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The City of WinnipegIndependent Fairness CommissionerSummary report for the period ended June 30, 2018

Strictly Private and ConfidentialAugust 28, 2018

City of Winnipeg185 King Street, 3rd FloorWinnipeg MB R3B 1J1Canada

August 28, 2018

Deloitte LLP360 Main StreetSuite 2300Winnipeg MB R3C 3Z3

Tel: 204-944-3626www.deloitte.ca

Purpose of this report

City Council (“Council”) created the role of the Independent Fairness Commissioner (“IFC”) for the purpose of ensuring that real estate transactions and management services (“Transactions”) are performed in a fair, transparent and open manner. Under the direction of Council, the City Auditor has engaged Deloitte LLP (“Deloitte”) to provide certain services as part of the IFC role through the performance of compliance audits in accordance with the assurance standards of the Chartered Professional Accountants of Canada (“CPA Canada”). To ensure Council’s objectives for the IFC are addressed, a Compliance Framework was developed under the oversight of the City of Winnipeg’s Planning, Property and Development Department (“PP&D”; also referred to as “Management”). This Compliance Framework was used as the basis for the performance of compliance audits by Deloitte on selected Transactions. During the period December 2017 and June 2018 (the “Summary Period”), Deloitte completed compliance audits in connection with 25 real estate and management services Transactions.

The City Auditor has requested that we provide a separate report as at June 2018 summarizing the findings and observations noted during the 25 compliance audits performed during the Summary Period. This report (the “Summary Report”) has been prepared in response to the City Auditor’s request, and is organized into the following sections:

• A summary of the Transactions that were subject to a compliance audit during the Summary Period;

• Summary analysis of key findings or themes observed through compliance audits conducted, as well as a high level discussion of associated implications; and

• Summary recommendations, for Management’s ultimate determinations, that can assist in Management addressing the identified themes, findings, and compliance exceptions noted.

The Summary Report outlines our observations as at June 2018, and we appreciate that Management may have subsequently addressed certain finding and observations, which may be observed during the performance of the next compliance audits to be performed in September 2018.

We would like to take this opportunity to express our appreciation for the cooperation of PP&D and its employees during the performance and completion of the compliance audits.

Yours very truly,

Deloitte LLPChartered Professional Accountants

http://www.deloitte.ca/

ldineen

Dean Schinkel LLP

3 Private and ConfidentialThe City of Winnipeg | Final Report | August 28, 2018This written communication is solely for the City of Winnipeg's benefit, and is not intended to be relied upon by any other person or entity.

Background and purpose

Transaction summary

Transaction listing

Overview

Report Sections

Overview 3

Summary of findings 8

Observations noted 12

Implementation 24

Appendix 26


Background

The following provides an overview of the Independent Fairness Commissioner (“IFC”) role, the Compliance Framework, and background on the transaction compliance audits undertaken by the IFC.

Independent Fairness Commissioner role

Winnipeg’s City Council (“Council”) created the role of the IFC for the purpose of ensuring that real estate transactions and management services (“Transactions”) are performed in a fair, transparent and open manner.

In June 2017, under the direction of Council, the City Auditor engaged Deloitte LLP (“Deloitte”) to provide certain services as part of the IFC role through the performance of compliance audits in accordance with the assurance standards of the Chartered Professional Accountants of Canada (“CPA Canada”). These audits are performed with respect to selected real estate transactions undertaken by the City of Winnipeg’s Planning, Property and Development Department (“PP&D”).

The Compliance Framework

To ensure Council’s objectives for the IFC are addressed, a Compliance Framework was developed under the oversight of PP&D (also referred to as “Management”) through consideration of applicable City of Winnipeg (“City”) by-laws, policies and procedures including PP&D’s internal Real Estate Transaction Management Framework (“RETMF”).

The Compliance Framework is used as the basis for the performance of compliance audits of selected Transactions, and can be subject to revision by PP&D based on evolving requirements. The Compliance Framework as well as compliance of Transactions with the Compliance Framework are the responsibility of PP&D Management.

The current version of the Compliance Framework, utilized for the purposes of compliance audits through June 2018, is Version 1.01 dated March 27, 2018. This version of the Compliance Framework is presented in the appendix to this report.


Transaction summary

Transaction listing

Winnipeg’s City Council created the role of the IFC for the purpose of ensuring that real estate transactions and management services are performed in a fair, transparent and open manner.

Overview | Background and purpose

Transaction compliance audits

Deloitte’s responsibility in the role of IFC is to express an opinion on the City of Winnipeg’s compliance with the Compliance Framework based on our audits of selected transactions undertaken by PP&D.

Compliance audits completed by Deloitte in the role of IFC are conducted in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether PP&D complied with the applicable criteria of the Compliance Framework.

An audit includes examining, on a test basis, evidence supporting compliance with the applicable criteria of the Compliance Framework and includes:1) performing corroborative interviews with City of Winnipeg employees

and representatives who were responsible for conducting the Transaction;

2) examining documentation provided by City of Winnipeg employees; and

3) reperforming transaction specific calculations, where applicable.

We perform our audit procedures based on discussions with PP&D Management and information available as at the date of our review, which occurs prior to a Transaction being presented to the Standing Policy Committee on Property and Development, Heritage and Downtown Development (“SPCPDHDD” or the “Committee”) and/or Council for approval.



Transaction summary

Transaction listing

IFC compliance audits are comprised of seven primary stepsOverview | Background and purpose

Conflict checks are completed by Deloitte to identify any potential independence conflicts between Deloitte and the transacting parties.

Each report on compliance is provided to SPCPDHDD for review in advance of the associated SPCPDHDD/Council meeting, which Deloitte and the City Auditor attend in order to be available to address questions by the Committee.

Transaction documentation is prepared by PP&D staff for internal review by Management, and the current draft of the Administrative report for the Transaction is provided to Deloitte.

Deloitte completes a preliminary review of Transaction documentation, and related findings are drafted by Deloitte.

A draft report on compliance is provided to Management and the City Auditor for review and comment.

Management provides responses to the draft findings, which are included as ‘unaudited management responses’ within the final IFC report. Commentary with respect to findings may be amended in cases where clarification or sufficient evidence of compliance is provided by Management.

The final compliance audit report is issued by Deloitte to the City Auditor for submission to SPCPDHDD and/or Council, as an attachment to PP&D’s Administrative report in connection with the Transaction.

01

07

02

03

04

05

06

Compliance audit process

Our process for completing the compliance audit includes the following:

Nature of reported findings

The findings and compliance exceptions noted through the performance of Deloitte’s audit procedures have been classified into the following categories:

• Criteria met: Those Criteria defined in the Compliance Framework that are applicable to the Transaction and for which no exceptions were noted.

• Exceptions noted: Those Criteria defined in the Compliance Framework that are applicable to the Transaction and for which we have noted exceptions in compliance.

• Not subject to audit: Those Criteria that could not be subjected to audit on the basis of Management’s representation that the related activities have not been performed based on the rationale provided. This rationale provided can be categorized as follows:

1. The criteria could not be subjected to audit as related or preceding criteria were not completed, and as such the applicability of subsequent criteria cannot be determined.

2. The requirements of the criteria in question have not yet been performed, and will be performed after or during approval from the SPCPDHDD; or

3. The criteria was performed under a prior administrative report, and therefore not within the scope of the compliance audit.

• Criteria not applicable: During the course of our test procedures performed, Management represents and confirms that certain Criteria are not applicable to the Transaction, which are therefore not included in the scope of the compliance audit.


