Owners of strata properties on False Creek South lands belonging to the City of Vancouver have reasons to be anxious.
They want to stay in the beautiful waterfront community, but the city has yet to decide whether or not to renew the 60-year leases that will mostly be expiring between 2036 and 2046.
In addition, they do not know how much they will be paid for their investment if the city decides to take the land back.
According to a former city planner now working for the False Creek South Neighbourhood Association, the valuation of the lessees’ interest is a matter that may reach the courts.
Nathan Edelson noted that based on the “legal work” by the association, the worth of the stake that needs to be paid in case the city does not renew the leases could be “close to market value”.
But according to Edelson, the city believes that the value of the residents’ investment is “considerably less”.
“A lot of the people who bought property were led to believe, and we believe that there is a legal case for this, you know, we don’t want it to go to a legal case, but if it were to, that there would be grounds for a serious consideration that that means virtually freehold,” Edelson told the Georgia Straight in a phone interview.
False Creek South is one of the most desirable communities in the city.
Located between the Burrard and Cambie bridges and north of the Fairview Slopes neighbourhood, the 55-hectare community boasts extensive park and green spaces that provide a lush setting for mostly low-rise residential buildings.
It is also an inclusive community with its equal mix of condos, nonmarket rentals, and housing co-ops.
The city owns 80 percent of the land in False Creek South. Of the 3,155 market and nonmarket housing units in the neighbourhood, 825 of the market units are on city-owned land.
On July 12, 2017, city staff presented to council a framework to resolve end-of-lease issues regarding those strata properties.
The framework covers 669 residential leasehold strata units and 48 commercial strata units, for a total of 717 units.
According to the staff report, the city must purchase the lessee’s interest in the strata lot if the lease is not renewed, and this is where things get complicated.
The purchase price cannot be based on a schedule provided in the lease agreement, because there was no such provision in the first place.
Staff explained in the report that this leaves the basis for the price to be “the fair market value of the leasehold tenant’s interest in the strata lot evaluated…as if the strata lot lease did not expire”.
But according to Edelson, residents and the city do not agree on what constitutes market value.
In addition to protecting the value of their investment, Edelson said that a number of residents are also concerned about being able to access money from financial institutions in order to maintain their properties.
Edelson noted that many properties now require renovations, and residents need to get loans to finance the work.
“An issue that we’re running into is that as the leases are coming to an end, it’s very hard for people, for seniors or people on fixed income, who own a strata to pay for costly renovations,” Edelson said. “So having a significant lease-end value, we believe, may become part of the way people can borrow funds in order to pay for major renovations.”
The city is working on a new planning program about the future of False Creek South.
What is clear is that more development is coming to the neighbourhood, and current residents are open to increased density that respects the historic design of their community.
“In many ways, residents don’t want the leases to end,” Edelson said. “They’d like to be able to be in a position to renew the leases, but to do it in the future in a more timely way, because this has become very stressful.”