General News · 15th June 2014
In the latest update, Noba claims that purchase of the Whaletown Commons property will cost each of us $40 per year for 5 years.
I checked the calculations. Here are my numbers and sources of information:
COST OF PURCHASE:
Assuming IT accepts an offer at the appraised value of $826,000.
7% GST (payable on all transactions except homeowner to homeowner) $57,820
Land Transfer Tax (2% of first $100,000 plus 1% of rest) $9,260
“Conveyancing” (from SRD report - presumably this is an internal SRD legal and processing fee) $15,000
Total purchase price $908,080
“Community Parks Capital Works Fund” (from SRD report) $483,107
“Community Parks Parkland Acquisition Fund” (from SRD report) $88,420
Whaletown Commons Society (some pledges are several years old) $60,000
Total available funds $631,527
This leaves an outstanding balance of $276,553 to be borrowed.
A loan of $276,553 borrowed at 4% and repaid in 5 years requires annual payment of $61,068 (I used the Royal Bank mortgage calculator on their website)
Assuming this is paid by 700 households (we have approx. 700 tax paying parcels), each of us will pay $87.24 per year.
So... the bottom line, assuming my numbers are correct, is we totally blow our budget and all reserves, leaving nothing in the kitty (for several years), and it costs nearly $90 per year (not $40) for 5 years in addition to the 10 we've already spent accumulating park funds.
We will have a very empty piggy bank plus a 72 acre part logged property that is so bunged up with covenants that it’s no use for anything except park.
Whaletown Commons is very important because it's the only parcel left in a sea of private properties. Future years will probably see a need to consolidate, centralize and expand community facilities that are currently spread all over the middle of nowhere... er... sorry, Whaletown.
But does acquisition now at this price make sense?
Another update- post meeting
Comment by Rick Bockner on 23rd June 2014
At the meeting with the Regional District reps held in The Gorge Hall last week, the head negotiator and admin representative told us that as a regional government they are exempt from GST, transfer charges, and they pay a reduced interest rate of 1.4%. He also stated that the management of the account is a part of their work and budgeted for already, and that he thought the cost might end up being closer to the 20-30$ a year range for 5 years.
This information will significantly alter your projected bottom line, and negotiations are still on to get the price down further. So perhaps we could save the projections until we have some real figures to work with?
Comment by Richrd Lawton on 16th June 2014
Today was a rare ‘pop-up’ day for me. There were lots of supportive comments and emails about YAWC. Two errors were pointed out:
1. Land Transfer Tax is now officially called “Property Transfer Tax” and is 1% of the first $200,000 plus 2% of the rest. Transfer tax was $5,260 understated. (It should be $14,520 instead of $9,260)
2. The pledges to the Whaletown Commons Society were made several years ago, and since circumstances will have changed for many donors it is unlikely that $60,000 is still available. Two thirds of the original pledges seems much more realistic, which reduces available funds by $20,000.
Total Cost of Purchase is thus $913,340
Total Available Funds is thus $611,527
This leaves an outstanding balance of $301,813 to be borrowed.
Repayment over 5 years is $66,646 per year, or $95.20 for each of 700 parcels.
The cost of Whaletown Commons is thus close to $100 per year for 5 years PLUS 10 years accumulating funds.
It will take all our resources for 15 years to buy one property that is only usable as park!
As I wrote the article I felt a strong temptation to address the broader issue of community planning FIRST. Whaletown Commons is just one piece of a larger puzzle. Do we buy a bus ticket to Victoria when we don’t yet know if we are going to fly, sail or drive, or even if Victoria is our destination?
I also bit my tongue about the advisability of borrowing, especially for non essential projects.
Comment by Sarah Kovac on 16th June 2014
The cost could well be much higher. It's extremely hard to get a mortgage on a raw land purchase at such a low rate. Nor is it likely that interest rates will stay so low for five years.
Whoever negotiated the 'deal' was ignorant of present land prices, since it's four times what a similarly-sized piece of land sold for nearby.