How the City effectively Creates Millions in Property Values
Ron Bolin: Feb. 13, 2011
A few years ago Council, in the same kind of wisdom that it used for the Conference Centre, decided to get rid of the Urban Containment Boundary (UCB) which demarcated urban from rural land in the city by basically shifting the UCB to the city boundary. This allowed two massive development proposals on the southern boundary of the city: Sandstone and Cable Bay (now called Oceanview). The city has spent countless hours working with both ventures, but in this piece I will only be concerned with Oceanview.
You may recall that we had an “alternate referendum process” dealing with a Cable Bay/Oceanview annexation to the City from the RDN where over 10% of Nanaimo voters refused that negative option process which entailed passage of the required referendum question unless over 10% of registered voters, acting by petition, refuse it. While such an alternate process seldom fails as most remain ignorant of the question, this one, through the great efforts of a number of people from both the city and the RDN, did not.
Undeterred, the developer and the city (with an unknown expenditure of time and resources by our planning department and Council) continued with the revised planning for the project. The end result of the actions of our planners and our Council in approving the plan identified in the ad below, but with no major changes on the ground, changed the value of the property mightily. This is how a few strokes of a City pen create big bucks in real estate.
While I do not know how much was paid for the five properties that define the Cable Bay/Oceanview project, I do know that they were assessed in 2009 at $5,729,500 with three of the five identified as “Managed Forest” for $289,500 and with the other two zoned as “Residential” and assessed at $5,440,000. In a turn of events which I still am unable to follow, the total assessment on these properties in 2010 was reduced to $514,000, less than 10% of the 2009 assessment, with all five properties now in the “Managed Forest” category. In yet another grand turn, the 2011 assessment rolls show these same five properties (all now listed as “Industrial”) at $13,309,000.
And now the latest entry into this intrigue of valuations comes in the form of an ad:
The property “comes with its approved 420 acres within the City of Nanaimo, British Columbia on Vancouver Island. Oceanview Golf Resort & Spa Master Plan approved for 2,677 dwelling units ranging from single family to multi-family/hotel units. Master Plan provides for 18 hole golf course. Official Community Plan (OCP) designation is ‘Resort Centre’. 97.3 acres contiguous is located in District of Cedar. Excellent views of Northumberland and Stuart Channels and Vancouver Island mountains.”
The list price is $60,000,000.
This is a fantastic walk through assessments, planning department recommendations and Council decisions, through Managed Forest, Residential, and the latest Industrial classifications, from an unknown amount spent to acquire the land, to assessments ranging from a half million dollars to five and a half million to 13 and a half million, to an offering price of $60,000,000 – and in the meantime almost nothing changed on the ground…. Go figure…. And calculate the value added by strokes of the pen at City Hall.
The original purchase price is said to have been about $2.4 million I believe this is what the City could have purchased it for from Weyerhaeuser. Instead the City chose to purchase just 20 acres,Joan Point for about $650.000.
Barely a month ago Wilf Richrd,of Oceanview, said that he was still trying to find financing to the tune of $60M & that he would not let Nanaimo down; the project would go ahead this fall.
Roger McKinnon who,strangley is not the salesman representing this sale( the sale is being offered by a Calgary company) he too said the project would go ahead.
I believe it was Jerry Berry that did much to promote this development indeed Glenn Brower of Oceanside said that it was Jerry Berry’s idea to go big intead of 5 acre lots!
The whole exercise smells rotten & frankly the way the news has been presented with promises of development in the fall just seems like a rearguard action so that some of those involved can walk away from a failed project.
I’m sure that within the year we will be reading a story of a well known realtor who will be saying” I was only the salesman”..
One has to wonder if the taxes on the property have been paid?
I’m sure that there has been a reasonably larger ammount of investment) I know of one person that invested $3M)but the large ammount of well drilling alone will have eaten up a portion of that.
That said; there seems to someone at City Hall that is trying to make it easy for them by reducing the tax rate.
A job for the Ombudsman perhaps?
Trailblazer: You seem to have some information about what actual development/expenditures have taken place on the property. Can you elaborate. I also wonder about the zoning changes to industrial -any ideas?
It might be a good thing if the taxes have not been paid. We might be able to get it back on a tax sale.
There was considerable well drilling done on the site in the hopes of selling some high priced lots on Dod Narrows.