84%, $7.0M

16%, $3.0MSummary of Transactionsby risk rating


Transaction summary

Transaction listing

Overview | Transaction summaryDuring the Summary Period we completed compliance audits in connection with 25 Transactions including acquisitions, dispositions, leases, and property management transactions

Value at which the subject property was transacted atOpportunity cost not realized during transaction

Transaction types contemplated in the RETMF and applicable by-laws, policies, and procedures as captured in the Compliance FrameworkTransaction types not specifically contemplated within the RETMF and applicable by-laws, policies, and procedures as captured in the Compliance Framework

Transaction classified as low risk andcomplexityTransaction classified as high risk andcomplexity

Transactions subject to compliance audit

During the Summary Period we completed compliance audits in connection with 25 Transactions, which are summarized to the right and listed in detail on the following page. The findings relating to these compliance audits form the basis for the commentary in this Summary Report.

Transactions subject to compliance audit are identified by PP&D based on guidance from the City Auditor. These transactions are generally provided to SPCPDHDD for approval, with the IFC’s audit report on compliance presented as an attachment to Management’s report.

The Compliance Framework was developed by Management in contemplation of four transaction types, as follows:

• Acquisition: Purchase of land by the City;

• Disposition: Sale of surplus land by the City;

• Lease: Lease agreements, where the City is lessee; and

• Property management: Lease agreements, where the City is the lessor.

• Lease Transactions where the City of Winnipeg is the lessee are completed by the Property Management Branch (“PMB”), and all other Transactions are completed by the Real Estate Department (“RED”). Both of these groups operate as divisions within PP&D.

• We note that other types of Transaction were provided to Deloitte for IFC audit. These included license agreements, offers of compensation, and encroachment agreements. We note that these transaction types are not specifically contemplated within the Compliance Framework. These Transactions are audited based on criteria applied with direction from Management.

• Certain disposition and lease transactions are entered into by the City at non-market rates. The foregone value (“opportunity cost”) associated with these arrangements is reflected in our summary of transaction values to the right.

• Management applies a risk and complexity rating to each Transaction subjected to audit, as either “low” or “complex” (high), which is provided to the IFC for consideration and inclusion within the compliance audit report.

76

3 3 3

12

Disposition Lease - Lessor Acquisition Lease - Lessee Encroachmentagreement

License Offer ofcompensation

Tra

nsac

tion

coun

t

Summary of Transactions by type

$0.0

$2.0

$4.0

$6.0

Lease - lessee Disposition Lease - lessor Acquisition Offer ofcompensation

Encroachmentagreement

LicenseTra

nsac

tion

valu

e (C

$M)

Summary of Transaction type by value



Transaction summary

Transaction listing

Overview | Transaction listingTransactions subjected to compliance audit during the Summary Period are presented below

# Transaction IFC report date Transaction type PP&D division Risk rating

1 Fultz1 November 20, 2017 Disposition RED Low

2 Multiple properties1 November 20, 2017 License RED Low

3 In-camera Transaction2 January 1, 2018 Offer of compensation RED Low

4 1057 Logan January 1, 2018 Lease - Lessor RED Low

5 255 Hamilton January 1, 2018 Disposition RED High

6 In-camera Transaction2 February 12, 2018 Acquisition RED Low

7 44 Higgins February 12, 2018 Disposition RED Low

8 The Market Lands April 25, 2018 Disposition RED High

9 311 Ross & 346 Pacific April 27, 2018 Disposition RED High

10 999 Sargent March 29, 2018 Lease - Lessor RED Low

11 Queen Elizabeth Way (SWRT1) March 29, 2018 Disposition RED Low

12 Southwest Rapid Transitway (SWRT1) March 29, 2018 Acquisition RED Low

13 500-234 Donald March 29, 2018 Lease - Lessee PMB Low

14 101 Creek Bend March 29, 2018 Disposition RED Low

15 Bison Butte Mountain Biking Facility April 25, 2018 Lease - Lessor RED Low

16 489 London May 28, 2018 Lease - Lessee PMB Low

17 1880 Alexander May 28, 2018 Lease - Lessor RED Low

18 In-camera Transaction2 May 28, 2018 Offer of compensation RED Low

19 Shahi May 28, 2018 Encroachment agreement RED Low

20 811 St. Paul May 28, 2018 Lease - Lessor RED Low

21 Brookside May 28, 2018 Encroachment agreement RED Low

22 121-123 Princess June 13, 2018 Encroachment agreement RED Low

23 1100 College June 13, 2018 Lease - Lessor RED Low

24 In-camera Transaction2 June 13, 2018 Acquisition RED High

25 1450 Mountain June 13, 2018 Lease - Lessee PMB Low

Notes

1. Transactions 1 and 2 were not presented to the SPCPDHDD as they were the initial compliance audits completed to assist in developing and refining the audit reporting process.

2. The noted Transactions were presented to SPCPDHDD for approval in-camera.


Findings matrix

Findings summary Trends

Summary of findings

Report Sections

Overview 3



Implementation 24

Appendix 26


Findings matrix


The findings for each Transaction subjected to compliance audit are summarized belowSummary of findings | Findings matrix

Finding summary matrix

The findings for the 25 individual Transactions subject to compliance audit during the Summary Period have been summarized in the matrix below. Although the Compliance Framework includes 70 criteria in total that can be subject to compliance audit (see attached Appendix), the summary matrix below outlines only the criteria that were applicable across the population of the 25 Transactions. Criteria for which an exception was noted (i.e., criteria not met) are shaded dark red, while criteria not subjected to audit are highlighted separately. For audit purposes and where an exception is noted, it was determined that sufficient and appropriate evidential matter did not exist or was not adequately documented to support compliance (i.e., criteria met or not met, without a further analysis as to significance). However, the relevance or significance of a particular criteria may vary based on the nature of a Transaction, and it is Management’s responsibility to provide sufficient and reasonable explanation of the significance of specific areas of non-compliance noted and corrective actions necessary, where required.

Exception noted

Not subject to audit as preceding criteria were not completed

Criteria met Criteria not applicableNot subject to audit as the criteria was performed under a prior administrative report

Not subject to audit as the criteria requirements are to be addressed after SPCPDHDD approval

1.01

1.03

1.04

2.01

2.02

2.03

2.04

2.05

2.06

2.07

2.08

2.09

2.10

2.11

2.12

2.13

2.14

3.01

3.02

4.01

5.01

6.01

6.02

6.03

7.01

7.02

7.03

7.04

7.05

7.06

8.01

8.02

8.05

9.01

10.0

111

.01

11.0

211

.03

11.0

411

.05

11.0

611

.07

11.0

812

.01

13.0

115

.01

16.0

117

.01

18.0

118

.02

18.0

318

.05

18.0

618

.08

19.0

320

.01

Fultz - 1. x x x x x / x x x x x x x x x x x x e 2 e / / x / / / / / e x / / x / / / / / / / / / e x / / o / / / x / x / xMultiple properties - 2. x x x x x x / / / / / / / / / / / x / 2 / / / / / / / / / / x / / x / / / / / / / / / / / / / / / / / / / / x x

In-camera Transaction - 3. x 1 1 x / / x x x x x e e e / e e 1 1 2 / / / / 1 / / / / / x / / x 1 1 1 1 1 1 1 1 1 / / / / / / / / / / / / x1057 Logan - 4. x x x x x / / / / / / / / / / / / x e 2 / / / / / / / / x / e e / x / / / / / / / / / / / / / / / / / / / / x x

255 Hamilton - 5. x x x x / / x x x x x e e e / e e x e 2 e / / x / / / / / o x x o x / / / / / / / / / e x / o x / / / o o / / xIn-camera Transaction - 6. x x x x / / x x x x x x e x / e e x o 2 / x / / x o o o / / e e / x / / / / / / / / / / / / / / e / / / / / / x

44 Higgins - 7. x x x e / / x / / / x x e e / e e e e 2 e / / e / / / / / e x e o x / / / / / / / / / e e / o / / / / / o / / xThe Market Lands - 8. x x x x x / x o o o o o o o o o o e x 2 e / / x / / / / / e x x x / / / / / / / / / x x 2 / x / / / / / / o x

