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Lethbridge Herald, The (Newspaper) - February 5, 1975, Lethbridge, Alberta The Lethbridge Herald Countdown LXVIII-46 ALBERTA, WEDNESDAY, FEBRUARY 5, 1975 15 Cents million buys gov'ts may violate Aita. law 30% share of Syncrude ftffinlnnrf fntam mav ho Ann r-honiio for- land Hiif tha fnrmalifittc nf Price too low? Macleod land deal The Fort Macleod town council may be in violation of provincial law if it com- pletes its land dealings with Montreal meat packer Larry Paletta. Mr. Paletta has paid for 70 acres of town land at an acre, He wants the land for the site of a proposed packing'plant. The Alberta Municipal Government Act says municipal land may not be sold for less than "fair actual value." It also prohibits a municipality granting any kind of bonus or enticement to a prospective business developer. An independent professional land appraisal, commissioned by The Lethbridge Herald, puts the value of the land at WOO per acre. The Alberta deputy minister of municipal affairs says this is "too big a spread" and the town council should be concerned. But his department will not initiate legal action. That would have to come from Fort Macleod taxpayers, says W. D. Isbister. The town has cashed Mr. Paletta's 000 cheque for land, but the formalities of the land transfer have not been completed The town also plans to give Mr. Paletta an option to buy an additional 360 acres of town land for an acre. Originally the town asked for an acre for one of the two option parcels but reduced the price to an acre for both parcels when the Montreal businessman indicated he thought was unrealistic. The option parcels were also appraised at The Herald's request. J. L. Zezulka, of Reliance Agencies in Lethbridge, an appraiser accredited with the Appraisal Institute of Canada, found the value of the option land to be an acre overall. Complicating the land values is a plan to reroute Highway 3 to bypass Fort Maceleod to the south and west if the traf- fic flow in future years makes it necessary. The plan has the bypass running adja- cent to one of the option parcels and directly through most of the other option parcel. Bypass affects land value If the bypass is built, Mr. Zezulka said the value of the option parcels would increase to an acre overall. But the bypass would mean that the 70- acre packing plant site would lose direct main highway access and would be decreased in value from an acre to an acre, Mr. Zezulka said. Following is a table comparing the results of the appraisal with the proposed deal: i a.' Plait site Option land The, Herald has not been permitted to see the town's option agreement with Mr. Paletta, but officials say the deal needs only the packer's signature to be com- pleted. Several town officials told The Herald last fall they carried out their negotiations with the Montreal businessman knowing he bad other towns in mind as alternatives fpr his meat packing plant. Mayor Charlie Edgar said the alter- natives were Claresholm and Kamloops. Secretary treasurer Roy White said they were Claresholm and Cranbrook. One town official, caught up in the enthusiasm of the proposed packing plant and other possible Paletta projects, said last fall: "Hell, we'd have given him the wanted just to get him Deputy Minister Isbister said municipal affairs department policy is to stay out of situations such as the town Paletta deal unless there is evidence of some im- propriety. Asked about the difference between the price and the appraisal, he said, "If I were on the council I would be concerned it had been priced too low with that kind of spread. "I can sympathize with the kind of pressure that this council is under because Fort Macleod, I'm sure, is like any other town and would like to round out their economy by having a nice payroll move in. "I think the pressure is on the council when a fellow comes along and says if you can give me a good buy on this I'll do this and this, but I think they do have that other obligation to insure that they get a reasonable price, the deputy minister said. He said "In the long haul... you're not going to chase anybody off with a price of versus "If he's a legitimate developer I don't think that's going to affect him much. Of course I haven't looked at it in the eyes of the guy who is buying the land so I guess I'm just theorizing in this Mr Isbister said. The deputy minister said Section 126 allows taxpayers to challenge a deal made by a municipality with some potential developer. He said the department takes the posi- tion that a town is a corporate body and that its constitution is really embodied in the municipal government act. "As a responsible municipal corpora- tion then they must rise and fall of their own decisions. We don't take action... un- less there are outright cases of fraud or something. "But if it really is a question of judg- ment on the part of a council or they do something that is wrong then we think the courts are the remedies and the individual taxpayer or a group of them are the people who initiate any the deputy minister said. "We would certainly never initiate an