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Cable Bay/Oceanview/Oceanside Relying Once Again on the Kindness of Nanaimo Taxpayers
Ron Bolin: Sept. 17, 2012
The Saturday (Sept. 15) edition of the Nanaimo News Bulletin published the City of Nanaimo Notice of Tax Sale and the properties that will be up for sale at 10 am on Monday, Sept. 24, in “the room designated as the Council Chambers”. (I assume that this means the Shaw Auditorium, but if you want to be there, check with the City as I am unclear why a definite location was not given.)
Among the 89 properties listed for sale is 960 Phoenix Way, yet another of the Cable Bay, etc. properties to come onto the block for failure to pay taxes. This means that taxes on this property have not been paid for the last three years and that there will be yet another year for the owner to redeem the property, i.e. by this time next year. The property is currently assessed at $808,000 dollars.
It may be remembered that the owner(s) of this property had two of the parcels of this same undeveloped development up at the tax sale last year. I have been informed that these two parcels were redeemed before this year’s deadline. I have also been informed that the appeal made by the developer against the enforcement of the Managed Forest Land exit fee ($312,957.20) associated with the upgrading of the property to “Resort” status has been lost and the fee has apparently been paid. See Private Managed Forest Land Act Decision – 2012:
The minimum sale price for tax sale properties included the taxes, some penalties, and interest, but it is difficult to understand why an owner would choose a tax sale over the regular payment of the taxes unless there is financial gain, in which case those who do pay their taxes regularly are providing a subsidy to those who do not. Last year the City, precluding competitive bidding, acquired the two Cable Bay properties at the minimum sale price.
While I have sympathy for widows, orphans and those having difficulty keeping their homes in these time of rising taxes and falling incomes, I heartily protest the use of our procedures to protect the interests of land speculators. When our Council virtually extinguished our Urban Containment Boundary and subsequently raised the development status of this property to a “resort” category, it, in effect, raised the speculative value of this property by tens of millions of dollars. See:
http://www2.canada.com/nanaimodailynews/news/story.html?id=b883fc8f-866a-4350-aec8-6642fc4667aa&k=13453
As thanks from the developer, nonpayment of taxes is what we got, and are continuing to get, in return. We should at least be businesslike in our approach this year and put in a substantial bid for the property. In this case we would at least earn interest on the difference between that bid and the minimum upset at no cost to us. And we know we are going to be in for a cost and tax kicking given our new City positions, water woes and the upcoming disclosure of our asset management problems. We need to seek all the financial help we can get wherever we can get it.
The following section is from the City of Nanaimo web site and deals with the subject of Tax Sales. You might wish to see the process in action.
ANNUAL PROPERTY TAX SALE
Any property with taxes unpaid at the end of three years, will be sold at the City’s annual tax sale. The City is obliged to hold the annual tax sale each year on the last Monday of September (or if this is a holiday, on the next Monday which is not a holiday). It is held at 10:00 a.m. at City Hall located at 455 Wallace Street, Nanaimo BC V9R 5J6.
The list of properties that may be available for sale will be published in the local newspapers on two separate dates, the last publication being not less than 3 days, or more than 10 days, before the date of the tax sale. A final list of the properties still available for sale will be distributed at the time of the tax sale.
The sale is a public auction with the successful bid being the highest bid above the upset price. The upset price is the total of all outstanding taxes plus penalties, interest and costs. We require payment by certified cheque at the time of sale before 3:00 p.m. of the day of the sale. If these are not produced, the tax sale is re-opened and the property is sold again.
The owner of the property, or any registered charge holder, will be notified of the sale of the property for taxes. They have a period of 12 months to redeem the property by paying the outstanding taxes. Only at the end of the redemption period, if the property has not been redeemed, will title pass to the successful bidder. If the property is redeemed, all of the amounts paid to the City by the successful bidder will be returned with interest at the rate prescribed under Section 11(3) of the Taxation (Rural Area) Act.
The successful bidder has only limited legal rights to the property during the redemption period. The registered owner continues to have use and enjoyment of the property.
The successful purchaser of tax sale property that results in transfer of title at the end of the redemption period will be required to pay any property purchase taxes and goods and services taxes which may apply to the sale. The effect of the tax sale is to also act as a quit claim in favour of the purchaser of all mortgages registered against the property.
Posts and Comments on Nanaimo Governance 
Monday, Sept. 24, in “the room designated as the Council Chambers”. (I assume that this means the Shaw Auditorium, but if you want to be there, check with the City as I am unclear why a definite location was not given.)
