Tuesday, October 23, 2007

Sale of the Western Forest Products lands

Western Forest Products has put on the market about 28000 hectares of land on Vancouver Island, including some interesting waterfront properties out near Jordan River.

The scale of the sales are still not a huge and dramatic amount of lands. 28 000 ha is 280 sq km or an area 14 km by 20 km. When looking at the size of Vancouver Island this is not much. The sale of the land near Jordan River is 1800ha, I suspect that this is about 40 to 50 individual pieces of land. Without zoning permission and subdivision, these properties are not really that useful to anyone.

The individual properties do not have access to them, they do not have electrical power, and they are limited by the existing restrictions of rural areas. Within the current rules, the most one could do with this land is create about 50 saleable properties, but at a huge cost because of the basic infrastructure that needs to be built. Without local government approval, these lands are not really worth much to a developer. As a single private estate they are something amazing and unique, but that is not what I expect the developer bought them for.

One impact that no one is looking with these lands is the impact on the AAC (annual allowable cut) of WFP. I do not know what the MAI (mean annual increase) is for the lands, but let us assume it is about 2 cubic metres per ha. The sale of these lands will decrease the WFP AAC by somewhere around 50 000 cubic metres per year. This is enough of a drop to put one logging crew out of work and the amount of wood a typical coastal mill for about a month.

The sale will also add a lot of property tax income to local governments. Right now for property tax purposes the WFP lands are taxed as managed forest lands. Property tax is paid based on the value of timber harvested in a given year. No harvesting, no property tax.

With the sale of the land, the property becomes liable for property tax based on the value of the land if it were sold on the open market. Each individual lot is about an average size of 40ha and has a value of about $300 000 each and have a tax value of about $1500 a year. The sale of the 1800 ha near Jordan River should result in a property tax windfall of about $70 000 a year.
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