Friday, June 06, 2008

Durham taxpayers got hosed on Jim Flaherty's watch, but not his friends

Never mind what Jim Flaherty says, Ontario can be a very good place to invest. If you’re a friend of his, that is. If you’re just his constituents in Durham though, not so much it seems.

Jim Flaherty and his wife, Christine Elliot, go back a long ways in the Durham region. From 1995 to 2005 he was the MPP for Whitby-Ajax, serving as a minister in the Mike Harris Conservative governments. He ran federally in Whitby-Oshawa in 2006 and won; of course we now know him as Stephen Harper’s Ontario bashing minister of finance. And politics is a Flaherty family business. His wife, Christine Elliott, represents the same riding today for the Ontario Conservatives. They own Durham, it would seem.

But Jim Flaherty, you’ll recall, doesn’t think much of the business climate in his home province:

Federal Finance Minister Jim Flaherty launched a post-budget blitz Friday by lecturing provinces on the need to lower taxes and taking a swipe at Premier Dalton McGuinty for making Ontario "the last place" in Canada to start a business.

"It discourages investment in the province of Ontario," he said. "If you're going to make a new business investment in Canada, and you're concerned about taxes, the last place you will go is the province of Ontario."

Apparently he didn’t give this advice to his friends at The Wasdell Centre for Innovative Learning. The Wasdell Centre is a specialized private school in the Town of Ajax, in Jim Flaherty’s riding. They’ve been investing in Ontario, and they’ve managed to do quite well.

In all goes back to 2003, when the Durham District School Board deemed a school and property in Ajax, known as Parkside Public School, as surplus. As you can see from the assessment role below, the property had an assessed value in both 2002 and 2003 of just over $2.5 million.


It’s procedure for publicly-owned lands such as this to be made available to other public organizations, such as regional or municipal governments, at no cost. After all, there’s only one taxpayer, and they already own the land. In this case, oddly, they all passed, and the property went up for sale.

On August 24th, 2004, the lands were sold to 1625047 Ontario Inc. for just $1.6 million, or about $900,000 under the assessed value for 2003.

This numbered company is better known as The Wasdell Centre for Innovative learning, run by Elizabeth Moxley-Paquette, its principal.

The property The Wasdell Centre got for $1.6 million was 6.6 acres and included the school, a parking lot and an adjacent park that contains two baseball diamonds. It was apparently a little more space then they needed for their schooling purposes, because on March 29th, 2006, 1625047 Ontario Inc. applied to the Region of Durham to sever the lands that consisted of the park.

Interestingly, in 2006 the assessed value of the property, all 6.6 acres, was $944,000. You’ll recall it was assessed at over $2.5 million in 2005, that’s a sharp drop over three years.

Anyway, with the park property severed, in December 7th, 2006 the Town of Ajax decided to purchase the park property from 1625047 Ontario Inc. for $900,000.

A few things to keep in mind here, because the taxpayers of Durham got hosed on a number of levels, while The Wasdell Centre came out sitting very pretty:

1)The Town of Ajax could have had this entire property, park and school, at no cost to the taxpayers, when the Durham District School Board declared it surplus in 2003. The whole property. At no cost. All they had to do was ask.

2)The entire property was assessed at $944,000 for 2006, and yet that same year the Town of Ajax agreed to pay $900,000 just for the park portion.

3)Remember, 1625047 Ontario Inc. paid $1.6 million for the property in 2003. In 2006, they sold off 2.9 acres of it for $900,000 to Ajax. Which means that for just $700,000, they got the school and the property it sits on, about 3.7 acres.

That’s a pretty good deal for The Wasdell Centre. Not such a good deal, though, for the taxpayers of Durham.

The Flahertys

But what does this all have to do with Jim Flaherty and Christine Elliott, besides that it was their taxpaying constituents getting hosed? Actually, they do have closer connections than that.

A WHOIS search for shows it is registered by MktPerspectives Inc., contact e-mail You’ll recall she’s also the principal of the Wasdell Centre, and the person behind 1625047 Ontario Inc.

MktPerspectives Inc. is also known as 1211102 Ontario Inc., and as late as July of 2006 change notices were being filed on behalf of the company by Christine Elliott, about four months after she was elected MPP in a March 30, 2006 by-election. A lawyer like her husband, she practices corporate, real estate and estates law.

And remember the initial sale of the surplus property to 1625047 Ontario Inc. in August of 2004? Acting for the transferee was Christine Elliott of the firm of Flaherty Dow Elliott & McCarthy. She’s still listed on their Web site.

The interests of the Flahertys in The Wasdell Centre goes beyond their law firm acting on its behalf, however. A finance department spokesperson told the media last month the couple advanced a $250,000 loan to The Wasdell Centre.
Mr. Flaherty's spokesman, Chisholm Pothier, said the minister had no ownership in the school, although he and his wife, Ontario MPP Christine Elliott, had loaned Wasdell $250,000.

