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Terrace, Inc.: Small town becomes a major land broker
If the city of Terrace were ever to create a separate real estate group to manage its land holdings, it might be one of the busiest businesses around.
From the several thousand acres making up the Skeena Industrial Development Park to the log building on Keith Ave. purchased earlier this year from the Terrace and District Chamber of Commerce, the city has a wide portfolio of real estate.
Riding on the wave of an improved economy, the city hasn’t shied from signing deals when the sale fits the community’s need for affordable housing or its interest in developing an industrial tax base.
Over the past 14 months the city has either concluded or has pending six land sales marked up under its corporate lands account and land acquisition fund.
The first sale was worth $877,000 for a large portion of the former Terrace Co-op property on Greig Ave. to Calgary-based Superior Lodgings.
The property was bought by the city for $1 million in 2005 using money from the lands account with the goal of being able to influence downtown development.
Superior wants to build a large hotel on the site but no money has changed hands and none will until the land receives environmental clearance from the provincial government.
Later that summer the city did conclude a sale – 4.38 hectares at the Skeena Industrial Development Park to an earthworks company called Global Dewatering for $250,000.
And earlier this year the city sold 66.7 hectares of industrial park land to the Kitselas First Nation’s Kitselas Development Corporation for $1,647,700.
Not content to rest with that, the city is now pursuing Chinese manufacturing investors to buy land at the park with sales that could be worth tens of millions.
And in the Keith Ave. light industrial area, the city struck a deal this year to sell just under five acres on the corner of Kenney St. and Keith Ave. to the company that owns the local Chrysler, Toyota and trailer dealerships for the expansion of its current sales lot on Hwy16.
That deal is worth $1 million.
Still on Kenney St., this time north across Hwy16 in the Horseshoe residential area, the city has a $951,000 deal to sell approximately 2.5 acres on the corner of that street and Park Ave. to Coast-to-Coast Holdings of Calgary.
That company wants to build 105 housing units and has committed to an affordable housing component, but details of that have yet to be released.
According to veteran city councillor Brian Downie, it is a mistake to view the selling of land as opportunistic.
In fact, various policies aimed at enhancing housing options in Terrace are the main drivers of the recent activity.
“Clearly the city is receiving value for the property, but you’re misreading things if you assume we are selling land just because the sale value of lands in the city are substantially increasing,” said Downie.
He stresses that the land sales have everything to do with addressing the housing priorities outlined in various studies over the past years and very little to do with the accumulation of wealth on the part of the city.
Several of the recent land sales are acting on this policy, said Downie.
Although not yet defined, an acceptable affordable housing component was a key feature in the city choosing Coast-to-Coast as the buyer of the property on Kenney St. and Park Ave.
And part of the deal with the Kitselas Development Corporation at the industrial park calls for money to be placed in a new city account called an Affordable Housing Fund.
But the city’s policy as described by its administration is also in direct response to the interest in the lands they have received during the period of economic activity in the area.
Part of that policy is the creation of a new position of corporate lands manager and the appointment of Herb Dusdal to fill that position.
Once the public works director, Dusdal has worked for the city for 20 years and is now a chief negotiator.
Not easily given to interviews, Dusdal is very much low key in a position that is central to the city’s real estate portfolio.
He was in China just last month with Mayor Dave Pernarowski and other local officials to work on the fine print of the anticipated sale of as much as 1,000 acres of land at the industrial park.
According to chief administrative officer Heather Avison, Dusdal has had his hands full with business activity that continues to fuel demand for Terrace property.
“If anyone expresses an interest in the land they go talk to Herb and he will negotiate,” said Avison. “At some point it will come to council for the decision as to whether or not we will proceed with selling or not selling.”
Avison cites the Coast-to-Coast deal as an example of a sale driven by demand.
“We had owned that piece of land for many years,” Avison said of the parcel which was once the location of a transportation ministry works yard.
“The main reason we put out the notice of the intention to dispose was because Herb was being contacted regularly with various parties being interested in that land,” she said.
The same was true for the land on the corner of Kenney St. and Keith Ave. purchased by Terrace Chrysler.
“We weren’t actively selling that land,” said Avison. “They approached us, and Herb started to talk to them to see what we could do.”
Still within the city’s land inventory is property stretching west that once formed the log yard for the Skeena Cellulose sawmill which has since been dismantled.
There’s also a parcel of just under an acre on Haugland Ave. on the southside that’s figured in debates surrounding affordable housing.
“We don’t have it listed for sale but if someone else came forward with an interest we would look at it,” said Avison.
Downie said the current market conditions eased the way for housing development deals.
“In 2008 the investment opportunities for someone to come in and build a large apartment complex was not as attractive as it is now. And so the market has changed and clearly the issue for us is that we have zero rentals available and it’s causing hardships in the community. This is an opportunity for us and we need to find some answers,” he said.
Despite the potential for millions to flow into the city’s land accounts, residents shouldn’t expect to see any of that in the form of tax decreases. Apart from monies being set aside for whatever affordable housing plan the city develops, it has a larger commitment, said Avison.
“When will the money start flowing into the community? The short answer, from land sales, is never,” said Avison. “It’s all going to be going back into recovering costs and developing the [industrial] park.”
That’s because the city is committed to providing water, sewer and other services as part of its sales efforts at the park.
City finance director Ron Bowles said that for a water system alone, $5,200 of each acre sold for the going rate of $10,000 is automatically put into a water reserve fund that will eventually be put toward hooking industry up to the municipal water supply.
Where Terrace residents could see benefits is through taxation of the industries that set up in the industrial park.
A policy adopted by city council last year would have it “review any new light or industrial tax revenues annually with a target to reduce business and residential property taxes.”
But the city also has a long list of big ticket projects such an extensive renovation of the aquatic centre, the possibility of having to pay for the reclamation of the Co-op lands, a second vehicle overpass of the CN tracks and a pedestrian overpass.
There isn’t a priority list of what project should be tackled first and a move to involve citizens in that debate was defeated earlier this year in a council session focusing on community engagement.
“As far as other values that we received from the sale I think it’s safe to say it’s not something that has been resolved,” said Downie of how any new revenues might be handled. “It would be resolved through the budgeting process.”
That’ll be the job of the next council.
Whoever sits on city council following the November municipal elections will be faced with something few local elected bodies have ever dealt with – the prospect of making decisions with the financial means to back them up.