any
future occurrences of this sort.
Appendix - Lot Transfers and Transactions
For the purpose of land development. A Plan of Subdivision can often involve complex
transactions. Once the Plan of Subdivision was finalized, through various agreements, a
total of 87 lots were created in the Swinford Park area.
Of the 87 lots, SOSD hold title to 71 lots. To facilitate the sub-division and re-zoning,
various residents in the area together with a builder, approached SOSD on incorporating some
of their land into the SOSD’s re-zoning plans. This resulted in the creation of 16 additional
lots.
Sixteen of the lots were hold in trust by SOSD only for the purpose of inclusion in the Plan
of Subdivision. Five of the 16 lots were part of another agreement whereby SOSD agreed to
service these 5 lots as a part of a land transfer (or swap as it has been referred to).
LOTS LOTS SOSD
CREATED HELD IN TRUST
LOTS
Carsdale Drive 3 3 -
Woodbine Ave 6 3 3
Swinford Way 23 6 17
Glenboro Place 13 13
Lot 6 Block 2 1 1 -
Wellwood Place 16 - 16
Murray Ave 5 3 2
Grady Bend 20 - 20
87 16 71
As at May 30. 2005, SOSD continues to hold title to 5 lots In the initial phases of the
Swinford Park development and 20 lots in the final phase of this development (i.e. Grady
Bend) pending sales finalization.
The process of transferring the 71 lot titles was outlined in the Lot Sale Agreements between
the SOSD and the purchasers. The Agreements state that: “The Vendor shall retain title to the
lots for and on behalf of the Purchaser and shall transfer title to the lots to the Purchaser
or to any person that the Purchaser designates upon payment of the balance due and owing with
respect to that individual lot.”. For this reason. some lot title transfers are recorded as
being made directly from SOSD to an individual rather than to a builder.
In addition to these lot title transactions. SOSD signed easement agreements with the City of
Winnipeg for a nominal fee of $1 paid by each party to the other. Signing easements is a
normal practice in a development such as this.