The wells did not provide the water they,Cable Bay, were hoping for non the less drilling continued on the rest of the site perhaps because the cost of piping in City water would be considerable (for both the developer & the City)
Fresh water was & still is a huge issue throughout the Nanaimo area.
The zoning issue is a puzzler.
I can only surmise that industrial land is taxed less than other classifications.
For sure little of the property is “managed forest”
What is also confusing is that Island Timberlands (you were at the meeting) applied to Plan Nanaimo to re designate their adjacent waterfront property classed as “resort” just as Cable Bay did.
That land has now been logged to within 50 yards of Cable Bay itself; which is probably inconsequential.
As to the land coming back in a tax sale , that seems quite possible. Back to what is the question.
For the residents of Cedar Cable Bay has always been thought of as a green belt buffer between the industry of Harmac & the “village” of Cedar.
Island Timberlands have some 150,00 acres of prime land that stretch from Jordan River to Comox.
Much of that land has far more development potential ,even in this age, than does Cable Bay.
What I do wish to know is who at the City of Nanaimo orchestrated a back up offer for the purchase of the then floundering Harmac Pulp Mill a back up offer to the one that Cable Bay Lands made! and why?
Was just looking at the City Map property reports and if I am not mistaken this is the zoning; RURAL AGRICULTURAL/RESIDENTIAL ZONE. There was on that said it had multipal zones.
Gordon: Thanks for calling my attention to this. When I said that these five properties were shown as Industrial, I was using the report from BC Assessment. Looking at CityMap it is shown as Rural Agriculture/Residential on four of the parcels and Business/Residential/Other on the fifth one. Just another interesting turn in this saga. I will try to figure out what is going on that the city and BC Assessment should have these lands in different categories.
Was there ever any doubt that once the land owner obtained development approval from the City of Nanaimo it would sell the property? Why risk actually developing the property? Better to leave this to a more well heeled developer. There is a lot of competition for the something 60 want-to-live-around-a-golf-course market. There are thousands of properties available around Phoenix and Las Vegas at half the likely sale price of condos or lots in Oceanview.
What about City Hall and staff? A whole new zoning category was created just for Oceanview. Small developers in Nanaimo struggle mightily (with the Planning Dept.) to obtain development approvals with all sorts of expensive requirements added on. But the boys from Alberta get a special zoning category. At the same time urban containment boundaries are conveniently thrown on the garbage heap. This City’s governance has been truly awful. Any significant change of direction will require a major house cleaning at City hall.
The trouble with the proposition is that maybe it takes $60 million if not more to service the property, remember that this property is landlocked in respect to public infrastructure, it is essentially worth no more than its previous zoning designation (5 acre plots with wells and septic fields).Suppose that the average profit for a real estate unit is $50,000 then it will take 1200 sales before the project can break even. If the market absorption rate for this project is 50 units per year then it will take 24 years before the project sees a profit! No matter how you adjust the numbers as development projects go this is not one, but you can read about it in the OCP where it is enshrined and sounds great.
And that is the point; for a convincing investment message get a municipal endorsement.
So what can be done to protect investors? It’s simple; pass a bylaw stating that land must be contiguous with public infrastructure in order to be considered for densities higher than rural/agricultural.
Cable Bay. It has closed its offices in the Dorchester and its web site is defunct. Has it now sold out to our pension funds? (Not at C$60 G’s I’ll bet!). The principals have retired to sunny beaches?
Inflated price of C$60,000, resulting from a city hall flick of a pen, is not unusual. It has been going on at least since WWll: we didn’t notice because, with our homes prices bubbling too, we didn’t notice.
A couple of years ago one of Nanaimo’s men about town told me council should up zone all the south end to create wealth. Bubble-omics is inflation in relation to precious metals: not in relation to pen flickers. Our Mr. Man-about-town doesn’t know that!
Mr. Man-about-town’s vision is a developers’ inflationary shibboleth that shows up on paper only. Cable Bay has put that to rest for the time being: whence goes Sandstone?
Expect both to turn up on our pension portfolios were it will steadily depreciate as you and I pay.
The current council, the current bureaucratic planning edifice, the current civic system is long past their buy dates. QED
Don’t be so sure that Cable Bay has been put to rest.
There are those at Council & City Hall that still clutch on to the project ; for whatever reason! your guess is as good as mine.
When ,as he indicated, Mr Wilf Richard or one of his minions approaches Council for yet more concessions who is going to be there to object & if so how strongly?