311 Ross & 346 Pacif ic - 9. x x x x / / x o o / x x e e x e e e e 2 e / / x / / / / / e x x / x / / / / / / / / / x x 2 / x / / / / / / o x999 Sargent - 10. x x x x x x x o o o o o o o o o o x x 2 / / / / / / / / x / x e / e / / / / / / / / / / / / / / / / / / / / e x

Queen Elizabeth Way (SWRT1) - 11. x x x x x / x o o o o o o o o o o x x 2 e / / e / / / / / e e / / x / / / / / / / / / e x / / / / / / / / x / xSouthw est Rapid Transitw ay (SWRT1) - 12. x x x x x / x x x x x x e e / e e x / 2 / e / / e / / / / / e / / x x / / / / / / / / / / / / / / / / / / x / x

500-234 Donald - 13. x x x x x x x o o o o o o o o o o x o 2 / / / / / / / / e / x e / e x / / / / / / / / / / / / / / / / / / / / x101 Creek Bend - 14. x x x x x / x o o o o o o o o o o x o 2 e / / x / / / / / o x e o x / / / / / / / / / e x / e / / x o x / / / x

Bison Butte Mountain Biking Facility - 15. x e x x e / / / / / / / / / / / / x e 2 / / / / / / / / x / x e / e / / / / / / / / / / / / / / / / / / / / e x489 London - 16. x x x x x x x o o o o o o o o o o x o 2 / / / / / / / / x / x e / x x / / / / / / / / / / / / / / / / / / / / x

1880 Alexander - 17. x e x x x / x o o o o o o o o o o x e 2 / / / / / / / / x / x / / x / / / / / / / / / / / / / / / / / / / / e xIn-camera Transaction - 18. x 1 1 1 1 / 1 1 1 1 1 1 1 1 1 1 1 1 1 2 / / / / 1 / / / / / / / / x 1 1 1 1 1 1 1 1 1 / / / / / / / / / / / / x

Shahi - 19. x x x x / / x / / / e e e e / e e x o 2 / / / / / / / / e / / / / x / / / / / / / / / / / / / / / / / / / / / x811 St. Paul - 20. x x x x x / x x e 2 / / / / / / / / x / x / / x / / / / / / / / / / / / / / / / / / / / e x

Brookside - 21. x x x x x / x x 2 / / / / / / / / x / / / / x / / / / / / / / / / / / / / / / / / / / / x121-123 Princess - 22. x x x x x / x x 2 / / / / / / / / x / / / / x / / / / / / / / / / / / / / / / / / / / / x

1100 College - 23. x x x x x / x x 2 / / / / / / / / x / x / / x / / / / / / / / / / / / / / / / / / / / x xIn-camera Transaction - 24. x x x x / / x x x x x x e e / e e x / 2 / e e / e / / / / / x e / x x / / / / / / / / / / / / / e / / / / / / x

1450 Mountain - 25. x x x / / x / / / / / / / / / / / x / 2 / / / / / / / / e / e e / e x / / / / / / / / / / / / / / / / / / / / x

Applicable criteria

Tra

nsa

ctio

ns

sub

ject

to

co

mp

lian

ce a

ud

it


Findings matrix


Across the 25 compliance audits completed during the Summary Period, 53% of applicable criteria were not met

Summary of findings | Findings summary

Commentary

• Overall, across the 25 Transactions subjected to audit during the Summary Period, 53% of applicable criteria were not met (exception noted), with an additional 17% of criteria not subjected to audit as preceding criteria were not sufficiently met.

• Overall 12% of criteria were identified as being not subject to audit due to either the criteria being assessed under a prior administrative report, or the criteria was indicated by Management to be addressed after SPCPDHDD approval.

24

11

10

10

17

16

9

15

16

12

12

16

11

14

7

13

10

3

8

11

10

10

12

15

7

1

5

4

3

11

3

10

10

11

14

11

10

1

14

27

1

1

1

1

1

1

1

2

2

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

4

5

3

8

6

13

3

8

3

5

7

3

4

6

1

3

7

2

9

4

Fultz - 1.

Multiple properties - 2.

In-camera Transaction - 3.

1057 Logan - 4.

255 Hamilton - 5.


44 Higgins - 7.

The Market Lands - 8.

311 Ross & 346 Pacific - 9.

999 Sargent - 10.

Queen Elizabeth Way (SWRT1) - 11.

Southwest Rapid Transitway (SWRT1) - 12.

500-234 Donald - 13.

101 Creek Bend - 14.

Bison Butte Mountain Biking Facility - 15.

489 London - 16.

1880 Alexander - 17.


Shahi - 19.

811 St. Paul - 20.

Brookside - 21.

121-123 Princess - 22.

1100 College - 23.


1450 Mountain - 25.

Summary of findings of applicable criteria

Exception notedNot subject to audit as preceding criteria were not completedNot subject to audit as the criteria requirements are to be addressed after SPCPDHDD approvalNot subject to audit as the criteria was performed under a prior administrative reportMet


Findings matrix


There has been limited evidence of improvement in the level of compliance over the duration of the Summary Period

Summary of findings | Trends

Commentary

The adjacent table summarizes the running average of the percentage of applicable criteria found to be either not met or not subjected to audit over the Summary Period.Additional summary observations include:

• Across the 25 compliance audits performed over the Summary Period, 70% of applicable criteria were either not met or could not be subjected to audit due to insufficient proceeding criteria being met. The trailing trend (illustrated by the green line in the exhibit) has demonstrated consistent compliance themes over the Summary Period.

• Across all audited Transactions, we have noted the following:

• 18% of criteria were met;

• 53% of criteria were not met;

• 17% of criteria were not subject to audit as preceding criteria were not completed;

• 7% of criteria were not subject to audit as the criteria requirements are to be addressed after SPCPDHDD approval; and

• 5% of criteria were not subject to audit as the criteria was performed under a prior administrative report

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Fultz

- 1.

Mul

tiple

pro

perti

es -

2.

In-c

amer

a Tr

ansa

ctio

n - 3

.

1057

Log

an -

4.

255

Ham

ilton

- 5.

In-c

amer

a Tr

ansa

ctio

n - 6

.

44 H

iggi

ns -

7.

The

Mar

ket L

ands

- 8.

311

Ross

& 3

46 P

acifi

c - 9

.

999

Sarg

ent -

10.

Que

en E

lizab

eth

Way

(SW

RT1

) - 1

1.

Sout

hwes

t Rap

id T

rans

itway

(SW

RT1

) - 1

2.

500-

234

Don

ald

- 13.

101

Cree

k Be

nd -

14.

Biso

n Bu

tte M

ount

ain

Biki

ng F

acilit

y - 1

5.

489

Lond

on -

16.

1880

Ale

xand

er -

17.

In-c

amer

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ansa

ctio

n - 1

8.

Shah

i - 1

9.

811

St. P

aul -

20.

Broo

ksid

e - 2

1.

121-

123

Prin

cess

- 22

.

1100

Col

lege

- 23

.

In-c

amer

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ansa

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4.

1450

Mou

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n - 2

5.

Summary of trailing average of findings

Not subject to audit as preceding criteria were not completedNot subject to audit as the criteria requirements are to be addressed after SPCPDHDD approvalNot subject to audit as the criteria was performed under a prior administrative reportException notedCriteria met


Report Sections

Overview 3



Implementation 24

Appendix 26

Overview Themes identified

Observations noted


Several themes appear to be contributing to non-complianceObservations noted | Overview


Overview commentary

Deloitte conducts the compliance audits in accordance with Canadian generally accepted auditing standards. Those standards require that we obtain reasonable evidential matter supporting compliance, which would be primarily evidenced by file documentation provided by City of Winnipeg employees. Should that evidential matter not exist or be sufficiently available at the time of audit, an exception would be noted in our compliance audit report. We have summarized below several recurring themes that appear to be contributing to areas of non-compliance noted within the compliance audits undertaken during the Summary Period. These include the following:

1. Certain criteria within the Compliance Framework have consistently not been met, due to either insufficient file documentation or lack of evidence of compliance with the associated by-laws, policies and/or procedures.

