DIDSBURY - The same six lots of north end industrial land that have been under public scrutiny for the way in which the Town of Didsbury sold them eight years ago are also now the subject of a legal dispute.
Residents have repeatedly asked council for financial disclosure on the 2010 sale to a now defunct company, questioning the appropriateness of some of its concessions and its implications on financial statements today.
Harold Northcott, the town’s CAO, did not answer any of the Gazette’s questions regarding the lots. Instead he issued a written statement: “In relation to the industrial lots (Plan 0714629 Lots 2 - 7), The Town is involved in a legal dispute with these properties.”
It is unclear what the dispute concerns.
James Carpenter -- whose company, 852016 Alberta Ltd., currently owns at least some of the lots, if not all -- has also declined comment.
Residents’ issues stem from the purchase deal the now defunct company Harvest Builders made with the town eight years ago.
The deal included an “unusual” way the lots would be assessed for property taxes, according to the CAO of the town at the time. The Town of Didsbury also issued a mortgage to the developer to buy the properties. As of last fall, the Town of Didsbury was still listed as a mortgagee on at least one of the lots, if not more.
“…There is nothing to suggest that other private businesses were able to access the same mortgage opportunities…,” wrote Rhonda Hunter on the Didsbury Municipal Election 2017 Facebook page last fall. She also questioned whether it fell within the guidelines of the Municipal Government Act.
Hunter, now the mayor of Didsbury after being elected in October 2017, would not comment on the deal due to the town's legal dispute.
She says the current council has received the information they need to make decisions.
"Our administration has been very open and honest with our council," said Hunter. "We have the information we need on all town issues."
Administration was directed through a council motion carried on Sept. 26, 2017 to return a report on the procedures associated with a municipality lending funds to a business with relevant Municipal Government Act references.
Grown weary of waiting for the report and other financial details of the deal to be brought to open council, resident Kevin Bentley brought up his concerns in open council last month. In recent weeks, he wrote further questions to council in a letter.
Council and administration have declined to discuss the details of the sale of the lots and its current financial ramifications on the town, citing in-camera discussions.
A search of publicly-available documents shows the Town of Didsbury sold the five lots on 19th Street and one on 29th Avenue for a total of $350,000 in January 2010 to the now defunct 1307754 Alberta Ltd., operating as Harvest Builders.
Details of the sale were noted in exhibits entered in court in the 2013 bankruptcy proceedings of 1307754 Alberta Ltd. Carpenter’s ex-wife, Darla, was the sole shareholder of the company and assigned the company into bankruptcy in July 2012.
The “unusual” property assessment deal residents are now questioning, was described by Roy Brown -- the town’s CAO at the time -- in another court exhibit.
“The offer from Harvest Builders did have an unusual clause in it that met both the needs of Harvest Builders and the Town. The clause ascribed a built out value to the project. So that over a period of five years, the Town would receive tax revenue based upon the estimated build out assessment,” wrote Brown in a letter to the trustee.
Without writing what that value was, Brown used a built out value of $1 million as an example. “The Town would receive taxes on that one million dollar assessment regardless of whether or not the project was completed.”
Brown confirmed in the same letter that the Town of Didsbury sold the land at a lower value “so as to be able to ensure that they achieved on-going long term benefits. Harvest Builders on the other hand did not have to put out as much cash as would normally be required to achieve ownership of the land.”
The same month it sold the land to Harvest Builders, the Town of Didsbury was registered on the properties’ titles as a mortgagee - an entity that lends money to borrowers who want to purchase real property.
According to a historical land title certificate obtained by the Gazette for Lot 7, the Town of Didsbury was registered as a mortgagee on Jan. 28, 2010 in the amount of $250,000.
The town, along with 596296 Alberta Ltd. were secured creditors registered against the industrial land during the bankruptcy proceedings. The town's claim was for the $250,000 mortgage and 596296 Alberta Ltd.'s claim was for $100,000, described in an exhibit as a mortgage but registered as a caveat on the title of one of the lots as “an agreement charging land.”
The six industrial lots were awarded to Marco Contracting -- the major unsecured creditor in the bankruptcy with a claim of over $1 million -- in the bankruptcy settlement.
The bankruptcy trustee’s report notes Marco Contracting Inc. “made arrangements with the Town of Didsbury and 596296 Alberta Ltd…. for a transfer of property to Marco Contracting Inc.”
It is not known what arrangements were made or whether the unique property tax deal was maintained.
The land was registered as being transferred to Carpenter’s company, 852016 Alberta Ltd. on Sept. 19, 2014, according to a Historical Land Title Certificate for one of the lots.
The town’s $250,000 mortgage was discharged on Sept. 16, 2016, according to the same document.
It also noted that three months earlier on June 10, a different Town of Didsbury mortgage was registered on the title for $310,628.
A tax notification was also registered on the title of at least one of the lots on April 24, 2017. A tax recovery notification is entered on title at the request of the municipality when taxes are in arrears. It is not known if that notification has been removed from the title.