We must not forget the origins of this debacle.
It was collusion between the City of Nanaimo & Glen Brower that led to the whole concept.
It is not the increase in value that the City Hall pen can create, but the size of the increase in value these official signatures can make; the minimal recovery for this authorization service received by the citizens of the city; and the fact that such grants are made in perpetuity without a reversion to former type if the undertaking which led to the grant is not undertaken, which gripes my soul.
A request to the City for information about the tax status of the Cable Bay/Oceanview lands led me write the following email which was sent cc: to the Mayor and Council. The gist of the response I got by phone message from Ms. Mercer in the Finance Department was that the information was privileged: unless I paid a $10 per property fee.
Dear Ms. Mercer:
Thanks for your prompt response to my request for information regarding the status of tax payments on the Cable Bay/Oceanview lands.
While I can understand a policy of protecting the privacy of home owners in such matters, I find it reprehensible in the case where it protects businesses with which one might contemplate doing business, and particularly businesses which have received benefits from the city in the form of such actions as basically removing our Urban Containment Boundary, holding an alternate approval process for them which resulted in very substantial expenses in time and money by citizens, and very high, and I have been told unrecorded, Staff time and material expenses in bringing them to their current sale price.
But then, it is not privacy that is at stake, is it? For $10 per property (five are involved in Cable Bay/Oceanview) one can get this information. When I win the lottery, I will get it.
Ms. Mercer: Please understand that I know that this situation in not of your making, nor do I wish to castigate you in any way as I know you are simply the messenger.
Council: Taxation is your bailiwick. Do you support the current blackout policy?
They,Cable Bay, are in arrears.
Could this project have actually gone ahead and been built, during the boom days, had it not been for the roadblocks thrown up by Councilor Pattje and company?
Had you researched the background of the “applicants” you would see that they have never completed a development as projected.
The closest they came to “success” was at Drayton Alberta where they have a nine hole golf course come trailer park complete with travel trailers for the impoverished oil field workers further north.
The “applicants” have been prosecuted by the normally self serving BC & Alberta securities commissions & have had to settle out of court to the tune of $20M in one case & a hefty fine for the other.
Add to this the disingenuous advertising aimed at (sometimes successfully) investors with claims such as “These lots will not last long at $1 million” & three lots sold etc etc..
If you think for a moment that anyone in his or her right mind is going to purchase high end real estate in the shadow of a working pulp mill then I have a bridge to sell you.
The property is located about 12 km from the actual City of Nanaimo & it is the taxpayer who would have to front the cost of infrastructure to it; not an inexpensive proposition with access,water sewer etc to consider.
The property itself is & never will be of any value than it’s original designation of Forest Reserve.
The property has little to no potable water. The property has little to no drainage making perk tests almost impossible.
In short the purchase of the property at $2.4 million they are trying to make a proverbial silk purse from a sows ear!
As for Mr Patje. He is an advocate of densification as am I.
Mr Patje gave his support to the citizens rejection of the annexation of RDN lands to the City or Nanaimo.
That said he was not part of the main thrust to fight Cable Bay.
Over 7000 signatories shouted out their disapproval of Cable Bay development.
Mr Taylor. You have posted on many Blogs your dislike of those that don’t vote, turn out to Council meetings or generally become involved!
Here the people have spoken (though not to your liking) the developers have been exposed for what they are (speculators)& you cry in your beer about what could have been?
You did not actually answer my question.
If the land is as useless for development as you claim, the only conclusion is that a whole lot of people should have listened to you and they must simply be idiots.
I am not crying in my beer at all, I never did buy into Mr. Pattjes claims, any more than I buy into yours.
The market will decide if the project is viable, plain and simple. The question I posed, which you did not answer, was during the boom cycle could it have been built?
You say no, perhaps you are right, perhaps you are wrong.
The argument about densification as I have heard it used to oppose Oceanview makes little sense. How could a high end, gated community with private golf course and marina attract people away from condos downtown? The people who could afford such luxury would NEVER buy downtown.
If the facts as presented by you are true, there would have been no need to oppose anything, as buyers would soon realize their land was useless when they discovered they could never use the land for anything other than forest reserve.
Question, if, as you say this land is so useless and you think no one would ever buy it ….. who do you think the developers are going to sell to?
