Abstract
Since the mid-1990s, Canadian public real property (land, buildings, and equipment) has been subject to regular scrutiny through bureaucratic procedures aimed at ridding the state’s estate of all ‘surplus’ properties. Surplus is transferred to Canada Lands Company, a state owned enterprise charged with privatizing public land. Bureaucratic devaluation thus allows for subsequent revaluation through multiple forms of state-sponsored remediation: the physical, legal, and financial manipulation of public property by Canada Lands Company. Analyzing Canada Lands Company’s history, role, budgets, and activities, this article uncovers the particular dynamics of how Canadian public land is being privatized through devaluation and revaluation by the state. Two arguments of broader significance for literatures on the political economy of the state and public land frame the discussion: (1) Canada Lands Company’s activities speak to the important managerial role played by the (Canadian) state in the land dispossession process; and (2) Canada Lands Company’s treatment of surplus public land as a financial asset is a distinguishing feature of the Canadian public property management system, setting it apart from elsewhere.
Keywords
In a 1991 House of Commons Federal Real Property Act debate, opposition member Dennis Mills summed up what was to be a watershed moment in the management of Canadian public property: “we know that this government has this itch to sell just about everything that is part of the national government’s inventory” (Mills, 1991: 5228). And so they, and successor governments, did. From that point forward, publicly owned land, buildings, and equipment have been subject to bureaucratic procedures aimed at ridding the state’s estate of all ‘surplus’ holdings. Budget reductions and maximizing monies received through surplus sales were henceforth the driving aim of Canadian federal public real property management, with rules put in place just after this debate scratching the privatization itch through ‘efficiency-oriented’ disposal. According to the Guide to the Management of Real Property (Treasury Board, Government of Canada, 2011), “as soon as a department recognizes that a property is no longer required in support of its program or operational needs, it identifies the property as surplus” and surplus is to be disposed of as quickly and “proactively” as possible. Surplus is offered first to other government departments, but with all equally subject to the same aims and rules, surplus disposal often becomes market acquisition. Given that surplus designations rely on (real or perceived) reductions in the need for, or usefulness of, public land, devaluation is the first step toward turning state property into private property. Devaluation takes two interrelated forms: the conceptual denigration of public property holdings through privatization-oriented bureaucratic procedures, and physical degradation, decay, or vacancy through austerity-induced changes in the public sector’s property-related needs and requirements. 1 Put simply, budget cuts lead to emptier buildings and deferred maintenance; and new policies and procedures lead to asset shedding and fewer land holdings in the public sector.
When public property management reforms were first being discussed, government sentiment was described by one spokesman as being: “our basic philosophy is that the marketplace will decide the allocation of resources better than any central planner” (quoted in Boyle, 1988: 71). By 1995, once the necessary procedural and policy changes had been made to encourage surplus disposal, not only was the marketplace starting to decide the fate of devalued state land, central planning itself had been shifted from government departments to the arm’s length quasi-public enterprise Canada Lands Company (CLC). CLC now receives title to all surplus federal holdings prior to market sale and focuses its activities on augmenting the exchange value of surplus state property. CLC’s land value ‘enhancements’ aim to maximize the amount of revenue government earns through privatization and to provide profit-making opportunities for subsequent private owners. Conceptualized here as a process of revaluation, augmenting the value of public land can involve remediation, renovation, rezoning, public works installation, etc. Even if the marketplace is to decide resource allocation, the state has retained a crucial, though often obscured, management role by minimizing the monetary and social costs associated with opening new pathways for accumulation through de/revaluation.
CLC provides regulatory-managerial support for privatization by collecting rent to subsidize property development, by commercializing public space, and by financializing public land. Because it is a Crown corporation and not a private for-profit firm, it occupies a special role in the de/revaluation process. CLC holds onto vacant, spoiled, depreciated, and/or sensitive land for as long as required before marketable; it is not subject to the same circuit rhythms and temporal-circulation constraints experienced by capitalists in the valorization process (Marx, 1992 [1885]: Chapter 4). CLC is also able to draw on the full borrowing power and creditworthiness of the Government of Canada, dodging the influence of secondary financial markets so commonly seen within private real estate today. As a public entity, its market actions are obscured, rendered mundane, and camouflaged through the prosaic (hegemonic) activities of capitalist state legitimation that operate across society more broadly.
