Wednesday, July 24, 2024

Napanee Council ‘throws’ some money at Town Hall after gains on property sales

This property at 53 Community Road in Napanee — formerly a dog pound, among other things — was sold for a net gain of over $160,000. Photo by Michelle Dorey Forestell/Kingstonist.

The Council of the Town of Greater Napanee found its members debating what to do with funds from the sale of two properties this week, ultimately deciding to put the money toward the established goal of Town Hall renovation.

At the regular meeting of Council on Tuesday, May 14, 2024, Treasurer Ellen Hamel presented two “gain on sale” reports, seeking direction on what to do with the surplus funds acquired. The properties sold were 53 Community Road, and 115/117 John Street, the latter being a vacant lot adjacent to the site of the former Paisley Hotel, which burned down in the early 2000s.

According to Hamel, in April 2024, the Town sold 53 Community Road. The property’s sale price was $250,000, and after fees and adjustments, the payment received was $232,969.07. After considering property-specific expenses, the asset itself, and its treatment in the financial statements, the net gain on the sale was $160,099.07.

Hamel reminded Council that, in 2023, they had expressed a commitment to apply any proceeds/gains of land sales towards the repayment of 99 Advance Avenue, the Town’s new central office building.

Hamel explained the financial implications of transferring the gain on the sale of 53 Community Road, including help to build the Other Land Reserve, which is used to fund the $4.8 million in unfinanced capital for 99 Advance Avenue. 

She provided two options to proceed: “Council may choose to direct staff to transfer the gain on the sale to a different reserve fund. Or, option two, Council may direct staff to do nothing, and the gains on the sale would be incorporated into any 2024 operating surplus or deficit.” 

She recommended Council direct staff to transfer $160,099.07 in gains on the sale of 53 Community Road to the Other Lands Reserve.

After some brief clarification, Council did direct that the gains on the sale of 53 Community Road go to the Other Lands Reserve: moved by Councillor Bob Norrie, seconded by Councillor Bill Martin, and passed with none opposed.

Next, Council heard a second report by Hamel in which staff sought direction about how to deal with the gains from the sale of 115/117 John Street. That site is currently a vacant lot used for parking, since the building which housed Pie in the Sky Cafe and the former Hotel Hollywood adult video store was demolished in 2017. It had also been connected to the Paisley Hotel — a favourite drinking spot and once fine hotel from a bygone era — which burned to the ground in the 2000s.

Hamel reported that, in April 2024, the Town sold 115/117 John Street for $125,000. After fees and adjustments, the payment received was $114,916.73. After considering property-specific expenses, the asset itself, and its treatment in the financial statements, the gain on the sale is $60,505.64. 

“From this, previously written off taxes for the County and school boards of $35,898.44 are to be repaid to the respective authorities as per S.343(4) of the Municipal Act,” Hamel noted. “As a result of the financial adjustments and accounting entries, there is $18,247.20 available to be transferred to reserves.”

Hamel asked Council to note that this does not take into consideration the expenses incurred for the municipal taxes and fees added to the roll as a result of the building’s demolition. 

She pointed out that, in 2018, the last Council passed a resolution to receive the “Financial Services July 2018 Unsuccessful Tax Sale Properties Report” and approved the properties listed in Schedule “A” to be declared surplus by the municipality and advertised for sale. Also, Council approved any future sale proceeds from these properties to be applied to general operating revenue and transferred to the “Allowance Collectible Accounts and our Assessment Appeal Reserve.” 

The John Street property was listed on Schedule A of that report. According to Hamel, the municipality has written off the Town’s portion of taxes and fees in excess of the $20,000 in gains on the sale. Also, a note in the audited financial statements states that the Town funded its share of the writeoff taxes receivable, accrued interest, and “related changes” from the Reserve for Assessment Appeals, and that proceeds from future sales will be returned to the Reserve for Assessment Appeals.

Hamel noted that, in 2017, the balance of this reserve exceeded $1M dollars; currently it sits around $200,000.

“Transferring this surplus back to the Assessment Appeals Reserve will help to rebuild this reserve, which was substantially drawn down as a result of funding related writeoffs,” noted Hamel.

“However, more recently in 2024, Council expressed a commitment to apply any proceeds of the sale towards the remediation and renovation of the Town Hall. Given there are two conflicting directions regarding the use of the gain on the sale, staff are looking for clarified direction.” 

Hamel presented the following options and implications for Council to consider, as noted in her report. First, Council could choose to uphold the 2018 resolution and the notes to the audited financial statements and direct staff to transfer the gain on the sale of $18,247.20 to the Assessment Appeal Reserve. Alternatively, Council could reaffirm its intent to direct staff to transfer the gain on the sale to a reserve for Town Hall remediation/renovation. 

Hamel’s report notes that it is highly common for commercial assessments to be appealed, and given any future development of this property, it would be wise to fund the Assessment Appeal Reserve to help offset any future appeals on similar properties. 

Alternatively, transferring the gain on the sale of 115/117 John Street to support the renovation of the Town Hall would help offset expected future expenses in the Market Square. She noted that this community-focused project aims to benefit the surrounding geographical area. 

Councillor Dave Pinnell spoke to the recommended options.

“There’s going to be some very exciting times come to this building here [Town Hall] in the very near future…. There’s gonna be great momentum. I’m just wondering if we could put this towards the Town Hall here, so that we can continue on with the beautification of the building and the surrounding grounds. Although the building is going to be painted, there is still work that needs to be done,” he said, giving examples of landscaping and other projects.

With tongue firmly in cheek, Pinnell added, “It wouldn’t be me if I didn’t say I’d rather see this go towards the aquatics fund, but I know that’s not going to happen. So I’m going to ask for it to be for Town Hall.”

Councillor Angela Hicks agreed with Pinnell and asked for clarification on how to proceed. Clerk Jessica Walters said, “New terms of Council are allowed to provide different direction. As your treasurer has indicated, either option would be a valid choice for Council to make here, so there’s no need to rescind that motion. The new direction would override that previous direction from 2018.” 

This answer satisfied Hicks, who went on, “When I look at the financial implications that Ellen has provided, are you perhaps recommending that some or all of this money be put back into the Assessment Appeals Reserve? Because when I read this, you’re saying it’s been drawn down quite a bit. So we don’t have any buffer there at all? Are we able to do half-and-half? I’m just wondering if there’s an appetite to protect ourselves against appeals in the future, as well as put some money back into Town Hall.”

Hamel replied, “I always like to see money put into reserves, as a treasurer, but I also understand Council’s desire to have funds available for this property. So it really is just at the desire of Council at this point in time.”

At this point, Councillor Mike Schenk moved option two, seconded by Pinnell. Schenk summarized his position by saying, “So when you’re dealing with — I shouldn’t say ‘only,’ but — $18,000, considering the amount of money that is going to be needed to keep the historical building, you know, palatable, that’s why I’m saying, ‘hey, let’s throw that money towards it.’”

Council decided to do just that and voted unanimously to “throw” the $18,000 and change into a reserve for Town Hall remediation and renovation.

Meetings of the Council of the Town of Greater Napanee can be viewed virtually (or watched afterward) on the Napanee Town Council YouTube channel or attended in person in Council Chambers at Napanee Town Hall, 124 John Street. Further information about Council meetings, including agendas and reports, is available on the Town’s CivicWeb portal.

Leave a Reply

You cannot copy content from this page, please share the link instead!