Good analysis Trailblazer, just one comment, the cost of infrastructure is always the obligation of the developer and never the obligation of the City. In this case these costs are significant due to distance and lack of right of ways and easements to the property. So significant are these costs that the project is not viable, indeed has never been viable. The project proponents know this, some City planners know this, and duped investors will eventually and reluctantly come to this conclusion as well.
This particular example applies to one project and one developer. Putting another face on it, the average home in Nanaimo increased in value by 247% from Jan. 2000 until Jan. 2010.
How many here, think that is a fair increase on their property investment ?
Can anyone really explain the values put on property of any kind? I used to think it was just supply and demand, but not so sure anymore.
Think there is a lot more manipulation by the Star Chamber than I used to.
Jim: I am not sure what kind of face your comment about the increase in Nanaimo average home prices is supposed to put on this issue. If the home owner bought in Nanaimo in 2000 and sold and bought a new house in 2010, they paid 247% more than what they would have paid for the same house in 2000. Where is the gain? In Nanaimo nothing changed except the size of the mortgages. Who benefited from this “increase”?
The issue of the value of property of any kind is perhaps beyond the purview of this blog and has been a subject of universal controversy since Adam and Eve were driven out of Eden.
Ron: If they paid $100,000 in 2000 and sold in 2010 for $247,000 their gain is $147,000. They would clearly have more money to take into the old folks home, than if the value of their property had remained stagnant, yes no?
Your post points to one example of how property values increase by millions. I would simply suggest that property values in Nanaimo have increased 247% in ten years for basically speculative reasons. The same with Oceanview.
What that means is a different debate. But the average person has seen their ‘paper’ wealth more than double in that time. Some have leveraged that increased value and invested wisely and increased their personal ‘value’ many times over.
Those who simply sat on the ‘increased’ value of their property, once again, missed the boat.
Jim: They are selling an asset and converting it into cash. If they don’t buy something new, they still have to have someplace to live, right? That new rental place is also 247% more expensive than it was 10 years earlier. If they live long enough, their $247,000 will run out. (Probably in about 8 years if the cost of retirement living for two is set at $2500/month which is probably too low -and doesn’t include rent increases). During this same period the house they sold has probably gained in value to well over $350,000 (pick an inflation rate).
This is the difference between an asset and cash. One grows with inflation and cash does not. And this is why we should all be very afraid of what has happened and is continuing to happen. The inflation story does not have a happy ending. The increase in cash value of Nanaimo real estate is a phantom unless you either make money on the sale/rental associated transactions or take the money and go somewhere where prices are lower or maybe to a place where the level of inflation is not so high: how about moving to Mexico, Costa Rica or El Salvador?
You asked ‘where is the gain?’.
If you put $100,000 in a sock under your bed in 2000, you would still have $100,000 today. Purchasing power erosion aside.
If you put the same $100,000 into real estate, it would be worth $247,000 today. Which has outstripped inflation during the same time frame.
How that is not a gain, kinda baffles my little mind.
Don’t see what is baffling. The question is not about dollars. It is about what those dollars buy. And what you are suggesting is that they sell their house and, in effect, put the money under their mattress while withdrawing each month to pay the living expenses. What is difficult about this? We are talking about a place to live, not about dollars.
I thought we were talking about property values. Not all property purchases provide shelter.
Your post points to one example of how property values increase by millions. I would simply suggest that property values in Nanaimo have increased 247% in ten years for basically speculative reasons. The same with Oceanview.
Unfortunately the income in Nanaimo did not keep pace with the inflation.
Nanaimo has high housing costs compared to income which is lower than average.
Super inflation such as we have experienced is the drug of choice for developers & real estate sales but it leaves the ever increasing less fortunate with little chance of joining the race.
Such is the folly of a developer directed City Council.
As to “could the property have been developed in boom times”.
As has been suggested the infrastructure costs are too high.
The developer had insufficient funding.
Golf courses have run their course (pardon the pun).
The Marina was & is not viable according to marine engineers I have spoken to.
Who wishes to live in the shadow of a pulp mill with it’s noise & smell.
Who wishes to live in a project with a twenty year build out date.
Who wishes to invest in a project that has insufficient access.
The golf course is not viable because of the lack of water.
The golf course is not viable because of the lack of soil; it would have to be shipped in in great quantities.
Had the project started the market would have still fallen & the developer would no doubt be cap in hand at City Council asking for more concessions as with Fairwinds & other struggling “high end” gated community projects.