Critical (Marxian) political economy writing on the subject of the state and its machinations has historically centered on instrumentalist and structuralist positions, often traced to Nicos Poulantzas (1969) and Ralph Miliband (1969). Bob Jessop, on the other hand, has dubbed the Miliband-Poulantzas debate “sterile and misleading” (quoted in Barrow, 2002: 44), but we need not revisit the debate or its detractors here. Instead this literature is invoked merely to point out that there is a tradition of interpreting capitalist state activities as being structurally circumscribed by the mode of production, and/or swayed by the people directly shaping policy choices. The roles of the state vary by institution, context, and conjuncture, patterned by support for capital accumulation, legitimation, and coercion (O’Connor, 1973; Panitch, 1977). It is within the larger backdrop of capital–state relations that this paper seeks to approach the more specific dynamic of why and how CLC, a state owned enterprise, is used to manage the devaluation of public land and enhance its exchange value. In Marxian terms, public land is turned into a commodity, with its dual exchange value and use value attributes, through the individualization or marketization of ‘use’—i.e. utility for the market, private owners, or service purchasers as opposed to non-monetized use rights accorded to citizens in general—and through exchange value-oriented land enhancements managed by and paid for through CLC activities, creating the conditions for surplus value realization.
State support for capitalist markets exists in myriad form (see Aronowitz and Bratsis, 2002); paving the way for ‘accumulation by dispossession’ (Harvey, 2003) is now a widely popular aspect of public policy. With dispossession as privatization, we see that the state can support profit making by opening up new spaces for capital accumulation through public property sales, regulatory changes, and new policy techniques favoring commercialization. ‘Dispossession’ dominates the Canadian experience from the mid-1980s through to today given the waves of privatization seen over the neoliberal period. ‘Dispossession’ similarly creates state land itself: the theft of indigenous communities’ collective right to land use colors Canada’s earliest days; today the process converts state property into private property, bloodless but forceful nonetheless.
Dispossession does not necessarily equate to less state more market, or an evacuation of the state role. Canadian governments remain active participants in economic development through state owned enterprises and public sectors continue to control vast property holdings. Both aspects—state support and retreat—are of relevance to public land sales and management through CLC. Later portions of the paper illustrate how this works empirically: CLC’s projects reconfigure public property in market-amenable ways, often involving private developers but through state managed procedures until land is sold or commercialized.
Even now, after decades of neoliberalism, Canada has retained a distinctly ‘mixed’ economy which can be traced back to several factors, including: a lack of internal linkages, the need to integrate distinct colonial economies into a single national market after Confederation, as a way of forging/maintaining a national identity, and in attempt to overcome domination by American entrepreneurs and minimize economic dependence (see Clarkson, 2002; Eden and Molot, 1993; Innis, 1995; Laxer, 1991; Watkins, 1963). Factors contributing to the creation of Crown corporations like CLC tended to reflect these considerations as well (see Gordon, 1981; Hardin, 1989; Taylor, 1991; Tupper and Doern, 1981). Taylor sums this up when he writes that commercially-oriented Crown corporations were a means by which government could intervene in the economy “to bind the nation (together), to develop and market its resources, and to retain some measure of the profits and rents” (1991: 97). Teeple (2000: 95) zeros in even further, arguing state owned enterprises in Canada “were for the most part created in the first place to aid in capital accumulation” by reducing costs to the private sector through state subsidization. Political parties of all stripes have been involved in their creation and development, there being “little ideological resistance to state ownership of assets and operation of enterprises” prior to the 1970s (Taylor, 1991: 98). With privatization-oriented policies dominant ever since, neoliberal ‘ideological resistance’ to state ownership is largely without challenge and Crown corporation numbers have steadily declined since their postwar high. Set against this downward trajectory is the select use of certain state owned enterprises to support dispossession, CLC being a prime example, along with the specialized government agencies used to develop public-private partnerships (Whiteside, 2015). These Crown corporations are used to facilitate privatization of/in the public sector, not its enlargement. Rather than being the victims of dispossession, CLC and its kin are the agents of privatization—developed by the state to manage and encourage property sales in other areas of the bureaucracy.
Eidelman’s (2016: 122) assessment of the urban political economy literature finds that “we know surprisingly little about patterns of public land ownership in cities, and even less about the forces that shape the behavior of public landowners.” This paper argues that by focusing on CLC and surplus public land treatment, we fill in some of these blanks: CLC provides insight into the role of the public sector in land de- and revaluation, financialization, and privatization through surplus property disposal practices. Much like Goldstein’s description of an ‘economy of repair’ (2014: 132), CLC is tasked with spearheading exchange value-oriented enhancements made to surplus state land—holdings that have been conceptually degraded or physically damaged but which present an accumulation opportunity for capital through asset sales or revenue opportunity through commercialized public management. Budget cuts often make it cost prohibitive to revitalize public assets without resorting to privatization or partnerships with market actors. In the meantime, buildings may decay, land may become contaminated, and the search for surplus is incentivized. Viewing public property through a policy lens that is largely concerned with the short run budgetary costs of holding surplus (e.g., deprecation) ignores the social or long run fiscal costs that result from a narrowing of public property holdings (e.g., less space for social housing or decommodified parkland, and revenue loss through asset shedding). Surplus privatization relies on privileging exchange value over use value, and turning qualitative values into quantitative calculus through the monetization of public property; land is treated as a financial asset whether sold for revenue or retained as ‘public’ land by CLC for rental income. 2
This paper also responds to questions posed by Christophers (2017) in his study of UK surplus public land, including how land treatments proceed elsewhere and to what extent surplus land is financialized (treated as a financial asset) by other states. 3 As will be explained shortly, the Canadian case both mirrors and defies the UK experience: both systems of surplus land identification begin with use value considerations but Canadian methods and treatment are simultaneously oriented toward exchange value, which becomes particularly evident with ‘strategic’ surplus disposal. Thus state property is being financialized in ways not witnessed in the UK, and CLC is key to these differences.
