Arbitration hands $6 million win to False Creek residents in dispute over fees paid on leased land

An arbitration panel has awarded South West False Creek residents living on leased city land a 26 percent cut in monthly fee increases sought by the city, saving them as much as $6 million.

The city will still achieve a significant increase under the complex award, but well below its original goal. The head of the three-person panel was former Chief Justice Don Brenner, who died suddenly just days after the award was handed down.

The decision clears the way for an even more important debate about what happens to the award-winning community between the Cambie and Granville bridges at the expiry of the leases in the next 20 to 25 years. Hundreds of homes in the area are on leased land.

Created in the 1970s to rehabilitate what was then contaminated industrial land, the South West False Creek community plan used leased land and co-op housing programs to provide a mix of one-third social, one-third mid-market and one-third full market housing. Cars were discouraged, transit was provided and 5,000 residents built a strong, successful, sustainable community.

By leasing the land, rather than selling it, the city achieved affordable housing and retained the land value in the city’s Property Endowment Fund.

And by using densities that were considered high in their day — there isn’t a single family home in the entire area — the city-driven project sparked all the massive changes we now see around the Creek. Condo residents on leased land paid monthly charges to the city that could be raised from time to time to market levels. Residents could also pre-pay a fixed amount for the outstanding term of the lease.

(As area residents, my wife and I prepaid many years ago. I have not been involved in any city deliberations on this issue because of the possibility of perceived conflict, given that I live on leased land. I learned of the decision through an e-mail notification from neighbours involved in the arbitration.)

When the city proposed to raise lease fees to market levels in 2006, soon after Millennium had paid top dollar for the Olympic Village land nearby, residents who had not prepaid faced fee increases of several hundred percent. Hard work by Vision councillor Raymond Louie produced a city agreement to go arbitration and to allow one more prepayment option. (In a very real way, these residents suffered collateral damage from the extraordinary price paid by Millennium, the highest ever paid for land in the city to that time.)

But the arbitration took five years and hundreds of thousands of dollars. The successful leaseholders, in the sample used in the arbitration, will still see their rents rise, but the rent will be $924.54, as compared to the $1,254.99 demanded by the city back in October 2006. Much more money will flow to the city, but not as much as it originally sought.