Town asked for $3M to remove ROFR

Times Reporter 

 

Administration came to council to request direction regarding a land purchase that happened in 1989. Deputy Chief Administrative Officer Linda Nelson gave background information on the land purchase. 

In 1989 the town purchased approximately 580 acres of land from Klaiber Land and Cattle Company Ltd., Cyber Investments Ltd. and 301531 Alberta Ltd. 

“At the time of the land transaction, a ROFR, or Right of First Refusal, was registered via caveat against the lands by the sellers,” said Nelson. 

“The ROFR gave the sellers the future option to purchase the land back at the same price if an offer to purchase the lands was made by another buyer, before it is sold to another buyer; i.e. the ROFR holders would need to match the offer to purchase.”

Nelson continued on to say that at the time of the purchase/sale of the lands a price had not been negotiated, and so the town is not bound to a specific price. The terms of the ROFR also state that the town is not obligated to sell. 

In addition to the land purchase/sale the town had made an agreement with one of the ROFR holders that they may lease the land for cattle grazing for a period of 20 years, which expired in 2009. When the town took the lands over, negotiations began with the three ROFR holders, resulting in an offer from the ROFR holders, which expired at 4 p.m. on Aug. 30, 2013.

“One of the ROFR holders has invited the town to make an offer with regard to the removal of the ROFR, and has suggested that the offer be in the vicinity of the most recent offer from the ROFR holders, which was $3 million,” said Nelson.

“For further information, prior to the town commencing negotiations on the removal of the ROFR, it was felt that the ROFR allowed for the land to be subdivided and sold, and that the ROFR rights could still be acted upon on each parcel of land to be sold.”

The interpretation was not mutual; the ROFR holders felt that the entire land, approximately 580 acres, must be sold as one parcel. 

Because the town and the three companies did not agree on the interpretation, their argument went to the courts for a decision. On April 2, 2013 the judge ruled that the lands were interpreted as meaning the entire parcel of land. 

Nelson gave council two different recommendations to choose from: direct administration to continue the negotiations for the removal of the ROFR, or that administration may continue to negotiate on the lands while pursuing other options. Those options include leasing the land for commercial and industrial uses and retaining a portion for town facilities. 

Councillor John Rempel questioned why $3 million was being requested to remove the ROFR. Administration was unable to answer that question. Councillor Rocky Blokland said he couldn’t support a motion of granting the $3 million because it would put Strathmore in financial dire straits and would curtail any major projects that would come up in three to five years. 

“We have no municipal land left so for future considerations maybe we should consider keeping the lands for ourselves down the road,” said Blokland. 

Council went with the latter recommendation, where administration may continue to negotiate on the lands while pursuing other options.