The paper opens by detailing the relevant aspects of historical Canadian political-economic development that created vast public land holdings and a strong role for Crown corporations, followed by the contemporary features that now devalue federally owned (mainly urban) land through austerity, privatization, and bureaucratic ‘surplus disposal’ procedures. Next, CLC’s annual budgets are examined, uncovering how it operates as custodial landowner, land privatizing realtor, and landlord rent collector vis-à-vis surplus land. Finally, the paper sets to analyzing surplus revaluation by providing examples of how CLC’s urban land projects act as conduits for dispossession.
Devaluing the state’s estate
Despite 400 years of colonial-capitalist incursions, only 10 percent of the Canadian landmass is privately owned; 90 percent is ‘Crown’ land owned ultimately by the British monarch but held and managed by ‘custodians’ in the Canadian public sector (government departments, ministries, agencies). With the vast majority of land in Canada being ‘public’ land, and the federal government being the single largest landholder in the country, the sheer size of the Canadian landmass also makes this government one of the world’s largest landholders: 28 million square meters of building space and 23 million hectares of land, together an area about the size of Turkey, and that is only considering its property in the ‘south’ below the 49th parallel.
During the initial period of colonial governance, bargains made with private railway developers and settler farmers meant Crown land rights were often surrendered to private parties and indigenous rights to collective ownership were frequently ignored. In 1867, the British North America Act solidified the rights of federal and provincial governments, and the division of power between the two. Much land, including urban land, became part of provincial government jurisdiction, with federal holdings retained in the northern territories and scattered around the country in urban and rural settings (e.g., federal activities relating to transportation, heritage, national defense, etc.). Over the next 150 years, provincial governments in turn surrendered most of their Crown rights to city and agricultural land through a system of freehold tenure (long-term tenancy legally recognized through fee-simple purchases) but retained ownership of all subsoil resources. Rights to surface resources (water, timber, minerals, energy) are now typically granted only through lease or license.
The circumscription of unfettered private rights to land in Canada is markedly different from both the English feudal tradition and American-style land sales systems (Vogt, 1999). By the early twentieth century, groups within the business community were expressing their fear of “a general assault upon the rights of private property” (Armstrong and Nelles, 1973: 21) when governments began seizing land to widen public operations through the activities of Crown corporations in sectors ranging from hydro to rail. The number and range of sectors occupied by Crown corporations would only increase after the Second World War, but concerns from private industry would prove unfounded: most Crown corporations were used to support private markets and capital accumulation. As Vogt (1999: 45–46) explains: “Historically, Canadians have granted to governments a major economic and social role and have accepted fairly uncritically the creation of state property that accompanies such a role. For several decades after Confederation [in 1867] the state played what has been called a promotional role. It facilitated capital accumulation and the building of substantial [public and private] infrastructure.”
Like most other state owned enterprises, CLC traces its origins to the postwar era. In 1956, the federal government created Public Works Lands Company Limited (renamed Canada Lands Company Limited in 1981) to function as an intermediary handling public land development, leases, permits, title transfers, etc. for other government departments. However, the Canadian federal government typically retained its land prior to the 1990s in order to fulfill department mandates and meet the needs of other Crown corporations (notably Canadian National Railways (CN) and Air Canada which required a lot of land for their operations), narrowing CLC’s activities for the first few decades of its existence. It would later become dormant with the ascension of neoliberal era dispossession. Neoliberal rollback in the late 1980s and early 1990s meant the widespread sale of public property in Canada, particularly land-holding entities that included CN (1995), Petro-Canada (1991), Navcanada (1996), and Air Canada (1988), just to name a few (McBride, 2005: 103). Not only was Crown corporation land included in their sale, but privatization deals also created surplus land when commercially viable portions were divested and contaminated or otherwise unmarketable land was retained by the state. CLC was reactivated in 1995 to handle the CN sale and manage the institutionalization of real property privatization, representing a new phase for the public enterprise: shrinking public property rather than enlarging it.
