The Bizarre Marketing of 32 Oke Road | Greater Napanee Ratepayers Association

The Bizarre Marketing of 32 Oke Road

by Hubert Hogle

Summary: This propery was vested in the Town after an unsuccessful tax sale. It is one of many surplus properties that have been on the Town books for years with little or no effort to sell them. For some reason, this one was selected for special treatment right after the new council took office. It was advertised in a very minimal way with very unusual terms. It was sold to the former mayor for $10,100 even though there was a cash offer for $32,500 which could have been accepted. 79 days later, the former mayor flipped it for $100,000. The provisions of the sale of land by-law requiring an appraisal, and council oversight of the sale process do not appear to have been followed.

32 Oke Road Napanee consists of a Butler Steel Building in fair condition and two other frame buildings on 0.69 ac of land. It was used by a masonry contractor until about 2005 when it was abandoned. No taxes have been paid since. The Current value assessment is $176,000.

The property was offered for sale for arrears of taxes of $83,956.75 on July 23, 2014. There were no offers equal to the taxes in arrears. Nothing further was done and after two years the tax sale lapsed.

The tax sale procedure was repeated. By 2018, arrears had grown to $139,679.35. Tenders closed on May 24, 2018 with no offers equal to the taxes in arrears. This was reported to council on January 9, 2018.

At a meeting on January 23, 2018, Gerry Haggerty addressed council and noted that when tax sale properties are advertised, the property descriptions (lot and concession, roll number) do not give the public enough information to know where the property is located. Mr. Haggerty inquired why civic addresses aren’t used, why a sign isn’t placed on the property or why the notice isn’t listed in the MLS system. There is no record of any response to this inquiry.

On July 17, 2018, the Treasurer reported to Council that the tax sale of 32 Oke Road (and 3 other properties) had not been successful. The report set out 4 options. Staff recommended option 3 which was to “carry out due diligence inspection of the property prior to registering a notice of vesting with the view to resell the property at whatever price the municipality wishes.:

The report also stated:

“If Council approves this approach, at a future meeting, Staff will present to Council options on how to proceed with the future sale of the listed properties.”

The following resolution was passed:

RESOLUTION #321/18: Kaiser & Cole That Council receive for information the Financial Services – July 2018 Unsuccessful Tax Sale Properties report; And further that Council approve Option 3) and that the properties listed in Schedule “A” be declared surplus once vested by the municipality and advertised for sale; And further that Council approves that any future sale proceeds relating to these properties be applied to general operating revenue and transferred to our Allowance of Uncollectible Accounts and our Assessment Appeal Reserve.

A notice of vesting was registered on August 7, 2018.

At the August 21, 2108 meeting, Councillor Harvey inquired as to the status of the staff report regarding unsuccessful tax sale properties vested by the Town, but not yet sold and the option to sell them through MLS. The Treasurer said he would bring forward a report to the next Council meeting.

On September 11, 2018, the Treasurer recommended

that Council declare surplus to the Town’s needs the 25 properties listed in the attached Schedule “A” – List of Properties Executed by the Tax Sale Process and Vested and that those properties be advertised as such.

The Treasurer’s report noted:

Also, per Section 4 of By-Law No 07-59, the municipality shall obtain an appraisal of the fair market value of the land with the exclusions per Section 5 of the by-law. Once the properties have been declared surplus to the needs of the municipality Staff will be able to search for an appraiser and prepare a report to Council as to the priority listing of properties to sell. The report will include methods of selling the properties. Staff will investigate options to list and sell the properties in a fiscal manner that best meet the objectives of having these properties active and contributing tax revenue.

The following resolution was passed:

RESOLUTION #372/18: Cole & Kaiser That Council receive for information Financial Services – Tax Sale Properties Vested to be Declared Surplus for Purposes of Disposition report; And further that Council declare surplus to the Town’s needs the properties listed in the attached Schedule “A” – List of Properties Executed by the Tax Sale Process and Vested and that those properties be advertised as such. CARRIED.

The Service Area Update on December 18, 2018 contained the following statement:

Tax Sales Ongoing. Unsuccessful tax sales have been vested and listed as surplus. Report to Council forthcoming as to options to sell surplus properties

The Service Area Update on January 22, 2019; February 26, 2019; March 26, 2019 and April 23, 2019 each contained the following statement:

Tax Sales Ongoing. Unsuccessful tax sales have been vested and listed as surplus. Tenders are in the process of being prepared to sell some of the vested properties as well as reviewing other options to sell surplus properties.

The Service Area Update on February 26, 2019 and March 26, 2019 contained the following statement:

Pilot Project: Rogers & Trainor scheduled to make presentation to Council Feb 26th mtg – Specific properties being reviewed by legal counsel.

On February 26, 2019 James Ward and Alex Adams of Rogers and Trainor Commercial Realty Inc., Brokerage made a detailed powerpoint presentation to council, regarding the sale of surplus properties.

On March 12, 2019, a report was made to council which included the proposal of Rogers and Trainor to sell the 23 parcels of land which had been declared surplus. It noted that of the available properties, three parcels (25.9 acres) are currently in the process of being offered through a sealed public tender process.

It is not clear how or why those three properties were selected for special treatment.

