Owner of rundown St. Stephen properties no longer subject of report by development group

Three rundown properties in St. Stephen that have upset neighbours are headed to mortgage sales, while a local development group has abandoned its effort to find out more about the owner.

Buildings at 9 Schoodic St. and 181 King St., owned by Starshine Properties, are to be sold later this month.

A property at 80 Union St. is also on the list but burned down overnight Monday.

Sgt. Scott Mackenzie of the St. Stephen RCMP said the fire is being treated as suspicious, and an investigation with the New Brunswick Fire Marshal's Office is underway.

Mackenzie said that no one was injured, since the building was vacant, and that the remains of the building were demolished Tuesday.

Despite repeated requests Tuesday, the St. Stephen Fire Department would not answer any questions about the fire.

Starshine is owned by Alberta-based Annette Penkala, who bought about 20 properties in the southwestern New Brunswick town during the pandemic for a total of $2.4 million.

Penkala kept 9 Schoodic and 80 Union empty, and they became an easy target for squatters. Several neighbours of both have told CBC that they are a blight on the neighbourhood.

The buildings sit empty as St. Stephen deals with unprecedented homelessness. The town's only overnight homeless shelter, only blocks away from 80 Union, closed at the end of April. 

Penkala and her lawyer, Randall Wilson, were unable to be reached for comment.

Group stopped from delivering report to council

Future St. Stephen, an economic development group whose mandate includes housing concerns, was working on a report about Starshine Properties to present to St. Stephen council.

At a council meeting in April, the agenda said "Starshine Properties update next month."

But when councillors at that meeting questioned the group's president, Jeremy Barham, about the promised report, he said he was "sworn to secrecy."

Neighbours documented the fire that tore through the building at 80 Union Street on Monday night into Tuesday morning. By late morning, the building was almost completely torn down.
Neighbours documented a fire that tore through the building at 80 Union St. on Monday night into Tuesday morning. By late morning, the building was almost completely torn down. (Submitted by David Whittingham)

At May's council meeting, the agenda said "No update yet on Starshine Properties."

And now, there is no plan for a report at all.

"No, I've had my hands slapped about that, and I'm not going to be giving any further reports," Barham said when reached by phone, refusing to explain why he was stopped from making the report or by whom.

Barham said Future St. Stephen wants to help solve the housing crisis and the Starshine properties issue was an "unfortunate development" taking away rental units from the town.

He would not say if it was the municipality that instructed him to abandon his report, but he confirmed his group is contracted by the municipality.

But talking about a private company is a "sensitive topic," he said.

The university's interim president, Jeremy Barham, says the donor who funded the program 'wanted to level the playing field and make [SSU] as accessible as UNB or the other provincially-funded universities."
Future St. Stephen president Jeremy Barham says the group is no longer compiling a report about Starshine Properties, but he won't say why. (Julia Wright / CBC)

Questioned further about who why the report won't be done, Barham said he was "under a confidentiality agreement" and then stopped himself.

"I wish you would go away, I really do," he said in an interview.

"I know you're doing your job, but this is really, really frustrating.

"I know you have the right to [ask questions] but we're trying to solve a problem, and I don't think it's helping."

Mayor says he didn't stop report

St. Stephen Mayor Allan MacEachern said neither he nor anyone else from the municipality interfered with the development group's plan for a report, adding group is a separate entity "at arm's length" from the municipality.

But he did question why a report was started at all about a private company.

"No, we're not into doing reports on private businesses … that's not our business to get into people's business," MacEachern said.

He said Future St. Stephen's file included housing as part of its efforts to help fuel economic development.

St. Stephen mayor Allan MacEachern said ministers Kris Austin and Jill Green were being "petty" in their response to his state of emergency declaration on homelessness.
St. Stephen Mayor Allan MacEachern says no one in municipal government stopped Future St. Stephen's report on Starshine Properties. (Graham Thompson/CBC News)

"Like I said, we shouldn't be talking about private businesses in my world at all," MacEachern said.