There are far more attractive places to build such a project if indeed they are still viable ; which I doubt.
Gated community,golf course,spa’s are the wet dreams of Realtors & developers who have access to cheap land.
The reality of the market which is unlikely to change is that we need more affordable housing to suit the income of the majority of our citizens.
If the project (Cable Bay) was doomed to fail, why waste time opposing it, simply let the market kill it off, as it should. Of course I have difficulty evaluating the credibility of your opinion as to the viability of the project, since I know nothing of your expertise in the field of developments of that scale.
The hyper inflation of the real estate ‘boom’ goes well beyond any local government and was the product of manipulations well beyond the means of even provincial policy. It was a North American, if not worldwide event.
The actual ‘market’ value of houses was more a function of how much the bank figured you could pay back, rather than what it was worth in real terms.
As to Nanaimo’s income not keeping pace, how it even survives is a mystery to me. If you withdrew the government payrolls, this town would simply dry up and blow away. In fact when all the 55+ types with their bags of gold, die off, and all the young people have sought employment elsewhere, I suspect Nanaimo real estate values will plummet as government workers will be all that is left.
The only ‘new’ money that this town has seen has come from those who have cashed out somewhere else, and saw Nanaimo real estate as a bargain.
So, which came first, the supply or demand? If demand, then council did nothing except meet the demand, created by those wishing to enjoy this lovely piece of real estate.
In fact, if it were not for all those evil developers, I wonder where the 80,000 or so people would now be living ….. or perhaps they might not even be here? I’m not convinced that would be an improvement.
As far as this city being so developer/business friendly, I am sure there are many who would never bother even attempting to jump through the hoops at city hall to do business here. A good example is the hoops Wal Mart is going through to simply add 22,000 square feet to their store.
By the time staff gets finished jerking them around, that whole project will costs thousands upon thousands more than necessary. Many businesses do not have the pockets Wal Mart has, and simply would pass Nanaimo by.
Perhaps ALL land ownership should be taken out of private hands and strictly controlled by the state, who will set market prices all can afford, and then the state can build us all houses we all can afford, and then provide us with government cheese so we don’t go hungry.
Is that the kind of solutions Ron and Trailblazer would be happy with??
Jim: Perhaps you should not project your emotions onto others. The failure of state management has been amply demonstrated, though it will continue to be tried. But similarly the failure of what we are currently doing is also again on display. Perhaps we need to be a little more creative if we wish to at least dampen down the oscillation of the business cycle which leads to these extremes.
Henry George over a century ago suggested a method which may well be worth reexamination in his Progress and Poverty: http://www.henrygeorge.org/pcontents.htm
for which I provide a brief Wikipedia overview here:
“Progress and Poverty seeks to explain why poverty exists notwithstanding widespread advances in technology and even where there is a concentration of great wealth such as in cities.
George saw how technological and social advances (including education and public services) increased the value of land (natural resources, urban locations, etc) and, thus, the amount of wealth that can be demanded by the owners of land from those who need the use of land. In other words: the better the public services, the higher the rent is (as more people value that land).The tendency of speculators to increase the price of land faster than wealth can be produced to pay has the result of lowering the amount of wealth left over for labor to claim in wages, and finally leads to the collapse of enterprises at the margin, with a ripple effect that becomes a serious business depression entailing widespread unemployment, foreclosures, etc.
In Progress and Poverty, George examines various proposed strategies to prevent business depressions, unemployment and poverty, but finds them unsatisfactory. As an alternative he proposes his own solution: a single tax on land values. This would be a tax on the annual value of land held as private property. It would be high enough to allow for all other taxes — especially upon labor and production — to be abolished. George argued that a land value tax would give landowners an incentive to use the land in a productive way, thereby employing labor and creating wealth, or to sell the land to those who could and would themselves use the land in a productive way. This shift in the bargaining balance between resource owners and laborers would raise the general level of wages and ensure no one need suffer involuntary poverty.”
Ron, Perhaps I shouldn’t, not sure though.
The notion of how to fairly collect taxes is only one side of the equation, what taxes are spent on is the other.
We have developed a different system in recent decades, and that is to simply use pretend money to finance the things we want and hope the grand kids can figure out how to balance the books somehow.
The idea of poverty in Canada would be considered a lavish lifestyle in countries where poverty means you don’t eat and you die.
