“Communication error” costs GN $14M in Cape Dorset school replacement

Cape Dorset residents gather near the site of the former Peter Pitseolak high school July 21, which burned down in 2015, as part of a ceremony and memorial for the community institution. (FILE PHOTO)

A “communication error” left Cape Dorset’s Peter Pitseolak school under-insured to the tune of millions of dollars, Nunavut MLAs learned Nov. 8.

During committee of the whole scrutiny of the 2017-18 capital budget that day, South Baffin MLA David Joanasie asked about the total cost associated with the loss of the newly-renovated school, which was completely destroyed by fire in September 2015.

At the time, the school had just re-opened following a $17.3 million expansion.

But it turns out that the Government of Nunavut did not communicate the full amount of that $17 million cost to its insurer.

“When the school burned down, we learned that it was under-insured, so we couldn’t put in a claim for the remaining value of the school there, the book value,” Finance Minister Keith Peterson said.

The book value of the renovated section—after amortization—was $14.6 million, Peterson explained, an amount Nunavut MLAs agreed to forgive Nov. 8 as part of a review of Bill 21, the Write-Off Assets Act 2015-16.

Once the GN learned of its error, the Department of Finance quickly moved to make sure that insurers are aware of the true value of all its assets, Peterson said.

“There have been three schools in the past that had burned down, I believe,” Peterson added.

“The insurer decided that there would be a $10 million deductible. In essence, we were to become self-insurers.”

Jeff Chown, the deputy minister of finance, said the department has now done a full review of all GN assets to ensure their valuations are up-to-date.

“We’re continuing to work with them to ensure that we don’t have communication errors of this nature in the future so that we’re properly informed at the time of additions to capital assets,” he told MLAs Nov. 8.

An RFP has been issued for the design and construction of the new building that will house Peter Pitseolak school, although it’s not expected to be complete until September 2019, at an estimated cost of $34 million.

The Nunavut legislature adjourned Nov. 8 until Jan. 20, 2017.