2. Certain aspects of the Compliance Framework do not align with current practice adopted by PP&D, and adjustments to the Compliance Framework may be required.

3. Certain types of Transactions are not specifically contemplated in the Compliance Framework.4. Certain planned process improvements noted as “in process” have continued to be exceptions for the duration of the Summary Period.5. Certain aspects of the RETMF warrant further clarification.

The focus of this Summary Report is intended to identify at a high level, the key themes and findings that have been noted over the course of the Summary Period from a compliance perspective and does not represent a review of the RETMF, City by-laws, policies and procedures. For each finding noted in the Summary Report, we have highlighted potential associated implications for explanatory purposes, as well as various recommendations in response to the identified findings. This commentary is based on our experience performing compliance audits through the Summary Period, and does not contemplate all potential implications or outcomes that have the potential to arise. Although recommendations have been provided for Management’s consideration, it is the responsibility of Management and their ultimate determinations as to actions taken to address exceptions noted or related themes observed.

Consistent with the reporting standards under which these audits are performed, each criterion with respect to a Transaction is considered to be either in compliance, or not in compliance with the Compliance Framework, with no weighting or consideration provided in respect to the degree of compliance. While certain findings of non-compliance may represent basic shortfalls in documentation, in the absence of further information, we are unable to assess the significance of the compliance exceptions. We further note that certain criteria were identified as “not subject to audit” due to insufficient preceding criteria being completed. In these instances, further exceptions may have been identified if audit procedures were applied to those criteria not subject to audit. Ultimately, it is Management’s responsibility to provide sufficient and appropriate explanation of the specific areas of non-compliance noted for specific Transactions prior to final approval of a Transaction by SPCPDHDD.

Additional implementation considerations and recommendations are provided in the “Implementation” section below and are viewed as an integral part of ensuring the ongoing monitoring and related actions taken to address the Summary Report findings. As noted previously, although there are specific areas where Deloitte and the City Auditor can review management’s documentation and provide observations associated with Management’s implementation plans associated with this Summary Report, it is ultimately the responsibility of Management based on their determinations as to actions taken to address its ongoing compliance requirements.


We have observed that in numerous instances, the objectives of the RETMF could be met with existing tools, templates, and processes outlined in the RETMF, yet that these appear to have not yet been adopted into practice. We recommend that Management give consideration to providing additional training to file preparers in the use of these tools, to ensure they are appropriately completed as part of file review. We have identified further recommendations below in this regard.

1. Certain criteria within the Compliance Framework have consistently not been met, due to either insufficient file documentation or lack of compliance with the associated by-laws, policies and/or procedures

Observations noted | Themes identified


Observation Implication Recommendation

1.1 Administrative reports and Complete Reporting Checklists related to Transactions do not specifically meet all of the documentation requirements as prescribed by the RETMF.

The RETMF outlines standards for complete reporting within administrative reports and Complete Reporting Checklists suggestedto represent minimum requirements tofacilitate fair, transparent, and open communication to relevant stakeholders. A failure to meet these requirements presents a risk of inaccurate or incomplete information being provided to SPCPDHDD and/or Council as the basis for decision making.

Management should consider the following:• Additional ongoing training at regular intervals to ensure file

preparers are versed in how to appropriately address specific items and related documentation in the Complete Reporting Checklist.

• Identify a process for Management to contact the auditor to discuss any items of uncertainty identified as part of their review as it relates to provided sufficient and appropriate audit evidence.

1.2 There is a lack of evidence of Management review of the Administrative report and Complete Reporting Checklist prior to finalizing and submitting the Transaction for approval by SPCPDHDD/Council.

There is a risk that Management has not completed a sufficiently thorough file review prior to submitting a Transaction for approval, in order to ensure that all required procedural elements have been appropriately completed or that all relevant information pertaining to the file has been considered and disclosed, as appropriate.

• Management should consider how to ensure that documentation of diligence associated with its review of the draft administrative report, Complete Reporting Checklist, and related attachments against the RETMF requirements is completed prior to submitting the administrative report to SPCPDHDD/Council for approval.

• Management should consider where modifications to the Complete Reporting Checklist template may be required to provide for the documentation of their review and approval of these documents, prior to submission.

1.3 Appraisals are regularly not completed as required by the RETMF, and the rationale for not completing an appraisal is not documented in the Transaction file.

There is a risk that transactions are being undertaken without sufficient understanding of the value of the property being transacted, resulting in an increased potential for unfavourable arrangements to the City.

• Management should consider how it can evidence that the appraisal requirement is considered for all Transactions. A standardized template (the “Transaction Appraisal Template”) is an example of what can be created to provide documentation and evaluation by the Appraisal Branch of the rationale where it is deemed an appraisal is not required.






1.4 Documentation regarding the rationale for the use of an internal vs. external appraiser, the form of appraisal, and the reasonable appraiser test is not documented.

There is a risk that transactions are being proposed without a sufficient level of investigation being undertaken with respect to the value of the property being transacted, resulting in an increased potential for an inappropriate appraisal value to be relied on for decision making purposes.

• Management should consider if a standardized template should be created to assist in the documentation of the rationale relating to each of the considerations noted in our observation, as well as evidence of approval of the associated determinations by Management and the Appraisal Branch (as required by the RETMF). This template should be developed with consideration to the level of documentation and rigor of analysis that would be appropriate to satisfy the intent of the RETMF.

1.5 Where an external appraiser is deemed to be required, the use of a competitive procurement process is not undertaken as prescribed by the RETMF, or documentation of the appraisal branch’s selection of a pre-approved appraiser is not retained.

There is a risk that transactions are being undertaken without sufficient understanding of the qualifications or independence of the external appraiser.

• The Transaction Appraisal Template should include a requirement to document, where an external appraiser is required, the Appraisal Branch’s considerations regarding:

• Management’s considerations relating to the use of a competitive procurement process and engagement of Materials Management in the selection of an external appraiser, in accordance with the RETMF; and

• In cases where an external appraiser was selected from the pre-approved list, confirmation of the appraiser’s pre-approval with respect to the particular type of appraisal required.






1.6 There is a lack of evidence that an appraisal has been reviewed by an accredited member of the Appraisal Institute of Canada (“AIC”) and a member of RED/PMB, in a format consistent with RETMF requirements.

There is a risk that appraisals contain errors, omissions, factual discrepancies or were not prepared in accordance with appropriate appraisal methodology and that these errors were not identified through appropriate review, leading to a misleading value conclusion.

• Management should consider how the Complete Reporting Checklist should be amended to provide for documentation of review of the property appraisal by an accredited member of the AIC as well as a member of RED or PMB (as applicable to the Transaction). This documentation should include the name of the reviewer, date of review, verification that the form of documentation is compliant with the RETMF, as well as evidence of the reviewed document in the file.

1.7 Market Analyses performed by PMB do not fully satisfy the requirements of the RETMF.

There is a risk that transactions are being undertaken without sufficient understanding of the relative costs of a proposed lease relative to alternative comparable properties in the market, resulting in an increased potential for unfavourable arrangements to the City.

• Management should consider developing a standardized market analysis template to ensure that a consistent approach is utilized, and that the analysis completed is appropriate and sufficiently thorough in every instance.

• PMB should ensure that the Client department completes the Client Questionnaire template provided in the RETMF.

1.8 Information Circulars are often not issued to all required parties as required by Appendix D of the RETMF.

There is a risk that Transactions are being carried out without the full knowledge and approval of all relevant stakeholder departments/entities.

• Management should consider formalized and documented guidelines that are clear as to the required recipients of Information Circulars under various applicable circumstances.

• The RETMF Complete Reporting Checklists should be amended to include documentation of responses received to Information Circulars.

