Fredericton council agrees to sell historic building valued at $475K for $1K

Fredericton city councillors have agreed to sell a historically significant building valued at almost half a million dollars to a private developer for $1,000, under the condition the company restore it and put it up for rent.

Councillors were split in their vote on Monday to sell the Lemont House to State Street Properties, with some voicing concerns about the sale price and about how far the terms of the agreement went in requiring the developer to charge affordable rents.

"I do just feel like we are giving a very good deal here to this developer,"Coun. Cassandra LeBlancsaid.

"I know not everyone agrees with that opinion, but I feel that, you know, this will end up in just a few yearsas expensive apartments along the water in a historic property and all we are asking is for $1,000."

The Second Empire-style building at 605 Queen St. was constructed in the 1880s and was lived in by the Lemont family, who were furniture dealers and owned a store on Queen Street.

In 2021, the City of Fredericton acquired the property from Aquilini Properties as part of an undisclosed settlement following a lawsuit Aquilini launched against the city in 2019.

Aquilini owns the Crown Plazaandhad at one time used the Lemont House to accommodate long-term guests.

But for years leading up to the city's acquisition of it, the buildingsat vacant, prompting concerns from heritage advocates about its deteriorating condition.

Since acquiring the Lemont House, the city granted it heritage status and made a public request for proposals, which led to the successful submission by State Street Properties.

CBC News requested an interview with State Street Properties on Monday afternoon but did not receive a response.

The company's website shows it owns several residential and commercial buildings, including on Queen, Regent and Dundonald streets.

Limit on rent prices

According to the development agreement between the city and State Street Properties, the average base rent for the 17 apartment units must be below the average new construction rental rates set out by Canada Housing and Mortgage Corporation for a period of five years.

Michael Baldwin, director of corporate services for the city, said in an interview theapartments wouldbe bachelor and one-bedroom units.

According to the CMHC, the average rent for newly constructed one-bedroom apartments was $1,180 in 2023, and $993 for bachelor apartments.

However, the development agreement between the city and State Street Properties says that limit on rent prices is subject to being higher,according to the consumer price index and property tax increases.

During the meeting, LeBlanctried introducing a motion to amend that agreement so that the cap onrentpriceswould be in place for 10 years instead of five.

Her motion also proposed eliminating the caveat allowing rent to be higher subject to consumer price index and property tax increases, but no otherseconded the motion.

Fairness up for debate

The resolution to sell the Lemont House narrowly passed on Monday, with Deputy MayorJocelyn Pike, and councillors Greg Ericson, LeBlanc, Jason Lejeune and Ruth Breen voting against it.

Breen said she had concerns about the potential affordability of the rental units, but even more so about the fairness of the deal for the city.

"My deepest concern is that this property is valued at roughly half a milliondollars, and we're selling it to avery successful developer for $1,000," she said, before the vote.

"If that's the best the market can do, I think we need to explore other options in how this can best be repurposed to serve the residents of Fredericton as a whole."

Coun. Eric Megaritysaid he thinks sale price is fair for the city, considering no other private interests proposedbetter options, and the fact the Lemont House will likely require "a lot of money" inrepairs.

"If we want tosave a heritage building we have to throw something in there," Megarity said.

"And I think what we're doing is very fair and reasonable. We will get the taxes. We're bringing the heritage building back forI don't know how many decades."

According to the development agreement, the developer must begin development within 12 months of the sale, "with the aim of bringing the housing stock online as soon as is reasonably possible."

The agreement also requires the development and maintenance of the building to comply in all respects to its heritage designation pursuant to city bylaws.