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Plan to sell off Canada’s foreign-mission buildings fizzles

A mansion in Rome that was supposed to reap big real-estate profits for the federal treasury has instead cost taxpayers about $1 million, as a grand plan to cut the operating costs of Canada’s official residences abroad fizzles.

Global Affairs Canada cancelled the sale of its Rome official residence in May, and later moved the ambassador back inside, after spending $312,000 over two years to keep the Villa Grandi vacant and another $850,000 this year to refurbish it.

The opulent building in central Rome, which Canada bought in 1950 for a mere $186,000, was on a 2012 list of 50 diplomatic buildings around the world that the former Conservative government planned to sell as part of its deficit-chopping budget that year.

Canadian embassy, Moscow

Canada has planned to move its embassy out of this crumbling building in Moscow for at least 10 years. Global Affairs Canada has taken out a lease on a new building, but cannot get local approvals for renovations. Meanwhile, the empty building costs about $2.4 million each year in rent. (wikipedia.org)

The exercise was supposed to generate millions in real-estate profits around the globe, some of which would be reinvested in smaller-scale missions, or applied to the federal deficit.

Global Affairs Canada was also supposed to trim its operating budget for diplomatic real estate by at least $3.5 million annually.

But notwithstanding a few spectacular real-estate transactions, the department has been able to trim its operations budget by just $500,000 to date, and has been hit with unexpected renovation bills and expensive leases for empty buildings.

Restrictive rules

The 10,800-square-foot Villa Grandi, with its expansive grounds, was appraised at about $15.5 million, though highly restrictive Italian heritage rules limited buyer interest.

Even so, Canada got two firm offers for the historic building, $10.5 million in February and $11.5 million in April, the latter one arriving just days after the Villa Grandi was taken off the market for reconsideration of the sale.

Global Affairs Minister Stephane Dion then reversed course in the spring — cancelling all plans for a sale — after bureaucrats argued that “the historic and impressive nature of Villa Grandi’s grounds and setting, together with its heritage designation, attest to the irreplaceable nature of a prominent and well-located landmark.”

“Historic considerations and the iconic nature of the property, along with its ties to Canada’s history and our bilateral relationship with Italy, weigh in favour of retaining the property.”

A May 13 briefing note, providing background and outlining options for Dion, was obtained by CBC News under the Access to Information Act.

Historic considerations … weigh in favour of retaining the property.
– Advice from Global Affairs Canada bureaucrats on cancelling the sale of Canada’s official residence building in Rome

The Villa Grandi is named for Count Dino Grandi, who had fascist associations before taking a lead role in overthrowing Mussolini, thereby earning a pardon from the Allied powers after World War II.

The department estimates the annual operating costs for the Villa Grandi at about $300,000. Meanwhile, the ambassador had been living at Canada’s official residence in the Vatican, known as the Villa Laurier, where annual operational costs are about $153,000. Canada’s ambassador to the Vatican had been bumped  to a leased residence elsewhere in Rome.

CBC News has also reported previously on a stalled real-estate deal in Moscow.

Plans to move the Canadian embassy — including the ambassador’s apartment in the current dilapidated structure — to a more modern building have been stymied by a local bureaucracy, which has a reputation for requiring bribes.

Costly vacant building

Canada put the move on hold in 2014, but continues to pay some $2.4 million in rent each year for an empty building on Kursovoy Lane. Meanwhile, the department has paid an Ottawa artist an estimated $81,000 for two art installations for the atrium of the still-unused Kursovoy building, internal documents show.

The global disposal program has nevertheless had some notable successes in the hot real-estate markets of London and Hong Kong.

Canada House London U.K.

Canada has brought together offices that were housed previously in two buildings — Macdonald House and Canada House — at a single site on Trafalgar Square. Macdonald House was sold in 2013 for $530 million. (Tamatisk/Wikimedia)

Macdonald House, Canada’s official residence on London’s Grosvenor Square, was readily snapped up for $530 million in 2013. Some of the profits were put into renovation and expansion of Canada House, the historic high commission on Trafalgar Square, including $200,000 for a grand reopening ceremony.

And the official residence of Canada’s consulate-general in Hong Kong sold in May this year for about $86 million. The sale was below target. The 5,809-square-foot luxury villa, in the posh Jardine’s Lookout area, had been appraised at $100 million.

Despite the mega-deals, a spokesman for Global Affairs Canada confirms the department has achieved only $500,00 of the expected annual savings of $3.5 million in operations, money that was removed from its budget in 2012.

“Operating budget pressures remain at approximately $3 million for this exercise,” said Michael O’Shaughnessy. “These funds have not been restored.”