By the early 1990s, bureaucratic policies and formal legislation reversed the longstanding practice of land retention and began to require the identification and disposal of surplus land. Public property was now felt to have an inherent ownership ‘life cycle’ terminating in surplus and its sale, and owning real property became accounted for as a cost of program delivery through accrual accounting and asset amortization (McKellar, 2006). The incentive structure was flipped on its head: holding land (or other property) beyond any direct or immediate benefit would disadvantage a department’s budgetary bottom line and disposing of it would be rewarded.
The impetus for change and for surplus identification and disposal-enabling legislation, protocols, and institutions can be traced to the widely influential Nielsen Report from 1986 which launched the entire devaluation process, providing the blueprint for privatizing federal property and creating the need for an accommodating land appraisal toolkit. 4 Nielsen characterized earlier federal property management policies as creating a “system which is bloated with inventory, undermanaged and overstaffed,” and recommended that “a divestiture strategy should be implemented immediately” (Nielsen, 1986: 13–14). For Nielsen, “the existing framework designed in the name of control, probity, and prudence has created unneeded barriers to effective management of real property” (Nielsen, 1986: 13). ‘Barriers’ and ‘effectiveness’ were identified through the lens of a 12-member private sector advisory panel, which many senior public servants saw as has having a “slash and burn” mentality (Ircha and Young, 2013a: 7). By 1991, strategies were taken up through legislative, policy, and program changes that began routinizing surplus disposal and land sales. Within a few short years, from 1994 to 2000, half of all military bases in Canada were deemed unneeded ‘surplus’ and scheduled for disposal, many of which were located in urban centers invoking much conflict and controversy with various interest groups vying for their redevelopment (see Ircha and Young, 2013a). Land related to rail, urban ports, commercial ports, and airports rounded out the list of top federal surplus land holdings in the early days.
Devaluing the state’s estate surplus public land identification and privatization-encouraging reforms.
Once public land is designated as being surplus to immediate operational needs, a ‘highest and best use’ (HABU) market appraisal is conducted, this third party assessment being tailored “to identify the most profitable, competitive use to which the subject property can be put. The highest and best use is shaped by the competitive forces within the market where the property is located and provides the foundation for a thorough investigation of the competitive position of the property in the minds of market participants” (Sauder School of Business (SSB), 2010: 12.1). The results of the market appraisal are used by surplus land-holding departments to determine whether improvements beyond ‘as is’ can significantly enhance the exchange value of that land—if so, CLC is brought in to develop a business case for divestiture and/or commercialization. With both the HABU market appraisal and CLC business case in hand, custodial departments make their final decision regarding the route surplus disposal will take: routine or strategic. Routine disposals are those where public real property (more often equipment than land or buildings) is sold directly by the department itself given that enhancements beyond ‘as is’ will reap little financial reward. If property disposal is deemed strategic, devaluation gives way to revaluation through CLC-led enhancements. In other words, strategic disposals occur where HABU analyses determine that pre-sale remediation and redevelopment will generate greater market interest (opening private accumulation opportunities through land sales or leases) and lead to greater financial returns for government once redeveloped. Departments are further incentivized to choose the strategic route through the introduction of changes in accounting treatment and changes in revenue sharing procedures. With the adoption of accrual accounting and shorter property lifecycles in the 1990s, the amortization of costs associated with existing landholdings became magnified. If/when public land is sold, custodial departments come to receive all revenue, ending the Treasury’s longstanding practice of capturing earnings from land sales in a consolidated fund.
Considered together—lifecycle analyses, HABU assessments, monetary or revenue focused business cases, revenue sharing procedures, accounting treatment, and CLC support—all aspects of public land management gear Canadian federal government decisions-makers toward the devaluation of public land holdings. Holding un- or under-utilized properties, particularly in urban centers where market-oriented redevelopment offers the most lucrative possibilities, is dis-incentivized by bureaucratic design. And if earlier rounds of austerity have led to devaluation through property destruction, government departments have all the more reason to privatize.