Our idea of poverty is that you can do nothing, and contribute nothing to the community and still have a roof over your head, food in your belly, clothes on your back and your medical needs taken care of, granted it does mean you’ll have to cut out the smokes and booze, but perhaps can’t afford a car or cellphone, that is poverty by the Canadian standard.
As for the hyper cost of housing in North America, if you go back far enough rather than blaming the developers, you need to blame the ‘left wing’ elite that figured it was everyone’s God given right to own a home. The markets simply obliged to what was government interference at the highest level. Of course their was the ‘moral’ failing that added to the whole fiasco also.
Like I have commented before, we are all just making this up as we go.
How we doing so far??
The theoretical value of land is increased by the construction of physical infrastructure and buildings; and it is true that social infrastructure also adds theoretical value. Construction and social services do however come at a cost in terms of capital expenses and taxation. Real value is based on how much money actually changes hands in a transaction. The amount and velocity of money changing hands is a measure of economic employment (productivity). Poverty can be widespread in this environment in spite of all the wealth because not all individuals are treated equally. We recognize these realities through the redistribution of money raised through taxation.
We cannot lay the blame for poverty on land speculation. We need to remember that land use rituals have been around for a very long time. Ours is not much different than others of today. We like to believe that we are managing human relations in a civil manner, that we are bringing order to what might otherwise be chaos, that we are creating economic opportunity, and that everyone is being treated fairly. Over successive generations and through various alliances we have created a legal code of conduct which we refer to as the City Bylaws. Like all legal codes ours is subject to interpretation and manipulation and there in lies fertile ground for politicians, bureaucrats, entrepreneurs, opportunists, speculators, and fraudsters alike and all of whom have both positive and negative effects on poverty.
Jim: Just to clear up a couple of points:
First, to my way of thinking to “fairly collect taxes” demands, in itself, that they be “fairly” spent, i.e. for the direct benefit of all who pay those taxes, not for some supposed trickle down purposes.
Second, please do not put words into my mouth. Good developers are the foundation of a good community and work as partners with a community’s vision. Unfortunately they are too ofter left to their own devices and limited goals when the community provides no firm vision or leadership.
Third, if one studies the most recent failure of the financial system, its ongoing and as yet unresolved difficulties may have had a kernel of that liberalism so promoted by all the world’s religions, but the hard shell unregulated practices which drove the system to ruin can be traced directly to those not so liberals who have their hands directly on the financial tiller and turn every grace into a way to create more credit which they can divert to their own pockets.
Why does Nanaimo or any community need developers? Why do municipalities not simply service land and make it available to builders, to build the type of housing they want. Why this dance with developers,,,,, good or bad. Just eliminate them, and turn the whole issue over to the public sector. The city buys and services the land as they see fit, and then puts it on the open market for builders. I think it has merit.
The biggest cause of the current financial failure is due to the moral deficit that is so prevalent in the world. I don’t believe it to be any more complicated than that.
Jim, even if Council had taken one week to approve the Cable Bay/Oceanview project it still would not be anywhere near the starting point. The problem is financing – a project like this is not going to go anywhere unless the developer has piles of its own money to get it started. No bank is going to be providing financing until the project is well into pre-sales.
As to your statement about a “‘left wing’ elite that figured it was everyone’s God given right to own a home”, that is merely silly it is so wrong and ahistorical. Identify this so-called left-wing elite – who were its members – who made pronouncements along this line, when were they made. The post-war expansion of home ownership (Levittown, etc.) was the product of marketting mostly by developers but the notion of universal home ownership in North America has always been more of a conservative idea than a socialist one. In the UK it was Margaret Thatcher who pushed home ownership for the masses. Conservatives have traditionally seen home ownership as a way to increase the stake of working people in the system while socialists (in the past) were ambivalent to enhancing private ownership, preferring co-ops or state ownership.
Are you saying that financing was no different during the ‘boom’ years when the project was first floated?
I was referring to the whole US housing bubble which was predicated on the notion that home ownership should be available to all Americans. This led to the government sponsored financing fiasco which was fueled by greed on many levels.
I would disagree claim of being silly and wrong. But, I have come to know, we are all experts in our own minds, so no need to pursue this any further.
I suggest this subject has been completely talked out.How about youall posting some profiles/comments on the gang of 6 running for council? This is much more interesting to your readers than the debate about developers at this point in time.
