Browsing the archives for the Marianne tag.

Why is Ottawa Overpaying Developers for Land?

Green Reality, South March Highlands

The City’s scarce environmental purchase funds appear to be used to overpay Urbandale and other developers when buying lands designated Urban Natural Area (UNA).

According to the Oct 12, 2012 staff report to the City’s Finance Committee, the going price for environmental land acquisition is $160 K / acre which is up 50% over the originally budgeted amount in 2010.

Considering that UNA lands are already undeveloped and cannot ever be developed, you have to wonder how this exorbitant price increase was justified over only 2 years.

Even if staff are using recent price increases for developed land, the math doesn’t work.

  • According to the Ottawa Real Estate Board, the average price of resale homes in Ottawa increased only 2.3% in 2012 over 2011 compared to 7.7% in 2011 over 2010.
  • Inflating the 2010 budget estimate of $101, 250 / acre x 1.077 x 1.023 = $111,554 / acre  in 2012
  • So why are staff agreeing to pay $160,000 / acre?

But is it even believable that land price increases for developed real estate should be used to justify massive increase in value for land that can never be developed?  On what basis would any reasonable person expect there to be any increase in value at all beyond inflation?

  • Allowing for inflation results in only a compounded increase of only about  4%

So how can a price increase of 50% be rationally justified?

  • It seems that either the process is corrupt  or the City managers that are responsible for these funds are so incompetent that they should be dismissed.

A review of land acquisitions from 1998 – 2010 reveals that the most that the City ever paid in the past was only $86 K /acre and that the only transaction in 2010 was at $71 K / acre.

What seems particularly odious is that the same staff were busy justifying a price ranging between $231 K /acre t0 $363 K / acre in Nov 2010.  The Coalition to Protect the South March Highlands asked the City to purchase 74 acres of KNL’s land in Beaver Pond Forest prior to it being clear-cut:

  • KNL Phase 9 is 110 acres of which KNL had already agreed to convey 40% to the City for free as UNA
  • City staff had estimated the value of the remaining 66 acres at $18 M or $231 K / acre for unserviced land that had previously been designated as NEA prior to granting Campeau development rights in the SMH
  • Note that KNL is a joint venture between Urbandale and Richcraft.  It seems that Urbandale has remarkably good fortune in extracting top-dollar from the City for land acquisitions and that City staff are often willing to pay it.

Since UNA land cannot be developed, and tax assessments are supposed to be never more than 3 years out of date, why does the City ever pay more than the assessed value of the land for taxes multiplied by the appropriate inflation adjustment?

So it appears that staff has misled Council on several occasions:

  • By using an estimate of $100 K /acre in the 2010 budget when the City had only paid $71 K / acre that year
  • By reporting to City Council  in 2010 that a fair price was effectively $231 K / acre or higher when Council was deliberating on the Beaver Pond Forest acquisition
  • By consistently overpaying developers by 50% when acquiring UNA land post-2010
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Turning a Good Swap Into a Bad One

South March Highlands

The original swap proposed by Marianne Wilkinson was workable only because it traded land that was in immediate threat of development for land that was not and did so on an equal basis.  More importantly, it was part and parcel of a larger deal which protected an environmentally significant forest.

However the Peter Hume deal that Councillor Wilkinson settled for on Dec 15, is worse than completely meaningless – it results in a net loss of greenspace at an opportunity cost of $1.46 M!

According to city staff’s ever moving estimate, the 74 acres of Beaver Pond Forest has a fair market value of $18 M or $243 K / acre.

The Hume-Wilkinson deal approved by council surrenders 12 acres elsewhere in the South March Highlands to obtain a 6 acre corridor that has no possible ecological function.  The net loss of trading 12 acres to get 6 at a rate of $243 K / acre means that the city just paid Urbandale the equivalent of $1.46 M for Marianne’s precious corridor.

This corridor is to be an 80m wide pathway through the middle of a subdivision that is supposed to start at Beaver Pond, cross a road, and terminate at Shirley’s Brook.  There is no ecological value to it, while the land that was surrendered is adjacent to a larger protected area.

What was she thinking?

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Ottawa Citizen Continues to Whitewash TFD

South March Highlands

The Ottawa Citizen has put so much white wash over the Terry Fox Drive (TFD) extension project that it will soon be unsafe to drive.  Each article that they publish seems to add more white-wash than the last.

The article, “Councillor muses about Terry Fox land swap“, quotes Marianne Wilkinson as saying she wants a park, but “the road must go ahead“.

Click on each tab below to reveal why she is wrong.

Why?

There is no economic justification for spending $47.7 M on a road that will sever the eco-connectivity of the area that Councillor Wilkinson wants to create a park in.

The original justification for the road evaporated with the tech bubble in 2001.  The City’s Auditor General in 2007 found that the population projections used to justify it and several other projects were unrealistic since actual growth has been 80% less than forecasted. 

