A Regina businessman says he's been treated unfairly by the provincial government, which expropriated his land and paid him as little as one-fourth what it shelled out for comparable land immediately south of his.

In September of 2015, the Ministry of Highways expropriated more than 120 acres of Rudy Balzer's land near the Global Transportation Hub (GTH) for part of an interchange and the West Regina Bypass.

The government paid him $42,000 an acre for 82 acres, and $25,000 an acre for 44 acres which were close to the city's sewage lagoon.

I thought that price was a lot more than what I was offered from our property and I couldn't figure out why. - Rudy Balzer, Regina businessman

Balzer said that's far less than the land is worth and far less than a Crown corporation paid other Regina businessmen for comparable land needed for the adjoining bypass interchange.

A year and a half earlier, in March 2014, the GTH, a government-owned industrial and transportation logistics park, bought 204 acres of land located just south of Balzer's from a numbered company owned by developers Anthony Marquart and Harold Rotstien.

In that case, the GTH paid $103,000 an acre — 2.5 to 4 times as much per acre as Balzer was paid.

"I thought that [$103,000] price was a lot more than what I was offered from our property and I couldn't figure out why," Balzer told CBC's iTeam.

Balzer's land similar to GTH land

Balzer's land is similar in many ways to the property the GTH purchased from Marquart and Rotstien:

Both parcels are located in the City of Regina.

Both parcels were zoned Urban Holding on land designated for future industrial use, according to government-procured appraisals.

According to those same appraisals, the "highest and best use" of both lands is as an industrial subdivision.

The Ministry of Highways needed both parcels for an interchange on the Regina bypass.

Balzer said given all that, it makes no sense that he received $25,000-$42,000 an acre in 2015 when Marquart and Rotstien received $103,000 an acre in 2014.

Rudy Balzer says his plans for an industrial subdivision on the west side of Regina were ruined when the Ministry of Highways expropriated his property.

"If it's that costly on the south side of Dewdney Avenue, then the north side should be the same thing because it's going to be part of the same interchange," Balzer said.

"I'm not being treated fairly."

He explained that for more than a decade he's been trying to develop his land into an industrial subdivision through his company, North Plains Management Ltd., which owned the land.

However, he said, the expropriation has ruined those plans.

"I was disappointed, angry and frustrated because I had put a lot of my time into it, getting these approvals from all these different areas and now it was all kind of for nothing," Balzer said.

How the government came up with its price

In December 2014, an appraisal commissioned by the Ministry of Highways concluded Balzer's land was worth $20,000 and $40,000 an acre respectively for the two parcels.

The appraiser, Peter Lawrek, explained to CBC's iTeam that he came to that conclusion after examining 18 comparable sales around the city of Regina.

Lawrek explained that the appraiser's job is to determine the most likely price that a property would sell for in a free and open market, with a willing buyer and seller.

"Clearly what we're trying to do is, if you put it up for sale, what would it sell for?" Lawrek explained. "It's no more difficult than that."

Lawrek said in his valuation of any land along the bypass route he's required to come up with the market value of the land assuming the road wasn't being built. He said in that way no one profits or suffers unduly as a result of the government's project.

"In order for negotiations to begin you've got to know 'What's it worth sitting there without any thought of a highway coming?'" Lawrek said. "It has to be done that way to be fair."

Lawrek also appraised GTH land

This is the land the GTH purchased for $103,000 an acre from Regina developers. Lawrek said he used the very same "fair market approach" when he appraised the 204 acres owned by Marquart and Rotstien in October 2013 for the Ministry of Highways.

In that case he concluded the land was worth between $30,000 and $35,000 an acre. He said in his view that was the likely price the land would have fetched at that time on an open market, assuming a willing seller and a willing buyer.

However, it was the GTH that ended up purchasing the land, not the ministry, and it paid $103,000 an acre for the property; about three times more than Lawrek concluded the land was worth.

"I stand by my work," Lawrek told CBC's iTeam. "What else can I say?"

He agreed that the Balzer's land and the GTH land are similar. He said in light of that he understands Balzer's question about the gap between $25,000 to $42,000 an acre and $103,000 an acre.

"Rudy's question is fair, isn't it?" Lawrek said.

"If you're an owner across the road, why wouldn't you ask that question?"

Premier defends $103,000/acre land purchase

When asked by the media on Feb. 8 about the GTH purchase, Premier Brad Wall said "I'm completely satisfied with the work of the GTH in purchasing these things."

Wall personally signed the cabinet order-in-council which approved the $103,000-an-acre purchase price, despite the fact that Lawrek's market-value appraisal said it was worth $30,000 to $35,000 an acre.

Saskatchewan Premier Brad Wall defends the GTH purchase of land at $103,000 an acre. (CBC)

Wall argued that if anything, the people who sold the land may have left money on the table.

"You could make the case that if there were speculators who were trying to make some money — as there always is in these kinds of developments — they didn't do a very good job, because the value of the land that they sold just a year or so ago has gone up significantly," Wall said.