Destruction of one sort or another is often necessary for devaluation in the capitalist system. Financial crises, housing foreclosures, climate change and environmental catastrophes, or military warfare are leading examples (e.g., see Christophers and Niedt, 2016; Harvey, 2006; Johnson, 2015; Knuth, 2017), or, as argued here, destruction can occur through the conceptual degradation of public property use values and/or its physical degradation through neglect and abandonment. Destruction reframes, reallocates, or resets value crises, and destruction is frequently followed by the boon of redevelopment (Weber, 2002). Rather than requiring that market actors directly shoulder the risks and costs associated with reimporting value into unneeded or unwanted public property, CLC is tasked with finding buyers for devalued surplus through exchange value enhancements prior to land sales. As such, CLC property management and redevelopment schemes clearly proceed according to exchange value logic: “CLC adds value to a property by determining the highest and best use, assessing market demand for such uses, engaging with communities to obtain input and support for any significant changes to the property, creating plans for the development or re-zoning of the property to maximize value and obtaining municipal approvals for the plans. For larger properties and where value creation opportunities exist, CLC also services the property, which includes constructing roads, installing utilities, building out the park spaces, and servicing building lots which are subsequently sold to builders of commercial, office or residential buildings in accordance with approved municipal plans.” (CLC, 2016: 11–12)
Lacking an ‘in house’ state agent like CLC, the UK case is both similar to and different from the Canadian experience. Canadian surplus designations are equally foundational to the disposal process and surplus designations are identified in relation to operational needs. However, side-by-side with these obvious similarities is the clear presence of exchange value oriented treatment and motivations in Canada: budgeting practices that treat holding public property as an operational cost, property lifecycle calculations that consider disposal a best practice of public property management, revenue incentives associated with surplus sales, HABU analyses done by market appraisers who calculate the exchange value potential of land redevelopment, and, then, the entire modus operandi of CLC itself with its ‘value creating’ orientation to surplus public land. Thus while surplus is intrinsically linked with operational needs, it is co-determined through exchange value (or revenue-related) calculations. While it cannot be said that all Canadian federal public land is mobilized as a financial asset, this certainly is the case when transferred to CLC.
CLC budgets
Consistent with Schumpeter’s argument that ‘the budget is the skeleton of the state’ (1954 [1918]: 6), CLC’s fiscal accounts reveal what is otherwise obscured by its standing as a state owned enterprise. Commercially oriented, its mandate is the “orderly disposal of selected surplus federal real properties with optimal value to the Canadian taxpayer…” with ‘optimal value’ determined through “financial value” and “economic stimulation”, a strictly monetized conception of value, not one tethered to a broader sense of the public interest (CLC, 2014a). Its budgets reveal how CLC manages devaluation and funds the redevelopment of public land, creating new opportunities for capital accumulation through the dispossession of public property. Where retained, public land is managed on a commercialized basis, with CLC acting as landlord rent collector.
When CLC was reactivated in 1995 to support government’s 1991 real property policies and surplus disposal initiatives, it first acquired C$250 million (1995$) through the privatization of the Canadian National Railway (CN), this sale being structured to exclude many tracts of surplus, often contaminated, land. Its total revenue has been steadily rising ever since, indicating the profitable enterprise that is revaluing devalued public land. By 2015, CLC held C$880 million in assets.
The items that form its major revenue and expense categories (Figures 1 and 2) are represented on both sides of the ledger in very similar proportions: real estate sales managed by CLC, hospitality and rental operations managed by other subsidiaries (especially the CN Tower in Toronto, the Old Port in Montreal, and Downsview Park in Toronto), and interest from financing. Of these items, hospitality and real estate sales are central. Real estate tends to be a greater revenue/expense but not consistently, the ratio varies based on portfolio supply (i.e., government departments’ transfers of surplus land) and macroeconomic factors (e.g., inflation, growth/recession, housing and tourism demand).
CLC’s total revenues. Source: author’s calculations based on CLC annual reports 2004–15 sections on consolidated financial accounts. CLC’s total expenses. Source: author’s calculations based on CLC annual reports 2004–15 sections on consolidated financial accounts.
CLC’s operations are mainly ‘self-financing’, reflected in low interest expenses (proportionally and in dollar terms) (Figures 3 and 4). Hospitality and rental revenue are the main avenues through which CLC finances the remediation required to rehabilitate devalued public land and enhance the exchange value of the strategic surplus land it receives. Strategic surplus land is purchased by CLC using non-interest bearing promissory notes issued to the Treasury—making its creditworthiness backed by the full borrowing power of the Government of Canada—to be repaid through future land sales. Operations activities fund most development and construction expenses along the way. CLC’s credit market activities are mainly limited to short term money market transactions (notes, bills). By minimizing its exposure to longer-term debt markets (bonds, commercial bank loans), it has enjoyed low interest payments over the years.
5
CLC: items as a percentage of total expenses. Source: author’s calculations based on CLC annual reports 2004–15 sections on consolidated financial accounts. ClC: items as a percentage of total revenue. Source: author’s calculations based on CLC annual reports 2004–15 sections on consolidated financial accounts.
CLC may treat its land as a financial asset, but, given that operations mainly finance land development, CLC has itself remained fairly insulated from the impact of ‘financialization’, if defined by a company’s exposure to financial markets or use of financial instruments, and/or as a share of total company revenue (for a literature review and various definitions of financialization, see van der Zwan, 2014). Indirect financialization is present given that CLC frequently enters into joint venture with private land developers who bring their own capital to the table. Landholdings make up 70–90 percent of its asset portfolio in any given year; cash and short-term investments make up only 10–30 percent of the total (Figure 5). CLC is part landlord and part land developer. It is reliant on rent collection and property markets; its operations/hospitality subsidiaries help finance land development but these services are not its main focus, and neither are its financial market activities.
