Loan for wooden building bypassed Treasury Board’s approval, documents show

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A public-money trust issued a multimillion-dollar loan to a Prince George businessman and B.C. Liberal Party insider without project approval from the provincial government's Treasury Board, which was a key condition of the transaction, according to documents obtained by The Globe and Mail (PDF)l.

The Northern Development Initiative Trust (NDIT) approved the $8.9-million loan to Commonwealth Campus Corporation, a company controlled by Dan McLaren, in 2009.

The funds were to be used by Mr. McLaren and his company to purchase lands in downtown Prince George, according to briefing notes prepared for Janine North, the CEO of NDIT. The notes were prepared for a special board meeting to discuss the loan.

Those lands, the documents show, would become the site of the government's 10-storey Wood Innovation and Design Centre (WIDC) project.

The WIDC had been announced in the Liberal government's 2009 Speech from the Throne.

The briefing notes show the loan was to be made "subject to approval from Treasury Board for the capital investment in the Wood Innovation and Design Centre."

The documents reference the need for the WIDC project's approval from the Treasury Board several times.

This week, The Globe and Mail published comments by Kevin Falcon, former B.C. finance minister and chair of the Treasury Board, that the Treasury Board refused to approve the funds needed to fulfill a pledge made by Premier Christy Clark on a September, 2011, trip to Prince George, promising that the project would be the "world's tallest" wood building.

Jobs Minister Pat Bell, whose riding is in Prince George, had also publicly promised that WIDC would be the world's tallest wood building.

The province has been forced to scale back the project and the WIDC, once envisioned as a wooden palace showcasing the use of wood products from B.C., is now expected to be just six storeys tall and won't use all the land assembled by Mr. McLaren.

He and another local businessman, Brian Fehr, allege that Mr. Bell had assured them that Mr. Fehr's proposal to build the WIDC using all of Mr. McLaren's lands would be shortlisted for the government contract. It was not, and Mr. McLaren's loan from NDIT, of which $1.2-million is outstanding, is now in foreclosure.

The NDIT is a publicly funded trust whose mandate is to encourage infrastructure and economic development in Northern B.C. It is unclear why the loan proceeded without meeting the condition of Treasury Board approval, which is still pending.

Dan Rogers, the former mayor of Prince George who was a member of the board of NDIT at the time, said the trust's directors were looking for assurances before making the loan.

"I do recall there were concerns over the security of any loan and the need to ensure that there was some security, not only from those getting the loan, but some certainty as to the reasons for the loan and obviously, confirmation that Treasury Board was actually moving ahead with the project was key to those discussions," Mr. Rogers said.

"The expectation of the board was that there would be some certainty and that certainty would be in the form of Treasury Board approval," he added.

Ms. North, the NDIT CEO, did not respond to requests for comment.

The Globe and Mail has previously reported that Ms. North was ordered by a senior government bureaucrat working under Mr. Bell to rewrite a letter about the WIDC project stating that NDIT made the loan to Mr. McLaren "at the request of the two local Ministers of the Crown." In the second version of the letter, that phrase was removed.

In Victoria on Monday, the NDP opposition continued to press for an independent investigation into the affair.

"The list of unanswered questions surrounding the Wood Innovation and Design Centre in Prince George continues to grow," NDP Leader Adrian Dix told the House.

He noted that Mr. Falcon had already warned, in a leaked internal document, against making announcements without Treasury Board approval.

"Why did the Premier proceed to reannounce the Wood Innovation and Design Centre if Treasury Board had not yet approved the project?" Mr. Dix asked.

Ms. Clark responded that the project is going ahead, in some form.

"It's happening. It's going to revitalize the downtown of Prince George. It's going to be a model for the world of what we can do here with wood in British Columbia," she said.

Ms. Clark made no apology for backing down on her 2011 commitment to build the "world's tallest" wood building. "Whether it is a school or a hospital or this project, the scope will sometimes change, and that's certainly what's happened in this case," she told reporters.

"The project changed because budgets have changed."

The final decisions on the project are expected to be announced this month.

Ms. Clark sidestepped questions about the public challenge from her former finance minister over the scope of her 2011 promise.

"I don't know what motivates anybody's comments but at the end of the day this project is happening," she told reporters.

Mr. Falcon, the MLA for Surrey-Cloverdale, was not in the legislature on Monday. His caucus colleague Bill Bennett expressed frustration that outgoing Liberal MLAs have been critical of the Clark government.

"There is an issue with a bunch of people who are not running again … and think you can just say whatever you feel like saying and there are no consequences – and I guess for them, there aren't."