Edmonton Scandinavian Centre Association
Background Information and Concerns
September 7, 2023
(Note: When possible, blue text links to underlying documentation or other information.)
Dutch Canadian Centre/Home of the Scandinavians (the “Property)
Dutch Canadian Centre/Home of the Scandinavians (the “Property) consists of the land and building located at 13312 – 142 Street NW. The Dutch Canadian Club (Edmonton) (the “DCC”) is the registered owner and ESCA’s interest is secured by a caveat.
The Property is listed for sale with Avison Young (online marketing information) as:
- Until ten to fifteen years ago, rental income made a material contribution to operating costs. This is no longer true.
- Issues with the roof and HVAC system may lead to expensive repairs and/or replacement within five years.
- Continued ownership is neither feasible nor desirable. On average, DCC members are in their eighties. Membership in the DCC and Scandinavian societies is not being replenished.
The DCC accepted an offer to purchase the Property in July 2023. The condition date has been extended to September 22, 2023.
Michael Kirk, a partner at Miller Thomson, is handling the real estate transaction for ESCA. Miller Thomson is ESCA’s registered office.
The DCC is a society incorporated in Alberta. It is separate from the Co-op, ESCA, and the five Scandinavian societies.
Scandinavian Centre Cooperative Association Limited (the “Co-op”)
1958: The Co-op was established in Edmonton as a for-profit organization.
May 8, 2004: The Co-op advanced $175,000 to the DCC and secured it with a mortgage on the Property.
May 19, 2004: The Co-op assets were transferred to Edmonton Scandinavian Centre Association. The assets consisted of the DCC mortgage of $175,000 and +/- $225,000 cash and equivalents. (See Motion #2 at the end of #4 Status Report.)
May 28, 2004: A letter from Roddick Scott & Johnson discussed why the Co-op was prematurely struck by Corporate Registry.
May 31, 2004: An application to dissolve the Co-op was prepared May 31, 2004 and faxed to Alberta Government Services the following day.
Edmonton Scandinavian Centre Association (“ESCA”)
May 5, 2004: ESCA’s Application to Form a Society was filed with Alberta’s Registrar of Corporations.
May 19, 2004: ESCA received the Co-op’s assets, which included a $175,000 receivable from the DCC.
- ESCA would (or had) advanced a further $200,000 to the DCC.
- The DCC acknowledged an indebtedness of $435,000 to ESCA that consisted of $375,000 cash plus $60,000 material and labour contributed by two Scandinavian-owned businesses.
- ESCA will receive 30% of the Property’s value if it is sold by the DCC.
September 25, 2006: As noted on page 4 of the linked document, article 20 of ESCA’s Bylaws was amended to read, in part:
“Upon the members agreeing to dissolve the association, all liabilities of The Edmonton Scandinavian Centre Association shall be paid and any remaining assets of The Edmonton Scandinavian Centre Association shall be donated to a registered non-profit society.”
November 27, 2006: A caveat protecting ESCA’s interest was prepared and registered at Land Titles on January 8, 2007.
April 30, 2023: The Bylaws were replaced in their entirety and filed with the Registrar of Corporations on May 16th. Article 27 of the new Bylaws states, in part:
“The Representatives may pass a special resolution to pay all liabilities, distribute any remaining assets in equal shares to the individual societies that comprise the Five Societies and are in existence immediately prior to ESCA’s dissolution, and dissolve ESCA (“Resolution to Dissolve”).”
ESCA’s Financial Statements as filed with Annual Returns
- December 31, 2004: This combines the operating costs of the Co-op and ESCA. Assets include an investment in DCC of $175,000.
- December 31, 2005 with 2004 comparison: The investment in DCC remained at $175,000.
- December 31, 2007 with 2006 comparison: The investment in DCC increased to $375,000 during 2006 and has not changed since then.
The Five Societies
The Five Societies referenced in ESCA’s Bylaws are often referred to as the Scandinavian Societies. They are:
- Denmark – Danish Canadian Society (DANIA)
- Finland – Finnish Society of Edmonton
- Iceland – Icelandic Canadian Club of Edmonton
- Norway – Solglyt Lodge 4-143
- Sweden – Vasa Order of America, Skandia Lodge #549
All the above, except Solglyt Lodge, is a registered Alberta Society. Solglyt’s members pay their fees to the US-based Sons of Norway organization, which is registered as an extra-provincial non-profit corporation in Alberta. Solglyt manages its finances without input or control from Sons of Norway.
- We discussed whether ESCA is an owner or trustee. The change to ESCA’s Bylaws in 2006, as described above, may clarify this concern.
- Was ESCA required to file T1044s with the CRA and, if yes, how do you recommend addressing the filing deficiency? ESCA’s assets always exceeded $200,000.
- Assuming ESCA owns the mortgage, will the disposition of the Property result in a taxable gain for ESCA?
The Five Societies
Can a 20% share of ESCA’s net funds be distributed on a tax-free basis to societies that meet the following criteria?
- It is an Alberta-based and registered society.
- Its main purpose is not the provision of dining, recreational or sports facilities for its members.
Is additional information needed to verify the following societies meet these criteria?
Apparently, VASA members have access to 160 acres at Pigeon Lake. Members have leased lots and built cabins, which range in value from very little to $1 million. The cabins are passed between generations or sold to other VASA members when a member decides to move on or dies. I do not know how the land is held.
ESCA’s Bylaws allow for members of the Five Societies to reorganize and maintain their position within ESCA.
- Can Solglyt, which is currently part of the US-based Sons of Norway organization, create an Alberta-based society to receive the funds?
- Are there US and/or Canadian taxation or reporting implications if funds are paid to Solglyt while it is part of Sons of Norway?