Items as a proportion of total assets. Source: author’s calculations based on CLC annual reports 1999–2010 sections on consolidated financial accounts.
Given that urban financialization is based on the anticipation of future value or events (Teresa, 2015: 471), CLC’s status as a public corporation means it plays the important role of managing and regulating property revaluation in ways that cut out much of the gamble for private market actors. Not only are the costs and risks associated with redeveloping surplus land shouldered by, shared with, or subsidized through the state like we see with public–private partnerships (Ashton et al., 2014; O’Neill, 2009; Whiteside, 2015), but all the risks and costs of imparting market value into devalued public land are borne directly by CLC in the initial remediation period. Assets do not leave CLC’s books until they find a buyer; they are shielded from market-imposed devaluation after being designated as surplus to state operations. In the interim, financing for land redevelopment costs (architectural planning, site preparation, remediation, rezoning, and public works installation) comes either from the borrowing power of the federal Treasury, or is funded through fees, rent, and user charges earned through CLC’s commercial activities. Construction costs for new housing subdivisions are often co-financed in joint venture with private land developers. Once revalued, public land is transformed into a private commodity realized through sale or lease. Market forces largely determine what happens to that land after it is privatized, with values rising or falling accordingly.
Revaluing surplus public land
Sites of CLC-managed devalued land are typically located within urban centers tucked close to the US border where the vast majority of the population lives and where circuits of capital are most well developed (Ircha and Young, 2013a). Northern land is rarely deemed ‘strategic surplus’ given that this designation is limited to sites where CLC activities will produce significant monetary returns for government. With rights to resource extraction falling to other jurisdictions, most surplus northern federal government land would be of little (current) interest to real estate markets due to its geographic location, its often prohibitively high circulation costs (infrastructure and transportation), climate, sparse population, little consumption demand, and few internal market linkages. Urban land de/revaluation is the object, and cities mainly the venue, for CLC-related controversy.
Federal jurisdiction over (potentially lucrative) surplus property is thus for the most part concentrated in cities with fortunately situated ports, railway yards, military bases, heritage sites, office buildings, and can sometimes be found in the most lucrative of all Canadian markets: Vancouver’s Point Grey Jericho properties, for example, or Toronto’s Harbourfront and CN Tower, or Montreal’s Old Port. Surplus federal land without the potential for market revenue (i.e., in a rural or remote location) is not, by bureaucratic definition, ‘strategic’ since remediation would do little to augment exchange value and market offers would find little private uptake. Surplus designations coincide with market interest in public land.
Revaluing the state’s estate: CLC's portfolio of surplus public land (recently sold or currently on offer).
Source: Canada Lands Company (CLC) (nd).
Of CLC’s current 31 projects, nearly a third are of imminent completion or have municipal approval, plans for another third are still to be determined, and the final third are complete and turning a profit for private participants. For those operational and nearly operational projects, state property dispossession has led to residential, commercial, retail, and industrial activities. Revaluation of devalued Department of National Defence (DND) land (due to base closures) typically involves private real estate developers, construction and engineering firms, and financial institutions, and is home to retailers ranging from multinational corporations and national chain stores to the petty bourgeoisie. Revaluation of devalued land once hosting government departments’ offices and production facilities (shed through fiscal austerity and state restructuring) usually involves similar private sectors plus industrial-manufacturing firms. Revalued surplus land adjacent to important waterfronts in major urban centers (Toronto and Montreal) is more typically retained or tightly controlled by CLC given the heritage and tourism importance of that land, and thus privatization with these parcels is often limited to long or short term leases offered to private hospitality, entertainment, and service sector vendors. Finance, insurance, real estate (FIRE) and hospitality sectors clearly benefit from surplus land privatization. If market value had not been privileged other social values could have been favored instead: more public industry and social housing, and decommodified common property space for parkland, fallow, or water access.
Space constraints will not allow for a full analysis of each individual land development scheme, but two areas are worth highlighting are: (1) de/revaluing urban land in the wake of neoliberal political-economic restructuring (i.e., land rendered surplus through the privatization of Crown corporations, austerity-induced neglect, devolution of federal authority, and the closure of military bases) and (2) the recent trend toward using surplus designations to settle land claims disputes with First Nations groups (regarding land treaty violations and/or unceded territory). The latter represents a relatively recent role taken on by CLC; results are currently indeterminate but still indicative of how exchange value calculations are used to square colonial era land theft today. The former illustrates the two central arguments of this paper: that CLC treats its land as a financial asset by privileging and promoting exchange value, and that the Canadian state plays a crucial, active role in the dispossession process by subsidizing or absorbing immediate costs and providing managerial support.
