Federated Co-operatives Ltd. says a recent decision by Regina City Council jeopardizes a planned investment in the city worth more than $2 billion that included a canola crush facility.
Council recently voted 10-0 in favour of entering into an option to purchase agreement to sell 634 acres of land north of the existing Co-op Refinery Complex to a buyer for $4 million.
The city is not making the name of the buyer public, but the Grain and General Services Union, which represents Viterra employees, confirmed that Viterra is the buyer. The union also represents some editorial staff at The Western Producer.
The land will be used for an $800 million development that is forecast to generate $500 million in gross domestic product for the city.
FCL said it had planned to use the same parcel of land to build a renewable diesel plant and canola crush facility adjacent to its refinery.
Pam Skotnitsky, vice-president of strategy with FCL, told councillors in an April 12 meeting that the co-op “vehemently opposes” the deal.
She said FCL was not consulted about the sale of the land adjacent to its refinery and only found out about it through a CBC article published on April 10.
In an April 11 letter submitted to Regina mayor Sandra Masters, Skotnitsky said FCL was dismayed by the lack of transparency and competitive process.
“The sale of the land as proposed jeopardizes our planned investments and would force us to select a location apart from the City of Regina,” she said in the letter.
She told councillors that FCL is concerned about the “rushed process” and apparent favoritism in the sale process.
“Preferential treatment appears to be taking place for this land as the land is now being sold below the assessed value of $6.3 million,” said Skotnitsky.
There are unconfirmed reports that Viterra plans to build a canola crush plant at the location.
Viterra and FCL both declined to comment on this story.
Another major player in Regina’s agriculture scene also weighed in on what he too believes was a flawed process.
Murad Al-Katib, president of AGT Food and Ingredients Inc., told city councillors that one major constraint for building value-added projects in the city is finding large tracts of land that can be serviced and have access to rail transportation.
The 634 acres in question is one of the few parcels of land in the city that ticks off all the boxes. AGT would have liked the opportunity to bid on that valuable property.
“We’d like to see a transparent and open process,” he said.
Al-Katib said the proposed sale limits the opportunity to explore building an agriculture value-added “processing node” that could have been linked to FCL’s project.
He mentioned that AGT is currently processing pulses from the Regina Plains area into plant-based proteins and wants to do the same with wheat and canola meal.
City administrators said notice of its intention to enter into an option to purchase agreement for the parcel of land was published in the Regina Leader Post on April 3. They also said it is tricky to notify other companies about a proposed project due to competitive reasons.
Al-Katib said he did not see the Leader Post notice and noted that it contained no map and was just a legal description of the land. He was not aware of what was happening until council announced the special meeting to be conducted on April 12.
Gilbert Le Dressay, vice-president of refinery operations with FCL, said the refinery has been an economic generator for the City of Regina for more than 85 years.
FCL has spent more than $3 billion on expansions at the refinery since the early-2000s and spends an average of $150 million to $250 million on capital projects every year.
The refinery employs 900 people and contributes another 1,000 temporary jobs.
“The refinery has a large economic impact on the city and creates many jobs in and around the city,” said Le Dressay.
“We want the opportunity to do a potential multibillion-dollar investment with an integrated ag complex.”
Skotnitsky said the proposed sale splits up land owned by the city, leaving small strips of land on either side to the west and east of the parcel.
She proposed that the four quarter sections listed in the option to purchase be shifted to the west.
That would provide the city with the ability to sell a 635 acre parcel of land in the west and another 553 acre parcel to the east. The undisclosed proponent would have the option of choosing which parcel it wanted, leaving the remaining one for FCL.
However, council unanimously approved the option for purchase agreement as originally outlined.
Viterra has one year to exercise its option to purchase the land for $4 million. It has another two years after that to start construction on the project.
If construction does not happen within that two year period the city will take back ownership of the land, refunding the $4 million purchase price less the $50,000 option fee.