On January 9, 2018, after a failed tax sale, council wrote off $1,307,150.27 arrears of taxes, penalties and interest owing on the Heritage Park subdivision. Taxes had been owing for 20 years and over half of the write-off was penalties and interest.
This property is 16 ac of serviced land, a former subdivision plan with 149 units and it’s worth a lot of money.
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” [Heritage Park, 32 Oke Road and others] – 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.
At the first meeting of the new council on December 18, 2018, the Service Area Update contained the following statement:
Unsuccessful tax sales have been vested and listed as surplus. Report to Council forthcoming as to options to sell surplus properties
The following motion was passed:
RESOLUTION #498/18: Kaiser & Pinnell That Council resolve itself into closed session pursuant to Section 239 of the Municipal Act in order to discuss… two prospective dispositions of land…
It is likely that the two pieces of land referred to in this resolution were 32 Oke Road and the Heritage Park Subdivision.
If so, the question arises as to why staff selected, out of the 23+ surplus properties, these two parcels for special treatment.
The Service Area Updates 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.
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.
In April, 2019, two small ads appeared in the Napanee Beaver calling for tenders on short notice for Heritage Park. The ads identified the properties by assessment roll/PIN numbers with no map or any indication of the nature of the properties. No one, except those with an inside track would have had any inkling what the ads referred to.
The tender forms required a deposit equal to 100% of the bid, an unusual term by any measure. The short time frame, the minimal advertising and the demand for 100% deposit no doubt had the effect of suppressing outside bids. Perhaps that was the intention.
It seems clear, in retrospect, that staff had buyers lined up to buy both properties and the newspaper ads were nothing short of a charade, designed to disguise this. I learned from a resident of Camden Road that a particular developer had already been allowed onto the property to dig test holes.
I attended council on May 14 and pointed out to council (most of whom seemed unaware of what was happening) the insanity of trying to market the valuable Heritage Park property in this manner.
But, the sale of Heritage Park proceeded but was cancelled by the CAO on his own ititiative. A bid was submitted by Rapel Patel, owner of an adjacent convenience store but not accepted.
(In the meantime, 32 Oke Road was sold for $10,100. The sale was completed on May 27 and the lucky buyer was the former mayor, Gordon Schermerhorn, who resold it to John Hoy for $100,000 on Aug 14. See The Bizarre Marketing of 32 Oke Road for the complete story on that land sale.)
On May 28, the CAO felt inspired to respond to my complaint about the sale process for Heritage Park in an unusual and unscripted verbal report. It was summarized in the minutes as follows:
CAO provided a detailed verbal report regarding the timeline for the former Heritage Park subdivision lands, why the land sale public tender was cancelled, and highlighted the following: the public tender process for the sale of the lands was in place prior to the Rogers and Trainor process coming into effect the tender was advertised in the newspaper, on the Town’s web site and through a professional real estate FACEBOOK site the requirement for the full tender amount to be submitted as the deposit is to ensure that the bidder has serious intentions and the financial ability to develop the lands moving forward the Town will benefit more from the property taxation that will be generated than the price paid for the land a request for an extension was requested by a potential bidder the day before the closing and after legal consultation the process was cancelled as not all interested parties could be notified a report will come forward to Council regarding the future process for the disposition of these lands.
It is clear from this that staff had been negotiating the sale of Heritage Park with select developers for some time and they seemed to me to have an agenda.
On July 24, Heritage Park was listed with Rogers and Trainor for $1.1-million. But potential bidders had only 28 days to get their bids in. The listing required bidders to submit bids using the Town’s form. But the realtor didn’t get the form until 8 days before the time limit for bidding expired.
This is a complex property and any serious developer would need time to do due diligence (soil testing, EAs, check utilities connections, drainage, grades etc.). This can’t be done in such a short time frame. A property like this should be advertised widely and exposed to the market for 3-6 months to attract the best price. Any serious purchaser would need full access to the property to do due diligence. Anyone without advance knowledge is being asked to buy a pig in a poke. Once again, the short time frame has the effect of suppressing outside bids. Again, perhaps that was the intention.
It seems strange that this sale proceeded with such haste after the property had languished for 20 years with unpaid taxes.
On September 10, council approved a sale of the property in closed session. The decision was ratified in open session.
RESOLUTION #448/19: McCormack & Richardson That Council authorize the Mayor and Clerk to execute all documents and take all actions necessary to complete the sale of the former Heritage Park Subdivision property as outlined in the confidential report of the General Manager – Community & Corporate Services received by Council in Closed Session.
The Service Area Update on the Sep 24 stated:
Council has accepted Heritage Park offer – closing anticipated in November. A pre-consultation meeting is being scheduled between municipal staff, consultants and the prospective developer’s team to discuss a revised plan of subdivision.
The Service Area Update on Nov 26 stated:
Council has accepted Heritage Park offer – January 2020 closing .
The sale did not close in January. Or February. Or March. Teranet records show that, on April 24, 2020 the sale of Heritage Park to James Selkirk Custom Home Ltd for $1.15-million closed. What additional documentation was signed has never been revealed.
We do know that two parcels were conveyed in separate transfers thus enabling the purchaser to build four semi-detached units which can then be split without a severance creating 8 separate saleable units thus alleviating the purchaser from the need to apply for severances and allowing him to extract a good part of the purchas price before a new subdivision has been approved.
What other concessions were made? Were impost fees and development charges waived as was reputedly done with Hampton Inn? We probably will never know. And council is prohibited by by-law from ever telling us.
A media release was issued on the same day as closing touting the benefits of the project. Nothing was disclosed about the lack of transparency or what inducements had been given up to get the deal.
I am delighted to see this property being developed after it had been allowed to grow up in weeds and brush over the last 20 years. $1.15-million is significant but it was insufficient to recover the $1,307,150.27 of tax arrears which were written off on January 9, 2018 on vesting.
Was is a fair price? We will never know because nothing about this sale was open or transparent.
Nothing has been explained about why staff let 20 years of taxes accumulate without taking enforcement action.
Like the other bizarre sales of surplus properties, this stinks.
A property is worth what you can get for it. The only way to know for sure what it’s worth is to expose it to the open market in a fair and open manner for an appropriate period of time, accepting the highest bid. This wasn’t done.