Before government privatized the Canadian National Railway (CN), the Crown corporation was forced to commercialize and downsize. CN quickly shed parcels of urban land, contaminated land in particular, leaving CLC to remediate this devalued property. In Moncton, New Brunswick, downsizing meant not only lost jobs when CN’s Shop Yards, where most locomotives in Eastern Canada were maintained, was closed in 1988, it also meant the abandonment of the site a few years later. Stonehouse explains: “the closure threw several thousand people out of work and left an environmental mess just a 20 minute walk from city hall: petroleum waste, arsenic, copper, lead and zinc. It was a blight, plain and simple” (quoted in Peacock and MacKinnon, 2013: 71). CLC took the lead on remediation and the expense of recycling 4,000 tons of metal, removal of 120,000 tons of lead contamination and 30,000 tons of wood, and the installation of kilometers of irrigation pipes and drainage (Peacock and MacKinnon, 2013). Upon completion, CLC had transformed this once-devaluated former Crown corporation property through commercialization (installing fee-based recreational facilities) and privatization (selling parcels of land to create a private technology park). The project was no doubt a success in that it turned a vacant ‘eye sore’ into a place for community and business activity, but it equally indicates the importance of neglect and privatization (and broader neoliberal restructuring) in creating the conditions under which CLC’s revaluation activities are encouraged.
The CN Shops project ultimately won an ‘Award of Excellence’ for its environmental remediation, and it is often touted as a success story for CLC—the relatively quick revaluation of land, in consultation with the local community and city officials, and private sector participation via the technology park. In other words, CLC’s presence, expertise, and upfront financing ‘greases the wheels’ to help devaluated land move more quickly from dilapidated to profitable. Other similar projects that have not involved CLC, such as the redevelopment of the Saint John, New Brunswick port lands, are often riven with competing interests and languish in the proposal stage for decades, leading some to suggest that the strong supportive role played by CLC is what makes all the difference when it comes to hastening the creation of market value (Peacock and MacKinnon, 2013: 85).
Mid-1990s federal austerity and privatization were nation-wide; just as Moncton’s surplus CN land was being remediated, the fate of surplus federal land in Toronto once owned by CN (railway land adjacent to Lake Ontario) and Transport Canada (through its port authority activities along the city’s Lake Ontario waterfront) was also being contemplated. Unlike in Moncton where the remediation of abandoned CN land offered the potential for only very modest market interest and financial gain, surplus federal land in Toronto offered far more lucrative possibilities once revalued by CLC. When CN was privatized, most surplus railway land was sold outright to a private developer and the CN Tower became property of CLC with commercialized leases dolled out to private vendors and entertainment providers. When Transport Canada shed its port authority responsibilities, it eventually led to a Toronto Harbourfront full of high priced condominiums and commercial/retail facilities with very little space left for low-rent housing or decommodified commons. Given that CLC is mandated to realize full property value in surplus disposal, and that estimated market price was set at a premium for a then-underdeveloped parcel of prime land in Canada’s largest city, value maximization won out over other competing community interests (Ircha and Young, 2013b; Sanderson and Filion, 2013). More recently, in January 2017, the trend continues with CLC acquiring the historic Dominion Public Building next to Toronto’s Union Station, which it plans to privatize through a multibillion-dollar ‘megaproject’ (CBC, 2017).
Like port and railway land privatization, the closure of federal military bases in an austerity context is another major source of Canadian surplus urban land. In 1991, one government official described the Department of National Defence (DND) as ‘hoarding land’ and suggested that there was pressure to “take advantage of those lands for public purposes, for example, social housing,” or by converting DND surplus into national parkland (Brewin, 1991: 3362). As it turns out, rather than social housing or public parkland, much of CLC’s current (2016) portfolio and its redevelopment activities have come to involve converting former military bases into pricey residential subdivisions (via fee-simple purchase agreements), in partnership with private land developers, using a ‘new urbanism’ approach that incorporates private retail and light commercial activities. Like other forms of surplus revaluation, these developments have again been most successful (in dollar terms) in/near major cities (e.g., Village at Griesbach, Edmonton and Currie Barracks, Calgary; Garrison Crossing, Chilliwack near Vancouver). In other instances, such as the surplus military base CFB Chatham (in a more rural locale near Miramichi, New Brunswick), the private sector has been more reticent to rent and invest.
In 2006, CLC’s mandate was widened beyond value for money maximization to include settling longstanding land claims disputes and legal obligations to indigenous communities. But here too we see monetization and exchange value at the fore. Taking the example of Jericho Lands in British Columbia, in 2014 CLC and three First Nations groups (the Musqueam, Squamish, and Tsleil-Waututh nations) entered into an historic deal where ownership over 52 acres of surplus federal land—one of the largest underdeveloped tracts of urban Vancouver and located in the wealthy Point Grey neighborhood along the coast—was transferred using a fee-simple purchase agreement at market value, known as an “accommodation agreement”. This market-based effort aims to resolve the longstanding dispute in Coast Salish peoples’ territory (encompassing Vancouver and beyond) over unceded land—land neither historically surrendered by First Nations inhabitants nor legally acquired by the Crown.