Jim. You are unfortunately buying the rewriting of history by American Republicans. The American housing bubble was not “predicated on the notion that home ownership should be available to all Americans”. Anti-red lining legislation was passed in the early 1980’s and did not result in a housing boomlet. Close to 95% of the bad loans were not subject to any federal legislation and at the height of the speculative frenzy Fanny Mae and Fanny Mac had largely been shouldered out of the picture. It was NOT bad housing loans in St. Louis that caused the problem. It was bad housing loans in Arizona, Florid, California, Nevada and other boom areas. Nobody forced the Banks to make these loans – they made them willingly because they were then “bundled” and sold. All of this was possible because the Government had withdrawn from supervision of banking activities. It all happened under the watchful eye of a Republican controlled Congress (1994 to 2006) and a Republican presidency (2000 to 2008). There are some good books on the finance product bubble, written from an non-ideological perspective, which I could recommend.
And I see you are buying into the Democrat version of the same series of events.
We agree to disagree.
Jim. As to the first part of your response “Are you saying that financing was no different during the ‘boom’ years when the project was first floated?”
Yes I am saying basically that. A developer’s funding application would not be considered until they had a substantial percentage of pre-sales – usually about two-thirds. To have pre-sales at that level meant that construction had probably started, there were approved building plans, a sales office up and running, etc. The difference now, of course, is getting the pre-sales. In a possibly declining market the smart purchaser does not buy something which may not be available for three or four years.
But we will never know what the market response MIGHT have been during that time, as the developer never got to that stage, thanks to the opposition of Nanaimo’s concerned citizens.
Coyote Bill: While we are happy to see discussion on election issues here, we do not wish to get involved in the personalities in an election campaign, particularly where commentators are not required to display their real identities. If you wish to write an article on this topic and how it might be approached rationally, please see the conditions for submission.
CB – PS: The blog has listed the web sites or blogs of candidates which we have been able to find. See the bottom right on the front page. We would like to let the candidates speak for themselves. We would further suggest that these sites are the appropriate place for asking questions of the candidates and of their providing public answers.
re: Jim Taylor, 24 February 2011 at 9pm. Jim if you look at the $100,000,000 which our city “developers” poured into the still yawning hole downtown, you can answer your own question about why the city is not more active in the development business. They have been too active already.
May I add to that point the odd decision by Council to place a back up bid of $10 million, to the Cable Bay bid, for the Harmac Pulp Mill whilst it’s future was still uncertain!!!
Curiouser & curiouser!
Free enterprise welfare seems to have no bounds.
True free enterprise is difficult to find.
Ron; If as policy, municipalities developed all raw land without a profit motive, it could / should be beneficial.
As to the $100,000,000 example downtown, I have never been able to make up my mind if the end result was the product of incompetence or larceny, or a combination of the two.
Interesting conversation: inflation versus value. Three events make this issue much greater than Nanaimo:
1. 1972 Breton Woods over turned: gold standard abandoned. Currency value transformed over night into printing presses and, later, digital screens.
2. 1980 NEP: National Energy Program was intended to shield Canadians from energy price escalation and what has now come to be called Peak oil.
3. 1985 FTA: supposedly transforming our work force into high tech, highly paid managers supplied by cheap off shore labour producing life’s necessities inexpensively.
When TEAM became Vancouver council in 1972 it proudly declared the EXECUTIVE CITY: no more need to sully our delicate little hands working: all that will be done, sight unseen, as we sit comfortably in our corner view offices dreaming of the weekend sailing.
Nanaimo council, not alone among the dreamers at the time, was riding high on the bubble . . . oblivious then as now!
All this and more and where are we now? We have luxury towers unoccupied, development at a stand still, a mayor, council and bureaucracy overwhelmed.
“. . . If the home owner bought in Nanaimo in 2000 and sold and bought a new house in 2010, they paid 247% more than what they would have paid for the same house in 2000. Where is the gain? In Nanaimo nothing changed except the size of the mortgages.
Yes Ron, 20 Feb. The essential issue is . . . value versus inflation.
“The issue of the value of property of any kind is perhaps beyond the purview of this blog . . .” Huh! Perhaps it is. Rampant inflation has distorted our sense of personal and collective worth!
“Free enterprise welfare seems to have no bounds.” Oh yes it does Trailblazer. Colonized people, the world over, are awakening?
Are we far behind?