1.9 Environmental liability is often not clearly defined in lease and property management transactions.

There is an increased risk that the City may become exposed to environmental liabilities as a result of actions by a third party tenant.

• The terms and conditions template provided by Legal Services for use in these Transactions should be reviewed with Management to ensure the objectives of the RETMF are met, and to ensure the corresponding evidence required is retained within file documentation.






1.10 Evidence of review and final approval of legal documentation pertaining to Transactions, including sign-off on final amendments to Terms & Conditions, are often not documented in the file.

There is a risk that final approval is not being obtained from Legal Services, or that the legal terms and conditions contemplated within an Administrative report do not reflect their final approved form.

• Management and Legal Services should consider how it can formalize a process to ensure that Legal Services’ confirmation and approval of transaction legal documentation in its final form is documented and retained in the Transaction file.

1.11 The Risk and Complexity tool is frequently not completed, reviewed, and/or included in file documentation prior to the Transaction being submitted to SPCPDHDD or Council for approval.

There is a risk that Transactions will be assigned an inappropriate risk rating, leading to procurement practices that are not aligned with the actual level of complexity and risk associated with the Transaction (e.g., absence of competitive bid process or lower than appropriate levels of involvement by Materials Management).

• Management should ensure that a Risk and Complexity tool is completed, reviewed, and retained within each Transaction file, as required by the RETMF.


We have noted several instances where the criteria outlined in the Compliance Framework do not align with the nuances of particular practices followed by PP&D. In certain of these instances, the Compliance Framework may require adjustment to reflect these operational realities, while ensuring that the objectives of the RETMF are maintained.

2. Certain aspects of the Compliance Framework do not align with current practice adopted by PP&D, and adjustments to the Compliance Framework should be considered where appropriate.



Observations Implication Recommendation

2.1 Information Circulars are required to be sent to all Departments, Utility Agencies, and the Ward Councilor prior to the Transaction being submitted for approval.

Management has indicated this is not common practice for Transactions other than dispositions and leases.

The RETMF and Compliance Framework may not align with the operational realities and practices of PP&D, resulting in exceptions being noted in IFC reviews despite standard approved protocol being followed by PP&D.

• Management should formalize and document clear guidelines as to the required recipients of Information Circulars under various applicable circumstances and types of transaction.

2.2 Management has indicated that an appraisal is not required for all types of Transaction due to Council Policies and by-laws that stipulate rents for certain Transactions, such as encroachment agreements.

• A review as to the relevance of an appraisal with respect to particular types of transaction should be undertaken by PP&D. To the extent that it is agreed and determined appropriate that an appraisal would not be warranted for a specific Transaction or circumstance, the RETMF should be amended to provide for these situations.

2.3 Criterion 4.01 of the Compliance Framework, related to the approval of the Transaction under the appropriate delegation of authority, relates to a phase of the Transaction process that occurs after the completion of the compliance audit.

• Management should consider an amendment to the Framework which removes this criterion, and consider the implementation of an alternate process, if required, to ensure compliance with the criterion.


During the Summary Period we were provided several Transaction types which were not specifically contemplated within the RETMF or Compliance Framework. As a result, there is insufficient formalized guidance that exists with respect to the specific policies, procedures, by-laws, or aspects of the RETMF that would apply to these transactions.

3. Certain types of Transactions were not specifically contemplated within the Compliance Framework




3.1 Of the 25 Transactions audited, 6 Transactions were not directly contemplated in the RETMF. These Transaction types include:

• Offer of compensation: Transactions that relate to the compensation of a third party by the City due to the outcome of a prior real estate transaction conducted by the City (e.g., damages done to an adjacent property as a result of a City real estate transaction, and final compensation related to an expropriation).

• Encroachment agreement: An agreement permitting the encroachment of a third party on City-owned real estate.

• License agreement: The licensing of City-owned real estate to a third party for use for use other than inhabiting the area.

As the RETMF and Compliance Framework do not provide specific guidance regarding encroachment and licensing agreements, lease criteria are generally applied as deemed applicable by Management. Further, we understand that only some criteria related to complete reporting are applicable to offers of compensation. Given the RETMF and other applicable City policies, by-laws, and directives may not be fully applied, there is a risk that the objectives of the RETMF may not be fully met for these Transactions.

• These transaction types should be reviewed in light of the RETMF as well as other applicable City by-laws, policies, and procedures to determine the appropriate criteria to ensure a Transaction is completed in a fair, transparent and open manner.

• Management should formalize and document these criteria through an amendment to the Compliance Framework.


Management has cited several instances where the RETMF is in the process of being implemented, and as such the criteria of the Compliance Framework are not capable of being fully met as of this writing.

4. Process improvements noted as “in process” have continued to be exceptions for the duration of the Summary Period




4.1 A recurring theme noted within Management’s unaudited comments within the individual compliance audit reports is that the RETMF has not been fully implemented as it is part of an ongoing process.

The objectives of the RETMF cannot be fully achieved if there continues to be numerous areas of non-compliance of certain criteria due to in part to certain aspects of the RETMF having not yet been implemented.

• In future instances where PP&D attributes non-compliance to in-process improvements related to the RETMF, Management should provide a clear implementation timeline with respect to the deficient item(s) in their unaudited responses. This implementation timeline should be formalized and progress against it monitored by City Audit.

4.2 The Tracking Database has not yet been implemented.

The RETMF prescribes the implementation of a tracking database to flag when real estate transactions require actions to be taken or decisions made. The absence of this tool prevents the desired level of monitoring disclosure to interested stakeholders as contemplated in the RETMF.

• A review of the current status of the Tracking Database and requirements to complete and implement the database should be undertaken. This implementation process should be formalized and progress against it monitored by City Audit.


We have identified several instances where the RETMF and Compliance Framework require further clarification to support compliance by Management. In certain cases, these documents are not explicitly clear with respect to what is required to achieve compliance. In other cases, the objectives of the RETMF may not be fully met due to insufficient clarity or prescriptiveness within the guidelines contained in the RETMF.

5. Certain aspects of the RETMF require further clarificationObservations noted | Themes identified



5.1 Market analysis requirements are not clearly defined, allowing potential for varying interpretations of what is required in selecting a property, including the following:

• Requirements to demonstrate completeness of alternative property searches.

• Requirements to verify total costs.

• Requirements to update analysis’ for new information.

• Requirements to apply competitive procurement rules to capital leasehold improvements.

• The form of analysis, impacting the comparability of terms and conditions.

• Specific qualitative factors to be considered, and discussion of how they are factored into the analysis.

• Client department requests, and the weighting of consideration provided to them.

The RETMF’s description of the elementsrequired for a market analysis is not sufficiently detailed to ensure a structured, robust and repeatable form of analysis.

This increases the risk that market analyses relied on for decision making are not sufficiently detailed or comparable in their scope or analysis, increasing the risk of certain key information not being identified, investigated or communicated.

A standard market analysis template should be created that clearly outlines and describes the full scope of inputs, analyses and disclosures required for a complete market analysis. These include, but are not limited to:

• All criteria presented in the RETMF related to various occupancy costs on a total basis or cost per square foot;

• Total estimated leasehold costs per year;

• Total expected cost to the City for each specific location;

• The Client Requirements Questionnaire in Appendix I of the RETMF should be required to be submitted with all client department requests for a property from PMB and RED; and

• Amendments to the RETMF for the deficiencies observed should be considered by Management.

• We also recommend that certain procedural elements associated with the completion of a market analysis, such as the process for undertaking a market scan, are clearly formalized within the template.





5.2 The RETMF does not provide sufficiently detailed guidance with respect to required analysis or reporting requirements for non-monetary transactions or when considering transaction opportunity costs.

We have noted that in certain cases PP&D has disclosed an estimate of the opportunity costs of a Transaction, but this figure is not supported by an appraisal analysis.

