After an attempt to buy the old Highfield Square property failed, the City of Moncton has decided to expropriate the property in order to build a new entertainment and sports centre downtown.
The city had a deal in place with Warren Gate Investment Inc. to buy the former shopping mall and its land for $6-million dollars. However, the bank that holds the mortgage on the property also had to agree to the deal..
Monday Mayor George LeBlanc said the city made numerous attempts to get the bank's approval, but was unsuccessful.
"Their bank, which I believe is the Bank of Scotland, had financial difficulty and I believe was taken over by the British government," said LeBlanc.
As a result, LeBlanc said the city will now expropriate the land. He doesn't anticipate a problem since the owner has already agreed to accept $6 million.
"It would strike me that this would be one of the least risky expropriations you could have in the sense that this is someone who has already agreed to sell us the land and they've already agreed on the price that they want to sell it to us for," said LeBlanc.
However, some councillors do see reason for concern. They say the value of the land has almost doubled, to $11 million, since the purchase agreement was signed and worry that expropriation could be risky and cost more than $6 million.
The city's lawyer, Steve Truman, said with expropriation the city will own the land within a few months, but it could take much longer to determine the final price.
"It could be six years, 10 years, 20 years from now, we could still be discussing, arguing, negotiating or litigating the issue of costs," he said.
Truman says $6 million is a fair market value for the property since any buyer will have to spend $5 million to demolish the former mall and deal with environmental concerns on the property.
Moncton wants the downtown land in order to build a proposed $105-million sports and entertainment complex. While that project has yet to be approved by council, city officials maintain they could sell the Highfield Square land to recover their costs should the convention centre project not proceed.