In any event, the following staff recommendation was accepted by council:

RESOLUTION #163/19: Pinnell & Norrie That Council receive for information the Community & Corporate Services – Sale of Surplus Lands report; And further that Council acknowledge that existing By-Law No. 07-59 is adequate for the purpose of sales and other disposition of Town land; And further that Council authorize staff to enter into a pilot project with Rogers & Trainor Commercial Realty Inc. for the purpose of developing a process for the disposition of municipal commercial, industrial, and development lands; And further that Council direct staff to provide monthly updates to Council with a final report date due at the Regular Council meeting in December 2019. CARRIED.

The April 23 Service Area Update contained the following statement under Economic Development, Surplus Land:

• Establishing working agreement with Rogers & Trainor

• Identifying land parcels/packages to be offered through R&T pilot project

• Tender for 32 Oke Rd closes April 26

• Preparing tender documents for Heritage Park area

What is not clear is that why, of the numerous parcels of surplus property, 32 Oke Road and the Heritage Park property were selected for special treatment while the others were left for more leisurely treatment on December 17, 2019. (See The Bizarre Marketing of the Heritage Park Property for information on how that sale was handled.)

A small advertisement (8½ cm X 5½ cm) to sell 32 Oke Road by sealed tender appeared in the Town of Greater Napanee section of the Napanee Beaver on April 11, 18 & 25. The ad stated that tenders would be received “Until 3:00 p.m. noon on Friday. April 26, 2019”. The advertisement identified the property only by address and assessment roll/PIN numbers. There was no picture, plan or description of the nature of the property. The ad stated that the complete tender form was on the Town website. The Town website contained a 6 page tender form which contained some curious terms:

1. Neither the Beaver ad nor the tender form stated whether there was any reserve bid;

2. Neither the ad nor the tender form stated whether the lowest or any tender would be accepted;

3. The tender form required a deposit equal to the full amount of the bid;

4. The tender from had a detailed list of disclaimers including one that stated the Town made no representation as to the current zoning although that information was clearly known to the author of the ad.

5. There was no indication as to how an interested purchaser could gain access to the building.

I went to the property and was surprised to find the entry door to the Butler steel building unlocked. The door and locking mechanism were in good condition and there appeared to be no vandalism inside and I concluded that it had not been unlocked for very long.

I returned a few days later and found that an additional locking device had been placed on the door. A neighbour advised me that the Town had installed it after my first visit.

There was no indication on the property that it was for sale, or as to how an interested purchaser could gain access.

The tender form stated that tenders would be opened at 4pm on April 26 in the council chambers. I attended as did Ripal Patel who had submitted a tender. Brandt Zatterberg and an assistant were present to open tenders. At 4pm, Mr. Zatterberg picked up Mr. Patel’s tender, stated that it had been received at 3:04 p.m. and then set it back on the desk unopened. He did not return the tender. He opened the second tender and stated that it was for 10,100 from 5006616 Ontario Ltd signed by Gordon Schermerhorn.

5006616 Ontario Ltd. had been incorporated by Mr. Schermerhorn nine days earlier, on April 17, 2019.

Mr. Patel states that his tender was for $32,500 and contained a certified cheque for that amount. Mr. Zatterberg retained Mr. Patel’s tender and certified cheque.

Mr. Patel states that he went to see Mr. Zatterberg 3 days later, on April 29, and told him that his tender was for $32,500. Mr. Zatterberg still did not return Mr. Patel’s tender. (Mr. Patel states that it was finally returned around June 1.)

At that point, no binding contract had been created and the Town was under no obligation to accept either tender and could have chosen to accept either one of the two or neither or could have re-advertised the property.

On May 27, 2019, the property was conveyed to 5006616 Ontario Ltd. for $10,100. The transfer states: “This document is being authorized by a municipal corporation Marg Isbester (Mayor) and Susan Beckel (Clerk).”

On August 14, 2019 5006616 Ontario Ltd (Mr. Schermerhorn’s company) sold the property to Chips Custom Machining Ltd (John Hoy) for $100,000.00.

It appeared to me that the provisions of the Sale of Land by law 07-59 (“the By Law”) setting out the procedures for the sale of land may not have been followed. So, I made a application to the Clerk under The Freedom of Information and Protection of Privacy Act. The clerk took the whole 60 days allowed by the legislation to respond. Here’s what I asked and the response I received.

Q1. Section 4 of the by law requires that prior to the sale of any surplus land, the municipality shall obtain an appraisal of the fair market value of the land. (The Treasurer’s report dated September 11, 2018 indicated that “Once the properties have been declared surplus to the needs of the municipality Staff will be able to search for an appraiser…”) I would ask whether an appraisal was obtained, and if so for a copy of same. If no appraisal was obtained, I ask whether council ever waived the requirement for an appraisal and, if so, for a copy of the by-law or resolution waiving the requirement of section 4.

Clerk’s Answer: The record that responds to this request is contained in Closed Session minutes, which will not be provided as per Section 6(1)(b) of MFIPPA.

[It is probably that this occured at the first regular session of the new council on Dec 18/18 which contains this item: Adjourn to Closed Session pursuant to Section 239 of the Municipal Act in order to discuss: …. two prospective dispositions of land …]

Q2. Section 8 of the bylaw requires that council shall determine the sale price or reserve bid amount based on the appraisal of the surplus land and any costs associated with the proposed method of sale. I would ask if council ever determined the method of sale, sale price or reserve bid amount and, if so, a copy of the by-law or resolution. If a reserve bid was set by staff, I would ask for copies of all documentation relating the same including any authorization from council for staff to do so.