An email from a government spokesperson said "it is important to note that at the time the value of land in the area was rising rapidly and continues to appreciate today. In the past year, the GTH has sold land for approximately $200,000 per acre."

In a follow-up email the GTH confirmed that the sales referred to were all in 2015 and ranged between $198,000 and $223,000 an acre.

The iTeam asked if this price was for serviced land or raw land, noting that the 204 acres purchased by the GTH was raw land, without services.

The GTH confirmed that the land was "service ready", meaning it is "rough-graded to standard and the utilities are implemented within our roadways for clients to connect to."

The CBC asked the GTH how much it paid to make the parcel "service-ready."

The GTH replied, "we consider our land cost build-up proprietary information because we have to be competitive in the marketplace."

Lawrek told CBC it costs about $200,000 a saleable acre to "service" raw land for industrial use in Regina, including hard and soft costs but excluding land costs, and servicing agreements with the city. Lawrek said in his view the difference between "service ready" and serviced lots is semantic. He says the difference in cost between the two designations is insignificant.

GTH and Ministry value land differently: Government

When asked to explain why Balzer was paid so much less than Marquart and Rotstien for similar land the Ministry of Highways said it's able to acquire land through expropriation for public improvement while the GTH has to compete for land in the open market.

The GTH 'must compete for land on the open market against other buyers. It must make a business decision as to how much it can offer and still make a reasonable rate of return.' - Ministry of Highways email

The Ministry of Highways explained that it purchases land "for fair market value" based on independent appraisals of property. It says it acquires appraisals to determine what the land would sell for in a free and open market because "we have an obligation to treat landowners fairly but we also have an obligation to taxpayers to compensate landowners appropriately."

The ministry went on the explain that the GTH "must compete for land on the open market against other buyers. It must make a business decision as to how much it can offer and still make a reasonable rate of return."

What the GTH did with that 204 acres

Less than one month after it bought the 204 acres from Marquart and Rotstien, it agreed to sell 58 acres of that land to the Ministry of Highways at less than half price: $50,000 an acre. The ministry plans to use that property for an interchange on the West Regina Bypass.

The ministry also agreed to pay the GTH $65,000 an acre to use 55 acres of that land for a "borrow pit." The ministry will dig a pit and use the dirt to construct the bypass. That will leave a 55-acre hole in the ground which will not be available for development.

In the end, the GTH will have about 91 acres remaining from the 204-acre parcel which it could turn into industrial lots.

Bill Boyd defended the government's decision to ask the Global Transportation Hub to buy land for two to three times more than government appraisals said it was worth. (CBC) The minister responsible for the GTH and the chair of the board, Bill Boyd, explained that this purchase was necessary because having the bypass interchange was always seen as essential to the future of the Hub.

The iTeam asked Boyd why the government didn't simply expropriate the land at the $30,000-to-$35,000-an-acre price recommended in the Ministry of Highways appraisal.

Boyd explained that the seller had an appraisal showing the land was worth $125,000 an acre and the GTH had its own appraisal saying the property was worth $51,000 to $65,000 an acre.

"So there's a pretty big risk to the taxpayer, I would say, that if we expropriated that it would be challenged at some point in the future in court," Boyd explained, when he sat down with the iTeam in December 2015. "That appraisal would be presented at that point and we could lose."

Boyd said the GTH came up with the $103,000-an-acre price by taking a mid-point between the GTH appraisal and the Marquart and Rotstien appraisal.

Ministry of Highways says it's in discussions with Balzer

In Balzer's case, his land was expropriated based on the Ministry of Highways appraisal, which meant he was paid between $25,000 and $42,000 an acre.

In an email, a spokesperson for the Ministry of Highways pointed out "the Expropriation Act provides for up to two years for discussions to continue. We are currently going through this process with Mr. Balzer so it is possible that the final price he receives for his land is higher."

The ministry also said that "at the end of the two-year period, Mr. Balzer can ask the court to make a final determination of fair market value if we still haven't reached an agreement."

Conflict between Balzer and province goes back years

In November 2012, Balzer's company, North Plains Management Ltd., filed a lawsuit against the government of Saskatchewan related to the very same land and the Ministry of Highways' plans for it.

The statement of claim alleges the Ministry of Highways devalued Balzer's land when it gave notice it would need some of the property for the bypass, though it didn't say which parts specifically and it didn't expropriate at that time.

Balzer argued that created uncertainty which "left the lands in an unmarketable state."

In its statement of defence, filed in June 2013, the government said that it didn't specify which land it wanted and didn't expropriate at that time because the highways project was still in planning stages.

The government's statement also points out that Balzer didn't yet have the necessary approval for his subdivision from the Ministry of Government Relations. There's been no activity on that lawsuit since 2013.

Balzer is now preparing to get an appraisal in order to fight the government's valuation of the land.