One week after signing a deal to buy the abandoned CN rail corridor between Kelowna and Coldstream in the North Okanagan, details are emerging about how much each of the local government partners will have to pay.
While the negotiated price was $22 million plus a tax receipt for the full value of the land—estimated as high as $50 million—the initial announcement did not break down the costs to Kelowna, Lake Country and the North Okanagan Regional District.
According to Kelowna city officials, the city is estimating its share at $7.6 million, which would be funded from reserves and interim financing with no additional tax increase to residents.
Because the value of the land is more than the monetary consideration, the City of Kelowna will also issue a charitable donation receipt to CN for the difference.
While the original asking price of the corridor was $50 million, the negotiated cost of the corridor is a combination of the $22 million in cash and the “land donation” for which the City of Kelowna will issue CN the charitable donation receipt.
The Regional District of the North Okanagan will fund its estimated share of $1.9 million from its reserves with no increase to taxes there.
The District of Lake Country’s estimated share is $5.1 million. To minimize the tax impact to its residents, Lake Country will seek approval to borrow up to approximately 50 per cent of that amount.
Given the tight timelines of the 120-day due diligence period, the controversial alternate approval process will be used in Lake Country starting right away. The process puts the onus on opponents to gather the signatures of 10 per cent of the electorate in a 30-day time period to force reconsideration of the proposal.
Kelowna says, given the regional benefits of public ownership, it has agreed in a memorandum of understanding with Lake Country, to acquire a 50 per cent interest in the land within the Lake Country boundaries on a temporary basis.
That, it says, will help abate the immediate cost to Lake Country until it can buy back the share from Kelowna.
“Given that we are neighbours with shared borders, this is a mutually beneficial agreement for Kelowna and Lake Country,” said Doug Gilchrist, divisional director of community planning and real estate for the City of Kelowna.
He acted as the lead negotiator for the local governments on the deal with CN.
“The arrangement alleviates the debt load for the District of Lake Country’s residents, protects the opportunity of all the jurisdictions to finalize the deal with CN, and preserves the corridor as a continuous route physically connecting the communities of the Central and North Okanagan with no current tax impact for Kelowna residents.”
In addition to using reserves and borrowing, the local governments also say they are committed to actively pursuing additional funding for the remaining approximately $7.3 million of the agreed purchase amount through alternate sources, including grants and partnerships, before the close of the due diligence period.
The due diligence period following signing of the agreement allows 120 days (end of March) to investigate terms of the agreement, including funding options. With the majority of that time still available, local governments are continuing to work through the details.
While a number of ownership models were explored the preferred model is for each jurisdiction to own the land that falls within its boundaries. The funding allocation between jurisdictions represents the property value of the lands being acquired by each partner.
The land, which could one day be used as a recreational trail or a self-propelled transportation route, is considered a “once-in-a-lifetime” opportunity by the municipalities and regional district.
“With a route that follows portions of the largely undeveloped shorelines along Kalamalka, Wood and Duck lakes, preserving this corridor as a public asset that is also suitable for dedicated multi-modal transportation is a priority,” said Gilchrist.
“The land would become accessible and valued as a public asset for the benefit of all our citizens.”
Under the Canadian Transportation Agency discontinuance process, a single entity must put forward an interest in acquisition of the corridor; therefore the purchase model is to have the City of Kelowna be the sole purchaser with subsequent purchase and sale agreements to the other jurisdictions.
Refer to kelowna.ca/OKRailCorridor for updates.
