Work on lands began before dust settled on sale

The mayor of Penticton defended the decision to allow soil testing on city land that hadn’t officially been sold as a result of City Hall’s new pro-business approach, and insisted taxpayers were protected in the meantime.

Just before Monday’s regular council meeting, Mayor Dan Ashton said he wanted to make a statement to address the plan to sell nine city-owned lots on Eckhardt Avenue given “there’s been a lot of chatter.”

Ashton revealed events that led up to the deal, which was revealed to the public last October. He said the land had been under option to the Okanagan Hockey Academy for one year, but the option expired.

A local commercial real estate agent approached the city with another buyer, he said, which was a numbered company that later revealed itself as the Okanagan Elite Hockey Association Business Development Co. — separate from the academy. The plans to buy the city land and build a hockey dormitory on site then emerged last fall.

Council approved the sale in November, he said, and the recent “change in culture” at City Hall to react more quickly to development with potential economic spinoffs prompted them to allow some work to be conducted before the final condition of financing was met.

“We did our very best to facilitate the earthworks on the project before,” he said, noting council and staff took “every precaution possible through legally binding documents to protect the interests of the citizens of Penticton.”

The developer’s financing fell through, however, and two extensions were subsequently granted. Ashton said the process is not uncommon, as the sale of city land on Munson Mountain also required two extensions.

After the final deadline of midnight at Feb. 1 passed without completion, Ashton said, council voted to keep the $50,000 non-refundable deposit and keep the land in city possession.

“It is unfortunate the proponent failed to complete the project,” he said.

Ashton said the developer has since secured a new lender in the form of a financial consultant from Calgary, who will be in town today (Wednesday) to discuss the matter further.

Resident Laila Parsons said the city should wait until land values go back up to sell the land.

“I feel the city is buying property too high and selling too low,” she said, asking why the rush.

Ashton said they had an offer on the property, which, once sold, would then generate tax revenue for the city. Chief financial officer Doug Leahy said the first five years would generate approximately $7,000 annually in taxes, which would rise to $50,000 to $70,000 a year in taxes once development incentives were phased out.

Parsons pushed the issue further to ask why work was permitted on site when the land sale hadn’t been completed.

Ashton explained that the city was sympathetic to the developer looking to begin soil testing before the frost to accommodate the early completion date of August.

An earthworks permit was issued by City Hall, Ashton confirmed, which allowed the developer to conduct initial soil testing. Unfit soils from the former lakeshore and bog were removed from the site, and earth was subsequently compacted.

“Under no circumstances were they allowed to put anything that couldn’t be pulled out of there,” he said, noting that the structural permits were never issued although some superficial frames were put in place. “There would be no hard structures done on it.”

Parsons also asked why the large willow tree was removed after plans showed development would happen around it.

Ashton said two to three metres of soil had to be removed from the site, which affected the root structure, and it had to be removed.

That work may have also changed the value of the site, the mayor explained, and the Municipal Government Act requires the city to re-evaluate its worth.

City manager Annette Antoniak said that the re-evaluation process was currently underway and expected to be completed in a matter of days. It would involve appraisals internally and by a third party.

Equipment belonging to the trades may also remain on site. “We’re fully insured on that property,” Antoniak said.

Resident Goran Markovic asked the city whether it had protected itself from having liens placed on the property by contractors who have yet to be paid. “I’m pro-business and in favour of getting going on this, as long as the city has some protection,” he said.

“The city was very proactive about protecting the citizens of Penticton,” Ashton said.

Development services director Anthony Haddad said the development permit remains at third reading, unable to be adopted unless the land sale is completed — which ultimately requires financing.

The building permit application process must be completed by Dec. 31, 2013, he added, or else the developer would have to reapply.


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