Image Credit: CFJC Today)

By James Peters

Cherry Avenue

MLA Milobar grills housing minister on Cherry Avenue apartment purchase

Apr 25, 2023 | 12:35 PM

KAMLOOPS — A lengthy interrogation of Housing Minister Ravi Kahlon by Kamloops-North Thompson MLA Peter Milobar Monday (April 24) provided some insight into what went into B.C. Housing’s purchase of a North Shore apartment complex.

The nearly-hourlong back-and-forth took place during debate on estimates in the B.C. legislature.

On April 6, B.C. Housing announced the purchase of a 42-unit apartment complex located at 435 Cherry Avenue. In a news release, the province said it intends to offer rental housing to “low- and moderate-income families, seniors, individuals, and people living with disabilities.”

B.C. Housing invested $12.8 million in the apartment block, though in the estimates debate Monday, Kahlon admitted the actual purchase price was $11.2 million. The remaining $1.6 million was spent on closing costs and property transfer taxes.

Milobar noted B.C. Assessment’s 2023 valuation of the property was $4.2 million, meaning the province’s investment was more than three times the assessed value.

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“This is a building that sat empty for two-plus years at a time when there are record rents being charged in Kamloops with almost zero vacancy percentage. If there was a rush to buy it and get it back in the housing market, that would have happened,” said Milobar. “It sat empty for over two years in a hot rental market and this government paid over three times the assessed value. Why is that?”

Kahlon responded by noting an independent appraisal carried out for B.C. Housing by Kelowna-based Appraisal West valued the property at $10.4 million. Both the appraisal and purchase were completed in February 2023.

“This won’t be the first time when an assessed property value, especially in the larger scale, is assessed much lower than the actual value,” said Kahlon. “Again, there’s an independent appraisal that came in at $10.4 (million), which a lot of the work is based off of.”

Kahlon noted the appraisal did not account for more than $400,000 in renovation and repair work carried out by the previous owner. The work was made necessary after a major fire gutted three units in January 2021.

“What type of due diligence was done, given that this was a fire rebuild, fire renovation?” Milobar pressed. “The permit was pulled in 2022. This was only dealt with in February of 2023 — which smells an awful lot like trying to get rid of year-end money by B.C. Housing with a rush out the door — with a purchase of three times assessed value.”

B.C. Housing is planning to complete a series of additional repairs and renovations before the building opens, including mechanical and plumbing, roof and exterior cladding, new windows and security systems, and upgrades to the sprinkler and electrical systems.

Kahlon says it should be ready to open in about six months, with the tenants’ rental rates tied to their income levels. A request for proposals has been issued to find an operator for the building.

“We have significant pressures that we’re facing in Kamloops and the region around Kamloops. We have more and more people who need an adequate level of housing and need it fast — people in encampments,” said Kahlon. “What we’re doing here is providing 42 affordable apartments for low- and moderate-income families in Kamloops.”

Milobar continued to express doubts about the research B.C. Housing undertook before finalizing the purchase.

“The minister said an extensive amount of due diligence is done on these types of purchases,” he said. “We have a city full of residents who can’t understand this valuation. We have the development community that can’t understand this valuation. We had three developers — and they’ve all been public about this — go through the building and compare notes with each other. They all came with valuations anywhere from $6-7 million recently for the exact same building, yet the government paid $11.2 million.”

“One of the big things for me is, how do we find homes for people living in parks, living along the riverbed, sleeping on the street?” countered Kahlon. “I’ve had a chance to talk to (Kamloops) mayor and council. This is a major issue for them. They implore us to find ways to get people indoors, to get them into shelter, to get them the supports they need.”