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Yesterday, the UK’s latest Conservative Prime Minister, Rishi Sunak, sacked the Chair of the Conservative Party, Nadhim Zahawi, for breaches of the Ministerial Code, the aide-mémoire designed to promote ethical behaviour for those in Government.  (Zahawi: photo right)

The letter from the Independent Adviser on Ministers' Interests, Sir Lawrie Magnus, to the Prime Minister is here. And Rishi Sunak's letter to Nadhim Zahawi is here.

Ministerial Merry-go-round

On 5 July 2022 Zahawi was appointed Chancellor of the Exchequer by Boris Johnson replacing Rishi Sunak who had resigned from the Government in protest at Johnson’s behaviour. 

Zahawi lasted 63 days before being reshuffled to another lesser portfolio by the new Prime Minister, Liz Truss. She replaced Johnson and lasted for 44 days, the shortest Prime Ministerial term in British history.

When Zahawi became Chancellor – responsible for the tax affairs of the nation - he failed to declare he was being investigated by the UK tax authorities (HMRC). In September 2022 he settled matters with the HMRC paying an estimated £3.7m in tax due together with a 30% penalty bringing the total due to £4.8m (CAN$7.9M).

There can be no clearer evidence that the rot in UK Conservatism goes right to the top.

Dodging tax

The Prime Minister’s letter to Zahawi, formally sacking him, seems to me to be written more in sorrow than in anger.

An exchange of letters is customary in these situations - with all the usual courtesies - but Sunak goes completely over the top by telling Zahawi that he should be extremely proud of his wide-ranging achievements in government.

Zahawi’s tax dodging wasn’t “carelessness”. It was calculated.

Innocent errors do not attract a penalty.

But the fact that Zahawi got away with it for so long is, I suppose, quite an achievement.

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The Toronto Star reports this afternoon that Doug Ford has warned the Federal Government to back-off and not intervene to stop development in the Greenbelt. 

This is Ford being Ford. He huffs and puffs but the two key investigations which could make a difference are already under way. I think we should just let the Integrity Commissioner and Auditor General inquiries take their course. 

Here in Newmarket, I am intrigued by what’s happening next door in King where a huge tract of Greenbelt was sold by Schickedanz Bros in September 2022 to Michael Rice for $80M. Once the Greenbelt status is removed, the 687 acres will be worth many times that. My initial concern was that the seller had been duped.

Ontario Home Builders Association

The more I look into the issue the less tenable that is. The Principal of Schickedanz Bros is Bob Schickedanz who was President of the Ontario Home Builders Association at the time of the sale.

On 17 September 2019 a media release from the Association tells us that Bob graduated from the University of Toronto and

“At 24 rejoined the family business in the role of property acquisitions, development planning and approvals, where he enjoyed great success. By 2000, with 35 years of experience under his belt, Bob joined his brother Rick, the founder and president of Far Sight homes. In keeping with family traditions, Rick and Bob brought in Rick’s sons… to help run the company and to keep the family business growing.”

The Schickedanz family has a long track record in real estate and development going back generations so the idea of them being duped as innocent country cousins can now, I think, be safely discounted.

Chief of Staff to Steve Clark 

At the time of the Schickedanz sale (then as now) the Chief Executive of the Ontario Home Builders Association was Luca Bucci who had previously served as Chief of Staff to Steve Clark, the Minister of Municipal Affairs and Housing from January 2021 until April 2022. (Photo right: Steve Clark)

I am still waiting to hear from King Mayor, Steve Pellegrini, who told his Council on 7 November 2022 that the new landowner, Michael Rice, was prepared to make land available to Southlake Regional Health Centre for a “nominal fee”.  This commitment was given to Pellegrini on 1 November 2022, three days before the Government announced that it was opening up parts of the Greenbelt to development.

You can read the Marit Stiles complaint to the Integrity Commissioner here.

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Update on 31 January 2023: From the Toronto Star: Durham and development in the Greenbelt

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Personally, I think it is now impossible for Michael Rice, Mayor Steve Pellegrini and the senior management at Southlake to stay silent on what happened at the in-person meeting on 1 November 2022 where Rice – or an agent representing him – gave a commitment to donate a tranche of (the soon to be ex) Greenbelt lands (south of Miller’s Side Road, east of Dufferin and west of Bathurst) to Southlake Regional Health Centre for a nominal fee. 

The meeting was three days before the Government made public its plans to allow development in specific, identifiable parcels of Greenbelt land.

The background is here.

On 23 January 2023 I lodged Freedom of Information requests with Southlake asking for sight of all records they have relating to the in-person meeting on 1 November 2022. I have also asked Southlake when they first learned the land needed for their new acute care hospital was to be offered to them for a nominal fee.

The in-person meeting on 1 November 2022

Yesterday, 24 January 2022, I emailed King Mayor Pellegrini, copied to the Township Clerk, Denny Timm, asking if he would tell me who called the in-person meeting on 1 November 2022 and for what purpose. I also asked Mayor Pellegrini if he asked the landowner for evidence that the Greenbelt lands were developable.

I fully expect to hear from the Mayor. But if not he is surely inviting someone to take a deputation to the Township’s Committee of the Whole where he or she will have 10 minutes to explain the significance of the 1 November 2022 meeting.

It is only a matter of time before we get the details.

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Update on 25 January 2023: From Newmarket Today: People smell something fishy: Greenbelt investigation applauded

Update on 27 January 2023: The Globe and Mail reports: Federal Environment Minister might intervene in Greenbelt development Plan:

"The Globe and Mail and other news outlets have reported that some of the land taken from the Greenbelt changed hands as recently as September 2022. Boith Mr Ford and Mr Clark have said they did not tip developers off before the decision was made public in November. The Ontario Provincial Police have said they are considering launching an investigation."