"We're here to work for them all, you've got to be careful of that stuff."

Mortgage sale

According to notices posted in the Telegraph-Journal in April, the Schoodic and Union properties will be sold at a mortgage auction on June 26 by Marie Dianne Sullivan, operating as J&D Apartment Rentals Inc.

She and her husband, Joe, owned the properties as landlords themselves before selling to Penkala. The notices say that if a "sufficient" offer is not received at the auction, Sullivan can sell the properties privately.

Under the New Brunswick Property Act, if a buyer does not pay off a mortgage on time, the mortgagee, in this case the  Sullivans, can sell the property at public auction to regain the  money owed to them.

Documents from Service New Brunswick show that the mortgage between Penkala and Sullivan was to be fully paid off by March 15.

CBC News was unable to reach Sullivan.

A qualified hope for buildings

MacEachern said he's hopeful a buyer comes forward who can bring the buildings back to the town's housing stock.

"There's lot of appetite for places to live, so obviously I want them rejuvenated or replaced with newer apartments and housing for our people," MacEachern said.

But he said he recognizes that with the buildings in "bad" shape and high construction costs, it will be challenging to renovate the buildings and still keep rents affordable.

"You're seeing people get put out of places like these, they're getting renovated and then they can't afford them," he said.

"It's a hard balancing act there. We all want housing, but affordable housing is the word everyone wants to hear."

Neighbours hope for a change

Penkala's two buildings on Schoodic Street have been the subjects of police activity.

All tenants at the 9 Schoodic building were evicted under the SCAN act in 2022, a special law targeting drug and illegal activity. However, 16 Schoodic, another Starshine property nearby, was also the subject of a SCAN investigation in May, RCMP and the New Brunswick government confirmed.

9 Schoodic St. is one of Penkala's buildings being sold at mortgage sale. The building has been vacant since a SCAN eviction in 2022.
The buildling at 9 Schoodic St. is the subject of a coming mortgage sale. The building has been vacant since a SCAN eviction in 2022. (Sam Farley/CBC)

While No. 9 remains empty, CBC News observed that 16 is clearly inhabited this month.

Meanwhile, the building at 80 Union St. went up in flames on Monday at about 9:30 p.m., according to neighbour David Whittingham.

He said the St. Stephen Fire Department showed up shortly after the fire started. Fire trucks from Calais, Maine, across the border, were also there, said Whittingham.

Even as the fire department was hosing down the building, he said, an excavator showed up at about 2 a.m. and started pulling the building down.

16 Schoodic St. is another building owned by Penkala. It is not one of the buildings being sold at mortgage sale. It has been officially vacant since a SCAN eviction this May, but is clearly still being lived in by squatters.
This building at 16 Schoodic St. has been officially vacant since a SCAN eviction in May but is still being lived in by squatters. (Shane Fowler/CBC)

All that remained in the early hours of the morning was a small portion facing Cove Street. The demolition continued at about 10 a.m. Tuesday, with last remaining part of the structure coming down.

Whittingham said he hopes the town will remove the large amount of debris quickly.

Neighbours say 80 Union St. still had squatters breaking in from time to time, and when property managers weren't quick enough to act, neighbours worked together to board up the house themselves.

"I guess confusion is the best word to use," Ron Jodrie, who has lived on Union Street since 1968, said of the mortgage sale.

Since Penkala took over, the property has had constant squatters, break-ins, and blatant drug use on the porch, he said of the nine-unit building.

If the building does sell, "we're concerned about who is going to purchase it and what their motive would be," Jodrie said.

"The building is in absolutely terrible condition. There's no way that it's livable."

80 Union St. is fully vacant and is one of Penkala's buildings included in the mortgage sale.
The vacant 80 Union St. building, one of the Starshine properties included in the mortgage sale, was destroyed by fire Monday night. (Sam Farley/CBC)

Jodrie hopes that a buyer will tear down the building and build new housing, but he's not optimistic.

If the new buyer continues to run the properties the same way, "we're just not willing to tolerate it anymore," Jodrie said.