The following article has been prepared by Lac Ste. Anne County to chronicle the administrative procedures and Council decisions behind the disposal process for the derelict County Administration Building located at 4927 Langston Street in Sangudo.
In November of 2016, with the new County Administration building nearing completion, County Council made motion directing Administration to proceed with a demolition plan and inclusion of the cost to demolish the vacant old County Administration building located in Sangudo, Alberta. An amount of $163,000 was authorized to be included in the 2017 operating budget, though the amount was thought to only be a portion of the remediation, demolition and reclamation costs required; full cost estimates were not able to be obtained without a Request for Proposal (RFP) process.
At that time, it was accepted that the building deficiencies, which included the presence of asbestos, water infiltration, mold concerns, roof conditions and other major structural flaws and deficiencies, were so significant that selling this building would not be possible due to lack of interest. With annual building maintenance costs estimated to be in excess of $18,000.00, action was necessary to reduce the financial strain this building was having on the taxpayers of the County.
While Administration continued to develop the demolition plan requested by County Council, a number of businesses from the Sangudo community came forward with concerns about the plan to demolish the vacant old County Administration building. The group felt demolishing the building would be a detriment to the community and were confident that, if the County would explore selling the building, an alternative could be found.
As Administration is charged with providing County Council with information on all alternatives to build the foundation of good decision making, the task of gathering the necessary information took place. It was determined that the opportunity to sell the building should be investigated. Selling the vacant old County Administration building would be favourable over investing hundreds of thousands of dollars for its demolition.
The Municipal Government Act (MGA), s. 201, gives County Council the ability to build policy and programs for the municipality. In this, Lac Ste. Anne County does not have a policy for the disposition of assets such as this building and, as these situations are of such a rare occurrence, County Council has the authority to make these types of decisions by resolution, on an individual basis as required.
Ensuring that any offers received on the building would be subject to County Council approval, and preserving Council’s authority to determine the ultimate fate of the building, it was listed for sale on December 19, 2017, at the estimated market value of $99,900. Other conditions were established with the real estate agent that are standard to our tax recovery property listing procedures, such as no offers will be accepted until the property is advertised for sale in a listing for 14 days, and property is for sale “as is, where is.”
As to the advertisement of the sale, the MGA, s. 70(1) (a), requires that if a municipality proposes to sell property for less than market value it must advertised. With regards to the vacant old County Administration building, this property was being sold at market value, not below, and therefore advertisement would not be necessary as per this section of the MGA.
In the MGA, “market value” means the amount that a property might be expected to realize if it is sold on the open market by a willing seller to a willing buyer. To establish the listing price at approximate market value, the County’s Assessment Department, which prepares assessments for all types of property in the County by professional, accredited Assessors, was brought in for the valuation process.
Assessors receive training in a variety of areas, including property valuation techniques, legislation, and quality assurance, all in accordance with the provincial legislation and regulations which govern assessments. County Council is confident in the estimated value supported by the County’s Assessment Department. The County’s Assessment Department assesses more than 10,000 properties annually, with less than 0.01% of those assessments being appealed to an Assessment Review Board.
The MGA sets out two (2) types of valuation standards—the market value standard and the regulated standard. The market value standard is considered the most fair and equitable means of assessing property. It is fair because similar properties are assessed in the same manner; it is equitable because owners of similar properties in a municipality will pay a similar amount of property tax. Unfortunately, if the building is unique in the area, finding sufficient market data for this type of valuation may not be possible.
In situations of insufficient comparable sales, legislation recommends the cost approach. In this approach, the Assessor discounts the market value of the land and the replacement cost of the building by all forms of depreciation and obsolescence. The amount of depreciation is determined by using the effective age of the building and applying the factors from the Costing Manual. The obsolescence factors of the building are functional obsolescence and physical obsolescence. Functional obsolescence occurs when a property loses value due to its architectural design, building style, size, outdated amenities, local economic conditions, and changing technology. Physical obsolescence in the building is calculated by the amount of repairs required due to a building being worn out. In the case of the vacant old Administration building, depreciation and obsolescence factors, previously published as the presence of asbestos, water infiltration, mold concerns, roof conditions and several major structural flaws and deficiencies, meant significant repairs by any purchaser and greatly reduced the market value of the building.
In total, the property was listed for 57 days on MLS.ca and Century21.ca. These sites were visited nearly 120 times over that period, including 26 realtor visits. The real estate agent had print advertisements in local and capital region publications, as well as web listings, throughout the listing period. During the listing period, there were three (3) viewings, resulting in two (2) offers. The offers, received on January 8, 2018 and February 2, 2018 respectively, were presented to County Council at the regular County Council meeting on February 8, 2018.
The purchase offer language in the two offers received was reviewed by County legal counsel to ensure that the liability obligations of the County were addressed, and that the “as is, where is” nature of the sale was clearly highlighted.
At the February 8, 2018 meeting, pursuant to the MGA, s 197(2), County Council closed the meeting to review the offers. Further, as per the Freedom of Information and Protection of Privacy Act, s 16, revelation of third party business information supplied in confidence, County Council had the authority to review and discuss the offers in the closed session.
Upon return to open session, County Council made motion that they had reviewed the assessment information provided by the accredited County Assessor and discussed the two offers received, and based upon legal opinion regarding the conditions of sale, accepted the contract number 29769848Dec23 Offer to Purchase of the vacant old County Administration building.
To ensure that the County was fair and open regarding the conditions of the vacant old County Administration building, copies of all building reports were provided to the purchaser. As well, the purchaser had access to the building to complete their due diligence. The building reports included the 2005 Engineering report, all Asbestos and Mold remidiation reports and the 2014 George Cuff report which summarized the known defects of the building.
To ensure transparency, Administration will be advertising the completed sale of the vacant old County Administration building, although no advertisement can be made until all conditions of the offer are met. At that time, advertisement will run in the Bulletin and here on the County website for a total of four (4) weeks, between the removal of conditions and the March 30, 2018 closure dates.