Making decisions on municipaly own commercial property
By Stephen Hawboldt
The taxpayers of Annapolis County contribute toward the upkeep of five commercial properties. Three of these properties, all located in the Cornwallis area, present political and financial challenges for Annapolis County taxpayers. The other two in Annapolis Royal and Lawrencetown are primarily occupied by county operations.
In the immediate future, the former Converges call center building presents the greatest challenge. Known as 421 Burns Hill Road, that building was acquired from the various, some defunct, agencies that managed the closure of CFB Cornwallis by the Digby Annapolis Development Corporation (DADC). This is a municipal corporate entity owned jointly by Annapolis County and the District of Digby that shares all costs, revenue, assets, and liabilities equally.
In the interest of promoting economic development, a former tire recycling plant that had suffered a tire yard fire was acquired by DADC. Each municipal partner invested close to a half million dollars in creating a facility that was attractive as a call centre.
Today, each municipal unit has an outstanding debt of about $140,000 plus interest, which is likely uncollectible. This may be the least expensive part of an investment gone sour because the call centre closed before the capital investment was recovered. It is costing each unit close to $200,000 annually to maintain an empty building.
The DADC and the two member municipalities, unless they wish to continue paying these costs, will need to develop a strategy to relieve taxpayers of this burden. After several tries, the DADC has not been able to attract investor interest but this may be changing according to a report to the December Annapolis County committee of the whole council.
The DADC also owns the bright yellow, building on Atlantic Avenue, Cornwallis Park, that is currently occupied the Annapolis Digby Economic Development Agency (ADEDA) and private sector tenants. While the history is unclear, it appears that the building may have been a forced acquisition when local governments elected to withdraw from the former Western Valley Development Authority (WVDA).
Currently, the building operations, without a return on capital investment, are close to breaking even. That could change. The future of development authorities is uncertain as a result of the cancellation of federal financial support. In addition, it is likely the building will require structural and basic infrastructure upgrades in the near future. The DADC may face some difficult, and possible very expensive, choices. These may be delayed slightly as the Nova Scotia Department of Fisheries and Aquaculture is renting space until their new offices, elsewhere at Cornwallis, are ready.
Basinview Centre, a property owned by Annapolis County, has been in the news recently due a proposed fivefold increase in commercial rentals that would have caused the closure of a grocery store, Graves ValuFoods. The primary tenant, likely occupying more than half of the building, is the Fundy YMCA, a major regional recreation complex. The building was originally acquired so the municipality could contribute about $2.3 million to complete the now defunct Basin Wellness Centre. This loan will be retired in 2017.
Currently the annual operating costs of the building are about three quarters of a million dollars with commercial and Fundy YMCA rental income leaving an annual deficit of about $600,000. It is most unlikely income from commercial rentals will ever cover the annual operating costs of the building.
If the primary purpose of Basinview Centre is to provide recreational services for residents, any subsidy could be seen as part of the county’s recreation budget. Several municipal units in the province currently fund comprehensive recreational complexes. Any commercial rental income could be also be viewed as defraying the costs of this recreational programing. Currently, county taxpayers pay slightly less than eight cents on a residential tax rate of 98 cents per $1000 of assessment to cover the operating costs of Basinview Centre.
As the retirement date of the debt approaches, county councillors will likely be discussing their options for Basinview Centre. Like the former Converges call centre property on Burns Hill Road and the ADEDA building on Atlantic Avenue, the options present some very difficult political and financial decisions for municipal councillors.