City of Powell River councillors will contemplate a bylaw that will govern lease rates on city properties for the next three years.
At the October 22 city finance committee meeting, director of properties, development and communications Scott Randolph outlined the proposed bylaw, to ensure the city is charging current market rates for its leased properties.
Randolph said the current lease rate bylaw was established in 2015 and is due to expire at the end of this year. He said the city is looking to put a new lease rate bylaw in place.
“The rates were formulated after we engaged a professional, qualified appraiser to perform a lease rate market analysis,” said Randolph.
These include categories such as office space at the airport, which is Pacific Coastal Airlines; airport land, commercial; commercial improved, such as the second floor of the library building; commercial vacant land; industrial improved, which is land with a building on it; and industrial vacant land.
“In simple terms, the market analysis considered the average value of the properties in each of the categories and rates being charged by other communities of a similar size,” said Randolph. “For the most part, the analysis found rates that have been charged up until now are close to where they should be. Based on the results of the analysis, rates have been raised in a few categories to make them more current.”
Examples included commercial – improved, airport land – commercial and airport land – non-profit.
Randolph said the new bylaw has been structured differently, in that the categories of lease rates have been more clearly defined, and rather than providing a range in some categories, the rates presented are the lowest that can be charged without seeking approval of council. Randolph added that this does not preclude the city negotiating higher rates based on the quality of the property.
“We’re just setting the basement and if we feel the property is worth more, then we would charge more,” said Randolph. “The new lease rates will result in an increase in the revenue that we generate.”
Increases range between a two per cent increase for commercial improved and a 20 per cent increase for airport land – commercial. The lease rate market analysis cost the city $10,000, said Randolph.
He proposed the bylaw’s duration be for three years because he feels the rates should be refreshed every three years rather than the six that the city just completed. The market analysis in the future will not cost the city as much as the recently completed one did because all of the base information is in place, according to Randolph.
He said the plan is to send the bylaw to council for the first three readings and adoption.
Mayor Dave Formosa said he is happy to acknowledge the city has come to a position where it can finally have someone to deal with the land files.
“The city owns many lands and has many leases and it was basically run off the corner of the desk of the chief financial officer,” said Formosa.
He added that when a decision was made to create Randolph’s directorship, Randolph worked through the land files, updating leases that haven’t been touched in many years.
Councillor Cindy Elliott asked if a four-year term would be preferable for reexamining lease rates to coincide with the turnover of councils.
Councillor George Doubt, chair of the finance committee, said it was a good thing to have completed the lease rate analysis.
“It’s prudent and making sure we get the revenue,” said Doubt. “Having it every three years makes sense to me. It’s all about making sure we get proper value for the property we are leasing. Every three years gives us time to do that.”
Doubt asked if in future, market analysis would be done coming up to the bylaw’s expiration.
Randolph said yes, and in the future, it will be a lot quicker to do. He said he thinks a three-year bylaw duration is appropriate, given changes being seen in the marketplace.
“It keeps us fresh and I think it’s fair to our tenants as well,” said Randolph.
Formosa said if one takes into account the fact that the city purchased the library building, at the time of purchase, the upper floor was more than half empty. He said it is now full.
“We now have zero vacancy so it is now bringing the city a fair amount of money each month with a new source of revenue,” said Formosa.
Council will consider the bylaw at its November 5 meeting.
