An attempt by the Town of Harbour Grace to sell off a bankrupt business space has become embroiled in controversy, as the business's former owner is raising questions about the money involved in the deal.
Before the COVID-19 pandemic hit, Fitz's Mobile Welding was booming, and a major employer in the small Conception Bay community. Through a leasing arrangement with the town, the company took over what was once the S.W. Moores Memorial Stadium and refitted it, upgrading its electrical system, repairing its roof and turning it into "one of the largest fabrication facilities on the island," according to Susan Fitzgerald, the defunct company's former president.
After the early days of the pandemic, the welding business entered into bankruptcy, an experience so raw Fitzgerald can barely speak about it.
"You put your heart and soul into it. You work night and day, Sunday to Sunday. You don't walk away and you try everything," she said.
Layered on top of those emotions are lingering questions about what happens to the now-mothballed building.
According to Fitzgerald, the improvements her business made to the stadium added substantial value to the stadium, increasing its worth from about $400,000 to $1.1 million in its most recent appraisal.
But for Fitzgerald, that appraisal, along with another one that pegged it at $1.4 million, doesn't square with the amount the town is now trying to sell it for — $382,760 — and she questions that bargain price.
"I understand wanting to try to sell the building. I want to see it sold and being straightened away, but I want to see the residents … capitalize on the value of the building," she told CBC News on Oct. 29.
Town's hands are tied: mayor
According to Mayor Don Coombs, the substantial gap in selling price is due to a tricky legal situation involving the lease. The Bankruptcy and Insolvency Act, said Coombs, limits what the town can recoup from a sale and so a $1-million sale wouldn't end up benefiting town coffers.
"Under the act, that's not the way it works. We are only permitted to take what our debt is," he said.
Coombs said the sale went through a trustee-led bidding process with the highest bid coming in at a little more than $300,000. The trustee gives wiggle room to negotiate up to the higher amount the town is on the hook for, and Coombs said he wants the whole ordeal squared away.
"Our point of view is to get taxpayer money, get it back, get a business open, put people to work," he said in an interview on Nov. 2.
Fitzgerald doesn't buy that line of reasoning.
"I think he's wrong. I think that they need to try to get more value for it," she said.
In a recent council meeting over Zoom, Coombs said he has a personal connection to the bidder.
"He's a friend of mine; him and other partners have entered into it. But they were the highest bidders; it had nothing to do with me," Coombs told CBC News.
Fitzgerald wants a second legal opinion to weigh in on the sale, and the idea has traction inside Harbour Grace's council chambers: the stadium sale split council at a recent meeting in a three-against-three vote, stalling the process and highlighting bitter divisions among the councillors.
At that meeting, two councillors echoed Fitzgerald's call for more legal advice on the matter, and as of Tuesday the entire sale remains on hold.