During the February Senate meeting, Christopher Manfredi, provost and vice-principal (VP) (Academic) announced the sale of a portion of McGill-owned land, resulting in an unanticipated $20.6 million in revenue for the university. Known as the Redpath properties and located to the west of campus near Guy Street and Dr. Penfield Avenue, the land was originally received as a donation to the university. Before its sale, the Redpath properties served as a minor source of income for McGill, as the housing units built on the land regularly paid rent to the university. The rent for the properties this year would have been between $750,000 and $900,000.
Faculty of Arts Senator, John Galaty, cited concerns related to the university auctioning off assets in order to offset its deficit.
“Here you have […] $20 million in relationship to a $10 million deficit,” Galaty said. “It’s moved a significant amount of money from the asset column over to the […] revenues being taken in by the university so we can pay our bills [….] Most of the downtown of Montreal used to belong to McGill, and one wonders, ‘If we’d only kept it and leased it rather than sold it, we’d probably be better off.’”
Manfredi assured the McGill Senate that this decision was unique and not part of a larger strategy to pay bills; however, he also conceded that the university may choose to sell other properties in the future as a method to fund different projects, including the proposed acquisition of the Royal Victoria Hospital (RVH) site by McGill.
“There is no strategy to sell property in order to pay our bills,” said Manfredi. “If we were to undertake [the RVH] project, one of the ways in which McGill might finance its share would be by looking at some of our non-strategic real estate assets on the periphery of the campus and converting those into cash that would then be reinvested into the [RVH] site, if we go down that road.”
VP (Administration and Finance) Michael Di Grappa also attested to the fact that there were no current plans to sell any of McGill’s other properties, refuting Galaty’s notion that the university was employing a strategy of selling capital to pay back debts.
“This was not an attempt to sell assets in order to pay for operating deficits or anything like that,” Di Grappa said. “With respect to the specific sale of the Redpath properties, that’s a case of an emphyteutic lease on land —[a lease] on which condominiums were built [….] The university [was] the owner of the land and [it collected] a rent for the use of the land from the owners of the condos.”
The lease for houses on the Redpath properties was created in the 1970s and included a formula for resetting rent prices every 20 years. In 2014, an offer was made to the university when the rent was being recalculated.
“The owners were faced with an issue where, in roughly 30 years, the land and whatever was built on it was reverted back to McGill,” Di Grappa said. “The owners of the condos approached us because we were negotiating the increase in rent from 2014, and they made an offer to buy the land so they wouldn’t have to pay rent for [a certain] number of years.”
According to Di Grappa, from McGill’s perspective, keeping the land was not an ideal option because it could not profitably be used for university-related purposes.
“It is not a strategic property,” said Di Grappa. “[It is] not as if we could use it for another campus or another classroom, and it would be a waste to use it for student residences because the condos would fetch a higher value and [the university] would only be able to have 85 units there.”
Di Grappa defended the university’s decision to sell the land.
“In calculating the amounts we would derive in the 30 or so years from this emphyteutic lease versus the amount they would give us up front, we thought it was in the best interests of the university to take this particular deal,” Di Grappa said. “The sale was very satisfactory for the university because we have very pressing needs. The owners were very happy; they have the freedom to do what they wish with the land.”
The revenues from the sale of the Redpath properties will be invested in a sustainability project.
“That particular sale has actually allowed us to make a provision in our budgeting […] to support a very important project in sustainability sciences, where we’ll be making a $10 million investment over the next five years,” Manfredi said. “We’re able to do that because of that kind of extraordinary revenue.”
As for McGill’s other properties, including lands on the South Shore and Macdonald campus, Di Grappa maintained that the university intends to keep these.
“There are no plans to dispose of any of that other space,” he said.