December 09, 2014 - 2:27 PM
KELOWNA - It's been a week since a negotiated sales, purchase and gift agreement was signed with CN for the defunct rail line between Kelowna and Vernon, and now it's all about securing funding.
The City of Kelowna will appear as the sole purchaser to satisfy a requirement from the Canadian Transportation Agency discontinuation process that a single entity put foward an interest in aquisition. Subsequent purchase and sales agreements will go to the other juristictions involved.
Meanwhile, the terms of the agreement are being reviewed. There's a 120-day due diligence period to allow parties to investigate terms of the agreement and funding options. Though various ownership options were considered, the preferred model is for each jurisdiction to own the land that falls within its boundaries. That means the funding allocation between jurisdictions represents the property value of the lands being acquired by each partner.
The original asking price for the property before negotiations was $50 million, but negotiations brought that price down to $22 million. Therefore, the City of Kelowna has an estimated share of $7.6 million that won't be funded by a tax increase but through reserves and interim financing. The Regional District of North Okanagan will fund an estimated share of $1.9 million from reserves with no increase to taxes, while the District of Lake Country will need to come up with $5.1 million. Lake Country will need to get creative to minimize the tax impact and is looking at borrowing up to 50 per cent of this amount.
To help Lake Country with their dilemma, the City of Kelowna has agreed to acquire a 50 per cent interest in the land inside Lake Country boundaries on a temporary basis and the district can then purchase the share back from the city.
The remaining $7.3 million of the agreement purchase is expected to come through alternate sources of funding such as grants and partnerships secured before the close of the due diligence period.
Precise Funding Amounts:
City of Kelowna
Regional District of the North Okanagan
District of Lake Country
*City of Kelowna Investment: $2,572,500
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