Government in the commercial real estate market and how to lose money

The municipality of the Crowsnest Pass has roughly $1.3 million in reserves not a lot when you consider towns in Alberta on a per capita basis have on average 4-5 times that amount.

After Mayor Decoux declared on November 9, 2011 that we could no longer afford to operate the Crowsnest Centre, or afford not to take advantage of the commercial opportunity that site as to offer.

There as been a lot of debate about knocking the old hospital down, first reaction that I hear from most people is get rid of the eye sore.

The next question is it easier to get somebody interested in the site with out the building there?

I feel it makes no difference if a hotel chain is prepared to buy that site for $2 million they will just discount that price by the $6-800,000 to knock it down.

Let’s say you do not buy that argument you believe that the building as to be gone before you can sell the land.

Then you have to figure out how to pay for it? The municipality could get a loan how long would the taxpayers have to carry the debt?

The municipality could take the money out of reserves?

It would take a substantial portion of those reserves and how much income would be lost and the same question how long would it be tied up.

Maybe we can learn from what another community did in a similar situation let’s take a thriving community in Southern Alberta. Lethbridge, a while back the council of the time purchased a piece of prime real estate across from the Park Place Mall. They paid $2,000,000 for the property and spent $900,000 to clean it up.

Have a look at the picture   http://dailyphotodose.com/2012/01/23/lethbridge-bridge-inn-hotel/   it does not look as big as the Crowsnest Centre maybe that number of $6-800,000 is not out of line for demolition. Going by the theory that a prime location like this next to a major mall, in the heart of down town in the midst of a community that has seen it’s population double in the last fifteen years. This piece of land should have been an easy sell, which in turn would have led to plenty of development, increased tax base and additional employment.

The property just sold in the last few weeks for $2 million dollars, the city paid $2 million dollars for it and spent $900,000 to demolish the previous buildings. Imagine if the Crowsnest Pass had took on that kind of debt or went through $900,000 of reserves to turn around and lose a $1 million, especially when it took 11 years to sell this prime piece of real estate in a awesome location in a community that has not stopped developing in the last twenty years. (That's right Lethbridge purchased this land in 2001)

Put the centre up for sale make a purchase conditional on the new owner demolishing the building within an agreed time frame do not take on debt or burn up most of our reserves for a sale that could take 10-15 years to happen.