Land sales could mean $5M dividend
The city’s land department could be en route to paying a $5-million dividend this year thanks to large commercial sales and no new spending on development projects in 2017.
Despite tepid residential sales, it would likely be the largest payout from a city business unit in three years — bigger than power or gas profits — and since a new dividend formula was developed.
“It’s been on fire, and in a good way,” Mayor Ted Clugston said this month after the announcement of another commercial land sale.
It was the fifth such sale in the past 18 months, all bringing in millions in unbudgeted revenue to the department that only paid a small dividend in 2016, and nothing for years before that.
Mid-year financial statements show that with electrical generation joining petroleum sales in a flatline, land sales could provide the biggest payout of the municipal business units.
“It’s absolutely been profitable, but not from usual sources,” said land office manager Grant MacKay.
The department had budgeted to sell about 40 residential lots this year, but after a strong start to the year, the final number will be closer to 33, said MacKay.
“It’s been a slow summer and fall on the residential front, but we’ve been more than able to make that up with the commercial sales.”
Commercial land sales — that aren’t budgeted because of their uncommon nature — have carried the load this year. Adding to that, a number of recently announced sales won’t close until the 2018 budget year.
At that point however, any dividend would theoretically be smaller as money would be required to start new land development projects.
New dividend policy includes new measures to account for costs throughout the given year. This year’s spending was lower than usual, meaning bigger operating profit.
It’s a specific set of circumstances, MacKay says, that led to a larger than expected operating margin.
Money would be channelled to the city’s Community Capital Fund, which earmarks cash for special building projects.
The department announced this month a $900,000 conditional sale on four acres of commercial land in Ranchlands, and two other conditional sales moved forward with development approvals this month.
The city announced in May it had come to a tentative deal to sell four acres of land to an out-of-town developer, and this month permits for two apartment blocks were issued for the site at 280 Southlands Blvd. That is a condition of the sale moving forward.
Also earning development approval this week as a 32-unit bare land condo complex in Southlands, by New Rock Developments.
A $900,000 conditional sale for a lot at 12 Gehring Rd. near the Saamis Tepee was set to close this week, but could be extended, according to MacKay.
Those sales will likely role into 2018, as does a $3-million option for Canalta Hotels to purchase the other half of a lot on Strachan Road where the Drumheller hotel interest is currently building.