The VSB To Lose Millions? BC Supreme Court Lowers Rent On Property Owned By The School Board
Photo Credit: Dan Toulgoet via Vancouver is Awesome
After a BC Supreme Court ruling that reduced lease payments for Kingsgate Mall, the Vancouver School Board is set to lose millions in annual rental income. The decision marks the latest development in a legal battle over the fair market valuation of the property, which has been ongoing since 2017.
The land Kingsgate Mall occupies in the Mount Pleasant area of Vancouver is owned by the VSB. Since 2005, the school board has leased it to Kingsgate Property Ltd., a subsidiary of Beedie Development LP. According to the original lease, the rent paid on the property was calculated at 8.25 per cent of the market value. In 2017, a disagreement arose between the VSB and Beedie Development over whether or not this was fair market rent. The dispute led to arbitration. A third party was brought in, and the case was brought in front of a tribunal hearing.
In 2022, the tribunal concluded that the property was valued at $116.5 million, which meant that Beedie would pay $9.6 million in annual rent to the school board. In total, Beedie owed the VSB around $49 million in past and future rent. However, one tribunal member argued that the land was only worth $20 million.
In December of last year, the tribunal was reviewed by BC Supreme Court Justice Anita Chan, who sided with the lone tribunal member and ruled that the higher valuation was incorrect. The annual rent for the property fell to $1.65 million. Chan overruled the majority decision of the tribunal, finding that Beedie had been ordered to pay rent over six times higher than they should have been.
The lowered rent is a major financial setback for the VSB, as they had expected much higher lease revenues from the property. The new ruling for the market value of Kingsgate Mall would apply to the entire $49 million, significantly lowering how much the VSB is to earn in rent from Beedie.
Beedie is pleased to have the dispute settled. “It is extremely unfortunate that it took a lengthy and very expensive legal battle with the Vancouver School Board to establish this fact, and we sincerely hope this matter is now firmly behind us,” Beedie president, Ryan Beedie said in a statement. Beedie claims to be looking to the future to make decisions that are best for Kingsgate Mall and the surrounding community.
However, the ruling could have a significant impact on the VSB’s budget and financial planning, as it now faces a shortfall in expected rental income. Now, both sides still have to cooperate in hopes of any future developments on the long-term lease. In a statement, the VSB said that it’s considering next steps. “The board is currently evaluating its next steps in response to the ruling,” said spokesperson Jiana Ling. As there are currently no other legal proceedings, what actions the VSB will take to rebalance its budget remains uncertain.