I guess they,the City of Nanaimo, don’t wish to be out bid!
The minimum sale price for tax sale properties included the taxes, some penalties, and interest, but it is difficult to understand why an owner would choose a tax sale over the regular payment of the taxes unless there is financial gain,
Cable Bay was tied in with Canadian Property Investments , Glen Brower etc.
I believe that Glen Brower loaned short term monies at high rates, not uncommon in the speculation business.
The “financing’ provided by the City of Nanaimo would likely be at a much cheaper rate than Mr Brower & his associates!
I have always found it interesting that the Joan Point Park which has at this time no legal access was purchased by the City before Cable Bay Lands put forward any kind of plan.
The relationship between the City( Council & staff) & Cable Bay deserves much more scrutiny than It has been given.
I have been reliably informed that “the room designated as the Council Chambers” refers to the Board Room in City Hall and NOT the Shaw Auditorium where Council meetings are held.
I have been further informed that the upset prices on the properties will only be available at the time of the sale which doesn’t leave much time for any but the professionals to prepare for bidding.
I have subsequently been informed that the upset price on 960 Phoenix Way is about $42,000. Remember that this includes taxes, costs, interest etc. over the past three years. Theoretically this is the price at which one could acquire the pawn ticket to the property which, if not redeemed by the current title holder(s) would lead to full title and ownership next year. It could be redeemed before the tax sale if the owner were to pay the taxes owing. In a usual year, most of the owners pay up just prior to the tax sale. There could be other bidders, but the City has been an active bidder over the years, acquiring the pawn ticket at the upset price.
It should be noted that the price at the upset tax sale price of this pawn ticket is about $1500 per acre. Try to buy some land around here at anywhere near that price. While this property does not include any coast, it does align along the Cable Bay trail and could well provide a basis for a Nanaimo Land Bank, a park adjoining Joan Point Park, or be preserved by a winning consortium for other purposes.
Let’s attend the sale to see how this game works.
I agree with Trailblazer. Further I don’t feel the City of Nanaimo should be carrying these “investors” any further with taxpayer’s monies by bidding on ANY properties going into tax sale! The City is entitled only to property taxes, but is NOT entitled to use tax monies to speculate with themselves. Just gives unscrupulous “speculators” greater ability to stay in business as legitimate “developers” with OTHER tax payers monies. Makes chumps of all who pay when due! If the economy continues to deteriorate how can we decide who will get the benefit of these low interest, taxpayer subsidized loans? Will this be decided “in camera”? This is the beginning of the slippery slope to the end of numerous “careers” as privatizing politicians and developers. Does the word collusion apply here when it comes to campaign funding and favours? No double talk, let’s hear the truth.
At the end of a recent piece on the annual tax sale in the Daily News, Brian Clemens, Nanaimo’s Financial Director, is quoted as saying:
“The only reason we hold these annual tax sale auctions is because we are required to do so by provincial law and we’ve made a number of unsuccessful attempts over the years for the province to stop requiring us to hold them.”
This quote reminded me vividly of a conversation I had in Kingston with his counterpart for Jamaica when I worked there on a computer land titling project with the Inter-American Development Bank. During our conversation she lamented the difficulty which was had in trying to collect property taxes. Oh, I averred, did the difficulty lie in all the poor land occupants and squatters in Kingston? No, she responded, the receipt for their property tax payment might be the only document which showed their claim to the property on which they lived and worked and they were assiduous in paying. The difficulty lay in the rich gated communities which are found in the Hills surrounding Kingston. When I asked if they had a routine tax sale process, I was informed that they did not.
I did not pursue the obvious questions about how this system worked. Recognizing from her earlier comments that it, in fact, did not work, I eschewed the politics which would have been involved in any further discussion and moved on to other topics.
The tax sale is meant to keep all property tax payers honest. It performs a valuable function. Without it there is only politics.
In conversation with Mr. Clemens at the tax sale yesterday, his reasoning became clear. The Local Government Act apparently allows the province, in areas outside municipal boundaries, to simply acquire the land up for tax sale without the necessity of a tax sale, i.e. the properties automatically become the property of the province. This same procedure allowing the City to acquire the land up for tax sale without having to go through the charade of having a sale would save the City time and money. If land is to be sold for three years of unpaid taxes which works out to be about 5% of its assessed value, isn’t it reasonable that the public should share in the excess value rather than that it go to speculators? After all, if the pawn ticket which is bought at a tax sale, is not redeemed, the City can then sell the property for the public purse and gain the difference for the public.
