The City of Kelowna spent $18 million to buy this Truswell Road property for a park.

Image Credit: Submitted/City of Kelowna

The City of Kelowna buys a lot of property through a variety of different processes. But, in all cases, the seller knows it’s the city wanting to buy.

“If you receive an offer, typically within the offer, the buyer’s information is shared,” Ben Walker, the city’s real estate services manager told iNFOnews.ca. “The seller would know the buyer and, I think, we have a fairly strong reputation and we don’t hide our name.”

When a property is listed through the MLS system, the city uses a realtor to act on its behalf but once the offer is formally made the buyer knows it’s the city making it.

In other cases, like the recent purchase of the Truswell property on Mission Creek and Okanagan Lake for $18 million, the city talks directly to the property owner because the land isn’t listed through MLS.

READ MORE: iN VIDEO: Kelowna pays $18M for lakefront property, triple assessed value

“We’ve been chatting for 20 years but there were two years of ongoing conversations between parties,” Walker said of that purchase. “The price was determined through a third-party appraisal, commissioned by both parties, and the highest and best use was that it was developable for high-end multi-family.”

Which is why the purchase price was more than three times what BC Assessment said it was worth, which evaluates land differently than real estate appraisers.

BC Assessment considers things like the location of a home, the size of the house and property, age and comparable sale prices.

It seems comparable sale prices carries the biggest weight.

Which is why a home at 12990 Pixton Road in Lake Country, which sold for $12 million in 2019, was assessed in 2020 at only $10.7 million (it's now back on the market for $18.9 million).

“We would look at the sale but we wouldn’t look at just one sale,” Tracy Wall, the Thompson Okanagan Region acting assessor for B.C. Assessment, told iNFOnews.ca in 2020. “We would look at all the sales of those high valued properties before we determined what the final assessment was. We try to set our roll at what we call the median or what similar properties are selling for. We like to be right up there with the sale prices but we aren’t always because we would consider that sale among many sales.”

 READ MORE:The Interior’s most expensive home is actually in Lake Country, not Kelowna

An appraiser on the other hand also looks at the “highest and best use” for a property, which is something actually required if a city is going to expropriate a property.

That’s why the Truswell property would fetch a higher price because in theory the owners could have sold it at that higher price to a developer wanting to build a luxury condo or hotel. The city bought it for a future park.

The same “higher and best use” principal applied in 2019 when the city bought the 189-acre Diamond Mountain property across from Glenmore Landfill for $11.9 million, about six times the assessed value.

That purchase was to keep it from being developed. At the time, Troika Developments was trying to get approval to build up to 1,000 homes on the land.

READ MORE: Kelowna spends millions to keep development away from garbage dump

Another way the city has to buy land is to just walk up to a homeowner, tell them their land is designated as a future park and ask if they are interested in selling.

Doesn’t that simply drive up the asking price, knowing the city is the prospective buyer?

“If someone asks for a higher price, it doesn’t mean we’re going to go after it,” Walker said. “As a seller, you can put whatever price you want on it, but the way we approach those, we look at comparable sales, like similar sized lots, say it’s waterfront then similar frontage, and we look at comparable sales where we feel the fair market value is at and where that price will be reflected on the open market.”

If it does come down to an expropriation, which is seldom used, that process is governed by the provincial Expropriation Act which requires that the appraisal determine the highest and best use of the land.

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