WHEREAS many long-term grazing lease disposition holders have invested time and money improving Sustainable Resource Development grazing leases, based on the terms and conditions of agreements that were originally in place, or that came as a result of policies developed in the early 1980s;
WHEREAS disposition holders rightfully anticipated that these improvements would benefit their farm businesses in the long term because they would, at a future date, be allowed to purchase their leased land for a fair market price as assessed on unimproved value, and without competition;
WHEREAS disposition holders had reasonable assurance that they would have priority of purchase rights when the land was converted to farm development leases or made available for sale;
WHEREAS policy changes in the late 1980s amended / rescinded earlier public land sales criteria, and this continues to have a negative impact on a number of long-term disposition holders who made improvements (as encouraged by the province) on their leases prior to policy changes.
THEREFORE BE IT RESOLVED that the Alberta Association of Municipal Districts and Counties approach the Province of Alberta to request that Sustainable Resource Development review their current land lease / sale policies to ensure that long-term disposition holders be allowed to purchase leased lands at prices assessed on unimproved values; and that leaseholders are not disadvantaged by a lack of recognition for development costs and improvements on leased land by the requirement for competition in the sale process.
Many grazing lease disposition holders have invested a considerable amount money to improve the usability and value of the leased land. Their decision to invest in the leases was based on the terms and conditions of agreements originally in place, or as a result of policies developed in the early 1980s, which were designed to encourage development of leases. Under the provincial policies of the time, the value of improvements would not be included in potential sale price to the leaseholder, because property sale prices were based on unimproved appraised value.
The rationale for policies in the mid-1980s (as described by the province) was that leaseholders would be more likely to invest in expensive improvements if they had a measure of certainty that long term benefits for their investments would be realized. From this, disposition holders anticipated improvements they made would benefit their farm business over the long term.
Leaseholders also had reasonable assurance that they would have priority of purchase rights when the land was made available for sale. Again, decisions made by leaseholders were based, in part, on information provided by the minister’s office and through public notices, and news releases (eg. information for lease conversion sent to leaseholders in September 1985).
The province encouraged conversion of grazing leases to farm development leases, with or without option to purchase, in order to prevent the fragmentation of farm units that incorporated leased lands as part of the farm assets. The province encouraged the development of grazing lease lands in settled areas, particularly in northern Alberta, where only a small percentage of the lease lands had intensive development and were desirable for acquisition to farm holdings.
However; by 1990, the province made changes to the land sales criteria which dismissed the priority right to purchase for disposition holders and allowed that lands available for sale would be open to public auction or tender. Additionally, sale price minimums were raised to 85% of market value, which now included the value of improvements.
In a letter to a leaseholder in May of 2010, the minister (Sustainable Resource Development) indicated that further to the above, an option available to the grazing leaseholder would be to request conversion to a farm development lease, without the option to purchase the land. The lease would then be issued through a competitive process. The rationale for changes to the previous sale criteria (as explained by the minister) is the government’s fiduciary responsibility to realize a fair return for Albertans – best achieved through the competitive process.
While the need for fiscal responsibility to all Albertans is understood, the current land sales policies disregard the expenditures of those individuals who invested their own money to improve leased land. The current policy forces disposition holders to meet the highest bid on lands available for sale, and allows outside parties to compete for land that the disposition holder has worked to improve at his own expense. In effect, the disposition holder is being penalized for the investment made improving the land, in that, if he chooses to purchase the land and is the successful bidder, he must pay a second time for the value of improvements he had previously paid for.
TIMELINE
August 1985 The province (Public Lands and Wildlife) announced that changes had been made to the administration of public lands, granting existing grazing leaseholders the option to convert up to six quarters of leased land to farm development leases without competition from other applicants, with or without the option to purchase. It noted recently introduced tendering systems and the opportunity for public auction of land.
September 1985 The minister’s office sent letters to leaseholders advising them that the sale price of lease purchases would be based on appraised unimproved value, unless range improvement funding had been provided by the province.
November 1985 A news release was issued indicating the waiver of previous posting requirements for saleable lands, and advising that priority would be given to grazing leaseholders to convert land they have already improved. The press release indicated that saleable land criteria had not changed and referenced an information pamphlet which indicated:
February 1986 Letters were sent to leaseholders reiterating the benefits of conversion of improved grazing leases to farm development leases, the option to purchase improved grazing leases, and stressing exclusion of public lands in the eastern slopes from conversion or sale.
January 1990 All policies created earlier in the decade had been rescinded.
October 1998 A public land sales information document was available to leaseholders, indicating land sale values are set at fair market value (maximizing benefits to the Crown) using appraisal standards set for private land real estate. Land will be sold at public auction or tender, except for the following:
However, in cases of land under disposition (without option to purchase) current leaseholder does not have priority right to purchase land without competition
May 2010 The Minister responded to a leaseholder enquiry and noted the following:
July 2010 The Minister responded to leaseholder enquiry indicating that all policies introduced in the mid-1980s had been rescinded in the late 1980s. Attached to the letter was information About Public Lands (effective September 2007) outlining criteria regarding public lands sales.
The AAMDC has no active resolutions related to this issue.