N.W.T. government won't say how much rent it pays on its own building

Speaking at a public review of an recent auditor general's report on the Stanton Territorial Hospital renewal project, N.W.T. ministers are standing by the decision to lease back a government-owned building — but say they can't give details on how much it's costing.

The auditor general, however, stated in its report last fall that the cost should be made public. 

MLAs met on Wednesday with territorial ministers to review progress made on recommendations from the report that was released in October 2024. Ministers accepted all but one of the report's recommendations, which detailed how the Stanton hospital project went hundreds of millions of dollars over budget, with an entirely new hospital built and the government then paying rent on its own building — the old hospital.

While the territorial government still owns the old hospital in Yellowknife, it's leasing it out to third-party developer Ventura, and paying to sub-lease it back.

The auditor general's report estimated that as of June 2023, the hospital project's overall costs are in the range of $1.21 billion, over the project's 30-year life. The project was originally valued at $750 million. 

Lease costs 'pennies on the dollar,' gov't official says

Perry Heath, assistant deputy minister of health and social services, said it was a very easy decision to lease the old hospital and that the building provided "value for money, in terms of building new spaces at pennies on the dollar."

But the government won't say how much "pennies on the dollar" is.

Bill MacKay, deputy minister of finance, said due to "keeping commercial relationships confidential" the cost could not be publicly released. The government said the lease was secured at 30 per cent less than market rates.

Andrew Hayes, deputy auditor general for Canada, said N.W.T. residents deserve to know how much it's costing taxpayers for both the new and old buildings. 

"So that's the root of the disagreement," he said. 

Questions around cancelling lease

MLA for Dehcho, Sheryl Yakeleya, asked if it was possible to cancel the lease if it was found to save money.

Steve Loutitt, deputy minister of infrastruture, said he was unaware of any way to do that, but said hypothetically it would require negotiations and probably be a very large expense.

Danny McNeely, MLA for Sahtu, asked if the total investment into the old hospital since June 2021 has differed in any way that could change the leasing cost. Loutitt didn't have an answer. 

There were also updates this week on other recommendations from the auditor general's report.

The territorial government has a draft plan for developing a new public-private partnership (P3) management framework, which is expected to be completed in December 2027. It will require full estimates for projects, including capital, operating and management costs.

MacKay said that timeline is based on the department's capacity, and because there are no P3 projects currently on the horizon.

An update to the government's capital plan is expected in April.

Another priority for the government is filing conflict-of-interest declarations in a timely manner and ensuring they're properly filed and accessible. The office of the auditor general had highlighted these as an issue, saying that in many cases it was unable to find evidence of any conflict-of-interest declaration forms involving people bidding on projects.

Housing Minister Lucy Kuptana said she's glad to see the government is working toward improving the systems in place for large infrastruture projects.

"We don't have many new buildings. The cost to build in the Northwest Territories is so expensive, and every dollar counts. And we have to fight for every dollar that we have in our budget with our departments," she said.

"That's why this is even more important. It is how we spend our money, and who's looking at that to make sure that we're accounting for things properly."