There is a risk that decision makers to these transactions will not be provided with sufficient or adequately supported information with respect to the opportunity cost element of the proposed transaction.

• Appraisal requirements with respect to non-monetary or non-market transactions should be formalized in order to clarify the conditions that would warrant an appraisal to be performed (e.g. driven by nature of transaction or order-of-magnitude estimate of value).

• Appraisal requirements and complete reporting requirements related to opportunity costs and non-monetary Transactions should be reviewed by PP&D to ensure the objectives of the RETMF are fully met, and the RETMF amended accordingly.

5.3 We noted instances within certain Transactions that there are certain values that may fall within the scope of the overall transaction, but not within the scope of appraisals or market analyses (e.g., offers of compensation).

While not contemplated by an appraisal, these costs are still relevant and at times significant. We note the RETMF does not specifically address these additional costs as it focuses primarily on appraisals as a form of valuation, and that further clarity regarding the scope of the RETMF, investigation requirements, and compliance audits with respect to these elements is required.

There is a risk that not all compensation elements associated with a Transaction are adequately investigated, documented, and/or disclosed.

We note that in certain situations such as leases, property management, and offers of compensation, this can represent a significant portion of the Transaction value.

• The RETMF competitive procurement guidelines in Appendix D and F should be reviewed by PP&D, and revised to ensure that these elements of compensation are appropriately analyzed and disclosed to decision makers.





5.4 Several criteria included in the Risk and Complexity Tool are subjective to measure based on the guidance included in the tool.

Examples of such criteria include the weighting of the socio-economic considerations on a number scale, ranking of the size of the Transaction to the relative Transaction Portfolio, and whether the asset is considered a strategic asset.

There is a risk that Transactions will be assigned an inappropriate risk rating, leading to procurement practices that are not aligned with the actual level of complexity and risk associated with the Transaction (e.g., absence of competitive bid process or lower than appropriate levels of involvement by Materials Management).

• The criteria and guidance of the risk and complexity tool should be reviewed and amended as appropriate by Management to ensure that the guidance included in the tool is sufficiently clear, and documentation as to the specific ratings of each section are required to a level such that an individual with a reasonable and comparable understanding of the Transaction could come to the same conclusion for each individual criteria.

5.5 The rationale for not completing an appraisal is not required to be included in Management’s administrative report to SPCPDHDD and Council.

There is an increased risk that a material change in decision making could occur due to incomplete or inaccurate information being provided to the decision makers as the result of an appraisal not being performed. As such it is reasonable that the explanation as to the reason of an appraisal not being included in file documentation should also be included in the administrative report provided to SPCPDHDD/Council.

• The Complete Reporting requirements within the RETMF (Appendix B) should be amended to require disclosure of the rationale for not completing an appraisal to be reported to SPCPDHDD/Council.


Implementation

Implementation

Report Sections

Overview 3



Implementation 24

Appendix 26


Implementation

Additional review and follow-up is required to ensure the objectives of the RETMF are metImplementation

Additional implementation considerations.

As noted within the ongoing compliance audit reporting process, the Compliance Framework that is used as the basis for the performance of compliance audits of selected Transactions can be subject to revision by PP&D based on evolving requirements. This provides a level of flexibility to ensure the overall objectives related to the creation of the IFC role continue to be addressed for future Transactions. Accordingly, and in addition to the specific recommendations identified in response to the summary themes identified, we recommend that certain additional activities are considered to provide for the ongoing review and monitoring that is required to enable the appropriate future revisions to the Compliance Framework, as well as the necessary process improvements identified. The activities should also be considered by Management with the goal of ensuring alignment between all relevant stakeholders and departments as they are considered within the implementation process. The activities include the following:

1. A debrief session with relevant members of Management, City Audit, and Deloitte to facilitate a detailed discussion regarding the requirements of certain criteria where compliance has consistently not been achieved.

2. In all instances where it is noted that an amendment to the RETMF or development of a template may be appropriate, we recommend that all such amendments are reviewed by City Audit, the Director of PP&D, Deloitte, key City Departments (such as Public Works, Water and Waste) and any other entities or individuals deemed appropriate by Management prior to the amendment being finalized, with all changes disclosed to the SPCPDHDD.

3. The development of a detailed timeline by Management, with review by the City Auditor, which clearly delineates responsibilities, actions and associated target dates for implementation of changes required to address:

• aspects of the Compliance Framework and/or RETMF where implementation has been identified by Management as “in progress”

• actions undertaken to address the findings and themes included in this Summary Report

• other process changes and amendments further identified in the debrief session noted above

4. Regular follow-up and monitoring by the City Auditor with respect to Management’s progress in the implementation of recommendations completed at pre-defined intervals, with implemented progress documented and communicated to the Audit Committee through the Quarterly Report Card process, as well as the SCPPDHDD and/or Council as appropriate.

5. A feedback process should be implemented to understand and investigate future conditions, which may or may not have been contemplated in this Summary Report, where non-compliance is identified by the IFC in future compliance audits. This feedback process can be incorporated into the ongoing monitoring process associated with the implementation of the recommendations included in this Summary Report.


Compliance Framework

Appendix

Report Sections

Overview 3



Implementation 25

Appendix 26



Version 1.01 of the Compliance Framework is presented belowAppendix | Compliance Framework

Criteria Description

1. Information reported to Council or delegate with respect to the Transaction was complete

1.01 Reporting to Council has been prepared in the form of an Administrative Report that includes a recommendation(s); reason for theAdministrative Report; implications of the recommendations; history of the Administrative Report; financial impact of the transaction; summary of consultations; and identification of the preparer, reviewer, and review date, in accordance with Appendix B of the RETMF.

1.02 Reporting to the CAO has been prepared in the form of a Briefing Note that includes a recommendation(s); reason for the Briefing Note; implications of the recommendations; history of the Briefing Note; and identification of the preparer, reviewer, and review date, in accordance with Appendix B of the RETMF.

1.03 The complete reporting checklist (as outlined in Appendix C of the RETMF) which corresponds to the transaction type has been fully completed, including all attachments noted to be evidenced in file. Rationale for the notation of any particular item within the checklist as "N/A" has been included.

1.04 The complete reporting checklist relating to the transaction has been reviewed by the author of the associated Administrative Report or Briefing Note, as evidenced by date and sign-off on the checklist.

2. An appraisal of the property has been performed by a qualified individual, in an acceptable format, as needed

2.01 An appraisal of the subject property has been prepared, and the associated Appraisal Requisition Form has been filled out and included in the file.

2.02 In cases where the Manager of Real Estate has conferred with the Appraisal Branch and it has been determined that an appraisal was not required, the rationale has been documented and retained in the file.

2.03 For transactions involving the Property Management Branch for which an appraisal was deemed not to be required, a market analysis reflecting consideration of all factors outlined in Appendix D of the RETMF has been prepared by the Leasing Officer or Appraisal Branch and included in the file. In addition, the Property Management Branch has determined the appropriate form of market analysis by completing the Risk and Complexity Tool for Market Analysis and including this documentation in the file.

2.04 The decision as to the form of appraisal and the use of an internal or external appraiser was made by the Senior Appraiser, Superintendent of Property Management, Supervisor of Sales & Acquisition or Manager of Real Estate in accordance with the guidance and matrix in Appendix D of the RETMF, and documented by the Appraisal Branch. Documentation outlines the preparer's consideration of the "Reasonable Appraiser" test as defined by Canadian Uniform Standards of Professional Appraisal Practice.





2. An appraisal of the property has been performed by a qualified individual, in an acceptable format, as needed (cont’d)

2.05 Where an external appraiser was deemed to be required, a competitive bid process was undertaken or an appraiser was selected at the discretion of the Appraisal Branch from the pre-approved list of appraisers. If the external appraiser was selected from the pre-approved list of appraisers, the appraiser has been pre-approved for the type of appraisal function required (i.e., expropriation, disposition, acquisition, internal use, etc.).