City Management agreed, yet the traffic study for the road has never been corrected, nor was Council approval obtained to continue to proceed with a project of this magnitude having no economic justification.

No wonder Council can’t balance the City budget.

Who?

According to the Census, only 26,000 people in Kanata live north of the Queensway and most of them live south of South March Highlands – Morgan’s Grant, Dunrobin, and North March being the only communities in the north end of Kanata.

Meanwhile there have been 4 roads built in Kanata to enhance north/south connectivity (in addition to the 4-land March Road) since TFD was planned in 2000:

  • Hertzberg road now connects to TFD,
  • Kanata Avenue links to Campeau and TFD,
  • CastleFrank now crosses the Queensway,
  • TFD links Centrum to Kanata south.

The City is also spending $18 M to upgrade Goulbourn Forced Road so that is will be a usable road. 

How many roads do 26,000 people need?

According to OCRI, high tech employment is lower now than it was in 2000 and is likely to be flat for the foreseeable future (click to enlarge):

Graph of OCRI: Knowledge Based Employment Showing Flat Trend

Negative to Flat 10-year Growth In High Tech Employment

With the demise of Nortel, causing its parts sold off to foreign investors, we are unlikely to see significant employment growth returning to Kanata.

Who does the Councillor expect to use this road?

How?

The Citizen chose not to challenge Councillor Wilkinson on how she expects to justify a park to the NCC when TFD extension will sever eco-connectivity to it.

Scientific studies have proven that the road severs both the existing park in Trilliam Wood and the future park that the Councillor wants to have south of the road.  The leading scientific expert on the area, Dan Brunton, has called the road a “Berlin Wall” because it creates an impassible obstacle that will kill any animal that tries to cross it.

The City’s own Forest and Greenspace Advisory Committee, consisting of an expert panel of ecological advisors, passed a unanimous resolution expressing “grave concerns about the ecological damage caused by the TFD extension”, denouncing the proposed mitigation measures as inadequate as well as the failure of the City to protect the area. 

The Ottawa Field Naturalists, Canadian Bio-Diversity Institute, Greenbelt Coalition, Riverkeeper, Ecology Ottawa, Sierra Club, Save Our Greenspace, and several other ecological and community groups have jointly issued a statement appealing that the road be abandoned.

In trying to promote a park and build a road, how does the Councillor expect to have her cake and eat it too?

When?

Councillor Wilkinson is right in asking that the NCC extend the Greenbelt to embrace the South March Highlands.  The entire area should be a park that is out of the reach of the developer-driven planning at City Hall.

However when will the Councillor drop her support for a road that is no longer needed?

When will she rescind delegation of authority to City staff that enables them to approve developer plans for this area without public review?

If the Councillor were actually opposed to development in the area she would be using every mechanism available to her to delay it. 

When will she act as she speaks?

Conflict of Interest?

One can only wonder about why the Councillor floated a $100 M price tag for the purchase of land that cost considerably less for the developers to purchase.

In 2012, the land will soon be close to worthless from a developers’ perspective when habitat protection automatically kicks in as a result of Ontario’s Endangered Species Act. 

There are 17 species-at-risk identified with the South March Highlands, many of which currently reside in lands owned by developers.  With habitat protection, it will be very difficult and costly for developers to develop this area.

At some point, Ontario’s Ministry of the Enviornment will also get serious about dealing with the Radon gas that is embedded in the granite beneath the area.  This gas will be released by any blasting done for development and is already a health hazard for existing residents of North Kanata.

Environmental mitigation for radon gas emissions will make it harder for developers to sell homes in the area.

Without the road, developers will have to rework their draft plans for subdivisions, involving costly engineering work.  And even if the road is allowed to proceed, the environmental assessment process for development in such a sensistive area should be subject to lengthy public review.

Selling the land to the NCC at even cost plus 10% makes better business sense from a developer’s perspective because it creates more economic cash flow than tying up expensive capital for diminishing returns.

It appears that the Councillor is not experienced in the art of business negotiation, so why is she batting about high price tags?   Is it because the City is too accustomed to giving developers whatever they want?

Ecology Ottawa, Do_Developers_Run_City_Hall, examined campaign funding by developers for City Councillors in the last election.  It will be interesting to see how much funding from developers goes to Wilkinson and other candidates in this year’s election.

Ecology Ottawa also tracks the environmental voting record of all City Councillors and it will be very interesting to see if there is any inverse correlation between the declining environmental grades given to several councillors and any increased campaign contributions they receive from developers in the upcoming election. 

As an example you can see from page 2 of postcard-and-grades, the Councillor for North Kanata’s environmental record has deteriorated from a B to a C-D rating since the last election.

While we are looking at the long hand of developers, we should also ask why doesn’t the City’s editorial board ever allow its reporters to challenge the road? 

Could it have something to do with the significant amount of advertising revenue from the City of Ottawa each year? 

Or perhaps the massive amount of advertising revenue from advertising from developers.  This volume is enough to justify a whole section of the paper each week called “New Homes”.

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