Field of Dreams

On the grounds of a former sanatorium near Kamloops, a group of B.C. and Alberta investors hope to build a new “urban-agricultural” community for 3,000 people. ?But if they build it, will buyers come? When you visit a ghost town, you don’t expect a lineup. But when I pull up to the gate of the former King Edward VII tuberculosis sanatorium in Tranquille, 20 minutes outside of downtown Kamloops, I am the third car in queue. It seems I’m not the only one curious about the property everybody simply calls Tranquille.?


On the grounds of a former sanatorium near Kamloops, a group of B.C. and Alberta investors hope to build a new “urban-agricultural” community for 3,000 people. 
But if they build it, will buyers come?

When you visit a ghost town, you don’t expect a lineup. But when I pull up to the gate of the former King Edward VII tuberculosis sanatorium in Tranquille, 20 minutes outside of downtown Kamloops, I am the third car in queue. It seems I’m not the only one curious about the property everybody simply calls Tranquille.

“It’s a pretty regular occurrence here,” says Annette McLeod, who has joined her husband Tim to give me a tour of the site. “Grown men in ninja suits come out at night with baseball bats to look for ghosts.”

Tim McLeod is the development manager for B.C. Wilderness Tours Inc., the B.C.-Alberta development consortium that owns the 190-hectare property. The former TB infirmary and mental health institution – a series of once grand-looking buildings now blighted with broken windows and overgrown weeds – was established in 1907 but has sat virtually untouched for almost a quarter century. McLeod and a group of 13 investors are hoping to breathe life back into the storied property bordering Kamloops Lake with an ambitious plan that includes a 120-hectare farm, a five-star eco-resort, a marina and a 1,300-unit real estate development. 

So far, the investors have spent just over $3 million on environmental surveys and demolition. They plan to spend a further $30 million to get the site to the point where they can sell portions of the property to developers, who will in turn sell single-family lots for between $200,000 and $400,000, ultimately creating a community of some 3,000 people. The group also hopes to turn the barns and hayfields, which once fed patients at the sanatorium as well as Kamloops residents, back into a working farm. 

[pagebreak] “We’re proposing a new model, an urban-agricultural environment, that places the farm immediately next to the community,” McLeod says. “We’re going back to the family-farm market model, where food was sold to the nearby market, but we’re bringing the market right next door.”

The “urban-agricultural” argot is what McLeod and his team are using to sell Tranquille to investors and city officials, but to complete the project they’ll need a squeaky-clean site and final approval from the City of Kamloops on their community plan. The question remains as to whether McLeod and his partners have found fertile land – in a part of the province short on blockbuster developments – or barren flatlands, destined to lie fallow for another quarter century.

It’s a spectacular summer day when I visit Tranquille, the sun sparkling on Kamloops Lake. But southeast of us a spectre rises against the hill. It’s a plume of white smoke from the Domtar pulp mill. If the silo that towers over Tranquille speaks to the area’s agricultural legacy, the smokestack is a reminder of Kamloops’s more recent history as an industrial town. It also helps explain why a stretch of prime waterfront has sat undeveloped for so long. 

The city’s location, at the intersection of four major highways and the CN and CP railways, has long been an attractive spot for industry. When Weyerhaeuser Canada Ltd. opened the Kamloops pulp mill in 1965, it brought 600 mill and office jobs to town. But since then, the resource sector’s decline has played out in a very visible way. In 1999 Weyerhaeuser merged with MacMillan Bloedel and moved its head office from Kamloops to Vancouver, handing ownership of the pulp mill to Montreal-based Domtar in 2007. A year later, Weyerhaeuser closed its Mission Flats sawmill, eliminating 200 jobs. Mining too has been sporadic. The Highland Valley Copper Mine employs about 900 people in Kamloops, but it’s been plagued with reduced outputs in recent years and faces an uncertain future. 


Pictured above and on next page: Today Tranquille is strewn with derelict buildings and rusty playgrounds. But the site’s views and fertile soil are what have investors hopeful.

Today, with activity in resources largely stagnant, the city has refocused efforts to diversify its economy, particularly in sectors such as tourism, retail and high-tech. To do that, though, it must change the enduring perception that the city of 90,000 people is merely a pit stop to somewhere else. 

“Promoting the lifestyle in Kamloops will be key to encouraging people to live and invest here,” says Dan Sulz, executive director of Venture Kamloops, the city’s economic development arm. “We have the hottest summers in the country, great transportation networks, an educated labour pool, the cost of land is less and it is not as busy.” 

The city began serious efforts at economic development only five years ago, founding Venture Kamloops in 2004 and Tourism Kamloops in 2005. Yet despite the late start, the hard work appears to be paying off. Between 2005 and 2008, local hotel accommodation revenues grew from $49 million to $59 million, while passenger traffic at the airport increased 34 per cent between August 2008 (when WestJet announced daily non-stop flights to Calgary) and August 2009. Housing prices are also slowly catching up. In 2000 the average house price in Kamloops sat at $128,328, almost $100,000 less than the provincial average. As of October 2009, the average house price had risen 133 per cent to $299,295, compared to a provincewide increase of 106 per cent. 

Tim McLeod says that growth trajectory is one of the key reasons why his group of investors decided to make the move on Tranquille. “Kamloops is close to the coast, to Calgary and to the Shuswap, and we saw a lot of investment going into the city,” he says. “The more we looked, the more we realized how undervalued it is.” In particular, he thinks there’s great opportunity with boomers from B.C. and Alberta seeking a small city environment – minimal traffic, lower prices – and a drier, sunnier climate in which to spend their golden years. 

