Nanaimo’s Recent Tax Sale
Ron Bolin: Oct. 1, 2011
It may be appropriate for the City to assist homeowners who live in their homes and have been unable to pay their property taxes for three years to give those owners an extra year to come up with those taxes by purchasing them in a tax sale. But what about those who use the system as a means of relatively cheap financing for their business ventures? I do not know which other of those properties the City saved from private sale are rental properties or speculative land developments. I do know that two large pieces of the Cable Bay/Oceanview development are among them. While it may be in our community interest to assist live-in homeowner citizens with an extra year at minimal cost, do we owe the same compassion to out-of-town landlords and developers?
The properties in immediate question are 1170 and 1270 Phoenix Way and lie immediately below Joan Point Park. In 2011 the 60.51 acres of 1170 Phoenix Way was assessed at $2,398,000 and the 90.6 acres of 1270 Phoenix Way was assessed at $3,452,000. The City purchased these two properties for the upset price of $100,848.74. Within a year, the owner(s) can repatriate these lands which are assessed at $5,850,000 for that $101,000 upset cost. I don’t know the current cost of risk capital, but I expect it is significantly greater, else why go to tax sale. If the City is to bid on such commercial property, its bid should be related to its commercial value. Making a significant bid seems to provide an opportunity to either make a significant return for City on the amount taxpayers have invested in the delinquent taxes or, alternatively, to acquire land for a city land bank at modest cost to the taxpayers. Either is preferable to taxpayer support for what amounts to a low interest loan program for commercial land owners.
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The link between Council , staff & Cable Bay would seem to run deep.
Glen Brower who has spent a significant ammount of time ,money & effort to promote Cable Bay is also a money lender at , I believe, rates in the order of 15%.
This would seem to be a bail out for not just the owners of Cable Bay but for the City who have spent many thousands of dollars of tax dollars to push this project ahead regardless of public opinion or common sence.
Could there be collusion between City hall & the developer?
Only a week or so ago Roger McKinnon was once again boasting (in the newspaper) of breaking ground on the golf course at Cable Bay!
It is my understanding that Cable Bay owed about $360,000 in back taxes.(correct me if I am wrong)
“If” Cable Bay can take back the property for $101,000 do they still have to repay the delinquent taxes?
A couple of comments. The tax rate for delinquent taxes is no bargain, it is high by industry standards. Before anyone takes back delinquent properties they have to pay the back taxes, plus the penalties which include administration fees and interest. If they are not redeemed, then the city winds up owning them. If the city did not bid on them, then someone from the public could bid, and if not redeemed in one year, could wind up owning the property (with the outstanding balances still to be paid).
So “buying” such a property is a risky chance, tying up your money for a year only to have the original owner bail it out again.
Merv: I make so bold as to suggest that the costs associated with delinquent taxes must be minimal for any going commercial concern else why risk their good name by letting property go to tax sale by refusing to pay property taxes for three years and then going for a fourth by risking purchase in a tax sale? I understand the risk of purchase at a tax sale, and I understand the sympathy for Nanaimo live-in-the-property home owners, but business is business. What I do not understand is why the City should play footsie with landlord and developers who often do not even live in Nanaimo. It seems to me the reward of acquiring the Oceanview properties at a tax sale by bidding an amount commensurate with the value of the property to the City is well worth the risk that they may pay that price and recover it. As it has shown time and time again, the City has very deep pockets and the risk to its funds in such a case is virtually nil.
The idea of owning Cable Bay has a strange appeal to me. This would be an opportunity to change the direction of development on this property. We could move away from the hubris and cheese chasing that characterized the last plan. Then, move towards something, less ambitious, more intelligent, more environmentally sensitive, and more doable.
Let’s rezone this back to something like ultra low density. Sub-divide this property into 5 or ten hectare lots allowing only single family residences. No longer allow density development on the fringes of our city.
I guess we’ll see what happens in a year or two.
Daniel.
The Cable Bay lands have a multitiude of problems.
No water , all the wells drilled on the property were either low volume or non potable water.
No drainage, the area is mostly rock & has poor to no ability to sustain a septic field.
This is why the idea of developing the land was a no go from the get go even for 5 acre lots.
The land could have been a mini Stanley Park but in Nanaimo we don’t think in such terms.
Other than that it’s uses could have been , demonstration forest, sustainable forest, or back to it’s original use,forest reserve .
As for development , whatever you consider that to be,
No one in their right mind is going to build , with the vast ammount of lands available elsewhere, in the shadow of a fuctioning profitable pulp mill.
The last thing Nanaimo needs are more stump farms/5 acre lots that generally collect unsued equipment & rusting trucks.
Considering the world around us It is a time for Nanaimo to ‘consider’ contraction.from the far reaches of the UCB.
Perhaps we should consolidate what we have; densify down town at the expence of all outlaying areas, cut our losses before it’s too late!
I hear you Trailblazer. If you say Cable Bay can’t be developed, I’m inclined to believe you. Certainly you seem to exhibit more expertise on the subject then our city planners and our newspaper editors.
I wouldn’t object to converting these properties to park, and woodlots.
My suggestion of rezoning this area to ultra-low density residential is based on a general idea. Surrounding an urban area with 5 to 10 hectare lots is one of the more effective ways of containing a city, focusing density, and protecting the environment.
If we can disperse ownership of properties surrounding an urban area, this makes it difficult for a would be developer to purchase enough land to make these suburban projects possible. Combined with disciplined zoning, these types of projects become almost undoable.
I say, ‘almost’ because as Douglas Adams once said, “When engineering a system to be foolproof, one tends to underestimate the ingenuity of fools.”
Diciplined zoning!
I like it.