2.06 Consideration with respect to the engagement of Materials Management in the procurement process for an external appraiser was made and documented.

2.07 If an external appraiser was used, the engagement to prepare an external appraisal report with respect to the property was documented through a signed written engagement letter using the most current template maintained by City Legal Services (as at the date of engagement).

2.08 Prior to finalizing the appraisal report and within six weeks of the delivery of the appraisal report, the draft appraisal (both internally and externally prepared) has been reviewed by a designated member of the Appraisal Institute of Canada. This review has been documented by either a narrative review or review memo signed off by the Senior Appraiser.

2.09 The appraisal has been reviewed by staff of the Real Estate Division or Property Management Branch, as applicable based on the type of transaction.

2.10 The appraisal was completed by an accredited member in good standing with the Appraisal Institute of Canada (as at the date of Transaction review).

2.11 The appraisal was prepared in conformity with Canadian Uniform Standards of Professional Appraisal Practice, as evidenced by a signed certification contained within the appraisal.

2.12 In cases where the most recent appraisal with respect to the property was completed more than 24 months from the expected date of the transaction, an Update Appraisal was completed.

2.13 A copy of the appraisal has been retained within the office file, or the location of the appraisal has been referenced within the file.

2.14 Management of PP&D have represented that appraisal documents have not been shared or released to the Community Committees or any other third parties, in accordance with confidentiality requirements.





3. Consultation and communication with internal City stakeholders such as City departments, the Ward Councilor, and utility agencies has been solicited prior to the execution of the transaction

3.01 PP&D issued a circulation to applicable City departments, the Ward Councilor, and utility agencies to identify any requirement(s) for the real property with a 14 working day deadline for response in accordance with the requirements stipulated in Appendix H of the RETMF. All correspondence has been retained within the transaction file. Departments that are required to be contacted include: Assessment and Taxation, Community Services, Fire Paramedic Service, Local improvements, Planning, Property and Development Department, Public Works Department, Transit Department, Water and Waste department. Winnipeg Parking Authority, and Winnipeg Police Service. Utility and service provider entities that are required to be contacted include: BellMTS, Manitoba Hydro, and Shaw.

3.02 No requirements were identified by a City department to retain the subject property in response to the circulation to City departments outlined in criteria 3.01.

4. Transaction approval has been granted by an appropriate individual based on the delegations of authority outlined in the Delegation of Authority - January 28, 2009 Council minutes

4.01 Transaction approval has been granted by an appropriate individual based on the delegations of authority outlined in Delegation of Authority -January 28, 2009 Council minutes.

5. All land has either been declared surplus or is planned to be declared surplus concurrently with the approval of sale by the Chief Administrative Officer and/or Council, based on the applicable Delegation of Authority

5.01 Council/CAO (as applicable) has declared land surplus prior to sale, or such declaration is planned to be made concurrently with transaction approval. In the case of lands acquired in tax sale, closed streets or lanes, approval has been obtained from the Committee on Finance (no CAO/Council declaration of surplus required).

6. Property, Planning, and Development has been authorized to commence negotiations for the acquisition or disposal of land, andcompleted site inspections as appropriate

6.01 The Board of Commissioners has authorized PP&D to commence negotiations for all land acquisitions, except in instances where an approved Capital Project clearly identifies the land acquisition (in which case PP&D has received a request from the associated Department).

6.02 Approval to negotiate property acquisition for streets and lanes has been obtained from the Standing Policy Committee on Public Works, except in cases where Council has previously approved a local improvement project and the Public Works Department report to the Standing Policy Committee on Public Works and Council has indicated that the land acquisition is to be funded out of the Land Acquisition for Transportation Purposes Account.





6. Property, Planning, and Development has been authorized to commence negotiations for the acquisition or disposal of land, andcompleted site inspections as appropriate (cont’d)

6.03 Prior to entering into negotiations to sell or otherwise dispose of the property, PP&D visually inspected the site to ensure that new encroachments over the City owned property have not occurred during the holding period, and has ensured that all legal encroachments over the lands or contiguous with the City's ownership are protected on sale.

7. An Environmental Site Assessment ("ESA") was completed as required

7.01 A determination was made and documented by a qualified environmental professional (as defined within Appendix M RETMF) as to whether an ESA was required.

7.02 If determined to be required pursuant to criterion 7.01, a Phase I ESA was conducted by a qualified environmental professional (as defined within Appendix M of the RETMF), in accordance with CSA standard Z768-01 Phase I Environmental Site Assessment (as evidenced by a representation to this effect).

7.03 If recommended in the Phase I ESA, a Phase II ESA has been conducted by a qualified environmental professional (as defined within Appendix M of the RETMF) according to CSA standard Z769- 00 Phase II Environmental Site Assessment (as evidenced by a representation to this effect).

7.04 All ESAs have been reviewed by a qualified individual with experience in interpreting results and recommendations in the ESA, or has otherwise been reviewed or consulted with either a member of Public Works or a member of the Water and Waste Department's environmental protection program. Documentation evidencing this review has been retained within the file.

7.05 For any lease transaction, the lease documentation includes environmental provisions to clarify environmental liability.

7.06 Under a disposition of land and property, the transaction documentation stipulates that the potential buyer of the land will hold the environmental due diligence responsibility

8. A competitive procurement process was conducted when prescribed by the RETMF

8.01 A Risk & Complexity Tool in the format outlined in Appendix F of the RETMF was completed as prescribed by the criteria outlined in Appendix E of the RETMF. If required, the Risk & Complexity Tool was completed by the Real Estate Division/Property Management Branch staff responsible for the transaction and reviewed by their respective Supervisor/Superintendent/Manager. If not completed, the rationale for not utilizing the tool has been documented by the Real Estate Division/Property Management Branch staff member and approved by their respectiveSupervisor/Superintendent/Manager.





8. A competitive procurement process was conducted when prescribed by the RETMF (cont’d)

8.02 Engagement of Materials Management and the utilization of a Competitive Bid Process was undertaken in accordance with the directives in Appendix E of the RETMF. In cases where Materials Management or a Competitive Bid Process was not undertaken as required or suggested within the appendix, the supporting rationale have been documented and agreed between PP&D and Materials Management.

8.03 No more than six tenders for residential building lots were accepted from any individual or company.

8.04 Residential building lots were not sold 'over-the-counter' until the tendering process with respect to all lots in the same subdivision was completed. Any unsold lots from the tender process were included in the tendering of 'new' lots within the same subdivided area before being made available 'over-the-counter'.

8.05 Any land being considered for disposal that was previously acquired through expropriation has been offered back to its original owner at the terms of the best offer received, prior to commencing a sale process to any other party.

9. All land transactions and the negotiated terms have undergone a legal review prior to being presented to the CAO or Council, as appropriate, for approval

9.01 Prior to being presented to the CAO or Council (as appropriate) for approval, the City Legal Department has completed a formal review of all agreements, contracts, and proposed modifications to legal documentation pertaining to the transaction and provided final confirmation and approval. This review has included ensuring compliance of the agreements with the applicable by-laws and Policies.

10. Alternative properties and procurement methods were considered in selecting the property

10.01 A search was undertaken to identify alternative property locations and purchase/lease opportunities available. In cases where multiple opportunities were identified by this search, a comparative analysis was undertaken to evaluate the most economical option. This analysis was reviewed and communicated with the requesting department.

11. Where land is to be expropriated, compliance with the Expropriation Act has been considered and verified by City Legal Services

11.01 City Legal Services has represented that they have confirmed compliance of the transaction with the terms of the Expropriation Act in its approval of the transaction.

11.02 Prior to undertaking an expropriation of a property not specifically required by a project plan, a search was undertaken for alternative acquisition opportunities that would avoid expropriation.





