Updated on June 9, 2011
City starts complex legal work to provide certainty to residents on leased land
With the long arbitration on lease rates on city land now complete, Vancouver legal and real estate specialists are turning to the much more difficult question of determining what happens to thousands of leasehold residents when their leases expire in about 25 years.
City real estate director Michael Flanigan told False Creek resident Dorothy Amor in a recent e-mail that:
Council and [the] city manager have directed city staff to begin working with the Province to seek clarity around the lease expiry issue. A staff team will commence work with the province over the coming months to address this question in the context of the Strata Property Act and the recommendations that were made by the expert committee who had been working to bring clarity to this and other issues around leasehold tenure.
It is not expected that any decisions will be made for many months as it could take several years to work this matter out with the regulators and industry experts, but please know that the city has taken your concerns very seriously and is endeavoring to address this matter as best as practicably possible.
The leased lands, located for the most part in the original False Creek developments and Champlain Heights, provided a key element of the city’s housing affordability strategy in the 1970s and 1980s. Instead of selling the land for condo development, the city used the leases to keep housing prices down and to keep the land assets in city ownership, where they remain as revenue generators for the property endowment fund.
But what happens at the end of the lease? Many of the leases have loosely-worded commitments to compensate residents at the lease end “as if the lease continues.” What does that mean? If the city decides at that point to end the leases, how much would residents receive for their homes?
There are several thousand homes on leased land, some condominium projects and a number of co-ops, which remain a key element in the city’s affordable housing stock. But the lease issue has even wider ramifications because the province also has leased property with similar issues.
The problem is more urgent than it sounds. At some point — not yet, but soon — banks may be reluctant to provide mortgages to owners whose mortgage term is longer than the remaining lease term.
(Disclosure: my family lives in a condominium townhouse on leased land in False Creek.)