Southern Authority leased building for $500K a year, sits partly empty

A building leased by the Southern Authority for $500,000 a year hasn't been fully utilized since 2014.

The Southern Authority signed a 20-year deal with a numbered company owned by Winnipeg businessman Peter Ginakes and twopartners in 2007, to rent an 18,000-square-footfacility to place high-risk kids in care as an alternative to hotels.

The building needed $2.1 million dollars in renovations,$1.5 million of which was paid for by the numbered company, the rest was taken on by the province. Threeyears after the agreement was first signed, the facility opened, and was ready to take in Child andFamily Serviceskids.

The Southern Authority, which is also known as the Southern First Nations Network of Care, oversees 10 First Nations child and family services agencies and gets its funding from the province.

"There are two, five-bed units for high-risk high needs children," said Tara Petti, CEO of the Southern Authority. "One side is for boys which is more of a crisis stabilization unit,more of a short term, a short stay and the other side is the Ji-zhaabwing program and that is for girls' emergency placement," said Petti.

Because it's an emergency placement, the number of children housed there changes day by day. As of Wednesday, Petti said there were sixkids staying in the building.

The province said there have been a total of 250 children that have received care at the facility since the building was open and operational in 2010.

CBC has learned one portion of the facility, located near Arlington and Notre Dame, has been sitting vacant since 2014. The province said the administrative side suffered two incidents of water damage that resulted in the Southern Authority vacating this space during repairs and insurance negotiations. The damage has been repaired and the province is currently reviewing options for suitable use.

Auditors Grant Thornton LLP were hired to look into the long-term property deal that's projected to cost the Southern Authority about $10 million in lease payments for the 20-year term.

• Child welfare agency signed $10M untendered lease with company partly owned by Peter Ginakes: audit

A briefing note in the February 25, 2016 audit report said the original lease cost was "up to twice the Winnipeg market rate" which "may raise questions of good judgment and prudent use of limited resources within child welfare."

According to the audit, the cost was one of several red flags raised by the province during the 2007 lease negotiations between the landlord and the Southern Authority's executives who are no longer with the organization.

The province helped re-negotiate the lease at a substantially lower price, but approved the project even though it was never put out for tender.

"We don't want to be stuck paying this multi-million dollar lease there," said Allan Courchene, Chair of the Southern Authority's newly created board of directors. "We don't want to pay that type of rate when we are a new organization and we want to continue to service our children in care and the agencies."

The province took over the lease payments as of April 1, and is now figuring out what to do with the building.

"Last month there was a direction given to the government to get the lawyers looking at this lease arrangement to see what legal options are available," said Gord Mackintosh, Minister of Family Services and Housing in 2007.

He said government lawyers are currently looking over the lease to try and renegotiate the terms of the agreement.

"The work now is to focus on first of all ensuring that the lawyers are looking at this lease and is there anything that can be done about the lease and if not, look at the use of that facility because there has to be value for that facility," said Mackintosh.

The province said it was considering using the space to house refugees or possibly creating a treatment centre.