11. Where land is to be expropriated, compliance with the Expropriation Act has been considered and verified by City Legal Services(cont’d)

11.03 In the case of an expropriation, Council has issued a Declaration of Expropriation which defines the property to be expropriated and states that the process shall be undertaken in accordance with the Expropriation Act. In addition, notice of the intended expropriation was provided to the Land Titles office no more than six months prior to the transaction. Notice of the Declaration of Expropriation has been distributed to the current land owner(s) within 60 days of the declaration.

11.04 Notice of the Declaration of Expropriation has been distributed to the current land owner(s) within 60 days of the declaration.

11.05 Within a 120 day period of the issuance of the Declaration of Expropriation and before serving a notice for possession of the land, an offer of compensation which includes all provisions identified in paragraph 16(1) of the expropriation act has been provided directly to the land owners.

11.06 If objection to the expropriation was made within 30 days of the later of the declaration or the notification of the declaration, an inquiry officer was appointed and a report was drafted by said officer and provided to Council within the 120 day period.

11.07 Within 120 days of the last Declaration of Expropriation being submitted (excluding an amendment for a correction being submitted on an existing Declaration), the Declaration of Expropriation has been confirmed by Council.

11.08 The offers, approvals and declarations issued throughout the expropriation process have been made in accordance with the Delegation of Authority.

12. Unsolicited offers for the purchase of City owned property have been pursued only when the conditions established by Council have been met

12.01 Any unsolicited offer for the purchase of City-owned property is pursued only when one or more of the four conditions outlined by Council (as defined in the Council minutes of December 6, 2006 - Offers to purchase City-owned property policy) have been met.

13. Any offer for the purchase of City-owned property was only acted on by PP&D if it was provided in the form of a formal written offer

13.01 Any offer for the purchase of City-owned property was only acted on by PP&D if it was provided in the form of a formal written offer.





14. Acquisitions of privately owned property containing dilapidated structures are accompanied by a program of rehabilitation, redevelopment, or improvement

14.01 Acquisitions of property that contain a dilapidated structure are related to a program of rehabilitation, redevelopment or improvement which has been formally accepted in principle by a Standing Committee of Council and/or is under active consideration by the Executive Policy Committee, the Board of Commissioners or City Council, as evidenced by documentation of this relationship in an Administrative Report prepared for Standing Policy Committee or Council approval.

14.02 When a report to the Technical Advisory Committee on City Properties recommends the acquisition of a property with a derelict and/or boarded up house, the report also includes a recommendation regarding whether the house should be demolished immediately upon possession by the City. This specific recommendation has been forwarded to the appropriate authority (either the Board of Commissioners or the Committee on Environment).

15. Specific policies relating to transactions involving property under the purview of the Parks & Recreation division have been observed

15.01 Where a developer has approached the City to lease or purchase City-owned land to proceed with a major Parks and Recreation Development, PP&D proceeded with negotiations of the transaction after a formal recommendation or request was made by the Community Committee and Committee on Parks, Protection, and Culture, in accordance with Council Minutes of May 31, 1989, Procedure for the Sale or Lease of City-Owned Property for Major Parks and Recreation Development.

15.02 In the acquisition of property for Parks and Recreation purposes, PP&D has verified that the nine criteria stipulated in Council Minutes, October 18, 1989, “Proposed Policy for the Purchase of Land for Parks and Recreation Purposes”, have been considered, with the four Primary Factors indicated as being satisfied. This is evidenced by documentation in the transaction file and in the associated Administrative Report for Council or Standing Policy Committee review and approval.

16. Where land declared surplus had previously been transferred by a Developer to the City, that land has first been offered back to that Developer

16.01 Where (1) a Community Committee has taken transfer of lands instead of cash payment pursuant to the 10% dedication requirement in the subdivision of lands, (2) the Community Committee may subsequently declare said lands surplus for the purpose of sale, and (3) the developer has expressed an interest in the purchase of said lands, then the property has been first offered to the developer at a price determined by the Committee on Finance in accordance with Committee on Finance policy, August 13, 1979.





17. Other policies related to the general process for the sale of land have been adhered to

17.01 Within 30 days of being declared surplus by Council, the property has been posted on the City of Winnipeg website.

17.02 In the sale of land, any engagement of a broker was undertaken in accordance with Council Policy, June 19, 1996.

18. The policies pertaining to acquisitions and dispositions of specific types of property have been adhered to

18.01 Compensation payable in connection with the acquisition of small properties such as lane and street corner cuts, widenings, etc., has been set at a minimum of $500.00 which includes the value of land and an amount to compensate for the inconvenience to the owner.

18.02 The sale of City-owned residential land sold to adjoining owners or for development purposes has been undertaken in accordance with Council policy, October 31, 1977 as amended February 13, 1991, Sale of City owned small parcels or lots to be used for residential purposes.

18.03 The Committee on Environment has recommended the planning requirements with respect to the sale of any City owned residential property with a less restrictive zoning than 'R2' and consideration has been provided by the Community Committee in which the land is located.

18.04 Those portions of closed streets comprising corner roundings in residential areas have been offered for sale to the adjoining owners for the nominal sum of $1.00 subject to consolidation of titles at the purchaser's expense. This applies in those cases where, in the City's documented opinion, the sale is considered to be in the City's interest to square off the holding and where the corner rounding is considered to have an intrinsic value only to the adjoining owner.

18.05 Where a developer has expressed interest in the purchase of lands dedicated to the City by the developer for regional street rights-of-way and buffer strips and the lands have subsequently been declared surplus for the purpose of sale, the lands were first offered to the developer at a price determined by the Committee on Finance. It is a pre-condition that the lands acquired for regional streets have not in fact been opened by by-law. Where the land to be sold back to the developer is buildable, the building time requirement of two years applies as well as the requirement that transfer was not issued until the basement and foundation have been completed.

18.06 Sales of property designed or acquired for park or cemetery purposes have received approval of at least two-thirds of the members of Council pursuant to Section 156(2) of The City of Winnipeg Act (S.M. 1989-90, C.10).

18.07 All industrial park land has been sold at the appraised value of the general mass-appraisal prepared as of the preceding September 30th and approved by SPC on Property and Development, in accordance with the terms outlined in the RETMF as well as Policy No. PD-012.

18.08 Industrial land which is not located within an industrial park (as defined by clause 2 of Policy No. PD-012) has been appraised on a site-specific basis.





18. The policies pertaining to acquisitions and dispositions of specific types of property have been adhered to (cont’d)

18.09 For the sale and lease of land adjacent to a landfill, the transaction within zones of concern (defined in policy 4559, Council October 17, 1984) was subjected to review and a favorable recommendation was received from the Waterworks, Waste, and Disposal Department.

18.10 The City's proposed acquisition contemplates only the acquisition of the rights to mines, minerals, gravel, etc., where these rights are in the same ownership as the surface rights and then only where the lands are being acquired by negotiation. In those cases where the City is contemplating expropriation of required land, the proposed transaction only considers the expropriation of the surface rights. This policy is not followed where the City would be acquiring land for use as gravel pits, quarries, etc.

19. The policies pertaining to specific types of transaction have been adhered to

19.01 The acquisition of property through a tax sale has been completed in accordance with Terms and conditions to acquire properties offered for sale to the City that are in tax sale, as specified by Council, December 13, 2000 and with Acquisition and disposition of tax sale properties, as specified by the Committee on Finance (February 11, 1986).

19.02 In the acquisition of land through a tax sale an inspection has been carried out, and property is to be transferred free and clear of all liens (other than those property taxes outstanding) at the price of $1, as evidenced in the transaction agreement.

19.03 Sales or leases of lands at less than market value to not-for-profit organizations have been completed in accordance with Council policy, October 31, 1990.

19.04 Sales to school division organizations have been completed in accordance with Council policy, November 16, 1977.

20. The transaction has been included in the Tracking Database

20.01 The transaction has been included in the Tracking Database in accordance with Appendix L of the RETMF.

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