He said the loan was made so that Wasdell could expand from a home schooling program for developmentally disa
bled children, including one of their sons, to a full-fledged school.

Documents show that a $1.4 million mortgage for prime plus 6 per cent on the property was taken out by 1625047 Ontario Inc. in February of 2006, held by TD Bank. Later that year the severed parkland was sold to Ajax, and on February 23, 2007 another mortgage was registered on the school property.

This second mortgage is in the amount of $14,000 and is interest free for nearly two years until January 23, 2009. That’s also the day the first payment is due, and the last payment is due one month later, February 23rd. And who holds this second mortgage on the Wasdell Centre property? You guessed it, Jim Flaherty and Christine Elliott.

Why were Flaherty’s connections to a private school news anyway? Well, in the 2007 federal budget, Flaherty awarded some attractive tax breaks that will benefit private schools.
The Harper government is giving a tax break to families who send their kids to elite private schools, raising the ire of public education advocates.

Under a little-noticed measure in last month's budget, scholarships and bursaries to attend elementary and secondary school will now be fully tax exempt.

Finance officials estimate the new exemption will mean ``significant tax savings" for about 1,000 students – or, by extension, their parents.

Officials insisted that the exemption applies to scholarships for either public or private schools. But they couldn't supply any examples of public schools – which are funded from the public purse and don't charge tuition fees – awarding scholarships or bursaries.

This, of course, wasn’t anything new for Flaherty. He also introduced rich tax breaks to the benefit of private schools when he was Ontario finance minister under Mike Harris.
As Ontario's finance minister in 1991, Flaherty introduced private school tax credits that were to be worth up to $3,500 per student by the time they were fully phased in.

The tax credits were abolished when Dalton McGuinty's Liberals took office in 2003.

What do we know?

We know that The Wasdell Centre, a private school in Jim Flaherty and Christine Elliott’s riding, got a sweetheart deal on some surplus property in Ajax, and the taxpayers of the riding got reamed.

We know Christine Elliott did legal work for The Wasdell Centre, including filings to facilitate the purchase of that surplus property.

We know Christine Elliott and Jim Flaherty gave The Wasdell Centre a $250,000 loan, but we don’t know the details of when the loan was advanced or what the security, interest or terms were.

We know that The Wasdell Centre bought the property in August 2004 for $1.6 million, and we know the first mortgage listed on the property was from TD Bank in February 2006 for $1.4 million. We don’t how the property was financed for that first year-and-a-half, or by whom.

We know that Christine Elliott and Jim Flaherty hold a $14,000 second mortgage on The Wasdell Centre property, from February 2007.

We know that in March 2007, one month later, Jim Flaherty used the 2007 federal budget to extend tax breaks that benefit the students of such elite private schools and, by extension, these private schools themselves, by making them more affordable to attend.

And we know that, clearly, if you live in Durham, it’s a good idea to be a friend of Jim Flaherty.

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Devin Johnston said...

Excellent research and a well-written article, ABCiT. KUTGW!

Barcs said...

Yesterday Dion demanded that Flaherty be fired.....

Tonight the liberals (if they show up to vote on the budget.. the one with the immigration bill that the liberals trashed) will either vote to support Flaherty's work (or atleast not oppose it in a vote).

Tonight is the perfect chance for Dion to do what he demands of Harper.

(Dollars to doughnuts Flaherty still has his job tomorrow)

Mike514 said...

It’s procedure for publicly-owned lands such as this to be made available to other public organizations, such as regional or municipal governments, at no cost.

Any references to this? Just curious; never heard of this before (not that it doesn't make sense). And why wouldn't anyone pick up on this? If the city's entitled to some free land, surely someone - city councillors, local community group, anyone - would have spoken up and tried to claim the land as public property before the land was sold.

I also find it curious that Ajax would turn down the free offer of land (in 2004?) only to pay a hefty sum for that same land about 2 years later. Any ideas? What's in it for the city?

Wilson said...

Jeff, this may be my favourite post of yours since I've been reading (a year, maybe?). Well-written, well-supported with documentation, a pleasure to read (aside from the feelings of outrage from the actual content, but that's part of the craft!).

When I first saw it, I scrolled down the page and thought, "Wow, this is long." But then I read the first few sentences and I was hooked.

Well done. And you know from past experience that I don't praise lightly. :)

A BCer in Toronto said...

Thanks Devin, and Wilson.

Mike, I don't have a link to a reference or anything on rules re: surplus property; from talking to people familiar with the procedure though I'm told that's how it works, as a high level. As for my Ajax passed when it was free and then bought it two years later, that's a very good question, and one I don't know the answer to. The decision to make the purchase was made during an in-camera council meeting, so the debate isn't public. It certainly is fishy.

Mike514 said...

Thanks for the response, Jeff. Good work. I noticed the Libs asked for a review into all this back in early April (through a quick Google search). Seems they didn't get anywhere and have since moved on, for better or worse.