ELECTION: What do Surrey mayoral candidates plan for SCDC?

Surrey’s mayoral candidates have a variety of plans for the city’s development corporation.

The 100-per-cent city-owned Surrey City Development Corporation (SCDC), which has been around since 2007, is behind projects such as the new Surrey City Hall and the built-to-suit brewery in Bridgeview for Central City Brewing.

"Really, our role is to make some money for the city and to stimulate economic growth," said SCDC’s acting CEO Doug Avis.

Avis said the 3 Civic Plaza project, which will combine retail, hotel office and residential space, is a good example of that. The corporation donated the land and is going to end up being a 30 per cent partner with Century Group, he explained.

Avis said it will bring a high-end hotel to the area, helping to "solidify the new downtown," and noted that Kwantlen Polytechnic University is coming into the office portion of the development.

"So we’re bringing more above-secondary-level education into this area, which will be a boost for the area," he said.

Avis also pointed to the Campbell Heights industrial project.

"We bought 250 acres from the province and we’re developing that out as a land developer. We’ve actually sold about half of the site now to various users and some developers, and we’re making a lot of money and we’re also bringing a lot of jobs to Surrey," he stated.


Doug McCallum has been the harshest critic of SCDC during Surrey’s mayoral race, saying if elected, he would disband the company over a one-year period and begin to liquidate assets.

"It’s not a mandate of the city or Surrey residents to develop a corporation – and use their money – to be in speculative real estate ventures," he said.

McCallum said his other concern is that there is an unfair advantage to the corporation in the development industry.

He says the company is in a "money-losing situation."

"It has $96 million in debt and $70 million of that is owed to the city," he said.

McCallum also pointed to the auditor’s comments on SCDC’s last financial statement, which says it is "not yet considered self-sustaining."

"What that means is, literally, it’s a parasite of the city. The city is going to have to continue to pump money into this corporation for it to survive," he noted.

SCDC’s Chief Financial Officer Emily Taylor dismissed the notion that the city is taking a loss.

"I’d say that’s a wrong way to interpret the auditor’s statement. They’re not saying we’re a drain on the city. What that represents is the fact that when we get land from the city, they give it to us at cost, it doesn’t mean they’re taking a loss," she said.

As for the company’s profits, it saw more than $6 million in profits in 2013, up from roughly $4.9 million in 2012, she explained, as outlined under "annual surplus from operations" in SCDC’s 2013 financial report.

When it comes to the company’s net debt ($96 million in 2013), Taylor said the report can be confusing. Net debt, she explained, excludes SCDC’s "non-financial assets" of $109 million, which represent income properties as well as real estate projects under development. "If they were for sale, they would end up in the financial assets," thus reducing the net debt, she said.

As well, Taylor said the company redeemed a number of shares in 2013: $41 million roughly, $37 million of which was in exchange for promissory notes issued by the city. The exchange of shares for promissory notes was a re-arrangement of project financing which had the effect of increasing net debt and simultaneously reducing accumulated surplus.

"It’s difficult to understand, I know, and I can see why it’s confusing when Doug’s looking at it."

She also noted the company paid a $4.5 million dividend to the City of Surrey in 2013 and will be paying another $4.5 million dividend to the city in 2014.

In stark contrast to McCallum’s sentiment, current councillor and Surrey First mayoral candidate Linda Hepner says SCDC would continue on the same path if she’s elected.

"We could not have done what we did in City Centre without owning that land to be able to transform it into what it is today. We can do that in other areas of the city. For example, if we had that in Newton to the same degree in City Centre, we could make things happen a whole lot faster," Hepner stated.

As well, Hepner said the city could not have gone through with the Build Surrey program without SCDC, and the $4.5 million dividend it provides to the city.

To Hepner, having a development corporation is about thinking like a big city, pointing to examples such as Winnipeg, Toronto and Calgary.

"It’s a vision that I think is showing the residents of Surrey that we’re managing their assets – which is the property – and we’re not selling it to balance a budget. We’re utilizing it to make money for you and I to have a lower tax base."

Is it an advantage to the developer? "Probably not," Hepner stated. Rather, the advantage is to taxpayers, she said.

Hepner believes McCallum has "a twisted view" of SCDC.

"When he’s saying it’s draining the city of money, we transfer that property over to SCDC, but we’re still the 100 per cent shareholders. It’s a game in technicality…. I think it’s a bit of smoke and mirrors what his language is."

And landing between McCallum and Hepner is One Surrey mayoral candidate Barinder Rasode, who says she wouldn’t eliminate the corporation, but would change its mandate.

"SCDC should be a department of the city that looks at maintaining city-owned land but then only partnering on projects that enhance things under our Sustainability Charter, such as under the social arm of the Sustainability Charter."

She’d like the city to look at creating a "centre of caring" that could house such organizations as the Surrey Food Bank or Surrey Christmas Bureau.

Rasode said she’s hearing over and over that "SCDC has definitely overstepped its mandate."

"I don’t think SCDC should have a mandate that is seen as direct competition to businesses in the free market, which I think it does," she said. "I don’t think we should be investing taxpayers dollars in high-risk investments like strip malls."

Mayoral hopeful Vikram Bajwa believes SCDC is a good thing for the city, but would like it to focus on building a Surrey airport.

"Our population is going to be more than Vancouver’s within five years," Bajwa said. "That will bring a lot of jobs and it will put Surrey on the map like Vancouver and Toronto. Right now we’re limited."

Asked where an airport could go, Bajwa said there’s land near the U.S. border crossing and that would be the "ideal place."

Independent mayoral candidate Grant Rice described himself as a "fairly harsh critic" of SCDC over the years.

"What I find most worrisome is the fact that they’re in some pretty risky ventures," he said, such as the built-to-suit brewery.

Rice would like to refocus the company and have it build affordable rental housing.

"We would take the fees from secondary suites that we collect, and we would funnel those into an affordable housing strategy where we would build non-market and market housing in the city," he explained, "something that the private sector is not interested in doing."

Independent mayoral candidate John Edwards said he would scale back the work SCDC does, not get rid of the company completely.

"I think I would reduce the amount of money that we’re spending on that organization. Take some of that funding and invest in youth programs and other social development issues as well," he said.

While he believes SCDC has done good work, he thinks youth should become more of a priority to the city.

Mayoral candidate John Wolanski, like McCallum, says he would disband the corporation.

He said the "private sector should assume the risk, not the taxpayer," adding the city shouldn’t be involved in risky ventures.

"The whole thing is that the government’s starting to get into things they shouldn’t," he stated.

To phase out the corporation, Wolanski said he would follow through with any existing contracts. "You can’t just throw people out."


Avis said regardless of the talks going on during the election about SCDC’s future, for now, it’s business as usual for the company.

"It’s just speculation from our perspective," he said, adding, "If there’s going to be other mandates down the road… and the city wants us to do that, we’ll do that."

Avis said it puzzles him that there’s a perception the company is losing money or costing the city money. He said the reality is totally different.

"We hold more assets than liabilities," he noted. "We’re a profitable company and we’re financially a lot stronger than what has been pointed out."

See SCDC’s financial statements online at Scdc.ca.



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