The land deal was worth C$237 million. CLC paid for half and owns half, the federal government provided the First Nations groups with 28 percent as per the accommodation agreement, and the three First Nations groups negotiated an additional 22 percent equity stake. In 2016, another 38.8 acres were obtained from the provincial government, worth C$480 million, consolidating the 90 acres now known as Jericho Lands. Also structured as an accommodation agreement, the province gave the First Nations groups C$96 million toward their half of the joint venture land purchase with CLC. It remains an open question as to where the rest of the money needed by the First Nations groups will come from and whether this will include partnering with philanthropic capital, incurring bank debt, and/or securing credit through financial markets. Current leases on the land run until 2020, at which point government and other buildings will have to be vacated and development plans will be initialized. Jericho Lands is being called a “blank canvass” for redevelopment; this is an area ripe for future research as forms of commercialization or privatization will likely follow.
Patrick Wolfe writes that the primary goal of settler-colonialism is, “access to territory” (2006: 388), emphasizing that settler politics is about land acquisition—both historically and today (see also Coulthard, 2014). In this we hear echoes of Marx on the enclosures and Harvey on accumulation by dispossession through fraud, predation, and theft. Given that Jericho Lands development plans are still to be determined, it is unclear at the moment what types of profit- or rent-extracting relations will be established but one certainly hopes First Nations land settlements, with historical land theft and the emergence of capital equally dripping in blood, will not result in self-selected dispossession and financialization.
Concluding remarks: Devaluation and revaluation
Public land and property can be devalued by government either through its physical destruction and decay (rot, dilapidation, contamination) or through budgetary/ideological transformation in the capacities and priorities of the public sector. CLC’s task is to take devalued land and turn it into a commodity that will find a buyer through exchange value enhancements. To do so, CLC operates as a rent collector and property developer, privatizer, commercializer, and financializer of public land. As a Crown corporation, not a private for-profit firm, it occupies a special role in the de/revaluation process.
The activities of CLC coincide with the well-established, active role played by the Canadian state in economic development, from pre-Confederacy settler-colonialism, to its full flowering under Keynesianism, to different but equally supportive neoliberal policies. In short, there is a long history of public–private collaboration and state-led market making in Canada. The liberal academic antagonism of state vs. market or public vs. private can seldom be found in practice once we scratch the surface. As argued here, CLC indicates a state active in its support for capital accumulation, even/especially through dispossession. CLC as Crown corporation, as public landholder, as commercial decision-maker, and as market maker, fits with the larger pattern of state support for markets and the socialization of costs and risks to promote accumulation in the wake of devaluation. CLC supports land revaluation and market development in its own particular way and under unique dynamics of late modern capitalism—with its penchant for dispossession and financialization.
In large part what CLC does that no private for-profit corporation would be able or willing to do is that it interferes with or steps outside of the regular circuits of accumulation and valorization available to capital. It can hold, with no loss, devalued land, it can take its time with development decisions and market letting, and it can draw on the entire borrowing power of a sovereign state to do so, insulating it from many aspects of secondary market financialization seen so often today. It is entrepreneurial and staffed by private sector real estate experts but it is not itself driven by profit per se. It is driven to make public land profitable for others, for private retailers, industry, homeowners, realtors, land developers, hospitality service providers, and vendors. It is required to remit dividends to the federal government at the end of the fiscal year, and it is proud to report its consistent ability to do so, but its real business is the revaluation of devalued land. It trades in land devalued conceptually through bureaucratic procedures and legislation, land devalued through austerity-initiated need and want changes in government, and land devalued through contamination and neglect. CLC revalues land using funds from its operations arm and rent collecting activities, insulating itself from financialization and sparing it significant interest payments, but the land it remediates does not escape the same fate—often redevelopment schemes are financed and executed in joint venture with private land developers drawing on private credit and dragging creditors’ interests into the mix, and, unlike elsewhere, public land is treated by CLC as a financial asset.
CLC does all it can to make devalued public land privately profitable, and it does this because its mandate is consistent with the mandate of the state more generally: support capital accumulation, provide for legitimation, apply coercion where necessary (O’Connor, 1973; Panitch, 1977). For Canadian public land, this translates to: socializing the costs of remediation and obscuring the narrow market-oriented values privileged through surplus land disposal, but doing so using a publicly owned corporation with outcomes enforced through the dull compulsion of property rights law. That CLC plays these roles in mundane and often invisible ways, with little academic interest or even day-to-day public awareness, is testament to its hegemony.
Footnotes
Declaration of conflicting interests
The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding
The author(s) received no financial support for the research, authorship, and/or publication of this article.