I guess this situation gives a whole new meaning to the term “revolving loan”
Can the city simply not increase the cost of interest, carrying charges etc. to make it uneconomical for landowners to be borrowing from the Bank of Nanaimo?
Jim: I believe that you will find all the parameters regarding the sale price are prescribed by the Local Government Act except the price over and above the upset price.
Perhaps the City should bid in the Million dollar range?
The assessment on the property is $808,000. I’d say they could safely go to about $500,000.
I have just returned from Nanaimo’s annual Tax Sale. Of the 89 properties listed for sale in the paper, only seven remained by the time of the sale. The Cable Bay/Oceanview property in which I was interested was not among these seven as the delinquent taxes, fees and costs were apparently paid before sale time.
The total of taxes fees and costs owing on the seven properties which were up for sale was $43,608.18. Only two of these properties attracted any bidders, but in both cases the private bidders were outbid by the City of Nanaimo which acquired all seven properties for a total of $65,729.82.
The 2012 total assessed value of these seven properties was $1,318,800 and were thus acquired (in pawn as the original owners now have a year to redeem them) for about 5 cents on the dollar. This is a wise use of public money whether the properties either come to the city for resale or reuse, or are, in the case of Nanaimo resident/occupants, used in pawn to provide an additional year of shelter.
Carrying land for minimal cost for land speculators whether local or from out of town is definitely NOT a wise public use. In such cases the City should make an economic bid for the land and collect the extra interest if the land is redeemed. If property taxes are looked upon as a borrowing opportunity for a business rather than a resident/occupant, then the City should likewise be businesslike and make an economic bid.
Here are the notes of introduction to yesterday’s Tax Sale. If anyone is considering bidding at the next tax sale next year, you should be fully familiar with these points impacting such a sale. As far as I am aware this information is not available elsewhere in this well laid out form. My thanks to Ms. Mercer for passing them on.
__________________________________________
SPEAKING NOTES
CONDUCTING THE TAX SALE AUCTION
1. Welcome. My name is Laura Mercer and I am the Collector.
2. I call the City of Nanaimo tax sale to order at 10:00 am on September 24, 2012.
3. I advise all persons present that:
• The City is required by the Local Government Act to sell at tax sale, all properties whose taxes have not been paid for 3 years.
• We do our best to ensure that properties don’t actually transfer pursuant to tax sale.
• We have attempted to contact each of the current property owners.
• The sale of properties will be conducted in accordance with the following terms and conditions.
• There are 7 properties available for sale by auction. The Local Government Act requires municipalities to advertise in a local paper not less than 3 or more than 10 days prior to the tax sale. Advertisement was placed in the Nanaimo News Bulletin on Saturday September 15th, 2012 and Thursday September 20nd, 2012.
• If you intend to bid, I assume that you have read the handout entitled ‘City of Nanaimo 2012 Tax Sale’ Information Sheet.
• If you are the successful purchaser of one of the properties, you will be required to sign the 2012 Tax Sale Information Sheet, complete a purchaser information form and proceed to the table to my left at the end of the Tax Sale to complete the purchase.
• Tax sale is a tricky, complex undertaking. You need to have a good handle on the complexities if you intend to bid today.
• We do not give legal advice.
• The Local Government Act gives the Collector authority to sell a property for the UPSET PRICE which equals all outstanding taxes + penalties + interest + 5% tax sale costs + Land Title Office fees.
• All property sales are “as is” without warranty or guarantee by the City of Nanaimo.
• Prospective bidders are advised that it is their responsibility to search the title of the property in advance to determine if there are any charges registered against the property.
• If no bidding takes place within 3 calls by the Collector (auctioneer), the City is declared the purchaser at the UPSET PRICE.
• Section 421 of the Local Government Act provides that when real property is sold at tax sale, all rights held by the person who was the owner at the time of the tax sale, immediately cease to exist, except for the right of redemption, the right to bring an action to set aside the tax sale, and the right to possession.
• The registered owner’s right of possession is subject to the purchaser’s right to bring action against the original property owner for waste (i.e., damage or destruction to the premises) and the right of the purchaser to enter onto the property to maintain it in the proper condition and to prevent waste.
• Damage, destruction or loss of property during the redemption period is at the risk of the purchaser. The purchaser is advised to insure his interest in the property.
• Regarding occupants of the property, the City will NOT be involved in any communications between the purchaser in the tax sale and the occupants.
• You should take into consideration that, if they are not paying us, they aren’t likely to pay others either.
• You will have to satisfy yourself regarding who occupies a property.
• Properties are as is/where is.
• You could be buying a liability due to charges or damage to the property.
