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Military personnel drive in a light-armoured vehicle across a washed-out highway to High River on June 24, 2013.JOHN LEHMANN/The Globe and Mail

Properties could be seized in a hard-hit neighbourhood of the flood-ravaged town of High River, Alta., as the mayor and town council work to clear the area – located at a critical choke point of the Highwood River – of all buildings.

The warning of municipal expropriation, which Mayor Craig Snodgrass said is a last-ditch option the town would attempt to avoid "at all costs," came days after High River announced it would try to clear the badly damaged Wallaceville neighbourhood of all houses, condos and businesses. But a small group of Wallaceville residents, led by a former town councillor, oppose the mayor's scheme – creating one of the first major flashpoints within the community as it seeks to rebuild after June's devastating floods.

Under the town's plan, homeowners will be offered buyouts based on their 2013 property assessments. Wallaceville – which both the provincial government and town say is likely to flood again – will be returned to an undeveloped state, allowing river water levels to rise without destroying property. In an area where many homes remain boarded up and empty, it's a plan Mr. Snodgrass said is supported by 90 per cent of the 200 residents there.

The action planned by the town is being juxtaposed with a similar Alberta government policy for so-called floodway zones, areas where flood-water flows are the deepest, fastest and most destructive. After this year's floods across southern Alberta, homeowners in the floodway zones were offered a buyout. The homeowners had the option of staying in the floodways, but those who have decided to remain in place are not eligible for future disaster assistance payments.

Although Wallaceville is only partly located in the floodway, a new town council elected in October and led by Mr. Snodgrass initiated talks with the provincial government to pick up the bill for a full neighbourhood buyout. On Monday, the town announced it had come to an agreement with the province.

After hearing from a number of homeowners intent on staying in Wallaceville, Mr. Snodgrass said Thursday residents can choose to stay, but also noted the town has the power to expropriate homes if there are just a few people holding out at the end.

"It doesn't work if there are two houses right in the middle of it," the mayor said.

"This is a Town of High River decision, not an Alison Redford decision," he added.

Alberta cabinet ministers were not available to comment on the situation Thursday. However, Municipal Affairs spokesman Mike Feenstra said the plan would widen the Highwood River channel at the choke point, and keep water away from downtown and other neighbourhoods.

"The Town of High River concluded that this is the right decision for long-term flood mitigation in the area and we're happy to support them in their efforts to make the town safe and vibrant once again," Mr. Feenstra said in an e-mail.

While Mr. Snodgrass said he hopes Wallaceville homeowners will realize a buyout based on a preflood assessment is better than expropriation at today's value, long-time resident Jamie Kinghorn said the town needs to give homeowners more money or better housing alternatives if they want them to move.

Mr. Kinghorn, a former town councillor who ran against Mr. Snodgrass in the race for mayor, agrees most Wallaceville residents want to leave. But for some people, their mortgages are bigger than their assessed values. For instance, one young couple completed major renovations to a home just before the flood and their assessed value doesn't reflect the work that was done, he said.

Mr. Kinghorn said his own house is assessed at $190,000, and he also owns a Wallaceville rental property assessed at $140,000. But he said to buy a decent property in High River right now requires more than $400,000.

Although town officials questioned the upshot of building a 3.2-metre dyke to protect Wallaceville, Mr. Kinghorn maintains the position of the old town council – that the whole of High River needs to be protected by any means – is the correct one. The current policy, he said, has "pitted neighbour against neighbour."

He noted that ultimately the province and the federal government will foot the bill for the buyouts. "I'd like to ask [Prime Minister Stephen] Harper what happened to property rights in Alberta?"

However, Jane Russell has lived in Wallaceville since 1988 and has seen 10 floods in or around her house. She and her husband are now living in a friend's condo, and have been unsure of whether to look for a new home or to try to rebuild. She said the town's new plan helps them move forward.

"You can't keep the water out there. It comes through the ground, and every time it's worse," she said. "I agree with this week's news. But it's hard to be happy because you've lost your everything."

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