action in a situation like this (Fort Macleod) because we have to assume the council acted in good faith in its best judg- ment and that there was no deliberate or any other fraudulent thing occurring." Must hold plebiscite Mr. Isbister said Section 126 says if municipal councils want to sell land at prices less than the fair actual value they must hold a plebiscite and get permission from the taxpayers. Speaking generally, he said a town coun- cil that went to its taxpayers with a situa- tion where it wanted to sell land at less than the fair actual value and pointed out the benefits of the sale, would likely get taxpayers' approval. Mr. Isbisiter believes a municipality has no leeway in pricing land. "There is an encouragement for towns go but to look for industry, but in our view and according to the legislation (Sec- tion they should be expressing the benefits of the town, not attempting to un- dercut other towns in terms of more favorable land prices Mr. Isbister told The Herald. Section 128 of part five of the Alberta Municipal Government Act says: "The disposal of any land or estate or interest in land... does not require the as- sent of the electors except that the council does not have power to sell to any person lands, buildings or portion thereof at any sum less than what is the fair actual value thereof at the time of sale, except where the sale is for the purpose of providing land on which housing accommodation is to be constructed without... the re- quirement of submitting the matter to a vote of the proprietary electors "No council has power to grant a bonus or other aid to any person, for the construction, establishment or operation of any manufacturing, mill, railway or other business or concern whatever Under Section 426 a town councillor voting in favor of such an arrangement is guilty of an offence and liable on summary conviction to a fine of not less than and not more than and in default of pay- ment to imprisonment for a term not ex- ceeding 60 days. A councillor voting for such a bonus would be disqualified from holding municipal office for three years. The act uses the term "fair actual value" in Section 128. Mr. Zezulka in his appraisal tabulated what he called the "fair market value." The act does not define "fair actual value." Mr. Zezulka's definition of "fair market value" is "The highest price estimated in terms of money which a property will br- ing if exposed for sale in the open market allowing a reasonable time to find the purchaser, who buys with full knowledge of all the issues to which the property it adapted and for which it is capable of be- ing used, neither buyer nor teller beinf-un- der abnormal influence or pretfure. Mr. Isbister told The Herald hii interpretation of the term "fair actual value" would he very similar to Mr. Zezulka's definition., tttcy, afctwe tee Ptflt t) Chipping away The tedious process of renovating and reconstructing the .south wing of Wilson Junior High School is well under way as repairmen attempt to undo the work of the destructive Dec. 9 fire. Glen Little Construction workman Ken Waynes chips the scorched tile in the boys' bathroom while other workmen have an objective of having the building closed in and roof on by the end of this month. Freight hike rolled back OTTAWA 25-per- cent rail freight rate increase, which the railways have been charging for 10 days, was pushed back temporarily by the Canadian transport com- mission today. But the commission in- dicated it would permit the railways to file new 12.5-per- cent rate increases which would take effect im- mediately. The full increase will come into force Marchl. This decision effectively brings the rail freight rate struggle 'full circle to the original commission ruling Dec. 31. But this time a different legal provision was used by the commission. The higher rates affected about shippers and 22 per cent of rail freight traffic. The decision was hailed as a "great victory for the prov- inces" by Gordon Blair, counsel for Manitoba and Saskatchewan. The Prairie provinces have led opposition Heath backer enters U.K. Tory leader race LONDON (CP) Con- servative members of Parlia- ment snatched the party lead- ership from Edward Heath Tuesday in a surprise vote that gives Margaret Thatcher a chance to become Britain's first woman party leader. Heath, prime minister from to 1174, dropped out of the leadership tattle hours after Mrs. Thatcher, beat Urn in the first round of the contest. But the former education minister still bat a hard fight for victory. Longtime Heath backer William WMtetaw, 56, announced that he will be on the second leadership ballot next Tuesday. Whitelaw, who used to be Heath's state secretary for Northern Ireland and now is party chairman, bills himtelf as the candidate who can reconcile Heath loyalist! with the Conservative right wing that formed Mrs. Thatcher's power base. A second billot is needed because Mrs. Thatcher's first- vote win fell short of the clear majority of the 276 MPt nettssary for victory. to the way the railways raised the rates. There was no immediate comment from the railways. The decision follows an