Regina city council was publicly criticized last week for a land sale it is engaged in with an undisclosed buyer.
Some of the outcry is from adjacent property owners who may, or may not, have had use for the land themselves.
However, any criticism from the general public about the cloak-and-dagger secrecy of the sale may not be fair.
A municipality is a business
The sale in question involves 633 acres of city-owned land waiting for redevelopment from agricultural use.
Regina purchased the land in anticipation of needing it annexed into their city limits. That’s a strategy Saskatoon regularly employs.
This land was purchased back in the 1970s at an estimated value of $470,000. Not a bad uptick for the city on the optioned price of $4 million today!
That’s how municipal land banks are able to be a profit centre and offset other costs a municipality can’t recover.
However, they need to be able to work within some of the same parameters that typical businesses would enjoy which to some extent involves not being able to publicly show their hand.
It’s important to remember this decision was voted on unanimously, partially because the city employed the best and brightest of its staff to vet it.
This speaks to the confidence the city has in its administrative management and their specific knowledge bases. I think effective councils are accomplished with competent managers informing councillors before decisions are made.
Under appraisal value is OK
Appraisals and sale prices rarely align as appraisals are primarily based on past transactions. They have some difficulty in being able to adjust for current market conditions or unique transactions, both of which are determining factors in this sale.
While they are helpful in determining value, appraisals aren’t necessarily the only barometer used for market analysis.
Commercial property often sells based on supply and demand.
It’s doubtful the city had multiple bidders lined up for this expanse of land. On the other side, appraisers were likely hunting for comparable land sales of this size outside of ag-related transactions.
It makes the value process very selective, from both an appraisal and a market view. Market trumps appraisal in this case as the market value reflects what someone is willing to pay today.
You can’t cash an appraisal, right?
Transparency is a relative term
In one interview, Mayor Sandra Masters made some valuable points about transparency when it comes to the business of the city doing business.
“I don’t believe it’s opaque and secret. . . . I think that every deal that gets done between two parties is a private deal. Again, the administration followed public process. There was advertisement that we were posting these lands up for sale,” she told a reporter at CBC.
The city’s legal, financial and economic development departments were all involved in analyzing the transaction. It was under their recommendations that council proceeded with the sale.
Small town chatter
Media sources are stating the unidentified buyer is Viterra but no one at City Hall, including the mayor, is confirming that.
Regina residents should remember this is only an option to purchase and would need to be exercised within a year. Hopefully, the economic spin is tangible for residents if and when the sale happens.
I would suspect the non-refundable $50,000 deposit sitting in City Hall trust is a drop in the bucket for whomever is the buyer.
The deal is never done until it’s done.