The city plans to sell 15,446 square feet (sf) of waterfront land at Loudon Walkway on Long Lake to the owners of seven properties for a total of $326,000 or $21 per sf. But according to BC Assessment data, that is less than half the average 2016 assessed value of $682,542 or $44 per sf.
Long Lake is one of the most desirable lakes in the city with most of the shoreline developed with custom lakefront homes that have strong market appeal.
The land the city plans to sell is a former undeveloped road that runs along the shore in front of the seven privately owned properties. The planned road was scrapped and the land reserved as city park under a bylaw adopted in 1983.
City staff claim the 1983 bylaw is invalid based on a legal opinion they are not willing to share with the public.
Legally, however, all bylaws are valid until either rescinded by the council or overturned by a court. Since neither has happened, city council is effectively breaking its own laws to sell public park land to private interests.
Council is also ignoring legal requirements to obtain public approval for sales of park property.
City staff say the sales are necessary to fix historical encroachment issues as homeowners have extended their yards on to land belonging to the park. Currently, these encroachments are dealt with by agreements with the property owners.
Realtor could realize “signficant value”
But News Nanaimo has obtained an independent appraiser’s report prepared for the city that says at least two property owners stand to realize important benefits once the additional land is added to their properties.
One of the private owners, realtor Mike McKillican, could realize “significant value” added to his property at at 4176 Wellesley Road as a result of the unusual transaction, according to the report by Simon Wainwright of Cunningham & Rivard Appraisals.
In January this year, Mr. McKillican bought the waterfront 3-bedroom property from an elderly widow for $500,000 in a private sale that was not publicly listed on the multiple listing service. He knew the former owner as he lives across the street.
The property currently sits on two small lots and compromises 5,780 sf, which can support only one building. However, after buying the additional land from the city, the property will be able to support two houses.
This “greatly increases the market appeal and value of this property,” says the appraiser’s report.
It says Mr. McKillican “confirmed that he was aware that consolidation with the Loudon Walkway was a possibility which would likely allow two future residential building sites.”
However, in an interview with News Nanaimo, Mr. McKillican strenuously denied that he knew this at the time he bought the property. He said he has no plans to develop the property and does not believe it is possible to do so.
He said he wants the additional land to secure driveway access to the existing garage on the property and remove the uncertainty of an encroachment agreement that the city can cancel on 30 days notice.
“My only objective is to remove the encroachment so that in 20 years when I want to sell, it’s not an obstacle to buyers,” said Mr. McKillican.
Mr. McKillican also said he plans to have his in-laws move into the home as they are getting on in years. However, a week ago, the house was listed for rent on Craigslist for $2,500 per month starting January 1, 2018. A previous listing two weeks earlier was asking for $2,000 per month.
Vacation rental owner and city staff member can buy
Karin Parakin, who owns Lakeview Vacation Homes and lists several properties in the area for short-term rentals, will also benefit from the deal, according to the report.
She owns two of the seven eligible properties that can buy the park land from the city. One of those, 4200 Victoria Avenue, will have subdivision potential after buying the land the city is offering, the report says.
However, on Friday the city’s director of community development Dale Lindsay said he did not agree that the additional land allows subdivision of this parcel.
On her company’s website, Ms. Parakin “highly recommends” Mr. McKillican as a realtor to her clients who are thinking of relocating to Nanaimo.
Also among the property owners is well-known City of Nanaimo social planner John Horn, who owns a property on Victoria Avenue. He is in line to purchase the second-largest parcel of land in the deal.
The fact that a city employee was among the potential purchasers of city property was never disclosed to council. Mr. Horn did not respond to a request for comment but several people interviewed for this article said he was not interested in purchasing the land despite the low offering price.
Deal in 2012 looms large
The city’s current plans are being heavily influenced by a deal in 2012 where the city sold 3,392 sf. of the Loudon Walkway to the owner of 4044 Apsley Ave. In that case, the owner paid all costs related to the deal, including obtaining his own appraisal for the land he would acquire from the city, which the city accepted.
After initially treating the land as park under the 1983 bylaw and planning to obtain voter approval through an alternative approval process, the city changed course at the eleventh hour at an in-camera meeting on July 4, 2011.
Released in-camera records of that meeting show that staff claimed that “discussions with the City’s lawyers indicate that the Bylaw is not valid as it was applied at a time when the roads within the City were under the jurisdiction of the Province.”
That explanation contradicts the city’s 1975 Letters Patent which say that responsibility for roads in the former Wellington District would pass to the city in 1980 — three years before city council formally closed the road and created Loudon Walkway in 1983.
Section 571 of the Municipal Act that was in effect in 1983 also says that cities owned the roads within their boundaries.
The 2012 transaction is also being used as the primary basis for how the city is valuing the land that it now proposes to sell. That means the property owners are effectively being offered land at prices that were relevant five years ago.
In the case of Mr. McKillican, the realtor, he is potentially being offered land at $21 per sf., which is less than a third of the $64 per sf. he paid for his land in January.
In an email on Friday, Mr. Lindsay insisted that the 1983 bylaw is not valid and that council is just being asked to close the original road previously scrapped in 1983 and dedicate most of the land as park.
“The disposition of the surplus land to the adjacent owners would be a separate decision point for Council. Council at that point can decide to sell the land, or to continue to provide encroachment agreements to the owners and retain ownership under the City of Nanaimo. As we previously discussed, prior to the disposition of the land the name of the owner and the sale amount would be made publicly available,” said Mr. Lindsay.