$22 million CN Rail line deal reached

Tentative agreement reached for province and local civic governments to acquire rail line from Kelowna to Vernon.

Calling it a “once-in a life-time” opportunity, the City of Kelowna, along with the District of Lake Country and the North Okanagan Regional District announced Monday they have finalized a deal with Canadian National Railway to buy the abandoned former CN rail corridor stretching from Kelowna to Coldstream in the North Okanagan.

The sale price is $22 million plus a tax receipt to CN for the greater value of the land in question.

The deal, expected to close in early March, had been the subject of ongoing negotiations for months. Those negotiations were led by Kelowna city staff.

“This is a once-in-a-lifetime opportunity to preserve a continuous, regionally-significant corridor with the potential to provide long-term public benefits for our residents,” said Doug Gilchrist, divisional director of community planning and real estate for the City of Kelowna on behalf of the regional partners.

“We are ecstatic to have reached a negotiated agreement with CN that both parties consider fair.”

Gilchrist said he was happy with how the negotiations played out and even joked that the final price—substantially lower than the reported $50 million CN was originally asking for the corridor lands—was a “Black Friday sale” because it was finalized on Friday, Nov. 28, one of the most popular shopping days in North America.

The negotiated price to secure the corridor is a combination of $22-million in cash and what is considered a land donation for which the City of Kelowna will issue a charitable donation receipt.

The discontinued rail line corridor runs between Kelowna and Mile 88 in Coldstream, just south of Vernon. While not a negotiating partner, the city of Vernon was a supporter of the deal, said Gilchrist, as was the Okanagan Indian Band.

In a release announcing the deal, the local governments said they respect and support the Okanagan Indian Band in its claim of “reversionary rights” on the land that falls within Indian Reserve No. 7 and, as such, those parcels have been excluded from the pending agreement.

The municipalities now have 120-days to do their due diligence and lift conditions, which include financing. This agreement supersedes the previous application for a non-binding (on the municipalities) net salvage value determination by the Canadian Transportation Agency. The CTA, which had given two one-week extensions to the allow more time for the municipalities and CN to do a deal, will no longer be required to determine a value of the lands in question.

In the release from Kelowna, the local governments said they are making every effort to minimize the current tax impact in the interest of securing a land asset that would they feel will be valued for generations to come.

In the past, it has been stated that applications could be made for funding to the provincial and federal government to help pay for the railway corridor lands.

The specific land parcels fall within the jurisdictions of Kelowna, Lake Country and the Regional District of the North Okanagan, so funding options such as partnerships, grants, municipal reserves or borrowing will be finalized by those jurisdictions during the due diligence period.

The agreement stipulates CN will attempt to remove the rail infrastructure from the corridor for salvage by the end of 2015. Once the discontinuance process has concluded, and assuming public ownership is achieved, local governments will establish construction and operation agreements; determine future costs and other considerations as part of protecting the rail corridor for future generations.

The municipalities would like to see a valley-long recreation trail built along the corridor and in the future, it could even be used for as a transportation route.

Kelowna, Lake Country, Coldstream and Vernon, as well as the regional districts of Central Okanagan and North Okanagan, have jointly identified the value the rail line could have as a continuous multi-modal transportation corridor connecting all the communities.

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