in- tricate series of legal moves arising from a commission ruling more than a month ago permitting half the 25-per- cent increase to come into force Jan. 1. The rest was postponed to March 1. The rate increases affect about shippers and 22 per cent of rail freight traffic. He suggested the commis- sion would consider per- mitting the railways to increase their rates 12.5 per cent immediately, waiving the normal 30-day waiting period before rates take ef- fect. The remainder of the increase would come into force March 1. Mr. Jones said that if the .commission merely set aside the original order, the full freight rate .increase would be implemented about one month sooner than the commission had planned. The commission had origi- nally postponed part of the in- crease 60 days to allow the railways and the provinces to discuss the effect of the higher freight rates. Alberta's investment may reach billion ByALSCARTH Herald Legislature Bureau EDMONTON Albertans' potential stake in the Syncrude oil sands venture climbed to more than billion Tuesday as three governments announced im- mediate infusion of million to save the project. Alberta's immediate participation will cost tax- payers million to become 10 per cent owners of the plant, Premier Peter Lougheed told the legislature. The Ontario and Canadian governments simultaneously announced they will invest million million by Ottawa for a 15 per cent share and million by Ontario for a five per cent share. Share of risk up The Syncrude partners increased their share of the risk by million in the meantime to make up the billion they said is required to prevent the barrel a day plant being cancelled. "Alberta pressed for the ul- timate users of much of the product as represented by the federal government and by the government of Ontario to have double the risk equity of Mr. Lougheed said. He later told a press conference "I don't think we could say it's a better deal but I don't think it's worse either." Considering the pull- out by a fourth partner, Atlan- tic Richfield, in December, he said he is extremely pleased tie project is proceeding. The Syncrude participants announced that "activity at the Syncrude project site will be stepped up to complete the project on Mr. Lougheed said. The federal government removed one obstacle in the way of the project selling its product at international prices." It also confirmed royalties paid Alberta will not be taxed. Agreement came after 12 hours of meetings Monday attended by the premiers of Alberta and Ontario, the federal energy minister, the three remaining Syncrude partners and other officials. Shell Canada also attended but dropped put of the negotiations when Alberta refused to change the ground rules for participation in the profits, Premier Loiigheed told the legislature. As part of the agreement hammered out in .Winnipeg, the Alberta government will also lend two partners Gulf Oil of Canada andtities Ser- vice million as part of their additional risk capital. Imperial Oil is the third partner. Repayment of the loans, million each, has yet to be negotiated. But interest will be determined on as close to a regular commer- cial base as possible, Mr. Lougheed said. He said the most significant provision for the loans is (hat the province can convert them into a bigger share in the plant "if the project was showing good profit potential." AEC strengthened Another facet of the new deal is Syncrude handing over to the AEC total ownership of the "non-risk" pipeline and utility power plant being constructed in conjunction with the processing plant. "This will strengthen the Alberta Energy Company because of the guaranteed revenue generation basis of both the pipeline and the utili- ty power plant. In the case of the utility power plant we had always preferred to have this under complete Alberta control it is non-risk and can be more effectively tied in with our provincial power the premier said. Total stake in the project by Albertans could now reach billion, compared with million when the Syncrude agreement was signed in August, 1973. Inflation and increased government participation ac- count for the nearly quadrupl- ed increase in that stake. Mr. Lougheed, however, emphasized at a press conference that potential benefits from the investment are enormous. Direct income generated by the plant during its 25-year life is estimated by independent consultants at billion, he said. Profits to the provincial treasury, above any garnered from equity participation, are estimated at billion if Synthetic crude is selling at in 1979. The break even point would mean oil selling at 'only a barrel in 1978, which the premier considers unlikely under present market conditions. The economic feasibility study was one of several studies- (For reaction see Page and (ward About town School Trustee Carl Joknoa opposing square windows in schools because they look "chicken Comics............24 Comment........... 4 .19-21, 23 Family..........2M1 Markets...........22 Sports........12-14, 16 Theatres............7 TV.................7 Weather............3 Uw (Might (-J4C) Hlfh Thcnfe? -11 <-ac) dear, very ctM ;