Below: the Greenbelt land south of Miller's Side Road

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The Greenbelt land west of Bathurst which lies immediately adjacent to Newmarket was bought in September 2022 for $80M by Green Lane Bathurst GP Inc whose President is Michael Rice.

Less than two months later, on 4 November 2022, the Provincial Government proposed opening the land up for development. 

So, what would the land be worth now?

Price per acre

The Rice Greenbelt land covers 687 acres giving a price per acre of $116,448. Less than 2km away, going south on Bathurst lies Chester’s Chicken Farm, whose 16.42 acres are currently on the market for $6,499,000. This works out at $395,797 per acre. Across Bathurst in Newmarket lies the former Marianneville land which was donated to the Town on 14 December 2021 in exchange for a tax receipt which could be used to offset tax otherwise owing to the Canada Revenue Agency.

Here the 15.92 acres were deemed to be worth $14,290,000 which works out at $897,613 per acre. For reasons which I needn’t go into here, I believe this valuation to be completely bogus and wildly inflated. (You can read my letter to the Canada Revenue Agency here in which I call for a new valuation.)

All three lie within - or, in the case of Marianneville, mostly within - the Greenbelt. The donated Marianneville lands are in Newmarket, a settlement area.

$80M - a very good deal

If the Rice Greenbelt lands had been valued on the same basis as the Chester Chicken Farm they would have been sold for $271,912,539. On the other hand, if they had been valued as the Marianneville lands at Glenway West they would have sold for an eye-watering $616,660,000.

Which ever way you cut it, Michael Rice got a very good deal.

The valuation of land is as much an art as a science, especially in the absence of a market (as in the Marianneville case which involved the charitable donation of land in exchange for a tax receipt).  

But a sale at Fair Market Value would be the price the property would bring:

“in an open and unrestricted market and between a willing buyer and a willing seller who are knowledgeable, informed, and acting independently of each other.”

It is impossible to believe the person who sold Rice 687 acres for $80M in September would have done so if he had known the land – or a huge chunk of it - would be earmarked for development less than two months later.

And why did Rice buy this huge tract of land when everyone else believed it was Greenbelt in perpetuity and protected from development?

Gambling on a hunch

Was Rice gambling on a hunch that, at some stage, it would become developable? Or was there more to it than that?

In its motion on 7 November 2022, King’s Committee of the Whole said the new landowner was committed to providing lands for the Southlake Regional Health Centre site for a nominal fee. The Mayor, Steve Pellegrini, told the press afterwards he thought this could be $5.

Of course, if Rice were to sell the lands Southlake needs for its new acute hospital for $5 that would be a done deal – a willing buyer and a willing seller. But if Rice were to donate the lands outright he could, cheekily, make the gift conditional on getting a tax receipt from Southlake (a charity) which he could then use to offset tax owing to the Canada Revenue Agency. This is, of course, the infamous Marianneville wheeze. Charitable giving with a payback.

But, for the moment, we need to know when Rice first realised the Greenbelt land he bought could be opened up for development. And we need to know when he first approached Southlake, making them an offer they couldn’t refuse.

Once we have this information everything else will start slotting in to place.

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Earlier today (Friday 20 January 2023) Doug Ford said he was confident no developers had been tipped off about the changes to the Greenbelt which would allow building on land that was out of bounds to developers. 

They were.

On Friday 4 November 2022, the Minister for Municipal Affairs and Housing, Steve Clark, announced that 15 areas of land totalling approximately 7,400 acres were to be removed from the Greenbelt. 

This was the first time the Government indicated that this land would be taken from the Greenbelt for development.

And yet on Tuesday 1 November 2022 – three clear days before the new Greenbelt policy was publicly unveiled – a representative of the Rice Group told the Mayor of King, Steve Pellegrini, that some of their soon to be redesignated Greenbelt lands in King (west of Bathurst and south of Miller's Side Road) would be made available to Southlake Hospital “for a nominal fee”.

The Rice Group purchased 687 acres of Greenbelt land for $80M in September 2022. (see right)

On 7 November 2022, Steve Pellegrini tabled a motion saying King supported a new hospital on the (soon to be) former Greenbelt lands and that:

“the landowner is committed to providing the necessary lands for the Southlake Regional Health centre site for a nominal fee.”

In December 2022 I lodged a Freedom of Information request with the Township asking what form that commitment took and to whom it was conveyed. (See below) The Town tells me:

“The commitment of a nominal fee for the hospital lands was conveyed verbally to Mayor Pellegrini during an in-person meeting with Rice Group and Southlake Representatives on November 1, 2022.”

When did the Rice Group first realize their Greenbelt land could be developed?

This begs a number of questions. When did the Rice Group first realise the Greenbelt land it purchased a few months earlier could be developed? When did the Rice Group first approach Southlake offering some of the land for a nominal fee and what precisely was said? Did Southlake not raise questions about the land being in the Greenbelt? And how did the Rice Group respond to that?

Steve Pellegrini told the ERA newspaper yesterday that King was doing nothing nefarious by asking the Province to fast track its land for a new hospital. Clearly, he was assuming the sale or gift of the land for a nominal fee would go through.

Pellegrini told the ERA:

The Township had worked with a previous owner looking to develop the land but couldn’t because it was in the Greenbelt.

The landowner died a few years ago and the family sold the land to the Rice Group. The sale closed a couple of weeks before it was pulled from the Greenbelt. 

When without warning the province pulled the King land out of the Greenbelt, council capitalised on it by saying “at least give us a hospital”.”

Did Pellegrini tell the Rice Group at the in-person meeting on 1 November that the hospital was a non-starter because the proposed site was in the Greenbelt? And if he did say that how did the Rice Group respond?

The Integrity Commissioner and the Auditor General will be interested in the answers.

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