Don Campbell, a Vancouver-based real estate researcher and president of the Real Estate Investment Network (REIN), agrees there’s reason for optimism. In a March 2009 study, REIN identified Kamloops as the fourth-strongest market in B.C. for investors (behind Surrey, Abbotsford and Maple Ridge), the only city outside the Lower Mainland to reach the top four. The study ranked cities on 12 factors to determine which offered the best return on investment; for Kamloops the winning indicators were steady and sustained population and job growth (particularly in the tourism, retail and health-care sectors), low vacancy rates and an increasingly diverse economy. “Anyone who is deciding to invest should look at regions with future potential, not a past reputation. Look at areas that are on the cusp,” Campbell says. “If a development of this kind is managed properly,” he adds, speaking of Tranquille, “they’ve picked a great region.” 

When Kamloops lawyer Russ Cundari got involved in Tranquille, he had a long-term vision in mind – a good thing too, because Cundari has been waiting 10 years now for ground to be broken. He, along with local developer Ed Nielsen, created B.C. Wilderness Tours in 1999 in order to buy the Tranquille property, through a court-ordered sale, for $1.15 million. (The previous owner, Vancouver businessperson Giovanni Camporese of A&A Foods, had purchased the property from the government eight years prior with the intention of turning it into a resort but defaulted on his mortgage.) But then Nielsen died, in 2002, and, without a developer attached to the project, Cundari’s original investor team decided to back out. It wasn’t until the current consortium was put together in 2005 that the plan for redeveloping Tranquille could begin in earnest. 

And the plan is big: for Cundari, Tranquille represents a unique chance for Kamloops to make up ground it has lost in recent years to the Okanagan. Born and raised in Kamloops, Cundari recalls a time when it was the larger centre and people in Kelowna would come to Kamloops to shop. Then Kelowna outstripped Kamloops – in growth, in prosperity – and all that changed. “It’s not that we’re trying to imitate Kelowna, but I have always said to [city] council, ‘We need to exploit our resources,’” Cundari says. He points in particular to Kamloops Lake’s great potential for recreational and real estate development.


Tranquille investor Russ Cundari sees his project as a once-in-a-lifetime opportunity for Kamloops.

In their timing, Cundari’s group may be better situated than another major development on Kamloops Lake. Tobiano – a golf course, marina and equestrian development 20 minutes west of Kamloops and on the opposite side of the lake – had the good fortune to see its golf course named the number-one new course in Canada by both ScoreGolf magazine and Golf Digest in 2008. But the 400-hectare, $800-million project was also launched just before the real estate market went into a nosedive, forcing developer Pagebrook Inc. to drop the price on 77 lots by half this past July, some of which had sold for half a million dollars in 2008. 

Don Campbell of REIN thinks the local real estate market is at the middle peak of a “big W” cycle right now, with more turbulent months to come. “It’s a fantastic time for investors – as long as they know it’s the big W,” Campbell says. “That’s particularly important in smaller centres, which will experience more fluctuation.” While house prices rose 3.5 per cent in Kamloops this September (and 15 per cent provincewide), compared to the same month a year prior, many market watchers attribute that rise to pent-up demand and low mortgage rates, a trend that’s not likely to continue. Campbell, for one, doesn’t expect a stable market to return to B.C., and Kamloops, until early 2011. 

All of which is just fine with the folks at Tranquille, who don’t expect to see anybody living on their property for a few years yet. Between now and June 2011, the group must complete the development zone plan, get subdivision approval from the City of Kamloops, have the Ministry of Environment approve the site remediation plan (many of the buildings contain asbestos and there’s also a former power plant on site) as well as finish designing the water and sewage infrastructure. Then they have to actually build that infrastructure, and only once that’s underway can they parcel up the land and sell it to home builders. With any luck, presales on residences could begin by December 2011 and people could be moving in one year later.

Whatever the ultimate time frame, one thing’s for certain: financially it won’t be easy. The group is currently raising $4.4 million through a limited partnership to carry them through to June 2011, at which point they’ll need to find an equity partner to contribute a further $25 million to help with the infrastructure costs. In the end, B.C. Wilderness Tours won’t be able to make any money until they can actually sell the land – and, after watching what happened during the recent market correction, the group’s investors are understandably cautious. Says Cundari: “We won’t spend money until the money comes in.” 

As Tim McLeod and I sit under the leafy branches of an apricot tree to talk about his plans, it occurs to me that everything he says will make Tranquille a success makes intuitive sense. It is designed to capitalize on waterfront, its rural atmosphere, proximity to the city and people’s growing concern with living sustainably. It’s five minutes from the fast-growing Kamloops airport, 40 minutes from Sun Peaks Resort and 25 minutes from Thompson Rivers University, the city’s third-largest employer. It’s well situated in a region most agree is poised for further growth. 

Yet as McLeod continues to talk about the importance of preserving history, of eliminating asbestos in the floors and walls of the sanatorium and of the 250 endangered trumpeter swans that nest every winter in the sanctuary next door, the battered buildings all around us are a reminder of how much time has passed since Tranquille last had a purpose – and how much more has to happen before it finds purpose once again. Both McLeod and Cundari say their company carries no debt and that they can afford to wait and design a plan that will sell in the market three years from now. But that wait – which began 25 years ago – could be a long one.