The District of Sicamous views the purchase of the Finlayson Street medical building as a sound investment for the community as well as a stepping stone towards future development of a wellness centre.
Following up on the recent announcement of the district’s intentions to acquire the property at 217 Finlayson, town manager Evan Parliament provided more detailed background information during a report at the Oct. 11 council meeting.
Parliament began by explaining the district has been working with the clinic to find a second doctor and/or nurse practitioner, noting, “we do have a strong lead but we haven’t cemented that yet.”
While recruiting, the district is also looking ahead long-term to the development of a new medical wellness centre on Main Street.
“So the question is, what about the existing medical clinic?” said Parliament. “Dr. (Jack) Beech has been serving the community for close to 40 years. We certainly don’t want to be in competition with a second medical clinic. We don’t want to be doing anything on Main Street that will take away from what is already there with the existing medical clinic.”
So, continued Parliament, the district started looking at the building that is currently home to Sicamous’ medical and dental offices. The property and 11,000-square-foot structure was appraised at $790,000 in 2016 and assessed at $929,000 in 2017.
“When I first heard that the building is available for a cash purchase, no conditions, for $690,000, we started to work the numbers…,” said Parliament.
Property taxes on the building for 2017 were $17,510 – the district’s portion being about half that – while the building currently earns $91,000 yearly in leases from its seven tenants (one of them being the district).
If the district were to acquire the building, it wouldn’t have to pay property tax or management fees.
“When you look at no property management fees being paid, you’re at a (capitalization) rate of approximately seven per cent. That’s a decent return,” said Parliament. “So when you look at it strictly from an investment point of view, it’s a good opportunity, a good investment. It makes more money than our current method, which is, we put our money into the bank and we receive less than three, less than two per cent.”
Parliament said the purchase would allow the district to be more aggressive in its doctor recruitment campaign while providing more space in the future for community services.
“The idea is we would transfer these existing leases into a new building (on Main Street) and that the old building would become community space,” he said. “We would simply turn it over to our recreation department and let any not-for-profit group or anyone use that facility that meets the general needs of the community.”
Funding for the acquisition will come from the district’s general capital reserves, and Parliament expects it will be paid back within six years.
Economic Development Corporation
While money for the purchase comes from the district, Parliament said it’s staff’s recommendation that the transaction be lead by the district’s economic development corporation.
Approval of the EDC is currently before the province, and is expected to be OK’d by the end of October.
Parliament explained the EDC would be a subsidiary of the District of Sicamous, but the liability and risk of running the medical building would fall on the EDC’s shoulders.
“By doing this deal, we would complete the sale and transfer this asset over to the development corporation and the development corporation would pay us back,” said Parliament. “We have several options for how we would do that, but simply, we would have the dev. corp. pay back the $690,000 to us over a period of time – allow them to grow this asset and use creative private-sector initiatives to move this project forward.”
District chief financial officer Kelly Bennett said the $690,000 would be paid back to the district with interest.
“We’re not property managers, but we can certainly assign it to someone else to run,” said Parliament. “So this is why we’ve created this development corporation… This is a good opportunity because there’s some real dollars here that the private sector can leverage.
“We’re going to propose how we’re going to do that after we close the sale, which is Nov. 10.”
After the meeting, Parliament explained he would initially serve as the EDCs chief executive officer, with Bennett overseeing finances. Both would represent the district as well as the corporation.
“And then we’ll appoint the members and, over time, we’ll transition out,” said Parliament. “And once they’re up and fully functional, they, the company, will have additional cash to pay for – down the road – paid positions. But for right now it’s going to be us. Because we can’t afford a paid position right now, we have no money, the company has no money.”
Asked if there were any known deficiencies with the medical building, Parliament said the roof needs replacing. However, the district is also having the building assessed for a structural engineer’s report.
“We know the roof needs replacing, but then, the beauty of us buying it, we have access to grants to pay for that,” said Parliament. “We’d be able to get grants to help assist for any renovations – whether they have to do with meeting new code, whether we have to replace the elevator, etc., we have access to other funds. But we’re getting a structural engineer’s report for what exactly what needs to be done.”
Mayor Terry Rysz said the acquisition fits in with council’s goals of trying to develop revenue options in the community so that the district isn’t always turning to taxpayers.
“The fact we were able to acquire it for this amount of money for what the actual appraised value is pretty unique…,” said Rysz. “It’s just going to be an asset for the community and also give some revenue streams to fund our economic development corporation at the get-go.”