View from Costco on Chain Lake Drive: left, BANC Developments; right, wilderness area. Trees aren’t worth much until someone cuts them down.
NOTE: I have corrected this report to reflect the fact that a much-quoted $6 million figure demanded by developers actually refers to an offer made with respect to just 210 acres. H/T Waye Mason.
A 2013 sale of city-owned land to BANC Developments suggests the land adjacent to the Blue Mountain-Birch Cove Lakes wilderness area could be worth $67 million to its current owners.
But that’s only if is re-zoned to allow development. As it is now, the same land is assessed at only $2.4 million.
Our team of crack analysts also believe that the owners, primarily Annapolis Group and Stevens Group, would prefer to hang on until this or a future council decides to re-open the whole question. This is a manoeuvre known as a “full Rankin”.
Halifax Council has decided not once, but twice, to buy the 1,308 acres of designated parkland near the Bayer’s Lake Business Clusterpark. This idea originated in 2006 and it inspired the province to declare roughly 3,200 adjoining acres a protected wilderness area. The city land would be an ecologically vital buffer for the wilderness area and an accessible green-space for folks who aren’t hikers or canoeists. It would be 20 minutes from downtown Halifax and reachable by bus.
The province has done exactly what it promised. And so, really, has Halifax Council. All that remains is for staff to negotiate the terms or start expropriation. They have been directed to do this after due process.
The owners want $6 million; the city is offering $2.8 million.
IS COUNCIL SOMEWHAT RESPONSIBLE FOR T-LAB’S OUTRAGEOUS ESTIMATE?
Yes. In 2013, after meeting in secret, Council authorized the sale to BANC Developments Ltd. of 183 acres behind Kent Building Supplies and Staples in Bayer’s Lake. You can easily see the demarcation between wilderness area and BANC’s “developed” land from the Costco parking lot across the street. (Please see photo above.)
At $9.3 million, the sale price is $51,070 per acre. If that price were applied to the 1,308 acres in question, it would work out to $66,799,224.
IS THAT ALL YOU GOT?
No. The Facilitator’s Report rejected by staff last week mentioned 210 acres that Annapolis felt was worth $6 million, vs $2.8 million suggested by the city. In the absence of real information, I think it’s fair to extrapolate, giving us $37.4 million for 1,308 acres. The city’s valuation for those 210 acres extrapolates to $17.4 million. (I do not apologize for these seat-of-the-pants valuations. This is what happens when your government won’t release hard data.)
So, I offer four conjectures for the value of the land:
Mine: $67 million
Annapolis Group: $37.4 million
The city: $17.4 million
Also mine: $2.4 million, based on the total current assessment.
The differences are based on what you’re allowed to do with the land. $67 million is possible if the land is zoned industrial/commercial, like the BANC land. However, if the land cannot be developed in any way, which has been the case for 10 years, I would argue the value is closer to $2.4 million.
In essence, the developers are arguing they should be paid as if the current zoning magically changed in their favour. But it won’t unless Council can be pressured into doing that, so the owners deserve bottom dollar. It’s tough, but that’s business for you.
Again—the direction to staff to buy the acreage as identified almost 10 years ago is done and dusted. Negotiations are taking place in that context. Obdurate Councillor Reg Rankin would have you believe otherwise, but he is as wrong as a flat-earther.
WOULD DELAY BE A GOOD TACTIC FOR THE DEVELOPERS?
A favourable re-zoning would be worth big money and worth waiting for.
If it were re-zoned as, say, residential, then you could subdivide and build spectacular lakeside homes for wealthy people right next to a wilderness area and 20 minutes from downtown. The value would jump to at least $67 million, as noted.
IS A FULL-RANKIN REALLY POSSIBLE?
Yes. Council memories fade with time. Sometimes they change their minds after new members are elected. And, sometimes, councils just get tired of dealing with a particular issue and will do anything to move on.
If Turpin Labs were advising the landowners, we would tell them to delay sale until one of those things happens. After all, land only gets more valuable with time. And developers are patient—much of the land hasn’t changed hands in more than 30 years.
WHAT SHOULD COUNCIL DO?
If we were advising Council, we would recommend bringing this deal to a close quickly, even if it means overpaying. Alternatively, there’s expropriation, which would probably put the matter in the hands of the courts. That can be a crapshoot, but there’s just as much risk posed by the ongoing pressure to close the purchase after 10 years of delay.
WHAT SHOULD WE EXPECT NEXT?
It’s possible someone will propose swapping the 1,308 acres for all or part the Williams Lake backlands. It would be pitched as a grand compromise but, in fact, would be a $67m rip-off.