By Marianne Curtis
The RM of La Broquerie council has been asked to justify the sale of the municipality’s former board offices by a former reeve.
According to municipal minutes, the municipality agreed to sell the former municipal office building to Ted Falk for a price of $930,000 last fall. The original cost of the building was $540,000 which leaves a difference of $347,000.
The province’s supervisor of municipal accounting confirmed that the municipality has a debenture against the original costs of the building with an outstanding balance of $324,490.00 as of December 1st, 2009.
The sale of the building does not require the municipality to retire the debt because it is a general charge against the whole of the municipality not a specific charge against the asset. However, the sale leaves a debt of $324,894 outstanding that will be levied over the next 7 years to retire the debt borrowed for the original cost of the building sold. This would end up costing ratepayers over $380,000, he explained.
The municipality has a few options available to them to ensure that the debentures are paid without costing ratepayers.. The first would require a specific Debenture Reserve fund to be established that would be used to make the yearly payments.
RM of La Broquerie administrator John Livingstone admits that the money is in the municipality’s “cash” account and no reserve fund bylaw has been drawn up.
“I have not had time to do it yet,” explained Livingstone. “I will get it done sometime during 2010.”
The other option is that council could consider to “buy back” the debenture from the province which could cost the RM of La Broquerie up to $400,000, the supervisor admitted.
“So in a nutshell, when council sold the building they created a loss,” noted the accounting supervisor.
South Eastman Health has maintained a lease on half of the building for a number of years and when the municipality moved into their new offices, the health authority obtained a lease for the rest of the structure.
According to the municipality, the building was appraised between $940,000 and $960,000 however former Reeve Ken Mantie maintains an appraisal done by his council stated the building was worth $1.2 million.
“I find it surprising that the same person that appraised the building when I was on council, sold it now for significantly less,” stated Mantie. “While I never liked the idea of the municipality being a landlord, there was revenue coming in from the building.”
In 2008, the RM of La Broquerie collected almost $151,500 in revenue through the lease agreement with South Eastman Health.
It was noted that when the municipality decided to sell the building, it was never listed for sale, nor was the entire council in agreement with the sale.
~as published in the February 2010 Dawson Trail Dispatch