A Kamloops developer is bristling at a $12.8 million purchase price paid by the B.C. Government for a 42-unit apartment building at 435 Cherry Avenue.
The building, which was damaged by a fire in Jan. 2021, had an assessed value of $4.2 million.
Joshua Knaak of ARPA Investments says while he doesn’t put a lot of stock into assessed values, he would not have paid more than $7-million for the property, which the province intends to use as affordable rental housing.
“I mean obviously there is need for housing of that nature but having seen that property and being familiar with it, that is probably one of the most incredible overpays that I have ever seen announced anywhere in the province,” Knaak said on NL Newsday.
“I walked through it with two people that know valuations and the three of us decided we were each going to independently come up with a number and then say it at the same time, and the numbers were between $6 and $7 million.”
Knaak is behind a project to construct a new mixed-use building called the Innova on Tranquille at the intersection of Clapperton and Tranquille roads, directly adjacent to the Cherry Avenue property.
He is also behind the Station on Tranquille building and the nearby development at Spirit Square.
“I don’t believe the government understands what they’re doing when the acquire “affordable” housing at ridiculous overpriced valuations,” Knaak said, noting overpaying for properties could have unintended consequences.
“All that that is going to do is turn around and drive up the values of other apartment buildings of other properties in the area which just continues to broaden the gap for affordable housing.”
The City of Kamloops bought the nearby Northbridge Hotel and an adjacent property for $7.1 million in Sept. 2021, slightly under the asking price of $7.49 million. Those two properties were assessed at $3.1 million, and had an appraised value of $6.1 million.
“There was a substantial chunk of that sold off for $3.8 million so really the acquisition of The Duchess would have been [$3.3 million] for 60 some units,” Knaak said. I understand that property is now slated for demolition but the difference between [$3.3 million] for 60 something units and $12.8 million for 42 units, its actually laughable.”
“It is incomprehensible how they achieved that valuation and I mean good for whoever it was who sold it but bad for the taxpayers and bad for anybody who truly wants to see housing become affordable.”
In a statement, the province says that the $12.8 million price it paid included land, taxes, renovations and other miscellaneous costs.
“The government assessed value is typically lower than the actual market purchase price for a property,” the statement said. “BC Housing obtains independent property appraisals to guide purchases. These appraisals support the purchase prices for properties.”
It also said an independent appraisal of the site in Feb. 2023, took into account the existing market value of the property including the land and building.
“This appraisal valued the property at $10.4 million, but did not consider the redevelopment potential of the site,” the statement added.
“The property is zoned for much higher density. The valuation also did not consider the suites that have already been fully renovated to a high standard by the previous owner. These renovations are valued at approximately $400,000, accounting for much of the difference.”
“The closing costs for the building are higher than usual because they include the cost of renovations, which are being completed by the previous owner. These renovations were already underway when we purchased the building,” the statement said.
The government says renovations on the building – which has one studio unit, 23 one-bedroom units, and 18 two-bedroom units – will take roughly six months, with tenants expected to move in by the end of this summer.