Tax sale leaves City of Nanaimo with undevelopable land

NANAIMO – Property without buyers automatically reverts to municipality.

A stretch of land in south Nanaimo, suspected to have low value and little development opportunity, is about to become city property.

Eight properties on Machleary Street are rolling over to the City of Nanaimo after the owner failed to pay overdue taxes. It’s a situation the city is faced with only once every 20 years.

A roster of properties with three years of unpaid taxes head to the auction block every year. The municipality is mandated by the Local Government Act to hold an annual tax sale, but looks to purchase the full inventory to give landowners more options to get their property back. The city also acquires property by default if there are no other bids.

In 2014, it spent just over $280,000 on 22 tax sale properties including $13,200 on 0.78 hectares on  Machleary Street.

Most people redeem their property within a year of the tax sale, according to Diane Hiscock, the city’s manager of revenue services. The city also gives landowners the added option of getting an extension if they pay 50 per cent of the redemption price. But in an unusual twist, the city has been left holding eight parcels, with no effort by the owner to buy them back.

“It was a bit of a surprise for us, so we are in the process of registering the title over,” said Hiscock, of the Machleary Street parcels, which she said is raw land and were not worth much because they are not developable. Ultimately what happens with the parcels will be up to city council.

Bill Corsan, the city’s manager of real estate, said it’s unusual for tax sale property to roll over to the city, happening only once every 20 years.

Most of the properties that go to the city have development issues and low value because mortgage holders have no interest in actually redeeming it and many have been turned into parks, he said.

These parcels on Machleary Street are also considered low value and hard to develop with the highest purchase price at $2,100.

The Machleary Street area has 18 parcels, five of which the city already owns. It had planned to sell its land to a developer that was looking to consolidate the whole block to expand a senior’s care facility but the project didn’t go ahead and ended in default.

He said the city now needs to understand the condition of the site and if there are liabilities associated with it, adding that it was formerly the site of an unauthorized dump.

Nanaimo city council will ultimately decide what happens with the Machleary Street properties. An update is expected to land on the council table in the new year. The City of Nanaimo held its 2015 tax sale on Monday and spent  $197,241 on 13 properties.