Registry office could put Blackfalds on the hook for million dollar deficit: Lacombe, Red Deer registry agencies

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Registry agents say town, taxpayers misled on costs by Service Alberta

 

If the Town of Blackfalds’ plans to open a municipally-run registry office go ahead, the community could be facing a $1-million net deficit in seven years, according to private registry owners.

In fact, Cheryl Davis, a Blackfalds homeowner and owner of One Stop Licence Shop in Red Deer, and Warren Schnoor, owner of Lacombe Registries Ltd., believe that projection is optimistic, given their combined 50 years of experience in the industry.

Both spoke in opposition to the town’s plans to create a municipally-controlled corporation for the purposes of operating an Alberta Registries office during a public hearing Tuesday, citing what they called misleading revenue and cost projections provided to the town by a Service Alberta employee.

“I’m very concerned that the $250,000 loss projected over years one and two will be much higher than forecast and losses could actually continue indefinitely,” said Davis. “The revenue side of the financial forecast provided by Service Alberta seems to be overly optimistic. Experienced agents have looked at this and they don’t believe it’s attainable.”

Service Alberta, as per the town’s business plan, forecasts 11,000 transactions in the first year, 20,000 in the second year and increasing over the next five years to 45,000 transactions.

Davis said it was unrealistic for such large increases, given census results show there are just 7,000 Blackfalds residents over the age of 15. Even if each of those residents made two transactions a year, that would be 14,000 – falling well short of the 20,000 transactions forecasted for year two, and $74,000 short on projected revenue, and further behind in subsequent years.

By comparison, Lacombe Registries currently does 48,000 transactions a year, and Schnoor says, given census information and his own experience, he doesn’t see Blackfalds doing more than 20,000 a year in a best case scenario, which he says would result in a net deficit of close to $1-million.

“Registry services simply don’t increase at an escalation like that unless you have a matching population increase,” Davis said. “This kind of increase would be unprecedented and most unlikely….A continuing increase at the ‘pie in the sky’ forecast is not what any agent in this market has experienced.”

She noted it was also likely not all Blackfalds residents would use a registry in town, given there are seven registries within 24 km of the town currently, and about 50 per cent of the population works outside the community. Further, a town-run office would only be open from 8:30 a.m. until 4:30 p.m. Monday through Friday, meaning many would be unable to take advantage of the proposed registry office.

What’s more, she said there was little room for growth of a registry office, particularly in Central Alberta. In terms of potential clients, Red Deer was ranked the 11th-worst out of the 88 most densely populated registries. Lacombe was dead last.

Expenses in the business plan, too, they said, were misleading and understated.
The costs for a secure store room, including the required ¾ plywood sheeting covering all walls, a steel door, bolted safe and security measures, fees required to be paid on a per-use basis for testing software, credit and debit fees, and training costs, and numerous specialized pieces of equipment. Another $12,000 would be needed for support should the registry want to provide Alberta health care services.

“Not only are the earning very optimistic, but the startup costs and ongoing costs are understated, so this is why we feel there could be some cost overruns,” said Davis.

“Adding more storefronts, especially with questionable viability is not forward thinking in 2019, nor does it make economic sense. It’s only right to ask, is this the right time to be owning a registry in Blackfalds?”

Private enterprise

Other concerns centred on the potential for municipal government to step on the toes of private enterprise.

For one, Schnoor said Service Alberta has a policy for how a new registry office is appointed, which includes figuring out the impact to other registry outlets and a mandatory Request for Proposal (RFP) completed. He said an RFP had not, to his knowledge, been completed in this case. When he wrote an email to Brian Malknson, the minister of Service Alberta, he said the response back was: “When we’re dealing government to government, you don’t have to follow the rules.”

He said the policy and process is akin to a franchise agreement with Service Alberta, providing some protection for parties invested with regards to the operation of the registry office. Instead, he said Service Alberta is choosing to act “outside the rules.”

While he said it was no fault of the Town of Blackfalds, he said it was something for them to be aware of.

As well, Davis and Schnoor both said private sector registries wouldn’t be able to compete with the government salaries of over $49,000 for clerks, and $67,000 for team leads, combined with benefit packages, paid leaves and shortened hours of work, all while the registry runs a deficit, which private sector ones would not be able to do.

“It will hurt me, it will hurt Cheryl. We may lose staff to you because you’re offering wages far greater than we could ever pay,” he said. “Honestly, if you have benefits and a pension plan to go with the manager salary, I might apply, because it would be not that far off from the profit I make owning my own registry.”

Submitted letters from the community included opposition to $250,000 worth of startup costs being placed on the taxpayer, to a concern for parking at the proposed Civic Cultural Centre location, even with the desire for such a service to be provided within the community.

However, in light of information provided by Davis and Schnoor, council deferred on the creation of a municipal corporation so administration could provide comparables between information provided by Schoor and Davis and that of Service Alberta before they made a decision moving forward at a future meeting.

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