The opposition to Cable Bay did not stop it or even slow it down. The opposition was unsuccessful. The only think which the opposition stopped was the development of a small number of acres outside the City boundary. The Developer had alternate plans which did not require these 23 or so acres since a dvelopment that crosses jurisdictional boundaries (opposition or no opposition) is always more problematic. City Hall did nothing but cooperate with the Developer to the extent that (very unusually) a whole new zoning category was created to facilitate things. If the Developer had lots of their own green stuff the project would have moved along very quickly and units would already be on the market.
As to why anyone should oppose Cable Bay. Lousy planning! The city is already unsustainably spread out. Personally I would rather have no planning at all than lousy planning which indiscriminately and unfairly creates added value for some property owners but not others.
Jim: (Jim Taylor 27 February 2011 at 9pm) ; Land Banking has been used in Nanaimo where city owned land is turned over to agencies such as Habitat for Humanity or low barrier or low income housing projects. It has been practiced elsewhere successfully at the subdivision level, but not, I believe here. Landbanks are often collected for taxes during tough economic times and we could find ourselves in this situation in the next couple of years.
It seems that the possibilities of collecting land for land banking in Nanaimo have been foiled by our tendency to provide a base zoning of residential to land which raises its price even at the vacant stage of development. See what has happened to the cable bay land. We could have bought those 500+ acres at one time for less that we paid recently for the 3 acre addition to Neck Point Park. But we didn’t. And then we proceeded to perform the ablutions necessary to vastly increase the price by our overzealous fever for development for which only plans and no money were required, a lot like the “liar loans” that have characterized the US mortgage collapse. We need to go back to “show me the money” before we give our development capabilities away. Or if we have given them, they should be retracted if the money is not shown in a reasonable time frame.
Ron: If Trailblazers assessment of the project is correct, the project could never have been successful regardless of who owns it.
Just because someone lists it for $60 million means nothing. I can list my own house for $60 million and have a wish in one hand …. and ….
The idea of municipalities bringing developed land to market, since they should not be driven by greed, nor have any of the moral hazards associated with the private sector, is perhaps simply an idea whose time has come.
Affordable housing on Vancouver’s land bank was tried by newly elected Mayor Gordon Campbell in 1986 and quickly abandoned: it’s erstwhile management team is now puling all the stops to get Las Vegas’ Paragon to build a massive casino on False Creek.
I am no economic sage, just an innocent observer.
But I can recognize that Nanaimo, along with Vancouver and the rest of the western world, has lost, indeed willfully destroyed, its productive capacity: we are no longer able to create wealth enough to sustain our personal/civic edifice (although we are yet to realize it).
Casinos are all there is!
I am sure that is common knowledge among Nanaimo bloggers but it doesn’t seem to show up in the conversation. Reading these posts I sometimes get the impression we are still in the balmy 1950’s.
We may diddle as we may with Cable Bay, Sandstone, the UCB, unwelcome towers on Newcastle waterfront or whatever zoning legerdemain planners conjure up: it makes little sense.
Productive manufacturing industry has been replaced by finance: paper money inflation. Real wealth is now in hard core commodities.
Precious metals, oil, gold, are the high profile commodities at present but land isn’t far behind: hence the rush to “up zone”: and it is still inflation even with improvements.
Nanaimo’s efforts pale in comparison to say TV’s “PICKERS” or Vancouver’s aimless rush to up zone downtown to 70/80 floors.
PIcker junk may afford ephemeral joy on the mantle piece but who eventually occupies those towers is moot? If they ever get built. And prices attached to some of that so called “collector” junk is absurd.
But evidently it all beats out cash in the retirement portfolio!
Good intentions, legislation, regulations, keep otherwise unskilled workers busy but only events, circumstance, effect real change and in that we are vulnerable.
It is, nevertheless, hitting some of us pretty hard.
Sorry to preach but don’t expect on-line gossiping to change over seven decades of bad management.
These ‘issues’ serve as valid distractions for the generation that is busy rearranging the deck chairs on The Titanic, while all the time doing Polly Anna impersonations.
Hoping upon hope, we will have expired before we hit the iceberg.
Jim Taylor 28 February 2011 at 9am – Jim: While I am not as sanguine as you about the lack of greed or moral hazards on the part of governments, if the kind of property melt down occurs here as it has in the States, then Nanaimo should most assuredly build up it land-bank for public use when times get better again. Tax sale prices can be very affordable.