Wednesday, September 14, 2011

Juan de Fuca Lands - so now what?

The CRD land use committee has voted against the Three Point Properties application to rezone 583 acres of land to the west of Jordan River.   What happens now with these lands?

The land is in seven separate titles which would mean these properties could end up as seven large rural residential properties.  Effectively these are seven building lots, the actual size of the properties does not matter.   The value will always be limited because they will not have access to the water though likely have good ocean views.  

Another limitation no one has talked in the context of these properties is the access to electrical power.   The power line running along the West Coast Road is a small scale transmission line, I think, thought the transmission line officially ends at Jordan River (1L146).   If the line along the road is not designed for residential electrical distribution, to get power to the properties is going require stringing another wire on the poles from Jordan River.   This is five to ten kilometers of distribution line that needs to be installed.  

If you want power out there and it is not available, you will have to pay for it.   It is not going to be cheap.   I had a chance to buy an amazing 160 acre property in 1998 but it was 15 km from the nearest substation and needed to have a residential distribution line installed on existing poles.   The price quoted to get the line was more than the price of the property.

If there is no electrical power available to the properties, their value as individual lots drops dramatically. Honestly I see little danger of the lands being developed for any sort of housing without power.

If the land remains as forest with the intent to harvest, the land is likely to start to see harvesting in about 30 years.   583 acres of coastal western hemlock forest should provide something on the order of 110,000 cubic meters of mature timber.  This has a value in the ball park of $6,000,000 at current values of timber.  

There is no danger of immediate harvesting on the lands, but at some point there will be enough value on each of the properties that they will be worth buying, clearcutting and then selling.  $850,000 to $900,000 is a reasonable expectation of the value of the timber on average in each property when the timber is mature.

I expect that the properties will not have much happen with them any time soon.  At some point the properties will be sold and harvested.  Without being tied to a tree farm licence, the timber harvesting is not under the same rules as harvesting on public lands.   There much fewer restrictions on private land timber harvesting than harvesting within a Crown Land timber tenure.

My expectation is to see the properties clear cut from boundary line to boundary line in the late 30s or early 40s.

The quoted value of $5,000,000 to buy the property is too low, it does not even reach the current market values of mature timber on the land.   I suspect that a current fair market value for the property is something in the order of $8,000,000, though I have not done an extensive market analysis to confirm this, but $5,000,000 is clearly a low ball value.
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