• A title search today doesn’t mean that there won’t be new charges attached to the property during the redemption period (i.e. federal or provincial charges).
• The City of Nanaimo makes no representation, express or implied, as to the condition or quality of the property(ies) being offered for sale. Prospective purchasers are urged to inspect the properties and make all necessary inquiries to municipal and other government departments, and in the case of strata lots, to the strata corporation, to determine the existence of any bylaws, restrictions, charges or other conditions which may affect the value or suitability of the property(ies).
• The announced upset price is the minimum price acceptable.
• The announced upset price will be the starting point of the bidding on each property.
• A bid by any person will be deemed to be conclusive proof that the person has made themselves acquainted with these terms and conditions of sale and has agreed to be bound by them.
• The highest bid above the upset price will be accepted.
• The auction will be conducted with three calls on the final bid.
• The final determination as to the successful bidder will be made by the Collector, who will keep a sales record which shall be conclusive in all respects as to each sale.
• If no bid is received at or above the upset price, the municipality is deemed to be the purchaser.
• Full payment by certified cheque, cash or debit card must be remitted by 3:00 p.m. of the day of the tax sale. Failure to pay will result in the property being offered for sale again at 10:00am on Tuesday September 25th, 2012.
• The Collector is required by law to search all property titles and within 90 days after tax sale, notify all registered charge holders shown on each property.
• The current registered owner(s) may redeem the property within one year and still have the right of possession during the one year redemption period.
• To redeem the property, the charge holder must remit the full upset price plus interest on the purchase price at a rate set by the Province, within one year of the tax sale.
• If the property is redeemed, the purchaser is entitled to all amounts paid plus interest as set by the Province of BC. Refund interest is calculated on the purchase price of the property, not the upset price.
• As soon as the property is redeemed, the Collector will refund to the tax sale purchaser the purchase price plus interest to the date of redemption.
• Refund interest paid to a tax sale purchaser due to the redemption of a tax sale property is considered to be taxable income pursuant to the Income Tax Act and therefore the tax sale purchaser may accordingly receive a T5 slip.
• If the property has been sold at tax sale and the City has been declared the purchaser, 50% of the upset price plus interest may be paid as an instalment thus extending the redemption period by 11 months and 21 days. This applies only to properties with improvements.
• If the property is not redeemed during the redemption period, the Collector registers the new owner at the Land Titles Office, thus cancelling all previous registered charges with some exceptions (such as those imposed by a senior government and those provided for in Section 276 of the Land Title Act).
• In the case of a property subject to the Strata Property Act, the purchaser may be responsible for the payment of any outstanding strata fees and charges which must be paid to the strata corporation prior to conveyance of the property.
• The purchase of a tax sale property that is not redeemed is subject to tax under the property Transfer Tax Act on the fair market value of the property at the end of the one year redemption period.
• The new owners are required to pay the property sales tax to the Provincial Sales Tax Administrator on the fair market value of the property after application has been made to register in the Land Titles Office as well as any City of Nanaimo taxes that have accrued since the tax sale purchase.
• The City of Nanaimo will be bidding on ALL properties. Council has appointed a representative to bid on behalf of the City.
• If you intend to bid up the price you are only making it more difficult for the Registered Owner to keep their property.
• If you intend to bid, please keep the bids in increments of $100 to simplify the process.
Those bidding, please make your bid clear.
Ron,
• Full payment by certified cheque, cash or debit card must be remitted by 3:00 p.m. of the day of the tax sale. Failure to pay will result in the property being offered for sale again at 10:00am on Tuesday September 25th, 2012.
• The Collector is required by law to search all property titles and within 90 days after tax sale, notify all registered charge holders shown on each property.
• The current registered owner(s) may redeem the property within one year and still have the right of possession during the one year redemption period.
• To redeem the property, the charge holder must remit the full upset price plus interest on the purchase price at a rate set by the Province, within one year of the tax sale.
• If the property is redeemed, the purchaser is entitled to all amounts paid plus interest as set by the Province of BC. Refund interest is calculated on the purchase price of the property, not the upset price.
• As soon as the property is redeemed, the Collector will refund to the tax sale purchaser the purchase price plus interest to the date of redemption.
Something here does not sound right! am I missing something?
“If the property is redeemed the purchaser is entitled to all amount s paid plus interest!
The Collector will refund the purchase price plus interest?
So in the case of Cable Bay, the City not only bails them out but pays interest on the monies it had to loan to purchase the property in the first place!
Not just a loan to CB but at no interest?
Correct me if I am wrong.